- Forging Capitalism: Rogues, Swindlers, Frauds and the Rise of Modern Finance by Ian Klaus
Yale, 287 pp, £18.99, January 2015, ISBN 978 0 300 18194 4
An MP and financier dead from poison on Hampstead Heath; the secretary of a life insurance company in his office with his brains blown out; a stockbroker with his throat cut in a railway carriage in Grosvenor Road Station; a diamond magnate jumping overboard from a passenger liner in the mid-Atlantic: lurid with suicide, Victorian capitalism got a very bad press. In 1776 Adam Smith had argued in The Wealth of Nations that free-market capitalism was a force for material and moral progress. Capitalism left to itself, he insisted, must produce the best of all possible worlds, since a capitalist pursuing self-interest makes life better for everyone. ‘The study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to society.’ He is ‘led by an invisible hand to promote an end which was no part of his intention.’ Independently of Karl Marx – little known and never influential among Victorian intellectuals – a great many critics fustigated this way of thinking. Fire and brimstone evangelists like Carlyle, agonised agnostics like Matthew Arnold, Arts and Crafts socialists like Ruskin and Morris, and vegetarian Fabians like Shaw and the Webbs accused capitalism of betraying what was best for all by bringing out the worst in each. In Victorian fiction its heroes are few, and overshadowed by its villains. Disraeli’s novels glorified Nathan and Lionel de Rothschild as the Sidonias, father and son – the one a great Jewish financier who rescues kings and princes and saves civilisation, the other a paladin who combines the wealth of Croesus, the wisdom of Solomon and the beauty of Byron. But their glamour is pallid beside the turpitude of Dickens’s Nickleby, Dombey and Merdle, or Trollope’s Melmotte. Even Disraeli reckoned that capitalism of the sort that came to Britain with William of Orange (‘Dutch finance’) was detestable: it had resulted in ‘the degradation of a fettered and burthened multitude … made debt a national habit … credit the ruling power … introduced a loose, inexact, haphazard and dishonest spirit in the conduct of both public and private life; a spirit dazzling and yet dastardly, reckless of consequences and yet shrinking from responsibility’.
Even allowing for sensationalism, dottiness and theatricality, it’s still possible to read the history of the Victorian age as the story of a society blighted by capitalism at every level, not just in those lower reaches where men, women and children were dehumanised by wage slavery in mines and mills. Virginia Woolf described a typically bourgeois sense of insecurity when she recalled the attitude of her father, Leslie Stephen, to money: ‘Not all his mathematics together with a bank balance which he insisted must be ample in the extreme, could persuade him, when it came to writing a cheque, that the whole family was not “shooting Niagara to ruin”.’ The ruling elite was fearful of the social unrest and threat of political revolution that accompanied the growth of capitalism, and racked by the headache of what Burke had described as ‘one of the finest problems in legislation … what the state ought to take upon itself to direct by the public wisdom and what it ought to leave, with as little interference as possible, to individual discretion’.
The full text of this book review is only available to subscribers of the London Review of Books.
[*] The first two volumes of Kynaston’s history of the City were reviewed in the LRB by James Buchan and Jonathan Parry respectively, in the issues of 28 April 1994 and 21 September 1995.
Vol. 38 No. 2 · 21 January 2016
In his review of Ian Klaus’s Forging Capitalism, John Pemble identifies Adam Smith as the favourite punch-bag of Victorian anti-capitalists (LRB, 7 January). But Pemble – and Klaus – perpetuate some enduring myths about Smith’s stance towards laissez-faire capitalism. He did not insist, as Pemble alleges, that ‘capitalism left to itself … must produce the best of all possible worlds.’ Smith devoted whole chapters of The Wealth of Nations to arguing for universal state-funded education and poverty relief. On workers’ rights, he posited that whenever regulation ‘is in favour of the workmen, it is always just and equitable’. He was well aware of the dangers of unfettered banking, and argued for a ban on the 18th-century equivalent of payday loans.
Vol. 38 No. 5 · 3 March 2016
John Pemble claims that after the Reform Act of 1867, ‘for the first time ever men without property were allowed to vote’ (LRB, 7 January). The 1867 Act extended the vote to all male urban householders and male lodgers paying £10 rent a year for unfurnished accommodation, and almost doubled the electorate to two million, but it was still built around property qualifications. It was the Representation of the People Act 1918, consequent on the war efforts of property-less men and many women, that really widened suffrage (from the 7.7 million entitled to vote in 1912 to 21.4 million by the end of 1918) by abolishing nearly all property qualifications for men.
Vol. 38 No. 7 · 31 March 2016
Tony Arnold addresses a serious point about the historical link between property-ownership and the right to vote (Letters, 3 March). But he makes a common factual error that has major implications for our understanding of the franchise in Britain. The error is to suppose that the term ‘householders’ in the various Representation of the People Acts refers to what today would be called ‘home-owners’. Had that been so, none of the Reform Acts would have had much effect, if only because, until the First World War, only about 10 per cent of dwellings were owner-occupied – across all classes. The householder, by contrast, was any adult man who occupied a dwelling and contributed towards the rates: a definition excluding not only his wife but also any adult sons living under the parental roof. And in the 1832 Reform Act it had been only the ‘ten-pound householder’ (meaning an annual rent at this level) who qualified. Hence the real importance of the abolition of this threshold in the 1867 Reform Act, which applied to the boroughs, and in the 1884 Reform Act, which applied to county constituencies too.
We used to think that this system grossly under-represented the working class. After all, before 1914 only about one-third of the twenty million British adults had the Parliamentary vote and only about two-thirds of adult men. Historians now see things differently, primarily because of the pioneering work of the late Duncan Tanner, whose early death is commemorated in The Art of the Possible, edited by Chris Williams and Andrew Edwards. The fact is that when the Representation of the People Act of 1918 extended the franchise, it did so not by (supposedly) abolishing property qualifications, but by enfranchising two large categories of voter. Since all men over 21 now qualified (and under 21 if they were soldiers), there were new male voters in all social classes; and, of course, there were now female voters. But had all women been given the vote, they would now have outnumbered the men. This shocking danger was averted by stipulating a different age threshold for women, who had to be thirty, and by stipulating too that (unless property-owners themselves) they had to be the wives of local government electors. And how did local government electors qualify? In effect, as householders. So the old household suffrage lived on in this ghostly fashion, now generally qualifying a married couple, and still excluding the sort of younger women who might well have been wartime Voluntary Aid Detachment or munitions workers. The true definition of the householder is not a quibble but the key to understanding how Britain became a democratic country.
Trinity Hall, Cambridge