The Great Transformation

T O C H A P T E R O N E

1. Balance of Power as Policy, Historical Law, Principle, and System

1. Balance-of-power policy. The balance-of-power policy is an English national institution. It is purely pragmatic and factual, and should not be confused either with the balance-of-power principle or with the balance-of-power system. That policy was the outcome of an island position off a continental littoral occupied by organized political communities. “Her rising school of diplomacy, from Wolsey to Cecil, pursued the Balance of Power as England’s only chance of security in face of the great Continental states being formed,” says Trevelyan. This policy was definitely established under the Tudors, was practiced by Sir William Temple, as well as by Canning, Palmerston, or Sir Edward Grey. It antedated the emergence of a balance-of-power system on the Continent by almost two centuries, and was entirely independent in its development from the Continental sources of the doctrine of the balance of power as a principle put forward by Fénelon or Vattel. However, England’s national policy was greatly assisted by the growth of such a system, as it eventually made it easier for her to organize alliances against any power leading on the Continent. Consequently, British statesmen tended to foster the idea that England’s balance-of-power policy was actually an expression of the balance-of-power principle, and that England, by following such a policy, was only playing her part in a system based upon that principle. Still, the difference between her own policy of self-defence and any principle which would help its advancement was not purposely obscured by her statesmen. Sir Edward Grey wrote in his Twenty-Five Years as follows: “Great Britain has not, in theory, been adverse to the predominance of a strong group in Europe, when it seemed to make for stability and peace. To support such a combination has generally been the first choice. It is only when the dominant power becomes aggressive and she feels her own interests to be threatened that she, by an instinct of self-defence if not by deliberate policy, gravitates to anything that can be fairly described as a Balance of Power.”

It was thus in her own legitimate interest that England supported the growth of a balance-of-power system on the Continent, and upheld its principles. To do so was part of her policy. The confusion induced by such a dovetailing of two essentially different references of the balance of power is shown by these quotations: Fox, in 1787, indignantly asked the government, “whether England were no longer in the situation to hold the balance of power in Europe and to be looked up to as the protector of her liberties?” He claimed it as England’s due to be accepted as the guarantor of the balance-of-power system in Europe. And Burke, four years later, described that system as the “public law of Europe” supposedly in force for two centuries. Such rhetorical identifications of England’s national policy with the European system of the balance of power would naturally make it more difficult for Americans to distinguish between two conceptions which were equally obnoxious to them.

2. Balance of power as a historical law. Another meaning of the balance of power is based directly on the nature of power units. It has been first stated in modern thought by Hume. His achievement was lost again during the almost total eclipse of political thought which followed the Industrial Revolution. Hume recognized the political nature of the phenomenon and underlined its independence of psychological and moral facts. It went into effect irrespective of the motives of the actors, as long as they behaved as the embodiments of power. Experience showed, wrote Hume, that whether “jealous emulation or cautious politic” was their motive, “the effects were alike.” F. Schuman says: “If one postulates a States System composed of three units, A, B, and C, it is obvious that an increase in the power of any one of them involves a decrease in the power of the other two.” He infers that the balance of power “in its elementary form is designed to maintain the independence of each unit of the State System.” He might well have generalized the postulate so as to make it applicable to all kinds of power units, whether in organized political systems or not. That is, in effect, the way the balance of power appears in the sociology of history. Toynbee in his Study of History mentions the fact that power units are apt to expand on the periphery of power groups rather than at the center where pressure is greatest. The United States, Russia, and Japan as well as the British Dominions expanded prodigiously at a time when even minor territorial changes were practically impossible of attainment in Western and Central Europe. A historical law of a similar type is adduced by Pirenne. He notes that in comparatively unorganized communities a core of resistance to external pressure is usually formed in the regions farthest removed from the powerful neighbor. Instances are the formation of the Frankish kingdom by Pepin of Heristal in the distant north, or the emergence of Eastern Prussia as the organizing center of the Germanies. Another law of this kind might be seen in the Belgian De Greef’s law of the buffer state which appears to have influenced Frederick Turner’s school and led to the concept of the American West as “a wandering Belgium.” These concepts of the balance and imbalance of power are independent of moral, legal, or psychological notions. Their only reference is to power. This reveals their political nature.

3. Balance of power as a principle and system. Once a human interest is recognized as legitimate, a principle of conduct is derived from it. Since 1648, the interest of the European states in the status quo as set up by the Treaties of Münster and Westphalia was acknowledged, and the solidarity of the signatories in this respect was established. The Treaty of 1648 was signed by practically all European Powers; they declared themselves its guarantors. The Netherlands and Switzerland date their international standing as sovereign states from this treaty. Hence-forward, states were entitled to assume that any major change in the status quo would be of interest to all the rest. This is the rudimentary form of balance of power as a principle of the family of nations. No state acting upon this principle would, on that account, be thought of as behaving in a hostile fashion toward a Power rightly or wrongly suspected by it of the intention of changing the status quo. Such a condition of affairs would, of course, enormously facilitate the formation of coalitions opposed to change. However, only after seventy-five years was the principle expressly recognized in the Treaty of Utrecht when “ad conservandum in Europa equilibrium” Spanish domains were divided between Bourbons and Hapsburgs. By this formal recognition of the principle Europe was gradually organized into a system based on this principle. As the absorption (or domination) of small Powers by bigger ones would upset the balance of power, the independence of the small Powers was indirectly safeguarded by the system. Shadowy as was the organization of Europe after 1648, and even after 1713, the maintenance of all states, great and small, over a period of some two hundred years must be credited to the balance-of-power system. Innumerable wars were fought in its name, and although they must without exception be regarded as inspired by consideration of power, the result was in many cases the same as if the countries had acted on the principle of collective guarantee against acts of unprovoked aggression. No other explanation will account for the continued survival of powerless political entities like Denmark, Holland, Belgium, and Switzerland over long stretches of time in spite of the overwhelming forces threatening their frontiers. Logically, the distinction between a principle and an organization based upon it, i.e., a system, seems definite. Yet we should not underrate the effectiveness of principles even in their suborganized condition, that is, when they have not yet reached the institutional stage, but merely supply a directive to conventional habit or custom. Even without an established center, regular meetings, common functionaries, or compulsory code of behavior, Europe had been formed into a system simply by the continuous close contact between the various chancelleries and members of the diplomatic bodies. The strict tradition regulating the inquiries, démarches, aidemémoirs—jointly and separately delivered, in identical or in nonidentical terms—were so many means of expressing power situations without bringing them to a head, while opening up new avenues of compromise or, eventually, of joint action, in case negotiations failed. Indeed, the right to joint intervention in the affairs of small states, if legitimate interests of the Powers are threatened, amounted to the existence of a European directorium in a suborganized form.

Perhaps the strongest pillar of this informal system was the immense amount of international private business very often transacted in terms of some trade treaty or other international instrument made effective by custom and tradition. Governments and their influential citizens were in innumerable ways enmeshed in the varied types of financial, economic, and juridical strands of such international transactions. A local war merely meant a short interruption of some of these, while the interests vested in other transactions that remained permanently or at least temporarily unaffected formed an overwhelming mass as against those which might have been resolved to the enemy’s disadvantage by the chances of war. This silent pressure of private interest which permeated the whole life of civilized communities and transcended national boundaries was the invisible mainstay of international reciprocity, and provided the balance-of-power principle with effective sanctions, even when it did not take on the organized form of a Concert of Europe or a League of Nations.

BALANCE OF POWER AS HISTORICAL LAW

Hume, D., “On the Balance of Power,” Works, Vol. III (1854), p. 364. Schuman, F., International Politics (1933), p. 55. Toynbee, A. J., Study of History, Vol. III, p. 302. Pirenne, H., Outline of the History of Europe from the Fall of the Roman Empire to 1600 (England 1939). Barnes-Becker-Becker, on De Greef, Vol. II, p. 871. Hofmann, A., Das deutsche Land and die deutsche Geschichte (1920). Also Haushofer’s Geopolitical School. At the other extreme, Russell, B., Power. Lasswell’s Psychopathology and Politics; World Politics and Personal Insecurity, and other works. Cf. also Rostovtzeff, Social and Economic History of the Hellenistic World, Ch. 4, Part I.

BALANCE OF POWER AS PRINCIPLE AND SYSTEM

Mayer, J. P., Political Thought (1939), p. 464. Vattel, Le Droit des gens (1758). Hershey, A. S., Essentials of International Public Law and Organization (1927), pp. 567–69. Oppenheim, L., International Law. Heatley, D. P., Diplomacy and the Study of International Relations (1919).

HUNDRED YEARS’ PEACE

Leathes, “Modern Europe,” Cambridge Modern History, Vol. XII, Ch. 1. Toynbee, A. J., Study of History, Vol. IV(C), pp. 142–53. Schuman, F., International Politics, Bk. I, Ch. 2. Clapham, J. H., Economic Development of France and Germany, 1815–1914, p. 3. Robbins, L., The Great Depression (1934), p. 1. Lippmann, W., The Good Society. Cunningham, W., Growth of English Industry and Commerce in Modern Times. Knowles, L. C. A., Industrial and Commercial Revolutions in Great Britain during the Nineteenth Century (1927). Carr, E. H., The Twenty Years’ Crisis, 1919–1939 (1940). Crossman, R. H. S., Government and the Governed (1939), p. 225. Hawtrey, R. G., The Economic Problem (1925), p. 265.

BAGHDAD RAILWAY

The conflict regarded as settled by the British-German agreement of June 15, 1914: Buell, R. L., International Relations (1929). Hawtrey, R. G., The Economic Problem (1925). Mowat, R. B., The Concert of Europe (1930), p. 313. Stolper, G., This Age of Fable (1942). For the contrary view: Fay, S. B., Origins of the World War, p. 312. Feis, H., Europe, The World’s Banker, 1870–1914 (1930), pp. 335 ff.

CONCERT OF EUROPE

Langer, W. L., European Alliances and Alignments (1871–1890) (1931). Sontag, R. J., European Diplomatic History (1871–1932) (1933). Onken, H., “The German Empire,” in Cambridge Modern History, Vol. XII. Mayer, J. P., Political Thought (1939), p. 464. Mowat, R. B., The Concert of Europe (1930), p. 23. Phillips, W. A., The Confederation of Europe, 1914 (2d ed., 1920). Lasswell, H. D., Politics, p. 53. Muir, R., Nationalism and Internationalism (1917), p. 176. Buell, R. L., International Relation (1929), p. 512.

