The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction
• Preface [1848]
• [addition to the Preface In the Second Edition, 1849]
• Preface to the Third Edition [july, 1852]
• [addition to the Preface In the Fourth Edition, 1857]
• [addition to the Preface In the Fifth Edition, 1862]
• [addition to the Preface In the Sixth, Edition, 1865]
• [addition to the Preface In “the People's Edition,” 1865]
• Preface to the Seventh Edition [1871]∗
• Principles of Political Economy
• Preliminary Remarks
• Book I: Production
• Chapter I: Of the Requisites of Production
• Chapter II: Of Labour As an Agent of Production
• Chapter III: Of Unproductive Labour
• Chapter IV: Of Capital
• Chapter V: Fundamental Propositions Respecting Capital
• Chapter VI: On Circulating and Fixed Capital
• Chapter VII: On What Depends the Degree of Productiveness of Productive Agents
• Chapter VIII: Of Co-operation, Or the Combination of Labour
• Chapter IX: Of Production On a Large, and Production On a Small Scale
• Chapter X: Of the Law of the Increase of Labour
• Chapter XI: Of the Law of the Increase of Capital
• Chapter XII: Of the Law of the Increase of Production From Land
• Chapter XIII: Consequences of the Foregoing Laws
• Book II.: Distribution.
• Chapter I.: Of Property
• Chapter III.: Of the Classes Among Whom the Produce Is Distributed
• Chapter IV.: Of Competition and Custom
• Chapter V.: Of Slavery
• Chapter VI.: Of Peasant Proprietors
• Chapter VII.: Continuation of the Same Subject
• Chapter VIII.: Of Metayers
• Chapter IX.: Of Cottiers
• Chapter X.: Means of Abolishing Cottier Tenancy
• Chapter XI.: Of Wages
• Chapter XII.: Of Popular Remedies For Low Wages
• Chapter XIII.: The Remedies For Low Wages Further Considered
• Chapter XIV.: Of the Differences of Wages In Different Employments
• Chapter XV.: Of Profits
• Chapter XVI.: Of Rent
• Book III: Exchange
• Chapter I: Of Value
• Chapter II: Of Demand and Supply In Their Relation to Value
• Chapter III: Of Cost of Production, In Its Relation to Value
• Chapter IV: Ultimate Analysis of Cost of Production
• Chapter V: Of Rent, In Its Relation to Value
• Chapter VI: Summary of the Theory of Value
• Chapter VII: Of Money
• Chapter VIII: Of the Value of Money, As Dependent On Demand and Supply
• Chapter IX: Of the Value of Money, As Dependent On Cost of Production
• Chapter X: Of a Double Standard, and Subsidiary Coins
• Chapter XI: Of Credit, As a Substitute For Money
• Chapter XII: Influence of Credit On Prices
• Chapter XIII: Of an Inconvertible Paper Currency
• Chapter XIV: Of Excess of Supply
• Chapter XV: Of a Measure of Value
• Chapter XVI: Of Some Peculiar Cases of Value
• Chapter XVII.: On International Trade
• Chapter XVIII: Of International Values
• Chapter XIX: Of Money, Considered As an Imported Commodity
• Chapter XX: Of the Foreign Exchanges
• Chapter XXI: Of the Distribution of the Precious Metals Through the Commercial World
• Chapter XXII: Influence of the Currency On the Exchanges and On Foreign Trade
• Chapter XXIII: Of the Rate of Interest
• Chapter XXIV: Of the Regulation of a Convertible Paper Currency
• Chapter XXV: Of the Competition of Different Countries In the Same Market
• Chapter XXVI: Of Distribution, As Affected By Exchange
• Book IV: Influence of the Progress of Society On Production and Distribution
• Chapter I: General Characteristics of a Progressive State of Wealth
• Chapter II: Influence of the Progress of Industry and Population On Values and Prices
• Chapter III: Influence of the Progress of Industry and Population, On Rents, Profits, and Wages
• Chapter IV: Of the Tendency of Profits to a Minimum
• Chapter V: Consequences of the Tendency of Profits to a Minimum
• Chapter VI: Of the Stationary State
• Chapter VII: On the Probable Futurity of the Labouring Classes
• Book V: On the Influence of Government
• Chapter I: Of the Functions of Government In General
• Chapter II: On the General Principles of Taxation
• Chapter III: Of Direct Taxes
• Chapter IV: Of Taxes On Commodities
• Chapter V: Of Some Other Taxes
• Chapter VI: Comparison Between Direct and Indirect Taxation
• Chapter VII: Of a National Debt
• Chapter VIII: Of the Ordinary Functions of Government, Considered As to Their Economical Effects
• Chapter IX: The Same Subject Continued
• Chapter X: Of Interferences of Government Grounded On Erroneous Theories
• Chapter XI: Of the Grounds and Limits of the Laisser-faire Or Non-interference Principle
• Bibliographical Appendix: Prepared By Sir William Ashley In 1909

CHAPTER XI

of the grounds and limits of the laisser-faire or non-interference principle

§ 1. We have now reached the last part of our undertaking; the discussion, so far as suited to this treatise (that is, so far as it is a question of principle, not detail) of the limits of the province of government: the question, to what objects governmental intervention in the affairs of society may or should extend, over and above those which necessarily appertain to it. No subject has been more keenly contested in the present age: the contest, however, has chiefly taken place round certain select points, with only flying excursions into the rest of the field. Those indeed who have discussed any particular question of government interference, such as state education (spiritual or secular), regulation of hours of labour, a public provision for the poor, &c., have often dealt largely in general arguments, far outstretching the special application made of them, and have shown a sufficiently strong bias either in favour of letting things alone, or in favour of meddling; but have seldom declared, or apparently decided in their own minds, how far they would carry either principle. The supporters of interference have been content with asserting a general right and duty on the part of government to intervene, wherever its intervention would be useful: and when those who have been called the laisser-faire school have attempted any definite limitation of the province of government, they have usually restricted it to the protection of person and property against force and fraud; a definition to which neither they nor any one else can deliberately adhere, since it excludes, as has been shown in a preceding chapter,∗ some of the most indispensable and unanimously recognized of the duties of government.

Without professing entirely to supply this deficiency of a general theory, on a question which does not, as I conceive, admit of any universal solution, I shall attempt to afford some little aid towards the resolution of this class of questions as they arise, by examining, in the most general point of view in which the subject can be considered, what are the advantages, and what the evils or inconveniences, of government interference.

We must set out by distinguishing between two kinds of intervention by the government, which, though they may relate to the same subject, differ widely in their nature and effects, and require, for their justification, motives of a very different degree of urgency. The intervention may extend to controlling the free agency of individuals. Government may interdict all persons from doing certain things; or from doing them without its authorization; or may prescribe to them certain things to be done, or a certain manner of doing things which it is left optional with them to do or to abstain from. This is the authoritative interference of government. There is another kind of intervention which is not authoritative: when a government, instead of issuing a command and enforcing it by penalties, adopts the course so seldom resorted to by governments, and of which such important use might be made, that of giving advice and promulgating information; or when, leaving individuals free to use their own means of pursuing any object of general interest, the government, not meddling with them, but not trusting the object solely to their care, establishes, side by side with their arrangements, an agency of its own for a like purpose. Thus, it is one thing to maintain a Church Establishment, and another to refuse toleration to other religions, or to persons professing no religion. It is one thing to provide schools or colleges, and another to require that no person shall act as an instructor of youth without a government licence. There might be a national bank, or a government manufactory, without any monopoly against private banks and manufactories. There might be a post-office, without penalties against the conveyance of letters by any other means. There may be a corps of government engineers for civil purposes, while the profession of a civil engineer is free to be adopted by every one. There may be public hospitals, without any restriction upon private medical or surgical practice.

§ 2. It is evident, even at first sight, that the authoritative form of government intervention has a much more limited sphere of legitimate action than the other. It requires a much stronger necessity to justify it in any case; while there are large departments of human life from which it must be unreservedly and imperiously excluded. Whatever theory we adopt respecting the foundation of the social union, and under whatever political institutions we live, there is a circle around every individual human being which no government, be it that of one, of a few, or of the many, ought to be permitted to overstep: there is a part of the life of every person who has come to years of discretion, within which the individuality of that person ought to reign uncontrolled either by any other individual or by the public collectively. That there is, or ought to be, some space in human existence thus entrenched around, and sacred from authoritative intrusion, no one who professes the smallest regard to human freedom or dignity will call in question: the point to be determined is, where the limit should be placed; how large a province of human life this reserved territory should include. I apprehend that it ought to include all that part which concerns only the life, whether inward or outward, of the individual, and does not affect the interests of others, or affects them only through the moral influence of example. With respect to the domain of the inward consciousness, the thoughts and feelings, and as much of external conduct as is personal only, involving no consequences, none at least of a painful or injurious kind, to other people: I hold that it is allowable in all, and in the more thoughtful and cultivated often a duty, to assert and promulgate, with all the force they are capable of, their opinion of what is good or bad, admirable or contemptible, but not to compel others to conform to that opinion; whether the force used is that of extra-legal coercion, or exerts itself by means of the law.

Even in those portions of conduct which do affect the interest of others, the onus of making out a case always lies on the defenders of legal prohibitions. It is not a merely constructive or presumptive injury to others, which will justify the interference of law with individual freedom. To be prevented from doing what one is inclined to, from acting according to one's own judgment of what is desirable, is not only always irksome, but always tends, pro tanto, to starve the development of some portion of the bodily or mental faculties, either sensitive or active; and unless the conscience of the individual goes freely with the legal restraint, it partakes, either in a great or in a small degree, of the degradation of slavery. Scarcely any degree of utility, short of absolute necessity, will justify a prohibitory regulation, unless it can also be made to recommend itself to the general conscience; unless persons of ordinary good intentions either believe already, or can be induced to believe, that the thing prohibited is a thing which they ought not to wish to do.

It is otherwise with governmental interferences which do not restrain individual free agency. When a government provides means of fulfilling a certain end, leaving individuals free to avail themselves of different means if in their opinion preferable, there is no infringement of liberty, no irksome or degrading restraint. One of the principal objections to government interference is then absent. There is, however, in almost all forms of government agency, one thing which is compulsory. the provision of the pecuniary means. These are derived from taxation; or, if existing in the form of an endowment derived from public property, they are still the cause of as much compulsory taxation as the sale or the annual proceeds of the property would enable to be dispensed with.∗ And the objection necessarily attaching to compulsory contributions, is almost always greatly aggravated by the expensive precautions and onerous restrictions, which are indispensable to prevent evasion of a compulsory tax.

§ 3. A second general objection to government agency, is that every increase of the functions devolving on the government is an increase of its power, both in the form of authority, and still more, in the indirect form of influence. The importance of this consideration, in respect of political freedom, has in general been quite sufficiently recognized, at least in England, but many, in latter times, have been prone to think that limitation of the powers of the government is only essential when the government itself is badly constituted; when it does not represent the people, but is the organ of a class, or coalition of classes: and that a government of sufficiently popular constitution might be trusted with any amount of power over the nation, since its power would be only that of the nation over itself. This might be true, if the nation, in such cases, did not practically mean a mere majority of the nation, and if minorities were only capable of oppressing, but not of being oppressed. Experience, however, proves that the depositaries of power who are mere delegates of the people, that is of a majority, are quite as ready (when they think they can count on popular support) as any organs of oligarchy to assume arbitrary power, and encroach unduly on the liberty of private life. The public collectively is abundantly ready to impose, not only its generally narrow views of its interests, but its abstract opinions, and even its tastes, as laws binding upon individuals. And the present civilization tends so strongly to make the power of persons acting in masses the only substantial power in society, that there never was more necessity for surrounding individual independence of thought, speech, and conduct, with the most powerful defences, in order to maintain that originality of mind and individuality of character, which are the only source of any real progress, and of most of the qualities which make the human race much superior to any herd of animals. Hence it is no less important in a democratic than in any other government, that all tendency on the part of public authorities to stretch their interference, and assume a power of any sort which can easily be dispensed with, should be regarded with unremitting jealousy. Perhaps this is even more important in a democracy than in any other form of political society; because where public opinion is sovereign, an individual who is oppressed by the sovereign does not, as in most other states of things, find a rival power to which he can appeal for relief, or, at all events, for sympathy.

§ 4. A third general objection to government agency, rests on the principle of the division of labour. Every additional function undertaken by the government, is a fresh occupation imposed upon a body already overcharged with duties. A natural consequence is that most things are ill done; much not done at all, because the government is not able to do it without delays which are fatal to its purpose; that the more troublesome and less showy, of the functions undertaken, are postponed or neglected, and an excuse is always ready for the neglect; while the heads of the administration have their minds so fully taken up with official details, in however perfunctory a manner superintended, that they have no time or thought to spare for the great interests of the state, and the preparation of enlarged measures of social improvement.

But these inconveniences, though real and serious, result much more from the bad organization of governments, than from the extent and variety of the duties undertaken by them. Government is not a name for some one functionary, or definite number of functionaries: there may be almost any amount of division of labour within the administrative body itself. The evil in question is felt in great magnitude under some of the governments of the Continent, where six or eight men, living at the capital and known by the name of ministers, demand that the whole public business of the country shall pass, or be supposed to pass, under their individual eye. But the inconvenience would be reduced to a very manageable compass, in a country in which there was a proper distribution of functions between the central and local officers of government, and in which the central body was divided into a sufficient number of departments. When Parliament thought it expedient to confer on the government an inspecting and partially controlling authority over railways, it did not add railways to the department of the Home Minister, but created a Railway Board. When it determined to have a central superintending authority for pauper administration, it established the Poor Law Commission. There are few countries in which a greater number of functions are discharged by public officers, than in some states of the American Union, particularly the New England States; but the division of labour in public business is extreme; most of these officers being not even amenable to any common superior, but performing their duties freely, under the double check of election by their townsmen, and civil as well as criminal responsibility to the tribunals.

It is, no doubt, indispensable to good government that the chiefs of the administration, whether permanent or temporary, should extend a commanding, though general, view over the ensemble of all the interests confided, in any degree, to the responsibility of the central power. But with a skilful internal organization of the administrative machine, leaving to subordinates, and as far as possible, to local subordinates, not only the execution, but to a greater degree the control, of details; holding them accountable for the results of their acts rather than for the acts themselves, except where these come within the cognizance of the tribunals; taking the most effectual securities for honest and capable appointments; opening a broad path to promotion from the inferior degrees of the administrative scale to the superior; leaving, at each step, to the functionary, a wider range in the origination of measures, so that, in the highest grade of all, deliberation might be concentrated on the great collective interests of the country in each department; if all this were done, the government would not probably be overburthened by any business, in other respects fit to be undertaken by it; though the overburthening would remain as a serious addition to the inconveniences incurred by its undertaking any which was unfit.

§ 5. But though a better organization of governments would greatly diminish the force of the objection to the mere multiplication of their duties, it would still remain true that in all the more advanced communities, the great majority of things are worse done by the intervention of government, than the individuals most interested in the matter would do them, or cause them to be done, if left to themselves. The grounds of this truth are expressed with tolerable exactness in the popular dictum, that people understand their own business and their own interests better, and care for them more, than the government does, or can be expected to do. This maxim holds true throughout the greatest part of the business of life, and wherever it is true we ought to condemn every kind of government intervention that conflicts with it. The inferiority of government agency, for example, in any of the common operations of industry or commerce, is proved by the fact, that it is hardly ever able to maintain.. itself in equal competition with individual agency, where the individuals possess the requisite degree of industrial enterprise, and can command the necessary assemblage of means. All the facilities which a government enjoys of access to information; all the means which it possesses of remunerating, and therefore of commanding, the best available talent in the market—are not an equivalent for the one great disadvantage of an inferior interest in the result.

It must be remembered, besides, that even if a government were superior in intelligence and knowledge to any single individual in the nation, it must be inferior to all the individuals of the nation taken together. It can neither possess in itself, nor enlist in its service, more than a portion of the acquirements and capacities which the country contains, applicable to any given purpose. There must be many persons equally qualified for the work with those whom the government employs, even if it selects its instruments with no reference to any consideration but their fitness. Now these are the very persons into whose hands, in the cases of most common occurrence, a system of individual agency naturally tends to throw the work, because they are capable of doing it better or1 on cheaper terms than any other persons. So far as this is the case, it is evident that government, by excluding or even by superseding individual agency, either substitutes a less qualified instrumentality for one better qualified, or at any rate substitutes its own mode of accomplishing the work, for all the variety of modes which would be tried by a number of equally qualified persons aiming at the same end; a competition by many degrees more propitious to the progress of improvement than any uniformity of system.

§ 6. I have reserved for the last place one of the strongest of the reasons against the extension of government agency, Even if the government could comprehend within itself, in each department, all the most eminent intellectual capacity and active talent of the nation, it would not be the less desirable that the conduct of a large portion of the affairs of the society should be left in the hands of the persons immediately interested in them. The business of life is an essential part of the practical education of a people; without which, book and school instruction, though most necessary and salutary, does not suffice to qualify them for conduct, and for the adaptation of means to ends. Instruction is only one of the desiderata of mental improvement; another, almost as indispensable, is a vigorous exercise of the active energies; labour, contrivance, judgment, self-control: and the natural stimulus to these is the difficulties of life. This doctrine is not to be confounded with the complacent optimism, which represents the evils of life as desirable things, because they call forth qualities adapted to combat with evils. It is only because the difficulties exist, that the qualities which combat with them are of any value. As practical beings it is our business to free human life from as many as possible of its difficulties, and not to keep up a stock of them as hunters preserve game, for the exercise of pursuing it. But since the need of active talent and practical judgment in the affairs of life can only be diminished, and not, even on the most favourable supposition, done away with, it is important that those endowments should be cultivated not merely in a select few, but in all, and that the cultivation should be more varied and complete than most persons are able to find in the narrow sphere of their merely individual interests. A people among whom there is no habit of spontaneous action for a collective interest—who look habitually to their government to command or prompt them in all matters of joint concern—who expect to have everything done for them, except what can be made an affair of mere habit and routine—have their faculties only half developed; their education is defective in one of its most important branches.

