[[p. 177]] The science of Political Economy has now guided, and often governed, the civilised world for near a century, but it may be doubted if the world is much the better for its guidance. We are, indeed, as nations, enormously richer than we were; but this is clearly due for the most part to the growth of physical science. During this century, steam power has developed from infancy to manhood, and has supplied us with millions of slaves, more docile than the best trained animals, more powerful than the giants and genii of Eastern fable. It has been calculated that for every man now engaged in physical labour there are the equivalent of ten steam men at work, and that by means of labour-saving machinery we do fifty, or, perhaps, a hundred times as much effective work per man as could be done a century ago. Now we know that for many centuries before the invention of the steam-engine the men of England supported themselves in rude plenty without any excessive labour, although they had also to provide both necessaries and luxuries for a vast body of idle nobles and fighting men, just as they do to-day. There were, of course, periodical famines, but perhaps no worse or more frequent on the average than those which, [[p. 178]] despite all the resources of civilisation, still occur in Russia, India, or Ireland.

    In England, four hundred or five hundred years ago, the ordinary work-day was eight hours, and the labourer had abundance of such food and clothing and shelter as at that time he felt the need of. According to the standard of living at the time, he lived in comfort and in plenty, with time to spare for rest and recreation. Can that be said of the whole body of our labourers to-day?

    Yet, if we had been truly guided, if we had had a true political economy, when, in course of time, we obtained the inestimable advantage of labour-saving machinery equal in its effect to fifty times our whole working population, the entire body of labourers should have had shorter hours of work, more abundance of the necessaries of life, and a larger share of the comforts and enjoyments required by our higher civilisation and our higher standard of living. There is, however, ample evidence to show, not only that this is not the case, but that, in proportion to the amount of wealth they produce, labourers, as a whole, are far worse off than they were from two to five centuries back; in other words, the contrasts of riches and poverty, the gulf between rich and poor, is greater--far greater--than ever before in the world's history.

    Now, if political economy has not caused, it has certainly done nothing to prevent, this gross inequality in the distribution of wealth. It is for this reason that everywhere, to-day, it is being denounced by [[p. 179]] thinking men as a false science--as a delusion and a snare--as an ignis fatuus, leading men away from the paths of happiness and true well-being, and guiding them towards the quagmires of unhealthy competition, poverty, and discontent.

    The important question we have now to consider is, therefore, whether our legislators and our social reformers are on the right track; whether they have been hitherto conducting us along a road leading to general well-being, or in the very opposite direction; whether our political and social arrangements are calculated to produce, or have, in fact, produced, a reasonable amount of happiness for the mass of the people; whether they are such as to render it possible for all the inhabitants of our country to secure satisfaction of the barest physical wants--good food, decent clothing, warm and healthy dwellings, without which it is a mockery to expect that general intellectual and moral elevation which alone constitutes true civilisation. In view of the notorious fact that thousands, nay, millions of our people, cannot obtain these elementary necessaries of a reasonably comfortable existence, we ask, Do we not require a new science of Social Economy, in the place of the old and altogether insufficient science of Political Economy?

    Let us now, shortly, consider the causes of this lamentable failure. How is it that a science which has been so highly elaborated by so many able men, has yet led to no adequate beneficial result?

    The early writers on the subject found a number [[p. 180]] of erroneous ideas guiding countries and governments in their dealings with each other. Money was looked upon as the chief form of wealth, and there was a great dread of more money going out of a country than came into it. The mutual benefit of trade between countries was not recognised; and it was thought necessary to interfere by restrictive legislation, in order to benefit ourselves and injure other nations as much as possible. The price of food and other necessaries was believed to be determined by the sellers. Hence, to prevent them from charging too much for their wares, the selling price of many articles was fixed by law; and the same was done with the rate of wages, and the rate of interest. The early Political Economists saw that these, and many other interferences with trade, industry, and commerce, were altogether unnecessary and injurious; and they endeavoured to explain in a rigorously logical manner why they were injurious. From doing this they were led on to investigate the nature and origin of all the facts and phenomena of trade and commerce, of supply and demand, of wages, interest, rent of land and profits, of money value and price; why some things have great value but little price--as air and water, while other things are very dear but have little real value--as gold and diamonds; and these inquiries were found to be often so complex and difficult, that there came to be a sort of fascination in them; and, just as mathematicians find great intellectual pleasure in working out problems merely because [[p. 181]] they are difficult, or because they form part of a more extensive investigation of mathematical principles, so eminent men devoted themselves, one after another, to working out, in the greatest detail, all the problems of Political Economy. Hence a science became established, built up step by step, corrected and improved by successive writers, and, because it undoubtedly exposed many errors, it was adopted by capitalists and legislators as an almost infallible guide to the best and surest methods of increasing the "WEALTH OF NATIONS."