2. Hundred Years’ Peace

1. The facts. The Great Powers of Europe were at war with one another during the century 1815 to 1914 only during three short periods: for six months in 1859, six weeks in 1866, and nine months in 1870–71. The Crimean War, which lasted exactly two years, was of a peripheric and semicolonial character, as historians including Clapham, Trevelyan, Toynbee, and Binkley agree. Incidentally, Russian bonds in the hands of British owners were honored in London during that war. The basic difference between the nineteenth and previous centuries is that between occasional general wars and complete absence of general wars. Major-General Fuller’s assertion that there was no year free of war in the nineteenth century appears as immaterial. Quincy Wright’s comparison of the number of war years in the various centuries irrespective of the difference between general and local wars seems to bypass the significant point.

2. The problem. The cessation of the almost continuous trade wars between England and France, a fertile source of general wars, stands primarily in need of explanation. It was connected with two facts in the sphere of economic policy: (a) the passing of the old colonial empire, and (b) the era of free trade which passed into that of the international gold standard. While war interest fell off rapidly with the new forms of trade, a positive peace interest emerged in consequence of the new international currency and credit structure associated with the gold standard. The interest of whole national economies was now involved in the maintenance of stable currencies and the functioning of the world markets upon which incomes and employment depended. The traditional expansionism was replaced by an anti-imperialist trend which was almost general with the Great Powers up to 1880. (Of this we deal in Chapter 18.)

There seems, however, to have been a hiatus of more than half a century (1815–80) between the period of trade wars when foreign policy was naturally assumed to be concerned with the furtherance of gainful business and the later period in which foreign bondholders’ and direct investors’ interests were regarded as a legitimate concern of foreign secretaries. It was during this hiatus that the doctrine was established which precluded the influence of private business interests on the conduct of foreign affairs; and it is only by the end of this period that chancelleries again consider such claims as admissible but not without stringent qualifications in deference to the new trend of public opinion. We submit that this change was due to the character of trade which, under nineteenth-century conditions, was no longer dependent for its scope and success upon direct power policy; and that the gradual return to business influence on foreign policy was due to the fact that the international currency and credit system had created a new type of business interest transcending national frontiers. But as long as this interest was merely that of foreign bondholders, governments were extremely reluctant to allow them any say; for foreign loans were for a long time deemed purely speculative in the strictest sense of the term; vested income was regularly in home government bonds; no government thought it as worthy of support if its nationals engaged in the most risky job of loaning money to overseas governments of doubtful repute. Canning rejected peremptorily the importunities of investors who expected the British government to take an interest in their foreign losses, and he categorically refused to make the recognition of Latin-American republics dependent upon their acknowledgment of foreign debts. Palmerston’s famous circular of 1848 is the first intimation of a changed attitude, but the change never went very far; for the business interests of the trading community were so widely spread that the government could hardly afford to let any minor vested interest complicate the running of the affairs of a world empire. The resumption of foreign policy interest in business ventures abroad was mainly the outcome of the passing of free trade and the consequent return to the methods of the eighteenth century. But as trade had now become closely linked with foreign investments of a nonspeculative but entirely normal character, foreign policy reverted to its traditional lines of being serviceable to the trading interests of the community. Not this latter fact, but the cessation of such interest during the hiatus stood in need of explanation.

T O C H A P T E R T W O

3. The Snapping of the Golden Thread

The breakdown of the gold standard was precipitated by the forced stabilization of the currencies. The spearhead of the stabilization movement was Geneva, which transmitted to the financially weaker states the pressures exerted by the city of London and Wall Street.

The first group of states to stabilize was that of the defeated countries, the currencies of which had collapsed after World War I. The second group consisted of the European victorious states who stabilized their own currencies mainly after the first group. The third group consisted of the chief beneficiary of the gold standard interest, the United States.

I. Defeated Countries		II. Victorious European Countries			III. Universal Lender
	STABILIZED		STABILIZED	WENT OFF GOLD		WENT OFF GOLD
Russia	1923	Great Britain	1925	1931	U.S.A.	1933
Austria	1923	France	1926	1936
Hungary	1924	Belgium	1926	1936
Germany	1924	Italy	1926	1936
Bulgaria	1925
Finland	1925
Estonia	1926
Greece	1926
Poland	1926

The imbalance of the first group was carried for a time by the second. As soon as this second group likewise stabilized its currency, they also were in need of support, which was provided by the third. Ultimately, it was this third group, consisting of the United States, which was most hard hit by the cumulative imbalance of European stabilization.

4. Swings of the Pendulum After World War 1

The swing of the pendulum after World War I was general and swift, but its amplitude was small. In the great majority of countries of Central and Eastern Europe the period 1918–23 merely brought a conservative restoration following upon a democratic (or socialist) republic, the outcome of defeat; several years later almost universally one-party governments were established. And again, the movement was fairly general.

Country	Revolution	Counterrevolution	One-party government
Austria	Oct. 1928 soc. dem. republic	1920 middle-class republic	1934
Bulgaria	Oct. 1918 radical agrarian reform	1923 fascist counter- revolution	1934
Estonia	1917 socialist republic	1918 middle-class republic	1926
Finland	Feb. 1917 socialist republic	1918 middle-class republic	—
Germany	Nov. 1918 soc. dem. republic	1920 middle-class republic	1933
Hungary	Oct. 1918 dem. rep. Mar. 1919 soviets	1919 counterrevolution	—
Jugoslavia	1918 democratic federation	1926 authoritarian military state	1929
Latvia	1917 socialist republic	1918 middle-class republic	1934
Lithuania	1917 socialist republic	1918 middle-class republic	1926
Poland	1919 soc. dem. republic	1926 authoritarian state	—
Romania	1918 agrarian reform	1926 authoritarian regime	—

5. Finance and Peace

On the political role of international finance in the last half-century hardly any material is available. Corti’s book on the Rothschilds covers only the period previous to the Concert of Europe. Their participation in the Suez share deal, the offer of the Bleichroeders to finance the French War indemnity of 1871 through the issuance of an international loan, the vast transactions of the Oriental Railway period are not included. Historical works like Langer and Sontag give but scant attention to international finance (the latter in his enumeration of peace factors omits the mentioning of finance); Leathes’s remarks in the Cambridge Modern History are almost an exception. Liberal freelance criticism was either directed to show up the lack of patriotism of the financiers or their proclivity to support protectionist and imperialist tendencies to the detriment of free trade, as in the case of writers such as Lysis in France, or J. A. Hobson in England. Marxist works, like Hilferding’s or Lenin’s studies, stressed the imperialistic forces emanating from national banking, and their organic connection with the heavy industries. Such an argument, besides being restricted mainly to Germany, necessarily failed to deal with international banking interests.

The influence of Wall Street on developments in the 1920s appears too recent for objective study. There can be hardly any doubt that, on the whole, its influence was thrown into the scales on the side of international moderation and mediation, from the time of the Peace Treaties to the Dawes Plan, the Young Plan, and the liquidation of reparations at and after Lausanne. Recent literature tends to separate off the problem of private investments, as in Staley’s work which expressly excludes loans to governments, whether proffered by other governments or by private investors, a restriction which practically excludes any general appraisal of international finance in his interesting study. Feis’s excellent account, on which we have profusely drawn, comes near to covering the subject as a whole, but also suffers from the inevitable dearth of authentic material, since the archives of haute finance have not yet been made available. The valuable work done by Earle, Remer, and Viner is subject to the same unavoidable limitation.

T O C H A P T E R F O U R

6. Selected References to “Societies and Economic Systems”

The nineteenth century attempted to establish a self-regulating economic system on the motive of individual gain. We maintain that such a venture was in the very nature of things impossible. Here we are merely concerned with the distorted view of life and society implied in such an approach. Nineteenth-century thinkers assumed, for instance, that to behave like a trader in the market was “natural,” any other mode of behavior being artificial economic behavior—the result of interference with human instincts; that markets would spontaneously arise, if only men were let alone; that whatever the desirability of such a society on moral grounds, its practicability, at least, was founded on the immutable characteristics of the race, and so on. Almost exactly the opposite of these assertions is implied in the testimony of modern research in various fields of social science such as social anthropology, primitive economics, the history of early civilization, and general economic history. Indeed, there is hardly an anthropological or sociological assumption—whether explicit or implicit—contained in the philosophy of economic liberalism that has not been refuted. Some citations follow.

(a) The motive of gain is not “natural” to man.

“The characteristic feature of primitive economics is the absence of any desire to make profits from production or exchange” (Thurnwald, Economics in Primitive Communities, 1932, p. xiii). “Another notion which must be exploded, once and forever, is that of the Primitive Economic Man of some current economic textbooks” (Malinowski, Argonauts of the Western Pacific, 1930, p. 60). “We must reject the Idealtypen of Manchester liberalism, which are not only theoretically, but also historically misleading” (Brinkmann, “Das soziale System des Kapitalismus,” in Grundriss der Sozialökonomik, Vol. IV, p. 11).

(b) To expect payment for labor is not “natural” to man.

“Gain, such as is often the stimulus for work in more civilized communities, never acts as an impulse to work under the original native conditions” (Malinowski, op. cit., p. 156). “Nowhere in uninfluenced primitive society do we find labour associated with the idea of payment” (Lowie, “Social Organization,” in Encyclopedia of the Social Sciences, Vol. XIV, p. 14). “Nowhere is labour being leased or sold” (Thurnwald, Die menschliche Gesellschaft, Book III, 1932, p. 169). “The treatment of labour as an obligation, not requiring indemnification …” is general (Firth, Primitive Economics of the New Zealand Maori, 1929). “Even in the Middle Ages payment for work for strangers is something unheard of.” “The stranger has no personal tie of duty, and, therefore, he should work for honour and recognition.” Minstrels, while being strangers, “accepted payment, and were consequently despised” (Lowie, op. cit.).

“We can not fail to observe that work is never limited to the unavoidable minimum but exceeds the absolutely necessary amount, owing to a natural or acquired functional urge to activity” (Thurnwald, Economics, p. 209). “Labour always tends beyond that which is strictly necessary” (Thurnwald, Die menschliche Gesellschaft, p. 163).

(d) The usual incentives to labor are not gain but reciprocity, competition, joy of work, and social approbation.

Reciprocity: “Most, if not all economic acts are found to belong to some chain of reciprocal gifts and countergifts, which in the long run balance, benefiting both sides equally.… The man who would persistently disobey the rulings of law in his economic dealings would soon find himself outside the social and economic order—and he is perfectly well aware of it” (Malinowski, Crime and Custom in Savage Society, 1926, pp. 40–41):

Competition: “Competition is keen, performance, though uniform in aim, is varied in excellence.… A scramble for excellence in reproducing patterns” (Goldenweiser, “Loose Ends of Theory on the Individual, Pattern, and Involution in Primitive Society,” in Essays in Anthropology, 1936, p. 99). “Men vie with one another in their speed, in their thoroughness, and in the weights they can lift, when bringing big poles to the garden, or in carrying away the harvested yams” (Malinowski, Argonauts, p. 61).

