A Criticism of Mr. Henry George

Arnold Toynbee

[The first of two lectures delivered in St. Andrew's Hall, London, January 1883]

PREFATORY NOTE.

When Mr. Toynbee delivered the two speeches which make up this pamphlet, it was his intention to use the shorthand writer's report of what he said as the basis of a treatise, containing a fuller statement of his arguments, and, in particular, a large number of statistical details, of which in speaking he only indicated the general results. A protracted and, as it has proved, fatal illness frustrated his purpose. Mr. Toynbee was never able so much as to look over the proofs of his addresses, to assure himself that he was correctly reported, much less to review and recast what he said. Delivered as they were in the extremity of physical weakness, and now appearing without revision, these speeches may well seem to those who knew him best to be but an imperfect expression of his thought and aims. Nevertheless, the friend to whom the task of editing them has fallen has not felt himself justified in making any but the most trifling and obvious corrections. There were, indeed, no materials for a more complete revision, as the speeches were entirely extempore, and Mr. Toynbee was not in the habit of making notes of his addresses. The excellence of the shorthand writer's notes permits the hope that there may be no serious errors in the report of what Mr. Toynbee actually said, however far this may fall short of what, had strength not failed him, he was competent and anxious to say. But any regrets on this score are now merged in the wider and lasting regret for all that has been lost to his friends and the community by his untimely death. -- A. M.

The book I have undertaken to criticise does not stand alone in economic and social literature. It is one of many similar works which have been inspired by a vision of human misery. It is true that it is not filled, like the work of the great socialist, Karl Marx, with detailed descriptions of human degradation; nevertheless, it has human injustice for its theme. Some of us, I know, are inclined to put the book down in disgust and impatience; but I think any of us who have, even for a moment, looked into the abyss will be glad that this book has once more reminded us of the widespread suffering that is concealed beneath the smooth surface of our ordinary life. I know that many who have read this book have felt not merely disgust and impatience, but have thought that the warm and fierce sympathy shown in it with human pain was not real; but they have made a great mistake.

I do not think we now require such books as these to make us realise and understand those more obvious forms of suffering which press upon us from every side. We are all of us, I suppose, appalled when we picture the dark and desolate cabins of Maamtrasna, on that bleak mountain side, inhabited by half-civilised savages, or when we visit those still more dark and desolate corners of this great city, inhabited by beings whom we still call men and women, or when we catch a glimpse of the moral interior of a labourer's cottage. These forms of suffering, I say, are obvious -- they are obtrusive; but it is a more refined form of suffering which, it seems to me, this book brings to our notice. It is the suffering of men who earn what we call good wages, whose labour -- labour, let me remind you, which does not invigorate the brain, but which wears it out prematurely, and depresses the mind and dulls the intellect - whose labour, I say, cannot obtain for them even a whole house as a home, nor the decent enjoyments of life, nor the certainty of an honourable old age. Forty years ago it was the famished multitude clamouring for bread that threatened society. To-day, though we still have our 800,000 paupers, and hundreds of thousands more who are kept from pauperism only by heroic sacrifice, to-day, I say, society is threatened not by this multitude, for cheap bread has kept them quiet since 1846, but it is threatened by that large class of men whose wants have grown while their income has been stationary, or whose wants have grown faster than their incomes.

I know that there are some, again, who will say that this description is exaggerated, and I admit that there are classes of artisans -- stone carvers, for example -- whose wages are high, and who find rational delight in their employment; but I maintain that any people who have visited factories, or descended into mines, any person who has taken the trouble to compare the necessary expenditure of an artisan with his income, will understand that what I say is true. The misery, however, which produced the socialism with which we are familiar in England was misery, in the first instance, of a physical kind. All modern socialism originated with the great industrial revolution which began at the commencement of the last century; the industrial revolution which silenced the spinning-wheel and hand-loom, and dragged men and women into great cities and huge factories. With that began the modern problems of the distribution of wealth; and also at that time great socialist writers made their appearance; but the same epoch which gave birth to the socialists, gave birth also to their great enemies, the economists.

These writers - Malthus, James Mill, David Ricardo -- men of intellect and of upright character, framed an explanation of the misery which they saw before them, which denied hope to the human race. One man, the most eminent of them, Ricardo, caught up the scattered points which various writers had elucidated, and welded them into a compact and lucid science No writer that I know has a greater power of abstract thought than David Ricardo, and I have found it difficult, if once you grant his premises, to find any mistakes in his conclusions. From 1817 to 1848 the economists reigned supreme. There were, indeed, objections raised, objections raised even by men in their own ranks. Sismondi, the great Swiss economist, for example, once talking to Ricardo, said, "What, then, is wealth everything? is man nothing?" Ricardo answered -- at least you will find the answer in his books -- that the suffering which Sismondi pitied was the result of an inevitable law.

