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If you are not located in the United States, you -will have to check the laws of the country where you are located before -using this eBook. - -Title: Riches and Poverty - (1910) - -Author: Leo George Chiozza Money - -Release Date: February 23, 2021 [eBook #64616] - -Language: English - -Character set encoding: UTF-8 - -Produced by: Turgut Dincer, Chris Pinfield and the Online Distributed - Proofreading Team at https://www.pgdp.net (This file was - produced from images generously made available by The Internet - Archive) - -*** START OF THE PROJECT GUTENBERG EBOOK RICHES AND POVERTY *** - - -Transcriber's Note: - -Obvious printer errors have been corrected. Hyphenation has been -rationalised. - -Small capitals have been replaced by full capitals. Italics are -indicated by _underscores_. - -Very wide tables have been split into two. - - - - -RICHES AND POVERTY - - - - -BRITISH INCOMES IN 1908-9 - - +--------------+------------------------------------------+ - | RICH | | - | 1,400,000 | COMFORTABLE | - | persons | 4,100,000 persons | - | £634,000,000 | £275,000,000 | - +--------------+------------------------------------------+ - | | - | | - | | - | | - | | - | | - | | - | POOR | - | | - | | - | 39,000,000 persons | - | | - | | - | £935,000,000 | - | | - | | - | | - | | - | | - | | - | | - | | - | | - | | - +---------------------------------------------------------+ - -_The Aggregate Income of the 44,600,000 people of the United Kingdom in -1908-9 was approximately £1,844,000,000. 1,400,000 persons took -£634,000,000; 4,100,000 persons took £275,000,000; 39,000,000 persons -took £935,000,000. (See Chapters 2 and 3.)_ - - - - - RICHES AND POVERTY - - (1910) - - BY - - L. G. CHIOZZA MONEY, M.P. - - ELEVENTH EDITION - - METHUEN & CO. LTD. - 36 ESSEX STREET W.C. - LONDON - - - _First Published_ (_5s. net_) _October 1905_ - _Second Edition_ _December 1905_ - _Third Edition_ _July 1906_ - _Fourth and Cheaper Edition_ (_1s. net_) _January 1908_ - _Fifth Edition_ (_1s. net_) _February 1908_ - _Sixth and Seventh Editions_ (_1s. net_) _March 1908_ - _Eighth Edition_ (_1s. net_) _May 1908_ - _Ninth Edition_ (_1s. net_) _December 1909_ - _Tenth Edition, Revised_ (_5s. net_) _March 1911_ - _New and Cheaper Issue_ (_1s. net_) _June 1913_ - _Eleventh Edition_ (_5s. net_) _March 1914_ - - - - -TO MY WIFE - - - - - PREFACE TO THE TENTH (REVISED) - EDITION, 1910 - - -The present edition of "Riches and Poverty" revises my estimates of the -distribution of the wealth of the United Kingdom down to the year 1908. -The effect of the revision is to show that in the five years that have -elapsed since this work was first published, the distribution of wealth -has grown even more unequal. The comparative stationariness of money -wages of late years is a fact upon which the labourers themselves, and -not less the nation of which they form by far the greater part, are to -be commiserated. I write at a time when a great deal of discontent is -becoming evident amongst large masses of the population; it may be well -for those, and they are many, who have written in condemnation of that -discontent, to ponder the following pages, and in particular to compare -the profits recorded by the Inland Revenue Commissioners with the -evidence as to wages collected by the Labour Department of the Board of -Trade. - -My own view of the subject is, that the massing of capital in large -units has so considerably strengthened the hand of capital in its -dealings with labour that in recent years Trade Unions have -comparatively lost much ground. To-day the masters in many of our -industries can exercise collective powers much more effectively than -Trade Unions. Combination amongst employers in some trades has reached a -point at which it has become possible to rule alike the price of -products and the price of labour. - -While since 1900 nominal or money wages have been at a standstill, the -cost of living has continued to rise. The retail cost of food in London -rose 9 per cent. in 1900-1908. Therefore British real or commodity wages -have fallen heavily since 1900. A London platelayer, when he has the -privilege of working seven days a week, can earn 21s. a week in 1910 as -in 1900, but the real value of the 21s. has fallen by about 9 per cent.; -in effect, that is, he earns 1s. 10d. a week less than in 1900. Now 19s. -2d. is not a just wage for a London platelayer. - -The statements which were made in the 1905 edition of "Riches and -Poverty" proved to be uncomfortable reading for many, and I have now a -great many books on my shelves in which they have been discussed. The -attempts to refute them have entirely failed. It is now generally -accepted that the number of Income Tax payers is approximately what I -stated it to be, and the increase of Income Tax assessments indicates -that my estimates of the income of the rich did not err on the side of -liberality. - -Work such as is attempted in these pages ought, of course, to be -entrusted to the hands of a permanent Census Department, empowered to -collect information, and instructed to analyse and diffuse it. In the -absence of such a Department, and in the lamentable condition of our -national statistical records, the conclusions of a private investigator -are only too likely to be called in question by those who do not stomach -what he has to say. It may be said that the disagreeable estimates I -have presented in the frontispiece of this volume rest upon private -authority, and that they cannot be accepted without great reservation. I -should like to direct attention, therefore, to a series of facts which -_are_ official, which _cannot_ be denied, and which rest upon the basis -that they _represent masses of property actually taxed_. - -I refer to the estates which pass at death in the United Kingdom year by -year, and which are valued for the purposes of the death duties. The -following facts, to which I called attention for the first time in -"Riches and Poverty," can be easily memorized, and every one ought to -know them. - -Year by year, as regularly as the seasons, properties pass at death in -the United Kingdom, free of all debts, absolutely net, to the value of, -in round figures, £300,000,000. Of this £300,000,000, the aggregate of -approximately 80,000 separate estates, as much as £200,000,000, or -thereabouts, is left by about FOUR THOUSAND (4000) PERSONS. - -I repeat that these figures are not my estimates, but the official -figures ascertained and published by the Inland Revenue Commissioners. -They can be verified by any reader of this book by reference to the -latest Official Report of the Commissioners of His Majesty's Inland -Revenue (Cd. 4868. Price 1s. 7d.). - -Those who are acquainted with the facts know, as Mr Balfour recognized -in reply to me in a debate in the House of Commons on September 13th, -1909, that the official figures I have quoted would be larger but for -the passing of property _inter vivos_ in avoidance of the death duties. -But, to take the figures as they are, an under statement of the wealth -of the rich, I put this question to those who come to consider the -estimates I have made: - -_If, in the United Kingdom, out of £300,000,000 a year passing at death, -as much as £200,000,000, or two-thirds of the whole, is left by only -4000 persons, does it not follow, as the night the day, that the -distribution of the national income must necessarily proceed on some -such lines as those estimated in the frontispiece to this volume?_ - -And with that question I once more issue these pages to the public. - - L. G. CHIOZZA MONEY - - CHALDON, SURREY - _October 1910_ - - - - -CONTENTS - - PAGE - BOOK I - THE ERROR OF DISTRIBUTION - - CHAPTER I - THOUGHTS ARISING OUT OF A GREAT CONTROVERSY - - The false assumption that customs duties can determine prosperity 3 - Evidences of riches and poverty as "arguments" 4 - "Thirty per cent. of our population underfed" 5 - A question of distribution 7 - - - CHAPTER II - THE NATIONAL INCOME - - The total product consists of goods and services 8 - The exchanged product can be measured 9 - Income Tax assessments; my 1905 estimate confirmed 11 - The income eluding taxation 13 - Income from abroad 15 - Aggregate of incomes exceeding £160 per annum 16 - Growth of Income Tax income in five years 17 - Aggregate of small incomes lying between Income Tax payers - and wage-earning classes 20 - Aggregate of incomes of manual workers 29 - Aggregate of the national income 31 - The Income Tax exemption limit bisects the total product 31 - - - CHAPTER III - DISTRIBUTION OF THE NATIONAL INCOME - - The average family income 32 - Investigation of number of Income Tax payers 33 - Number of incomes under £700 39 - Number of incomes over £700 measured by number of large houses 43 - Approximate number of Income Tax payers 44 - Persons with respectively more and less than £160 per annum 47 - One-half of entire product taken by 12 per cent. of the population 47 - One-third of entire product taken by one-thirtieth of population 48 - A poor people thinly veneered by the well-to-do 49 - The movement in 1903-1908 50 - - - CHAPTER IV - THE ESTATES OF RICH AND POOR - - The graduated Estate Duty of Sir William Harcourt 51 - Deaths per annum in the United Kingdom 54 - Numbers and values of estates passing at death in recent years 55 - Savings of the poor 57 - Rich and poor estates in an average year 59 - - - CHAPTER V - THE NATIONAL ACCUMULATION - - Estimate of the accumulated wealth of the United Kingdom 62 - Public property, Imperial and local 65 - The national and local debts private mortgages upon public - assets 67 - British wealth in private hands 68 - Foreign wealth in British hands 71 - Average wealth per head 71 - - - CHAPTER VI - THE MONOPOLY OF CAPITAL - - Living property owners estimated from Death Duty records 73 - Growing avoidance of Death Duties 77 - 120,000 persons own two-thirds of the national capital 79 - The alleged "capital" of the working classes 80 - Those rule who own 80 - - - CHAPTER VII - THE AREA OF THE UNITED KINGDOM - - Area the fundamental attribute of land 81 - Almost the entire area in private hands 82 - One-half the area owned by 2,500 persons 83 - The number of landlords 84 - Estimate of land rents 86 - Why the aggregate of land rents is relatively small 87 - The cheapening of food 87 - The small areas of the town 88 - The rent-charge formed by local rates 90 - - - CHAPTER VIII - THOSE WHO WORK AND WHOSE WHO WAIT - - Effect of congestion of capital upon distribution 93 - Practical examples of the distributive process 94 - Capital largely divorced from business ability 99 - Schedule D profits compared with paid-up capitals 100 - Effect of appreciation of securities upon position of the - wage-earners 101 - Railway profits and railway wages 102 - Calculating the labour factor 103 - Capital takes the lion's share 106 - - - CHAPTER IX - PROFITS, BAD TRADE AND UNEMPLOYMENT - - Growth of profits in recent years 107 - Rise and fall of wages in recent years 108 - Growth of profits compared with rise and fall in wages 110 - Labour bears the brunt of depression 115 - Records of unemployment of Trade Union members 116 - The Trade Union unemployment rate probably representative 119 - How Trade Unions keep the tools sharpened 121 - The great majority of the British people lack security of tenure - of employment 122 - "Remedies" for unemployment 123 - Insurance against unemployment 123 - Labour Exchanges no remedy 124 - - - CHAPTER X - PART OF THEIR WAGES - - Accident and disease concomitants of wages 125 - Laxity of factory inspection 127 - Accidents in factories and workshops 127 - Diseases of occupations in factories and workshops 129 - Accidents in mines and quarries 130 - Accidents on railways 136 - Accidents on ships 137 - Accidents in certain engineering works 137 - Aggregate of reported accidents and cases of industrial - disease 138 - Phthisis as an industrial disease 139 - Physical deterioration not an accident 140 - - - CHAPTER XI - CONSEQUENCES - - The governance of the rich 141 - The direction of life and labour through expenditure 143 - The cotton trade and the fate of its products 144 - The demand for woollens 145 - The call for boots 147 - The waste of labour of nominally useful workmen 149 - The parable of the temporary supper-room 149 - The parable of the Ascot frock 151 - Mr Rowntree's primary poverty line 153 - The possible call for commodities by the poor 154 - The agricultural labourer's call 155 - The boot employee as a customer for the textile employee 156 - The Error of Distribution connotes the misdirection and - degradation of labour 156 - - - CHAPTER XII - THE WASTE OF CAPITAL - - The national accumulations small in relation to the national - income 159 - More evidences of poverty than of wealth 159 - The moral of oversea investments 160 - Six thousand millions of capital wasted in forty years 163 - The demand for luxuries misdirects capital 164 - The waste of capital in the game of competition 166 - The waste of capital in weak and bogus company promotion 166 - - - BOOK II - TOWARDS ORGANIZATION - - CHAPTER XIII - THE GOLDEN KEY - - More trade and a better distribution 171 - The social problem must be discussed with reference to the - Error of Distribution 172 - - - CHAPTER XIV - THE NATION'S CHILDREN - - The renewal of the race 173 - The verdict of anthropology 173 - Injustice before birth and after 176 - The innocence of the Factory Act 178 - The Physical Deterioration Committee on reasonable care of - the infant 180 - The mothers of the future 181 - The mothers of the present 181 - Women health inspectors 182 - The public medical service 183 - The small cost of a public maternity fund 184 - A Jewish example 185 - The birth of a child a matter of national moment 187 - Neglectful parents must be punished 187 - The segregation of the unfit 187 - Twenty-five million births in twenty years 189 - - - CHAPTER XV - THE SCHOOL - - The Error of Distribution and the heritage of the child 191 - The nation loses the bulk of its intelligence and genius 191 - The school must be a preparation for life 192 - The doctor in the school 193 - The school children of Bradford 194 - "The child has got to be fed" 196 - Observation and expression 199 - The study of systematized knowledge 202 - The teaching of hygiene and temperance 204 - Compulsory continuation schools for both boys and girls 204 - Can we afford to make our schools what we desire them to be? 207 - - - CHAPTER XVI - THE HOME - - An increasing population in a diminishing number of centres 209 - Our many poorhouses 210 - The years taken from the lives of the poor 211 - Crowding and overcrowding 212 - Tenement statistics 212 - Overcrowding on area has increased 213 - Not only death and disease but ugliness to be fought 215 - Where further building should be prevented 217 - The housing question as a land question and as a capital - question 218 - The community should be landlord 218 - The taxation of land on its selling value would assist - in municipalizing area 219 - The small area needed to rehouse our city populations 220 - The municipality must plan its extensions in advance 221 - Some examples from Germany 222 - An example in the United Kingdom 223 - How land and capital enter into the housing problem 229 - National housing loans needed 231 - - - CHAPTER XVII - THE EMPTY COUNTRY - - The migration from the country to the towns 234 - The decrease in agricultural employment and its causes 240 - Agriculture must be an increasingly limited field - for employment 240 - The cheap land outside the towns 243 - Is control of area worth half a year's income? 243 - The community can acquire cheap land and make it valuable 244 - Rising food prices 247 - Neglected afforestation 248 - Imperial questions must be treated on an Imperial scale 249 - - - CHAPTER XVIII - ORGANIZATION - - An insufficient production of ponderable commodities 250 - The small stream of ponderable things is made the subject of - unnecessary services 251 - Present production is wasteful 252 - The waste of labour in competition 252 - The waste of labour in distribution, etc 253 - So called "natural" monopolies 255 - Monopoly necessary if labour is to be fully economized 256 - Power distribution and public control 256 - The problem of monopoly illustrated by the milk trade 259 - The milk trade typical of many other services 262 - Municipal and joint-stock direction contrasted 263 - The management of our railway companies 263 - The prevalence of nepotism in private enterprise 264 - The Belgian State railways 265 - Coal production and distribution 267 - The private trust the only alternative to public ownership 269 - Public ownership of capital the only remedy for unemployment 270 - Those govern who employ 271 - - - CHAPTER XIX - THE AGED POOR - - Two million persons over 65 years of age and most of them poor 272 - Mr Thomas Burt's return of aged paupers 273 - Mr Ritchie's return of number of paupers relieved during a year 275 - Of the population aged 65 and over, one in three is a pauper 277 - Probable number of aged paupers 278 - Length of the working life 280 - The Charity Organization Society and cost 283 - Mr Asquith's Old Age Pension Act 284 - First year's working of Old Age Pensions 285 - Old Age Pensions at 65 286 - Invalidity Insurance 286 - - - CHAPTER XX - ADAM SMITH'S FIRST MAXIM OF TAXATION - - The famous first maxim self-contradictory 287 - Taxation in relation to the Error of Distribution 288 - The doctrine of equality of sacrifice 288 - An unanswerable case for repeal of all food duties 289 - The duties on liquors and tobacco should remain 289 - - - CHAPTER XXI - THE MAIN INSTRUMENT OF TAXATION - - Through an Income Tax taxation can be applied according to - "ability" 291 - The British Income Tax an ancient impost 291 - The so-called "Land" Tax of 1692 was an income tax 292 - The "Land" Tax of 1692 and the present Income Tax compared 295 - A graduated Income Tax taxes unearned increment 296 - The Income Tax in 1905 described 297 - The "Abatements" 297 - Schedule A described 298 - Schedule B " 299 - Schedule C " 300 - Schedule D " 300 - Schedule E " 302 - The Inhabited House Duty a second Income Tax 302 - The Finance Act of 1907 introduced differentiation between - earned and unearned income 303 - The Finance Act of 1909. Mr Lloyd George's reform of the - Income Tax 303 - Mr Asquith's differentiation illustrated 304 - The Super-Tax 305 - The Super-Tax as it really is 305 - The Income Tax summarized 306 - The Income Tax in effect 307 - The Inhabited House Duty should be abolished 308 - Simplification needed 308 - Without a Census of Income the Income Tax cannot be properly - enforced 310 - Masters compelled to reveal employees' incomes 311 - Taxation at the source might remain 312 - The family man's allowance 314 - Is an annual Budget debate necessary? 315 - Mill and Bentham on Ethics of Taxation 317 - A Plain Bill for the citizens' subscription to the - National Club 318 - - - CHAPTER XXII - THE DEATH DUTIES - - The Death Duty Reforms of 1907-9 320 - My suggestions of 1905 now law 321 - The plain justice of the Lloyd George Scale 322 - The alleged burden of the Death Duties 323 - Do our Death Duties waste the national capital? 323 - Gifts _inter vivos_ 324 - President Taft on the dangers of wealth monopoly 324 - - - CHAPTER XXIII - OF REVENUE WITHOUT TAXATION - - A source of revenue not necessarily a source of taxation 326 - A State without revenue 327 - Socialism and revenue and taxation 327 - The German Governments rich are Governments 328 - Half the revenue of Prussia is derived from Socialism 328 - Yield of Prussian State Railways 329 - - - CHAPTER XXIV - CONCLUSION - - Progress in 40 years 330 - Some items in material progress, 1867-1903 332 - What Dudley Baxter wrote in 1867 333 - The poor within our borders to-day are as large in number as - the entire population in 1867 338 - The employer the effective schoolmaster 340 - A poor government is a weak government 341 - Sir Robert Giffen on taxation 341 - We must have regard to both palliatives and remedies 342 - Public ownership of capital must replace private ownership 343 - The substitution of the public shareholder for the private - shareholder not difficult 344 - The uplifting of work through the reduction of toil 345 - The statesman must take up the tools of the scientist 346 - The appeal to the few 348 - The appeal to the people 348 - - - INDEX 351 - - - - - RICHES AND POVERTY - - - - - BOOK I - THE ERROR OF DISTRIBUTION - - - - - CHAPTER I - THOUGHTS ARISING OUT OF A GREAT CONTROVERSY - - -During recent years a considerable share of the thoughts of men has been -devoted to the consideration of one part of our fiscal policy,—that part -which is concerned with Customs duties. In public and in private, on -hundreds of platforms and in thousands of homes, the ancient issue has -been debated between those who hold that Customs duties should be -imposed for revenue purposes only and those who contend that Customs -duties may be used as instruments with which to direct wisely the -agricultural, industrial and commercial development of a nation. In the -arguments which have been adduced by both sides in this controversy a -large part has been taken by evidence of the prosperity or want of -prosperity of the United Kingdom, as though Customs policy were the sole -factor in determining the wealth and progress of a people. Blind to the -fact that a wise Customs policy can at best enable a nation to make the -most of its natural advantages, extreme disputants have been engaged on -the one side in piling up incontestable evidences of British wealth and -on the other side in producing equally incontestable evidences of -British poverty. The Free Trader has revelled in import and export, -shipping, banking and revenue statistics, while the Protectionist has -reminded us of the existence of millions on the verge of hunger, of -hundreds of thousands of paupers, and of tens if not hundreds of -thousands of unemployed. The Free Trader has demonstrated that, as a -whole, we are a wealthy and a prosperous people. The Protectionist has -been able to throw doubt upon that wealth and prosperity chiefly because -it is an indisputable fact that, whatever may be true of our accumulated -wealth and total income, every British city has its slums, its paupers -and its out-of-works. The Protectionist has been unable to resist the -Free Trade evidence as to the magnificence of our commerce and shipping -and the increasing national income recorded by the Inland Revenue -Commissioners. The Free Trader has had reluctantly to admit the -existence, in our wealthy country, of social disorders and masses of -extreme poverty which are terrible blots upon our prosperity. If one -side has dwelt almost exclusively upon signs of wealth and the other -side almost exclusively upon evidences of poverty, what else could be -expected when a highly complicated problem became the shuttlecock of -faction? Even honest politicians become afraid to make statements which -may be treated as "admissions" when party feeling runs high. The more -should we welcome the notable utterance of Sir Henry Campbell-Bannerman -at Perth on June 5th, 1903: - -"But I take it (the Chamberlain policy of 'Preference') as confined to -food, and it amounts to this, that the cost of the necessaries of daily -life is to be raised to the people of this country in order that the -Colonial producer may do more business, make larger profit, and the -landowner get better rents. Now the pinch of this does not fall upon the -well-to-do. It may be an inconvenience to a great number of people, but -the real pinch of it falls upon a needier class altogether, who are -sadly large among us. What is the population of the Colonies which I -have named? About thirteen millions. This is the population who will -share more or less the benefit of this new arrangement. In this country -we know, thanks to the patience and accurate scientific investigations -of Mr Rowntree and Mr Charles Booth, that there is about 30 per cent. of -our population underfed, on the verge of hunger. Thirty per cent. of 41 -millions comes to something over 12 millions—almost identical as you see -with the whole population of the Colonies. So that it comes to this, -that for every man in the Colonies who is benefited, one head is shoved -under water in this country. I think I might set down that fact as -almost enough of itself to condemn any scheme, however plausible. Surely -the fact that about 30 per cent. of the population is living in the grip -of perpetual poverty is, or ought to be, a sufficient answer to the -Prime Minister's complacent suggestion that we can now afford to try -experiments which fifty years ago were not to be thought of." - -These words have been widely used as a reply to the assertion that we -are a prosperous people. Their true meaning is, that while we have -acquired great wealth, and enjoy a considerable national income, that -wealth and that income are not so distributed as to give a sufficiency -of material things to all our population. As for their use as an -"argument" for Protection, we have but to turn to that land favoured of -nature, the United States of America, to find records of poverty fully -as distressing as our own. - -Mr Robert Hunter, the American sociologist, thus summarises the poverty -of the United States of America: "There are probably in fairly -prosperous years no less than 10,000,000 persons in poverty; that is to -say, underfed, underclothed, and poorly housed. Of these about 4,000,000 -persons are public paupers. Over 2,000,000 working men are unemployed -from four to six months in the year. About 500,000 male immigrants -arrive yearly and seek work in the very districts where unemployment is -greatest. Nearly half of the families in the country are propertyless. -Over 1,700,000 little children are forced to become wage-earners when -they should still be in school. About 5,000,000 women find it necessary -to work, and about 2,000,000 are employed in factories, mills, etc. -Probably no less than 1,000,000 workers are injured or killed each year -while doing their work, and about 10,000,000 of the persons now living -will, if the present ratio is kept up, die of the preventable disease, -tuberculosis." - -We have, then, to thank the fiscal controversy for this: In the belief -that evidence of prosperity, or the reverse of prosperity, is a proof or -disproof, as the case may be, of the wisdom of a particular Customs -policy, we have been reminded at once of our riches and of our poverty. -Through the controversy over that absurd phrase the "balance of trade," -worthy landsmen have been reminded that the United Kingdom possesses -half the world's seagoing ships, and poor clerks have learned with -astonishment that our oversea investments produce over £100,000,000 of -profits per annum. The unemployed workman, drawing from his beneficent -trade union the small allowance with which his own thrift has provided -him, and which barely keeps the wolf from his door, has learned that our -imports of food—"chiefly from foreign countries"—are worth £200,000,000 -per annum. Millions—other people's millions—have become common objects -of the newspaper column, and it is probable that a great part of our -population is now acquainted with the fact that the gross income brought -under the review of the Income Tax Commissioners is about £1,000,000,000 -per annum. It has also, alas, become familiar that our Poor Law -expenditure reaches £17,000,000 a year, and that, even in our best years -of trade, many of our skilled workmen are denied the means of earning -their livelihood. While demonstrating our prosperity the good Free -Trader has paused to write a cheque for a West Ham Distress Fund, or -subscribed some shillings for a children's slum party. - -The object of these pages is to help the reader to form an accurate idea -of the distribution of the wealth which results from our industries and -commerce. 44,000,000 people in the United Kingdom work to produce -certain commodities, and a part of this output is exchanged for -commodities produced in other lands. We produce, we export, and we -import, and our home production increased by our imports and decreased -by our exports constitutes a great income which is divided up amongst us -in such manner that some of us are rich and some of us are poor. Let us -endeavour to make concrete our ideas on the subject of riches and -poverty, that we make quite sure what we mean when we speak of the -wealth and prosperity of the United Kingdom. - - - - - CHAPTER II - THE NATIONAL INCOME - - -In considering and estimating the national income it is necessary to -remind ourselves, in the first place, that our production, our exports -and our imports, alike consist of both goods and services. The processes -of thought and action result in the conception, production, distribution -and use of ponderable and imponderable commodities. In an advanced -community the greater part of the material and immaterial productions -which are the expressions of its various activities becomes the subject -of exchange. The many exchanges are made by reference to a common -standard, and thus we are enabled to measure, in terms of money, the -greater part of the national income. There remains a not inconsiderable -production of ponderable and imponderable things which it is difficult -or impossible to measure in terms of money, but upon which largely -depends the happiness of a people. The material produce which does not -become the subject of exchange, includes several very important items, -amongst which may be mentioned the produce of the gardens or allotments -of many agricultural labourers, and the production of clothing and the -cooking of food by the women of the middle and lower classes. The -immaterial things which do not come into the market are exceedingly -important, especially to the poor. The household work of a poor woman -with a husband and several children, if it could be measured in terms of -money, would be worth a considerable sum. The imponderable part, the -managing, the careful buying, the arranging, the cleaning, the serving, -added to the manufacturing part, the cooking and the stitching, go often -to make a sixteen-hours' working day, and who shall place a market price -upon each of the sixteen hours? In the well-to-do household we also find -the woman active for some fourteen or sixteen hours a day, but the -product of the hours is more often immaterial than in the poor man's -home. Thus the care of servants has been known to cause the expenditure -of much time and anxiety by women of large income. A rich woman who has -studied under Marchesi may exercise in private, to solace her father or -lover, a soprano worth one shilling per note in the public concert-room. -It is worth no less in the drawing-room, but in estimating the national -income we have to neglect its market value just as we must neglect that -of the poor woman's apple-pie. - -With this reminder as to the production of unexchanged commodities, -which, while important, are yet but an exceedingly small part of the -product of the entire activities of our people, I proceed to an -examination of the money value of that greater part of the product which -is bought and sold. - -The collection of the Income Tax makes a more or less complete -inquisition into the profits or salaries received or earned by those -whose incomes exceed £160 per annum. Below that limit income tax is not -payable, but a small amount of the income of persons with less than this -£3 per week does actually come under the review of the Commissioners. - -If we take the figures of the latest period of which we have record, we -find that in the financial year 1908-9 (_i.e._ the twelve months ended -March 31st, 1909) the following particulars of gross incomes were -ascertained by the Inland Revenue Officials (fifty-third Report of the -Commissioners of Inland Revenue, Cd. 5308, p. 105):— - - GROSS AMOUNT OF INCOME BROUGHT UNDER REVIEW IN 1908-9 - - Schedule A. Profits from the ownership of - lands, houses, railways, mines, etc. £269,900,000 - - Schedule B. Profits from the occupation - of lands (Farmers' Tax) 17,400,000 - - Schedule C. Profits from British, Indian, - Colonial and Foreign Government - Securities 47,500,000 - - Schedule D. Profits from Businesses, Concerns, - Professions, Employments, etc., - including certain profits from places - abroad 565,600,000 - - Schedule E. Salaries of Government, - Corporation, and Public Company - Officials 109,600,000 - -------------- - £1,010,000,000 - -------------- - -The following table shows the growth of the aggregate during the past -fifteen years:— - - GROSS PROFITS ASSESSED TO INCOME TAX - (_From Inland Revenue Report_) - - 1893-4 £673,700,000 - 1894-5 657,100,000 - 1895-6 677,800,000 - 1896-7 704,700,000 - 1897-8 734,500,000 - 1898-9 762,700,000 - 1899-1900 791,700,000 - 1900-1 833,300,000 - 1901-2 867,000,000 - 1902-3 879,600,000[1] - 1903-4 902,800,000[2] - 1904-5 912,100,000 - 1905-6 925,200,000 - 1906-7 943,700,000 - 1907-8 980,100,000 - 1908-9 1,010,000,000 - -It should be observed that these figures are for gross income, and some -adjustments have to be made before we can arrive at the total income of -that part of the nation which has the mingled pleasure and pain of -paying Income Tax. - -From the £1,010,000,000 brought under review in 1908-9, the Inland -Revenue authorities allowed the following deductions before arriving at -taxable incomes:— - - (_a_) Exemptions in respect of incomes - under £160 per annum £58,400,000 - - (_b_) Abatements on incomes ranging from - £160 per annum to £700 per annum 120,300,000 - - (_c_) Life Insurance Premiums 10,500,000 - - (_d_) Charities, Hospitals, Friendly - Societies, etc. 11,800,000 - - (_e_) Repairs to Lands and Houses 40,100,000 - - (_f_) Wear and tear of Machinery and Plant 22,900,000 - - (_g_) Other Allowances 52,700,000 - ------------ - Total Deductions £316,700,000 - ============ - -So that Income Tax in 1908-9 was actually collected not upon -£1,010,000,000 but upon £693,300,000. - -But we have not to make all the above deductions in arriving at the -actual income of the income tax paying class. We have only to deduct -those items which are not the real income of that class, viz.:— - - (_a_) Exemptions in respect of incomes - under £160 £58,400,000 - (_d_) Charities, Hospitals, etc. 11,800,000 - (_e_) Repairs to Lands and Houses 40,100,000 - (_f_) Wear and tear of Machinery 22,900,000 - (_g_) Other Allowances 52,700,000 - ------------ - £185,900,000 - ============ - -Deducting these items we get:— - - GROSS ASSESSMENTS TO INCOME TAX - CORRECTED[3] - - Gross Assessments 1908-9 £1,010,000,000 - Less Deductions as above 185,900,000 - -------------- - £824,100,000 - ============== - -This figure may be compared with the £719,500,000 given on page 11 of -"Riches and Poverty" (1905) for the fiscal year 1902-3. The increase is -no less than £104,600,000 in five years, and this increase is especially -commended to the notice of those critics who have worked so hard to -whittle away a little from my estimates of 1903-4. The onward sweep of -the figures has been magnificent; and accomplished facts now provide the -apologists of the rich with the task of explaining away another -£100,000,000 or so per annum. - -To resume, the £824,100,000 arrived at above, handsome figure as it is, -is certainly not complete. There is unquestionably still a considerable -amount of evasion under Schedule D of the Income Tax. The landlords of -Schedule A cannot escape assessment because the tax is paid by occupiers -and deducted from rent, but there is a certain amount of -under-assessment. Under Schedules B, C and E evasion is, for the most -part, difficult or impossible. Under Schedule D,[4] however, a large -number of incomes are understated and many which ought to be assessed -escape altogether. It is almost as true to-day as it was in 1861 that, -in the words of Mr Lowe's Draft Report to the Income Tax Committee of -that year, "Schedule D depends on the conscience of the tax-payer who -often, it is to be feared, returns hundreds instead of thousands, and -who is certain to decide any question that he can persuade himself to -think doubtful, in his own favour." It is recorded by the Income Tax -Commissioners in their Twenty-Eighth Annual Report that when, in 1803, -taxation at source was substituted for self-assessment in the case of -all income but business profits, the effect was to make the produce of -the tax at 5 per cent. in 1803 almost equal to that of 10 per cent. in -1799, showing that in the earlier year those who assessed themselves -unaccountably overlooked one-half of their incomes. Dudley Baxter -reminds us in his classical paper on the National Income[5] that in his -Budget Speech in 1853 Mr Gladstone quoted a remarkable instance of -evasion. When Cannon Street Station was constructed, twenty-eight -persons claimed compensation for the loss of annual profits which they -estimated at £48,000. The jury, after considering their case, awarded -them £27,000. They had returned their profits to the Income Tax -Commissioners at £9,000! In recent years the formation of limited -liability companies has frequently revealed profits far in excess of -those previously stated under Schedule D. Whatever figure we allow for -such evasion must, in the nature of the case, be conjectural. In "Riches -and Poverty" (1905), p. 13, I estimated evasion and avoidance as 20 per -cent. of the declared profits. Twenty per cent. of £365,000,000 (the -profits of "Businesses, Professions, etc," assessed under Schedule D) in -1902-3 was £73,000,000. We have since had remarkable proof of the -reasonableness of this estimate. In 1907-8 the gross assessments to -Income Tax rose by £36,000,000 (see p. 11). There is little doubt that -part of the rise was due to Mr Asquith's enactment (Finance Act, 1907, -Clause 19) differentiating between earned and unearned incomes _on the -condition that earned or partly earned incomes up to £2,000 a year were -declared by their owners_. For the financial year 1907-8 does not -include the profits of the good year 1907 which (see Chap. 21) were not -assessed under our averaging system until 1908-9. It was the new -personal declarations which led to the revelation of income hitherto -escaping tax, and part of the £36,000,000 rise in assessments in 1907-8 -is undoubtedly part also of the estimate of £73,000,000 escaping tax -which I made in "Riches and Poverty" (1905). For 1908-9, therefore, I -reduce my estimate of income escaping tax accordingly. I now take it as -£60,000,000 in 1908-9. - -Another point for consideration is the amount of profit received by -persons in this country from places abroad. It is exceedingly difficult -to tax the whole of such profits. In 1908-9, £88,800,000, made up as -follows, was ear-marked by the Commissioners as profit received from -abroad:— - - ASSESSED PROFITS EAR-MARKED AS - RECEIVED FROM ABROAD, 1908-9 - - (1) India Government Stocks, Loans } - and Guaranteed Railways } £9,000,000 - (2) Colonial or Foreign Government } - Securities } 23,200,000 - (3) Colonial or Foreign Securities, - other than Government, Coupons, - and Oversea Railways other - than those in (1) 56,600,000 - ----------- - £88,800,000 - =========== - -The total profit received or receivable yearly in this country from -oversea investments it is impossible to estimate precisely, but there is -good reason to believe that it is not less than £140,000,000. It should -not be imagined, however, that the whole of the difference between this -sum and that ear-marked by the Commissioners escapes assessment. -Undoubtedly some of it eludes taxation, but a considerable sum, it -should be remembered, is included with ordinary business profits under -Schedule D. A few illustrations will make this clear. Messrs Armstrong, -Whitworth & Co. have a shipyard in Italy the profits of which are -received in this country, but are not distinguished from the ordinary -profits of the company in the income-tax assessment. The same is true of -such a firm as Lipton Ld. which owns extensive tea plantations in -Ceylon. The profits made in Ceylon and remitted to this country are -included in and assessed with the general profits of the business. There -are a large number of firms which similarly own foreign or colonial -property or branches which are organic parts of their businesses and are -often the sources of their materials. When allowance is made for these -facts it is probable that some £115,000,000 of oversea profits -(including the nearly £90,000,000 or so actually ear-marked) are -assessed to income tax, leaving but about £25,000,000 unassessed. - -Accepting these figures, we arrive at the following estimate of the -total income enjoyed by those persons who have over £3 per week:— - - INCOME OF PERSONS ENJOYING OVER £160 - PER ANNUM, 1908-9 - - Gross Assessments to Income Tax Schedules - A, B, C, D, and E £1,010,000,000 - _Deduct_ - Items not representing real income, etc. - (see page 12) 185,900,000 - -------------- - £824,100,000 - _Add_ - (_a_) For under-assessment under - Schedule D 60,000,000 - (_b_) Foreign profits escaping tax 25,000,000 - ------------ - £909,100,000 - ============ - -The foregoing figures relate to the fiscal year ended March 31st, 1909, -the latest period for which detailed figures are available. - -It is necessary to point out again that while this fiscal year 1908-9 -covered the assessment of the calendar year 1907, which was a year of -great profit-making, it did not fully assess the profits of that boom -year. Under Schedule D of the Income Tax the profits assessed in 1908-9 -were the profits of the three years 1905, 1906, and 1907. That is to -say, the figures just arrived at, £909,100,000, _are an understatement -of the true aggregate incomes of those having upwards of £160 a year in -1907_. The actual income of the income tax payers in 1907 greatly -exceeded £909,000,000. - -In "Riches and Poverty" (1905) my equally conservative estimate of the -income tax payers' aggregate income for 1903-4 was £830,000,000. We -therefore get the following comparison:— - - GROWTH OF AGGREGATE INCOME OF PERSONS - ENJOYING OVER £160 A YEAR - - 1903-4. Estimate of "Riches and } - Poverty" (1905) } £830,000,000 - 1908-9. Estimate of this Edition } - (1910) } 909,000,000 - ------------ - Increase £79,000,000 - ============ - -And this remarkable growth in five years is shown in spite of the fact -that I have allowed for £13,000,000 of income tax assessment as being -due to increased severity of collection, for I have assumed that -£13,000,000 more of existing home profits were revealed in 1908-9 than -in 1903-4. - -Now let us turn to the incomes which do not exceed £160 a year, and -which, therefore, are not assessable to income tax. - -First of all, we have the class of small incomes which lie between the -manual workers and the income tax payers. We cannot hope, in view of the -poverty of the information which our present Census methods place at our -disposal, to estimate this part of the national income with any degree -of confidence, and we can at best arrive at a rough approximation. I -estimate that in 1908, of our "occupied" population, about 3,100,000 -were neither income tax payers on the one hand nor manual labourers on -the other hand. That is to say, they were petty tradesmen, civil -servants, clerks, shopmen, travellers, canvassers, agents, teachers, -farmers, inn-keepers, lodging-house-keepers, pensioners, and so forth, -whose profits or salaries are below £3 per week. At what rate can we -estimate their average income? - -The total includes a very considerable number of young persons between -10 and 20 years of age. The teachers, some 250,000 in number, include -pupil teachers of both sexes whose remuneration begins at a few -shillings per week, and as a whole the teaching profession is wretchedly -paid. The commercial and law clerks, some 500,000 in number, include -juniors, office boys, and poorly paid girl typists. As to shopkeepers, -there is an exceedingly large number of these distributing agents whose -incomes are of the slenderest dimensions. Unfortunately we do not know -how many shops in the United Kingdom have an annual value of less than -£20, but their number must be very great, and the petty tradesmen who -keep them have to work hard for poor returns. We have also to remember -the quite considerable number of shops which are branches of great -distributive firms and managed by shopmen with small salaries. As to -shop assistants in general, their salaries are exceedingly small. I am -informed by the National Amalgamated Union of Shop Assistants, -Warehousemen and Clerks that the average male assistant "living in" gets -from £25 to £30 per annum plus "premiums" and board and lodging, while -"living out" the average is about £74. Grocery and boot salesmen in the -shops of big distributing companies, who often are not required to "live -in," get from 20s. to 30s. per week. The wages of the "managers" of -shops are sometimes as low as 25s. per week. As for the value of the -"living in," this may be illustrated by the fact that in a certain West -of London house, where "living in" is the rule, a man applied for -permission to "live out." He was told that he could do so, but that only -£5 per annum extra could be allowed him. In a return to the Board of -Trade for the purpose of statistics, the same employer would doubtless -value the same "truck" at £30 or £40 per annum. I have before me the -wages paid to the young women who work for a great multiple shop firm -with 200 shops; they range from 3s. to 11s. per week! - -Passing to the class of commercial travellers and canvassers, there is -perhaps no calling in which earnings vary so greatly. While there are a -number in the income-tax class, there are thousands of men included in -the class we are now considering who live on "commission only," and -thousands more who are paid by generous employers 15s. to 25s. per week -plus a small commission. Advertisement and book canvassers are engaged -upon widely varying terms, and many of them have a very precarious -livelihood. - -In "Riches and Poverty," edition 1905, I wrote: "Nearly the whole of the -farmers of the United Kingdom earn less than £160 per annum. Out of a -total profit of £17,500,000 as much as £11,000,000 is excused on the -ground that income is below £160. This £17,500,000 is the annual income -of an uncertain number of the larger farmers, probably as many as -300,000, which gives an average income of about £60 per annum! In -1902-3, 302 farmers elected to have their actual profits assessed under -Schedule D. They were assessed at £10,974, which gives an average of -only £37 per annum. These 302 farmers paid an aggregate rental of -£116,259!" - -These remarks did not take sufficient account of the under-assessment of -farmers' profits under Schedule B. It would probably have been nearer -the mark to take one-half of the rental paid rather than the official -one-third as representing farmers' profits. If we did so, the profits of -300,000 farmers would come out at say £26,000,000 instead of -£17,500,000, and the average profit would run to £87 per annum. Even -this correction, however, would leave the great majority of our farmers -under the £160 income tax line. - -These notes on some of the largest classes of persons which go to make -up the order of incomes immediately under consideration will serve to -show that we are dealing with working men and working women whose -earnings are exceedingly small. It should also be remembered that many -of them are subject to losses from terms of unemployment. Clerks and the -poorer travellers have little security of tenure, and at any given time -there are many out of work. Hundreds of applications are commonly -received in reply to single advertisements for clerks and travellers. To -the petty tradesman bad trade does not spell "unemployment," but it -often spells keeping a shop which does not keep its proprietor for many -months. - -Taking everything into consideration, and remembering that no large -incomes are introduced to weight the average, the upper limit being as -low as £160 per annum, I do not think we can estimate the average income -of the 3,100,000 persons at more than £75 per annum, and I should put -the figure lower if I did not assume that a certain amount of interest -is drawn by some members of the group. This estimate gives £232,000,000 -as the annual income of those who are not "manual" workers, but whose -incomes are not assessed to income tax because they are less than £3 per -week. - -I have thus assigned to these members of the lower middle classes no -greater earning power than they possessed in 1903. I think I am well -advised in this. As will be seen later, wages have been almost -stationary of late, and there is no reason to believe that clerks, -commission men, etc., have fared better. Even as I write there comes to -me a letter from a man whom I employed when editing a newspaper some -years ago. He says (August 1910), "My present wage is 25s. per week, -with no allowance for lodging out when doing country work. It is easily -understood that this is not a sum which allows of luxuries for the -present or provision for the future." He is now a directory canvasser, -one of thousands in the employ of a large firm of publishers. - -Since these pages went to the printer, a Committee of the British -Association has issued a Report (1910) on the group of incomes just -referred to which largely confirms the conclusions I presented in 1905. -The Committee arrive at an average earned income of £71 against the £75 -which I consider to cover both earned and unearned incomes. They treat -of 4,000,000 people where I treat of 3,100,000, but that is because, -while I exclude manual labourers as a class, the Committee include many -manual labourers. Thus the Committee include sweeps in this intermediate -class, while I include them with the manual workers whose earnings we -shall next consider. - -We now come to the largest class of the working population, the "manual -workers" commonly so called. - -Including persons of both sexes and all ages, I estimate from the census -returns the number of manual workers in our population of 44,500,000 at -15,500,000. This number includes, in addition to all those engaged in -industrial, agricultural, and domestic service, soldiers, sailors, -policemen, and postmen. - -In 1886 the Board of Trade conducted the only Census of Wages made in -the United Kingdom prior to 1907. (We have not yet had a report on the -later Census.) Sir Robert Giffen, who in his then capacity as Assistant -Secretary of the Board of Trade in charge of the Commercial Department, -directed the Census, describes in his General Report issued in 1893 (C. -6889) the method adopted. Schedules were sent out to employers, after -careful consideration of the circumstances of each industry, specifying -the various occupations of each trade and asking for details as to rates -of wages, the numbers employed at each rate, the hours of labour, and so -forth. - -As to industrial employment generally the following trades were -investigated: Cotton, woollen, worsted, linen, jute, hemp, silk, carpet, -hosiery and lace manufacture, smallwares, flock and shoddy manufacture, -coal and iron mines, metalliferous mines, paraffin oil works, slate -mines and quarries, granite quarries and works, stone quarries, china -clay works, police, construction and care of roads, pavements and -sewers, gasworks, waterworks, pig-iron manufacture, general engineering, -iron and brass foundries, iron and steel, shipbuilding (iron and wood), -tin plate manufacture, saw mills, brass and metal wares, cooperage -works, coach and carriage building, boot and shoe making, breweries, -distilleries, brick and tile making, chemical manure manufacture, and -railway carriage and wagon building. - -The details obtained related to 355,838 men, 80,253 boys, 151,263 women -and 48,772 girls, and were considered by Sir Robert Giffen to be -"representative of, perhaps, three-fourths of the manual labour classes -of the United Kingdom." He also expressed the opinion that the "broad -results shown by the census summary would not be sensibly modified by -including the great mass of other employments not comprised in that -summary." - -In the following table the Board of Trade summarised the proportion of -men, women, boys and girls working at various rates of wages, in 1886, -in the industries which I have mentioned:— - - WAGES IN 1886. THE BOARD OF TRADE SUMMARY OF RATES OF WAGES (NOT ACTUAL - EARNINGS) DERIVED FROM THE DETAILED EXAMINATION OF 38 SELECTED - INDUSTRIAL OCCUPATIONS - - Men. Women. Boys. Girls. - Per Cent. Per Cent. Per Cent. Per Cent. - - Half Timers -- -- 11.9 27.2 - Under 10s. per week 0.1 26.0 49.7 62.5 - 10s. to 15s. " 2.4 50.0 32.5 8.9 - 15s. to 20s. " 21.5 18.5 5.8 1.4 - 20s. to 25s. " 33.6 5.4 0.1 -- - 25s. to 30s. " 24.2 0.1 -- -- - 30s. to 35s. " 11.6 -- -- -- - 35s. to 40s. " 4.2 -- -- -- - Above 40s. " 2.4 -- -- -- - ----- ----- ----- ----- - Total 100.0 100.0 100.0 100.0 - ----- ----- ----- ----- - Average Rate of _s._ _d._ _s._ _d._ _s._ _d._ _s._ _d._ - wages 24 9 12 11 9 2 6 5 - -It will be seen that the average rate of men's wages came out at 24s. -9d. per week or, say, £64 per annum in a year of constant occupation. -The weighted average rate for both sexes and all ages comes out at 17s. -6d. per week or, counting 52 weeks' work in the year, £45. 10s. per -annum. - -The Board of Trade also investigated the rates of wages in other -occupations, and the following table compares the £64 of the adult males -in general industries with the rates of wages paid to adult males in (1) -railway service, (2) building, (3) mercantile marine, (4) Royal Navy, -(5) Army, (6) domestic service, (7) asylums, (8) hospitals (in 1886 -unless another date is given):— - - AVERAGE RATES OF WAGES (NOT ACTUAL - EARNINGS) FOR MEN IN 1886 - - Per Annum - Average of Wage Census (38 Industrial occupations) £64 - Railways (for 1891) 60 - Building Trades (for 1891) 73 - Seamen: Mercantile Marine, including estimated } - value of food and berths } 65 - Royal Navy, including value of food, etc. 65 - Army (Non-Coms, and men). Including value } - of food, etc. } 48 - Domestic Servants (large households). Including } - value of food, etc. } 68 - Employees in Lunatic Asylums. Including value } - of food, etc. } 60 - Employees in Hospitals and Infirmaries. Including } - value of food, etc. } 61 - --- - Unweighted Average £62 - --- - -In his report already referred to, Sir Robert Giffen, after detailing -the average rates of the above table, says (p. xxxiii): "Thus in nearly -all these trades the average rates are about the same as the average -rate in the Census of Wages Summary." But the table does not include the -badly paid agricultural labourer, the largest group of all, and the -figures for seamen, etc., are, it should be observed, swollen by -estimates of the value of board and lodging. - -Finally, Sir Robert Giffen arrived at the general conclusion that "the -broad results shown by the census summary would not be sensibly modified -by including the great mass of other employments not comprised in that -summary." - -In January 1893 Sir Robert Giffen gave evidence before the Labour -Commission and submitted the facts I have detailed. He prepared a -general estimate of the proportion of the national income then taken by -the wage-earning classes, and his evidence on this point (questions 6909 -to 6914) is summarized in the following table:— - - EARNINGS OF MANUAL LABOURERS IN 1886 - (Sir Robert Giffen's estimate for the Labour Commission) - - Number. Annual Average Aggregate Earnings. - per Wage-Earner. - Men 7,300,000 £60 0 0 £439,000,000 - Women 2,900,000 40 0 0 118,000,000 - Boys 1,700,000 23 8 0 46,000,000 - Girls 1,260,000 23 0 0 29,000,000 - ---------- --------- ------------ - 13,200,000 £48 0 0 £633,000,000 - ---------- --------- ------------ - -There can be no question that this estimate of Sir Robert Giffen's -somewhat exaggerated the actual earnings of manual labourers as a whole. -In the first place, it was too much to assume that the 24s. 9d. per week -or £64 per annum was representative of the whole of adult male labour. -Without introducing agricultural labourers (the largest group in the -country), general labourers, postmen, and other ill-paid workers, the -unweighted average of the table on page 24 is £62. If £60 per annum had -been given as the average _rate of wages_ of all the adult male workers -in 1886 it would probably have been an exaggeration. It was not given as -a rate of wages, however, but as the actual earnings of the men after -all allowance made for short time, unemployment, sickness, accidents, -strikes, lockouts, stress of weather, etc. Sir Robert Giffen appears to -have assumed that all the adult male workers of the United Kingdom were -employed on the average about 50 weeks out of 52, and were paid at the -average rate of £64 per annum! - -In 1866 Leone Levi, in estimating the manual workers' earnings, assumed -that four weeks per annum were lost. Dudley Baxter in 1867 pointed out, -in criticism of Leone Levi, that if four weeks' "play" were all that -need be allowed "England would be a perfect Paradise for working -men."[6] Dudley Baxter, in view of the circumstances of his day, allowed -ten weeks for "play" in making his estimate, and there can be no -question that he was nearer the truth than Levi. At the present day the -level of employment is very much the same as it has been for the past -forty years, while sickness, accidents, and the weather are still with -us. We need not wonder, then, if Professor A. L. Bowley, who has given -the subject of wages so much attention, bases his estimates upon the -loss of six weeks' work per annum through sickness and holidays, and -makes an additional allowance for unemployment, while also assuming that -10 per cent. of the working population only get casual or irregular -work, bringing them in about half the amount shown in the Wage Census.[7] - -If the estimate given to the Labour Commission had allowed for six -weeks' "play," the average earnings of men, women, boys and girls would -have come out at £40. 5s. per annum instead of £48, and the aggregate -earnings, therefore, at much less than £633,000,000. Leone Levi's -estimate for 1884, allowing for only four weeks' play in the year, was -£521,000,000. This figure is too large, but it is over £100,000,000 less -than that of Sir Robert Giffen. - -I now take the Wage Census figure of 1886 as a basis and correct it for -the upward movement of wages since that date by the wage index numbers -of the Board of Trade (Cd. 4954, which slightly corrects the index -numbers of Cd. 1761, used in "Riches and Poverty," 1905 edition, p. 24), -which are based on the mean of over 150 rates:— - - Average Wage - (Men, Women, and Board of Trade - Year. Children) per Index Number - Week. 1900 = 100.* - _s._ _d._ - 1886 (Wage Census figure) 17 6 82.86 - 1900 " " 21 1 100.00 - 1908 " " 21 3 101.02 - -* The meaning of this column is that, if the average wage of 1900 be -represented by 100, the average wage of 1886 is represented by 82·86 and -that of 1908 by 101·02. - -We thus arrive at 21s. 3d. as the average weekly wage of the manual -workers in 1908. There is much reason to believe that this estimate errs -on the side of liberality. It is unfortunate that we have not a -compulsory wage census, and the method of estimation used here can -pretend to no more than approximation. It neglects the important fact -that between 1886 and 1908 the ranks of women and child workers have -swollen at the expense of adult male workers. The 15,500,000 (estimated) -manual workers of 1908 consisted as to a larger proportion of women and -children than the 13,200,000 (estimated) manual workers of 1886. I -regard the 21s. 3d., therefore, as the most liberal figure that can be -put forward as the average earnings of the men and women and child -workers of the United Kingdom in 1908. - -We have now to decide what allowances should be made (1) for the great -army of casual, incompetent, and aged or ageing workers who figure in -the census returns as following definite occupations, and (2) for the -loss of time through unemployment, sickness, accidents, stress of -weather, strikes, lockouts, "bank" and other holidays, etc., in the case -of the remaining workers. - -With regard to the first item, I do not think we are justified in -estimating the incompetents and casuals at less than 1,000,000 out of -the 15,500,000. For the purposes of the present estimate, I assume that -these 1,000,000 workers earn, on the average, £25 per head per annum, or -an aggregate of £25,000,000. My view is that this is a liberal estimate -of the earnings of what may be termed the camp-followers of the -industrial army. - -With regard to the remaining 14,500,000, we have to form an estimate of -the amount of time lost per annum through voluntary or enforced leisure. -No certain information exists, and the widest differences of opinion -have been expressed on the subject. As I have said above, Dudley Baxter -took ten weeks; Leone Levi took four weeks; Mr A. L. Bowley takes six -weeks plus a further allowance for unemployment. - -The Board of Trade, in their recent examination of fluctuations in -employment, made an analysis from the records of the Amalgamated Society -of Engineers, combined with information supplied by employers, of the -time lost in the engineering trade. They came to the conclusion that, in -an average year, perhaps 8 per cent. of working time was lost from all -causes, and expressed the opinion that in a good year the loss might -fall to 4 per cent. and in a bad year rise to 15 per cent. or more (Cd. -2337, p. 101). This would mean, for the engineering trade only, a loss -of time varying from only two weeks in the year to as much as eight -weeks or more. - -In other employments the widest variations exist. There are the quite -regular employments, such as the army, the navy, the postal service, the -police service, and, for the greater part, the railway service. There -are violently fluctuating employments, such as the building trades and -the shipbuilding trades. In all alike, sickness takes its toll, and -unemployment arises from accidents, from disputes, from "drink," and -from seasonal influences and depression, while, on the other hand, -overtime occasionally goes to swell the aggregate earnings. - -I make the assumption that the average working year of the 14,500,000 -remaining wage-earners consists of 44 weeks. Applying the average wage -already arrived at (21s. 3d. per week), we get an average annual earning -of, say, £46. 15s., which gives us £678,000,000 as the probable -aggregate earnings of the 14,500,000 workers. Adding the £25,000,000 -assumed to be earned by the remaining 1,000,000, we arrive at -£703,000,000 as the total earnings of the manual labourers in 1908. - -It is probable that this calculation does not take sufficient account -either of the changes of occupations since 1886, or, as has been already -pointed out, of the changes in the respective proportions of men, women -and children employed. The average wage of the 1886 Census, taken as the -basis of the calculation, was, it is necessary to insist, exaggerated by -the omission of the most ill-paid workmen, while the returns upon which -it was based, framed as they were by employers, are only too likely in a -proportion of cases to have put the wages paid in the most favourable -light. The employers again, who filled in the forms, were only some 75 -per cent. of the firms applied to by the Board of Trade, and it is a -fair inference that those who neglected to reply had no excessive pride -in the records of their wage-sheets. I submit, therefore, that as the -1886 average wage figure is a liberal estimate,[8] the figure which I -have deduced from it does not, in all probability, err on the side of -under-estimation. - -Professor Bowley estimates the total paid in wages in 1901 as -£705,000,000,[9] and the Board of Trade in the Fiscal Blue Book of 1903 -(Cd. 1761) say:— - -"From investigations based on the Board of Trade Census of Wages (1886) -combined with the recorded changes of wages since that date and the -distribution of the working population among various industries as shown -in the census returns, the total wages bill of the United Kingdom has -been estimated at between £700,000,000 and £750,000,000, according to -the state of employment." - -The estimate which I have given, therefore, differs but little from -those of Professor Bowley and the Board of Trade.[10] I prefer to use -the smaller figures on several grounds. In the first place, the -allowance for "play" is a conservative one. In the second place, I have -the gravest doubts as to the propriety of including in the estimates of -the wages of domestic servants, sailors, and others, an allowance for -the value of "lodging," as is done in the figures used. To include so -many shillings a week for the accommodation afforded by a seaman's bunk -or a general servant's fraction of an attic is to flatter "earnings" out -of all resemblance to the truth. The free cottages and other allowances -to agricultural labourers are often of a scarcely marketable character. -We may be justified in valuing an unhealthy hovel at 1s. 6d. per week, -in view of the fact that the labourer, if he had it not, would need to -pay rent elsewhere, but in too many cases the "cottage" is fit not for -inhabitation but for demolition. In the third place, no allowance is -made for the excessive rents paid by workmen in London and other large -towns. These rents are really part of the working expenses of the wage -earners, and there is as good ground for making deductions on account of -them as there is for deducting wear and tear of machinery in the case of -income-tax incomes. - -We can now arrive at an approximate estimate of the National Income as a -whole in 1908-9 (say 1908). - - THE NATIONAL INCOME IN 1908 - - (1) Persons with incomes which exceed - £160 per annum £909,000,000 - (2) Persons with incomes below £160 per - annum:— - (_a_) Persons earning small salaries, - petty tradesmen, etc. 232,000,000 - (_b_) The wage-earning classes 703,000,000 - -------------- - £1,844,000,000 - ============== - -It will be seen that _the income tax exemption limit of £160 per annum -splits the national income into two almost equal parts_. Of a total -income amounting to £1,844,000,000 in 1908, those with over £160 per -annum took £909,000,000, while those with less than £160 per annum took -£935,000,000. - -[Footnote 1: Figures examined in "Riches and Poverty" (1905), Chapter 2.] - -[Footnote 2: In "Riches and Poverty" (1905), Chapter 2, I estimated this -figure at £900,600,000.] - -[Footnote 3: It has been too freely assumed in calculating the national -income that the gross assessments represent actual income.] - -[Footnote 4: As Schedule D is an exceedingly important gauge of national -prosperity, it may be well to remind the reader of its precise -application. It is a tax upon all income derived from trades, industries -and professions, and from all sources not specified under the other four -Schedules. Profits from businesses established in places abroad are -assessable under it. The assessments are made annually, and are -generally based upon the mean of the income received during the -preceding three years. Fuller particulars will be found in Chapter 21.] - -[Footnote 5: "National Income." R. Dudley Baxter. Macmillan & Co. 1868.] - -[Footnote 6: "The National Income," Dudley Baxter.] - -[Footnote 7: "Economic Journal," Sept. 1904. Page 458.] - -[Footnote 8: Take, for example, the boot and shoe trade. The Wage Census -for 1886 (Cd. 6889, p. xiii.) gives the average earnings in boot and -shoe factories (both sexes and all ages) as £48 per annum. In 1908, more -than twenty years after, the Board of Trade "Labour Gazette" shows, from -employers' returns, that (in a July week) 60,337 boot workers took only -£58,147 in wages, which is about 19s. per week or £49, 8s. in a year of -52 such weeks. With regard to this trade, it is clear that either the -1886 estimate was too liberal, or that earnings have been practically -stationary in the twenty years.] - -[Footnote 9: "Economic Journal," September 1904.] - -[Footnote 10: If, however, the reader prefers to rely upon the larger -estimates he will find that the general conclusions of this and the -following chapter remain practically unaltered.] - - - - - CHAPTER III - DISTRIBUTION OF THE NATIONAL INCOME - - -Taking the population of the United Kingdom, 1908, at 44,500,000, and -the total income at £1,844,000,000, we get an average income per head of -about £40. - -Thus, if the income of the nation were equally distributed amongst its -inhabitants, a family of five persons would enjoy an income of about -£200 per annum. - -But how is the £1,840,000,000 actually divided amongst our people? -Contrasts between great riches and extreme poverty are every day -presented to our eyes. Can we do anything to reduce to a definite shape -our vague conceptions of riches and poverty? - -Investigation of the material at our disposal has convinced me that it -is hopeless to do very much in the way of detailed classification of -incomes. Our census methods are ridiculously inadequate, and our -inquisition into individual incomes is but partial. It is possible, -however, to depict the subject of distribution in broad outlines with -considerable accuracy. - -As we have already noticed, the £160 line at which assessment to income -tax begins, divides the national income into two almost equal parts. -Those persons who have more than £160 per annum enjoy an aggregate -income of £909,000,000. Those persons who have less than £160 per annum -enjoy an aggregate income of £935,000,000. - -Let us endeavour to discover how many persons have an income of £160 and -upwards. - -A certain amount of confused light is thrown on the subject by the -returns of the Inland Revenue Department. Under Schedules D and E, which -relate to profits from "Businesses, Concerns, Professions, Employment, -etc.," to use the official language,[11] the commissioners give us a -record of the number of individual assessments which are made. A summary -of these is as follows:— - - INCOME TAX. SCHEDULES D AND E. - PROFITS FROM BUSINESSES, CONCERNS, EMPLOYMENTS, ETC. - - Number of Gross Income - Assessments. Assessed. - (_a_) Persons not employees 416,661 £109,900,000 - (_b_) Firms (number of partners - not known) 53,663 80,500,000 - (_c_) Public Companies (number - of shareholders unknown) 37,937 291,000,000 - (_d_) Local Authorities 11,985 24,000,000 - (_e_) Bankers, Coupon dealers, - etc., deducting tax on - behalf of the Revenue not available 33,100,000 - (_f_) Employees (Schedule D) 114,074 27,100,000 - (_g_) Employees (Schedule E) 471,564 109,600,000 - --------- ------------ - 1,105,884 £675,200,000 - ========= ============ - -We have thus a record of 1,100,000 _assessments_, but these assessments -do not always correspond to individual tax-payers. - -Item _a_, "Persons not employees," gives us the fact that 416,661 -individuals are taxed in respect of trading or professional profits. -Item _b_ reveals the existence of 53,663 firms with an unknown number of -partners. Item _c_ covers a great many large and small shareholders. -Item _d_ covers a large number of investors who have lent money to local -bodies. Item _e_ similarly covers many persons of property deriving -interest from various securities which are taxed "at the source." In -items _f_ and _g_ each assessment refers to an individual. - -Further, these 1,100,000 assessments are made under Schedules D and E -only, which cover but £675,000,000 out of a total gross assessment to -income tax of £1,010,000,000 in 1908-9. There remain to consider -Schedules A, B, and C. - -A moment's reflection will show that from these three schedules, which -deal respectively with realty, farmers' profits, and government -securities, we can expect little assistance. The assessments under -Schedule A are made upon tenants, who in the majority of cases are not -the actual and ultimate tax-payers. The number of assessments is -enormous; we do not know it, but it would not help us if we did, for it -has no relation whatever to the number of property owners. Under -Schedule B, as is explained elsewhere,[12] there are few income tax -payers. Under Schedule C certain interest from home and foreign -government securities is taxed, but not by assessment on the actual -tax-payers. - -To sum up, the number of assessments to income tax is not known, and, if -it were known, it would be very much greater than the number of -individual tax-payers. Two-thirds of the income tax is collected, not -directly from the persons who owe the tax, but indirectly or "at the -source." It is possible for an individual tax-payer to appear more than -once in each schedule. With delightful humour the Inland Revenue -Commissioners give a hypothetical case of a composite income of £5000 -per annum, made up as follows:— - - HYPOTHETICAL COMPOSITE INCOME - - Schedule. Amount. - A Profits from the Ownership of Lands, Houses, etc. £500 - B " from the Occupation of Lands 200 - C " from Government Securities 200 - D " as an Author 100 - D " as a Solicitor (partner in a firm the - total profits of which are £5000) 2,500 - D " from Investments in a Public Company - (total profits of the Company, - £55,000) 500 - D " Investment in Municipal Stock 100 - D " from Investments in Foreign Bonds - (payable by coupons cashed in the - United Kingdom) 100 - D " Salary as a Land-Agent 500 - E " Salary as a Borough Auditor 300 - ------ - £5,000 - ====== - -This hypothetical gentleman, who is at once a landlord, a farmer, a -fundholder, a man of letters, a lawyer, a shareholder, an investor in -foreign bonds, a land-agent, and a borough auditor, does great credit to -the sense of humour of the Inland Revenue authorities, and may be called -an extreme case. There are, however, tens of thousands of fortunate or -unfortunate persons who are at once business men, investors, and -landlords or houselords, and it is clear that if we are to arrive at the -actual number of individuals who earn or receive incomes of £160 per -annum or upwards we must proceed by other methods. - -Before leaving the table on page 33, however, the reader should take -note of the low range of incomes it reveals, so far as individuals can -be detected in the list: - - Per Annum. - (_a_) The 416,661 persons not employees have an - average income of £260 - (_f_) The 114,074 employees taxed under - Schedule D have an average income of 230 - (_g_) The 471,564 employees taxed under - Schedule E have an average income of 230 - -Many of these individuals have other sources of income beside their -earnings, but the low mean income of each class remains remarkable when -that fact is taken into account. Classes _f_ and _g_ cannot possibly -deceive the Income Tax Commissioners as to their incomes, for the law -compels employers to tell the authorities exactly what their employees -earn. With an average as low as £230 it is clear that the majority of -salaries lie between the exemption limit of £160 and £200 a year. The -under payment of the middle class stands revealed. - -If the reader takes note of these facts he will be less surprised by the -results of the analysis to which we will now proceed. - -We now turn to what information is available upon the subject of -individual incomes. So far as the poorer classes of income tax payers -are concerned, some clear light is afforded by the Income Tax -Commissioners in a table showing the number of persons claiming -abatements. This table, which is of great importance, is given on page -37. - -These abatements are claimed by certain individuals who satisfy the -Commissioners that their entire incomes, _from every source_, lie -between £160 and £700 per annum. Thus we get definite information that -in 1908-9, 779,552 individuals declared their incomes to be within these -limits. - -The record of the number of abatements is worth particular attention. In -1893-4 the limit of