Full Text Archive logoFull Text Archive — Free Classic E-books

Speculations from Political Economy by C. B. Clarke

Adobe PDF icon
Speculations from Political Economy by C. B. Clarke - Full Text Free Book
File size: 0.1 MB
What's this? light bulb idea Many people prefer to read off-line or to print out text and read from the real printed page. Others want to carry documents around with them on their mobile phones and read while they are on the move. We have created .pdf files of all out documents to accommodate all these groups of people. We recommend that you download .pdfs onto your mobile phone when it is connected to a WiFi connection for reading off-line.

Produced by John Hagerson, Jonathan Ingram,
and the Online Distributed Proofreading Team.







The following nine articles are "Speculations," by no means
altogether recommendations. They are _from_ Political Economy, i.e.
they have nearly all of them been suggested by considering mere
propositions of Political Economy. Some of them are old, or given me
by friends: some are, I believe, new: these many persons will set
aside as unpractical or impracticable, as that is the approved word
by which people indicate that an idea is new to them. The topics of
the nine articles have been largely taken from those now under
political discussion, but they can hardly be called ephemeral; and,
though they do not form a treatise, they will hardly be called
disconnected. As they are speculations, no trouble has been taken to
work out suggestions in detail, or give the "shillings and pence"














Political economists have not overlooked efficiency of labour: they
have underestimated its importance in the opinion of Edward Wilson,
who has supplied me with the examples and arguments that follow and
who has verbally given me leave to publish as much as I like.

The English workman, especially in a country town of moderate size,
regards capital as unlimited, employment ("work") as limited. A wall
six feet high is to be built along the length of a certain garden: if
one bricklayer is employed, the fewer bricks he lays daily the more
days' employment he will get; if several bricklayers are employed,
the fewer bricks one lays daily the more employment is left for the
others. It thus appears that the more inefficient the labourer is,
the better for himself, his fellow-handicraftsmen, and for "labour"
in general: the more money is drawn from the capitalist.

There is a grain of truth in this view with respect to petty
unavoidable repairs in a narrow locality: but the capital spent on
such is as a drop in the ocean compared with that embarked in a
single large work. Consider the case of the London Building Trade, as
practised in the suburbs on all sides of London. The London
bricklayers thoroughly believe that it is their interest to be
inefficient: it is said that they have a rule that no bricklayer
shall ever lay a brick with the right hand; they have also a rule
against "chasing," i.e. that no bricklayer, whatever his skill, shall
lay more than a certain number of bricks a day; they believe that if
the bricklayer laid a larger number of bricks he would get no more
pay for a harder day's work, while the "work" would afford employment
to a smaller number of labourers. Look however a little further. The
speculative builders round London compete against each other, so that
they carry on their trade on ordinary trade profits. Such a builder
is building streets, house after house, each house costing him L800,
and selling for L1000 say; and this, after paying his interest at the
bank, etc., pays him about 10 to 15 per cent on his own capital
embarked. Suppose now that the bricklayers increase their
inefficiency either by a trade rule or by a combination to shorten
the hours of labour. The cost of each house is increased L50 to him:
nothing in the new bricklaying rules or rates affects the purchasers;
the builder estimates that his profits will fall to 5 to 8 per cent
on his capital. He does not care to pursue so risky a business at
this rate of profit; he determines to contract operations. When he
goes to his bank, a branch of one of the gigantic London joint-stock
banks, at the end of the quarter, the manager of the branch comes
forward as usual ready to continue the bank advances; but the builder
says simply, "The building trade is not so good as it was," and
declines. The increased cost of bricklaying has affected all other
speculative builders in much the same way; the consequence is that
"gold" accumulates in the branch banks. The secretaries and managers
of the great joint-stock banks do not let their capital idly
accumulate; they buy New Zealand 6 per cents, or transfer to
Frankfort or New York the capital that, but for the rise in cost of
bricklaying, would have gone to the London bricklayers.

In this case it is easy to see that the quantity of work to be done
is not limited. Should the cost of building diminish but a little,
the rate of profit of the builders on their _own_ capital (in many
cases not one-tenth of the capital they employ) will run up to 20 or
30 per cent, or even more; and at even a 20 per cent profit the
bricklayers would find that a perfect rage for building would set in.
Every speculative builder in the trade would strain his credit to the
utmost, and take up every L100 from his bank that he could induce the
bank manager to let him have.

A second illustration. Forty years ago, on our farm in the south of
England, two men with flails used to begin threshing wheat in the
long barn about 1st November, and used to thresh till 1st April. They
got eight shillings a week with us, but in adjoining counties seven
shillings (and even six) were winter wages. Now the steam threshing-
machine will empty that long barn in two short days' work. It takes
half a dozen men to do the work, and they get about fifteen shillings
a week, though their labour is much shorter and easier than that of
the old flail men. At the same time our farmers now are much poorer
men than they were forty years ago: they have less capital, they have
made for many years past a low rate of profit, and they are
frequently themselves complaining that they cannot afford to pay
their labourers well, and inferring that they should get Protection
back again in some shape or other. The labourers on their part
imagine very generally that their increased wages for less work are
due to Mr. Arch and agitation; that the employers of labour will
never pay more than is wrested from them (this is in large measure
true); and that employers must pay whatever agitators are strong
enough to demand (this is wholly erroneous).

In this case it is evident on the surface that the labourers who
thresh with the steam-thresher are more efficient than the flail-men:
their labour is worth the half-a-crown a day to the employer, and
therefore the employer, however poor, can afford to pay it as he
receives it back with a profit. On the other hand, if the flail-men
were raised from the dead, no farmer would now pay them even eight
shillings a week for threshing; their labour would not be worth even

One illustration more. Thirty years ago there were few more wretched
trades than the shoemakers of Northampton. Wages were low, the labour
was severe, the social condition of the workmen was necessarily low
also. The sewing-machine, with some special adaptations to make it
sew leather, increased about sixfold the bootmaking power of a
workman. It is needless to say that the Northampton shoemakers met
the introduction of this machine with the fiercest opposition: they
said five-sixths of their number must be thrown out of employment.
The struggle was won by the machine (as in other cases); shoemakers'
wages have ruled 50 to 100 per cent higher ever since, at the same
time that the shoemaking population has largely increased; and the
social comforts and character of the workpeople have improved vastly
too. This is an example that has always puzzled the workmen
themselves; but it requires no explanation after what has been said
about the efficiency of labour. The puzzle to the shoemakers is what
becomes of the additional boots and shoes made. They do not reflect
that, even of a necessary of life, only a certain quantity is used at
a certain price. Nothing is more necessary in London, especially in
winter, than coal; but, when coal some years ago went up to 40s. a
ton in London, it was marvellous how people in all ranks managed to
reduce their consumption of coal. Much more in the case of boots,
which will bear the cost of export to remote countries, did the
demand increase as the price fell. A fall of 10 per cent only in the
price of boots would cause every wholesale boot exporter to export on
the largest scale. No doubt the invention of a self-acting machine
which should turn out 1000 pairs of boots an hour at a nominal cost
of workmanship per pair would reduce the shoemakers of Northampton to
idleness and starvation. But in practice it has rarely happened that
any machine has been introduced in any trade that has thus completely
choked the increased demand. It has happened often that the workmen
who could only work the old way, and were not able to take up the new
machine, have been reduced to starvation. Even then, after this
generation has passed away, the new machine-workers have been better
off than their predecessors.

Employers of labour cannot pay as wages more than the labour is
worth: no organisation or rules will make them. But employers may pay
a good deal less than the labour is worth, and often have done so.
However great their profits, there is, according to J. S. Mill,
always a tacit understanding among all employers of labour to pay the
minimum the labourers can be induced to accept. It is only by
combination that the labourers can get the full value of their
efficiency. Here Mr. Arch comes in: I have little doubt that the
flail-threshers might, under a well-managed large trade combination,
have got nine shillings a week instead of eight shillings forty years

But every rise in wages gained by the workmen, unless springing from
or in conjunction with an increase in efficiency, will tell against
themselves; it must increase the price of the article, whether
houses, wheat, or boots; this must diminish the demand for the
article, and this must throw some of the workmen out of employ.

It is difficult to find an example of price of wages which presents
any difficulty of explanation when we apply to it the consideration
of efficiency. If bricklayers were to offer to exert themselves to
the utmost, and do in eight hours the same amount and quality of work
they now do in nine, the speculative builders would doubtless be
willing to give the same wages for eight hours' work that they now
give for nine. In case the labourers by increase in their efficiency
are able to get higher wages, the choice will (in general) lie with
them how much of the increase they take in increased money wages, how
much they take in shortened hours of labour. We thus see how, in an
uncivilised community, owing to the inefficiency of their labour,
their whole time and energies are expended on their hunting, or
otherwise providing bare subsistence. The greater skill of our
civilised labourers, working with machines provided by our science,
and profiting by our fixed capital (as our railway tunnels and
embankments), is vastly more efficient: it ensures the labourers a
certainty and regularity of food which the savage does not enjoy, and
provides him a certain margin of leisure beyond what the inefficient
savage labourer can count upon; it also provides the whole surplus
production out of which the intellectual and leisure classes are

It is to be noted that an increase of efficiency in any industry (and
very largely in the case of industries producing generally essential
utilities) raises real wages in all other industries, and this,
whether the particular trade gains (as we have seen it nearly always
do) or loses, as is conceivable, though rarely occurring. Thus, if
the introduction of a boot-sewing machine lowers the price of boots
50 per cent, this can have no effect in lowering the money wages of
farm labourers; and, as a matter of fact, the fall in cost of boots
has sensibly improved the position of farm labourers. In the same way
the superior efficiency of carriers by railway over the old road
carriers has diminished the cost of coal and all articles (the bulky
ones most sensibly) in all parts of England. There thus arises the
instructive result that handicrafts in which there has been no
improvement in the last forty years have obtained a rise of real
wages (amounting in some cases to 50 per cent) by the improvements in
efficiency in all the trades around them.

To sum up: No man in ordinary business will give a price for anything
that he intends to sell again unless he expects to profit by selling
it again. No capitalist will pay a workman to make a table unless he
expects to sell the table for a sum somewhat exceeding the cost of
the wood and the workman's labour. It follows directly that the one
grand object of the workman, both as an individual, a trade, and a
class, should be to improve the efficiency of his labour. He may gain
something by combination and higgling for the turn of the market, but
the limit to what he can get is the value of his labour to his

In order to attain this improved efficiency the most important
practical aid is piecework. This has done much even in agriculture:
the turnip-hoer by the acre earns more, while he does his work at his
own time with more comfort to himself than the old day-labourer. What
is more important, the men who by head and hand are superior at
turnip-hoeing are able to do the work cheaper than ordinary
labourers, and turnip-hoeing thus falls entirely to the most
efficient hoers, whose efficiency thus again gets constantly
improved. There is no doubt to me that, if the London bricklayers
would arrange to work by contract, they would soon obtain more wages
without being compelled (as they imagine would be the case) to work
more severely or longer hours to gain those wages. If they were more
efficient, nothing could prevent the competition of employers soon
giving extra wages for extra value of work.

But it may, finally, be urged that there is surely such a thing as
over-production. If there is an over-production of boots, trade is
flat, the wholesale dealers find they are making no profit, they stop
their purchases, the workmen are thrown out of employ on a large
scale. To this the reply is that there is almost a necessary
alternation of up and down in every particular trade, whether the
efficiency of the workmen is high or low. If trade is good, the large
dealers will extend their purchases, and very commonly rather over-
extend their purchases: a reaction follows, and _vice versa_ when
trade is bad.

