mulated capital has created a power of supply | things in which more of it would be required for beyond the demand; a low rate of interest follows, purchases, must be preceded by an increase in the which gives birth to some speculative mania, into aggregate of incomes. Were incomes doubled, it which men of all classes rush headlong. These might be expected that a double quantity of gold wild speculations convert capital into income; the would be required for circulation. Incomes and popular imagination becoming excited with dreams transactions limit currency, and there must exist of large profit, the hoarded capital passes into a some definite proportion between the two. The state of activity, and into hands who, spending it incomes annually spent in England and Wales canas income, create a new demand for commodities. not be less than £400,000,000, while the currency Thus is the process reversed by which capital was of coin, and notes equal to coin, is not more than saved from income. But the destruction of capital £70,000,000. In order to sustain a gold-circulaleads again to saving. The indomitable thrift of tion of £80,000,000, which would be necessary if the English rebuilds what the fire of speculation gold were depreciated one-half, the spending indestroys; contraction sets in all over the land, and come of the whole community must be raised to savings from income again flow in and fill up the double what it is at present-a revolution more exhausted reservoirs of the bankers. Then there momentous than any peaceful change on record. are extraordinary facilities for banking; the money- Chapter the seventh, on the Money Market, market is easy, and the commercial world is in opens with a graphic description of the dealers. a state of languid depression. But the money-The broker is thus described:capital has not been destroyed, it has only changed hands: the community has the same life-blood in it as ever, but it does not believe it, and is lowspirited, and hippish, and acts warily.

The fourth chapter is on money-income, and the fifth on the revolution of capital and income. Incomes are of two classes, those of producers and those of distributors. The author does not touch upon the fact that the public pay enormously too much for distribution; his business is with things as they are. Capital may be applied either to production or distribution, but the last must be limited by the first; and measures which facilitate distribution may retard production. Capital sunk in large works is the soonest transformed into income, and remains longest as income; there is no other mode of outlay by which the conversion of capital into income is so rapidly effected. The productive operation of such works resolves itself into the destruction of articles consumed by labourers and producers, while, during the process, the income is gradually reappearing as capital. The author accounts for the return to new capital, which political economists have supposed must meet its return from increased income, by adverting to the diminished returns of old capital, and by the fact, which there is no gainsaying, that old capital is often ignorantly or imprudently spent as income; and, lastly, by the effect of new income upon the aggregate of income, because one of the effects of the investment of new capital is to increase the aggregate of income by an amount greater than itself, inasmuch as the employment of labour creates a new demand for commodities. We must pass over the laws of the revolution of capital and income, and proceed to chapter six, which treats of prices and currency.

Retail prices govern wholesale prices, and are themselves limited by income. A rise in the price of commodities can only take place when there is an increase of the aggregate income. The prices of the retailer are decided by the means of the consumer, with such variations as may be caused by the extent of the supply and the cost of production. Speculations or miscalculations may momentarily affect prices, but not permanently. Hence a depreciation in the currency, or a state of

In appearance humbly beneath all these (the bankers), but in truth familiarly amongst them, glide about the brokers, an altogether peculiar class of men, like Oliver le Dain, Barber-Premier of Louis XI., caring more for the substance than the show of power. It is their business which can have the remotest practical relation to money. to know, and they do know, everybody and everything They have the mesmeric faculty of thought-reading. The exact figures of a merchant's balance-sheet, though a pro

found secret between him and his head-clerk, they know how to decipher in the quiver of his lip and the wrinkles of his eye. They can tell a bad bill by the feel; and if there be a taint of bankruptcy within miles, they snuff it in the air. These are the architects who build the most lofty and delicate portion of the edifice of credit; and, under their skilful hands, its fairy pinnacles shoot far into of doing and undoing is incessant, they tread, like Alpine the clouds. Ever on those dizzy heights, where their work goats, the edge of precipices, and, though it be but a hair between them and destruction, that hair is almost always sufficient.