Joy of work: “Work for its own sake is a constant characteristic of Maori industry” (Firth, “Some Features of Primitive Industry” E. J., Vol. I, p. 17). “Much time and labour is given up to aesthetic purposes, to making the gardens tidy, clean, cleared of all debris; to building fine, solid fences, to providing specially strong and big yam-poles. All these things are, to some extent, required for the growth of the plant; but there can be no doubt that the natives push their conscientiousness far beyond the limit of the purely necessary” (Malinowski, op. cit., p. 59).

Social approbation: “Perfection in gardening is the general index to the social value of a person” (Malinowski, Coral Gardens and Their Magic, Vol. II, 1935, p. 124). “Every person in the community is expected to show a normal measure of application” (Firth, Primitive Polynesian Economy, 1939, p. 161). “The Andaman Islanders regard laziness as an antisocial behaviour” (Ratcliffe-Brown, The Andaman Islanders), “To put one’s labour at the command of another is a social service, not merely an economic service” (Firth, op. cit., p. 303).

(e) Man the same down the ages.

Linton in his Study of Man advises caution against the psychological theories of personality determination, and asserts that “general observations lead to the conclusion that the total range of these types is much the same in all societies.… In other words, as soon as he [the observer] penetrates the screen of cultural difference, he finds that these people are fundamentally like ourselves” (p. 484). Thurnwald stresses the similarity of men at all stages of their development: “Primitive economics as studied in the preceding pages is not distinguished from any other form of economics, as far as human relations are concerned, and rests on the same general principles of social life” (Economics, p. 288). “Some collective emotions of an elemental nature are essentially the same with all human beings and account for the recurrence of similar configurations in their social existence” (“Sozialpsychische Abläufe im Völkerleben,” in Essays in Anthropology, p. 383). Ruth Benedict’s Patterns of Culture ultimately is based on a similar assumption: “I have spoken as if human temperament were fairly constant in the world, as if in every society a roughly similar distribution were potentially available, and, as if the culture selected from these, according to its traditional patterns, had moulded the vast majority of individuals into conformity. Trance experience, for example, according to this interpretation, is a potentiality of a certain number of individuals in any population. When it is honoured and rewarded, a considerable proportion will achieve or simulate it.…” (p. 233). Malinowski consistently maintained the same position in his works.

(f) Economic systems, as a rule, are embedded in social relations; distribution of material goods is ensured by noneconomic motives.

Primitive economy is “a social affair, dealing with a number of persons as parts of an interlocking whole” (Thurnwald, Economics, p. xii). This is equally true of wealth, work, and barter. “Primitive wealth is not of an economic but of a social nature” (ibid.). Labor is capable of “effective work” because it is “integrated into an organized effort by social forces” (Malinowski, Argonauts, p. 157). “Barter of goods and services is carried on mostly within a standing partnership, or associated with definite social ties or coupled with a mutuality in non-economic matters” (Malinowski, Crime and Custom, p. 39).

The two main principles which govern economic behavior appear to be reciprocity and storage-cum-redistribution:

“The whole tribal life is permeated by a constant give and take” (Malinowski, Argonauts, p. 167). “To-day’s giving will be recompensed by to-morrow’s taking. This is the outcome of the principle of reciprocity which pervades every relation of primitive life.…” (Thurnwald, Economics, p. 106). In order to make such reciprocity possible, a certain “duality” of institutions or “symmetry of structure will be found in every savage society, as the indispensable basis of reciprocal obligations” (Malinowski, Crime and Custom, p. 25). “The symmetrical partition of their chambers of spirits is based with the Bánaro on the structure of their society, which is similarly symmetrical” (Thurnwald, Die Gemeinde der Bánaro, 1921, p. 378).

Thurnwald discovered that apart from, and sometimes combined with, such reciprocating behavior, the practice of storage and redistribution was of the most general application from the primitive hunting tribe to the largest empires. Goods were centrally collected and then distributed to the members of the community, in a great variety of ways. Among Micronesian and Polynesian peoples, for instance, “the kings as the representatives of the first clan, receive the revenue, redistributing it later in the form of largesse among the population” (Thurnwald, Economics, p. xii). This distributive function is a prime source of the political power of central agencies (ibid., p. 107).

(g) Individual food collection for the use of his own person and family does not form part of early man’s life.

The classics assumed that pre-economic man had to take care of himself and his family. This assumption was revived by Karl Bücher in his pioneering work around the turn of the century and gained wide currency. Recent research has unanimously corrected Bücher on this point. (Firth, Primitive Economics of the New Zealand Maori, pp. 12, 206, 350; Thurnwald, Economics, pp. 170, 268, and Die menschliche Gesellschaft, Vol. III, p. 146; Herskovits, The Economic Life of Primitive Peoples, 1940, p. 34; Malinowski, Argonauts, p. 167, footnote.)

(h) Reciprocity and redistribution are principles of economic behavior which apply not only to small primitive communities, but also to large and wealthy empires.

“Distribution has its own particular history, starting from the most primitive life of the hunting tribes.” “The case is different with societies with a more recent and more pronounced stratification.…” “The most impressive example is furnished by the contact of herdsmen with agricultural people.” “The conditions in these societies differ considerably. But the distributive function increases with the growing political power of a few families and the rise of despots. The chief receives the gifts of the peasant, which have now become ‘taxes,’ and distributes them among his officials, especially those attached to his court.”

“This development involved more complicated systems of distribution.… All archaic states—ancient China, the Empire of the Incas, the Indian kingdoms, Egypt, Babylonia—made use of a metal currency for taxes and salaries but relied mainly on payments in kind stored in granaries and warehouses … and distributed to officials, warriors, and the leisured classes, that is, to the non-producing part of the population. In this case distribution fulfils an essentially economic function” (Thurnwald, Economics, pp. 106–8).

“When we speak of feudalism, we are usually thinking of the Middle Ages in Europe.… However, it is an institution, which very soon makes its appearance in stratified communities. The fact that most transactions are in kind and that the upper stratum claims all the land or cattle, are the economic causes of feudalism …” (ibid., p. 195).

T O C H A P T E R F I V E

7. Selected References to “Evolution of the Market Pattern”

Economic liberalism labored under the delusion that its practices and methods were the natural outgrowth of a general law of progress. To make them fit the pattern, the principles underlying a self-regulating market were projected backward into the whole history of human civilization. As a result the true nature and origins of trade, markets, and money, of town life and national states were distorted almost beyond recognition.

(a) Individual acts of “truck, barter, and exchange” are only exceptionally practiced in primitive society.

“Barter is originally completely unknown. Far from being possessed with a craving for barter primitive man has an aversion to it” (Bücher, Die Entstehung der Volkswirtschaft, 1904, p. 109). “It is impossible, for example, to express the value of a bonito-hook in terms of a quantity of food, since no such exchange is ever made and would be regarded by the Tikopia as fantastic.… Each kind of object is appropriate to a particular kind of social situation” (Firth, op. cit., p. 340).

(b) Trade does not arise within a community; it is an external affair involving different communities.

“In its beginnings commerce is a transaction between ethnic groups; it does not take place between members of the same tribe or of the same community, but it is, in the oldest social communities an external phenomenon, being directed only towards foreign tribes” (M. Weber, General Economic History, p. 195). “Strange though it may seem, medieval commerce developed from the beginnings under the influence, not of local, but of export trade” (Pirenne, Economic and Social History of Medieval Europe, p. 142). “Trade over long distances was responsible for the economic revival of the Middle Ages” (Pirenne, Medieval Cities, p. 125).

Thurnwald established the fact that the earliest forms of trade simply consisted in procuring and carrying objects from a distance. Essentially it is a hunting expedition. Whether the expedition is warlike as in a slave hunt or as in piracy, depends mainly on the resistance that is encountered (op. cit., pp. 145, 146). “Piracy was the initiator of maritime trade among the Greeks of the Homeric era, as among the Norse Vikings; for a long time the two vocations developed in concert” (Pirenne, Economic and Social History, p. 109).

(d) The presence or absence of markets not an essential characteristic; local markets have no tendency to grow.

“Economic systems, possessing no markets, need not on this account have any other characteristics in common” (Thurnwald, Die menschliche Gesellschaft, Vol. III, p. 137). On the early markets “only definite quantities of definite objects could be bartered for one another” (ibid., p. 137). “Thurnwald deserves special praise for his observation that primitive money and trade are essentially of social rather than of economic significance” (Loeb, “The Distribution and Function of Money in Early Society,” in Essays in Anthropology, p. 153). Local markets did not develop out of “armed trade” or “silent barter” or other forms of foreign trade, but out of the “peace” maintained on a meeting place for the limited purpose of neighborhood exchange. “The aim of the local market was to supply the provisions necessary for daily life to the population settled in the districts. This explains their being held weekly, the very limited circle of attraction and the restriction of their activity to small retail operations” (Pirenne, op. cit., Ch. 4, “Commerce to the End of the Thirteenth Century,” p. 97). Even at a later stage local markets, in contrast to fairs, showed no tendency to grow: “The market supplied the wants of the locality and was attended only by the inhabitants of the neighbourhood; its commodities were country produce and the wares of every-day life” (Lipson, The Economic History of England, 1935, Vol. I, p. 221). Local trade “usually developed to begin with as an auxiliary occupation of peasants and persons engaged in house industry, and in general as a seasonal occupation.…” (Weber, op. cit., p. 195). “It would be natural to suppose, at first glance, that a merchant class grew up little by little in the midst of the agricultural population. Nothing, however, gives credence to this theory” (Pirenne, Medieval Cities, p. 111).

(e) Division of labor does not originate in trade or exchange, but in geographical, biological, and other noneconomic facts.

“The division of labour is by no means the result of complicated economics, as rationalistic theory will have it. It is principally due to physiological differences of sex and age” (Thurnwald, Economics, p. 212). “Almost the only division of labour is between men and women” (Herskovits, op. cit., p. 13). Another way in which division of labor may spring from biological facts is the case of the symbiosis of different ethnic groups. “The ethnic groups are transformed into professional-social ones” through the formation of “an upper layer” in society. “There is thus created an organization based, on the one hand, on the contributions and services of the dependent class, and, on the other, on the power of distribution possessed by the heads of families in the leading stratum” (Thurnwald, Economics, p. 86). Herein we meet one of the origins of the state (Thurnwald, Sozialpsyschische Abläufe, p. 387).