But it must be recollected over-production in all trades at once is
impossible: capital is now not buried in pots by our great joint-
stock banks; if one trade is at standstill the capital is carried to
the most remunerative use that the experienced bank secretaries can
discover. If agriculture is, as we have lately seen it, in a
depressed state for years, inasmuch as wheat is "over-produced" in
America till the price in England falls to 36s. per quarter (and
less), at which it hardly pays to produce it in England; this of
itself implies an enormous spur to all other industries--the real
cost of labour has in them fallen (for the labourer will not be able
to keep to himself the whole benefit of cheapened food)--the rate of
profit in all other industries has risen (_pro tanto_). If we ever do
arrive at a state when all the desires are fully satisfied--when
there is over-production in all industries--we shall have general
reduction in the hours of labour: "efficiency" will take that form.


The wealth of England is the sum of the wealth of each individual in
England. An individual may have L10,000 in England, L5000 invested in
Australia. We may reckon his wealth in England either as including or
excluding the L5000, which he could transfer (probably very speedily)
to England in gold if he desired it tangibly. Whichever way we reckon
his wealth and that of other individuals, we shall in like manner in
the sum get the wealth of England: it will be in one case the wealth
in England-in the other case the wealth in England plus the lien
which residents in England have on other countries in the world.

In parallel manner the effective capital of England, which can be
brought into the wages fund, must be the sum of the capital of all
the individuals.

These two self-evident truths are capable of many applications: we
see directly from them that the National Debt, so far as it is held
by residents in England, neither diminishes the national wealth nor
affects the wages fund. We see also directly that any exchange
between an Englishman and a foreigner which gives a profit to the
Englishman gives an equal profit to the English nation.

When a merchant buys 1000 quarters of wheat from America and pays in
gold, he does so to make a profit for himself; but he cannot make a
profit for himself without making an equal profit for the nation. The
exchange of the wheat for gold is profitable to both seller and
buyer; otherwise the bargain would not be struck. A value is added to
the wheat by its being brought from Minnesota (where it is wanted, as
all good things are wanted) to London, where it is much more wanted,
and this increased value is greater than the cost of moving the wheat
from Minnesota to London; this excess is the profit on the exchange
which the buyer and seller divide between them. The exact shares in
which they divide the profit between them depend on some of the most
complicated considerations in the science of political economy.
Indeed, political economy can no more work out a case in figures,
even when every circumstance is given, than political economy can
tell in pounds sterling what should be the rent of a given farm. But
the point required for our present purpose is easy and certain,--
unless the English buyer got _some_ share in the profit he would not
give his gold for the wheat.

The great principle of Free Trade is that in this, and in all similar
cases, the individual shall be left to make what profit he can; that
his dealings with foreigners shall be interfered with by Government
in no way; that he shall not be checked in his operations by import
duties, bounties on exports, staples, or any other of the numerous
obsolete interferences in the statute-book. The principle is that
each individual can manage his own trade better than Government can
manage it for him; that, therefore, Government shall let any
individual do his best in trade his own way, knowing that whatever
profit an individual makes in foreign trade is an equal national

It may be shortly stated that in the old Protectionist theory,
destroyed by Adam Smith, gold was considered to be wealth. Hence, if
an individual bought foreign wheat for gold, the English suffered a
national loss of wealth, and the foreign nation made a national gain.
It is unnecessary to occupy space in refuting this (to us absurd)
idea, as no refutation can be more satisfactory than Adam Smith's

If I profit on the transaction of buying 1000 quarters of wheat for
gold, I do so irrespectively of all other exchanges by others.
Whether the firm next door to me has succeeded in selling to a Boston
house L2000 worth of Sheffield cutlery or no is a matter entirely
beside my bargain. My profit will depend practically on the movements
in the English corn trade: a small rise in the price of wheat at Mark
Lane between the date of my purchasing by cable the wheat in America
and my selling it at Mark Lane, may give me a large profit, or _vice
versa_. But my exchange of gold for the wheat is a separate
transaction of itself: it stands entirely on its own bottom.

It is perfectly true that if my neighbour in Threadneedle Street does
succeed in selling L2000 worth of cutlery to the New Englander, there
is another distinct national profit to England and to America.
[Footnote: I am assuming for simplicity throughout that every
exchange made by private merchants in this foreign trade is a
successful speculation; if in any particular speculation a merchant
loses, his country loses the same amount. As foreign trade, on the
whole, is an enormous national profit, I am justified in sinking the
particular cases of loss. It may be said, "But perhaps all your
exchange of gold for wheat is a national loss": it is evident that
when the trade takes this form the merchants who import foreign corn
stop their operations instantly; in practice they stop them with
prescient instinct.] But whether he succeeds in making a bargain or
not, I object to being interfered with by Government, and prevented
making my own little profit. If my neighbour is practically deprived
of his profitable bargain by Government action on the part of the
Americans--if they are Protectionists and believe that gold is the
only National Wealth, and put a heavy duty on cutlery--if by doing
this they prevent an exchange profitable to both nations--they stop
TWO merchants from a profitable stroke of business. Whether they
injure the English merchant or the Bostonian would-be purchaser of
cutlery MOST is (as above explained) very difficult to prove in any
well-ascertained instance, but it is quite certain that the
interference of the American import duty causes a loss to each
merchant and to each nation.

Where now is Reciprocity and where Retaliation? We can no doubt say
to the Americans, "As you have injured us in the matter of cutlery,
so will we injure you by putting a duty on wheat." But it is merely
cutting off one's nose to spite one's face. In the exchange of gold
for wheat the division of the profit on one transaction is uncertain,
but in the long run it is probably about equal between the English
and the American merchants, i.e. between the English and the American
nations. (I am not overlooking the fact that the ultimate benefit to
England is cheap bread; but it is unnecessary in the present argument
to follow the food down the throats of the consumers: the wheat is
really worth to the corn merchants what they can get for it from the
consumers.) We cannot stop the corn trade with America by a duty (or
diminish it) without as great a loss to ourselves (probably a
greater) than to them; the retaliation in putting a duty on corn
because the Americans put a duty on cutlery would be (with our
lights) mere spite: it would be as though a farmer who took one
sample of wheat to market and one of barley, should meet a factor who
offered him his price for the wheat, but would not spring to his
price for the barley, and the farmer should thereupon sulkily carry
both his samples home again.

The ideas of Reciprocity and Retaliation are pure relics of the old
Protectionist commercial theory, viz. that there is always a national
loss in parting with gold--that the foreign trade can only be
profitable to England so long as the value of the exports exceeds
that of the imports, so that a continual accumulation of gold may go

Now, first, we may meet this with the abstract scientific argument
that there is no character by which gold can be diagnosed as wealth
from steel or broadcloth. Our merchant who buys wheat for gold could
buy from the Americans wheat for cutlery or wheat for broadcloth. The
reason he gives gold for the wheat is merely because he makes a
better profit by giving gold than by giving anything else in exchange
for the wheat. The nation therefore gets a better profit that way

Descending a little from this abstract argument, our opponent says,
"If you go on buying wheat for gold, and cannot sell your cutlery and
broadcloth out of the country for gold, you _must_ run out of gold."
But the fact has been proved by many years' experience not so to be:
for many years our imports have been some L150,000,000 sterling more
than our exports, while our stock of gold in the Bank of England (and
the gold in circulation) remain the same from year to year. This is
one of those many things (like the supply of meat to London) which
will regulate itself perfectly and insensibly (without any violent
disturbances in trade or the money market) if Government will only
leave the matter entirely alone. If our stock of gold is at all short
our merchants give a little less per quarter for American wheat; the
trade is checked; the sensibility of the market--the experience of
our corn-traders--is such that the balance is preserved with very
slight oscillations. The refusal of the Americans (enforced by an
import duty) to purchase our cutlery, etc., _does_ partially check
the reflux of gold to this country, and does lower sensibly the price
which the Americans get for their wheat from us. Errors in political
economy avenge themselves--often fearfully--on their perpetrators.
But our objector will still want to have explained to him where the
L150,000,000 sterling required in England annually comes from. It is
not essential to, or indeed any part of, my present argument to
explain this; but I will anticipate matters so far as to say shortly
here that this L150,000,000 is, roughly speaking, the interest on
English capital invested in foreign countries paid in cash to the
owners resident in England--it is equivalent to an annual tribute.

Professor Henry Fawcett's _Lectures on Free Trade_ is a sound and
admirable book: it is occupied a good deal with the practical
question why so few foreign nations have adopted Free Trade, and how
such foreign nations are to be converted to the orthodox creed of
Adam Smith. But, as I think, unfortunately Professor Fawcett has in
that book used the words Reciprocity and Retaliation pretty freely.
Their mere use is enough to fortify a French or American
Protectionist in his present policy; he naturally says, "The English
Free-traders themselves admit that we are making money out of them:
we take their gold for our wine and wheat; we refuse to give our gold
for their cutlery and broadcloth: those English have now to come to
us whining for Reciprocity; as to their Retaliation we are not
alarmed--we know they _must_ have wheat and _will_ have wine." I
would wish to expunge the words Reciprocity and Retaliation from the
subject, as being words merely suggestive of false views. But the
most fatal course to the adoption of a Free Trade policy by foreign
nations has been our plan of humbling, begging (and indirectly giving
a consideration for) Commercial Treaties. Such a course is enough to
(and does) counterbalance with foreign nations all our theoretical
writings about Free Trade. We go to France and say, "We will let in
your wines at a lower duty provided you do us the favour and give us
the advantage of lowering your duties on English manufactures." I
cannot conceive any way of putting the matter more strongly
calculated to convince the French that we believe we lose by
purchasing their wines and gain by selling them our manufactures.

It appears to me that if we wish to convince Europe and America of
the truth of Free Trade (as understood by our political economists),
our proper course is to adopt Free Trade ourselves FULLY (if the
principle is good for wheat it is good for tea--I shall return to
this), and then to say to foreigners, "See how we prosper under Free
Trade." If the Americans continue to maintain Protectionist duties on
our manufactures, our line of conduct is not to offer to pay them
indirectly to relax those duties, but to say, "You are losing more by
your duties than we are; the proof of the pudding is in the eating."
If I believe, as I do, that the Americans are gaining less wealth
under Protection than they would under Free Trade, I cannot imagine
any plan less likely to convert them to my views than my going to
them and saying, "We will give you L5,000,000 sterling (or some
valued political advantage) if you will alter your mistaken policy."
If this course did not confirm the Americans in the very deepest
suspicions that Protection is really advantageous to them, and that
we in our inmost heart think so too, my ideas of human nature are
altogether at fault. But every foreign debate, whether in France,
Germany, or America, on Free Trade, convinces me that I am not
mistaken in the effect which I attribute to our prayers to every
foreign nation to grant us a Commercial Treaty.


Wheat is now admitted to England free of duty. Tea pays a duty of
about L4,000,000 sterling a year. This is called a duty for revenue,
not for protection. Tea is an article of universal consumption; the
tax on it is open to the objections against a poll tax or hearth tax,
viz. that by it many a poor old woman is taxed as heavily as far
richer people; indeed, owing to the poor consuming the lower-priced
teas, they are by the present duty taxed at a higher rate than those
who can afford the more expensive teas.

