An essay in universal history from an Orthodox Christian Point ofView part the age of revolution

37. RICH AND POOR: THE ROTHSCHILD CENTURY

Economic liberalism is based on egoism in theory and practice. Thus in 1776 Adam Smith wrote: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love… [The individual] is in this as in any other cases, led by an invisible hand to promote an end which was no part of his intention… I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need to be employed in dissuading them from it.”³⁶

It is a paradoxical theory, to say the least: that the public interest is best served by everyone pursuing his self-interest as freely as possible! But it found confirmation in the work of a Jewish London banker called David Ricardo in the 1820s. “It was Ricardian economic theory,” writes Norman Cantor, “that became and remains the theoretical foundation of that market capitalism in which so many nineteenth-century Jews [most famously, the Rothschilds] made their fortune and general fame, or at least found the means for a satisfying private family life. Ricardo was the Moses of Jewish capitalism, who brought down the tables of truth to show to the chosen people and the admiring Gentiles as well.
“The main point of Ricardian economics is identical with that of Reform Judaism’s Haskalah-Kantian theology. Just as God in the latter is a creator whose majesty is humanly unapproachable, so the market is a universal, rationalizing structure that cannot be modified by human will or sentiment, such as by paying wages beyond the minimum with which the market can operate, or by state interference with the business cycle or capital accumulation. Leave God and the market alone and attend to your personal, family, and communal lives and business interests…”³⁷
There is indeed nothing mystical about the Jews’ acquisition of enormous wealth. In the present as in the past – for example, in the Hungarian Jew George Soros’ vastly successful gamble on Britain leaving the European Exchange Rate Mechanism in 1990, or in the Jewish bank Goldman Sachs’ ability to profit even from the drastic culling of the American banks in 2007 – we see the same prosaic formula for success, consisting of the following in order of importance: (i) The exceptionally close solidarity of the members of the tribe to each other on the basis of their common Jewish faith or – which comes to the same thing – Jewish nationality; (ii) their vast capital base, which enables them to ride out storms and disasters that would sink less well capitalized organizations; and (iii) their vast intelligence network combined with great speed and security of communication, which enables them always to be “ahead of the game” in what may be called “institutionalized insider dealing.”
All three elements were important in the rise of the most famous Jewish family of the nineteenth century, the Rothschilds…
Niall Ferguson writes: “’Master of unbounded wealth, he boasts that he is the arbiter of peace and war, and that the credit of nations depends upon his nod; his correspondents are innumerable; his couriers outrun those of sovereign princes, and absolute sovereigns; ministers of state are in his pay. Paramount in the cabinets of continental Europe, he aspires to the domination of our own.’
“Those words were spoken in 1828 by the Radical MP Thomas Dunscombe. The man he was referring to was Nathan Myer Rothschild, founder of the London branch of what was, for most of the nineteenth century, the biggest bank in the world. It was the bond market that made the Rothschild family rich – rich enough to build forty-one stately homes all over Europe…
“… His brothers called Nathan ‘the general in chief’. ‘All you ever write,’ complained Salomon wearily in 1815, ‘is pay this, pay that, send this, send that.’ It was this phenomenal drive, allied to innate financial genius, that propelled Nathan from the obscurity of the Frankfurt Judengasse to mastery of the London bond market. Once again, however, the opportunity for financial innovations was provided by war.
“On the morning of 18 June 1815, 67,000 British, Dutch and German troops under the Duke of Wellington’s command looked out across the fields of Waterloo, nor far from Brussels, towards an almost equal number of French troops commanded by the French Emperor, Napoleon Bonaparte. The Battle of Waterloo was the culmination of more than two decades of intermittent conflict between Britain and France. But it was more than a battle between two armies. It was also a contest between rival financial systems: one, the French, which under Napoleon had come to be based on plunder (the taxation of the conquered); the other, the British, based on debt.
“Never had so many bonds been issued to finance a military conflict. Between 1793 and 1815 the British national debt increased by a factor of three, to £745 million, more than double the annual output of the UK economy. But this increase in the supply of bonds had weighed heavily on the London market. Since February 1792, the price of a typical £100 3 per cent consol had fallen from £96 to below £60 on the eve of Waterloo, at one time (in 1797) sinking below £50…
“According to a long-standing legend, the Rothschild family owed the first millions of their fortune to Nathan’s successful speculation about the effect of the outcome of the battle on the price of British bonds. In some versions of the story, Nathan witnessed the battle himself, risked a Channel storm to reach London ahead of the official news of Wellington’s victory and, by buying bonds ahead of a huge surge in prices, pocketed between £20 and £135 million. It was a legend the Nazis later did their best to embroider. In 1940 Joseph Goebbels approved the release of Die Rothschilds, which depicts an oleaginous Nathan bribing a French general to ensure the Duke of Wellington’s victory, and then deliberately misreporting the outcome in London in order to precipitate panic selling of British bonds, which he then snaps up at bargain-basement prices. Yet the reality was altogether different. Far from making money from Wellington’s victory, the Rothschilds were very nearly ruined by it. Their fortune was made not because of Waterloo, but despite it.