The Scotch bankers are pourtrayed as

Keen and alert, without the Lancashire hardihood; scientific, yet practical; valuing good theories, but yielding up no facts; able to sift the wheat from the chaff of the economists, and not afraid to cross swords with a Grote or a Baring before a Committee of the House of Commons; these men are the consummate masters of their craft, and they have reared up a system of banking which, for its purpose and its place, stands unrivalled. It is a body from which every particle of loose flesh has been worked off, leaving nothing but the muscle and bone of solid utility. ... It was not unworthy of the genius of Scott to pause for a moment in his imperishable creations, in order to defend such a system from assault. But the thought of transplanting it elsewhere is vain. It is "racy of the soil." It must for ever remain as peculiarly and beautifully Scotch as the poems of Burns or the heath of Ben Lomond.

The business and peculiarities of the Money Market, the system of English banking, the flow of spare balances to London, the supply of money in the London Market, the analysis of discount, the two rates of interest and their different variations, the tendency to a glut of money in London, the nature of the demand for money, the doings of speculators, the moral habits of commerce, and the morals of gambling and speculation, form the subjects of this chapter, one of the finest in the book. The line is thus drawn between commerce and gambling.

Whatever aids the distribution of goods is commerce. Any mode of operating upon prices that cannot have that

that commerce renders to society-the equable sharing out

tendency is gambling. But the simple holding over of this :-The prices of goods and incomes of persons stocks, such as grain, so far from being gambling, is often, in England are regulated by the prices of exin spite of the popular prejudice, one of the best services ported goods and the incomes to which they give of short stores among a shipwrecked crew. All sorts of rise. England, having no mines of gold, must get time bargains, therefore, it need scarcely be said, whether it from abroad; and, therefore, wherever her goods of securities, railway-shares, or produce, where no realities come into contact with gold, there the relation pass or are intended to pass, are as purely gambling as between the two must be determined. Thus, rouge et noir and roulette. As for "rigging the market" and similar expedients, frequent enough in times of mania, though English goods stand in a much higher rethey are not gambling, but fraud; and if the law could lation to gold at the present moment in Australia grasp delicately enough to seize the perpetrators, the proper than they do here, yet, if the yield of gold conplace for them is the bar of the Old Bailey. tinues as abundant as it has been, the relation that prevails in Australia must eventually prevail among the producers of the goods at home, making allowance for the cost of transit and other expenses of export. The prospects opened by this theory are an indefinite expansion of the manufacturing system in Lancashire and elsewhere, producing a general rise in incomes, and a corresponding general demand for home commodities and provisions. Agricultural incomes will be the first affected, and those of the fabricators of luxuries the last. New capital will be drawn to manufactures, and capital will be transferred from old pursuits to new ones, where, which is very seldom, it could be done without ruinous loss. The transfer of labour from a non-paying industry to a paying one might be expected to follow, if experience had not shown the utter hopelessness of such a change. But the prospect is one of long-continued changes, ending, when it does end, in a new structure of society, demanding new and powerful institutions for acting upon the intellectual and moral life of the whole community, which, from the inevitable influx of gold, is about to be subjected to greater temptations and perils than it has ever undergone-perils which must be met by the moderation, wisdom and self-denial of the English people.

From the Money Market to its great centre, the Bank of England, is a natural and inevitable transition, and "the Bank" accordingly forms the subject of chapter eight. The Restriction Act, and the conduct of the Bank under it, which grew rich in spite of itself, through the stimulus of the Government expenditure, are passed under brief review, and the Bank is complimented upon its just exercise of a power so vast and so open to abuse as that entrusted to them in 1797. In reference to the power of the Bank over the Money Market, the writer declares that it is prevented from increasing its loans to any extent by no want of power, but only by the want of that knowledge of individuals which would enable them to do it safely. He mourns the effect of a reduction in the rate of discount by the Bank, which is invariably taken as a signal that money is abundant. He dwells upon the crashes which follow from the expansion of the paying-power, "through a mere blast from the bellows in Threadneedle-street," and the inconceivable misery they produce. He points out the great danger of a high commercial organisation, and affirms that the liability to paroxysms of commercial disorder belongs to England in virtue of an economical organisation, surpassing in delicacy and complexity anything of which the world ever before had experience; and adds, that the only cure for such derangements, for which all legislation is a mere nostrum, must be a moral one. He lays down as a rule for the management of the Bank, that it should purchase no more Government securities; and, that it should never discount for

less than four per cent., which latter proposal he defends and recommends in a long and valuable note showing the practical teaching of past events. The ninth chapter treats of the New Gold which may and does come into the country in three ways, being brought in by owners as income, transmitted or brought for investment as capital, or sent in payment for goods. That brought in as income is an amount so small as not to be worth notice.

