Blackwood's Edinburgh Magazine—Volume 62, No. 386, December, 1847

by Various

At present, with a population of twenty-seven millions and a half, we are said to be unable to lay out thirty-five millions annually in the construction of our railways, in addition, to a taxation of fifty millions,—in other words, we cannot raise eighty-five millions a-year without approaching to the verge of bankruptcy!

This, if true, is a very humiliating position, and shows symptoms of a decadence so marked, that we question whether any parallel case can be extracted from history. A population augmented by one-third, say the economists, cannot afford to expend a sum less by ten millions than that which was raised without inconvenience towards the end of the great continental war; and this sum, far from being swallowed up abroad, is usefully employed at home, and is daily assuming the shape of realised capital, yielding a profitable return!

It would follow, then, as a matter of necessity, that we must be infinitely poorer now than we were thirty years ago. Let us see how that matter stands. The net rental of the real property, in England alone, as we find from the assessment tables for the poor-rates, had risen from £51,898,423 in 1815, to £62,540,030, in 1841, and may be estimated at the present moment as augmented by fully one-fourth all over the united kingdom. The personal property, according to Mr Porter, whose accuracy will be unquestioned by free-traders, was estimated at twelve hundred millions in 1814, at two thousand millions in 1841, and has since continued to augment, so that we may fairly assume, that within thirty years, that species of property has been doubled.

Here, then, are grounds for a panic such as that which is now shaking the empire! Here are reasons for leaving the inchoate railways unfinished, dismissing the workmen, and closing our accounts in terror of a national bankruptcy! Really, with such facts before us, we cannot avoid coming to the conclusion that men who use such language as has been too commonly prevalent of late, are either shamefully ignorant, or have a motive for promulgating error.

The expenditure from 1811 to 1815 was, as we have already seen, wholly profitless, and yet it in no way whatever deranged the economy of the country. The vast outlay of capital, which took place at subsequent speculative periods, was a thorough drain upon the country, because it was consumed abroad without return, and gave no employment or stimulus to the home producer. But the railways are investments of a very different description. They do not affect the currency farther than we have noted above, and the remedy for that is simple. By their means the pressure of the famine has been lightened to the poorer classes, and they are not only remunerative to their owners, but of immense benefit to the districts through which they pass. Of three thousand one hundred miles of railway now open, the gross receipts may be taken, in round numbers, as at nine millions annually. Passengers are carried at one half the cost of the old conveyances—so are goods, and time is prodigiously economised. There is, therefore, a positive saving of other nine millions to the inhabitants of the country; and the completion of the works now in progress, will add immensely to, and more than double this. The cheapening of fuel, the transport of manure, and of building materials, and the opening up of mineral fields, hitherto unused and unprofitable, are vast boons to agriculture and trade, and there can be no doubt that the country is deeply interested in their progress.

If it be asked whether the public are able to spare the capital requisite for the completion of those lines without danger or embarrassment to other branches of industry, we think the calculations which we have already given will afford a satisfactory reply. There is no want of capital in Britain, and railway companies will always be able to obtain it at a certain rate of interest. But a currency contracted like ours, and totally incapable of expansion, must inevitably, upon the occurrence of any external accident, derange every branch of our social economy; and as interest rises, so, as a matter of course, will the value of realised property be depreciated. Money is at present the scarcest thing in the market: the capitalist may demand his own price of usance for it; and were this state of things to continue, the results would be far more ruinous than any one has yet anticipated. People are prepared to suffer almost any sacrifice for the maintenance of that credit which is the idol of the Englishman; but the sacrifice must be temporary, not prolonged, else a stoppage becomes inevitable. Neither the merchant nor the manufacturer, nor any other class of men, can afford to conduct their operations at a remunerative rate, while money is exorbitantly high; and all questions even of convertibility shrink into absolute insignificance before the fact, that were money to continue long at eight per cent., the mills and manufactories throughout the country must be shut up, and the public works discontinued. In other words, we would be plunged into a state of anarchy, the ultimate issue of which it would be very difficult to conceive.