To explain the views which the economists took, we must remember that they looked upon life as a mad race between population and wealth. They would not allow for a moment that the machinery in the factories was to be stopped in order that women and children might breathe, lest a little wealth should be lost, and the world go back. There were others who protested outside the ranks of the economists. There were the Christian socialists, there was Thomas Carlyle, who in his Past and Present flung upon the economists passionate reproaches, which all of them left unheeded but one, and that man was John Stuart Mill. In 1848 was published Mill's book, which, though it incorporates much of the old economic doctrines, yet represents an immense and unparalleled advance in England of union and of sympathy with the mass of the people. In that book, for the first time, is seen the influence of the socialists upon the economists; the influence of the earliest social reformers, who, bewildered and perplexed as they were, said that a science that told them these things must be a false science. And since Mill's time, the argument has gone on, and at last it is now apparent to all the world, that the long and bitter controversy between economists and human beings has ended in the conversion of the economists. The economist now dares to say that the end of his practical science is not wealth, but man; and further, he owns that his intellectual theories have also undergone a vast change. He has learnt to recognise that the laws which he supposed were universal are often only partial and provisional; he has learnt to recognise that the method which he uses with such confidence -- the method of abstract deduction -- is a most dangerous one; that it can be used only by men who know that at every step they have to question their premises, and that at every step they have to test their conclusions by experience. Last of all, he recognises that the vast problems which we all now see are looming upon us cannot be solved by rash and hasty statements, but only by patient and vigilant science. He recognises that to solve the problem of to-day we must go back far into the past. He recognises that the problem of distribution is not a simple one; that it is a very difficult and a very complicated one. That is the position of the economists at the present time; but it is a singular thing, that at the very time when David Ricardo has been discredited amongst the economists themselves, he has become the founder of two new systems of socialism. He, the great middle-class economist, the man who was looked up to as the bulwark of society, this man by his theory of wages has produced Lassalle, and by his theory of rent has produced Henry George. To-night I have nothing to do with Lassalle, I have to speak of Mr. Henry George.

The book which Mr. George wrote between 1877 and 1879 is, as we all know, a remarkable one. It is full of acute dialectic and splendid declamation; full, as I said in my opening remarks, of a real and keen sympathy with the people. Indeed, as he tells us in his book, he might well sympathise with the people, for he had been a workman himself. Nevertheless, remarkable as the book is, original as the book is -- not so original as many of us suppose, not so original if we come to look back upon American economic literature -- it has yet, in spite of partial truths, promulgated errors which I believe to be fundamentally dangerous. And I, for one, seeing how much wrong the economists have done in the past by false theories, remembering that the economists for years denounced Trades Unions, and told the unionists that they could not raise the rate of wages by combination; remembering that the economists have sometimes influenced legislation in the past in a mischievous direction, that they were guilty, for instance, of the Irish Land Act of i860, which substituted contract for tenure; I am determined that, as far as in me lies, I will be no party to any more illusions. I will do what I can to further the public good, but I will not sacrifice my intellectual conscience by supporting a fair, but delusive panacea.

The book which I have spoken of was written in 1877, but it was preceded by a pamphlet, which was written in 1871. I said just now that George was a child of David Ricardo, but that is an inadequate statement; we must also recognise that he is the child, or rather, that his theories are the children, of the peculiar circumstances of a new State. The first pamphlet which Mr. George wrote was a pamphlet about the Land Question in California. And it is no wonder that he should have written the pamphlet, for he saw in a country with natural resources greater than those of France, and with a population at that time numbering not more than 600,000 people, tramps and paupers make their appearance. That was enough to make a man gasp and stare. He also saw the concentration of land in a few hands - one peculiar evil, that is to say, of an old country making its appearance in a new one. Properties there were at the time which exceeded almost anything we know in England, properties of more than a quarter of a million acres held by men who did not even go through the pretence of rendering any public service as the condition of their tenure.

Mr. George pondered on these things, and whilst he was pondering, he stumbled across Mill's pamphlets, published in 1870, on the reform of land tenure. In those pamphlets Mill for the first time put forward the famous proposal for the appropriation of the unearned increment. But the proposal was not a new one. It is to be found in the first edition of Mill's book, published in 1848, and it is to be found still further back than that in his father's book on political economy, published in 1821. The history of the idea is a singular one, for there is no doubt that it was the historian of British India with whom the idea originated. It was his observations on the systems of land tenure and revenue in India that led him to make, in a clear and incisive form, the proposal which has now been popularised and become the basis of an agitation. That proposal put forward in Mill's pamphlet- awakened new thoughts in Mr. George. It awakened also new thoughts in land reformers in Victoria and our own colonies. All over the world men were busy with the idea, fighting then for its practical application.

Mr. George's pamphlet, though a very remarkable one, appears to have produced little effect. His practical proposals were two. First, he said, "We will tax all land up to its full value." By that he meant that he would take all that part of rent which is due to the growth of civilisation and to wealth, and not to individual labour and enterprise.

