Nationalisation’s problem child (1966)

From the February 1966 issue of the Socialist Standard

The British Post Office, oldest of the Nationalised industries and at one time the favourite child of the enthusiasts for Nationalisation, is now under heavy fire. Its critics can find nothing good to say about it: the charges are too high; postal, telegraph, telephone and counter services are all said to be bad and getting worse. Correspondence to the Press and questions in Parliament are full of complaints of delayed transmission of letters, too few collections and deliveries, telephone waiting lists, wrong numbers and overloaded lines, parcels held up or strayed and so on.

Some of the criticisms are reasonable; most are wrongly directed; and some are simply dishonest, like the tongue-in-the-cheek Editorials about the discontinuance of Christmas Day deliveries, in newspapers which in England this year missed publication for three days on end. The same newspapers, most of which were sold at a Penny in 1939 and now cost fourpence for a smaller issue, think they are entitled to condemn the letter rate although at fourpence it is less than three times the pre-war penny halfpenny. The critics have their suggested remedies, including straight denationalisation, splitting the posts from the telegraphs and telephones, and handing both over to boards like those operating the railways and mines. In the meantime the Post Office itself has its organisation under independent critical examination, and the Parliamentary Committee on Nationalised industries also has the Post Office on its agenda.

All of which must make sad reading for the older enthusiasts for Nationalisation in the Labour Party and ILP, who campaigned for years on behalf of the Post Office as the best of all possible organisations, as the guiding light for all-round State ownership and indeed as the example of Socialism itself. Only the SPGB is not, and never has been, in these struggles over issues totally irrelevant from the Socialist standpoint. The Nationalisers were wrong at the start, and the developments of capitalism have overwhelmed them, made nonsense of their prophesies and reduced them to their present state of confusion. '

Some Nationalisers never imagined that Nationalisation had anything to do with the Socialist aim of getting rid of capitalism and inaugurating a Socialist system in which the means of production would be the common property of society and in which goods would be produced and services operated solely for use, without rent, interest and profit, without buying and selling: for them Nationalisation was merely a way, a supposedly better way, of running capitalism. They thought it would be so efficient and profitable that it would compete private enterprise out of existence and be universally accepted as the normal form.

The late A. Emil Davies. Chairman of the Railway Nationalisation Society was one of these. In his The State in Business, first published in 1914 and issued in a second edition in 1920, he thought his battle was well on the way to victory. One of his beliefs was that "it is apparently only a question of a year or two” before the American Government would take over the American telephone companies. Not only have the American telephones not been Nationalised (well over half the world’s telephones are still operated by private companies) but the battle-cry of the de-Nationalisers in Britain is "Why can’t we have a telephone service as widely developed and efficient as the American?” But it really has little to do with the sterile controversy about the supposed merits and de-merits of State versus private capitalism. Much more important is whether, as in America, investors’ money has been readily available for telephone development, or whether, as in Britain successive governments, until quite recent years, were not able or willing to provide it. Russia, for the same reason, is even further down the scale of telephone development but in Brazil the opposite is true. The private company has not been able to raise money from investors and the Brazilian government, as reported in the Times (23.12.65), is nationalising the telephones precisely in order to speed up expansion.

What nearly all the critics of the British Post Office forget is that in a quarter century of inflation and rising prices, Nationalised industries were no more able to operate profitably without raising charges than were private companies. They also overlook the fact that in a period of low unemployment, and of absolute shortage of labour in some areas, the Post Office, like other services requiring Saturday and Sunday work and awkward attendances, cannot well compete with five-day jobs, often better paid, in factories: the Post Office had no such problems when unemployment ranged up above the million level.

Some of the early campaigners for Nationalisation, unlike the “non-political” Emil Davies, thought they were striking a blow for Socialism. Because they could not see early success in winning over the working class for Socialism, they supported State enterprise because they thought it would provide a simple centralised organisation easy for eventual incorporation into Socialist society. Their error was in forgetting that the work of gaining a Socialist majority was not helped but made more difficult by the confusion they created.

They were driven into one contradiction after another. Having claimed that Nationalisation is Socialist and that the Post Office form of it is the proper one they had to explain away how it was that Tory and Liberal Government nationalised the telegraphs and telephones and that it was Gladstone (at that time Tory Chancellor of the Exchequer) who in 1844 got Parliament to pass the first Act giving the Government power to nationalise the railways.

They failed to understand the role Nationalisation played in capitalism, and that it is one of the ways in which the general body of capitalists protects their interests against sections of their own class who, through monopoly or through concentration in the most profitable areas and neglect of the others, hold the general body to ransom. Gladstone in 1844 understood this quite well. The railways, as the most efficient means of transport, were indispensible to manufacturers and traders, and Gladstone’s Act was meant as a threat to them that unless they refrained from exploiting their monopoly the Government would take them over. Posts, telegraphs and telephones presented a special aspect of the same problem. Private organisations were quite willing to operate in the profitable urban areas but had no interest in providing the nation-wide service which industry and commerce needed. Churchill had the same idea in mind in 1943 when he spoke of ‘‘a broadening field for State ownership and enterprise, especially in relation to monopolies of all kinds” (Times 5.4.43).

The same purpose, that of protecting the interests of the general body of capitalists, is aimed at in America by the anti-trust laws and by the Government’s control over telephone and other charges through the Federal Communications Commission, and in Britain by the anti-monopoly laws and laws against re-sale price maintenance.

But capitalist interests are divided and the sections adversely affected by anti-monopoly laws or by Nationalisation fight back. The manufacturers of telephone equipment have long campaigned to get the telephones freed from direct government control. They believe that the desire of governments to use the Post Office as a means of raising revenue has been a cause of starving the telephones of money needed for expansion and that if this control were removed a big new demand would open up for their products: they look with envy at the much greater telephone developments in USA and elsewhere.

In the Nineteen-thirties they found allies in the leaders of the Labour Party who also turned away from Government department Nationalisation. So then we had Lord -- then Mr. Attlee, a former Postmaster General and later to be Labour Prime Minister, discovering that the “socialist” Post Office was “the outstanding) example of collective capitalism” (New Statesman 7.11.31). The campaign was led by the late Lord Morrison who advocated a form of organisation like that in the Port of London Authority though he had himself in 1923 described the same PLA as "a capitalist Soviet . . . the constitution of which is thoroughly objectionable from the Labour and Socialist point of view.” The late Mr. Lees-Smith who had been Postmaster General in a Labour Government, also, in 1931, wanted “the Post Office, or at least the telephones under a public corporation like the Port of London Authority.” He, like Attlee, had discovered that this was “the latest development in socialist theory.”

Post Office Act, 1961

The Post Office survived that campaign to get it away from direct governmental and parliamentary control but in recent years, following the setting-up of the Boards for railways, mines, gas and electricity, steps have been taken in the same direction for the Post Office.

The Post Office Act 1961 was intended to make the Post Office into a “commercial undertaking,” and free it to a large extent from the direct financial and other control by the Exchequer. Now further changes are likely, thus completing, a series of adaptations of the Post Office to the needs of capitalism; from the earliest phase when it was an organisation for conveying “the King’s Posts,” and the period when it was simply a means of raising revenue for the Government; and the era after the Penny Post of 1840 in which the purpose was both to raise revenue and to be a communications service for industry and commerce.

It is at present required to aim at an 8 per cent. profit on invested capital, but always some profit has been expected. As a Select Committee ruled in 1888 “it is most likely to continue to be conducted satisfactorily if it should also continue to be conducted with a view to profit, as one of the Revenue yielding Departments of the State.” (Which has its echo in Russia to-day where the economist Leontiev, wrote in Pravda of “the commonly accepted necessity of a sharp increase in the role of profit as the most general indicator of the effectiveness of a factory’s work”—(quoted in the Observer 4.4.65).

It was one of the illusions of the early Labour Party and ILP advocates of Nationalisation that when the government took over an industry they would have access to enormous profits and could benefit the workers by paying above average wages to their own employees and by reducing charges and running the industry purely as a “public service” without profit.

The idea was encouraged by the original intention to take over the industries without compensation and as late as 1925 this was still being debated at an ILP conference where it was opposed by, among others, Attlee and by Dalton who was to be Chancellor of the Exchequer. The dilemma they were in was that the Government which confiscates one lot of investments will immediately find that capitalists will cease to invest in any other security liable to confiscation, and a government administering capitalism constantly needs to raise money from investors. Having then decided that they must compensate the former shareholders they ran into the next dilemma—that when they have a declining industry on their hands they still have to meet the compensation payments. In private hands the investor in, say, a coal mine simply loses his money if the mine goes bankrupt, but the government’s liability to meet interest payments on the Government stocks given to former mine owners continues even if all the mines are closed.

