CHAPTER X. SOLUTION OF THE PROBLEM. "Wealth has accumulated itself into masses; and poverty also in accumulation enough lies separated from it; opposed, uncommunicating, like positive and negative poles."-CARLYLE, 1831. Conclusions respecting Capital. Ir may aid the reader to state briefly the results which appear to be established by the reasoning in the previous chapters. 1. It goes to prove that there is in England a uniform tendency to excess in the growth of money capital disposable for new employment. 2. That the accumulations thus arising have hitherto invariably led to speculative excitement and enterprises, which afforded temporary relief to the plethora of capital, but which were necessarily attended by great individual losses and much disturbance of commerce, credit, and employment, and the spread of that demoralization which gambling produces. 3. That such periods are soon followed by a replacement of the lost capital through new saving, and the great gains of some profiting by the losses of others, accompanied by a renewed and aggravated tendency to the same state of things as before. 4. That without the gold discoveries, the last railway outlay and the crisis of 1847 would of themselves have produced, and that, in fact, there has now again arisen, precisely that condition of capital and industry which has been so often experienced that condition, namely, of abundant monetary facilities, in which the heralds and precursors of another delusive and ruinous excitement are multiplying on every side. 5. That the effect of the new gold presenting itself here in the form of money capital disposable for loans, and constituting an addition to that which without it would be in excess, must violently aggravate all the causes leading to speculation which it finds in existence. To the above the remark may be added, that a powerful, though painful, corrective to speculation, heretofore arising from demands for gold from abroad, is not likely to come into play in the present position of foreign countries, and especially of France and the United States, where the hoards of the precious metals are as much higher than their usual average as our own accumulations in the Bank of England. Theory of Depreciation. Connected with the foregoing, and forming what may be called the Theory of Depreciation, the following conclusions are also regarded as established: 1. That the new gold, so far as it can enter the English currency, must do so chiefly through an action on prices and incomes, arising immediately from increased prices being paid for English commodities, or from an increased sale of them, or from both, in markets out of England. 2. That whatever be the addition thus made to the aggregate of money income in England, only a small fractional proportion of that amount of new gold will be drawn into the currency. 3. That the amount of gold brought here to be spent as income is too small to be of any account. 4. That all gold brought otherwise, namely, by owners, to be invested or employed for profit, or as it will chiefly come in payment, direct or indirect, for exported goods, will, excepting the profit, be new money capital in its primary form, and will enter into competition with existing disposable capital for all kinds of investments. 5. That such capital can only affect prices by first increasing the aggregate of income, already pressed upon beyond its power of profitably receiving or returning new capital, and that the efforts of the new capital to find employment are thus likely to produce repeated speculative movements of a convulsive and disastrous character. Finally, the survey of our position has led to the conclusion that the only effectual preservative against such evils is to be found in the diffusion amongst the community at large of a higher tone of moral feeling, and a more correct perception both of the nature of the danger and of the mode of its approach. In the second part of this work, the attempt will be made to show that, though legislation cannot avert, it may diminish, the evils of speculation, and that the foregoing conclusions warrant the adoption of a financial policy, which, though perfectly consistent with free trade in the food of the people, is not consistent with the exaggerated maxim of leaving the whole direction of industry to private interest, and is different from any that is at present popular. |