Let us remember that that is the proposal -- to take, mark you, not what a man puts into the soil, but what comes to a man owing to no exertion on his own part. "If," said Mr. George, "you tax these great estates up to their full value, then it will be impossible any longer for the great landowners to keep their properties together; they will be forced to sell." In the next place, he proposed, and it was a remarkable proposal to make, to limit the size of properties -- that is to say, that land in future should be granted only in 40 and 50 acre sections; and he believed that in that way a steady and regular development of population and wealth would take place. I want you to remember that proposition, because Mr. George abandoned it afterwards. His pamphlet attracted some attention, but produced, as I said, little effect. Mr. George, however, did not abandon his consideration of the question. He turned to other American economists; he studied the writings of Henry Carey, the Pennsylvanian economist; of Francis Walker, the eminent head of the United States Department of Statistics; of Francis Bowen, another American economist; and of M. Emile de Laveleye.

All these books he had studied, when in the year 1877 there came the great labour war in Pennsylvania. That labour war in Pennsylvania, and the distress that followed, led Mr. George to begin this great work, which he completed two years afterwards. Remember that the work was begun at a time of immense distress, and of widespread and deep depression of trade. In 1878, for example, it was said that 600,000 men left the East for the West. Everywhere wages fell, and artisans who had emigrated from England to America returned from America to England. It was in the midst, therefore, of an unexampled depression of trade, in a continent with the greatest natural resources in the world, that this book was written. Again, remember that these circumstances must have left their mark upon the treatise. And note, too, that Mr. George's practical proposals are now a little changed from those of 1871. His first practical proposal is still to confiscate rent -- i.e., to take the unearned increment without compensation; but, on the other hand, he abandons his old proposal of limiting the size of farms, and asserts that large farms are due to an inevitable law of economic development, with which he will not meddle.

This is the book which I have to criticise. It abounds with points, it abounds with side issues; but there is one main contention, and one principal theory. The contention is, that rent must be taken, and the theory is a theory of the development of society in relation to the distribution of wealth. That not only for Mr. George, but for all of us, is the main issue ; that is the real question -- Is the law of economic development one which will tend to produce greater and greater equality in the distribution of wealth, or is it one which will concentrate wealth more and more in a few hands? Now we know that in England wealth has become gradually concentrated in fewer hands. The fact has been disputed, and it is not such a simple question as some people suppose; but still, if we take the evidence of the most competent persons, we shall find that upon this point they agree. There was a famous Budget speech made by Mr. Gladstone in 1864, a speech in which, after dilating upon the unexampled prosperity of the country. Air. Gladstone paused, and turned round and said to his astonished audience, "But what is human life in the great majority of cases but a bare struggle for existence?" And the remark was repeated in less emphatic, but equally significant, language only the other day by the latest member of the Cabinet, Sir Charles Dilke. We have, therefore, the evidence both of Mr. Gladstone, the Prime Minister, and Sir Charles Dilke, that wealth is concentrated in fewer hands, or, at any rate, that the mass of the people do not share in the growing prosperity of our industry and our commerce. And the same phenomenon was visible in America in those two years of which I speak. There, also, was the spectacle of men like Vanderbilt. who inherited twenty millions, and of others almost equally rich, who, whilst the labourers were driven by thousands from the East to the West, still lived in luxury, and seemed to have kept the wealth which they had made.

What is the explanation? What is the explanation of this ever- recurring question; the question which has bewildered the minds and saddened the hearts of every man who cares for his fellowmen? The explanation must be one of four things. Either there is an impassable, inexorable physical limit, which presses down the labourers, and against which the labourers struggle in vain. Or, there must be some fatal flaw in our institutions. Or, there must be some sinister shadow cast by the law of production -- by the system of production on a large scale. That system which for production is most efficient may perhaps cause a more unequal distribution of wealth. Or, last of all, the fault may be in human nature; it may be that it is human rapacity -- the apparently inexorable demand of men to benefit themselves at the expense of their fellow-creatures. One of these four or a combination of these four must be the cause. Mr. George says that the explanation is not to be found in any limit set by external nature; that it is not to be found in all institutions or some, but only in one -- private property in land. And he expressly denies that the economic structure of society can have any influence; and further, he thinks that if you once stamped out that one baneful institution, human nature would be powerless to oppress and degrade. Of the four possible kinds of cause Mr. George accordingly only acknowledges the second, namely, our institutions, and only one part of these -- i.e., private property in land.

Is Mr. George right about the first statement? That is our first point. Remember that at present, for the purposes of to-night, I am speaking of new countries, not of old countries; I shall deal with old countries in my next lecture. Is Mr. George right with regard to America when he says there is no present physical limit to the prosperity of the people?

Yes, Mr. George is right with regard to America. In the first place, it has long been recognised by economists, that in manufactures there is what is called a law of increasing return -- that is, as men come together in masses, the cost of carriage is diminished, the .power of combination is increased, inventions take place, and enterprise advances ; and all these things increase the net produce of labour per head, ie., the wealth left over after the exertions which have produced it have been satisfied and the tools and materials replaced. That is the view of Mr. Nassau Senior, and it is the view, also, of most English economists -- not, I think, that they have seen its significance.