(f) Money is not a decisive invention; its presence or absence need not make an essential difference to the type of economy.

“The mere fact that a tribe used money differentiated it very little economically from other tribes who did not” (Loeb, op. cit., p. 154). “If money is used at all, its function is quite different from that fulfilled in our civilization. It never ceases to be concrete material, and it never becomes an entirely abstract representation of value” (Thurnwald, Economics, p. 107). The hardships of barter played no role in the “invention” of money. “This old view of the classical economists runs counter to ethnological investigations” (Loeb, op. cit., p. 167, footnote 6). On account of the specific utilities of the commodities which function as money as well as their symbolic significance as attributes of power, it is not possible to regard “economic possession from a one-sided rationalistic point of view” (Thurnwald, Economics). Money may, for instance, be in use for the payment of salaries and taxes only (ibid., p. 108) or it may be used to pay for a wife, for blood money, or for fines. “We can thus see that in these examples of pre-State conditions the evalution of objects of value results from the amount of the customary contributions, from the position held by the leading personages, and from the concrete relationship in which they stand to the commoners of their several communities” (Thurnwald, Economics, p. 263).

Money, like markets, is in the main an external phenomenon, the significance of which to the community is determined primarily by trade relations. “The idea of money [is] usually introduced from outside” (Loeb, op. cit., p. 156). “The function of money as a general medium of exchange originated in foreign trade” (Weber, op. cit., p. 238).

(g) Foreign trade originally not trade between individuals but between collectivities.

Trade is a “group undertaking”; it concerns “articles obtained collectively.” Its origin lies in “collective trading journeys.” “In the arrangements for these expeditions which often bear the character of foreign trade the principle of collectivity makes its appearance” (Thurnwald, Economics, p. 145). “In any case the oldest commerce is an exchange relation between alien tribes” (Weber, op. cit., p. 195). Medieval trade was emphatically not trade between individuals. It was a “trade between certain towns, an inter-communal or inter-municipal commerce” (Ashley, An Introduction to English Economic History and Theory, Part I, “The Middle Ages,” p. 102).

(h) The countryside was cut out of trade in the Middle Ages.

“Up to and during the course of the fifteenth century the towns were the sole centres of commerce and industry to such an extent that none of it was allowed to escape into the open country” (Pirenne, Economic and Social History, p. 169). “The struggle against rural trading and against rural handicrafts lasted at least seven or eight hundred years” (Heckscher, Mercantilism, 1935, Vol. I, p. 129). “The severity of these measures increased with the growth of ‘democratic government.’ ” “All through the fourteenth century regular armed expeditions were sent out against all the villages in the neighbourhood and looms or fulling vats were broken or carried away” (Pirenne, op. cit., p. 211).

(i) No indiscriminate trading between town and town was practiced in the Middle Ages.

Intermunicipal trading implied preferential relationships between particular towns or groups of towns, such as, for instance, the Hanse of London and the Teutonic Hanse. Reciprocity and retaliation were the principles governing the relationships between such towns. In case of nonpayment of debts, for instance, the magistrates of the creditor’s town might turn to those of the debtor’s and request that justice be done in such manner as they would wish their folk to be treated “and threaten that, if the debt is not paid, reprisal will be taken upon the folk of that town” (Ashley, op. cit., Part I, p. 109).

(j) National protectionism was unknown.

“For economic purposes it is scarcely necessary to distinguish different countries from one another in the thirteenth century for there were fewer barriers to social intercourse within the limits of Christendom than we meet to-day” (Cunningham, Western Civilization in Its Economic Aspects, Vol. I, p. 3). Not until the fifteenth century are there tariffs on the political frontiers. “Before that there is no evidence of the slightest desire to favour national trade by protecting it from foreign competition” (Pirenne, Economic and Social History, p. 92). “International” trading was free in all trades (Power and Postan, Studies in English Trade in the Fifteenth Century).

(k) Mercantilism forced freer trade upon towns and provinces within the national boundaries.

The first volume of Heckscher’s Mercantilism (1935) bears the title Mercantilism as a Unifying System. As such, mercantilism “opposed everything that bound down economic life to a particular place and obstructed trade within the boundaries of the state” (Heckscher, op. cit., Vol. II, p. 273). “Both aspects of municipal policy, the suppression of the rural countryside and the struggle against the competition of foreign cities, were in conflict with the economic aims of the State” (ibid., Vol. I, p. 131). “Mercantilism ‘nationalized’ the countries through the action of commerce which extended local practices to the whole territory of the State” (Pantlen, “Handel,” in Handwörterbuch der Staatswissenschaften, Vol. VI, p. 281). “Competition was often artificially fostered by mercantilism, in order to organize markets with automatic regulation of supply and demand” (Heckscher). The first modern author to recognize the liberalizing tendency of the mercantile system was Schmoller (1884).

(l) Medieval regulationism was highly successful.

“The policy of the towns in the Middle Ages was probably the first attempt in Western Europe, after the decline of the ancient world, to regulate society on its economic side according to consistent principles. The attempt was crowned with unusual success.… Economic liberalism or laissez-faire, at the time of its unchallenged supremacy, is, perhaps, such an instance, but in regard to duration, liberalism was a small, evanescent episode in comparison with the persistent tenacity of the policy of the towns” (Heckscher, op. cit., p. 139). “They accomplished it by a system of regulations, so marvellously adapted to its purpose that it may be considered a masterpiece of its kind.… The city economy was worthy of the Gothic architecture with which it was contemporaneous” (Pirenne, Medieval Cities, p. 217).

(m) Mercantilism extended municipal practices to the national territory.

“The result would be a city policy, extended over a wider area—a kind of municipal policy, superimposed on a state basis” (Heckscher, op. cit., Vol. I, p. 131).

(n) Mercantilism, a most successful policy.

“Mercantilism created a masterful system of complex and elaborate want-satisfaction” (Bücher, op. cit., p. 159). The achievement of Colbert’s Reglements, which worked for high quality in production as an end in itself, was “tremendous” (Heckscher, op. cit., Vol. I, p. 166). “Economic life on a national scale was mainly the result of political centralization” (Bücher, op. cit., p. 157). The regulative system of mercantilism must be credited “with the creation of a labour code and a labour discipline, much stricter than anything that the narrow particularism of medieval town governments was able to produce with their moral and technological limitations” (Brinkmann, “Das soziale System des Kapitalismus,” in Grundriss der Sozialökonomik, Vol. IV).

T O C H A P T E R S E V E N

8. The Literature of Speenhamland

Only at the beginning and the end of the age of liberal capitalism do we find a consciousness of the decisive importance of Speenhamland. There was, of course, both before and after 1834 constant reference to the “allowance system” and the “maladministration of the Poor Law” which were, however, usually dated not from Speenhamland, 1795, but from Gilbert’s Act, 1782, and the true characteristics of the Speenhamland system were not clearly established in the mind of the public.

Nor are they even today. It is still widely held that it simply meant indiscriminate poor relief. Actually, it was something entirely different, namely, systematic aid-in-wages. It was only partially recognized by contemporaries that such a practice was in head-on collision with the principles of Tudor law, nor was it realized by them at all that it was completely incompatible with the emerging wages system. As to the practical effects, it remained unnoticed until later that—in conjunction with the Anti-Combination Laws, 1799–1800—it tended to depress wages, and to become a subsidy to employers.

The classical economists never stopped to investigate into the details of the “allowance system” as they did in the case of rent and currency. They lumped all forms of allowance and outdoor relief with the “Poor Laws,” and pressed for their abolishment root and branch. Neither Townsend, Malthus, nor Ricardo advocated a reform of the Poor Law; they demanded its repeal. Bentham, who alone had made a study of the subject, was on this matter less dogmatic than on others. Burke and he understood what Pitt had failed to see, that the truly vicious principle was that of aid-in-wages.

Engels and Marx made no study of the Poor Law. Nothing, one would imagine, should have suited them better than to show up the pseudo-humanitarianism of a system which was reputed to pander to the whims of the poor, while actually depressing their wages under the subsistence level (powerfully assisted in this by a special anti-trade-union law), and handing public money to the rich in order to help them to make more money out of the poor. But by their time the New Poor Law was the enemy, and some Chartists naturally tended to idealize the Old. Moreover, Engels and Marx were rightly convinced that if capitalism was to come, the reform of the Poor Law was inevitable. So they missed not only some first-class debating points, but also the argument with which Speenhamland reinforced their theoretical system, namely, that capitalism could not function without a free labor market.

For her lurid descriptions of the effects of Speenhamland, Harriet Martineau drew profusely on the classic passages of the Poor Law Report (1834). The Goulds and Barings who financed the sumptuous little volumes in which she undertook to enlighten the poor about the inevitability of their misery—she was deeply convinced that it was inevitable and that knowledge of the laws of political economy alone could make their fate bearable to them—could not have found a more sincere and, on the whole, better-informed advocate of their creed (Illustrations to Political Economy, 1831, Vol. III; also The Parish and The Hamlet in Poor Laws and Paupers, 1834). Her Thirty Years’ Peace, 1816–1846, was composed in a chastened mood and showed more sympathy toward the Chartists than toward the memory of her master, Bentham (Vol. III, p. 489, and Vol. IV, p. 453). She concluded her chronicle with this significant passage: “We have now the best heads and hearts occupied about this great question of the rights of labour with impressive warnings presented to us from abroad that it cannot be neglected under a lighter penalty than ruin to all. Is it possible that the solution should not be found? This solution may probably be the central fact of the next period of British history; and then better than now it may seem that in preparation for it lies the chief interest of the preceding Thirty Years’ Peace.” This was delayed-action prophecy. In “the next period of British history” the labor question ceased to exist; but it came back in the 1870s, and another half-century later it became a world question. Obviously, it was easier to discern in the 1840s than in the 1940s that the origins of that question lay in the principles governing the Poor Law Reform Act.

Right through the Victorian Age and after, no philosopher or historian dwelled on the petty economics of Speenhamland. Of the three historians of Benthamism, Sir Leslie Stephen did not trouble to inquire into its details; Elie Halevy, the first to recognize the pivotal role of the Poor Law in the history of philosophic radicalism, had only the haziest notions on the subject. In the third account, Dicey’s, the omission is even more striking. His incomparable analysis of the relations between law and public opinion treated “laissez-faire” and “collectivism” as the woof and warp of the texture; the pattern itself, he believed, sprang from the industrial and business trends of the time, that is, from the institutions fashioning economic life. No one could have stressed more strongly than Dicey the dominant role played by pauperism in public opinion nor the importance of the Poor Law Reform in the whole system of Benthamite legislation. And yet he was puzzled by the central importance assigned to the Poor Law Reform by the Benthamites in their legislative scheme and actually believed that the burden of the rates on industry was the point in question. Historians of economic thought of the rank of Schumpeter or Mitchell analysed the concepts of the classical economists without any reference to Speenhamland conditions.