    Now, it is not asserted that there are any important errors in Political Economy as a science. On the contrary, it is, no doubt, mainly true, and for our present purpose I will admit it to be wholly true. I will admit, also, that it corrected many errors of kings, governments, and merchants, and led them to a more enlightened policy towards trade and commerce. So far as this went it did good work; but this work was done long ago, and it has for some time past produced nothing but evil, because it has been held to be what it is not--a guide to the Well-being, as well as to the Wealth, of nations; a science that would, if strictly followed, lead to the greatest happiness of the whole community, as well as to the accumulation of enormous riches by the successful few.

    Political Economy may be defined as the science which enables capitalists to secure the maximum production of wealth. It does secure this result, but it also (under existing social conditions) ensures that [[p. 182]] the wealth created by the labour of the many shall be enjoyed by a comparative few. So long as the wealth is created, it takes no heed who has the wealth.

    Further, it altogether ignores the social or moral results of this wealth accumulation, except that it decidedly favours its use to produce more and more wealth. It ignores altogether any rights of those who create all the wealth to the greatest share, or even to any share, in the well-being and happiness the wealth is capable of producing.

    Again, it never discusses any questions of right or wrong in social and political arrangements; it recognises no such thing as JUSTICE, either in the acquisition, the production, or the distribution of wealth; it never questions any social or political arrangements, except those which are of a fiscal nature, but takes them as it finds them, treats them as fundamental facts, and then shows how, under existing conditions, the greatest quantity of wealth may be created.

    Coming to details, it treats capitalists and labourers as necessarily distinct bodies, usually summarised under the neutral terms, "capital" and "labour;" and it shows how "labour" can be employed by "capital" to produce the maximum of wealth; but it does not trouble itself about who gets the wealth, or whether either capitalists or labourers are really benefited by the increased wealth they produce.

    On exactly the same principles the Political Economy of the slave-holding states of North America discussed [[p. 183]] the best methods of treating the slave population, in order to produce the greatest amount of wealth for their owners. The various questions of education, religion, marriage, food, hours of labour, and punishments, were discussed from this one point of view, just as, in the first half of this century, and to some extent even to-day, the factory system, in its relation to the "hands" and their children, was discussed from a similar point of view. It has been boldly maintained before the recent Labour Commission, that it is a good thing in itself for children--of course only for the children of the poor--to get up at five in the morning to work in a factory, to which they have often to walk a mile through rain or snow; the afternoon being spent at school.

    Political Economy--speaking always of the science, not of the men who write upon it--is not disturbed by the wider and ever-wider gulf that, with the increase of wealth, separates rich and poor; by the increasing uncertainty of employment arising from the massing together of vast bodies of labourers, wholly dependent on capitalist employers for their daily bread; by the unnatural and unhealthy lives of the poor so massed together in towns and cities; by the ever-increasing waste of labour in the production of useless, trivial, or even hurtful luxuries, which is an inevitable result of the increasing numbers of the idle rich; by a system which causes much of the wealth created by the labour of one generation to be employed in enabling many thousands of the succeeding generation to live in [[p. 184]] complete idleness, often resulting in vice, and even in crime.¹

    Surely a science like this--so narrow in its scope, so powerless for good, so utterly divorced from all considerations of morality, of justice, even of broad and enlightened expediency--should be treated as a blind and impotent guide, which, if any longer followed, will lead us on to social and political ruin.

    It is the reaction against the teachings of this narrow and unpractical science, and its proved uselessness as a guide, that has led so many good and humane men to advocate some form of Socialism as the only remedy for the evils which seem inherent in our present social system. Socialism, as depicted by its most able advocates, is very alluring; but whether or no it will be an ultimate development of human society, there can, I think, be little doubt that it will not, in our own country, constitute the next step in human progress. The mass of men are not yet anywhere sufficiently educated, either socially, intellectually, or morally. For some generations to come, individualism will probably prevail, but ever more and more permeated by mutual helpfulness, and systematised co-operation, till, in every class of society, the well-being of all will be considered as essential to the happiness of each individual.

    Our great English writer and friend of humanity, [[p. 185]] John Stuart Mill, was profoundly impressed with the evils of our present social system, though very doubtful whether any form of Socialism or Communism would not be a remedy worse than the disease. He says--

    "If the choice were to be made between Communism, with all its chances, and the present state of society, with all its suffering and injustices; if the institution of private property necessarily carried with it as a consequence that the produce of labour should be apportioned as we now see it, almost in an inverse ratio to the labour--the largest portions to those who have never worked at all, the next largest to those whose work is almost nominal, and so in a descending scale, the remuneration dwindling as the work grows harder and more disagreeable, until the more fatiguing and exhausting bodily labour cannot count with certainty upon being able to earn even the necessaries of life--if this or Communism were the alternative, all the difficulties, great or small, of Communism would be but as dust in the balance."