That which comes as capital will not go into the currency, because the currency is already in excess. It may tend to lower the rate of discount, or to foster speculation, and it may do that to such an extent as to demoralise the nation. The best that

could be hoped from it is, that it would lie inactive. But the greatest part comes in payment, and that does not go into currency, but into the Bank, where it is credited to the merchant. The only way in which new gold can get into the currency has already been hinted at, and is laid down in Mr. Senior's theory, the principle of which has never been contested. It is briefly

Chapter the tenth contains the solution of the problein which appears to lie in the conclusions to which the writer has arrived, and which may be briefly stated as follows:—

1. There is in England a uniform tendency to excess in the growth of money-capital.

2. These accumulations have always led to speculations,

attended by individual loss, disturbance of credit, and

demoralisation.

3. Such periods are followed by new savings of capital, great gains to some, great losses to others, and a tendency

to the same state of things as before.

4. That there has now again arisen precisely that condi

tion of capital and industry which is the precursor of another delusive and ruinous excitement.

5. That the introduction of the new gold will violently aggravate all the causes leading to speculation.

To the above the remark is added, that the corrective to

speculation supplied by demands for gold from abroad is

not likely to occur-both France and the United States

having hoards of the precious metals much beyond their

usual average.

The following conclusions are also regarded as established. They constitute the author's theory of depreciations, and must be given at length:

1. That the new gold, so far as it can enter the English currency, must do so chiefly through an action on prices and incomes, arising immediately from increased prices being paid for English commodities, or from an increased

sale of them, or from both, in markets out of England.

2. That whatever be the addition thus made to the

aggregate of money income in England, only a small frac

tional portion of that amount of new gold will be drawn | production of commercial reform; but when it into the currency.

3. That the amount of gold brought here to be spent

as income is too small to be of any account.

4. That all gold brought otherwise, namely, by owners, to be invested or employed for profit, or as it will chiefly come in payment direct or indirect, for exported goods, will, excepting the profit, be new money capital in its primary form, and will enter into competition with existing

disposable capital for all kinds of investments.

5. That such capital can only affect prices by first increasing the aggregate income, already pressed upon beyond its powers of profitably receiving or returning new capital, and that the efforts of the new capital to find employment are thus likely to produce repeated speculative movements of a convulsive and disastrous character.

Finally.... the only effectual preservative against such evils is to be found in the diffusion amongst the community at large of a higher tone of moral feeling, and a more

becomes a question of something higher than bargain-making, it has not a vestige of a claim to attention; in fact, all the conclusions of political economy must give way when they clash with moral principle. The practice of England has been in accordance with this view; legislators have resisted the principle. We have a poor-law which laisser faire would have abolished, and we have sanitary laws which it would never have enacted. The present want of England is something quite different from the knowledge of the best modes of producing wealth: she is in greater peril than ever she was yet from foreign hostility, solely because of the intense and unremitting efforts of her

correct perception both of the nature of the danger and of most enlightened classes to increase their command the mode of its approach.

We now come to the second part of the work, which, under the head of PRECAUTIONS, attacks with considerable power, though it fails to overthrow, the system of laisser faire. The author's doctrine is, that though legislation cannot avert, it may diminish the evils of speculation, and that the conclusions to which he has arrived warrant the adoption of a financial policy which, though perfectly consistent with free trade in the food of the people, is not consistent with the exaggerated maxim of leaving the whole direction of industry to private interest, and is different from any that is at present popular.