With A. Toynbee’s lectures (1881) the Industrial Revolution became a subject of economic history; Toynbee made Tory Socialism responsible for Speenhamland and its “principle of the protecting of the poor by the rich.” About this time William Cunningham turned to the same subject and as by miracle it came to life; but his was a voice in the wilderness. Though Mantoux (1907) had the benefit of Cunningham’s masterpiece (1881) he referred to Speenhamland as just “another reform” and curiously enough credited it with the effect of “chasing the poor into the labour market” (The Industrial Revolution in the Eighteenth Century, p. 438). Beer, whose work was a monument to early English socialism, hardly mentioned the Poor Law.

It was not until the Hammonds (1911) conceived the vision of a new civilization ushered in by the Industrial Revolution that Speenhamland was rediscovered. With them it formed a part not of economic but of social history. The Webbs (1927) continued this work, raising the question of the political and economic preconditions of Speenhamland, conscious of the fact that they were dealing with the origins of the social problems of our own time.

J. H. Clapham endeavored to build up a case against what might be called the institutionalist approach to economic history such as Engels, Marx, Toynbee, Cunningham, Mantoux, and, more recently, the Hammonds, represented. He refused to deal with the Speenhamland system as an institution and discussed it merely as a trait in the “agrarian organization” of the country (Vol. I, Ch. 4). This was hardly adequate since it was precisely its extension to the towns which brought down the system. Also, he divorced the effect of Speenhamland on the rates from the wage issue and discussed the former under “Economic Activities of the State.” This, again, was artificial and omitted the economics of Speenhamland from the point of view of the employers’ class which benefited by low wages as much or more than it lost on the rates. But Clapham’s conscientious respect for the facts made up for his disregard of the institution. The decisive effect of “war enclosures” on the area in which the Speenhamland system was introduced, as well as the actual degree to which real wages were depressed by it, was shown for the first time by him.

The utter incompatibility of Speenhamland with the wage system was permanently remembered only in the tradition of the economic liberals. They alone realized that, in a broad sense, every form of the protection of labor implied something of the Speenhamland principle of interventionism. Spencer hurled the charge of “make-wages” (as the allowance system was called in his part of the country) against any “collectivist” practices, a term which he found no difficulty in extending to public education, housing, the provision of recreation grounds, and so on. Dicey, in 1913, summed up his criticism of the Old Age Pensions Act (1908) in the words: “It is in essence nothing but a new form of outdoor relief for the poor.” And he doubted whether economic liberals ever had a fair chance of bringing their policy to a successful issue. “Some of their proposals have never been carried into effect; outdoor relief, for example, has never been abolished.” If such was Dicey’s opinion, it was only natural that Mises maintained “that as long as unemployment benefit is paid, unemployment must exist” (Liberalism, 1927, p. 74); and that “assistance to the unemployed has proved to be one of the most effective weapons of destruction” (Socialism, 1927, p. 484; Nationalökonomie, 1940, p. 720). Walter Lippmann in his Good Society (1937) tried to dissociate himself from Spencer, but only to invoke Mises. He and Lippmann mirrored liberal reaction to the new protectionism of the 1920s and 1930s. Undoubtedly, many features of the situation now recalled Speenhamland. In Austria unemployment benefit was being subsidized by a bankrupt Treasury; in Great Britain “extended unemployment benefit” was indistinguishable from the “dole”; in America WPA and PWA had been launched; actually Sir Alfred Mond, head of Imperial Chemical Industries, vainly advocated in 1926 that British employers should receive grants from the unemployment fund in order to “make up” wages and thus help to increase employment. On the unemployment issue as on the currency issue, liberal capitalism in its death throes was faced with the still unsolved problems bequeathed to it by its beginnings.

9. Poor Law and the Organization of Labor

No inquiry has yet been made into the wider implications of the Speenhamland system, its origins, its effects and the reasons of its abrupt discontinuance. Here are a few of the points involved.

1. To what extent was Speenhamland a war measure?

From the strictly economic point of view, Speenhamland can not truly be said to have been a war measure, as has often been asserted. Contemporaries hardly connected the wages position with the war emergency. In so far as there was a noticeable rise in wages, the movement had started before the war. Arthur Young’s Circular Letter of 1795, designed to ascertain the effects of the failure of crops on the price of corn contained (point IV) this question: “What has been the rise (if any) in the pay of the agricultural labourers, on comparison with the preceding period?” Characteristically, his correspondents failed to attach any definite meaning to the phrase “preceding period.” References ranged from three to fifty years. They included the following stretches of time:

3 years	J. Boys, p. 97.
3–4 years	J. Boys, p. 90.
10 years	Reports from Shropshire, Middlesex, Cambridgeshire.
10–15 years	Sussex and Hampshire.
10–15 years	E. Harris.
20 years	J. Boys, p. 86.
30–40 years	William Pitt.
50 years	Rev. J. Howlett.

No one set the period at two years, the term of the French War, which had started in February 1793. In effect, no correspondent as much as mentioned the war.

Incidentally, the usual way of dealing with the increase in pauperism caused by a bad harvest and adverse weather conditions resulting in unemployment consisted (1) in local subscriptions involving doles and distribution of food and fuel free or at reduced cost; (2) in the providing of employment. Wages remained usually unaffected; during a similar emergency, in 1788–89 additional employment was actually provided locally at lower than the normal rates. (Cf. J. Harvey, “Worcestershire,” in Ann. of Agr., v, XII, p. 132, 1789. Also E. Holmes, “Cruckton,” I.c., p. 196.)

Nevertheless, it has been assumed with good cause that the war had, at least, an indirect bearing on the adoption of the Speenhamland expedient. Actually, two weaknesses of the rapidly spreading market system were being aggravated by the war and contributed to the situation out of which Speenhamland arose: (1) the tendency of corn prices to fluctuate, (2) the most deleterious effect of rioting on these fluctuations. The corn market, only recently freed, could hardly be expected to stand up to the strain of war and threats of blockade. Nor was the corn market proof against the panics caused by the habit of rioting which now took on an ominous import. Under the so-called regulative system, “orderly rioting” had been regarded by the central authorities more or less as an indicator of local scarcity which should be handled leniently; now it was denounced as a cause of scarcity and an economic danger to the community at large, not least to the poor themselves. Arthur Young published a warning on the “Consequences of rioting on account of the high prices of food provisions” and Hannah More helped to broadcast similar views in one of her didactic poems called “The Riot, or, Half a loaf is better than no bread” (to be sung to the tune of “A Cobbler there was”). Her answer to the housewives merely set in rhymes what Young in a fictitious dialogue expressed thus: “ ‘Are we to be quiet till starved?’ Most assuredly you are not—you ought to complain; but complain and act in such a manner as shall not aggravate the very evil that is felt.” There was, he insisted, not the slightest danger of a famine “provided we are free of riots.” There was good reason for concern, the supply of corn being highly sensitive to panic. Moreover, the French Revolution was giving a threatening connotation even to orderly riots. Though fear of a rise in wages was undoubtedly the economic cause of Speenhamland, it may be said that, as far as the war was concerned, the implications of the situation were far more social and political than economic.

2. Sir William Young and the relaxation of the Act of Settlement

Two incisive Poor Law measures date from 1795: Speenhamland and the relaxation of “parish serfdom.” It is difficult to believe that this was a mere coincidence. On the mobility of labor their effect was up to a point opposite. While the latter made it more attractive for the laborer to wander in search of employment, the former made it less imperative for him to do so. In the convenient terms of “push” and “pull” sometimes used in studies on migration, while the “pull” of the place of destination was increased, the “push” of the home village was diminished. The danger of a large-scale unsettlement of rural labor as a result of the revision of the Act of 1662 was thus certainly mitigated by Speenhamland. From the angle of Poor Law administration, the two measures were frankly complementary. The loosening of the Act of 1662 involved the risk which that Act was designed to avoid, namely the flooding of the “better” parishes by the poor. But for Speenhamland, this might have actually happened. Contemporaries made but little mention of this connection, which is hardly surprising once one remembers that even the Act of 1662 itself was carried practically without public discussion. Yet the conviction must have been present in the mind of Sir William Young, who twice sponsored the two measures conjointly. In 1795 he advocated the amendment of the Act of Settlement while he was also the mover of the 1796 bill by which the Speenhamland principle was incorporated in law. Once before, in 1788, he had in vain sponsored the same measures. He moved the repeal of the Act of Settlement almost in the same terms as in 1795, sponsoring at the same time a measure of relief of the poor which proposed to establish a living wage, two-thirds of which were to be defrayed by the employer, one-third to be paid from the rates (Nicholls, History of the Poor Laws, Vol. II). However, it needed another bad failure of the crops plus the French War to make these principles prevail.

3. Effects of high urban wages on the rural community.

The “pull” of the town caused a rise in rural wages and at the same time it tended to drain the countryside of its agricultural labor reserve. Of these two closely connected calamities, the latter was the more significant. The existence of an adequate reserve of labor was vital to the agricultural industry which needed many more hands in spring and October than during the slack winter months. Now, in a traditional society of organic structure the availability of such a reserve of labor is not simply a matter of the wage level, but rather of the institutional environment which determines the status of the poorer part of the population. In almost all known societies we find legal or customary arrangements which keep the rural laborer at the disposal of the landowner for employment at times of peak demand. Here lies the crux of the situation created in the rural community by the rise in urban wages, once status gave way to contractus.

Before the Industrial Revolution there were important reserves of labor in the countryside: there was domestic or cottage industry which kept a man busy in winter while keeping him and his wife available for work in the fields in spring and autumn. There was the Act of Settlement which held the poor practically in serfdom to the parish and thereby dependent upon the local farmers. There were the various other forms under which the Poor Law made the resident laborer a pliable worker such as the labor rate, billeting or the roundsmen system. Under the charters of the various Houses of Industry a pauper could be punished cruelly not only at discretion, but actually in secret; sometimes the person seeking relief could be apprehended and taken to the House if the authorities who had the right of forcibly entering his place of abode in day-time found that he “was in want, and ought to be relieved” (31 Geo. III. c. 78). The death rate at such houses was appalling. Add to this the condition of the hind or borderer of the North, who was paid in kind and was compelled to help at any time in the fields, as well as the manifold dependencies that went with tied cottages and the precarious forms of land tenure on the part of the poor, and one can gauge the extent to which a latent reserve army of docile labor was at the disposal of rural employers. Quite apart from the wage issue, there was, therefore, the issue of the maintenance of an adequate agricultural labor reserve. The relative importance of the two issues may have varied at different periods. While the introduction of Speenhamland was intimately connected with the farmers’ fear of rising wages, and while the rapid spread of the allowance system during the later years of the agricultural depression (after 1815) was probably determined by the same cause, the almost unanimous insistence of the farming community in the early 1830s on the need for the retention of the allowance system, was due not to fear of rising wages, but to their concern about an adequate supply of readily disposable labor. This latter consideration cannot, however, have been quite absent from their minds at any time, especially not during the long period of exceptional prosperity (1792–1813) when the average price of corn was soaring and outstripped by far the rise in the price of labor. Not wages, but labor supply was the permanent underlying concern at the back of Speenhamland.