Not only is the cultivation of the active faculties by exercise, diffused through the whole community, in itself one of the most valuable of national possessions: it is rendered, not less, but more necessary, when a high degree of that indispensable culture is systematically kept up in the chiefs and functionaries of the state. There cannot be a combination of circumstances more dangerous to human welfare, than that in which intelligence and talent are maintained at a high standard within a governing corporation, but starved and discouraged outside the pale. Such a system, more completely than any other, embodies the idea of despotism, by arming with intellectual superiority as an additional weapon those who have already the legal power. It approaches as nearly as the organic difference between human beings and other animals admits, to the government of sheep by their shepherd, without anything like so strong an interest as the shepherd has in the thriving condition of the flock. The only security against political slavery is the check maintained over governors by the diffusion of intelligence, activity, and public spirit among the governed. Experience proves the extreme difficulty of permanently keeping up a sufficiently high standard of those qualities; a difficulty which increases, as the advance of civilization and security removes one after another of the hardships, embarrassments, and dangers against which individuals had formerly no resource but in their own strength, skill, and courage. It is therefore of supreme importance that all classes of the community, down to the lowest, should have much to do for themselves; that as great a demand should be made upon their intelligence and virtue as it is in any respect equal to; that the government should not only leave as far as possible to their own faculties the conduct of whatever concerns themselves alone, but should suffer them, or rather encourage them, to manage as many as possible of their joint concerns by voluntary co-operation; since this discussion and management of collective interests is the great school of that public spirit, and the great source of that intelligence of public affairs, which are always regarded as the distinctive character of the public of free countries.

A democratic constitution, not supported by democratic institutions in detail, but confined to the central government, not only is not political freedom, but often creates a spirit precisely the reverse, carrying down to the lowest grade in society the desire and ambition of political domination. In some countries the desire of the people is for not being tyrannized over, but in others it is merely for an equal chance to everybody of tyrannizing. Unhappily this last state of the desires is fully as natural to mankind as the former, and in many of the conditions even of civilized humanity is far more largely exemplified. In proportion as the people are accustomed to manage their affairs by their own active intervention, instead of leaving them to the government, their desires will turn to repelling tyranny, rather than to tyrannizing: while in proportion as all real initiative and direction resides in the government, and individuals habitually feel and act as under its perpetual tutelage, popular institutions develop in them not the desire of freedom, but an unmeasured appetite for place and power: diverting the intelligence and activity of the country from its principal business to a wretched competition for the selfish prizes and the petty vanities of office.

§ 7. The preceding are the principal reasons, of a general character, in favour of restricting to the narrowest compass the intervention of a public authority in the business of the community: and few will dispute the more than sufficiency of these reasons, to throw, in every instance, the burthen of making out a strong case, not on those who resist, but on those who recommend, government interference. Laisser-faire, in short, should be the general practice: every departure from it, unless required by some great good, is a certain evil.

The degree in which the maxim, even in the cases to which it is most manifestly applicable, has heretofore been infringed by governments, future ages will probably have difficulty in crediting. Some idea may be formed of it from the description of M. Dunoyer∗ of the restraints imposed on the operations of manufacture under the old government of France, by the meddling and regulating spirit of legislation.

“The State exercised over manufacturing industry the most unlimited and arbitrary jurisdiction. It disposed without scruple of the resources of manufacturers: it decided who should be allowed to work, what things it should be permitted to make, what materials should be employed, what processes followed, what forms should be given to productions. It was not enough to do well, to do better; it was necessary to do according to the rules. Everybody knows the regulation of 1670 which prescribed to seize and nail to the pillory, with the names of the makers, goods not conformable to the rules, and which, on a second repetition of the offence, directed that the manufacturers themselves should be attached also. Not the taste of the consumers, but the commands of the law must be attended to. Legions of inspectors, commissioners, controllers, jurymen, guardians, were charged with its execution. Machines were broken, products were burned when not conformable to the rules: improvements were punished; inventors were fined. There were different sets of rules for goods destined for home consumption and for those intended for exportation. An artizan could neither choose the place in which to establish himself, nor work at all seasons, nor work for all customers. There exists a decree of March 30, 1700, which limits to eighteen towns the number of places where stockings might be woven. A decree of June 18, 1723, enjoins the manufacturers at Rouen to suspend their works from the 1st of July to the 15th of September, in order to facilitate the harvest. Louis XIV., when he intended to construct the colonnade of the Louvre, forbade all private persons to employ workmen without his permission, under a penalty of 10,000 livres, and forbade workmen to work for private persons, on pain for the first offence, of imprisonment, and for the second, of the galleys.”

That these and similar regulations were not a dead letter, and that the officious and vexatious meddling was prolonged down to the French Revolution, we have the testimony of Roland, the Girondist minister.∗ “I have seen,” says he, “eighty, ninety, a hundred pieces of cotton or woollen stuff cut up, and completely destroyed. I have witnessed similar scenes every week for a number of years. I have seen manufactured goods confiscated; heavy fines laid on the manufacturers; some pieces of fabric were burnt in public places, and at the hours of market: others were fixed to the pillory, with the name of the manufacturer inscribed upon them, and he himself was threatened with the pillory, in case of a second offence. All this was done under my eyes, at Rouen, in conformity with existing regulations, or ministerial orders. What crime deserved so cruel a punishment? Some defects in the materials employed, or in the texture of the fabric, or even in some of the threads of the warp.

“I have frequently seen manufacturers visited by a band of satellites who put all in confusion in their establishments, spread terror in their families, cut the stuffs from the frames, tore off the warp from the looms, and carried them away as proofs of infringement; the manufacturers were summoned, tried, and condemned: their goods confiscated; copies of their judgment of confiscation posted up in every public place; fortune, reputation, credit, all was lost and destroyed. And for what offence? Because they had made of worsted, a kind of cloth called shag, such as the English used to manufacture, and even sell in France, while the French regulations stated that that kind of cloth should be made with mohair. I have seen other manufacturers treated in the same way, because they had made camlets of a particular width, used in England and Germany, for which there was a great demand from Spain, Portugal, and other countries, and from several parts of France, while the French regulations prescribed other widths for camlets.”

The time is gone by, when such applications as these of the principle of “paternal government” would be attempted, in even the least enlightened country of the European commonwealth of nations. In such cases as those cited, all the general objections to government interference are valid, and several of them in nearly their highest degree. But we must now turn to the second part of our task, and direct our attention to cases, in which some of those general objections are altogether absent, while those which can never be got rid of entirely, are overruled by counter-considerations of still greater importance.

We have observed that, as a general rule, the business of life is better performed when those who have an immediate interest in it are left to take their own course, uncontrolled either by the mandate of the law or by the meddling of any public functionary. The persons, or some of the persons, who do the work, are likely to be better judges than the government, of the means of attaining the particular end at which they aim. Were we to suppose, what is not very probable, that the government has possessed itself of the best knowledge which had been acquired up to a given time by the persons most skilled in the occupation; even then, the individual agents have so much stronger and more direct an interest in the result, that the means are far more likely to be improved and perfected if left to their uncontrolled choice. But if the workman is generally the best selector of means, can it be affirmed with the same universality, that the consumer, or person served, is the most competent judge of the end? Is the buyer always qualified to judge of the commodity? If not, the presumption in favour of the competition of the market does not apply to the case; and if the commodity be one, in the quality of which society has much at stake, the balance of advantages may be in favour of some mode and degree of intervention, by the authorized representatives of the collective interest of the state.

§ 8. Now, the proposition that the consumer is a competent judge of the commodity, can be admitted only with numerous abatements and exceptions. He is generally the best judge (though even this is not true universally) of the material objects produced for his use. These are destined to supply some physical want, or gratify some taste or inclination, respecting which wants or inclinations there is no appeal from the person who feels them; or they are the means and appliances of some occupation, for the use of the persons engaged in it, who may be presumed to be judges of the things required in their own habitual employment. But there are other things, of the worth of which the demand of the market is by no means a test; things of which the utility does not consist in ministering to inclinations, nor in serving the daily uses of life, and the want of which is least felt where the need is greatest. This is peculiarly true of those things which are chiefly useful as tending to raise the character of human beings. The uncultivated cannot be competent judges of cultivation. Those who most need to be made wiser and better, usually desire it least, and if they desired it, would be incapable of finding the way to it by their own lights. It will continually happen, on the voluntary system, that, the end not being desired, the means will not be provided at all, or that, the persons requiring improvement having an imperfect or altogether erroneous conception of what they want, the supply called forth by the demand of the market will be anything but what is really required. Now any well-intentioned and tolerably civilized government may think, without presumption, that it does or ought to possess a degree of cultivation above the average of the community which it rules, and that it should therefore be capable of offering better education and better instruction to the people, than the greater number of them would spontaneously demand. Education, therefore, is one of those things which it is admissible in principle that a government should provide for the people. The case is one to which the reasons of the non-interference principle do not necessarily or universally extend.∗

With regard to elementary education, the exception to ordinary rules may, I conceive, justifiably be carried still further. There are certain primary elements and means of knowledge, which it is in the highest degree desirable that all human beings born into the community should acquire during childhood. If their parents, or those on whom they depend, have the power of obtaining for them this instruction, and fail to do it, they commit a double breach of duty, towards the children themselves, and towards the members of the community generally, who are all liable to suffer seriously from the consequences of ignorance and want of education in their fellow-citizens. It is therefore an allowable exercise of the powers of government to impose on parents the legal obligation of giving elementary instruction to children. This, however, cannot fairly be done, without taking measures to insure that such instruction shall be always accessible to them, either gratuitously or at a trifling expense.

It may indeed be objected that the education of children is one of those expenses which parents, even of the labouring class, ought to defray; that it is desirable that they should feel it incumbent on them to provide by their own means for the fulfilment of their duties, and that by giving education at the cost of others, just as much by giving subsistence, the standard of necessary wages is proportionally lowered, and the springs of exertion and self-restraint is so much relaxed. This argument could, at best, be only valid if the question were that of substituting a public provision for what individuals would otherwise do for themselves; if all parents in the labouring class recognized and practised the duty of giving instruction to their children at their own expense. But inasmuch as parents do not practise this duty, and do not include education among those necessary expenses which their wages must provide for, therefore the general rate of wages is not high enough to bear those expenses, and they must be borne from some other source. And this is not one of the cases in which the tender of help perpetuates the state of things which renders help necessary. Instruction, when it is really such, does not enervate, but strengthens as well as enlarges the active faculties: in whatever manner acquired, its effect on the mind is favourable to the spirit of independence: and when, unless had gratuitously, it would not be had at all, help in this form has the opposite tendency to that which in so many other cases makes it objectionable; it is help towards doing without help.

In England, and most European countries, elementary instruction cannot be paid for, at its full cost, from the common wages of unskilled labour, and would not if it could. The alternative, therefore, is not between government and private speculation, but between a government provision and voluntary charity: between interference by government, and interference by associations of individuals, subscribing their own money for the purpose, like the two great School Societies. It is, of course, not desirable that anything should be done by funds derived from compulsory taxation, which is already sufficiently well done by individual liberality. How far this is the case with school instruction, is, in each particular instance, a question of fact. The education provided in this country on the voluntary principle has of late been so much discussed, that it is needless in this place to criticize it minutely, and I shall merely express my conviction, that even in quantity it is [1848], and is likely to remain, altogether insufficient, while in quality, though with some slight tendency to improvement, it is never good except by some rare accident, and generally so bad as to be little more than nominal. I hold it therefore the duty of the government to supply the defect, by giving pecuniary support to elementary schools, such as to render them accessible to all the children of the poor, either freely, or for a payment too inconsiderable to be sensibly felt.1

One thing must be strenuously insisted on; that the government must claim no monopoly for its education, either in the lower or in the higher branches; must exert neither authority nor influence to induce the people to resort to its teachers in preference to others, and must confer no peculiar advantages on those who have been instructed by them. Though the government teachers will probably be superior to the average of private instructors, they will not embody all the knowledge and sagacity to be found in all instructors taken together, and it is desirable to leave open as many roads as possible to the desired end. It is not endurable that a government should, either de jure or de facto, have a complete control over the education of the people. To possess such a control, and actually exert it, is to be despotic. A government which can mould the opinions and sentiments of the people from their youth upwards, can do with them whatever it pleases. Though a government, therefore, may, and in many cases ought to, establish schools and colleges, it must neither compel nor bribe any person to come to them; nor ought the power of individuals to set up rival establishments, to depend in any degree upon its authorization. It would be justified in requiring from all the people that they shall possess instruction in certain things, but not in prescribing to them how or from whom they shall obtain it.

§ 9. In the matter of education, the intervention of government is justifiable, because the case is not one in which the interest and judgment of the consumer are a sufficient security for the goodness of the commodity. Let us now consider another class of cases, where there is no person in the situation of a consumer, and where the interest and judgment to be relied on are those of the agent himself; as in the conduct of any business in which he is exclusively interested, or in entering into any contract or engagement by which he himself is to be bound.

The ground of the practical principle of non-interference must here be, that most persons take a juster and more intelligent view of their own interest, and of the means of promoting it, than can either be prescribed to them by a general enactment of the legislature, or pointed out in the particular case by a public functionary. The maxim is unquestionably sound as a general rule; but there is no difficulty in perceiving some very large and conspicuous exceptions to it. These may be classed under several heads.

First:—The individual who is presumed to be the best judge of his own interests may be incapable of judging or acting for himself; may be a lunatic, an idiot, an infant: or though not wholly incapable, may be of immature years and judgment. In this case the foundation of the laisser-faire principle breaks down entirely. The person most interested is not the best judge of the matter, nor a competent judge at all. Insane persons are everywhere regarded as proper objects of the care of the state.∗ In the case of children and young persons, it is common to say, that though they cannot judge for themselves, they have their parents or other relatives to judge for them. But this removes the question into a different category; making it no longer a question whether the government should interfere with individuals in the direction of their own conduct and interests, but whether it should leave absolutely in their power the conduct and interests of somebody else. Parental power is as susceptible of abuse as any other power, and is, as a matter of fact, constantly abused. If laws do not succeed in preventing parents from brutally ill-treating, and even from murdering their children, far less ought it to be presumed that the interests of children will never be sacrificed, in more commonplace and less revolting ways, to the selfishness or the ignorance of their parents. Whatever it can be clearly seen that parents ought to do or forbear for the interest of children, the law is warranted, if it is able, in compelling to be done or forborne, and is generally bound to do so. To take an example from the peculiar province of political economy; it is right that children, and young persons not yet arrived at maturity, should be protected so far as the eye and hand of the state can reach, from being over-worked. Labouring for too many hours in the day, or on work beyond their strength, should not be permitted to them, for if permitted it may always be compelled. Freedom of contract, in the case of children, is but another word for freedom of coercion. Education also, the best which circumstances admit of their receiving, is not a thing which parents or relatives, from indifference, jealousy, or avarice, should have it in their power to withhold.

The reasons for legal intervention in favour of children, apply not less strongly to the case of those unfortunate slaves and victims of the most brutal part of mankind, the lower animals. It is by the grossest misunderstanding of the principles of liberty, that the infliction of exemplary punishment on ruffianism practised towards these defenceless creatures has been treated as a meddling by government with things beyond its province; an interference with domestic life. The domestic life of domestic tyrants is one of the things which it is the most imperative on the law to interfere with; and it is to be regretted that metaphysical scruples respecting the nature and source of the authority of government, should induce many warm supporters of laws against cruelty to animals, to seek for a justification of such laws in the incidental consequences of the indulgence of ferocious habits to the interests of human beings, rather than in the intrinsic merits of the case itself. What it would be the duty of a human being, possessed of the requisite physical strength, to prevent by force if attempted in his presence, it cannot be less incumbent on society generally to repress. The existing laws of England on the subject are chiefly defective in the trifling, often almost nominal, maximum, to which the penalty even in the worst cases is limited.

