Let us see what it is that he is really proposing. At present the advantage gained by successful capitalization is enjoyed in right of an inheritance or in right of thrift and saving. This, says the Socialist, can be improved upon. The work of capitalization should be carried out by public bodies, whose duty it would be to put some men among the overseers and many others among the overseen. For every one man who under this system was obliged, ninety-nine would be disobliged. The causes which at present give success in life are in part, it is true, beyond our control; we think them unjust and we grumble at the partiality of fortune; but should we be better pleased (we, that is, who are set to do hodman's work and to belong to the ranks of the overseen) if our fate was entirely decided in the lobby of the bureaucracy set to rule over us? The duties of life are not all alike pleasant. If the rewards of life are arbitrarily made equal, the work of the poet-even if he is confined to dithyrambs on municipal sewers-will still be esteemed a pleasanter occupation than that of the scavenger. In every conceivable form of government each man must be guaranteed the exclusive use of the benefits due to him in the performance of his office. We have not, therefore, got rid of inequality or of the fact that one man draws more than another out of capitalization. All we have succeeded in doing is to distribute these inequalities at the fiat of a corruptible bureaucracy instead of on the principle of Free Exchange. When a large proposal of this nature is made, we are entitled to look round to see what are the effects of any existing experiment on the principle suggested. Our present poor law system allows guardians the power to give to one pauper a preferential form of relief, viz. outdoor relief, and to confine another to the workhouse. This is exactly analogous to the power of making some men overseers and others overseen. The poor law is most unpopular, and precisely for this reason that it passes the wit of man to minister justice indifferently under such conditions. Be the arguments in favour of a prohibition of private 'capitalism' what they may, in practice they have been disregarded, and the working man has exercised his liberty to acquire a right of deferred consumption in a great many ways. The following table, taken from the last Statistical Abstract, shows that the total of working class savings amount to a considerable sum, and that during the fifteen years included in the Abstract that sum had as nearly as possible doubled. The fact emphasizes a point which people are sometimes apt to forget, namely, that the hope of those of us who have no property must be in the creation of new wealth and not in the redistribution of wealth which is already in existence. *Building Societies, 1890 52,482,000 *Industrial and Provident (Co-operative) Societies, 1890 15,261,000 *Industrial Insurance Companies, 1890 8,873,000 +Friendly Societies 20,167,000 Collecting Friendly Societies, 1889 In order that some idea may be given of the rate at which these investments are growing, I have made out a second list, showing the state of affairs fifteen years earlier. *Post Office Savings Bank, 1877 *Trustee Savings Bank, 1877 at Post Office, 1881 (no earlier figures given) *Building Societies, 1876. 20,854,000 6,224,000 1,476,000 9,336,000 III,730,000 *Industrial and Provident (Co-operative) Societies, 1876. * Statistical Abstract, 1877 to 1891, No. 39. + Rev. T. Frome Wilkinson, Mutual Thrift, estimated p. 191. In following the history of popular savings we shall find that the material as well as the educational advantages of these provident institutions is for the most part proportionate to the liberty of action which they enjoy. No more remarkable illustration of this truth is to be found than in the history of the savings bank. The labourer takes his surplus earnings to the bank, and exchanges them for a credit. With a laudable desire to make this credit a safe security to the poor man, it is laid down by Act of Parliament that these sums shall be placed by the Post Office and Trustee Banks in the hands of the Commissioners for the reduction of the National Debt for investment in consols, Treasury bills and other Government securities. All the petty savings of the provinces are in this way carried up to London, a small portion is placed in Local Loan Stock three per cent., and in a sense a percentage of this finds its way back to the country. It has been held, no doubt rightly, that a Government department cannot undertake the whole function of a banker. Our savings banks, therefore, are merely the reservoirs in which petty savings may collect. They make no pretence to be dealers in credit; and if a full exercise of the function of a banker is an advantage to the community society has to that extent been a loser. An interesting description of the advantage of banking and of the exchange of credits in which it consists will be found in the following passage from Mr. Mac Leod's Elements of Economics. He describes how