Chapter IV.

Causes of Depression.

Not our Fiscal System—Production greater than ever, Distribution different—Producers and Capitalists the Sufferers—Consumers and Labourers the Gainers—An Economic Revolution arising from a Diffusion, and more equal Distribution, of Wealth—Among W age Earners the Causes of Distress are Intemperance, Improvidence, and Bad Land Laws.

The question now arises:—What is there in all this showing to make us envious of the economic condition of our protectionist neighbours on either side of the Atlantic? There is nothing; on the contrary there is everything to show that such evils as we suffer from arise, not from our Free Trade system, but from other causes. What these causes are, and what the remedies, will form the burden of the remaining pages of this essay. We have arrived at the kernel of the problem, and we will discuss it by the light of what has been already advanced.

Let us first ascertain in what sense the present state of things can be called Depression. There is no sign of national impoverishment. There has been no falling off in the production of wealth. Our foreign trade, measured by quantities, was never so great as within the last two years. By way of interest on loans made to the rest of the world, which interest is due to us in gold, but paid to us in commodities, we now get, in consequence of the fall in prices, something like 50 per cent, more than we did some years ago for the same money.

Here is a table which shows the consumption per head of certain imported articles for the years 1873, 1879, and 1383.

There is no sign of decadence or of decay in such figures as these. What is shown is an accession and diffusion of wealth. Of this we have many proofs. One great cause has been the general fall in prices. As has already been observed, three factors have combined to bring about this fall. As regards two of these, namely, the opening up of new fields of production, and the improvement of industrial processes, however classes or individuals may have suffered thereby, the community has benefited. As regards the third, the scarcity of gold, that has been a misfortune to the world, but a benefit to Great Britain. Owing to her unique position as the great creditor nation she profits largely by this scarcity, while other countries indebted to her find a constantly increasing difficulty in satisfying her claims.

To manufacturers, merchants, wholesale traders, and producers generally, the increasing scarcity of gold, so far as it has contributed to the fall in prices, has been a source of loss. Owing to this and the other causes named, the fall, during the last few years, has been very rapid. Changes have taken place in two or three years which, formerly, it took a generation to effect, and the classes just named have not been able to keep pace with them. Capital has also suffered. It does not obtain the returns it formerly did. The high price of all first-class investments shows this; while, as regards capital employed in manufactures, there is a general complaint of insufficient returns.

Mr. B. Whitworth, M.P., at a meeting of the Statistical Society on 16th December last, stated that he was himself engaged in the cotton trade, and was in a position to say that for the last five or six years there had not been 2 per cent, made on the whole capital engaged in the cotton trade of this country.

Now, seeing that there has been a greater production of wealth than ever, and that certain classes have not been able to obtain as great a proportion as formerly, it is clear that other classes must have gained. The sufferers have been capitalists and producers; the gainers have been labourers and consumers.

The grand result, therefore, has been a diffusion, and a more equal distribution of wealth, and this is shown in the page 25 cheapness and plenty which prevail. Articles of prime and secondary necessity are brought within the reach of the lower grades of labour, for whom life has been made more easy. For the labouring class generally, the attainment of a higher standard of comfort and of morals is made possible; thrift is made practicable; there is less inducement to crime; and pauperism tends to diminish.

This is anything but a depressing picture. It is of the highest importance that the ever-increasing stream of wealth which is created by our labour at home, and which pours in from abroad as interest on our investments, and as profit on our great carrying trade, in the shape of the world's products, should be diffused among the many, and not concentrated in the hands of the few. What has taken place is a beneficent revolution calculated to produce far-reaching social and political consequences. It is a filling up of the gulf which divides the very rich from the very poor; an equalising of conditions by an elevation of the masses; a gradual binding together and fusion of classes; and a preventive of that dire poverty, and deep discontent, in which socialism and communism find their source.

But, while the community has thus benefited, it cannot be denied that certain classes have suffered distress and privation. In some cases the suffering has been merited, in others unmerited.

In agriculture deep depression reigns. The lately developed wheat-growing regions of America, Australasia, and Asia, have caused one million acres in the United Kingdom to go out of wheat cultivation, and a quarter of a million of our rural population has been driven into the towns.

This migration is producing many bad consequences. It is a great national evil. It increases the competition in the labour market of the towns, and drives down wages, and while it decreases the demand for goods, it increases the numbers of those who make them. It crowds our cities and raises rents. It takes men, women, and children away from the field and the moor, and all their health-giving influences, and deteriorates the race by planting them amid the noisome haunts of poverty and disease.

That wheat cultivation should, for a time at least, owing to economic causes, cease to pay, is not of itself a calamity, but it is made into a calamity when, owing to our iron-bound land system, there is no alternative for the farmer but to throw up his farm, for the landlord but to forego his rent, and for the labourer but to migrate.

As regards manufactures, we find the capitalist complaining of restricted markets, excessive competition, falling prices, and curtailed profits. To this class no great consolation can be held out. Owing to a concurrence of favouring circumstances, the law of competition—the tendency of profits to a minimum—has been brought into full play, and the community reaps the benefit. Capital will never again be able to obtain as large a share of the profits of production as it once did. The old style of business has quite passed away. Differences of price between producing and consuming countries no longer exist, except as regards cost of carriage. Steam and electricity have abolished them, and have created a revolution. Allowing for cost of transport, wheat is, now-a-days, sometimes cheaper in London than in Chicago. All this means, of course, loss of profits to the trader, but it also means a corresponding gain to the rest of the community.