The reply in defence of these anomalies is, "We have to raise
L4,000,000 sterling by a duty on something; on whatever we put it, it
will no doubt be bad." Granting, however, this for a moment, the onus
lies on the defender of the existing tariff to prove that it is
better to raise the L4,000,000 required from tea than from wheat, or
than to raise L2,000,000 from tea, L2,000,000 from wheat. Mr. Raban,
a leading tea-planter in Assam, has observed that if the duty on tea
was replaced by one on wheat to raise the same gross amount, the
pressure on the English poor would be less; while an encouragement
would thus be given both to tea-planting in India and to agriculture
in England. I adduce this case of the duty on tea merely to bring out
strongly the fact that Free Trade in wheat is not universal Free
Trade. I do not recommend that the duty on tea should be replaced by
other duties: I am going to raise the question whether it should not
be replaced by direct taxation.

In the case of tea, the duty can hardly be said to be "protective,"
except so far as by raising the cost of tea it impels English
drinkers to have more free recourse than they otherwise would to
other drinks; but in a large number of cases a duty operates both as
a revenue and as a protective duty. It is a curious fact that the
fanners, after unanimously struggling FOR the duty on wheat because
it was a protective duty, subsequently unanimously struggled for
thirty years AGAINST the malt tax (involving a duty on barley)
because it was a revenue duty. As soon, however, as the malt duty was
repealed, they discovered that it had been a protective duty; barley
fell in price (malting samples) about l2s. a quarter, and has never
recovered, nor does any farmer now suppose it ever will. This is
rather a complex case, because on the abolition of the malt tax an
equal tax (in gross amount) was put on beer; and it might be supposed
at first sight that this would not affect the price of barley. It has
in several ways: Firstly, Many brewers now brew common beer with one-
third malt, two-thirds molasses, cane sugar, etc. The tax being on
the beer, Government no longer cares whether it is brewed from malt
or from rubbish, and the consumers grow soon accustomed to the
lowered taste of malt in their beer; Secondly, The admission of
foreign malt and barley without duty has quickened the importation by
removing those restraints and interferences which hamper trade out of
all proportion to their expressed amounts in pounds, shillings, and

In order to establish a Universal Free Trade and to make every port
in England a free port, it would be necessary to raise by direct
taxation about L40,000,000 annually, because the excise on beer,
etc., would have to be abandoned with the Customs duties. We will
consider the possibility of raising this L40,000,000 by direct
taxation before we dilate on the advantages which would follow
Universal Free Trade.

Ricardo, at the end of his masterly consideration of the effect of
taxation variously levied, comes to the general conclusion that the
best tax is that which is least in amount. Adam Smith and the older
economists held that one test which a well-devised tax had to satisfy
was that it should take the money from the taxpayer insensibly,
indirectly. Now, all taxes that thus insensibly drain the taxpayers
invariably take more in gross from them than reaches the Government.
To raise L40,000,000 by customs and excise costs about L3,000,000; so
that the people have to pay L43,000,000, while the Government gets
L40,000,000. In direct taxes, as income taxes, property rates, the
cost of collection is very small--about two-pence in the pound. In
public as in private business it is much more economic to look
payments in the face and make them with our eyes open than to let the
money slip away in driblets. Moreover, modern politicians think, in
opposition to Adam Smith, that it has a good moral effect on the body
politic to be made to feel exactly what taxes they pay, so that they
cannot help knowing whenever taxation is increased.

A serious objection to indirect taxation is that it always falls with
unfair weight on the poor, as in the case of tea duties stated above.
It may be urged that the existing duties are (except tea) nearly all
on luxuries, as beer, spirits, tobacco. But the English have drunk
beer for many hundred years; the taste for beer is largely fixed by
inheritance; beer as supplying sustenance in a form that _rapidly_
assists exhausted nature is, to very many at least, as much a
necessary of life as tea is. Whether we believe tobacco to be
injurious or not, we have no right to impose on an article so very
largely consumed a duty which amounts to taxing the poor out of
proportion to the rich.

If all the indirect taxes are removed, the poor (at least down to
those earning L1 a week and upwards) must be made to contribute to
direct taxes. It may be urged against Universal Free Trade that the
poor are so ignorant that they would sooner pay sixteen-pence a week
in taxes indirectly than eightpence directly. This might prove a
fatal objection to carrying out Universal Free Trade at the first
attempt; but one of the objects to be gained by direct taxation is
the education of the people. It may also be urged that the whole
political power being now in the hands of the masses, they are so
selfish and unjust that if taxation is made a plain matter they will
put all taxation on the rich and refuse to pay anything themselves.
The reply to this is, If this is your estimate of the understanding
and morality of the masses, you should not have put the whole
political power in their hands.

We are only attempting at present to show that the L40,000,000
sterling (to replace duties and those parts of the excise which hang
on duties) _could_ be raised by direct taxation: we are not
attempting to show the best way it could be raised by direct
taxation; it will be seen hereafter that a portion of it might
perhaps be better raised by a National Property Rate.

The L40,000,000 would be raised by an income tax of sixteen-pence in
the pound--(I am underestimating safely--about a shilling in the
pound would raise it really),--carried down to L156 a year without
any reductions; while incomes of L1 a week paid eightpence weekly,
and incomes of L2 a week paid twelvepence weekly. In the Crimean War
the nation endured an income tax of sixteen-pence in the pound; it is
certain that the nation is richer now, and better able to bear such a

But this is not the strength of the argument. In the Crimean War
England endured sixteen-pence in the pound _extra_, in addition to
all existing taxes (some of which were raised too), and the capital
thus taken from the people was destroyed (much of it) or dissipated
in the Crimea. But the sixteen-pence in the pound here suggested
would be in lieu of an equal amount of taxes taken off (it would be
rather less in amount than the taxes taken off): the nation
therefore, would not feel it at all, though individuals would feel it
in different ways. A poor man would have eightpence a week deducted
from his wages, but he would get his beer at three-fifths the present
price, his tea at two-thirds the present price, etc. He would soon
feel that he gained by the change. The rich would find that they
lost; but that loss would, I believe, be made up to them over and
over again.

First, I believe it is impossible to realise the effect on our trade
of having London, Liverpool, etc., free ports. We possess at present
half the ocean trade of the world: with our ports free, we should get
a yet larger share of the world's trade, and secure it permanently.
That is to say, we should certainly keep it until other nations
adopted Universal Free Trade.

Secondly, The fall in the price of tea, beer, etc., would be more
than the amount of the tax remitted: the freedom of universal
manufacture without any Government interference, the liberty to land
tea without delay, and put it into the market without having to
advance the duty, would cause at once a great activity in the trades,
and at the same time a fall in price. By diminishing the need for
middle-men the quality of the beer, tea, etc., would be raised, and
adulteration diminished.

Thirdly, The fall in the price of tea and beer would bring down the
price of all competing drinks: it would at first diminish the
consumption of competing drinks. The cheapening the price of some of
the prime necessaries of life would be to some extent divided between
capital and labour. As in the case of wheat, the labourer would be
made better off, while the profits of capital would be raised. A
general and permanent improvement in all trades would result, except
possibly in those of the tea-dealer and brewer--but I do not think
they would lose. I see no end to the developments from Universal Free
Trade: we can only gain some idea of what they would be by tracing as
far as we may what the results of Free Trade in one article--wheat--
have been; and in doing this we must recollect that before 1846 the
quantity of wheat imported was trifling compared with the present

To this scheme of direct taxation Edward Wilson objects, "Taxation
should fall on expenditure, not on income." It is true that our
object must always be to encourage accumulation, and discourage
destruction of capital (expenditure). Practically, it does not appear
that a heavy income tax diminishes the taste for accumulation in
England: it does increase the tendency of large capitalists to invest
their capital out of England, so as to avoid the State charges on
capital in England. But the capital in England and the quantity of
English capital invested abroad are already so enormous that the
"tendency" of an increased income tax may be disregarded. Lastly, it
may be objected, Would the sixteen-pence income tax levied as you
propose (or nearly so) raise L40,000,000? At the time of the Crimean
War each penny in the pound income tax brought in a million sterling.
At the present time, each penny in the pound income tax brings in
nearer two millions sterling, but the productiveness of the tax is
much interfered with by the large remissions now allowed, and
subtractions which take effect just where the contributors to the tax
are most numerous, say from L100 to L300 a year. I therefore reckon
that, without remissions, the tax of sixteen-pence in the pound down
to L156 a year would produce about L30,000,000, and that the tax down
to L52 a year would about produce the rest. The _total_ income that
income tax is now levied on is nearly L600,000,000. We need not be
surprised at the productiveness of the income tax. A man of L10,000 a
year pays tax on that. But he has a steward on L300 a year, he is
worth to his firm of lawyers L100 a year, and so on: these pay income
tax on the L300 and the L100 over again. When the income tax is
carried down to incomes on L1 a week, the tax will be levied on the
same income over and over again. Even a spendthrift with L10,000 a
year usually scatters more than he actually destroys.

Lastly, It has not been overlooked that there is an income tax now:
and if the whole proceeds of the sixteen-pence income tax were used
to fill up the deficiency in customs and excise, then we have to make
up a deficiency equal to the present proceeds of the income tax. This
might be done (to start with) by the National Property Rate now to be
suggested. But the expectation is, that with Universal Free Trade,
and the tremendous stimulus thereby given to commerce and
manufacture, the National Income would rise with a bound, and that in
two or three years a much lower rate than sixteen-pence income tax in
the pound would supply the amount of all the indirect taxes


Many people see quite clearly that, the population of England being
25,000,000, the next baby born has a right to one twenty-fifth-
millionth part of the area of England in soil of average fertility.
The arrangements of society by which the laud is partitioned among a
limited class, and the complicated rights sanctioned by law in one
plot of land, are considered of no validity as against the natural
right of the new-born baby. I do not see this theory to be self-
evident: on the other hand the supporters of it always give it as
fundamental, axiomatic; they no doubt presume rightly that the land
is limited, and that if one man holds more than his arithmetical
share, he must push out somebody else from his arithmetical share:
while a man who keeps a hundred pocket-knives does not perceptibly
hinder other people having numerous pocket-knives. Still I do not see
how this consideration weighs against Lord Derby's title to his
lands, if the body politic has determined that on the whole it is
best for the community that land should not be held equally by all,
and sanctions by law Lord Derby's monopoly of a large area. On the
theory of the natural right of every infant born to its arithmetical
share, the monopolisers of land are liable to a perpetually recurring
ransom: this can only practically be carried out by a special
National Rate on Real Property (_i.e._ Land, with the houses, mines,
etc., inseparably attached to it), which must be in addition to such
taxes as income tax, succession duty, etc., which land already
suffers equally with trades, professions, offices, and personalty.
The local rates in England exceed L25,000,000 annually; and the
ratepayers perhaps reckon this a large enough ransom. I should remark
in passing that one man with 1000 acres of land does not dispossess
any more babies of their rights than do ten men with 100 acres each.
The ransom therefore must be a strictly level rate: to put a higher
rate on large holders, or to despoil large holders of a portion of
their landed property, will be to work the ransom unfairly. It hence
will follow that any heavy ransom is now impracticable. Of late years
some farms have gone out of cultivation because they will not pay the
tithe, land tax, and rates already on them: to put any heavy ransom
on the land would at once throw large areas in England out of

The question of the ransom, therefore, is not so all-important as has
been considered; the rates at present being L25,000,000, it might be
possible to levy an additional national rate of L5,000,000 to keep
down the perpetually upspringing rights of new-born infants, without
throwing land out of cultivation to any sensible extent. The whole
question will lie thus between a total rate of L25,000,000 and
L30,000,000. I am about, however, as a corollary to this subject, to
suggest a way of forming a National Rate Book which probably would
not materially alter the present rating, but which would alter
entirely the taking of land for public purposes, and would effectuate
all that is good in the phrase the Nationalisation of Land.