     Most of us will, no doubt, agree with this powerful statement, but I believe there is an alternative. Leaving out of consideration, therefore, for the present, any question of Socialism, I shall endeavour to point out by what steps we may attain to a system of SOCIAL ECONOMY which, while securing many of the beneficial results of Socialism, will preserve all the advantages of individual self-dependence and healthy rivalry, and will so educate and develop social feelings, that if any advance in the direction of Socialism is then desired, it will no longer be impracticable. We see, in the case of the South American republics, that the freest political institutions work nothing but evil when men are unfitted for them; and the constant revolutions and [[p. 186]] wars, bloodshed and oppression, in those ill-governed countries, should warn us against attempting forcibly to establish any system of social organisation for which the masses, whether of the rich or the poor, are not yet fitted.

    In seeking for the foundation of a true Social Economy, which shall secure to labour its just reward, and enable every man who will labour to obtain all the necessaries and comforts, and many of the luxuries of life, I find it in the great principle of Justice and of the Equality of Opportunities for all adult members of society. It seems to me self-evident that any fundamental injustice or inequality in the opportunity to gain a livelihood cannot lead to good results, and cannot be the permanent condition of society.

    Guided by these principles, let us endeavour to discover the causes of the present unequal distribution of wealth, and the consequent absence of general well-being and contentment.

    It is a fundamental fact that all wealth is the result of labour intelligently applied to natural products or aided by natural forces, or, as comprising all these--to land. Labour, Land, and Intelligence combined are, therefore, the sources of all wealth.

    Capital is usually claimed as one of the factors of wealth-production, but this is to obscure the issue. Capital is itself wealth--is itself the result of labour and intelligence applied to land--is, therefore, only a secondary, not a primary, source of wealth. Of its uses and dangers we will speak presently.

    [[p. 187]] Now, as wealth can only be produced by means of Land, on which to exert Labour and Intelligence, and as no man can exist without the use or consumption of some portion of wealth, it necessarily follows that, unless he has the opportunity or the privilege to use some portion of land, or to obtain some of the products of land, he is denied the right to exist. Hence, equality of opportunities implies the right or privilege of all men to a share in the use of land; and as, when the land of a country all becomes private property, this right cannot exist, therefore private property in land is condemned as a fundamental injustice--as a denial of equal opportunities, privileges, or rights.

    I will not now pursue this particular question further, but, in the light of the principles asserted, will endeavour to show the causes of existing Social Inequalities.

    One of the more immediate and remediable causes of these inequalities is, that labourers are dependent on capitalists for employment--for the very power of doing any productive work, by which alone they can obtain food and other necessaries. They have usually no means of support but wage-earning; when this fails they are destitute and helpless. They are not, therefore, in the position of freemen, since they are dependent on others for the permission to labour--for the opportunity to earn even a bare subsistence.

    Now, in order to remedy this evil, in order to make the labourer really a free man, he must be placed in a position to work, either alone or in association with [[p. 188]] his family or his fellow-labourers, without the necessity of waiting till some capitalist has need of him.

    To ensure this, he must, in the first place, have a sufficiency of land attached to his dwelling from which he may directly obtain the bare food to support life when his usual work fails, and may also have a permanent home from which he cannot be driven at the will of any other man. He must also have some home industry to employ profitably the spare time, or the hours which would otherwise be wasted, of himself and his family. Lastly, he should have his regular trade or employment, which he should exercise either on his own account or in co-operative association with other workmen, not as the hired wage-thrall of a master capitalist.

    This, of course, implies that men must no longer live crowded together in great cities, where the labourer is altogether removed from contact with productive nature, and is helplessly dependent on the capitalist for permission to labour, and, therefore, for permission to live. The many evils of great cities have been pointed out by the moralist and by the social and sanitary reformer, but they have been looked upon as necessary products of civilisation--as the results of a tendency in human nature--as needful for economy of production and of distribution. Looked at from the standpoint of the capitalist and the speculator, this is true. Great cities give them an unlimited command over labour, and the greatest facilities for gathering into their own pockets the wealth which other men [[p. 189]] create; but to the very same extent they are a curse to the labourer, who necessarily loses what the others gain.

    Even on the question of economy of production due to huge factories and minute division of labour, there is much to be said on the other side. For here, again, the economy is all for the capitalist, the waste and loss for the labourer. The individual capitalist discharges a hundred or even a thousand men when he no longer wants them, or works short time, or lowers wages--all economical for him, but a terrible loss for the thousands or ten-thousands of workmen, who are thereby rendered compulsorily idle! I prefer the economy which gives the labourers constant work, even if the capitalist gets rich less rapidly, or even not at all.

    Again, the many factories concentrated in great cities require an army of men to be engaged in the distribution of their products; and every hand these products pass through takes a profit out of them--all causing a loss to the great body of workers, first, in the diminished wages they receive, owing to the competition of dependent labourers, next, in the higher price they have to pay the retail trader for the goods they themselves have made.