exemption was £150. In the following year the -exemption limit was raised £10 to £160, and for the first time an -abatement was allowed upon incomes up to £500. In 1898-9 abatements were -introduced on incomes up to £700. - - INDIVIDUAL INCOMES BETWEEN £160 AND £700 - Defined by claims for abatements - - ----------+--------------------------------------------------------------+ - | ABATEMENTS. | - +----------+---------+-----------+---------+---------+---------+ - | | £160 on | £100 on | £150 on | £120 on | £70 on | - | £120 on | incomes | incomes | incomes | incomes | incomes | - |incomes of|exceeding| exceeding |exceeding|exceeding|exceeding| - Year. | £150 and |£160 but | £400 but |£400 but |£500 but |£600 but | - | under | not | not | not | not | not | - | £400. |exceeding| exceeding |exceeding|exceeding|exceeding| - | | £400. | £500. | £500. | £600. | £700. | - ----------+----------+---------+-----------+---------+---------+---------+ - 1893-4 | 509,397 | | | | | | - 1894-5 |} | 436,325 | 13,010 | | | | - 1895-6 |} | 449,003 | 20,375 | | | | - 1896-7 |} | 464,017 | 23,492 | | | | - 1897-8 |} | 481,306 | 26,056 | | | | - 1898-9 |}Exemption| 495,791 |} | 31,669 | 11,115 | 3,940 | - 1899-1900|}limit and| 515,680 |} | 38,055 | 16,861 | 6,714 | - 1900-1 |}abatement| 530,014 |}Abatements| 42,123 | 20,520 | 8,647 | - 1901-2 |}altered--| 554,727 |}extended--| 46,967 | 23,899 | 10,490 | - 1902-3 |}see next | 575,444 |} see | 49,610 | 26,737 | 11,982 | - 1903-4 |} column | 603,338 |}following | 51,922 | 27,777 | 12,879 | - 1904-5 |} | 612,548 |} columns. | 53,384 | 29,227 | 13,483 | - 1905-6 |} | 622,437 |} | 56,305 | 31,100 | 14,886 | - 1906-7 |} | 628,818 |} | 58,704 | 33,150 | 16,607 | - 1907-8 |} | 638,482 |} | 64,560 | 39,166 | 22,272 | - 1908-9 |} | 648,310 |} | 66,523 | 40,721 | 23,998 | - ----------+----------+---------+-----------+---------+---------+---------+ - - ----------+---------+----------+-------- - | | | - | | | - | | Annual | Rate of - | Total | Increase | Income - |Abatement|in No. of | Tax. - Year. |Granted. |Abatements|Pence in - | | Granted. | the £. - | | | - | | | - ----------+---------+----------+-------- - 1893-4 | 509,397 | | 7 - 1894-5 | 449,335 | | 8 - 1895-6 | 469,378 | 20,043 | 8 - 1896-7 | 487,509 | 18,131 | 8 - 1897-8 | 507,362 | 19,853 | 8 - 1898-9 | 542,515 | 35,153 | 8 - 1899-1900| 577,310 | 34,795 | 8 - 1900-1 | 601,304 | 23,994 | 12 - 1901-2 | 636,083 | 34,779 | 14 - 1902-3 | 663,773 | 27,690 | 15 - 1903-4 | 695,916 | 32,143 | 12 - 1904-5 | 708,642 | 12,726 | 12 - 1905-6 | 724,728 | 16,086 | 12 - 1906-7 | 737,279 | 12,551 | 12 - 1907-8 | 764,480 | 27,201 |9 to 12 - 1908-9 | 779,552 | 15,072 |9 to 12 - ----------+---------+----------+-------- - -It will be seen that since 1897-8 there has been a rapid increase in the -number of abated incomes. This has been caused not by the sudden growth -of incomes of this class, but by (1) the abatements being better -understood, and (2) heavier taxation making it better worth while for -individuals to claim the abatements. With the income tax at 1s. and 1s. -3d. it became worth while to fill up the form. We have, then, to thank -the late war, and the increased taxation which followed it, for putting -at our disposal a fairly complete record of the number of individual -incomes between £160 and £700. Probably the record is still incomplete, -and we must make an allowance for the fact. It is probable also that a -certain number of persons of small income who ought to pay tax escape -assessment. Both counts, however, are certainly well covered by adding a -small percentage to the number of individual incomes revealed by the -claimed abatements. In "Riches and Poverty," edition 1905, with the -actual claims made standing at about 700,000, I suggested that 50,000 -would be a fair estimate of the number not claiming abatements or who -escaped taxation. But in five years some 80,000 new claims have been -made. Over 27,000 of these were made in 1907-8; this was probably due to -the clause in the Finance Act of 1907 compelling all employers, and not -companies alone, to divulge their employees' incomes, thus bringing to -light non-assessed incomes and causing claims for abatements by their -owners. My estimate of 50,000 I should, in view of this further -information, raise to 90,000 or 100,000, and at the present time I am -inclined to think that some 40,000 incomes between £160 and £700 must -still be regarded as either escaping tax or as being not reviewed in the -abatements table. We thus arrive at, in round figures, 820,000 as a near -approximation to the number of individuals who possess between £160 and -£700 per annum. - -The aggregate income of the 779,000 persons granted abatements in 1908-9 -is not given in the report. We can, however, estimate it closely, and -this is done in the following table, figures being added for the 40,000 -persons whom we have assumed either to neglect to claim abatements or to -escape taxation altogether:— - - INDIVIDUAL INCOMES BETWEEN £160 AND £700 (1908) - - Estimated - Aggregates. - 648,000 Incomes between £160 and £400. - Average assumed to be £300 £194,400,000 - 67,000 Incomes between £400 and £500. - Average assumed to be £450 30,150,000 - 41,000 Incomes between £500 and £600. - Average assumed to be £550 22,550,000 - 24,000 Incomes between £600 and £700. - Average assumed to be £650 15,600,000 - 40,000 (balance of estimated total of - 820,000) Incomes of persons who - either neglect to claim abatements or - altogether escape taxation. Average - assumed to be £300 12,000,000 - ------------ - 820,000 Incomes aggregate £274,700,000 - -To proceed, we see that some 820,000 persons enjoy an estimated -aggregate income of £274,700,000 per annum. But the total income of the -income tax paying classes we have already seen to be £909,000,000. There -remains therefore, to form an estimate of the number of persons who -enjoy the balance of £634,000,000. - -Our best clue to these persons, who individually possess incomes -exceeding £700 a year, is to be found in the number of rich men's houses -in the United Kingdom. - -In Great Britain an Inhabited House Duty is levied upon the occupiers of -all houses and residential business premises of an annual value -exceeding £20. The duty being graduated, we obtain records of the houses -of Great Britain classified according to their rentals. The duty is not -levied in Ireland. - -The Inland Revenue report gives us the following interesting record. - - GREAT BRITAIN ONLY: PRIVATE DWELLING-HOUSES OF £20 AND UPWARDS: - 1908-9 - - Class of House. Number of Class of House. Number of - Houses. Houses. - £ 20 and under £25 384,583 | £ 20 and over 1,473,214 - 25 " 30 256,906 | 25 " 1,088,631 - 30 " 41 414,663 | 30 " 831,725 - 41 " 50 104,949 | 41 " 417,062 - 50 " 61 125,051 | 50 " 312,113 - 61 " 80 61,498 | 61 " 187,062 - 80 " 100 38,898 | 80 " 125,564 - 100 " 150 44,953 | 100 " 86,666 - 150 " 200 16,563 | 150 " 41,713 - 200 " 300 13,649 | 200 " 25,150 - 300 " 400 5,207 | 300 " 11,501 - 400 " 500 2,416 | 400 " 6,294 - 500 " 600 1,187 | 500 " 3,878 - 600 " 700 723 | 600 " 2,691 - 700 " 800 472 | 700 " 1,968 - 800 " 900 323 | 800 " 1,496 - 900 " 1000 176 | 900 " 1,173 - 1000 and over 997 | 1000 " 997 - -The figures refer to Great Britain only, but the number of income tax -payers in Ireland is small, the payment of income tax in that country, -in 1908, being but £996,000 out of £31,860,000 paid by the United -Kingdom as a whole. - -If there were a constant ratio between incomes and rentals, and if every -private house contained but one family, the record of houses would be a -sufficient clue to the number of income tax payers; but there is no such -correspondence, and a considerable proportion of the houses are let in -tenements. - -In London persons with an income over £160 a year rarely pay a rental -less than £30. In the provinces a rental as low as £25 may sometimes -represent an income tax payer. Many £25, £30, and even £40, and more -houses in London and elsewhere are tenement dwellings. Some notorious -London slums consist of houses of about £30 annual value. In West London -6s. a week, £15, 12s. a year, commands two poor rooms. - -Some residential shops, etc., not included in the above list, house -income tax payers, but usually the well-to-do shopkeeper lives away from -his shop, the upper part of which is let to poorer persons. - -These considerations make it impossible to deduce the aggregate of -income tax payers from the house record, but it is a suggestive fact -that in Great Britain there were in 1908 only 1,088,631 private houses -of £25 and over. It is clear that the number of persons with incomes -exceeding £160 a year cannot much exceed that figure, even when -allowance is made for the Irish houses not included in the record. - -As we have ascertained from the income tax abatement claims the -approximate number of income tax payers between £160 and £700 a year, we -are enabled to neglect the difficult relation of small rentals to -incomes, and to concentrate our attention upon a simpler and more -satisfactory problem, the number of houses likely to be in the -occupation of persons with upwards of £700 a year. - -It is submitted that persons in the Metropolis possessing an income of -over £700 per annum are unlikely to occupy private dwelling-houses of an -annual value below £60. Indeed, London householders with incomes below -£700 sometimes pay higher rentals than £60. Against this fact we must, -however, place the existence of many blocks of flats of high rentals -which pay Inhabited House Duty, not per flat, but per block. I think we -may balance the one consideration against the other, and assume that the -private dwelling-houses in London exceeding £60 in annual value roughly -correspond to the number of persons with £700 per annum and upwards. - -In the provinces and Scotland rentals are lower, and I think we may -safely draw the line at £50, in view of the fact that we are excluding, -as in London, all residential shops, public houses, etc. - -The number of houses in Great Britain of the classes referred to is as -follows:— - - PRIVATE DWELLING-HOUSES IN GREAT BRITAIN LIKELY TO BE IN THE OCCUPATION - OF PERSONS WITH £700 PER ANNUM AND UPWARDS (1908-9) - - Annual Value. Metropolis. Rest of England. Scotland. - £50 to £61 76,141 10,739 - 61 " 80 18,502 37,075 5,921 - 80 " 100 10,033 24,875 3,988 - 100 " 150 12,593 28,411 3,949 - 150 " 200 5,110 10,075 1,378 - 200 " 300 5,541 7,427 681 - 300 " 400 2,645 2,437 125 - 400 " 500 1,408 960 48 - 500 " 600 748 424 15 - 600 " 700 504 210 9 - 700 " 1000 746 212 13 - £1000 and over 826 145 26 - ------ ------- ------ - 58,656 188,392 26,892 - ====== ======= ====== - -If the reader has not before examined the subject he will probably be -exceedingly surprised to find that there are so few rich men's houses, -and therefore so few rich men, in Great Britain. In England and Wales -there are 247,048 houses and in Scotland only 26,892 houses likely to -contain persons with incomes exceeding £700 per annum. There are nine -times as many such houses in England as in Scotland. This corresponds -closely to the income tax assessments. The yield of the income tax in -Scotland is but one-ninth or one-tenth of the yield in England. - -We have to add an estimate for Ireland. The yield of the income tax in -Ireland is very small, about one-third of the yield of Scotland. If, -then, we add 9000 houses for Ireland, we shall probably be near the -truth. - -We thus get the following figures for the whole of the United Kingdom, -making our figures round: - - PRIVATE DWELLING-HOUSES IN THE UNITED KINGDOM PROBABLY CORRESPONDING - TO INCOME TAX PAYERS WITH £700 AND UPWARDS PER ANNUM (1908-9) - - Number. - London 58,700 - Rest of England and Wales 188,400 - Scotland 27,000 - Ireland 9,000 - ------- - Total 283,100 - ======= - -We can now arrive at an estimate of the total number of income tax -payers. It is as follows: - - INCOME TAX PAYERS OF THE UNITED KINGDOM (1908-9) - - Incomes. Number. - Between £160 and £700 820,000 - Exceeding £700 280,000 - --------- - Total 1,100,000 - ========= - -I think that this estimate of 1,100,000 may be accepted with confidence -as a near approximation to the actual number of individual incomes which -exceeded £160 per annum in 1908-9. - -Taking 1,100,000 as a trustworthy figure, we are in a position to show -how the population of the United Kingdom is divided by the line of -income tax exemption. If we assume that each of the 1,100,000 persons is -the head of a family of five persons, we get, by obvious -calculation, the following result: - - THE EQUATOR of BRITISH INCOMES - - +----------------------------------+ - | | - | £909,000,000 per annum | - | taken by | - | 5,500,000 people | - |having Incomes of £160 and upwards| - | per annum | - | | - +----------------------------------+ - | | - | £935,000,000 per annum | - | taken by | - | 39,000,000 people | - | having Incomes below £160 | - | per annum | - | | - +----------------------------------+ - -_In 1908 the Income Tax Exemption limit of £160 per annum divided the -National Income into two almost equal parts._ - - DISTRIBUTION OF THE NATIONAL INCOME AS BETWEEN THOSE WITH MORE AND - THOSE WITH LESS THAN £160 PER ANNUM (1908-9) - - Number. Income. - Persons with incomes of - over £160 and their - families (1,100,000 × 5) 5,500,000 £909,000,000 - Persons with incomes of less - than £160 and their - families (total population - less 5,500,000) 39,000,000 935,000,000 - ---------- ----------- - 44,500,000 £1,844,000,000 - ========== ============== - -These striking facts are expressed in diagrammatic form on page 45. -Broadly speaking, it is shown that _one-half of the entire income of the -United Kingdom is enjoyed by about 12 per cent. of its population_. - -But a still more extraordinary conclusion emerges from the facts we have -examined. Of the 1,100,000 income tax payers, 820,000 are persons with -incomes over £160 and not exceeding £700. The aggregate income of these -820,000 persons we estimated at £275,000,000 (page 39), and the estimate -is a liberal one. By subtraction from the total income of the income tax -classes (£909,000,000) we see that the 280,000 rich persons with over -£700 per annum possess an aggregate income of £634,000,000 per annum. -The facts are clearly shown in the following table and in the diagram -which forms the frontispiece of this volume: - - RICHES, COMFORT, AND POVERTY, 1908 - - Distribution of the National Income as between (1) those with £700 per - annum and upwards; (2) those with £160 to £700 per annum; and (3) those - with not more than £160 per annum. - - Number. Income. - RICHES - - Persons with Incomes of - £700 per annum and - upwards and their - families, 280,000 × 5 1,400,000 £634,000,000 - - COMFORT - - Persons with Incomes - between £160 and £700 - per annum and their - families, 820,000 × 5 - 4,100,000 275,000,000 - - POVERTY - - Persons with Incomes of - less than £160 per - annum and their - families 39,100,000 935,000,000 - ---------- -------------- - 44,500,000 £1,844,000,000 - ========== ============== - -Thus, to the conclusion that one-half of the entire income of the nation -is enjoyed by but about 12 per cent. of its population, we must add -another even more remarkable, viz.: that _more than one-third of the -entire income of the United Kingdom is enjoyed by less than -one-thirtieth of its people_. - -The broad outlines thus drawn I shall not attempt to amplify, for, as -will be gathered from the nature of the available material, such -amplification would be of little value. Nor would any useful purpose be -served by any arbitrary division of our population into "upper," -"middle," and "working" classes. The three divisions of population at -which we have arrived, although arbitrary, have naturally arisen in the -course of our inquiry, and with some propriety we may term them -respectively the Rich Classes, the Comfortable Classes and the Poor -Classes. - -The great fact emerges that the enormous annual income of the United -Kingdom is so badly distributed amongst us that, out of a population of -44,500,000, 39,000,000 are "poor" in the sense that their incomes do not -exceed £160 a year. It is no longer incredible that in a population of -44,500,000 people, enjoying an aggregate income of £1,844,000,000, there -exist "30 per cent. living in the grip of perpetual poverty." When we -realize that 39,000,000 out of our 44,500,000 are poor, measured by a -very modest standard of income, the statistics of Booth and Rowntree -cease to surprise us. In analysis, the United Kingdom is seen to contain -a great multitude of poor people, veneered with a thin layer of the -comfortable and the rich. - -It will be of interest to compare the above statistics with those which -appeared in "Riches and Poverty," edition 1905. The statement then -presented was based on the Inland Revenue figures of 1903-4, and the -frontispiece bore the heading "British Incomes in 1904." For the -purposes of comparison, the 1905 edition figures may be attributed to -1903, since the fiscal year 1903-4 is as to nine months in 1903. -Similarly, the figures arrived at in the above pages may be dated 1908, -an interval of five years separating the two investigations. - -The following is the comparison arrived at, after adjustment of the -earlier figures by raising the estimated number of income tax payers in -1903 from 1,000,000 to 1,050,000, for the reasons given on page 38. - - DISTRIBUTION OF BRITISH INCOMES - - ---------------------------+-----------------------+--------------------- - | 1903 | 1908 - |Figures of "Riches | - | and Poverty," 1905 | - | edition, adjusted[13]| - | by raising estimate | - RANGE OF INCOME. | of Income | - | Tax payers from | - | 1,000,000 to | - | 1,050,000. | - +------------+----------+------------+-------- - | Number of | | Number of | - | Persons. | Income. | Persons. | Income. - ---------------------------+------------+----------+------------+-------- - Persons with over £700 | | Million£ | |Million£ - a year and their families| 1,250,000 | 570 | 1,400,000 | 634 - | | | | - Persons with over £160, | | | | - but not over £700, and | | | | - their families | 4,000,000 | 260 | 4,100,000 | 275 - | | | | - Persons with not more | | | | - than £160 and their | | | | - families | 37,250,000 | 880 | 39,000,000 | 935 - ---------------------------+------------+----------+------------+-------- - Totals | 42,500,000 | 1710 | 44,500,000 | 1844 - ---------------------------+------------+----------+------------+-------- - -The result is to show that, in the five years, the wealthy classes have -increased their share of the national dividend, both actually and -relatively. We shall later find this conclusion confirmed by a -comparison of the respective growths of taxed incomes and wage rates. - -The stationariness of wages is a fact which closely demands the -attention of the nation. - -[Footnote 11: For a fuller explanation of these Schedules reference -should be made to Chapter 21.] - -[Footnote 12: See Chapter 21.] - -[Footnote 13: The change in the proportions through the adjustment is -insignificant and negligible, as will be seen by reference to the -original estimate.] - - - - - CHAPTER IV - THE ESTATES OF RICH AND POOR - - -Our review of the extraordinary facts relating to what has been called -with grim humour the "National" income, prepares us for an examination -of the estates of rich and poor. - -Legal distribution of the property of deceased persons can only be made -upon payment of certain taxes, commonly called death duties, and legally -known as the Estate, Legacy and Succession duties. The nature and extent -of these duties I shall discuss in a later chapter. At this point I am -only concerned with the facts which are brought to light in the -collection of the chief death duty, the Estate duty, as since varied, of -the great 1894 Budget[14] of the late Sir William Harcourt. - -The principle of graduation was very properly applied to this duty, and -accordingly we obtain, through the reports of the Inland Revenue -Commissioners, an exceedingly valuable record, not only of the total -value of the property which is "left"—it is a suggestive term—by the -deceased, but of the classification of that property in large and small -estates.[15] - -The Estate Duty is payable upon all estates which exceed £100 net (net, -that is, after the discharge of all debts due by the deceased) and the -Inland Revenue authorities undoubtedly pass under review the greater -part of the property which is thus legally taxable. There must be a -certain leakage, of course, for such heritages as household furniture, -cash in money or notes, bearer bonds, and so forth, are sometimes -divided up amongst the relatives of a departed property owner without -account to the State, and it is difficult properly to assess unquoted -securities, goodwills, trade stocks, furniture, etc. Moreover, large -sums pass _inter vivos_. How much property thus escapes official -observation we do not know, but it is probably a considerable amount. - - PROPERTY LEFT AT DEATH IN THE UNITED KINGDOM. NUMBERS AND VALUES OF - ESTATES BROUGHT TO THE NOTICE OF THE INLAND REVENUE COMMISSIONERS IN THE - FIVE YEARS 1904-5 TO 1908-9. - - ------------------------------------------+----------------+----------------+ - | | | - CLASS OF ESTATE. | 1904-5. | 1905-6. | - | | | - ------------------------------------------+-------+--------+-------+--------+ - | | Value. | | Value. | - |Number.|Mill. £.|Number.|Mill. £.| - A. _Estates not Dutiable_: | | | | | - Bankrupt Estates | 1,628| | 1,552| | - Estates not exceeding £100 net | 15,931| 0.9 | 15,462| 0.9 | - +-------+--------+-------+--------+ - Total A | 17,559| 0.9 | 17,014| 0.9 | - +-------+--------+-------+--------+ - B. _Estates Liable to Duty_: | | | | | - Small Estates:— | | | | | - (1) Not exceeding £300 gross | 18,505| 3.5 | 18,262| 3.5 | - (2) Between £300 and £500 gross | 8,846| 3.6 | 8,907| 3.6 | - _Net Capital Values_:— | | | | | - Exceeding £100 but not over £500 | 5,853| 2.5 | 5,728| 2.5 | - " 500 " 1,000 | 10,098| 8.4 | 9,894| 8.1 | - " 1,000 " 10,000 | 16,704| 60.4 | 16,130| 58.8 | - " 10,000 " 25,000 | 2,295| 41.8 | 2,254| 40.4 | - " 25,000 " 50,000 | 883| 34.6 | 931| 36.4 | - " 50,000 " 75,000 | 288| 18.9 | 277| 19.5 | - " 75,000 " 100,000 | 161| 15.0 | 139| 12.1 | - " 100,000 " 150,000 | 128| 14.0 | 133| 18.2 | - " 150,000 " 250,000 | 89| 21.6 | 91| 18.6 | - " 250,000 " 500,000 | 44| 17.6 | 70| 23.9 | - " 500,000 " 1,000,000 | 23| 17.2 | 21| 13.1 | - " 1,000,000 " 2,000,000 |} | | | | - " 2,000,000 " 3,000,000 |} 1| 5.9 | 8| 13.5 | - " 3,000,000 |} | | | | - +-------+--------+-------+--------+ - Total B | 63,918| 265.1 | 62,845| 272.2 | - +-------+--------+-------+--------+ - _Total Estates_ | 81,477| 266.0 | 79,859| 273.1 | - ------------------------------------------+-------+--------+-------+--------+ - - +----------------+----------------+----------------+---------------- - | | | | Average of - | 1906-7. | 1907-8. | 1908-9. | 1904-5 to - | | | | 1908-9. - +-------+--------+-------+--------+-------+--------+-------+-------- - | | Value. | | Value. | | Value. | | Value. - |Number.|Mill. £.|Number.|Mill. £.|Number.|Mill. £.|Number.|Mill. £. - | | | | | | | | - | 1,704| | 1,663| | 1,802| | 1,670| - | 16,039| 0.9 | 16,475| 0.9 | 15,875| 0.9 | 15,956| 0.9 - +-------+--------+-------+--------+-------+--------+-------+-------- - | 17,743| 0.9 | 18,138| 0.9 | 17,677| 0.9 | 17,626| 0.9 - +-------+--------+-------+--------+-------+--------+-------+-------- - | | | | | | | | - | | | | | | | | - | 18,995| 3.7 | 19,340| 3.7 | 19,481| 3.7 | 18,917| 3.6 - | 9,311| 3.7 | 9,736| 3.9 | 9,640| 3.8 | 9,288| 3.7 - | | | | | | | | - | 5,990| 2.6 | 6,374| 3.0 | 6,422| 2.9 | 6,074| 2.7 - | 10,516| 8.6 | 10,782| 9.1 | 10,729| 9.1 | 10,404| 8.6 - | 17,098| 61.6 | 17,356| 65.4 | 17,266| 64.5 | 16,910| 62.1 - | 2,473| 42.5 | 2,341| 40.3 | 2,328| 40.4 | 2,338| 41.0 - | 909| 34.9 | 908| 35.5 | 918| 34.4 | 910| 35.1 - | 314| 19.6 | 278| 19.8 | 297| 19.5 | 291| 19.4 - | 127| 11.3 | 144| 14.0 | 155| 13.9 | 145| 13.2 - | 159| 19.2 | 109| 16.4 | 136| 16.8 | 133| 16.9 - | 104| 22.4 | 90| 18.7 | 78| 17.3 | 90| 19.7 - | 58| 21.3 | 51| 20.1 | 50| 20.1 | 54| 20.6 - | 18| 12.9 | 17| 16.6 | 15| 8.3 | 19| 13.6 - | | | { 4| 4.6 | 6| 9.2 | } | - | 10| 34.1 | { 1| 2.6 | 1| 2.2 | } 7| 18.1 - | | | { 2| 8.6 | 2| 5.0 | } | - +-------+--------+-------+--------+-------+--------+-------+-------- - | 66,082| 298.5 | 67,533| 282.3 | 67,524| 270.9 | 65,580| 278.3 - +-------+--------+-------+--------+-------+--------+-------+-------- - | 83,825| 299.4 | 85,671| 283.2 | 85,201| 271.8 | 83,206| 279.2 - +-------+--------+-------+--------+-------+--------+-------+-------- - -Before setting out particulars of the numbers and values of the estates -revealed through the operation of the Estate Duty, it will be well to -remind the reader of the number of deaths per annum in the United -Kingdom. In the years 1899 to 1903, the figures were as follows:— - - DEATHS IN UNITED KINGDOM - - Year. Deaths. - 1904 707,000 - 1905 670,000 - 1906 681,000 - 1907 679,000 - 1908 677,000 - - Average Deaths per annum 1904-1908 = 683,000. - -We see that the mean number of deaths in the five years 1904-8 was just -over 680,000 per annum. - -We now inquire, as to these 680,000 persons who die in the United -Kingdom in a year, how many leave property of sufficient value to be -brought under the notice of the tax-gatherers, and what is the value of -the property left by them. - -These questions are answered in considerable detail by the table on -pages 52 and 53, which shows, for each of the last five financial years -of which we have record, the numbers and values of the estates reviewed. - -It will be seen that, taking the average of these five years, we get the -following summary facts:— - - Deaths per annum 683,000 - Sworn Estates per annum, number 83,206 - Estates of less value than £100 net each per annum 17,626 - Estates exceeding £100 net each per annum 65,580 - Net value of Dutiable Estates per annum £278,300,000 - -The question now arises, what is the average value of the tiny estates -which are not the subject of affidavits? What is the amount of property -per head left by the poor people who form the great majority of the -inhabitants of our rich country? There are the few humble sticks of -furniture, and the small sums invested in savings banks, friendly -societies, trade unions, building societies, etc., What are these worth? - -The Chief Registrar of Friendly Societies, Mr Stuart Sim, in his latest -Report (No. 105 of 1909), p. 44, gives us the Summary of Registered -Provident Societies and Thrift Institutions, which appears on page 56. - -The total funds, £439,000,000, represent the savings of some millions of -people, but the total number of "members," nearly 34,000,000, must not -be taken to stand for so many individuals. There is, of course, much -duplication in the membership, one individual being sometimes member of -two, three, four, or more societies or clubs. A carpenter, earning 30s. -a week, may be a member of his trade union, member of two friendly -societies, have a few pounds in the Post Office Savings Bank, and be a -depositor in a building society, thus figuring as "five members" in the -list. - -The list is not complete, for it does not cover the industrial insurance -companies, which waste in costly management so large a part of the sums -paid them, and unregistered friendly societies and slate clubs. - - THRIFT INSTITUTIONS: SUMMARY OF REGISTERED PROVIDENT SOCIETIES - AND CERTIFIED AND POST OFFICE SAVINGS BANKS AT DEC. 31st, 1907. - - --------------------------------------+--------+-----------+----------- - NATURE OF INSTITUTION. | No. of | No. of | Funds. - |Returns.| Members. | - --------------------------------------+--------+-----------+----------- - Building Societies: | | | £ - Incorporated Societies | 1,852 | 565,047| 57,300,118 - Unincorporated Societies | 58 | 58,000| 15,989,111 - +--------+-----------+----------- - | 1,910 | 623,047| 73,289,229 - +========+===========+=========== - Friendly Societies, etc.: | | | - Ordinary Friendly Societies | 6,563 | 3,416,869| 19,346,567 - Societies having Branches | 20,640 | 2,710,437| 25,610,365 - Collecting Friendly Societies | 55 | 9,010,574| 9,946,447 - Benevolent Societies | 73 | 29,716| 337,393 - Working Men's Clubs | 1,036 | 272,847| 381,463 - Specially Authorised Societies | 162 | 70,980| 532,717 - Specially Authorised Loan Societies | 618 | 141,850| 897,784 - Medical Societies | 96 | 313,755| 65,513 - Cattle Insurance Societies | 60 | 4,029| 8,570 - Shop Clubs | 7 | 12,207| 1,349 - +--------+-----------+----------- - | 29,310 | 15,983,264| 57,128,168 - +========+===========+=========== - Co-operative Societies: | | | - Industries and Trades | 2,267 | 2,461,028| 53,788,917 - Businesses | 399 | 108,550| 984,680 - Land Societies | 146 | 18,631| 1,619,716 - +--------+-----------+----------- - | 2,812 | 2,588,209| 56,393,313 - +========+===========+=========== - Trade Unions | 652 | 1,973,560| 6,424,176 - +--------+-----------+----------- - Workmen's Compensation Schemes (1) | 59 | 99,371| 164,560 - +--------+-----------+----------- - Friends of Labour Loan Societies | 248 | 33,576| 260,905 - +--------+-----------+----------- - Total Registered Provident Societies| 34,991 | 21,301,027|193,660,351 - +========+===========+=========== - | Banks. |Depositors.| Deposits. - Railway Savings Banks | 18 | 64,126| 5,865,072 - Trustee Savings Banks (including | | | - Investments in Stock) | 222 | 1,780,214| 61,729,588 - Post Office Savings Bank (including | | | - Investments in Stock) | 15,166 | 10,692,555|178,033,974 - +--------+-----------+----------- - Total Certified and Post Office | | | - Savings Banks | 15,406 | 12,536,895|245,628,634 - +========+===========+=========== - Grand Total | 50,397 | 33,837,922|439,288,985 - --------------------------------------+--------+-----------+----------- - - (1) The figures given include 64,700 members, and £105,475 funds - undistributed, at 31st December 1907, in respect of Schemes whose - Certificates had expired or were revoked at that date. - - _Note._—Where Returns are made to a date other than 31st December the - particulars at the nearest date available are given. - -On the other hand, it would be a profound mistake to regard the sum -shown—£439,000,000—as belonging entirely to manual workers. No small -part of the funds of building societies, savings banks, etc., belong to -the middle classes, and even professional men do not disdain to purchase -houses through building societies. - -Additions must be made for the tiny stocks of little shopkeepers and the -"furniture" in poor houses, but on the latter account those who know -what the furniture of the poor usually consists of will make modest -estimates of its value. Its exchange value is almost negligible, and its -value in use is that it is a factor in the sordid discomfort of the poor -home, being in that respect not unworthy of the ugly walls which enclose -it. - -Altogether it is probable that we may estimate the total property of the -poor at less than £500,000,000 in 1908, and regard this sum as belonging -chiefly to a great mass of people, forming by far the greater part of -the 39,000,000 persons under the line of Income Tax exemption. Probably -about £15,000,000 of this sum passes at death per annum, and only a -small part of it, chiefly the house property, comes under review by -Somerset House. - -With the facts we have reviewed we are in a position to arrive at a just -idea of the respective proportions of rich and poor estates. On page 59 -will be found a table which shows the nature of those proportions. I -have taken the averages of the past five years arrived at in the tables -on pages 52-53, and have made a rough division between rich and poor by -drawing the line at the possession of property worth £1,000 net capital -value. - -To give a true idea of the division of deaths in the two classes, it is -necessary to make allowance in the rich class for the deaths of the -children of the well-to-do. It may be taken that, in addition to the -20,000 adults who die every year possessed of estates worth upwards of -£1,000, 7,500 children and young persons die in well-to-do homes. I then -place in the upper part of the table the number of deaths remaining -after deduction from 683,000 of all the other figures in the table. - -In arriving at the amount of property left by the poor I have assumed -that of the £15,000,000 of savings estimated as passing at death per -annum, £5,000,000 does actually come under review in the first few lines -of the table on pages 52-53. The balance, £10,000,000, I have brought -into the account as corresponding to the 592,294 deaths in the first -line of the table on p. 59. - -With these explanations the table will speak for itself, and its tale is -a startling one. We see that, drawing the line between the rich and poor -arbitrarily at the possession of £1,000, of the 683,000 persons who die -in a year, 28,397 die rich or very rich, leaving £259,700,000, while -654,603 die poor or very poor, leaving between them only £29,500,000. - -The figures over £10,000 are worth special attention:— - - FORTUNES OVER £10,000 EACH (NET) - - Year. Number. Value. - 1904-5 3,912 £186,600,000 - 1905-6 3,924 195,700,000 - 1906-7 4,172 218,200,000 - 1907-8 3,945 197,200,000 - 1908-9 3,986 187,100,000 - -_Year by year, with the regularity of the seasons, about four thousand -persons die leaving between them about £200,000,000 out of total estates -declared to be worth about £300,000,000._ - - PROPERTY LEFT BY 683,000 PERSONS - Average of 1904-5 to 1908-9 - - _POOR AND VERY POOR_ - Deaths. Property Left. - Died with so little property - that no affidavit was sworn - (Property estimated at - £10,000,000, see p. 58) 592,294 £10,000,000 - Died Bankrupt 1,670 - Died leaving less than £100 - net 15,956 900,000 - Died leaving between £100 - and £500 net 34,279 10,000,000 - Died leaving between £500 - and £1,000 net 10,404 8,600,000 - ------- ----------- - Total Poor and Very Poor 654,603 £29,500,000 - - _RICH AND VERY RICH_ - - Died under age without - property 7,500 - Died leaving between £1,000 - net and £10,000 net 16,910 62,100,000 - Died leaving between £10,000 - net and £1,000,000 net 3,980 179,500,000 - Died millionaires 7 18,100,000 - ------- ------------ - Total Rich and Very Rich 28,397 £259,700,000 - ------- ------------ - TOTAL RICH AND POOR 683,000 £292,500,000 - ======= ============ - -170 persons per annum die worth £150,000 each; 80 die worth over -£250,000 each; 26 die worth over £500,000 each; and 7 die worth about -£2,500,000 each. - -Thus, in an average year, 26 persons die leaving between them far more -than is possessed by 654,000 poor persons who die in one year. Again, in -a single average year, the wealth left by the few rich people who die -approaches in amount the aggregate property possessed by the whole of -the living poor. - -[Footnote 14: Finance Act, 1894 (57 & 58 Vict. c. 30).] - -[Footnote 15: It was in the first edition of this work that attention -was first drawn to this new source of information.] - - - - - CHAPTER V - THE NATIONAL ACCUMULATIONS - - -We pass from the consideration of the property which is left at death in -a single year to the estimation of the value of the total capital stock -of the United Kingdom. - -We can proceed by two different methods. We can argue from the property -left by those who die in a single year to the property possessed by the -living, or we can capitalize that part of the national income which is -derived from property. The former method was used as long ago as the -'fifties by Porter in his "Progress of the Nation." The second method -has been employed by many statisticians, notably by Sir Robert Giffen. - -In the following table I have formed an estimate of the accumulated -wealth of the nation at the present time, dividing it into three -categories:— - -(1) "National" property in the proper sense, i.e. property in the -possession of the Imperial Government or Local Authorities. - -(2) Land and Capital Stock within the United Kingdom owned by private -individuals, and - -(3) Property in foreign countries and British Possessions owned by -persons in the United Kingdom. - - ACCUMULATED WEALTH OF THE UNITED KINGDOM: 1908 - [This table should not be quoted without the context] - - (1) PUBLIC PROPERTY (IMPERIAL AND LOCAL):— - - (_a_) Imperial Property £550,000,000 - (_b_) Local Property 1,370,000,000 - -------------- - £1,920,000,000 - Subtract (1) National Debt - (£762,000,000) and (2) Local - Loans (£600,000,000) 1,362,000,000 - -------------- - £558,000,000 - ============== - - (2) PROPERTY IN THE UNITED KINGDOM OWNED BY PRIVATE INDIVIDUALS:— - - (_c_) Agricultural Lands and the Farmhouses, - Buildings, Fences, Roads, - Ditches, etc., thereof. Profits - under Schedule A of Income - Tax (1908-9) £52,000,000 - capitalized at 20 years' purchase £1,040,000,000 - - (_d_) Houses, Business Premises, etc., - and their Lands. Profits under - Schedule A of Income Tax - (1908-9) £217,000,000 capitalized - at 15 years' purchase 3,255,000,000 - - (_e_) Other Profits from Land under - Schedule A of Income Tax - (1908-9) £1,300,000 capitalized - at 25 years' purchase 32,000,000 - - (_f_) Farmers' Capital. Estimated at - £6 per acre for 47,000,000 acres - under cultivation 282,000,000 - - (_g_) The National Debt (neglecting - the small amount held abroad) 762,000,000 - - (_h_) Local Debts 600,000,000 - - (_i_) Capital of Miscellaneous Trades:— - - (1) Profits of Miscellaneous - Businesses, Professions, etc., - taxed under Schedule D of - Income Tax in 1908-9 (allowing - for profits assumed to - escape taxation £60,000,000, - see p. 16), and deducting - for profits from abroad - (£25,000,000, see p. 16), were - £444,000,000. One-half of - this sum (£222,000,000) - assumed to be from capital - and capitalized at 10 years' - purchase 2,220,000,000 - - (2) Profits of small traders who - are not Income Tax payers - are in part derived from - capital 100,000,000 - - (_j_) Railways. Profits taxed under - Schedule D 1908-9 = - £43,000,000 capitalized at 25 - years' purchase 1,075,000,000 - - (_k_) Mines and Quarries. Profits taxed - under Schedule D 1908-9 = - £18,000,000 capitalized at 5 - years' purchase 90,000,000 - - (_l_) Gasworks. Profits taxed under - Schedule D 1908-9 = £7,800,000 - capitalized at 20 years' purchase 156,000,000 - - (_m_) Ironworks. Profits taxed under - Schedule D 1908-9 = £5,100,000 - capitalized at 5 years' purchase 25,000,000 - - (_n_) Waterworks. Profits taxed under - Schedule D 1908-9 = £6,200,000 - capitalised at 20 years' purchase 124,000,000 - - (_o_) Canals. Profits taxed under - Schedule D 1908-9 = £4,200,000 - capitalized at 20 years' purchase 84,000,000 - - (_p_) Markets, Tolls, Fishings, Cemeteries, - etc. Profits taxed under - Schedule D 1908-9 = £1,400,000 - capitalized at 20 years' purchase 28,000,000 - - (_q_) Other Interests and Profits taxed - under Schedule D 1908-9 = - £7,700,000 capitalized at 20 - years' purchase 154,000,000 - - (_r_) Furniture, Works of Art, etc., in - Private Houses. Assumed to be - one-sixth of the value of "Houses" - in Schedule A (see item _d_) 540,000,000 - --------------- - £10,567,000,000 - - (3) PROPERTY IN PLACES ABROAD OWNED BY PERSONS IN THE UNITED KINGDOM - - (_s_) Interest from Indian, Colonial and - Foreign Government Securities - taxed under Schedule C 1908-9 - = £32,200,000 capitalized at - 25 years' purchase £805,000,000 - - (_t_) Interest from Indian, Colonial and - Foreign Securities, including - Railways, taxed under Schedule D - 1908-9 = £56,600,000 - capitalized at 20 years' purchase 1,132,000,000 - - (_u_) Other Profits from abroad derived - from property assumed to have - a capital value of about 700,000,000 - -------------- - £2,637,000,000 - ============== - SUMMARY - - (1) Public Property £558,000,000 - (2) Property in the United Kingdom - owned by Private Individuals 10,567,000,000 - (3) Property in places abroad owned by - persons in the United Kingdom 2,637,000,000 - --------------- - £13,762,000,000 - =============== - -To the explanations given in the table itself some further notes may be -added. For the greater part, the estimates are based, it will be seen, -upon Income Tax statistics. The items thus arrived at are near -approximations to the truth. The table also contains some necessarily -rough estimates of uncertain items. - -The matter of public property is an exceedingly difficult one to deal -with. In item _a_ I have estimated that our warships and stores of naval -and military material, Imperial shipyards, dockyards and arsenals, -public offices, galleries, museums and their contents, government -factories and workshops and their plant, post office, telegraph and -telephone capital, etc., are worth £550,000,000 at a conservative -estimate. The capital value of all our ships, allowing for depreciation, -cannot be less than £150,000,000, and naval works and material must be -worth fully £80,000,000. Army material and military works are of less -value, but can scarcely be estimated at less than £120,000,000. The -value of the post office, telegraph and telephone businesses at only 15 -years' purchase of the profits would be £60,000,000. The Suez Canal -shares are worth £28,000,000. Thus £550,000,000 as an estimate of the -total value of all Imperial property is not an excessive figure.[16] - -The public property in the care of local authorities, as trustees for -the nation, is exceedingly great. It is convenient to consider common -lands in this connexion. Probably there are some 2,000,000 acres of -common lands in England and Wales—all that remains unfilched of full -many times that area.[17] If we value these commons at an average of £25 -per acre—some of the commons, as in Surrey, are worth from £200 to -£2,000 an acre, valued at present market rates—we get £50,000,000. - -Roads are an important item in the national valuation—they are almost -all that is left to the nation of the nation's area. There are about -22,000 miles of main roads and about 97,000 miles of minor roads. These -have value as land and value as highways, but if we value land and -construction together at an average of only £5,000 per mile we arrive at -about £600,000,000 as a conservative estimate of the value of the roads -of the United Kingdom. - -There remain to consider the values of the parks and other land, -buildings (including offices, houses, schools, markets, asylums and -workhouses), bridges, sewers, lighting systems, gasworks, electric light -and power undertakings, tramways, waterworks, reservoirs, etc. - -The outstanding debts of the local authorities of the United Kingdom are -now about £600,000,000. The whole of this amount has been spent upon the -objects referred to and they are worth considerably more. I submit that -it is a very conservative estimate to value local government property at -20 per cent. more than the amount of the outstanding loans or say -£720,000,000. - -We thus arrive at £1,370,000,000 as a rough but reasonable estimate of -the value of the local property. Adding it to the £550,000,000 of -Imperial property we get £1,920,000,000 as a valuation of that portion -of the accumulated wealth of the United Kingdom which is in the -collective ownership of the nation.[18] - -But, against the possession of these large amounts of property we have -to set the mortgages upon the public assets which are represented by the -National Debt and Local Debts. These, of course, are not directly -secured upon Imperial and Local Government property, but upon the -Imperial and local revenues. It is convenient, however, to regard them -as mortgages, and to deduct them as I have done in the table. Making -this deduction, I am able properly to include the amount of the national -debt and local debts in my estimate of the value of private property -(see items _g_ and _h_). This gives a true view of the subject. The -people of the United Kingdom collectively own relatively little -property. In the time to come this will be remedied, for local -authorities are rapidly acquiring reproductive undertakings. Until they -are paid for, however, by the discharge of the loans raised to acquire -or equip them, we do well to remember that they are mortgaged to -individuals. Therefore, in deducting the debts from the valuation of -public property and in adding them to the private property I submit that -I am presenting an accurate picture of the actual position. - -To sum up this part of the subject, the people of the United Kingdom -collectively possess property worth £1,920,000,000 and are collectively -indebted to a few of their number in the sum of £1,362,000,000. Thus, -all that they may be said to own collectively is property worth the -comparatively insignificant sum of £558,000,000. - -I pass to the private property which is commonly called "national" -wealth. - -In item _c_ agricultural lands and the farmhouses and other buildings -thereon are valued at £1,040,000,000. In 1898 the Royal Commission on -Agriculture arrived at the value of lands by taking 18 years' purchase -of the profits of 1893. The value of agricultural land is now rising -with the appreciation in the price of food.[19] - -Item _d_ "Houses," it should be clearly understood, covers not only -dwelling-houses, but factories, workshops, offices, and all other -premises save farmhouses. It also includes, as is so often overlooked, -both house value and land value. In capitalizing at 15 years' purchase, -the market value of the property is certainly not overstated. The -£3,255,000,000 so arrived at is a handsome sum and by far the most -considerable item in the list. It includes, in the value of factories -and other business premises, a considerable amount of trade capital. - -It should not be forgotten that we are speaking of economic valuation, -not of intrinsic value. Houses which rank for no small part of the -£3,255,000,000 are of small intrinsic value, their economic value being -only produced by the sheer necessities of those whose needs must find a -roof. London contains great areas of filthy brick-work which are worthy -to be destroyed, but worth many millions to the houselords who draw -rents from them. - -Item _f_ deals with farmers' capital. Here I have used the figure -arrived at in 1905 by R. H. Inglis Palgrave.[20] After careful -examination of the amounts of capital per acre employed in various parts -of the country, Mr Palgrave considers £6 an acre an excessive estimate, -but Major Craigie, who has given the subject much attention, is inclined -to think it too low. - -Items _g_ and _h_ have been already referred to. - -Item _i_ (1) is an estimate of the amount of capital employed in the -miscellaneous trades and professions taxed under Schedule D of the -Income Tax. I have assumed that one-half of the estimated profits were -derived from capital, and this half I have capitalized at 10 years' -purchase. The amount so arrived at—£2,220,000,000—may be regarded as a -reasonable estimate, not as an accurate one. In 1908, it may be pointed -out, the nominal "paid up" capital of registered joint-stock companies -amounted to £2,123,000,000. - -Under _i_ (2) £100,000,000 is put down as a rough estimate of the -capital employed by small traders whose incomes are less than £160 per -annum. I think that £100,000,000 is a liberal estimate, but it should be -noted, against this opinion, that in 1885 Sir Robert Giffen's estimate -was £335,000,000. In either case the figure is sheer guesswork; there is -no proper statistical material. - -Items _j_ to _q_ need little comment. I point out, however, that the -profits of mines, quarries and ironworks are capitalized at only 4 -years' purchase by some authorities in view of their exhaustible -character. - -Item r relates to furniture, works of art and other movable property. I -have estimated this to amount to one-sixth of the item "Houses" (_d_). -It is right to point out, however, that this estimate is very much at -variance with former ones. Sir Robert Giffen in 1885 took one-half of -the value of "Houses," and Mulhall and other statisticians have commonly -used this estimate. But is it reasonable? I think not. In the first -place the item "Houses" covers a great number of business premises the -contents of which are valuable but are already estimated for in item -_i_. The item also covers the value of all the land connected with the -premises. Deducting for land and for business premises, could we, even -as to the balance, assert that the average private dwelling contains -furniture and other effects worth 50 per cent. of the cost of the -structures? Enquiry has shown me that such an estimate would be only -warrantable in the case of rich houses. But rich houses, as we have -seen, are comparatively few, and "comfortable" houses not many. Coming -to the great bulk of the small dwelling houses of the United Kingdom the -furniture and effects are so poor that their value, unfortunately, as -compared even with that of the mean houses which shelter them, is small, -and in many cases negligible. - -In taking one-sixth instead of one-half of item _d_ in arriving at item -_r_ therefore, I feel that I am making the most liberal possible -estimate. To make the figure about £1,600,000,000, as we should do by -taking the traditional one-half of the value of "Houses," would, I -submit, be very wide of the mark. - -The total value thus estimated of the property in the United Kingdom -owned by individuals affords a striking contrast with that owned by the -State. It amounts to £10,567,000,000. - -We have now to consider the third category: "Property in places abroad -owned by persons in the United Kingdom." The items speak for themselves -and are capitalized at very reasonable rates. We get the remarkable fact -that certain persons in this country own about £2,600,000,000 of -property in places abroad. - -The grand total of the whole estimate is £13,762,000,000—£300 per head -of the population, or say £1,500 per family of five persons. - -[Footnote 16: There is also, of course, the value of the trained -personnel of both army and navy, which could not be taken at less than -£250 per soldier and £400 per sailor, but I confine this estimate to the -value of "property" commonly so called.] - -[Footnote 17: There are no commons in Ireland and Scotland.] - -[Footnote 18: In 1885 Sir Robert Giffen estimated Government and local -property at £500,000,000, but I do not know his reasons for naming that -figure.] - -[Footnote 19: Lord Eversley seems to think that 25 years' purchase meets -the conditions of 1905. See discussion in the Royal Statistical -Society's Journal for March 1905.] - -[Footnote 20: "Estimates of Agricultural Losses." Paper read to the -Royal Statistical Society in March 1905.] - - - - - CHAPTER VI - THE MONOPOLY OF CAPITAL - - -In view of the facts as to rich and poor estates which we examined in -Chapter 4, it is obvious that to state that the accumulated wealth of -the United Kingdom probably amounts to £300 per head of the population, -or £1,500 per family of five persons, is to mask in averages a great -inequality of distribution. - -Reverting to the Death Duty records, it is possible, by means of them, -to give a true idea of the manner of distribution amongst our people of -the greater part of the nearly £14,000,000,000 of capital. - -I again direct attention to the tables on pages 52 and 53. Year after -year, with extraordinary constancy, a certain amount of money passes in -each class of estate. So small are the variations in relation to the -magnitude of the totals that it is hardly necessary to average the five -years in working at the figures. - -If about 65,000 persons die every year leaving about £279,000,000, what -is the ratio to these figures of the numbers and property of the living? - -The question thus raised is an exceedingly interesting one. Porter in -his "Progress of the Nation" seems to have assumed a ratio of 45 to 1, -but I do not think that the true figure can be so high as this. - -The British Crown, since Queen Anne, has passed at the following dates: - - Anne, 1702 - George I., 1714 - George II., 1727 - George III., 1760 - George IV., 1820 - William IV., 1830 - Victoria, 1837 - Edward VII., 1901 - George V., 1910 - -Thus, in 208 years, the Crown has passed eight times, or, on the -average, once in about 26 years. - -I have investigated the dates at which a considerable number of -well-known estates have passed at death during two centuries and have -found the most remarkable variations in different families. The Earldom -of Suffolk has passed at average intervals of 16.7 years between 1731 -and 1898. The Earldom of Coventry has passed at intervals of 22 years -between 1712 and 1843. These are intervals which are well under the -average, while above the mean are cases quite as remarkable. The Earldom -of Essex, between 1709 and 1892, has passed only four times, giving an -average of 45.7 years. The Earldom of Bathurst, again, between 1775 and -1892, passed only five times, giving an average of 43.4 years. - -Taking the mean of a large number of actual cases, I get an average of -29.2 years and I have decided to take 30 as a round figure which cannot -be far from the truth. Assuming, then, that there are thirty living -property owners for every dead one in the final column of the table on -page 53, I have constructed the table entitled "The Division of -Property: An Argument from the Dead to the Living," which appears on -pages 74 and 75. The figures in columns 1 and 2, taken from the table in -Chapter 4, are multiplied by 30 to form the figures in columns 3 and 4. -The results are exceedingly interesting. - - THE DIVISION OF PROPERTY: AN ARGUMENT FROM THE DEAD TO THE LIVING - - +---------------------------+---------------------+ - | | THE DEAD. | - | +---------------------+ - | |Averages of the Death| - | |Duty Records in the | - |CLASSES OF ESTATE. |five years 1904-5 | - | |to 1908-9. | - | +---------+-----------+ - | | (1) | (2) | - | |PERSONS. | PROPERTY. | - +---------------------------+---------+-----------+ - | | | £ | - |Less than £100 net | 15,956 | 900,000| - |Less than £300 gross | 18,917 | 3,600,000| - |£300 to £500 gross | 9,288 | 3,700,000| - |£100 to £500 net | 6,074 | 2,700,000| - | +---------+-----------+ - |Total Estates not over £500| 50,235 | 10,900,000| - | +---------+-----------+ - |£500 to £1,000 net | 10,404 | 8,600,000| - |£1,000 to £10,000 net | 16,910 | 62,100,000| - |£10,000 to £25,000 net | 2,338 | 41,000,000| - |£25,000 to £50,000 net | 910 | 35,100,000| - |£50,000 to £75,000 net | 291 | 19,400,000| - |£75,000 to £100,000 net | 145 | 13,200,000| - |£100,000 to £150,000 net | 133 | 16,900,000| - |£150,000 to £250,000 net | 90 | 19,700,000| - |£250,000 to £500,000 net | 54 | 20,600,000| - |£500,000 to £1,000,000 net | 19 | 13,600,000| - | Over £1,000,000 net | 7 | 18,100,000| - | +---------+-----------+ - | Total Estates over £500 | 31,301 |268,300,000| - | +---------+-----------+ - | Grand Total | 81,536 |279,200,000| - +---------------------------+---------+-----------+ - - +---------------------------+-------------------------------------+---------+ - | | THE LIVING. | | - | +-------------------------------------+ | - | |Figures of columns 1 and 2 multiplied| AVERAGE | - | |by 30 upon the assumption that each |VALUE OF | - |CLASSES OF ESTATE. |dead property owner in column 1 | ESTATES | - | |corresponds to 30 living ones. |PER HEAD.| - | +-----------------+-------------------+ | - | | (3) | (4) | | - | | PERSONS. | PROPERTY. | | - +---------------------------+-----------------+-------------------+---------+ - | | | £ | £ | - |Less than £100 net | 478,680 | 27,000,000 | 56| - |Less than £300 gross | 567,510 | 108,000,000 | 190| - |£300 to £500 gross | 278,640 | 111,000,000 | 398| - |£100 to £500 net | 182,220 | 81,000,000 | 444| - | +-----------------+-------------------+---------+ - |Total Estates not over £500| 1,507,050 | 327,000,000 | 216| - | +-----------------+-------------------+---------+ - |£500 to £1,000 net | 312,120 | 258,000,000 | 826| - |£1,000 to £10,000 net | 507,300 | 1,863,000,000 | 3,672| - |£10,000 to £25,000 net | 70,140 | 1,230,000,000 | 17,536| - |£25,000 to £50,000 net | 27,300 | 1,053,000,000 | 38,571| - |£50,000 to £75,000 net | 8,730 | 582,000,000 | 66,600| - |£75,000 to £100,000 net | 4,350 | 396,000,000 | 91,034| - |£100,000 to £150,000 net | 3,990 | 507,000,000 | 127,067| - |£150,000 to £250,000 net | 2,700 | 591,000,000 | 218,800| - |£250,000 to £500,000 net | 1,620 | 618,000,000 | 381,481| - |£500,000 to £1,000,000 net | 570 | 408,000,000 | 715,789| - | Over £1,000,000 net | 210 | 543,000,000 |2,585,714| - | +-----------------+-------------------+---------+ - | Total Estates over £500 | 939,030 | 8,049,000,000 | 8,571| - | +-----------------+-------------------+---------+ - | Grand Total | 2,446,080 | 8,376,000,000 | 3,424| - +---------------------------+-----------------+-------------------+---------+ - -In the first place, the total property comes out at £8,376,000,000 which -is about £5,400,000,000 less than the estimate of private property -arrived at in Chapter 5. This is not surprising. There can be no -question that a considerable amount of property evades the Death Duties. -On page 78 will be found details, taken from the Reports of the Inland -Revenue Commissioners, of the various descriptions of property which -passed in the year 1908-9. Take the item "Household Goods, Apparel, -etc." It amounts to but £6,000,000. Now, in Chapter 5, as the reader -will remember, I formed an estimate of £550,000,000 as the value of such -effects, this estimate being £400,000,000 lower than that made by Sir -Robert Giffen twenty years ago. The £6,000,000 is officially described -as relating to "household goods, pictures, china, linen, apparel, etc." -Multiplied by 30 it gives but £180,000,000, which is certainly -£300,000,000 less than it should be. It will be seen that "Book Debts, -Stock, Goodwill, etc.," figure for only £17,000,000 in 1908-9, pointing -to under-estimation. Similar undervaluation probably obtains in regard -to other items of property, while bonds to bearer frequently escape -taxation. Of investments in places overseas a very great part -undoubtedly escapes death duty. - -Another and most important point is that a considerable amount of -property eludes the Death Duties through gifts by the living. The -following figures are significant:— - - COMPARISON OF (1) INCOME TAX ASSESSMENTS AND (2) ESTATE ASSESSMENTS - - Gross Assessments Net Estates - to Reviewed for - Income Tax. Death Duties. - Million £ Million £ - 1895-6 677.8 213.2 - 1896-7 704.7 215.8 - 1897-8 734.5 247.3 - 1898-9 762.7 250.6 - 1899-1900 791.7 292.8 - 1900-1 833.3 264.5 - 1901-2 867.0 288.9 - 1902-3 879.6 270.5 - 1903-4 902.8 264.1 - 1904-5 912.1 265.1 - 1905-6 925.2 272.2 - 1906-7 943.7 298.5 - 1907-8 980.1 282.3 - 1908-9 1010.0 270.9 - -It will be observed that there is a remarkable lack of correlation -between the income tax and the death duty assessments. The former have -grown most satisfactorily. The latter grew in the first few years of the -operation of the Harcourt revised Death Duties and then became, for -practical purposes, stationary. There can be no doubt that the -explanation is to be found in the increase of gifts made _inter vivos_ -to avoid the payment of death duty, and that the estates reviewed in -1908-9 should have been nearer £400,000,000 than £300,000,000. - -Parliament has tried to meet this avoidance by enacting (Finance Act of -1909, which was passed into law in 1910 after rejection by the Peers in -1909) that gifts _inter vivos_ shall not be exempted from death duty -unless made more than three years prior to the death of the giver. - -The apparent discrepancy between the £8,376,000,000 arrived at on page -75 and the £13,700,000,000 arrived at on page 65 is therefore not an -inaccuracy, but an accurate consequence of the facts referred to. - -As it stands, then, the table on pages 74-75 represents the greater -part, but not the whole, of the property of the persons to whom it -relates. Nevertheless, it gives us as accurate an idea of the manner of -distribution as though it dealt with the whole. - -CLASSIFICATION ACCORDING TO (1) SIZE OF ESTATE AND (2) DESCRIPTION OF -PROPERTY, OF THE GROSS VALUE OF THE ESTATES WHICH PASSED AT DEATH -IN THE FISCAL YEAR 1908-9 - ----------------------------+-----------+----------+-----------+----------- - | Stocks, | | Money | Trade - | Funds, | Cash in | lent on | Assets, - Size of Estates. |Shares, and|the House |Mortgages, |_i.e._ Book - |other like | and in | Bonds, | Debts, - |Securities.| Bank. |Bills, etc.| Stock, - | | | | Goodwill, - | | | | etc. ----------------------------+-----------+----------+-----------+----------- - | £ | £ | £ | £ -Not exceeding £300 gross | 239,910| 1,263,509| 119,186| 222,528 -Between £300 and £500 gross| 392,345| 974,686| 211,362| 262,508 -£100 to £500 | 265,873| 354,133| 110,053| 664,130 -£500 to £1000 | 1,586,521| 1,633,265| 760,018| 863,702 -£1000 to £10,000 | 21,247,265| 6,169,300| 7,281,737| 4,296,571 -£10,000 to £25,000 | 18,767,290| 2,345,310| 4,112,023| 2,184,906 -£25,000 to £50,000 | 17,675,813| 1,454,151| 3,111,506| 1,704,057 -£50,000 to £75,000 | 10,562,035| 726,051| 1,561,811| 1,334,990 -£75,000 to £100,000 | 7,534,683| 572,995| 1,354,405| 852,908 -£100,000 to £150,000 | 10,175,403| 567,701| 1,479,966| 668,643 -£150,000 to £250,000 | 9,738,895| 317,672| 888,356| 736,528 -£250,000 to £500,000 | 11,377,749| 860,505| 1,648,587| 1,244,988 -£500,000 to £1,000,000 | 3,370,659| 36,126| 280,636| 1,177,432 -Over £1,000,000 | 6,318,402| 616,113| 82,533| 1,059,061 ----------------------------+-----------+----------+-----------+----------- - Total |119,252,843|17,891,517| 23,002,179| 17,272,952 ----------------------------+-----------+----------+-----------+----------- - ----------------------------+----------+----------+------------+---------- - | | | | - | |Household | | House - Size of Estates. | Policies | Goods, |Agricultural| Property - | of | Apparel | Land. | and - |Insurance.| etc. | | Business - | | | |Premises. - | | | | ----------------------------+----------+----------+------------+---------- - | £ | £ | £ | £ -Not exceeding £300 gross | 562,756| 277,353| 100,014 | 598,220 -Between £300 and £500 gross| 353,865| 210,848| 94,088 | 967,152 -£100 to £500 | 507,869| 239,037| 329,362 | 2,862,200 -£500 to £1000 | 844,829| 404,730| 588,750 | 4,120,809 -£1000 to £10,000 | 3,553,234| 1,673,603| 4,102,764 |18,168,513 -£10,000 to £25,000 | 1,400,980| 849,525| 2,432,372 | 6,516,563 -£25,000 to £50,000 | 1,067,993| 633,560| 2,465,454 | 4,322,623 -£50,000 to £75,000 | 314,705| 360,607| 1,407,645 | 2,091,525 -£75,000 to £100,000 | 337,012| 208,217| 1,741,005 | 1,161,460 -£100,000 to £150,000 | 490,791| 364,077| 1,373,393 | 1,635,301 -£150,000 to £250,000 | 535,038| 336,487| 1,542,264 | 1,454,949 -£250,000 to £500,000 | 279,200| 448,789| 1,611,265 | 1,222,858 -£500,000 to £1,000,000 | 179,368|-[A]39,952| 1,649,580 | 614,244 -Over £1,000,000 | 282,723| 225,708| 1,253,498 | 307,871 ----------------------------+----------+----------+------------+---------- - Total |10,710,363| 6,192,589| 20,691,454 |46,044,288 ----------------------------+----------+----------+------------+---------- - -[A: Capital transferred in the year to other classes exceeded that -brought into these classes.] - ----------------------------+---------+----------+----------- - | | | - | Ground | | Total - Size of Estates. | Rents | Other | Gross - | and |Property. | Capital - | similar | | Values. - |Burdens. | | - | | | ----------------------------+---------+----------+----------- - | £ | £ | £ -Not exceeding £300 gross | 1,505| 388,068| 3,773,049 -Between £300 and £500 gross| 5,811| 397,431| 3,870,096 -£100 to £500 | 13,008| 517,903| 5,863,568 -£500 to £1000 | 43,922| 1,226,606| 12,073,152 -£1000 to £10,000 | 571,404| 7,811,769| 74,876,160 -£10,000 to £25,000 | 790,506| 4,802,567| 44,202,042 -£25,000 to £50,000 | 724,520| 4,199,814| 37,359,491 -£50,000 to £75,000 | 371,867| 2,061,497| 20,792,733 -£75,000 to £100,000 | 271,003| 1,225,183| 15,258,871 -£100,000 to £150,000 | 354,061| 1,485,937| 18,595,273 -£150,000 to £250,000 | 561,046| 2,479,257| 18,590,492 -£250,000 to £500,000 | 411,398| 2,257,972| 21,363,311 -£500,000 to £1,000,000 | 105,066| 992,010| 8,365,169 -Over £1,000,000 | 188,350| 6,571,469| 16,905,728 ----------------------------+---------+----------+----------- - Total |4,413,467|36,471,483|301,889,135 ----------------------------+---------+----------+----------- - -The table is full of striking contrasts. I have divided it into two -parts, the lower of which consists almost entirely of the income tax -paying classes. We should expect those with incomes exceeding £3 per -week for the most part to be the property owners of the nation. It will -be seen that the number of persons with £500 of property and upwards -indicated by this table is 939,000. This number may be compared with our -estimate of income tax payers, which was 1,100,000. - -Of the 939,030 persons with £8,049,000,000, as many as 312,120 own -between them but about £258,000,000, leaving 626,910 persons with -£7,791,000,000. - -Of the 626,910 persons with £7,791,000,000, as many as 507,300 have -between them £1,863,000,000, leaving 119,610 persons with -£5,928,000,000. - -And it is amongst the big estates that we must assuredly look for the -bulk of the avoidance of Death Duties, which is clearly indicated by the -table on pp. 76-77. Thus the closer we get to the facts the more amazing -the monopoly of capital appears. It is literally true to say that a mere -handful of people owns the nation. _It is probably true that a group of -about 120,000 people who with their families form about one-seventieth -part of the population, owns about two-thirds of the entire accumulated -wealth of the United Kingdom._ - -It is an inevitable consequence of the monopoly of capital by a few -people that the distribution of the national income is as pictured in -the frontispiece of this volume. If we were quite unable to investigate -incomes, we should know without investigation that the facts as to -capital must have as a corollary a grossly uneven distribution of -income. If, again, we had merely the known facts as to incomes before -us, and death duty statistics were not available, we should be able to -deduce from them just such a monopoly of wealth as is examined in this -chapter. - -As to the insignificant fraction of the national wealth owned by the -working and lower middle classes, it is mockery to term it the "capital -of the working classes," as is done not infrequently. It corresponds, -for the most part, to the squirrel's store of nuts. It stands chiefly -for sick pay, unemployment benefits, funeral moneys, bits of jerry-built -houses, and so forth. It is rarely industrial capital used for the -benefit of the savers. - -Those who have so little property cannot bargain fairly for the sale of -their services with those who own the national undertaking. A small -group of private owners exercises the effective government of the nation -through the possession of the means of production, which are the means -of life. As for the Government at Westminster, it is impotent because, -like the mass of the people, it owns little or no property. It cannot -even control the chief source of the national wealth—coal, or the prime -factor in trade—railways. The investments of the State, like the -investments of the masses, are a negligible quantity. And those rule who -own. - - - - -CHAPTER VII - -THE AREA OF THE UNITED KINGDOM - - -Let us now consider the area of the United Kingdom. I use the word area -with intention, for it is its area which differentiates land from all -other commodities. Man can make soil by disintegrating rock. He can -entirely strip the soil from a given superficies. He can change a fen -into a farm. He can rob land of its fertility by careless cultivation. -He can rear floors above land or sink shafts below it. Upon the base -afforded by a small piece of land he can manufacture enough cloth to -clothe a multitude. There is one thing, however, which he cannot do. He -cannot change the geographical position of land. The element of area, of -extension, is inherent and immobile, unchangeable and indestructible.[21] - -It follows that the manner of the control of land is an exceedingly -important matter to a community. The immobile area is the base of all -human activities. Upon it we needs must live, and the manner of our -distribution upon it largely determines our happiness. - -In the United Kingdom, as we have already seen, the people collectively -own but little property, and of the entire area of the country, the -control of which so largely determines their relations with each other, -but the roads, rivers, and a few insignificant commons and parks are -public property. The whole area measures 77,000,000 acres and nearly -77,000,000 acres are private property. - -As we might expect from the facts we have already examined, the greater -part of the area is in a comparatively small number of hands. There are -a large number of landowners, but great landowners are few. - -As in many other parts of these enquiries, we are faced with a plentiful -lack of precise information as to the ownership of the soil. The more -important the subject, the less trouble we take, as a people, to keep -record of it. In 1910 it is impossible for any man to say precisely how -many persons own British land. No Bluebook on the subject has been -published for thirty-five years. The last return of landowners, known as -the "New Domesday Book," was made in 1873, and is forgotten by the -present generation, although it created much interest and controversy -upon its publication. - -The contents of the New Domesday Book were carefully corrected and -analysed by Mr John Bateman.[22] For England and Wales alone his summary -of the figures, revised as to the great estates down to 1883, is as -follows:— - - OWNERSHIP OF LAND IN ENGLAND AND WALES - - Number of Owners. Class of Owner. Acres. - - 400 Peers and Peeresses 5,729,979 - 1,288 Great Landowners 8,497,699 - 2,529 Squires[23] 4,319,271 - 9,585 Greater Yeomen[23] 4,782,627 - 24,412 Lesser Yeomen[23] 4,144,272 - 217,049 Small Proprietors 3,931,806 - 703,289 Cottagers 151,148 - 14,459 Public Bodies 1,443,548 - Waste 1,524,624 - ------- ---------- - 973,011 34,524,974 - ------- ---------- - -While the number of owners came out at nearly 1,000,000, it will be seen -that the ownership of the greater number is a very small thing indeed. -For practical purposes, about 38,000 persons owned by far the greater -part of England and Wales. The analysis shows: - - 38,214 people owned 27,473,848 acres: - average 719 acres each. - 934,797 people owned 5,526,502 acres: - average 6 acres each. - -Again of the 934,797 small owners: - - 703,289 people owned 151,148 acres: - average less than 1 rood. - -As to the United Kingdom, Mr Bateman's analysis showed: - - UNITED KINGDOM LAND OWNERSHIP: 1883 - - Acres. - Total Area 77,000,000 - Owned by 2,500 persons 40,426,000 - -It has been quaintly observed in mitigation of these facts, and with a -view to reconciling the British people to the humiliation and economic -servitude involved in these facts, that some part of the 2,500 persons' -40,000,000 acres consists of mountain and waste land. As a matter of -fact, this plea is a further condemnation of the position, for very -little indeed of our small British area ought to be "waste." British -landowners are responsible to the nation for their wanton neglect of -afforestation. Let the "waste" land of the rich be handed over to the -nation if it is declared to be valueless to its few owners. - -Since 1883 the number of owners has doubtless increased, but not -largely, for even those people who own little strips of land bearing -houses chiefly do so on leasehold tenure, being in effect employed in -the engaging process of nursing ground rents for a future generation of -the few who own. It may be that in the United Kingdom at the present -moment there are about 1,250,000 freeholders, but the substantial -ownership of British land remains as it is faithfully pictured in the -above figures. - -As need hardly be added, these facts about land ownership are a most -striking confirmation of the conclusions arrived at in these pages as to -the monopoly of capital. - -As we are land animals, we are compelled, such of us as cannot command -the capital necessary to buy a base to live upon or work upon, to come -to terms with the individuals who are in possession of the British area. -The payment which is made for permission to use land is commonly called -rent, and the total amount of the rent paid for the use of the -77,000,000 acres is a considerable sum. We can form a very fair estimate -of it from the Income Tax returns already examined. - -First, as to the landlords' revenue from agricultural land. This we -obtain from Schedule A of the Income Tax. The income assessed in 1908-9 -was £52,000,000 gross, but as we have already noted, part of this was -not real income. Between the cost of repairs (for which the -Commissioners allowed £6,360,000), adjustments on appeal, etc., the net -income from agricultural lands taxed in 1907-8 was about £44,000,000. -But this is the rent, not of the land alone, but of the farms as going -concerns, with all their buildings, fences, roads, ditches, etc. The -actual rent of the land alone may perhaps be put at £35,000,000. - -Secondly, we come to the rents of all lands bearing houses, factories, -business premises, etc. The gross income assessed under Schedule A of -the Income Tax in 1908-9 was £217,000,000, of which £49,000,000 was for -the Metropolis alone. From this figure considerable deductions have to -be made to arrive at net income. The Commissioners allowed for repairs -£33,700,000, for Charities, etc. £7,400,000, for empty property -£8,000,000, for over-assessments, etc. £3,900,000. Thus the real income -from houses and the land upon which they stand, accruing to private -landlords is reduced to £164,000,000. Of this £164,000,000 how much is -rent from land alone? - -In London about one-third of the gross assessment is land rent. In the -Provinces the proportion is smaller; probably less than one-fourth. As -to the former figure, the L.C.C. surveyor, after careful examination of -the subject in detail, a few years ago estimated the land values of the -Metropolis at £15,000,000, which was just over one-third the gross -assessment of land and buildings together. I take, then, the -Metropolitan land rents at £16,000,000 and those of the rest of the -United Kingdom at one-fourth of the gross assessment (£164,000,000), or -£41,000,000. Thus we arrive at £57,000,000 for the whole of the United -Kingdom. To this we have to add £1,000,000 of miscellaneous sporting -rents, tithes, etc. - -But Schedule A does not exhaust the profits derived from the ownership -of land. Under Schedule D are assessed Railways, Mines, Quarries, -Ironworks, etc., which are undertakings attached to land, and in the -profits of which land rents form a part. The most important case is that -of mines. In 1893 the Royal Commission on Mining Royalties carefully -calculated all mining royalties, dead rents, etc., received by -freeholders in 1889 at less than £5,000,000.