145.‘It is probably the destiny, it is even now the function, it is certainly the interest of the European, and more particularly of the English family of mankind to guide and urge and control the industrial enterprises of all Asia, of all Africa, and of those portions of America settled by African, Asiatic, or hybrid races.’ The ‘scientific organization’ of labour to achieve maximum result at minimum of cost, ‘without strikes or quarrels’ was ‘secured, it must freely be acknowledged, by slavery’ but this had ‘moral and social consequences which are not beneficial’. ‘Economic Value of Justice to the Dark Races’, 9 December 1865; ‘The Insurrection in Jamaica’, 18 December 1865. See Bernard Semmel, The Governor Eyre Controversy, London 1962, pp. 115, 141, and Thomas C. Holt, The Problem of Freedom: Race, Labor, and Politics in Jamaica and Britain 1832–1938, Baltimore 1992, pp. 318–23.
146.‘Japan’, 24 October 1863.
147.‘Japanese Offenses and British Retaliation’, 7 November 1863. William Watson, ‘The Namamugi Incident, 1862’, History Today, May 1964, p. 325.
148.‘The Financial Effect of the Suez Canal Purchase’, 27 November 1875; ‘The Political Effect of the Suez Canal Purchase’, 27 November 1875.
149.‘The Indian Viceroyalty’, 5 December 1863. Did Bagehot once remark to Hutton, as the latter claimed, that ‘he would have been glad to find a fair excuse for giving up India, for throwing the Colonies on their own resources, and for persuading the English people to accept deliberately the place of a fourth or fifth rate European power?’ Possibly, as dinner-table paradox. But there is nothing in his published writings, or private letters, to suggest he seriously held these views. CW, Vol. XV, p 119.
150.‘The New Mexican Empire’, 22 August 1863. Buchan describes the Economist’s attitude to ‘Napoleon’s Mexican adventure’ as being so critical that ‘it is believed the British government put private pressure on Bagehot to modify its tone lest Anglo-French relations, which were then bad, became irretrievably embittered.’ This seems very unlikely, and is based perhaps on a citation of Hutton’s essay in the centenary volume. The Economist 1843–1943, p. 84.
151.CW, Vol. VII, pp. 64–72, 40. For more on race and national character in Bagehot, see Edward Beasley, The Victorian Reinvention of Race: New Racisms and the Problem of Grouping in the Human Sciences, New York 2010, pp. 78–80.
152.Sisson, Case of Walter Bagehot, p. 111.
153.For the rich, Harrison argued, political science attained ‘absolute perfection’ when it left their comfort alone, ‘whilst parading a resultless activity under the name of self-government, freedom and progress. To such a one the grand glory of Parliament is that it does nothing – and does that nothing in a highly patriotic and constitutional manner.’ ‘Our Venetian Constitution’, Fortnightly Review, March 1867, pp. 266, 270–71.
154.‘Mr. Gladstone’, National Review, July 1860, in CW, Vol. III, pp. 429, 432, 438–39.
155.‘Very rarely, if ever in history, has a man achieved so much by his words – been victor in what was thought at the time to be a class-struggle – and yet spoken so little evil.’ ‘Mr Cobden’, 8 April 1865.
156.‘Bolingbroke as a statesman’, National Review, April 1863, in CW, Vol. IV, p. 160. Bagehot’s 1863 pamphlet Count Your Enemies and Economise Your Expenditure singled out Cobden’s Three Panics of the previous year: ‘ever since we can remember he has objected to the magnitude of our armaments. He objected as much when they cost sixteen millions as now when they cost twenty-eight millions. Common sense tells us at once that there is something wrong here.’ CW, Vol. IV, p. 48.
157.‘Principles of Political Economy’, Progressive Review, 1848, in CW, Vol. XI, p. 193.