“After a series of miscued interventions, British troops had been fighting against Napoleon on the Continent since August 1808, when the future Duke of Wellington, then Lieutenant-General Sir Arthur Wellesley, led an expeditionary force to Portugal, invaded by the French the previous year. For the better part of the next six years, there would be a recurrent need to get men and materiel to the Iberian Peninsula. Selling bonds to the public had certainly raised plenty of cash for the British government, but banknotes were of little use on distant battlefields. To provision the troops and pay Britain’s allies against France, Wellington needed a currency that was universally acceptable. The challenge was to transform the money raised on the bond market into gold coins, and to get them to where they were needed. Sending gold guineas from London to Lisbon was expensive and hazardous in time of war. But when the Portuguese merchants declined to accept the bills of exchange that Wellington proferred, there seemed little alternative but to ship cash.
“The son of a moderately successful Frankfurt antique dealer and bill broker, Nathan Rothschild had arrived in England only in 1799 and had spent most of the next ten years in the newly industrializing North of England, purchasing textiles and shipping them back to Germany. He did not go into the banking business in London until 1811. Why, then, did the British government turn to him in its hour of financial need? The answer is that Nathan had acquired valuable experience as a smuggler of gold to the Continent, in breach of the blockade that Napoleon had imposed on trade between England and Europe. (Admittedly, it was a breach the French authorities tended to wink at, in the simplistic mercantilist belief that outflows of gold from England must tend to weaken the British war effort.) In January 184, the Chancellor of the Exchequer authorized the Commissary-in-Chief, John Charles Merries, to ‘employ that gentleman [Nathan] in most secret and confidential manner to collect in Germany, coins, not exceeding in value £600,000, which he may be able to procure within two months from the present time.’ These were then to be delivered to British vessels at the Dutch port of Helvoetsluys and sent on to Wellington, who had by now crossed the Pyrenees into France. It was an immense operation, which depended on the brothers’ ability to manage large-scale bullion transfers. They executed their commission so well that Wellington was soon writing to express his gratitude for the ‘ample… supplies of money’. As Harries put it: ‘Rothschild of this place has executed the various services entrusted to him in this line admirably well, and though a Jew [sic], we place a good deal of confidence in him.’ By May 1814 Nathan had advanced nearly £1.2 to the government, double the amount envisaged in his original instructions.
“Mobilizing such vast amounts of gold even at the tail end of a war was risky, no doubt. Yet from the Rothschilds’ point of view, the hefty commissions they were able to charge more than justified the risks. What made them so well suited to the task was that the brothers had a ready-made banking network within the family – Nathan in London, Amschel in Frankfurt, James (the youngest) in Paris, Carl in Amsterdam and Salomon roving wherever Nathan saw fit. Spread throughout Europe, the five Rothschilds were uniquely positioned to exploit price and exchange rate differences between markets, the process known as arbitrage. If the price of gold was higher in, say, Paris than in London, James in Paris would sell gold for bills of exchange, then send these to London, where Nathan would use them to buy a larger quantity of gold. The fact that their own transactions on Herries’s behalf were big enough to affect such price differentials only added to the profitability of the business. In addition, the Rothschilds also handled some of the large subsidies paid to Britain’s continental allies. By June 1814, Herries calculated that they had effected payments of this sort to a value of 12.6 million francs. ‘Mr. Rothschild’, remarked the Prime Minister, Lord Liverpool, had become ‘a very useful friend’. As he told the Foreign Secretary, Lord Castlereagh, ‘I do not know what we should have done without him…’ By now his brothers had taken to calling Nathan the master of the Stock Exchange.
“After his abdication in April 1814, Napoleon had been exiled to the small Italian island of Elba, which he proceeded to rule as an empire in miniature. It was too small to hold him. On 1 March 1815, to the consternation of the monarchs and ministers gathered to restore the old European order at the Congress of Vienna, he returned to France, determined to revive his Empire. Veterans of the grande armée rallied to his standard. Nathan Rothschild responded to this ‘unpleasant news’ by immediately resuming gold purchases, buying up all the bullion and coins he and his brothers could lay their hands on, and making it available to Herries for shipment to Wellington. In all, the Rothschilds provided gold coins worth more than £2 million – enough to fill 884 boxes and fifty-five casks. At the same time, Nathan offered to take care of a fresh round of subsidies to Britain’s continental allies, bringing the total of his transactions with Herries in 1815 to just under £9.8 million. With commissions on all this business ranging from 2 to 6 per cent, Napoleon’s return promised to make the Rothschilds rich men. Yet there was a risk that Nathan had underestimated. In furiously buying up such a huge quantity of gold, he had assumed that, as with all Napoleon’s wars, this would be a long one. It was a near fatal miscalculation.