    But if population were more uniformly distributed over the surface of the country, with multitudes of small industries and small factories belonging to associated workmen, then a large portion of this army of middle-men distributors and speculators would not be required, the producer and the consumer would usually [[p. 190]] deal together at first hand, and this great saving might entirely balance the saving by production on a larger scale.

    The common argument against any suggestions of this kind is that it is a step backwards, that it is impossible to return to hand-labour and small industries; and we have the usual comparisons of the old hand-loom and the modern power-loom, of the old spinning-wheel and the modern spinning-mule. But this is simply throwing dust in our eyes, and is entirely beside the question. All the resources of invention and improvement for more than a century, all the marvellous discoveries of science, have hitherto been utilised in the interest of the capitalist alone, not in that of the workman. They have all been applied to machinery adapted for use in huge factories, because it was the capitalist who required them, and it was his interest to get his profits on the largest possible scale. But directly there is a demand by small manufacturers and by single workmen, science and invention and mechanical art will work for them, and will provide machinery adapted for small associated workers and for cottage industries, just as it has provided the beautiful sewing-machines and knitting-frames and type-writers for use in the smallest dwelling.

    In like manner, so soon as there is a demand for it, there will be no difficulty in supplying mechanical power to work these machines as easily as water or gas are supplied now, either by compressed air, or water, or by electricity, so that every workman may be [[p. 191]] able to start his machine at a moment's notice, and pay only for the power he actually uses. Under this system he might carry on at once an out-door and an in-door trade, employing profitably much of the time now wasted by bad weather, by long winter nights, by weary tramping to and from the factory; and at the same time obtaining health and vigour by the change of labour, by the freedom of his life, and, above all, by the invigorating fact that he was his own capitalist and his own master, and that the whole value of what his labour produced went into his own pocket.

    Here, again, are many distinct sources of economy. We have human labour saved, wasted time utilised, health improved, and happiness increased--a true MORAL and SOCIAL ECONOMY which, when once it is fairly tried, will be found far to outbalance the mechanical economy derived from making thousands of men and women the mere slaves and adjuncts of machinery, under conditions involving monotony, disease, and discontent. Just as surely as free wage-labour has always been found to be superior to slave-labour, so surely will it be found that the independent self-employing worker will far surpass in efficiency him who works only for fixed daily wages paid him by a master.

    The next great source of remediable inequality arises from the way money can be and is manipulated, so as to enable ever-increasing numbers of men to live in idleness, supported by the labour of those who work. This result is so often denied that it may be necessary [[p. 192]] to explain and illustrate the fact. It is continually asserted that men who possess money, and spend it, do good to the community by employing labour; while it is often urged that the poor or the workers could not get on without such men. It is, therefore, necessary to go to first principles.

    Let us suppose an island, cut off from the rest of the world, but which produces all the food, clothing, and luxuries necessary for a happy existence. Let us suppose the inhabitants to be all workers, all having the use of such portions of the land as they require, for which they pay a rental to the State, which suffices in lieu of all taxation. They use gold and silver money to facilitate exchange among themselves, just as we do. Now let one of these men discover a hidden treasure of fabulous amount. He keeps it secret, but leaves off work, and henceforth is able to buy everything he wants. Let a hundred men each find a similar treasure, and follow his example. Are the people of the island any richer for this treasure spent among them? Are they not, on the contrary, poorer, since the hundred men who before worked are now idle, and all that they eat and drink and consume has to be provided by the labour of the rest?

    This illustration serves to show that when rich gold and silver mines are discovered in a country and are largely worked, the result is a positive injury to the general population; for all useful and necessary articles become dearer owing to the metals by which their value is estimated becoming more abundant; while the [[p. 193]] number of labourers in some other occupations being proportionately diminished, causes an independent rise in price of some products. The enormous production of gold and silver in Australia and North America during the last forty years has certainly been one of the contributory causes of the widespread poverty and hardship that continues to prevail in England and the United States.

    But let us suppose another case. There are many streams on the island, some large and some small, from which all the inhabitants get water; but many of the smaller streams rise in springs on private farms or gardens, and flow through them to the sea; and, as there was plenty of other water, these small streams were recognised as belonging to the occupier of the land for the time being. Now, there came an earthquake which disturbed the strata, and stopped the flow of one of the larger brooks, and people had to go a long way for water, unless they could use the small streams flowing wholly through private grounds. For the use of these streams the owners demanded a toll, and obtained it. Then other brooks dried up, and the need for water became greater, and all who had streams in their private grounds increased the toll; and then they laid on the water in pipes, and charged highly for it, and gained enormous wealth, which they spent profusely. They hired numerous men and women to be their servants, and others to make costly clothes and ornaments, and jewels, and to attend to their horses and dogs, their carriages and yachts; till at last half [[p. 194]] the population of the island were employed in providing luxuries and pleasures for the few water-owners, and the other half of the population had to work twice as hard as before to obtain the necessaries of life for the whole population, and to pay the heavy water-rates. Now, this is exactly a parallel case to that of the ownership of land, especially in great cities, where the landlords' wealth ever increases as the growing population has ever greater need for this first necessary of existence, but whose increased wealth is due to the tax (called rent) they are enabled to levy on the rest of the community.