This phrase is liberally used but rarely defined. Different orators
appear to have quite different ideas as to what it means; and when
they explain what they suppose it to mean, they generally prove that,
in the way they understand it, it would be serious national damage.

It is unnecessary to observe that landlords now (omitting individual
exceptions and idiosyncrasies) expend their best endeavours in
getting the best rent they can for their land. They have no
prejudices in favour of farms of a particular size; a landlord of a
farm of 1000 acres would let it directly in five-acre plots if he
could get a better (and equally certain) gross rent by so doing.
"Nationalisation" is often taken to mean that Government is to buy
land and let it out in small plots. But apart from expense of
Government management and objections to Government interference, we
may safely assume that there would be a national loss by this
procedure: the private owner would discover very quickly if he could
make a profit by letting his farms piecemeal.

All Government interference can do to improve the produce of the land
is to abolish all restrictive laws, and to make the general tenure of
land such that every piece of land shall fall into the hands of that
man who is able to make the most of it. The National Rate Book now
suggested is designed to accomplish this end. We will subsequently
consider how it might assist public companies. As the suggested way
of getting a National Rate Book is at first sight rather startling, I
would premise that it is no rash invention of mine; it worked
admirably in Attica--as see Demosthenes or Boeckh.

To make the National Rate Book, each landowner values (with the
magistrate) his land at what price he pleases; the State has the
right to buy the land at any time at that price, plus 33-1/3 per cent
for compulsory purchase. The magistrate sees that each separate
house, farm, and plot is valued separately. No person need prove his
title; any man can value any piece of land, and need not prove
himself to be owner, tenant, or agent; but any piece of land valued
by no one would be claimed as public property.

A man who valued himself unfairly low would not be bought out at once
and dispossessed by Government, unless it happened that during that
year his land was taken up by Government or by a railway company for
some public purpose. The regular course of business would be as
follows:--An owner A would put his house and curtilage in the Rate
Book at L1200. The sycophant B would come to the magistrate, offer
L1600 for the property, and lodge the L1600 with the magistrate. The
magistrate then, without divulging the name of the sycophant, would
write to A either to rate his house at L1600 (paying a fine for so
doing), or to take L1600 for it. If he took the L1600, B would get
the property, and Government the increased rate. If A preferred
raising his rateable value to L1600, B would get the fine, Government
would get the increased rate.

_The utmost pressure put upon any owner under this system would be
that, if he would not pay rates on x pounds for his property, he
would lie obliged to take x pounds for the property._

The 33-1/3 per cent for compulsory purchase is illusory, and I have
only put it in the statement of the scheme to meet an objection which
I know to be common (and equally illusory). It is clear that if I know
I am going to get 33-1/3 per cent for compulsory purchase, whether
from Government or a secret sycophant, I shall proportionately
undervalue my property. Thus if I estimate the real value of my house
and curtilage at L1200, and feel that I do not care if I sell at that
price, I shall put it down in the Rate Book at L900. This applies to
all owners, so that the allowance for compulsory sale would only
artificially depreciate by one-fourth all the rateable values put down
in the magistrate's book.

I have not stopped to cumber the statement of this simple plan by
adding the details necessary to meet severance of a farm by a railway
company, etc. The provisions to meet complicated tenures, etc., would
run much the same as in the Lands Clauses Consolidation Act.

It will be at once seen that this form of Rate Book would really
nationalise the land by bringing each piece into the hands of him who
could make most out of it. If I saw my way to use a piece of laud so
that it should be worth L1000 to me, and if on looking into the Rate
Book I saw that the present owner only considered it worth L600 to
him, I should at once lodge my L900 with the magistrate. A few owners
would really feel as Naboth. They could indulge this feeling by
putting a very high rateable value on their property. The high rates
they would thus have to pay would be the due ransom of the land; but
in general every piece of land would pass into the hands of him who
could make most of it. There would spring up, as in Attica, a large
class of professional sycophants. By their incessant operations,
properties small and great would be continually passing from the
slothful and the old-fashioned to the enterprising and modern-
educated. No nationalisation of the land could get so much out of it
or conduce so highly to progress as the National Rate Book. We should
have companies and adventurers buying up all sorts of pieces of land,
just as formerly they speculated in taking up land for mining in
Cornwall. We should see an extraordinary activity in the employment
of capital in England.

For all public improvements, as a new street or a Government military
station, a few minutes with the map and Rate Book would show the
Government officer or engineer the best route or plot to take, and
would also show him the exact cost of the land for the scheme. There
would be no law expenses, no prolonged fights, no juries, no

Wastes, downs, heaths, bogs, would be rated very low. It would be in
the power of Government to take up largely and at small cost large
areas of Surrey heaths, etc., to provide air and recreation ground
for an evergrowing metropolis. In this manner, too, public commons
and quasi-public commons might be secured to the public all over
England: a public-spirited town-council or a local Kyrle Society
would have a wide field and an immense stimulus for action.

I have not stopped to rebut the common (but mistaken) idea that
burdens on the land (being in gross not more than the rackrent)
affect the cultivation. Partners have long drunk at market dinners
"Confusion to the black slug that devours the English farmer." How is
it that these farmers did not (do not) see that there are tithe-free
farms (and some tithe-free parishes) in England, and that the tenants
of such farms get no advantage by being tithe-free?

As I explain elsewhere, a tenant with several years of his lease to
run is (economically considered) a part landowner: if the tithe were
suddenly abolished, tenants with leases would get relief as well as
their landlords. So if a new tax or rate is laid on land (and made
payable by the tenant), all tenants with leases will have to pay such
tax or rate out of their own pocket so long as their lease lasts;
afterwards it will fall wholly on the landlords.

It is repeated now, in nearly every country newspaper, that the
English farmer cannot compete with the American grower because of the
burdens on the land of England. I will not write out (I cannot
improve) Ricardo's proof that rent does not enter into price. The
"burdens" on land are really first charges on the rackrent and do not
affect a year-to-year tenant at all. When a farmer meditates taking a
farm he asks not merely what is the rent: he inquires what is the
tithe, what the average amount of the rates (and is that likely to
increase or diminish during the next seven years); the intending
tenant only wants to know what sum in all he will have to pay for the
farm; whether any of this payment is called tithe or not, or whether
some of it is quit-rent, or whether he is to pay the land tax for his
landlord's convenience,--about all this he cares nothing; they are
mere questions of names to him.


John S. Mill, following W. T. Thornton, advocated a system of petty
proprietors against the English system of large farms with hired
labourers. Figures were quoted to show the splendid produce got by
petty proprietors in France and elsewhere--as the result, however, of
infinite toil. The petty proprietors were, moreover, shown to be much
better off than our hired labourers; and the magic of property
combined with independence was represented as having produced a
superior class. These things may have been so, at least in some cases
and particular countries, at the date (before 1846) when J. S. Mill
originally put forward these views. The liberal, and radical writers
on political economy and sociology still follow (most of them) on the
same side, which has become in a manner historically the liberal
side. There is much against it.

First, Production on the large scale is cheaper than on the small;
this is as true of agriculture as of other industries. The large
farmer has one fixed and one movable steam-engine of his own; he has
his own drills, threshing and winnowing machines, reaping and mowing
machines. The petty proprietor may hire these, but at a dear rate,
and few of them can work to any advantage on his small patches of
corn. The large farmer has large fields; he saves area as against the
petty proprietors; he has fewer headlands and fences, harbouring
weeds and stopping the sun and air. The large farmer can work corn
and sheep together; one shepherd and his boy will look after 500
ewes. You may travel 200 miles by rail in France and not see two
flocks of sheep. Sheep-farming is seen all the world over to be an
industry that pays on the large scale; and the want of it injures the
corn produce of the French petty proprietor. Louis Napoleon sent
Lavergne to make a report on English farming; the substance of his
report is, that were France farmed on the English system by English
farmers, the corn produce would be four or five times what it is now;
leaving sheep out of the question.

The advocates of peasant-proprietorship, at least the better informed
ones, do not now suppose that a peasant receiving a few acres out of
a large English average farm (and capital to make a start) could make
a subsistence out of it. They believe that peasant-proprietors could
maintain themselves on small plots of rich land in and close to
towns, working as market-gardeners or cowkeepers rather than as

This narrows down the peasant-proprietor theory vastly in its
practical application; it remains hardly a national question. But I
have been astonished to see in the neighbourhood of London of late
years the large "gentleman" market-gardeners steadily displacing the
smaller and all the single-handed men. The subject is so important
that I will take one of two instances in detail. I have seen a
gentleman market-gardener, eight miles or so from Covent Garden,
growing strawberries, several acres in each patch. He had young men
(a separate staff) out at daybreak to keep the birds off. The small
gardener, growing a few long beds of strawberries, is ruined by the
birds, whether he lets them eat or goes into the expense and labour
of netting. The gentleman has his own large spring-vans waiting;
these vans are fitted for fruit, and as the pickers gather the
strawberries they deliver them in small and frequent parcels to the
packers. The moment the first van is laden it starts at three miles
per hour and travels to Covent Garden itself, where the strawberries
are delivered to the fruit-dealer, who buys them wholesale of the
gentleman-gardener. The small grower has to get his strawberries to
the local railway station, and to arrange to get them from the London
terminus to market; his trouble and expense are considerable; but,
more important still, his strawberries do not come into the hands of
the wholesale dealer in the "condition" that the large grower's do.
This large grower admitted that he was paying L12 an acre per annum
for some of his land; he added, "My labour per acre, and even my
manure per acre, costs so much that I do not think about a few pounds
rent more or less." These gentleman-gardeners are on the average
better educated than the small market-gardeners; they travel about
the country, gather hints, and pick up new good varieties of
strawberries, etc. From their scale of operations and varied sorts of
strawberries they can, even in rough wet weather or in drought,
always supply to their wholesale dealer some fruit. In fine, they
beat the small grower at every point; they undersell him at Covent
Garden; they outbid him for desirable garden-land within reach of
London. It may be said that in growing plain vegetables the small
gardener would not be at such a disadvantage. I will reply (without
detailing all my observations) that I have seen the same gentleman-
gardener growing a two-acre plot of early radishes, and that he
completely spoilt early radishes for all the small gardeners.

The advocates of peasant-proprietors have thought cowkeeping hopeful
for small men. In my experience dairies of fifty or sixty cows have
an enormous advantage; they can have perfectly designed dairies; they
have enough cream to make butter daily throughout the year (which
saves much trouble, loss, and occasionally inferior butter); they can
maintain approximately a uniform supply. In short, they beat,
undersell, and displace the small cowkeepers wherever the large dairy
is moderately well managed.

The cottager or peasant-proprietor has, I believe, an advantage in
poultry of all kinds. When poultry are kept in very large numbers
they are more liable to disease, and the diseases are more
disastrous--sweeping off the whole large stock. Fowl and egg farming
is one of the most successful, perhaps the most successful point with
the French peasant-proprietors. To make birdfarming successful the
proper plan is to keep a moderate number of as many birds as
possible--fowls, "galeenies," ducks, geese, turkeys, large pigeons--
and to go in for eggs as well as fowls. I have not seen peasant-
proprietors in England attempting this, which seems to me one of the
most hopeful of experiments for them.