As regards the supposed possibility of helping the workers through lower prices (even if the lower prices had been practicable) the Labour leaders overlooked the fact that wage levels themselves largely follow price movements. And the idea of paying Government employees more than other workers was equally remote from reality.

In short their understanding of the only means of achieving Socialism — by the conscious act of a Socialist majority displacing the capitalist social system was as lacking as their real understanding of how capitalism works. So it took over forty years of experience to land them in the present position, of having abandoned all their early ideals and misconceptions only to accept instead all the traditional rules about how capitalism has to be run.

As far as they are concerned the idea of there being a real alternative to capitalism, a Socialist social system, is gone and forgotten.

B.S.

“Rare and Refreshing Fruit” in the Mediterranean. (1912)

From the August 1912 issue of the Socialist Standard

“The greatest democratic Government of our times” were returned to power as a protest against the “wicked extravagance” of the Tory party. They ran on a programme of “Peace, Retrenchment, and Reform,” and claimed their three hundred odd majority as an emphatic mandate for their policy. Six and a half years have passed, and the Ministerial “Daily News and Leader” of July 16 tells us that: “There is the great fact that since the Liberals came into office in 1906 the Naval Estimates have gone up from £33,000,000 to £44,000,000—an increase of £11,000,000 in all. Add to that the £1,000,000 just given from the realised surplus, and you have an increase of £12,000,000.”

In complete answer to would-be apologists the same paper says that: “The Germans spend 22 millions less than Great Britain on her navy —or only half as much—£1 German to every £2 English. Is not that an adequate margin to a great naval nation like ourselves ?”

But the Government does not stop there. Following upon the return of the Featherstone butcher Asquith from the Mediterranean meeting with the Soudan butcher Kitchener, three new Dreadnoughts, we are informed by the Cocoa News, each costing two millions, are to be built. In the words of our informant, “the increasing expenditure following upon these demands will be not less than £4,000,000, and probably £5,000,000, the year after. In other words we are now within easy distance of a £50,000,000 Navy.”

The Cabinet says that the road to Egypt is insufficiently guarded! True once again to Liberal traditions, the policy adopted is in total conflict with every promise Liberals have made regarding Egypt. Gladstone and his successors repeatedly said that England’s stay in Egypt would be very brief and “we” should evacuate directly peace was restored. “Peace” was restored after the most cold-blooded butchery of a people “rightly struggling to be free” (vide Gladstone) that annals can show. Thirty years have passed, but warships and soldiers are still there in great numbers.

While they are prating about peace the Liberals are heaping up armaments all over their empire. Not only in Persia and Egypt are these preparations for slaughter being made, but at home as well, and these forces will be used to crush the toilers by both Liberal and Tory sections of the employing class. And this is the Government which the Labour Party are supporting with their votes.

Adolph Kohn

The Outline of History by H. G. Wells. A Criticism. (1921)

Book Review from the February 1921 issue of the Socialist Standard

Link to Part 2

As Mr. Wells's history approaches modern times it lays greater stress than in earlier epochs upon changes in economic conditions and their profound effects upon social and intellectual life. The reason is, of course, the fact that the Industrial Revolution of the 18th and 19th centuries—the most striking and momentous economic change in the annals of man—is so conspicuously at the root of all the characteristics peculiar to "modern society" that its importance cannot be overlooked nor an account of it shirked.

At the close of Chap. XXXVI. 12, after dealing with the "Enclosure Acts" and the beginnings of the factory system, we find this, for the most part, fine passage :

  As the Industrial Revolution went on, a great gulf opened between employer and employed. In the past every manufacturing worker had the hope of becoming an independent master. Even the slave craftsmen of Babylon and Rome were protected by laws that enabled them to save and buy their freedom and to set up for themselves. But now a factory and its engines and machines became a vast and costly thing measured by the scale of the worker's pocket. Wealthy men had to come together to create an enterprise ; credit and plant, that is to say, "Capital," were required. "Setting up for oneself" ceased to be the normal hope for an artisan. The worker was henceforth a worker from the cradle to the grave. Besides the landlords and merchants and the money-dealers who financed trading  companies and lent their money to the merchants and the State, there now arose this new wealth of industrial capital—a new sort of power in the State.

Many so called Industrial Histories do not state the facts so clearly and frankly as does the above quotation. In a later chapter Mr. Wells deals at greater length with the Industrial Revolution, but while it is itself described in a fairly satisfactory manner, some of its effects upon society are missed. Little mention is made (probably by design, as will be seen later) of the horrors and miseries of the new factory system, nor of the child slaves of the factory lords. The cycles of industrial crises—among the most conspicuous phenomena of the 19th century—are not mentioned at all.

Mr. Wells treats briefly of the early trade unions but, strangely enough, omits to make mention of the Chartist movement. The life and brilliant, though Utopian, schemes of Robert Owen are dealt with at some length as being typical of the Utopian school of thought. Although the authors' misconception of the Marxian theory lead him to make some very foolish criticisms, he provides the following testimony to Marx's foresight and clarity of thought:

  A sense of solidarity between all sorts of poor and propertyless men, as against the profit-amassing and wealth-concentrating class, is growing more and more evident in our world. Old differences fade away, the difference between craftsman and open-air worker, between black-coat and overall. . . . They must all buy the same cheap furnishings and live in similar cheap houses ; their sons and daughters will all mingle and marry; success at the upper levels becomes more and more hopeless for the rank and file. Marx, who did not so much advocate the class war, the expropriated mass against the 'expropriating ' few, as foretell it, is being more and more justified by events. Chap. XXXIX. 2.

In an earlier chapter the author points out that "The 'solidarity of labour' is, we shall find when we come to study the mechanical revolution of the nineteenth century A.D, a new idea and a new possibility in human affairs."

In the light of the three quotations given above what shall we think of the following extract from an article by Mr. Wells in the "Sunday Express," 14.11.20?

  Das Kapital (by Marx) a cadence of wearisome volumes about such phantom unrealities as the bourgeoisie and the proletariat. . . . when I encountered Marxists I disposed of them by asking them to tell me exactly what people constitute the proletariat. None of them knew. No Marxist knows.

Is this only confusion of thought of an extraordinary variety, or is it deliberate journalistic humbug and lying ?

A point which is worthy of comment and appreciation because it is so rare to find it recognised by a non-Marxian writer, is the fact that Mr. Wells sees in the economic needs of the capitalist class the factor which produced "popular education." After mentioning the sectarian night classes and Sunday schools of the early 19th century he says : 

  The earlier, less enlightened manufacturers, unable to take a broad view of their own interests, hated and opposed these schools. But here again needy Germany led her richer neighbours. The religious teacher found the profit-seeker at his side unexpectedly eager to get the commonality, if not educated, at least 'trained.' The student of English magazines of the middle and later Victorian-period may trace the steadily spreading recognition of the new necessity for popular education. . . . At the back of this process was the mechanical revolution . . . insisting inexorably upon the complete abolition of a totally illiterate class throughout the world. (Chap. XXXIX. 2.). 

Surely Mr. Wells missed a golden opportunity here of demonstrating the truth and utility of his great theory of "nomadization"?

In the final chapter of the history proper an account is given of the "imperialism" of the European "Powers" and of the political events which led up to the "Great War," followed by a brief but excellent record of the military side of the war itself. In dealing with earlier wars Mr. Wells makes much of "the Powers" as social forces, discusses their "rivalries," and constantly refers to the "traditional policy" of this Power or that. All this is in the approved style of the usual bourgeois "historian." The social forces upon which these "rivalries" and "traditional policies," nay, even the very existence of the "powers" themselves, are based are almost entirely unrecognised.

The author deals in the same barren way with the ''Great War." To him it was the inevitable outcome of rampant "nationalism" and "imperialism," but what these were the inevitable outcome of he does not tell us. Here again "nomadization" might have been pressed into service. That war is a necessary result of the capitalist method of production and that nationalism and imperialism are but the theoretical and political expression of two successive phases of this system, Mr. Wells fails to recognise. More satisfactory by far is the account of the material, social, and mental effects of the war. Here Mr. Wells gets nearer to bedrock economic facts. He is greatly influenced by and quotes lengthily from the "Economic Consequences of the Peace," by J. M. Keynes.