Let us turn next to agriculture. Is this law true of agriculture? An Englishman -- any Englishman who has read, for example, Ricardo's book, and remembers the ploughing up of the sheep-walks in the years of the great war with Napoleon, when we got five or six bushels of wretched corn to the acre -- would think that it is not true, and that in agriculture, at any rate, there is a law of diminishing return. After a time, even in a new State, even in a new continent like America, the return to the labour expended on the fields must be less and less in proportion to the effort. But of America as a whole this is not yet true. There are apparent exceptions, due to the peculiarities of American agriculture, due to the wasteful and exhausting method of cultivation pursued in America, which has led to a premature diminution of the fertility of the soil, not only in the Eastern States, but in what is called the new North-West. Still, on the whole, we may say that up to the present time not only has the total wealth of America increased, in agriculture as well as in manufactures, but -- and this is the crucial point -- the total wealth per head. Not only is there more wealth, but if it were equally divided each man would have more. So far, then, we agree with Mr. George. If, therefore, external nature does not impose a barrier, why is it, asks Mr. George, that, with all this vast increase of wealth, wages either do not increase or actually decrease? Who gets this vast accession of wealth?

Mr. George answers: not the great speculators, not the Rothschilds, not the great contractors, not the lords of the loom and the spindle, not the great ironmasters, not the keepers of great stores, not the great grain dealers and merchants, but one class alone, the owners of land. They alone seize upon the increase, and are rich, whilst the people become poorer, or, at least, remain as poor as ever. To some, perhaps, accustomed to the accumulation of wealth in England, this may seem an absolutely absurd statement; but let us be patient, and study Mr. George's book in his own country. If we turn to an eminent American economist, to whom I have already alluded, Mr. Francis Bowen, we find that he makes this remark -- that the commonest and the simplest way of making a fortune in America is to buy up land where a city is likely to be built, and to wait for an increase in value. And, again, let us also remember this, in justice to Mr. George's view, that the great railway kings in America have not made their fortunes merely by speculation in stocks and shares, but in land speculation; for land speculation has been bound up from the beginning with the extension of railways in America. Still, how far, admitting all this, can Mr. George's statement be considered true?

Now I come to the difficult part of my lecture, and I ask you to be patient. If you are really eager about these questions, and recognise as you all must, how huge they are, how they have bewildered men from the beginning of time, you will be patient; if I tried to make the problem really simpler than it is, you might justly complain of me. I could do so, but I should have to use for that purpose illegitimate artifice.

Let me remind you, the theory is, that [unreadable] the increase of wealth. How does Mr. George prove this? Let us try and work out his theory; let us watch how the theory is explained in the development of a little miniature State. I will try to make the picture as vivid in your minds as possible. Suppose, for example, one of those settlements of our Puritan forefathers on the Atlantic coast, and with no commerce with the outside world. Mr. George says, in the first place, when these settlers land there is no rent -- anyone can go upon the land, anywhere. After a time, wealth increases and population increases; slowly the people move outwards from the settlement, and new pieces of land are taken into use. Now we must suppose that already the division between employers and workmen in the industrial system has taken place, and we have got to ask (and this is the whole point; I am not going to deal with interest to-night, I am going to deal with wages) -- what will determine wages in this little settlement? Mr. George says that wages will be determined by what the labourer can get working for himself on the land last taken into use. Put it in this way: supposing the man who works on a piece of land a mile away from the little group of houses on the sea-coast can get three pecks of wheat a day as his wage. If an employer in the town says to him, "I will give you two pecks, if you will work for me at such-and-such a business," the labourer will say, "No; I will take at least three, because I can make at least three by working for myself on the land outside." Therefore, says Mr. George, in a new settlement wages will be determined by what a man can make working for himself on the last piece of land taken into use.

Now, how, according to this theory, are we to explain the fall in wages which takes place? "Oh," says Mr. George, "that is very simple. As years go on, the whole of that little plain is occupied, and men begin to carry their cultivation up the sides of the mountains. Then it is found that the labourer can only earn one peck, we will say, a day working on the piece of land last taken into use, and then all through the settlement wages will fall to one peck a day instead of three; and" the landowner -- we are not now talking of the capitalist or the employer, we are talking of the landowner -- will sweep off the whole of the increased wealth." That is the explanation, according to this statement, of the fall of wages with the advance of civilisation.

Now, in the first place, I wish to point out that this theory assumes the law of diminishing return -- that is, it assumes that after a time the return to men's labour will diminish. But that contradicts Mr. George's statement (with which I entirely agree), that the true law of agriculture and of industry is a law of increasing return. Mr. George, however, has an answer, which is obvious on the surface of the book. He says, "Oh, I don't talk merely of wages as a quantity; I talk of wages as a proportion." This is Mr. George's answer, in the first place ; but my reply to Mr. George is this: "If you speak of wages only as a proportion, how does your theory explain the fall of wages, the appearance of tramps, and the appearance of poverty m a new State?" because, though wages might increase or might remain stationary, yet still, as long as they did not decline, we should be at a loss to explain by Mr. George's theory the fact which Mr. George sets out to explain -- the appearance of tramps and the fall of wages in a new Slate. And, in the next place, if we look carefully at Mr. George's book itself, we find that all the evidence he gives is of the fall of wages as a quantity. He tells us that wages in California fell from 16 dollars a day, say, in 1849, to 20 dollars a day in 1879; so that the facts which he himself adduces, which he sets out to explain, are not explained by his theory. Mr. George, however, has yet another answer to make:

"What I mean," he says, "is, that speculation in land is the true cause of a fall in wages in a new State."