The second point urged by Mill, and still by some, is that peasant-
proprietors are better off than English labourers. With the present
price of agricultural labour in England this seems to be very
generally not the case; the French peasant-proprietors and the
agricultural lower classes in Germany are (with small exceptions) now
worse off than the English farm-labourer; they work very much harder
and they get less to eat. The economic truth doubtless is that the
hired labourer may or may not be better off than the peasant-
proprietor, according to circumstances; and circumstances in England
just now are in favour of the hired labourer.

Then as to independence, it may fairly be questioned whether a good
agricultural workman, now practically liberated from the Law of
Settlement, and who can command a fair wage anywhere, is not really
more independent than a French peasant absolutely tied to a three-
acre plot for life.

The real difference between the advocates of the nationalisation of
the land and the Conservatives is this. The Conservative says, "Leave
everything to its natural course, and let us have no Government
interference. If the peasant-proprietor really can maintain himself
while paying as high a rent as the ordinary farmer, we shall soon
have plenty of them." Or, the Conservative has no objection to a
philanthropist starting a few picked peasant-proprietors as an
experiment. But he objects to starting any gigantic new scheme of
working the land, except as a matter of business; he objects to
Government philanthropy, which means giving away other people's

Our farm-labourers, as a rule, know nothing of gardening, and few of
them can command L10 capital. I have sometimes looked round to select
a picked man, and wondered whether, if I put him in a selected five-
acre plot near a town, and also lent him the L200 or so capital
requisite to give him a chance, this picked agricultural labourer
would succeed; and I have inclined to think he would not succeed. I
need not therefore express any opinion as to what would happen if
Government were to take 10,000 or 100,000 farm-labourers, advance
them L200 each, and place them in five-acre or ten-acre plots: there
would be a tremendous bill to pay, and the plan of peasant-
proprietors would be put aside for many a day. If the plan is to be
successful it must be introduced gradually and in a business manner,
_i.e._ what does not pay must not be persisted in.

The plan, now frequently put forward, that Government is to employ
all men out of work to reclaim and bring into cultivation waste
lands, is liable to additional objections. Who is to fix the wages,
the hours of labour, and the tale of work for the Government
labourers? If these were fixed as the advocates of the plan wish them
fixed, Government would soon have all the labourers of the country in
its employ. If, on the other hand, these were fixed below the market
rate, Government would only have such labour as the Poor-Law Unions
now have, and which they find hardly worth employing.

Leaving this (practically grave) difficulty aside, if a heath or a
moor is now uncultivated it is because nobody sees how it can be
profitably brought into cultivation; it can always at a sufficient
outlay be reclaimed, but that will not be done unless it is
calculated that the rent of the land when reclaimed will pay the
interest on the whole expense of reclamation, and something besides.
If Government reclaims land that private persons cannot reclaim with
profit, we may be sure that Government will suffer a considerable
loss. This must be provided out of taxes: are the promoters of
reclamation of wastes by Government prepared for this?

The wastes of England are the only land left the public. Elsewhere
the public can only walk along a pavement or a high road. The good
land is all pretty well in cultivation; and the best of what is left
can give but a moderate profit on reclamation, while its enclosure,
under Act of Parliament, deprives the public of it for ever. Hence
Professor H. Fawcett, throughout his parliamentary career, put his
veto with great success on all enclosure schemes. It is possible that
there might be a profit on the enclosure of Epping Forest: who will
now support that reclamation?

It is very desirable that wealthy private philanthropic individuals
and wealthy private philosophic societies, should try experiments in
small farming, market-gardening, co-operative farming, reclamation of
wastes, etc. There is no hindrance to their so doing: they can
readily hire as many farms as they please at cheap rents, and
subdivide them, and put in picked labourers with an advance of
capital. But that Government should embark in uncertain speculations
of this kind is quite another thing.

The safe general principle, whether in the sale of horses, the
letting of houses, or the letting of land, is that Government should
not interfere; or, to speak more correctly, Government interference
should only interfere to prevent restrictive covenants and to ensure
Free Trade, so that every article (land included) may pass without
restraint into the hands of the man to whom it is worth most. The
greater the individual profit the greater the national profit. Under
a section headed "Law," below, I will say something about the removal
of entail, etc.--a dry but important branch of the question. The
National Property Rate, with the aid of sycophants, would remove many

There has been much controversy and several Parliamentary Acts
concerning the regulation of bargains between landlord and tenant.
How a tenant or a landlord can be injured in such a bargain is
impossible to understand, except in so far as a man is injured who
gives L30 for a horse worth only L20. Will Parliament interfere to
protect such horse-purchasers? The matter has been obscured by
omitting to notice that a tenant with a long lease at a fixed rent
possesses a share (often the larger share) of the "landlord
interest," in the language of political economy. As a simple example:
A tenant took, say in 1850, a Scotch farm on a Scotch lease absolute
of nineteen years, at L500 a year. Within two or three years of his
so taking it the rise in wool, potatoes, and other things, caused the
value of the farm to rise to L600 a year, and this increased value
lasted the whole of his lease and some time after. Now, treating the
increase of value of L100 a year as permanent (as it was very soon
regarded both by landlord and tenant), it is clear that this L100 a
year for the period of the lease (say seventeen years to run) went to
the tenant, not to the landlord; and the first seventeen years of an
annuity in fee is worth more than all the rest.

It is evident that on a seven years' (absolute) lease the tenant
would similarly get a good share (not the larger share) in all the
improvement in value that occurred during his lease. Up to ten or
twelve years ago the value of land had been rising very steadily in
the South of England for near half a century. Rents were pushed up
very generally at the termination of every lease, though noblemen,
great county gentlemen, the Church, and the Universities, as a rule,
never raised the rent on an old tenant; but they could raise the rent
all the more by a jump when a new man came in. During all these years
the tenant-farmers complained rarely of their leases, though they
were often subject to covenant nuisances about cropping, selling off
the farm, game, and incoming for the new tenant.

But during the last ten years the process is reversed. A farmer took
a farm for L500 a year for seven years in the south of England, and
before the lease had run half out the farm was not worth L400 (and in
many cases not L300). Here the tenant suffered a heavy loss. When in
former years he got a gain he never proposed to allow his landlord 15
per cent extra rent. But now that the drop in value of such farms has
taken place, and probably will not proceed further, a tenant who
takes a new lease requires no Act of Parliament to protect him: he
can protect himself. By the date the Abolition of the Game Laws (a
wrong but intelligible phrase) was carried, the farmers in the South
of England were in a position not to take any benefit under that Act,
but to covenant for all the game and sporting on their farms for
themselves. So as to the Act regulating the leases between tenant and
landlord, where they chose to avail themselves of it, the tenant now
can generally get more favourable terms outside the provisions of the
Act. Farms are so down, tenants so scarce, that landlords have to
give way on all minor points. Wherever Government interference
operates at all, it is almost sure to operate harmfully. Consider for
a moment the case of "incoming." Formerly, by the "custom of the
country" south of London, the incoming tenant paid for two years'
dressing for the corn crops, north of London he paid the outgoing
tenant only for one year's dressing, by the custom of the country
too. The question practically only amounted to increasing by 5 per
cent the capital necessary to take the farm south of London. Now what
can be gained by Government interference in such a matter as this, in
which each farmer and land-agent was in general in favour of the
"custom" he had grown up under?

A prevalent idea is that the land is not highly farmed enough, and
that the land of England might be made to yield much more, and that
Government is to cause this to be done. It is most unfortunate to
raise this theory at the moment when land is "down," i.e. when
produce is cheap, labour expensive. Every farmer knows that the only
way to meet these conditions is to farm "lower." In a south country
farm the farmer will sow much less corn, and try to keep more sheep.
In the Western States of America, where produce is very cheap, labour
very dear, the "lowness" of the farming is always abused by the
English traveller (who thus shows that he knows nothing about either
farming or political economy). A farmer, twenty-five years ago, took
a very large and fine corn farm: it had been worked on the five-
course system, i.e. three white crops in five years; the farmer made
a careful calculation whether a four-course husbandry, i.e. two white
crops in four years, would not be more profitable; it appeared to
come to exactly the same thing. At this juncture a rise of a shilling
a week in wages took place; this gave a clear advantage to the four-
course, and the farm was at once worked round to the four course
shift. In this simple case a small rise in wages brought about a
considerable diminution in gross produce, while the loss to the
farmer was small. The remarks in this section have been directed to
the case, common in the South of England, where there has been within
the last twelve years a fall of rent from 25 to 50 per cent. In
pasture farms, in rich land, and in potato farms (wherein you can
keep one-sixth the land in potatoes), the fall in rent has been much
less--sometimes inappreciable.

But, some person may urge, if Government interferes, and compels the
farmer to farm higher than he wishes to himself, the gross produce
will be more, and the employment for labourers will be at the same
time better. True, and this is the quintessence of Protection. The
whole point of Free Trade is to allow capital to be employed where it
is most profitable: high farming is only to be preferred (both for
individual and nation) to low when it is the more profitable. Capital
that cannot be employed to ordinary trade profit on the land must be
transferred to other industries where it will earn the ordinary rate
of trade profit; or, if there is no trade yielding such profit ready
to absorb it in England, the capital must go to the United States or
New Zealand and earn an increased profit. As to the labourers, they
must follow the capital; or they may starve in England leaving few
progeny, while the well-fed labourers of the Western States of
America and New Zealand leave large families: this will do instead of

It is to be noted that great improvements in farming, especially in
machinery, have been effected in the last thirty years, largely by
the operation of the All England and County Agricultural Societies. I
note further that the people who abuse the farmers for bad farming
and clamour for Government interference to promote high farming,
conspicuously refrain from supporting these agricultural societies.


Government might monopolise the retailing of tea in England. At
present, in a country town like Exeter or Canterbury, there may be
fifty grocers selling tea. In their competition they lay out a good
deal in advertisement and handsome shop fronts in the most expensive
streets; they keep (the fifty between them) many more hands than are
necessary to retail the tea. All this outlay has to come out of the
consumer. Government would buy pure tea first-hand in large
quantities cheap; a few trustworthy highly-paid officials would test
it, value it, and see it done up in sealed packages of sizes from 16
lbs. down to 2 oz.: these might be sold in an odd room attached to
the Post Office in each town and village. There can be little doubt
but that a saving in capital and labour would thus be effected, while
the public would get the tea cheaper and purer than at present. The 2
oz. purchaser, in particular, would pay a good deal less for 2 oz. of
real tea than she pays now for 2 oz. of rubbish.

Or,--Government might hand over the tea-retailing of Canterbury and
five miles round to a company as a monopoly: the state of things
would be something like what we experience in the large stores now:
the public would get their tea probably cheaper (quality considered)
than at present; the company would make a large profit on their
capital. If Government sanctioned two tea-retailing companies at
Canterbury, these would probably make a less rate of profit: though,
after the first heat of fight was over, they would probably agree to
sell the same tea at the same (profitable) rates, and the consumers
would gain little out of so restricted a competition. If a new
company were to apply for a private Act to enable them to retail tea
at Canterbury, the old company would show Parliament that themselves
sufficed to satisfy the requirements of the public.