In the final chapter of his work our historian ventures a forecast of the future of society. He sees the ideal community of the future as a "Community of Knowledge and Will." This, if interpreted as a community of knowledge and interest is quite an acceptable forecast. The various details of this society which Mr. Wells enumerates we need not trouble about. Criticising Utopias of the distant future is a waste of energy. Vividly he points out the possibilities inherent in the machine. 

  This—and the disappearance of war and the smoothing out of endless restraints and contentions by juster social and economic arrangements—will lift the burden of toilsome work and routine work, that has been the price of human security since the dawn of the first civilizations, from the shoulders of our children. Which does not mean that they will cease to work, but that they will cease to do irksome work under pressure, and will work freely, planning, making, creating, according to their gifts and instincts. They will fight nature no longer as dull conscripts of the pick and plough, but for a splendid conquest.

He discusses the possibilities of and tendencies towards this ideal community, but the fact that he denies the socially constructive importance of the modern class struggle drives him to the conclusion that the only hope lies in a great revival of moral enthusiasm (which he mistakenly calls "religion") combined with "education." We also believe in. the efficacy of education —revolutionary education amongst the world's proletariat. But Mr. Wells's "education" is a universal instruction for social service. We also believe in that, but see and point out that it is an impossible dream in a society grounded on exploitation and class-rule. Such a scheme of education can and will only be achieved after the Socialist Revolution— not before.

It is Mr. Wells's opinion that the ruling class of to-day can be persuaded by reasonable, humanitarian arguments or by far-sighted self-interest to bring about a "re-adjustment" of society which will gradually abolish exploitation and class distinctions. This opinion we cannot share. It is opposed by the whole teaching of history. No ruling class when faced by discontent and revolt ever acted in such a manner. To expect our present rulers to do so is to wallow in superstition rather than stand four-square to science.

Mr. Wells has guided us through latter-day history upon a plan of his own. He has emphasised the stupidity and ignorance of our ruling class and its political representatives, but his standard has been an idealist, not a realist one. Gladstone, a typical capitalist statesman, is declared, for instance, a "grossly ignorant man." But W.E.G. can only be considered ignorant in a relative sense. Everyone is ignorant by some standard of wisdom. Gladstone did what was expected of him by the class he represented. He conformed to the conditions imposed upon him. He was sufficiently wise for his task and no wiser. Thus he became the most popular and revered statesman of his age —he became "great."

But the great "sin of omission" on the part of Mr. Wells is that he fails to point out—in the present writer's opinion deliberately refrains from pointing out, for he must know of it—that for greed, stubbornness, and rapacity in the defence of their interests—even their most grossly material interests—the capitalist class of the present order have shown themselves worthy successors of the slave- and serf-holders of proceeding periods, whilst for political craftiness the earlier ruling classes were "children at the game" in comparison with the modern, bourgeoisie,  

Why does Mr. Wells make no mention whatever in his review of the nineteenth century, of the Paris Commune ? This was no mere political episode, but an object lesson in sociology and, as such, one of the most significant occurrences of the century. Mr. Wells is no "drum and trumpet" historian, but to him as to the common run of bourgeois historians the Commune is taboo. With its 100,000 working-class victims the Paris Commune tears aside the veil of hypocrisy and humanitarian cant which envelop the social relations of our day and reveal naked the power-lust of the capitalist class. The more recent history of the class struggle in Russia, Finland, Germany, and Hungary but confirms and strengthens our view. It is, indeed, difficult to conceive that Mr. Wells, with his knowledge, really believes in the tactic of moralising the capitalist class. In the present writer's opinion Mr. Wells knows better. But as an experienced and "successful" writer and journalist, camouflage (to be polite) is one of the tools of his trade.

#    #    #    #

In conclusion : It is one of the minor tragedies of capitalism that in this "scientific age" the scientific history of our race has yet to be written. Material in abundance lies in the archives, museums, and libraries of the world, and the theoretical means thereto have existed for close upon a century. But the capitalist class forbid. Let us work mightily for the great day when those social parasites which thus paralyse the activity of that supreme product of evolution—the intellect of man—will be banished with the dead and gone into the limbo of the past.

R. W. Housley.

This Prosperity (1937)

From the April 1937 issue of the Socialist Standard

The depression is over and prosperity is here once again. This is the good news discovered by politicians, bankers and captains of industry and passed on to the workers in speeches and articles up and down the country. The Chancellor of the Exchequer, Mr. Neville Chamberlain, in a speech at Birmingham on January 29th said that the Midlands are “enjoying a greater prosperity than had ever been known in the history of living people.” (The Times, January 30th, 1937.) Mr. Colin Campbell, Chairman of the National Provincial Bank, Ltd., in his survey of the country’s affairs at the annual meeting of his bank, sees "prosperity firmly based on well-distributed purchasing power.” (Economist, January 30th, 1937.) Indeed, the bankers and economists are becoming alarmed at the comparative shortage of skilled labour and consequent ability of the workers to secure wage increases. The question occupying their minds is when the next slump is due to break and whether by any means they or the governments can prevent it.

Prosperity for Whom?
It need hardly be said that the prosperity which so impresses the spokesmen of the propertied class is the prosperity of that class: hence their view that higher wages due to scarcity of labour is an ”evil.” They can talk of "prosperity” with registered unemployment at 1,700,000; with 4,500,000 people, according to Sir John Orr, inadequately fed because they can only afford to spend an average of 4s. a week on food, whereas the normal Army food allowance is 7s. 3½d. a week (Daily Herald, February 13th, 1937); with millions of workers inadequately housed and overcrowded. The Times (December 22nd, 1936) admits that house building in Glasgow is actually declining, although “in that city one-third of the population is overcrowded.” “Prosperity ” with 70 per cent, of the adult population in the Rhondda Valley drawing unemployment pay or public assistance; and with an army of 1,223,478 persons in England and Wales in receipt of Poor Relief at the end of September, 1936. In Scotland there were a further 316,674 in receipt of outdoor relief alone. (See Ministry of Labour Gazette, January, 1937.)

Mr. Neville Chamberlain and his associates can bear the poverty of the working class with Christian fortitude, not to say indifference and contempt, while at the same time they are able to find £1,500- millions for new armaments over the next five years.

From Gladstone to Chamberlain 
Elsewhere in this issue we reprint an address written by Marx in 1864 in which he tore to shreds the complacency of an earlier Chancellor of the Exchequer, a similar narrow-minded representative of property, Mr. W. E. Gladstone. The one was a Liberal free-trader, the other is a Conservative protectionist; both were able to hide the facts of unemployment and needless misery under a cloud of tawdry principles of “sound finance,” and under mocking assertions of better times here and now or better times to come.

It is instructive to compare the two as examples of the type of propertied men thrown into prominence in the capitalist era, a nice blend of unimaginative brutality and dull, book-keeping efficiency.

All that divides them is their belief in or rejection of free-trade, an issue of no concern to the great mass of the population. Both so wedded to capitalism as to be unable to conceive of a rational alternative system, both dazzled by statistics, and unaware of the nature of the capitalist system they nominally controlled.

Three-quarters of a century of “ Progress ” 
What has this capitalism brought to the working class in the 73 years since 1864? Malnutrition, unemployment, pauperism and insecurity still stalk the land in spite of a yet more “intoxicating augmentation Of wealth and power,” entirely or nearly entirely confined to the propertied class. If the condition of the worst-paid workers and the unemployed is somewhat better than then, the extent of unemployment is greater, and insecurity has now come to be a permanent nightmare for grades of better-paid workers who used to believe themselves immune. It is still as true as ever that hundreds of thousands, if not millions, of industrious workers are worse fed and clothed than convicts, and at or below the level of the workers who are receiving public assistance. Mr. Gladstone went into ecstasies over trade figures and tax returns. What would he have said had he lived in our time? Imports and exports in 1863 together totalled £444-millions; in 1034the total was £l,127-millions, after having reached nearly £2,000-millions in 1929; Yet even in the latter year unemployment was well over 1,000,000. In 1863 there were 80 very rich persons having taxable incomes over £50,000 a year. In 1928-9, according to official tax returns (Statistical Abstract, 1936, p. 200) there were no fewer than 575. Even during the depression in 1933-4 the number was 279. So little have death duties and income tax and social reforms interfered with the normal tendency of capitalism to make the rich richer that in 1932-3 there were more people (84) with incomes over £100,000 a year than there were with £50,000 a year in 1863.