The only trading class which at present has nothing to complain of is the small retail trader. He alone has benefited from the fall in prices, for he has not been particularly prompt in adapting his charges to the fall in the wholesale markets: From inquiries made of stockbrokers it is ascertained that of late the only investor has been the retail trader. Coming to the domain of finance, we find among the bankers a falling off of profits, while in Stock Exchange business there is deep depression Unless profits be made in trade, there can be no investment on balance, no fresh enterprises, and business in securities languishes as a matter of course. This affords another proof of the different distribution of wealth. What capitalists and producers have had to forego, labourers and consumers have received. The few have lost, the many have gained. Until lately the few, after the satisfaction of their wants, had large sums to invest, which came into the market. This is no longer the case, these large sums are now dis- page 27 tributed among the many, and much thereof is now spent in increased comfort and enjoyment by them.

We now come to the great army of workers and wage earners. With regard to this class, all testimony agrees as to the fact that, during the last forty years, their condition has materially improved: the average of their money wages having increased, while the cost of living has decreased.

The British workman has not only claimed, and obtained, a larger share of the profits of production, but he has at the same time benefited from the cheapness and plenty which are the natural concomitants of the fiscal system under which he lives. Professor Leone Levi, in his Report on the wages and earnings of the working classes prepared for Sir Arthur Bass, gives in Section III. the following tables, which, he states, are based on the census of population, with a complete analysis of the occupations of the people, and the rate of wages actually prevalent, and paid, in the various industries.

On this table Professor Leone Levi makes the following remarks: "Thus with an increase of less than 11 per cent, in the number of earners, there has been an increase of 24.64 per cent in the amount of earnings, the average earning per head having increased from £38 in 1867, to £42.14 in 1884; or in the proportion of 12.37 per cent.

Dividing the earners and earnings by age and sex, the results are as follows:— page 28

Occupations.	Number of Earners.		Amount of Earnings.		Average Earnings.
	1884	1867	1884	1867	1884	1867
			£	£	£	£
Males under 20	1,650,000	1,200,000	29,000,000	23,000,000	18.o	19.0
Males 20 and under 65	6,530,000	5,900,000	363,000,000	293,000,000	57.2	51.7
Females under 20	1,300,000	1,300,000	39,000,000	27,000,000	22.17	20.15
Females 20 and under 65	2,720,000	2,600,000	99,000,000	75,000,000	33.0	28.17
Total	12,200,000	11,000,000	521,000,000	418,000,000	43.10	38.0

on which he says:—"The total earnings thus calculated include the value of board and lodging wherever given. Deducting this item, the amount of money earnings may be estimated at £470,000,000." In Section VI.—Relation of Wages to Production, Professor Leone Levi quotes Mr. Ellison's statistics respecting the cotton industry, in which valuable data exist for arriving at what may be considered the fair remuneration of labour, and gives the following table, which shows:—"The details of the cost of production in 1859-61, and 1880-82."

and he remarks thereon:—"Economies may be practised in the other expenses, but in any case such gross results account for the complaints of cotton spinners and others connected with this large industry."

In Section IX. he takes the number of families belonging to the working classes at 5,600,000, and the total income as £521,000,000, or, exclusive of food, &c., £47 0,000,000, being an average of about 32s. per week, per family, a fair amount if equally distributed.^*

It is clear, therefore, that the workman's share of the profits of production was never so great as it is now, and that what he now earns may be laid out to greater advantage than ever.

One of the effects of this prosperity is seen in the statistics relating to life, which show that during the Free Trade era, the average duration among men had increased 2 years; and among women, 3½ years.

If, then, it be a fact, as undoubtedly it is, that the wage-earning class has received a great accession of wealth, and if we find a considerable portion of that class, as we do, always on the brink of poverty, it follows that either there must be inequality in distribution or waste in application. So long as inequality of powers exists among men, so long will there be inequality of earnings; but whatever men may earn, the earners can always be divided into sections, one of which is careful and thrifty, and the other careless and improvident. Among the causes which operate to produce a state of things in which cheapness and plenty prevail side by side with idleness and starvation, are intemperance, improvidence, and faulty laws.

With regard to intemperance, it is a melancholy fact that something like £126,000,000 are annually spent in intoxicating drinks; and that many a workman spends on a Saturday night five shillings out of his weekly wage of twenty shillings. That it is a source of crime and pauperism no one can deny. At a conference of relieving officers of the metropolis, held page 30 on the 27 th February, those who spoke testified with one voice as to the distinct connection between drink and pauperism, and drink and lunacy, and testimony was given that very few of the applicants for relief were abstainers.

As regards improvidence, in nothing is want of prudence so much shown as in the matter of marriage. How can anything but poverty and misery be the lot of multitudes if they be brought into the world by parents who themselves are on the verge of pauperism? How can there be anything else but a crowding and a jostling in the labour market when we, here in Great Britain, increase at the rate of one thousand a day—when, every morning, there are a thousand additional mouths to be fed? How can such a constant increase as this take place without recurring periods of distress?

The marvel is, not that distress exists, but that it is not tenfold what it is, considering the faultiness of certain laws under which we live—the laws which govern the ownership and occupation of land.

As has been observed, we have of late years witnessed a partial depopulation of our rural districts, and a crowding into the towns—a disastrous result, which can be traced to a system which has proved unfitted to adapt itself to the altered circumstances in which agriculture is placed.