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It may have been used in the construction of railways, an assistance which England has bestowed on so many foreign states, or China may have employed it in developing purely local industry. Directly, the gain to England is solely the interest which she annually receives, but here we must draw an important distinction. If the loan has been granted by England out of savings, out of surplus wealth won above consumption, then England is not made poorer by the loan than she was before it was granted; but there is a great principle which governs this question, which produces powerful effects. The progress of other countries, their growth in civilisation, generates a sure and constant development of exchange with each other, and especially, under the existing circumstances of mankind, with England; they increasingly desire English products, and England desires theirs. Tea from China, cotton and corn from America, wool from Australia, indigo from India, become the subjects of ever-expanding demand in England, and these countries gladly take English goods-the fruit of English labour, in return for what they send. In this great matter, nothing develops a country more than railways. The railways constructed with English money, bring corn to the sea-coast of America and Russia; lands formerly shut out from the rest of the world, are made part, so to speak, of the common agricultural machinery of collective humanity. Food can now reach England through the help of these railways, and food is what England most needs, and what is most essential for the support of her labourers. The enormous expansion of English trade, its vast exports, the

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products of English labour, are due to the progress of other countries beyond all other causes, and if English loans have helped that progress by enabling its instruments to be provided, they have multiplied the international exchange of commodities, and thereby fed English industry, and rewarded English labourers. with additional wages, and English capital with augmented profits.

We thus reach the conclusion that it is the manner in which the English loan is applied in the foreign country, which determines whether the export of English wealth does or does not benefit the industry of England, and those who profit by it. A loan to a spendthrift foreign people, which has consumed its wealth and merely seeks to satisfy its creditors, whatever may be the security given for ultimate repayment, is merely a gain of interest to England, and in every other respect is as pure a waste, as if it had been hoarded in gold in the Bank of England's cellar. If, on the contrary, it has been absorbed by sending out emigrants to Australia, who produce more wool for the increase of English trade, the effect is precisely the same as if it had been laid out in Lancashire or Yorkshire.

CHAPTER VI.

WAGES.

I.

WE have now arrived at a subject which in the actual position of society throughout the civilised world is, along with free trade, the most important and at the same time, in some respects, the most difficult in all Political Economy. The prosperity of nations and the welfare of all classes of the community are most closely associated with the direction which public feeling and national legislation may take on these two paramount questions. Yet here precisely, in reference to these very matters, we are driven to re-echo the lamentation which Mr Goschen poured forth in the House of Commons. on June 29, 1877. Democratic feeling throughout the world rejects Political Economy. It is held to be hostile to the interests of the mass of the people. It is looked upon with indifference, as something unreal, as ignorant of the ways of human life. It is regarded as the idle talk of a set of doctrinaires, who know nothing of human nature, nor of its position in the actual world. People refuse to listen to what it has to say. Why busy one's self with that which has no claim to be considered? Even the House of Commons has learned to

sympathise with popular feeling. The authority of

small balance, either for him or against him, as the case may be.

Such is the banker's action. He begins with a debt to collect, and ends with a debt which he permits his borrower to incur towards him. There is no capital in all this-no property touched by the banker-no goods, no wealth; paper only, with a trifling exception of cash. Yet each transaction deals with goods, but not the banker. It is the depositor who deposits cheques received for wealth which he has sold, and the borrower who buys other goods with the purchasing power he borrowed, who handle wealth and exchange it. To say, then, that bankers have floating capital is an untrue expression; but they do possess a floating thing, and that is floating purchasing power. That is the true formula which describes what the banker deals in. That buying power floats, because it is not permanently invested it is lent to one man for a brief period, returns to the bank, and is again lent to another, The capital-that is the property which has passed from one owner to another by the help of the bank-does not float; it is as permanently used, by a single action, as any wealth bought without the intermediate agency of a bank. The manufacturer buys cotton with the floating purchasing power-speedily returnable-which he got from the bank; but the cotton he immediately consumes and converts into yarn. The cotton does not float, but the power to buy does.

The supply of the means to lend and to purchase presents many interesting features. The growth of civilisation, the multiplication of new fields of industry, the rapidly-expanding intercourse of nations with one

another, their ever-increasing confidence that a debt due by a man dwelling in a foreign country will be duly paid-these and other causes spread the process of borrowing over a vast number of localities. The industries and trades worked all over the world with capital-not money, but goods exported-borrowed from England, are incalculable. Mr Mill has laid great stress on the tendency of profits and interest to descend to a minimum, as smaller returns come in from successive applications of capital, especially to land. Theoretically the doctrine is indisputable. In the latter days of the world all land will have been brought under cultivation, and increase of yield will be extremely difficult. But the theory will have little practical value for many ages to come. The movement is distinctly now in the opposite direction. This set of the tide, this marked tendency of the last fifty years to enlarge the field of labour, to place old nations by trade and capital more in the position of new ones, to convert the development of country after country into, as it were, the acquisition of new lands for mankind, and thus to intensify the motive for saving, Mr Mill failed to perceive. He was blind to it when he spoke of land. It never occurred to him, as will be shown later, that the fields of England had been increased by millions, that America, Russia, India, the Colonies, in a word, innumerable countries, were asking for the products of English industry, were summoning England to save more capital, and invest it in new manufactures, were offering their own wealth in exchange, and that profits, wages, and interest were set upon the rise.

In no sphere is this intercommunity of nations more

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