To illustrate his contention I will ask you to come back with me to our little settlement at the sea-side. Mr. George supposes that men hold on to great tracts of land in that little settlement, and will not sell it or let it, so that the labourers who want to settle on the land have to pass this tract, and passing it, are forced by this artificial cause of land speculation to take poorer land into use. That being the case, their increased skill, their increased agricultural knowledge, will not now, owing to pushing back, as it were, on what Mr. George calls the land line, owing to the pushing back of cultivation up to the hills, counterbalance the diminishing fertility of soil in agriculture.

But my answer is again (I am coming to the end of this very soon): first, Mr. George, you are not consistent with yourself. In various passages you say that private property in land is the primary, speculation only a derivative, cause; so that, even if there were not speculation, wages would fall as a quantity with the advance of civilisation. But next I ask. Is there any evidence that cultivation has been pushed in America so far back as to diminish the return to labour and agriculture? Certainly not. If we may take the price of wheat as an index, we find that the price between 1810 and 1820 averaged about eight dollars, measured in gold, for a barrel of wheat in Philadelphia. In 1820 it was nine dollars; but then in 1869 it was six dollars, measured in gold, and it has been falling, as we know, since, so that Mr. George brings no evidence as to the diminishing fertility, as to the diminishing power of labour in agriculture, owing to the pushing back of the margin of cultivation. Notice, too, that Mr. George has, curiously enough, neglected altogether -- I suppose it is to obtain that simplicity which we economists stand so much in need of in studying things - the mechanism of exchange. For according to Ricardo's theory, which Mr. George accepts implicitly, the margin of cultivation, of which we have spoken, instead of determining the wages and the remuneration of the employed, is itself determined by the growth of population and wealth and commerce. Let us go back for the last time to our settlement, and I will show you what is the process according to Ricardo.

As population advances, poorer lands may be taken into use; but Ricardo points out that a farmer (he was thinking, of course, of the English farmer of his own day, who was ploughing up the edges of the moors and the sheep-walks), though he might get only six bushels per acre on that new bit of land which is ploughed up on the side of the hill, would yet expect the same interest and the same wages for superintendence, and expect to pay his labourers the same wages as before. In other words, what would happen is, not that he would obtain a lower remuneration, a smaller share of the general produce of industry, because he was working on inferior land, but that he would sell his smaller produce at a higher price. My point is, that wages and profits -- or we will throw away the word profits, which is a troublesome one, and say wages and the earnings of the great employers (for Mr. George, in the most extraordinary way, includes under the title wages the wages of superintendence, the earnings of these great employers and iron- masters, and the great grain speculators), the wages of these men are determined, as a general rule, independently of the productiveness of the soil, and therefore rent cannot be the cause of wages and profits falling lower than before. That is Ricardo's theory of rent, which Mr. George only half understands, and which, as far as California or any new country is concerned, is true, though there are exceptions with regard to old countries. Rent, I may as well admit at once (and I shall deal with this with care in my next lecture), rent in Ireland and rent in this great City of London; and rent, again, in some parts of agricultural England, has in certain cases lowered wages -- that I admit; but then that is owing to a different cause, which I shall try to explain in my second lecture.

I have now shown, first, that Mr. George's theory is self-contradictory ; secondly, that he cannot explain by his theory the facts which he himself adduces; and in the third place, that the theory is false; not the theory that there is a law of increasing return, but the theory that it is rent which alone swallows up the increase. Last of all, in criticising Mr. George, let us ask whether Mr. George's facts are right; in the first place, whether there is or is not a fall of wages in California; in the second place, whether there is or is not a fall of wages in America and our colonies generally, a matter, mind, of primary importance to workmen who have to emigrate.

What is the truth about California? Mr. George is quite right in saying that wages rose from 8s 4d a-day (wages of a common labourer), to about 3 6s. 8d. a-day in 1849, when the gold discoveries were made. They fell, however, rapidly ; they were only 12s. 6d. a-day in 1856. In i860, they fell to 8s. 2d (I am talking of the average wages), but in 1879, the year in which Mr. George published his book, wages were higher than they were in i860. They were 9s. a-day, that is the average wage calculated from statistics supplied by Mr. Tooke in his History of Prices; by Dr. Young in his Labour in Europe and America (these are my authorities for wages in California); and, finally, by Mr. George himself. But if money wages have somewhat increased, the increase in real wages, i.e., in the amount of the conveniences and necessaries of life that a workman can obtain with his money, is greater still, inasmuch as the prices of nearly all the principal articles of life have fallen about one-third -- were falling about one-third in California generally between 1856 and 1879.