158.John Stuart Mill, ‘French Affairs’, Daily News, 6 August 1848, in Collected Works of John Stuart Mill, Vol. XV, Toronto 1986, pp. 1110–112. Mill’s Parisian correspondents included not just Tocqueville, a critic of the revolution, but Louis Blanc, one of its leaders. Alan Ryan, J. S. Mill, London 1974, p. 183.
159.John Stuart Mill, Principles of Political Economy, in CW, Toronto 1965, Vol. III, pp. 775–76.
160.‘The crimes of the parti de l’ordre are atrocious, even supposing that they are in revenge for those generally attributed to the Commune’: Mill to Frederic Harrison, [May?] 1871, in The Later Letters of John Stuart Mill 1849–1873, eds. Francis E. Mineka and Dwight N. Lindley, Toronto 1973, p. 1816.
161.‘On Representative Government’, Economist, 18 May 1861. ‘We can agree with him on everything, except in the degree.’ ‘Mr. Mill’s Address to the Electors of Westminster’, Economist, 29 April 1865.
162.‘Despotism is a legitimate mode of government in dealing with barbarians, provided the end be their improvement’: John Stuart Mill, On Liberty, London 1859, p. 23; ‘Of the Government of Dependencies by a Free State’, in On Representative Government, London 1861, pp. 313–40. For a thorough assessment of empire in Mill’s thought, see Jennifer Pitts, A Turn to Empire: The Rise of Imperial Liberalism in Britain and France, Princeton 2005, pp. 138–60.
163.J. S. Mill, England and Ireland, London 1868, p. 37. ‘Assessing Mill’s response to Fenianism involves entering an attitudinal labyrinth. He disapproved of both the ends and means of Fenianism’: Bruce L. Kinzer, England’s Disgrace: J. S. Mill and the Irish Question, Toronto 2001, pp. 169, 178, 181.
164.‘Mr. Mill on Ireland’, Economist, 22 February 1968. Three years earlier, the Economist published a series of letters from the economist John Elliott Cairnes, who proposed to encourage peasant proprietorship in Ireland with a bill to compensate tenants for improvements. Mill wrote to Cairnes in January 1866: ‘I have read several of your letters in the Economist and admire them greatly’, but as a remedy this ‘seems to fall far short of your premises’: Kinzer, England’s Disgrace, p. 182; ‘Letters’, Economist, September–November 1865.
165.Bagehot, ‘Senior’s Journals’, Fortnightly Review, August 1871, in CW, Vol. VII, p. 300.
166.See Alan S. Kahan, Aristocratic Liberalism: The Social and Political Thought of Jacob Burckhardt, John Stuart Mill, and Alexis De Tocqueville, New York 1992, pp. 4, 156.
167.Desjobert was a disciple of Jean-Baptiste Say and one of a small group of deputies to consistently oppose France’s imperial designs in Algeria. Alexis de Tocqueville, Writings on Empire and Slavery, ed. Jennifer Pitts, Baltimore 2001, pp. xxiv, 5.
168.Alexis de Tocqueville, Recollections, New York 1970, pp. 39–40.
169.Alexis de Tocqueville, Selected Letters on Politics and Society, Berkeley 1985, p. 228.
170.Alexis de Tocqueville, Democracy in America, eds. Harvey Mansfield and Delba Winthrop, Chicago 2000, p. 7. For a post–1848 shift, see Domenico Losurdo, Liberalism: A Counter-History, London 2011, p. 263.
171.‘The Crédit Mobilier and Banking Companies in France’, January 1857, CW X, pp. 356–57; ‘One Difference between France and England’, 12 September 1868; Buchan, The Spare Chancellor, p. 99; Barrington, Life of Walter Bagehot, p. 235.
3. Edward Johnstone and the Aristocracy of Finance
1.David McLellan, Karl Marx: A Biography, Basingstoke 2006, p. 224.
2.Karl Marx, The Eighteenth Brumaire of Louis Bonaparte, New York 1963, p. 103.