It might seem somewhat artificial to try and distinguish between the motives seeing that a rise in wages would be expected to attract a larger supply of labor. In some cases, however, there is proof positive which of the two concerns was uppermost in the farmer’s mind.

First there is ample evidence that even in case of the resident poor the farmers were hostile to any form of outside employment which made the laborer less available for occasional agricultural employment. One of the witnesses of the 1834 Report accused the resident poor of going “herring and mackerel fishing and earning as much as one pound a week while their families are left to the care of the parish. On return they are sent to gaol [jail] but they do not mind as long as they are out again for the well paid work.…” (p. 33). That is, the same witness complains, why “farmers are frequently unable to find a sufficient number of labourers for their Spring and October work” (Henry Stuart’s Report, App. A, Pt. I, p. 334A).

Secondly, there was the crucial question of allotments. Farmers were unanimous that nothing would keep a man and his family as surely off the rates as a plot of his own. Yet not even the burden of the rates would induce them to agree to any form of allotment which might make the resident poor less dependent on occasional farmwork.

The point deserves attention. By 1833 the farming community was stolidly in favor of retaining Speenhamland. To quote some passages from the Poor Law Commissioners Report, the allowance system meant “cheap labour, expeditious harvests” (Power). “Without the allowance system the farmers could not possibly continue to cultivate the soil” (Cowell). “The farmers like that their men should be paid from the poor-book” (J. Mann). “The great farmers in particular, I do not think want them (the rates) reduced. Whilst the rates are as they are, they can always get what hands they want extra, and as soon as it’s raining they can turn them all on to the parish again …” (a farmers’ witness). Vestry persons are “averse to any measure that would render the labourer independent of parish assistance which, by keeping him to its confines, retains him always at their command when wanted for urgent work.” They declare that “high wages and free labourers would overwhelm them” (Pringle). Stolidly they opposed all proposals to invest the poor with allotments which would make them independent. Plots which would save them from destitution and keep them in decency and self-respect would also make them independent and remove them from the ranks of the reserve army needed by the agricultural industry. Majendie, an advocate of allotments recommended plots of a quarter acre, anything above that he thought hopeless, since “the occupiers are afraid of making labourers independent.” Power, another friend of allotments, confirmed this. “The farmers object very generally, he said, to the introduction of the allotments. They are jealous of such deductions from their holdings; they have to go farther for their manure; and they object to the increased independence of their labourers.” Okeden proposed allotments of one-sixteenth of an acre, for, he said, “this would almost exactly use up as much spare time as the wheel and the distaff, the shuttle and the knitting needles” used up when they were in full activity in every industrial cottage family!

This leaves but scant room for doubt about the true function of the allowance system from the point of view of the farming community, which was to ensure an agricultural reserve of resident poor available at any time. Incidentally, Speenhamland in this way created the semblance of a rural surplus population, where in reality there was none.

4. The allowance system in the industrial towns.

Speenhamland was primarily designed as a measure of alleviation of rural distress. This did not mean restriction to villages since market towns, too, belonged to the countryside. By the early 1830s in the typical Speenhamland area most towns had introduced the allowance system proper. The county of Hereford, for instance, which was classed from the point of view of surplus population as “good,” showed six out of six towns owning up to Speenhamland methods (four “definitely,” four “probably”), while the “bad” Sussex showed out of twelve reporting towns three without and nine with Speenhamland methods, in the strict sense of the term.

The position in the industrial towns of the North and Northwest was of course, very different. Up to 1834 the number of dependent poor was considerably smaller in the industrial towns than in the countryside, where even before 1795 the nearness of manufactures tended to increase the number of paupers greatly. In 1789 the Rev. John Howlett was arguing convincingly against “the popular error that the proportion of poor in large cities and populous manufacturing towns is higher than in mere parishes, whereas the fact is just the contrary” (Annals of Agriculture, v, XI, p. 6, 1789).

What the position in the new industrial towns was, is unfortunately not exactly known. The Poor Law Commissioners appeared disturbed about the allegedly imminent danger of the spreading of Speenhamland methods to the manufacturing towns. It was recognized that the “Northern counties are least infected by it,” yet it was still asserted that “even in the towns it exists in a very formidable degree.” The facts hardly bear this out. True, in Manchester or Oldham relief was occasionally given to persons in health and full employment. In Preston at ratepayers meetings, so Henderson wrote, a pauper was vocal who had “thrown himself on the parish his wages having been reduced from one pound to 18 shillings weekly.” The township of Salford, Padiham, and Ulverston also were classed as practising the method of aid-in-wages “regularly”; similarly Wigan, in so far as weavers and spinners were concerned. In Nottingham stockings were sold under prime cost “with a profit” to the manufacturer obviously owing to subsidies to wages paid from the rates. And Henderson, reporting on Preston, was already seeing in his mind’s eye this nefarious system “creeping in and enlisting private interests in its defence.” According to the Poor Law Commissioners’ Report the system prevailed less in the towns, merely “because the manufacturing capitalists form a small proportion of the rate-payers and consequently have less influence in the vestries than the farmers in the country places.”

However this may have been in the short run, it seems probable that in the long run there were several reasons militating against a general acceptance of the allowance system on the part of industrial employers.

One was the inefficiency of pauper labor. The cotton industry was mainly run on piece work or task work, as it was called. Now, even in agriculture “the degraded and inefficient pensions of the parish” worked so badly that “4 or 5 of them amounted to one in task work” (Select Committee on Labourers’ Wages, H. of C. 4, VI, 1824, p. 4). The Poor Law Commissioners’ Report remarked that piece work might allow the use of Speenhamland methods without necessarily destroying the “the efficiency of the manufacturing labourer”; the manufacturer might thus “really obtain cheap labour.” The implication was that the low wages of the agricultural laborer need not mean cheap labor since the inefficiency of the laborer may outweigh the low price of his labor for the employer.

Another factor which tended to turn the entrepreneur against the Speenhamland system was the danger of competitors who might be producing at a considerably lower wage-cost as a result of aid-in-wages. This threat left the farmer unmoved who was selling in an unrestricted market, but might have greatly disturbed the urban factory owner. The P. L. C. Report argued that “a Macclesfield manufacturer may find himself undersold and ruined in consequence of the maladministration of the Poor Law in Essex.” William Cunningham saw the importance of the 1834 Act mainly in its “nationalizing” effect upon the administration of the Poor Law, thus removing a serious obstacle from the path of the development of national markets.

A third objection to Speenhamland, and the one which may have carried the greatest weight with capitalist circles, was its tendency to withhold the “vast, inert mass of redundant labour” (Redford) from the urban labor market. By the end of the 1820s the demand for labor on the part of urban manufacturers was great; Doherty’s trade unions gave rise to large-scale unrest; this was the beginning of the Owenite movement which led to the biggest strikes and lockouts England had yet experienced.

From the employers’ angle, therefore, three strong arguments militated, in the long run, against Speenhamland: its deleterious effect on the productivity of labor; its tendency to create cost differentials as between the various parts of the country; its encouragement of “stagnant pools of labour” (Webb) in the countryside, thus propping up the urban workers’ monopoly of labor. None of these conditions would carry much weight with the individual employer, or even with a local group of employers. They might easily be swayed by the advantages of low labor cost, not only in ensuring profits, but also in assisting them to compete with manufacturers of other towns. Entrepreneurs as a class would, however, take a very different view, when, in the course of time, it appeared that what benefited the isolated employer or groups of employers formed a danger to them collectively. Actually, it was the spreading of the allowance system to Northern industrial towns in the early thirties, even though in an attentuated form, that consolidated opinion against Speenhamland, and carried a reform on a national scale.

The evidence points to an urban policy more or less consciously directed toward the building up of an industrial reserve army in the towns, mainly in order to cope with the sharp fluctuations of the economic activity. There was not, in this respect, much difference between town and countryside. Just as the village authorities preferred high rates to high wages, the urban authorities also were loth to remove the nonresident pauper to his place of settlement. There was a sort of competition between rural and urban employers for the share in the reserve army. Only in the severe and prolonged depression of the mid-1840s did it become impracticable to bolster up the reserve of labor at the cost of the rates. Even then rural and urban employers behaved in a similar fashion: large scale removal of the poor from the industrial towns set in, and was paralleled by the “clearance of the village” on the part of the landowners, in both cases with the aim of diminishing the number of resident poor (cf. Redford, p. 111).

5. Primary of town against countryside.

Speenhamland, according to our assumption, was a protective move of the rural community in the face of the threat represented by a rising urban wage level. This involves primacy of town against countryside in respect to the trade cycle. In at least one instance—that of the depression of 1837–45—this can be shown to have been the case. A careful statistical investigation made in 1847 revealed that the depression started from the industrial towns of the Northwest, then spread to the agricultural counties, where recovery set in distinctly later than in the industrial towns. The figures revealed that “the pressure which had fallen first upon the manufacturing districts was removed last from the agricultural districts.” The manufacturing districts were represented in the investigation by Lancashire and the West Riding of Yorkshire with a population of 201,000 (in 584 Poor Law unions), while the agricultural districts were made up of Northumberland, Norfolk, Suffolk, Cambridgeshire, Bucks, Herts, Berks, Wilts, and Devon, with a population of 208,000 (similarly, in 584 Poor Law Unions). In the manufacturing districts the improvement started in 1842 with a slowing down of the increase in pauperism from 29.37 percent to 16.72 percent followed by a positive decrease, in 1843, of 29.80 percent, in 1844 of 15.26 percent and, in 1845, of a further 12.24 percent. In striking contrast to this development, improvement in the agricultural districts began only in 1845 with a decrease of 9.08 percent. In each case the proportion of Poor Law expenditure to the head of the population was calculated, the latter having been computed for each county and year separately (J. T. Danson, “Condition of the People of the U.K., 1839–1847,” Journ. of Stat. Soc., Vol. XI, p. 101, 1848).