Among those members of the community whose freedom of contract ought to be controlled by the legislature for their own protection, on account (it is said) of their dependent position, it is frequently proposed to include women: and in the existing Factory Acts,1 their labour, in common with that of young persons, has been placed under peculiar restrictions. But the classing together, for this and other purposes, of women and children, appears to me both indefensible in principle and mischievous in practice. Children below a certain age cannot judge or act for themselves; up to a considerably greater age they are inevitably more or less disqualified for doing so; but women are as capable as men of appreciating and managing their own concerns, and the only hindrance to their doing so arises from the injustice of their present social position. When the law makes everything which the wife acquires, the property of the husband, while by compelling her to live with him it forces her to submit to almost any amount of moral and even physical tyranny which he may choose to inflict, there is some ground for regarding every act done by her as done under coercion: but it is the great error of reformers and philanthropists in our time, to nibble at the consequences of unjust power, instead of redressing the injustice itself. If women had as absolute a control as men have, over their own persons and their own patrimony or acquisitions, there would be no plea for limiting their hours of labouring for themselves, in order that they might have time to labour for the husband, in what is called, by the advocates of restriction, his home. Women employed in factories are the only women in the labouring rank of life whose position is not that of slaves and drudges; precisely because they cannot easily be compelled to work and earn wages in factories against their will. For improving the condition of women, it should, in the contrary, be an object to give them the readiest access to independent industrial employment, instead of closing, either entirely or partially, that which is already open to them.2

§ 10. A second exception to the doctrine that individuals are the best judges of their own interest, is when an individual attempts to decide irrevocably now, what will be best for his interest at some future and distant time. The presumption in favour of individual judgment is only legitimate, where the judgment is grounded on actual, and especially on present, personal experience; not where it is formed antecedently to experience, and not suffered to be reversed even after experience has condemned it. When persons have bound themselves by a contract, not simply to do some one thing, but to continue doing something for ever or for a prolonged period, without any power of revoking the engagement, the presumption which their perseverance in that course of conduct would otherwise raise in favour of its being advantageous to them, does not exist; and any such presumption which can be grounded on their having voluntarily entered into the contract, perhaps at an early age, and without any real knowledge of what they undertook, is commonly next to null. The practical maxim of leaving contracts free is not applicable without great limitations in case of engagement in perpetuity; and the law should be extremely jealous of such engagements; should refuse its sanction to them, when the obligations they impose are such as the contracting party cannot be a competent judge of; if it ever does sanction them, it should take every possible security for their being contracted with foresight and deliberation; and in compensation for not permitting the parties themselves to revoke their engagement, should grant them a release from it, on a sufficient case being made out before an impartial authority. These considerations are eminently applicable to marriage, the most important of all cases of engagement for life.1

§ 11. The third exception which I shall notice, to the doctrine that government cannot manage the affairs of individuals as well as the individuals themselves, has reference to the great class of cases in which the individuals can only manage the concern by delegated agency, and in which the so-called private management is, in point of fact, hardly better entitled to be called management by the persons interested, than administration by a public officer. Whatever, if left to spontaneous agency, can only be done by joint-stock associations, will often be as well, and sometimes better done, as far as the actual work is concerned, by the state. Government management is, indeed, proverbially jobbing, careless, and ineffective, but so likewise has generally been joint-stock management. The directors of a joint-stock company, it is true, are always shareholders; but also the members of a government are invariably taxpayers; and in the case of directors, no more than in that of governments, is their proportional share of the benefits of good management equal to the interest they may possibly have in mismanagement, even without reckoning the interest of their case. It may be objected, that the shareholders, in their collective character, exercise a certain control over the directors, and have almost always full power to remove them from office. Practically, however, the difficulty of exercising this power is found to be so great, that it is hardly ever exercised except in cases of such flagrantly unskilful, or, at least, unsuccessful management, as would generally produce the ejection from office of managers appointed by the government. Against the very ineffectual security afforded by meetings of shareholders, and by their individual inspection and inquiries, may be placed the greater publicity and more active discussion and comment, to be expected in free countries with regard to affairs in which the general government takes part. The defects, therefore, of government management, do not seem to be necessarily much greater, if necessarily greater at all, than those of management by joint-stock.

The true reasons in favour of leaving to voluntary associations all such things as they are competent to perform, would exist in equal strength if it were certain that the work itself would be as well or better done by public officers. These reasons have been already pointed out: the mischief of overloading the chief functionaries of government with demands on their attention, and diverting them from duties which they alone can discharge, to objects which can be sufficiently well attained without them; the danger of unnecessarily swelling the direct power and indirect influence of government, and multiplying occasions of collision between its agents and private citizens; and the inexpediency of concentrating in a dominant bureaucracy all the skill and experience in the management of large interests, and all the power of organized action, existing in the community; a practice which keeps the citizens in a relation to the government like that of children to their guardians, and is a main cause of the inferior capacity for political life which has hitherto characterized the over-governed countries of the Continent, whether with or without the forms of representative government.∗

But although, for these reasons, most things which are likely to be even tolerably done by voluntary associations, should, generally speaking, be left to them; it does not follow that the manner in which those associations perform their work should be entirely uncontrolled by the government. There are many cases in which the agency, of whatever nature, by which a service is performed, is certain, from the nature of the case, to be virtually single; in which a practical monopoly, with all the power it confers of taxing the community, cannot be prevented from existing. I have already more than once adverted to the case of the gas and water companies, among which, though perfect freedom is allowed to competition, none really takes place, and practically they are found to be even more irresponsible, and unapproachable by individual complaints, than the government. There are the expenses without the advantages of plurality of agency; and the charge made for services which cannot be dispensed with, is, in substance, quite as much compulsory taxation as if imposed by law; there are few householders who make any distinction between their “water-rate” and other local taxes. In the case of these particular services, the reasons preponderate in favour of their being performed, like the paving and cleansing of the streets, not certainly by the general government of the state, but by the municipal authorities of the town, and the expense defrayed, as even now it in fact is, by a local rate. But in the many analogous cases which it is best to resign to voluntary agency, the community needs some other security for the fit performance of the service than the interest of the managers; and it is the part of the government, either to subject the business to reasonable conditions for the general advantage, or to retain such power over it, that the profits of the monopoly may at least be obtained for the public. This applies to the case of a road, a canal, or a railway. These are always, in a great degree, practical monopolies; and a government which concedes such monopoly unreservedly to a private company, does much the same thing as if it allowed an individual or an association to levy any tax they chose, for their own benefit, on all the malt produced in the country, or on all the cotton imported into it. To make the concession for a limited time is generally justifiable, on the principle which justifies patents for invention: but the state should either reserve to itself a reversionary property in such public works, or should retain, and freely exercise, the right of fixing a maximum of fares and charges, and, from time to time, varying that maximum. It is perhaps necessary to remark, that the state may be the proprietor of canals or railways without itself working them; and that they will almost always be better worked by means of a company renting the railway or canal for a limited period from the state.

§ 12. To a fourth case of exception I must request particular attention, it being one to which as it appears to me, the attention of political economists has not yet been sufficiently drawn. There are matters in which the interference of law is required, not to overrule the judgment of individuals respecting their own interest, but to give effect to that judgment: they being unable to give effect to it except by concert, which concert again cannot be effectual unless it receives validity and sanction from the law. For illustration, and without prejudging the particular point, I may advert to the question of diminishing the hours of labour. Let us suppose, what is at least supposable, whether it be the fact or not—that a general reduction of the hours of factory labour, say from ten to nine,1 would be for the advantage of the workpeople: that they would receive as high wages, or nearly as high, for nine hours' labour as they receive for ten. If this would be the result, and if the operatives generally are convinced that it would, the limitation, some may say, will be adopted spontaneously. I answer, that it will not be adopted unless the body of operatives bind themselves to one another to abide by it. A workman who refused to work more than nine hours while there were others who worked ten, would either not be employed at all, or if employed, must submit to lose one-tenth of his wages. However convinced, therefore, he may be that it is the interest of the class to work short time, it is contrary to his own interest to set the example, unless he is well assured that all or most others will follow it. But suppose a general agreement of the whole class: might not this be effectual without the sanction of law? Not unless enforced by opinion with a rigour practically equal to that of law. For however beneficial the observance of the regulation might be to the class collectively, the immediate interest of every individual would lie in violating it: and the more numerous those were who adhered to the rule, the more would individuals gain by departing from it. If nearly all restricted themselves to nine hours, those who chose to work for ten would gain all the advantages of the restriction, together with the profit from infringing it; they would get ten hours' wages for nine hours' work, and an hour's wages besides. I grant that if a large majority adhered to the nine hours, there would be no harm done; the benefit would be, in the main, secured to the class, while those individuals who preferred to work harder and earn more, would have an opportunity of doing so. This certainly would be the state of things to be wished for; and assuming that a reduction of hours without any diminution of wages could take place without expelling the commodity from some of its markets—which is in every particular instance a question of fact, not of principle—the manner in which it would be most desirable that this effect should be brought about, would be by a quiet change in the general custom of the trade; short hours becoming, by spontaneous choice, the general practice, but those who chose to deviate from it having the fullest liberty to do so. Probably, however, so many would prefer the ten hours' work on the improved terms, that the limitation could not be maintained as a general practice: what some did from choice, others would soon be obliged to do from necessity, and those who had chosen long hours for the sake of increased wages, would be forced in the end to work long hours for no greater wages than before. Assuming then that it really would be the interest of each to work only nine hours if he could be assured that all others would do the same, there might be no means of attaining this object but by converting their supposed mutual agreement into an engagement under penalty, by consenting to have it enforced by law. I am not expressing any opinion in favour of such an enactment, which has never in this country been demanded, and which I certainly should not, in present circumstances, recommend:1 but it serves to exemplify the manner in which classes of persons may need the assistance of law, to give effect to their deliberate collective opinion of their own interest, by affording to every individual a guarantee that his competitors will pursue the same course, without which he cannot safely adopt it himself.

Another exemplification of the same principle is afforded by what is known as the Wakefield system of colonization. This system is grounded on the important principle, that the degree of productiveness of land and labour depends on their being in a due proportion to one another; that if a few persons in a newly-settled country attempt to occupy and appropriate a large district, or if each labourer becomes too soon an occupier and cultivator of land, there is a loss of productive power, and a great retardation of the progress of the colony in wealth and civilization: that nevertheless the instinct (as it may almost be called) of appropriation, and the feelings associated in old countries with landed proprietorship, induce almost every emigrant to take possession of as much land as he has the means of acquiring, and every labourer to become at once a proprietor, cultivating his own land with no other aid than that of his family. If this propensity to the immediate possession of land could be in some degree restrained, and each labourer induced to work a certain number of years on hire before he became a landed proprietor, a perpetual stock of hired labourers could be maintained, available for roads, canals, works of irrigation, &c., and for the establishment and carrying on of the different branches of town industry; whereby the labourer, when he did at last become a landed proprietor, would find his land much more valuable, through access to markets, and facility of obtaining hired labour. Mr. Wakefield therefore proposed to check the premature occupation of land, and dispersion of the people, by putting upon all unappropriated lands a rather high price, the proceeds of which were to be expended in conveying emigrant labourers from the mother country.

This salutary provision, however, has been objected to, in the name and on the authority of what was represented as the great principle of political economy, that individuals are the best judges of their own interest. It was said, that when things are left to themselves, land is appropriated and occupied by the spontaneous choice of individuals, in the quantities and at the times most advantageous to each person, and therefore to the community generally; and that to interpose artificial obstacles to their obtaining land is to prevent them from adopting the course which in their own judgment is most beneficial to them, from a self-conceited notion of the legislator, that he knows what is most for their interest, better than they do themselves. Now this is a complete misunderstanding, either of the system itself, or of the principle with which it is alleged to conflict. The oversight is similar to that which we have just seen exemplified on the subject of hours of labour. However beneficial it might be to the colony in the aggregate, and to each individual composing it, that no one should occupy more land than he can properly cultivate, nor become a proprietor until there are other labourers ready to take his place in working for hire; it can never be the interest of an individual to exercise this forbearance, unless he is assured that others will do so too. Surrounded by settlers who have each their thousand acres, how is he benefited by restricting himself to fifty? or what does a labourer gain by deferring the acquisition altogether for a few years, if all other labourers rush to convert their first earnings into estates in the wilderness, several miles apart from one another? If they, by seizing on land, prevent the formation of a class of labourers for wages, he will not, by postponing the time of his becoming a proprietor, be enabled to employ the land with any greater advantage when he does obtain it; to what end therefore should he place himself in what will appear to him and others a position of inferiority, by remaining a hired labourer, when all around him are proprietors? It is the interest of each to do what is good for all, but only if others will do likewise.

The principle that each is the best judge of his own interest, understood as these objectors understand it, would prove that governments ought not to fulfil any of their acknowledged duties—ought not, in fact, to exist at all. It is greatly the interest of the community, collectively and individually, not to rob or defraud one another. but there is not the less necessity for laws to punish robbery and fraud; because, though it is the interest of each that nobody should rob or cheat, it is not any one's interest to refrain from robbing and cheating others when all others are permitted to rob and cheat him. Penal laws exist at all, chiefly for this reason—because even an unanimous opinion that a certain line of conduct is for the general interest, does not always make it people's individual interest to adhere to that line of conduct.

§ 13. Fifthly; the argument against government interference grounded on the maxim that individuals are the best judges of their own interest, cannot apply to the very large class of cases, in which those acts of individuals with which the government claims to interfere, are not done by those individuals for their own interest, but for the interest of other people. This includes, among other things, the important and much agitated subject of public charity. Though individuals should, in general, be left to do for themselves whatever it can reasonably be expected that they should be capable of doing, yet when they are at any rate not to be left to themselves, but to be helped by other people, the question arises whether it is better that they should receive this help exclusively from individuals, and therefore uncertainly and casually, or by systematic arrangements, in which society acts through its organ, the state.

This brings us to the subject of Poor Laws; a subject which would be of very minor importance if the habits of all classes of the people were temperate and prudent, and the diffusion of property satisfactory; but of the greatest moment in a state of things so much the reverse of this, in both points, as that which the British islands present.

Apart from any metaphysical considerations respecting the foundation of morals or of the social union, it will be admitted to be right that human beings should help one another; and the more so, in proportion to the urgency of the need: and none needs help so urgently as one who is starving. The claim to help, therefore, created by destitution, is one of the strongest which can exist; and there is primâ facie the amplest reason for making the relief of so extreme an exigency as certain to those who require it, as by any arrangements of society it can be made.

On the other hand, in all cases of helping, there are two sets of consequences to be considered; the consequences of the assistance itself, and the consequences of relying on the assistance. The former are generally beneficial, but the latter, for the most part, injurious; so much so, in many cases, as greatly to outweigh the value of the benefit. And this is never more likely to happen than in the very cases where the need of help is the most intense. There are few things for which it is more mischievous that people should rely on the habitual aid of others, than for the means of subsistence, and unhappily there is no lesson which they more easily learn. The problem to be solved is therefore one of peculiar nicety as well as importance; how to give the greatest amount of needful help, with the smallest encouragement to undue reliance on it.

Energy and self-dependence are, however, liable to be impaired by the absence of help, as well as by its excess. It is even more fatal to exertion to have no hope of succeeding by it, than to be assured of succeeding without it. When the condition of any one is so disastrous that his energies are paralyzed by discouragement, assistance is a tonic, not a sedative: it braces instead of deadening the active faculties: always provided that the assistance is not such as to dispense with self-help, by substituting itself for the person's own labour, skill, and prudence, but is limited to affording him a better hope of attaining success by those legitimate means. This accordingly is a test to which all plans of philanthropy and benevolence should be brought, whether intended for the benefit of individuals or of classes, and whether conducted on the voluntary or on the government principle.

In so far as the subject admits of any general doctrine or maxim, it would appear to be this—that if assistance is given in such a manner that the condition of the person helped is as desirable as that of the person who succeeds in doing the same thing without help, the assistance, if capable of being previously calculated on, is mischievous: but if, while available to everybody, it leaves to every one a strong motive to do without it if he can, it is then for the most part beneficial. This principle, applied to a system of public charity, is that of the Poor Law of 1834. If the condition of a person receiving relief is made as eligible as that of the labourer who supports himself by his own exertions, the system strikes at the root of all individual industry and self-government; and, if fully acted up to, would require as its supplement an organized system of compulsion, for governing and setting to work like cattle, those who had been removed from the influence of the motives that act on human beings. But if, consistently with guaranteeing all persons against absolute want, the condition of those who are supported by legal charity can be kept considerably less desirable than the condition of those who find support for themselves, none but beneficial consequences can arise from a law which renders it impossible for any person, except by his own choice, to die from insufficiency of food. That in England at least this supposition can be realized, is proved by the experience of a long period preceding the close of the last century, as well as by that of many highly pauperized districts in more recent times, which have been dispauperized by adopting strict rules of poor-law administration, to the great and permanent benefit of the whole labouring class. There is probably no country in which, by varying the means suitably to the character of the people, a legal provision for the destitute might not be made compatible with the observance of the conditions necessary to its being innocuous.