The continued increase in powers of producing wealth has been used by capitalism to widen still further the gulf between rich and poor. Great Britain has multiplied its foreign trade, added over a million square miles to the Empire, and still the fact remains, as Marx pointed it out then, that there are hard-working thrifty men and women who have to sacrifice cleanliness and comfort in order to get a bare sufficiency of food. It has been brought home only recently again that better housing (at higher rents) for ex-slum dwellers has- meant less food and a higher death rate.

Nothing will be done by the Ruling Class

One harmful notion widely believed at present is that now for the first time the Government and public opinion are aware of poverty and undernourishment, and therefore something will be done.

It is true that in recent years there have been many official and unofficial inquiries into malnutrition, wages, unemployment, and so forth and therefore the ruling class cannot so easily be ignorant of the facts. But it will mean next to nothing. Apart from genuine concern about the low physique of recruits needed for their armed forces the ruling and propertied class will not sacrifice their wealth in order to raise the standard of living of the workers. They will yield nothing that is not forced from them by the pressure of the working class.

Do they know in 1937 that many millions of workers are under-nourished ? So they did in 1864 as Marx points out. They did nothing then, nor will they now.

Once the momentary stir has been allowed to subside the facts will be forgotten or denied by our rulers, or hidden under Chamberlain's ecstasies about prosperity. Just as The Times could boast in 1865 that the preceding years of working class misery were “an epoch of unbroken peace and unparalleled prosperity" (Evening Standard, January 13th, 1937), so our rulers will do again in defiance of continuing poverty.

The need of our times is a working class which refuses any longer to trust to capitalist promises, and determines to take action for its own emancipation.

Apply to the world of to-day the following pregnant passage from Marx's address. There could be no better statement of the truth of the Socialist condemnation of capitalism: —

   “In all countries of Europe it has now become a truth demonstrable to every unprejudiced mind, and only denied by those whose interest it is to hedge other people in a fool's paradise, that no improvement of machinery, no application of science to production, no contrivances of communication, no new colonies, no emigration, no opening of markets, no free trade, nor all of these things put together, will do away with the miseries of the industrious masses; but that on the present false base, every fresh development of the productive powers of labour must tend to deepen social contrasts and point social antagonisms."

Edgar Hardcastle

Marx's Financial Articles (1983)

From the December 1983 issue of the Socialist Standard

In the critique of political economy which became his life work Marx set out, as he put it in the Preface to the first German edition of Capital, to “lay bare the economic law of motion of modern society”. One of his conclusions was that the expansion of production under capitalism did not proceed at a smooth, steady pace, but was “a series of periods of moderate activity, prosperity, overproduction, crisis and stagnation” (Capital Vol I, Pelican, p.58), in which the long-term trend was nevertheless upwards.

The crisis which marked the end of the period of boom took the form of a financial crash—that is, a collapse of credit and a strong demand to be paid in cash. This gave rise to the illusion that the crisis was simply a monetary question whereas in fact the monetary crisis was a reflection of the real overproduction that had taken place.

Overproduction reflected itself as a monetary crisis, since, in the middle of the 19th century, the main form of credit was the trade bill, or bill of exchange, a promise to pay issued by a manufacturer or merchant which would be honoured when he had sold his product. Such bills could be discounted, that is, cashed below their face-value, the precise deduction depending on the going rate of interest (discount rate). In normal times these bills circulated alongside bank notes as an accepted means of payment.

Clearly, if overproduction has taken place, all the bills are not going to be able to be honoured, so that as soon as people realise—or even suspect, with or without reason—that  overproduction has taken place they will no longer be prepared to accept these bills in payment and will insist on cash. Nor will banks be prepared to discount the bills, except at a very high rate of interest. The result is a credit squeeze, high interest rates and a financial crisis.

Marx studied two of these crises in close detail, that of 1847—when just after arriving in London in 1850 he was investigating the relationship between crises and revolution—and that of 1857. In fact, by co-incidence, 1857, besides being a crisis year, also saw the publication of two British parliamentary reports on financial questions: the secret evidence taken by a House of Lords committee which investigated the 1847 crisis and a House of Commons report on the workings of the 1844 Bank Act. Marx replied on these two documents, together with the House of Lords report itself which had been published, without the evidence, in 1848 and a report on the 1857 crisis published in 1858, to write a considerable number of articles for the New York Daily Tribune in 1857 and 1858 as well as to make notes for the section of Volume III of Capital to be devoted to interest-bearing capital. Marx had also frequently written on financial subjects before 1857 for the NYDT, especially when a financial or industrial crisis seemed about to break out. He always commented on the British budget when it was presented to the House of Commons and as early as 1853 had written an article explaining the principles and working of the 1844 Bank Act to his American readers.

Since, in the end, Marx never got round to preparing for publication these notes he made for Capital –they were very scrappy and had to be put into some sort of order by Engels—it is these NYDT articles which must be regarded as expressing in a final form for publication his views on financial crises. Hence these articles are to be regarded as an important complement to Volume III of Capital.

The British banking laws of 1844 and 1845 which Marx analysed in detail were an attempt to put into practice the doctrine of the so-called Currency School. In 1797, at the beginning of the Napoleonic Wars, the convertibility of Bank of England notes into gold had been suspended and was not restored until 1819. As a result of the experience of this period of inconvertibility a controversy arose in the first part of the 19th century over whether or not the number of paper notes issued by banks should be controlled by legislation. The Currency School argued that it ought to be, in order to ensure that the circulation of paper notes conformed to what they believed to be the economic laws governing the circulation of a metallic currency (gold and/or silver). Their opponents, known as the Banking School, denied the need for such control arguing that, as long as the paper notes were ultimately convertible into a fixed amount of gold, the number that would in actual practice circulate would always be governed by the economy’s need for currency. It was thus impossible, in their view, for the number of convertible paper notes to be over-issued since if more were issued that the economy needed the surplus notes would eventually find their way back, one way or another, to the bank that had issued them.

The Currency School based their theory on the views expressed by Ricardo on the circulation of a metallic currency like gold. According to Ricardo, there was a direct causal relationship between the amount of gold in a particular country and the general level of prices prevailing there. When a country had a favourable balance of trade, with exports exceeding imports, there would be an inflow of gold to that country; this increased quantity of gold would lead to an increase in the general price level; exports would therefore tend to fall off and imports to increase; as the balance of trade shifted from favourable to unfavourable so gold would flow out of the country, bringing about a fall in prices again. In other words, according to Ricardo, with a metallic currency the amount of money in circulation was automatically regulated by the flow of gold into and out of a country as its trade balance changed one way or the other. [1]

The Currency School wanted to make the circulation of a paper currency (or rather of a currency composed partly of gold and partly of paper notes) conform to this automatic model described by Ricardo. They thus proposed that the number of notes that could be issued should be tied to the amount of gold in the vaults of the bank that issued them. In 1844 led by the banker Samuel Loyd (later Lord Overstone, 1796-1883) they persuaded the then Tory Prime Minister, Sir Robert Peel, to try to put their so-called currency principle into practice. The Act was piloted through the House of Commons by Peel himself and so is often known as the “Peel Bank Act”. Marx explained its principle and main features in an article published in the NYDT on 24 September 1853:

  It assumes that £14,000,000 of bank notes form the necessary minimum amount of circulation. All notes issued by the Bank of England beyond that amount shall be represented by bullion. Sir Robert Peel imagined he had discovered a self-acting principle for the issue of notes, which would determine with mechanical accuracy the amount of the circulation, and which would increase or diminish it in the precise degree in which the bullion increased or decreased. In order to put this principle into practice, the Bank was divided into two departments, the Issue Department and the Banking Department, the former a mere fabric of notes, the latter the true Bank, receiving the deposits of the State and of the public, paying dividends, discounting bills, advancing loans, and performing in general the business with the public, on the principles of every other banking concern. The Issue Department makes over its notes to the Banking Department to the amount of £14,000,000, plus the amount of bullion in the vaults of the Bank. The Banking Department negotiates those notes with the public. The amount of bullion necessary to cover the notes beyond £14,000,000 remains in the Issue Department, the rest being surrendered to the Banking Department. If the amount of bullion diminish beneath the circulation exceeding £14,000,000, the notes returning to the Banking Department in discharge of its advances, or under the form of deposits, are not reissued nor replaced, but annihilated (Marx-Engels, Collected Works, Vo112, pp.298-9).

