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. 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

cheap and simple bond, and upon the most convenient terms of repayment, what landlord, who had the least confidence in his tenantry, would hesitate to place within their reach, in the only way in which the thing can be done, those means of improved cultivation, from which he himself must ultimately reap so much benefit? He might, of course, make his own terms with the tenant; and the latter might be very well able to satisfy his landlord, who knows him, as to security, when he could not satisfy the Government, and still less a moneylender. The offer of the funds by the Government, on the condition of good security, would clear away a host of difficulties. A very energetic landlord might, indeed, at somewhat greater cost, do what is here proposed without the intervention of the Government; but for one who would go thus far out of his way, a hundred would be willing to enter into the terms, if the capital were brought home to their own doors.

As to the use that might be made of capital thus placed at the disposal of farmers, there is no need to repeat what has been said by so many high authorities. That an immense

amount of new capital might be employed in agriculture was the opinion of Sir Robert Peel, and has been strongly expressed both by Sir James Graham and the present Prime Minister. We have the two things, both the capital and the field of employment, but they stand apart, and, whatever political economy may assume, the chasm between them is not one that private interest will bridge over. No; the capital, if left to itself, will go to bruise quartz rock in California, or possibly to construct railways in the Celestial Empire, rather than to drain cold clays on the banks of the Thames, or to quicken the languor of the vale of Taunton. Thus, then, stands the case; one surely having a fair claim to be judged upon its own merits, and not to be prejudged by reference to a maxim which rests upon no scientific basis whatever, and which has been again and again overborne in practical legislation by the common sense of the community.

CHAPTER V.

LOANS FOR COLONIZATION AND EMIGRATION.

"It is to the emigration of English capital that we have chiefly to look for keeping up a supply of cheap food and cheap materials of clothing proportional to the increase of our population; thus enabling an increasing capital to find employment in the country, without reduction in profit, in producing manufactured articles with which to pay for this supply of raw produce. Thus the exportation of capital is an agent of great efficacy in extending the field of employment for that which remains; and it may be said truly that, up to a certain point, the more capital we send away, the more we shall possess and be able to retain at home."

Principle of Loans applies to other Cases.

J. S. MILL.

Ir will no doubt be thought that the proposal of a ten-million loan to the farmers is startling enough in itself, without the accompaniment of loans for any other purpose, and that if the former is to have any chance of being listened to, it would be better to let it stand alone. But I have no right to shrink, and I do not shrink, from the consequences of the position here maintained. The main ground on which the propriety of agricultural loans is justified, does warrant a wider application of the same principle. It may from time to time be a most important duty of Government not to enforce, but to encourage and facilitate a better application of capital than that to which private interest, if left wholly to itself, would lead. Mr. Mill, after laying down the old doctrine respecting the increase of capital in which an over production of commodities is treated, as if it were identical with an excess of money capital, says, "The point is fundamental; any difference of opinion on it involves radically different conceptions of political economy, especially in its practical aspect."

I perfectly agree in this, and accept the consequences. Having, therefore, the clearest conviction that Mr. Mill's doctrine, when applied to money-capital, by which the changes in all other capital are regulated, is erroneous-believing no fact to be more certain than the tendency of money-capital to accumulate in excess, until it is temporarily destroyed,-I draw the general practical conclusion, that it may become a legitimate function of the Government, when circumstances present a strong case for interference, to favour the direction of that capital to channels into which unaided private interest would not cause it to flow.

Misdirection of Capital in 1845.

The supposed infallibility of private interest in finding out the best application of new capital, is a conclusion which, within a comparatively recent period, received most conspicuous contradiction. The shopkeeper is no doubt the best judge as to whether it is prudent to lay in another hundred pounds' worth of goods; and the merchant, however liable to err, knows, at least better than any minister of State, how far it is prudent to order sugar from the Brazils, or send cottons to Calcutta; but it is quite untrue that the non-trading classes, who are the chief accumulators of disposable capital, are good judges; or, indeed, that they are not the very worst judges of the safety of the investments by which they are so often tempted. For such persons, who want an income without trouble, there is no safe investment, except government securities, or the bonds and debentures (not shares) of great joint-stock companies. What can they know of the merits of a mining scheme in America or Australia, or of a railway project, whether foreign or domestic? For answer, it is enough to refer to the year 1845. What could be more wild and extravagant than the miscalculations of that year? What more frantic than the waste, the sheer waste of capital which then took place the waste upon surveys which came to nothing and upon bills which were abandoned, or passed and not acted

upon the waste by transfer to landlords who often mistook such windfalls for the first-fruits of a harvest which was to last for ever, and dissipated them accordingly-the waste by double prices paid for all kinds of materials and services, and which were taken out by nearly the whole class of navigators in intoxicating drinks, or the mere whims and fancies of animal indulgence? Thousands of families are still pinched by the losses of that year, but the loss of capital was the least of the disorders then produced. There was an incredible amount of mis-direction given to the education of the young, from which results more lasting evil. Numbers of young men were during the railway excitement placed suddenly in the possession of high salaries, which produced absurdly false expectations in themselves and in their connections. They contracted habits of expense, of which they soon experienced the bitter fruits. Meanwhile, youths destined for commerce and other professions were hastily converted into engineers; and many of those young men, able and highly educated, are now working, and glad to get work, in various engineering establishments at the wages of mechanics.

It is no extravagant proposition to say, that an intelligent Government, free from speculative passions, might have given a safer direction to that last great outflow of capital, than that which was given by the blind and ignorant impulses under which it actually took place. It does, therefore, seem to me a practical conclusion, abundantly sustained by all that is known of the working of our monetary system, that not only in the particular case of agriculture, but in others likely to present themselves from time to time, it may become advisable for the Government to promote the movement of spare capital into channels into which, of its own accord, it would either not flow at all, or only to a very slight extent.

I will proceed to state two cases in which the Government might borrow capital, and lend it out on unexceptionable security, with immense advantage to all classes. The first is for

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