Subject to these conditions, I conceive it to be highly desirable, that the certainty of subsistence should be held out by law to the destitute able-bodied, rather than that their relief should depend on voluntary charity. In the first place, charity almost always does too much or too little: it lavishes its bounty in one place, and leaves people to starve in another. Secondly, since the state must necessarily provide subsistence for the criminal poor while undergoing punishment, not to do the same for the poor who have not offended is to give a premium on crime. And lastly, if the poor are left to individual charity, a vast amount of mendacity is inevitable.1 What the state may and should abandon to private charity, is the task of distinguishing between one case of real necessity and another. Private charity can give more to the more deserving. The state must act by general rules. It cannot undertake to discriminate between the deserving and the undeserving indigent. It owes no more than subsistence to the first, and can give no less to the last. What is said about the injustice of a law which has no better treatment for the merely unfortunate poor than for the ill-conducted, is founded on a misconception of the province of law and public authority. The dispensers of public relief have no business to be inquisitors. Guardians and overseers are not fit to be trusted to give or withhold other people's money according to their verdict on the morality of the person soliciting it; and it would show much ignorance of the ways of mankind to suppose that such persons, even in the almost impossible case of their being qualified, will take the trouble of ascertaining and sifting the past conduct of a person in distress, so as to form a rational judgment on it. Private charity can make these distinctions; and in bestowing its own money, is entitled to do so according to its own judgment. It should understand that this is its peculiar and appropriate province, and that it is commendable or the contrary, as it exercises the function with more or less discernment. But the administrators of a public fund ought not to be required to do more for anybody, than that minimum which is due even to the worst. If they are, the indulgence very speedily becomes the rule, and refusal the more or less capricious or tyrannical exception.2

§ 14. Another class of cases which fall within the same general principle as the case of public charity, are those in which the acts done by individuals, though intended solely for their own benefit, involve consequences extending indefinitely beyond them, to interests of the nation or of posterity, for which society in its collective capacity is alone able, and alone bound, to provide. One of these cases is that of Colonization. If it is desirable, as no one will deny it to be, that the planting of colonies should be conducted, not with an exclusive view to the private interests of the first founders, but with a deliberate regard to the permanent welfare of the nations afterwards to arise from these small beginnings; such regard can only be secured by placing the enterprise, from its commencement, under regulations constructed with the foresight and enlarged views of philosophical legislators; and the government alone has power either to frame such regulations, or to enforce their observance.

The question of government intervention in the work of Colonization involves the future and permanent interests of civilization itself, and far outstretches the comparatively narrow limits of purely economical considerations. But even with a view to those considerations alone, the removal of population from the overcrowded to the unoccupied parts of the earth's surface is one of those works of eminent social usefulness, which most require, and which at the same time best repay, the intervention of government.

To appreciate the benefits of colonization, it should be considered in its relation, not to a single country, but to the collective economical interests of the human race. The question is in general treated too exclusively as one of distribution; of relieving one labour market and supplying another. It is this, but it is also a question of production, and of the most efficient employment of the productive resources of the world. Much has been said of the good economy of importing commodities from the place where they can be bought cheapest; while the good economy of producing them where they can be produced cheapest is comparatively little thought of. If to carry consumable goods from the places where they are superabundant to those where they are scarce is a good pecuniary speculation, is it not an equally good speculation to do the same thing with regard to labour and instruments? The exportation of labourers and capital from old to new countries, from a place where their productive power is less to a place where it is greater, increases by so much the aggregate produce of the labour and capital of the world. It adds to the joint wealth of the old and the new country, what amounts in a short period to many times the mere cost of effecting the transport. There needs be no hesitation in affirming that Colonization, in the present state of the world, is the best affair of business, in which the capital of an old and wealthy country can engage.

It is equally obvious, however, that Colonization on a great scale can be undertaken, as an affair of business, only by the government, or by some combination of individuals in complete understanding with the government; except under such very peculiar circumstances as those which succeeded the Irish famine.1 Emigration on the voluntary principle rarely has any material influence in lightening the pressure of population in the old country, though as far as it goes it is doubtless a benefit to the colony. Those labouring persons who voluntarily emigrate are seldom the very poor; they are small farmers with some little capital, or labourers who have saved something, and who, in removing only their own labour from the crowded labour-market, withdraw from the capital of the country a fund which maintained and employed more labourers than themselves. Besides, this portion of the community is so limited in number, that it might be removed entirely, without making any sensible impression upon the numbers of the population, or even upon the annual increase. Any considerable emigration of labour is only practicable, when its cost is defrayed, or at least advanced, by others than the emigrants themselves. Who then is to advance it? Naturally, it may be said, the capitalists of the colony, who require the labour, and who intend to employ it. But to this there is the obstacle, that a capitalist, after going to the expense of carrying out labourers, has no security that he shall be the person to derive any benefit from them. If all the capitalists of the colony were to combine, and bear the expense by subscription, they would still have no security that the labourers, when there, would continue to work for them. After working for a short time and earning a few pounds, they always, unless prevented by the government, squat on unoccupied land, and work only for themselves. The experiment has been repeatedly tried whether it was possible to enforce contracts for labour, or the repayment of the passage money of emigrants to those who advanced it, and the trouble and expense have always exceeded the advantage. The only other resource is the voluntary contributions of parishes or individuals, to rid themselves of surplus labourers who are already, or who are likely to become, locally chargeable on the poor-rate. Were this speculation to become general, it might produce a sufficient amount of emigration to clear off the existing unemployed population, but not to raise the wages of the employed: and the same thing would require to be done over again in less than another generation.

One of the principal reasons why Colonization should be a national undertaking, is that in this manner alone, save in highly exceptional cases, can emigration be self-supporting. The exportation of capital and labour to a new country being, as before observed, one of the best of all affairs of business, it is absurd that it should not, like other affairs of business, repay its own expenses. Of the great addition which it makes to the produce of the world, there can be no reason why a sufficient portion should not be intercepted, and employed in reimbursing the outlay incurred in effecting it. For reasons already given, no individual, or body of individuals, can reimburse themselves for the expense; the government, however, can. It can take from the annual increase of wealth, caused by the emigration, the fraction which suffices to repay with interest what the emigration has cost. The expenses of emigration to a colony ought to be borne by the colony; and this, in general, is only possible when they are borne by the colonial government.

Of the modes in which a fund for the support of colonization can be raised in the colony, none is comparable in advantage to that which was first suggested, and so ably and perseveringly advocated, by Mr. Wakefield: the plan of putting a price on all unoccupied land, and devoting the proceeds to emigration. The unfounded and pedantic objections to this plan have been answered in a former part of this chapter: we have now to speak of its advantages. First, it avoids the difficulties and discontents incident to raising a large annual amount by taxation; a thing which is almost useless to attempt with a scattered population of settlers in the wilderness, who, as experience proves, can seldom be compelled to pay direct taxes, except at a cost exceeding their amount; while in an infant community indirect taxation soon reaches its limit. The sale of lands is thus by far the easiest mode of raising the requisite funds. But it has other and still greater recommendations. It is a beneficial check upon the tendency of a population of colonists to adopt the tastes and inclinations of savage life, and to disperse so widely as to lose all the advantages of commerce, of markets, of separation of employments, and combination of labour. By making it necessary for those who emigrate at the expense of the fund, to earn a considerable sum before they can become landed proprietors, it keeps up a perpetual succession of labourers for hire, who in every country are a most important auxiliary even to peasant proprietors: and by diminishing the eagerness of agricultural speculators to add to their domain, it keeps the settlers within reach of each other for purposes of co-operation, arranges a numerous body of them within easy distance of each centre of foreign commerce and non-agricultural industry, and insures the formation and rapid growth of towns and town products. This concentration, compared with the dispersion which uniformly occurs when unoccupied land can be had for nothing, greatly accelerates the attainment of prosperity, and enlarges the fund which may be drawn upon for further emigration. Before the adoption of the Wakefield system, the early years of all new colonies were full of hardship and difficulty: the last colony founded on the old principle, the Swan River settlement, being one of the most characteristic instances. In all subsequent colonization, the Wakefield principle has been acted upon, though imperfectly,1 a part only of the proceeds of the sale of land being devoted to emigration: yet wherever it has been introduced at all, as in South Australia, Victoria, and New Zealand, the restraint put upon the dispersion of the settlers, and the influx of capital caused by the assurance of being able to obtain hired labour, has, in spite of many difficulties and much mismanagement, produced a suddenness and rapidity of prosperity more like fable than reality.∗2

The self-supporting system of Colonization, once established, would increase in efficiency every year; its effect would tend to increase in geometrical progression: for since every able-bodied emigrant, until the country is fully peopled, adds in a very short time to its wealth, over and above his own consumption, as much as would defray the expense of bringing out another emigrant, it follows that the greater the number already sent, the greater number might continue to be sent, each emigrant laying the foundation of a succession of other emigrants at short intervals without fresh expense, until the colony is filled up. It would therefore be worth while, to the mother country, to accelerate the early stages of this progression, by loans to the colonies for the purpose of emigration, repayable from the fund formed by the sales of land. In thus advancing the means of accomplishing a large immediate emigration, it would be investing that amount of capital in the mode, of all others, most beneficial to the colony; and the labour and savings of these emigrants would hasten the period at which a large sum would be available from sales of land. It would be necessary, in order not to overstock the labour market, to act in concert with the persons disposed to remove their own capital to the colony. The knowledge that a large amount of hired labour would be available, in so productive a field of employment, would insure a large emigration of capital from a country, like England, of low profits and rapid accumulation: and it would only be necessary not to send out a greater number of labourers at one time, than this capital could absorb and employ at high wages.

Inasmuch as, on this system, any given amount of expenditure, once incurred, would provide not merely a single emigration, but a perpetually flowing stream of emigrants, which would increase in breadth and depth as it flowed on; this mode of relieving overpopulation has a recommendation, not possessed by any other plan ever proposed for making head against the consequences of increase without restraining the increase itself: there is an element of indefiniteness in it; no one can perfectly foresee how far its influence, as a vent for surplus population, might possibly reach. There is hence the strongest obligation on the government of a country like our own, with a crowded population, and unoccupied continents under its command, to build, as it were, and keep open, in concert with the colonial governments, a bridge from the mother country to those continents, by establishing the self-supporting system of colonization on such a scale, that as great an amount of emigration as the colonies can at the time accommodate, may at all times be able to take place without cost to the emigrants themselves.

1 The importance of these considerations, as regards the British islands, has been of late considerably diminished by the unparalleled amount of spontaneous emigration from Ireland; an emigration not solely of small farmers, but of the poorest class of agricultural labourers, and which is at once voluntary and self-supporting, the succession of emigrants being kept up by funds contributed from the earnings of their relatives and connexions who had gone before. To this has been added a large amount of voluntary emigration to the seats of the gold discoveries, which has partly supplied the wants of our most distant colonies, where, both for local and national interests, it was most of all required. But the stream of both these emigrations has already considerably slackened, and though that from Ireland has since partially revived, it is not certain that the aid of government in a systematic form, and on the self-supporting principle, will not again become necessary to keep the communication open between the hands needing work in England, and the work which needs hands elsewhere.

§ 15. The same principle which points out colonization, and the relief of the indigent, as cases to which the principal objection to government interference does not apply, extends also to a variety of cases, in which important public services are to be performed, while yet there is no individual specially interested in performing them, nor would any adequate remuneration naturally or spontaneously attend their performance. Take for instance a voyage of geographical or scientific exploration. The information sought may be of great public value, yet no individual would derive any benefit from it which would repay the expense of fitting out the expedition; and there is no mode of intercepting the benefit on its way to those who profit by it, in order to levy a toll for the remuneration of its authors. Such voyages are, or might be, undertaken by private subscription; but this is a rare and precarious resource. Instances are more frequent in which the expense has been borne by public companies or philanthropic associations; but in general such enterprises have been conducted at the expense of government, which is thus enabled to entrust them to the persons in its judgment best qualified for the task. Again, it is a proper office of government to build and maintain lighthouses, establish buoys, &c. for the security of navigation: for since it is impossible that the ships at sea which are benefited by a lighthouse, should be made to pay a toll on the occasion of its use, no one would build lighthouses from motives of personal interest, unless indemnified and rewarded from a compulsory levy made by the state. There are many scientific researches, of great value to a nation and to mankind, requiring assiduous devotion of time and labour, and not unfrequently great expense, by persons who can obtain a high price for their services in other ways. If the government had no power to grant indemnity for expense, and remuneration for time and labour thus employed, such researches could only be undertaken by the very few persons who, with an independent fortune, unite technical knowledge, laborious habits, and either great public spirit, or an ardent desire of scientific celebrity.

Connected with this subject is the question of providing by means of endowments or salaries, for the maintenance of what has been called a learned class. The cultivation of speculative knowledge, though one of the most useful of all employments, is a service rendered to a community collectively, not individually, and one consequently for which it is, primâ facie, reasonable that the community collectively should pay; since it gives no claim on any individual for a pecuniary remuneration; and unless a provision is made for such services from some public fund, there is not only no encouragement to them, but there is as much discouragement as is implied in the impossibility of gaining a living by such pursuits, and the necessity consequently imposed on most of those who would be capable of them, to employ the greatest part of their time in gaining a subsistence. The evil, however, is greater in appearance than in reality. The greatest things, it has been said, have generally been done by those who had the least time at their disposal; and the occupation of some hours every day in a routine employment, has often been found compatible with the most brilliant achievements in literature and philosophy. Yet there are investigations and experiments which require not only a long but a continuous devotion of time and attention: there are also occupations which so engross and fatigue the mental faculties, as to be inconsistent with any vigorous employment of them upon other subjects, even in any intervals of leisure. It is highly desirable, therefore, that there should be a mode of insuring to the public the services of scientific discoverers, and perhaps of some other classes of savants, by affording them the means of support consistently with devoting a sufficient portion of time to their peculiar pursuits. The fellowships of the Universities are an institution excellently adapted for such a purpose; but are hardly ever applied to it, being bestowed, at the best, as a reward for past proficiency, in committing to memory what has been done by others, and not as the salary of future labours in the advancement of knowledge. In some countries, Academies of science, antiquities, history, &c., have been formed with emoluments annexed. The most effectual plan, and at the same time least liable to abuse, seems to be that of conferring Professorships, with duties of instruction attached to them. The occupation of teaching a branch of knowledge, at least in its higher departments, is a help rather than an impediment to the systematic cultivation of the subject itself. The duties of a professorship almost always leave much time for original researches; and the greatest advances which have been made in the various sciences, both moral and physical, have originated with those who were public teachers of them; from Plato and Aristotle to the great names of the Scotch, French, and German Universities. I do not mention the English, because until very lately their professorships have been, as is well known, little more than nominal. In the case, too, of a lecturer in a great institution of education, the public at large has the means of judging, if not the quality of the teaching, at least the talents and industry of the teacher; and it is more difficult to misemploy the power of appointment to such an office, than to job in pensions and salaries to persons not so directly before the public eye.

It may be said generally, that anything which it is desirable should be done for the general interests of mankind or of future generations, or for the present interests of those members of the community who require external aid, but which is not of a nature to remunerate individuals or associations for undertaking it, is in itself a suitable thing to be undertaken by government: though, before making the work their own, governments ought always to consider if there be any rational probability of its being done on what is called the voluntary principle, and if so, whether it is likely to be done in a better or more effectual manner by government agency, than by the zeal and liberality of individuals.

§ 16. The preceding heads comprise, to the best of my judgment, the whole of the exceptions to the practical maxim, that the business of society can be best performed by private and voluntary agency. It is, however, necessary to add, that the intervention of government cannot always practically stop short at the limit which defines the cases intrinsically suitable for it. In the particular circumstances of a given age or nation, there is scarcely anything really important to the general interest, which it may not be desirable, or even necessary, that the government should take upon itself, not because private individuals cannot effectually perform it, but because they will not. At some times and places there will be no roads, docks, harbours, canals, works of irrigation, hospitals, schools, colleges, printing-presses, unless the government establishes them; the public being either too poor to command the necessary resources, or too little advanced in intelligence to appreciate the ends, or not sufficiently practised in joint action to be capable of the means. This is true, more or less, of all countries inured to despotism, and particularly of those in which there is a very wide distance in civilization between the people and the government: as in those which have been conquered and are retained in subjection by a more energetic and more cultivated people. In many parts of the world, the people can do nothing for themselves which requires large means and combined action: all such things are left undone, unless done by the state. In these cases, the mode in which the government can most surely demonstrate the sincerity with which it intends the greatest good of its subjects, is by doing the things which are made incumbent on it by the helplessness of the public, in such a manner as shall tend not to increase and perpetuate, but to correct that helplessness. A good government will give all its aid in such a shape as to encourage and nurture any rudiments it may find of a spirit of individual exertion. It will be assiduous in removing obstacles and discouragements to voluntary enterprise, and in giving whatever facilities and whatever direction and guidance may be necessary: its pecuniary means will be applied, when practicable, in aid of private efforts rather than in supersession of them, and it will call into play its machinery of rewards and honours to elicit such efforts. Government aid, when given merely in default of private enterprise, should be so given as to be as far as possible a course of education for the people in the art of accomplishing great objects by individual energy and voluntary co-operation.

I have not thought it necessary here to insist on that part of the functions of government which all admit to be indispensable, the function of prohibiting and punishing such conduct on the part of individuals in the exercise of their freedom as is clearly injurious to other persons, whether the case be one of force, fraud, or negligence. Even in the best state which society has yet reached, it is lamentable to think how great a proportion of all the efforts and talents in the world are employed in merely neutralizing one another. It is the proper end of government to reduce this wretched waste to the smallest possible amount, by taking such measures as shall cause the energies now spent by mankind in injuring one another, or in protecting themselves against injury, to be turned to the legitimate employment of the human faculties, that of compelling the powers of nature to be more and more subservient to physical and moral good.1

BIBLIOGRAPHICAL APPENDIX

prepared by sir william ashley in 1909

For the history of economic investigation and discussion since the publication of Mill's Principles in 1848, the only general work to which reference can be made in English is Palgrave's Dictionary of Political Economy (1894–1908), which contains many useful articles under the headings of the various subjects and authors. Readers of French will obtain some assistance from Block, Les Progrès de la Science Économique depuis Adam Smith (1890), representing the strictest school of French orthodoxy, and from Gide and Rist, Histoire des Doctrines Économiques (1909), written from a more modern point of view. Readers of German will naturally refer to Conrad's Handwörterbuch der Staatswissenachaften, of which the third and enlarged edition is now being issued; and they will find a number of valuable reviews of the course of discussion of the several main topics in the series of monographs brought together under the title Die Entwicklung der deutschen Volkswirthschaftslehre im neunzehnten Jahrhundert (1908).