    Surely these cases show us that the more idle and luxurious rich there are in a country--the more money is spent in display, and fashion, and reckless extravagance--the worse off the working-people of that country must become. Sophistry may disguise it among the complex workings of modern civilisation, but whenever the case is reduced to its simplest elements--as I have endeavoured to reduce it in the illustrations just given--we see that wealth and poverty are strictly co-relative, and that whenever the first increases greatly in the hands of individuals, the poor must also increase, either in their numbers or in the average intensity of their poverty. These illustrations have also brought out very clearly--what all the best economic writers admit--that money, whether gold, silver, or paper, is not wealth, but only an instrument for facilitating the exchange of wealth; and we will now consider the abuse of money, by which men who produce [[p. 195]] nothing, and do no useful work, are yet enabled to acquire great wealth, and to keep their descendants for several generations living in idleness.

    True wealth or capital consists of useful products of every kind, and is eminently perishable. The primary necessary, food--forming, perhaps, at any moment half the real wealth of a country--lasts only a few days or months; another large portion, clothing, lasts but a few years, and then perishes; dwellings, furniture, and machinery last longer, but require continual repairs or they soon cease to be serviceable; even our most solid forms of wealth--roads, bridges, canals and railroads--also need repairs, and often require to be altered or reconstructed to meet new wants or changing conditions. Now these things, and such as these, comprise all real wealth, and we see that they are all either perishable or require constant supervision and repair or alteration, to keep them in serviceable condition. Hence, a man who had produced or had acquired such wealth as this, could not derive an income from it without continuing to bestow on it some care and labour. He could not safely live in idleness and expect his property to retain its value, still less could he secure from it a perpetual income on which his heirs for many generations could securely live in idleness. But money enables him to do this, and more than this: it enables him often to increase his wealth two-fold, or ten-fold, or even a hundred-fold, without doing any service to his fellows, or anything to increase the useful or real wealth of the community.

    [[p. 196]] Why is this possible? Surely there must be something wrong when the mere instrument of exchange takes the place of real wealth--becomes enduring instead of perishable--produces a certain and perpetual income without labour, whereas the true wealth which it represents could only at best produce an uncertain income by means of continuous attention and some cost of labour.

    This is a vital question for all real workers--those who by their labour produce the wealth of the community--because the present system leads to a continual increase of those who are able to live in idleness on invested capital, producing, apparently, perpetual incomes; and their increase necessarily makes the workers poorer than they otherwise would be. Just consider for a moment. Every year surplus wealth is created, passing usually into the hands of rich men; and if any portion of this surplus wealth can be safely invested to produce a permanent income, then the number of those who can and do live upon such incomes year by year increases. Now, as there is no other source of wealth in a country than the labour and intelligence of the workers applied to land or its products, the larger the share of that wealth which can be obtained by idlers living on invested money, the smaller will be the share left for those who produce the wealth. It is, therefore, of vital importance to the workers to find out the source of this great evil, this power of accumulated wealth--in its real nature perishable--to take away from them an ever larger and [[p. 197]] larger share of the fresh wealth which they daily and yearly create.

    This is a question which is not discussed in works on Political Economy or Finance, since the unlimited increase of the wealth of capitalists is considered to be an unmixed blessing. We must, therefore, study the problem for ourselves, and we shall find its solution in the widespread system of CREDIT, on which modern commerce, and social improvements, and government institutions are alike made to rest, and which is as the very breath of its nostrils to modern capitalism. It is this gigantic system of credit--or more properly of indebtedness--which furnishes the numerous opportunities for investment by means of which realised wealth is able to prey perpetually upon labour. It is this, also, which affords the opportunity for gigantic and reckless speculation, by which a few capitalists and financiers make great fortunes, while many suffer loss, and the whole nation is proportionately impoverished.

    Whether it is Government debts for war purposes; or railroad, canal, or water-company bonds; or State or municipal loans for public improvements, the system of borrowing money on interest is both unnecessary and injurious. If the purpose for which the money is required be an honest, useful, and remunerative purpose, then, as may be easily shown, a loan is unnecessary. If it is required for a dishonest purpose, if it is worked by financiers and speculators for purposes of individual profit and plunder, then a loan is doubly injurious, inasmuch as it offers opportunities [[p. 198]] for dishonesty, while it permanently impoverishes the mass of the people, who are taxed to pay the interest. I have said that in the case of a genuine, useful, and remunerative public work any loan is unnecessary, and I will now explain this by means of an actual example.