it is part of the Scotch banking system 'to open or create credits to certain amounts in favour of respectable and trustworthy persons. A cash credit, therefore, is a drawing account created in favour of a customer upon which he may operate in precisely the same manner as on a common drawing account; the only difference being that, instead of receiving interest on the daily balance at his credit, as is very common in Scotland, he pays interest on the daily balance at his debit..... Almost every young man commencing business in Scotland does so by means of a cash credit. . . . . These credits are granted to all classes of society, to the poor as well as to the rich. Every ... thing depends upon character. Young men of steadiness and judgement get their friends to become sureties for them on a cash credit this is as good to them as money; and then they have the means placed within their reach of rising to any extent that their abilities and industry permit them. . . Not only has Scotch agriculture been raised to its present tate entirely by these cash credits, but also public works of all sorts-roads, canals, railroads, docks-in fact everything has been created by the same means. It was stated that the Forth and Clyde Canal was executed by means of a cash credit of £40,000 granted by the Royal Bank.... All these marvellous results, which have raised Scotland from the lowest state of barbarism up to her present proud position in the space of 150 years are the children of pure credit. . . . The express purpose of these banks was to create credit, incorporeal entities created out of nothing, for a transitory existence; and then, having performed their function, vanishing again into the nothing from whence they sprang. And has not this CREDIT been CAPITAL? . . . But their solid results have by no means faded like "the baseless fabric of a vision."... On the contrary, their solid results have been her far-famed agriculture; the manufactures of Paisley, Glasgow and Dundee; the unrivalled steamships of the Clyde; great public works of all sorts-canals, roads, bridges, docks, railroads; and poor young men converted into princely merchants. What the Nile is to Egypt, that has her banking system been to Scotland. . . . . Mr. Mac Leod is here defending the note issue system of Scotch banks, but his panegyric covers the whole system of legitimate banking. Compare this picture to the restricted operation of the savings bank. It will be said at once that our commercial banking system already affords the necessary facilities for credit to those persons who are entitled to it, and that the poor man is not a person entitled to credit. If there is any justification for this view it consists in the fact that the character of the poor man is not such as to warrant a banker in making a loan to him. The Scotch banking system has done much to popularize credit; but it has not succeeded in reaching the humblest class. Is, then, the thing impossible? The experience of the People's Banks of Germany and Italy has shown that the poor man can, under certain conditions, convert his promise to pay into an article of exchangeable value. The main condition is simply that the exchanges must be effected on the mutual or co-operative basis, which is able to solve a difficulty otherwise insoluble. The reason for this is at once obvious and extremely instructive, and, as we shall have occasion to point out, it has its analogy in insurance business and possibly elsewhere. A Scotch farmer or a Scotch tradesman is a person who has had some experience of the mechanism of business; he has learnt that character is capital, or at least can give its owner the command of capital. To such a responsible person a bank, knowing that the risk is not great and that the enterprise in which he is engaged is a reasonable one, can afford to lend at a moderate rate. When we go a little lower in the social scale the character of the people is less trained in this particular form of trustworthiness. They are less familiar with the principles of business. They have a greater disposition to evade their liabilities, and individually their transactions are very small and are supposed to be unworthy of the attention of the high finance. The risk of lending money to them is therefore great, and money lending has degenerated into usury. The inherent disability of a poor man's loan institution, not based on the mutual principle, is aptly summed up in a little story told by Mr. Wolff, to whose interesting volume on People's Banks the reader is referred for much valuable information on the subject. Speaking of a small English experiment in Peoples' Banks, he remarks: 'Nothing seems more striking in the experience of this society than the conscientious honesty and punctuality with which the poor people make a point of repaying loans, once they are constituted trustees of their own interests— even those who would otherwise make no bones of keeping back rich men's money. One man, who sent in his instalments with most praiseworthy regularity, had previously |