6. Depopulation and overpopulation of the countryside.

England was the only country in Europe with a uniform administration of labor in town and country. Statutes like those of 1563 or 1662 were enforced in rural and urban parishes alike and the J. P.s administered the law equally throughout the country. This was due both to the early industrialization of the countryside and to the subsequent industrialization of urban sites. Consequently there was no administrative chasm between the organization of labor in town and country as there was on the Continent. This again explains the peculiar ease with which labor appeared to flow from village to town and back again. Two of the most calamitous features of Continental demography were thus avoided—namely, the sudden depopulation of the countryside owing to migration from village to town, as well as the irreversibility of this process of migration which thus involved the uprooting of such persons who had taken up work in town. Landflucht was the name for this cataclysmic depletion of the countryside which had been the terror of the agricultural community in Central Europe ever since the second half of the nineteenth century. Instead, we find, in England, something like an oscillation of the population between urban and rural employment. It was almost as if a large part of the population had been in a state of suspension, a circumstance which made the movement of internal migration very difficult, if not impossible, to follow. Remember, moreover, the configuration of the country with its ubiquitous ports which made long-distance migration so to speak unnecessary, and the easy adjustment of the administration of the Poor Law to the requirements of the national labor organization becomes understandable. The rural parish often paid outdoor relief to nonresident paupers who had taken up employment in some not too distant town, sending round relief money to their place of abode; manufacturing towns, on the other hand, frequently paid out poor relief to resident poor who had no settlement in the town. Only exceptionally were mass removals carried into effect by the urban authorities as in 1841–43. Of the 12,628 poor persons at that occasion removed from nineteen manufacturing towns of the North only 1 percent, had their settlement in the nine agricultural districts, according to Redford. (If the nine “typical agricultural districts” selected by Danson in 1848 are substituted to Redford’s counties, the result varies but slightly, i.e., from 1 percent to 1.3 percent.) There was but very little long-distance migration, as Redford has shown, and a large part of the reserve army of labor was kept at the employers’ disposal by means of liberal relief methods in village and in manufacturing town. No wonder that there was simultaneous “overpopulation” both in town and country, while actually at times of peak demand Lancashire manufacturers had to import Irish workers in large numbers and farmers were emphatic that they would be unable to carry on at harvest time if any of the village paupers were induced to emigrate.

Some Contemporary Books on Pauperism and the Old Poor Law

Acland, Compulsory Savings Plans (1786).

Anonymous, Considerations on Several Proposals Lately Made for the Better Maintenance of the Poor. With an Appendix (2nd ed., 1752).

Anonymous, A New Plan for the Better Maintenance of the Poor of England (1784).

An Address to the Public, from the Philanthropic Society, instituted in 1788 for the Prevention of Crimes and the Reform of the Criminal Poor (1788).

Applegarth, Rob., A Plea for the Poor (1790).

Belsham, Will, Remarks on the Bill for the Better Support and Maintenance of the Poor (1797).

Bentham, J., Pauper Management Improved (1802).

———, Observation on the Restrictive and Prohibitory Commercial System (1821).

———, Observations on the Poor Bill, Introduced by the Right Honourable William Pitt; written February 1797.

Burke, E., Thoughts and Details on Scarcity (1795).

Cowe, James, Religious and Philanthropic Trusts (1797).

Crumple, Samuel, M.D., An Essay on the Best Means of Providing Employment for the People (1793).

Defoe, Daniel, Giving Alms No Charity, and Employing the Poor a Grievance to the Nation (1704).

Dyer, George, A Dissertation on the Theory and Practice of Benevolence (1795).

———, The Complaints of the Poor People of England (1792).

Eden, On the Poor (1797), 3 vols.

Gilbert, Thomas, Plan for the Better Relief and Employment of the Poor (1781).

Godwin, William, Thoughts Occasioned by the Perusal of Dr. Parr’s Spiritual Sermon, Preached at Christ Church April 15, 1800 (London, 1801).

Hampshire, State of the Poor (1795).

Hampshire Magistrate (E. Poulter), Comments on the Poor Bill (1797).

Howlett, Rev. J., Examination of Mr. Pitt’s Speech (1796).

James, Isaac, Providence Displayed (London, 1800), p. 20.

Jones, Edw., The Prevention of Poverty (1796).

Luson, Hewling, Inferior Politics: or, Considerations on the Wretchedness and Profligacy of the Poor (1786).

M’Farlane, John, D. D., Enquiries Concerning the Poor (1782).

Martineau, H., The Parish (1833).

———, The Hamlet (1833).

———, The History of the Thirty Years’ Peace (1849), 3 vols.

———, Illustrations of Political Economy (1832–34), 9 vols.

Massie, J., A Plan … Penitent Prostitutes. Foundling Hospital, Poor and Poor Laws (1758).

Nasmith, James, D. D., A Charge, Isle of Ely (1799).

Owen, Robert, Report of the Committee of the Association for the Relief of the Manufacturing and Labouring Poor (1818).

Paine, Th., Agrarian Justice (1797).

Pew, Rich., Observations (1783).

Pitt, Wm. Morton, An Address to the Landed Interest of the defic. of Habitation and Fuel for the Use of the Poor (1797).

Plan of a Public Charity, A (1790), “On Starving,” a sketch.

First Report of the Society for Bettering the Condition and Increasing the Comforts of the Poor.

Second Report of the Society for Bettering the Condition of the Poor (1797).

Ruggles, Tho., The History of the Poor (1793), 2 vols.

Sabatier, Wm., Esq., A Treatise on Poverty (1793).

Saunders, Robert, Observations.

Sherer, Rev. J. G., Present State of the Poor (1796).

Spitalfields institution, Good Meat Soup (1799).

St. Giles in the Field, Vestry of the United Parishes of, Criticism of “Bill for the Better Support and Maintenance of the Poor” (1797).

Suffolk Gentleman, A Letter on the Poor Rates and the High Price of Provisions (1795).

[Townsend, Joseph], Dissertation on the Poor Laws 1786 by A Well-Wisher of Mankind.

Vancouver, John, Causes and Production of Poverty (1796).

Wilson, Rev. Edw., Observations on the Present State of the Poor (1795).

Wood, J., Letter to Sir William Pulteney (on Pitt’s Bill) (1797).

Young, Sir W., Poor Houses and Work-Houses (1796).

Some Modern Writings

Ashley, Sir W. J., An Introduction to English Economic History and Theory (1931).

Belasco, Ph. S., “John Bellers, 1654–1725,” Economica, June 1925.

———, “The Labour Exchange Idea in the Seventeenth Century,” Ec. J., Vol. I, p. 275.

Blackmore, J. S., and Mellonie, F. C., Family Endowment and the Birthrate in the Early Nineteenth Century, Vol. I.

Clapham, J. H., Economic History of Modern Britain, Vol. I, 1926.

Marshall, Dorothy, “The Old Poor Law, 1662–1795,” in The Ec. Hist. Rev., Vol. VIII, 1937–8, p. 38.

Palgrave’s Dictionary of Political Economy, Art. “Poor Law,” 1925.

Webb, S. and B., English Local Government, Vol. 7–9, “Poor Law History,” 1927–29.

Webb, Sidney, “Social Movements,” C.M.H., Vol. XII, pp. 730–65.

10. Speenhamland and Vienna

The author was first drawn to the study of Speenhamland and its effects on the classical economists by the highly suggestive social and economic situation in Austria as it developed after the Great War.

Here, in a purely capitalistic surrounding, a socialist municipality established a regime which was bitterly attacked by economic liberals. No doubt some of the interventionist policies practiced by the municipality were incompatible with the mechanism of a market economy. But purely economic arguments did not exhaust an issue which was primarily social, not economic.

The main facts about Vienna were these. During most of the fifteen years following the Great War, 1914–18, unemployment insurance in Austria was heavily subsidized from public funds, thus extending outdoor relief indefinitely; rents were fixed at a minute fraction of their former level, and the municipality of Vienna built large tenement houses on a nonprofit basis, raising the required capital by taxation. While no aid-in-wages was given, all-round provision of social services, modest though they were, might have actually allowed wages to drop excessively, but for a developed trade union movement which found, of course, strong support in extended unemployment benefit. Economically, such a system was certainly anomalous. Rents, restricted to a quite unremunerative level, were incompatible with the existing system of private enterprise, notably in the building trade. Also, during the earlier years, social protection in the impoverished country interfered with the stability of the currency—inflationist and interventionist policies had gone hand in hand.

Eventually Vienna, like Speenhamland, succumbed under the attack of political forces powerfully sustained by the purely economic argument. The political upheavals in 1832 in England and 1934 in Austria were designed to free the labor market from protectionist intervention. Neither the squire’s village nor working-class Vienna could indefinitely isolate itself from its environment.

Yet obviously there was a very big difference between the two interventionist periods. The English village, in 1795, had to be sheltered from a dislocation caused by economic progress—a tremendous advance of urban manufactures; the industrial laboring class of Vienna, in 1918, had to be protected against the effects of economic retrogression, resulting from war, defeat, and industrial chaos. Eventually, Speenhamland led to a crisis of the organization of labor, which opened up the road to a new era of prosperity; while the Heimwehr victory in Austria formed part of a total catastrophe of the national and social system.

What we wish to stress here is the enormous difference in the cultural and moral effects of the two types of intervention: the attempt of Speenhamland to prevent the coming of market economy and the experiment of Vienna trying to transcend such an economy altogether. While Speenhamland caused a veritable disaster of the common people, Vienna achieved one of the most spectacular cultural triumphs of Western history. The year 1795 led to an unprecedented debasement of the laboring classes, which were prevented from attaining the new status of industrial workers; 1918 initiated an equally unexampled moral and intellectual rise in the condition of a highly developed industrial working class which, protected by the Vienna system, withstood the degrading effects of grave economic dislocation and achieved a level never reached before by the masses of the people in any industrial society.

Clearly, this was due to the social, as distinct from the economic, aspects of the matter. But did the orthodox economists have a proper grasp of the economics of interventionism? The economic liberals were, in effect, arguing that the Vienna regime was another “maladministration of the Poor Law” another “allowance system” which needed the iron broom of the classical economists. But had not the classics themselves been misled by the comparatively lasting conditions created by Speenhamland? They were often correct about the future, which their deep insight helped to shape, but utterly mistaken about their own time. Modern research has proved their reputation for sound practical judgment to have been undeserved. Malthus misread the needs of his time completely; had his tendentious warnings of overpopulation been effective with the brides to whom he delivered them personally, this “might have shot economic progress dead in its tracks,” says T. H. Marshall. Ricardo misstated the facts of the currency controversy as well as the role of the Bank of England, and failed to grasp the true causes of currency depreciation which, as we know today, consisted primarily in political payments and difficulties of transfer. Had his advice on the Bullion Report been followed, Britain would have lost the Napoleonic War, and “the Empire would not exist to-day.”