I am, indeed, not quite satisfied about these facts, although I have taken immense pains with them. Statistics, I have found, are very unreliable. One man will tell you about prices of things in San Francisco, and another man will tell you about the prices of things in California, and these facts must be taken subject to that consideration. But what about wages generally in America? That is the main point. Have they risen, or have they fallen? My own impression was that they had risen -- real wages I mean -- and I consulted three American economists: First, Mr. Amasa Walker, a Free-trade economist; next, Mr. Francis Bowen, a Protectionist economist: and lastly, Mr. Francis Walker, a Free-trade economist again; and I find that all these three economists agree that wages -- real wages -- have, on the whole, risen since 1800. Mr. Francis Walker was the latest writer -- he brings his figures down to 1877; Mr. Amasa Walker down to 1869, and Mr. Francis Bowen down to 1S70.

So far, then, the figures of the American economists are in favour of my view; but I was not satisfied with that. I determined to study the course of wages in our own colonies; and what do I find to be the case? This: that in the gold colonies, Victoria and New South Wales, exactly the same line of movement has taken place. Wages were low before the gold discoveries; they rose rapidly when the gold diggings were discovered. They have fallen, and have fluctuated, especially the wages of skilled artisans, a good deal since; but at the present time, in New South Wales, according to statistics supplied by the Government, they are higher than they were in 1856; and the New South Wales correspondent of the Times, writing from Sydney on August 2 last, said also that wages had never been so high as they were at the present time. You can now justly turn to me, and say: "If that is so what is your theory of wages? If rent has not reduced wages in America, if wages have risen, and also along with wages, not interest, which is a different thing, but the remuneration of management -- the great gains of speculation -- what is the explanation?" his explanation is a very simple one. The net produce of American agriculture and American industry has, as Mr. George has said, increased during this time, and, as a consequence, the net produce to be divided between the labourer and the employer and the owner of capital, of course, is greater than before.

It has thus been possible for the employers and owners of capital to amass enormous wealth without depriving the labourer of all share in the increased returns. Mind, I admit that his share is not what it ought to be. I am only hinting to you that we shall have to look for our explanation in America, and perhaps in England, to the division of the net produce between the employer and the workman; but I have not dealt adequately and fairly with Mr. George until I have shown how his theory originated. His theory is not a mere fiction of his brain; it is one that has a natural origin in American experience. His theory, for example, that wages are determined by what a man can get on the last land taken into cultivation is by no means an abstract one. If you study the history of California and of Victoria and of New South Wales, you will find that all writers -- not only newspaper writers, but economists -- say that at one time wages in every trade were determined by what men could get by working at the gold diggings. For instance, Mr. Tooke, the historian of prices, tells us that men working at the gold-diggings in Victoria could get about [unreadable] a week in 1851, and the wages, therefore, in Melbourne were about [unreadable] a week for all kinds of labour -- the difference being, of course, accounted for by the risk of the gold trade. The explanation is, that where there is an unlimited demand for labour in any one trade, to which labour has ready access, then the wages obtained in that trade will determine the wages paid in every other trade. No man will take less -- that is, as a blacksmith or as a carpenter -- in Melbourne than he can obtain, roughly speaking, at the gold diggings further oft". It is the same in California. But I have not done; it is not merely in California that you will find these facts brought forward and these phrases used. Take the great American ironmaster, Mr. Hewitt, who was examined before the Trades Union Commission, and ask him what determines wages in the Eastern States, and he will say at once, "Oh, what a labourer can get off the land; that determines wages." He puts it in this way -- "We great ironmasters in the Eastern States, in Pennsylvania, are obliged to pay our puddlers at least what they can obtain on the farms in the West."

There was at the time the words were used a demand, perfectly unlimited, for labour in agriculture in the West, and therefore any labourer in an iron foundry in Pennsylvania would say to his master, "Give me this wage, or I shall go West and take up land, where I can get that much for myself" On the other hand, of course, wages are always somewhat lower in an Eastern State, because men prefer to live in cities; they like the excitement of city life, and they dislike the solitude and hard life of the West. Then there is one more point before we have done with this part of our subject. Mr. George says it was not merely the exhaustion of the rich gold deposits in California that produced a fall of wages. He maintains, of course, that workmen got high wages, because anyone could go with his rocker and his spade to a stream, and simply dig out the gold, wash it in his pan, and sell the gold dust just as it was there to the dealer. That is, it only required a pick and a shovel, and a man had nothing more to do than to dig out the gold. Sometimes these deposits would not yield much gold, and then, as the result, the labourers got lower wages; that is clear. But then says Mr. George, "Notice, if you please, that these gold diggings were common property; no man might hold a claim over one of them for a longer time than it was in use. He could peg out his claim, and if he did not use it any one day, then he had to go."

Mr. George is perfectly right. That was the law not only in California, but in Victoria. Then he says, the Comstock lode was rich in certain places, and yet the opening of that great vein did not raise wages. I agree with Mr. George, that had land been monopolised in California in the first instance, instead of wages rising everywhere with the gold discoveries, all that the workmen would have asked would have been a slightly higher wage than they could obtain in the carpenters shops and the blacksmiths' shops in San Francisco, and the rest would have gone to the capitalist, in the first instance, who took the lease, and ultimately to the landlord; it would have gone to rent. But let me point out, if you please, that Mr. George's own remedy would not allow wages to rise, because Mr. George proposes to tax land up to its full value, and, therefore, these gold miners at the placer deposits would not have had higher wages, but would have had to yield a large part of the gold which they had obtained to the State, so that their individual wages would not have risen, though the gold would have gone to the community, instead of to the individual. For the rest, I perfectly agree with Mr. George that private property in land is not essential to good agriculture; that security of tenure is sufficient; and that it has been an iniquitous mistake on the part of our own Colonial Governments, and on the part of the Government of America, to sell land to individuals instead of keeping it for the use of the people. But this view is not, of course, a new one, it is an old question in all the colonies.