The case of tea is a very specious one. By Government taking to
itself each branch of business in succession till all was in
Government hands we should arrive at Communism. For each successive
interference of Government a reason from economy can generally be
found: as in the case of telegraphs, so in the case of tea. The real
objection to Government monopolising the retail of tea is, that so
long as we live under a system of competition we had better stick to
that plan altogether. At every turn of our present struggling system
there is waste; but the ultimate effect of competition is to reduce
the waste to a minimum. In the extreme case of tea it is pretty clear
that the system of stores will, when fully developed, give the public
all or nearly all they might hope to get from Government retailing,
and at the same time will reduce the loss by competition among tea-

But there is one industry, one branch of the public service, which
should be the very last to be monopolised or restricted by
Government, viz., the carrying of passengers and goods from one place
to another, especially carrying by railway; and yet this particular
industry is hampered by law and restricted by monopolies above all
others--as I suppose, most unnecessarily; but I will take a few cases
in detail before arguing from the general principle of Free Trade.

There is one railway from London to Brighton: there are two railways
from London to Exeter. There are fewer quick trains daily from London
to Brighton than from London to Exeter. There are third-class
carriages at a penny a mile on all the quick trains from Waterloo to
Exeter: from London to Brighton the only penny a mile train starts at
an inconvenient hour and travels exceedingly slow. The Brighton
charge express fares on every convenient quick train they run; the
South-Western have no express fares at all. The South-Western third-
class carriages are padded, and as comfortable as the first; the
Brighton third-class carriages are bare, very long, and run so badly
that the shaking, the rattling of glass, and the draughts, keep
everybody (who can possibly afford it) out of them.

Naturally there have been numerous schemes for a second railway from
London to Brighton in the course of the last twenty-five years. The
present railway company has (they are not to blame for it) opposed
each scheme tooth and nail. They have shown that they themselves
satisfy the requirements of the public, and at the same time do not
make a very high dividend. If a new grocer required an Act of
Parliament to set up as a tea-retailer in Canterbury, could not all
the existing tea-retailers there prove most triumphantly that an
additional grocer was not wanted, and that their own profits were
reasonable? It is not too much to say that the greater part of the
evidence admitted by Parliamentary Committees against proposed new
railways is foolery: without wasting time on it, the Parliamentary
Committee might assume as proved that no monopolist trader wants a
competitor. But the only safety for the public is in competition. In
railway competition the public always profit: if the two companies
agree to run at the same fares, the public gain in number and speed
of trains, better carriages, and attentive consideration of their
comfort. Moreover, in the case of two railways between London and
Exeter, or between London and Brighton, the two lines only meet (not
then quite) at the two termini; and the public is accommodated at all
the new intermediate stations where there was no station at all

The North-Western Railway was many years ago opposing a directly
competing scheme. They brought before the Parliamentary Committee the
late Mr. Horne, whom they justly credited with ability enough to
throw dust in the eyes of almost any Parliamentary five. Mr Home's
evidence was: "I understand railway traffic as well as anybody; the
public are deluded in thinking they would gain by competition: the
two companies might fight for a week or two, then they would more
wisely agree, and put up their fares above the present North-Western
fares, till they had recouped themselves out of the public all they
had lost by their fight." This did very well for the Parliamentary
Committee; but it is a fallacy. At present the North-Western Railway,
though empowered by law to charge three-pence a mile first-class,
charge twopence a mile only: why?--because twopence a mile they find
to be on the whole the most paying rate. Ergo, after the fight with
their directly competing brother was over, they would settle down to
twopence a mile again. The public could not lose by the competition;
they might gain. All experience shows that they invariably do gain.

In France, Government has restricted the construction of railways very
greatly, and protected the monopoly of each existing company closely.
The mileage of railway open in France, in proportion to area and
population, is very small in comparison with that in England.
Moreover, the French lines are worked by quasi-Government officials,
whose object is to avoid work, and still more to avoid responsibility,
and who will not make the slightest effort to accommodate the public:
they do not wish the trade at their station increased. Under this
system the traffic on the French railways is low; especially when we
consider how little each is interfered with by other lines, and what a
broad band of country it has to drain.

The immense progress made by England since 1846, as compared with the
progress of France or of Germany, is often attributed _solely_ to
Free Trade. I believe Free Trade has done much for us: but I am sure
that our railway superiority (to France, Germany, etc.) has done much
also. Probably no one who has not _resided_ some time in a French
town (say a station on a main railway 150 miles from Paris as the
least favourable case for my argument) can realise the enormous
disadvantage by loss of time that a French business man is under, as
compared with the Englishman. To get some necessary manufactured
article from Paris is a matter of days; during which his machinery
may all stand still. The communication with Paris, however, is where
the Frenchman suffers least: the number of trains is so small, and
the slowness of all (but the express) is such that the "local"
traffic is nothing: unless a man intends to go a good many miles he
would ride or even walk rather than go by train. He does not mind
getting up at 2 a.m. to go to Paris; but he will not get up at that
hour to go six or eight miles, especially if he is given no choice as
to the hour at which he must return.

But the usual remark about the French railways is, "See how much
better they manage these things in France. While our railway
companies are all spending their money in fighting and in
competition, and pay dividends of 4 or 5 per cent, the French
railways have their routes settled by Government engineers, and pay 8
or 10 per cent." I am going to propose a plan for stopping all
company fighting in England for ever: but--as to the dividend--it can
only mean that, like any other Government monopoly, the French public
are being made to pay more for travelling than they need.

As regards the interest of the public, the rate of dividend paid by a
great railway company is of very small importance. For many years the
South-Western Company paid double the dividend the Great Western did.
How did this affect the work each did for the public--the conveyance
of passengers and goods? Many common highways have been made by
parishes and landowners combined for the public convenience; the
capital so laid out paid no direct interest (the road was a highway,
not a turnpike): how does this case differ from a railway that pays
no dividend on the original stock? If the railway carried me from
Exeter to London in five hours for thirteen shillings, what does it
matter to me whether the company pays 2-1/2 per cent or 6-1/2 per
cent to its original shareholders? In a very few small and special
cases we have seen a railway line not pay for the working, and be
closed. In a few other cases, where the dividend paid is less than 4-
1/2 per cent, it is possible that the utility of the line to the
public is less than the loss of the shareholders in a non-paying
investment. I say this is a possible and conceivable case--in some
very short lines or in some very thinly inhabited districts. Such
cases I believe rare. Not rarely the initial cost of the line has
been seriously increased by promotion, legal and parliamentary
expenses, enormous sums extorted for land, severance, etc.; if these
expenses can be done away with, these cases of railways constructed
at a loss _on the whole_ to the nation may be made fewer still.

The way in which the railway monopoly, the monopoly of the great
companies, has grown up is noteworthy. To enable a company to take
the land of a private man compulsorily a private Act of Parliament
was necessary. The Parliamentary Committees then said, We will not
enable you to dispossess forcibly private owners of their land for "a
public purpose" unless you further shew that this includes a public
advantage. Private owners were of course let in to show cause against
a new railway; they always talked like Naboth (the Parliamentary
Committees must have been wearied by the continual references to
Naboth), but the genuine private owners sold themselves at the last
minute; after they had pushed the company up to the highest bid, they
well knew that this was above what they could get in the after
arbitration, and "closed," withdrawing their opposition the last day
in the Committee room. The opposition company, besides the grounds of
insufficient need for a new line, etc., always supports and comforts
the opposing landowners: but the great resource of the opposing
company is to hire a landowner to oppose, especially a local attorney
or agent who owns land proposed to be taken by the new line. Such an
attorney, employed professionally by the opposing company, cannot be
bought off at any price; he is a real Naboth, and in his character of
a dispossessed landowner he will fight for the company every point
that they cannot decently fight for themselves.

Opposing a railway bill in Parliament has thus become an art; so much
so, that no independent small line can be made unless they can get
the support of one (at least) of the great companies that are
supposed to occupy the area. The lines made (economically often) by
the great companies themselves are not primarily designed for the
accommodation of the public, but for the private purposes of the
great company; sometimes they are made merely to diddle another great

It is well to compare the law regarding making a new railway with
that for making a new main-drain in the fens. In the latter case the
new drain company receives extraordinary powers and may put a rate on
the land benefited. In the case of a railway passing through a farm,
the common estimate is that it adds a shilling an acre value to the
rent of the farm; if there is a station on the farm it often adds
much more to the agricultural value. Landlords are up to this: a
landlord triumphantly told me, "I got L7000 from that company for
cutting me up; but I would have given them L14,000 to cut me up
more." (In this case, however, building value came in.) But the
disgraceful squabbling of companies, who "sell" any owner without
scruple when they come to terms among themselves, has disgusted
landlords from actively supporting railway schemes.

A great deal of the opposition between rival companies has been from
their point of view an error, as they have subsequently discovered
for themselves. When the Great Western Company first opened their
station at Basingstoke there was war between them and the South-
Western, who thought all their London West-End passengers would
transfer themselves to the Great Western at Basingstoke in order to
avoid a cab drive from Waterloo to Paddington. Some passengers do so
transfer themselves. But _via_ Basingstoke a fine trade sprang up
between the south of England and the Oxford and Leamington route,
which far more than compensated the South-Western Company for the
London passengers they lost at Basingstoke. So in a very few years
there was peace at Basingstoke, and a through-carriage daily from
Birkenhead to Southampton. I think it is impossible to estimate how
much one railway company profits by the facilities afforded by all
the surrounding companies. The loss at a limited number of competing
termini is seen; the gain in the local and cross-country traffic is

I propose Free Trade in Railways. I mean that any person or company
shall be free to make a railway wherever they please. They will have,
before commencing the line, to lodge with the Board of Trade the cost
of the land they take as valued in the National Rate Book, with the
30 per cent for compulsory purchase. They will not have to lodge the
money where they have come to terms with the owner; and the Board of
Trade will allow them to construct the line in reasonable sections.
Having lodged their money, the company (or private speculator) will
only have to go to work under the (amended) Lands Clauses
Consolidation Act.

If this scheme were sanctioned we should have in the course of the
next twenty years, _as I estimate_, L100,000,000 additional invested
in England profitably--not under Government pressure, but by business
men to get interest. Even where the new lines paid little interest we
should get the accommodation of the public. We should have no big
village without its railway; and we should have a great extension of
private sidings. On the eastern half of England we might get a great
number of narrow gauge steam trams running along the present trunk
roads. (Suppose a steam tram from London to York by the Royston
route, going through all the towns, running trams an hour apart all
day, going eight miles an hour through the towns, sixteen or twenty
miles an hour in the country, taking up and setting down everywhere,
would it not pay?)

The only objection to Free Trade in railways is that it would injure
the existing railway monopoly. Under this principle no monopoly ever
would have been or ever will be put down. But I believe the existing
great companies would very generally gain by Free Trade in railways.

For, first, few new railways would be in direct competition with the
old. The old lines have level roads; they can run quicker and with
less wear and tear than the new ones, which would generally have
steeper gradients. The new Free Trade lines would be in the main a
network in the interstices of the present lines. By this the existing
companies would gain enormously; they would be the trunk lines which
the network would feed. It is true that there would soon be a second
line to Brighton; the present Brighton Company would possibly pay as
good a dividend then as they do now. But if they did not, it would
only show how they tax the public now as well as hinder trade. I am
not bound to show that the monopolists would profit by Free Trade; I
deny that the monopolists have any vested interest in their monopoly,
or that Parliament, i.e. the nation, has made any covenant with them
that their monopoly shall never be invaded.