[24] This sum has now -probably increased to about £7,000,000, including mines and quarries of -all descriptions. The rental value of the land employed in Railways, -Canals, etc., can hardly be taken as more than £6,000,000 per annum. - -Collecting the figures we have estimated, we get: - - ESTIMATE OF LAND RENTS OF THE UNITED KINGDOM - - From Farm Lands £35,000,000 - From Lands bearing Dwelling-Houses, - Factories, Business Premises, etc. 57,000,000 - From Sporting Rents, etc. 1,000,000 - From Mines, Quarries, etc. 7,000,000 - From Other Property 6,000,000 - --------------- - [25]£106,000,000 - =============== - -Thus, in round figures, we get £106,000,000 as an estimate of the -tribute which is paid to private owners for permission to use the area -of the United Kingdom. As we have seen, 2,500 persons own one-half the -whole area, while 38,200 persons own three-fourths of the area of -England and Wales, so that the greater part of this income of -£106,000,000 goes into few hands. - -In view of the fact that the total income of the United Kingdom has been -estimated at £1,840,000,000, it is at first surprising that the amount -of this land rent is not larger than £106,000,000, and it is of interest -to ask why it is, in view of the monopolization of so much of the whole -area by so few people, that the land rents are not greater than they -are. - -The first explanation is the influence of free imports and cheap -transport in putting at our disposal the harvests of the entire world. -Cheap food for our people has spelt "loss" to the landowner. The -landowners possess just as much land as before, neither more nor less, -but as the produce which it yields is lower in price, they have been -able to exact, for permission to produce the kindly fruits of the earth, -a smaller rent. As our wealth has grown in the last generation the -tribute paid to the owners of agricultural lands has grown less. Now -that food is again appreciating in price the land tribute will on this -account rise again. - -But, while the rent paid for farm lands has fallen since the seventies, -the rent paid for urban sites has increased, and, of course, a further -portion of the whole area has passed from the first category into the -second. The country-side has been increasingly deserted, and our big -towns have grown,[26] both by their own natural increase, and by a -continual influx from the villages and small towns. - -How is it, then, that the landlords have not been able to exact a -greater rent than about £57,000,000 for the use of urban sites? In the -first place, while this sum may seem small in proportion to the total -income of our people, it is very large in relation to the exceedingly -small area for the use of which it is exacted. Almost the entire area of -the United Kingdom is sparsely populated. It is an empty country dotted -with small crowded spots called towns. When we reflect, then, that the -land rent of the great empty country is £35,000,000, while the land rent -of the crowded towns is £57,000,000, we see the latter item in its true -light, as enormous in relation to the insignificant area for permission -to use which it is paid. - -In this connexion it is important to observe that an exceedingly large -manufacturing business can be carried on upon a small piece of the -earth's surface, measuring 50 feet by 100 feet, or only an eighth part -of an acre. The whole of the manufacturing plant of the United Kingdom -stands upon a base which cannot possibly amount to more than a -negligible fraction of the whole area of the country. Thus, while the -industrial has to bid high for the use of land, he needs, as a rule, but -a very small piece for his purposes. The area needed for a tennis court -is often sufficient for the base of a business in which 100 or 200 hands -are employed and which draws a huge profit from their labour. - -Or take the subject of housing. All the urban sites of the United -Kingdom together occupy a negligible part of its area. If our 9,000,000 -houses occupied half an acre each, as unfortunately they do not, they -would account for but 4,500,000 acres out of our 77,000,000 acres. - -But apart from the fact that the size of the area which yields urban -land rents is exceedingly small, local rates are a perpetual charge upon -land rents. The point is that, as the renter of fixed property is rated -according to his rental, the size of the rental he is able to pay is in -part determined by the amount of the rates. The higher the rates, the -less rent he can afford, and therefore the less can the landowner obtain -for the use of his land. - -For the reason just stated, it is often argued that the landowner -actually pays local rates.[27] The fact that he is unable to exact as -much rent as though no rates existed is said to be equivalent to an -actual payment by the landowner of the difference between the rent which -he receives and the rent which he might receive. This economic doctrine -is worth examination. - -In the first place it is not only the rates which the occupier takes -into consideration when he decides that he can afford to rent a certain -property. He considers "rates and taxes." The Inhabited House Duty is -taken into consideration fully as much as the poor rate. If it did not -exist the tenant could afford to pay a higher rent. - -Let us carry this a little further. What is the Inhabited House Duty? It -is an Income Tax roughly proportioned to the size of a man's income by -the size of the house which he inhabits. But there is another Income -Tax, the Income Tax commonly so-called, levied at so much in the £ on -incomes over £160 per annum. Is the Income Tax taken into consideration -by a family man looking out for a house? Not directly, perhaps, in the -same way that he adds the "rates and taxes" to the rent before deciding -that he can afford a certain eligible residence, but indirectly there -can be no question whatever that the Income Tax has great influence in -deciding a man's rental. Indeed, the raising of the Income Tax from 6d. -to 1s. may directly cause a man to leave a £60 house for a £50 house. We -see, then, that if the landowner pays the local rates, he most certainly -pays the Inhabited House Duty, and further that if he pays the form of -Income Tax called the House Duty, it is at least arguable that he pays -the Income Tax proper. - -But that is not all. There is another determinant of the rent which a -man can afford, and that is the price of gas. In and around London the -variation in price is considerable, and the careful householder does not -forget the fact when deciding whether to live North, South, East, or -West. South of the Thames gas is cheaper than in the North. According to -the doctrine under examination, therefore, the landowners North of the -Thames must at least "pay" the difference between the two rates. - -Again, on the same lines it might be argued that, as a rise in the price -of building materials checks building and therefore makes a landowner -ready to accept a lower rent for his land, the landowner actually pays -the increased cost of building when materials rise. - -And so we might proceed from one logical step to another until we -arrived at the comfortable conclusion that, if the sole expense of a -householder were his rent, he could pay his whole income as rent, and -that, therefore, the real "loss" of the landowners is the difference -between the entire income of the nation and the land rents which they -now actually receive. - -The whole truth of the matter is: For long years rates have been levied -upon the occupiers of fixed property. Contracts as to the use or sale of -land and the property affixed thereto have been made between man and man -with full knowledge of the existence of rates. While, therefore, it is -perfectly true that, but for the existence of local levies, the owners -of the soil would be receiving a higher tribute than is actually the -case, it is straining the meaning of language to say that they pay the -rates, or that the rates are an actual burden upon them. In so far as -present-day landowners have inherited their land from men who were given -it by a worthless Sovereign or in any other way came by it without -proper consideration, to talk of the burden of rates upon real property -can scarcely excite sympathy. In so far as present-day landowners -acquired their property for proper consideration or inherited it from -those who so acquired it, the rates were taken into account when the -price was paid, and no burden can therefore truly be said to exist. If -to-day A gives £1000 for a piece of land he does so with full knowledge -of local rates, and the seller gets less for his land because of his -knowledge. Therefore, when A, in his turn, leases his land and a house -built upon it to another person, he cannot allege that he bears the -burden of the rates. Yet it remains true that, if the burden did not -exist, the land would yield A a higher rent. In a word the rates have -become a rent-charge upon the property. - -To sum up the conclusions of this chapter, we have seen that while the -total income of the nation is £1,840,000,000, the landowners take -£106,000,000 as land rent, and that this amount would be much greater -but for (1) the untaxed admission of competitive foodstuffs, (2) the -very small area occupied by the towns, and (3) the levying of local -taxation upon fixed property. - -[Footnote 21: _Cf._ Marshall, "The fundamental attribute of land is its -extension."—"Principles of Economics," Book I, p. 221.] - -[Footnote 22: "Great Landowners." John Bateman (Harrison).] - -[Footnote 23: These classifications are purely arbitrary.] - -[Footnote 24: See C 6980, page 79.] - -[Footnote 25: It has been constantly stated that the land rents of the -United Kingdom amount to £250,000,000. Such an estimate is unwarranted.] - -[Footnote 26: It is only in the large towns that land rents have risen. -Many towns of less than 20,000 in population are decreasing in size and -their rents consequently falling. In the ten years ended 1901 no less -than 187 towns of from 2,000 to 50,000 inhabitants declined in -population.] - -[Footnote 27: The point is of so much importance that it may be well to -quote some expressions of opinion on the subject. - -"In practice there is little doubt that the majority of intending -tenants, both in town and country, do take the precaution of enquiring -what rates or taxes they will have to pay, and vary their estimates -accordingly. In their case, then, it is the landlord, and not the -tenant, who bears the burden of the rates." "Land Nationalisation" (p. -86), by Harold Cox. (Methuen & Co.). - -"We have assumed with most economists, that in the end, on the average, -the rates, however levied, fall upon the owner (inasmuch as they compel -him to lower the rent which he demands for his property)." "Towards a -Social Policy" (p. 49), by a Committee of Liberals. "The Speaker" -Publishing Co. Ld.] - - - - -CHAPTER VIII - -THOSE WHO WORK AND THOSE WHO WAIT - - -We have seen that, although the sum of the land rents taken by the -owners of the British area is actually very great, it is small as -compared with the total of the national income. We have also seen that -there is a simple explanation of this. We have become a manufacturing -and a town-dwelling people, and the area occupied by our factories and -towns is very small. The chief demand for land is confined to the -outskirts of such towns as are increasing in size. The landlords of the -big towns have their pockets increasingly filled with unearned -increment, while the landlords of the empty country are reminded in the -most practical possible way of that inherent quality of immobile area to -which we have referred as the distinguishing characteristic of land. -When we speak of a town as growing rapidly we refer to the growth in -relation to the area of the town, not in relation to the area of the -country. I reiterate this point because, when it is once realised, we -see our way as a community to an exceedingly simple solution of many -important problems. We speak of the enormous size of London. As a matter -of fact, the whole area administered by the London County Council is but -75,000 acres. Again, "Greater London" contains but 443,000 acres, and -yet is the dwelling-place of 7,000,000 people, or far more than the -entire population of the 2,420,000,000 acres of the Dominion of Canada. - -We shall return to the foregoing considerations hereafter. - -As a result of the small amount of land required as a base for the -establishment of industrial plant, or for the warehouse or stores of a -distributive business, it is usually but a small part of the total -product of an industrial or commercial organisation which is taken by -the owner of its site. That this is usually true is obvious from the -fact that of a total annual income of £1,840,000,000 the owners of area -are able to exact but £106,000,000. Of this £106,000,000 again, as was -pointed out in the last chapter, £35,000,000 is exacted from farmers who -make the meagre profit of from £17,000,000 to £26,000,000 per annum over -and above their rentals. Out of the teeming populations of the towns, -with all their manufacturing and commercial activities, the owners of -area are able to draw but about £57,000,000. - -Now let us revert to the extraordinary figures which are the basis of -the frontispiece to this volume. - -We have shown that, of a total income of £1,840,000,000, as much as -£634,000,000 is taken by a small group of persons numbering 280,000, or -with their families 1,400,000. The great landowners are obviously -amongst these 280,000 persons, and the greater part of British land -rents are therefore included in their income. But, if the whole of it be -included, there still remains £528,000,000 of income not derived from -land rents, and taken by a very small number of persons. - -The explanation of this fact is to be found in the monopoly of capital -which we examined in Chapter 6. In so few hands is the greater part of -the accumulated capital of the country concentrated that, in spite of -the fall in the rate of interest, the lion's share of the national -income is secured by a few. Each "dose" of capital may produce a smaller -return than of old, but there are more "doses" of capital in the -possession of the few capitalists, and these, in relation to the whole -population, add but very slowly to their numbers, so slowly that we get -the extraordinary congestion of capital revealed by the Death Duty -returns and pictured in the table in pages 74 and 75. - -Thus the monopoly of capital is a more far-reaching thing than the -monopoly of land, and it secures for a number of people almost as -limited as the great land-owning class, a gross profit compared with -which the sum of British land rents is insignificant. - -It is of interest to show, from a number of concrete examples, how the -joint product of mental and manual labour comes to be shared up between -those who work and those who wait.[28] - -The following particulars are extracted from recent balance-sheets of -ten well-known industrial joint-stock companies, each of which is -representative of hundreds of others. I shall distinguish the concerns -by a letter only, for I am not criticizing individuals, but seeking to -illustrate the causes which produce inequalities of wealth. - -Company A owns a well-known proprietary article. The balance-sheet -examined is dated 1904. Its issued capital is £1,000,000, and there are -no Debentures. A Profit and Loss a/c shows that the year's sales -amounted to £411,000. The total expenditure incurred in manufacturing -the year's production was only £218,000. There was therefore a balance -of profit amounting to £193,000. That is to say, after paying all -outgoings, including wages, salaries, rent, advertising, and so forth, -produce which cost £218,000 to manufacture was sold for nearly twice as -much. A dividend of 20 per cent. was paid for the year, and £30,000 -carried to reserve. What, then, did those get who worked to produce the -goods which were sold for £411,000? Obviously, a part only of the -£218,000, probably not more than £100,000. If it be taken as £100,000, -we see that those who worked to make the products of the Company -(including the brain work of managers, foremen, etc.) obtained only -£100,000, while the shareholders of the Company took £192,000. A great -slice of the increment went into the pockets of individuals who -certainly had not earned it. - -Company B is a restaurant company and the balance-sheet is for 1903. It -does not publish a Profit and Loss a/c. The issued capital is £189,000, -but a great deal of this is "water," for bonus shares have been issued -year after year. In the year under review the profits amounted to -£76,000, or over 40 per cent. of the amount of the watered capital. We -do not know what the Company pays in wages, but I doubt if it reaches -£30,000 per annum, or one-half the amount of the year's profits. The -employees are chiefly young girls who are paid a few pence per hour. -This case is an exceedingly instructive one to the student of "unearned -increment," because the restaurants are many in number and situated on -most valuable sites. After paying the ground landlord's unearned -increment, the sleeping partners in this concern gain, as they sleep, a -hundredfold more unearned increment than the ground landlords. - -Company C sells an article of food. The balance-sheet is dated 1903. Its -issued capital is £2,000,000, and there are £500,000 of 4½ per cent. -debentures. Much of the capital is represented by goodwill. The net -profit for the year, after paying Directors' fees, amounted to £139,000. -In spite of the enormous capital, the sleeping "ordinary" partners get 7 -per cent. Again we do not know the wages paid, but it is hardly likely -to be as much as the net profit of £139,000. If the employees get that -sum, which is doubtful, the sleeping partners gain as much as all the -workers who make and sell the products of the Company and manage and -direct it. - -Company D is an engineering firm. The balance-sheet is dated 1904. The -issued capital is £3,500,000 and there are £1,500,000 of 4 per cent. -debentures. The net profits for the year were £636,000, which sufficed, -after paying debenture interest, preference dividend, directors' fees, -etc., to give the ordinary shareholders 15 per cent. It is not probable -that the wages paid in a year are greater than the £636,000 of net -profit, but if they amount to £1,000,000, which is unlikely, the workers -of the Company gain little more than the shareholders. - -Company E is a restaurant company. Date of balance-sheet 1903. The -issued capital is £325,000 and in addition there are £100,000 of -debentures. The profits for the year amounted to £52,000. After paying -debenture interest, and preference dividend, the ordinary shareholders -got 16 per cent. The amount of wages paid is not known, but it is -probably under £20,000. To take this liberal estimate, the workers get -£20,000; the sleeping partners £52,000. - -Company F is an engineering concern; the balance-sheet is for 1903. The -issued capital is £5,000,000 and there are debentures for £2,250,000. -The net profits for the year amounted to £556,000. After paying -debenture interest and preference dividend, 10 per cent. was paid to the -ordinary shareholders. Again it is impossible to state with accuracy the -amount of wages paid, but it is improbable that they exceed the amount -of the net profit. 5,000 men at £80 per annum would come to £400,000. - -Company G is engaged in manufacturing cotton. Its capital is £10,000,000 -and there are debentures for over £1,000,000. The net profit (the -balance-sheet is for 1903) amounted to £2,684,000, which is a return of -25 per cent. on the entire capital. I do not know the wages bill, but if -the company employed 5,000 people at £100 a year each, and 10,000 more -at £50 a year each the total wages would be £1,000,000. Such employment -would still leave the sleeping partners with nearly three times as much -increment as the workpeople! - -Company H is a restaurant company, which fortunately gives us a profit -and loss account. The balance-sheet is for 1904. The issued capital is -£570,000 and in addition there are £300,000 of 4 per cent. debentures. -The profit and loss account shows the following figures: - - Gross Profit on Trading £474,000 - Salaries, wages, _rents_, rates, repairs, horsekeep, - maintenance and other expenses 327,000 - -------- - Profit £147,000 - ======== - -Here we have the statement that included in the £327,000 of total -expenses is a certain sum which was paid in salaries and wages. What was -it? We do not know, but the company had 90 restaurants at each of which -about 10 persons were engaged. That means 900 employees. If they were -paid £40 a year each (as a matter of fact they were paid less than that) -the wages would amount to £36,000. If, in addition, at headquarters, -etc., 100 more people were employed at £100 each, that would mean -another £10,000 a year or a total wages bill of £46,000. The net profits -were £147,000. Therefore the investors got at least four times as much -as those who worked to make the profits! As for the landlord's share, a -glance at the figures shows that it must have been very small in -proportion to that taken by the sleeping partners. Yet again the -business is done upon some of the most valuable sites in the whole -country. The business, indeed, is only valuable because of the sites, -yet the capitalist and not the landlord takes the lion's share of the -unearned increment. - -Company I is a manufacturing firm in an important trade. The -balance-sheet is for 1903 and the directors complain of "_depression of -trade_." The issued capital is £500,000 and there are debentures for -£300,000. The net profit made was £70,000 which, after paying debenture -interest, sufficed to provide 10 per cent. for the shareholders. If the -company "finds work" for 1,000 men at an average of £70 per man, the -profits, even in depression, are more than is paid to the workmen who -make the profits. - -Company J works a great monopoly service under licence from the -State.[29] The issued capital amounts to £5,500,000 and in addition -there is Debenture Stock amounting to £3,570,000. In 1904 the income -amounted to over £2,019,000 and the outlay, including rents, wages, -materials, management, etc., to £1,155,000, leaving a net profit of -£864,000. Of this the State took £186,000 for royalties, leaving a -balance of £678,000 for the share and debenture holders. Thus the -sleeping partners took far more than the entire earnings of managers, -clerks, operators, and workmen. The number of individuals employed by -this concern in 1904 was 30,000. As illustration of a fact already -referred to, viz. that a great business needs but a small base, it may -be added that the year's rents (building _plus_ land rents), taxes and -insurance came to only £77,000. Thus, while the landlords of most -valuable sites took something much less than £77,000, the capitalists -took £864,000 out of the business done upon the sites. - -I have thus described the earning and distribution of a very -considerable amount of income by 10 large industrial joint-stock -companies. It should be observed that the profits made were won in a -period of trade depression and falling wages, when short time and -unemployment slew their thousands. - -The consideration of such companies is exceedingly instructive for -another reason. In them the functions of capital and of business ability -are usually divorced. Their shares are, as to a great part, held by mere -sleeping partners, while the business ability is supplied by managers or -managing directors who, while they may have a certain proprietary -interest in the company, rarely own more than a small part of the -capital. In the cases quoted, after payment for both labour and skill in -management, great and disproportionate sums remain over to reward those -who "wait." - -The companies quoted cannot be regarded as exceptional cases. The reader -has but to glance from day to day at the reports of company meetings -published in the daily newspapers to note the steady manufacture of -dividends by industrial and other joint-stock concerns. In 1908 the -number of joint-stock companies registered in the United Kingdom and -believed to be trading was 45,000 and the paid-up capital -£2,100,000,000. In 1908-9, the corresponding financial year, 37,937 -"public companies" were assessed to income tax and declared their -profits at £291,000,000. From this £291,000,000 we have to make certain -deductions before we arrive at the profits of ordinary joint-stock -companies, for the total includes railway companies and some banks, -waterworks, etc., not registered with the Registrar of Joint-stock -Companies. Allowing £65,000,000 on this score we have £226,000,000 left -as the profit made by joint-stock companies having a nominal capital of -£2,100,000,000. Many of these companies have debenture capital but, on -the other hand, it is probable that, of the £2,100,000,000, fully -one-third is "water"—exaggerated goodwills, promoters' profit, -underwriters' commissions, bonus shares and the rest of it. Anyone who -is interested in this point should examine the yearly return of -companies registered which now shows not only the amount of capital -"considered as paid up" but the actual amount subscribed in cash and the -payments for underwriting. In a recent return I find such items as this: - - Capital considered as paid up £76,683 - Minimum Subscription required £7 - Amount allotted before beginning business £16,729 - -and this: - - Capital considered as paid up £25,000 - Minimum Subscription required £8,000 - Commission for underwriting 25 per cent. - Amount allotted before commencing business £8,010 - -That is how a great part of the £2,100,000,000 of registered joint-stock -"_paid up_" capital is made. - -Setting dummy capital against debentures, we see that, after payment of -wages to the workmen and foremen, after the payment of salaries to -clerks and officials, after the reward of business ability by the -payment of managers or managing directors, after the payment of -royalties to patentees where such were payable, after the payment of all -rents exacted by the owners of area, there remained a profit of -£226,000,000, being over 10 per cent. on the total paid-up capital, -watered and unwatered, of all the joint-stock companies registered in -the United Kingdom. - -We have also to remember that a large amount of unearned increment -accrues to many of the sleeping partners who draw the £226,000,000 -through the appreciation of their securities on the stock markets. Thus -the £1 shares of Company H referred to above were quoted in July 1905 at -£6 each, which means that either the present or past holders of the -shares gained not only handsome interest, but saw their capital -increased sixfold without any exertion upon their part. This creation of -a market in the profits of usury has terribly unfortunate results for -the employees of joint-stock companies. To the original shareholders who -sold at a huge premium the 30 per cent. dividend was 30 per cent. To the -new shareholder who pays the price which has arisen from the usurious -profits, the 30 per cent. dividend is only 4 per cent. or 5 per cent. He -goes to the shareholders' meeting clamouring for his 5 per cent., and -eager to resist any suggestion that the wages of those who make his -profits should be increased. The very success of the company thus -becomes an argument not for the increase of wage but for a reduction of -expenses. The managing director knows that he has got to face a body of -shareholders who, for the most part, rate a high dividend as a low one. -This point was illustrated in my own experience recently in a very -striking way. Writing in the "Daily News" I commented upon the small -wages paid by a well-known company paying a dividend of 30 per cent. per -annum. This roused the indignation of a shareholder in the company who -wrote me a letter the chief point of which ran as follow: - - "Most of the shareholders have paid £6 or £7 per share, and so get a - return of not more than 5 per cent." - -So one set of taskmasters passes out of the game with its tremendous -gains, and is succeeded by another set. To the latter the poor -workpeople are not churning out 30 per cent. but a mere 5 per cent. When -the new shareholders enter their premises they see easy work done by -overpaid people who make dividends of only 5 per cent. If, at a -shareholders' meeting (it has happened at company meetings) a -shareholder pleads for higher wages for the employees, he is howled -down. They are earning only 5 per cent! - -Another illustration is to be found in railway stocks, many of which -have (1) been deliberately watered, and (2) risen in price on the -market, so that, while railway men are badly paid, the present holders -of the stocks are apparently making small profits. Many railway -companies have enlarged their ordinary capital by the delightfully -simple process of multiplying by two. £100 of original stock has been -changed into £100 of "preferred" and £100 of "deferred." This has not -been done behind the scenes, but boldly and with the permission of our -rich men's parliament. As a consequence it is made to appear that the -net receipts of railways are only about 3½ per cent. of their "paid-up" -capitals. But the nominal capitals have not been "paid-up"; and even in -so far as the original capital is concerned much of it is unreal. Thus -the magnitude of the injustice which they suffer is hidden from railway -servants. They risk their lives for the public every day and what do -they get for it? In 1908, the 27 leading railway companies paid in wages -only £30,000,000, or only 25s. per employee per week! These 27 companies -own nearly all the railway lines, employ nearly all the railway servants -and make nearly all the profits assessed by the Inland Revenue -Commissioners. And what do these profits amount to? As I have shown in -Chapter 5, they amount to £43,000,000 per annum, or far more than is -paid in wages in one of the most dangerous and most useful of all -occupations. - -It is instructive to note how the joint-stock company promoter -calculates the wages factor in forming his plans. I recently had sent to -me the prospectus of a gas company, formed to take over and enlarge an -existing concern. It began by picturing the fat dividend "earned" by -other gas companies, thus:— - -The profitable nature of the Gas Companies, and the favour in which -their Shares are held by Investors, is shown by the following -particulars, which are obtained from the Stock Exchange Official List, -Stock Exchange Year Book, and other Official sources: - -The Croydon Gas Company pay 14 per cent., and the £100 Ordinary Stock is -quoted at £320. - -The Wakefield Gas Company pay 11½ per cent., and the £25 Ordinary Shares -are quoted at £63. - -The Brentford Gas Company pay 12 per cent., and the £100 Consolidated -Stock is quoted at £250. - -The Staines and Egham District Gas Company pay 13 per cent., and the £25 -Ordinary Shares are quoted at £60. - -While the Eastbourne Gas Company's A and C Stock pay dividends of 15 per -cent. respectively, and the £10 Shares are now standing at 165 per cent. -premium. - -What all men who live by work and not by dividends should note is, how -such beautiful results are arrived at. Inquiry will show that common -"gas" is extracted from certain suitable varieties of coal by the hard -labour of individuals employed in the handling of the inventions of the -dead. It is hard work and exhausting work. If the shareholders, who only -stand and wait, receive such princely dividends, what is the share of -those who make the gas? - -The company prospectus referred to is good enough to reveal the nature -of the division of the spoils. Its own statement is as follows:— - -Taking the consumption of Gas at only 30,000,000 cubic feet per annum, -and after allowing for the total cost of Coals, Labour, etc., and -crediting the sales for Coke and Residuals, Rates, and Taxes, Materials, -etc., the income of the Company should be as follows: - - By sale of 30,000,000 feet of Gas at 5s. 10d. per 1,000 - cubic feet (present price being 6s. 10d.) £8,750 0 0 - - " sale of Coke, Tar, Breeze, and Residuals, including - Meter Rentals 1,813 0 0 - ----------- - £10,563 0 0 - - To purchases: - - " 3,000 Tons of Coal at 17s. 6d. per - ton £2,650 0 0 - - " Purification, 2d. per 1,000 feet 250 0 0 - - " Repairs and Renewals to Works - and Machinery, 4d. per 1,000 - feet of Gas made 500 0 0 - - " Repairs, Services to Mains, Lamp - Columns, and Meters, 2d. per - 1,000 feet of Gas made 250 0 0 - - " Directors' Remuneration, Secretary - and Manager's Salary, Wages - at works, Rates and Taxes, etc., - and Miscellaneous Expenses 1,353 0 0 - --------- - 5,003 0 0 - ---------- - Net Profit £5,560 0 0 - - To pay 6 per cent. on 15,000 - Preference shares at 6 per cent £900 0 0 - - To pay 12 per cent. on 15,000 Ordinary - shares at 12 per cent. 1,800 0 0 - --------- 2,700 0 0 - --------- - Leaving a surplus, available for further dividends on - the Ordinary Shares and for Reserve Fund £2,860 0 0 - ---------- - -The company expects to sell its gas and by-products for £10,563. It -further expects that its entire outlay in producing the £10,563 worth of -gas, etc., will be only £5,003, leaving a net profit of £5,560! Now let -us look for the estimated _remuneration of labour_. - -Here are the lines:— - - To directors' remuneration, secretary and manager's - salary, wages at works, rates and taxes, etc., - and miscellaneous expenses £1,353 - - And the repair and renewal items, which include - some wages 750 - ------ - Total £2,103 - ====== - -So that £2,103 per annum covers, not only wages at works, salaries, -directors' fees, but repairs, rates and taxes, and miscellaneous -expenses, which must include postages, stationery, etc. It is obvious, -therefore, that the total reward of all bodily and mental labour, all -furnace-feeding and more or less scientific management, all work -whatsoever connected with the gas-making and repairs is calculated by -the promoters to cost something less than £2,103. Therefore, it is -actually promised to investors, in the light of day, that they can take -out of the product of the company's labour profits amounting to £5,560, -while all the workers, including managers, are to take only about -£1,500. And nothing is more certain than that, in the present condition -of what we prettily call the "labour market," thousands of men, with -thousands of women and children dependent upon them, would clamour to -have the chance to take a share of the £1,500 while working to make -£5,560 for the investors. Nor is it that we are merely examining the -extravagant promises of a prospectus. There is nothing impossible in -this scheme; the company has a good thing, and it is bound to make fine -profits. I have given above a few specimens of gas dividends. Here are -some more: - - Nominal - Value Price - Name of Company. of Shares Dividend. of Shares - or Stock. (1905). - The British Gas Light Co., Ltd. £20 10 p.c. £41 - The Ipswich Gas L. Co. (A Stk.) 10 13½ p.c. 28 - Eastbourne Gas Co. (C Stock) 10 15 p.c. 28 - Harrogate Gas Co. (A Stock) 100 17 p.c. 340 - Aldershot Gas and Water Co. 10 11½ p.c. 23 - Portsea Is. Gas Lgt. Co. (B Shs.) 50 13 p.c. 127 - European Gas Co., Ltd. 10 11 p.c. 23 - Bournemouth Gas and Water Co. 10 14 p.c. 30 - Watford Gas and Coke Co. 100 13½ p.c. 276 - -In each of these cases the remuneration of labour is much less than the -remuneration of those who "wait." - -Thus the records of public companies place at our disposal a very fair -picture of distribution as it is. We cease to wonder at the terrible -error in the distribution of the nation's income. It is brought home to -us that a few individuals, through a monopoly of capital, have a great -economic advantage over the multitude of their fellows. That it is -impossible to argue that the error of distribution accords, even -roughly, with the intrinsic value of the various orders of services, is -sufficiently shown in the case of these companies, for their gross -profit is usually subject to deduction for the reward of brain-power -before assessment by the Income Tax Commissioners. We see that it is not -any form of ability, either in design or in organization (which is but -design) or in manual effort which secures the largest rewards in -industry. It is capital, as capital, which takes the lion's share of the -product of the mental and manual labour exercised upon the small area of -land which serves for the basis of our industries.[30] The landlord's -share, although actually great, is relatively small. In agriculture the -conditions are different. It is the landlord, as landlord, who takes the -lion's share of the product of the cultivated acres of the United -Kingdom. - -[Footnote 28: I use this phrase with intention. Interest, once defined -as the reward of "abstinence," is now usually explained by the -economists of the schools to be the reward of "waiting." "Abstinence" -has been laughed out of court.] - -[Footnote 29: The State has now agreed to buy out this undertaking.] - -[Footnote 30: In view of the fact that the Single Tax doctrines of Henry -George are still sedulously propagated in this country it is of interest -to quote here the following passage from one of Mr George's latest -works: - -"_We have no fear of capital, regarding it as the natural handmaiden of -labour; we look on interest itself as natural and just; we would set no -limit to accumulation, nor impose on the rich any burden that is not -equally placed on the poor; we see no evil in competition, but deem -unrestricted competition to be as necessary to the health of the -industrial and social organisms as the free circulation of the blood is -to the health of the bodily organism—to be the agency whereby the -fullest co-operation is to be secured. We would simply take for the -community what belongs to the community, the value that attaches to land -by the growth of the community; leave sacredly to the individual all -that belongs to the individual; and, treating necessary monopolies as -functions of the State, abolish all restrictions and prohibitions -save those required for public health, safety, morals, and -convenience._"—From "The Condition of Labour" by Henry George. Published -by Swan, Sonnenschein, 1891. Pages 91 and 92. - -This gospel of unrestricted competition (in the same volume Henry George -chided Pope Leo XIII. for counselling the State to restrict the -employment of women and children) is actually preached to the poor as a -solution of the problem of poverty.] - - - - - CHAPTER IX - PROFITS, BAD TRADE AND UNEMPLOYMENT - - -If we look at the amounts of profit assessed under the income tax during -the last fifteen years we are struck with the steady growth of the -figures:— - -GROSS PROFITS ASSESSED TO INCOME TAX - - 1893-4 £673,700,000 - 1894-5 657,100,000 - 1895-6 677,800,000 - 1896-7 704,700,000 - 1897-8 734,500,000 - 1898-9 762,700,000 - 1899-1900 791,700,000 - 1900-1 833,300,000 - 1901-2 867,000,000 - 1902-3 879,600,000 - 1903-4 902,800,000 - 1904-5 912,100,000 - 1905-6 925,200,000 - 1906-7 943,700,000 - 1907-8 980,100,000 - 1908-9 1,010,000,000 - -These figures have been widely quoted, and with reason, as indicative of -rapidly growing prosperity. We see that the gross assessment to income -tax has actually grown by over £336,000,000 since 1894. We could have no -better proof of the growth of the national product which is divided up -amongst us. - -There is but one set-back in the table. It occurred in the year 1894, -when the total gross assessment fell by £16,600,000, and the assessment -under Schedule D (Trades and Professions) fell by £16,000,000. This -fall, of course, was only an apparent one caused by an alteration in the -limit of exemption. Since that date there has been remarkable growth. -Since "Riches and Poverty" first appeared (1905) the growth has -proceeded very rapidly indeed. - -It is of interest to inquire into the movement of wages and employment -during these years of remarkable prosperity. Did wages rise and was -employment constant? - -In "Riches and Poverty," edition 1905, pp. 99 _et seq._, I wrote: - -"Let us take some typical trades, and examine the rates of wages paid in -these years of rapidly increasing profits. - -"The figures about to be quoted are those collected by the Labour -Department of the Board of Trade. - -"London carpenters in 1894 were paid 9½d. per hour. In 1897 the rate -rose to 10d. and in 1903 to 10½d. In Birmingham in 1894 the rate was 9d. -and in 1903 9½d. In Belfast the rise between 1894 and 1903 was from 7¾d. -to 8½d. - -"Bricklayers' labourers in London were paid 6½d. per hour in 1894 and -7d. in 1903. In Manchester the rate remained constant at 6d. per hour. -In Birmingham there was a rise from 6d. to 6½d. Masons' labourers in -Glasgow have been paid since 1894 a constant rate of 5½d. - -"Turning to coal-hewers we get some considerable changes, which are best -shown in tabular form:— - - NOMINAL DAILY EARNINGS OF COAL HEWERS - 1894-1903 - - || | | Sth. Staffs. | - ||Northumberland.| Durham. | and East | West - || | | Worcestershire.| Scotland. - || _s._ _d._ |_s._ _d._| _s._ _d._ |_s._ _d._ - 1894|| 5 9 | 5 5 | 4 8 | 6 0 - 1897|| 5 0 | 4 11 | 4 4 | 4 6 - 1900|| 6 0 | 5 10 | 4 8 | 6 3 - 1901|| 7 9 | 7 5 | 5 0 | 8 0 - 1903|| 6 0 | 5 10 | 5 0 | 5 9 - -"In the ten years there has been a considerable variation, but the high -rates of 1901 were brief in duration. Coal-hewers' wages have now gone -back almost to the level of 1894. - -"Engine fitters in London earned 38s. in 1894 and 39s. in 1903. In -Birmingham and Manchester the rates rose from 34s. in 1894 to 36s. in -1903. In Newcastle there was a greater rise in the same period, from -31s. 6d. to 36s. - -"Ironfounders in London obtained 38s. in 1894, 40s. to 42s. in 1900 and -40s. in 1903. In Manchester the rates were much the same. In Birmingham -36s. was paid in 1894 and 38s. in 1903. - -"Compositors in London were paid 38s. in 1894 and 39s. in 1903. In -Manchester the rate remained constant at 35s. In Glasgow the rate -remained constant at 34s. - -"Agricultural labourers in the Eastern Counties obtained 11s. 1d. per -week in 1894 and a gradual increase to 13s. 1d. in 1903. In the North -near coal there was a rise from 17s. 5d. to 18s. 4d. In the Midlands -13s. 5d. was paid in 1894 and 14s. 6d. in 1903. - -"Textile wages are best expressed by an index number. Taking the rate of -1903 as 100 the rate paid in 1894 was nearly 95 per cent. of that of -1903. This increase refers to cotton spinners and weavers and linen and -jute operatives taken together. - -"A mere recital of the foregoing facts is sufficient to show that the -rise in wages in 1894-1903 was at a much lower rate than the growth of -profits in the same period." - -Revising this work for 1910, I regret to say that the changes in the -above-quoted rates have been so few that it is not worth while to -rewrite what I set down five years ago. Wage rates have been almost -stationary in the interim, and the changes that have been made in the -above figures are too insignificant to be worth recording. - -The matter is best dealt with by setting out the Board of Trade wages -index numbers. In the important table on page 112 I have contrasted the -representative wage index numbers prepared by the Board of Trade with -index numbers representing the gross assessments to income tax. In a -similar table in "Riches and Poverty," 1905 edition, I did not take into -consideration the growth of the number of income tax payers. In the -present calculation I have assumed a growth of income tax payers of -10,000 a year throughout the period, which must be very near the truth. - -It will be seen that, representing the profits of 1900 by 100 and -calculating the profits of other years as percentages of 100, the total -profits index number rises from 86.8 in 1893 to 112.5 in 1908. - -The wages are treated in the same way, the rates of the years before and -after 1900 being expressed as percentages of the rates of that year. It -will be found that the index number expressing the unweighted average of -the building, coal-mining, engineering and textile trades, and -agriculture rose from 90.1 in 1893 to 101.0 in 1908. - -It is a striking contrast:— - - - PROFITS AND WAGES CONTRASTED - (From Table on page 112). - - Profits. Wages. - Per cent. of those Per cent. of those - of 1900. of 1900. - 1893 86.8 90.1 - 1900 100.0 100.0 - 1908 112.5 101.0 - -It should be remembered that the income tax assessments are largely made -upon the average of the profits of the three years preceding the year of -assessment (see Chapter 21), and that the income tax has been better -collected in recent years, but even when allowance is made for this the -figures remain remarkable. - -The table does much less than justice to the growth of profits, for this -reason. As will be seen by the table on page 37, the growth of income -tax payers has been chiefly in the region of small salaries, which (see -p. 36) average about £200 a year. The addition of 10,000 income payers -at £200 a year adds but £2,000,000 to a year's aggregate assessment. But -the addition of 10,000 £200 income tax payers in a year, little as it -adds to the aggregate, waters down the average income tax income (col. -C, p. 112), and so lowers the Profits Index Number. If one could -separate the small salary earners from the table, _profits would show a -much more decided growth_, considerable as is the rise in the index -number as modified by the small fry. - -On the other hand, the Wage Index Number deals with certain -trades—mining, textile, engineering, building, agriculture—which have -certainly gained more in wage rates in the period than a great mass of -labour outside the groups named. Therefore, while the Profits Index -Number minimizes the growth of profits, the Wage Index Number -exaggerates the growth of wages as a whole. On the latter point, see -Chapter 2. - - TAXED PROFITS AND WAGES CONTRASTED - - The Wage Index Numbers are those of the Board of Trade (Cd. 4954). The - Profit Index Numbers are based upon the Inland Revenue Assessments. The - Financial Year 1893-4 is taken to correspond with the Calendar Year - 1893. - - _Note._—The wages and profits of 1900 are represented by 100. The wages - and profits of the other years are expressed as percentages of those of - 1900. - - ---------+-----------------------------------------------------+----------- - | PROFITS. | WAGES. - +---------------+-------------+-----------+-----------+----------- - | A | B | C | D | E - YEAR. | Gross | Probable | Average | Index No. | - | Assessments | Number of | Gross | of | Wages - | to | Income Tax | Income of | Incomes. | Index No. - | Income Tax. | Payers. |Tax Payers.|1900 = 100.|1900 = 100. - ---------+---------------+-------------+-----------+-----------+----------- - | £ | NUMBER. | £ | PER CENT. | PER CENT. - 1893 | 674,000,000 | 950,000 | 709 | 86.8 | 90.1 - 1894 | 657,000,000 | 960,000 | 684 | 83.8 | 89.5 - 1895 | 678,000,000 | 970,000 | 698 | 85.5 | 89.1 - 1896 | 705,000,000 | 980,000 | 719 | 88.1 | 89.9 - 1897 | 734,000,000 | 990,000 | 741 | 90.8 | 90.8 - 1898 | 763,000,000 | 1,000,000 | 763 | 93.5 | 93.2 - 1899 | 792,000,000 | 1,010,000 | 784 | 96.0 | 95.4 - 1900 | 833,000,000 | 1,020,000 | 816 | 100.0 | 100.0 - 1901 | 867,000,000 | 1,030,000 | 841 | 103.0 | 99.0 - 1902 | 880,000,000 | 1,040,000 | 846 | 103.6 | 97.8 - 1903 | 903,000,000 | 1,050,000 | 860 | 105.3 | 97.2 - 1904 | 912,000,000 | 1,060,000 | 860 | 105.3 | 96.7 - 1905 | 925,000,000 | 1,070,000 | 864 | 105.8 | 97.0 - 1906 | 944,000,000 | 1,080,000 | 874 | 107.1 | 98.3 - 1907 | 980,000,000 | 1,090,000 | 899 | 110.1 | 101.7 - 1908 | 1,010,000,000 | 1,100,000 | 918 | 112.5 | 101.0 - ---------+---------------+-------------+-----------+-----------+----------- - Increase| 49.8 | 15.7 | 29.5 | 29.5 | 12.0 - 1893-1908| Per Cent. | Per Cent. | Per Cent.| Per Cent. | Per Cent. - +---------------+-------------+-----------+-----------+----------- - Increase| 21.2 | 7.8 | 12.5 | 12.5 | 1.0 - 1900-1908| Per Cent. | Per Cent. | Per Cent.| Per Cent. | Per Cent. - ---------+---------------+-------------+-----------+-----------+----------- - -[Illustration: PROFITS AND WAGES, 1893-1908 -(see Table on p. 112)] - -Thus in recent years the proportion of the national income taken by -labour made no gain upon the proportion taken by capital. On the -contrary, labour took a diminished share of the increased product. - -Since the Boer War labour has barely retained the increase which it -obtained between 1894 and 1900. - -The seriousness of the position is increased by the great rise in the -cost of living, as the following figures testify: - - WAGES AND COST OF LIVING - - Board of Trade - Board of Trade Index Number - Wages Index No. Retail Price of - Food in London. - - 1895 89.1 93.0 - 1900 100.0 100.0 - 1908 101.0 109.0 - ----- ----- - Increase per cent. 13.3 17.2 - ==== ==== - -Thus, real wages have actually fallen since 1895. - -Again, as has been already remarked, the Board of Trade Wages Index -Number deals with trades which on the whole have gained more than wages -generally. Railway wages have been stationary for years, even while the -cost of living has been going up. On the German and Swiss national lines -the men have been granted higher wages in compensation for increased -costs; here our railway companies abuse their monopolistic position to -the uttermost in regard to wages as in regard to the public welfare. - -In addition to reduced rates of wages in slump years, the working -classes are made to bear the brunt of depression through (1) "short -time" or partial unemployment, and (2) dismissal. - - UNEMPLOYMENT.—TABLE SHOWING, FOR THE END OF EACH MONTH IN 1900-1910, - THE NUMBER OF MEMBERS OUT-OF-WORK IN THE TRADE UNIONS WHICH PAY - "UNEMPLOYMENT BENEFIT." THESE FIGURES DO NOT INCLUDE MEMBERS RECEIVING - STRIKE OR SICK PAY - - ---------+-----------+------+-----++---------+-----------+------+----- - Date. |Membership.|Number| Per || Date. |Membership.|Number| Per - | |out of|Cent.|| | |out of|Cent. - | |Work. | || | |Work. | - ---------+-----------+------+-----++---------+-----------+------+----- - 1900. | | | || 1902. | | | - January | 521,833 |14,252| 2.7 ||July | 550,169 |21,859| 4.0 - February | 524,872 |15,114| 2.9 ||August | 551,565 |24,549| 4.5 - March | 524,199 |11,821| 2.3 ||September| 553,870 |27,522| 5.0 - April | 525,865 |13,075| 2.5 ||October | 548,442 |27,270| 5.0 - May | 531,608 |12,645| 2.4 ||November | 549,197 |26,454| 4.8 - June | 533,119 |13,992| 2.6 ||December | 552,415 |30,302| 5.5 - July | 533,499 |14,566| 2.7 || 1903. | | | - August | 534,331 |15,971| 3.0 ||January | 547,671 |27,685| 5.1 - September| 536,242 |19,520| 3.6 ||February | 549,843 |26,471| 4.8 - October | 535,668 |17,750| 3.3 ||March | 559,129 |24,096| 4.3 - November | 539,175 |17,515| 3.2 ||April | 554,901 |22,665| 4.1 - December | 540,102 |21,496| 4.0 ||May | 554,524 |22,102| 4.0 - 1901. | | | ||June | 556,695 |24,804| 4.5 - January | 545,539 |21,682| 4.9 ||July | 555,743 |27,394| 4.9 - February | 543,487 |21,159| 3.6 ||August | 561,946 |30,751| 5.5 - March | 544,688 |19,618| 3.8 ||September| 558,508 |32,179| 5.8 - April | 547,197 |21,018| 3.6 ||October | 555,105 |32,358| 5.8 - May | 544,460 |19,487| 3.4 ||November | 562,954 |33,614| 6.0 - June | 541,651 |18,605| 3.4 ||December | 559,897 |37,501| 6.7 - July | 539,422 |18,164| 3.9 || 1904. | | | - August | 543,971 |21,025| 3.7 ||January | 561,226 |36,767| 6.6 - September| 542,917 |20,180| 3.7 ||February | 563,824 |34,388| 6.1 - October | 544,827 |19,995| 3.8 ||March | 567,232 |33,950| 6.0 - November | 545,832 |20,614| 3.6 ||April | 561,611 |33,706| 6.0 - December | 554,018 |25,703| 4.6 ||May | 571,384 |36,002| 6.3 - 1902. | | | ||June | 573,373 |34,066| 5.9 - January | 553,218 |24,470| 4.4 ||July | 568,272 |34,494| 6.1 - February | 561,708 |24,072| 4.3 ||August | 575,061 |37,006| 6.4 - March | 551,270 |20,241| 3.7 ||September| 575,575 |39,005| 6.8 - April | 550,958 |21,349| 3.9 ||October | 576,642 |39,396| 6.8 - May | 549,023 |21,926| 4.0 ||November | 577,268 |40,244| 7.0 - June | 544,893 |22,832| 4.2 ||December | 573,726 |43,435| 7.6 - - UNEMPLOYMENT—_continued_ - - ---------+-----------+------+-----++---------+-----------+------+----- - Date. |Membership.|Number| Per || Date. |Membership.|Number| Per - | |out of|Cent.|| | |out of|Cent. - | |Work. | || | | |Work. - ---------+-----------+------+-----++---------+-----------+------+----- - 1905. | | | || 1908. | | | - January | 578,910 |39,315| 6.8 ||January | 649,789 |40,580| 6.2 - February | 578,708 |35,778| 6.2 ||February | 639,073 |40,900| 6.4 - March | 578,684 |32,558| 5.6 ||March | 639,716 |43,853| 6.9 - April | 575,968 |32,348| 5.6 ||April | 638,237 |48,035| 7.5 - May | 575,512 |29,487| 5.1 ||May | 627,613 |49,515| 7.9 - June | 576,346 |29,995| 5.2 ||June | 653,327 |53,766| 8.2 - July | 576,472 |29,845| 5.2 ||July | 646,511 |53,163| 8.2 - August | 578,444 |31,046| 5.4 ||August | 648,585 |57,912| 8.9 - September| 578,542 |30,696| 5.3 ||September| 593,444 |55,793| 9.4 - October | 584,288 |29,560| 5.0 ||October | 591,053 |56,200| 9.5 - November | 586,040 |27,769| 4.7 ||November | 644,770 |58,349| 9.1 - December | 581,630 |28,734| 4.9 ||December | 679,060 |61,619| 9.1 - 1906. | | | || 1909. | | | - January | 588,121 |27,614| 4.7 ||January | 688,588 |59,786| 8.7 - February | 586,956 |26,064| 4.4 ||February | 696,688 |58,670| 8.4 - March | 585,376 |22,465| 3.8 ||March | 700,654 |57,450| 8.2 - April | 582,201 |21,037| 3.6 ||April | 700,867 |57,250| 8.2 - May | 590,919 |21,080| 3.6 ||May | 699,779 |55,473| 7.9 - June | 593,830 |21,785| 3.7 ||June | 698,284 |55,331| 7.9 - July | 595,637 |21,464| 3.6 ||July | 693,848 |54,877| 7.9 - August | 596,010 |22,528| 3.8 ||August | 697,268 |53,918| 7.7 - September| 598,611 |22,826| 3.8 ||September| 695,720 |51,749| 7.4 - October | 600,122 |26,313| 4.4 ||October | 694,930 |49,664| 7.1 - November | 604,370 |27,446| 4.5 ||November | 696,415 |45,569| 6.5 - December | 597,198 |29,212| 4.9 ||December | 692,153 |45,963| 6.6 - 1907. | | | || 1910. | | | - January | 617,911 |25,990| 4.2 ||January | 694,456 |47,259| 6.8 - February | 618,574 |23,932| 3.9 ||February | 701,252 |40,121| 5.7 - March | 618,230 |22,058| 3.6 ||March | 701,766 |36,543| 5.2 - April | 619,591 |20,310| 3.3 ||April | 699,932 |30,475| 4.4 - May | 624,993 |21,081| 3.4 ||May | 703,439 |29,787| 4.2 - June | 622,584 |22,189| 3.6 ||June | 702,522 |25,866| 3.7 - July | 631,158 |23,291| 3.7 ||July | 698,888 |26,664| 3.8 - August | 632,068 |25,458| 4.0 || | | | - September| 631,241 |28,914| 4.6 || | | | - October | 638,788 |30,079| 4.7 || | | | - November | 639,678 |32,010| 5.0 || | | | - December | 644,298 |39,343| 6.1 || | | | - -As to the amount of short time worked between 1900 and 1910, we have no -adequate information, but as to unemployment the evidences have forced -themselves upon public attention in every part of the country. - -How ruthlessly the workman is made to bear the chief burden of bad trade -and how, even in the best years, there is always a surplus of unemployed -labour, can be clearly shown. - -There are about 2,000,000 men and women Trade Unionists in the United -Kingdom, belonging to some 1,300 Trade Unions, and forming but about -one-seventh of the manual workers of the United Kingdom. Some of these -Unions pay "unemployed benefits," and are therefore enabled to record -accurately how many of their members are out-of-work. The membership of -these particular Unions is about 650,000. The Board of Trade collects -from them, monthly, details of the members out-of-work and these details -are published in the official "Labour Gazette." From that publication I -have compiled the table on pages 116-117, which shows faithfully, so far -as about half a million of our workmen are concerned, how capital deals -with labour. It covers the years since 1900, and continues the record -printed on pp. 106-107 of "Riches and Poverty," edition 1905. - -The period examined covers a complete trade cycle, with its fat years -and lean years. I think the reader cannot fail to be struck with the -extraordinary variations in the state of employment shown in the table. -Even in the best year of the period, 1900, and in March, the best month -of that year, 11,821 members were receiving out-of-work pay out of a -total of 524,199, and before a month had passed 1,200 more men had been -discharged. By January, 1901, the number of unemployed exceeded 21,000, -or 4.0 per cent. By the end of 1901 the employers had rid themselves of -26,000 men out of 554,000. Throughout 1902 the number receiving -out-of-work pay was round about 25,000 at the end of each month, the -figure rising to 30,000 in December. By the end of 1903 another 7,000 -were discharged, and in December 1904 the total rose to over 43,000 out -of 574,000, or 7.6 per cent. In 1905 there was improvement, continuing -in 1906-7. At the end of 1907, however, 39,000 out of 664,000 were out -of work, and a year later 62,000 out of 679,000, or 9 per cent., were -unemployed. 1909 saw recovery, which has happily continued until now -(August 1910). At the end of July 1910 the unemployment rate had fallen -to 3.8 per cent. - -These facts relate, not to casual labourers, but to the flower of our -skilled workmen—to a class of men who are least likely to suffer (1) -because they are the most needed instruments of capital, and (2) because -they are organized and best able to resist injustice. If we were able to -set out the facts relating to all manual labourers we should probably -get a picture even more distressing. It is at any rate unlikely that, -amongst manual labourers as a whole, employment is better than in the -chief Trade Unions. - -In December 1904, the Hackney Town Council conducted a census of the -unemployed of Hackney. It was carried out in a very sensible way. At a -cost of about £150 every house in the borough was canvassed between -December 12th, 1904, and January 31st, 1905, and particulars obtained -from every person over 16 years of age found to be unemployed. The -results were:— - - Population - (1901). Houses. Unemployed. - - North Hackney 45,110 9,152 465 - Central " 69,368 9,837 1,090 - South " 104,794 14,751 2,963 - ------- ------ ----- - Totals 219,272 33,740 4,518 - ======= ====== ===== - -South Hackney, which contains the poor Homerton Ward, of course gave the -worst results. The unemployed in South Hackney actually numbered 3 per -cent. of its whole population, men, women, and children! Taking the -borough as a whole, including well-to-do Stamford Hill, the unemployed -rate came out at nearly 7 per cent. of the "employable" population of -all classes. 530 cases of "pawning and selling home" were discovered. -Thus, for all classes of workers in Hackney, the unemployment rate was -almost precisely the same as the rate in the Trade Unions paying -unemployment benefit. It is also worthy of note that, out of a total -number of 4,315 males unemployed, as many as 1,477 were "labourers," and -1,167 of these "general labourers." These facts, impressive as they are, -amount to an understatement of the case, however. Many of the -unemployed, from feelings of delicacy, failed to record their condition -for fear of public attention being directed to them personally. Mr -Councillor Fairchild of Hackney told me that he knew of forty cases of -unemployment not returned in the census. This goes to show that we are -justified in taking the unemployed Trade Union rate as really -representative of the whole body of labour. While, on the one hand, it -excludes postmen, railway servants, policemen, and others who have quite -regular work, it does not include the great mass of "labourers" and -other casual workers whose state of employment must always be worse than -that of the men belonging to the benefit-paying Trade Unions. - -It is well to point out, for the facts are little known, the enormous -sums expended by the chief Trade Unions in out-of-work pay. For recent -years the figures have been:— - - EXPENDITURE ON UNEMPLOYED BENEFIT BY CERTAIN TRADE UNIONS HAVING A - TOTAL MEMBERSHIP OF ABOUT 650,000 - - Year. Expenditure. - - 1898 £234,000 - 1899 185,000 - 1900 261,000 - 1901 325,000 - 1902 429,000 - 1903 516,000 - 1904 655,000 - 1905 523,000 - 1906 424,000 - 1907 466,000 - -Thus, even in the best recent years, 1899 and 1900, these Unions had to -pay out £185,000 and £261,000 respectively to sustain members -out-of-work. Modern industry works with a constant margin of unemployed -labour, a margin which ever tends to depress wages and to place the -employed at a disadvantage in bargaining for the sale of their services. - -The sums above named are part, of course, of the alleged working class -"capital" referred to on page 56, and often advanced as proof of the -_riches of the poor_. In plain fact they are abstracted from poor wages -in order to keep the home together when those poor wages fail altogether -in seasons of unemployment. To term them "capital," or to flaunt them as -"wealth," shows a curious perversity of ideas. - -While we do not know how many workers are unemployed at any given time, -it is probable that, as the whole body numbers about 15,000,000, and -60,000 are sometimes unemployed out of a group of 650,000 of these, the -total may reach 500,000 or 600,000 or more in bad years. - -Yet, when we obtain particulars of the profits of capital in "bad years -of trade," we see little diminution in the handsome sums confessed to -the Commissioners of Inland Revenue, and we understand how profits are -sustained at the expense of the suffering and partial degradation of a -great body of British citizens larger in number than the entire -landowning and capitalist classes. I shall be surprised if it does not -occur to some of those who read these lines that in view of the -extraordinary profits shown in the totals on page 112 the wholesale -dismissal of workmen at the first symptom of slackening trade is a -disgrace to our civilization. - -As I have remarked earlier in these pages, unemployment is by no means -confined to the manual labour classes. All the humbler units of -commercial life are subject to treatment which is little better than -that accorded the "workman." As I write there are thousands, if not tens -of thousands, of clerks, writers, warehousemen, shop assistants, -travellers, canvassers, agents, and others out of work and undergoing -terrible sufferings in the endeavour to keep afloat. Cases are frequent -in which advertisements offering berths of small account are hungrily -applied for by hundreds of applicants. It is a sad reflection that for -the vast majority of our people there is no such thing as security of -tenure of employment. The profits assessed to income tax, the income, -that is, of about one-ninth of our population, continue to rise by leaps -and bounds, but the state of employment remains very much as it was. -After a careful examination of the employment records of forty years the -Board of Trade gave their verdict in 1904 (Cd. 2337, p. 84), that "the -average level of employment during the past four years has been almost -exactly the same as the average of the preceding forty years." - -But, as our population to-day is very much greater than in 1860, the -same "average level of employment" means that there are far more -unemployed workmen in England to-day than was the case forty years ago. -The proportion of out-of-works is neither larger nor smaller, but the -magnitude of the problem is greater because there are more of us. - -No attempt is yet made by our inadequate Census to obtain particulars of -the number of unemployed. The Census Bill of 1910 led to a wrangle as to -whether a religious census should be taken, but there was not even a -wrangle as to whether the golden opportunity should be seized to -ascertain the number of unemployed. So the Census of 1911 will come and -go. Before the Census of 1921 is taken many proposals will be made for -dealing with unemployment, but no one will know the size of the problem -to be dealt with. - -There is, of course, no remedy for unemployment under present economic -conditions. All that can be done by the State, consistently with the -private ownership of land and industrial capital, is to _remedy the -distress arising from unemployment_, and as I write (1910) the -Government are contemplating a scheme for unemployment insurance, based -on contributions by men and masters, with aid from taxation. Such a -scheme should be strongly supported, but there should be clarity of -ideas as to what is effected by insurance. Unemployment insurance no -more cures unemployment than life insurance cures death. All that is -done by it is to _relieve the distress caused by the unemployment_. It -is a great and worthy object, but the unemployed workman drawing his -out-of-work pay, _is still unemployed_. - -The Labour Party has propounded a "Right-to-Work" Bill, but this again, -on examination, suggests work _or maintenance_, its promoters seeing -clearly that economic work cannot be made to order by a State which is -as poor in property as the workmen themselves. The Right-to-Work Bill is -thus no more a _remedy for unemployment_ than an insurance scheme is -such a remedy. - -Nor can the State, by pursuing its few public works chiefly in bad -seasons, level unemployment as between good years and bad, or as between -good seasons and bad. The troughs of the waves of depression are too -great to be filled by such means, and they deceive themselves who think -that they can rule those waves by the manipulation of Government -contracts. - -The Labour Exchange is a useful machine for organizing labour to meet -the vicissitudes of individualistic industry. It has been described as -equivalent to the _organization of industry_, but that is a misnomer. -The organization of industry can only begin with the organization of the -means of production. If we organize production we necessarily organize -labour. If we enrol unemployed workmen, and move them about as pawns to -suit the uneconomic conditions of unorganized capital units ("Come and -tell us if you want a man;" "Come and tell us if you want a job") we may -save the workman some trouble and loss of self-respect in finding new -jobs, and render more tolerable his periods of idleness, but most surely -we neither organize industry nor increase the volume of employment. - - - - - CHAPTER X - PART OF THEIR WAGES - - -In considering the earnings, as distinguished from the rates of wages, -of the manual labour classes, we have found it necessary to make an -allowance for time lost through sickness and accidents. Let us now -examine the available records of the industrial accidents and diseases -of occupations which are part of the wages of the working classes, and -at the price of which the comforts of the well-to-do are purchased. - -As to persons employed in factories and workshops, we have the reports -made to the inspectors under the Factory and Workshop Act of 1901. By -Section 19 of the Act it is provided that where there occurs an accident -which either - -(_a_) Causes loss of life to a person employed in a factory or workshop; -or - -(_b_) Causes to a person employed in a factory or workshop such bodily -injury as to prevent him on any one of the three working days next after -the occurrence of the accident from being employed for five hours on his -ordinary work, written notice shall forthwith be sent to the factory -inspector for the district. - -If the accident arises from special causes defined as machinery moved by -power, boiler explosions, escape of gas or steam, or use of hot liquid -or molten metal, the casualty has to be reported to a Certifying Surgeon -as well as to the Inspector. - -It is also provided that if any notice required by Section 19 as to an -accident in a factory or workshop is not sent to the local inspector, -the occupier of the factory or workshop shall be liable to a fine not -exceeding £5. - -Thus, under the Factory and Workshop Act, an accident is not always a -reportable accident. One worker may meet with a trivial accident which, -though he is able to continue work, prevents him from doing his ordinary -work for, say, the next six hours only after the accident. This would be -a reportable accident. A second worker may meet with an accident which, -though it does not prevent him from continuing his ordinary work for -five hours on "any one of the three working days next after the -occurrence of the accident," may afterwards develop into a permanent -partial disablement, so that for weeks, or even months, he may be unable -to do any work. This accident would not be "reportable" under the -Factory Act. - -But there is a more important reason why the official records of -accidents are incomplete. It lies in the fact that the administration of -the Factory and Workshop Act by the Home Office is lax, and the staff of -men and women inspectors ridiculously inadequate. The number of -factories and workshops under inspection in 1908 was as follows: - - - FACTORIES, WORKSHOPS, ETC., UNDER INSPECTION, 1908 - - Class of Works. Number of Works. - Factories 110,691 - Workshops 149,398 - ------- - 260,089 - ======= - -The staff of inspectors and assistant inspectors in 1908 was stated -officially to be of an authorized strength of 200. This is an -improvement upon the 152 recorded in "Riches and Poverty," edition 1905, -p. 115, but it cannot be termed adequate. If we imagine the 260,000 -registered workplaces divided equally amongst the staff we see that each -inspector has to deal, on the average, with 1,300 workplaces. If, then, -each registered workplace were inspected only once in each year, each -inspector would need to inspect 32 factories or workshops per week. As -this is a physical impossibility, it is clear that each registered -workplace is not called upon even once in each year. - -Whether an employer does or does not report a reportable accident -largely depends upon the vigilance of the local inspector, and as it is -physically impossible for a few inspectors to be vigilant in regard to -many employers there can be no question that an exceedingly large number -of accidents go unreported. No reflection is made here upon the -inspectors themselves; it is simply pointed out that, however devoted -they may be, they cannot properly carry out the work which needs to be -done. - -The Factory Report for 1908 (Cd. 4664) enables us to make the following -comparison with the 1903 figures given in "Riches and Poverty" (1905 -edition). - - CASUALTIES IN FACTORIES AND WORKSHOPS, 1903-8 - - Fatal Non-Fatal - Accidents. Accidents. - 1903 1,047 92,600 - 1908 1,042 121,112 - -The fatal accidents have remained stationary; the non-fatal accidents -have curiously increased. The explanation is largely that the additional -staff of inspectors has led to better reporting of accidents. Probably -many still go unreported. - -However, merely to take the list of "reported" accidents as it stands, -we get the gruesome total of 1,042 persons killed and 121,000 wounded in -factories and workshops in a single year. - -A considerable number of the non-fatal accidents are of a serious -character, as may be judged from the following details showing the cases -reported to certifying surgeons as arising from the "special causes" -already referred to: - - FACTORIES AND WORKSHOPS: ACCIDENTS REPORTED TO CERTIFYING SURGEONS, 1908 - - Degree of Injury. Number. - - Fatal 1,042 - Loss of hand or arm 126 - Loss of part of hand 3,303 - Loss of part of leg or foot 78 - Fractures 1,680 - Loss of sight 44 - Injuries to head or face 5,109 - Burns and scalds 5,617 - Other injuries 24,902 - ------ - 41,901 - ====== - -The number of reports to the Certifying Surgeons in 1903 was 30,509 -("Riches and Poverty," edition 1905, p. 117). - -Having formed an idea, if an inadequate one, of the deaths, mutilations -and injuries which occur in our factories and workshops in a single -year, let us pass to the question of diseases of occupations. The -particulars on page 129 are taken from the Factory Reports. - - DISEASES OF OCCUPATIONS IN FACTORIES AND WORKSHOPS - (Cases reported under the Factory and Workshop Act) - - --------------------------------------------------+-----------+----------- - | CASES. | DEATHS. - +-----------+----------- - |Year ended |Year ended - Disease and Industry. | December. | December. - +-----+-----+-----+----- - |1908.|1903.|1908.|1903. - --------------------------------------------------+-----+-----+-----+----- - LEAD POISONING— | | | | - Smelting of Metals | 70 | 37 | 2 | 2 - Brass Works | 6 | 15 | | - Sheet Lead and Lead Piping | 14 | 11 | | - Plumbing and Soldering | 27 | 26 | | - Printing | 30 | 13 | 2 | 2 - File Cutting | 9 | 24 | 2 | 2 - Tinning and Enamelling of Iron Hollow-ware | 10 | 14 | 0 | - White Lead Works | 79 | 109 | 3 | 2 - Red and Yellow Lead Works | 12 | 6 | 0 | - China and Earthenware | 117 | 97 | 12 | 3 - Litho-transfer Works | 2 | 3 | 0 | - Glass Cutting and Polishing | 3 | 4 | 1 | - Enamelling of Iron Plates | 7 | 4 | 0 | - Electrical Accumulator Works | 25 | 28 | 1 | - Paint and Colour Works | 25 | 39 | 0 | 1 - Coach Making | 70 | 74 | 3 | 5 - Shipbuilding | 15 | 24 | | 1 - Paint used in other Industries | 47 | 46 | 1 | 1 - Other Industries | 78 | 40 | 5 | - +-----+-----+-----+----- - Total Lead Poisoning | 646 | 614 | 32 | 19 - +-----+-----+-----+----- - MERCURIAL POISONING | 10 | 8 | | - +-----+-----+-----+----- - PHOSPHORUS POISONING | 1 | | | - +-----+-----+-----+----- - ARSENIC POISONING | 23 | 5 | 1 | - +-----+-----+-----+----- - ANTHRAX | 47 | 47 | 7 | 11 - +-----+-----+-----+----- - TOTAL FACTORIES AND WORKSHOPS | 727 | 674 | 40 | 30 - +-----+-----+-----+----- - LEAD POISONING AMONGST HOUSE PAINTERS AND PLUMBERS| 239 | 201 | 44 | 39 - +-----+-----+-----+----- - Grand Total | 966 | 875 | 84 | 69 - -The greater part of the table, it will be seen, refers to factories and -workshops, but a line is added to show the cases of lead poisoning -amongst house painters. - -Thus, in 1908, 84 workpeople, and in 1903, 69 workpeople, succumbed to -poisoning or anthrax, while about 966 non-fatal cases were reported in -the later year. Hundreds more, of course, go unreported, but the figures -as they stand, representing only part of the terrible truth, make one -shudder. - -Most of the lead poisoning cases under china and earthenware refer to -women and young girls, and it should be noted that the figures for 1903 -are very much better than those of previous years. Prior to 1899 one in -every fifteen of the persons employed in lead processes was reported as -suffering from plumbism! Stringent new rules were made in 1898, a -monthly medical examination being provided for, and in 1899 the reported -cases fell from 457 to 249. Now they have fallen, as our table shows, to -about 100 per annum. That is bad enough, for only some 6,000 pottery -workers are employed in the lead processes. The improvement, however, -shows how much can be done to protect the factory worker. Pity it is -that such steps were not taken before the people of the Potteries were -stunted by their deadly employment. - -The horrible disease, anthrax, is responsible for about ten deaths per -annum, and as its bacillus lurks in wool, hair, hides and skins imported -from many countries for many industries, a large number of workers, from -warehousemen to woolcombers, regularly run the risk of contagion. - -Turning to mining, the public is reminded at intervals, by a large scale -disaster, of the work of the coal-miner. Momentarily, we think of the -perilous nature of the industry upon which our wealth is built, and then -the tide of events sweeps on—and we forget. - -Who remembers the last Rhondda holocaust? Was it in 1904 or in 1906? How -many men perished? What was the cause? Few could answer these questions. -Perhaps the 1910 disaster at Whitehaven will be more easily remembered -because of its picturesque horror; because the sea washes over the -miners' tomb; because reluctant hands were compelled to build a wall -between the dead and the living. But these things are but the scenery of -tragedy. It is the deaths that matter, and Whitehaven, awful as it is, -accounts for but about one-ninth or one-tenth of the deaths in or about -coal-mines of which the year 1910 will take toll.