As long ago as 1856, Mr. Tooke, whom I have quoted so often, an eminent merchant, who wrote a most valuable "History of Prices," proposed that land should be let on lease instead of being sold. And then, again, it was proposed in Victoria in 1870 and 1873, in the land agitation of which I have spoken; and as I have said, the principle is a just one; but there are practical difficulties. I find, for example, that Mr. Charles Pearson, who has studied the land question from the extreme radical point of view in Victoria for some time, and has tried all sorts of methods to prevent land accumulating in the hands of a few great owners, remarked of this proposal, which he admitted was in the abstract a just one, that where there was a great number of lease- holders it would be an extremely dangerous one, because all those leaseholders would have votes, and could vote about the renewal of their leases. Well, I do not attribute myself very much importance to the objection, because not one form alone, but all forms of taxation, and all forms of exacting wealth from individuals in a new State may be openings for corruption. But I want to point out that the question is not such a simple one; and we have seen that earnest and thoughtful radical land reformers, like Mr. Pearson, do not think it is a very easy one. The gain to the State, I admit, would be enormous; but remember that my point is still, that though this revenue would go into the pockets of the State -- into the Treasury, instead of into the pockets of individuals -- yet it would not benefit wages, wages have not, as a general rule, been reduced by the rise of rent, and they could not be >increased by its confiscation.

I have, last of all, in this explanation, to show you what is the true theory of the facts -- the true facts which Mr. George adduces. I have said already that the rapid fall of wages in California and Victoria was due to the exhaustion of the placer deposits. I admit that the previous rapid rise was due to the fact that these deposits were not monopolised by individuals. But now -- this is a very vital question -- What about the tramps of whom Mr. George speaks? The facts are astounding. In one pamphlet Mr. George says that the common estimate in 1878 was that there were 20,000 labourers unemployed in San Francisco. Another estimate made in 1875 put the number at 10,000. Now, what is the explanation of the appearance of these tramps, these vagrants, in a new State -- a most appalling fact? I am not speaking of Chinamen; they are distinct altogether from European labourers. The Chinamen numbered about 8,000 in 1870; the figure I have given is the number of unemployed labourers of European race. At the time of which I speak there were not only tramps in California, but tramps in Lake City, and tramps in the new North-West. Why is that? The explanation is given by Mr. George himself in a pamphlet he wrote on the labour struggle, and it is to be found in all the recent valuable reports presented to the Duke of Richmond's Commission en American agriculture.

It is this -- that with the large farm system of cultivation workmen cannot obtain regular employment. For instance, take one great farm in Dakota, which had an area equal to about three times the size of the City of New York. On this farm in the spring 150 men were employed, and in the summer 250, and in the winter only 10. What became of these men? They went to the towns. For, you may say, nine months in the year the labourers in the great wheat farms in California, the largest wheat farms in the world, have no employment, and are driven into San Francisco; and these are the men who, justly perhaps, protest against Chinese labour, and who meet on the sand-locks in San Francisco, and propose to remedy their grievances. That is the explanation of tramps in California and Minnesota and Dakota. I must remind you that Mr. George does not propose to touch the large farm system. He says the large farm system is due to a law of economic development, with which he will not meddle. But as long as vast accumulators of capital continue to deal thus ruthlessly with their human instruments, what good will the confiscation of rent do? The evil in this case plainly is not the ownership of land in large quantities, which is all that Mr. George would prevent, but its tenure in large quantities, which he would allow.

What, then, is to be said about this large farm system Is it to go on? If we look at it closely, we shall find that this is but one typical form of a universal and urgent problem. It is not only in farms and in agriculture that great businesses are being formed, or have been formed, but in industry and manufactures, as we well know here.

As Karl Marx and other writers have pointed out, gradually large industries are stamping out, or rather, large businesses are stamping out, small ones. Gradually capital is being accumulated in fewer and fewer hands, until at last some think we shall have nothing but a handful of stupendous monopolists, with a struggling mass of labourers at their feet. This, I say, is one great cause affecting the division of produce; it is one great reason why wages have not risen in proportion to the increase in productive power; it is because the economic structure of society is such that the huge employer and the huge capitalist can practically dictate terms to the labourers. What is the remedy for this? Mr. George offers none. There is one which he hints at, but I do not think it a serious one. If anyone likes to ask me afterwards my opinion I will discuss it. Why does Mr. George propose no remedy? Why does he refuse to meddle with it? Because he is a believer in what the economists no longer believe in -- in what are called the "economic harmonies"; that is, he believes, as Adam Smith believed, and as Bastiat believed, that if you once abolish private property, or, rather, confiscate the unearned increment, then individual interests will harmonise with common interests, and competition, which we know is often now a baneful and destructive force, will then become a beneficent one.