Thus the Vienna experience and its similarities to Speenhamland, which sent some back to the classical economists, turned others doubtful of them.

T O C H A P T E R E I G H T

11. Why Not Whitbread’s Bill?

The only alternative to the Speenhamland policy seemed to have been Whitbread’s Bill, brought in in the winter of 1795. It demanded extension of the Statute of Artificers of 1563, so as to include the fixing of minimum wages by yearly assessment. Such a measure, its author argued, would maintain the Elizabethan rule of wage assessment, while extending it from maximum to minimum wages, and thus prevent starvation in the countryside. Undoubtedly, it would have met the needs of the emergency, and it is worth noting that members for Suffolk, for instance, supported Whitbread’s Bill, while their magistrates had also endorsed the Speenhamland principle in a meeting at which Arthur Young himself was present; to the lay mind the difference between the two measures could not have been strikingly great. This is not surprising. One hundred and thirty years later, when the Mond Plan (1926) proposed to use the unemployment fund to supplement wages in industry, the public still found it difficult to comprehend the decisive economic difference between aid to the unemployed and aid-in-wages to the employed.

However, the choice in 1795 was between minimum wages and aid-in-wages. The difference between the two policies can be best discerned by relating them to the simultaneous repeal of the Act of Settlement of 1662. The repeal of this Act created the possibility of a national labor market, the main purpose of which was to allow wages “to find their own level.” The tendency of Whitbread’s Minimum Wage Bill was contrary to that of the repeal of the Act of Settlement, while the tendency of the Speenhamland Law was not. By extending the application of the Poor Law of 1601 instead of that of the Statute of Artificers of 1563 (as Whitbread suggested), the squires reverted to paternalism primarily in respect to the village only and in such forms as involved a minimum of interference with the play of the market, while actually making its wage-fixing mechanism inoperative. That this so-called application of the Poor Law was in reality a complete overthrow of the Elizabethan principle of enforced labor was never openly admitted.

With the sponsors of the Speenhamland Law pragmatic considerations were paramount. The Rev. Edward Wilson, Canon of Windsor, and J. P. for Berkshire, who may have been the proponent, set out his views in a pamphlet in which he declared categorically for laissez-faire. “Labour, like everything else brought to the market, had in all ages found its level, without the interference of law,” he said. It might have been more appropriate for an English magistrate to say, that, on the contrary, never in all the ages had labor found its level without the intervention of law. However, figures showed, Canon Wilson went on, that wages did not increase as fast as the price of corn, whereupon he proceeded respectfully to submit to the consideration of the magistracy “A Measure for the quantum of relief to be granted to the poor.” The relief added up to five shillings a week for a family of man, wife, and child. An “Advertisement” to his booklet ran: “The substance of the following Tract was suggested at the County Meeting at Newbury, on sixth of last May.” The magistracy, as we know, went further than the Canon: it unanimously allowed a scale of six shillings (if the first child was counted).

T O C H A P T E R T H I R T E E N

12. Disraeli’s “Two Nations” and the Problem of Colored Races

Several authors have insisted on the similarity between colonial problems and those of early capitalism. But they failed to follow up the analogy the other way, that is, to throw light on the condition of the poorer classes of England a century ago by picturing them as what they were—the detribalized, degraded natives of their time.

The reason why this obvious resemblance was missed lay in our belief in the liberalistic prejudice which gave undue prominence to the economic aspects of what were essentially noneconomic processes. For neither racial degradation in some colonial areas today nor the analogous dehumanization of the laboring people a century ago was economic in essence.

(a) Destructive culture contact is not primarily an economic phenomenon.

Most native societies are now undergoing a process of rapid and forcible transformation comparable only to the violent changes of a revolution, says L. P. Mair. Although the invaders’ motives are definitely economic, and the collapse of primitive society is certainly often caused by the destruction of its economic institutions, the salient fact is that the new economic institutions fail to be assimilated by the native culture which consequently disintegrates without being replaced by any other coherent value system.

First among the destructive tendencies inherent in Western institutions stands “peace over a vast area,” which shatters “clan life, patriarchal authority, the military training of the youth; it is almost prohibitive to migration of clans or tribes” (Thurnwald, Black and White in East Africa; The Fabric of a New Civilization, 1935, p. 394). “War must have given a keenness to native life which is sadly lacking in these times of peace.…” The abolition of fighting decreases population, since war resulted in very few casualties, while its absence means the loss of vitalizing customs and ceremonies and a consequent unwholesome dullness and apathy of village life (F. E. Williams, Depopulation of the Suan District, 1933, “Anthropology” Report, No. 13, p. 43). Compare with this the “lusty, animated, excited existence” of the native in his traditional cultural environment (Goldenweiser, Loose Ends, p. 99).

The real danger, in Goldenweiser’s words, is that of a “cultural in-between” (Goldenweiser, Anthropology, 1937, p. 429). On this point there is practical unanimity. “The old barriers are dwindling and no kind of new guiding lines are offered” (Thurnwald, Black and White, p. 111). “To maintain a community in which the accumulation of goods is regarded as anti-social and integrate the same with contemporary white culture is to try to harmonize two incompatible institutional systems” (Wissel in Introduction to M. Mead, The Changing Culture of an Indian Tribe, 1932). “Immigrant culture-bearers may succeed in extinguishing an aboriginal culture, but yet fail either to extinguish or to assimilate its bearers” (Pitt-Rivers, “The Effect on Native Races of Contact with European Civilization,” in Man, Vol. XXVII, 1927). Or, in Lesser’s pungent phrase of yet another victim of industrial civilization: “From cultural maturity as Pawnee they were reduced to cultural infancy as white men” (The Pawnee Ghost Dance Hand Game, p. 44).

This condition of living death is not due to economic exploitation in the accepted sense in which exploitation means an economic advantage of one partner at the cost of the other, though it is certainly intimately linked with changes in the economic conditions connected with land tenure, war, marriage, and so on, each of which affects a vast number of social habits, customs, and traditions of all descriptions. When a money economy is forcibly introduced into sparsely populated regions of Western Africa, it is not the insufficiency of wages which results in the fact that the natives “cannot buy food to replace that which has not been grown, for nobody else has grown a surplus of food to sell to them” (Mair, An African People in the Twentieth Century, 1934, p. 5). Their institutions imply a different value scale; they are both thrifty and at the same time non-market-minded. “They will ask the same price when the market is glutted as prevailed when there was great scarcity, and yet they will travel long distances at considerable cost of time and energy to save a small sum on their purchases” (Mary H. Kingsley, West African Studies, p. 339). A rise in wages often leads to absenteeism. Zapotec Indians in Tehuantepec were said to work half as well at 50 centavos as at 25 centavos a day. This paradox was fairly general during the early days of the Industrial Revolution in England.

The economic index of population rates serves us no better than wages. Goldenweiser confirms the well-known observation Rivers made in Melanesia that culturally destitute natives maybe “dying of boredom.” F. E. Williams, himself a missionary working in that region, writes that the “influence of the psychological factor on the death rate” is easily understood. “Many observers have drawn attention to the remarkable ease or readiness with which a native may die.” “The restriction of former interests and activities seems fatal to his spirits. The result is that the native’s power of resistance is impaired, and he easily goes under to any kind of sickness” (op. cit., p. 43). This has nothing to do with the pressure of economic want. “Thus an extremely high rate of natural increase may be a symptom either of cultural vitality or cultural degradation” (Frank Lorimer, Observations on the Trend of Indian Population in the United States, p. 11).

Cultural degradation can be stopped only by social measures, incommensurable with economic standards of life, such as the restoration of tribal land tenure or the isolation of the community from the influence of capitalistic market methods. “Separation of the Indian from his land was the ONE death blow,” writes John Collier in 1942. The General Allotment Act of 1887 “individualized” the Indian’s land; the disintegration of his culture which resulted lost him some three quarters, or ninety million acres, of this land. The Indian Reorganization Act of 1934 reintegrated tribal holdings, and saved the Indian community, by revitalizing his culture.

The same story comes from Africa. Forms of land tenure occupy the center of interest, because it is on them that social organization most directly depends. What appear as economic conflicts—high taxes and rents, low wages—are almost exclusively veiled forms of pressure to induce the natives to give up their traditional culture and thus compel them to adjust to the methods of market economy, i.e., to work for wages and procure their goods on the market. It was in this process that some of the native tribes like the Kaffirs and those who had migrated to town lost their ancestral virtues and became a shiftless crowd, “semi-domesticated animals,” among them loafers, thieves, and prostitutes—an institution unknown among them before—resembling nothing more than the mass of the pauperized population of England about 1795–1834.

(b) The human degradation of the laboring classes under early capitalism was the result of a social catastrophe not measurable in economic terms.

Robert Owen observed of his laborers as early as 1816 that “whatever wage they received the mass of them must be wretched.…” (To the British Master Manufacturers, p. 146). It will be remembered that Adam Smith expected the land-divorced laborer to lose all intellectual interest. And M’Farlane expected “that the knowledge of writing and accounts will every day become less frequent among the common people” (Enquiries Concerning the Poor, 1782, pp. 249–50). A generation later Owen put down the laborers’ degradation to “neglect in infancy” and “overwork,” thus rendering them “incompetent from ignorance to make a good use of high wages when they can procure them.” He himself paid them low wages and raised their status by creating for them artificially an entirely new cultural environment. The vices developed by the mass of the people were on the whole the same as characterized colored populations debased by disintegrating culture contact: dissipation, prostitution, thievishness, lack of thrift and providence, slovenliness, low productivity of labor, lack of self-respect and stamina. The spreading of market economy was destroying the traditional fabric of the rural society, the village community, the family, the old form of land tenure, the customs and standards that supported life within a cultural framework. The protection afforded by Speenhamland made matters only worse. By the 1830s the social catastrophe of the common people was as complete as that of the Kaffir is today. One and alone, an eminent Negro sociologist, Charles S. Johnson, reversed the analogy between racial debasement and class degradation, applying it this time to the latter: “In England, where, incidentally, the Industrial Revolution was more advanced than in the rest of Europe, the social chaos which followed the drastic economic reorganization converted impoverished children into the ‘pieces’ that the African slaves were, later, to become.… The apologies for the child serf system were almost identical with those of the slave trade” (“Race Relations and Social Change,” in E. Thompson, Race Relations and the Race Problem, 1939, p. 274).