[31] - -There will be the usual inquiry in the matter of this disaster, and I -assume that the gravest consideration will be given to the -circumstances. It appears to have been forgotten that on November 26th, -1907, five men were killed and seven injured at this same Whitehaven -Colliery under circumstances which involved breaches of the Coal-Mines -Regulation Act, and that on that occasion nearly 200 miners were -imperilled. The cause was careless shot-firing, the same cause which -destroyed 120 miners in the Rhondda in 1905—and in his official report -Mr R. A. S. Redmayne said:— - -"Had the flame reached the haulage road, the loss of life would have -been very great, as probably all the morning shift, amounting to 180 -persons ... would have lost their lives." - -Thus there was very grave and recent warning as to the need for care in -this fiery mine underneath the sea. - -That in passing. My immediate purpose is to point out that such -disasters as that of 1905 or 1910, destroying over 100 lives at a single -blow, barely disturb the average loss of life in coal-mines, so great is -the yearly loss. - - DEATHS FROM ACCIDENTS AND EXPLOSIONS IN COAL-MINES, 1851-1908 - - 1851 to 1900 54,322 - 1901 1,131 - 1902 1,053 - 1903 1,097 - 1904 1,049 - 1905 945 - 1906 1,040 - 1907 1,136 - 1908 1,116 - ------ - Total, 58 years 62,889 - ------ - Average per annum 1,083 - ------ - -Loss of life in getting coal is not a spasmodic thing for occasional -tears; it is a day by day matter. The public at large is stricken with -horror by such a disaster as Whitehaven. Miners' widows are made every -day by trifling accidents of which the public never hears. It is bad -that 133 men have been buried and burned off the coast of Cumberland in -1910; it is worse that from 1,000 to 1,500 men will have perished in our -coal-mines between January 1 and December 31, 1910. - -And what of the maimings? Under the Mines Acts, notification of -accidents in mines and quarries is also compulsory. Three classes of -accidents are distinguished under the Acts: (1) Fatal accidents; (2) -injuries from special causes, viz. explosions of gas, accidents in the -use of explosives, and boiler explosions; (3) other injuries not of a -"serious" character, no definition being given of serious personal -injury. When death occurs from a case already reported as an injury, a -further notification is required. - -In 1908, the casualties in British mines and quarries were as follows: - - MINES AND QUARRIES, 1908 - - Injured. - (Cases of Disablement - Killed. for more than 7 days). - - Coal and Metalliferous Mines— - 1. Underground Accidents: - (_a_) Explosions 128 139 - (_b_) Falls of ground 603 52,579 - (_c_) Shaft accidents 90 1,010 - (_d_) Miscellaneous 373 78,489 - 2. Surface accidents 151 11,041 - ----- ------- - 1,345 143,258 - Quarries 92 4,809 - ----- ------- - 1,347 148,067 - ===== ======= - -(The above table gives fuller particulars than that on page 120 of -"Riches and Poverty," edition 1905; the latter gave particulars of -"serious" accidents only.) - -One miner in about 600 is killed, and one miner in six is more or less -seriously injured in the course of a year. The incapacity of the injured -included in these figures and proportions ranges from one week to -life-long disablement. - -In the slate quarries of North Wales, one man in every three is injured -in the course of a year. The wages paid are very low. - -Returning now to the figures of the table on p. 132, it will be observed -that the deaths in recent years are almost precisely the same in number -as the average of the fifty-eight years examined. That, of course, -points to great improvement, because the number of miners at work and -the quantity of coal got has rapidly increased in the period. With -regard to explosions alone, the saving of life under the Coal-Mines Acts -has been very great. In his valuable paper on the effect of British -labour laws upon industrial occupations, read to the Royal Statistical -Society in 1905, Mr Leonard Ward, H.M. Inspector of Factories told us: - -"The total number of deaths from explosions which occurred during the -five years 1856-60 was 1,286, and if the number of persons employed and -the death-rate from that cause had remained constant, the total deaths -for fifty years would be 12,860; allowing for increase in numbers -employed, the total deaths during that period would probably have -exceeded 25,000, instead of which the actual total is about 15,000 less -than that, hence it would seem that by the prevention of explosions -alone, no less than 15,000 lives have been saved during the last fifty -years by the operation of the statutes which regulate the hygienic -conditions of employment in coal-mines." - -That is to say, legislative insistence on ventilation of coal-mines -saved some 15,000 lives in fifty years. - -This fact should, in the first place, give pause to those who have no -faith in legislation, and in the second place it should give -encouragement to those who believe that further great improvements can -be effected. The law prevented 15,000 deaths in fifty years; it -permitted 10,000 to occur. It is impossible to read such an official -report as that upon the Whitehaven explosion of 1907 without being -impressed by the great carelessness which still obtains in dangerous -mining operations. The last great Rhondda accident occurred through -wanton carelessness. I do not know the cause of the Whitehaven disaster, -but, speaking of fiery mines generally, it does appear that there is a -strong case for the total prohibition of shot-firing. One may hedge -round this labour-saving process with what restrictions one will; if it -is done under any conditions serious accident or disaster must come -sooner or later. Can there be any justification for labour saving of -such character? - -That is to speak of but one factor in the production of mining -accidents. Other considerations, and serious ones, arise in connexion -with such a case as that of Whitehaven where workings extend for miles -under the sea and where yet there is no attempt made to provide egress -to an emergency shaft. The men went down at Whitehaven and out to their -work under the sea. They had either to return the way they came or to -return not at all. It may be that the provision of a return passage to -an emergency shaft would have burdened the undertaking with such a -capital expenditure as to prevent the economic working of the mine. If -that is so, a nation which owes its industrial greatness to coal should -consider whether it is desirable to work this under-sea coal or not, for -it would appear obvious that a mine as fiery as the 1907 inquiry proved -the Whitehaven colliery to be, must sooner or later be the scene of -serious disaster under the given conditions. To pass to another point, a -large proportion of mining accidents occur in the shafts. It would be -interesting to know the ages of many of the cages and of much of the -winding machinery which are employed in our coal-mines. From reading -official reports on mining accidents I have come to the uncomfortable -conclusion that far too many of the appliances are fit for the scrap -heap. - -In the figures relating to mining casualties, many young children are -included. In the ten years 1895 to 1904, 414 children between the ages -of 12 and 16 years were reported as killed underground, under the heads -"haulage," "machinery" and "sundries."[32] - -It is quite unknown to the general public how many women, girls and boys -are employed in and about mines. The figures of the 1901 Census show -that in the coal-mines of England and Wales only, 134,422 boys and 1,458 -girls under 20 years of age are employed. Of the boys as many as 31,587 -are between the ages of 10 and 15 years! I dwell upon these facts -because I once had brought home to my mind in a very striking way the -necessity of making them known. Speaking to an audience at the National -Liberal Club, I mentioned incidentally that a very large number of -children were employed in our mines. To my astonishment, I was loudly -interrupted by a certain Liberal candidate for Parliamentary honours, -who openly scoffed at the idea that children were so employed, while the -audience clearly did not know which of us was in error. - -With railway accidents the public is more familiar, although it is -questionable whether many people realize that, in an average week, 10 -railway servants are killed and 250 are wounded. - -By a Board of Trade order, made under the Regulation of Railways Act of -1871, accidents on railways are compulsorily reported. Fatal accidents -must be notified to the Board of Trade within 24 hours after the -occurrence of the accident. Non-fatal accidents must be reported -whenever they prevent the injured servant on any one of the three days -following the accident from working for five hours. The "special causes" -distinguished in the cases of Factories and Mines are not referred to. - -Legislation has done a little to protect the railway worker. While the -number of railway employees has increased considerably in the last 20 -years—from 350,000 to 579,000—the number of accidents has remained about -the same. Nevertheless, the death roll is still heavy and the number of -wounded very great. In 1903 there were 497 killed and 14,356 injured. In -1908 there were 432 killed and 24,181 injured. Of course the risk varies -considerably as between one kind of railway employment and another. -Railway mechanics have an accident death-rate of 1 in 4,524 and an -injury rate of 1 in 147. Shunters, on the other hand, are killed at the -rate of 1 in 264 per annum, while 1 in every 17 is injured! Goods -guards, who are not brought into contact with the public as are their -more fortunate and safer colleagues the passenger guards, suffer almost -as badly as shunters—1 in 374 being killed and 1 in 18 injured per -annum. Facts such as these show how great is still the risk of railway -work and what a debt we are under to those who do it. As to the manner -of repayment of the debt it may be again remarked that, in 1908, the 27 -leading railway companies, employing something like 90 per cent. of the -railway employees of the country, paid an average wage of only 25s. per -week. There are probably 100,000 railway employees who receive less than -20s. per week. - -In the case of merchant seamen we have only the records of accidents -resulting in death. Every illness or injury has to be recorded in the -ship's log, but only death statistics are compiled. The fatalities from -shipwreck and accident vary considerably in number from year to year, -but appear to be falling. - -It remains only to record the accidents in engineering works covered by -the Notice of Accidents Act of 1894. This Act provides for the -notification of accidents in the construction of railways and in the -construction, working or repair of tramways, canals, bridges, tunnels, -or other works authorized by any local or personal Act of Parliament. -Also it covers the use of any traction engine or other machine worked by -steam in the open air. Under this Act there have been reported, in -recent years, about 60 deaths and 1,200 injuries per annum. - -Collecting the figures we have reviewed, we are able to construct the -table below, which shows, for all occupations, the number of persons -reported as having been either killed or wounded in 1908. - - REPORTED CASES OF INDUSTRIAL ACCIDENT AND DISEASE, 1908 - Number of Workpeople who suffered Death or Injury. - - |Killed, or| Injured, or - |Died from |Suffered from - | Disease. | Disease. - +----------+------------- - Accidents in Factories and Workshops, etc. | 1,042 | 121,112 - Accidents in Mines and Quarries | 1,437 | 148,067 - Accidents on Railways | 432 | 24,181 - Accidents on Ships, etc.: | | - Merchant Vessels | 999 | 3,781 - Fishing Vessels | 212 | 392 - Accidents in Engineering Works (under | | - Notice of Accidents Act) | 32 | 1,228 - Diseases of Occupations | 84 | 966 - +----------+------------- - Totals | 4,238 | 299,727 - +----------+------------- - -It should be distinctly understood that these figures refer to reported -cases only and that they are far from complete. In the case of factories -and workshops it is probable that the greater number of the serious -accidents are reported, but thousands of minor cases escape record. The -railway figures have been much more complete since 1896, in which year -the number of accidents recorded jumped from 7,480 to 14,110 owing to a -more stringent regulation as to reporting made by the Board of Trade. -The figures as to accidents on ships and in engineering works are very -incomplete. - -Cases of industrial disease form the smallest part of the table, but if -the whole truth could be expressed in statistics, the result would be -appalling. All that we have reported under this head are cases of -metallic poisoning and of anthrax. Terrible as these are, they affect so -few people as to be of far less consequence to the nation than the high -death-rate of Lancashire cotton operatives or Belfast linen workers. -Phthisis does not appear in official statistics as a "disease of -occupation," but thousands of textile workers die of phthisis resulting -from work done in a humid atmosphere. Physical degeneracy is not an -"accident," for it progresses with our knowledge and deliberate consent, -but how much graver is the deterioration of the jute workers of Dundee -than the figures relating to railway accidents. In 1899, Mr H. J. -Wilson, H.M. Factory Inspector for Dundee, measured and weighed 169 boys -and girls with a view to discovering the amount of degeneracy as -compared with the recognized normal. Here is the melancholy result: - - PHYSICAL DETERIORATION IN DUNDEE[33] - - ------------+---------------+--------------- - | Height. | Weight. - +-------+-------+-------+------- - Age. |Dundee.|Normal.|Dundee.|Normal. - ------------+-------+-------+-------+------- - 11 to 12— |Inches.|Inches.| Lbs. | Lbs. - Boys | 50.0 | 53.5 | 62.8 | 72.0 - Girls | 51.5 | 53.0 | 63.0 | 68.1 - | | | | - 14 to 15— | | | | - Boys | 54.0 | 59.0 | 70.5 | 92.0 - Girls | 55.7 | 59.7 | 77.5 | 96.1 - ------------+-------+-------+-------+------- - -Speaking of the deaths from phthisis and diseases of the lungs in -Belfast, Dr Whitaker, Medical Officer of Health for that city, says in -his report for 1902: "Of the 2,911 deaths reported from these causes, -1,779 were attributed to diseases of the respiratory organs and 1,132 to -phthisis. It is therefore evident that these diseases caused upwards of -one-third of the mortality in our midst. This is not to be wondered at -when we remember the nature of the occupations in which so many of our -people are engaged and the unhealthy surroundings which environ -them."[34] - -The truth is that many thousands of the deaths which occur in the United -Kingdom every year are really caused by "diseases of occupations," and -that to the thousands of deaths must be added hundreds of thousands of -cases of direct injury to health arising from work in unhealthy and -insufficiently controlled factories and workshops. - -Death, injury and disease have thus been administered to our industrial -population for several generations. To-day, conditions are better than -of old, but they are still so bad that to speak of improvement is to -indict the past as black indeed. Against the fact that industrial -hygiene has improved, must be set the grave consideration that it is in -part an enfeebled people which is now provided with a slightly better -environment. We have effectually degraded no small proportion of the -race; the present measures of industrial control are not strong enough -to restore it. - -[Footnote 31: Since these pages went to press, another large scale -disaster at Bolton has killed over 300 miners.] - -[Footnote 32: See Mr Fenwick's Return "Mines (Fatal Accidents)," No. -140. 1905.] - -[Footnote 33: Annual Report on Factories and Workshops, 1900, page 336.] - -[Footnote 34: This and many other cognate facts were quoted by Mr -Leonard Ward in his paper on Industrial Occupations read to the Royal -Statistical Society on May 16th, 1905.] - - - - - CHAPTER XI - CONSEQUENCES - - -The consequences of the error of distribution now demand our attention. - -The congestion of so much of the entire income and accumulated wealth of -the United Kingdom in a few hands has a most profound influence upon the -national development. It means that the great mass of the people—the -nation itself—can progress only in such fashion as is dictated by the -enterprise or caprice of a fraction of the population. The possessors of -wealth exercise the real government of the country and the nominal -government at Westminster but timidly modifies the rule of the rich. -When we say that about one million people command one-third of the -entire income of the nation we mean, broadly, that one million people -have under their control the lives of one-third of the population or of -15,000,000 people. When we say that about five million people command -one-half of the entire income of the country we mean, broadly, that five -million people control the lives of one-half of the population, or of -22,000,000 people. Expenditure is a call for material or immaterial -commodities, and a demand for commodities is a demand for labour. That -call rules the continuous series of employments which form the main -activities and which mould the lives and character of our people. If the -call be for worthy things, our people are directed into noble -occupations. If the call be for unworthy things, labour is misdirected -and degraded. - -The self-degradation of a limited number of unduly rich persons would be -a little thing from a national point of view if its effects could be -confined to the rich themselves. Unfortunately, those effects are not a -stagnant pool which we may avoid, but a stream which flows through and -pollutes the lives of the majority of our people. A working man may -resist the temptation to ape the vices which are bred of idleness, but -the highest standard of morality cannot save him from degrading his -manhood in the service of waste. Without his knowledge the product of -his toil may be bartered for the toy of a moment, and the skill of his -hands pass to the foreigner in exchange for the means of wanton luxury. -The rare steam coal of South Wales, got in blood and tears in a fiery -mine, may be exported to France in exchange for a racing automobile. It -would matter little that a limited number of drones inhabited the hive -if they had no command of the work of the community. It matters -everything when these drones, by their expenditure, can each command -thousands of workers to attend their idleness. - -There are certain well-defined servants of the rich wholly devoted to -their pleasure, such as menial servants, grooms, stablemen, gardeners, -makers of expensive articles of food, clothing, furniture, etc., hotel -servants, many of the inhabitants of the rich quarters of towns and of -fashionable pleasure resorts, many tradespeople and their shop -assistants, and other workers. Again, there are certain well-defined -servants of the poor, such as petty tradespeople, general storekeepers, -the workmen and officials engaged in institutes, charities, free -libraries, municipal tramways and other services, public gardens, and so -forth. There is often, however, no clear distinction between those who -serve the few rich and those who serve the many poor. Every trade, -however useful nominally, has to give of its best to be poured into the -cup of luxury and spilt in wanton extravagance. Our 1,300,000 builders, -our 1,400,000 metal workers, engineers and shipwrights, our 1,300,000 -textile workers, our 1,300,000 clothiers, and all the other persons -engaged in our "useful" industries, furnish their large quota of -products for the rich and their small quota of products for the poor. -The edict of the rich man goes forth and industry hastens to obey it. -Bricks from Berkshire which are sadly needed for the building of decent -cottages for agricultural labourers are taken into Surrey to form part -of one of the vulgar and pretentious red-brick villas which mock every -canon of architecture and make hideous the most beautiful portions of -that Garden of England. Good fir from Sweden, imported in exchange for -the toil of Lancashire or the sweat of Cleveland, roofs in the tenth, -fifteenth or twentieth bedroom of the man who has more rooms than -children, and more menial servants than guests, while the Census shows -us that in England and Wales there existed, in 1901, 3,286,526 tenements -of fewer than five rooms, of which 251,667 had but one room, 658,203 but -two rooms, 779,992 but three rooms and 1,596,664 but four rooms. The -mechanic, the electrical worker, the girl at the loom, all appear to be -usefully employed in contributing to the well-being of the nation. As a -matter of fact, the lion's share of the wealth they create goes to add -to the income of a few, while the remainder is distributed amongst a -number so great as to constitute nearly the whole of the population. If -we consider the case of the cotton industry alone, it appears, on the -surface, that 582,000 workers (172,000 men and 410,000 women and -children) are most usefully employed in the production of articles of -the first necessity. They do work, each year, upon some 16,000,000 cwts. -of raw cotton which they manufacture into about £120,000,000 worth of -cotton goods. But trace the history of these goods. Are they consumed by -the countrymen of the people who make them? Alas! no. Of the yearly -output of £120,000,000, as much as £100,000,000 is exported to foreign -countries and British Possessions, chiefly to foreign countries. Only -£20,000,000 worth of the magnificent output of our cotton workers is -retained by our 44,000,000 people. In addition there is a consumption of -a few million pounds worth of imported cotton goods. Can it be true that -our population need to renew their household and personal stock of -cotton fabrics to the extent of a value of but 10s. per head per annum? -Of course it is not true. From cotton is manufactured, for the person, -dresses or blouses of muslin, lawn, cambric, prints, mercerized stuff, -etc., shirts and underclothing in great variety for both sexes, -handkerchiefs, lace, hosiery, etc., and for the household, cotton sheets -and other bed furnishings, curtains of lace, cretonne and muslin, -towels, dusters, and a host of other things. Yet so poor are the mass of -our people that 10s. per head per annum furnishes them with all the -cotton goods which they can afford to buy for both their persons and -their households. Great is their need and small are the means available -for its satisfaction. If it were not so, our cotton trade would need -many thousands more bales of raw cotton per annum, first to supply a -quite ordinary home demand and second to export to the foreigner to -obtain in exchange the satisfaction of other ordinary needs. - -In the following table I have estimated a demand for cotton goods by a -household of five persons. The prices are wholesale and relate to the -_materials_ only. It should be distinctly understood that nothing is -included for retail profit or for the manufacture of the materials into -garments. I have estimated for all the cotton goods used on the person -or in the household, not forgetting the cotton linings commonly used in -woollen clothing. - - CALL (AT WHOLESALE PRICES) BY A HOUSEHOLD OF 5 PERSONS, FOR COTTON - MATERIALS - - For the Person: - (1) The Man £0 16 0 - (2) The Woman 1 9 0 - (3) Three Children 1 2 1 - For the Household 1 10 6 - ------- - £4 17 7 - ======= - -In framing this estimate I have imagined an exceedingly modest standard -of comfort, one such as few readers of these lines would probably care -to adopt, and the prices, as I have said, refer to the wholesale cost of -the material only. Yet, modest as it is, the estimate works out at -nearly 20s. per head. Given such a modest demand, our cotton trade would -need to produce about £45,000,000 worth of cotton goods per annum for -home consumption alone. As we have seen, it finds a call for only -£20,000,000 worth, a great part of which, of course, is absorbed by the -"rich" and "comfortable" classes. - -It is a deeply significant fact that a nation of 44,500,000 people, -producing by its manifold activities a total income of £40 per head per -annum, should be able to afford to retain of its total output of cotton -fabrics but 10s. per head per annum. - -Let us turn to our woollen and worsted industries. Here we have in an -average year an output worth some £65,000,000 of which £23,000,000 is -exported, leaving £42,000,000 for home consumption. In addition there is -a considerable importation (£12,000,000) of woollen and worsted goods, -chiefly woollen goods, of a character which we do not ourselves produce, -from France. Thus we have a total home consumption worth £54,000,000 per -annum. This amounts to about 25s. per head per annum, a sum which, in -view of our climatic conditions, is, if anything, less satisfactory than -that for cotton consumption. Again let us picture our working-class -household of five persons and inquire what might be its most modest -imaginable expenditure upon articles made of wool:— - - CALL (AT WHOLESALE PRICES) BY A HOUSEHOLD OF 5 PERSONS, FOR WOOLLEN AND - WORSTED GOODS. MATERIALS ONLY - - For the Person: - - (1) The Man £3 7 10 - (2) The Woman 2 9 9 - (3) Three Children 3 0 0 - For the Household 3 0 0 - ---------- - £11 17 7 - =========== - -In working out this estimate in detail, I have again postulated a low -standard of comfort. Thus the man is assumed to have but one new woollen -suit and one new pair of trousers per annum, and an overcoat once in two -years. It is also assumed that the children are partly provided for by -adaptation of their parents' discarded garments. Even so, the estimate -works out at 47s. per head. At this rate there would be a call for about -£105,000,000 of woollen and worsted goods by the 44,500,000 people of -the United Kingdom. As a matter of fact, the call is for only -£54,000,000 worth, or about 25s. per head on the average. But who is the -Average Man? He is a creature of the statistician. The real truth is, of -course, that quite a small number of people consume a very great part of -our total present annual call for £54,000,000 worth of woollen and -worsted goods. The masses of the people spend a sum which is a small -fraction of the average expenditure of 25s. per head. - -Again, let us consider the boot and shoe industry. Here I have no -reliable estimate as to the value of production, but we know that -employment in the trade is sometimes exceedingly bad, and that in -Leicester, Northampton and elsewhere the greatest distress exists from -time to time because the boot manufacturers have _overtaken demand_. -What does this mean? There are some 7,000,000 houses in England and -Wales not assessed to the Inhabited House Duty because they are under -£20 in annual value. It is safe to say that each of the inhabitants of -each of these 7,000,000 houses would gladly purchase three pairs of -boots and shoes if they had the means to do so, and would then not be -overburdened with footwear. That means that a need exists at this moment -for 7,000,000 × 5.2 (the average number of persons per house in this -country) × 3 = 109,000,000 pairs. That great demand, obviously, could be -renewed, did means allow, within 12 months.[35] - -Yet, in November 1904, the Mayor of Leicester (Mr S. Hilton, of Messrs -S. Hilton & Sons, boot factors) dealing with the question of want of -employment in the boot industry said: - -"I think the present great need of Leicester is a new industry. We -cannot expect, at any rate for some considerable time, that much more -employment will be derived from the boot and shoe trade, at least, not -sufficient for a growing population. The rapidity with which boots and -shoes are turned out, owing to the improved machinery and modern -methods, will supply all the demands for some time to come, and the man -who may be the means of introducing some additional industry in this -town, which will not only prove remunerative to the employer, but -provide work for the many men and youths who are in need of it, will be -a benefactor to the town." - -With improving methods and machinery, there must, sooner or later, -arrive, in every industry, a time when output overtakes visible demand, -and when that time arrives, as it is alleged to have done in Leicester, -great suffering is caused to many hard-working people. Their trade slips -from them, and the matter of re-adjustment, the establishment of new -industries, the transition to other employments, entails severe -distress. But who can truly say that the boot trade has yet reached, in -this country, the maximum of possible output? Certain it is that there -are many who need new footwear and cannot afford it, even while -Leicester men look vainly for employment. The real truth would appear to -be that Leicester is suffering from the under-consumption of those who, -if they had the means, would buy boots. I have shown that 100,000,000 -pairs at least could be readily absorbed in Great Britain. Yet men are -unemployed at Leicester and the Mayor calls for a new industry! - -The fact is, of course, that while 7,000,000 or more poor householders -lack the means to buy boots, some tens of thousands of unduly rich -households are squandering those means and in effect commanding men to -leave the boot trade to take up industries which shall serve their -pleasures. - -In relation to the trades which supply the materials of clothing the -census returns give evidence that our industries are not developing -healthily. It should be remembered, however, that it is impossible to -measure the growth of luxury by the census returns, although it makes a -certain impression in them. The labour of tens of thousands who follow -nominally useful occupations is actually devoted to waste. This may be -illustrated by two typical cases which recently were brought to the -notice of the public. On February 8th, 1905, in the King's Bench -Division, a millionaire, well-known in financial circles (his name -matters not, for I take the case not to reproach an individual but -because it is a typical one) sued a West-End firm of contractors and -caterers for damages. It appears that in July 1903 he gave a dinner -party with a concert and supper, and engaged the defendant firm to erect -behind his residence in Grosvenor Square a temporary supper-room for the -occasion. He gave instructions that "no expense was to be spared." The -electric light was installed in the temporary structure, and from this -or another cause, a fire occurred, and the temporary structure perished -a few hours before its time. Out of this arose the claim for damages, -which failed, the jury awarding the contractors their counter-claim for -the work done. - -It is not the merits of the action to which I direct the reader's -attention. What would the mere statistics tell us of the men who were -engaged in erecting the temporary supper-room "regardless of expense"? -We should find them described as following quite useful occupations: - - Building Contractors. - Electrical Engineers. - Plumbers. - Carpenters. - Painters. - Upholsterers. - Carmen. - Labourers, etc. - -As a matter of fact the skill and labour of these honourable callings -were turned to sheer waste at the command of the millionaire financier. -With the same expenditure of time and effort, and with the same -consumption of material, those men might have decently housed one or two -families for life. Had they been free to choose between the housing of a -poor family and the carrying out of a rich man's caprice, can we doubt -which work they would have chosen? But they were not free to choose, and -inquiry would probably show that they are constantly employed to do -similar work in rich men's houses. Their lives are wasted to the nation -at large, and devoted to the fancies of a few. In return, they are -handed wage-money which is too often unearned by those who pay the -bills. Thus A the financier commands B to waste his precious skill, and -at the same time commands certain other persons, C and D, to devote part -of their labour to sustaining B while he wastes his time and does -nothing for them in return. - -Let me give another pertinent illustration: - -In July, 1904, a great deal of attention was aroused by a case in which -a West-End dressmaker was fined for working her girls at illegal hours. -Her excuse was that she was compelled to get finished at very short -notice a frock to be worn at Ascot by a certain rich lady. Considerable -comment was aroused by the case, especially in view of the fact that a -play with a purpose in which a similar incident was introduced was being -played at the time in a London theatre.[36] I was particularly struck -with the fact that the fashionable customer who caused the trouble was -chiefly censured for her dilatoriness and want of consideration in -ordering her frock at the last moment. But the gravamen of the offence -lay not in ordering the frock late but in ordering it at all. The chief -point is not one within the scope of the consolidated Factory and -Workshop Act of 1901, but a much greater one, which goes deep down into -the roots of the problem of want and poverty in the richest country in -the world. For the special Ascot frock, the garment costing anything -from 10 to 50 guineas, made to be worn once and then cast aside, is a -perfect illustration of the misdirection of life and waste of labour -which is caused by the error in the distribution of the national income. -For every special Ascot frock worn by one woman, whether that frock be -made in legal or illegal hours, a number of other women go -insufficiently clad. - -Such illustrations might be multiplied indefinitely. At the great Albert -Hall Charity Bazaar held in 1904 a titled lady present wore a -magnificent dress which had been completed literally at the eleventh -hour of the previous evening by a number of young women whose economic -condition is such that only the best of health and the best of fortune -can save them from becoming the objects of "charity" in the time to -come. As in the case of the temporary supper-room, these girls, to judge -by the census of occupations, would appear as following useful -occupations. From the point of view of the national welfare, they had -better be paid wages for digging holes and filling them up again. - -While the rich consume the means of living of the poor we need not be -surprised if useful trades languish. A rich person can but consume a -limited quantity of useful commodities. After that consumption, having -still a great superfluity, he seeks other diversions, and the orders go -forth which swell the ranks of the wrongfully employed. - -At the other end of the scale, what is the possible expenditure upon -goods by the poor? The answer which has been given to this question by -the researches of Mr Charles Booth in London and of Mr Seebohm Rowntree -in York is seen to be one which can only be regarded as inevitable in -view of the figures we have examined. Mr Booth concluded that 30.7 per -cent., or nearly one-third of the population of London were probably -living in "poverty." Mr Rowntree found that in York, a typical -provincial city, in a year of good trade, 7,230 persons, representing -15½ per cent. of the working classes, or 10 per cent. of the entire -population of York, were living below a primary poverty line drawn at an -income of 21s. 8d. per week for a family of five persons paying only 4s. -per week for rent. Mr Rowntree also found 13,072 persons living in York -under conditions which were but little above the primary line, making a -total of 20,302 persons, or 28 per cent. of the population of York, -living in want. - -Mr Rowntree's primary poverty line of 21s. 8d. per week was arrived at -thus.[37] He considered necessary expenditure under the three heads: (1) -Food, (2) Rent, (3) Clothes, fuel and other necessaries. To begin with -food, he framed a dietary which contained no butcher's meat or butter, -and allowed such a luxury as tea but once a week. The only meat was -bacon and very little of that. It was a dietary "more stringent than -would be given to any able-bodied pauper in any workhouse in England or -Wales." Taking the lowest co-operative store prices, he found that this -dietary would cost 3s. each for the adults and 2s. 3d. each for the -children per week. Thus the cost of food alone would be 12s. 9d. per -week. Allowing for rent and rates 4s., we arrive at 16s. 9d. per week. -To this Mr Rowntree added for clothing, fuel, and all other necessaries -4s. 11d. per week, making, in all, the 21s. 8d. referred to. Here is the -estimate in detail:- - - MR ROWNTREE'S PRIMARY POVERTY LINE - - _s._ _d._ - Expenditure on Food 12 9 - Rent and Rates 4 0 - Clothing, including Boots 2 3 - Fuel 1 10 - Lighting, washing materials, furniture, crockery, etc. 0 10 - ------- - 21 8 - ======= - -It will be seen that nothing is allowed for drink, or tobacco, or -newspapers, or postage stamps, or any relaxation whatever. Yet 15 per -cent. of the working people of York were found to be living _below_ a -primary poverty line conceived on such a scale as this. For boots, -clothing, underclothing, hats, furniture, glass, crockery, utensils, -curtains, washing materials, and gas or oil, only 3s. 1d. per week or £8 -per annum (32s. per head per annum). Need we wonder, then, if Lancashire -is only called upon by 44,000,000 British people for £20,000,000 worth -of cotton goods? - -The Board of Trade recently gave us (Cd. 2337) some useful studies of -workmen's budgets which show that even Mr Rowntree's 3s. 1d. per week -for goods is a larger sum than is expended by most workmen's families -with about 21s. per week. The Board of Trade examined 1,944 workmen's -budgets with the following results:— - - AVERAGE EXPENDITURE ON FOOD BY URBAN WORKMEN'S FAMILIES IN 1904 - - Average Average Balance of - Number no. of Average expenditure income - of children weekly on after - Families. living at income. food. expenditure - home. on food. - - _s. d._ _s. d._ _s. d._ - Under 25s. 261 3.1 21 4½ 14 4¾ 6 11¾ - Between 25s. and 30s. 289 3.3 26 11¾ 17 10¼ 9 1½ - Between 30s. and 35s. 416 3.2 31 11¼ 20 9¼ 11 2 - Between 35s. and 40s. 382 3.4 36 6¼ 22 3½ 14 2¾ - Above 40s. 596 4.4 52 0½ 29 8 22 4½ - -As the Board of Trade point out "It is not to be supposed that the -returns received represent in their exact proportions the different -grades of working-class incomes in the towns of the United Kingdom. The -higher range of family incomes is unduly represented in the returns, -partly owing to the fact that the more intelligent operatives have -supplied returns more readily and more accurately than those belonging -to the unskilled labouring classes." - -It is of interest to note that the 261 budgets under 25s. per week -averaged 21s. 4½d. per week, which closely corresponds to Mr Rowntree's -primary poverty line. The expenditure on food is seen to be 14s. 4¾d. or -1s. 6¾d. more than was allowed by Mr Rowntree. Thus only 6s. 11¾d. per -week is left for all other expenditures, including rent, fuel, light, -clothes and furniture. If we take the class above, between 25s. and -30s., we see that only 9s. 1½d. is left after payment for food. Even in -the class earning from 30s. to 35s. the food bill leaves but 11s. 2d. -per week for rent and all other requirements. - -If we pass from the town to the country and inquire into the condition -of the agricultural labourer we find an even smaller command of comfort. -At the census of 1901 the number of agricultural labourers, shepherds, -etc., was 956,000. What of cottons or woollens or boots or furniture can -these command? The late Mr Arthur Wilson Fox in the invaluable Report -(Cd. 2376) on the wages of agricultural labourers, which was such a -labour of love to him, shows that their total earnings including the -value of all "truck" vary from 14s. 6d. per week in Oxfordshire to 22s. -in Durham, the average being 18s. 3d. for the whole of England. In Wales -the average is 17s. 3d.; in Scotland 19s. 3d. and in Ireland only 10s. -11d. The expenditure on clothing in England varies between £6 and £10 by -a family of six persons; in Ireland, of course, it is much less. - -The simple truth is that the total demand for clothes and underclothes, -hats, boots, furniture, china, glass, ironmongery, domestic utensils and -other comforts by about 20,000,000 of people out of our population of -44,500,000 is exceedingly small. The greater part of slender incomes is -absorbed by the cost of food and drink, and after provision is made for -rent, fuel and lighting, the balance amounts to a few odd shillings. We -need not wonder, then, that our textile industries have to meet such a -modest home demand, or that the Mayor of Leicester cries out for a new -industry to employ "surplus labour." - -Let us consider the position of bootmakers as customers for the textile -trades. The Census figures of 1901 for the boot trade were as follows -(England and Wales; 22,000 dealers included): - - PERSONS EMPLOYED IN BOOT AND SHOE TRADE, 1901, ENGLAND AND WALES - - Men (over 20) 165,589 - Women (over 20) 31,734 - Boys and youths 32,715 - Girls 21,105 - ------- - Total 251,143 - ======= - -The average earnings of these workers are actually less than £1 per -week. The Board of Trade publish monthly the earnings of a -representative number of them, derived from particulars furnished by -employers. The "Labour Gazette" for August 1910 showed that in July -1910, 60,337 boot workers took £58,147 in a week, or about 19s. per -week. After paying for rent and food, how little is left to provide -custom for the makers of cottons or woollens. And equally, when textile -workers draw meagre wages, how little is left, after the gratification -of primal needs, to provide custom for the maker of boots. - -Thus the error in the distribution of income connotes an error in the -distribution of our population amongst useful and useless, noble and -ignoble, industries. Too few of our population are engaged in the -manufacture of houses, boots, textiles, and furnishings. Too many of our -population are engaged either in the direct production of luxuries or in -the production of useful articles to be exchanged for foreign luxuries. -The great masses of our people are under-served; a small proportion of -our people are over-served. There is enough labour put forth to give -material happiness and comfort to all, but so much of the labour runs to -waste that only one-ninth of our population can be said fully to possess -the means of comfort. - -Considerations such as these make us understand how futile it is to -boast of the aggregate trade, internal or external, of a nation, or to -term that wealth "national" which is the possession of a few. - -[Footnote 35: Some notes of mine on this subject in the "Daily News" -brought me the following letter from the provinces: - -"You very rightly, I think, referred on Monday and Tuesday to the -subject of boots. Here is my own experience. I am a railway man, in -constant work at 30s. per week. I am the happy, or otherwise, father of -six healthy children. Last year I bought twenty pairs of boots. This -year, up to date, I have bought ten pairs, costing £2, and yet at the -present time my wife and five of the children have only one pair each. I -have two pairs, both of which let in the water; but I see no prospect at -present of getting new ones. I ought to say, of course, that my wife is -a thoroughly domesticated woman, and I am one of the most temperate of -men. So much so, that if all I spend in luxuries was saved it would not -buy a pair of boots once a year. But this is the point I want to -mention. During 1903 my wages were 25s. 6d. per week, and I then had the -six children. My next-door neighbour was a bootmaker and repairer. He -fell out of work, and was out for months. During that time, of course, -my children's boots needed repairing as at other times. I had not the -money to pay for them being repaired, so had to do what repairing I -could myself. One day I found out that I was repairing boots on one side -of the wall, and my neighbour on the other side out of work, and longing -to do the work I was compelled to do myself. I shall never forget the -feelings that passed through my mind as I thought of the circumstances; -and so it came home to me again when I read your reference to the boot -trade, and I decided I would forward this to you. Most surely, as you -say, if the 30,000,000 could and would buy those 50,000,000 pairs of -boots you mention, there need not be any slackness in the boot trade; -but, as you say again, if your reference to the question is the means of -making people think seriously about it, much good will be done." - -Thus between my correspondent who sorely needed boots, and his neighbour -the bootmaker there stood a wall—and our commercial system.] - -[Footnote 36: "Warp and Woof," by Mrs Alfred Lyttelton.] - -[Footnote 37: "Poverty," a Study of Town Life, by B. Seebohm Rowntree -(Macmillan).] - - - - - CHAPTER XII - THE WASTE OF CAPITAL - - -It has been observed by Professor Marshall that "perhaps £100,000,000 -annually are spent even by the working classes, and £400,000,000 by the -rest of the population of England in ways that do little or nothing -towards making life nobler or truly happier."[38] In view of the fact -that the "working classes" are the bulk of the nation, and the "rest of -the population" a relative handful, this estimate points to a little -waste by the many, and much waste by the few. The fact is, of course, -that if the working classes, after prolonged study of dietetics and -hygiene, spent their incomes in the most economical way possible, and -refrained entirely from alcoholic liquor and tobacco, they would still -be unable, save in exceptional cases, to command the means of a noble -and truly happy life. As for the "rest of the population," if we -consider the 5,000,000 persons who enjoy an income of £909,000,000 per -annum, we see very clearly that their superfluity is so great that they -could easily add to the fixed capital of the nation at the rate of -£500,000,000 per annum, and still have left incomes sufficient, if -wisely expended, to command a very considerable degree of comfort. As -things are, an enormous amount of wealth is wasted every year upon -current expenditure of an ignoble character, even while every city and -every industry needs the application of more capital. - -Nothing is more striking in the estimate of capital which we formed in -Chapter 5 than the small proportions of the total when considered in -relation to the extent of the national income. For the total, it should -be remembered, includes the value of the land of the United Kingdom. -Subtracting it, we see that the wealth which has been added to the land -is worth not more than about £8,000,000,000, whereas the national income -amounts to £1,840,000,000. Thus, in the United Kingdom we have -accumulated stock, apart from the market price of the land, only to the -extent of about four years' income. - -The facts which correspond to these figures are that, in every county -and in every township, there are more ugly and uncomfortable houses than -beautiful and convenient ones, more inefficient plants than -well-equipped businesses, more badly clothed than well-clothed people, -more evidences of poverty than of wealth. On every hand we see the need -of capital, but while its application is so sorely needed, the few rich -who command so much of the national income pour it out in wanton -extravagance. The growth of luxury has been accompanied by an increasing -want of enterprise in industry and commerce. Even in London the most -fruitful opportunities lie neglected. The port is inefficient; the -Thames highway has been neglected; north and south Londoners remain -strangers because of lack of transit facilities; street traffic is -archaic; the important railway termini are dirty, inconvenient and -unconnected. All these and many less important things cry aloud for the -application of capital. In London and in every other town there is a -housing problem, and the housing problem is a problem of capital. If the -income of the last 20 years had been patriotically expended there would -be no housing problem to-day, and the fixed capital of the country would -be very much greater than it is. - -Another significant fact is the very considerable investment of British -capital abroad, probably amounting, as we have seen, to about -£2,600,000,000. These investments are often spoken of as "our foreign -investments." There is a grim irony in the phrase. For what in essence -are these investments? They left our shores, originally, in the form of -exported manufactures, the product of British labour. We had no gold to -lend, but some amongst us could command and lend the fruit of our work. -These exported products were sent away from our shores by a mere handful -of rich persons who saw in foreign or Colonial loans or enterprises the -opportunity of gaining a higher rate of interest than at home. Year by -year there is returned to those who made the investments, or to their -successors in title, a tribute of foreign and Colonial commodities which -goes to swell our imports. In 1908 this yearly tribute of imports, for -which no present exports have to be exchanged, amounts to about -£130,000,000 or £140,000,000. Whether the nation as a whole gains by -this tribute depends entirely upon the wisdom and patriotism of those -who receive it. If we could ensure its wise use as capital for the -promotion of the general welfare, then the United Kingdom would gain -materially by the lien which a few of its people possess upon foreign -and Colonial activities. But we have no guarantee as to the manner of -its use, and too often it but serves to bring to this country -commodities which in no way make life "nobler or truly happier." I do -not mean that articles of luxury are necessarily imported in payment of -the interest on "our" oversea investments, but certain it is that the -limited class which owns them are the chief consumers of luxuries. It -should never be forgotten that, as has already been pointed out in these -pages, the most ordinary raw material may become a vehicle of luxury, -and the commonest forms of labour its servants. Certain imports, _e.g._ -motor cars or Steinway grand pianos, can be ear-marked as luxuries, but -potatoes from Jersey wasted in a long dinner or Douglas pine from Canada -built into a racing pavilion are "luxuries" more to be deplored than the -importation of Valenciennes lace or Sèvres porcelain by persons of -refinement. - -It may be well to remark, in passing, that to place a heavy customs duty -upon imported luxuries would in no way benefit the nation at large. It -would merely stimulate the production of luxuries in the United Kingdom, -and so increase the already considerable number of persons engaged in -the trades of luxury. - -That we have incidentally gained by acting as a world money-lender is -indisputable. The case of Argentina is a familiar one. British exports -have been largely lent to that country for the construction of railways. -Those railways have cheapened Argentine transport, and so placed at our -disposal cheap bread and meat. But this benefit has been incidental and, -moreover, shared by the world at large. Against such incidental gains we -have to place the criminal neglect of our own country. While capital has -gone overseas in a never-ending stream, the people whose united -activities produced the commodities embodied in that capital have -remained poor for lack of the proper investment of capital at home. -Large sections of the British people have unconsciously worked for the -benefit of the foreigner and of the British Colonist, never realizing -that their own country sorely needed all the capital that their labour -could create.[39] - -We cannot even lay the flattering unction to our souls that the British -capital which has been sent abroad has gone entirely to build foreign or -Colonial railways, or to develop other useful industries, nor, in so far -as it has been usefully employed, can we claim much credit for the fact. -The sole motive which has influenced the individuals who have thus -disposed of the products of British labour has been individual gain. -That gain they have sought without regard to any consideration of -patriotism. Foreign nations have had our capital indifferently for war -or for peace, for building railways or for constructing warships. A -generation ago we wickedly poured our capital into Turkey. A generation -ago were born hundreds of thousands of British children who, for lack of -the full employment of British capital on British soil, are to-day -creatures of the abyss. - -The flow of capital to places abroad continues to this hour. If South -Africa is booming, the possessors of capital hasten to gather dividends -on soil thousands of miles away, and with the interest received in this -country, direct British labour to noble or ignoble ends, as may seem -good in their eyes. If a foreign war is proceeding, they hasten to lend -the belligerents as many millions as may be required at anything from -five to eight per cent., and with the interest they give righteous or -unrighteous "work" to other British sons of freedom. If a South African -mine or a Japanese war loan offers apparent opportunities of quicker -profits than putting fresh capital into British ironworks, or founding a -new British industry, it is the end of South Africa or Japan which is -served. Three per cent. gained at home, of course, is not so desirable -as ten per cent. gained abroad. If, therefore, a housing scheme at home -promises to yield but three per cent., while the employment of coolies -in South Africa promises ten per cent., South Africa and the coolies are -"developed"[40] and the housing scheme collapses. This is by no means a -rhetorical flourish; it is the statement of a case not more extreme than -hundreds which occur every year. - -If I have dwelt upon our oversea investments (I use the possessive -pronoun for the sake of simplicity of expression) it is because they -illustrate in a very forcible way the misuse of British capital. But the -neglect of British interests which they illustrate is small indeed when -compared with the waste of income upon the pursuit of pleasure and the -foundation of worthless industries at home. If the whole of our oversea -investments had been made since 1860, the average amount so invested -would be not more than £50,000,000 per annum. That consideration enables -us to view the matter in its due perspective. The foreigner and the -Colonist have gained through the profit-hunting of the few possessors of -British wealth, but only to the extent indicated. The oversea -investments, with all the taint of national shame which attaches to many -of them, sink into insignificance when we consider the wanton waste of -labour which has occurred at home. Since 1860 probably as much as -£6,000,000,000 of income which should have passed into reproductive -capital has been thrown away in forms of expenditure which have been to -the degradation of the community. Had that £6,000,000,000 been employed -in the promotion of cheap transport, in the attachment of agricultural -workers to the soil, in the acquisition of land by municipalities, in -the provision of healthy homes for the people, the problems which -confront us to-day would be of a different order, and it would not be -possible for the dire poverty of one-third of our people to be basely -used as a weapon of political warfare. - -And while so much of the labour which might have added to the nobility -and happiness of the British people has been wasted by direction of a -small fraction of their number, no small part of our employed capital is -but the tool of mischief. For just as individual capital goes abroad to -seek its usury without regard to principle or patriotism, so at home it -engages in the most profitable enterprise known to its limited -intelligence, without regard to morality or the national welfare. It is -often more profitable to appeal to what is worst in human nature than to -seek to supply it with things healthy and honourable. "Is there money in -it?" is the only touchstone which individual capital applies to -enterprise. - -Obviously there must be reciprocation between the demand for luxurious -articles and the capital employed in their production. The misdirection -of labour which we examined in the last chapter connotes a considerable -misdirection of capital. Thus the effects of luxurious expenditure are -two-fold. There is dissipation of income in the payment for luxurious -immaterial commodities which call for no fixed capital, and again there -is the expenditure of income upon luxurious material commodities which -call capital to their creation. In either case the result is waste. The -menial servant is an illustration of the first process. He is divorced -from production and his work lost to the nation at large. The commodity -which he sells is obsequious hand-service, degrading alike to himself -and the person he serves. The purchase of a motor-car is a striking -example of the second process. To produce it a considerable plant is -required and capital flows to a business profitable because its -customers are rich persons who view low priced articles with suspicion. - -A striking illustration of a combination of the two processes is -afforded by a fashionable hotel and restaurant. Here we have a large -amount of capital sunk in an enormous building which is sustained -entirely by the expenditure of the wealthy. A host of menial servants -are employed, whose lives are a denial of manhood and womanhood. In -addition there are nominally useful occupations associated with the -conduct of the business. It calls for the manufacture of food, of -utensils, and of furniture, and a large number of tradesmen and their -nominally useful assistants are regularly employed in connexion with its -supplies. A hotel of 700 bedrooms directs the services of an army of -people, most of whom would appear in the Census as following useful -occupations. The whole concern is for the most part an organization for -the waste of capital and labour, and its manifold activities are called -into existence by the orders of a very limited number of unduly rich -people who desire that hand-service shall be at their command at a -moment's notice wherever they may be. - -Even more extraordinary is the organization of entire districts in the -service of wealth and luxury. Nothing can be more pitiable than the -spectacle which is presented by a neighbourhood the inhabitants of which -are economically dependent upon the patronage of a limited number of -well-to-do residents. The local tradesmen, the local builders, the local -carters, the local nurserymen, the local physician, the local -boat-builders, the entire local organization, with its little capital -and much labour, is under the economic over-lordship of a few persons -whose patronage sustains the entire machinery. Little that is useful is -produced in the district; but by a process which none of its inhabitants -could explain there are imported into it commodities from all parts of -the country. Parasites upon parasites, they scramble for the expenditure -of the well-to-do, and often contrive to make fat livings out of them. -Thus, through the initial evil, the underpayment of labour at one end of -the scale, there is created at the other end a class of luxury providers -who have no conception of their true position in our social system, or -of their uselessness to the community at large. - -There remains to consider the tremendous waste of capital which arises -from (1) unnecessary competition and (2) weak or bogus company -promotion. - -In the game of competition frequent attempts are made to establish -superfluous businesses in many branches of trade. While industry remains -unorganized such waste of capital must continue, for lacking an estimate -of the quantity of commodities required in any particular department, -the limits of consumption can only be found by fruitless attempts to -discover an unsatisfied demand. This blind application of capital, not -to service, but in the hope of gain, accounts for the waste of large -quantities of labour. - -Turning to company promotion, it is certain that hundreds of millions of -capital have been wasted in the last twenty years through the dangling -of fancy baits before the possessors of unearned increment. The company -promoter obtains from Somerset House the names and addresses of -shareholders in such concerns as those referred to in Chapter 8, and so -is enabled to send to persons who have already tasted the joys of -"waiting" a prospectus promising them even larger slices of unearned -increment than they already receive. So other millions derived from -labour pass into channels of waste. - -The waste and misdirection of capital is a far-reaching matter. Lacking -capital, which simply means lacking tools, labour cannot be economically -exerted, whether in agriculture, in manufacturing, or in distribution. -For the use of tools we leave the great mass of our population dependent -upon a comparative handful of rich persons. That dependence amounts to -an economic serfdom which places the direction of the lives and labours -of the people in the hands of the few. The unduly large share of the -national dividend possessed by the rich produces in them grave faults of -character and purpose which make them indifferent administrators of the -capital without which labour is powerless. The unduly small share of the -national dividend possessed by the poor is the source of a stream of -moral and physical evils which, mingling with the waters of death which -descend from the high levels of luxury, produces effects whose causation -is only obscure as long as we neglect the study of the Error of -Distribution. - -[Footnote 38: "Principles of Economics," Vol. i., p. 786.] - -[Footnote 39: The same is true of France. Our neighbours across the -Channel have fully £1,500,000,000 invested in places outside the -country.] - -[Footnote 40: At Johannesburg on April 15th, 1905, Mr Lionel Phillips is -reported to have said: "The Chinese were housed, fed and looked after -better than the working population of England." It may well be.] - - - - - BOOK II - TOWARDS ORGANIZATION - - - - - CHAPTER XIII - THE GOLDEN KEY - - -The misdirection of labour and the waste of income can be checked if we -would have it so. It is in our power, as a nation, to employ the wealth -of the community for national ends and to increase abundantly the -fertility of labour. It is true that we want "more trade," and it is -also true that we need better use of the results of the trade that we -have. The problem of poverty is neither obscure nor insoluble; its cause -is clear from the extraordinary series of facts we have examined; its -solution becomes equally clear when we realize what ample means of -remedy we have at our command. We perceive that the chief ramifications -of the social problem are but varying effects springing from one cause, -the waste of labour. We realize that Poverty, in a nation of 44,000,000 -persons possessing an aggregate exchange income of about £1,840,000,000, -need be with us only as long as we care to tolerate it. Each social or -political problem takes on a new aspect when we consider it, as we -should consider it, in relation to the income of the nation and its -distribution. - -Unfortunately, the facts of the case have been studied by few people, -and, in so far as they have been published at all, it has been in pages -inaccessible to the public. Of our 44,000,000 people, it is doubtful if -as many as a hundred have studied the subject matter at first hand. Even -in relation to taxation, the question of distribution is rarely -discussed. It is but necessary to listen to a debate on the income tax -in the House of Commons to perceive that on the subject of "ability" the -vaguest conceptions exist. Our most ardent reformers discuss their plans -without reference to the economic framework of the society which they -propose to reform. As a result, we get a vast amount of misdirected -effort, a dreary outpouring of vague and empty rhetoric, a pitiful -misconception on the part of the public as to the true condition of -their finances, industries and commerce, and a succession of timorous -proposals for reform ludicrous in relation to the nature and magnitude -of the problems with which they seek to deal. - -In the following pages an attempt is made to correlate the facts as to -the Error of Distribution with many of the problems of government. From -the standpoint that we are a people with a great income, with a clear -idea as to the ill-distribution of that income and the manner in which, -through the joint operations of luxury and poverty, a nation may be -devitalized even while its income is growing, let us consider the means -of amelioration. - - - - - CHAPTER XIV - THE NATION'S CHILDREN - - -Let us begin at the beginning with what should be the chief care of the -reformer—the child. - -Every year in the United Kingdom there are some 700,000 deaths and some -1,200,000 births. The social structure which we seek to improve thus -offers us a double hope. However degraded, however enfeebled, however -criminal many of the units of the present generation may be, they must -pass away. Unit after unit is cancelled; unit after unit is replaced. -The child, save in a small percentage of cases, is given to us an -unsullied page, upon which we may write what we will. - -If the reader would realize fully the truth which I have just expressed, -let him ponder the following utterance by Professor D. J. Cunningham -when under examination by the recent Inter-Departmental Committee on -Physical Deterioration. After referring to the manner in which changes -in the condition of life affect the growth of an individual class, and -more especially how poverty with its squalor, its bad feeding, and its -attendant ignorance as to the proper nurture of the child, lowers the -physical standard of the poor, he went on to say: - -"In spite of the marked variations which are seen in the physique of the -different classes of people of Great Britain, anthropologists believe, -with good reason, that there is a mean physical standard which is the -inheritance of the people as a whole, and that no matter how far certain -sections of the people may deviate from this by deterioration (produced -by the causes referred to) the tendency of the race as a whole will -always be to maintain the inherited mean. In other words, those inferior -bodily characters which are the result of poverty (and not vice such as -syphilis and alcoholism) and which are therefore acquired during the -lifetime of the individual, are not transmissible from one generation to -another." - -I break the quotation to accentuate the conclusion: - -"Therefore, to restore the classes in which this inferiority exists to -the mean standard of national physique, all that is required is to -improve the standard of living, and in one or two generations the ground -that has been lost will be recovered." - -According to Dr Alfred Eichholz, H.M. Inspector of Schools, fully 90 per -cent. of the children born in poor neighbourhoods are healthy. Dr Edward -Malins, President of the Obstetrical Society, gives it as his opinion -that 80 to 85 per cent. of children are born physically healthy, -whatever the condition of the mother antecedently.[41] The weight of -new-born children, he thinks, is, speaking generally, not below the -average—there is a constant reversion to the race standard. - -It is probable that these statements of Dr Eichholz and Dr Malins -require some modification. Other evidence goes to show that it is far -from true that the majority of children born in poor neighbourhoods are -healthy. Thus Dr Henry Ashby, of Manchester, a leading authority on the -diseases of children, said in a letter to the "Lancet" on October 1st, -1904:— - -"My own experience in the out-patient room entirely confirms the opinion -that the nutrition of the mother has a very important bearing on the -nutrition of the fœtus and that the statement that the percentage of -unhealthy births among the poor is small is not justified by facts. We -constantly see fully developed infants a day or two old brought by -midwives or neighbours exceedingly badly nourished, blue and feeble, and -who are clearly ill fitted, as the event indeed proves, to withstand the -conditions of an external existence. There must be numbers of such born -in this city that perish within a few weeks of their birth, and who fail -to thrive for even a day. There is no question of syphilis; they are the -children of poor mothers who have lived lives of hard wear and tear -during pregnancy, are themselves badly nourished and weakly, and have -felt the pinch of poverty, though often perhaps poverty of the secondary -sort. I have a strong conviction also that the infants of the poorer and -weaker mothers, even though they are born fairly well nourished, are -difficult to rear, and easily waste even when under fairly favourable -conditions in a home or hospital." - -Evidence to the same effect was given to the Physical Deterioration -Committee, but unfortunately ignored in their report. It seems to a -layman a common-sense view that if, in the period when a woman has to -eat to "feed two," she is badly nourished, and exposed to undue fatigue, -the child must suffer. Nevertheless, the striking phrase of Dr Malins, -"Nature intends all to have a fair start," may be fully accepted, and -Professor Cunningham's words of hope require no modification. What we -have to remember is that pre-natal as well as post-natal conditions must -be improved if we wish to rehabilitate our stock. If we have not a -renewed opportunity with each birth, at least we have it, save in quite -exceptional cases, in the person of each pregnant woman. The weight of -evidence goes to show that the influence of heredity upon disease has in -the past been greatly exaggerated. The chief causes of deaths from -debility, atrophy and premature birth are to be found in the evil -environment and malnutrition of the mother during pregnancy. The unborn -child fights hard for its life, but in a number of cases, sufficiently -large seriously to affect the total population, it is born unfit. It -either succumbs rapidly or lingers on to be a curse to itself and its -kind. - -These all-important facts once realized, an avenue of hope stretches out -before us. 1,200,000 new births every year; 1,200,000 new units added to -the national stock, and the possibility of ensuring that nearly the -whole of them shall be born healthy. Here is Nature ever endeavouring to -reform the race—ever offering us opportunity. Combine with knowledge of -this opportunity knowledge of the means to take advantage of it. Combine -with the determination to secure reform the application of national -wealth to truly national ends and all things become possible. - -Under what circumstances are the children of the new generation now -born? It follows from our examination of incomes that a large proportion -of our new births are of mothers who exist in conditions of extreme -poverty. Fully one-fourth to one-third of the 1,200,000 are born to want -and squalor. In England and Wales, at the census of 1901, of a -population of 32,527,843, there were 12,983,109 persons belonging to -families living in four rooms or less. In one room each lived families -forming 507,763 people. In two rooms each lived families forming -2,158,644 people. In three rooms each lived families forming 3,186,640 -people. In four rooms each lived families forming 7,130,062 people. - -If the one-third of very poor could be gifted with all the virtues, if -drink were abolished and every penny spent upon scientific principles, -we have seen that they would still be unable to command a healthy -existence. One-third of our hope of the future is thus mortgaged. -One-third of the new-born go to feed the ranks of misery and to form, -such of them as do not perish in infancy, the raw material of the social -problems of those who are to follow us. - -In England and Wales, in 1908, 940,000 children were born. In the same -year 113,000 infants died under one year of age, or 120 per 1000 births. -The conditions which exist in some of our towns can be gathered from the -following figures:— - - INFANT MORTALITY - (Rates per 1000 births in 1908) - - Towns with High Rates. | Towns with Low Rates. - Stalybridge 206 | Reigate 80 - Farnworth 209 | Tunbridge Wells 83 - Aberdare 198 | Hornsey 75 - Rhondda 182 | Guildford 71 - Burnley 194 | Winchester 88 - Batley 186 | Watford 88 - Longton 199 | Ilford 98 - Tunstall 198 | Salisbury 95 - -The towns with low rates cannot be said to possess ideal conditions, but -merely to take them as a standard we see how considerable is the wastage -of life which goes on in Lancashire and Yorkshire and Staffordshire and -South Wales. In some of the poorer wards of our great towns one in three -of the children born perish within twelve months. That is the case in -some parts of Birmingham, where the Medical Officer of Health recently -stated that "a reduction of 50 per cent. in the rate of infant mortality -in Birmingham would mean the saving of 1500 lives per annum." - -But death is only one of the symptoms we have to consider in this -connexion, and death itself were preferable to the survival of a large -proportion of the children of neighbourhoods where the rate of infantile -mortality reaches one in every three or four births. Death is the -extreme case. Those who do not die in infancy have physical degeneracy -as their portion, and, in a world where virility and energy were never -more needed by the labourer if he is to bargain successfully for a -decent livelihood, enter the fierce lists of modern industry with -enfeebled bodies. Docile units thus flood the casual labour market, or, -totally unfitted for labour, swell the ranks of the "residuum." - -A woman ought not to work for the last three months of her pregnancy or -during the three months after her child is born. Further, if the child -is to be fed as Nature intended it should not be weaned until about the -seventh or eighth month of its life. - -What cognizance does the law now take of these simple physiological -facts? The Factory Act is not aware that pregnancy precedes childbirth. -It recognizes, however, that children are born, and provides that the -occupier of a factory or laundry shall not allow a woman to be employed -"within four weeks after she has given birth to a child." Thus a feeble -attempt is made to protect the working mother for a month after -childbirth, but no law whatever protects the child. It is legal for the -mother to go back to the factory on the twenty-ninth day and leave the -child to take its pitiful chance. - -The "four week" provision is largely a dead letter. How is an employer -to "know," when a woman applies to him for work, that she bore a child a -fortnight before her application? And who shall blame the woman for -seeking work, when she must work or starve? Miss A. M. Anderson, -Principal Lady Inspector of Factories, gives the following three cases -found in a single town in one week's inquiry:—[42] - -A. B., aged 24, unmarried, jute worker, had to leave work, being unfit, -seven weeks before confinement. Became destitute, and found work with -new employer, saying nothing about the baby. Earns 9s. 8d. per week. - -C. D., aged 34, married, jute spinner; the child illegitimate. Went back -to work three weeks after childbirth. The new employer knew nothing of -the confinement. - -F. F., aged 32, married, jute spinner. Went back to work in 15 days—to a -new employer. Earns 11s. to 12s. per week. Father out of work and -disappeared one week after the birth. The woman's mother "takes care" of -the new baby and two other children, the eldest of whom earns 8s. a week -in a jute mill. Thus 19s. or so per week supports two adults and three -children. They all live in a single room which is very dirty. - -In spite of an overwhelming mass of evidence as to the devastating -effect of the employment in factories and workshops of pregnant women -and mothers, the Physical Deterioration Committee's recommendations on -the subject were exceedingly timid. They appear to have been impressed -with the terrible consequences of the employment of women "from -girlhood, all through married life and through child-bearing"; they -realized that "the decreasing physical capacity of the child-bearing -woman brings her at last some relief at the hands of the manager of the -mill and she is sent away, often to take up the equally unsuitable -occupation of charwoman or house scrubber." But, after setting out pages -of good reason for action, the Committee, in effect, came to the -conclusion that little or nothing could be done, because they were -reminded of "the enormous practical difficulties that would accompany -any sort of legal prohibition." Even as to extension of the period after -confinement during which employment is forbidden, a point as to which, -as in many other matters, we are falling behind Western civilization as -a whole, the Committee did not advocate the enactment of a longer period -than four weeks. They pinned their faith to a medical certificate as to -fitness, and production of proof that reasonable care is made for the -child in a municipal crèche or otherwise. They also strongly urged the -application of "voluntary assistance" in the shape of maternity funds. - -Thus lastly they came to the crux of the matter, the subject of "ways -and means." The cause of the Committee's timidity is only too plain. It -is impossible to make a recommendation of any value which does not -entail expense. What is the use of talking of "medical certificates," -unless we can ensure that, when the medico has certified unfitness, the -poor mother shall have the means of refraining from work? Of what use to -talk of "reasonable care" of the infant, unless the means of reasonable -care be provided, and what form of care other than that of the mother is -"reasonable"? - -The whole aspect of the question is changed when we consider the extent -of our national resources. Miss Anderson, in the invaluable memorandum -on the subject which she supplied to the Committee, said: "It ought not -to be impossible to link together in one great national provident and -protective association all the isolated, half-informed societies and -agencies at work in aid of maternity and for the saving of infant life. -More than that, I believe, with Miss Squire (Lady Factory Inspector), -that all over the country, but particularly in the great centres in the -Midlands and the North, it needs only an organizing mind and purpose to -bring such a national movement into being." - -The Committee did not take up the idea of a "national movement." They -preferred to urge that "voluntary assistance" should devote itself to -the formation of maternity funds. But a problem of so much gravity -demands national effort, and the use of the national purse. Out of the -labour of the poor is drained the rents, profits and dividends which -make the gross assessment to income tax in 1908-9 as much as -£1,010,000,000. Of this sum, how much is needed to deal with the problem -of the poor mother? - -We have to consider not alone the woman who works in the factory, but -also the woman who works in the home. A large proportion of the latter -are necessitous and ignorant, lacking both the means to feed themselves -and their children properly, and the training to apply the means if they -had them. The case is one in which education and supply must go hand in -hand, and both education and supply should be provided for nationally. - -In the school the teaching of personal and domestic hygiene to scholars -of both sexes should begin at an early age. In the case of girls, infant -hygiene should be added in the higher standards. Girls should not leave -school or continuation classes until they have been seriously trained in -domestic duties. At present we herd them in classes of 60 or 80, and -leave a teacher, herself often ignorant of the chief duties of -womanhood, to impart to them a smattering of matters of secondary -importance. Able to write badly, to cipher inaccurately, and to read a -novelette, the girl goes forth from the school "educated," and more -ignorant of essential things than the untutored savage. - -If we would have these children technically trained in domestic economy -and hygiene, acquainted with the dietetic value of simple foods, and -sent out into the world fit to take their places in the national -economy, we must make up our minds to increase our expenditure upon -education. We must have more teachers and better trained teachers. - -But, if we put our hands earnestly to this work tomorrow, many years -would elapse before we could rear a new generation of mothers. What of -the mothers who now lack education—of the vast number of girls who are -now passing from school into the world they are so unfit to play a part -in? Work upon the right lines has already been commenced at Preston, St -Pancras, and other places. Let me outline the admirable scheme of Dr J. -F. J. Sykes, the Medical Officer of Health for St Pancras. - -St Pancras is a poor and crowded London Borough in which, as in many -other such neighbourhoods, infants are dying at a younger and younger -age from increased immaturity at birth, from diminished capacity to -resist disease and from increased rearing "by hand." It is but necessary -to take one walk through its mean streets to see that St Pancras is -breeding a degenerate race. The Borough Council has awakened to the -terrible evil which increasingly threatens them. They have a most -capable medical officer and they have appointed women inspectors to act -under his authority. These women inspectors perform the important -function of following up the weekly official returns of births. There -are about 130 births a week in St Pancras, and all of them cannot be -visited by the present small staff, but an endeavour is made to visit -every necessitous case. To all the mothers, whether visited or not, a -card or leaflet of useful information is sent by post. Dr Sykes does not -teach the mothers how to wean or artificially feed their children, but -to suckle their babies and to avoid weaning them before their first -teeth appear. To the many indigent mothers the women inspectors give -advice as to regimen and diet and, where artificial feeding is -absolutely necessary, how best to proceed. Endeavour is also made to -reach and advise pregnant women. Throughout, the chief aim is to reduce -hand-feeding to the smallest possible proportions. - -In cases of poverty requiring temporary assistance, the women inspectors -give cards of introduction to the Charity Organization Society, or to -the Poor Law Guardians. Where health is deranged or there is a desire or -necessity to wean, introduction to a doctor or a hospital is arranged -for. Where the husband is out of work the case is notified to the Labour -Bureau. In every case the hygienic, sanitary and domestic circumstances -of the mother and infant are carefully inquired into and reported upon. - -This practical work, now in operation in St Pancras, and with variations -in some other places, is what is wanted everywhere if we are to rescue -the poor children of the new generation. The appointment of sufficient -Women Health Inspectors by local authorities must be made compulsory. In -"Riches and Poverty," edition 1905, I wrote: "The Health Inspectors must -of course be directed by a capable Medical Officer enjoying a permanent -appointment. It is most important that Medical Officers of Health -everywhere should have the same security of tenure which they have in -London. At present they hold office as a rule at the goodwill of the -local authority." Mr Burns's Housing Bill of 1909 has secured this -important reform. In future every county will have its independent -Medical Officer, unafraid of local influence. - -Closely allied to the work of the Health Inspector is that of the -medical man, and here is raised a point of the utmost importance. Above -all, if we are in earnest about this matter of breed, the public medical -service should be greatly enlarged as part of the machinery of a -Ministry of Health, and the sale of soothing syrups and other "patent" -medicines absolutely prohibited.