Political economy is built upon suppositions, the fundamental one being, that man acts steadily from a desire to obtain as much wealth as he can with the least sacrifice. But the true method of the science is first to trace the inferences flowing from certain premises, and then to compare those conclusions as to what must be with that which actually is. Apart from verification, deductive inferences are nothing. The established truths of political economy are fewer than is supposed-men act upon inferences as though they were facts, and, what is worse, transform them into rules of moral action. But economical truths are not moral rules, and must not be. Acts of the direst cruelty have been perpetrated in the name of political economy. Witness the ejection of poor Irish families from their homes, inflicting an amount of wretchedness unparalleled, for which the perpetrators will have to answer before the bar of eternal justice, as surely as the veriest wretch that ever expiated his crime upon a scaffold. The doctrine of laisser faire is got beyond its original import. It now means not merely the letting commerce alone to do its best, unfettered by galling restrictions, but the letting of everything alone, the abandoning of the poor, the feeble, the aged, the innocent and the helpless to their fate, whatever may threaten them, under the notion that the partial evil will be the universal good, and that everything will come right in the end. It is never dangerous but when it is well meant, for its aspect is so hideous and revolting, that, except for the gleams of benevolence in its eyes, the world would have long ago chased it away as a monster. The dogma in its origin was correct in principle, and operated in the

over the products of labour--a tendency which ought to be held in check by every instrument of moral, literary or legislative influence.

Here follows a chapter on Taxation, showing the ancient feeling respecting it-the present dan ger from dislike to it, the prevalence of a sordid and miserly spirit in the national outlay, the hard and close-fisted economy of local boards, the screwing down of medical officers, and the withholding of education from the young, the low huxtering spirit prevalent in the parliamentary debates, and the wrangling about cheese-parings and candle-ends which deteriorate the whole moral tone of the nation. On the subject of the real incidence of taxation, Mr. Lalor states that the incidence of a particular tax can no more be de termined than the pressure of a particular tub of water after it has been flung into the river, &c.; but he traces the ultimate incidence of all taxes upon the receivers of what may be called residuary incomes, and by the same reasoning every remis sion of taxation finally operates to their advantage, though the immediate advantages, as everybody knows, are constantly monopolised by dealers and distributors. But the question of taxation he conceives to be a subordinate one, and claims attention to the measures required at the present moment to serve as a counterpoise to the over-rapid development of commercial wealth, to secure the highest welfare of the people, to organise an effective system of military defence, and to enable England to resume her proper place and perform her most sacred duties as a member of the great family of nations.

The next chapter is on Rural Life and Employ ments-the rural scenery of England, its moral and social effects, the present state of agriculture, and the condition of the poor old farmer, "the aged lion who has not so much as one surviving tooth." The majority of them are described as low-spirited, discouraged and down-hearted, and all the while desperately scolded, and snubbed, and lectured for want of enterprise. The case is evidently one calling for the exhibition of tonics or stimulants The stimulus of taxation won't do for farmersthe stimulus of "low prices" is worse. The re mission of local taxation would be but a temporary remedy, and the elixir vita of Protection, alas! is not to be had; so that the case of the farmers seems rather desperate. True, they may be turned

emigration would in this case be but a judicious investment. The same means, if rightly applied, would secure a continuance of the supply of cotton, as necessary to us almost as corn, and for which we are yet almost entirely dependant upon America. If a new Toussaint L'Ouverture should start up in Alabama or Carolina, where would Manchester turn herself for a new supply of cotton? Might not a Government loan make the resources of Hindoostan available?

A further legitimate field for capital would be in loans for the improvement of towns. A town life is the future life of England. At present it abounds in evils and annoyances, which, notwithstanding all our improvements, we have placed out of sight rather than removed. We have not only whitened the sepulchre, but incrusted it with marble; but still it contains the rottenness and the dead men's bones. The evils are both moral and physical, and both are largely due to the want of healthy habitations, town-drainage and watersupply, and parks. Capital might supply them all, with Government security; and the credit of Government, our author thinks, could not possibly be made use of for a better purpose.