Now, in justice to Mr. George, again, I must point out that he proposes that when industries become monopolies they should be undertaken by the State. Well, I admit that that is the true principle. They should be either undertaken by the State, or regulated by the State. We are going to deal, for example, with the Water Companies in London; and all great industries like the supply of water and the supply of gas, and so on, which involve necessarily a monopoly, ought either to be undertaken by the State, or regulated by the State. But apart from absolute monopoly, there may be the immense force of great capitalists not in open combination, who are able to press down wages. What is to be done? I said just now that we economists abandoned the belief in economic harmonies. What do we, then, think of the economic self-interest which most socialists denounce as a thing to be destroyed? We say that economic self-interest more resembles a great physical force than anything else, the laws of which must be studied in order that it may be controlled. For example, take self-interest working in the great grain market. To buy in the cheapest and sell in the dearest market is to take a thing from where it is least wanted to where it is most wanted. Here is a service, therefore, rendered by self-interest to the community; not that the great grain speculators are not over-paid ; still self-interest does work, where they have not a monopoly, for the good of the community as a whole. But look at self-interest working in the destruction of life in mines and factories.

We know very well what this was; we know very well there were no economic harmonies there. The absence of economic harmonies is to be read in that terrible history of the degradation of men, and women, and children which is to be found in our own Government reports. But while we regard competition as resembling a physical force, in that it admits of and demands study and control, we do not allow that it is, like physical forces, unalterable in itself. Whilst you cannot change the elements of nature, but only learn their secret and control them, human nature can change. Man we recognise now is not like a rock or a stone, but is pliable, and pliable to great ideas of justice. We need no longer crouch and shiver under the shadow of inexorable law. Man is master of his fate. Still I know there are some who will say this is an idle dream. Men always have followed their self-interest without remorse; men always will follow their self-interest without remorse. I deny that. But I admit that we cannot wait for the time when higher ideals will control men's self-interest, and that the economists, it they admit that the economic harmonies are to a large extent a fiction, are bound to admit the necessity for more administration and control. That is true. The era of free trade and free contract is gone, and the era of administration has come.

Not only has the era come, but silently it has been upon us before we knew it. Throughout the whole of this century, when we were busy unshackling our trade and flinging open our ports to the whole world, we were at the same time - against, I admit, the protests of the economists -- hemming in the disastrous and virulent greed of employers, passing Factory Acts, prohibiting the labour of women in mines, protecting women and children everywhere. But in 1881 we began a new era, for in that year an Act was passed which extended the protection of the State, which is the organised power of the community for good, not merely to women and children, but to men -- I mean the Irish Land Act. The author of that remarkable phrase in 1864, the man who said that for the great majority of beings life was a bare struggle for existence, unconsciously redeemed his utterance. He unconsciously redeemed his pledge, and by passing the Irish Land Act - though he may deny it, and it may be necessary for him to deny it, there is no reason why we should -- he has committed the Radical party to a socialist programme.

What I mean by socialism is this. I do not mean the destruction of private property; I do not mean communism; but I do mean the extension of the protection of the State not only to women and children, but, if need be, to men, because men also -- agricultural labourers and workers in mines and factories -- are but too often not free agents.

Here, however, arises a great problem. We shall have to carry out these measures without undermining that old independence, that habit of voluntary association, of which we are justly proud, for if we undermine that -- that pride which has made the English workman sacrifice everything to keep himself out of the workhouse, which has made workmen bind themselves together in Friendly Societies and Trades Unions and in Co-operative Societies -- if we undermine that, then it would be better to leave our work undone. But I believe it can be done. I believe that the problems of administration, difficult as they are, can be solved if men will only have patience, and in my next lecture I hope to sketch in outline a programme of administration, dealing with wages, the dwellings of the poor, the question of insurance, and the question of the recreations of the people. All these things I hope to deal with, and will try to show that without revolution and without socialism, in the continental sense, we shall be able to do something towards that better distribution of wealth which we all desire to see. But if we undertake a more complicated work of administration, remember, in the first place, that we are dealing, again, not with physical facts, but with the compound of sensibilities and interests shaped by ages of history and change which we call man, and that the thing is not simple -- it is difficult; that it will require not only the thought of one man, but the thought of many, and not only the thought of many, but the patience of more; and if, again, administration is to be successful, it means one thing more: it means devotion to the community.

\For all these new proposals will only open up new opportunities for corruption, unless at the same time we raise ourselves to the occasion, and determine that we will, in proposing them and in working them out, be actuated with no other feeling than a passionate devotion to the community. "But, alas!" many of you will say, "such a thing needs faith, and our faith is in ruins," I answer, "True, your faith is in ruins ; but I think also that in spite of darkness and bewilderment and tears, there will come a purer faith, a faith which, cleared of superstitious control, shall make devotion to the community no longer a troubled and uncertain refuge from doubt, but a source of a pure and tranquil inner life." But we need not wait for that, and if men individually will but make up their minds to do all that in them lies to bring about the great event for which the people have longed for so many centuries, the thing will be done -- the reign of social justice will have come.