[43] The Medical Officers of Health -should be able to marshal a liberal service of trained medical skill in -defence of the national well-being. Also at their command should be an -ample supply of Health Visitors and trained and certificated nurses. The -creatures, nearly always ignorant and frequently unclean, who now -"assist" poor women in their time of trouble, are responsible for part -of the infant mortality which swells our death returns. I shall never -forget some of the "monthly nurses" I have met in the homes of the poor. -One ancient dame I found swilling stout. She leered at me out of a beery -eye and explained that she liked stout "because it made her feel as -though she could sing." Needless to say, she strongly recommended the -same joyful fluid to her patients. - -The excellent Notification of Births Act of Lord Robert Cecil (1907) -should be adopted (or its adoption enforced—the Local Government Board -has power to enforce adoption) universally, in order that Health -Visitors may do their work effectually. - -Given a properly organized public medical service we could begin at the -beginning, with the unborn child. The pregnant woman could obtain, free -of charge and as a matter of course, advice upon her diet and conduct. -Through such a service, it would be a simple matter to administer a -Public Maternity Fund. It is probable that, of the 1,200,000 births per -annum, as many as 300,000 are in necessitous families. We cannot afford -to allow 300,000 children to be starved before and after birth every -year. - -The nation must set its face against the employment of married women in -factories or workshops, and gradually extend the period of legal -prohibition. There is only one proper sphere of work for the married -woman and that is her own home. In the case of factory workers the -employer must be made to furnish a maternity fund if he wishes to employ -married women. Thus penalized he will probably prefer not to employ -them—to the very great advantage of the labour market and the nation. -There are several model factories in the United Kingdom where the female -workers are dismissed upon marriage. This is found to prevent the girls -falling victims to loafers who desire to play three days a week. The -Jewish community amongst us, the very aliens who are despised by the -race they are supplanting in the East End of London, set us an example -which we should do well to imitate. The Jewish children are much -healthier and stronger than their Gentile neighbours because they are -better mothered. Jewish women find their true avocation at home. The -Jew, however poor, does not live on his wife's earnings, and it would be -counted shame for a Jewess to work during pregnancy or after childbirth. - -But what of the poor woman in her home? We can safely confer upon our -medical officers and women inspectors power to report upon and advise -the assistance of necessitous cases, before and after childbirth. The -mother and child must be fed. Nature must be allowed to fulfil her -desire to give the new unit of population a fair start in life. The cost -would be surprisingly small. If 300,000 cases were assisted to the -extent of £10 each it would entail an expenditure of only £3,000,000 per -annum. With £10 per case a great deal could be done. - -By assistance to the extent of £10 each I do not necessarily mean a -money payment. Often the assistance which is most wanted is personal -help. The poor Jewish women of East London have the aid of that -excellent institution the Sick Room Helps Society, which is practically -a charitable institution, the poor mothers contributing less than -one-third of the expenditure. The "Sick Room Helps" provided by this -Society are thus described by Miss Bella Löwy: - - "They had to take the place of the house-mother when, through - confinement or sickness, she was laid low, and when, were it not for - their ministrations, the children and husband, and the home (sometimes - consisting of one room only) would be absolutely uncared for. The Helps - were only sent in where there was no woman or girl old enough and able - to do the work. The Sick Room Helps, for the time being, took the place - of the housemother, washed the baby, got the children ready and sent - them to school, cooked the food, tidied and cleaned up the home, saw - that any accumulation of washing was done. In fact, she attended to the - hundred and one little things which required to be seen to even in the - most modest home, and they could readily understand how much more - cleanliness and order became indispensable when the family had to live, - eat and sleep in one room only. The advent of the Sick Room Helps also - ensured for the mother peace of mind, as well as of body, at a time - when she sorely needed both, and if she knew that her husband and - children were well-cared for and well looked after she was assisted on - the road to health and strength, and was, thereby, enabled to take up - afresh the routine of her numerous daily duties. Formerly the poor - mothers used to grudge themselves even a few days of enforced idleness, - and, by premature activity in getting up and about, they but too often - sowed the seeds of illness and sickness, and brought untold troubles on - themselves and their families. Notwithstanding that these facts were - well-known and were perfectly obvious to every thinking person, the - opposition to what was erroneously termed a new form of pauperization - had been very great. But an institution which not only benefited the - recipients by nursing them when it was imperatively necessary, but, at - the same time, gave employment to deserving women, enabling them to - support themselves, and, perhaps, their family, could not be accused of - encouraging pauperism in any way." - -Mrs Alice Model, the honorary secretary, tells me that the Jewish Board -of Guardians applies a sum annually for the relief of destitute women in -childbed, which is handed to this Society and applicants for relief are -referred to it. If a case is found suitable, a nurse is sent in twice -daily and milk and other suitable nourishment provided. Excellent -results are obtained and many lives saved. Work on such lines might -easily be carried on given a sufficient staff of Women Health Inspectors -and an expenditure such as I have mentioned to provide nurses and -nourishment. - -In this connexion a municipal milk service, which will be discussed in -these pages hereafter, would be of the first importance, and it would be -found a simple matter to supply pregnant women and nursing mothers with -an ample quantity of pure milk. Such a supply might be made universal -and be specially supplemented in necessitous cases. In any case, the -mother has a special claim upon the community and that claim should be -recognized. The birth of a child is a special tax upon the family in -which it occurs, a tax which is deliberately avoided by many people. Yet -the unit not only belongs to its family; it is an integral part of the -nation, and entitled to the care of a country which desires strong and -healthy citizens. - -Such provisions should be accompanied by drastic punishment of parents -who neglect their duties. Upon report of the Health Officer, the -prosecution and punishment of offenders against the nation's children -would swiftly follow. We must make the man who neglects his child, which -is also the nation's child, feel that he is the greatest criminal of -them all. - -It is impossible to leave the subject of the birth of the new generation -without reference to the necessity for the segregation of the unfit. It -must be made no longer possible for the habitual drunkard, the vagrant, -the criminal, the mentally defective, to reproduce their terrible kind. -The subject is so rarely brought before the public that few people -realize the nature and extent of the danger. _Fully two per cent. of our -existing elementary school children will never be fit to direct their -own lives._ The State has but one duty in the matter and that is to -protect society from the breeding of the unfit, while protecting the -unfit from themselves. The child of the habitual drunkard is often -feeble-minded. The child of the feeble-minded is frequently an idiot. -Need we wonder, while the State has no control of the feeble-minded, -that our lunatic asylums are ever growing too small for their pitiable -populations. Our criminal and workhouse records are full of testimony as -to the terrible results of the unchecked propagation of the insane by -the mentally weak. A few years ago, at Daventry, a couple were charged -with neglecting their ten-year-old son. It was stated that the child was -in the habit of smoking a pipe and drinking beer, supplied by the -father. A doctor stated that the boy was a perfect savage. He was -undersized and threatened to be an idiot or a criminal. The boy was sent -to the workhouse while the mother and father, described as "mentally -weak," were sentenced to one day's imprisonment and are now free to -bring forth _sui generis_. Another recently reported case which I noted -was that of a partly paralyzed old man who applied for out-relief to the -Oulton Guardians. He has had thirty children and the youngest, a girl, -is described as "practically an imbecile." From her, doubtless, and from -others of the brood, the terrible strain will proceed. Mr Amos W. -Butler, speaking at the American Association for the Advancement of -Science, gave particulars of the descendants of a feeble-minded woman. -She was the mother of two daughters, who were free to marry because, -like their parent, they were not actually insane. One of them, Rachel, -has married twice, and borne eleven children, three of whom are dead. -One of the survivors is a criminal and the others are degenerates. The -other daughter, Kate, has four children, all feeble-minded, two of them -illegitimate. One of them became the wife of a feeble-minded paralytic -and has had five awful children. The direct descendants of the woman -first mentioned number twenty-nine, and in ten years twelve of them have -spent an aggregate of twenty-two years in asylums and orphans' homes. - -These details may be nauseating, but of what use to shirk them? It is -only when we realize that such propagation is going on unchecked that we -see our duty clear in the matter. We then also see that segregation of -the unfit would not increase our burdens, but decrease them. - -Segregation recognized as a painful duty, it would no longer be -necessary to make any reservation when speaking of the hope that lies in -the child. Our 1,200,000 new births per annum would soon regenerate the -race. _During the next twenty years about 25,000,000 children will be -born in the United Kingdom._ - -[Footnote 41: See evidence before the Physical Deterioration Committee.] - -[Footnote 42: Cd. 2175, p. 117.] - -[Footnote 43: In this connexion it should be observed that there are -28,000 surgeons, physicians and medical practitioners in the United -Kingdom. The number (one to about 300 families) is probably larger than -the nation needs, but even to organize the whole of them as public -servants, and to make the medical service entirely free, would cost only -about £10,000,000 per annum, allowing for salaries ranging from £250 to -£1,000.] - - - - - CHAPTER XV - THE SCHOOL - - -In a commonwealth a man would need a healthy mind in a healthy body to -be true to himself, and to every man. In an unorganized community, in -which each man must needs struggle with his fellow for the right to -live, and in which to be unselfish is to be weak, and to be weak is to -go to the wall, a man needs a healthy mind in a healthy body in order to -set up himself and those dear to him in a fortress impregnable, with -ramparts against competitors, secret stores against time of siege, and -insurance policies against the horrors that threaten weak women and -young children whose champion has departed. - -As things are now, we have then, not merely to train the boy to be a man -for manhood's sake, but to fit him to fight what has been pleasantly -called "the battle of life." He must be not only strong but artful, not -only intelligent but cunning, not only brave but aggressive, not only -fit to work but fit to bargain, not only an artist but a shopkeeper. - -Knowing what we do of the hardness of the competitive system, how unfair -we are to these children whom we affect to "educate." We dose them with -a little book-learning and pass them on to seek employers. Nothing has -been taught them by way of preparation for the real education upon which -they are about to enter. They are wholly ignorant of the nature of the -machine of which they are about to become an insignificant part. They -plunge into the hard work which henceforth is to be their portion and -little that has been taught them is of value in connexion with it. The -boy is compelled to play a game for wages without knowledge of the -rules. Business presents itself to him as an impenetrable mystery, the -secrets of which are known but to a few. He becomes a producer of things -which in some way, he knows not how, are sold and bought and come to -yield him a certain or uncertain wage. He does not see, nor, if he saw, -would he understand, the balance sheet which sums up the processes which -yield him a part only of his production. He is not competent to measure -the extent of the injustice which he suffers. It is a game played -between a few who know and many who do not know. - -From the beginning of the child's life, the Error of Distribution plays -its part. The opportunity offered the child varies directly with the -income of its parent. The frontispiece of this volume measures not -income alone; it measures also the degree of opportunity which is -offered to the children respectively of the rich, the comfortable and -the poor. Since the bulk of the people are poor, the greater number of -the nation's children are handicapped at the start. Individually they -are deprived of their birthright. Collectively the community is deprived -of the proper value of their strength, their intelligence, their genius. - -The last point is rarely discussed. Intellect and genius are the -possessions of no single class. Year by year we kill off units of our -population who might live to work good for their kind. Year by year we -brutalize men who, given opportunity, might enrich our literature or -ennoble our art. Year by year we waste the greater part of the gifts of -our people. Here and there some rare combination of muscle and brain -rises superior to circumstance and lives to command the class which -would have repressed him. These exceptional cases serve to remind us of -the ability which is lost. We know only of the soldiers who live to be -commanders. Probably greater generals than Napoleon have perished as -privates in their first battle. That is unavoidable, for in battle some -must die. But in the arts of peace the sacrifice of potential commanders -need not go on. Given equality of opportunity, the marshal's baton in -each private's knapsack, and the nation need not waste one of its great -men. - -If we are in earnest in this matter of the problem of poverty, we must -hasten to equalize opportunity, and having begun with the unborn child, -continue our work in the school. We must seek to make the school a -preparation for life and endeavour to build up, out of the new -generation, citizens who understand, and who, understanding, will see to -it that they remain not poor. - -In the first place, we have to attend to the child's body. Through the -school we can see that the child is properly clothed and properly fed. -Through the school we can teach the child to understand its physical -nature and to respect it. In a certain class of trumpery novel, the -"tubbing" Englishman is distinguished from the unclean foreigner. The -simple fact is that the Englishmen who "tub" are quite exceptional -specimens of their kind. Few of the 9,000,000 houses of the United -Kingdom are provided with tubbing apparatus, and even the London County -Council has lately built "model" cottages which contain no bath. We must -change all that. The Germans are setting us the example of introducing -shower baths into their public elementary schools, and all the children -are bathed once a week. They soon get to enjoy it, and it is rarely that -a child objects. Mr George Andrew, in his valuable report to the -Scottish Education Department on the schools of Berlin and -Charlottenburg,[44] says that in the poorer localities this weekly bath -system is found to have an educational effect upon the parents. The -mothers, influenced by the knowledge that their children's underclothing -will be scrutinized, supply them with clean things. Thus even that least -amenable of subjects, the parent, may be reached through the child. - -In "Riches and Poverty" edition 1905, I wrote:— - -"In the matter of school hygiene and the physical training of children, -the introduction of the medico into the school is all-important. At -present, proper hygienic inspection of our schools does not exist. -Medical officers should be appointed both to see that school buildings -are absolutely healthy and to care for the personal health of the -pupils. Upon entering the school, the child should undergo a preliminary -examination and from thence onward remain under the care of the school -doctor. The preliminary examination would decide the question of fitness -for normal instruction; defective children would be drafted into special -classes." - -In 1907 the Education (Administrative Provisions) Act made it the "duty" -of local education authorities "to provide for the medical inspection of -children immediately before, or at the time of, or as soon as possible -after, their admission to a public elementary school" and the "power" of -such authorities to make arrangements "for attending to the health and -physical condition of the children." It is earnestly to be hoped that -this "power" will be exercised; at present many authorities are blind to -it. The reader may judge from a single example the importance of using -the schools as a means of physical control and training. Dr Ralph H. -Crowley, the Medical Superintendent of the Bradford Education Authority, -conducted an inquiry into the physical condition of the school children -of Bradford in 1907. The results make painful reading. - -Let us begin with the "general condition" of the Bradford children. The -examination as to cleanliness was made by observations of the head, -ears, and neck, and by rolling up the sleeves of the children. The -following approximate figures were arrived at: - - CONDITION AS TO CLEANLINESS - - Number. Per Cent. - - Clean 10,000 22.2 - Somewhat dirty 22,000 49.0 - Dirty 11,500 25.5 - Very dirty 1,500 3.3 - -I think we must agree with Dr Crowley that these figures "show a -deplorable state of things." What is to be said of "home life" and -"education," which between them fail to teach a child to be clean? - -Here are some saddening details as to the condition of the heads of -girls: - - CONDITION OF GIRLS' HEADS - - No. of Girls. Per Cent. - - Clean 7,000 30 - Nits present 8,500 35 - Lice present 8,500 35 - -And these figures, we are told, exclude many children sent home because -their heads had "broken out" through the presence of lice. - -As to clothing, here are the figures: - - CONDITION OF CLOTHING - - No. of Children. Per Cent. - - Good 10,000 22 - Average 19,000 42 - Bad or very bad 16,000 36 - -As for boots, the results are worth the consideration of British -bootmakers. As many as 6,500 children had foot-gear so bad that in many -cases "it was difficult to see how what were meant for boots managed to -keep on the feet." - -Condition as to nutrition was judged broadly, irrespective of cause. Dr -Crowley divided the schools into three classes—better class schools, -poor schools, poorest. I take the case of the poorest schools: - - C. SCHOOLS—POOREST - - Nutrition. Infants. Upper School. - No. Per Cent. No. Per Cent. - - Good or sufficiently good 51 30.7 105 24.4 - Below normal 58 34.9 183 42.6 - Poor or very poor 57 34.4 142 33.0 - -Taking the three groups of schools together, we find that 1,019 children -out of nearly 2,000 were "below normal" in point of nutrition. More than -one-half, that is, were suffering from chronic semi-starvation. Of the -1,019, as many as 344 were described as "poor or very poor." - -Very instructively Dr Crowley measured nutrition against mental -capacity, and showed clearly how often unhealthy minds are the product -of unhealthy bodies. Of children of exceptional intelligence, 62.7 per -cent. were of good nutrition. Of dull children only 24.9 per cent. were -of good nutrition. - -Dr Crowley concluded his significant report with these words: - -"No increased facilities for higher education or technical instruction -can in any way take the place of attention to the physical side of our -children. The future of our nation will depend, not on the ability of -the few, but on the fitness of the many, and this fitness must be -secured at all cost. It is for us as a nation a matter of life and -death." - -To proceed, anthropometric statistics should be carefully compiled, and -a sickness register kept, so that the nation may judge of the progress -made in restoring its stature. The teeth would have special attention -and the school dentist would work hand in hand with the school doctor. -Children need few dosings, but in special cases cod liver oil or a -suitable tonic could be administered, as is done in Belgium. - -In cases of defective nourishment the child must be fed, whatever the -character of the parent. No fears as to the loosening of parental -responsibility need stand in the way in this essential matter, for -drastic punishment of neglectful parents should go hand in hand with our -care of the child. Nothing, in my opinion, is so likely to encourage the -feeling of parental responsibility, and to shame careless mothers, as -the knowledge that at the school the child is regarded as a valuable -commodity. In this connexion it would be well for the Board of Education -to insist upon periodical reports, not less frequently than every three -months, to parents upon their children. A carefully written report upon -the progress of the scholar in all departments would be calculated to -stimulate the better feelings of the parent. - -The greatest timidity was shown by the Physical Deterioration Committee -in dealing with the important subject of underfed children. The report -runs: - -"By a differentiation of function on these terms—the School Authority to -supply and organize the machinery, the benevolent to furnish the -material—a working adjustment between the privileges of charity and the -obligations of the community might be reached. In some districts it -still may be the case that such an arrangement would prove inadequate, -the extent or the concentration of poverty might be too great for the -resources of local charity, and in these, subject to the consent of the -Board of Education, it might be expedient to permit the application of -municipal aid on a larger scale." - -It is the State that must furnish the "material," not as a matter of -charity, but from motives of the purest common sense. The timidity of -the Committee is the more remarkable when the evidence presented to them -is examined. Dr Eichholz made a special investigation into the -conditions of the Johanna Street Board School, Lambeth, as a type of -school in a very bad district, and he considers that 90 per cent. of the -children are unable, by reason of their physical condition, to attend to -their lessons in a proper way. His estimate of the underfed children in -the elementary schools of London is 122,000, or 16 per cent. of the -whole.[45] - -Those alone who have had to do with voluntary free breakfast schemes can -have any idea of the terrible hunger of the children who attend them. -The hugging of the mug of cocoa, the ravenous swallowing—it cannot be -called eating—of the slices of bread, make one shudder to think that, -but for such isolated voluntary effort, the poor children would in an -hour or so be entering a school at which their attendance is compulsory -to—study! And for one helped by voluntary effort how many go hungry to -their tasks, utterly unable, through physical weakness, to do their -work! - -Those who have grasped the importance of the utterance of Dr D. J. -Cunningham, quoted in the last chapter, will heartily agree with Sir -Shirley Murphy, L.C.C. Medical Officer of Health, that "the child has -got to be fed." The chief deterrent to many is fear that parents will be -demoralized by free meals at the schools. It must be realized by those -who entertain this fear that the parents are often already thoroughly -demoralized, and that their demoralization in the great majority of -cases has resulted from the conditions imposed upon them from their -birth by our social system. They are what they are because of -circumstances over which their control was nominal. _The reader, or -myself, if transplanted to Lambeth at a few months old, and nurtured as -they were nurtured, would at this moment be what they are._ "There, but -for the Grace of God, goes myself," is the reflection which every man -should make when he contemplates the waste products of the civilization -of which he himself is a favoured part. That truth realized by any man, -it is never again possible for him, if he has more than the average -share of the nation's income, to grudge a part of the amount by which -his income exceeds the average to raise to a higher level the children -of those whose lives have been a crying injustice from their cradles—of -those who have, with all their faults, done more than their share of the -hard labour of the world. - -In 1906 the Education (Provision of Meals) Act enacted that a local -education authority "may take such steps as they think fit for the -provision of meals for children in attendance at any public elementary -school in their area" to the extent of a halfpenny rate and no more. So, -with extreme timidity, the legislative machine advances. - -Games, physical drill, gardening and swimming, should be taught to every -child, under proper medical control. I assume the existence of -playgrounds in some ample shape—each school having its indoor and -outdoor places of recreation and its school garden. A great object is to -keep the child from the street. For the same reason, the school grounds -should be open on summer evenings and during all vacations. It is a -simple matter to make the vacations a time of real holiday for every -child—filled with lively interest and healthful sport. With the physical -exercises and teaching of games and, indeed, with all other departments -of school life should be associated what Rousseau considered to be the -chief moral principle that a child should learn—to do harm to no one. -That carries with it the teaching of "manners" in their best sense. Nor -should graces of person be neglected. The boy should not be allowed to -slouch about with his hands in his pockets. If he does, he is only too -likely to slouch into casual labour hereafter. - -Clean, neatly clad, healthy, well-nourished, upright, self-respecting -and therefore respectful of others, feeling its strength in every limb, -well-mannered, capable of lucid expression—is it beyond our powers to -make the average child all this? Not if these things are as well worth -consideration as the resistance of an armour-plate, the trajectory of a -rifle-bullet, or the virtues of a smokeless powder. Not if the proper -study of mankind is man. - -Having made provision for the body, we may now turn to the mind. I have -referred to the child's power of expression, and I think that the -average elementary scholar's incapacity to think clearly or to express -its ideas with lucidity show how much we have missed the way in our -educational methods. We have forgotten that to "educate" is literally to -"lead out." The two guiding principles or characteristics of the German -school curriculum as described by Mr George Andrew are: (1) The -principle of "_Anschauung_" (observation, intuition, concrete), and (2) -The development of oral expression. - -"Anschauung" literally means "looking at" and as an educational -principle it means observation of the concrete as paving the way to the -abstract. The child begins school with the supply of words and -conceptions which it has gained from infancy in its own house. These -have to be corrected and completed; the child's concepts are enriched by -fresh observations and by gradual steps it is advanced from the familiar -to the strange, from the known to the unknown. In the youngest classes -the instruction in reading, writing, arithmetic, drawing, nature study, -is all in varying degrees based on "Anschauung," and later the same -principle of observation is to be traced in the teaching of such -subjects as geometry, geography, and history, where models, pictures, -maps, and plans are continually resorted to in order to deepen and -vivify the ideas gained from the printed page. Mr Andrew thus contrasts -infant teaching in Scotland with that in Berlin: - - "In Scotland, infant classes generally begin with the alphabet and the - elementary reading-book, the object-lesson being something of an - "extra," in which much useful and stodgy information is often imparted - to the youthful mind—not always on subjects within its range of actual - experience—and then retracted under an incessant fire of jerky - interrogatories. - - "The Berlin child begins in a different way. With him the "observation - lesson" is the starting-point. It is maintained that the child in his - natural intercourse at home with his parents, brothers and sisters, and - playmates, has equipped himself with a certain rudimentary supply of - words and ideas, which concern themselves mainly with objects that have - fallen within his own range of vision. He has learned to speak in a - language, the purity or corruptness of which will largely depend on his - environment. It is on these two lines, his rudimentary knowledge of - simple objects and his power of simple speech, that his first school - instruction proceeds, individual words and their constituent _sounds_ - with (the corresponding letter names) being reached by a gradual - analytical process. In the "observation lesson" such objects as are in - the schoolroom, or again, the child's body and limbs, his food, his - clothes, his home, his street, etc., anything, in fact, which he can - see, or has seen, are made use of. But even in this early "observation - lesson" one cannot fail to note how the foundations are laid for - developing oral expression—for teaching the child _Sprachfertigkeit_. - Just as the child comes to school with his rudimentary ideas, and has - these gradually corrected and extended by "observation," so also in - this lesson the power of speech he brings with him is taken up and - developed from the beginning. He is asked to describe what is placed - before his eyes; he is made—and this is naturally the first - difficulty—to speak in a distinctly loud tone of voice; and he is made - to answer in a sentence or sentences. For example, the teacher's watch - was taken as the subject of an "observation lesson" in a class of - pupils newly come to school. One heard such little sentences as "This - is a watch"; "from the watch hangs a chain"; "on the face of the watch - are figures," etc. Every now and then some child is made to - recapitulate the whole account, e.g. to repeat the above three - sentences—a process to which great importance is attached." - -Thus from the beginning the child is taught to observe and to express -lucidly what it has observed, and this excellent principle—this real -"education"—is followed throughout its school life. As a result the -children become self-reliant in utterance, able to think clearly and to -express their ideas orally or in writing in logical order and -appropriate language. Thus, whatever the influence of the home the child -gains a proper use of its mother-tongue. In our own country the -vocabulary of the home remains the vocabulary of the child, and I know -of nothing more painful than to listen to the talk of our "educated" -elementary school children in poor neighbourhoods. - -There is no subject in the curriculum to which the principles of -observation and development of expression are not applied with success. -Thus, arithmetic is not taught by rule-of-thumb, as is too often the -case in our schools, but from the beginning the child is led to "count -with understanding." The child does not merely learn a series of -mechanical rules. He understands the process he employs and can give a -lucid account of his knowledge. It is perhaps hardly necessary to add -that he studies the metric system, and becomes familiar with the -arithmetic of business operations. - -Our elementary school curriculum must be made to include the study of -the sciences as a matter of course and not as special subjects. -Unfortunately, public opinion is still lamentably absent on this point. -An ex-Prime Minister is not ashamed to state publicly that he is -ignorant of science, and the majority of those who have received what is -known as a "liberal" education could not intelligently explain the -ringing of an electric bell or the action of their own hearts. This -deplorable neglect of science is sadly handicapping us as a nation in -every department, and it is a notable fact that the majority of recent -scientific discoveries have been made in other lands. In "Riches and -Poverty," 1905, I mentioned the following as especially notable: X-Rays, -Germany; Radium, France; Synthetic indigo, Germany; Artificial Silk, -France and Germany; Incandescent gas light, Germany; Wireless -telegraphy, Italy. Since then the English Channel has been crossed by a -flying machine—from the French side. I notice that Mr Andrew, in the -report already referred to, while acknowledging that science was -generally treated excellently in the German schools, obtained a "vague -impression that rather much was attempted." Is that vague impression to -be wondered at, in view of the pitiable condition of science teaching in -the United Kingdom? - -As a matter of fact, nothing is more fascinating to the average child -than the science-lesson. The child is instinctively a scientist; its -mind is ever searching for the reason of things, and the average British -parent is every day through his ignorance of science compelled to evade -the simple but very reasonable inquiries of his offspring. It should be -our object at the school to encourage the child's wonderings, and to do -what we can to cherish the wise habit of wondering. The savage at least -wonders when he sees a locomotive. The average "educated" citizen has -long ceased to wonder either about the science that moves his train or -the science that lights his house. - -It is easy to understand how well the two guiding principles of German -teaching fit the study of science, or of nature-knowledge, to use the -terminology of the Charlottenburg curriculum. The material aim of the -course is to give the pupil knowledge of nature in a form suited to his -grasp, including, be it observed, the laws of health. Then there is the -formal aim—to train the pupil's powers of observation, and to develop -his powers of thinking, and to awaken his sympathy with plant and animal -life and admiration for the beauty of Nature. At Charlottenburg Natural -History is taught under the three sub-divisions A. Botany, B. Zoology, -and C. Anthropology. Under the third is taught animal physiology, the -laws of health, and first aid in cases of accident. In connexion with -Botany, school excursions for the study of plant life are organized. I -can imagine no more useful discipline for a town dweller. In the domain -of physical science, the pupils are led on to the knowledge of Nature's -laws and to the causes of common things. Particular attention is paid, -Mr Andrew tells us, to such phenomena or principles as are of importance -in domestic, industrial and commercial life—those of domestic life -applying to the girls, the latter two to the boys. Light, heat, -magnetism, electricity, mechanics, sound, chemistry and mineralogy are -taken. Experiment is largely employed, and the apparatus used is -adequate and admirable, in this respect being a striking contrast to the -mean outfit which is usually considered good enough in the United -Kingdom. The reflection is forced upon one that, in the region of -foreign competition, with which this work is not concerned, they will be -formidable antagonists, these scientific German children, in the time to -come. - -In connexion with the teaching of hygiene in schools we can do much to -encourage abstinence from intoxicating liquors. If in the study of -physiology the harmful effects of alcohol upon the kidneys and other -organs is made clear to the children, a very wholesome fear of "drink" -will be bred in them. - -The little we are doing in the way of teaching domestic economy and -cooking to girls needs much strengthening. These subjects should be -compulsory in the highest classes of all girls' schools. There is -perhaps no other country in which poor women are so ignorant of cooking -as in the United Kingdom. There is no simple national dish which every -one knows how to make, and it is rarely that poor Englishwomen can make -a decent soup or have any idea of the proper cooking of vegetables. - -As a preliminary to the abolition of child labour under the age of 16, -the introduction of the principle of compulsion in connexion with -continuation classes is badly needed. The children are now set free at -the most dangerous period of their lives, and nothing but good could -arise from compelling their attendance at classes which, in the case of -girls, should deal with infant and domestic hygiene, cookery, and -dressmaking, and in the case of boys with science, technics and -languages. - -In 1908 I introduced into the House of Commons a measure to establish -compulsory day continuation schools in England and Wales. The Bill was -prefaced with a memorandum which pointed out: - -"According to the census of 1901 there were in England and Wales about -4,600,000 persons of both sexes between the ages of 14 and 21 years. -According to the reports of the Board of Education the number of pupils -aged 15 to 21 years attending day and evening continuation schools of -all sorts is only about 387,000." - -The Bill itself was as follows: - - 1. This Act may be cited as the Continuation Schools Act, 1909. - - 2. The earliest age at which a child shall be entitled to any exemption - from obligatory school attendance shall be fourteen years, and the - Education Acts, 1870 to 1902, are hereby repealed in so far as they - permit the partial or total exemption from school attendance of - children under fourteen years of age. - - 3. Every child whose age exceeds fourteen but does not exceed seventeen - years shall be deemed to be a continuation scholar, and is hereinafter - so termed in this Act. - - 4. Every education authority shall establish classes (hereinafter - termed a continuation school) for the continued education and technical - training, without fees, of all continuation scholars in its district - who do not attend approved day secondary or day technical schools. - - 5. The continuation school shall be carried on at hours which do not - terminate later than six o'clock p.m., and every continuation scholar - shall attend the continuation school for a period of not less than six - hours per week. - - 6. Sufficient school places, and sufficient teachers, scientific and - technical apparatus, material, tools, or plant, et cetera, shall be - provided to enable every continuation scholar controlled by the - education authority to be instructed in industry or agriculture, or in - domestic economy, in the English language and literature, in the - principles of hygiene, and in the duties and obligations of - citizenship, and the scheme and curriculum of each continuation school - shall be subject to the approval of the Board of Education. - - 7. For the purposes of the administration of this Act, the education - authority may co-opt any number of local employers not exceeding six. - - 8. Every employer shall permit every continuation scholar in his employ - time in which to attend the continuation school, and, failing to permit - such attendance, shall be liable on summary conviction to a penalty not - exceeding _two pounds_ for every day upon which his employee therefore - fails to make his due attendance at the continuation school. - - 9. Every parent or responsible guardian of a continuation scholar who - fails to attend a continuation school shall be liable on summary - conviction to a penalty not exceeding _ten shillings_ for every day - upon which the continuation scholar fails to attend the continuation - school, unless the non-attendance is due to the fault of the scholar's - employer, or to illness, accident, or other unavoidable cause. - - 10. It shall be the duty of the education authority to prosecute the - parent or responsible guardian or the employer of any continuation - scholar who is absent from the continuation or other approved school - save through illness, accident, or other unavoidable cause: - - Provided that no continuation scholar shall be required to attend a - continuation school held beyond two miles, measured along the nearest - road, from the residence of the continuation scholar. - - 11. _The cost of carrying out the provisions of this Act shall be paid - out of moneys provided by Parliament._ - -So much is said about the example of Germany that it may serve as a -stimulus to those who think the above provisions too drastic to observe -that my Bill was based upon the scheme which is in actual operation at -Munich and which may soon be in operation for all German children. - -It is by the adoption of such rational methods in our schools that we -may give opportunity to the new generation. If they exhibit ability they -can advance to, and benefit by, a secondary education which shall fit -them to perform the highest service for the State. If their abilities -are of a meaner order, we shall at least send them out into the world -well-equipped mentally and physically for their life's work and keep a -guiding hand upon them after their school days are ended. - -With such an education the individual unit of industry would have -strength and understanding to contend for a better wage and be fitted to -do better work. He would also take thought as to the constitution of the -society of which he forms a part, and employ intelligently the franchise -which in the past he has so frequently used to his own undoing. In an -individualistic society such a unit would be better fitted to hold his -own. In the wise collectivism towards which we are steering, he would be -fitted to do his whole duty to his fellows and himself. - -The relevance of education to the main theme of this book demands little -comment. It is obvious that, if we are to provide a proper physical and -mental training for our people we must spend more money. Better schools, -better playgrounds, better apparatus, more and better trained teachers, -classes not exceeding 30 pupils per class, the introduction of the -school doctor and school dentist, the provision of meals, the compulsory -continuation schools—all these things are needed and all these things -are costly. It is only want of reflection upon the enormous resources at -the disposal of the State which makes so many people timid in -educational reform. Take the matter of school doctors, for instance. On -page 64 of the Report of the Physical Deterioration Committee will be -found: - -"Dr Eichholz thought it (the medical inspection of school children) was -the greatest need in school organization." - -Therefore, you would say, Dr Eichholz and the Committee would urge that -the "greatest need" be properly supplied. Alas! the report goes on: - -"On the ground of expense he would confine a general examination to the -poorest schools, and considered that in London the work could be done by -ten young men at £250 each." - -The Committee, speaking for themselves, say: - -"The Committee believe that, with teachers properly trained in the -various branches of hygiene, the system could be so far based on their -observation and record, that no large and expensive medical staff would -be necessary...." - -Always the idea appears to be uppermost that this is a poor, a very -poor, country, which cannot afford to do the things which it would wish -to do. That teachers "properly trained in the various branches of -hygiene," which certainly do not cover the diagnosis of disease, should -be considered competent to decide which children should or should not -undergo medical examination amounts to an expression of opinion that we -cannot afford to provide the schools with their "greatest need." - -I refer the timid to the fact that the gross assessments to Income Tax -in 1908-9 were over £1,000,000,000. The practical point is this. Of the -£1,000,000,000, can we spare a few millions for the purposes mentioned -in this chapter? - -[Footnote 44: Cd. 2120.] - -[Footnote 45: It is of interest to observe that Mr Robert Hunter -estimates that 70,000 of the school children of New York arrive at -school either breakfastless or underfed. This estimate accounts for 13 -per cent. of the school children of the city.] - - - - - CHAPTER XVI - THE HOME - - -It is an amusing statistical fact that at the census of 1901 our -"overcrowded" England had but 558 persons to the square mile, or one -person to 1.15 acres, or one family to about 6 acres. If in 1901 the -population of England and Wales had been distributed evenly over the -area there would have been a distance of 240 feet between each person. -In 1871 a similar distribution would have removed each person from his -neighbour by 288 feet. Thus England is little more "crowded" to-day than -it was a generation ago. It is useful to remind ourselves by these -statistical exercises that the country is indeed nearly empty, and the -towns very full. In the 75,000 acres of the administrative county of -London were crowded, at the census of 1901, 4,536,541 people, a number -as great as the entire population of Australia, almost as great as the -entire population of the Dominion of Canada, and more than one-tenth of -the entire population of the United Kingdom. In London and 75 other -great towns in England and Wales are crowded about 15,000,000 persons or -about one-half of the entire population of the country. As London and -the great towns grow, the countryside is increasingly depopulated, and -not the countryside alone. Many small towns are decreasing in size. Thus -an increasing population is ever huddling closer together in a -diminishing number of centres. - -The greater number of our new births, then, are in crowded districts. -The figures of Book I. tell us, also that the greater number are in -urban houses of a rental under £20 per annum. The rental values of the -houses of Great Britain in 1907-8 were as follows: - - HOUSES OF GREAT BRITAIN, 1907-8 - - The figures do not include Ireland, but they include all residential - shops, lodging-houses, hotels, farm-houses, etc., in Great Britain. - - Under £20 (Exempt from House Duty), 6,875,000 - £20 and over (Charged to House Duty). 1,912,000 - --------- - 8,787,000 - ========= - -Of the 8,787,000 houses fully 7,000,000 are obviously the homes of the -very poor, as we should expect if the statements made in the earlier -parts of this book are true. In various districts the accommodation -which can be bought for £20 a year varies greatly, as has been already -pointed out. £20 per annum may command a decent home in some parts of -the provinces or Scotland, or a filthy tenement in East London or -Manchester. Broadly speaking, the majority of the houses under £20 are -fit for demolition. They rank in our estimate of capital (Chapter 5) for -a great deal of money; they command an enormous amount of rent, but, I -repeat, they are chiefly fit for destruction. In a minority of cases -they are indecent or insanitary; in a majority of cases they are either -old or ugly or uncomfortable. Rarely are they fit habitations for a -self-respecting people. The same is true of many of the houses up to £40 -and even £50 per annum in London and other crowded centres. Many £40 -dwellings in London are crowded tenement houses, each of several reeking -floors. - -What overcrowding means to the lives of those who suffer it may be -illustrated by the table prepared by Sir Shirley Murphy, which compares -the sanitary areas of Hampstead and Southwark in respect of expectation -of life. I have added the fourth column to give prominence to the -accusing fact that _the poor are robbed not of means alone but of life -itself_: - - EXPECTATION OF LIFE IN HAMPSTEAD AND SOUTHWARK, MALES ONLY, - IN 1897-1900 - - Expectation of life in Southwark - less than that in - Age. Hampstead. Southwark. Hampstead by - --- --- --- --- - Years. Years. Years. Years. - At birth 50.8 36.5 14.3 - 5 57.4 48.7 8.7 - 10 53.3 45.0 8.3 - 15 48.7 40.6 8.1 - 20 44.2 36.4 7.8 - 25 39.8 32.4 7.4 - 30 35.5 28.6 6.9 - 35 31.3 25.0 6.3 - 40 27.5 21.9 5.6 - 45 23.8 18.9 4.9 - 50 20.3 16.2 4.1 - 55 17.0 13.6 3.4 - 60 14.1 11.3 2.8 - 65 11.5 9.1 2.4 - 70 9.2 7.0 2.2 - 75 7.1 5.2 1.9 - -In Hampstead only 6.3 per cent. of the population live more than two in -a room in tenements of less than five rooms, and only 11.1 per cent. of -the population live in tenements of one or two rooms. In Southwark, on -the other hand, 22.3 per cent. of the population are in the first -category, and 31.6 per cent. in the second category. The table enables -the reader to measure the years which are stolen from the lives of the -inhabitants of Southwark. The area of Hampstead is 2,248 acres and the -population 68,416. The area of Southwark is 544 acres and the population -89,800. We should never forget that there are two sorts of crowding, one -of which is measured by room or tenement, the other by area. - -The Census definition of "overcrowding" by room or tenement is a very -modest one. It applies to tenements containing more than two occupants -per room, bedrooms and sitting-rooms included. Accepting this definition -there were 392,414 overcrowded tenements in England and Wales at the -Census of 1901, which were the homes of 2,667,506 people, or 8.2 per -cent. of the total population. - -That is bad enough, but if we take a more reasonable definition of -"overcrowding" and apply the term to all tenements (by tenement is meant -a separate occupation, whether a house or part of a house) of three -rooms or less we find that in 1901, in England and Wales, as many as -5,853,047 or 18 per cent, of the entire population occupied tenements of -either one, two or three rooms. A further 7,130,062 persons or 21.9 per -cent. of the population of England and Wales were housed in 4-roomed -tenements. The complete tenement figures are as follows: - - TENEMENTS (SEPARATE OCCUPATIONS, WHETHER HOUSES OR PARTS OF HOUSES) - IN ENGLAND AND WALES. 1901 - - -------------+-----------+-------------+-----------+---------- - | | | Percentage| - | | | of Total | - Number of | Number of | Occupants of| Population| Average - Rooms | Tenements.| Tenements. | in each | Occupants - in Tenements.| | | group of | per Room. - | | | Tenements.| - -------------+-----------+-------------+-----------+---------- - 1 Room. | 251,667 | 507,763 | 1.6 | 2.02 - 2 Rooms. | 658,203 | 2,158,644 | 6.6 | 1.64 - 3 Rooms. | 779,992 | 3,186,640 | 9.8 | 1.36 - 4 Rooms. | 1,596,664 | 7,130,062 | 21.9 | 1.12 - 5 or more | | | | - Rooms. | 3,750,342 | 19,544,734 | 60.1 | - +-----------+-------------+-----------+---------- - | 7,036,868 | 32,527,843 | 100.0 | - -------------+-----------+-------------+-----------+---------- - -It will be seen that, even in the 4-roomed tenements, there was an -average of 1.12 persons per room (room meaning every apartment in the -tenements, including sitting-rooms, attics, box-rooms, kitchens or -sculleries), and when we remember the small cubical content of many of -these "rooms" we see that as many as 12,983,109 persons, or 39.9 per -cent. of the population of England and Wales were certainly crowded, if -not "overcrowded." - -In Scotland, at the Census of 1901, 969,318 families occupied 3,022,077 -rooms, giving an average of only 3 rooms per family. Into the 3,022,077 -rooms of all sorts were crowded 4,472,000 people. - -While overcrowding, measured by room, slightly decreased between 1891 -and 1901, overcrowding on area considerably increased. In the ten years -a considerable number of model dwellings—models, that is, of everything -that dwellings should not be—were erected, and much ground in London and -elsewhere which should have been left open, was covered with buildings -of every conceivable degree of ugliness. - -As for existing houses, thirty years after the passing of the Public -Health Act of 1875, and fifteen years after the passing of the Housing -of the Working Classes Act of 1890, a considerable proportion are -actually insanitary, and only a minority conform to the most modest -standard of convenience and comfort. In the North of England and in the -Midlands there remain tens of thousands of houses built back-to-back, so -that there is no passage of air through them. - -The Manchester Citizens' Association recently published, from the pen of -its secretary, Mr T. R. Marr, a little book,[46] which shows, by a -coloured map, that slum property, including many back-to-back and -"converted" back-to-back houses, form a great ring round the offices and -factories of Central Manchester. Its lessons are enforced by a series of -photographs of slum property. Here is a picture of a Salford court, upon -which face the living rooms of eleven houses. Standing out in the court, -as a public exhibition, are three rotten places of convenience, only one -of them usable. Here, again, is a photograph taken in St Michaels' -Ward—taken, let us hope, in the absence of St Michael. A group of four -closets open on the street, and beside them, surrounded by a group of -slum children curiously watching the photographer, is a tap which is the -sole water supply of 22 houses. A third picture, also taken in St -Michaels' Ward, shows a stone-paved court of eleven houses. There is one -tap, an open ash-box, and several closets the doors of which are torn -from their hinges. - -In Liverpool, according to a paper read before the Royal Sanitary -Institute in April 1905 by Mr Fletcher T. Turton, the Liverpool Deputy -Surveyor, there were still 8,600 back-to-back houses standing, the -death-rate in their area being about 60 per 1,000! Further erection of -such houses is forbidden by Mr Burns's Housing Act of 1909, but there -are tens of thousands already in existence. - -In Leeds there are many of these back-to-back houses, without -ventilation, or yard, or private sanitary arrangements, let at rentals -varying from 3s. 6d. to 7s. 6d. per week. As many as three and four -houses join at one closet. The closets are frequently in yards, forty -yards from the house. In wet weather, rather than carry the waste water -from the bedrooms the length of the street, women may often be seen -pouring it down the street gully. On Sundays, when the inhabitants are -all at home, the difficulty as to sanitary accommodation is intensely -aggravated. - -In Sheffield, in the Potteries, and many other places, these abominable -back-to-back houses are to be found. Few workers' houses in the -Potteries have more than two bedrooms. The back-to-back houses in -Sheffield number 15,000, and sometimes as many as eight or ten persons -are to be found in their three little rooms. If we take only 7 persons -to the house there are 105,000 Sheffield people living in these dens. - -If there are not back-to-back houses or cellar dwellings in London, -there are many squalid areas which contain greater aggregations of the -poorest of the poor than can be found in any other part of the country. -In Marylebone, Southwark, St Pancras, Holborn, Bethnal Green, -Shoreditch, Stepney, and Finsbury upwards of 30 per cent. of the -inhabitants live in tenements of one or two rooms. In Finsbury the -proportion reaches 45 per cent.; in Shoreditch and St Pancras 37 per -cent. In Lambeth, Westminster, Paddington, Chelsea, Kensington, -Islington and Bermondsey 20 per cent. and upwards of the population live -in tenements of one or two rooms. Only, indeed, in Lewisham, Wandsworth, -Stoke Newington, Hampstead, Woolwich, Greenwich, Deptford, Camberwell, -Hackney and Fulham, do less than 15 per cent. of the inhabitants occupy -tenements of one or two rooms. Not even the school children of Ancoats -or Deansgate, Manchester, exhibit the degree of physical deterioration -of those of Lambeth or West Ham. - -It cannot be too strongly insisted that in connexion with the problem of -housing the people there is not merely the question of "overcrowding" or -of "crowding," whether in rooms or on area, to be considered. Not only -death and disease but ugliness and inconvenience have to be fought. The -speculative builder is covering suburban areas with mile after mile of -amorphous dwellings. Acre after acre of smiling meadow is disfigured. -Street after street of buildings of unredeemed ugliness reach out into -the beautiful country which lies so near to the 75,000 acres of London. -Trees are felled; every particle of verdure is scraped away. The town -advances, and before its grim threatenings Beauty flies. The lane -becomes the street; the hedge is replaced by cast-iron palings; beyond -the hedge there arises the row of "bay windows with venetian blinds" -which figure in the advertisements. Pass to the rear and you will find -the 16 or 18 feet frontage which the builder thought beautiful balanced -by a "back addition" which even the builder knew to be ugly. Facing the -back-additions, across two "gardens" together not so long as a cricket -pitch, another row of rear elevations, and so on, row after row. Such is -the vision with which we stimulate the fancy of the more fortunate of -the children of the people. We teach them drawing on the latest -principles—free-arm—in the school. We give them infinite ugliness as -their environment outside the school. We have still to learn that while -the dwellings and surroundings of the people are unlovely we cannot hope -for a gifted race. We have yet to understand that education begins when -the child opens its eyes and ears to the sights and sounds of the home -and its surroundings. It is not alone that the people lack monetary -income. To the ill-distribution of wealth is added the ill-distribution -of the means of a beautiful life. The majority of our people are denied -the vision of beauty, and even those who receive fair wages perish -morally for lack of that vision. - -From the centre to the circumference there passes all the evil thinking -and evil doing which the unnatural conditions of the centre have created -in the minds of men. The workman who leaves the centre for the new -suburb of Walthamstow is not surprised to find there the ugliness which -he left behind him. He does not expect to find Beauty—that is a -commodity confined to pictures. He does not wonder that man could be so -blind as to create a sore on the borders of one of the most beautiful -spots which this earth has to show. He owns his cottage with a smile, -oblivious of the might-have-been, and rarely if ever wonders why in a -country containing nearly 80,000,000 acres his considerable rental can -command so small a share of the surface of his native land. - -And surely it is for lack of vision that our efforts in connexion with -the housing problem are so misdirected. The rulers of our towns instead -of directing their attention to the outskirts have practically confined -themselves to tinkering at the centre. Blocks, palatial in size and -unholy in principle, have been erected and ironically dubbed "model -dwellings." It is true that in all big towns there are a certain number -of workmen who must live near their work, but there is usually a far -larger number who have no such tie. And the model dwellings referred to -usually succeed in housing not the class which must live near their work -but the class who could well go out beyond the suburbs. Thus the effect -of tinkering in the centre is often but to set free for the poorest of -the poor the tenements deserted by the better class who pass to the new -dwellings. That is good in its way, but how much better it would have -been to relieve the centre by emptying out its streets into the places -beyond. To buy up slums in the centre and create model dwellings is to -play into the hands of the landlords—to increase the value of the -unbought slums. To empty out the centre of its movable population is to -leave a better selection of homes for those who must remain, and to -leave the slum landlord to mourn a fall in the value of his "property." - -A great deal is often said about unoccupied sites in towns and their -suburbs and it has even been suggested that efforts should be used to -force them into the market and compel building upon them. Here again is -exhibited a most lamentable lack of vision. In so far as town sites are -unbuilt upon let them remain so, and if their owners are waiting for a -rise in value let us take measures to make that waiting prolonged. - -In a widely circulated leaflet on the land question I read: "If we pass -through the outskirts of any of our great centres of population, we see -pieces of land left practically derelict, with perhaps an old horse -grazing there disconsolately, or a few hens investigating a rubbish -heap. A little farther on we see houses being built and roads being laid -out. We know that still more houses are badly wanted, and we wonder why -the land between is not being utilized." - -Here we have a reformer ardently desirous of filling up an open urban -space which, if he were wise, he would use his best endeavour to keep -open for ever. Seeing houses being built and roads being laid out "a -little farther on"—what kind of houses and what sort of roads, I -wonder?—he is anxious to turn out the disconsolate horse and pile up -more houses in the intervening space. It apparently does not occur to -him that yet "a little farther on" there is land enough for the housing -of an army, and that a horse, however disconsolate, is at the worst a -prettier object than a speculative builder's "villa." - -Two things are necessary if the housing problem is to be grappled with -seriously and not resigned to private profit timorously modified by -municipal tinkering. The first is the control of land, and the second -ready access to capital. As has been truly said, the housing question is -a land question; as has been too rarely remembered, it is even more a -capital question. - -There is only one effective way in which the community can control land -and that is to become its landlord. It is also true that there is only -one effective way in which the community can keep in its own hands the -"unearned increment" arising from the enhanced value of land created by -the presence and work of the community, and again that effective way is -for the community to own the land. There is no necessity, however, for -the town to play into the hands of suburban landlords by purchasing dear -land. It can evade attempts to corner land required by the community by -going out and beyond that land if it is held for a rise. Indeed it is -better to leave a zone between its present circumference and the site of -its new housing area. Even in London, it is a simple matter to reach -land cheap enough for successful housing operations. It is of the utmost -importance that all municipalities should without further delay secure -considerable areas of the agricultural lands which surround their -townships.