3.Ibid., p. 101.
4.Ibid., p. 67.
5.‘Bagehot’s Memorandum on the Economist, 1873’ in CW, Vol. XIV, p. 424. The ‘incalculable sums’ London was ready to invest abroad by the 1870s needed tracking, for ‘no incipient and no arrested civilisations ever had this facility before. What will be the effect on such civilisations now, no untutored mind can say.’ ‘Postulates of Political Economy’, in CW, XI, p. 230. Bagehot’s stress on the City’s international role here, in 1876, represents a noticeable shift from his assessment of Lombard Street in 1873 as the conduit between ‘the quiet saving districts of the country and the active employing districts.’ ‘Lombard Street’, CW, IX, p. 53.
6.Lathbury wrote for a string of publications before the Economist, including the Daily News, the Saturday Review, and tw
o connected with his friend Lord Acton, the Home and Foreign Review and the Chronicle. He remained a contributor after leaving, going on to edit the Guardian, the Church of England weekly, and eventually published the Correspondence on Church and Religion of W.E. Gladstone in 1910. ‘Lathbury, Thomas (1798–1865)’, Peter B. Nockles in ODNB, 2004; Guardian, 16 June 1922; Times, 15 June 1922.
7.Lewis Edwards, ‘A Remarkable Family: The Palgraves’, in Remember the Days: Essays on Anglo-Jewish History, ed. John M. Shaftesley, London 1966, pp. 303–22; ‘Robert Harry Inglis Palgrave, Esq.’, in Bankers’ Magazine, Vol. XLVII, January to December 1887, pp. 35–38.
8.R. H. Inglis Palgrave, ‘The Country Banker’, Quarterly Review, January 1886, pp. 148–49. After resigning his editorship, Palgrave began a decades-long quest of the kind Bagehot had begun in Economic Studies, compiling a national dictionary of political economy published in three volumes between 1894 and 1899. ‘Palgrave, Sir (Robert Harry) Inglis (1827–1919)’, A. C. Howe in ODNB, 2004.
9.The Times’s City editor, Marmaduke B. Sampson, was a director of the Rothschilds’ São Paulo Railway, and boosted Brazilian and Russian stocks, until 1874. Leland Hamilton Jenks, The Migration of British Capital to 1875, New York 1921, pp. 254–55, 399.
10.This sort of career path was common. Palgrave edited the Bankers Almanack until 1919. A. J. Wilson, his number two, started the Investor’s Review in 1891. William Newmarch, the statistician who compiled the first price index under Bagehot, in collaboration with Tooke and Jevons, continued with journalism, and went into banking. The Economist 1843–1943, pp. 20–21, 33.
11.Edwards, Pursuit of Reason, pp. 325, 328, 333, 357.
12.‘The Retiring Editor of the “Economist” ’, The Bankers’ Magazine, London 1907, Vol. LXXXIV, pp. 149–51.
13.John St Loe Strachey, The Adventure of Living: A Subjective Autobiography, London 1922, p. 180.
14.‘Mr Edward Johnstone’, 13 December 1913.
15.Ibid.; Wayne Parsons, The Power of the Financial Press, Aldershot 1989, pp. 35–39.
16.David Landes, The Unbound Prometheus, Cambridge 1969, pp. 240–43.
17.P. J. Cain and A. G. Hopkins, British Imperialism, London 1993, pp. 173–79; Michael Edelstein, Overseas Investment in the Age of High Imperialism, New York 1982, p. 3. Overseas investment rates were cyclical and volatile, reaching as low as .6 per cent in 1877 and as high as 8.5 per cent in 1913. On whether capital was pushed out by falling returns at home, pulled out by high returns abroad, reflected inadequate domestic aggregate demand, or a combination of factors, see Edelstein, ‘Foreign Investment and Accumulation 1860–1914’, in The Economic History of Britain since 1700, eds. Roderick Floud and Deirdre McCloskey, Cambridge 1994, Vol. II, pp. 181–96.