A.—

The Mercantile System (p. 6)

Mill's account is based on that of Adam Smith, Wealth of Nations, bk. iv. ch. i. Much investigation has subsequently taken place into mercantilist literature and policy, some results of which may be seen in Roscher, Geschichte der National-Ökonomik in Deutschland (1874), § 57, closely followed (with a Positivist colouring) by Ingram, History of Political Economy (1888); in Schmoller, The Mercantile System and its Historical Significance (1884; Eng. trans. 1896), and Grundriss der Allgemeinen Volkswirthschaftslehre (1900), i. § 39 (in French trans., Principes d'Économie Politique (1905–1908), i. § 39); in Cunningham, Growth of English Industry and Commerce, vol. ii. pt. i., The Mercantile System (1903); and in Unwin, Industrial Organisation in the Sixteenth and Seventeenth Centuries (1904). One of the most significant of English mercantilist writings, Mun's England's Treasure by Forraign Trade (1664), has been recently republished (1895).

B.—

The Definition of Wealth (p. 9)

Mill's definition has been criticised, from very different points of view, by Jevons, Principles of Economics (posthumously published, 1905), p. 14; Nicholson, Principles of Political Economy, i. (1893), Introduction; and Ruskin, Unto this Last (1862), Preface, and Munera Pulveris (1863), Preface. For a recent classification of “desirable things,” see Marshall, Principles of Economics (1890; 5th ed. 1907), bk. ii. ch. 2. Sidgwick, Principles of Political Economy (1883), bk. i. ch. ii., points out that, though in England “Wealth” has commonly been regarded as the most fundamental conception in Political Economy, it has also been commonly held that it should be defined by the characteristic of possessing “Value,” so that it would seem more logical “to begin by attempting to get a precise conception of this characteristic.” For difficulties attaching to “Richesse,” as the French equivalent of “Wealth,” see Gide, Cours d'Économie Politique (1909), p. 47. [By the earlier French economic writers, however, the term was used in the plural, as in Turgot's Réflexions sur Formation et la Distribution des Richesses (1770: trans. by Ashley, 1898).]

The German language possesses no one inclusive term like “Wealth”; and German economists have long been accustomed to begin with the definition of “goods” (Guter) and, in consequence, of “a good” (Gut)—enjoying, in the use of the latter term, an advantage not available in current English speech. For characteristic examples reference may be made to Wagner, Lehrbuch der Politischen Oekonomie, Grundlagen (3rd ed. 1892), I, bk. ii. ch. i.; or Conrad, Grundriss zum Studium der Politischen Oekonomie (6th ed. 1907), § 5. The phrases “goods,” “economic goods,” “an economic good,” and so on, have of late years made their way into English and still more into American economic writings; see, for instance, Marshall (as above), and Clark, Essentials of Economic Theory (1907), ch. 2; and cf. Pierson, Principles of Economics (Eng. trans. 1902), pt. i. ch. i.

C.—

The Types of Society (p. 20)

Mill's brief sketch of the general economic development of humanity is a masterly one. But since his time there has been a vast amount of work done, especially in Germany, in the field of economic history. The best introduction to the subject is now Schmoller's Grundriss, bk. ii. (occupying the second volume of the French trans., Principes). A very suggestive treatment of certain aspects of the subject is presented in a brief compass in Bücher, Entstehung der Volkswirthschaft (Eng. trans. under the title Industrial Evolution, N. Y. 1901); which receives some necessary correction and is supplemented in important respects by Meyer, Die wirthschaftliche Entwickelung des Alterthums, Vortrag, 1895, and Die Sklaverei im Alterthum, Vortrag, 1898; and by v. Below, Über Theorien der wirthschaftlichen Entwicklung der Völker, in Historische Zeitschrift, lxxxvi. (N. F. 1.). The best general work in English is Cunningham's Western Civilisation in its Economic Aspects; Ancient Times (1898), Mediaeval and Modern Times (1900). Seligman, Principles of Economics (1905), part ii. bks. ii. and iii., brings together a great many instructive apercus in a short compass.

D.—

Productive and Unproductive Labour (p. 53)

The distinction was taken from Adam Smith, Wealth of Nations, bk. ii. ch. 3, who derived the words themselves from the French Physiocrats, though he used them in a different sense. It has been criticised by Jevons, Principles, ch. xviii., and Cancan, History of the Theories of Production and Distribution (1893), ch. i. § 7; and it is now but little used. Cf. Marshall, bk. ii. ch. 3.

E.—

The Definition of Capital (p. 62)

A good introduction to the large contentious literature on this subject is Schmoller, Grundriss, ii. § 182 c (in the French trans. Principes, iii. pp. 409 seq.); which makes use of the material collected in Böhm-Bawerk, The Positive Theory of Capital (Eng. trans. 1891), bk. i. ch. 3. As Wagner, Grundlagen, § 129, has pointed out, the conception of capital is twofold—economical and historical (cf. Gide, Cours, bk. i. ch. 3); the latter aspect was emphasised by Lassalle in his proposition that “Capital is a historical category.” An account in English of the history of the conception will be found in Marshall, i. App. E, and in Taussig, Wages and Capital (N. Y. 1896), ch. 2. Clark, Distribution of Wealth (1902), ch. 9, distinguishes between “Capital” and “Capital Goods.” Fisher, The Nature of Capital and Income (1906), defines Capital as “a stock of wealth existing at a moment of time,”—which would seem to identify Capital with Wealth generally; while Gibson, Human Economics (1909), defines Capital from the business point of view as “everything in which an individual or group has a legal estate and for which there is a buyer's valuation.”

F.—

Fundamental Propositions on Capital (p. 90)

For destructive criticism of these propositions see Jevons, Principles, ch. xxiv.; Sidgwick Principles, bk. i. ch. 5, note; and Nicholson, Principles, i. pp. 98 seq. The first and fourth of them, as stated by Mill, are only other aspects of his Wages Fund doctrine, and, according to Marshall, Principles, i. App. J, “express his meaning badly.”

G.—

Division and Combination of Labour (p. 131)

This subject, when further examined, widens out into the two far larger topics of economic differentiation and co-operation, which are themselves to a large extent but different aspects of the same process. In this sense it is philosophically treated with a great command of the results of recent investigations, in Schmoller, Grundriss, i. §§ 113 seq. (in Fr. trans. Principes, ii. pp. 248 seq.).

H.—

Large and Small Farming (p. 154)

On this problem, so far as England is concerned, it has to be remembered: (1) that the substitution of large for small farming in the eighteenth and early nineteenth centuries was closely associated with the movement for the enclosure of the “open” or intermixed fields; see hereon, Slater, The English Peasantry and the Enclosure of Common Fields (1907), and Hasbach, A History of the English Agricultural Labourer (Eng. trans. 1908); and (2) that the position of affairs has been greatly affected since Mill wrote by the shock to “cereal farming” caused by the influx of cheap American grain in the eighties: hereon, see Levy, Entstehung and Rückgang des landwirthschaftlichen Grossbetriebes in England (1904). Materials for an opinion on the economic prospects of small farming in England are to be found in Lawes and Gilbert, Allotments and Small Holdings, in Journal of the Royal Agric. Soc., vol. iii. 3rd series (1892); in the Report of a Departmental Committee on Small Holdings (1906); and in Jebb, The Small Holdings of England (1907). They are evidently bound up to some extent with the prospects of agricultural co-operation (in the purchase of fertilisers, the sale of produce, &c.), of which an account is given in Pratt, The Organisation of Agriculture (1905), and in the publications of the Agricultural Organisation Society. A general comparison of Large and Small Farming following, criticising, and supplementing that of Mill is presented by Nicholson, Principles, i. (1893) bk. i. ch. 9.

I.—

Population (p. 162)

In the writings of no contemporary economist, in Great Britain or abroad, does the idea that population is constantly tending to press upon the means of subsistence occupy the same conspicuous and primary place as it does with Mill. The treatment of the subject by Marshall, Principles, bk. iv. chs. 4, 13, and bk. vi. ch. 13, is characteristic of the general present attitude. Attention is coming to be directed more and more to those defects in the present industrial organisation which create a body of permanently underemployed as well as temporarily unemployed, even where the growth of population is evidently not outstripping the means of employment: hereon see Beveridge, Unemployment (1909), p. 6 and passim. The understanding of the exact teaching of Malthus, and of the differences between the first edition of the Essay (1798) and the second (1803), has been facilitated by the publication of Parallel Chapters from the First and Second Editions of an Essay on the Principle of Population (1895).

J.—

The Law of Diminishing Return (p. 188)

Careful restatements in general accord with Mill's teaching are to be found in Marshall, Principles, i. bk. iv. ch. 3; and Nicholson, Principles, bk. i. ch. 10. For the results of the Rothamsted experiments, showing that “beyond a certain point the increase of crop is not in proportion to the increase in the amount of manure applied,” see Lawes, Is Higher Farming a Remedy for Lower Prices? Lecture (1879); and Hall, The Book of the Rothamsted Experiments (1905). The extent to which the formula of diminishing returns covers the facts of agricultural development is discussed by Schmoller, Grundriss, ii. § 233 (Principes, iv. pp. 427 seq.). But while Mill and the older theoretic writers distinguished between the law of diminishing return in agriculture and the fact (by some called the law) of increasing return in manufacture (cf. Marshall, Principles, bk. iv. ch. 13, § 2), and writers of the historical school tend to minimise the effect of the law of diminishing return even in agriculture, some more recent theoretic writers go in the other direction and declare that the law of diminishing return is universal and applies to production of all kinds. For the sense in which they use such language, see Clark, Distribution of Wealth, p. 208, and Seligman, Principles, § 88.

K.—

Mill's Earlier and Later Writings on Socialism (p. 204)

Mill's account in the Preface to the 3rd edition of the nature of the alterations there made, scarcely give an adequate impression of the change of tone on his part between 1848 and 1852. The total impression produced by the argument of 1848 is that “Socialism” was probably undesirable and impracticable. Thus the difficulty of apportioning labour among the members of the community, which was met in 1852 by an expression of the hope that “human intelligence would not be inadequate” to deal with it, had called forth in 1848 the following remarks:

“In the existing system of industry these things do adjust themselves with some, though but a distant, approach to fairness. If one kind of work is harder or more disagreeable than another, or requires a longer practice, it is better paid, simply because there are fewer competitors for it; and an individual generally finds that he can earn most by doing the thing which he is fittest for. I admit that this self-adjusting machinery does not touch some of the grossest of the existing inequalities of remuneration, and in particular the unjust advantage possessed by almost the commonest mental over almost the hardest and most disagreeable bodily labour. Employments which require any kind of technical education, however simple, have hitherto been the subject of a real monopoly as against the mass. But as popular instruction advances, this monopoly is already becoming less complete, and every increase of prudence and foresight among the people encroaches upon it more and more.”

And the argument concluded thus:

“I believe that the condition of the operatives in a well-regulated manufactory, with a great reduction of the hours of labour and a considerable variety of the kind of it, is very like what the condition of all would be in a Socialist community. I believe that the majority would not exert themselves for any thing beyond this, and that unless they did, nobody else would; and that on this basis human life would settle itself into one invariable round. But to maintain even this state, the limitation of the propagative powers of the community must be as much a matter of public regulation as everything else; since under the supposed arrangements prudential restraint would no longer exist. Now, if we suppose an equal degree of regulation to take place under the present system, either compulsorily, or, what would be so much preferable, voluntarily; a condition at least equal to what the Socialist system offers to all would fall to the lot of the least fortunate, by the mere action of the competitive principle. Whatever of pecuniary means or freedom of action any one obtained beyond this, would be so much to be counted in favour of the competitive system.”

It is true that, in the next section, he went on to say:

“These arguments, to my mind conclusive against Communism, are not applicable to St. Simonism... St. Simonism does not contemplate an equal, but an unequal, division of the produce.”

But he judged the assumption on which it rested “almost too chimerical to be reasoned against”; and began the next section thus:

“There has never been imagined any mode of distributing the produce of industry, so well adapted to the requirements of human nature on the whole, as that of letting the share of each individual (not in a state of bodily or mental incapacity) depend in the main on that individual's own energies and exertions, and on such furtherance as may be obtained from the voluntary good offices of others. It is not the subversion of the system of individual property that should be aimed at, but the improvement of it.”

In the 3rd edition, it should be noted, the treatment of the subject is affected not only by a modification of personal opinion, but also by the insertion, which had taken place in the 2nd edition, of the account of Fourierism.

In 1869 Mill formed the design of writing a book on Socialism; and after his death the first rough drafts of the work were published by his step-daughter, Miss Helen Taylor, in the Fortnightly Review for February, March, and April 1879. These articles indicate a reversion on Mill's part to an attitude resembling more closely perhaps his state of mind in 1848 than that in 1852. It must be remembered that his criticisms bore primarily upon the Socialist literature of his own time (1869). His treatment of the subject was so carefully balanced that there is a certain risk of giving an unfair impression of the general effect of the argument by the selection of a few passages. The following passages, taken in conjunction with the chapters in the Principles, will, however, indicate with sufficient clearness his general point of view.

After an Introduction on the importance of the subject, Mill begins by setting forth at length the Socialist objections to the present order of society, and by recognising the large element of truth in them.

“But the strongest case is susceptible of exaggeration; and it will have been evident to many readers, even from the passages I have quoted, that such exaggeration is not wanting in the representations of the ablest and most candid Socialists. Though much of their allegations is unanswerable, not a little is the result of errors in political economy; by which, let me say once for all, I do not mean the rejection of any practical rules of policy which have been laid down by political economists: I mean ignorance of economic facts, and of the causes by which the economic phenomena of society as it is, are actually determined.

“In the first place, it is unhappily true that the wages of ordinary labour in all the countries of Europe are wretchedly insufficient to supply the physical and moral necessities of the population in any tolerable measure. But when it is further alleged that even this insufficient remuneration has a tendency to diminish; that there is, in the words of M. Louis Blanc, une baisse continue des salaires; the assertion is in opposition to all accurate information, and to many notorious facts. It has yet to be proved that there is any country in the civilised world where the ordinary wages of labour, estimated either in money or in articles of consumption, are declining; while in many they are, on the whole, on the increase; and an increase which is becoming not slower, but more rapid.”

The following passage supplements the chapter in the Principles on the theory of Profit:

“Another point on which there is much misapprehension on the part of Socialists, as well as of Trades Unionists and other partisans of Labour against Capital, relates to the proportions in which the produce of the country is really shared, and the amount of what is actually diverted from those who produce it, to enrich other persons.... With respect to capital employed in business, there is in the popular notions a great deal of illusion. When, for instance, a capitalist invests £20,000 in his business and draws from it an income of suppose £2000 a year, the common impression is as if he was the beneficial owner both of the £20,000 and the £2000, while the labourers own nothing but their wages. The truth, however, is that he only obtains the two thousand pounds on condition of applying no part of the £20,000 to his own use. He has the legal control over it, and might squander it if he chose, but if he did he would not have the £2000 a year also. As long as he derives an income from his capital he has not the option of withholding it from the use of others. As much of his invested capital as consists of buildings, machinery and other instruments of production, is applied to production and is not applicable to the support or enjoyment of any one. What is so applicable (including what is laid out in keeping up or renewing the buildings and instruments) is paid away to labourers, forming their remuneration and their share in the division of the produce. For all personal purposes they have the capital and he has but the profits, which it only yields to him on condition that the capital itself is employed in satisfying, not his own wants, but those of labourers. The proportion which the profits of capital usually bear to the capital itself (or rather to the circulating portion of it) is the ratio which the capitalist's share of the produce bears to the aggregate share of the labourers. Even as his own share a small part only belongs to him as the owner of capital. The portion of the produce which falls to capital merely as capital is measured by the interest of money, since that is all that the owner of capital obtains when he contributes nothing to production except the capital itself. Now the interest of capital in the public funds, which are considered to be the best security, is at the present prices (which have not varied much for many years) about three and one-third per cent. Even in this investment there is some little risk—risk of repudiation, risk of being obliged to sell out at a low price in some commercial crisis.