[47] By doing this well in advance of their building -operations they can insure that, as they themselves raise the value of -the land by developing it and establishing means of transit, the whole -of that value will remain in their hands. Moreover, if the owners of the -intermediate land thus see their market failing they will gladly place a -reasonable price upon their holdings. In this connexion it is probable -that the taxation of land upon its selling value may prove to be of -assistance. The man who controls a part of the area of his country and -who will neither use it himself nor allow others to use it should in any -case be taxed. I attach more importance, however, to the simple and -effective policy of widening the radius of operations until cheap land -is reached. - -It cannot be too clearly understood that simply to tax land on its -selling value is of itself no solution either of the land question or -the housing question. If land is priced by its owner at £1,000 per acre -and he is holding it to obtain that figure, we should not necessarily -bring it into the market by taxing it on its selling value. The price -asked obviously includes all the rise in value expected by the present -owner in the near future; that is why the price is held out for. If the -land be taxed upon the capital value the owner, unless very strong -financially, would probably have to sell. To do so, he would reduce the -price and the land would be taken up by a second owner. The expected -rise in value would thus be discounted, and the second owner having -obtained the land at a lower rate, would be able to hold the land for -the rise in spite of the tax payable. Thus the tax would not necessarily -bring the land into use. Nor, if it did, would it necessarily be devoted -to a desirable use. Owner B is not necessarily more moral or public -spirited than owner A. Owner A held up the land, but owner B, having -bought it, may put it to such base uses that we could wish it had been -held up a little longer. Above all, therefore, we must have public -control of area. - -As the owner of its own sites, the township can be the arbiter of its -own developments. This has been clearly recognized in Germany, where, -under the encouragement and stimulation of the State governments, -municipalities are acquiring land beyond their existing borders. -Considerable areas are owned by many German towns. Stettin has 12,500 -acres; Mannheim has 5,000 acres; Breslau has 12,000 acres; Frankfort has -11,000 acres. - -Large as our population is, it is really remarkable to note how little -area would be required to rehouse the people of the towns. Taking the -number of families in the United Kingdom at 9,000,000, only 1,800,000 -acres, or less than one-fortieth part of the area of the country, would -be required to house five families to the acre. This simple calculation -helps us to realize the point referred to in a former page—how tiny an -area now contains nearly the whole of our 44,500,000 people. - -Having wisely purchased land upon its borders, the municipality must -take thought as to the distribution of the population upon its new -territory. Plans must be made of the new roads, streets, open spaces, -and transit facilities long before they are actually required, so that -each step in development may be taken deliberately and that no new -difficulties may be built up to be the despair of the future. The -well-governed city should study its present and future area as the -artist regards his prepared sheet of canvas. Within its borders what -varying effects may be produced! With the loving care that the old -Italians bestowed upon the preparation of their panels, the municipality -should plan the ground upon which the life of the city is to move. It is -a picture the arrangement of which means life or death to the citizens; -it may easily be made to glow with health and beauty. - -Mr Burns's important Housing Act of 1909 has made it possible for local -authorities to plan out the future extensions of towns; it will be -interesting to see whether there is sufficient imagination in our local -rulers to make the provision fructify. - -In one of the most valuable contributions to this subject which have -been published in recent years,[48] Mr T. C. Horsfall describes the -thought and trouble which is given to the planning of the extension of -municipalities by German Town Councils. Thus Stuttgart, in 1901, when -preparing for a large extension of the town borders (its present -population is about 182,000), obtained the advice of skilled architects, -engineers, medical authorities, and _artists_. The politico-economic -aspect of the matter was also carefully considered. The opinions, plans, -and suggestions were then published in a volume to enable all the people -of Stuttgart to study the proposals for extension. - -Mannheim, again, which is chiefly a manufacturing town, prepared in 1901 -building plans which provide for the requirements of industry and -housing, while always remembering the claims of Beauty. I quote the -following from Mr Horsfall: "The description of the building plan for -Mannheim, prepared by Professor Baumeister, which is published in -Numbers 69, 70, and 71 of the 'Centralblatt der Bauverwaltung,' shows -that the new part of the town will be provided with a remarkably -complete system of narrow railways for passenger traffic, and with an -equally complete system of railway lines of the ordinary width leading -from goods-stations in all directions, for goods traffic, which will -enable every manufactory to load goods on to trucks on its own premises. -Carriage, therefore, will be exceptionally cheap in the town. Yet the -Town Council, who are thinking so much of economical working, recognize -that even their poorest fellow-citizens are men and women, whose bodies -and minds need wholesome recreation and an abundant supply of fresh air, -of light, and of the influence of flowers and trees. The building plan, -therefore, provides for the creation of avenue streets of widths varying -from 24 to 43 yards; and Professor Baumeister adds: 'Of course care has -been taken to provide open spaces, decorative shrubberies, parks and -sites for public buildings.' The width of ordinary streets varies from -8⅓ to 21⅓ yards." - -The German building plans provide in what districts factories may be -erected and determine (1) how much of building sites may be covered by -houses, and (2) the height of all buildings. Thus, even in cases where -the municipality does not own its own sites, it can in some measure -control the greed of the houselord. It cannot too strongly be insisted -upon, however, that absolute sovereignty of the manner of distribution -of the people upon area can only be obtained by acquisition of the land. - -The practicability of going out and beyond the township and emptying -into the open country the crowded and enfeebled inhabitants of the -cities has been amply demonstrated in the United Kingdom. An -object-lesson of the most practical character is afforded by the -beautiful garden city of Bournville, which the beneficence and wisdom of -Mr George Cadbury have raised four miles from the gloomy city of -Birmingham. - -Most people have heard of Bournville, but few are aware that it is not -merely a village erected for the accommodation of Mr Cadbury's -employees, but a working model of what may be done to solve the housing -problem of great cities. The village of Bournville now no longer belongs -to Mr Cadbury, for he has bestowed it upon the nation, the gift being -worth not less than £200,000. In December 1900, the estate was handed -over to the Bournville Village Trust, which is under the final control -of the Charity Commissioners. In the Deed by which the property was made -over to the Trustees the founder has thus set forth its objects: "The -founder is desirous of alleviating the evils which arise from the -insanitary and insufficient accommodation supplied to large numbers of -the working classes and of securing to workers in factories some of the -advantages of outdoor village life, with opportunities for the natural -and healthful occupation of cultivating the soil.... The object is -declared to be the amelioration of the condition of the working-class -and labouring population in and around Birmingham, and elsewhere in -Great Britain, by the provision of improved dwellings, with gardens and -open spaces to be enjoyed therewith." - -The objects thus outlined have been carried out by the provision of -beautiful homes set in gardens which are at once a source of revenue and -of healthful recreation to their possessors. - -Less than one-half of the breadwinners of Bournville are employed by Mr -Cadbury himself. The village is not a private preserve, as is so often -imagined, in which patronized cottagers live a bounty-fed existence, but -a free independent and public-spirited community which rules itself in -matters of detail through a Tenants' Committee or Council. A census of -the inhabitants made in December 1901 gave the following results:— - -_Proportion of Bournville Householders working in_ - - Per Cent. - Bournville 41.2 - Birmingham 40.2 - King's Norton and Selly Oak (manufacturing - villages within a mile of Bournville) 18.6 - ----- - 100.0 - ===== - - _Occupations of Bournville Householders_ - - Per Cent. - Factory workers 50.7 - Clerks and Travellers 13.3 - Mechanics, Carpenters, Bricklayers and others 36.0 - ----- - 100.0 - ===== - -Having this working population of people paying rentals between 5s. 6d. -including rates and 12s. 6d. excluding rates, the rate of infantile -mortality in Bournville in 1903 was only 65 per 1,000 against 331 in the -district of Birmingham known as St Mary's. - -The architectural beauty of Bournville has not been secured by -extravagant expenditure, but by tastefully treating good and simple -materials with due regard to utility. Mr W. A. Harvey, the architect, -says: "The idea of a cottage home that I have always endeavoured to keep -in view is one in which beauty is based on utility." There is nothing -tortured, nothing deliberately and queerly "quaint," no plastering of -ornament. The houses look comfortable because they are comfortable. The -windows are pretty because they are simple casements, the best possible -sort of window. - -A type of house which particularly pleased me had the following -accommodation: - - Ground floor: - - Living room, 17 feet by 16 feet with ingle-nook and bay window. - - Scullery, 13 feet by 11 feet 3 inches, with bath sunk in floor. - - Larder, 5 feet by 4 feet 6 inches. Coal cellar, watercloset, tool shed - and small paved yard. Verandah in front. - - First floor: - - Bedroom No. 1, 17 feet by 13 feet 6 inches. - - Bedroom No. 2, 13 feet by 8 feet. - - Attic Bedroom, 10 feet by 8 feet 7 inches. - - Linen cupboard. - -The total cost, including fencing, laying out garden, etc., was £280. -The house, it will be seen, has no "parlour," but one large living room -measuring 17 feet by 16 feet without the ingle-nook and large square bay -window. It is an exceedingly attractive and comfortable room, and the -sensible idea is appreciated by many of the tenants. The tastes of -others are met by the ordinary arrangement of a separate kitchen and -parlour. - -The picturesque and comfortable houses have a charming setting. They are -set back from the road and grouped in such manner as to give each house -the best use of the sun—an important matter often neglected in the -planning of even expensive houses, and absolutely ignored by the -speculative builder. It follows that there are no monotonous roads in -Bournville; natural grouping arises from attention to aspect. Each -cottage has one-eighth to one tenth of an acre of garden. The gardens -are laid out when the houses are built, so that the tenant has not to -begin by breaking up uncultivated land. Lines of fruit trees are -planted, and these, besides yielding a good supply of fruit, form a -pleasant screen between the gardens. As a rule, the tenants take a keen -interest in their gardens, and cultivate them with great success. In -addition to the cottage gardens there are about 100 allotments, which -are eagerly sought after by the inhabitants of the neighbouring -manufacturing villages. There are two gardening classes for young men. -Two professional gardeners with a staff are in charge of the gardening -department, and are always ready to give whatever information and advice -may be required, but each tenant is responsible for the cultivation of -his own garden. It is a notable fact that the gardens are found to -yield, on the average, 1s. 11d. each per week. Gardening is lovingly -fostered by the Village Council already referred to. The members of this -Council, whose services are rendered voluntarily, are elected by ballot, -and the annual elections and by-elections evoke considerable interest. -Through this body arrangements are made for the co-operative purchase of -plants, shrubs, and bulbs in great numbers; gardening tools such as -mowers, rollers or shears, bought for the purpose, are let on hire; a -loan library of gardening books has been formed; also a gardening -association with periodical inspections of gardens; while lectures are -arranged for the winter, and excursions for the summer. Further, the -Council has established and managed with conspicuous success flower -shows and an annual fête for the children. The bath-house and children's -playground are also under its control. - -The roads are 42 feet wide, and are all planted with trees. Out of the -100 acres laid out for building 14 acres have been reserved as open -spaces, including parks, green, and children's playgrounds. It is part -of the plan that in no part of the little community should children be -far removed from a proper playground. - -I have already referred to the rate of infantile mortality in -Bournville. It may be added that the death-rate for 1904, as certified -by the local Medical Officer of Health, was 6.9 per 1,000. The rate for -Birmingham for the same year was 19.3. In his report for 1900 the -Medical Officer of Health referred to Bournville as follows:—"I have in -my previous reports made mention of the model buildings on the estate -which has been laid out by Mr George Cadbury. I cannot refrain from -again mentioning how much I admire the system he has adopted. The object -of the dwellings has been to give plenty of light and air with a good -deal of air space to each house with sufficient land adjoining, and so -insure a 'breathing lung' for the inhabitants of these houses. The -houses are moreover built on modern principles, and no pains have been -spared to make them as dry and free from insanitary conditions as -possible. In addition, open spaces have been laid out so that at all -times there can never be any danger of increasing the density of the -population over the area on which the buildings have been erected. I -cannot speak too highly of these dwellings, and I can only hope that we -may be able to keep all dwellings as far as possible up to this -standard." - -To pass to the all-important financial side of the matter, the balance -sheet for 1909 gives the following results: - - BOURNVILLE VILLAGE TRUST INCOME AND EXPENDITURE, - YEAR ENDED DECEMBER 31ST, 1909 - - Income. Expenditure. - Total rents £9,249 Salaries £1,313 - Other incomes 1,042 Office expenses 164 - Rates, taxes, etc. 754 - Maintenance, repairs - and renewals 1,531 - Legal expenses 73 - Miscellaneous 143 - Maintenance of roads - and open spaces 244 - Depreciation on fencing, - etc. 229 - ------- ------ - £10,291 £4,451 - ======= ====== - - Balance excess of Income over Expenditure, £5,840. - -The whole of this surplus profit is devoted to building new houses and -to buying and developing more land, so that Bournville automatically -increases in size year by year. At the present time it is growing at the -rate of about 50 houses, or say, 250 persons, per annum, and the rate of -increase will, of course, be progressive. - -In considering the above figures it must be remembered that the -Bournville Trust in 1900 had the whole estate handed over to it by Mr -Cadbury as an absolute gift. No capital charges had therefore to be met. -I am informed by Mr L. P. Appleton, the building manager, however, that, -with regard to the houses erected by the Trust itself, they all show a -net return of 4 per cent. on the capital, after providing for ground -rent, rates and taxes, repairs, management and all out-goings.[49] - -The respective parts played by land and capital in such a scheme should -be carefully noted. If a municipality acquired land at £100 per acre, -and laid out roads and sewers at a cost of £400 per acre, and erected -upon each acre ten houses costing £280 each, the total outlay per acre -would be £3,300, and per house £330. How little a considerable variation -in the cost of land affects the result will be realized from the -following table: - - | |Cost of Roads,| | - Cost of Land | Cost of Land |Sewers, etc., | Cost of |Total cost of - per Acre. |per House. 10 | per House | building | each House - | to the Acre. | (£400 per | House. | and its Land. - | | Acre). | | - £ | £ | £ | £ | £ - 50 | 5 | 40 | 280 | 325 - 100 | 10 | 40 | 280 | 330 - 200 | 20 | 40 | 280 | 340 - 300 | 30 | 40 | 280 | 350 - -It is not commonly realized by many of those who write on the housing -question that building land is a manufactured article, and that when raw -land is secured housing is as far off as ever unless capital can be -secured to develop it. It would rarely be necessary for a municipality -to pay more than £200 per acre, but whether it paid £20 or £200 the cost -of making roads, sewers, etc., and of erecting the houses would remain -the same. To house all our people on the scale of ten families to the -acre as at Bournville would absorb only 900,000 acres of land, which -could be acquired for quite a moderate sum of money at a small remove -from crowded centres, but the cost of manufacturing the land and of -manufacturing the houses would be great. - -Given the provision of healthy houses by a municipality, would they be -appreciated by those for whom they were intended? Here the experience of -Bournville is conclusive. The village has never a house untenanted and -the new houses are eagerly sought after long before they are completed. -There is a constant stream of applications, and this in spite of the -fact that Birmingham is distant four miles. Many of the men cycle to and -from their work in the big city. They do not come to Bournville for -charity rents. They have to pay about the same rentals as in Birmingham. -The difference lies in the substitution of a healthy and lovely home for -a gloomy and uncomfortable tenement. - -There is nothing in the Bournville scheme which cannot be effectively -carried out by any municipality. Under the housing acts local -authorities possess the power to acquire land for present or future -building operations, the power to raise loans, and the power to build. -The explanation of their sluggishness in putting the acts into effect is -to be found in the fact we have already noted, viz. that the housing -question is chiefly a capital question. This was slightly recognized by -the Housing of the Working Classes Act of 1903 which extended the period -allowed by the 1890 Act for the repayment of loans from 60 years to 80 -years. - -The vital importance of good housing makes it necessary to do something -to put capital cheaply at the disposal of local authorities for the -purpose. The housing question is a national one, and demands the use of -national capital. Again we touch the matter of ways and means and again -we see the advantage of considering social problems in relation to the -income and accumulated wealth of the country. Year by year, as we have -seen, an enormous amount of capital is wasted. British workmen, denied -proper housing, are paid something less than the value of their product, -while the margin is largely wasted in luxury at home or even sent out of -the country to establish water works in Argentina, supply the sinews of -war to Japan, or employ Chinese Coolies in South African mines. The time -has come when the nation must consider the nature of its resources, and -study its own development. We must see to it that the demand for houses, -the primary demand of a civilized man, is answered, not by the -speculative builder, but by the nation itself. - -The proposal here made is a simple one. It is that National Housing -Loans should be raised and the proceeds placed in the hands of a -permanent Housing Board or Commission which should be empowered to -guide, assist and if necessary stimulate local authorities to rehouse -their poor. The Housing Board should have power to lend money to local -authorities, for the execution of approved schemes, for a period of 100 -years at a nominal rate of interest, say 1½ or 2 per cent., the loss to -be made up out of the proceeds of Imperial taxation. To deal effectively -with the question, a yearly loan of at least £20,000,000 would be needed -for some years. Borrowing this at 3 per cent. and lending it out at 2 -per cent. would create a charge of only £200,000 for each £20,000,000. -If then we authorized an annual issue of £20,000,000 for ten years—in -all £200,000,000, the total annual charge through loss of interest would -be but £2,000,000. Such a loan, about two-thirds of the cost of the late -South African war, would not only rehouse one-tenth of our people, but -place local authorities in possession of assets yielding a fine -revenue,[50] which on the Bournville plan, could be used for the -progressive extension of housing schemes. With access to capital for -housing at 2 per cent., and 100 years in which to repay it, local -authorities would be eager to claim their share of the national housing -provision. The loan would only be granted on the approval of plans for -the extension of the town boundaries, for transit facilities, and of -plans of the houses, gardens and recreation grounds for which the loan -was desired. - -Failing action by the local authority, the Housing Board would make a -compulsory housing scheme[51] upon representation by the persons lacking -accommodation. - -A drastic housing policy is needed as much in rural as in urban -districts. Want of housing accommodation is helping to thin our country -population, and the Housing Acts have been simply ignored in the past by -Rural Sanitary Authorities. On this head the Housing Bill of 1909 makes -salutary provisions giving county councils power to act in default of -rural district councils, and also giving power to the Local Government -Board to order schemes to be carried out within a reasonable time. - -We have to do something more for the agricultural labourer than house -him, however, and here we touch another question intimately bound up -with national development—the land in its primary aspect as the basis of -agriculture and the source of food and material. This brings us to the -consideration of the empty country. - -[Footnote 46: "Housing Conditions in Manchester" (Manchester University -Press price 1s.).] - -[Footnote 47: This point should be read in connexion with the more -drastic proposal made in the next chapter.] - -[Footnote 48: "The Example of Germany," by T. C. Horsfall. Published by -the Manchester University Press.] - -[Footnote 49: Near York Mr Joseph Rowntree has successfully carried out -a housing scheme upon Bournville lines, and provided at the modest -rental of 4s. 6d. a week (the rates are an additional 8d. per week) -houses within the reach of unskilled workmen. The cottages are thus -described: - -On the ground floor is a large living room (12 ft. 6 in. by 20 ft. 6 -in.) with a bay window and plenty of cupboard accommodation, a small -pantry, and a scullery fitted with a copper, bath, and sink. The copper -is fitted with a patent exhaust to carry the steam direct into the -flues, thus preventing the discomfort which often arises in small houses -on washing day. The bath is fitted with a drop-down lid, forming a table -when the bath is not in use. Upstairs there are three bedrooms, each -fitted with a fireplace, and there is a large wardrobe on the landing. -The walls are plastered internally with adamant cement, which dries very -quickly, and assumes a smooth hard surface, and is thus more sanitary -than the ordinary plaster. All the rooms are fitted with picture -mouldings. Gas is supplied throughout the house, and city water is laid -on. - -The gardens are not so large as at Bournville and the houses of cheaper -construction. The rental named, 4s. 6d. a week, is found to yield a -clear profit of 4 per cent., which is devoted, in happy emulation of the -Bournville scheme, to the extension of the little community.] - -[Footnote 50: On this point the experience of Richmond, Surrey, is of -great value. In the "Housing Handbook" Alderman W. Thompson shows what -great financial advantages Richmond will reap from its cottage building, -although this was carried out on land costing £700 an acre. The houses, -built in 1894 and 1900, cost from £162 to £276 each and let from 6s. to -8s. per week. Altogether there are 132 houses containing 650 rooms and -132 sculleries, on six acres of ground costing £4,250 for site; £1,857 -for roads and sewers; £505 for sundries, and £31,200 for building, being -a total cost of £37,812 and an average inclusive cost of £58 per room. -The income gives a gross profit which provides interest at 3¼ per cent. -on capital outlay, a sinking fund contribution of £486 per annum, and a -net profit of £38 per annum. Thus a large number of people have been -well housed at a profit to Richmond. At the end of 42 years from 1897 -Richmond will have paid off the entire loan through the operation of the -sinking fund and be in possession of a property worth £35,000 and -producing a net income of over £1,600 a year. It is found that the -tenants take a great pride in their dwellings, and that their social -habits have greatly improved.] - -[Footnote 51: The Grand Duchy of Hesse compels municipalities to borrow -money whether they like it or not. Hesse has determined that her people -shall be properly housed—a most wise and patriotic determination. The -Duchy therefore lays it down that the first duty of a municipality is to -buy land that its borders may extend in a proper and healthful manner. -Further, under the law of 1902, Town Councils which decline to build -houses for the people can be compelled to accept a loan from the bank -and to lend the money so obtained to a building society which is willing -to do the work.] - - - - -CHAPTER XVII - -THE EMPTY COUNTRY - - -Although it is a well-known fact that the increase of population of the -United Kingdom is practically an addition to the urban population, it -may be well to preface consideration of the land question in its -relation to the national wealth and income by reminding the reader of -the precise facts of the case. - -If we have regard only to the technical "Urban" and "Rural" Districts, -we get the following figures: - - ENGLAND AND WALES: POPULATION OF URBAN AND RURAL DISTRICTS RESPECTIVELY - - Urban Rural - Census of Districts. Districts. - 1891 21,745,286 7,257,239 - 1901 25,058,355 7,469,448 - -Thus the urban population increased by 15.2 per cent., while the rural -population increased by 2.9 per cent. - -Many of the so-called "Urban" Districts, however, are quite rural in -character, being often small towns dependent as business centres upon -the agricultural areas in which they are situated. In 1901 there were -215 Urban Districts with populations below 3,000; 211 with populations -between 3,000 and 5,000; and 260 with populations between 5,000 and -10,000.[52] - -Having regard to these considerations the following figures are arrived -at: - - (1) Classing with the Rural Districts all those Urban Districts which - had in 1901 populations below 10,000 we get: - - Urban Rural - Population. Population. - 1891 18,964,882 10,037,643 - 1901 21,959,998 10,567,845 - -This gives an urban increase of 15.8 per cent. and a rural increase of -5.3 per cent. - - (2) Classing with the Rural Districts those Urban Districts which had - in 1901 populations below 5,000 we get: - - Urban Rural - Population. Population. - 1891 20,576,448 8,426,077 - 1901 23,803,714 8,724,129 - -This gives an urban increase of 15.7 per cent. and a rural increase of -3.5 per cent. - -Combining the three tests, we see that the truth broadly stated is that -the rural population is almost stationary while the urban population is -rapidly increasing. The rural population is thus a diminishing -proportion of the whole. - -In 23 rural counties in England and Wales actual depopulation occurred -between 1891 and 1901, ranging from a decrease of 7.5 per cent. in -Montgomeryshire to a decrease of 1.9 per cent. in Cornwall. - -The Census Commissioners make an interesting test of depopulation of -rural areas by taking the 112 Registration Districts which are entirely -rural, and which had in 1901 an aggregate population of 1,330,319. Their -population at each census back to 1801 has been approximately as follows: - - POPULATION OF 112 RURAL REGISTRATION DISTRICTS, 1801-1901 - - Increase + or - Census Year. Population. Decrease - in - preceding decennium. - - 1801 932,364 ... - 1811 997,494 + 6.99 - 1821 1,139,137 + 14.20 - 1831 1,216,872 + 6.82 - 1841 1,288,410 + 5.88 - 1851 1,324,528 + 2.80 - 1861 1,321,870 - 0.20 - 1871 1,321,377 - 0.04 - 1881 1,313,570 - 0.59 - 1891 1,304,827 - 0.67 - 1901 1,330,319 + 1.95 - -The great advance in 1811-1821 was presumably due to the cessation of -the long war. In 1851-1891 actual depopulation occurred, but in -1891-1901 there was a gain of 1.95 per cent. Of the 112 districts, -however, 73 showed actual decrease in 1891-1901, the total increase -being entirely due to an advance in a few of the districts containing -mines. It is clear that in the last 50 years there has been actual -depopulation of strictly rural areas. - -This becomes still plainer when we examine the facts given in the table -on page 237 as to the natural growth of the rural areas. - - THE MIGRATION FROM THE COUNTRY - - -----------------+-------------------+-----------+-----------+---------- - | Population. | Increase | Excess of | Loss - +---------+---------+ of |Births over| by - | 1891. | 1901. |Population.| Deaths. |Migration. - -----------------+---------+---------+-----------+-----------+---------- - 112 Registration | | | | | - Districts | | | | | - entirely Rural |1,304,827|1,330,319| 24,492 | 150,437 | 124,945 - | | | | | - 222 Registration | | | | | - Districts which | | | | | - contain urban | | | | | - districts with | | | | | - populations under| | | | | - 10,000 |4,176,219|4,215,326| 39,107 | 414,816 | 375,709 - +---------+---------+-----------+-----------+---------- - Total of 334 | | | | | - Registration | | | | | - Districts |5,481,046|5,545,645| 64,599 | 565,253 | 500,654 - -----------------+---------+---------+-----------+-----------+---------- - -It will be seen that in a rural population of nearly 5½ millions, the -natural increase by excess of births over deaths was, in 1891-1901, -565,253, but in the same time 500,654 persons left these districts -either for urban England or for places abroad, so that the total -increase in population was only 64,599. - -Turning to the number of persons employed in agricultural operations of -all kinds, the table on page 239 shows the decline which has occurred. - -This extension of the table given in "Riches and Poverty," Edition 1905, -p. 223, modifies it somewhat. The reduction of agricultural labourers is -not so great as the crude totals suggest. It is the women and boys who -have chiefly disappeared from British agriculture, and it should be -observed that 248,500 wives and daughters disappeared in 1871 as -compared with 1861 merely by reason of the fact that they were -enumerated at the earlier date but not at the later one. According to -Lord Eversley's careful analysis ("Statistical Society's Journal," -1907), the actual decline of male agricultural employment (men and boys) -in Great Britain was from 1,657,000 in 1861 to 1,236,000 in 1901, or, in -England and Wales alone, from 1,449,000 in 1861 to 1,079,000 in 1901. -This is a serious decline, but not as great as is commonly supposed. - -Nothing is commoner than the belief that the trend to the towns is only -to be observed in the United Kingdom. As a matter of fact it is confined -to no country and is, indeed, a world-wide phenomenon. Between 1851 and -1906 the urban population of France increased from 25.5 per cent. to -42.1 per cent. of the whole. Between 1871 and 1905 the urban population -of Germany increased from 36.1 per cent. to 57.4 per cent. of the whole. -In both cases the population classed as "urban" is that contained in -towns with at least 2,000 inhabitants. - - ENGLAND AND WALES: PERSONS EMPLOYED IN AGRICULTURE, 1851-1901 - -+------+---------------------------+-----------------------+ -| | ADULTS | YOUNG PERSONS | -|Census| (Aged 20 and over). | (under 20). | -| of-- +---------+-------+---------+-------+-------+-------+ -| | Men. |Women. | Total. | Boys. |Girls. |Total. | -+------+---------+-------+---------+-------+-------+-------+ -| 1851 |1,141,000|336,000|1,477,000|328,000|100,000|428,000| -| 1861 |1,119,000|301,000|1,420,000|323,000| 60,000|383,000| -| 1871 | 972,000|122,000|1,094,000|277,000| 52,000|329,000| -| 1881 | 884,000| 50,000| 934,000|254,000| 11,000|265,000| -| 1891 | 816,000| 40,000| 856,000|237,000| 6,000|243,000| -| 1901 | 750,000| 43,000| 793,000|186,000| 9,000|195,000| -+------+---------+-------+---------+-------+-------+-------+ - -+------+----------------------------+ -| | TOTAL, ALL AGES. | -|Census| | -| of-- +---------+--------+---------+ -| | Males. |Females.| Total. | -+------+---------+--------+---------+ -| 1851 |1,468,000| 436,000|1,905,000| -| 1861 |1,442,000| 361,000|1,803,000| -| 1871 |1,249,000| 175,000|1,424,000| -| 1881 |1,139,000| 61,000|1,200,000| -| 1891 |1,054,000| 46,000|1,099,000| -| 1901 | 936,000| 52,000| 988,000| -+------+---------+--------+---------+ - -I remind the reader of these facts because it is necessary to -distinguish between what is true and what is untrue in the arguments -used in support of the cry "Back to the Land." As a general rule the -stationariness of the rural population is attributed to cheap imports, -or to land tenure, or to want of housing accommodation, or to the -attractions of town life, or to the higher wages offered in industrial -pursuits. All these things are causes of migration to the towns, but one -of the most potent causes is rarely considered. It is the application of -machinery and improved methods to agriculture. To produce a given -quantity of food, far less labour is required than of old. Therefore, -even in a country like France, which is almost independent of imported -food, it is obvious that there must be a trend townwards as the labour -displaced from agriculture seeks other employment. - -Thus, in considering land in its agricultural aspect _we must not regard -it as containing an unlimited field of employment_. Agricultural methods -will continue to improve, and the day will undoubtedly come when one -man's work applied in agriculture will literally feed a multitude. - -But, having made that reservation, let us look at the French and German -figures in another aspect. We see that in France, although the urban -population has increased, it is still much less than one-half of the -whole. In Germany, again, the town population in 1910 is about 60 per -cent. of the whole. In our own country, if we counted as urban -population the inhabitants of all towns containing 2,000 and upwards, we -should find it amount to over 80 per cent. of the whole. While, -therefore, not losing sight of the reservation already made, it is clear -that, in the United Kingdom, causes other than the application of -machinery to agriculture have operated to produce urban congestion. - -There was a time when no European country was so rich as England in men -who cultivated their own land. To-day there is no country in the world -in which cultivation and security of tenure are so widely divorced. -Whatever the trend to the towns in other countries may be, there is no -other country in which such a marked diminution in agricultural -employment has occurred as in the United Kingdom. The land which bred -the bowmen of Agincourt and the Ironsides of Cromwell now sends forth -the men of whom Sir Ian Hamilton wrote to Mr Horsfall "I will not give -you, a Manchester man, offence, if I say that their physique was hardly -equal to the fine standard of their determination and courage.... It is -the fault of some one that these brave and stubborn lads were not at -least an inch or two taller and bigger round the chest, and altogether -of a more robust and powerful build." - -Looking at the industry of our people as a whole, the main fact which -stands out is want of security of employment. Nearly the whole of our -industrial workers are earners of weekly wages, and of our sparse -agricultural population but a small proportion are owners. Compare the -position of France. There, fully one-half the population are attached to -the soil by virtue of ownership and secure in the mother-earth which -nourishes them. They may be poor, many of these peasant proprietors, but -at least they are not constantly on the verge of hunger; at least they -have the glorious privilege of independence. - -Our empty country-side is universally admitted to be a great national -danger. It is not alone that we are so much dependent upon imported -food; it is that the imported food is for the consumption of a race -degenerating in the unwholesome environment of town life. Everywhere the -cry of "Back to the Land" is raised, but, as though to mock that cry, it -is only answered by well-to-do weekenders, attendance upon whom, in -faked-up cottages from which labourers have been ousted, has become one -of our many degrading trades of luxury. - -We must be under no illusions. We must not believe that mature and -debilitated town-dwellers can be planted out in rows to gain a living by -entire devotion to agriculture. We can hope for but little from farm -colonies for the unemployed. Our chief hope, here as elsewhere, is in -the children. We must seek to attach our present rural population to the -soil under such conditions that their children may see hope where now -there is none. - -How shall we secure allotments and small holdings for the agricultural -labourer? Parliament in 1906-1909 has given much attention to rural -problems, and the Small Holdings Act of 1908, setting up Commissions -with power to make schemes for small holdings if County Councils neglect -to do so, extending to eighty years the period for which money may be -borrowed for the purposes of the Act, and giving powers for the -compulsory acquisition of suitable land, is now in operation. The Report -for 1908 shows that County Councils in England and Wales acquired 11,346 -acres for small holdings and 304 acres for allotments. - -We may venture to hope for better results than this, but is it asking -too much of the nation, at this juncture, to broaden its conceptions? -Why should we not, having regard to the extraordinary facts as to our -national wealth and income, having regard to the admitted dangers of our -present position, having regard to the best disposition and welfare of -our 44,500,000 people upon their island home of 77,000,000 acres,—why, -having regard to these things, should we not determine to secure -absolute control of area, and, having secured it, to order the first -essential of healthful life, proper distribution upon area? - -As has been already pointed out in these pages, the 77,000,000 acres of -the United Kingdom, outside the tiny spots called towns which occupy an -almost negligible fraction of the whole, _produce a gross rental of -only_ £52,000,000. This is the sum at which the whole of the land of the -United Kingdom, save that small part which is attached to houses, was -assessed to Income Tax in 1908-9. It represents the rentals of -agricultural lands as they stand with all their farm-houses and other -buildings, roads, ditches, fences, etc. In 1898 the Royal Commission on -Agriculture valued this land at only eighteen years' purchase. Twenty -times £52,000,000 is only £1,040,000,000 or about one-half of one year's -income of the country. This, it will be remembered, was the valuation of -land which we adopted in Chapter 5. - -The question I submit for consideration is this: Is it worth our while -to buy up our own birthright at the price of one-half of a single year's -income? - -The question should be answered with due regard to all the -considerations as to agriculture, housing and the distribution of -population and industries which have been advanced in these pages. The -problem of the town is before us, and not alone the question of the -tilling of the soil. It should also be answered with due regard to the -question of food importation and the probabilities as to the continuance -of cheap supplies. - -In 1875-6 the gross assessments of agricultural lands—an area very -little larger than at present, for, as has been shown, the largest town -occupies a relatively insignificant area—amounted to £67,000,000 or -£15,000,000 more than at the present time. If we had bought in 1875, -then, and rents had remained the same, we should have lost capital, but -would the value of the land have remained the same? In thirty years we -could have created a considerable yeomanry,—men holding land from the -State not in fee simple, but nevertheless in absolute security of -tenure. They could have paid us rentals at which small holdings would be -eagerly competed for, yet rentals larger than are at present derived by -the little sovereigns of the British country-side from their tenants. -Further, we should have stemmed the current of humanity which for thirty -years has flowed to the towns, and done something, in the phrase of -Ruskin, to "get as much territory as the nation has, well filled with -respectable persons." - -My point as to the value that is and the value that might be is -illustrated by Sir Robert Edgcumbe's experiment with Rew Farm, in the -parish of Winterbourne St Martin, in Dorsetshire. Sir Robert bought this -farm of 343 acres for £5,050, made a road through it, and sold it in -small holdings at prices ranging from £7 to £20 per acre. The land was -eagerly taken up and the experiment has been a great success. When Sir -Robert bought the land in 1888 the outgoing tenant was in financial -straits—he could not make Rew Farm pay. It was rented at £240 per annum -and its net rateable value was £215. It is improbable that a new tenant -would have paid more than £200. Yet, under small cultivation, the -rateable value of Rew Farm rose from the £215 of 1888 to £346 in 1902, a -rise of 60 per cent. In the same period, the rateable value of the -parish of Winterbourne St Martin as a whole fell from £2,807 to £2,073. - -Apart from the question of small holdings, nothing is more probable than -a rise in the value of British agricultural land to a point far beyond -any yet attained. Already, within the last few years, a revolution has -taken place in our wheat supplies—a revolution which has gone unnoticed -by the British public, so long accustomed to its miraculous cheap loaf -in the baker's shop that the miracle has become, as is the fate of all -miracles, a commonplace and unregarded thing. The table on p. 245 shows -the nature of the change which has occurred: - - UNITED KINGDOM IMPORTS OF WHEAT AND FLOUR IN EQUIVALENT WEIGHT OF GRAIN - In Millions of Cwts. - -------------------+-----+-----+-----+-----+-----+-----+ - |1895.|1896.|1897.|1898.|1899.|1900.| -------------------+-----+-----+-----+-----+-----+-----+ -Russia | 23.0| 17.2| 15.1| 6.4| 2.5| 4.5| -Roumania | 2.0| 5.4| 1.2| 0.2| | 0.7| -U.S.A. | 45.3| 52.8| 54.1| 62.0| 60.2| 57.4| -Argentina | 11.4| 5.0| 0.9| 4.0| 11.5| 18.7| -Canada | 5.1| 6.3| 6.9| 7.7| 8.7| 8.0| -India | 8.8| 2.1| 0.6| 9.5| 8.2| | -Australia | 3.6| | | 0.2| 3.0| 2.9| -------------------+-----+-----+-----+-----+-----+-----+ -Total of above and| | | | | | | - other countries |107.2| 99.6| 88.7| 94.4| 98.5| 98.6| -------------------+-----+-----+-----+-----+-----+-----+ - -------------------+-----+-----+-----+-----+-----+----- - |1901.|1902.|1903.|1904.|1905.|1908. -------------------+-----+-----+-----+-----+-----+----- -Russia | 2.6| 6.6| 17.3| 23.7| 24.8| 4.6 -Roumania | 0.5| 2.4| 3.1| 1.5| 2.1| 1.8 -U.S.A. | 66.8| 65.0| 46.7| 18.5| 14.5| 40.7 -Argentina | 8.3| 4.5| 14.2| 21.8| 24.1| 31.8 -Canada | 8.6| 12.2| 14.5| 9.0| 8.4| 16.8 -India | 3.3| 8.8| 17.1| 25.5| 22.9| 2.9 -Australia | 6.2| 4.2| | 11.4| 11.5| 5.8 -------------------+-----+-----+-----+-----+-----+----- -Total of above and| | | | | | - other countries |101.0|107.9|116.7|118.2|114.2|109.1 -------------------+-----+-----+-----+-----+-----+----- - -In 1902 America sent us 65,000,000 cwts. of wheat. In 1903 this great -supply fell sharply and in 1904-5 it was reduced to less than 20,000,000 -cwts. In 1908 there was recovery, but this was but temporary. Sooner or -later the United States supply will wholly cease. By 1925 the United -States will have some 110,000,000 to 120,000,000 people to feed. - -In "Riches and Poverty," 1905 edition, I wrote:— - -"The United States failing, we still secured our imported wheat supplies -in 1904 and 1905, but at an increased price. Canada failed, but those -uncertain suppliers, India and Australia, came to the rescue. Argentina -sent us more than ever before and Russia also came into the export -market. But the facts as to America remind us that none of these -suppliers can be relied upon indefinitely, and some of them are -notoriously uncertain. Canada has done badly in 1904 and there will -always be difficulties of climate to consider. Moreover, the United -States will in future come into the market as a buyer and compete with -us for the exports of North-West Canada and Argentina. The sum is that -we cannot for the future depend upon dirt cheap wheat raised by scratch -farming on virgin soil, and that, as a consequence, the price of wheat -will rise. As with wheat, so, sooner or later, with many other foods. -When it comes to putting more labour and manure, and less luck, into -farming in new lands, then conditions will be equalized, prices of -produce will rise, and the price of British land will rise also." - -It is now (1910) only necessary to add that the price of wheat has moved -thus: - - THE RISE IN WHEAT - - British Foreign Indian and - Wheat. Wheat. Colonial. - _s._ _d._ _s._ _d._ _s._ _d._ - 1894 (lowest on record) 22 10 22 10 23 6 - 1904 28 4 30 5 29 7 - 1905 29 8 31 2 30 8 - 1906 28 3 30 1 30 3 - 1907 30 7 32 4 33 10 - 1908 32 0 36 0 36 1 - 1909 36 11 39 2 40 3 - -Merely as a commercial speculation, then, it would be well worth our -while to invest £1,000,000,000 in buying up the United Kingdom. The land -is now probably at bed-rock price, and we should come in, as the slang -phrase goes, on the ground floor. The really dear land, that of the -towns, we could pass by. We want to get our industries and our people -out of the towns and with control of area we could do it. The State, as -landlord from John o'Groats to Land's End, could afford to dispense with -the acquisition of the tiny areas upon which the majority of our people -are now crowded. Land nationalization, viewed in this way, presents no -insuperable financial difficulties. On the contrary, it would put us in -possession, at an absurdly low price, of the opportunity to recreate our -social structure and the means to dispense with all taxation in the time -to come. Under wise management the national acreage could soon be made -to yield a revenue from farms, allotments, market gardens, houses, -factories, forests, etc., of something over three pounds per acre on the -average, for it would house the greater part of our people and produce a -larger part of our food by intensive cultivation. If we wisely use our -resources, our 77,000,000 can be made to produce, under methods of -intensive cultivation and co-operation already in practice, if not -enough food to feed our population, certainly a larger proportion of our -supplies than at present. - -Also worth consideration is the important matter of afforestation. There -are now but some 3,000,000 acres of woods and plantations in this -country, and many of these are badly managed, for forestry is almost an -unknown art in the United Kingdom. Landowners do not understand it; -their agents do not understand it. Yet its possibilities are enormous -and might be realized within twenty to thirty years of the simple -financial operation which I have suggested. There need be no acre of the -77,000,000 not useful or not beautiful. Millions of acres of land now -termed waste may be clothed in verdure to yield a steady and certain -income and make us largely independent of imported timber. There is no -greater authority on this subject than Dr Schlich, and he gives it as -his opinion, confirmed by thorough investigation of British and foreign -conditions,[53] that five or six million acres could be brought under -wood, thus producing the bulk of the timber we require. Every acre -afforested would require about £2 worth of labour. After planting, each -acre would need only about five days' labour a year, but that means -30,000,000 days of work. The timber grown and cut, there would be the -transport, lumbering, and allied industries calling for labour. Dr -Schlich estimates that 500,000 men, or say 2,500,000 people, would find -employment through the afforestation of say six million acres, and the -estimate is based upon solid foundations. - -It may be asked, why do the present owners of "waste" land miss such an -opportunity? The answer has several parts. Landowners are for the most -part (1) ignorant of the subject, (2) unprovided with capital, (3) -unwilling to wait. A business which does not begin to yield income for -some 15 years is not for the average private landowner. But the people, -who have waited so long for the right to tread their own soil, can wait -these fifteen years and other fifteen if need be. - -Given the overlordship of area, the establishment of a permanent Land -and Housing Commission, the nationalization of the means of transport, -the establishment of well endowed schools of agriculture and forestry, -and a generation of well-born children, what possibilities open out -before us! - -Is this conception too large for a race which talks of Empire? In the -United States there is a private trust which was organized by a single -individual with a capital of 1,000,000,000 dollars—a trust which owns -territory, mines, railways, steamships and mills, and supports 1,000,000 -people. Business transactions are growing greater, and must greater -grow, for the world cannot afford to peddle with its resources. The -future is with the men who realize that it is not more difficult to -think in millions than in thousands. Within the last few years we have -spent on a war with a small people £250,000,000 in the name of Empire. -£250,000,000 is the price of one-fourth of the entire area of the Mother -Country. It is high time for a little Imperial thinking in the home -market. - -[Footnote 52: These facts are summarized from the Census Reports.] - -[Footnote 53: See his excellent "Forestry in the United Kingdom."] - - - - - CHAPTER XVIII - ORGANIZATION - - -It has already been remarked in these pages that quite inadequate -numbers of persons are engaged in the production of many useful -articles. This would be true even if all the individuals enumerated as -producers in the census returns were fully employed upon existing plant -and under their existing managers. As a matter of fact, they are not -fully employed. Unemployment or short time always exists in greater or -less degree. Between inadequate numbers and inadequate employment of -those numbers the quantity of _ponderable commodities_ produced in the -United Kingdom is so small, as we have seen, that only a small fraction -of our people are well housed or well clothed. A great multitude craves -for satisfaction of elementary needs, while a host of shopkeepers wait -hungrily for customers who cannot buy. - -In the nineteenth century enormous strides were made in the invention of -machinery and labour-saving appliances and methods, and now, at the -opening of the twentieth century, we possess means more than ample for -the satisfaction of all. If invention now came to a standstill, we -could, with such science as we now command, produce, or obtain by -exchange for our production, far more food, houses, clothes, furniture -and other commodities than we actually need, and this while our -population enjoyed ample leisure in which to develop their higher -faculties. - -What, then, is at fault? Not only do the majority of our men work -arduously, but an immense army of women and young children are also -engaged in production and distribution. Of the population of England and -Wales between the ages of 20 and 55 only 179,946 males and 823,135 -unmarried females figured in the Census of 1901 as "without specific -occupations." What is the explanation, then, of an insufficient and -ill-distributed production? The answer can be given in a few words. It -is want of organization which leads to such poor results from so much -hard labour. _A poor stream of ponderable commodities filters through -thousands of unnecessary channels, and becomes the subject of many -strange services, each of which claims and gets some sort of reward. By -the enumeration of each of these services the total income which we -examined at the beginning of this book is made up. The Error of -Distribution of the national income connotes a wasteful and inadequate -production._ - -Waste in actual production is still exceedingly great. In only a -minority of cases are factories equipped with the best plant and -appliances. Model factories, in which the most economical production is -attained, are still exceptional. There are tens of thousands of small -employers who lack the capital properly to equip their establishments, -and who perforce waste labour. - -That is to speak of production as a whole, without reference to the -nature of the goods produced, but when we come to analyse the product, -waste is everywhere apparent. Labour, to be economically employed, -should produce only genuine articles, capable of application for a -considerable period to the purpose which they are designed to serve. As -we know only too well, a very great part of our manufacturing output is -of articles which make-believe, and it is only a small fraction of -production in any branch of industry which is the best of its kind. Our -competitive system is largely an endeavour to make profits out of the -sale of trashy articles, the production of which wastes alike the labour -engaged in making them and the labour for which they are exchanged. It -is difficult to say which is more pitiable, the waste of labour upon -rubbish designed for the consumption of the poor, or the waste of labour -upon luxuries designed for the consumption of the rich. - -Upon the waste connected with the trades and services of luxury I have -already dwelt at some length. Here it is only necessary to remind the -reader that it is of two kinds. There is the multiplication of servants -and attendants upon rich men and their houses and animals,[54] and there -is the employment of nominally useful workmen in the manufacture and -repair of the instruments of luxury. - -Turning to the marketing and distribution of commodities we have many -forms of waste of labour to study. Each manufacturer in a trade, selling -his goods in competition with others, sends out his agent or agents to -assert, not always truly, that his wares are the best and the cheapest, -and to secure orders for them. Thus a large number of able-bodied men -are divorced from production and made a quite unnecessary factor in -distribution. At the Census of 1901, 64,322 commercial travellers were -enumerated in England and Wales, as against 44,055 in 1891! These men -are usually of an exceedingly capable type, whose work, better directed, -might be of great service in useful production. - -Each factory, however small, must have its separate clerical staff, and -to thousands of men wasted as travellers we have to add tens of -thousands wasted as clerks. In the United Kingdom, in 1901, there were -439,972 commercial or business clerks, as against 300,615 in 1891. - -The commodities produced by the wasteful competitive factories are -often, too often, dealt with by wholesale middlemen, agents, brokers, -factors, merchants, who, with their staffs of clerks and warehousemen -account for an uncertain but considerable number of the working -community. Our imports of food, which in an organized community could so -easily be handled by a single staff at each port, are scrambled for by a -great host of merchants, factors and commission agents. - -A most conspicuous waste in distribution is in advertising, one of the -most unnecessary of all trades. In the game of competition, those often -win, not who supply the best goods, but who say that they supply the -best goods. As a result there has sprung up an enormous industry with -many branches which is engaged in pushing the sale of a few good and -many worthless articles. It "employs" thousands of male and female -clerks and canvassers, and directly and indirectly lays many nominally -useful trades under contribution. Printers, authors and journalists, -enamellers, carpenters, bill-stickers, paper-makers and others are -engaged to furnish the materials of the advertisements. Altogether it is -probable that some 80,000 people find a "living" in connexion with -advertising, when they should be doing useful work. Some part of the -stream of useful commodities is directed to them, and in return they -give nothing. Individually, they may be honest, industrious people, -doing the work they are employed to do to the best of their ability. -From a national point of view they are wasting their time. It may be -added that when they are pushing the sale of "patent" medicines, -whiskies and complexion creams they are doing something worse than waste -time. - -Chiefly arising out of our commercial system of distribution and the -crimes and misdemeanours which it creates, the various branches of the -legal profession absorb a considerable number of able-bodied men who -contribute nothing to the wealth of the nation but who are rewarded by a -large share of the national income. At the Census of 1901 as many as -27,184 barristers and solicitors and 42,339 law clerks were -recorded.[55] These 69,523 individuals with their dependents, probably -numbering nearly 300,000 in all, help to attenuate the thin stream of -ponderable commodities which flow from the places where people labour to -useful ends. - -We pass to the work of the hundreds of thousands of retail shopkeepers -and their servants, and here again we find a vast amount of wasted -labour. In each trade in each district there are a quite unnecessary -number of tradesmen hunting for profits. It is not uncommon to find -half-a-dozen butchers' men calling for orders upon the householders of a -single street. - -It is sometimes represented to shopkeepers that any movement towards -collectivism threatens their livelihood. Shopkeepers will do well to -remember that it is unrestrained individualism which is their worst -enemy. In almost every branch of retail distribution the multiple shop -principle is eliminating the independent shopkeeper and substituting -badly paid shop "managers." Apologists of individualism boast of the -economy which is thus being achieved. Thus M. Leroy Beaulieu in his -"Collectivism" (which is an attack on collectivism) writes, "The -tendency of civilization, where freedom exists, appears to be towards a -reduction in the number of persons who live entirely by commerce, owing -to the gradual substitution of large for small industries that is now in -progress. Would it be possible for collectivism to act more rapidly or -efficiently?" M. Leroy Beaulieu forgets that the crushing of the small -shopkeeper by private monopolists accentuates the error of distribution, -while collectivism economizes labour for the general good. - -What I have written does not apply, of course, to all fields of labour. -It has long been recognized that certain services can only be -effectually and efficiently performed under one management. Railways, -tramways, water-service, lighting, and so forth have come to be looked -upon as "natural monopolies." Even Mr Henry George, who thought that -"Socialism tended towards Atheism" and who considered that "limitation -of working hours and of the labour of women and children" could only be -enforced by methods which "multiply officials, interfere with personal -liberty, tend to corruption and are liable to abuse,"[56] admitted the -existence of "necessary monopolies" which might be treated as functions -of the State. Indeed, it is apparent to the most unthinking that between -two points A and B there can only be one best route for a railway, and -that, therefore, railway service between points A and B should be a -monopoly. Similarly it would be an obvious absurdity to construct two -sewers in one road, competing with each other for the removal of refuse, -or for two or more gas managements to run mains in the same streets. In -these and many other cases it is clearly recognized that economy of -labour is consistent with monopoly alone, and the only question that -remains to decide is whether the necessary monopoly should be in public -or private hands. I do not purpose here to discuss that question, for at -this date it is scarcely an open one. An overwhelming weight of opinion -has decided that public ownership must go with monopoly, wherever -monopoly is shown to be necessary. - -It is not so generally recognized that proper economy of labour and a -proper distribution of the products of labour can only be secured by: - -(1) The conversion of all common services into monopolies, and - -(2) The ownership of those monopolies by the public. - -Nevertheless, the waste arising from hundreds or thousands of -unnecessary centres of production and distribution is becoming better -understood, and in the United Kingdom, as in America and Germany, big -fish are increasingly eager to swallow the little fish. Combination in -the field of production is no less common than the unification of -control of stores and shops in the field of ultimate distribution. -Organization is in the air, and organization, commenced by individuals -for individual gain, can only end in the erection of monopolies, which, -for its own safety and health, the public, sooner or later, will find -itself compelled to control. - -In the foregoing pages we have considered the proper use of area and the -healthy housing of the people as questions urgently calling for -collective action. The colonization of British land by the revival of -agriculture and the redistribution of industries is ultimately bound up -with the development of Transport and Power Distribution. The former is -now a problem of private monopoly which we have allowed to arise. The -latter will become one if we do not at once realize the possibilities of -power distribution and determine that they are of so far-reaching a -character as to demand public ownership from the beginning. - -If we are successfully to take our industries and people out of -congested centres and spread them out over a considerable area we need -cheap and rapid transport and cheap and easily handled power. The -transport and power transmission of the future will be electrical. It is -upon record that in the early days of the steamship a Royal Commission -"sat upon" the then vexed question of "Steam versus Sails," and -unanimously decided that sails were the only practical wear for the -Royal Navy. One is reminded of this fact when one contemplates the slow -progress made by electric traction in this country, and the marked -reluctance to experiment on the part of those types of private and -injurious monopolists—our great railway companies. After much thought -and with the assistance of a pushful American citizen our London -"Underground" is, as I write, electrified, many years after electric -traction was known in Darkest Africa, but so far as the greater part of -our transport system is concerned we are at a standstill. The field of -experiment is resigned to the Americans and the Germans. - -The production and distribution of light, heat and power simply mean the -production and distribution of energy in the form we call electricity, -and since transport is simply motion we see that the future of lighting, -heating, transport and power is the future of electricity. - -In the matter of transport there is perhaps something to be said for the -statesmen who, without the slightest conception of the possibilities of -steam power, allowed our railways and canals to be made sources of -profit for private speculators. They erred in ignorance of the magnitude -and importance of the subject. There will be no such excuse if we allow -the production and distribution of electrical power to become the sport -of private monopolists. If there is blindness in this matter it will be -wilful blindness. For each district there can be but one power supply -consistently with economy, and so much hangs upon the wise distribution -of power that it is most important the public should be made to realize -the nature of the interests which are at stake. - -The adoption of the mysterious word "Electricity" is a most unfortunate -thing. If the public understood that electricity is Energy and that it -is transmutable at will into Power or Light or Heat, they would better -realize the possibilities of the future in town and country, and all -that the proper organization and control of Energy means to them. They -would at once resolve that the power of government must not be divorced -from the Power which will run in the electrical mains of the future, and -by the aid of which we can transform the face of our land. - -Let me drop the word Electricity and use the simple term Energy. Energy -will be produced at a central power station and distributed over a -considerable area. The energy mains will carry the means of lighting, -the means of motion (transport), the means of heating, the means of -manufacturing in large, the means of manufacturing in small, the means -of cooking, the means of cleaning, to every person in that area. Energy -will be at the disposal of every factory, of every workshop,—and of -every private house. No building will be without its motors, large or -small. Smoke and all the waste and dirt of smoke will disappear. - -I am not speaking of a remote future, but of possibilities which can -forthwith be realized. How important it is, then, that this Energy -supply, which is already entering and will increasingly enter into our -everyday lives, should be publicly owned from the first. Given private -ownership, the monopolists of Energy will run their mains where most -profit is quickly to be garnered instead of seeking, as we should seek, -first profits in the thinning out of towns and the restoration of the -health of our people. If we part with the control of power, it is Power -indeed which we part with. We should part, also, it is important to add, -with a magnificent source of public revenue, which will amount, in the -time to come, to much more than the revenue of our railways. It is only -by securing the distribution of such profits by public ownership that we -can make any impression upon the melancholy facts treated in the first -part of this volume. - -As I have already said, it is commonly recognized that such a function -as a tramway or water supply must of necessity be a monopoly, public or -private, if its working is to be economical. It is not difficult to show -that the control of the production and distribution of all articles of -common use must be unified if labour is not to be wasted. Just as one -water main and one alone is needed for the service of a row of houses, -so, to use a familiar illustration, one vehicle and one alone is needed -to supply the same row of houses with milk. If a number of milk-sellers -are competing for the custom of one small neighbourhood, as is usually -the case, a quite considerable number of able-bodied men, boys and -animals are engaged in unnecessarily traversing the same streets, one -after the other, to do the work which could be performed with much more -ease, certainty and expedition by a fraction of their number. Each of -the small tradesmen has to keep a set of accounts demanding his own -attention or that of his wife or clerk. Each milk dealer, again, has his -separate supply of milk from the railway station, sent by some farmer at -a distance. Each of these doses of milk is the subject of a separate -transaction, wasting labour at both ends of the journey and in transit. -From first to last, the process is clumsy and tedious, wasting labour at -every stage. The waste is precisely of the same nature as would occur if -several water companies supplied a certain street with water and had -their mains running side by side. There would be just as much absurdity, -and no more, in serving my road by four water-mains as in serving it by -the four milk chariots which now pay it such frequent visits. - -And to pursue this useful illustration a little further there is another -analogy between a water supply and a milk supply which should not be -forgotten. The importance of pure milk is not less than the importance -of pure water. The milk supply of towns is derived from a thousand -tainted sources, the precise nature of which is unknown both to the -consumers and to the milk dealers. I fear we should drink less milk if -we could see the handling of it—the literal handling of it—from the -start. I have a lively recollection of the last milking operation I -witnessed. Suffice it to say that I agreed, afterwards, that the butter -made on the farm looked to be very fine butter, and that I was entirely -satisfied with an ocular demonstration of its many virtues. As is -pointed out by Dr G. F. McCleary, the Battersea Medical Officer of -Health,[57] "if large towns want clean milk they must not look to -outside authorities to get it for them." The ordinary milk farmer is a -conservative creature who does not appreciate the "faddist" with his -demands for a clean milker and a clean cow. A dirty person draws milk -from a dirty animal into a dirty receptacle, and tons of manure come to -London with the morning milk. Dr Leslie Mackenzie, Medical Officer of -the Local Government Board for Scotland,[58] thus describes the process: - -"To watch the milking of cows is to watch a process of unscientific -inoculation of a pure (or almost pure) medium with unknown quantities of -unspecified germs.... Whoever knows the meaning of aseptic surgery must -feel his blood run cold when he watches, even in imagination, the -thousand chances of germ inoculation. From cow to cow the milker goes, -taking with her (or him) the stale epithelium of the last cow, the -particles of dirt caught from the floor, the hairs, the dust, and the -germs that adhere to them.... Everywhere, throughout the whole process -of milking, the perishable, superbly nutrient liquid receives its -repeated sowings of germinal and non-germinal dirt. In an hour or two -its population of triumphant lives is a thing imagination boggles at. -And this in good dairies! What must it be where cows are never groomed, -where hands are only accidentally washed, where heads are only -occasionally cleaned, where spittings (tobacco or other) are not -infrequent, where the milker may be a chance-comer from some filthy -slum—where, in a word, the various dirts of the civilized human, are at -every hand reinforced by the inevitable dirts of the domesticated cow? -Are these exaggerations? They are not. I could name many admirable byres -where these conditions are, in a greater or less degree, normal." - -There is but one way to obtain clean and pure milk and at the same time -to secure economy of labour in its production and distribution coupled -with adequate remuneration of the labour so economized, and that is the -way of public ownership. The municipality should conduct the entire -operation of milk supply. By so doing it would prolong the lives of its -citizens, save the lives of many infants, and add to its revenue. - -A public milk supply, even in relation to the food of adults, is an -urgent need. When considered in relation to infantile mortality the -question is seen to be a vital one. All medical officers of health are -at one on the point. We must have municipal milk depots if the children -are to be saved, and if we supply milk for children and nursing mothers -we may as well enlarge our basis of operations and make the milk -service, like the water service, a complete municipal monopoly. - -Thus organized, another great service would be lifted out of the sphere -of bargaining and chicanery and adulteration. In another industry the -waste of labour would cease. In another trade men would work with intent -to serve, and cease to hunt profits at the cost of their bodies and -souls. - -The case for the municipalization of the milk supply is a very forcible -one, but it is not more so than that for the public ownership of other -common services. The point as to waste of labour in production or -distribution largely affects them all. The dangers of adulteration and -dirt touch not milk alone, but the manufacture and distribution of every -commodity. Commercialism has undermined honesty. Sham, shoddy and -make-believe—these are erected in the form of houses, sewn up in the -form of suits, packed in tins to mock children as food, made the sole -occupation of millions of quite honest people. If honesty of production -is to be regained, the great services must pass, one by one, under -public control, and as each passes another opportunity for the amassing -of private fortunes will pass away and another factor in the Error of -Distribution will be cancelled. The best services at low charges for the -public will be accompanied by ample but not excessive remuneration of -management, a proper reward and short hours for the privates of -industry, and the accumulation of just so much profit in the public -treasury as may be deemed necessary to provide for new capital, -contingencies, or for public non-revenue services. Thus, and thus alone, -can we raise the status of the mass of the people and prevent the -congestion of wealth in a few hands. There can be no proper diffusion of -wealth until we have ended the system by which good and bad employers -use the lives of the multitude for their profit and pleasure, now -working them arduously in exchange for a payment which is an unfair -remuneration of the service, and anon refusing them even the opportunity -to do hard labour. - -The remarkable success of municipal trading, so far, may be measured by -the bitterness of the attacks which have been made upon it by private -capitalists. The recent complaints of the railway companies as to the -competition of municipal tramways entirely dispose of the theory that -private enterprise alone can ensure economical management and an -efficient production. It is argued that public bodies cannot obtain -faithful service from their employees, and that businesses managed by -them are bound to fail because the men in command do not understand the -interests they seek to control or the methods of industry. Capital, it -is represented, is bound to be wasted, and the tax-payer certain to -suffer in pocket as part proprietor of an unsuccessful business, even as -he suffers also as a consumer of his own poor product. In reply it is -only necessary to point out that there is nothing which can be urged -against a trading municipality which cannot also be urged against a -limited liability company. In the latter case, as in the former, the -shareholders know nothing of the details of the business they own. In -each there is a governing body which in its turn usually knows little of -the technicalities of the business undertaken. Thus the chairman of a -well-known steel company is a solicitor. The boards of directors of the -majority of our leading limited companies are composed of men who are -strangers to the businesses they "direct." In practice management -devolves upon the Managing Director, who is usually a man well versed in -his trade or profession. We see, therefore, that a limited liability -company, after all, is in precisely the same position as a municipality. -The private monopolists are compelled to find a practical man to manage -their business and make profits for them. That is precisely what the -municipality does. As a matter of fact, some of the cleverest men in the -United Kingdom are serving municipalities as advising and managing -engineers, instead of hiring themselves out to some board of directors. - -What do railway directors, for example, know of railway management? Do -they travel on their own line, note its deficiencies, and repair them? -Do they take a practical hand in its affairs? No. The practical -management is in the hands of certain paid servants, goods managers, -general managers, locomotive superintendents, and so forth. Is it -seriously argued that an individual engineer, as locomotive -superintendent of a private railway company, is more efficient than he -would be in the service of say the London County Council? If so, how -does it come about that the railway companies are losing trade while the -L.C.C. trams are crowded? If so, how is it that to travel on the South -Eastern Railway is a martyrdom, while to travel on a L.C.C. tram is a -pleasure? - -It will be seen on reflection that the only difference between the -company and the municipality is this. In the case of the company the -qualification of the directors is merely the owning of stock or shares -in the undertaking, and the perfunctory votes of a few shareholders. In -the case of the municipality the "director" has to secure the suffrages -of a great body of his fellow-citizens. As for nepotism, it is far more -common in private trade than in public life in this country. In nearly -every private business some inefficient son or cousin or nephew is -"provided for," to the loss of the undertaking. Competitive industry is -full of square men carefully planted in round holes by their friends and -relatives.