18.Some have questioned how much Britain invested abroad, and whether doing so was profitable. For a downward revision, see D. C. M. Platt, ‘British Portfolio Investment Overseas before 1870: Some Doubts’, Economic History Review, February 1980, pp. 1–16. For claims that the Empire offered returns below those available in Britain after 1885 (based on the accounting records of 482 British firms), and burdened taxpayers with military costs two and a half times higher than in Germany or France, see Lance E. Davis and Robert A. Huttenback, Mammon and the Pursuit of Empire: The Political Economy of British Imperialism, 1860–1912, Cambridge 1986. George Paish relied on the Economist and the Statist, where he worked under Giffen, to lay ‘the statistical and interpretive groundwork for all future research in this area’ from 1909 to 1914. ‘Paish, Sir George (1867–1957)’, Roger Middleton in ODNB, 2004. More recently, Feinstein rejected Platt’s ‘doubts’, in favour of the higher figures adduced by Paish, and the Economist. Charles Feinstein, ‘Britain’s Overseas Investments in 1913’, The Economic History Review, May 1990, pp. 288–95. Edelstein used a sample of 566 equity, preference, and debenture securities in the Economist’s Investors Monthly Manual to compare domestic, foreign, and colonial ‘realized rates of return’ from 1870 to 1913. He finds an average 4.6 per cent for domestic and 5.7 per cent for overseas, a 1.1 per cent differential, rising to 1.58 when ‘adjusted for risk’. Edelstein, Overseas Investment, pp. 16, 126, 140.
19.P. J. Cain, ‘Economics and Empire: The Metropolitan Context’, in The Oxford History of the British Empire, ed. Andrew Porter, Vol. III, Oxford 1999, pp. 47–50; ibid., Hobson and Imperialism, Oxford 2002, pp. 243–47. Pollard puts the number of British investors in 1914 at 300,000. But this includes small-time participants. Probate registers reveal that about half of stock exchange securities held at death were part of fortunes over £50,000, and weighted to foreign assets. Sidney Pollard, ‘Capital Exports, 1870–1914: Harmful or Beneficial?’, The Economic History Review, November 1985, pp. 498–99. O’Brien judges the Empire ‘neither sufficient nor necessary to the growth of the economy’, but concedes, ‘benefits accrued disproportionately’ to white settlers in the dominions and colonies, and ‘to those at the top end of the income and social scales in British society’. Up to 1906 the latter, defined as those making over £1,000 a year, paid less than 8 per cent of their incomes to the state, accounting for just 11 per cent of total tax revenue, while receiving 40–45 per cent of national income. Benefits included military, diplomatic, and civil service posts, and subsidies to investment that mitigated risks from default. Patrick K. O’Brien, ‘The Costs and Benefits of British Imperialism 1846–1914’, Past and Present, August 1988, pp. 180, 194–95, 200.
20.‘The Extent of our Colonial Investments’, 16 February 1884.
21.‘Why There is Stagnation in the Stock Exchange’, 24 November 1883.
22.‘The Imperial Ottoman Bank’, 30 June 1883.
23.Hobsbawm, Industry and Empire, p. 126.
24.‘The Deficits of Brazil’, 31 May 1884; ‘The Position of Uruguay’, 17 October 1885.
25.‘The Future of Mexico’, 20 January 1883.
26.‘Priority Claims on Peruvian Bat Guano’, 13 October 1883.
27.‘The Trade and Finance of the Argentine Republic’, 5 May 1883.
28.Philip Ziegler, The Sixth Great Power: Barings 1762–1929, London 1988, p. 237. Argentina’s share of total investment was more than double Brazil’s by 1890: £157 million to £69 million, with Mexico at £60 million, and Uruguay, Cuba and Chile some distance behind. Hobsbawm, Industry and Empire, p. 126. Roca’s ‘Conquest of the Desert’ brutally established Argentine control over Patagonia, killing and forcibly uprooting indigenous peoples to make way for European-descended settler agriculture.
