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

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.

It 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."