[59] In the municipal service there are fewer wasters than are -to be found connected with great limited liability companies. As for -waste of capital, it is common in private business, and its loss is as -real to the community, from an economic point of view, as the loss of -capital by a municipality. As for negligence and theft, these are common -in all kinds of business undertakings, but as a general rule audit and -control are stricter in municipal trading than in the case of private -companies. As for cheerful service, the reader has but to compare the -servants of municipal tramways with those of any private omnibus -company. My own experience is that it is the municipal servant who is -the more civil and obliging. Perhaps it is because the municipality -gives him better wages, shorter hours, and a decent coat. As for the -product of the machine, the London County Council gives the public -longer rides for the same fares while paying its men better. Thus the -share of the product which once went to swell private fortunes is -distributed, and by so much the Error of Distribution is reduced. - -What we have lost through the private ownership of our railways may be -gauged by the experience of Belgium. The Belgian State Railways sell -tickets which enable one to travel continuously, if desired, for the -time specified thereon, within the limits of the country. For instance a -five-day ticket will cost 16s. 6d. second class, or 9s. 6d. third class. -During the life of one of these tickets it serves as a pass, and it is -only necessary to show it upon request. The total length of the railways -is nearly 3,000 miles. All that is required to obtain the circular -tickets is to present at the office an unmounted photograph of small -size, which is attached to the ticket as a means of identification. When -the ticket is purchased an extra 4s. is demanded for the safe return of -the ticket after its term of usefulness expires. On the morning after -the expiration of the ticket it can be delivered at any ticket office -along the line, and the 4s. extra will be returned. This system enables -one to travel at a minimum expense. One would like to know why, if -private trading produces the best results, that travel is cheap in -Belgium and dear in England. Why cannot a Briton, favoured as he is with -all the alleged virtues of private enterprise in railway management, -obtain a circular ticket to travel in the United Kingdom? The benefits -of the Belgian railways are conspicuous in the matter of the housing -question. Cheap workmen's tickets are issued at rates so low that men -are enabled to live at considerable distances from their work. How low -the fares are may be gathered from the following figures: - - WORKMEN'S TICKETS ON BELGIAN STATE RAILWAYS - - For one Journey daily - Distance. to and fro. - Six Days' Ticket. - Miles. _s._ _d._ - 3 0 9¼ - 6 1 0 - 12 1 2½ - 24 1 7¼ - 31 1 9¾ - 62 2 6¼ - -Thus the daily return fare for 31 miles is less than 3¾d.! - -The special workmen's tariff has existed in Belgium since 1870, and was -at first simply introduced to give Belgian manufacturers the command of -plenty of cheap labour. But the Minister builded bigger than he knew, -for the cheap fares have caused a profound revolution in the position of -Belgian workmen. In 1870, 14,223 tickets were issued; in 1890, -1,188,415; in 1901, 4,412,723! As a result it is estimated that 100,000 -industrial workers, out of a total number of 900,000, although employed -in the towns, continue to live in the country, own a patch of ground, -and, with the higher wages of the town, enjoy the inestimable advantages -of country life. - -It is only through the nationalization of our railways that we can -secure (1) for the travelling public the speed, safety and comfort which -science has taught us how to command, (2) for the railway servants -safety and a just share of the product of their labour, and (3) for the -goods service rapid and economical transport. It is nothing less than -national shame that our railway men receive an average wage of only 25s. -per week. It is nothing less than national folly that our lives are -placed at the mercy of underpaid and overworked signalmen. - -A striking illustration of national treatment as compared with the -existing private exploitation of our national wealth is to be found in -the coal trade. Upon coal is built the wealth and commerce of the United -Kingdom. To it we owe our pre-eminence in manufactures and our -world-wide shipping and commerce. Without it the United Kingdom would -quickly sink to the position of a third-rate power. It might be assumed -_a priori_, therefore, that the production and use of coal would be -regarded by the British Government as a matter of national concern. As a -matter of incredible fact, so little do we regard coal production that -we even allow our rare supplies of naval coal to remain in private hands -and to be sold freely to foreigners. The tradition of "liberty" could -surely no further go. - -From first to last private coal production and private coal distribution -are wasteful of life, material, and labour. Of our output of 260,000,000 -tons of coal less than 10,000,000 tons are mined by machinery! In -nine-tenths of our coal-mines coal-cutting machines are unknown! Thus a -vast amount of unnecessary hand labour is used in a degrading and -dangerous occupation. From a national point of view it is undesirable -that a single unnecessary man should descend the mines. Under private -exploitation coal-mining employment reads thus (I quote from the Census -of Production Report, 1907): - - UNITED KINGDOM COAL-MINES, 1907 - - ------------+------------------------+------------------------+------- - | MALES. | FEMALES. | Total - +--------+-------+-------+--------+-------+-------+ both - |Under 16|Over 16|Total. |Under 16|Over 16|Total. | sexes. - | years. | years.| | years. | years.| | - ------------+--------+-------+-------+--------+-------+-------+------- - Below Ground| 43,862 |625,773|669,635| | | |669,635 - Above Ground| 15,623 |135,985|151,608| 643 | 4,681 | 5,324 |156,932 - ------------+--------+-------+-------+--------+-------+-------+------- - Total | 59,485 |761,758|821,243| 643 | 4,681| 5,324 |826,567 - ------------+--------+-------+-------+--------+-------+ ------+------- - -With coal-mining organized with due regard to national welfare, there -would be no boys, fewer men, and more machines in the depths of our -mines, while the employment of girls and women even in surface work -would be unthinkable. It is true that private capital may not now, as it -did in the 'forties, employ young girls and boys under ten in its "dens -of darkness." But it deliberately sacrifices hundreds of lives every -year by using inefficient plant and by the use of explosives, and still -we permit boys to go down the pits. In the holocaust in the Rhondda in -1905 many children perished. Not infrequently three generations of a -single family may be found working in the same colliery. Few people out -of the industry know that 44,000 boys work in our coal-pits. - -With our collieries in our own hands we should not only keep boys out of -the mines, but use every possible mechanical appliance to reduce the -number of men required to get the coal. We should seek for new -appliances to displace labour from such an unhealthy and dangerous -calling. To the same end we should seek to prevent the waste of coal in -every direction. Shot-firing would of course go, and after undercutting -the coal by electrical or hydraulic machinery we should bring it down by -hydraulic pressure. - -Having secured an economical production, in which we should no longer -commit the crime of killing a thousand miners every year, we should -distribute the coal cheaply to our local authorities, who would act as -distributing agents. The army of coal merchants and their clerks and the -thousand and one artful dodges of the retail coal trade would disappear, -and the public would secure their coal economically. - -What is the alternative to public ownership of common services? The -alternative is the rule of the "combine" or "trust," for it cannot be -too clearly realized that the organization of production and -distribution must proceed. But organization by private hands,—the -combination of industrial units into great trusts economizing -management, production and distribution,—cannot safely be tolerated. It -means the wielding of the chief power in the State by monopolists who -will use their power for private ends. The era of private competition is -closing. On every hand capital is combining with capital in restraint of -competition. Such combinations threaten the public welfare in several -directions. They can make it practically impossible for new capital to -enter an industry. They can, while economizing labour, keep the profits -arising from economy in their own hands, and build up gigantic fortunes -while increasing unemployment. They can offer such opposition to trades -unionism as to wield untrammelled power over their employees. They can -accentuate that Error of Distribution which it should be our chief -purpose to modify and remove. - -Finally, the organization of services under public control is the only -remedy for unemployment, for unemployment is but a phase of poverty. -Underpaid or not paid at all, wrongfully employed or unemployed, -overworked or underworked, these conditions are the inevitable -accompaniment of a state of society in which individuals make bargains -with individuals with a view not to service but to profit. To the -individual the unemployed workman is a pitiable object—that is all. To -the nation the unemployed workman is something more than pitiable; he is -a dead loss. Unless physically or mentally unfit, and therefore entitled -to gratuitous service, he should be employed in the scheme of the -nation's work. The community needs the service of all its members; there -is none superfluous, none. While yet one uncomfortable house rears its -head, while yet one person goes ill-clad, while yet one rod of area -remains unused, there is work to do, but to utilize the work of every -man economically and wisely in the performance of necessary work is only -possible through organization. We may delude ourselves how we will with -palliatives; we shall find no remedy for unemployment short of the -control by the community of the _essential_ work of the community. While -we leave the direction of labour in the hands of a few rich men there -will ever be a surplus of labour left for our hapless "government" to -deal with wastefully. While the community resigns its right to decide -its own destinies by submitting to the rule of the rich, there will -remain the problem of poverty of which unemployment is not the worst -part. - -Let it be clearly understood that, as things are, there is only one real -form of government that matters, and that is the rule of the employed by -the employer. The real arbiters of our destinies are not the King's -Ministers, but the few men who have power of life and death over their -fellows through the giving or withholding of employment. The majesty of -the law decides what a man shall _not_ do. The majesty of the employer -decides what a man shall do. The time has come when we must govern -ourselves, not negatively by way of restraint, but positively by way of -action. It is time that we determined where our roads should run and in -what fashion and in what employments we should engage ourselves. It is -time that we took stock of the lives and the homes of our people and -resolved to abolish their poverty by organizing their labour. - -[Footnote 54: It it a melancholy fact that those employed in the service -of waste are often better paid than those engaged in useful production. -In a recent action brought by a cloak-room attendant at a fashionable -restaurant it came to light that in two cloak-rooms each of four -attendants drew as his share of the "tips" over £3 per week.] - -[Footnote 55: I hope that no manual workman who reads these lines will -deduce from what I have written that, as things are now, his labour is -necessarily more useful than that of the clerk, the lawyer or the -shopkeeper. For every unnecessary distributing agent referred to above -several producing agents could be named whose work is useless or harmful -in the national economy. This I endeavoured to make clear in Chapter -11.] - -[Footnote 56: "Condition of Labour," page 90.] - -[Footnote 57: "Infantile Mortality," by Dr G. F. McCleary.] - -[Footnote 58: "The Hygienics of Milk," "Edinburgh Medical Journal," -1898.] - -[Footnote 59: In a speech delivered to the students of the Crystal -Palace Company's School of Practical Engineering in 1905 the following -advice was given. I quote from the newspaper report: "Students should -cultivate the art of making friends through life. Wherever they were -they should try to make good friends, for such friends were always -useful when one wanted to obtain employment. Half the battle was won in -applying for a situation if the applicant had a friend on the board." - -Excellent! "Be artful, sweet youth, and let who will be clever."] - - - - - CHAPTER XIX - THE AGED POOR - - -In "Riches and Poverty," edition 1905, I passed at this point to the -consideration of the cruellest phase of Poverty, the poverty of the -aged. Since 1905 Mr Asquith has given us an Old Age Pension Act, and it -is happily unnecessary to repeat in full the pleas which were advanced -in these pages in 1905. It is well, however, again to record the known -facts with regard to poverty in old age. - -If we did not know our country, and had never encountered its poor in -the flesh, in what condition could we expect to find the aged labourer -in view of the terrible extent of the Error of Distribution? It is not -alone that the majority of our people have the slenderest incomes. To -narrow wages is in most cases added uncertainty of employment, the -greatest enemy of thrift, while the period during which the average -workman draws the full rate of wages recognized in his trade has ever -been short, and tends with the increased strenuousness of modern -industry to grow shorter. - -There are about 2,100,000 persons aged 65 and upwards, in the United -Kingdom, but these are not divided between rich and poor in the -proportions shown in the frontispiece. We have to remember that the poor -are slain by their poverty. In the "comfortable" and "rich" classes the -span of life is much greater than in the case of the poor. It is -impossible to say precisely how the 2,100,000 persons are divided in -point of income, but probably, some 1,750,000 of them belong to the -classes whose incomes are below the income tax exemption limit. As to a -considerable proportion of them we have the clearest evidence of -grinding poverty. - -In 1890 Mr Thomas Burt, M.P., moved for a parliamentary return showing -the number of paupers of 60 years of age and upwards, distinguishing -indoor from outdoor relief. It appears from this return that the total -number of paupers over 60 years of age in receipt of relief on August -1st, 1890 (excluding lunatics in asylums, vagrants and persons who were -only in receipt of relief constructively by reason of relief being given -to wives or children), was 286,867. - -The number of those persons who were in receipt of indoor relief, the -number in receipt of outdoor relief, and their ages as stated, are given -in the table on the following page. - -The notable fact which emerges is that of 286,867 paupers over 60, as -many as 245,687 were over 65. Old age as a cause of pauperism is -strikingly illustrated by a comparison of the two numbers. It is clear -that death at 64 would mercifully have saved over two hundred thousand -poor old men and women from the stigma of pauperism. - -According to the census returns, in 1891, the following year, there were -1,372,974 persons (606,960 males and 766,014 females) at and over the -age of 65. On August 1st, 1890, the date of Mr Burt's return, therefore, -there were 245,687 persons out of about 1,372,000 persons 65 years old -and upwards or say 1 in 5½ in receipt of poor relief. - -But Mr Burt's return related to the paupers relieved on one day only. -What ratio does the number of aged paupers relieved in one day bear to -the total number relieved in the course of the year? - - PAUPERS OVER 60 YEARS OF AGE (ENGLAND AND WALES ONLY) - ON AUGUST 1ST, 1890 - - ----------------+----------------------+------------------------+ - | Indoor. | Outdoor. | - Ages. +------+--------+------+-------+--------+-------+ - |Males.|Females.|Total.| Males.|Females.| Total.| - ----------------+------+--------+------+-------+--------+-------+ - 65 to 70 | 9,468| 6,339 |15,807|10,567 | 35,866 | 46,433| - 70 to 75 | 9,953| 6,856 |16,809|17,633 | 43,266 | 60,899| - 75 to 80 | 7,086| 5,298 |12,384|16,474 | 32,021 | 48,495| - 80 and over | 4,949| 4,803 | 9,752|12,456 | 22,652 | 35,108| - +------+--------+------+-------+--------+-------+ - Total over 65 |31,456| 23,296 |54,752|57,130 |133,805 |190,935| - 60 to 65 | 8,018| 5,354 |13,372| 5,959 | 21,849 | 27,808| - +------+--------+------+-------+--------+-------+ - Total over 60 |39,474| 28,650 |68,124|63,089 |155,654 |218,743| - ----------------+------+--------+------+-------+--------+-------+ - - ----------------+------------------------ - | Total Paupers. - Ages. +-------+--------+------- - | Males.|Females.| Total. - ----------------+-------+--------+------- - 65 to 70 | 20,035| 42,205 | 62,240 - 70 to 75 | 27,586| 50,122 | 77,708 - 75 to 80 | 23,560| 37,319 | 60,879 - 80 and over | 17,405| 27,455 | 44,860 - +-------+--------+------- - Total over 65 | 88,588|157,101 |245,687 - 60 to 65 | 13,977| 27,203 | 41,180 - +-------+--------+------- - Total over 60 |102,563|184,304 |286,867 - ----------------+-------+--------+------- - -This question is answered by a further parliamentary return, asked for -in 1892 by Mr (afterwards Lord) Ritchie. This return shows for England -and Wales the number of persons of each sex aged 65 years and upwards, -and the number between 16 and 65, also the number of children under 16 -years of age, in receipt of relief (_a_) on January 1st, 1892, and (_b_) -during the twelve months ended Lady Day 1892. As in Mr Burt's return, -vagrants and lunatics are not included. The return differs from Mr -Burt's, however, in distinguishing those persons in receipt of medical -relief only. - -This return of Mr Ritchie's showed that while 700,746 paupers of all -ages were in receipt of relief on January 1st, 1892, the number relieved -during the year ended Lady Day 1892 was more than twice as great, viz. -1,573,074.[60] - -Mr Ritchie's return relates to all paupers, whereas that of Mr Burt -related to the aged only. It is difficult to say which fact in Mr -Ritchie's return is the more saddening, the relief of 401,904 aged -paupers in a single year, or that in the same period 553,587 _children -under sixteen were pauperized_. - -The following table (p. 276) summarizes the facts elicited by the return -as to the paupers relieved during twelve months. (It should be observed -that, of the 1,573,074 persons enumerated, 211,082 were in receipt of -medical relief only. Of the 401,904 paupers over 65, however, but 25,447 -were in receipt of medical relief only.) - - PAUPERS RELIEVED IN ENGLAND AND WALES DURING THE - TWELVE MONTHS ENDING LADY DAY 1892 - ------------------+------------------------+--------------------------+ - | Indoor. | Outdoor. | - Ages. +-------+--------+-------+-------+--------+---------+ - | Males.|Females.| Total.| Males.|Females.| Total.| ------------------+-------+--------+-------+-------+--------+---------+ -65 and over | 68,490| 45,654 |114,144| 95,140|192,620 | 287,760| -16 to 65 |134,561| 97,723 |232,284|141,826|243,473 | 385,299| -Under 16 | | |111,782| | | 441,805| ------------------+-------+--------+-------+-------+--------+---------+ - Totals | | |458,210| | |1,114,864| ------------------+-------+--------+-------+-------+--------+---------+ - ------------------+-------------------------- - | Total Paupers. - Ages. +-------+--------+--------- - | Males.|Females.| Total. ------------------+-------+--------+--------- -65 and over |163,630| 238,274| 401,904 -16 to 65 |276,387| 341,196| 617,583 -Under 16 | | | 553,587 ------------------+-------+--------+--------- - Totals | | |1,573,074 ------------------+-------+--------+--------- - -Comparing the number of paupers in England and Wales, as shown by the -figures on p. 276 with the census population of 1891, we get: - - TOTAL PAUPERS IN 1891 COMPARED WITH TOTAL POPULATION - (ENGLAND AND WALES ONLY) - -Total Paupers relieved 1,573,074 -Total Population, Census 1891 29,000,000 -Paupers per 1,000 54 - -Thus the paupers of all ages relieved in 1891 amounted to one in every -eighteen of the population of England and Wales. - -What of those over 65? The facts are: - - PAUPERS AGED 65 AND UPWARDS IN 1891 COMPARED WITH TOTAL POPULATION - OF THAT AGE (IN ENGLAND AND WALES ONLY) - - Total Paupers aged 65 and over 401,904 - Total Population aged 65 and over 1,372,900 - Paupers per 1,000 292 - -_Thus of the population of England and Wales aged 65 and over in 1891, -one in every three was in receipt of poor relief!_ - -In 1899, and again in 1900, the Local Government Board published returns -relating to aged pauperism in those years, and Mr Burt, in 1903, -obtained a second return in continuation of that of 1891. We are thus -enabled to compare _one-day_ returns for five different periods and this -is done in the following table: - - PAUPERS, INDOOR AND OUTDOOR, RELIEVED ON CERTAIN DAYS DURING A PERIOD - OF THIRTEEN YEARS (ENGLAND AND WALES ONLY) - - Ratio of Paupers - Paupers Paupers 65 and over to - aged 16 aged 65 total population - and over. and over. of that age. - (Per Cent.) - 1890 (1 Aug.) Not known 245,687 18.0 - 1892 (1 Jan.) 471,568 268,397 19.4 - 1899 (1 July) 469,939 278,718 18.7 - 1900 (1 Jan.) 494,600 286,929 19.2 - 1903 (1 Sept.) 490,513 284,265 18.3 - - [_Note._—In the Returns for 1892, 1899 and 1900 the numbers include - persons in receipt of relief constructively by reason of relief being - given to wives or children. In the Returns for 1890 and 1903 (Mr Burt's - returns) such persons are excluded.] - -Apart from seasonal changes—the number of paupers is, of course, always -higher in the winter than in the summer—it will be seen that the -proportion of paupers over 65 years of age to the total population of -that age has not varied much. On August 1st, 1890, there were 245,687 -paupers of 65 years and upwards, or 18 per cent. of the total population -of that age. On September 1st, 1903, there were 284,265 paupers of 65 -and upwards, or 18.3 per cent. of the population of that age. - -We have only the figures of the 1892 return to throw light upon the -number of aged paupers relieved during one year. If we assume that still -the same proportion of aged pauperism exists, viz.: 292 in each 1,000, -then, in the present year, out of a total population in the United -Kingdom aged 65 and upwards of about 2,100,000, as many as 613,200 -persons are pauperized. - -This number includes both indoor and outdoor paupers, and the ratio of -indoor and outdoor paupers varies greatly in different places because of -the varying policies of Boards of Guardians. But this point need not -detain us. Outdoor relief may in some cases be injudiciously given and -in other places most cruelly refused. The fact remains that, taking the -country as a whole, we have the clearest evidence of the existence of -613,000 exceedingly poor aged persons. - -More important it is to remember that, for one poor person who obtains -either indoor or outdoor relief, several who justly might claim it -refuse to avail themselves of the tender mercies of the Poor Law. The -poor, as a rule, will exhaust every penny of their savings and pawn -every stick of their furniture before they seek the workhouse door. -Moreover, the amount of genuine charity bestowed by the poor upon the -poor is wonderful. If, then, there are 600,000 aged paupers either -inside workhouses or receiving outdoor relief in the course of the year, -we may be quite sure that at least as many more are as urgently in need -of succour, and obtain it by increasing the poverty of their poor -friends rather than by seeking from the Guardians the loaf, the 2s. 6d., -and the insults which too often constitute outdoor relief. - -The reader will see how probable it is that, of the 2,100,000 persons -aged 65 and upwards now living in the United Kingdom, fully 1,750,000 -are in a condition of poverty which at the worst is pauperism and at the -best is sore need. Some 613,000 of them are certainly in receipt of poor -relief during the year. Probably another 600,000 are only deterred by -horror of the workhouse from recourse to the Guardians. For the -remaining third, as for the other two-thirds, the life which has for -three-score years been a constant struggle with poverty meets its -hardest and cruellest phase at the close. - -A certain number of extraordinary men exist who contrive to rear a -family upon 30s. a week, and to save enough to provide for their old -age. These are the few who are not merely themselves of a most frugal -disposition, but who have chanced to bestow their affections upon a girl -as abstemious and as thrifty as themselves. A pair of such character, -blessed with perfect health and not more than two or three healthy -children, may contrive to meet first the fall of earnings after 45 or -50, and finally old age itself, with a light heart. That such cases are -rare will only surprise those who have never had occasion to practise -thrift. Only a little less rare than the comfortable aged workmen are -those who contrive to provide for themselves a tiny pension for their -declining years, through the continuous sick pay of friendly society or -trade union, or through the superannuation benefit of the latter. There -are only 38 trade unions which provide a superannuation benefit, and -these have a membership of about 600,000. They pay between them about -£200,000 a year in old age pensions to about 25,000 members. How small -this number appears when we compare it with the total number of persons -over 65 in the United Kingdom, which is about 2,100,000 at the present -time! - -The value of the practice and experience of Trade Unions is very great. -Summing them up, I showed in "Riches and Poverty," edition 1905, that -workmen who earn their living, not by the mere exercise of physical -strength, but by skill, are usually used up by the age of 60, and not -infrequently by the age of 55. The latter age may be regarded as the -limit of full-earning capacity for the average skilled workman. After 55 -he is in the greatest danger of dismissal when trade becomes slack. From -a considerable number of inquiries, I arrived at the conclusion that the -full wage-earning capacity of the average skilled workman begins at -25-30 and ends at 50-55. Before 25-30 a man is inexperienced and not -valued so highly as after that age. After 50-55 the age factor again -begins to tell, and the workman trembles at thought of the future. Each -grey hair is a deadly enemy to his livelihood. - -If the skilled workman can hope to earn the full wages of his trade -(full wages, it should be remembered, means about 40 to 46 weeks' pay -per annum in most trades) for but 20 to 30 years, what of the men who -are hewers of wood and drawers of water? The answer is that after 45 -good wages are difficult to obtain, and that for the rest of their -lives, if not mercifully ended by death, the earnings are poor in the -summer, and often at zero in the winter. If we look at the "occupations" -(with what irony the term is used in this connexion) of the inmates of -workhouses at the census of 1901 we find: - - WORKHOUSE INMATES (OVER 10 YEARS OF AGE) AT CENSUS OF 1901 - - MALES - - Clerks 1,079 - Coachmen and grooms 1,848 - Carmen, carriers 1,546 - Seamen 2,052 - Dock labourers 2,355 - Agricultural labourers 9,469 - Gardeners 1,232 - Coal-miners 1,570 - Blacksmiths 1,381 - Carpenters, joiners 2,274 - Bricklayers 1,212 - Bricklayers' labourers 1,397 - Painters, glaziers 2,487 - Cotton operatives 1,218 - Tailors 1,594 - Shoemakers 3,061 - Costermongers 1,521 - General labourers 22,129 - Other occupations 31,287 - Without specified occupations or unoccupied 16,151 - ------- - 106,863 - - FEMALES - - Domestic servants 15,630 - Charwomen 8,176 - Laundry and washing service 4,554 - Cotton operatives 2,128 - Tailoresses 1,245 - Milliners and dressmakers 1,642 - Shirtmakers, seamstresses 2,814 - Costermongers, hawkers 1,159 - Other occupations 7,681 - Without specified occupations or unoccupied 32,220 - ------- - 77,249 - ------- - Total male and female 184,112 - ======= - -The large proportion of "general labourers" is very -striking, while those describing themselves as dock, bricklayers' and -general labourers together form one-fourth of the whole. It will also be -noticed that 9,469 agricultural labourers "followed the plough to the -workhouse door." In passing, I may remark that in the list of female -"occupations" the presence of 15,000 domestic indoor servants should not -go unnoticed. - -The almost universal approval which the proposal to grant Old Age -Pensions elicited would probably have carried it to fruition long before -the date of the Old Age Pension Act, 1908, but for one thing and one -thing only—the question of cost. It is amusing to note that the "Small -Committee of Persons Interested in the Controversy respecting Old Age -Pensions,"[61] practically a Committee of the Charity Organization -Society, who actively opposed Old Age Pensions in 1899-1902, placed in -the forefront of their "objections" the following: - -"That the cost would be an insuperable difficulty, for to grant 5s. a -week at age 65 in respect of the population of England and Wales only, -would involve about £20,000,000 per annum for the present recipients, -and by 1941 the figure would have risen to £36,000,000." - -In "Riches and Poverty," edition 1905, I said: - -"Our examination of the National Income and the manner of its -distribution disposes of this objection. The question resolves itself -into this—Ought the 5,000,000 persons who have an aggregate income -approaching £900,000,000 to be taxed to the extent of £15,000,000 to -provide pensions for the aged poor? If the facts illustrated in the -frontispiece of this volume could be brought home to every elector there -would be no doubt whatever as to the decision of the country on the -subject. With the gross assessment to Income Tax at £900,000,000 the -expenditure of £15,000,000 on a small provision for the aged strikes -one, not as extravagant, but as an exceedingly modest proposal to -mitigate the evils of the Error of Distribution. - -"I have named £15,000,000, and that is all that the scheme would cost. -It is not a universal superannuation scheme that is wanted; I find it -difficult to regard very seriously the proposal that, for fear of -"pauperization" we should pay every person, rich and poor, aged 65 and -upwards, the sum of 5s. per week. The idea appears to be that if the -scheme is not made universal some stigma will attach to those who are -pensioned. Surely this is an exaggerated view. The majority of those -aged 65 are poor, just as the majority of the whole population are poor. -If there is a stigma in such a case it attaches to those who go to form -the top part of my diagram—to those whose absorption of an undue share -of the national income connotes poverty for millions at the other end of -the scale. - -"My own feeling is that we should make the pension, like the -superannuation benefit of Trades Unions, _claimable_ by those aged 65 -and upwards who have not an income of more than £1 a week or property -valued at more than £250. We should then probably have to provide for -about 1,400,000 to 1,500,000 pensioners, at a cost of £18,000,000 to -£20,000,000. Administration would cost about £500,000 and we should save -about £4,000,000 in poor rates. Thus the net addition to taxation would -be about £15,000,000." - -Mr Asquith's Old Age Pensions Act of 1908 made the receipt of an Old Age -Pension a citizen right, claimable by every person filling certain -statutory conditions. These conditions are:— - - (1) That the person must have attained the age of 70. - - (2) That he is a British subject. - - (3) That his yearly income does not exceed £31, 10s. - -The receipt of poor relief (medical relief excepted), habitual idleness, -lunacy or conviction for crime, are statutory disqualifications. - -The amount of the pension varies from 1s. to 5s. per week according to -the following sliding scale: - - Rate of - Income of Pensioner. Pension - per Week. - £ _s._ _d._ _s._ _d._ - Not exceeding 21 0 0 5 0 - £ _s._ _d._ - Exceeds 21 0 0 but does not exceed 23 12 6 4 0 - " 23 12 6 " " 26 5 0 3 0 - " 26 5 0 " " 28 17 6 2 0 - " 28 17 6 " " 31 10 0 1 0 - " 31 10 0 No pension. - -It was expressly stated in the Act that the disqualification of those -who had been in receipt of poor relief was to cease on December 31st, -1910, and the Budget of 1910-11 accordingly made provision for the -payment of the pensions to such paupers after that date. - -The following statistics show the payments under the Act at December -31st, 1909 (the Act having come into force on January 1st, 1909): - - THE FIRST YEAR'S WORKING OF MR ASQUITH'S OLD AGE PENSION ACT - - Position at December 31st, 1909. - - Number of Amount Payable - Pensioners. per Annum. - England 405,755 £5,043,332 - Scotland 76,037 966,370 - Wales 26,972 337,254 - Ireland 183,976 2,335,764 - ------- ---------- - 692,740 £8,682,720 - ======= ========== - -It was a defect in the Act that the possession of a certain amount of -property, as well as the possession of a certain income, was not made -the disqualification that I suggested it ought to be. A man with £500 of -property, yielding an income of £20 a year, ought _not_ to be qualified -for an Old Age Pension. - -It is notable that, in introducing his Budget of 1908, Mr Asquith, in -expounding his scheme of pensions, estimated that it would cost not more -than £6,000,000 a year. As we have seen, the cost has proved to be very -much greater. It is fortunate that the under-estimation was made. If -Parliament had known that the cost would be £9,000,000 instead of -£6,000,000 Old Age Pensions might not now be law, so slowly is the -lesson learned that, to a nation of 44,000,000 people, with an aggregate -income of nearly £2,000,000,000, an expenditure of £9,000,000 is a small -matter, relatively as small as though the reader expended a few -shillings. - -But it is, of course, a misnomer to speak of "expenditure" in this -connexion. The National Dividend is not diminished by the transfer of -£9,000,000 from the well-to-do to the poor. No more is _spent_ through -the transfer; all that takes place is a transfer of the power of call -for commodities, and a consequent change of the _form_ of a certain part -of the National Dividend, not a change of its _size_. The production of -luxuries is slightly—very slightly—stemmed; the production of -necessaries is slightly—very slightly—increased. - -Mr Asquith's valuable Act needs to be amended by the reduction of the -pensionable age to 65 and to be supplemented by a State scheme for -sickness and invalidity insurance. (A minor defect which has revealed -itself is the continued disqualification of a man whose wife is in -receipt of relief.) The case for the amendment has been already -discussed in these pages; the case for invalidity insurance is that old -age is not the only determinant of dire poverty for the wage earner. The -facts adduced in Chapter 10 are eloquent of the need for succour which -exists in tens of thousands of cases. - -[Footnote 60: The Royal Commission on the Poor Laws called for a similar -"year count" of paupers for 1907. It revealed that in that year of good -trade 1,709,436 persons were relieved by the Guardians in England and -Wales. This is 47.7 per 1,000 of the population. The later count fully -confirms that of 1892.] - -[Footnote 61: This description is their own. See "Old Age Pensions" -(Macmillan & Co.) Introduction.] - - - - - CHAPTER XX - ADAM SMITH'S FIRST MAXIM OF TAXATION - - -Our next task shall be to examine the question of taxation in relation -to the Error of Distribution. - -It is over one hundred and thirty years since Adam Smith penned his -famous maxims of taxation, the first and most important of which ran as -follows: - -"The subjects of every state ought to contribute towards the support of -the government as nearly as possible in proportion to their respective -abilities; that is, in proportion to the revenue which they respectively -enjoy under the protection of the state." - -The first part of the proposition, which lays it down that contribution -towards the support of government should be in proportion to ability, is -interpreted by the second part to mean that contribution should be in -proportion to income. The second half of the maxim is therefore -subversive of the first. - -Let us compare the ability to bear taxation of three persons whose -respective incomes are: A £50; B £500; and C £10,000. If we accept Adam -Smith's explanation of his own maxim, we should apply taxation in -proportion to income. Note the effect of a tax of 10 per cent. upon the -three incomes: - - A £50 less 10 per cent. = £45 - B 500 " " = 450 - C 10,000 " " = 9,000 - -Most clearly we see that to A, with £1 a week, the loss of 10 per cent., -or five week's income, is a most serious matter—a crushing burden. With -£500 per annum, however, B, after the loss of 10 per cent. of his -income, is still left with a revenue ten times as great as that of A. -The taxation in B's case is serious but not overwhelming. C, after the -loss by taxation of one-tenth of his income, is left with the handsome -income of £9,000 a year, a sum which is more than sufficient to sustain -him in luxury. The loss in the third case is clearly a shadowy one; a -rich man has been rendered not quite so rich. - -Thus, by taxing in proportion to income, we impose upon the poor man a -crushing burden; upon the small income a serious burden; upon the large -income a burden scarcely to be felt. - -Obviously, then, the second part of Adam Smith's maxim is not a true -illustration of the doctrine of equality of sacrifice which is involved -in the use of the term "ability." - -This has been partially recognized in our present system of taxation. -Those with incomes exceeding £160 per annum are made to pay a tax which -is not imposed upon those with less than that income. Further, the -income tax is roughly graduated. A graduated death duty is also imposed -in order to obtain a larger contribution from the rich than from the -poor. - -I now urge that the doctrine of equality of sacrifice, which has already -been partially recognized, should be considered in relation to all the -facts treated in Book I. - -We have seen that the great mass of the people, who do the greater part -of the work of the nation, who produce the material commodities without -which life could not be supported, receive so small a share of the total -product that while 39,000,000 persons enjoy an income of £911,000,000, -about 5,500,000 persons receive an income of £930,000,000. If then, we -had to raise £200,000,000 per annum by taxation and were to raise the -whole from the second class, the result would be: - - 5,500,000 would have £930,000,000, } £730,000,000 or - less £200,000,000 } £133 per head. - - 39,000,000 would have { £911,000,000 or - { £23 per head. - -The Error of Distribution is so great that, were the whole taxation -levied upon those above the line of £160 per annum, the comfortable and -rich classes would still be left about six times as rich as those below -that line. - -An unanswerable case is thus made out for the repeal of the whole of the -customs duties on tea, coffee, cocoa, dried fruits and sugar, which bear -almost entirely upon the poorer classes. A heavy tax on tea or sugar is -a matter of indifference to the rich; to the poor it means a -considerable privation. Our indirect food taxes are a denial of the -doctrine of ability. - -The customs and excise duties on alcoholic liquors must of course remain -on moral grounds, and the tobacco duty might well remain for the -present. We should thus tax the working classes through their luxuries -alone, while the workman who dispensed with drink and smoked in -moderation would be practically untaxed. The general recognition of this -fact, combined with the cheapening of tea, coffee and cocoa, would not -be without its effect upon the nation's drink bill, and in so far as its -recognition reduced our revenue we could count it gain. - -Reverting to the facts illustrated in the frontispiece, the effect of -the abolition of the food duties would be slight in relation to the -extraordinary inequalities of income, but a just and certain step, -nevertheless, in the direction of amelioration. Just as a small burden -is great to a narrow income, so a small relief is a great boon, and -fully 10,000,000 of our people would feel in an appreciable degree the -removal of the food duties. The step has been urged by reformers for -many years; considered in relation to the Error of Distribution it is -seen to be an exceedingly small measure of justice, which needs little -rhetoric to enforce its claims. - -To proceed with the application of the doctrine of ability to taxation -in view of the facts as to the National Income, we come to the -consideration of the Income Tax and Death Duties. - - - - - CHAPTER XXI - THE MAIN INSTRUMENT OF TAXATION - - -Through the income tax we go directly to the person upon whom we desire -to levy taxation, and take from him such portion of his earnings or -other profits as we consider to be his just contribution to the revenue. -Through the income tax we can, if we care to do so, cause each subject -of the State to contribute towards the expenses of government according -to his ability. - -It is the purpose of this chapter to show that the income tax could be -so amended that, so far from being counted an obnoxious impost, it would -be regarded as a just and proper instrument of taxation. - - * * * * * - -It is generally believed that the British Income Tax was originated by -Pitt in 1798. As a matter of fact, however, the direct taxation of -incomes in the United Kingdom dates back many hundreds of years. For the -purposes of this work, I do not propose to trace the history of the -subject to an earlier date than 1692. - -The Property and Income Tax imposed in that year is commonly known as -the "Land-Tax," and this name has given rise to a great deal of -misunderstanding. - -In their twenty-eighth report (1885) the Commissioners of Inland -Revenue, in giving a detailed description of the Land-Tax of 1692, point -out that the impost "was in fact a Property and Income Tax, and moreover -that personal estate was quite as much the object of the charge as -land." So few people are aware of these facts that it may be well to set -out the actual provisions of the Act, as described by the Commissioners: - -It (the Act of 1692) is entitled "An Act for granting to their Majesties -an aid of four shillings in the pound for one year for carrying on a -vigorous war against France"; and the second section enacts, "That every -person, body politic and corporate, etc., having any estate in ready -monies or in any debts owing to them or having any estate in goods, -wares, merchandise, or other chattels, or personal estate whatsoever -within this realm or without shall pay yield and pay unto their -Majesties four shillings in the pound according to the true yearly value -thereof; that is to say, for every hundred pounds of such ready money -and debts, and for every hundred pounds' worth of such goods, wares, -etc., or other personal estate the sum of four and twenty shillings." - -The third section imposes a duty of four shillings in the pound upon the -profits and salaries of all persons having any office or employment of -profit (except naval and military officers). - -And then the fourth section proceeds thus, "And to the end a further aid -and supply for their Majesties' occasions may be raised by a charge upon -all lands, tenements, and hereditaments with as much equality and -indifferency as is possible by an equal pound rate of four shillings for -every twenty shillings of the true yearly value, be it enacted that all -manors, messuages, lands and tenements, and all quarries, mines, etc., -tithes, tolls, etc., and all hereditaments, of what nature soever they -be, shall be charged with the sum of four shillings for every twenty -shillings of the full yearly value." - -The rules for assessments follow the same order, and show that the -charge on personal estate was as much to be attended to as that on land. -Thus the assessors are directed in the first place to bring in -certificates of the names of every person dwelling within their -districts, "and of the substance and values of them in ready money, -goods, chattels, and other personal estate." Every person is to be rated -for personal estate at the place where he shall reside, and, if not a -householder, at the place where he resides at the execution of the Act, -or if out of the realm, where he was last resident; "and for the better -discovery of personal estates," every householder is to give an account -of his lodgers. - -But although the Act of 1692 was the first of those so-called Land-Tax -Acts, it was not until 1697 that the tax was imposed precisely in the -form which has been preserved to the present day, that is to say, as a -fixed sum for the whole kingdom, and to be raised in quotas specified in -the Act for each county, city or borough therein named. That Act was -renewed every year, with scarcely any difference in its provisions as to -the mode of assessment, and although the amounts charged upon the -counties, etc., varied according to the total sum required from the -kingdom, they were always fixed in due proportions to the original -quotas. The last annual Act, so far as land was concerned, was passed in -1797. - -Now it is a remarkable circumstance that these Acts of 1697 and 1797 -appear to mark, more strongly than before, the taxation of personal -estate as the primary object of the law. - -After the clauses imposing upon goods, wares, merchandise, etc., and -upon pensions and offices, the fixed charge of four shillings in the -pound towards raising the quotas, that relating to land appears to treat -it as a subsidiary contributor, as it were, and for the purpose of -making up the sum due to the Exchequer after exhausting the other -resources. The words are: "And to the end the full and entire sums by -this Act charged upon the several counties, etc., may be fully and -completely raised and paid; be it enacted, that all lands, etc., shall -be charged by a pound rate towards the said several sums by this Act -imposed." - -How the duty on personal estate was levied, or what was its proportion -in the quotas, we have no means of knowing. All that we do know is that -in Mr Pitt's time it had dwindled nearly to nothing; and that the tax -annually voted under the name of land tax had become a land tax in -reality. Thus we find in an assessment for the Tower Division in 1799 -that the sum charged for personal estate was only £227, while the charge -for lands, etc., is £29,964; and in one of the few accounts of later -transactions which remain to us, that for the year 1823, we are -presented with a return of £5,416, 10s. 0d. as the ludicrous result of a -tax at one per cent. on the capital value of the personalty of Great -Britain. - -The Commissioners go on to remark that it seems almost incredible that -year after year an Act should have been passed containing the most -minute directions for the assessment of personal estate, and yet that -nothing which could be called an assessment should have been made. They -suggest that "Perhaps the explanation may be found in another -peculiarity in the administration of this tax, the tendency to regard it -as a _fixed charge_ upon the subjects on which it was originally levied. -That this has been the case with land, both before and since 1797, is -well known, and if the same rule was applied to personalty it is easy to -conceive that, as the persons originally charged moved out of the -parish, or became destitute, or otherwise unassessable, their proportion -of the tax was shifted to the land as the readiest means of collecting -it." - -A certain amount of personalty was still assessed in the time of Pitt, -however, as may be gathered from the following figures from the roll of -the Tower Division. - - "LAND-TAX." ABSTRACT OF DUPLICATES FOR THE TOWER DIVISION - -------------------+-------------------+------------------- - | Quotas for the | - | respective | - Charge for | years 1698 and | - the year | 1699, under | Quota - 1693. | 9 & 10 and | for 1702. - 4s. Aid. | 10 & 11 | - | William III. | - | 3s. Aid. | -------------------+-------------------+------------------- - £ _s._ _d._ | £ _s._ _d._ | £ _s._ _d._ -34,057 5 5 | 25,542 19 0¾ | 34,041 12 10 -------------------+-------------------+------------------- - -------------------------------------------------------- - - Quota for 1799. - -------------------+----------------+------------------- - | | - | Personal | Pensions - Lands, etc. | Estate. | and - | | Offices. -------------------+----------------+------------------- - £ _s._ _d._ | £ _s._ _d._ | £ _s._ _d._ -29,964 15 0½ | 227 15 5 | 2,320 2 4½ -------------------+----------------+------------------- - -This specimen also shows how the original assessments of 1692 were -preserved until the time when, in 1798, over one hundred years after, -Pitt made provisions for the redemption of the old tax, and -simultaneously introduced a new Property and Income Tax based upon -better assessments. - -Unaware of the real nature of the so-called "Land-Tax" and as it would -also appear, of the present "Property and Income Tax," it is often -suggested by fiscal reformers that the old Land-Tax of 1692 should be -reimposed upon present land revenues. Those who make the suggestion do -not realize that what they desire has already been done and is actually -in practice at this moment. - -The old "Land-Tax" and the present "Income" Tax -thus compare:— - -The "Land-Tax" of 1692. - - Section 2: Every Person ... having any estate in ready monies or in any - debts owing to them or having any estate in goods, wares, merchandise - or other chattels, or personal estate whatsoever ... shall yield and - pay four shillings in the pound according to the true yearly value - thereof. - - Section 3: All persons holding any public office or employment of - profit (except military and naval officers) and their clerks, etc., - shall pay four shillings in the pound. - - Section 4: And to the End, a further aid and supply for their - Majesties' occasions may be raised by a charge upon all lands, - tenements and hereditaments ... by an equal pound rate of four - shillings ... be it enacted that all manors, messuages, lands and - tenements, and all quarries, mines, etc., tithes, tolls, etc. ... shall - be charged with the sum of four shillings for every twenty shillings of - the full yearly value. - -The Present "Property and Income" Tax. - - Schedule D taxes the profits of trades and professions and from various - forms of personal property. - - Schedule E taxes the salaries of all who hold public offices or - employments, whether they be officials or clerks. - - Schedule A taxes the income from "all manors, messuages, lands and - tenements, and all quarries, mines, etc., tithes, tolls, etc." - -It is also remarkable that whereas Land and Houses are placed in -Schedule A, the first branch of our Income Tax, the so-called Land-Tax -of 1692 placed lands and houses in its third category. The Act of 1692, -moreover, as we have seen, made the taxation of personalty its first -aim, and brought in a charge on land, houses and other fixed property to -make up any deficiency. - -With our modern Income Tax, fortunately, personalty does not escape as -it seems to have done in the seventeenth and eighteenth centuries, but -it is still true that a great deal of personal income evades taxation, -while it is impossible for fixed property to elude the assessors. - -I have taken the trouble to set out the foregoing details at some length -because the fact that Schedule A of the Income Tax, like Section 4 of -the Act of 1692, is a Land-Tax, appears to have escaped the attention of -many of those who desire to tax the unearned increment which so often -accrues to the owners of land. At the present moment, the owners of land -contribute 14 pence in the pound of its annual revenue to Imperial -Taxation under Schedule A. In the case of a small landowner with an -income of £750 a year that may be enough. In the case of a great -landowner with a rent roll of £20,000 a year it is certainly too little. -If, then, we would justly tax the income of those who derive unearned -revenue from land, we must graduate our income tax. In doing so, -fortunately, we shall not tax merely one form of unearned increment. The -conclusive proof of unearned income is the possession of a great income. -Whether it arises from rent, or from interest, or from the direct -taxation of labour is a secondary consideration. Whether its owner has -bought broad acres with profits drawn from the exertions of others, or -whether he has bought railway stock or foreign investments with the -proceeds of the sale of broad acres, we need not inquire. The great -income, the fact that the individual who receives it is one of the small -number of people who enjoy one-third of the entire income of the -country, is sufficient proof of "ability" to contribute generously to -the revenues of what should be the rich government of a rich State. And -it is difficult to imagine a rich man so wanting in that social instinct -which we call patriotism that, when once his extraordinary position in -relation to his fellows is made clear to him, he will not consent freely -to make such contribution. - - * * * * * - -The Income Tax, as it now exists, is an instrument of extraordinary -clumsiness and complexity. An intelligent foreigner, coming freshly to -the examination of its curious provisions, would be driven to the -conclusion that a junta of bureaucrats, intent upon hiding the mysteries -of statecraft from the knowledge of the vulgar, had of set purpose -wrapped its machinery and intention in every device of obscurement which -perverted ingenuity could suggest. - -In "Riches and Poverty," edition 1905, I gave an account of the Income -Tax as it then stood. I reproduce the account in order to make the -subsequent alterations clearer. - -Incomes, from whatever source arising, which do not exceed £160 per -annum, are entirely exempt from the tax. - -Incomes between £160 and £700 are allowed certain abatements which are -equivalent to a rough graduation of the tax. The following table shows -the nature of the abatements:— - - INCOME TAX ABATEMENTS - - Amount of Annual Income. Abatement. - Between £160 and £400 £160 - " 400 " 500 150 - " 500 " 600 120 - " 600 " 700 70 - -The following table shows how the abatements graduate the Income Tax -when the nominal rate of tax is 1s. in the £. - - INCOME TAX. EFFECT OF THE ABATEMENTS ON INCOME TAX AT 1s. - - Actual Rate of - Abatement Income after Taxation when - Income. Allowed. Abatement. the Tax is - 1s. in the £. - £ £ £ Pence in the £ - 180 160 20 1.33 - 240 160 80 4.00 - 300 160 140 5.60 - 400 160 240 7.20 - 440 150 290 7.90 - 500 150 350 8.40 - 540 120 420 9.33 - 600 120 480 9.60 - 640 70 570 10.68 - 700 70 630 10.80 - 740 nil 740 12.00 - -Thus, when the Income Tax is at 1s., an income of £180 pays less than -1½d. in the £, an income of £300 pays less than 6d. an income of £500 -pays less than 8½d., and an income of £700 pays less than 11d. - -I now give an explanation of the various Schedules under which the tax -is collected. The abatements, it should be understood, refer to all the -Schedules. - - * * * * * - -Schedule A, sometimes called Property Tax or Landlords' Tax, is assessed -upon the rents received by the owners of lands, houses, etc. It is -directly assessed upon occupiers, who, if they are tenants, deduct the -tax from their next payment of rent. Thus it is a Land and House Tax -which the landowner or houseowner cannot possibly escape. - -It should also be explained that the term "Lands," as used in connexion -with Schedule A, refers to Agricultural lands, and the farm-houses and -farm buildings, etc., thereon. The term "Houses" refers to houses, -business premises, etc., together with the gardens, pleasure grounds or -yards upon which they stand. - -Owners of agricultural lands are allowed to deduct for repairs -one-eighth of the rent. Owners of houses and other buildings are allowed -to deduct for repairs one-sixth of the rent. - - * * * * * - -Schedule B covers profits from the _occupation_ of lands, and taxes the -incomes of farmers, nurserymen, and market gardeners. - -Farmers' profits (unless farmers elect to be dealt with under -Schedule D) are assumed to be one-third of the annual rent of their -farms. Thus a farmer paying a rent of £480 or less is not subject to -income tax, as one-third of £480 is £160, and incomes of £160 or less -are not taxable. Nurserymen and market gardeners, however, are taxed on -their profits in the same way as in the case of other business men. - -The chief point to which I direct attention is that very few farmers pay -income tax at all. - -The arbitrary assessment of farmers at one-third the rent of their farms -is an absurdity. A farmer paying a rental of £480 is usually a -well-to-do man, but he escapes income tax because his income is assessed -as £160. A farmer who pays a rental of £600 and who in an average year -probably makes at least £400 a year, is, on the one-third basis, -assessed at £200. The income tax of farmers is for the most part paid -for them by the industrial classes, who are taxed _pro tanto_ to relieve -agriculture. - - * * * * * - -Schedule C deals with profits from British, Indian, Colonial and Foreign -Government Securities. So far as possible these profits are taxed "at -the source." Thus the Bank of England, in paying Consols dividend, -deducts income tax, and leaves the fundholder to claim repayment -afterwards if his income should be less than £160 per annum. - - * * * * * - -We now come to that important branch of the tax known as Schedule D. - -The profits included in this Schedule consist of those from trade and -industry, from professions, from all employments or vocations except -public offices, from oversea investments which are not Government -securities, and from interest on loans secured on the Public Rates, etc. - -In the case of income from trade, assessments are made upon the average -profits of the past three years. Let us suppose that a merchant in the -period, 1893-1902, made the following profits: 1893, £1,100; 1894, £900; -1895, £1,200; 1896, £1,300; 1897, £1,400; 1898, £1,400; 1899, £1,500; -1900, £1,600; 1901, £1,200; 1902, £1,200; 1903, £1,500; 1904, £1,600. -The table on page 301 shows how the profits are assessed under Schedule D. - -Thus, while between 1893 and 1904, the income was in two years above -£1,500, the assessment never rose above £1,500. The result, it will be -seen, is to deprive the State of the advantage of the maximum income. - -It follows that the assessments under Schedule D, from this cause alone, -are always something less than the actual income of the persons assessed. - - * * * * * - - ILLUSTRATION OF THE PRINCIPLE OF AVERAGING UNDER Schedule D - ------------------+------------------------------------------------ - Profits. | Assessment. --------+---------+-------------+-------------+-------------------- - | | Year of | Amount of | - Year. | Amount. | Assessment. | Assessment. | Remarks. --------+---------+-------------+-------------+-------------------- - | £ | | £ | - 1893 | 1,100 | | | - 1894 | 900 | | | - 1895 | 1,200 | | | - 1896 | 1,300 | 1896 | 1,066 | Average of £1,100, - | | | | £900 and £1,200. - | | | | - 1897 | 1,400 | 1897 | 1,133 | Average of £900, - | | | | £1,200 and £1,300. - | | | | - 1898 | 1,400 | 1898 | 1,300 | Average of £1,200, - | | | | £1,300 and £1,400. - | | | | - 1899 | 1,500 | 1899 | 1,366 | Average of £1,300, - | | | | £1,400 and £1,500. - | | | | - 1900 | 1,600 | 1900 | 1,433 | Average of £1,400, - | | | | £1,400 and £1,500. - | | | | - 1901 | 1,200 | 1901 | 1,500 | Average of £1,400, - | | | | £1,500 and £1,600. - | | | | - 1902 | 1,200 | 1902 | 1,433 | Average of £1,500, - | | | | £1,600, and £1,200. - | | | | - 1903 | 1,500 | 1903 | 1,333 | Average of £1,600, - | | | | £1,200 and £1,200. - | | | | - 1904 | 1,600 | 1904 | 1,300 | Average of £1,200, - | | | | £1,200 and £1,500. - | | | | - | | 1905 | 1,433 | Average of £1,200, - | | | | £1,500 and £1,600. - -We next come to Schedule E, which covers the salaries of all Government -officials, and of the employees of Limited Liability Companies, County -Councils, etc. For obvious reasons this branch of the tax is very easily -assessed. - - * * * * * - -It is necessary also to remind the reader that a second form of -income-tax is at present levied. I refer to the Inhabited House Duty, -which is payable by all householders (in Great Britain only—not in -Ireland) who live in houses of an annual value of £20 and upwards. The -rates are graduated as follows:— - - Above £20. Above £40. Above £60. - Rate in the £. Rate in the £. Rate in the £. - Private dwelling-houses 3d. 6d. 9d. - Business premises used - residentially 2d. 4d. 6d. - -Houses used solely for purposes of trade, and in which no occupier -resides, are not subject to the tax. - -In the last financial year of which we have record (1907-8) the duty -yielded £1,900,000. - -The present Inhabited House Duty dates from 1851 when it was levied, to -replace the stupid window-duty, by Sir Charles Wood. It can only be -described as a clumsy income tax, and it bears very harshly upon poor -Londoners, compelled by their circumstances to pay heavy rents to be -near their work. To the heavy rent the State adds a second most unjust -Income Tax. - - * * * * * - -In the above words the Income Taxes of 1905 were faithfully described in -their essential details. In the years that have elapsed various reforms -have been made. - -In the Finance Act of 1907 the principle of _differentiation as between -earned and unearned incomes_ was introduced. Mr Asquith embodied the -principle in the following words (Finance Act, 1907, clause 19, section -1): - - "Any individual who claims and proves, in manner provided by this - section, that his total income from all sources does not exceed two - thousand pounds, and that any part of that income is earned income, - shall be entitled, subject to the provisions of this section, to such - relief from income tax as will reduce the amount payable on the earned - income to the amount which would be payable if the tax were charged on - that income at the rate of ninepence." - -As the nominal rate of tax was 1s., earned incomes thus enjoyed a -substantial reduction. The abatement system, described on page 297, -continued to apply to both earned and unearned incomes, so that two very -roughly graduated scales of taxation came into existence, which are -illustrated on page 304. - -The number of tax-payers who understood what had been done for them may -be described as negligible. Without working out such a table as that on -p. 304, the income tax payer remained in ignorance of what treatment had -been meted out to him. The moral effect of a considerable reform was -almost completely lost. - -In the famous Finance Act of 1909, which did not pass into law, owing to -the action of the House of Lords, until the present year (1910), Mr -Lloyd George, succeeding Mr Asquith as Chancellor of the Exchequer, made -alterations in the Income Tax as excellent in principle and as obscure -in operation as that just described. - -He raised the nominal rate of taxation to fourteen pence -in the £, and left the rate for earned incomes at ninepence, -thus increasing the differentiation between earned and -unearned incomes. He also introduced a new step in -differentiation by enacting that earned incomes exceeding -£2,000 a year but not exceeding £3,000 a year should -pay twelve pence instead of fourteen pence in the £. - - THE EFFECT OF MR ASQUITH'S DIFFERENTIATION OF THE INCOME TAX, 1907 - --------+---------+----------------------------------- - | | Income Tax on Earned Incomes. -Income.|Abatement|-------------+----------+---------- - | allowed.| Tax payable.| Nominal | Virtual - | | | Tax. | Tax. --------+---------+-------------+----------+---------- - £ | £ | £ _s._ _d._|Pence in £|Pence in £ - 160 | 160 | ... | Exempt | ... - 200 | 160 | 1 10 0 | 9 | 1.8 - 300 | 160 | 5 5 0 | 9 | 4.2 - 400 | 160 | 9 0 0 | 9 | 5.4 - 500 | 150 | 13 2 6 | 9 | 6.3 - 700 | 70 | 23 12 6 | 9 | 8.1 - 800 | Nil | 30 0 0 | 9 | 9.0 - 1,000 | " | 37 10 0 | 9 | 9.0 - 2,000 | " | 75 0 0 | 9 | 9.0 --------+---------+-------------+----------+---------- - --------+---------+----------------------------------- - | | Income Tax on Unearned Incomes. -Income.|Abatement+-------------+----------+---------- - | allowed.| Tax payable.| Nominal | Virtual - | | | Tax. | Tax. --------+---------+-------------+----------+---------- - £ | £ | £ _s._ _d._|Pence in £|Pence in £ - 160 | 160 | ... | Exempt | ... - 200 | 160 | 2 0 0 | 12 | 2.4 - 300 | 160 | 7 0 0 | 12 | 5.6 - 400 | 160 | 12 0 0 | 12 | 7.2 - 500 | 150 | 17 10 0 | 12 | 8.4 - 700 | 70 | 31 10 0 | 12 | 10.8 - 800 | Nil | 40 0 0 | 12 | 12.0 - 1,000 | " | 50 0 0 | 12 | 12.0 - 2,000 | " |100 0 0 | 12 | 12.0 --------+---------+-------------+----------+---------- - -In order to give further effect to the principle of graduating the -Income Tax, Mr Lloyd George at the same time imposed a Supplementary -Income Tax, or Super-Tax, upon persons whose incomes exceeded £5,000 a -year. - -The Super-Tax is nominally 6d. in the £, but in practice it is always -less. For the Super-Tax of 6d. is payable only upon that part of the -income which exceeds £3,000 a year. That, reflection will show, creates -a _graduated_ Super-Tax, thus: - - THE LLOYD GEORGE SUPER-TAX AS IT REALLY IS - - ---------+-----------+--------+-----------------+------------+------------ - | Abatement | Income | | Nominal | Virtual - Income. | on | really | Tax payable. | Rate of | Rate of - | Income. | Taxed. | | Super-Tax. | Super-Tax. - ---------+-----------+--------+-----------------+------------+------------ - £ | £ | £ | £ _s._ _d._ | Pence in £ | Pence in £ - 5,000 | Exempt | ... | ... | ... | ... - 5,001 | 3,000 | 2,001 | 50 0 6 | 6 | 2.4 - 10,000 | 3,000 | 7,000 | 175 0 0 | 6 | 4.2 - 50,000 | 3,000 | 47,000 | 1,175 0 0 | 6 | 5.6 - 100,000 | 3,000 | 97,000 | 2,425 0 0 | 6 | 5.8 - ---------+-----------+--------+-----------------+------------+------------ - -It will be seen that it is a great gain under this system to have £5,000 -a year rather than £5,001. The extra £1 of income costs the tax-payer -£50, 0s. 6d. Thus a premium is placed by the State upon false -declarations, for if a Government is so unfair as to tax £1 of income -£50, 0s. 6d, who can blame a tax-payer who retorts in kind? - -It will be seen that it is impossible for the alleged 6d. Super-Tax to -reach 6d. It can at the highest reach 5.9 pence. - -But while the Super-Tax is so unfortunate in method it is excellent in -principle, and largely carries into effect the suggestions made in -"Riches and Poverty," edition 1905. It effects a rough graduation in the -taxation of incomes over £5,000 a year, and extends the gamut of the -Income Tax scale from zero at £160 a year to 19.8 pence in the £ at -£100,000 a year. - -I am now able to show the total effect of all the obscure provisions -which it has been my misfortune to attempt to describe in plain -language. The table on page 307 gives a faithful picture of the Income -Tax, as graduated and differentiated by all the reforms made down to -1910. The table is the expression of the following provisions, existing -in 1910, which I recapitulate for its better elucidation. - -_Incomes not exceeding £160 a year pay no tax. Small and moderate -incomes are relieved from taxation by being only taxed in part, i.e. -"abatements" are allowed according to the size of the income. Over £700 -a year there are no abatements. Unearned incomes are taxed at the -nominal rate of fourteen pence in the pound. Earned incomes not -exceeding £2,000 a year are taxed ninepence in the pound. Earned incomes -over £2,000 a year, but not over £3,000 a year, are taxed one shilling -in the pound. Finally comes what is called the "Super-Tax." Incomes, -whether earned or unearned, over £5,000 a year are taxed an extra -sixpence in the pound on such part of the income as exceeds £3,000._ - - EFFECT OF THE INCOME TAX IN 1910 - - -------+---------+-------------------------------------- - | | Earned Incomes. - Income.|Abatement+----------------+----------+---------- - |allowed. | Tax payable. | Nominal | Virtual - | | | Rate. | Rate. - -------+---------+----------------+----------+---------- - £ | £ | £ _s._ _d._ |Pence in £|Pence in £ - 160| 160 | | Exempt | - 200| 160 | 1 10 0 | 9 | 1.8 - 300| 160 | 5 5 0 | 9 | 4.2 - 400| 160 | 9 0 0 | 9 | 5.4 - 500| 150 | 13 2 6 | 9 | 6.3 - 700| 70 | 23 12 6 | 9 | 8.1 - 800| Nil | 30 0 0 | 9 | 9.0 - 1,000| " | 37 10 0 | 9 | 9.0 - 2,000| " | 75 0 0 | 9 | 9.0 - 2,100| " | 105 0 0 | 12 | 12.0 - 3,000| " | 150 0 0 | 12 | 12.0 - 3,100| " | 180 16 8 | 14 | 14.0 - 5,000| " | 291 13 4 | 14 | 14.0 - 5,100| " | 350 0 0 | 14 + 6 | 16.5 - 10,000| " | 758 6 8 | 14 + 6 | 18.2 - 50,000| " |4,091 13 4 | 14 + 6 | 19.6 - 100,000| " |8,258 6 8 | 14 + 6 | 19.8 - -------+---------+----------------+----------+---------- - - -------+---------+-------------------------------------- - | | Unearned Incomes. - Income.