The most convincing condemnation of the current economy is conveyed in the difficulty which producers everywhere experience in finding consumers for their products—a fact attested by the prodigious growth of classes of agents and middlemen, the multiplication of every sort of advertising, and the general increase of the distributive classes. Under a sound economy the pressure would be reversed; the growing wants of progressive societies would be a constant stimulus to the inventive and operative energies of producers, and would form a constant strain upon the powers of production. The simultaneous excess of all the factors of production, attested by frequently recurring periods of trade-depression, is a most dramatic exhibition of the false economy of distribution. It does not imply a mere miscalculation in the application of productive power, or a brief temporary excess of that power; it manifests in an acute form an economic waste which is chronic and general throughout the advanced industrial nations; a waste contained in the divorcement of the desire to consume and the power to consume.

If the apportionment of income were such as to evoke no excessive saving, full constant employment for capital and labor would be furnished at home. This, of course, does not imply that there would be no foreign trade. Goods that cannot be produced at home, or produced as well or as cheaply, would still be purchased by ordinary process of international exchange; but here again the pressure would be the wholesome pressure of the consumer anxious to buy abroad what he could not buy at home not the blind eagerness of the producer to use every force or trick of trade or politics to find markets for his "surplus" goods.

The struggle for markets, the greater eagerness of producers to sell than of consumers to buy, is the crowning proof of a false economy of distribution. Imperialism is the fruit of this false economy; "social reform" is its remedy. The primary purpose of "social reform," using the term in its economic signification, is to raise the wholesome standard of private and public consumption for a nation, so as to enable the nation to live up to its highest standard of production. Even those social reformers who aim directly at abolishing or reducing some bad form of consumption, as in the temperance movement, generally recognize the necessity of substituting some better form of current consumption which is more educative and stimulative of other tastes, and will assist to raise the general standard of consumption.

There is no necessity to open up new foreign markets; the home

markets are capable of indefinite expansion. Whatever is produced in England can be consumed in England, provided that the "income," or power to demand commodities, is properly distributed. This only appears untrue because of the unnatural and unwholesome specialization to which this country has been subjected, based upon a bad distribution of economic resources, which has induced an overgrowth of certain manufacturing trades for the express purpose of effecting foreign sales. If the industrial revolution had taken place in an England founded upon an equal access by all classes to land, education, and legislation, specialization in manufactures would not have gone so far (though more intelligent progress would have been made, by reason of a widening of the area of selection of inventive and organizing talents); foreign trade would have been less important, though more steady; the standard of life for all portions of the population would have been high, and the present rate of national consumption would probably have given full, constant, remunerative employment to a far larger quantity of private and public capital than is now employed. For the over-saving or wider consumption that is traced to excessive incomes of the rich is a suicidal economy, even from the exclusive standpoint of capital; for consumption alone vitalizes capital and makes it capable of yielding profits. An economy that assigns to the "possessing" classes an excess of consuming power which they cannot use, and cannot convert into really serviceable capital, is a dog-in-the-manger policy. The social reforms which deprive the possessing classes of their surplus will not, therefore, inflict upon them the real injury they dread; they can only use this surplus by forcing on their country a wrecking policy of imperialism. The only safety of nations lies in removing the unearned increments of income from the possessing classes, and adding them to the wage income of the working classes or to the public income, in order that they may be spent in raising the standard of consumption.

Social reform bifurcates, according as reformers seek to achieve this end by raising wages or by increasing public taxation and expenditure. These courses are not essentially contradictory, but are rather complimentary. Working-class movements aim, either by private coöperation or by political pressure on legislative and administrative government, at increasing the proportion of the national income which accrues to labor in the form of wages, pensions, compensation for injuries, etc. State socialism aims at getting for the direct use of the whole society an increased share

of the "social values," which arise from the closely and essentially coöperative work of an industrial society, taxing property and incomes so as to draw into the public exchequer for public expenditure the "unearned elements" of income, leaving to individual producers those incomes which are necessary to induce them to apply in the best way their economic energies, and to private enterprises those businesses which do not breed monopoly, and which the public need not or cannot undertake. These are not, indeed, the sole or perhaps the best-avowed objects of social reform movements. But for the purposes of this analysis they form the kernel.

Trade unionism and socialism are thus the natural enemies of imperialism, for they take away from the "imperialist" classes the surplus incomes which form the economic stimulus of imperialism.

This does not pretend to be a final statement of the full relations of these forces. When we come to political analysis we shall perceive that the tendency of imperialism is to crush trade unionism and to "nibble" at or parasitically exploit state socialism. But, confining ourselves for the present to the narrowly economic setting, trade unionism and state socialism may be regarded as complementary forces arrayed against imperialism, in as far as, by diverting to working class or public expenditure elements of income, which would otherwise be surplus savings, they raise the general standard of home consumption and abate the pressure for foreign markets. Of course, if the increase of working-class income were wholly or chiefly "saved," not spent, or if the taxation of unearned incomes were utilized for the relief of other taxes borne by the possessing classes, no such result as we have described would follow. There is, however, no reason to anticipate this result from trade union or socialistic measures. Though no sufficient natural stimulus exists to force the well-to-do classes to spend in further luxuries the surplus incomes which they save, every workingclass family is subject to powerful stimuli of economic needs, and a reasonably governed State would regard as its prime duty the relief of the present poverty of public life by new forms of socially useful expenditure.

But we are not here concerned with what belongs to the practical issues of political and economic policy. It is the economic theory for which we claim acceptance a theory which, if accurate, dis

pels the delusion that expansion of foreign trade, and therefore of empire, is a necessity of national life.

BIBLIOGRAPHICAL NOTE

Reinsch, World Politics and Colonial Administration. Hobhouse, Democracy and Reaction. Jebb, Studies in Colonial Nationalism. Cuningham, A Scheme for Imperial Federation. Conant, The United States in the Orient Reich, Imperialism; its prices; its vocation.

CHAPTER II

THE GREAT INDIAN MUTINY

THE Contest between the British and the Indian princes for the decaying Moghul empire, which opened seriously at the battle of Plassey in 1757, continued steadily either in open war or by way of "peaceful penetration." As a result, by the middle of the nineteenth century the valleys of the Ganges and Indus rivers, the eastern and western coast lines and great regions in the heart of the peninsula had become immediate possessions of the British; the remainder of the body of the peninsula consisted of "protected States," also British for practical purposes; and only the northern regions towards China remained independent. While many of these States had been added peaceably, the great majority of them had been wrested from the natives by force. The germs of revolt were thus planted by the conquerors themselves, and in 1857 the great Mutiny broke out which marked a crisis in the history of British dominion in India and a new epoch in the government of that country.

1. Causes of the Mutiny1

The various motives assigned for the Mutiny appear inadequate to the European mind. The truth seems to be that native opinion throughout India was in a ferment, predisposing men to believe the wildest stories and to rush into action in a paroxysm of terror. Panic acts on an Oriental population like drink upon a European mob. The annexation policy of Lord Dalhousie, although dictated by the most enlightened considerations, was distasteful to the native mind. The spread of education, the appearance at the 'Hunter, A Brief History of the Indian Peoples, chap. xv. By permission of the Delegates of the Clarendon Press, Oxford.