29.For a sense that inflationary pressures might lead to a stock market crash, though not a sovereign debt crisis, see ‘Argentine Borrowings’, 24 November 1888; ‘The State of Affairs in Argentina’, 30 November 1889; ‘The State of Affairs in Buenos Aires’, 21 December 1889. The Economist seems to have hired its own correspondent only in 1890. He tamped down talk of financial revival with warnings about political chaos – ‘“Those fools in London,” is now a common expression on the Bolsa’ – and stalled debt renegotiation. ‘Argentine Affairs’, 21 November 1891.
30.The guarantee fund was equal to 1.2 per cent of 1890 GDP. John D. Turner, Banking in Crisis: The Rise and Fall of British Banking Stability, 1800 to the Present, Cambridge 2014, pp. 154–57. In just four years, between 1886 and 1890, Barings raised almost £18 million for Argentina. The Barings Crisis that followed may have been minor compared to Overend, Gurney, & Co. in the City, as the Economist noted, but its external impact was wide-ranging, including a 10 per cent plunge in Argentina’s GDP in 1890–1891. ‘Liquidation of the Barings’, 22 November 1890; Ziegler, Sixth Great Power, pp. 237–42; H. S. Ferns, ‘Investment and Trade Between Britain and Argentina in the Nineteenth Century’, Economic History Review, May 1950, pp. 203–18.
31.‘Under almost irresistible pressure his [Johnstone’s] assistance was secured in straightening out affairs after the Argentine crisis’: ‘Retiring Editor’, The Bankers’ Magazine, p. 150.
32.Cain and Hopkins, British Imperialism, pp. 248–5
0; Edelstein, Overseas Investment, pp. 250–51.
33.‘Intense ignorance of the real facts about mines and mining’ from the ‘Cabinet downwards’ was ‘fostered by the press’, and kept shareholders ‘in the dark as to the hundreds of wildcat ventures … incomparably more dishonest’ even than in the Transvaal. ‘The Gold Mines of West Australia’, 16 July 1898; ‘Mr Scott Lings and the Economist’, 11 November 1899.
34.Bagehot, Economic Studies, CW, Vol. XI, p. 279.
35.‘Our Investments in South America’, 8 December 1883.
36.For direct forms of investment, see Mira Wilkins, ‘The Free-Standing Company, 1870–1914: An Important Type of British Foreign Direct Investment’, Economic History Review, May 1988, pp. 259–82.
37.Disraeli, by ‘a little overshooting the mark’, risked decreasing ‘the liking of the masses for the throne’. ‘The New Title of the Queen’, 18 March 1876.
38.The Economist interpreted the agreements that issued from Berlin in very broad terms for British power. Ottoman foreign policy would henceforward be ‘directed from London, not Constantinople’, with England also becoming the ‘rising sun’ and ‘ultimate source of honour and prosperity’ internally, since ‘Orientals are never slow to discover where the true centre of power lies’. ‘What the Convention with Turkey Means’, 13 July 1878. Occupation of Cyprus was necessary but insufficient, a sign ‘we persist in the insane fiction of treating the rulers of Turkey as equals’. ‘Turkey and the Convention’, 24 August 1878.
39.‘Earl Grey on the Afghan Difficulty’, 12 October 1878. The amir had ‘publicly and ostentatiously concluded a preferential alliance with Russia’, and was ‘a menace to British India.’ It replied to Sir John Lawrence, viceroy of India from 1864 to 1869, who objected to the Second Afghan War on legal grounds, that the pertinence of ‘international jurisprudence’ to Oriental states was ‘extremely doubtful’. ‘We are only surprised that no one has proposed to call in the Czar as arbitrator.’ ‘The Afghan Difficulty’, 26 October 1878.
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