“Estimating these risks at one-third per cent., the remaining three per cent. may be considered as the remuneration of capital, apart from insurance against loss. On the security of a mortgage four per cent. is generally obtained, but in this transaction there are considerably greater risks—the uncertainty of titles to land under our bad system of law; the chance of having to realise the security at a great cost in law charges; and liability to delay in the receipt of the interest, even when the principal is safe. When mere money independently of exertion yields a larger income, as it sometimes does, for example, by shares in railway or other companies, the surplus is hardly ever an equivalent for the risk of losing the whole, or part, of the capital by mismanagement, as in the case of the Brighton Railway, the dividend of which, after having been six per cent. per annum, sunk to from nothing to one and one-half per cent., and shares which had been bought at 120 could not be sold for more than 43.... Of the profits, therefore, which a manufacturer or other person in business obtains from his capital no more than about three per cent. can be set down to the capital itself. If he were able and willing to give up the whole of this to his labourers, who already share among them the whole of his capital as it is annually reproduced from year to year, the addition to their weekly wages would be inconsiderable. Of what he obtains beyond three per cent. a great part is insurance against the manifold losses he is exposed to, and cannot safely be applied to his own use, but requires to be kept in reserve to cover those losses when they occur. The remainder is properly the remuneration of his skill and industry—the wages of his labour of superintendence. No doubt if he is very successful in business these wages of his are extremely liberal, and quite out of proportion to what the same skill and industry would command if offered for hire. But on the other hand he runs a worse risk than that of being out of employment: that of doing the work without earning anything by it, of having the labour and anxiety, without the wages. I do not say that the drawbacks balance the privileges, or that he derives no advantage from the position that makes him a capitalist and employer of labour, instead of a skilled superintendent letting out his service to others; but the amount of his advantage must not be estimated by the great prizes alone. If we subtract from the gains of some the losses of others and deduct from the balance a fair compensation for the anxiety, skill and labour of both, grounded on the market price of skilled superintendence, what remains will be, no doubt, considerable, but yet, when compared to the entire capital of the country, annually reproduced and dispensed in wages, it is very much smaller than it appears to the popular imagination; and were the whole of it added to the share of the labourers it would make a less addition to their share than would be made by any important invention in machinery, or by the suppression of unnecessary distributers and other ‘parasites of industry.’...

“It seemed desirable to begin the discussion of the Socialist question by these remarks in abatement of Socialist exaggerations, in order that the true issues between Socialism and the existing state of society might be correctly conceived. The present system is not, as many Socialists believe, hurrying us into a state of general indigence and slavery from which only Socialism can save us. The evils and injustices suffered under the present system are great, but they are not increasing; on the contrary, the general tendency is toward their slow diminution.”

Mill then opens his statement of the objections to Socialism with the following classification, which illustrates the extent to which Socialist propaganda has changed its character since 1869:

“Among those who call themselves Socialists, two kinds of persons may be distinguished. There are, in the first place, those whose plans for a new order of society—in which private property and individual competition are to be superseded and other motives to action substituted—are on the scale of a village community or township, and would be applied to an entire country by the multiplication of such self-acting units; of this character are the systems of Owen and Fourier, and the more thoughtful and philosophic Socialists generally. The other class, who are more a product of the continent than of Great Britain and may be called the revolutionary Socialists, propose to themselves a much bolder stroke. Their scheme is the management of the whole productive resources of the country by one central authority, the general government.”

Remarking that:

“the peculiarities, however, of the revolutionary form of Socialism will be most conveniently examined after the considerations common to both the forms have been duly weighed,”

he begins by pointing out that:

“the distinctive feature of Socialism is not that all things are in common, but that production is only carried on upon the common account, and that the instruments of production are held as common property.”

Accordingly:

“The question to be considered is, whether this joint management is likely to be as efficient and successful as the managements of private industry by private capital. And this question has to be considered in a double aspect: the efficiency of the directing mind, or minds, and that of the simple workpeople.”

He discusses this, first in relation to the form of Socialism which he calls

“simple communism, i.e. equal division of the produce among all the sharers, or, according to M. Louis Blanc's still higher standard of justice, apportionment of it according to difference of need, but without making any difference of reward according to the nature of the duty nor according to the supposed merits or services of the individual,”

with the conclusion that its success would depend upon a moral education for which mankind could only be effectually trained by communistic association:

“It is for Communism, then, to prove, by practical experiment its power of giving this training. Experiments alone can show whether there is as yet in any portion of the population a sufficiently high level of moral cultivation to make Communism succeed, and to give the next generation among themselves the education necessary to keep up that high level permanently. If Communist associations show that they can be durable and prosperous, they will multiply, and will probably be adopted by successive portions of the population of the more advanced countries as they become morally fitted for that mode of life.”

And, going on then to “those other forms of Socialism which recognise the difficulties of Communism and contrive means to surmount them,” of which the principal was Fourierism, he gives reasons for the opinion that, for them, “practical trial” is no less necessary. He then goes on to the other main division:

“The various schemes for managing the productive resources of the country by public instead of private agency... are at present workabie only by the élite of mankind, and have yet to prove their power of training mankind at large to the state of improvement which they presuppose. Far more, of course, may this be said of the more ambitious plan which aims at taking possession of the whole land and capital of the country, and beginning at once to administer it on the public account. Apart from all consideration of injustice to the present possessors, the very idea of conducting the whole industry of a country by direction from a single centre is so obviously chimerical that nobody ventures to propose any mode in which it should be done.”

Mill's argument with regard to the second or “revolutionary” type of Socialism is accordingly based upon the difficulty of “the problem of management.” And his final conclusion is thus expressed:

“The preceding considerations appear sufficient to show that an entire renovation of the social fabric, such as is contemplated by Socialism, establishing the economic constitution of society upon an entirely new basis, other than that of private property and competition, however valuable as an ideal, and even as a prophecy of ultimate possibilities, is not available as a present resource, since it requires from those who are to carry on the new order of things qualities both moral and intellectual, which require to be tested in all, and to be created in most; and this cannot be done by an Act of Parliament, but must be, on the most favourable supposition, a work of considerable time. For a long period to come the principle of individual property will be in possession of the field; and even if in any country a popular movement were to place Socialists at the head of a revolutionary government, in however many ways they may violate private property the institution itself would survive, and would either be accepted by them or brought back by their expulsion, for the plain reason that people will not lose their hold of what is at present their sole reliance for subsistence and security until a substitute for it has been got into working order. Even those, if any, who have shared among themselves what was the property of others would desire to keep what they had acquired, and to give back to property in the new hands the sacredness which they had not recognised in the old.

“But though, for these reasons, individual property has presumably a long term before it, if only of provisional existence, we are not, therefore, to conclude that it must exist during that whole term unmodified, or that all the rights now regarded as appertaining to property belong to it inherently, and must endure while it endures. On the contrary, it is both the duty and the interest of those who derive the most direct benefit from the laws of property to give impartial consideration to all proposals for rendering those laws in any way less onerous to the majority....

“One of the mistakes oftenest committed, and which are the source of the greatest practical errors in human affairs, is that of supposing that the same name always stands for the same aggregation of ideas. No word has been the subject of more of this kind of misunderstanding than the word property. It denotes, in every state of society, the largest power of exclusive use or exclusive control over things (and sometimes, unfortunately, over persons) which the law accords, or which custom in that state of society recognises; but these powers of exclusive use and control are very various and differ greatly in different countries and in different states of society.”

And, after some historical illustrations of this proposition, he concludes:

“When, therefore, it is maintained, rightly or wrongly, that some change or modification in the powers exercised over things by the persons legally recognised as their proprietors would be beneficial to the public and conducive to the general improvement, it is no good answer to this merely to say that the supposed change conflicts with the idea of property. The idea of property is not some one thing identical throughout history and incapable of alteration, but is variable like all other creations of the human mind; at any given time it is a brief expression denoting the rights over things conferred by the law or custom of some given society at that time; but neither on this point nor on any other has the law and custom of a given time and place a claim to be stereotyped for ever. A proposed reform in laws or customs is not necessarily objectionable because its adoption would imply, not the adaptation of all human affairs to the existing idea of property, but the adaptation of the existing ideas of property to the growth and improvement of human affairs. This is said without prejudice to the equitable claim of proprietors to be compensated by the state for such legal rights of a proprietary nature as they may be dispossessed of for the public advantage.”

L.—

The Later History of Socialism (p. 217)

It will be observed that the socialistic writings commented on by Mill were all of French origin and were none of them subsequent to 1869, the date of Mill's articles on Socialism referred to under Appendix K. The Socialism which has been of most influence in later years has been of German origin, and must be studied in the writings of its chief exponents, Karl Marx, Ferdinand Lassalle, Rodbertus, and Friedrich Engels. The most notable in this connexion of those of Lassalle were Arbeiterprogramm (1862: Eng. trans. as The Working Man's Programme), and Herr Bastiat Schulze von Delitzsch der ökonomische Julian (1864: French trans. by Malon as Capital et Travail); of Rodbertus, Zur Beleuchtung der Sozialen Frage (1875; containing a new edition of Soziale Briefe an v. Kirchmann, 1850), and Die Handelskrisen (1858: Eng. trans. as Overproduction and Crises, 1898); and of Engels (in conjunction with Marx), Manifest der Kommunistischen Partei (1848: Eng. trans. revised by Engels 1888), and, alone, Die Entwickelung der Sozialismus von der Utopie zur Wissenschaft (1882: Eng. trans. as Socialism, Utopian and Scientific), and Introductions to Marx's Capital. But of most importance for the theoretic formulation of Socialism have been the writings of Marx (1818–1883): Zur Kritik der politischen Oekonomie (1859), and, above all, Das Kapital (i. 1867: Eng. trans. Capital, 1887; ii. 1893; iii. 1894. An English abstract of the 1st vol. by Aveling appeared in 1891 as The Student's Marx). Fundamental ideas in the writings of Marx were those of Surplus-Value, of Class War, of the Concentration of Wealth, and of the Materialist Interpretation of History. The extent to which these particular teachings have been abandoned by those younger German socialists known as “Revisionists” may be gathered from Bernstein, Die Voraussetzungen der Sozialismus (1899: Eng. trans. as Evolutionary Socialism, 1909).

Among useful books on the history of Socialism in general, and of German socialism in particular, may be mentioned: Laveleye, Le Socialisme Contemporain (1881: Eng. trans. 1885); Ely, French and German Socialism (1885); Gonner, The Social Philosophy of Rodbertus (1900); Rae, Contemporary Socialism (3rd ed. 1901); Brooks, The Social Unrest (1903); Kirkup, A History of Socialism (3rd ed. 1906); Ensor, Modern Socialism (2nd ed. 1907),—a most useful collection of typical documents and speeches from all the leading countries of Europe; and Herkner, Die Arbeiterfrage (5th ed. 1908).

English socialism has pursued in some respects a line of development of its own; and it may be studied in Fabian Essays in Socialism (1889: Reprint, with a significant preface, 1908); various Fabian Tracts, especially Shaw, The Fabian Society (1892); Macdonald, Socialism and Society (1905); Wells, New Worlds for Old (1908); and Villiers, The Socialist Movement in England (1908).

Two popular works which have had a very large circulation are, in America, Bellamy, Looking Backward (1890), and in England, Blatchford, Merrie England (1894).

For French socialism see Jaurès, Studies in Socialism (Eng. trans. 1906); Lavy, L'Oeuvre de Millerand (1902); and Millerand, Travail et Travailleurs (1908); for the recent developments of “Revolutionary Syndicalism,” Gide and Rist, Histoire des Doctrines Économiques (1909); and for Belgian socialism, Destrée and Vandervelde, Le Socialisme en Belgique (1903).

Among criticisms of socialism in various forms and aspects may be singled out Herbert Spencer, The Man v. The State (1884); Courtney The Difficulties of Socialism, in Econ. Journal, i. (1891); Schäffle, The Impossibility of Social Democracy (Eng. trans. 1892); Richter, Pictures of the Socialistic Future (Eng. trans. 1893); Devas, Political Economy (2nd ed. 1901), bk. ii. ch. 7; Strachey, Problems and Perils of Socialism (1908); and Mallock, A Critical Examination of Socialism (1909). An individualist position is ably maintained in the writings of Helen Bosanquet, especially The Strength of the People (1902).

M.—

Indian Tenures (p. 328)

The whole subject must now be studied in the works of the late B. H. Baden-Powell, and especially in the three massive volumes The Land Systems of British India (1892), and the brief text-book based upon that work, Land Revenue in British India (1894). See also his Indian Village Community (1896), and the more popular Village Communities in India (1899); and on the special subject of the Origin of Zamindari Estates in Bengal, his article under that title in the (Harvard) Quarterly Journal of Economics, xi. (Oct. 1896).

N.—

Irish Agrarian Development (p. 342)

The Irish Land Act of 1870 marked the beginning of an attempt to solve the agrarian problem in accordance with the principle popularly described as “dual ownership,” by giving the tenants a right to “compensation for disturbance.” The great Land Act of 1881 carried the process much further by accepting the proposals known as “the three F's” (fair rents, free sale of tenants' interests, and fixed tenure), and establishing a Land Court to fix “judicial rents” for a term of years. By the Land Act of 1903, however, a new departure was made; and machinery was provided for the voluntary transference to the tenants of the land still in the hands of the landlords, on terms attractive to both parties. This measure and the subsequent amending and supplementary Acts will probably, in no long time, bring about the establishment of a system of peasant proprietorship over a great part of Ireland. It should be added that there has of recent years been a rapid growth among Irish farmers of various forms of co-operation. For a brief account of the Act of 1881 and of its relation to contemporary Nationalism, see Low and Sanders, Political History of England during the reign of Victoria (1907). The least biassed accounts of Irish agrarian history during the last forty years are perhaps to be found in a brief work by a German economist, Dr. Bonn, Modern Ireland and her Agrarian Problem (Eng. trans. 1906), and in Bastable's articles in the (Harvard) Quarterly Journal of Economics, xviii. (Nov. 1903), and in the Economic Journal, xix. (March 1909). On the movement towards co-operation among farmers, see Plunkett, Ireland in the New Century (1903), part ii. The details of the history are best looked for in the reports of Royal Commissions and similar documents, such as the Report of the Royal Commission of 1880–1, and of the Royal Commission of 1886–7, the Report of the Select Committee of the House of Commons of 1894 (“Morley's Committee”), and the Report of the Royal Commission of 1897–8 (“Fry's Commission”), together with a Report by Mr. W. F. Bailey, Legal Assistant-Commissioner, of an Inquiry into the Present Condition of Tenant Purchasers (1903). the Reports of the Irish Agricultural Organisation Society (from 1895), and of the Irish Department of Agriculture and Technical Instruction (from 1901). See also Coyne, Ireland, Industrial and Commercial (pub. by Irish Dep. of Agriculture, 1902), and for the text of the Acts, Cherry and Barton, Irish Land Law.

O.—

The Wages Fund Doctrine (p. 344)

This doctrine was formally abandoned by Mill himself in the course of a review of Thornton's Labour in the Fortnightly Review for May 1869, reprinted in his Dissertations and Discussions, iv. The central passages of this article are as follows (Dissertations, iv. pp. 42 seq.):

“It will be said that... supply and demand do entirely govern the price obtained for labour. The demand for labour consists of the whole circulating capital of the country, including what is paid in wages for unproductive labour. The supply is the whole labouring population. If the supply is in excess of what the capital can at present employ, wages must fall. If the labourers are all employed, and there is a surplus of capital still unused, wages will rise. This series of deductions is generally received as incontrovertible. They are found, I presume, in every systematic treatise on political economy, my own certainly included. I must plead guilty to having, along with the world in general, accepted the theory without the qualifications and limitations necessary to make it admissible.

“The theory rests on what may be called the doctrine of the wages fund. There is supposed to be, at any given instant, a sum of wealth, which is unconditionally devoted to the payment of wages of labour. This sum is not regarded as unalterable, for it is augmented by saving, and increases with the progress of wealth; but it is reasoned upon as at any given moment a predetermined amount. More than that amount it is assumed that the wages-receiving class cannot possibly divide among them; that amount, and no less, they cannot but obtain. So that, the sum to be divided being fixed, the wages of each depend solely on the divisor, the number of participants....

“But is there such a thing as a wages-fund, in the sense here implied? Exists there any fixed amount which, and neither more nor less than which, is destined to be expended in wages?

“Of course there is an impassable limit to the amount which can be so expended; it cannot exceed the aggregate means of the employing classes. It cannot come up to those means; for the employers have also to maintain themselves and their families. But, short of this limit, it is not, in any sense of the word, a fixed amount.

“In the common theory, the order of ideas is this: The capitalist's pecuniary means consist of two parts—his capital, and his profits or income. His capital is what he starts with at the beginning of the year, or when he commences some round of business operations; his income he does not receive until the end of the year, or until the round of operations it completed. His capital, except such part as is fixed in buildings and machinery, or laid out in materials, is what he has got to pay wages with. He cannot pay them out of his income, for he has not yet received it. When he does receive it, he may lay by a portion to add to his capital, and as such it will become part of next year's wages-fund, but has nothing to do with this year's.

“This distinction, however, between the relation of the capitalist to his capital, and his relation to his income is wholly imaginary. He starts at the commencement with the whole of his accumulated means, all of which is potentially capital: and out of this he advances his personal and family expenses, exactly as he advances the wages of his labourers.... If we choose to call the whole of what he possesses applicable to the payment of wages, the wages-fund, that fund is co-extensive with the whole proceeds of his business, after keeping up his machinery, buildings and materials, and feeding his family; and it is expended jointly upon himself and his labourers. The less he expends on the one, the more may be expended on the other, and vice versâ. The price of labour, instead of being determined by the division of the proceeds between the employer and the labourers, determines it. If he gets his labour cheaper, he can afford to spend more upon himself. If he has to pay more for labour, the additional payment comes out of his own income; perhaps from the part which he would have saved and added to capital, thus anticipating his voluntary economy by a compulsory one; perhaps from what he would have expended on his private wants or pleasures. There is no law of nature making it inherently impossible for wages to rise to the point of absorbing not only the funds which he had intended to devote to carrying on his business, but the whole of what he allows for his private expenses, beyond the necessaries of life. The real limit to the rise is the practical consideration, how much would ruin him or drive him to abandon the business: not the inexorable limits of the wages-fund.

“In short, there is abstractedly available for the payment of wages, before an absolute limit is reached, not only the employer's capital, but the whole of what can possibly be retrenched from his personal expenditure: and the law of wages, on the side of demand, amounts only to the obvious proposition that the employers cannot pay away in wages what they have not got. On the side of supply, the law as laid down by economists remains intact. The more numerous the competitors for employment, the lower, caeteris paribus, will wages be....

“But though the population principle and its consequences are in no way touched by anything that Mr. Thornton has advanced, in another of its bearings the labour question, considered as one of mere economics, assumes a materially changed aspect. The doctrine hitherto taught by all or most economists (including myself), which denied it to be possible that trade combinations can raise wages, or which limited their operations in that respect to the somewhat earlier attainment of a rise which the competition of the market would have produced without them,—this doctrine is deprived of its scientific foundation, and must be thrown aside. The right and wrong of the proceedings of Trade Unions becomes a common question of prudence and social duty, not one which is peremptorily decided by unbending necessities of political economy.”

In spite of the remonstrances of Cairnes, and his attempt to restate the Wages Fund doctrine in a more satisfactory form, in his Leading Principles, part ii. ch. 1, it may be said to be abandoned now by all economists, at any rate in the form in which it was stated by Mill. For a criticism of Mill's retractation, and a statement of a sense in which it may still be allowable to speak of a Wages Fund, see Taussig, Wages and Capital, an Examination of the Wages Fund Doctrine (N. Y. 1896), especially part ii. ch. 11. And see Sidgwick Principles, bk. ii. ch. 8, § 2; Marshall, Principles, i. App. J: The Doctrine of the Wages Fund; and Nicholson, Principles, bk. ii. ch. 10, § 8.

P.—

The Movement of Population (p. 360)

The rate of growth of the population of the several parts of the United Kingdom is shown by the following table:

The factors in the increase of population are evidently (1) migration, (2) the “natural increase” of population, i.e. the excess of births over deaths. The annual natural increase has fallen in England and Wales from 14.5 per 1000 of the population for the period 1876–1880, to 12.1 in 1901–1905, in consequence of the fact that though the death-rate fell from 20.8 to 16 per thousand, the birth-rate fell from 35.3 to 28.1. The birth-rate in England and Wales, for the period since the Civil Registration Act of 1837, reached its maximum in the period 1870–1876, and has since shown a material decline.

The extent of this decline is shown in the next table:

As regards the decline in the birth-rate generally, the Registrar-General observes:

“There are sufficient grounds for stating that during the past 30 years approximately 14 per cent. of the decline in the birth-rate (based on the proportion of births to the female population aged 15–45 years) is due to the decrease in the proportion of married women in the female population of conceptive ages, and that over 7 per cent. is due to the decrease of illegitimacy. With regard to the remaining 79 per cent. of the decrease, although some of the reduced fertility may be ascribed to changes in the age constitution of married women, there can be little doubt that much of it is due to deliberate restriction of child-bearing.”

The decline in the birth-rate, whatever may be its cause, is a feature common to the birth statistics of most European countries. The statistics may be studied in the General Report on the Census of 1901, and in the Annual Reports of the Registrar-General. The figures are conveniently collected in the Blue-book, Public Health and Social Conditions, prepared by the Local Government Board (1909). The most detailed statistical analysis of the facts is to be found in a paper by Newsholme and Stevenson, and another by Yule, in the Journal of the Royal Statistical Society (March 1906).

Q.—

Profits (p. 421)

The most powerful impulse to fresh discussion of the nature of profits was given by the late General Walker, in the emphasis laid by him on “the function of the entrepreneur,” and his view that “profits are a species of the same genus as rent,” and “do not form a part of the price of manufactured products”; see his Wages Question (1876), ch. 14, and Political Economy (1883). In this discussion it has become usual to distinguish more sharply than the earlier writers between Interest and “pure” or “net” Profits; and there is now a large literature on both these topics. As to Interest, much influence has been exerted by the doctrine of the Austrian writer, Böhm-Bawerk, which explains interest as “a premium on present as against future things”; see Böhm-Bawerk, Capital and Interest (Eng. trans. 1890), and Positive Theory of Capital (Eng. trans. 1891). Of the writings this has called forth it may be sufficient to refer to Pierson, Principles of Economics (Eng. trans. 1902), part i. ch. 4, § 5, and to Cassel, The Nature and Necessity of Interest (1903).

On Profit, recent writings are largely influenced by the conceptions of (1) a “quasi-rent,” (2) “the marginal entrepreneur,” and (3) “long and short periods.” The present state of the discussion may be seen in Marshall, Principles, bk. vi. chs. 6–8; Clark, Essentials of Economic Theory (1907), pp. 117 seq.; Seager, Introduction to Economics (3rd ed. 1906), ch. 10; and in Conrad's Grundriss, § 84, and Gide's Cours, pp. 674 seq. The treatment of the subject by Schmoller, Grundriss, §§ 231–2 (Principes, vol. iv.), will be found illuminating. The “tendency” of profits and wages to an equality has been commented upon frequently by Cliffe Leslie, as in his articles on The Political Economy of Adam Smith and On the Philosophical Method of Political Economy, reprinted in his Essays (1879).

R.—

Rent (p. 434)

Criticisms of the Ricardian doctrine of rent, or of its formulation, are to be found in Sidgwick, Principles, bk. ii. ch. 8, and in Nicholson, Principles, vol. i. bk. ii. ch. 14; and it is restated in Pierson, Principles, pt. i. ch. 2, and in Marshall, Principles, bk. vi. ch. 9.

S.—

The Theory of Value (p. 482)

It is on this subject—as to which Mill remarked, in 1848, that “happily there is nothing in the laws of value which remains for the present or any future writer to clear up; the theory of the subject is complete” (p. 436)—that theoretic discussion has mainly turned during the last four decades, owing chiefly to the writings of Jevons, of Menger and the other representatives of the Austrian school, and of Clark and his American followers. The characteristic of all these writers is to approach the problem from the side of demand, and to find the key to value in Final or Marginal Utility (Grenznutz). The best introduction to the discussion is through Jevons, Theory of Political Economy (1871; 2nd ed. revised, 1879), chs. 3 and 4; and through Bonar's article on The Austrian Economists in the (Harvard) Quarterly Journal of Economics, iii. (Oct. 1888); and Smart, An Introduction to the Theory of Value on the lines of Menger, Wieser and Böhm-Bawerk (1891). Wieser's Natural Value (Eng. trans. 1893) attempts to apply the doctrine to the whole problem of Distribution. For the present state of the discussion see Marshall, Principles, i. bk. v.; Clark, Essentials, chs. 6 and 7; and Schmoller, Grundriss, §§ 171–2 (in French, Principes, vol. iii.).

Mill's doctrine of Cost of Production was attacked by Cairnes in his Some Leading Principles of Political Economy newly expounded (1874), soon after Mill's death. See hereon Marshall in Fortnightly Review (April 1876), and Principles, book v. ch. 3, § 2. Cairnes contributed an important consideration to the discussion by the emphasis which he laid on “Non-competing Groups.”

T.—

The Value of Money (p. 506)

For other expositions of “the Quantity Theory of Prices,” see Walker, Money (1878), chs. 3–8; and Nicholson, Money and Monetary Problems (1888; 4th ed. 1897), chs. 5–7. For a criticism, see Scott, Money and Banking (N. Y. 1903), ch. 4. An attempt to test the doctrine statistically is made by Kemmerer, Money and Credit Instruments in their relation to General Prices (N. Y. 1907). For the sense of “money” in modern business, see Withers, The Meaning of Money (1909).

U.—

Bimetallism (p. 510)

For the main points of the controversy on this subject, which had hardly begun when Mill wrote in 1848, see Jevons, Money (1875), ch. 12 (with his acceptance of the view of the “compensatory action” of a double standard system); Gibbs and Grenfell, The Bimetallic Controversy (1886),—a collection of pamphlets, speeches, &c., on both sides; Nicholson, Money and Monetary Problems; Walker, International Bimetallism (1896); Darwin, Bimetallism (1898); and Carlile, The Evolution of Modern Money (1901). An extreme monometallist position is represented in Giffen, Case against Bimetallism (1892).

V.—

International Values (p. 606)

The Ricardian doctrine, followed and carried further by Mill, has hitherto remained the almost exclusive possession of English economists. It has been expounded by Cairnes, Leading Principles, part iii. ch. 3, and by Bastable, Theory of International Trade (2nd ed. 1897). It has been objected to from two diametrically opposite points of view. Transferability of capital and labour, it has been argued, is true of international trade as well as of domestic, so that no separate theory is necessary for the determination of international values; e.g. Hobson, International Trade (1904). On the other hand it has been asserted that such a transferability is true neither of domestic nor of international trade, and that therefore it is necessary to reject both the Ricardian doctrine of home values and the Ricardian doctrine of international values; e.g. Cliffe Leslie, Essays in Political and Moral Philosophy (1879), Preface. A different theory has been put forward by Sidgwick, Principles, bk. ii. ch. 3. A mathematical treatment of the whole subject, with a criticism of all the leading writers, will be found in a series of articles by Edgeworth on The Theory of International Values in the Economic Journal, vol. iv. (1894). Bastable and Edgeworth, while admiring and accepting Mill's first statement of the theory (ch. 18, §§ 1–5), agree in regarding “the superstructure of later date” (§§ 6–8) as “laborious and confusing.”

W.—

The Regulation of Currency (p. 677)

The question of the effect of the Bank Charter Act has lost much of its importance in consequence of the growing use of cheques. These cheques are now largely drawn not against actual deposits but against banking credits; so that banks, while abandoning more and more the issue of notes, “manufacture money” on a vast scale in another way. Hereon see Withers, Meaningof Money, chs. 3 and 5. On the effect of an increase in the supply of gold, see Walker, Money, pt. i. ch. 4, and Withers, ch. 1.

X.—

Prices in the Nineteenth Century (p. 704)

The actual movement of prices has been much investigated since the time of Mill; and attempts, in large measure successful, have been made by Jevons and others to reduce the statement of it to precision by the use of Index Numbers. On the theory and practice of Index Numbers, see article by Edgeworth, s. v., in Palgrave's Dictionary of Political Economy, vol. ii.; Fountain's Memorandum in Report on Wholesale and Retail Prices (Board of Trade, 1903); and the article of Flux in (Harvard) Quarterly Journal of Economics (Aug. 1907).

The following table, taken from the Blue-book of the Local Government Board on Public Health and Social Conditions (1909), presents the conclusions of Sauerbeck as to prices, and of Bowley as to wages, in a form convenient for comparison.

NOTE.—The Index Numbers here given have been calculated as regards Wages for the years to 1873 on the averages ascertained by Mr. Bowley—see the Economic Journal (Dec. 1898) and the Journal of the Royal Statistical Society (Dec. 1899)—and for later years on the percentages in the 12th Abstract of Labour Statistics of the United Kingdom (1906–7), p. 54. As regards Prices, the Numbers are based on the Index Numbers calculated by Mr. Sauerbeck—see Report on Wholesale and Retail Prices (1903), p. 451, and particulars in the Journal of the Royal Statistical Society (March 1908).

With this may be compared the calculation of the Board of Trade, taking the level of 1900 as 100, as given in the Twelfth Abstract of Labour Statistics (1908), p. 80.

Before making use of these figures it must be remembered that they indicate the movement of wholesale prices; and attention would need also to be paid to the selection of commodities and the method of “weighting.”

To the Report on Wholesale and Retail Prices (1903) and to the “First Fiscal Blue-book” (British and Foreign Trade and Industry, Memoranda, &c., 1903) is prefixed as Frontispiece a chart combining the Index Numbers of Jevons for 1801–1846, of Sauerbeck for 1846–1871, and of the Board of Trade itself for 1871–1902; and so giving in one view the course of prices, so far as those materials indicate it, for the whole period 1801–1902.

As to Retail Prices, calculations will be found in the First “Fiscal Blue-book,” p. 215, and in the Second (British and Foreign Trade and Industry, Second Series, 1904), as to changes in the Average Retail Price of Workmen's Food in large towns in Great Britain during recent decades, as well as of the other principal items of the workman's budget, viz. rent, clothing, fuel, and light, during a quarter of a century. A considerable fall in food prices and a slight fall in the price of clothing since 1880 were in part counterbalanced by a rise in rents and, in the latter years, in fuel; with the result indicated below (Second Series, p. 32):

Statement showing Estimated Changes in Cost of Living of the Working Classes, based on Cost of Food, Rent, Clothing, Fuel, and Light, in a series of averages for quinquennial periods. (Cost in the year 1900=100.)

Y.—

Commercial Cycles (p. 709)

In England there has been no “commercial crisis” since 1866, though crises have continued to make their appearance in the United States, as e.g. in 1893 and 1907. But the alternations of commercial prosperity and depression continue; and the cyclical movement, as Jevons first showed, seems to occupy about ten years. The study of the subject must begin with Jevons' papers (1875–1882) on the Periodicity of Commercial Crises, printed in his Investigations in Currency and Finance (1884). A guide to the history and literature of the subject will be found in Herkner's article Krisen in Conrad's Handwörterbuch der Staatswissenschaften. The relation between Foreign Trade, Bank Rate, Employment, Marriage Rate, Pauperism, &c., for the period 1856–1907 can be conveniently observed in Table IX, and Chart II, “The Pulse of the Nation,” in Beveridge, Unemployment. On American conditions and their connexion with currency questions, see the papers of Seligman and others in The Currency Problem and the Present Financial Situation (N. Y. 1908).

Z.—

Rents in the Nineteenth Century (p. 724)

According to an estimate of Mr. R. J. Thompson printed in the Journal of the Royal Statistical Society (Dec. 1907) the rent of agricultural land in England and Wales advanced by probably 40 per cent. in the first twenty years of the nineteenth century. After 1820 a period of depression ensued, followed in 1840 by the beginning of an upward movement which continued with little intermission till 1878, when a serious depression again set in. The average rent of agricultural land in 1900 was 34 per cent. below the maximum of 1877, and 13 per cent. below the figure of 1846. The average rent of farm land in 1900 was estimated at about 20s. per acre; subject to charges for repairs, &c., amounting on the average to 35 per cent.; so that the net rent probably averaged 13s. per acre. Estimating expenditure on buildings, fences, drainage, &c., at 12l. per acre, 3½ per cent. on this would amount to 8s. 5d., leaving 4s. 7d. per acre as “economic rent,” in the Ricardian sense of payment for the use of the “original and indestructible powers of the soil.”

AA.—

Wages in the Nineteenth Century (p. 724)

There was undoubtedly a very large increase both in nominal or money wages and in real wages (i.e. their purchasing power) in the United Kingdom during the course of the century. The subject may be studied in Giffen's paper on The Progress of the Working Classes in the last half-century, reprinted in Essays in Finance (2nd series, 1886; and the first and more important of them more recently in Economic Inquiries and Studies, vol. i.); Webb, Labour in the Longest Reign (Fabian Tract, 1897); Bowley, Wages in the United Kingdom (1900), National Progress (1904), and his articles in the Journal of the R. Statistical Society, and Wood's article on Real Wages and the Standard of Comfort since 1850, in Jour. R. Stat. Soc. (March 1909).

The conclusions arrived at by the last two statisticians for the period since 1850 are thus summarised in the article last quoted, 1900–1904 being taken by Bowley, and 1900–1902 by Wood, as basis, and called 100:

Compare also the table in Appendix X above.

The progress in real wages began before 1850; thus, e.g. Bowley's Index Numbers for 1830 and 1840 are 45 and 50 respectively (see National Progress, p. 33); and, for earlier periods, his conclusions are that while during 1790–1810 real wages were falling slowly, during 1810–1830 they were rising slowly (see Appendix (1908) to Palgrave's Dictionary of Political Economy). The general result would seem to be a large rise on the whole between 1810 and 1900, though between 1840 and 1860 and again between 1873 and 1879 wages were almost stationary.

During the century a progress in real wages of substantially the same character took place in other countries. For a comparison by Bowley of the United Kingdom, the United States and France for the period 1844–1891, see Econ. Jour. viii. 488; and for France, 1806–1900, see Gide, Économie Sociale, p. 64.

BB.—

The Importation of Food (p. 738)

The following figures are given in the Report of the Agricultural Committee (1906) of the Tariff Commission:

For other estimates, and for sources of import, see “First Fiscal Blue-book” (British and Foreign Trade and Industry, 1903), p. 108.

CC.—

The Tendency of Profits to a Minimum (p. 739)

Compare Cliffe Leslie's article on The History and Future of Interest and Profit in the Fortnightly Review (Nov. 1881: reprinted in Essays, 2nd ed.); and Leroy-Beaulieu, Repartition des Richesses (3rd ed. 1888), ch. 8; and for the history of the rate of interest, see Schmoller, Grundriss, § 191 (Principes, vol. iii).

DD.—

The Subsequent History of Co-Operation (p. 794)

Since Mill wrote, Industrial Co-operation in England has taken the direction mainly of the multiplication of retail stores, deriving their supplies in great measure from a great Wholesale Society: this “Wholesale” producing some of its goods in its own factories and purchasing the rest in the open market. It has not taken the form anticipated by him of self-governing productive associations, providing their own capital. The history of the various movements grouped under the name of Co-operation may be examined in Schloss, Methods of Industrial Remuneration (3rd ed. 1898), chs. 22–24; Potter, The Co-operative Movement (1891); Webb, Industrial Co-operation (1904); Aves, Co-operative Industry (1907); and Fay Co-operation at Home and Abroad (1908). For recent developments in “independent” productive co-operation, see Ashley, Surveys, Historic and Economic (1900), p. 399.

