If advances to the amount named were taken out on good security, there is no reason why a second loan of the same amount should not be applied in the same way.

Farmers cannot obtain Capital for themselves.

The first and second propositions need no further enforcement, nor is it necessary to spend many words in showing that those occupiers who now most want capital are not likely to obtain it through any of the facilities existing in the money market.

The ordinary economical notion of capital is of something flowing by an irresistible impulse into every nook and corner in which more than the ordinary rate of profit can be obtained. Capital, it is said, has wings, and flies with ease over all fetters and obstructions to that precise spot in which it will obtain the best return. Hence, the assertion that a particular employment, towards which new capital is not actually moving, might be turned to great account, is always received by the political economist either with suspicion, or, as commonly happens, with unqualified denial. However fair appearances may be, there is deception somewhere. He is sure that such a thing cannot exist, and therefore that it does not. This maxim, like so many others, is true within certain limits, but very far from true beyond those limits. It is true in commerce, and the observations on which the maxim was founded had reference mainly to what takes place in commerce. The nature of most commercial operations is, to bring in quick tion. I had then sufficient faith in the reigning economical system, to believe that any meddling of the Government with the disposition of capital must be a folly. Having come, however, to the clearest conviction that the dogma of the economists respecting capital is false, I cannot adhere to any argument which was built upon it. I may add that, from the address of the Chancellor of the Exchequer which has just appeared, there is every reason to believe that he feels unable to persevere with his project of supplying capital to the farmers. He presents to the electors of Bucks nothing but the old chopped straw of changes in taxation, from which they will cer tainly derive no nutriment.

returns; and where, as in the foreign trade, the returns are not speedy, it yet happens that, the several operations being continuous, and going on in different stages at the same time, there is something like a continuous influx of returns; so that the merchant or trader has his capital at command in a way unknown to him whose returns come in only once in a year, and at one particular season. Hence, a merchant or trader can make use of much capital borrowed on short loans, and has great facility in enlarging or diminishing the amount of such borrowed capital. Capital of this kind, it has been seen, is that which is distributed by bankers, and the nicety and rapidity with which they can apportion their supplies to the wants of different branches of trade have, no doubt, contributed much to the notion of capital invariably rushing to every profitable investment.

It is further to be observed, that in commerce the return brings back the whole outlay; but in any industrial operation which involves the creation of fixed capital, the return, even when successful, is only an annual profit, out of which, by the time that the fixed capital is worn out, the original outlay may be expected to be replaced. But for any purpose of this kind the capital lent by bankers is not available. When capital is wanted on loan, for the purpose of being sunk, as the phrase is, or as a long investment, it is far less easily obtained. There must be lawyers, and bonds, and formalities, which, combined with a pretty high rate of interest, render the whole operation slow and unadvisable in the greater number of enterprises, except in those cases in which a wealthy body, like a railway company, takes up a large sum at once upon bonds, which are almost as negociable in the market as those of the Government.

Prosperous Trades create their own New Capital.

It is, however, a fact, that new investments do annually take place by sinking capital, in various branches of industry.

Manufacturers put up new machinery, merchants and traders erect new warehouses or new shop-fronts, the latter often very expensive, ship-owners (in spite of free trade) build new ships, and omnibus proprietors start new carriages, and in every such case new capital is sunk. This is a point of great practical importance. Now, as a general rule, it will be found that new capital sunk in any particular business has been saved from income made in that business. Hence most of the new investments are those of persons investing their own capital. A prosperous trader or manufacturer cannot invest his surplus capital to so much advantage in any other way as in his own business. It thus happens that prosperous branches of industry do, for the most part, themselves generate the capital by which they are extended.

From this will be seen the peculiar difficulty which now obstructs the application of new capital to agriculture. During the last war, the immense returns which were obtained enabled the farmers to go on, year after year, investing their own savings in the land. This was the secret of the rapid extension which then took place. The employment generated new capital for itself, as manufactures are doing at this moment in Lancashire; and the men and the money being together, without cumbrous and costly formalities, new enterprise was easy. But no one can suppose that agriculture has of late years generated new capital. The most prosperous farmers could not have been able to do much more than hold their ground, and for the great majority, their actual capital must have been diminished since 1846, unless we are to suppose that their industry in previous years was as profitable as coining. Farmers, then, have no new capital of their own to apply in those various modes of improved cultivation which, according to the most competent judges, would be certainly remunerative. To tell them that the money market is open to them, is to mock them. The means of helping them are indeed there, but if those means are to wait until the farmers are able to satisfy the capitalists as to security, rate of interest, and mode of

repayment, they will wait for ever. Such capital, as has been already said, may get to the land in the hands of new men, but only by a process which will tear up and cast adrift a much larger number of the old occupiers to wander through the world with broken fortunes and broken hearts.

Use of Government Intervention.

The farmers, then, will not obtain the aid of the capital now disposable without artificial intervention; but by the aid of the Government the thing could be done. The power of the Government to borrow at a lower rate of interest than any other borrower is undoubted. Equally obvious is the facility which it would have, operating upon a large scale, in taking repayment of capital and interest by equal annual instalments; and, at the same time, in paying the original capitalists by a different and more acceptable method. Capitalists may object to take for the repayment of their loans, an annuity for a series of years. A farmer who borrows money to invest in drainage, manures, or machines, cannot fairly expect to be able to pay except by this method of equal annual instalments. The principal does not come back to him, as it does to a merchant, in a lump, and he can only repay it out of the returns which he receives; but the intervention of the Government, with the aid of an actuary and a few clerks, would remove the whole of this difficulty.

Objections.

Two objections may be taken to Government loans for agriculture, and I cannot imagine any others. It may be said

1. That the offer of the money would not be accepted by the farmers.

2. That the money would be taken and would not be

repaid.

As to the first, it is soon disposed of. If the proffered loans

were not accepted, there would be no harm done. The Government need not go into the money market until it was assured that its going there would be of some use.

Agricultural Loans would be repaid.

But the loans most assuredly would be accepted to a very large extent, and would create more energy and rejoicing throughout the rural districts, especially of western and southern England, than any other measure. The one question worth discussion is, whether they would or would not be repaid? If they would certainly be repaid, I can scarcely conceive even the most prejudiced adherent of the principle of leaving industry to itself still maintaining, in the present circumstances of England, that such loans would be a mischief. Increased supplies of food grown at home, increased demand for all domestic products, and the reinvigoration of a branch of industry economically the most important of all, and affording at the present time a most valuable counterpoise to the dangerous spirit of speculation-these results would accompany the repayment of the loans, and justify them against all cavils. But would the loans be repaid? Why should they not? There has not been a murmur of suspicion respecting the repayments under the Drainage Acts. Those come in regularly; and even from Ireland, where the repayment of the funds spent during the famine in soup distributions and on stone-breaking has been objected to, there has not been a syllable of objection, nor, so far as I know, the least backwardness about repaying the instalments of what was advanced to private persons for the improvement of the land. But what security could the farmers give? Without long leases, none that would be satisfactory. It would, however, be no unimportant object to create a new motive for the granting of leases. But, leases or no leases, why should not the security be good if the landlord joins in it? And why should he not join in it? With an offer of capital at three and a half or three and a quarter per cent., upon a