|Abatement+----------------+----------+---------- - |allowed. | Tax payable. | Nominal | Virtual - | | | Rate. | Rate. - -------+---------+----------------+----------+---------- - £ | £ | £ _s._ _d._ |Pence in £|Pence in £ - 160| 160 | | Exempt | - 200| 160 | 2 6 8 | 14 | 2.8 - 300| 160 | 8 3 4 | 14 | 6.5 - 400| 160 | 14 0 0 | 14 | 8.4 - 500| 150 | 19 8 4 | 14 | 9.8 - 700| 70 | 36 15 0 | 14 | 12.6 - 800| Nil | 46 13 4 | 14 | 14.0 - 1,000| " | 58 6 8 | 14 | 14.0 - 2,000| " | 116 13 4 | 14 | 14.0 - 2,100| " | 122 10 0 | 14 | 14.0 - 3,000| " | 175 0 0 | 14 | 14.0 - 3,100| " | 180 16 8 | 14 | 14.0 - 5,000| " | 291 13 4 | 14 | 14.0 - 5,100| " | 350 0 0 | 14 + 6 | 16.5 - 10,000| " | 758 6 8 | 14 + 6 | 18.2 - 50,000| " |4,091 13 4 | 14 + 6 | 19.6 - 100,000| " |8,258 6 8 | 14 + 6 | 19.8 - -------+---------+----------------+----------+---------- - -The table on p. 307 shows, as the mere relation of the complicated -provisions does not show, both the virtues and the faults of Mr Lloyd -George's Income Tax. There is graduation, but it is effected so clumsily -that it positively bristles with anomalies. Consider, for example, the -gross anomaly of making a man with £3,000 a year pay only £150, while a -man with £3,100 a year must pay £180. Or, again, of asking from the -£5,000 man a £291 tax, and demanding £350 from the £5,100 man. Perhaps -the worst feature in the scale, however, is the fact that unearned -incomes from £701 to £5,000 pay the same rate. - - * * * * * - -Now let us consider the reform of the Income Tax. - -In the first place it is suggested that the Inhabited House Duty should -be entirely abolished. As has been already pointed out, it is a clumsy -second Income Tax and its incidence is most unequal. It is not paid in -Ireland, and too much of it falls upon poor clerks and tradesmen in -London and other big towns. It is urged here that if we properly reform -the Income Tax it should not be necessary to levy a second one under -another name. - -It must be frankly recognized that, in principle, the Income Tax reforms -urged in "Riches and Poverty," edition 1905, have been largely conceded. -Method is so important in this connexion, however, that it is necessary -to insist that the Income Tax still needs serious revision. - -Why is it that so much misplaced ingenuity has been applied to our -Income Tax law by successive Chancellors of the Exchequer? Why these -alleged rates of Income Tax, which on inquiry prove to be nominal, and -the enactment of a clumsy Super-Tax to amend a sufficiently clumsy -Income Tax? Why should it be necessary to arrive at a "sort of" -graduation by a series of provisions, which few men, inside or outside -the legislature, pretend to understand? - -The explanation is that we have not a complete Census of Incomes. The -point is of the first importance. The establishment, within the limits -of a very small possible margin of error, of the number of British -Income Tax payers in 1903, which I effected by a careful examination of -so far uncorrelated facts in "Riches and Poverty," edition 1905, brought -to light the then unsuspected fact that about 750,000 out of about -1,000,000 Income Tax payers actually declared their individual aggregate -incomes from all sources for the purposes of Income Tax. - -These declarations, as already explained, were made by the smaller -Income Tax payers in order to avail themselves of the abatement system, -the abatements being granted only to those persons with incomes not -exceeding £700 a year _who made declarations_. _In effect, those of this -class who do not declare are heavily fined._ - -The number of the declarants was further increased in 1907 by Mr -Asquith's differentiation of the Income Tax. - -Mr Asquith enacted, as we have seen, that persons who earned their -incomes, and whose incomes did not exceed £2,000 a year, should enjoy a -lower rate of taxation _if they declared their incomes_. - -This led to declarations by a fresh batch of Income Tax payers, and it -became possible for Somerset House to collect and publish a new set of -most valuable statistics. Unfortunately, the precise facts of the case -have neither been collected nor published, important as the knowledge of -them is if we are to tax wisely and justly. Nevertheless, there is -little doubt that the new batch of declarations between £700 and £2,000 -a year raised, or will soon raise, the proportion of Income Tax payers -making personal declarations to over nine out of eleven of the whole -body. - -The question immediately suggests itself: Why should not the balance of -two out of eleven, or thereabouts, be compelled to fall into line with -the majority? This balance consists, of course, of the well-to-do and -rich, chiefly those who derive their incomes from property. These -persons are not taxed directly at all. The State relies upon what is -called "taxing at the source." That is, dividends are taxed at the -company's offices before they are distributed, and rents are taxed -through the occupier, the occupiers being left to recover the Schedule A -tax from the landlords and houselords. - -This reliance upon an indirect form of "direct" taxation leads, of -course, to much income escaping tax, for rich people, it will be seen, -have not to make a return of their incomes, but are in the happy -position of letting the State catch them when it can. No other country -levying an Income Tax does this thing; yet we perversely maintain that -there is no system so effective as ours. Happily, the Finance Act of -1909 (passed in 1910) still further increases the number of those who -are to declare. - -First, as to earned incomes, as noted above, Mr Lloyd George enacted -that earned incomes over £2,000 but not over £3,000 are to continue to -pay one shilling in the £, and that those over £3,000 are to pay -fourteen pence. It follows that a new batch of declarations will be -forthcoming from those, or most of those, between £2,000 and £3,000, in -order to get the shilling rate. - -Again, a Super-Tax is to be levied upon all those whose incomes exceed -£5,000 a year, of whom there are not less than 14,000 or 15,000. This -Super-Tax is to be collected by Special Commissioners. How will these -Special Commissioners know to whom to apply? Obviously they have not a -list of the fortunate 15,000. They will doubtless go to work by sending -a form asking for a return of total income to all people who _appear_ to -be very rich. - -All the inhabitants of big houses, and, indeed, all the obviously rich, -will receive a declaration form to fill up. And, of course, in order to -catch the 15,000 the Commissioners will have to send notices to many -times that number of people, for it is really exceedingly difficult to -decide by appearance or reputation whether a man has £2,500 or £5,000 a -year. The Budget provides that every person sent a form must fill it up, -whether or not he has £5,000 a year. Consequently, at the very top of -the scale, the Income Tax Commissioners will come into possession of -personal declarations relating to 50,000 or more of our moneyed -citizens. - -And yet we shall not arrive at complete declarations from all Income Tax -payers. Nearly all persons who earn their incomes will declare, but as -to unearned incomes there is a big hiatus. - -Small unearned incomes up to £700 a year will be mostly declared in -order to get the abatements. - -Very big unearned incomes must be declared, as we have seen, through the -demands for Super-Tax. - -_But, between £700 a year and £5,000 a year, the unearned scale is -ungraduated, and, save for the people with less than £5,000 a year, -asked in error to declare by the Super-Tax Commissioners, there will be -no personal declarations._ - -Surely this ought not to be. If the poor are to declare and the very -rich are to declare, why should not the middle incomes be declared? Why -should the State continue to rely, in respect of the considerable amount -of income concerned, upon taxation at the source? The question becomes -the more urgent when we reflect that the fresh batch of declarations -brought in by Mr Asquith's differentiation scheme of 1907, noted above, -brought to light many millions of "new" income (see p. 14). Every new -revelation of existing income, of course, lowers taxation _pro tanto_. - -Perhaps the final argument for universal personal declaration of income -is furnished by the following enactment of the Budget of 1907: - -Finance Act (1907), Section 21. - -"Every employer, when required to do so by notice from an assessor, -shall, within the time limited by the notice, prepare and deliver to the -assessor a return of the names and places of residence of any persons -employed by him." - -We thus go behind the backs of small tax-payers to their employers, and -compel the divulgence of incomes which are usually the _total_ incomes -of the employed. Yet the employer who, by our direction, hands his -employee over to the tax-collector, is not compelled by us to declare -his own total income, unless (1) he has no other income than his -Schedule D income, or (2) he is a payer of Super-Tax. - -Given a Census of Incomes it would become possible to arrive at a -practical and just Income Tax. - -We could set up a plain graduated scale of taxation, differentiated up -to a certain point as between earned and unearned incomes, making it -quite clear to the tax-payer what is demanded from him and revealing to -him the justice or injustice of our methods by enabling him to compare -his rate of taxation with that of those richer or poorer than himself. - -We need not abandon taxation "at the source." We could levy on property -incomes at the source a certain rate of tax, say 1s. in the £. Then when -the total income was declared, the tax-payer would point out upon what -items, if any, 1s. in the £ had been deducted at the source and pay the -balance of the tax. - -Let us take a hypothetical case—that of a barrister earning £2,000 a -year, and deriving a further £1,000 from rents and a further £300 from -Consols. The total income, £3,300, let us suppose taxed under the -graduation scheme at 14d. in the £. The Income Tax on the £1,000 of -rents would be paid by his tenants and deducted from the rents paid him, -while the Bank of England would deduct 1s. in the £ from the interest on -the Consols. Declaring his total income at £3,300 he would pay the -balance due, thus:— - - Total Declared Income. £ _s._ _d._ - £3,300 at 14d. 192 10 0 - - Taxed at the source:— - (1) Schedule A. 1s. in the £ on - £1,000 of rent, deducted by - tenants £50 - (2) Schedule C. 1s. in the £ on - £300 of interest deducted - by Bank of England £15 - --- 65 0 0 - ------------ - Balance of Tax Payable-- £127 10 0 - ============ - -If, upon the introduction of such a system, local assessors were -empowered to ask every householder assessed for local rates at £20 a -year and upwards _to declare his income in the place where he resides_, -there would undoubtedly be a great increase in the Income Tax -assessments. A great part of the evasion of Income Tax results from -persons being taxed at their places of business, where there is often -little evidence of means. In a man's own neighbourhood it is difficult -grossly to understate income. - -For several years I put down in the House of Commons the following -suggested amendment to the Finance Bill: - -Every person upon whom notice is served in manner prescribed by section -forty-eight of The Income Tax Act, 1842 (which section relates to the -delivery of notices by assessors), requiring him to make a return of his -income chargeable to duty under any and every schedule of the Income -Tax, shall make a return, in the form required by the notice, which -shall show the amount of his aggregate income from all sources, whether -he is or is not chargeable with duty, and upon what part or parts of -such aggregate income, if any, Income Tax has already been paid under -the Income Tax Acts by deduction at the source, and in default shall be -liable to a penalty under section fifty-five of The Income Tax Act, -1842. - -On one occasion some twenty Members of Parliament consented to put down -this amendment with me, but every attempt to obtain its enactment has -failed. Until it is obtained there can be no just graduation of the -Income Tax, and tax-payers who declare their incomes under the existing -law will continue to pay too much because others pay too little. - - * * * * * - -Some smaller matters claim our attention. - -A minor but not unimportant reform, for which we have to thank Mr Lloyd -George, is the concession made to small Income Tax payers who have young -children, a concession which the present writer believes he was the -first to urge in the House of Commons. The Finance Bill of 1909 (Sect. -68) provided that Income Tax payers with incomes not exceeding £500 -should be entitled to exemption from taxation to the amount of £10 for -each child under the age of 16 years. The effect of this provision is -far-reaching. A clerk with £200 a year and three young children gets the -£160 abatement and £30 abatement in respect of his children. His -_taxable_ income is thus reduced to £10 and his payment of Income Tax to -7s. 6d. - -On the same ground, respect for the principle of ability to pay, the -Income Tax law should provide for special abatements in case of the -illness of salary earners, special misfortunes, the support of poor -relatives, etc. It is found possible to work such provisions in Prussia; -it ought to be found possible to do so here. - - * * * * * - -The importance of a thorough revision of the Income Tax law is growing. -The view urged here is that the citizen's subscription to the National -Club should not only be justly proportioned to his means, but presented -to him intelligibly, and collected without waste or undue interference -with business. - -The phenomenon of an annual Budget debate has come to be regarded as a -necessary Parliamentary evil, but is there any justification for it? - -When the nation has decided, through its representatives, for good -reasons or for bad reasons, that a certain sum of money must be raised -for public purposes, it is not the function of the Chancellor of the -Exchequer _qua_ Chancellor of the Exchequer to decide whether the -purposes are good or bad, or whether the sum is too large or too small. -As a member of the Government, the Finance Minister has, of course, a -voice in deciding what sums should be spent and upon what purposes, but, -as Chancellor of the Exchequer, his duty is not to reason why but to -find the money. In the finding of the money, ought there to be, year by -year, a long and painful discussion as to how it should be done? - -We have also become accustomed to regarding the Budget as a great and -glorious secret, to be carefully guarded until the Chancellor of the -Exchequer makes his annual speech. Does the tradition of secrecy rest -upon necessity? For my part, I call the necessity in question. I affirm -that our annual Budget need present no difficulties; that it is not -inherently a difficult thing to accomplish; and that the conception of a -Budget as a great secret, to be carefully hidden until Budget Day, is an -altogether childish conception. There is some excuse for reserving a -child's Christmas presents until he wakes up and finds the gifts of -Santa Claus in his stocking on the morning of December 25th, but there -is no excuse whatever for the ridiculous secrecy with which tradition -shrouds the annual Budget statement. - -I do not deny that secrecy has been necessary in connexion with such -Budgets as have been put on record in the past. Of what have these -Budgets consisted? Year by year, a number of clumsy, inefficient and -indefensible taxes have been tinkered by successive guardians of the -national purse. Tea taxes, coffee taxes, beer taxes, sugar taxes, -alleged income taxes, double inheritance duties, have had bits carved -off them, or bits attached to them, without rhyme or reason. Year after -year, Mincing Lane has been in throes of excitement as to whether there -was to be a penny on tea, or a penny off tea. Cunning gentlemen have -rushed in tea to evade a suspected inclination to tax that article -further, or sugar brokers have been excited at the prospect of making -something, or losing something, over a little less or a little more on -sugar. We are a grave and respectful people, or assuredly we should -laugh at this annual exhibition of mingled greed and incompetency. If as -much intelligence were put into the making of boots, none of us would be -able to walk. - -The subject is made additionally interesting by the fact that all along -men have known perfectly well how taxes ought to be levied. It is 130 -years since Adam Smith wrote his first maxim of taxation, which I have -already quoted: - - "The subjects of every State ought to contribute towards the support of - the government as nearly as possible in proportion to their respective - abilities; that is, in proportion to the revenue which they - respectively enjoy under the protection of the State." - -As long ago as 1848 John Stuart Mill wrote ("Principles of Political -Economy," Book V. Chapter 2): - -"As, in a case of voluntary subscription for a purpose in which all are -interested, all are thought to have done their part fairly when each has -contributed according to his means, that is, has made an equal sacrifice -for the common object; in like manner should this be the principle of -compulsory contributions: and it is superfluous to look for a more -ingenious or recondite ground to rest the principle upon.... To take a -thousand a year from the possessor of ten thousand would not deprive him -of anything really conducive either to the support or to the comfort of -existence: and if such _would_ be the effect of taking five pounds from -one whose income is fifty, the sacrifice required from the last is not -only greater than, but entirely incommensurable with, that imposed upon -the first. The mode of adjusting these inequalities of pressure, which -seems to be the most equitable, is that recommended by Bentham, of -leaving a certain minimum of income, sufficient to provide the -necessaries of life, untaxed.... The exemption in favour of the smaller -incomes should not, I think, be stretched further than to the amount of -income needful for life, health, and immunity from bodily pain." - -In passing, this quotation may be commended to those who regard the -exemption of very small incomes from taxation as a tenet of modern -Socialism. Here we have it propounded in 1848 by John Stuart Mill, who -got it from Jeremy Bentham. - -It is in spite of such admired utterances as these that we have still, -in the year 1910, such outrages upon common sense as taxes upon sugar, -taxes upon petrol, taxes upon cocoa, taxes upon business contracts, -taxes upon marriage certificates, and a great party in the State is at -this hour ardently desirous of adding to the number of such stupidities -by thousands or even tens of thousands. - -When we inquire for the reason for the existence of such unbusinesslike -and costly stupidities, we find a simple explanation. It has been held -in the past universally, and is held in the present by many, that the -Government has no business to inquire into the incomes of the people it -governs. Lacking knowledge of incomes, it has been obviously impossible -for Governments to tax people according to their ability to bear -taxation. Consequently, Chancellors of the Exchequer have had to devise -all sorts of trumpery and costly expedients to get by indirect means -what should have been got honestly and directly. - -In short, the first condition of fair budgeting is a Census of Incomes. -Given that, we are able to throw away all the lumber of indirect -taxation and of inefficient taxation. And it should be observed that -fair budgeting means simple budgeting—budgeting admitting of no annual -argument. The annual budget wrangle is the effect of our devious methods -of taxation. - -Given universal declarations of income, and an end could speedily be -made of our present array of taxes. We could decide upon some minimum of -income which should be totally exempt from taxation on the ground that -it represented the smallest sum upon which a family can be sustained in -health and decency. Above that margin, we could arrange a graduated -scale of taxation which should present to each citizen a fair bill for -public expenses. That bill could be made payable in two or even four -instalments, to make the payment an easy matter for the tax-payer. This -arrangement once made, any increase of taxation would simply call for a -proportionate increase from each tax-payer. Argument would not lie in -the province of the Chancellor of the Exchequer, for the matter would be -finally settled. Argument would begin and end with the decision of -Parliament to spend certain moneys; _that would not be a_ _Budget -argument, but an argument upon public policy in expenditure_. And the -plainer the bill for taxes, the more closely expenditure would be -scanned. - -My remarks, of course, must not be taken to condemn taxes upon alcohol -or taxes upon inheritances. And beyond lies the question of the -acquisition of monopolies by the State, and the consequent reduction of -taxation by reason of the State carrying on revenue-producing -undertakings. - - - - - CHAPTER XXII - THE DEATH DUTIES - - -In "Riches and Poverty," edition 1905, it was urged that the then -existing Estate Duties, ranging from 1 per cent. to 8 per cent., might -be sensibly increased. The revisions which have been made since 1905 are -clearly shown in the comparative table given on the next page, which -reviews in part the Estate Duties of the Budgets of 1894, 1907 and 1909. - -The rates of Death Duty have been thus raised to about the level -suggested in "Riches and Poverty," edition 1905. - -The scale does not represent the whole of the Death Duties. Not only is -the corpus of the property taxed under the scale, but the remainder, -after such taxation, is taxed again under separate scales of Legacy and -Succession Duties. I do not enter into the details here, but, generally, -such complications are to be deprecated. Let the State take its -equitable toll, but let it do so on a single progressive scale, and not -tax, and tax again, first taking a percentage from the estate, and next -taking a further percentage from the bit of the estate taken by a -brother or cousin or aunt of the deceased. - -As will have been gathered from Chapter 4 the increase of the duties on -estates over £10,000 was more than justified. The great bulk of the -national wealth is held in estates of over £10,000 each. The following -facts (see Chapter 4) relating to the estates which pass in an average -year should never be lost sight of: - - THE HARCOURT (1894), ASQUITH (1907), AND LLOYD GEORGE (1909) - DEATH DUTIES - - -----------------------+---------+-------------------- - | | - Value of Estate. |Harcourt,| Asquith, 1907. - | 1894. | - | | - -----------------------+---------+-------------------- - Exceeds But not over |Per cent.| Per cent. - £ £ | | - 100 500 | 1 | 1 - 500 1,000 | 2 | 2 - 1,000 10,000 | 3 | 3 - | | - 10,000 25,000 | 4 | 4 - 25,000 50,000 | 4½ | 4½ - 50,000 75,000 | 5 | 5 - 75,000 100,000 | 5½ | 5½ - 100,000 150,000 | 6 | 6 - 150,000 250,000 | 6½ | 7 - 250,000 500,000 | 7 | 8 - | | - 500,000 750,000 | 7½ | 9 - 750,000 1,000,000 | 7½ | 10 - | |/--------^---------\ - | |On First On - | |Million. Remainder. - 1,000,000 1,500,000 | 8 | 10 11 - 1,500,000 2,000,000 | 8 | 10 12 - 2,000,000 2,500,000 | 8 | 10 13 - 2,500,000 3,000,000 | 8 | 10 14 - 3,000,000 | 8 | 10 15 - -----------------------+---------+-------------------- - - -----------------------+-------------+--------------- - | | Rates - Value of Estate. |Lloyd George,| suggested in - | 1909. | "Riches and - | |Poverty," 1905. - -----------------------+-------------+--------------- - Exceeds But not over| Per cent. | Per cent. - £ £ | | - 100 500 | 1 | 1 - 500 1,000 | 2 | 2 - 1,000 5,000 | 3 | 3-4 - 5,000 10,000 | 4 | 5-6 - 10,000 20,000 | 5 | 7 - 20,000 40,000 | 6 | 8 - 40,000 70,000 | 7 | 9 - 70,000 100,000 | 8 | 10 - 100,000 150,000 | 9 | 11 - 150,000 200,000 | 10 | 12 - 200,000 400,000 | 11 |} - 400,000 600,000 | 12 |} 13 - 600,000 800,000 | 13 | 14 - 800,000 1,000,000 | 14 | 15 - | | - | | - | | - 1,000,000 | 15 | 16 - | | - | | - | | - | | - -----------------------+-------------+--------------- - - DEATHS AND ESTATES IN THE UNITED KINGDOM - - About 700,000 persons, including children, die every year. - - Of these, about 620,000 die almost or quite penniless. - - The balance of 80,000 persons leave £300,000,000. - - Of these, 4,000 persons leave £200,000,000. - -It is only necessary to state these extraordinary facts to show the -justice of Mr Lloyd George's reform of the Death Duties. - -It is of interest and importance to show what a small proportion of the -capital passing at death is actually taken by the State. The following -figures show, for the years 1894-5 to 1908-9, the total amount of all -the Death Duties (i.e. not only the principal "Estate Duty," the rates -of which are given on p. 321, but of the Legacy and Succession Duties, -Settlement Estate Duty, etc.), received during the year, the total -estates upon which the duties were paid and the average aggregate rate -per cent. of the whole of the duties: - - DEATH DUTIES PAID: 1894-5 TO 1908-9 - - Average - Fiscal Year. Total Total Estates. Aggregate - Death Duties. Rate of Duty - per cent. - £ £ - 1894-5 10,894,385 194,465,000 5.61 - 1895-6 14,088,608 249,942,000 5.63 - 1896-7 13,878,274 245,883,000 5.64 - 1897-8 15,449,190 270,326,000 5.71 - 1898-9 15,732,578 271,901,000 5.78 - 1899-1900 18,409,293 312,819,000 5.88 - 1900-1 16,721,129 284,884,000 5.87 - 1901-2 18,513,714 295,829,000 6.26 - 1902-3 17,913,177 296,382,000 6.04 - 1903-4 17,326,137 291,161,000 5.95 - 1904-5 17,258,431 284,309,000 6.07 - 1905-6 17,344,925 296,233,000 5.85 - 1906-7 18,958,763 319,579,000 5.93 - 1907-8 19,108,256 304,093,000 6.28 - 1908-9 18,310,280 294,662,000 6.21 - -These figures were prepared by Somerset House and given to the House of -Commons in September 1909 in answer to a question of Mr Thomas Gibson -Bowles. - -In 1908-9, in spite of the increase of rates in 1907, the Death Duties -took but £18,300,000 or a little over 6 per cent. of property worth -£294,600,000. - -But this is a partial statement of the facts. There is little doubt that -the estates passing yearly are worth nearer £400,000,000 than the -£300,000,000 which is officially reviewed and taxed. So that the total -burden of the Death Duties in 1908-9 was really about 4½ per cent. - -There has been some talk in this connexion of diminishing and wasting -the national capital. The national capital was conservatively estimated -in Chapter 5 as about £13,000,000,000. The Death Duties are now taking -about £20,000,000 a year. £20,000,000 is contained just 650 times in -£13,000,000,000, so that, even if the £20,000,000 a year were wasted, -the national capital would waste away in six and a half centuries. But -the £20,000,000 a year is not lost: it is transferred from private -pockets to the State and used a hundredfold for the better advantage of -the nation than if it were not so transferred. One may go further and -say that if it were not taken and used for the furtherance of reform, -the national capital would cease to make increase. Expenditure upon -Education alone needs to be doubled if British work is to fructify in -the near future. - -Some attention was given on page 76 to the question of the avoidance of -Death Duties by gifts _inter vivos_. The Finance Act of 1909 increased -to three years the period before death during which gifts passing _inter -vivos_ should be liable to Death Duties. It will be of interest to see -whether this checks the avoidance of Death Duties which has given us -such remarkable statistics as those recorded on page 76-77. - -It is not necessary to dwell at length in this chapter upon -considerations connected with the dangers to Society involved in the -monopolization of wealth by a few people, for they were treated at some -length in earlier pages. I may usefully direct attention, however, to a -speech made by the President of the United States of America, Mr Taft, -in September 1909, in which he said: - - "Let the State pass inheritance laws which shall require the division - of great fortunes among the children of descendants, and shall not - permit the multi-millionaire to leave his fortune in a mass. Make more - drastic the rule against perpetuities which obtain at common law, and - then impose a heavy graduated inheritance tax enabling the State to - share largely in the proceeds of such large accumulations of wealth - which would hardly have been brought about save under its protection - and aid. Thus gradually and effectively the concentration of wealth in - one or few hands will be neutralized, and the danger to the Republic - obviated." - -These are the words, not of a Socialist, but of the elected of the -Conservatives of the United States. They may fittingly end our -consideration of the revised Death Duties. - -The reformed Income Tax and Death Duties of 1909 will furnish, with all -their faults, a handsome revenue, and it may already be claimed that -what was urged in "Riches and Poverty," edition 1905, as to the means of -national regeneration, has been amply verified by accomplished facts. - - - - - CHAPTER XXIII - OF REVENUE WITHOUT TAXATION - - -After dealing at some length with the details of British taxation it is -well to point out why it is necessary for the British Government to -raise so much revenue by taxes. - -It appears to be commonly taken for granted that in the matter of -national ways and means a source of revenue is the same thing as a -source of taxation. Perhaps it is not surprising that this idea is -prevalent in Britain, for of a truth we have scarcely any national -revenue save what is derived from the more or less just taxation of -British citizens. - -Save in its power to levy taxes, the United Kingdom, as a State, is one -of the poorest in the world. - -The British Government, as compared with many other governments, is -singularly lacking in property. It follows that it is singularly lacking -in natural State revenue. As a matter of fact, the only items of British -State property worth mentioning are (1) the Post Office, which brings in -about £5,000,000 a year; (2) a few Crown lands, which bring in about -£500,000 a year; and (3) The Suez Canal shares, bought by Lord -Beaconsfield, which bring in about £1,000,000 a year. - -The total British State revenue from property is thus about £6,500,000, -and that is all. If the Government wants any more money it has to tax -the governed, a fact which arouses various emotions. - -The consequence is that, as public expenses increase, our taxes -constantly swell. The items of natural State revenue are too small, even -if elastic, to meet the growing bills. This is found out by all parties. -A politician out of office may, and usually does, denounce new taxes, -but we never find the same politician, after taking office, taking off -the taxes he has denounced; he simply cannot do it. The Conservatives, -it will be remembered, were unfriendly to Sir William Harcourt's Death -Duties, but when they came into power they not only did not repeal them, -but it is a fact that they seriously considered increasing them. - -I do not think it can be reasonably alleged that taxation has yet -reached an intolerable level, indeed the facts on that head are -sufficiently made plain in these pages. At the same time, I suppose that -none of us desires to increase the burden of taxation more than is -necessary. - -Is it not well, then, to ask ourselves whether taxation need be the only -hope of State revenue? Here comes in a rather curious fact. We have -passed through troubled days in which additional taxation has been -denounced as "Socialistic," and the "Observer" newspaper tells its -readers constantly that modern Socialism simply means taxation. - -_As a matter of fact, it is because the British Government has been one -of the least Socialistic in the world that it finds itself in 1910 -raising so much of its revenue from taxation._ - -The Germans are heavily taxed, but they are so much poorer than the -British people that the sum they raise in taxes is much smaller than the -sum raised here. It should not be forgotten that, in considering German -taxes, we have to add the taxes raised by the governments of its various -kingdoms and States to the taxes raised by the German Imperial -Government. When that is done it will be found that the total amount so -raised, although considerable, is not nearly enough to meet the Imperial -and national expenditure. What is the explanation? I commend it most -earnestly to the politicians and publicists who fill the air with -clamour about Socialism. - -Consider the following extract from the official description of German -Taxation in Blue Book, Cd. 4,750: - - To make any profitable comparison of direct taxation in England and - Germany, it is necessary to take into consideration in the case of the - latter not merely the Imperial taxes, but also the taxes levied by the - Federal States. It is also important to remember that a _large portion - of the States' expenditure, in Prussia as much as 47 per cent., is - covered by the profits of railways and other industrial undertakings, - the State being thus enabled_, pro tanto, _to dispense with taxation_. - -Varying, but usually considerable, proportions of the State revenues of -the kingdom of Bavaria, the kingdom of Saxony, the kingdom of -Wurtemberg, the six Grand Duchies, the five Duchies, and the seven -Principalities, not to mention the free cities, are derived similarly -from State undertakings, ranging from railways to forests, and from -mines to china factories. - -I beg the reader to realize that but for these enormous State natural -revenues the Germany of to-day would not be able to build Dreadnoughts -or to sustain the greatest army in the world. Successful State Socialism -has been the backbone of German finance, and the secret of a big -expenditure and the maintenance of the greatest army in the world and -the second largest navy in the world by a poorer country than ours, in -which (basing ourselves on the official Income Tax Statistics of -Prussia) we are able to affirm that one-half of the people are under the -income line of £45 a year (17s. 3d. per week). - -Germany derives from her Customs Duties, believed by ill-informed people -here to be the chief feeder of her revenues, about £30,000,000 a year. -This may be contrasted with a single item of German State Socialist -revenue: - - NET PROFITS OF THE PRUSSIAN STATE RAILWAYS - - £ - 1906 33,480,000 - 1907 34,323,000 - 1908 31,180,000 - -Surely it is worth the gravest consideration here that one-half the -State revenue of Prussia, the chief State of the German Empire, is -derived from the ownership of railways, forests, mines, and other -national undertakings. And there can be little doubt that Germany will -soon own and control her Power supply. _In 1910 the State railways of -the entire German Empire will yield a net profit of about £50,000,000, -meeting, in effect, the bill for German armaments._ - - - - - CHAPTER XXIV - CONCLUSION - - -Lest there be any lack of perspective in our view of the distribution of -wealth and of the material progress of the working classes, I preface -this concluding chapter with a note upon former investigations of the -national income. - -In 1868, Dudley Baxter, in his classical paper on the National Income -read to the Royal Statistical Society, estimated that in 1867, the -population being 30,000,000, the manual workers, then estimated to -number 10,960,000, took £325,000,000 out of a total national income of -£814,000,000. Thus the average wage of the manual workers (men, women -and children) was estimated at nearly £30 per head per annum. - -Professor Leone Levi estimated the amount of wages taken by the manual -labourers in 1866 at £418,000,000, but he allowed for "play" only four -weeks in the year, whereas Baxter, for very excellent reasons which he -stated in his paper, allowed for 20 per cent. of lost time. Thus a great -part of the difference in the two estimates is accounted for. - -In the "Economic Journal" for Sept. 1904, Professor A. L. Bowley, basing -his calculations of the total amount paid in wages largely upon the -figures of the Board of Trade Wages Census of 1886, making allowance for -enforced leisure, and also for the army of casuals and incompetents, -arrived at £350,000,000 as the sum paid in wages in 1867. This is a -striking confirmation of Dudley Baxter's estimate, for it is arrived at -by an entirely different route. - -If, then, we adopt the estimate of Baxter we shall probably be as near -the truth as is now possible. Accepting it, we find that the manual -workers in 1867 took about 40 per cent. of the national income. - -The manual workers in our present population of 44,000,000 maybe -estimated at 15,000,000 and they take, as we have seen, about -£700,000,000 out of a total estimated income of £1,840,000,000, or less -than 40 per cent. of the whole. - -Thus the position of the manual workers, in relation to the general -wealth of the country, has not improved. They formed, with those -dependent upon them, the greater part of the nation of 1867,—forty-three -years ago,—and they enjoyed but about 40 per cent. of the national -income according to the careful estimate of Dudley Baxter. To-day, with -their army of dependents, they still form the greater part of the -nation, although not quite so great a part, and, according to the best -information available, they take less than 40 per cent. of the entire -income of the nation. - -But, as will be seen from the figures given, the actual income of the -manual workers has increased. In 1867 it amounted to about £30 per head. -At the present time it amounts to about £46, 15s. per head. - -And not only have money wages thus risen, but the purchasing power of -money has considerably increased in the last generation. The retail cost -of food, clothing, and furniture has fallen; but, on the other hand, -coal and rents have risen. - -Between the increase in money wages and the increase in the purchasing -power of money there can be no question that the actual position of the -wage-earner has considerably improved in the last forty years. Amongst -other results, the death-rate has fallen, paupers have decreased, and -criminals have decreased. These and other important facts are shown in -the table on page 332. - - SOME ITEMS IN MATERIAL PROGRESS 1867-1908 - - ------------------------------+-----------------+------------ - | 1867. | 1908. - ------------------------------+-----------------+------------ - Population | 30,500,000 | 44,500,000 - | | - Average earnings of manual | | - workers (men, women and | | - children) | £30 | £46, 15s. - | | - Consumption of imported | | - food per head: | | - (_a_) Wheat per head, lbs.| 140 | 272 - (_b_) Sugar " " lbs.| 44 | 76 - (_c_) Rice " " lbs.| 6 | 18 - (_d_) Tea " " lbs.| 3¾ | 6 - | | - Consumption of Beer | | - (Gallons per head) | 27.78 26.62 | - | (1881 earliest | - |figure available)| - | | - Deaths | 634,008 | 676,634 - | | - Death-rate (per 1,000) | 20.8 | 15.2 - | | - Criminals convicted | 19,450 | 15,500 - | | - Paupers (England and Wales) | | - Jan. 1st | 958,824 | 911,588 - | | - Deposits in Post Office and | | - Trustee Savings Banks | £46,283,132 |£245,600,000 - | | - Price of bread per 4 lb. loaf | 8d. | 5.8d. - | | - Board of Trade consumption | | - Index number (prices of | | - 45 commodities expressed | | - as percentages of those of | | - 1900) | 136.0 | 102.8 - | (1871) | - ------------------------------+-----------------+------------ - -With our knowledge of the conditions of the present, these facts are -only relatively satisfactory, and serve but to fill us with horror of -the past. We see that more bread is consumed to-day than in 1867, but -remember that 40 persons perish from exposure and starvation in the -streets of London year by year.[62] We see that the death-rate has -declined from 20.8 per 1,000 to 15.2 per 1,000 between 1867 and 1908, -but remember that in the latter year as many as 113,000 children -perished in England and Wales under the age of twelve months. We see -that the average wage has risen, but also that it now amounts to but -£46, 15s. per annum on a liberal estimate. We see that prices have -fallen, but remember that, in 1908, one-third of our population, in -spite of lower prices, have not sufficient means to command a proper -supply of the common necessaries of existence, no matter how severe -their thrift. - -Writing in 1868, in the paper already referred to, Baxter wrote, in -dealing with the question of real earnings as distinguished from nominal -rates of wages, a passage which strikingly illustrates the conditions of -labour in his day:[63] - - "Another point is the age at which a manual labourer ceases to be an - effective. I am afraid that 60 years is about the average; six or seven - years earlier than the Middle Classes. After that age a man becomes - unfit for hard work; and if he loses his old master, cannot find a new - one. In some trades, a man is disabled at 55 or 50. A coal-backer is - considered past work at 40. I have endeavoured to be on the safe side - by taking 65 as the termination of their working life, and have - excluded all above that age from my calculation of wages. - - "But the most important point of all is the allowance which must be - made for what workmen call 'playing'; that is to say, being 'out of - work,' from whatever cause, whether forced or voluntary. It is here - that I am at issue with Professor Levi. He estimates the lost time at - no higher average than 4 weeks out of the 52, and thinks it - sufficiently covered by omitting from the wage-computation all workmen - above 60 years old, i.e. the non-effectives. If this were the real - state of things, England would be a perfect Paradise for working men! - If every man, woman, and child returned as a worker in the census had - full employment, at full wages, for 48 weeks out of the 52, there would - be no poverty at all. We should be in the Millennium! Far other is the - real state of affairs; and a very different tale would be told by - scores and even hundreds of thousands, congregated in our large cities, - and seeking in vain for sufficient work. - - "I will take a good average instance (and a very large one) of the way - in which wages are earned in the building trades. These trades form a - whole, and include carpenters, bricklayers, masons, plasterers, - painters, and plumbers, and number in England and Wales, about 387,000 - men above 20 years of age. In London their full time wages average 36s. - a week. In the country they are lower, 30s. to 28s. or 26s.; growing - less the farther we go northward. The full-work average may be taken at - 30s. But it is only the best men, working for the best masters, that - are always sure of full time. These trades work on the hour system, - introduced at the instance of the men themselves, but a system of great - precariousness of employment. The large masters give regular wages to - their good workmen, but the smaller masters, especially at the East End - of London, engage a large proportion of their hands only for the job, - and then at once pay them off. All masters, when work grows slack, - immediately discharge the inferior hands, and the unsteady men, of whom - there are but too many even among clever workmen, and do not take them - on again till work revives. In bad times there are always a large - number out of employment. In prosperity much time is lost by keeping - Saint Monday, and by occasional strikes. There are also 40,000 men - between 55 and 65 years of age, who, in the building trade, are - considered as past hard work, and who suffer severely by want of - employment.... - - "Let us turn to another great branch of industry, the Agricultural - Labourers: whose numbers are, men, 650,000; boys, 190,000; women, - 126,000; and girls, 36,000. Continuous employment has largely increased - since the New Poor Law of 1834, and good farmers now employ their men - regularly. But in many places such is not the custom. Near Broadstairs, - in Kent, I was told that, on an average, labourers are only employed 40 - weeks in the year.... Turn next to the cotton manufacture, including - 143,000 men, 82,000 boys, 150,000 women, and 121,000 girls; altogether, - 496,000. We all know their periodical distresses. It may be said that - these were accidents. They are not mere accidents, but incidents, - natural incidents, of our manufacturing economy. They are sure to recur - under different forms; either from gluts, or strikes, or war; and they - must be allowed for in computations of earnings. - - "I come lastly to instances from trades at the East End of London, - where I have lately had a great deal of experience. It is there that - the struggle for existence is most intense, from London being the - resort and refuge of the surplus population of other parts of the - country. The London Dock Labourers earn, when on full time, 15s. a - week; but so great is the competition that even in ordinary years they - are employed little more than half their time. During the past year 5s. - a week has been considered tolerably lucky.... - - "Cabinet-makers stand well in the lists of trades, their nominal wages - for the Kingdom being set down at 30s. a week. But the cabinet-makers - at the East End, a very numerous body, are in what is called the 'slop - trade,' and are ground down by the dealers, who own what are called - 'slaughter-houses,' in which they take advantage of the necessities of - the small manufacturers (expressively called 'garret masters') and - compel them to sell their upholstery at little above the cost of - materials. Between dealers and want of work, I am told that numbers of - the 'slop' cabinet-makers are not earning 7s. 6d. a week. - - "None but those who have examined the facts can have any idea of the - precariousness of employment in our large cities, and the large - proportion of time out of work, and also, I am bound to add, the loss - of time in many well paid trades from drinking habits. Taking all these - facts into account, I come to the conclusion, that for loss of work - from every cause, and for the non-effectives up to 65 years of age, who - are included in the census, _we ought to deduct fully 20 per cent. from - the nominal full time wages_. - - "I will cite one more fact in confirmation. The average number of - paupers at one time in receipt of relief in 1866 was 916,000, being - less than for any of the four preceding years. The total number - relieved during 1866 may, on the authority of a Return of 1857, be - calculated at 3½ times that number, or 3,000,000.[64] All these may be - considered as belonging to the 16,000,000 of the Manual Labour Classes, - being as nearly as possible 20 per cent. on their numbers. But the - actual cases of relief give a very imperfect idea of the loss of work - and wages. A large proportion of the poor submit to great hardships, - and are many weeks, and even months, out of work before they will apply - to the Guardians. They exhaust their savings, they try to the utmost - their trade unions or benefit societies; they pawn little by little all - their furniture; and at last are driven to ask for relief. I am not - astonished at their reluctance, for what do they get? After waiting in - a crowd and in the most humiliating publicity, they get an order for - the stoneyard, with 6d. a day, and a loaf per week of bread for each of - their family. Sometimes, rather than accept the relief, they die of - starvation." - -These words were written over forty years ago, but it would need little -emendation to give them application to-day. The growing strenuousness of -modern industry makes it more and not less difficult for the ageing to -earn a living. The increased use of machinery and the greater division -of labour have made experience of less value than of yore. The ageing -man resorts to hair dye to conceal the honourable age which is to rob -him of his livelihood. Baxter's remarks about the building trades are -absolutely true of to-day, but they now apply not to 400,000 men, but to -1,000,000. "All masters, when work grows slack, immediately discharge -the inferior hands.... In bad times there are always a large number out -of employment." The position of agricultural labourers has improved, but -chiefly because their rapidly decreasing numbers have placed a premium -upon their services. Even so, in parts of the country removed from -coal-mines, the most pitiable conditions prevail. Kettle broth is still -part of the menu of the Wiltshire labourer. - -In the East End of London the economic position of the dock and -riverside labourers is much the same as Baxter described it, while in -the furniture trade the "garret masters" are still with us. True—most -honourably true—it is also that still the workers endure great hardships -before they will apply to the Guardians. "They exhaust their savings, -they try to the utmost their trade unions or benefit societies; they -pawn little by little all their furniture; and at last they are driven -to ask for relief." - -The Board of Trade, after a careful examination of the question of -unemployment in 1904, arrived at the general conclusion that "The -average level of employment during the past four years has been almost -exactly the same as the average of the preceding forty years" (Cd. -2,337). The conditions of employment, the want of security of tenure, -are very much what they were in 1867. - -As for pauperism, it is difficult to congratulate ourselves upon -improvement since 1867 when we remember that in England and Wales alone -1,500,000 to 2,000,000 persons are in receipt of relief in the course of -a single year. This statement rests upon ascertained facts, as will be -found by reference to the statistics given in our examination of the -question of Old Age Pensions. The population of England and Wales being -about 36,000,000 (1910) this means that _one person in every twenty_ has -recourse to the Poor Law Guardians during a single year. - -If our national income had but increased at the same rate as our -population since 1867 it would, in 1908, have amounted to but about -£1,200,000,000. As we have seen, it is now about £1,840,000,000. Yet the -Error of Distribution remains so great that while the total population -in 1867 amounted to 30,000,000, we have to-day a nation of 30,000,000 -poor people in our rich country, and many millions of these are living -under conditions of degrading poverty. Of those above the line of -primary poverty, millions are tied down by the conditions of their -labour to live in surroundings which preclude the proper enjoyment of -life or the rearing of healthy children. The comparatively high wages of -London are accompanied by rents high in proportion and frequently by -waste of income and time upon travelling expenses. In so far as the -manual labourers have been reduced in proportion to population it has -been to swell the ranks of black-coated working men, clerks, agents, -travellers, canvassers, and others, whose tenure of employment is -precarious, whose earnings are very low, and whose labour as we have -already noted is largely waste. - -We have won through the horrors of the birth and establishment of the -factory system at the cost of physical deterioration. We have purchased -a great commerce at the price of crowding our population into the cities -and of robbing millions of strength and beauty. We have given our people -what we grimly call elementary education and robbed them of the elements -of a natural life. All this has been done that a few of us may enjoy a -superfluity of goods and services. Out of the travail of millions we -have added to a landed gentry an aristocracy of wealth. These, striding -over the bodies of the fallen, proclaim in accents of conviction the -prosperity of their country. - -There leaps to the mind the mordant lines in which Ruskin, thirty years -ago, wrote a "modern version" of the Beatitudes[65]:— - - Blessed are the Rich in Flesh, for theirs is the Kingdom of Earth. - - Blessed are the Proud, in that they _have_ inherited the Earth. - - Blessed are the Merciless, for they shall obtain Money. - -There is no whit of exaggeration in these lines. The passage of thirty -years has but added to their sting. Thirty years of accumulation of the -results of toil in hands other than those of the toilers have had for -consummation the accusing series of facts which are examined in the -early chapters of this book. Deprivation for the many and luxury for the -few have degraded our national life at both ends of the scale. At the -one end, "thirteen millions on the verge of hunger," physically and -morally deteriorated through poverty and unloveliness. At the other, the -inheritors of the earth, "senseless conduits through which the strength -and riches of their native land are poured into the cup of the -fornication of its capital." - -Blessed indeed are the Rich, for theirs is the governance of the realm, -theirs is the Kingdom. Theirs is a power above the throne, for it has -been a maxim of British politics that our government should be a poor -government, and a poor government cannot contend in the direction of -affairs with the imperium of wealth. This may be illustrated by our -attempts to "educate" the mass of the people. For a few brief years the -government, with small funds raised with timorous hands, does a little -to form the mind and character of the child. Even in these early years -it consents that the future proud citizen of Empire shall be improperly -fed and badly housed. These early moments passed, the mockery of -"education" ceases, and the child, taught by the State to read, to -write, and to cipher, becomes a unit of industry. At this point begins -the serious training of the citizen. Forthwith he is inducted into some -more or less worthy employment, that employment, as we have seen, -resulting from the great expenditure of the few and the poor expenditure -of the many. Careers are thus chiefly shaped by the wealthy, for theirs -is the greatest call. The demand for luxuries is too great; the demand -for necessaries is too small; the unit of industry is fortunate, -therefore, if he is inducted into useful service. The State washes its -hands of his development. The educational sham over, the real education -of life begins. So far as the State calls for privates of industry it is -chiefly to make them soldiers, sailors, makers of guns, builders of -battleships. The development of all things useful, of railways, of -canals, of roads, of cities, of houses, is resigned to the blind call -for commodities and the intelligence of individuals who, in search of -private gain, seek, without regard to the national well-being, to profit -by that blind call. - -Yet the manner in which its people are employed matters everything to a -nation. It is not sufficient to give the child a smattering of -knowledge. We need to take a collective interest in the general -education of our citizens, and that education is the result of -expenditure. The consumer gives the order. Given a fairly equable -distribution of income, the call will be as to the greater part for -worthy things, as to the smaller part for luxuries. Given a grossly -unequal distribution, and the call for luxuries will be so great as to -divert a considerable part of the national labour into channels of waste -and degradation. - -To keep a government poor is to keep it weak. The poor government may -resolve to educate, but it will have no means to carry out its resolve; -its teachers will be underpaid; its schools inefficient. The poor -government may pass Housing Acts; it will but call for better houses -that will not come when it does call for them. The poor government may -piously resolve to create small holdings; there will be no means to -carry out the pious resolve. The poor government may, at periodic -intervals, look the question of Unemployment in the face; its -legislation will but reflect its poverty, and be in its provisions an -acknowledgment that the power to employ, the power to govern, is in -other hands. - -Even those who have striven to hold fast the curious faith that -civilization comes, not through collective service, but through -individual strife, are constrained to admit that much waste is going on. -It is noteworthy that Sir Robert Giffen, in one of his last essays on -Taxation, said:[66] - -"When the proportion (of income appropriated by the state) becomes -one-tenth or less it is doubtful whether the state can do best for its -subjects by making the proportion still lower, that is, by abandoning -one tax after another, or whether equal or greater advantage would not -be gained by using the revenue for wise purposes under the direction of -the state, such as great works of sanitation, or water supply or public -defence. In other words, when taxes are very moderate and the revenue -appropriated by the state is a small part only of the aggregate of -individual incomes, it seems possible that individuals in a rich country -may waste individually resources which the state could apply to very -profitable purposes. The state, for instance, could perhaps more -usefully engage in some great works, such as establishing reservoirs of -water for the use of town populations on a systematic plan, or making a -tunnel under one of the channels between Ireland and Great Britain, or a -sea-canal across Scotland between the Clyde and the Forth, or purchasing -land from Irish landlords and transferring it to tenants, than allow -money to fructify or not fructify, as the case may be, in the pockets of -individuals. Probably there are no works more beneficial to a community -in the long run than those like a tunnel between Ireland and Great -Britain, which open an entirely new means of communication of -strategical as well as commercial value, but are not likely to pay the -individual _entrepreneur_ within a short period of time." - -Here we have a reflection of the uneasy feeling that all is not well in -the disposition of the income of the community. Very true it is that -"individuals in a rich country may waste individually resources which -the State could apply to very profitable purposes." Even were the means -by which "Captain Roland fills his purse" moral, we should need to look -to Captain Roland's expenditure. The effects of the robbery do not end -with the impoverishment of the despoiled. The despoiler proceeds to -spend the contents of his fat purse, and in spending he buys bodies and -souls, and builds up vested interests in degrading occupations. - -In the foregoing pages I have pointed both to mere palliatives of -existing evils and to real remedies which go to the root of things. Our -attempts to reform, our strivings towards organization, must in practice -have regard both to palliatives and to remedies. We have to keep in mind -both the impoverished and sometimes degraded creatures which are effects -of past and existing causes, while dealing drastically and radically -with the causes themselves. At present the greater part of the labours -of social reformers are directed to dealing with a succession of -distressful effects. Here are slums; how shall we rehouse their inmates? -Here are paupers; what shall we do with them? Here are unemployed; how -shall we keep them going until they find employers? Here are aged poor; -can we, should we, give them pensions? We owe a present duty in all -these and many other matters. The effects must be dealt with and -ameliorated. It is beyond question that there is a clear call to succour -the aged, to care for the weak, to aid poor women in their time of -trouble. The sufferer, the affected individual, the disease, must be -dealt with. But ever we must keep before us the causes which bring into -being the raw material of our social problems; ever we must have clear -vision of the crime of poverty in a wealthy country; ever we must seek -to come to grips with the original sin. - -To deal with causes we must strike at the Error of Distribution by -gradually substituting public ownership for private ownership of the -means of production. In no other way can we secure for each worker in -the hive the full reward of his labour. So long as between the worker -and his just wage stands the private landlord and the private -capitalist, so long will poverty remain, and not poverty alone, but the -moral degradations which inevitably arise from the devotion of labour to -the service of waste. So long as the masses of the people are denied the -fruit of their own labour, so long will our civilization be a false -veneer, and our every noble thoroughfare be flanked by purlieus of -shame. - -There is already a beginning made. A few hundred millions have been -applied as public capital in the ownership by many municipalities of -such services as tramways, gasworks, and waterworks. As we saw in our -examination of the national wealth, such capital is yet but a tiny -fraction of the whole, and it still bears a great mortgage and pays -interest to private hands. That interest, in process of time, will -disappear through the operation of sinking funds, and then, as to -certain services, the community will enter into its own with no tribute -to pay to private usurers. From the small beginnings made we must seek -to advance, nor need we be deterred by those who implore us to hasten -slowly. If Rome was not built in a day, Washington was built in not many -days, and the factory system itself is little more than a century old. -The lapse of a single generation might see well advanced the building of -our new city. - -It would be a great pity if anyone were to imagine that the changes -necessary to secure the just reward of all forms of labour are either -difficult to effect or likely to cause dislocation in the making. As has -been pointed out, the greater number of our industrial concerns are -already shaped in the form of limited liability companies, the -shareholders in which are dumb, while the management is in the hands of -paid officials. In 1902-3, while private firms were assessed to Income -Tax on £193,000,000, public companies were assessed on £239,000,000. In -1907-8 the respective figures were £183,000,000 and £259,000,000. The -re-shaping proceeds apace. The reform which needs to be effected is to -substitute the community at large for the dumb shareholders. Management, -ability, invention, would be properly rewarded, as they are now rewarded -in some cases, and as they are not now rewarded in many cases. The only -change would be the gradual substitution of the community for the -shareholders, and the consequent disappearance of unearned incomes. Such -portions of the product as were necessary for application as new capital -would be so applied by the community. For the rest, the whole of the -product would go to labour. Saving, the necessary saving, without which -labour would go without tools, would be simply and automatically -effected, and capital would take its true and rightful place as the -handmaiden of labour. - -Let us not go further without a vision and a hope. That vision, that -hope, is not of a regimented society, but of a community relieved from -nine-tenths of its present irksome routine and carking care. If the -individual is to be set free it can only be in a society so organized as -to reduce the labour employed in the production of common necessaries to -a minimum. That minimum cannot be secured without the organization of -each of the great branches of production and distribution. Common needs -can be satisfied with little labour if labour be properly applied. The -work of a few will feed a hundred or supply exquisite cloth for the -clothing of fifty. The work for a few hours per day of every adult -member of the community will be ample to supply every comfort in each -season to all. Thus set free, the lives of men will turn to the -uplifting, individual work which is the pride of the craftsman. The -dwellings of men will contain not only the socialized products within -common reach, but the proud individual achievements of their inmates. -The simple and beautiful clothing of the community will chiefly be made -of fabrics woven in the socialized factories, but it will often be -worked by the loving hands of women. A happy union of labour economized -in routine work and labour lavished upon individual work will uplift the -crafts of the future and the character of those who follow them. The -abominations of machine-made ornament will disappear, and art be wedded -to everyday life. Each new invention to save labour in mining, or -tilling, or building, or spinning, will be hailed with joy as a release -from toil and a gift of more time in which to do individual work. The -inventor, the originator, now unhappily compelled to hunt for a -capitalist and bow low his genius before some individual distinguished -only for that gift of acquisitiveness, that business ability, which is -the lowest attribute of mankind, will see his idea put to the test and -reap not unholy gains, but the honour of his fellows if it is not found -wanting. The painter, no longer compelled to paint the portraits of the -rich and not necessarily beautiful, will ally his gifts with the common -life of men and be carried in triumph before the enduring monuments of -his genius. The organizer, the man of arrangement, will be invited to -exercise his talent, not in over-reaching and despoiling his fellows, -but in planning their welfare in a thousand new schemes of development. -No host of wasteful workers will be found in the industrial camp. -Accounts will be simple and clerks few. No travellers, agents or touts -will be needed to push doubtful commodities. The sham and the substitute -will be found only in museums. It will be obviously ridiculous to employ -any but good materials, for labour can only be economized by producing -the things which are the best of their kind. Policies of insurance, -those typical documents of a community of prey, will be read in the -public archives with much the same feelings as we now read a warrant for -the burning of a Bruno. The young men who now waste their time in ruling -up books in banks and insurance offices or in serving writs will find -manly and useful work. The production of commodities will be -commensurate with the labour put forth, unemployment will be one of the -few crimes known to the statute-book, and last, but not least, the -economic dependence of woman will cease. - -The attainment of such ends will only be difficult as long as we refuse -to apply scientific methods to the ordering of common affairs. It is in -the domain of politics alone that men refuse to apply first principles -to the solution of problems. The mental daring which has accomplished so -much in engineering, in astronomy, in surgery, in every department of -science, is replaced in the sphere of politics by a timorous tinkering -with admitted evils. With things the scientist has worked marvels in a -single century. With those marvels the politician has done little. The -scientist has applied his skill to locomotion; the politician has -refused to avail himself of that skill in order to distribute the -population healthily. The scientist has stated the conditions of health; -the politician has refused to create those conditions. The scientist has -supplied the tools; the politician has neglected to take them up. - -The problem of riches and poverty is of the simplest. It presents none -of the difficulties which attach to the measurement of the mass of the -sun, or the treatment of such a disease as cancer. Science has presented -us with such instruments that we can easily create a tremendous -superfluity of commodities if we choose to do so. We know how to -produce; we know how to transport the results of our production. The -appliances at our command, wielded by the labour of 44,000,000 people, -could furnish many more foot-tons of work than are needed to give proper -housing, suitable clothing and good food to every unit of the community. -There is here no impenetrable secret; we have read enough in the book of -Nature to control her forces to effect; our power of production is not -too small, but already greater than our need. As I have pointed out in -an earlier page, if invention went no further if science now came to a -standstill, we should have tools more than adequate to abolish poverty. - -Unfortunately the politicians and the economists have never discussed -the question of poverty from this point of view. They have found men -buying and selling, and as buyers and sellers hunting for profits they -have discussed them. Volumes have been written on such subjects as -"rent," "interest," or "value," but nothing has been done to inquire how -much work is needed to feed, clothe and house a community, and how best -that work may be accomplished. In designing an engine, the man of -science considers the work to be done and the known means to do it. Is -it too much to ask that in ordering the affairs of a nation, statesmen -should consider the quantity of commodities needed to give material -happiness and the known means to produce and distribute them? To make -the best use of our energies, to profit fully by the discoveries and -inventions of the living and the dead, we must come to a common -agreement as to the work which needs to be done and determine that that -work shall be accomplished. For want of that agreement and -determination, for want, that is, of a wise collectivism, the greater -number of our people are poor. - -It is probable that the earliest readers of this book will be of those -who, like myself, are amongst the favoured few whose work brings them -pleasure and the means of happiness. To these the first appeal. Is it a -good thing, is it an honourable thing, to be one of the few whose bark -is borne upon the waters of wretchedness, whose fortunes float upon a -sea of unfathomable depths of despair? Look downwards and you shall see -monsters that once were human, frailties that once were women, devils -that once were children. These are the product of the individual strife -in which it is not always the noblest thing to succeed, but in which it -is ever a terrible thing to fail. Is success worth having which is -purchased at such a price? - -The last appeal shall be to the poor. It is no escape from labour which -the thinking man offers the people. There are no honourable avenues to -ease and luxury in the organization which would abolish poverty. It is a -world of service which a civilization would substitute for a world of -serfdom and pain. But if, realizing that the world has no room for the -idle, the people would rise to a freedom only bounded by the knowledge -of, and necessity for, collective decision, then there is the broadest -avenue for hope and the clearest call to action. The achievements of -those who are gone, these are the inheritance of the people. The only -true riches of the nation, men and women, these are the people -themselves. The people have but to will it, and we set our faces towards -a civilization. - -[Footnote 62: "Deaths from Starvation or Accelerated by Privation -(London)." Issued Sept. 14th, 1904.] - -[Footnote 63: Quoted from Dudley Baxter's "The National Income," by kind -permission of the publishers, Messrs Macmillan & Co.] - -[Footnote 64: In saying this Dudley Baxter committed one of the few -errors which can properly be laid to his charge. See Chapter 19.] - -[Footnote 65: "Usury," a preface re-published in "On the Old Road."] - -[Footnote 66: "Encyclopædia Britannica," Volume 33, page 200.] - - - - -INDEX - - -Abatements, Income Tax, 36, 297 - -Accidents, Industrial: - Engineering Works, 137 - Factories and Workshops, 127, 128 - Mines, 133 - Railways, 136 - Ships, 137 - Total, all Trades, 138 - -Advertising, 253 - -Afforestation, 248 - -Aged Poor, 272 - -Agricultural Labourers' Wages, 109, 155 - -Agricultural Land, Value of, 62, 68 - -Agriculture, as Field for Employment, 240 - -Anderson, Miss A. M., on Maternity Funds, 180 - -Andrew, George, Report on German Schools, 192 - -Anthrax, 130 - -Area, Control of, 242 - -Area, Distinguishing Attribute of Land, 81 - -Area of United Kingdom, 81 - -Army Material, Value of, 66 - -Ashby, Dr Hy., on Poor Mothers, 174 - -Asquith, H. H., Death Duties, 321 - Differentiates Income Tax, 303 - Old Age Pensions Act, 284 - -Average Wage, 29 - - -Back-to-Back Houses, 214 - -"Back to the Land," 242 - -Bateman, John, on Landowners, 82 - -Bathing in Schools, 193 - -Baxter, Dudley, on Conditions of Labour in 1868, 333 - On Income Tax Evasion, 13 - On Loss of Wages, 26 - On National Income in 1867, 330 - -Beaulieu, M. Leroy, on Eliminating Middlemen, 254 - -Beer Consumption, 332 - -Belgian State Railways, Success of, 265 - -Bentham, Jeremy, Suggested Exemption of Small Incomes from Taxation, 317 - -Births, in United Kingdom, 173 - -Board of Trade, Estimate of Wages, 30 - Wage Census, 21 - -Boot Trade, 147, 156 - -Bournville Garden City, 223 - -Bowley, A. L., Estimate of Wages, 30 - On Loss of Wages, 26 - On Wages in 1867, 330 - -Boy Labour in Mines, 136 - -Bradford School Children, Condition of, 194 - -Bread, Fall in Price of, 332 - -Bricklayers' Wages, 108 - -British Association, Committee on Small Incomes, 21 - -British Government, Poverty of, 326 - -Budget, Is an Annual Debate Necessary?, 315 - Tradition of Secrecy Unnecessary, 315 - -Building Societies' Funds, 56 - -Burns, John, Housing Act, 221 - - -Campbell-Bannerman, Sir H., on Poverty, 5 - -Canals, Value of, 64 - -Capital, In Few Hands, 79 - In Relation to Housing, 229 - Of United Kingdom, 62 - Of Working Classes, 57, 80 - Waste of, 158 - -Capitalization of Usury, 101 - -Carpenters' Wages, 108 - -Casual Workers, Earnings, 27 - -Census, Inadequacy of, 123 - Of Incomes, Importance of, 308, 312, 315 - Of Wages, 21 - -Charity Organization Society, Thought Old Age Pensions Too Costly, 283 - -Children, National Responsibility for, 173 - Should be the Chief Care of the Reformer, 173 - Underfed, 196 - -Clerks, 18 - Number of, 253 - -Coal Distribution, should be Municipal, 269 - Miners, Number of, 268 - Production, 267 - -Collectivism, Assisted by Joint-Stock Principle, 344 - By Economizing Labour Creates Individual Freedom, 345 - Necessity of, 343 - And Revenue, 326 - -Combination Accentuating Error of Distribution, 269 - -"Comfortable" Persons, Number of, 48 - -Commercial Travellers, 19 - Number of, 252 - -Commons, Value of, 66 - -Company Promotion, 166 - -Competition Disappearing, 269 - Waste through, 255 - -Compositors' Wages, 109 - -Consumption of Food, Growth of, 332 - -Continuation Schools Advocated, 204 - -Co-operative Societies' Funds, 56 - -Cost of Living, 115 - -Cotton Trade, 143 - -Criminals, Decline of, 332 - -Crowley, Dr R. H., on Bradford School Children, 193 - -Cunningham, Professor D. J., on Physical Deterioration, 173 - -Customs Duties, 3 - - -Death Duties: - And Length of Life, 73 - Assessments, Stationariness of, 76 - Avoidance of, 53, 54, 77 - Described, 320 - Do they Waste Capital?, 323 - Still Low, 323 - -Death-rate, Fall of, 332 - -Deaths from Mining Accidents, 132 - -Deaths in United Kingdom, 54 - -Declaring Incomes, Importance of, 308 - -Differentiation of Income Tax, 303 - -Diseases of Occupations, 129 - -Distribution, Combination in, 256 - Of Capital, 79 - Of Income, 32, 47, 48 - Of Land, 82, 83 - Of Wealth in Practice Illustrated, 94 - -Doctor, in the School, 193 - -Dressmaking, 151 - -Dundee, Physical Deterioration, 139 - - -Education, 181, 190 - Children should be Trained in Expression, 201 - Continuation Schools Necessary, 204 - Importance of Training in Observation, 199 - Science Teaching, 202 - -Education (Provision of Meals) Act, 198 - -Eichholz, Dr A., on Poor Children, 174 - -Electricity Should be Publicly Controlled, 257 - -Employers Compelled to Disclose Employees' Incomes, 311 - -Engineers, Unemployment amongst, 28 - Wages, 109 - -Estate Duties. See Death Duties - -Estates, 1904-1908, 52 - Classified by Nature, 78 - Classified by Size, 52, 74 - Passing Per Annum, 52, 55 - Of Rich and Poor, 51 - -Expectation of Life, 211 - -Expenditure Directs Labour, 141 - - -Factories, Accidents in, 127 - -Factory and Workshop Act, 125 - And Maternity, 178 - -Factory Inspection, 126 - -Farmers' Capital, 63, 69 - Profits, 19 - -Finance Act, 1907, 14, 302 - -Fiscal Policy, 3 - -Food, Consumption, Growth of, 332 - Duties for Revenue, 289 - Expenditure on, 154 - Price of, 115 - -Foreign Competition and Education, 202, 204 - -Foreign Investments, 14 - -Fox, Arthur Wilson, on Agricultural Wages, 155 - -Friendly Societies' Funds, 56 - -Furniture, Value of, 64, 70 - - -Gas Companies' Profits, 105 - -Gas Works, Value of, 64 - -Genius not a Class Possession, 191 - -George, Henry, on Necessary Monopolies, 255 - -Germany, Large Revenue from Socialism, 328 - -Giffen, Sir Robert, Estimate of Aggregate Wages, 1886, 25 - On Wages, 22 - On Waste of Capital, 341 - -Government by the Rich, 270 - -Growth of National Income, 17 - - -Hackney, Unemployed in, 119 - -Harcourt, Sir Wm., Death Duties, 321 - -Horsfall, T. C., on Town Planning, 221 - -Houses, Clue to Income Tax Payers, 42 - In Great Britain, 40, 43 - Value of, 62, 68 - -Housing, 88, 209 - Loans Proposed, 231 - -Hunter, Robert, on American Poverty, 5 - -Hygiene Should be Taught in Schools, 181 - - -Income, Average in 1908, 32 - -Income Tax, Abatements, 36, 297 - As it is, Illustrated, 307 - Assessments, 12, 33 - Assessments, 1893-1908, 10 - Chapter on, 291 - Differentiation, 14, 303 - Evasion, 13 - Graduation Advocated, 312 - History of, 291 - Origin of Schedules, 292 - Payers, Growth of, 37, 112 - Payers Measured by House Rent, 42 - Payers, Number of, 44 - Payers over £700, 44 - Provisions Summarized, 306 - Reaches Unearned Increment, 296 - Reforms Advocated, 308 - Schedule A Described, 298 - Schedule B Described, 299 - Schedule C Described, 300 - Schedule D Described, 300 - Schedule E Described, 302 - Successor of "Land Tax," 291 - -Incomes, between £160 and £700, 39 - Of Lower Middle Classes, 20 - Of Middle Classes, 36 - Revealed by Employers, 311 - -Individual Freedom through Collectivism, 345 - -Industrial Accidents, 125 - -Infant Mortality, 177 - -Inhabited House Duty, 40, 89 - Described, 302 - -_Inter Vivos_ Avoidance of Death Duties, 77 - -Interest and Distribution, 93 - -Invalidity Insurance, 286 - -Inventions, Foreign Progress, 202 - -Iron Works, Value of, 64 - -Ironfounders' Wages, 109 - - -Jews and Maternity, 185 - - -Labour Exchanges, 124 - -Labour Party and Unemployment, 124 - -Land, and Town Planning, 218 - Nationalization, 242 - Of United Kingdom, 81 - Recovery in Agricultural Values, 246 - -Land-Tax, was an Income Tax, 292 - -Land Values, 86 - -Landowners, 82, 83 - -Lead Poisoning, 130 - -Legal Profession, Persons Employed, 254 - -Levi, Leone, on Manual Labourers' Earnings in 1866, 330 - On Unemployment, 25 - -Living, Cost of, 115 - -Lloyd George, D., Death Duties, 321 - Grants Special Abatement in Respect of Children, 314 - Income Tax Reforms, 303 - -Local Loans, 62, 67 - -London, Area of, 92 - -Lower Middle Classes, Incomes of, 17 - -Luxuries, Expenditure on, 160 - - -McCleary, Dr G. F., on Milk Supply, 260 - -Mackenzie, Dr Leslie, on Milk Supply, 260 - -Malins, Dr E., on Poor Children, 174 - -Manual Workers, Number of, 21 - -Marshall, Professor A., on Waste, 158 - -Maternity amongst Poor, 178 - -Maternity Fund, Suggestion for a National, 184, 185 - -Medical Officers of Health, 183 - -Middle Classes, Small Incomes of, 36 - -Middlemen, Waste through, 253 - -Milk Distribution, Waste in, 259 - -Milk Supply, Should be Publicly Owned, 261 - -Mill, John Stuart, on Principle of Graduation, 317 - -Miners' Wages, 108 - -Mines, Value of, 64 - -Mining, Accidents, 130 - Employment, 268 - Royalties, 85 - -Misdirection of Labour, 150 - -Monopoly, Economy of, 256 - -Monopoly of Capital, 72 - -Monopoly of Wealth a Danger to the State, 141, 158, 324 - -Multiple Shops, 19, 254 - -Municipal Trading, Case for, 264 - Success of, 262 - - -National Capital, 61 - -National Debt, 62, 63, 67 - -National Dividend, how Distributed, 47, 48 - -National Housing Loans Proposed, 231 - -National Income, Growth of, 50 - How Distributed, 47, 48 - In 1908, 31 - What it is, 8 - -National Medical Service, 183 - -National Property, 62, 65 - -Nationalization of Land, 219, 242 - -Navy, Value of, 66 - -Notification of Births, 184 - - -Occupations Influenced by Wealth Distribution, 141 - -Old Age Pensioners, Number of, 285 - -Old Age Pensions, 272 - Cost of Not "Expenditure," 286 - -Old Age Pensions Act, 284 - -Organization of Industry, 124, 250 - -Overcrowding, 212 - -Oversea Investments, 14, 65, 160 - - -Paupers, Day Counts of, 274 - Decline of, 332 - Relieved in a Year, 275, 276 - -Physical Deterioration, 139 - -Physical Training, 192 - -Poor, Property of, 57 - -Population, Growth of, 332 - -Poverty, Campbell-Bannerman quoted, 5 - In Old Age, 272 - Line, 153 - Measured, 49, 50 - Now Unnecessary, 347 - Of British Government, 340 - Shortens Life, 211 - -Power Supply, Should be National, 256 - -Prices, Fall of, 332 - Index Number, 332 - -Production, Combination in, 256 - -Production and Waste, 251 - -Profits Examined, 94 - Growth of, 111, 112 - -Progress since 1867, 332 - -Prosperity and Fiscal Policy, 3 - -Prussian State Railways, 329 - -Public Ownership, the only Path to Equitable Distribution, 262 - -Public Works and Unemployment, 124 - - -Railway Capital, Watering of, 102 - Fares under Nationalization, 266 - Servants, Accidents, 136 - -Railways, Value of, 63 - -Rates, in Nature of Rent-charge, 90 - -Rent, and Profit, 97 - Estimate of Aggregate, 84, 85, 86 - Why Small Relatively to Profits, 86 - -Revenue without Taxation, 326 - -Rich, Estates of, 58 - Number of, 48, 50 - -Right to Work Bill, 123 - -Roads, Value of, 66 - -Rowntree, Poverty Line, 153 - -Rural Depopulation, 234 - -Ruskin, John, His modern version of the Beatitudes, 339 - - -Savings, 55, 56, 80 - Growth of, 332 - -Savings Banks' Funds, 56 - -Science, Important to Teach, 202 - -Seamen, Accidents, 137 - -Segregation of Unfit, 187 - -Shop Assistants, 18 - -Shopkeepers, 18, 254 - -Site Value, 87 - -Smith, Adam, on Taxation, 287 - -Socialism, Reduces Taxation, 328 - -Super-Tax, 305 - - -Taft, President, on Inheritance Duties, 324 - -Taxation and Distribution, 289 - Direct, Advocated, 318 - Doctrine of Ability, 288 - Indirect, Deprecated, 317 - Not the Only Means of Revenue, 326 - Should be Simplified, 318 - -Teachers, 18 - -Thrift Institutions, 56 - -Town Planning, 217, 221 - -Trade Capital, Value of, 63, 69 - -Trade Unions, Expenditure on Unemployment, 121 - Funds, 56 - Superannuation, 280 - Unemployment, 116 - -Tradesmen, 254 - -Transport should be a National Function, 256 - -Trust Rule, 269 - - -Unemployed, Probable Number of, 122 - -Unemployment, 28, 107 - Amongst Trade Unionists, 116 - Cost of, 121 - During 40 Years, 337 - In America, 5 - In Middle Classes, 122 - Insurance, 123 - Only to be Remedied by Public Ownership, 270 - "Remedies" for, 123, 124 - -Unfit, Segregation of, 187 - -United Kingdom, Area, 81 - -United States, Industrial Fatalities, 6 - Poverty of, 5 - -Usury, 101 - - -Wage Census, 21 - -Wage Earners, Number of, 21 - -Wage, Average, 29, 331 - Growth of, 332 - -Wages, 115 - Aggregate in 1908, 29 - Average in 1908, 27 - In 1886, 23 - Movement of, 27, 108, 111, 112 - Not Raised by High Profits, 101 - Stationariness of, 50 - -Waste of Labour, 251 - -Waterworks, Value of, 64 - -Wheat, Imports of, 245 - -Wheat Prices, 247 - -Whitehaven Colliery Explosion, 131 - -Woollen Trade, 145 - -Women Health Inspectors, 182 - -Women Workers in America, 6 - -Workhouse Inmates Classified, 281 - -Working Class "Capital," 80 - -Working Classes, Material Progress of, 330 - - -*** END OF THE PROJECT GUTENBERG EBOOK RICHES AND POVERTY *** - -Updated editions will replace the previous one--the old editions will -be renamed. - -Creating the works from print editions not protected by U.S. copyright -law means that no one owns a United States copyright in these works, -so the Foundation (and you!) can copy and distribute it in the -United States without permission and without paying copyright -royalties. 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