    In the island of Guernsey some years ago a market-place was much wanted, and the Government of the island having determined to build it, issued notes, inscribed "Guernsey Market Notes," for £1 each, and numbered from one to four thousand, £4000 being the estimated cost of the market. With these notes the Government paid the contractor, the contractor paid his men, and the men bought all the necessaries they required, as the notes were a legal tender in the island. They were used to pay rent, to pay taxes, and for all other purposes. When the market was finished, it immediately produced a revenue, and this revenue was applied to redeem the notes; and in ten years all were redeemed, and henceforth to the present time the market returns a considerable revenue to the Government of the island, which goes to reduce taxation; and all this was done without borrowing any money or paying any interest.

    Now here is a principle, applied on a small scale by a small self-governing community, which is capable of a very extensive application. All remunerative public works could be executed by some such method; while if it is urged that some works, like sanitary improvements, are not directly remunerative, it may be replied that this is usually because the benefit of such works [[p. 199]] is allowed to be absorbed by individuals instead of accruing to the community. This is because individuals possess the land in our towns and cities, and every sanitary improvement effected at the public expense increases the value of this land. In fact, no public improvement of any kind can be made in a city without increasing the value of the land, so that there is a double motive in urging on costly, and, perhaps, unnecessary, improvements--jobs are effected by financiers and contractors, while the owners of land know that, however much the ratepayers may suffer, they are sure to be benefited. Here is surely another indication that the land of every municipality, or other local community, which grows in value owing to the increase and the expenditure of the whole population, should belong to the community and not to private individuals.

    The subject, however, which we were more particularly considering was the doing away with those funds and investments by which money is made to produce a perpetual income. Now, when, as in Guernsey, there was no permanent debt created and no interest paid, there was no "stock" to speculate in and no income derivable from it. Here, then, we have a double advantage over the usual mode of creating interest-bearing debts, which indicates that we have discovered an important principle, which is applicable to almost every case of public improvement. Let us take the case of railways, for example. These are usually constructed under legislative acts, empowering a company [[p. 200]] to take the necessary land to build the line and to work it for the profit of the shareholders. This plan has led to the greatest possible amount of mischief. Lines have been made where not wanted; speculation to an enormous extent has been encouraged; huge monopolies have been created; shareholders by thousands have been ruined; while the last thing considered has been the general interest. During the last great American railway mania it has been estimated by Mr. Atkinson that railway-construction went on four times as fast as the increase of produce to be carried by the railways, thousands of miles of railway being made long before they would be wanted, involving loss in a great variety of ways, and being, in fact, one of the causes of recurring depression of trade.

    If, on the other hand, no such power had been given to companies, but, when public opinion in any State or country demanded a particular line of railway, it had been constructed by means of Railway Bonds created for the purpose, bearing no interest, and serving as legal currency within the State till they were all redeemed and paid off out of the profits of the line, then no speculation would have been possible. It would have been no one's interest to build unnecessary and unprofitable lines, because so soon as this was done the bonds of the particular line would have little chance of being redeemed; and as they would be a legal tender, they would soon be all paid in as taxes, and the Government--that is, all the taxpayers--would have to bear the loss. This would check further railway- [[p. 201]] making for a time, and thus prevent useless expenditure in the interest of speculators and contractors.

    On the other hand, every railway that returned any profits at all would steadily redeem its bonds, and then the whole of the future profits would go to reduce taxation or to make railway travelling free. It would thus be the interest of every one that no railways should be made that were likely to be worked at a loss, because that would lead to a depreciation of the bonds, and thus be a loss to the whole community. But it would be equally every one's interest that all really useful and necessary lines should be made, because, besides the direct benefit, the bonds would be quickly redeemed and the profits of the line would enable the general taxation to be reduced. Water-works, gas-works, public parks, new streets, and all similar improvements could be executed on a similar principle, the only safeguard required being that no large improvement should be undertaken in any town or district till the preceding one had been completed and had begun to redeem its bonds out of its genuine profits or proceeds.

    It has now, I think, been made clear how all public works and public improvements may be effected by public credit, properly so called, instead of by public debt, involving far less risk of loss, no permanent charge on the community, but leading, on the contrary, to a continuous reduction of taxation, and cutting away the very foundations of the system by which the financier and speculator are now enabled to plunder the working people.

    [[p. 202]] Turning now to another branch of the same subject--the great system of private indebtedness and trade credit, which leads to so much ruin and misery, so much fraud and robbery, whether by means of bogus companies, wild speculation, or fraudulent bankruptcy, it seems probable that this may be best dealt with by simply disestablishing it, that is, taking away from it the protection of the law. Many eminent men, including some great lawyers and even judges, believe that it would be well for society if the State recognised no debts, except for work done or goods supplied to be paid for on delivery. Everything in the shape of loans or advances without security, or goods supplied on credit, should be made at the lender's or seller's risk--should be really debts of honour, not recoverable by any legal process. It would, in every case, be a question of personal credit and trust. Character thoroughly established would be essential to obtain credit or a loan, and thus, both reckless trading and fraudulent bankruptcy would become impossible.