Marx regarded the theory of the Currency School as wholly mistaken and described the attempt to apply it through the 1844 Bank Act as a “fiasco” even in Volume I of Capital (Pelican, p.939). His first objection was to their view, derived from Ricardo, that the quantity of money in circulation governed the general level of prices. In his view the relationship was exactly the reverse: that more or less money was in circulation because prices were high or low, (see Volume I of Capital, Chapter III, 2b). In other words, money was essentially only a secondary factor, the amount circulating depending on the needs of the economy as determined by real economic factors such as the prices of the commodities to be traded (reflecting their value, or amount of socially necessary labour-time spent in producing them from start to finish) and the level of productive activity and trade. His views are summed up rather well at the end of his A Contribution to the Critique of Political Economy, where he says that Thomas Tooke (1774-1858), who had started out as a partisan of Ricardo’s theory but who later became a leading opponent of the Currency School, was led

  to recognise that the direct correlation between prices and the quantity of currency presupposed by this theory is purely imaginary, that increases or decreases in the amount of currency when the value of precious metals remains constant are always the consequence, never the cause, of price variations, that altogether the circulation of money is merely a secondary movement and that, in addition to serving as a medium of circulation, money performs various other functions in the real process of production (Lawrence & Wishart, 1971, p.186).

Marx had the highest regard for Tooke. He was particularly impressed by his History of Prices from 1792 to the Present Time which appeared between 1823 and 1857. When he wrote that detailed confirmation of the economic law that “prices are thus high or low not because more or less money is in circulation, but there is more or less money in circulation because prices are high or low” was “the only achievement of the post-Ricardian English economists” it was clearly the work of Tooke he mainly had in mind. When Tooke died in 1858 Marx wrote to Engels that the last English economist of any value was dead (letter of 5 March 1858).

Marx’s second objection, based on the empirical research of men like Tooke, was that it was not possible in practice to increase the amount of convertible paper money in circulation beyond what the economy required, as he argued and demonstrated with statistics many times in his NYDT financial articles. The needs of the economy determined the amount of currency in circulation just as much when the currency was gold and convertible notes together as when it was gold alone.

This does not mean that Marx is to be regarded as a member of the Banking School; in fact he criticised people like Tooke for not going beyond the currency question to examine the real economic factors at work. Nor should he be seen as an advocate of the reform of the banking legislation in Britain, even though he knew that this aggravated the monetary crisis phase of the industrial cycle:

  Ignorant and mistaken bank legislation, such as that of 1844-45, can intensify this money crisis. But no kind of bank legislation can eliminate a crisis (Capital, Volume III, Moscow, p.478).

His concern was to show that capitalism was a system that worked according to economic laws which arose from deeper causes than mere monetary reform. A surprisingly large part of Marx’s writings on economics—not just these articles in the NYDT but also his A Contribution to the Critique of Political Economy and the notebooks known as the Grundrisse—was devoted to exposing incorrect theories about money. For Marx, the only way to end recurring economic crises was a social revolution as a result of which money would be abolished.

The exact way in which the 1844 Bank Act proved to be a “fiasco” is well described by Engels in an explanatory passage he added to the chapter on “The currency principle and the Bank legislation of 1844” (chapter XXXIV) of Volume III of Capital which he edited after Marx’s death and which was published in 1894:

  the separation of the Bank into two independent departments deprived its management of the possibility of freely utilising its entire available means at critical times, so that situations could arise in which the banking department might be on the verge of bankruptcy while the issue department still had intact several millions in gold and, in addition, its entire 14 million in securities. And this could take place so much more easily since there is a period in almost every crisis when heavy exports of gold take place which must be covered in the main by the metal reserve of the bank. But for every five pounds in gold which then go abroad, the domestic circulation is deprived of a five-pound note, so that the quantity of circulating medium is reduced precisely at a time when the largest quantity is most needed. The Bank Act of 1844 thus directly induces the entire commercial world forthwith to hoard a reserve fund of bank-notes at the outbreak of a crisis; in other words, to accelerate and intensify the crisis. By such artificial intensification of demand for money accommodation, that is, for means of payment, at the decisive moment, and the simultaneous restriction of the supply the Bank Act drives the rate of interest to a hitherto unknown height during a crisis. Hence, instead of eliminating crises, the Act, on the contrary, intensifies them to a point where either the entire industrial world must go to pieces, or else the Bank Act. Both on October 25, 1847, and on November 12, 1857, the crisis reached such a point; the government then lifted the restriction for the Bank in issuing notes by suspending the Act of 1844, and this sufficed in both cases to overcome the crisis. In 1847, the assurance that bank-notes would again be issued for first-class securities sufficed to bring to light the £4 to £5 million of hoarded notes and put them back into circulation; in 1857, the issue of notes exceeding the legal amount reached almost one million, but this lasted only for a very short time (Moscow, pp.542-3).

The Act was suspended for a third time on 11 May 1866 during the crisis of that year by the then Chancellor of the Exchequer, Gladstone. Marx did not analyse this crisis in as much detail as he did those of 1847 and 1857, though he does refer to it in passing in Volume I of Capital (Pelican, pp.822-3) and he did discuss the 1866 suspension in a letter he sent to Collet in 1868 and which the latter published in the Urquhartite journal he edited, the Diplomatic Review (as the Free Press became) under the somewhat misleading title “How Mr Gladstone’s Bank Letter Procured a Loan for Russia” (Gladstone had in the meantime become the Prime Minister).

In Volume III of Capital Marx also argued that the 1844 Act had been deliberately designed to keep interest rates artificially high, so benefiting the financial section of the capitalist class at the expense of the industrial section. He thus regarded the bankers like Lord Overstone and George Norman (1783-1882), who both came in for his harsh comments, as being motivated by self-interest as well as being ignorant of monetary economics. In fact as early as 1850, in their notes for the Revue of Neue Rheinische Zeitung, Marx and Engels had spoken of “the Bank Acts of 1818 and 1844, which strengthened the financial aristocracy” (The Revolutions of 1848, Pelican, pp.305-6).

In case it should be thought that Marx’s remarks can be simply transposed to the modern discussion on money and inflation, we should bear in mind that he was talking about the circulation of a paper currency convertible on demand into a fixed amount of gold. This situation no longer obtains today. All modern currencies are now inconvertible paper money, the laws governing which are quite different—the opposite, in fact, insofar as the quantity issued does directly affect the level of prices rather than vice versa—to those governing the circulation of a metallic currency and a mixed metallic/ convertible paper currency. Marx did have something to say on this also in his A Contribution to the Critique of Political Economy and in Capital (chapter III, 2c) where his comments still provide a basis for an analysis of modern inflation as resulting from the over-issue of an inconvertible paper currency.

Adam Buick

[1] A detailed, and very clear, discussion and history of Ricardo's currency theory is to be found in the last section of Marx's A Contribution to the Critique of Political Economy on "Theories of the medium of circulation and money".

These be Your Gods, O Israel. (1906)

From the January 1906 issue of the Socialist Standard

’Midst the rhetorical and literary boom of drums and clang of cymbals the long expected and suddenly happening resignation of the Tory Government takes place, and the Liberal party marches bravely forward to take up the burden, the troubles, the cares, the anxieties – and the salaries – of office. A great demonstration at Albert Hall where the Prime Minister adumbrates – as the Daily News so well puts it – the programme of the Liberal Party if it is returned to power at the election in January. The People’s advocate – Reynolds – shrieks in triumph at the Radical victory shown in the statement of the programme and denounces, beforehand, as traitors to the people, all those who either vote Tory or abstain from supporting the Liberals. This is what Republicanism appears to lead to. In addition, a clever campaign is being conducted by the Daily News on behalf of “Social Reform” versus “Tariff Reform”, that, while dishing up the ancient, hoary ideas of taxing the land and establishing small holdings, wisely refuses to have any discussion upon its proposals carried on in its columns. Some of their dupes might be enlightened even by one or two letters and that danger must be avoided. In the first article, however, it is clearly laid down that the way to remedy the evils admittedly existing – an admission forced from the Liberal Party by the Tariff Reformers – is by a series of wise and moderate measures in the direction above indicated. In face of these attempts to ensure the return of the Liberals to power in January as friends of the workers a brief survey of their career will be in order.

The names – Conservative and Liberal – were first adopted at the election of 1830. Previous to that the parties were known as Tory and Whig. Originally the Tory Party represented the Landlord class, the remains of the Feudal Barons, while the Whigs represented the new commercial class that had been steadily growing in wealth and power since the 15th century. The civil war of 1642-49 was the big outward evidence of the internal antagonism existing between these two classes, and although the ebb of the tide brought out the Restoration it could not alter or even more than modify the power the commercial class had won as a result of the struggle. Steadily the Whigs grew in power till the time of George III, when another temporary set back, followed by the American and Napoleonic Wars, took place. But it was not to last.