out of their holdings and cleared off to make room for more enterprising men; but can that be done in the face of public opinion? Landlords have their duties; they ought not to be considered free to think only of making the most of their land. They ought to be held bound to make the best of it, and, at the same time, of the people who are upon it. The object, therefore, whether of landlord or statesman, should now be, not to get rid of these backward agriculturists, but to assist them to improve their rude and imperfect cultivation, and, above all, to supply their greatest want-that of capital. This capital the writer proposes that the Government shall supply, first borrowing it at three per cent. The farmers cannot obtain it for themselves; it is wanted to be sunk, and legal bonds and formalities would render the obtaining it too expensive. Besides, they could not satisfy capitalists as to security and mode of repayment. But by the aid of Government the thing could be done. It may be objected that the offer of money would not be accepted by the farmers, or that the money would be taken and would not be repaid. The first objection is not valid-the loans would be accepted to a very large extent. The question is, would they or would they not be repaid? Why Chapter VII. is on Working Partnerships, and should they not? There has been no suspicion as treats of Socialism at home and abroad — of to repayments under the Drainage Acts. The Socialist Tendencies in England, and of Reform landlords must join in the security; in the case of in the Law of Partnership-of the Popular Belief a loan at three-and-a-half per cent, no landlord respecting Profits-of Workmen as Capitalistswho had confidence in his tenantry would object. of Partnership as an instrument of social imThere is, there can be no question as to the remu-provement-of Joint Stock Undertakings by the nerativeness of capital thus employed; it is lying idle, waiting for employment, and were Government to demand it for the purpose, would be immediately forthcoming.

Middle Classes-and of Moral Aids to Co-operation.

Chapter VIII. is devoted to a serious and rather alarming consideration of the Position of England among the Nations. The writer asserts that In the following chapter (V.) the author pursues England, at the beginning of the present year, this principle of loans as applied to other cases, underwent a humiliation without precedent in her hinting that it may from time to time be an im- history-that at the conduct of Louis Napoleon, portant duty of Government not to enforce, but her citizens became afraid to utter their convicto encourage and facilitate, a better application of tions openly in the face of foreign nations. He capital than that to which private interest, if left recounts the English views of the coup d'état, and wholly to itself, would lead. He refers to the the idea it gave rise to of danger to this countrymoral and social evils which resulted from the the conduct of the English journals, and the alarm misdirection of capital in 1845, and states two occasioned by the denunciations of the Times cases in which Government might borrow and especially. He enlarges upon the risks incurred lend capital with immense advantage to all classes. to British interests, to commerce, to the missions, The first is for purposes of colonisation and emi- and adds the significant history of the French gration, and the second for the improvement of Protectorate of Tahiti, so disgraceful to us. We towns. He recommends colonisation by the cannot secure justice from foreign nations unless English aristocracy upon Mr. Wakefield's princi- we are ever armed and ready with the machinery ple, and urges the specific necessity existing at of destruction. The demands that have been the present moment for expediting emigration to made upon England may be made again. When Australia. He seems to regard the discovery of Napoleon, stung to madness by the attacks of the the Australian gold as unfortunate, seeing that it English journals, demanded that such licence is likely to tear asunder the industrial organisation should be put down, the English Minister calmly of the country. He asserts that the magnetic replied that it could not be done, because to do so mountain did not more certainly draw out the nails would be contrary to the custom of England. of the ship of Sinbad the Sailor (!) than the gold-Why was he able to give that answer to the master mines will draw away those shepherds from their of four hundred thousand bayonets? Only because lonely huts, where they are in effect the nails and the ships of the Nile were at hand, and the flag of rivets that hold together the whole pastoral system of Australia. If the wool is sacrificed to the gold, it will be the sacrifice of real wealth for the sake of its representative. To multitudes at home, wool is as necessary as bread. A loan applied to

Nelson ready to go to the masthead. The right of free discussion may be again challenged, and it must be maintained, and so must other rights which are equally open to challenge; but for their defence England must have the means of speaking

and acting with authority and effect in her inter- | practice. Its fundamental principle is, that all course with foreign nations. This country cannot great changes in the social condition of a people exist without alliances. The effect of disclaiming are preceded by changes in their convictions. These foreign relations would be not only a loss of honour, but an acquisition of contempt and a provoking of aggression.

Chapter IX. the last of Part II., is on the National Defences. It treats of tools and men to use them, of naval and military discipline, and other analogous topics, concluding with some powerful remarks on morality in connexion with military force and military and naval men. Of the comparative morality of soldiers and traders, the follow-the greatest fact in the history of man, which is ing is to the purpose :—