    Limited-liability in trading associations should be abolished. True old-fashioned partnerships, in which the partners are associated by mutual knowledge and similar interests, would take the place of "companies," in which some of the partners or promoters are mainly interested in robbing the rest; and with the abolition of these "companies" would be removed a gigantic means of speculation and fraud, which, as we have seen, not only injures individuals, but indirectly plunders the whole industrial community.

    [[p. 203]] We have now briefly discussed the two great principles of true Social Economy, by which, if carried into action, Labour would be entirely released from the tyranny of Capital, and, for the first time in history, receive its full and just reward. Socialists believe that this can only be effected by the whole capital of the country becoming the property of the State, and by all industries being worked by the State. This, however, is a question of the future. What is here proposed is an immediate and practicable first step, which would gradually extinguish capitalists as a separate class--first, by enabling every worker to become his own capitalist, either singly or in association with his fellow-workmen; secondly, by abolishing that system of universal indebtedness which affords the machinery for boundless speculation, and enables money to breed money--a thing which the great Greek philosopher, Aristotle, condemned as the most justly hated and the most unnatural. Just in proportion as these methods were brought into operation great capitalists would find their position more and more untenable. By the diminution of public debts and those of great companies the means of speculation and permanent investment would diminish, and ultimately cease; while, on the other hand, the growing independence of workers, becoming their own capitalists and their own employers, would steadily diminish the supply of wage-labour and as steadily raise the rate of wages of those who continued to work for employers.

    Then would be seen a most marvellous and beneficial [[p. 204]] change in the relations of capital and labour. Instead of labourers everywhere seeking work, and usually being obliged to accept employment on the capitalist's terms, we should see capitalists and employers everywhere competing for a supply of labour, and offering high wages, short hours, and a share in the profits, in order to secure it. Capitalists who were not manufacturers would be everywhere seeking investments, and would beg to be allowed to furnish associated labourers with capital, receiving instead of interest a small share of the profits.

    It will perhaps be said, this is a very fine picture, but how is it to be all done without a revolution? Let us endeavour to answer this question in a few words.

    The workers are everywhere in a majority; and in America, England, and many other countries, they have now the power in their hands (if they will but unite) to effect any political and social changes they think advisable; and if they take care to work only on the lines of justice and equality of opportunities, they will receive the earnest support of many of the best writers and thinkers of the age.

    The first thing to be done is to obtain the land around all cities, towns, and villages. This may be effected by a law giving to every community, large or small, the power to take any land now used for agricultural purposes at agricultural value, such land to be let out to any of the citizens who need it for personal occupation, on a secure tenure, subject to increase of [[p. 205]] rent when, by growth of the community or other public cause, the value of the ground rents increase. This would at once check the rapid increase of land values in towns, which is in large part the result of monopoly, and afford that secure footing for the labourer which is the first essential to his progress. To prevent the further appropriation by individuals of land-values created by the community, all ground-rents should be valued at moderate rates, and the owners granted terminable annuities for the amount; either for a limited number of years, or for the life of the present owner and his next living heir; so that all further increase of land-values in cities and towns would accrue to the municipality. This would secure the "unearned increment" of land-values to the community which creates them, on the principle advocated by John Stuart Mill, and would effectually stop further land-speculation.

    In the matter of public and private indebtedness the first step will be to return representatives who will see that all public reproductive works are carried out by means of special bonds to be redeemed out of the profits arising from the undertaking. When by these means, and by the revenues arising from the increased values of building lands, State and Municipal taxation is diminished, and the State credit increased, the railways, &c., may be successively taken and the shareholders dealt with in the same manner as has been proposed in the case of the landlords. In this way all the great public works, which ought never to have been [[p. 206]] allowed to become private property, may be acquired, one by one, by the community, without the need of any interest-bearing loans; and thus one great means by which so many men are enabled to live by speculation--that is, really on the labour of other men--will be abolished.²

    The inevitable result of these changes will be that rents will fall, the rate of interest will fall, taxation will diminish, and wages will rise. By means of these several advantages workmen who wish to work for themselves will soon be able to save the small capital necessary to do so; while those who wish to work in associative co-operation, after saving half the capital required, will probably be able to get the other half free of interest, on the security of a small share in the profits.

    Of course, any such proposals as these will be violently opposed by capitalists and their friends. They will tell us that it will bring about the ruin of the country--meaning the diminution of their wealth and power. But such opposition is to be expected, for even Adam Smith, the father of Political Economy, tells us that, "The interest of capitalists is always in some respects different from, and opposite to, that of the public." And Ricardo, the second great leader of the Political Economists, assures us that, "There is no gain to society at large from the rise of rent; it is advantageous to the landlords alone, and their [[p. 207]] interests are thus permanently in opposition to those of all other classes."