In 1830 the Liberals were returned to power with the largest majority on record, namely, 301, and they were in power in eight out of nine Parliaments up to 1865. The great Reform Bill of 1832 finally placed the political power in the hands of the plutocracy out of those of the aristocracy and completed the work for which the Liberal Party had existed. From this time onward the economic and social divisions between the aristocrats and plutocrats, blue bloods and traders, have been broken down, the last flickers of the struggle taking place over the Factories Acts, and to-day the trader is a peer like Lord Bass, and the aristocrat a trader like Lords Dudley, Penrhyn, Elvastone, etc. Whenever a new swindle is being floated on the Stock Markets, some titled person is asked to lend his name – for a consideration – to go upon the prospectus as a draw to the unwary or those “who love a Lord”. And this reaches high up the scale as well as low down. This combining of economic and social interests has obliterated all the real differences that at one time existed between the Conservatives and Liberals as political parties. Apart from the subsidiary struggle between the official agents of the capitalist class for the spoils of office, the only reason why the two parties are kept in existence is to gull the workers into the belief that they will materially better their conditions by returning to power – at one time, Liberals, at another, Conservatives. The advocates of Liberalism are just now detailing various actions of the Conservatives, when in power, against the workers interests – and they have plenty of material to use. For the moment, we may leave these advocates at their work while we take up the question of the claim of the Liberals to be the “Party of Progress”.

First, let us look at their record in industrial matters concerning the workers. They claim credit for having legalised combination among the workers in 1824. True! they were in office when the Act was passed, but the manner in which Mr Francis Place outside and Mr. Joseph Hume inside the House of Commons planned, intrigued and finally smuggled – there is no other word for it – the Act through Parliament, is unequalled in the annals of that edifice of trickery. In 1825, when the same Liberal Government, having woke up to what had been done, repealed the Act, the Prime Minister and Lord Chancellor stated they were unaware it had ever been passed! And we have clever politicians to-day, with not one-tenth of the ability and power of these two men, who imagine that, in circumstances vastly different, they will be able to get measures passed benefiting the workers without the capitalists recognising it!

When Lord Melbourne was returned in 1830, he appointed a Commission to enquire into the standing of the trade unions – then, of course, secret societies. The Commission consisted of W. Nassau Senior, professor of political economy at Oxford and Mr. W. M. Tomlinson, a lawyer. They advocated such terrible measures of repression that the Government did not dare to recommend them to Parliament, but put them in operation in detail. Thus, the Lancashire Miners and the Southwark Shoemakers suffered imprisonment in 1832, the Bermondsey Tanners in 1834, and in the latter year the notorious case of the Dorchester labourers also occurred when six agricultural labourers were sentenced to seven years transportation, and two of them were sold into slavery as soon as they landed in Australia. All the above for merely joining their Trade Unions! During this period a big agitation was going on among the working class against the fearful conditions of employment in the Mills and Factories, which conditions could only be described as hellish. The Liberals opposed strenuously every Factory Act that was brought forward on behalf of Women and Children, to say nothing of men. Cobden, Bright and Gladstone, deservedly the leading lights of canting hypocritical Nonconformity, turned their religion tenets to commercial account by demanding that, in the words of Jesus, the nation should suffer little children to go unto them that they might wring profit out of the hardly formed bones and tender flesh of children.

But all cant was not on their side alone. The philosophic Radicals of the Utilitarian school, while practically Atheists, were just as strong opponents of any restriction being placed upon the hours of labour of women and children, as the snuffling religious humbugs. Mr. Roebuck, for many years “Father of the House of Commons” and a member of this school, wrote to his wife in 1838 the following description of the interior of a cotton mill: –

  “The place was full of women, young, all of them; some of them large with child, and obliged to stand twelve hours each day. Their hours are from five in the morning to seven in the evening, two hours of that being for rest, so that they stand twelve clear hours. The heat was excessive in some of the rooms, the stink pestiferous and in all an atmosphere of cotton flue. I nearly fainted.”

Roebuck stood about six feet high and was well proportioned. Yet in 1844, six years after the above letter was written, he opposed the ten-and-a-half hours Bill and said the description of misery had been exaggerated, “take the women-of-all-work in London, compare them with the labouring girl in the factories and you will find that the condition of the latter is a sort of Paradise”!

Yes! the sort of Paradise in which a strong man nearly fainted upon the occasion of a short visit. And it was this sort of cant that was brought forward by the intellectual and industrial giants of the Liberal Party in opposition to the workers’ demands. The Tories, smarting under their defeat of 1832, supported the agitation for the Factories Acts, which did not directly affect them, and it was during their spell of power from 1841 to 1847 that the Act forbidding the employment of Women and Children in the Mines was passed (1842).

Not only were the Chartists prosecuted with the utmost rigor of the Law by the Liberals, but their treatment of Ernest Jones was particularly inhuman – a sample of the mercy one may expect who runs counter to the interests of the ruling class.

When the great Lock-out of the Building Trades took place in London in 1859-61, characterised by Sidney Webb as the greatest trade union struggle on record, the Liberal Government sent the Sappers to work on the Chelsea Barracks as blacklegs. The same Party opposed F. Harrison’s Bill to Legalise Trade Union Funds, but made up for laxity in this direction by sending the soldiers to Mold in Flintshire when the miners were out on strike in June, 1869, and shooting them down without even the formality of reading the Riot Act.

The Act of 1871 that was supposed to place Trade Unions upon a secure basis, was such a fraud, actually making the position of the worker worse than before, that the agitation was continued till in 1875 the Tories passed the Act that Trade Unions have existed under up to the present time. Still, something was done, as for instance the imprisonment of seven women in South Wales for shouting “Bah” after some blacklegs, and of some South London gas-stokers for merely preparing to strike. (1871.) It was during the same Government’s office that Mr. Plimsoll, who had for some years been carrying on an agitation on behalf of the Merchant Seamen, was thrown out of the House of Commons for calling certain Liberal shipowners “cold-blooded murderers” because they sent men to sea in rotten ships that could never reach their supposed destination, to gain the insurance money. The Load Line Bill – popularly known as the Plimsoll Line – was passed by the Tories in 1875.

Equally bad in the record of the “Party of Progress” in the political and intellectual as well as industrial fields. It is always claimed by the Liberals that they were the extenders of the Franchise and of intellectual liberties all round, but this is only a first-class example of the saying regarding the giving of a lie a start. A hardened old Whig like Justin McCarthy has to admit in his History of Our Own Times that the Reform Bill of 1832 “left the working classes almost altogether out of the franchise . . . It broke down the monopoly which the aristocracy and landed classes had enjoyed, and admitted the middle classes to a share in the law-making power”, and “this was all the more exasperating, because the excitement and agitation and success of the Reform Bill was brought about by working men.” Not only so, but, as stated above, the Liberals were returned to power in eight out of the nine Parliaments from 1830 to 1867, and returned upon the express promise to extend the franchise – only to show how consistently they can break promises. In 1866 Gladstone went out of office rather than accept a £6 franchise, which he said “would give the workers a majority, a thing neither he nor any of his friends ever intended to do.”

The ’cute old trickster, Disraeli, took the opportunity to score a popular triumph against the Liberals by introducing, and finally placing upon the Statute Book, a Bill for the £10 franchise which the bulk of the workers vote under to-day. The Property Qualification and Jewish Disability had been abolished under the same leadership in 1858. When Mr. Forster was piloting the Education Act through the House of Commons in 1871, he gladly accepted the help of the Tories to pass the religious clauses of the Bill, while he and his friends threw out the clauses of the Ballot Act, that provided for the payment of Election Expenses, in the same year.

Later in the ’80’s, when Bradlaugh wished to affirm, instead of taking an oath to a God he did not believe in, the Liberals threw him out of the House of Commons by physical force to show their love of intellectual freedom. Just now they are making all the capital they can out of the South African War, for which, by-the-way, they always voted supplies, but conveniently forget, that in 1882, Gladstone’s Government bombarded Alexandria and shot down the Egyptians, whom Gladstone himself described as “a people rightly struggling to be free”, in the interests of the Bondholders, whilst the worst Coercion Acts against Ireland were passed during this period.