I have suggested three great changes: (1) Perfect Free Trade at all
our ports; (2) The exploitation of the land through the National Rate
Book machinery; (3) Free Trade in Railways. Of these the last is
clearly advisable, nor is there anything (in my opinion) to be urged
on the other side. At the same time it is not less important than
either of the two other suggestions. But the three would work best
together--each aiding and reacting on the other; they would thus
provide "progress" (which means comfort to all classes) in England
for at least two generations of men. If there was no National Rate
Book, the new railways would have to pay exorbitantly for the land
they took up under the existing arbitration system; they would be
relieved merely from the parliamentary opposition of other companies
and of private individuals. The private owner must be deprived of his
present privilege of parliamentary opposition, which gives him the
power to extort an exorbitant price for his land--because a company
can always oppose in the garb of some private owner whom they have

A less but important branch of this reform is the narrowing of
Government interference under pretence of protecting the public.
Great expenses are thus thrown on railway companies. The companies
cannot, therefore, charge increased fares, but such expenses diminish
the number of new railway schemes brought forward. Nor do Government
rules protect the public so well as the old plan (abolished by Chief-
Justice Cockburn) of making the railway company pay for killing or
injuring people. Now, after a great railway smash, the company comes
forward and shows that there was no negligence on their part; that in
the signals, breaks, etc., they had satisfied all the Board of Trade
regulations, and the injured passengers can get nothing. The real way
to protect the passengers is to allow the company to make their own
arrangements, and to compel them to pay heavily for killing and
maiming passengers. This is quite defensible in theory, as in the
case of manslaughter by an individual we give him some punishment out
of our civilised respect for human life, though he may have been
little to blame. Great cost is thrown on railway companies (i.e. much
injury is done the public) by standing orders (cast-iron orders)
about gradients, etc. The company's solicitors order the company's
engineer to comply with standing orders at all costs rather than
introduce any special clause. The consequence is that we see much
money spent and a most inconvenient level-crossing placed at the
entrance to some large town, where a steep gradient for two hundred
yards on a straight piece of road (to which there is no objection)
would have avoided all difficulty. The responsibility in all such
cases should be thrown on the company, and Government interference


The transfer of stock in the name of two trustees in the funds is
done in a few minutes at small expense. The transfer of land in South
Australia is done in a few minutes at small expense at the Government
registry. The transfer of land in England requires an uncertain time
and cost--usually some weeks, and 5 per cent on the purchase money;
sometimes months, and 10 to 25 per cent on the purchase money. It is
equally expensive and slow in the register counties of York and
Middlesex. The Acts of Brougham, Bethell, Cairns, to facilitate
transfer have not materially reduced the evil. In many cases, however
much the land may be wanted for public or other purposes, the lawyers
tell you that no title can be made without a private Act of
Parliament--so effectually has the land been tied up.

The common idea is that this peculiar difficulty, delay, and cost in
the transfer of land arise from the law of inheritance and the legal
machinery of entail; but stock in the funds can be virtually entailed
and made to "follow the estate," and yet this stock can be
transferred just as readily as any other stock.

The explanation is known to every lawyer; but I have met with more
than one Member of Parliament who, though blatant about entail,
understood no more about the matter than a chimney-sweep.

The point is that, under English law, the trusts in the case of stock
attach to the trustees, not to the stock; in the case of land, the
trusts attach to the land itself as well as to the trustees. Hence,
when I purchase stock of trustees I need not trouble about how they
apply the purchase money; in the case of land I have to go into the
whole title.

A simple illustration. I provide for a daughter L300 a year by
putting L10,000 in the hands of two trustees in the funds. Should the
trustees prove rascals, sell the stock, and decamp with the money, my
daughter will lose everything; the purchaser from the trustees can
hold the stock clear of all charges or liability. But if I provide
for my daughter by charging an estate with L300 a year for her, then
however wrongfully that estate may be sold, mortgaged, or otherwise
dealt with, she gets safely her L300 a year. If the bank B has
advanced money on mortgage on that estate, not knowing the existence
of the charge of L300 a year for my daughter's benefit, the law
simply says to the bank, "It was your business to know; you should
have completely investigated the title before you advanced your

It follows, therefore, that if, with a Government Land Registry
Office (say one for each county), you required the purchaser only to
get in the legal estate, _i.e._ holding him not responsible for the
trusts or the application of the purchase money, then land could be
transferred exactly as money in the funds is now, in spite of all the
complications of our law (or rather custom) of entail.

The law of entail in England (so called) is not what the popular
orators suppose. The eldest son inherits really; that is, if there be
no will, no settlement, or other disposition of the property. But
there nearly always is. It is a very rare thing for the heir-at-law
to take land (except some very small pieces) by the law of
inheritance. As to entail, it is practically carried out by a
continued system of surrender and re-settlement--a device of lawyers
which is, in its historical development, an evasion (rather than a
part) of the law. Nevertheless, I think it is a matter of importance
that the shackles which fetter land should be loosened, and that the
present powers of owners to tie up land legally should be very much
curtailed. It is a sad proof of the way riches cling to the heart of
man even when he is leaving this world, that, whatever powers of
tying up land are sanctioned, an owner will usually exert them to the
uttermost. He is leaving his property, but he will keep a hold on it
fifty years after he is dead if he can. He will, after exhausting his
powers in life interests, leave the residuum to an unborn child "in
strict tail-male so far as the rules of law will permit;" and he will
stick in a springing use to effect that, if his greatnephew, the Rev.
George, should ever from an Anglican become a pervert to Roman
Catholicism, he shall take no benefit under the will.

Now the fact is that all tying up is to the detriment of the public.
No man can provide for all contingencies. Indeed he can see so little
a way ahead that in a few years it frequently happens that all the
careful provisions of the will are working exactly as the testator
would have desired them not to work. Land tied up is always worth
less to the owner because it is tied up; and we have seen that the
interest of the commonwealth is the sum of the interests of all its
component members. When you tell me that an estate is now of small
value to its life-owner and unget-at-able for any public purposes, in
consequence of a will made by a man who died twenty years ago, it
appears to me that you shew me convincingly that we have not Free
Trade in land.

I would propose that, either by will, settlement, or other
instrument, an owner should be able to give any number of life
interests, and nothing more; all trusts being placed outside the law.
The first objection will be that if the powers of owners are so
restricted, the desire for the ownership of land will be lessened:
the value of all the land in England will fall. This might be so, I
admit, to some extent; and it would favour the employ of the land for
agricultural profit.

The next objection is that it would become necessary to give land
(and money) directly to women without the intervention of trustees:
that women do not understand business and require to be taken care
of. My reply is that they always will require to be taken care of
unless they are entrusted with the management of their own affairs.
The loss to the nation, the expenses, the sacrifice of time and
labour in trusteeships, have now assumed gigantic proportions. If
women were given their own property to manage, some would (at first)
fool it away: we know what high interest, adventurers, unprincipled
persons, etc., can effect. But each woman defrauded or stripped of
her property to starve would be a warning to all the rest: in a few
years women would manage their property just as well as men. I
believe they would manage it better. A smaller percentage of women
would gamble on the Stock Exchange, the Mining Exchange, Austrian and
Spanish lotteries, and horse-races; and a much smaller percentage of
women would embark in desperate "business" speculations, heavy
purchases of foreign produce, etc.

It should be noted that in cutting down the powers of owners to
legally tie up, I do not interfere with honourable trusteeships of
any kind not enforceable by law or in equity. Such exist now, and
more largely than is generally supposed. The absolute devises and
bequests to friends (not relatives) are often on private (not
expressed) trust to provide for illegitimate children or numerous
other purposes which a man may not wish to parade to his family.


There has been no readjustment of the land tax for very many years.
It is a property rate, and originally was rateably levied at four
shillings in the pound. By the small increase in value of some land,
the large increase in value of other land, since the days of Queen
Anne, it has now become unequal in the highest degree. The farm A,
gross rental L100 a year, has a land tax of L5 a year; the suburban
estate B, gross rental L1000 a year, has a land tax of L2:l0s. a
year. The land tax assessors were sworn in annually (twenty years
ago, and may be still) to assess the tax equally, but it was
perfectly understood that the tax was to be collected every year on
the old long-standing assessment.

Suppose that the estates A and B above were reassessed, and that the
land tax on A was put 15s. per annum, that on B L6:15s. a year. Land
tax can be redeemed at about thirty years' purchase. The effect of
the readjustment would have been to take about L120 from the owner of
B and give it in a lump sum to the owner of A. It is probable that
the present owners of both A and B (or predecessors under whom they
claim) had purchased the estates A and B after the land tax had
become fixed on them, and the amount of land tax would then have been
fully considered in the price paid.

We see thus that in the case of the land tax, as we saw above of the
tithe, and as is also the case in any tax permanently on, a
disturbance of the existing taxation is inequitable. This point is so
much misunderstood that I will give one more illustration.

I am purchasing an estate, intending to farm it myself. There are 400
acres of land, and I reckon the land worth 30s. an acre. I am willing
to give twenty-five years' purchase. I find the tithe is L100 a year.
I therefore propose to give twenty-five times L500 = L12,500 for the
land. But before the bargain is completed I find that the tithe is
L150 a year. I at once sink my bid to twenty-five times L450 =
L11,250, and buy the estate at that price. The next year some
financier "equalises" the tithe, and my tithe is reduced to L100. Is
it not clear that, by the equalisation, I pocket L1250, and somebody
else loses it?

New taxes when imposed should be "equal," as far as can be arranged.
When a legacy duty was imposed, it would have been just to impose a
succession duty also. But, after the legacy duty had been imposed
twenty years with no succession duty, it was similarly inequitable to
put on a succession duty; for quantities of land had been bought in
the interval of twenty years at a slightly higher price than if there
had been no legacy duty, because there was no succession duty.

The proposal for "equalising" taxes is usually put forward in order
to get a somewhat larger gross income from the taxes equalised, or as
a political cry. Nothing can be more absurd than the cry that the
land is over-burdened in comparison with other property. There is no
comparison in the case. Some land being tithe free, some land tax
free, some nearly rate free, those persons who do not trouble
themselves to master the political economy may yet be satisfied that
the "burdens" of the land affect neither the farmer, the labourer,
nor the produce of the farm; the burdens fall _wholly_ on the
landlord (a farmer with a lease being, as above shown, a part
landlord). The efforts of some Conservative orators for the last
twenty-five years to prove the contrary are erroneous in the
reasoning; or I should say, much of the "reasoning" does not hang
together at all. Without formally refuting these efforts, I repeat
that they are fully refuted in the result.

It is therefore that I have insisted above that, in order to carry
out the proposed ransom of the land, a new Property Rate, separate
from and in addition to all other taxes, is necessary. Though the
manner of levying a National Property Rate which I have proposed
lends itself very nicely to getting in such an extra tax, it is not
at all on that ground that I have suggested the new manner of levy.
The object of the new manner of levy and the sycophants is to get
every piece of land in the country into the hands of that man who can
make most of it; including herein as an important item the cheap and
easy acquisition of land required for Government, public and
commercial (railway, etc.) enterprises.

In any great reform of our whole system of taxation a disturbance of
existing interests must take place. Though I would not disturb
existing interests for the sake of mere equalisation or official
beauty of work, I would not let the fear of disturbing private
interests stand in the way of any real or important reform. The
introduction of Universal Free Trade and the abolition of all duties
would be accompanied by a disturbance; but, as far as I can see, no
one would lose, while many would gain enormously.