    As to the objection that the raising of our working classes to a condition of general comfort and well-being would involve the loss of much of our foreign trade, it is the merest bugbear that ever was put forward in the interests of the wealthy classes. There are two amply sufficient answers to this objection. The first is, that with all our workers in a condition to command the necessaries and comforts of life, home consumption would increase so enormously that foreign trade would be of comparatively small importance. As an indication of what this increased consumption is likely to be, we may recall the fact that we now import a hundred and fifty millions worth of foods, all products of this country, and all capable of being produced in the country when our land is thoroughly cultivated by men who reap the harvest for themselves. If only half of this amount were produced, the money being almost all spent on home manufactures would to that extent replace foreign trade; and if to this we add, say forty, or even twenty, pounds a year increased income to each of our ten million workers, we shall arrive at a total of increased consumption that would go far to render a large foreign trade altogether unnecessary.

    But, quite independent of this enormous increase of home consumption, there is another answer to the objection, which ought to be still more conclusive to the objectors, because it is the answer of Political [[p. 208]] Economy itself. Yet our political writers and our legislators are either ignorant or conveniently forgetful of this, when they urge that the adoption of a general eight hours' day, or a general rise of wages, would render it impossible for us to compete with other countries for foreign trade, and try to persuade the workers that any such change would in the end be ruinous to themselves. But in Mill's "Principles of Political Economy" this very question is argued at great length and with marvellous cogency, and his results are held to be indisputable and form an essential part of the modern science of Political Economy. First, in Book III., chap. iv., he shows that wages are not an element of value, except in so far as they vary from one employment to another. In chap. xvii. of the same book he shows that cost of production does not regulate international values, the profitable interchange of commodities between different countries being determined, not by their absolute, but by their comparative, cost of production. Then, further on, in chap. xxv., he discusses the effect of wages on the competition of countries in foreign markets, and states, as a general conclusion: "General low wages never caused any country to undersell its rivals, nor did general high wages ever hinder it from doing so." If any one will carefully study the chapters which lead up to this conclusion, he will be forced to admit that it is correct, and it is, in fact, one of the acknowledged results of that science to which the capitalist and the legislator continually appeal when it serves their [[p. 209]] purpose. But in all the discussions for many years past as to shorter hours or a general rise in wages, I have never seen a single reference to it, either in the press or in Parliament; but, on the contrary, the exploded bugbear of "loss of foreign trade" has been, and still is, perpetually put forward, and, in their ignorance, accepted by many of the workers, as if it were a truth of Political Economy, instead of being its very opposite!

    Let us now briefly summarise the methods by which the horrible inequality in the distribution of the wealth which is annually created by the working portion of the community can be remedied; and to such as may think my proposals too radical I commend the dictum of J. S. Mill, to the effect that, when gigantic evils are to be remedied, small measures and petty palliatives are useless, for such measures do not produce even a small effect; they usually produce none at all, or even increase the evil. I propose, then, as alone adequate to grapple with the evil:--

    1. That the land must be devoted to the use of all on equal terms, and especially to those who are willing themselves to cultivate it. By doing this we shall bring about a more equable distribution of the population, a maximum of production from the soil, and a far closer relation between producer and consumer. This will be true economy, and will most certainly conduce to morality, to health, and to happiness.

    2. We must also aim at abolishing the relations [[p. 210]] of capitalist and labourer, of master and workman, by insuring that each labourer may himself become a capitalist; that in all small industries the employer and employed--the maker and the consumer--shall deal directly with each other; while manufacture on a larger scale may be effected by numerous associations of workmen utilising their own capital and labour.

    3. And, lastly, we must check individual indebtedness as a means of carrying on business, and cease to enforce the payment of unsecured debts; while we must gradually get rid of all the funded debts of kingdoms, states, cities, and companies, because they inevitably lead to hurtful speculation, to the growth of millionaires, and the plunder of the public.

    If some such fundamental remedies as those now suggested are not adopted, or at least fully and freely discussed with a view to their speedy adoption, the perennial struggle between capital and labour will continue with ever-increasing intensity, and the far more drastic proposals of Socialists and Communists, involving perhaps immediate confiscation of property and widespread ruin of individuals, will certainly gain increased support, and may ultimately be forced upon the legislature by the united power of labour organisations and social reformers.

    But to avoid this danger, no petty palliatives, no extension of the sphere of charity, will suffice; and I claim for my proposals the character of true conservative reform, inasmuch as they are calculated to bring about [[p. 211]] a more equable distribution of wealth and of well-being with a minimum of social disturbance, and by methods which are strictly equitable, and are founded on the great principle of the EQUALITY of RIGHTS and OPPORTUNITIES for all the citizens of a free community.

Notes Appearing in the Original Work

1. It is not asserted that all Political Economists have ignored these questions, but merely that they do not come within the sphere of Political Economy as a science. [[on p. 184]]

2. The method of carrying out these reforms has been more fully explained in the writer's article on "Economic and Social Justice," in Vox Clamantium. [[on p. 206]]