It might be urged that all these facts are ancient history, and do not apply to present Liberals or affairs. Well! let us take the last period when the Liberals were in office, namely, from 1892 to 1895. They were returned upon John Morley’s famous “Newcastle programme”, which contained, among the items – “Old Age Pensions”, “One Man one Vote”, “Miners’ 8 Hours”, “Taxation of Land Values”, “Ending or Mending the House of Lords”, “Home rule”, “Payment of Members and Election Expenses”, etc. – a programme much more definite and “advanced” than that shadowed forth at the Albert Hall, but although in power three years, not one of these items became law. It is said, of course, that the House of Lords stood in the way, but many of the items are Budget matters which the Lords do not control, while it may be noted that Gladstone, appointed more Peers than any other Prime Minister. Moreover, when in 1871 the House of Lords threw out his Army reform Bill he took it to the Crown and had it signed and made Law in spite of them! If, with one Bill, why not with another. When Keir Hardie asked for half-a-day to discuss the Unemployed, the Liberals could not spare the time, yet shortly afterwards they spent half-a-day passing resolutions of sickening adulation to the Duke of York on his marriage. When the Tories brought in an Old Age Pensions Bill the Liberals opposed it and threw it out.

Nemesis, however, dogged their steps, and if they could not pass any of the above “Reforms” into Law, opportunities were given them to show their impartiality when called upon to take action between employer and employed.

In September, 1893, the Miners, working for the Tory, Lord Masham, at Featherstone, were on strike, and during a demonstration the soldiers were marched against them and fired upon them, killing two and wounding several others. Mr. Lowther raised the matter in the House of Commons on the question of who was to bear the expense of the troops being sent to Featherstone. In the course of his reply Mr. H.H. Asquith (Home Secretary) made the following remarks to the “Labour” M.P.’s.

 “Where are the men who made these statements? (that the soldiers had been sent to help the Employers) . . . it is a very easy thing to go about the country speaking to excited audiences where you are safe from refutation or reply; but it is a very different thing . . . to come here to the House of Commons . . . face to face with the Minister you condemn and fight the matter out. These gentlemen know as well as I do, and would admit it if they cleared their minds and tongues of cant, that there is no man in this country who would not have acted as I have done, and who would not have felt it his bounden duty to supply the Local Authorities with such a force as in their judgment was necessary to supplement the local resources at their disposal”. – Hansard, vol, 17, pages 1725-1726).

The above extract effectually disposes of the statements made by Asquith’s friends that he did not send the troops to Featherstone. His own admission should be proof enough to the most hardened Liberal. Note also that not a single “Labour” member, then or since, repudiated Asquith’s statement that anyone one of them would have sent the soldiers to Featherstone if they held office – a splendid piece of evidence as to the position they occupy.

An inquiry commission was appointed and reported in January, 1894. It was pointed out that in this report the rifles used would carry three miles and kill, and it was therefore suggested that weapons of shorter range – say 200 or 300 yards – should be used in civil disputes as innocent persons were liable to be injured.

Mr. John Burns – not the Right Honourable then – said:

  “He could not agree with the point which had been raised as to the alteration of the weapons and ammunition to be used in the cases of civil riot; that would only alter the injury caused; some people might say ‘what about shooting down innocent people?’ They must take their risk of that. If innocent people attended affairs of this sort they did so at their own risk. He did not hold the Home Office responsible in this case”. – (Hansard, vol. 20, pages 1305-1306).

And yet we hear glib queries as to why an Office, that men of wealth and influence would sell their souls – if they had any – to obtain, is given to a working engineer! Let the above answer.

The price of this act – of treachery to the workers, of faithful service to his paymasters – is a seat in the Cabinet and £2,000 a year.

Note, moreover, Burns’ attempt to shift the responsibility of sending the troops to Featherstone off the shoulders of Asquith, after the latter’s own admission of the act.

One point, however, is logically taken by the assassin’s defender. Admit the right of the capitalist to have his wage slaves slaughtered when they revolt against their miserable conditions, and then the slaughtering may just as well be done by long range as by short range guns. Innocent people – three miles away – must take their risk of attending affairs of this sort! But the very admission of this right of the capitalist explains why both Tory and Liberal Press, from the Daily Mail to the Daily News have joined together in a chorus of congratulations to “Honest John” though the adjectival noun is rather early. Burns may be said to have got “on” before, to have got “Honour” of its kind – now, but there is not the slightest possibility of his getting “Honest” either in the near or ultimate future.

During 1894, a Liberal capitalist, Mr. C. H. Wilson, M.P., of the Wilson Steamship Company, Hull, had a strike of dockers occur at his wharves and brought in blacklegs to break the strike. The obliging Home Secretary (Asquith again) sent a gunboat to the scene of action – Hull – to protect the blacklegs and shoot down the dockers if they showed signs of being troublesome.

In 1895 the Liberals were defeated on cordite and have been out of office 10 years, but can any fair-minded person pretend in face of the brief account already given of their career during the 19th Century, that there is the slightest difference between them and the Conservatives as far as the workers are concerned? I think not.

It is for the working class to study and realise that while one section of the community – the capitalist class – own the means of life of the whole community, the remainder of the community are slaves to that section. Whatever label a political party or person may wear – whether Conservative, Liberal, Radical, Reform, Labour or any other – the one question for the working-class is “do they stand for the retention of a system allowing a small section of Society to exploit the other, the working class”? If so, no matter, with what qualification or modification, if any, then they are necessarily and inevitably the enemy of the exploited and must be so branded. Fine promises avail them nothing. In the words of Wendell Phillips, “WE NEVER FORGET”, but keeping the facts clearly in front of our fellow workers’ eyes march steadily to the goal of our Emancipation.

Jack Fitzgerald

Finance and Industry: Against Monopoly (1961)

The Finance and Industry Column from the December 1961 issue of the Socialist Standard

Dip into English industrial history in any century since William the Norman and you will find monopoly and restraint of trade in the news: the early Acts forbidding traders to corner supplies; Acts fixing prices (not forgetting Selwyn Lloyd’s 12th century predecessors fixing wages); the Tudor and Stuart kings raising revenue by selling monopoly licences to manufacture certain articles; the corn laws which restricted imports to give the landed interest a monopoly of food production; the manufacturers' fight to get rid of the laws so that food prices, and wages, would come down; and the governmental inquiry in 1916 which found that “there is at present in every important branch of industry in the United Kingdom an increasing tendency to the formation of Trade Associations and Combinations having for their purpose restriction of competition and the control of prices." Always the same pattern of one interest trying to form a monopoly and other interests trying to break it; and always both sides saying that their only motive is to help the poor.

The monopolists have never been at a loss to present a defence: that they are not putting up prices but “stabilising" them; that it makes for efficiency in production; and, in recent years, that it provides regular employment for the workers at high wages.

In another column a paragraph is reproduced from our issue of December, 1911, about the foolishness of expecting the politicians to carry out their promise to bust the trusts and destroy monopoly. Four years before that, a university lecturer on political economy, Mr. Frank Bower, noted in his Dictionary of Economic Terms that although “attempts have been made to secure legal control over Trusts, in order to prevent the evil effects of monopolies, . . . these efforts have not been very successful."

Many laws have been passed since then to cut the giants down in size and enforce competition, but all that has happened is that the giants have grown fatter and stronger, and still the reformists are promising to do something about it. At the 1945 General Election the Labour Party pledged itself to enforce "public supervision of monopolies and cartels." The Tories countered with this promise that ‘'charges of abuse of their power by Monopolies should be brought before an independent tribunal for public hearing."

The Labour Party won the election and kept their promise by passing the Monopolies and Restrictive Practices Act of 1948—the effect of which was practically nothing. So the Tories at the 1951 election promised to strengthen the law, a move to which the Labour Party could hardly object, but at the same time the Tories said they intended to investigate restrictive practices by trade unions and the monopolistic aspects of nationalised industries. They later passed two more Acts, The Monopolies and Restrictive Practices Commission Act, 1953, and the Restrictive Trade Practices Act of 1956. Now it was the turn of the Labour M.Ps. to complain that it was next enough, but none of them seem to know quite what to do. So much so that the Fabian Society at the end of 1960 published a pamphlet by Mr. Patrick Hutber, not stating any Fabian Society conclusions, but putting forward personal suggestions for discussion in the “urgent ” task of formulating a new policy. (Wanted—a Monopoly Policy).

In the meantime, because of the spate of take-overs and mergers of the past few years, the problem has become bigger. How farcical it all is can be seen from the fact that the first Fabian Essays published 80 years ago were already discussing what to do about monopolies.