On the same ground of equality of new taxation I should propose to
replace the amount now levied in duties mainly by an income tax. That
is a perfectly level tax; the idea that temporary incomes ought to
pay a lower rate is fallacious. We are all agreed to tax the poor at
a _lower_ rate; we have now a section of advanced Radicals proposing
to tax the rich at a higher rate. One present candidate for
Parliament is even willing to tax people of L100,000 a year and
upwards at nineteen shillings in the pound. This of course, or
anything approaching it, is unpractical. But I have suggested above,
as a rough plan in accordance with the existing one, eight-pence a
week on incomes of L1 a week, twelvepence a week on incomes of L2 a
week, sixteen-pence a week on incomes of L3 a week and upwards. The
question may very fairly be raised, Why stop this process at L3? why
not continue the series and develop it into a mathematical law? This
might be done more easily with a sixpenny income tax than a heavy
one. To tax earnings and savings (that is an income tax) instead of
expenditure can only be carried a certain way; if the tax is large
enough to diminish saving and promote living up to one's income, and
at the same time to send capital abroad, its effects would be
serious. For a particular and noble purpose I have suggested sixteen-
pence in the pound (which we bore without serious inconvenience in
the Russian war); I should imagine twenty to twenty-four pence in the
pound about the maximum that could be imposed for any purpose--such
as the prevention of hostile invasion. It must be noted that more
than the maximum bearable cannot be put on large incomes, L100,000 a
year, etc., any more than on small ones. Indeed it is rather the
contrary; for persons with large incomes are usually the very people
who already invest largely abroad, and who could (and would) transfer
their capital rapidly out of the country if they were subjected to
anything like confiscation.

Instead therefore of proceeding _upwards_ in our income tax sliding-
scale we must proceed downwards. Taking sixteen-pence in the pound as
the maximum rate we can impose on the big fish, the problem will be,
What is the highest income to which you will allow any remission from
the maximum rate? I think those having above L150 a year possess more
than the necessaries for healthful existence; looking therefore to
the equity and productiveness of the tax, I suggested remission to
those earning less than L3 a week.


The Wealth of Nations is a well-considered title. The economists
anterior to Adam Smith conceived England as surrounded by a barrier
impassable to property and money except by trade. In trade there was
an exchange apparently on equal terms; but the old economists saw a
difference in nature between imports and exports; when wool was sold
to Flanders gold was received, and remained somewhere in the nation;
it formed the national purchasing power, and could hire mercenaries
or otherwise command foreign labour and productions. Inversely, when
we imported wine or tea, we had to part with a portion of our
national purchasing power, while the wine and tea went down our
throats, leaving nothing in its place. It appeared clear that for any
increase in national wealth the value of the exports must exceed that
of the imports. Every well-prepared boy can now show in ten minutes'
scribbling in a Government examination the ridiculous folly of the
old economists; but several of them were experienced London
merchants, and perhaps were not the complete idiots they are now
triumphantly shown to be. If they had been asked whether wool was a
part of the national wealth they might have returned an answer that
their modern detractors are not quite prepared for.

Adam Smith and his followers, and still more closely Ricardo, divided
their Political Economy into two parts: in the first they consider
the wealth of the nation without the "complication" of foreign trade,
_i.e._ they, in fact, contemplate no money or goods as going out or
coming in whatever. They then in separate chapters, forming a big
appendix, consider the effects of Foreign Trade as a series of
exchanges. They do not discuss even the payment of a lump sum of gold
to a victorious nation. Senior, in his _Handbook of Political
Economy_, has considered, first, the economy of the world conceived
as a solitary, island of small size in a world-covered sea; secondly,
he treats foreign trade by conceiving two such islands. There is no
better way of treating Political Economy than this; and it is well
for the beginner to conceive the solitary island with fifty (or a
limited number of) families only on it, and work through the ordinary
theorems (with figures) in this restricted case. Whatever is true of
the fifty families in a small island must be true for 5,000,000
families in a big island.

The facilities of modern communications have caused most countries to
differ in their circumstances materially from the conditions assumed
by Adam Smith and his successors as axioms. In the case of England,
owing to its numerous wealthy colonies, gigantic foreign trade, and
consequently world-over-spread capital, the circumstances are so
completely altered that many results of the grammar of Political
Economy no longer apply even in the rough to England. If Adam Smith
had been asked what would happen to England if the imports for one
year exceeded the exports by L150,000,000 sterling, he would have
given the same answer as his predecessors, who reckoned wealth in
gold and silver, or more probably he would have declined answer,
pronouncing such a state of things an impossible conception. It is
now as difficult to treat politico-economically the wealth of the
nation as the wealth of Warwickshire--a difficulty that Adam Smith
would have shrunk from.

It is true that every abstract proposition concerning rent, capital,
and wages now (and always) holds true for the whole world; but, so
conceived, the propositions give no practical result. These things do
not lesson the value of the science of Political Economy, Mr. Ranken
or Dr. Pole would estimate very highly the value of a knowledge of
elementary mechanics to the humblest engineer, though such elementary
mechanics might not extend to the consideration of friction, etc.,
and might not be applicable to any bridge or steam-engine.

Of this L150,000,000 that is now annually remitted to England, not in
the way of exchange, some small portion is transferred by wealthy
Australians returning to settle in England for purchase of houses,
etc., in England; but by far the greater portion is the interest of
capital owned by men resident in England, but invested abroad: it may
be shortly termed tribute. This is mainly invested in the Colonies
and India; New Zealand and Australia taking large shares. There is
also much English capital invested in Continental railways, etc.; but
it is noteworthy how capital (as well as commerce) follows the flag.
The English capital invested in the United States is absolutely
large, but relatively (to that invested in Canada, etc.) very small.
It is certain that if the United States were under Queen Victoria the
amount of English capital invested there would be far greater than at

As far as England is concerned this L150,000,000 a year is a tribute
paid her by the rest of the world. New Zealand or South Australia may
take up a million sterling in London (because they get the loan
placed there at 5 or 6 per cent, while the local rate of interest in
Australia is far higher) in order to make a railway which perhaps
pays the local Government as much as the interest of the money they
give to England. Still, the capital being once fixed in Australia
while (by hypothesis) the stock is held in England, the result is
equivalent to a tribute.

All Liberal stump-orators now agree in telling the agricultural
population that their improved position is due to Free Trade (in
wheat), and that therefore they should vote for the Liberals. Nothing
is done more confidently in politics and history than the settling
the causes of events, or predicting what would have been the course
of events had some result been different, as, for instance, had the
separation of the United States from England not occurred. The truth
is that in politics causes are many; they act and react on each other
in their operations; and to say exactly how much is due to one cause,
or how much that cause acting alone would have effected, is
impossible. To get some judgment how much of the present prosperity
of the agricultural labourers (admitted on all sides as compared with
their position in 1846) is due to free importation of wheat alone,
let us (merely as a scientific artifice) imagine that a regular
sliding-scale duty on wheat were put on now, bringing wheat to 48s. a
quarter permanently. What would be the effect on the agricultural
population? We may suppose that the produce of the duty, were it five
or eight millions, or any other sum, was employed in remitting the
duties on tea or other productions generally consumed by agricultural
labourers. The placing of wheat at 48s. a quarter permanently would
at once recall a good deal of capital to the land, it would carry out
further the margin of cultivation, and at the same time cause a
higher farming of that within the non-existing margin; in both ways
it would raise the demand for agricultural labour, and would raise

On the whole, I incline to think that a sliding-scale duty on wheat
up to 48s. a quarter would not perceptibly alter the position of the
agricultural labourer, or might possibly improve it: it would lower
the wages and diminish the profits of capital in other trades. This
is not (as before explained) a fair way of arguing the question;
because it is impossible to calculate the indirect effects of Free
Trade in wheat, which ultimately came round to benefit the
agricultural labourer.

But considering how the efficiency of the agricultural labourer has
been improved by improved machines since 1846, it is hardly possible
to doubt that the agricultural labourer is much more indebted to the
engineers than to the Corn Law League for his improved position.
Under "machines" too may be included railway communications: also let
us not forget how much the agricultural labourer owes, not only to
drills and mowing-machines, but to boot-sewing machines, improved
tea-ships, etc.

If we look to the general increase of wealth in England since 1846,
the first thing that strikes us is the increase in the tribute, which
is about thrice what it was. This increase is largely imperial, i.e.
due to colonisation, annexation, etc. But here again we must not
overlook the reaction of causes on each other: our Free Trade in
corn, our improvements in machinery and ships, have so largely
contributed to spread our empire that it becomes impossible to
disentangle the separate work, or indeed to speak of any one cause as
a simple element: the causes all act together.

England is the most comfortable country in the world for a rich man
to live in, and consequently rich men congregate there; or, if they
travel, keep a headquarters there. In this way we have congregated a
disproportionate population in England. It may be argued that it
would be a healthier economic state if the exports and imports
balanced, and if the population of England was no larger than the
country itself could grow wheat for, _at a price not exceeding 40s. a
quarter_. However that may be, the important point for the working
men of England to mark is, that every loss of rich men resident,
every loss of tribute, every reduction of the wage-fund, every
pressure on the population to emigrate, everything that leads in the
direction of a self-supporting England, means immediate pressure on
the poor, with reduction of wages. That is the only way emigration
could be by natural law enforced. It is the poor, the labouring
population, who are so hugely interested in the empire. Of all the
follies taught to the labouring man the most foolish is the doctrine
that the empire abroad is maintained to provide incomes for the rich,
at the cost of the taxes paid for wars by the poor. It matters
comparatively little to the rich whether they live at Florence or
Dresden four or eight months in the year, whether the population of
England is to be maintained stationary, to increase at its present
rate of increase, or to be squeezed down to half its present number:
but it matters vitally to the poor. Whether, ultimately, after our
empire is gone and the population of England is stationary at fifteen
millions say, the poor in England would be better off than now is a
very difficult question, concerning which doctors differ; but it is
absolutely certain that during the Banting process, in the reduction
of the population down to that fifteen millions by a process of
starvation and emigration, continued for two generations of men, the
poor would have to go through experiences altogether novel. It is a
thing that would revolutionise England; and in spite of the superior
education of our labourers might lead to a break up of society.
Starvation and bankruptcy make any and every man a Radical if not a

To keep the poor comfortable for the present and for many years
immediately in front of us, we require a continual increase in the
wealth laid out in England annually in the purchase of labour. The
growth of the empire, the profitable investment of capital in foreign
countries (whereof the interest is paid and consumed in England), is
one great resource: the profitable investment of capital in England
itself is the other great, probably safer, resource. To effect this
we require every acre of land to fall into the hand of the man (or
company) who can make most of it: we require a Universal Free Trade
that shall render our hold on the commerce of the world secure until
all nations adopt Universal Free Trade (when we shall gain so much in
other ways that we shall be able to afford to share our monopoly with
others); we require the removal of all restraints on railways,
tramways, electric lights, etc., that hamper or prevent the
employment of capital in England (in other words, that send English
capital abroad). Finally, underlying the whole, and as the prime
cause that shall induce capitalists to employ their capital in
England rather than to send it abroad, we require the labour of every
working man to be in the highest degree efficient: this retards the
fall of the natural rate of profits to a minimum, and the attainment
of the stationary state. Whatever ideal beauty has been discovered in
the stationary state by J. S. Mill, it is pretty clear that England
is not approaching it. It is as difficult for us to stand still as it
is impossible to go back; and our only (third) course open (for the
present and for many years to come) is to progress.

Book of the day: