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70.: THE TRUCK SYSTEM [2] EXAMINER, 26 DEC., 1830, PP. 820-1 - John Stuart Mill, The Collected Works of John Stuart Mill, Volume XXII - Newspaper Writings December 1822 - July 1831 Part I [1822]

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The Collected Works of John Stuart Mill, Volume XXII - Newspaper Writings December 1822 - July 1831 Part I, ed. Ann P. Robson and John M. Robson, Introduction by Ann P. Robson and John M. Robson (Toronto: University of Toronto Press, London: Routledge and Kegan Paul, 1986).

Part of: Collected Works of John Stuart Mill, in 33 vols.

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70.

THE TRUCK SYSTEM [2]

EXAMINER, 26 DEC., 1830, PP. 820-1

In response to a correspondent, “W.M.J.,” whose letter is incorporated in the article, Mill here continues the argument of No. 67. The article, headed as title, is in the “Political Examiner,” and is described in Mill’s bibliography as “An article headed ‘Truck System’ in the Examiner of 26th December 1830” (MacMinn, p. 14). The part of the article following the quotation in full of W.M.J.’s letter is enclosed within square brackets (here deleted), which perhaps imply a different authorship; however, there is no other evidence to support such a conclusion.

we have received a clever letter, signed W.M.J., which, among other observations on our article of last Sunday, relating to the truck system, contends that we were mistaken in considering the payment of wages in goods as a means of economizing the circulating medium. “There is a manufacturer in Sheffield, for instance,” says our correspondent, “who pays his wages with drapery goods; but in doing this, how can he be said to dispense with the use of money? If he does not want it to pay wages with, he wants it to pay for the drapery goods with; and there cannot be any difference in the amount, except that which goes to himself for profit.”

This is plausible, but unsound. The wholesale transactions of one dealer with another employ very little money. They take place upon credit, either by means of bills of exchange, or mere entries in the books of the several dealers. When these mutual credits come to be liquidated, money is used to pay balances, and nothing more. The great demand for money is for the retail transactions; and there can be no doubt that when the employer of labour can contrive to feed and clothe his men by one great purchase, instead of leaving the men to do it by a hundred little purchases, the circulating medium is greatly economized.

Besides, even if it were true that the Sheffield manufacturer wanted money to pay for the drapery goods, as supposed in our correspondent’s hypothesis, he is allowed by law to make this payment in paper. Now, paper performs all the functions of currency, without costing any thing, or absorbing any portion of capital which might else be productively employed. But the manufacturer cannot by law pay his labourers in paper, because bankers may not issue paper of a sufficiently low denomination.1 Even, therefore, if the truck system did not economize the currency, it would still serve to economize the only costly part of the currency. It is, as our correspondent partly seems to perceive, a substitute for paper money,—the wisdom of the legislature having thought fit to interdict the more convenient medium.

Our correspondent challenges us to declare our opinions on the subject of currency. We should have done so ere this if we had deemed the occasion favourable, and if we were not, from experience, fully aware that the public attention cannot be advantageously directed to more than two or three great subjects at a time. Now, when we are no longer cursed with a currency, which, being inconvertible into cash, subjected the amount of the circulating medium to the uncontrolled discretion of a close corporation, we deem the question between a paper and a gold circulation to be of immeasurably less importance than is attached to it by most writers on either side of the controversy, and probably by our correspondent.

To the Editor of the Examiner

Sir,—

As a real admirer, I speak sincerely, not in the ordinary cant of newspaper correspondents, of the principles of your journal, I have seen, with pain, your diatribe against the House of Commons for the manner in which it entertained Mr. Littleton’s measure against the truck-system;2 a measure which, as a real friend to the manufacturing labourers, I am actively and zealously engaged in promoting. On their behalf, I request of your impartiality a little space in your columns for this humble effort to counteract what I believe to be the very mischievous tendency of your observations. Allow me to observe, that the conduct of yourself, and other political economists in this matter, is a parody on the foolish maxim—“Fiat Justitia Ruat Coelum;”3 that you in effect say, abandon not one iota of our stern principles, whatever may be the consequences. In this rigid unbending adherence to a favourite theory, you forget that you are sacrificing the end to the supposed means, and lose sight of the very basis of all your science,—the greatest happiness of the greatest number. What has the House of Commons done? What does it propose to do? Many thousands of labourers complain of the frauds and oppressions they suffer from the truck system, not sufferings arising from the low rate of wages, but frauds and oppressions, which the workmen of truck-masters groan under, peculiar to themselves, and which are not shared by the workmen of money-paying masters in the same manufactures in the same districts. To prevent this fraud, we require, that is, we ask for no more than that all contracts between master and workman shall be made, and shall be paid in a medium which does not admit of fraud, and in which the magistrate can understand the rights of, and administer justice between, the parties; instead of in any system of barter, in which it is impossible for the magistrate to know the value that passes between the parties, and consequently impossible for him to do justice to him that is defrauded and oppressed. This is no great restriction on the liberty of contracts. For the truck-master may still keep his store instead of his Tommy-shop, still add the profits of the retailer to those of the manufacturer,—the law merely interfering to provide that the wages of the workman shall be paid in that value which alone the [sic] can ascertain, leaves him to have any dealings he pleases afterwards to have with his master. The continuance of the system has produced a violent discontent, hourly increasing: the money-paying masters, unable to compete with the truck-masters, must either follow the same system, adding immensely to this discontent, or, what many of them would do, stop their works, and turn their men adrift, denouncing the truck system as the cause. The consequence would be, the instant rising of the men, in riots first directed against truck-masters and their property—and where afterwards, who could calculate? What force could check, what concessions or reasons would soothe or control a mob of a hundred thousand persons, flushed with riot and success, and justly complaining of the apathy of the government and Parliament to their sufferings and complaints? The consequences to the kingdom, who could foresee? What character the mob would assume, or what designs it might be led to entertain? And yet there are political economists who would incur this, rather than yield one iota of their theories, and blame the government for not partaking the same strange temerity.

Is there any thing new or wrong in the principle of legislation which would interfere with contracts, when the consequences of those contracts may be so prejudicial to others, to the community?

The table of the House of Commons groans with proofs, the experience of centuries shows that the Truck System invariably leads to the grossest frauds; and there is nothing either new or strange in the principle of law that prohibits contracts between parties, even when the parties are perfectly free agents, where those contracts are injurious to public morality.

But the workman is not a free agent. A workman once entered into the employment of a master is not free; his poverty, the lowness of his wages, the law of settlement, render it impossible for him to leave his service, to remain one, two, or three weeks idle, to travel to other parishes in search of an employer;4 and he is obliged, therefore, to submit to the exactions and frauds of an oppressive and fraudulent master. The workman is not upon equal terms—And why is he not? Because of the law of settlement, and because of those corn laws, and tithe laws5 which create a factitious, not a natural superabundance of population, and cause the workman’s poverty as effectually as if they were enacted for the express and avowed purpose. We do not wish to controul the laws of nature by acts of parliament; but we do wish, by act of parliament, to relieve the workman from some of the evils of the undue advantages which other acts of parliament have given his employer; and which we are not able to repeal.

You say that the effect of the law would be to lower wages. How is the truck-master’s paying in money, instead of in goods, to make the money-paying masters who are still the majority (thank Heaven!) reduce their wages to their men? How is the necessity of purchasing more gold for the extra circulation to diminish the sale of iron, or the quantity of employment which the masters would have to give? If the present masters’ capital is unsufficient, of course other capital would flow into the trade to make the supply equal to the demand. If more gold be required for circulation in consequence, (which is very doubtful considering the amount of capital that lies idle) it would, I admit, cost the country at large something to get that gold. But is that a price we should hesitate to pay, to get rid of a system which defrauds, oppresses, and degrades the workman, and which has brought the midland counties to the verge of a fearful convulsion? Assuredly not.—At all events, to permit paper, and not to permit truck, would be the proper way to get rid of that burden.

W.M.J.

In the last sentence our correspondent has, in our opinion, approached to the true practical conclusion. “To permit paper,” with proper securities for the solvency of the issuers, would effectually abolish the truck system: “not to permit truck,” would then be superfluous legislation. Paper-money is the most commodious, and might be made the safest of all modes of economizing a costly medium of exchange. It is found so in Scotland, where the securities against its abuse approach to the utmost limit of completeness and perfection yet reached by any human institution. From the day when the Legislature, instead of fortifying the small-note circulation by the proper securities, thought proper to abolish it, Parliament has been engaged, as was foreseen and foretold at the time, in an incessant and constantly recurring warfare against all manner of worse modes of effecting that which a properly regulated paper-money accomplishes in a good mode. The truck system is one of those worse modes; and it is worse, simply because, as our correspondent observes, it increases the difficulty of enforcing contracts, and holding parties to the terms of their bargain.

That it is attended with this inconvenience, we have no doubt; but that it can therefore be a cause of impoverishment to the labouring classes in general, we cannot admit. We request the attention of our correspondent to a simple argument. If the truck-master, after paying nominally two shillings a-day to his men, cheats them of sixpence a-day by overcharges in the prices of goods sold at his store, it is evidently the same thing as if he gave to each of them eighteen-pence a-day, and no more. Now, is it not evident, that by giving only eighteen-pence a-day, either directly or indirectly, he is enabled to employ, with a given capital, a greater number of men? And as it is not denied that he now employs men to the full extent of his capital, is it not clear that, if compelled to give two shillings a-day, he must throw a part of his labourers out of employment? The competition of those extra labourers, who would be altogether unemployed if the manufacturer were forced to give really adequate wages, is the true cause which compels the working people to accept wages that are not adequate. To abolish truck would not raise their real wages to the standard of their nominal ones, but would lower their nominal wages to the level of their real ones; and even lower, unless, by the introduction of paper, the necessity were spared of converting productive capital into idle gold and silver.

We have only room further to assure our correspondent, that he wrongs us in supposing that we are tenacious of a general principle without regarding specific consequences. Every general principle that is worth a rush, foresees and provides for all possible consequences; but a man who is not absurdly confident in his own foresight, looks carefully into details, as we always do, not only to avoid error in the application of his principles, but also to guard himself against latent errors in the principles themselves.

[1 ]By the provisions of 7 George IV, c. 6 (1826).

[2 ]For details see No. 67.

[3 ]“Theodore de la Guard” (Nathaniel Ward), The Simple Cobbler of Aqqawam in America (London: Denver and Ibbitson, 1647), p. 13.

[4 ]By Sect. 1 of 13 & 14 Charles II, c. 12 (1662).

[5 ]The tithe laws, which had been customary by canon law since about the eighth century, were made statutory by 27 Henry VIII, c. 20 (1535); see also 32 Henry VIII, c. 7 (1540), and 2 & 3 Edward VI, c. 13 (1548). In recent years such statutes as 7 & 8 George IV, c. 60 (1827) allowed for composition for tithes.