One of Mr. Hutber's proposals is that the Restrictive Practices Court should have power to threaten an offending company, that if it persisted in its evil ways, the government would take it over. This proposal, be says, “is new." Far from being new, it was an idea well known to the early Fabians and was ancient even then. It was Gladstone, then a Tory, who in 1844 was responsible for the first Act of Parliament giving the Government power to take over the railways. Manufacturers and traders who were being bled by the monopolistic railways had got Gladstone to pass the Act so that he could use it as a threat against the Companies unless they reduced their charges. (Nowadays traders are more likely to think that the nationalisation remedy is worse than the disease).

In the exercise of the powers given by the Act an enormous amount of work has been done examining complaints, ordering the termination of offending monopolistic or restrictive agreements, but with what result? The Economist (16/4/60) examined the results of all this activity. Since the purpose of the restrictive practices by manufacturers and traders is to force up prices to get more profit the simple test of the effect of the Act is to see to what extent it has succeeded in bringing prices down. The Economist had this to say:

  Mr. T. B. Heath of Manchester University has recently produced some extremely interesting analyses of its effects. Mr. Heath has concluded that the effect of the Act on the general level of prices has so far been very small. To date, the visible effect of the Act on retail prices has been almost nil.

What happens is that as soon as the law makes some practice illegal the lawyers get to work to discover ways of getting round it. One new and perfectly legal device is for manufacturers to agree not to fix prices (which would be illegal), but to make what are called “open price" agreements under which they set up a control agency to exchange information about the prices each manufacturer is charging, about the terms and conditions of sale, costs, the state of demand and level of output. The use they make of the information can be guessed.

Another result of the activities under the Monopolies Act has been to stimulate mergers by rival firms; if it is illegal for rivals to agree on price maintenance it is quite legal for them to merge.

Mr. Hutber, in the pamphlet referred to above, admits that after an earlier phase of anxiety among businessmen, the position at the time he was writing, was: “everything apparently going on very much as before, so that instead of gratified economists and dismayed businessmen, it is the businessmen who are gratified and the economists dismayed."

It is claimed by some critics of the Monopolies Acts in Britain that things are different in America; and indeed the battle there has been going on longer and more ruthlessly. In April of this year the American electrical manufacturing industry was convicted for breaches of the anti-trust laws. Seven directors were sent to prison and fines of two million dollars were imposed. But those who started waging war against the Standard Oil Trust in the eighteen eighties were not promising that after eighty years the battle would be going on.

In USA, as in Britain in Gladstone's day, the fight is in internal capitalist one, between the trust formers and their trade victims. The Financial Times (31/10/61), reports from New York:

  A large number of government agencies, private utilities and Municipal authorities, all of which have been among the industry’s biggest customers, have been preparing to claim damages from their suppliers on the grounds that the price-fixing conspiracies kept prices too high. If all the claims were upheld by the courts, the manufacturers might be obliged to pay out as much as a hundred million dollars in damages.

In the meantime, as Marxists have always held, the progress of Capitalism has involved the inevitable trend towards concentration into bigger and more costly enterprises. As Sir Hugh Beaver, former President of the Federation of British Industries wrote two years ago:

  There is a natural tendency to extol the virtues of the small man, and many seem to deplore the growth of big business, but it cannot be forgotten . . .  that we live in a world where all units are increasing in size and importance.

(Financial Times Annual Review, 1959.)

It was possible in the early nineteen twenties for J. R. Clynes, a trade union Labour M.P., who was later Minister in a Labour Government and Deputy Leader of the Labour Party, to write that “ it was better to have a large number of small Capitalists than a small number of large ones.” It would be almost unthinkable for a trade union Labour M.P. to make such a declaration today. (Ironically Clynes made the statement in the preface to a pamphlet, The Failure of Karl Marx, which purported to prove that Marx was wrong in his anticipation about the trend of Capitalism).

Nowadays the Unions and the Labour Party have fully accepted Capitalist big business, but are troubled by the dilemma of both wanting business to be big and powerful for competition with foreign rivals and of wanting to curb its power at home. The possibility of a Socialist world in which you do not have to curb market seeking, profit making industries because you have production solely for use, is still beyond their grasp.

Edgar Hardcastle

Real socialist journalism (1996)

Book Review from the October 1996 issue of the Socialist Standard

Journalism, Contributions to Commonweal 1885-1890 by William Morris (Thoemmes. £18.75.)

As is now well known William Morris was a socialist. From 1885-1890 he spoke at indoor and outdoor meetings throughout Britain for the Socialist League. He was also the editor of the League's official journal Commonweal. In this capacity, he not only contributed regular articles but also wrote a weekly column commenting on current events from a socialist point of view. Until now these comments have only been available to those with access to the bound volumes of Commonweal. His articles have already been published separately in a companion volume.

What makes these comments particularly interesting is that they reflect the basic position of the Socialist League, shared by Morris, that as capitalism could not be reformed to benefit the working class socialists should not waste their time campaigning either for reforms or to get people elected to parliament to press for them; they should rather concentrate exclusively on campaigning for socialism, with a view to building up a majority movement for it as rapidly as possible.

Morris’s name has often been hi-jacked by Labour MPs but in fact he was opposed to the whole idea of a parliamentary Labour Party. He thought that such a party would have to resort to unprincipled vote-catching to get into parliament and that once there it wouldn’t be able to do much for the workers and could end up helping the governing classes to govern.

Someone writing from this perspective is bound to throw a different light on the politics of the period 1885-1890 than can be found both in conventional history books and in the works of “Labour historians". It is this that makes this 670-page collection of short articles so fascinating.

The issue which dominated politics for most of this period was the Irish Question. When it opened Gladstone was the Prime Minister but he was twice defeated when he tried to get a Bill giving Home Rule to Ireland through Parliament. His Liberal Party in fact split over the issue with a section going over to the Tories.

The Tories and their Liberal Unionists allies won the July 1886 General Election. Lord Salisbury took over as Prime Minister. The new government which had already "played the Orange card’’ to get elected, proceeded to pursue a policy of "coercion” (the official word for it) in Ireland.

As a socialist Morris was naturally on the side of the exploited (in this case the Irish peasantry) against their exploiters and oppressors (the Anglo-Irish landlords and their protectors, the British government), but that did not mean that he supported the Irish Nationalists. Far from it.

Morris realised that the Irish Nationalists represented Irish capitalism and that, if successful, they would merely impose a "new tyranny" on the peasantry by turning them into "a fresh Irish proletariat to be robbed for the benefit of national capitalists''.

Morris was not opposed to “home rule" as such since the term could be used to describe the high degree of decentralised decision-making and self-administration that people living in a particular area would enjoy in socialism. Home Rule under capitalism, however, he regarded as something quite different; it would merely be a change of masters; "Undoubtedly when there is a parliament in Dublin the struggle of the Irish people for freedom will have to be begun again".

In his view, the most that could be said for it was that it would provide a framework within which the oppressed people in Ireland could come to see more quickly that the real conflict was not between “the Irish" and "the English” but between workers (of whatever nationality) and capitalists (of whatever nationality). It was for this reason (which turned out to be wrong) that Morris and the Socialist League were nevertheless prepared to go along with the proposal for Home Rule for Ireland.

Morris writes here on much else besides Ireland and the manoeuvrings at Westminster in connection with it. This was the period of the first demonstrations of the unemployed in Trafalgar Square, the fight to hold outdoor meetings without being obstructed by the police, the declaration "that we are all Socialists now" (by the Liberal politician. Sir William Harcourt, in August 1887), the execution of the Haymarket Martyrs in Chicago, the Bryant & May matchgirls strike, the strike for the dockers’ tanner, and Jack the Ripper.

Morris comments on all of these as well as on trade unionism, the co-operative movement, Henry George's Single Tax panacea, women's rights ("As long as men are slaves, woman can be no better. Let the women's rights societies adopt that last sentence as a motto—and act on it"), war ("the interests of the workmen are the same in all countries and they can never really be enemies of each other"), vegetarianism (he wasn’t one of course, being more into medieval banquets). Sunday closing (he wasn’t a teetotaller either and was all for workers being able to drink on Sundays as long as it was real ale and not the slop that was all they could normally afford), and prisons (which he repeatedly denounces as barbaric places of torture).

Morris wrote as a Socialist in the SPGB tradition. Those who might be inclined to doubt our claim here should read the book. They will find that no other conclusion is possible. 

Adam Buick