No doubt, the railways have had their share in absorbing capital, but what we maintain is, that the capital is abundant and could not have been better employed. The mania of 1845,—for most assuredly enterprise at that time had assumed that extravagant form—was checked by the intervention of Parliament, and a host of crude and unnecessary schemes were at once consigned to oblivion. Should it be said that Parliament did not exercise with sufficient energy its undoubted controlling power, then we shall merely ask who the gentlemen were that, down to the end of the above year, lent their countenance to railway extension? On the 13th of November 1845, we find Sir Robert Peel near Tamworth, with electro-silver plated spade, and mahogany barrow, wheeling away the first sod raised on the line of the Trent Valley railway, and expatiating broadly upon the advantage of "a more direct and immediate communication between the metropolis on the one hand, and Dublin and a great part of Ireland on the other; between the metropolis and the west of Scotland; between the metropolis and that great commercial and manufacturing district of which Liverpool and Manchester are the capitals." Not a word of warning or reproach, or of indication of coming scarcity of money, fell then from the lips of the great author of the Restriction Acts,—measures which were still lying in abeyance to awake for the benefit of the capitalist, and the depression of every other class, long before the sod, so ostentatiously turned over, could be replaced by the permanent rail. What wonder, then, if Parliament, with such examples before their eyes, and such notable testimony in favour of the development of the railway system, should have been slow in foreseeing the danger of too hasty an internal development?

It is also self-evident that during the last few months the frequent and heavy railway calls have added much to our pecuniary embarrassment. In some instances these calls have been by far too recklessly urged; in others it is difficult to see what other course could have been adopted. For whilst, on the one hand, the extreme dearness of money, the utter stoppage of credit, and the impossibility of disposing of property at any thing like its real value, were elements which the directors were bound to consider before using their statutory power; yet, on the other, they were not entitled to overlook the influence which a discontinuance of these works would exercise over the value of the capital already expended, and the great amount of individual and aggregate suffering which would result from the arbitrary dismissal of their labourers. It was the duty of government, while it was yet time, to have stepped in with some precautionary measure. They might have compelled the directors to summon a general meeting of the shareholders previous to the announcement of a call, and have allowed the latter a veto if their interests should have required it; but although proposals to that effect were laid before the Chancellor of the Exchequer, nothing whatever was done, and the increasing panic was heightened by the prospect of peremptory demands.

So much for the railways; by far the most useful class of works which the country has ever undertaken—useful, because, however they may appear to suffer by temporary depreciation, they will, we firmly believe, in the long run, prove amply remunerative; because, in a year of famine, they have given ample employment and adequate wages to a class of men who must otherwise have suffered unexampled deprivation; and because they have opened, and are opening up new elements of wealth, economising time, and facilitating our trade and our commerce. If, under the influence of monetary laws, for which their undertakers were in no wise responsible, they have tended in some degree to increase the common difficulty, let us recollect that the same power which sanctioned them is answerable for the restrictive measures. We have already shown that this new class of works required an increase of the internal currency which was not vouchsafed to it, and the authors of the Banking Act of 1844 are the parties chargeable with that neglect.

In short, to use the words of one of the Rothschilds, who surely is a competent judge, the prosperity of Britain depends, to a great degree, upon the amount of its circulating medium. It is our interest to have money plentiful and to keep it so; and we ought to interpose as few checks as possible to the fair operation of credit. With plenty of money we may command the markets of the world; with a restricted and contracting issue like the present we are comparatively powerless. The great fault of Sir Robert Peel and his coadjutors is, that they seek to confine credit within absolutely intolerable bounds. We may ask, with perfect propriety, whether the colossal fortunes, either of the right honourable Baronet or of his adviser Mr Jones Loyd, could, by any possibility, have been erected without this important element of credit, which they have now combined to prostrate? We apprehend not; and yet in a certain, though not very creditable sense of the phrase, both gentlemen have been true to their order. The new capitalist has the smallest possible degree of sympathy for those who are struggling upwards.