EE.—

The Subsequent History of Income Tax (pp. 806, 817)

For developments later than the time of Mill, reference should be had to Bastable, Public Finance (3rd ed. 1903), bk. iii. ch. 3 and bk. iv. ch. 4; Hill, The English Income Tax (Publications of the American Economic Association, 1889); Seligman, Progressive Taxation (Am. Econ. Assoc. Quarterly, 2nd ed. 1908); and two recent Reports, one of a Departmental Committee on the present working of the income tax (1905), and one of a Select Committee on Graduation (1906). In the Finance Bill now (1909) before Parliament it is proposed to introduce a super-tax on incomes above a certain point, and give an abatement on incomes below a certain point in respect of every child (up to a specified number) below a certain age.

FF.—

The Taxation of Land (p. 819)

In the Finance Bill now (1909) before Parliament it is proposed to impose a tax (1) of 20. per cent. on the future Unearned Increment in value of non-agricultural land; (2) of ½d. in the pound of the capital value of “undeveloped” land. The proposed exemption of agricultural land, when compared with Mill's assumption that there was likely to be a constant increase in the value of agricultural land owing to a rise in the price of food due to the growth of population, indicates the effect upon the public mind of the agricultural depression of the last two decades of the nineteenth century. On the general question of the assessment and special taxation of land values, see Report of the Royal Commission on Local Taxation (1901); Fox, The Rating of Land Values (1906); and the Blue-book on Taxation of Land in Foreign Countries (1909).

GG.—

The Incidence of Taxation (p. 863)

On the whole subject of The Shifting and Incidence of Taxation recourse can now be had to the treatise of Seligman bearing that title (2nd ed. 1899). For the incidence of Death Duties, Rates on Houses and Land, Inhabited House Duty, Taxes on Trade Profits and Taxes on Transfer of Property, see in particular the elaborate replies by “financial and economic experts” in the Blue-book, Memoranda relating to the Classification and Incidence of Imperial and Local Taxes (1899); and on the incidence of Import and Export Duties, see Edgeworth in Economic Journal, iv. pp. 43 seq.

HH.—

Company and Partnership Law (p. 904)

Partnership en commandite, as it is called abroad, is now allowed in the United Kingdom by the Limited Partnerships Act of 1907. This Act makes it possible to create a “limited partnership, wherein one or more persons, called general partners... shall be liable for all debts and obligations of the firm,” and “one or more persons, to be called limited partners, who shall at the time of entering into such partnership contribute thereto a sum as capital... shall not be liable for the obligations of the firm beyond the amount so contributed.” A limited partner must not take part in the management of the business.

The most important development since Mill wrote, however, has been the growth in commercial practice of what came to be known in business language as “private companies,” though organised under the general company law. This form has been increasingly adopted by businesses which wished to combine the advantages of Limited Liability with the advantage of unity and privacy of management belonging to the sole trader or old-fashioned firm. The legality of such arrangements, which were certainly not contemplated by the legislature when it introduced Limited Liability, was finally settled by the decision of the House of Lords in 1896 in the case of Broderip v. Salamon. See hereon Palmer, Private Companies and Syndicates. The conception of a “private company” was finally recognised and defined by the Companies Act of 1907. According to this Act a private company “means a company which by its articles (a) restricts the right to transfer its shares; and (b) limits the number of its members (exclusive of persons who are in the employment of the company) to fifty; and (c) prohibits any invitation to the public to subscribe for shares or debentures.” For the formation of such a company, instead of the seven members formerly required by the Companies Acts, two members will now suffice.

II.—

Protection (p. 926)

Mill's general line of argument has been further pursued and applied to contemporary conditions by Cairnes, Leading Principles; Fawcett, Free Trade and Protection (6th ed. 1885); and Farrar, Free Trade and Fair Trade (4th ed. 1887). Criticisms and considerations of other kinds will be found in Sidgwick, Principles of Political Economy, ch. v.; Patten, Economic Basis of Protection (Philadelphia, 1890); Johnson, Protection and Capital, in Political Science Quarterly, xxiii. (N. Y. 1908); Lexis, Handel, in Schönberg's Handbuch der Politischen Oekonomie (4th ed. 1898), vol. ii.; and Schmoller, Grundriss, §§ 253–271 (in Fr. trans.: Principes d'Économie Politique, vol. v.).

Mill's concession in favour of “infant industries” (bk. v. ch. 10, § 1) was much quoted subsequently in America, Australia and Canada. Writing to a correspondent in 1869 (see Letters, ed. Elliot), he expressed an intention to “withdraw” the opinion, and remarked: “Even on this point I continue to think my opinion was well grounded, but experience has shown that protectionism, once introduced, is in danger of perpetuating itself... and I therefore now prefer some other mode of public aid to new industries, though in itself less appropriate”; but in preparing the edition of 1871 he contented himself with the verbal changes indicated on p. 922 n. 1.

Mill makes no reference in his Principles to the writings of Friedrich List, the intellectual founder of the Zollverein, whose ideas have greatly influenced the subsequent commercial policy as well as the economic thought of Germany. Thereon see List's National System of Political Economy (1840, Eng. trans. by Lloyd: new ed. with Introduction by Nicholson, 1904), and Schmoller's article on List in Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (1884).

A new stage in the discussion was opened by the grant of Preference to imports from England by the Dominion of Canada in 1897—an example since followed by the other great self-governing Dominions of the British Empire; and by the movement in favour of a policy of reciprocal Preference by the Mother Country, initiated by Mr. Joseph Chamberlain, then Colonial Secretary, in 1903. The most important collections of political speeches on this subject are, on one side, those of Chamberlain, Imperial Union and Tariff Reform (1903); Bonar Law, The Fiscal Question (1908); and Milner, Imperialism and Social Reform (1908); and, on the other Asquith, Trade and the Empire (1903); Haldane, Army Reform and Other Addresses (1907); and Russell Rea, Insular Free Trade (1908). See also Balfour, Economic Notes on Insular Free Trade (1903).

Among the writings called forth by the controversy may be mentioned, of those in favour of some modification of the present tariff policy: Caillard, Imperial Fiscal Reform (1903); Ashley, The Tariff Problem (2nd ed. 1904); Cunningham, The Rise and Decline of the Free Trade Movement (1904) and The Words of the Wise (1906); Graham, Free Trade and the Empire (1904); Palgrave, An Enquiry into the Economic Condition of the Country (1904); Price, Economic Theory and Fiscal Policy, in the Economic Journal, xiv. (Sept. 1904); Compatriots' Club Lectures (1905); Kirkup, Progress and the Fiscal Problem (1905); Welsford, The Strength of Nations (1907); Lethbridge, India and Imperial Preference (1907); and Milner's article on Colonial Policy and Vince's on The Tariff Reform Movement in Palgrave, Dictionary of Political Economy, Appendix (1908).

Among the writings in favour of the present policy may be mentioned: Money, Elements of the Fiscal Problem (1903); Avebury, Essays and Addresses (1903); British Industries under Free Trade, ed. Cox (1903); Labour and Protection, ed. Massingham (1903); Smart, The Return to Protection (1904); Hobson, International Trade (1904); Bowley, National Progress (1904); various papers by Giffen in Economic Enquiries (1904); Brassey, Sixty Years of Progress (new ed. 1906); Pigou, Protective and Preferential Import Duties (1906); The Colonial Conference (Cobden Club, 1907); and Marshall, Memorandum on the Fiscal Policy of International Trade (White Paper, 1908).

Materials, statistical and political, for a judgment will be found in the two “Fiscal Blue-books”—British and Foreign Trade and Industry, Memoranda, &c., 1st series, 1903; 2nd series, 1904; in the Proceedings of the Colonial Conferences of 1887, 1894, 1897, 1902, 1907; and in the Reports and Memoranda of the Tariff Commission, since 1904. Among foreign works bearing upon the problem may be particularly mentioned: Fuchs, The Trade Policy of Great Britain (1893: Eng. trans. 1905); Wagner, Agrar- und Industriestaat (2nd ed. 1902); Schwab, Chamberlain's Handelspolitik, with Preface by Wagner (1905); and Schulze-Gaevernitz, Britischer Imperialismus (1906). On the history of the English Corn Laws, Nicholson's book with that title (1904) should be consulted. Free Trade and the Manchester School, ed. Hirst (1903), is a convenient collection of speeches, &c. of the thirties and forties.

JJ.—

Usury Laws (p. 930.)

The pretty general repeal all over Europe of the old usury laws has been followed since 1878 by a reaction, and a great number of “usury laws” have been passed in Germany, Austria, Hungary, Switzerland, and other countries; as well as for the possessions of the Great Powers outside Europe, as e.g. for the Punjaub, the Soudan, Algiers, &c. For an account and estimate of this movement, see Schmoller, Grundriss, § 189 (Principes, vol. iii.). As to the English “Money-lenders Act” of 1900, see the observations from a point of view identical with that of Mill in Dicey, Law and Public Opinion in England (1905), pp. 33 and 45.

KK.—

The Factory Acts (p. 759)

See, on the whole subject, Hutchins and Harrison, A History of Factory Legislation (1907). The legislature, after restricting the freedom of contract of adult men in various other ways, began very tentatively in 1893 to regulate their hours of labour by the Act of that year giving power to the Board of Trade to order railway companies to submit revised schedules of hours of duty for their servants: hereon see Bulletin of the U.S. Department of Labour, No. 20 (1899). Since then, by the Miners' Eight Hours Act (1908), it has introduced a “normal day” for a large number of adult men.

LL.—

The Poor Law (p. 969)

The Report of the Royal Commission on the Poor Law (1909) contains copious and systematically arranged treatises, in the Majority and Minority Reports, and in the supplementary volumes of Reports of special inquiries, on all aspects of the history and practice of the Poor Law since 1834; and will doubtless lead to considerable legislative changes.

MM.—

The Province or Government (p. 979)

On this subject, in its general philosophical aspects, the most influential English writings since the time of Mill have perhaps been those of Sidgwick, Principles of Political Economy (1883), bk. iii. chs. 3 and 4; and Elements of Politics (1891); and Green, Lectures on the Principles of Political Obligation in Works (1886), vol. ii. See also Ritchie, Natural Rights (1895), and, with regard to certain arguments drawn from modern biology, his Darwinism and Politics (1889).

[∗]Supra, book v. ch. 1.

[∗]The only cases in which government agency involves nothing of a compulsory nature, are the rare cases in which, without any artificial monopoly, it pays its own expenses. A bridge built with public money, on which tolls are collected sufficient to pay not only all current expenses, but the interest of the original outlay, is one case in point. The government railways in Belgium and Germany are another example. The Post Office, if its monopoly were abolished and it still paid its expenses, would be another.

[1][So since 5th ed. (1862). Originally: “and.”]

[∗]De la Liberté du Travail, vol. i. pp. 353–4.

[∗]I quote at second hand, from Mr. Carey's Essay on the Rate of Wages, pp. 195–6.

[∗]In opposition to these opinions, a writer, with whom on many points I agree, but whose hostility to government intervention seems to me too indiscriminate and unqualified, M. Dunoyer, observes, that instruction, however good in itself, can only be useful to the public in so far as they are willing to receive it, and that the best proof that the instruction is suitable to their wants is its success as a pecuniary enterprise. This argument seems no more conclusive respecting instruction for the mind, than it would be respecting medicine for the body. No medicine will do the patient any good if he cannot be induced to take it; but we are not bound to admit as a corollary from this, that the patient will select the right medicine without assistance. Is it not probable that a recommendation, from any quarter which he respects, may induce him to accept a better medicine than he would spontaneously have chosen ? This is, in respect to education, the very point in debate. Without doubt, instruction which is so far in advance of the people that they cannot be induced to avail themselves of it, is to them of no more worth than if it did not exist. But between what they spontaneously choose, and what they will refuse to accept when offered, there is a breadth of interval proportioned to their deference for the recommender. Besides, a thing of which the public are bad judges may require to be shown to them and pressed on their attention for a long time, and to prove its advantages by long experience, before they learn to appreciate it, yet they may learn at last; which they might never have done, if the thing had not been thus obtruded upon them in act, but only recommended in theory. Now, a pecuniary speculation cannot wait years, or perhaps generations for success; it must succeed rapidly, or not at all. Another consideration which M. Dunoyer seems to have overlooked, is, that institutions and modes of tuition which never could be made sufficiently popular to repay, with a profit, the expenses incurred on them, may be invaluable to the many by giving the highest quality of education to the few, and keeping up the perpetual succession of superior minds, by whom knowledge is advanced, and the community urged forward in civilization.

[1][The paragraph originally went on: “but which it might be proper to demand, merely in recognition of a principle: the remainder of the cost to be defrayed, as in Scotland, by a local rate, that the inhabitants of the locality might have a greater interest in watching over the management, and checking negligence and abuse.” These words were omitted in the 4th ed. (1857).]

[∗][1852] The practice of the English law with respect to insane persons, especially on the all-important point of the ascertainment of insanity, most urgently demands reform. At present no persons, whose property is worth coveting, and whose nearest relations are unscrupulous, or on bad terms with them, are secure against a commission of lunacy. At the instance of the persons who would profit by their being declared insane, a jury may be impanelled and an investigation held at the expense of the property, in which all their personal peculiarities, with all the additions made by the lying gossip of low servants, are poured into the credulous ears of twelve petty shopkeepers, ignorant of all ways of life except those of their own class, and regarding every trait of individuality in character or taste as eccentricity, and all eccentricity as either insanity or wickedness. If this sapient tribunal gives the desired verdict, the property is handed over to perhaps the last persons whom the rightful owner would have desired or suffered to possess it. Some recent instances of this kind of investigation have been a scandal to the administration of justice. Whatever other changes in this branch of law may be made, two at least are imperative: first, that, as in other legal proceedings, the expenses should not be borne by the person on trial, but by the promoters of the inquiry, subject to recovery of costs in case of success: and secondly, that the property of a person declared insane should in no case be made over to heirs while the proprietor is alive, but should be managed by a public officer until his death or recovery.

[1][“Acts” since 7th ed. (1871). Originally (1848): “the recent Factory Act.”]

[2][See Appendix KK. The Factory Acts.]

[1][This last sentence added in 3rd ed. (1852).]

[∗]A parallel case may be found in the distaste for politics, and absence of public spirit, by which women, as a class, are characterized in the present state of society, and which is often felt and complained of by political reformers, without, in general, making them willing to recognise, or desirous to remove, its cause. It obviously arises from their being taught, both by institutions and by the whole of their education, to regard themselves as entirely apart from politics. Wherever they have been politicians, they have shown as great interest in the subject, and as great aptitude for it, according to the spirit of their time, as the men with whom they were contemporaries; in that period of history (for example) in which Isabella of Castile and Elizabeth of England were, not rare exceptions, but merely brilliant examples of a spirit and capacity very largely diffused among women of high station and cultivation in Europe.

[1][The original “twelve to ten” (1848) was changed to the present text, and the consequent alterations made in the rest of the paragraph, in the 5th ed. (1862).]

[1][“Which has never... recommend” was added in the 5th ed. (1862). A Nine Hours Movement made its appearance in the 70's. The hours of labour for women, young persons and children in textile factories were reduced to 56½ per week by the Act of 1874, and to 55½ by the Act of 1901. A Miners' Eight Hours Act was passed in 1908.]

[1][The remark in the original, “and to get rid of this is important, even as a matter of justice,” was omitted from the 3rd ed. (1852).]

[2][See Appendix LL. The Poor Law.]

[1][The exception was added in the 5th ed. (1862). In the next line “cannot have” had been changed into “rarely has” in the 3rd (1852).]

[1][“The price of land being generally fixed too low and” omitted from 3rd ed. (1852).]

[∗][1857] The objections which have been made, with so much virulence, in some of these colonies, to the Wakefield system, apply, in so far as they have any validity, not to the principle, but to some provisions which are no part of the system, and have been most unnecessarily and improperly engrafted on it; such as the offering only a limited quantity of land for sale, and that by auction, and in lots of not less than 640 acres, instead of selling all land which is asked for, and allowing to the buyer unlimited freedom of choice, both as to quantity and situation, at a fixed price.

[2][From the 3rd ed. was omitted the following passage of the original (1848): “The oldest of the Wakefield colonies, South Australia, is scarcely” (in 2nd ed. (1849), “little more than”) “twelve years old; Port Philip” (Victoria) “is still more recent; and they are probably at this moment the two places, in the known world, where labour on the one hand, and capital on the other, are the most highly remunerated.”]

[1][The reference to Irish emigration was added in the 3rd ed. (1852), and concluded with this sentence: “While the stream of this emigration continues flowing, as broad and deep as at present, the principal office required from government would be to direct a portion of it to quarters (such as Australia) where, both for local and national interests, it is most of all required, but which it does not sufficiently reach in its spontaneous course.” This was replaced in the 4th ed. (1857) by the reference to emigration to the gold fields. The slackening of the stream was noticed in the 5th ed. (1862), and the partial revival of Irish emigration in the 6th ed. (1865).]

[1][See Appendix MM. Limits of the Sphere of Government.]