“Wellington famously called the Battle of Waterloo ‘the nearest run thing you ever saw in your life’. After a day of brutal charges, countercharges and heroic defense, the belated arrival of the Prussian army finally proved decisive. For Wellington, it was a glorious victory. Not so for the Rothschilds. No doubt it was gratifying for Nathan Rothschild to receive the news of Napoleon’s defeat first, thanks to the speed of his couriers, nearly forty-eight hours before Major Henry Percy delivered Wellington’s official dispatch to the Cabinet. No matter how early it reached him, however, the news was anything but good from Nathan’s point of view. He had expected nothing as decisive so soon. Now he and his brothers were sitting on top of a pile of cash that nobody needed – to pay for a war that was over. With the coming of peace, the great armies that had fought Napoleon could be disbanded, the coalition of allies dissolved. That meant no more soldiers’ wages and no more subsidies to Britain’s wartime allies. The price of gold, which had soared during the war, would be bound to fall. Nathan was faced not with the immense profits of legend but with heavy and growing losses.
“But there was one possible way out: the Rothschilds could use their gold to make a massive and hugely risky bet on the bond market. On 20 July 1815 the evening edition of the London Courier reported that Nathan had made ‘great purchases of stock’, meaning British government bonds. Nathan’s gamble was that the British victory at Waterloo, and the prospect of a reduction in government borrowing, would send the price of British bonds soaring upwards. Nathan bought more and, as the price of consols duly began to rise, he kept on buying. Despite his brothers’ desperate entreaties to realize profits, Nathan held his nerve for another year. Eventually, in late 1817, with bond prices up more than 40 per cent, he sold. Allowing for the effects on the purchasing power of sterling of inflation and economic growth, his profits were worth around £600 million today. It was one of the most audacious trades in financial history, one which snatched financial victory from the jaws of Napoleon’s military defeat. The resemblance between victor and vanquished was not lost on contemporaries. In the words of one of the partners at Barings, the Rothschilds’ great rivals, ‘I must candidly confess that I have not the nerve for his operations. They are generally well planned, with great cleverness and adroitness in execution – but he is in money and funds what Bonaparte was in war.’ To the Austrian Chancellor Prince Metternich’s secretary, the Rothschilds were simply die Finanzbonaparten. Others went still further, though not without a hint of irony. ‘Money is the god of our time,’ declared the German [Jewish] poet Heinrich Heine in March 1841, ‘and Rothschild is his prophet.’
“To an extent that even today remains astonishing, the Rothschilds went on to dominate international finance in the half century after Waterloo. So extraordinary did this achievement seem to contemporaries that they often sought to explain it in mystical terms…
“The more prosaic reality was that the Rothschilds were able to build on their successes during the final phase of the Napoleonic Wars to establish themselves as the dominant players in an increasingly international London bond market. They did this by establishing a capital base and an information network that were soon far superior to those of their nearest rivals, the Barings. Between 1815 and 1859, it has been estimated that the London house issued fourteen different sovereign bonds with a face value of nearly £43 million, more than half the total issued by all banks in London. Although British government bonds were the principal security they marketed to investors, they also sold French, Prussian, Russian, Austrian, Neapolitan and Brazilian bonds. In addition, they all but monopolized bond issuance by the Belgian government after 1830. Typically, the Rothschilds would buy a tranche of new bonds outright from a government, charging a commission for distributing these to their network of brokers and investors throughout Europe, and remitting funds to the government only when all the instalments had been received from buyers. There would usually be a generous spread between the price the Rothschilds paid the sovereign borrower and the price they asked of investors (with room for an additional price ‘run up’ after the initial public offering). Of course, as we have seen, there had been large-scale international lending before, notably in Genoa, Antwerp and Amsterdam. But a distinguishing feature of the London bond market after 1815 was the Rothschilds’ insistence that most new borrowers issue bonds denominated in sterling, rather than their own currency, and make interest payments in London or one of the other markets where the Rothschilds had branches. A new standard was set by their 1818 initial public offering of Prussian 5 per cent bonds, which – after protracted and often fraught negotiations – were issued not only in London, but also in Frankfurt, Berlin, Hamburg and Amsterdam. In his book On the Traffic in State Bonds (1825), the German legal expert Johann Heinrich Bender singled out this as one of the Rothschilds’ most important financial innovations: ‘Any owner of government bonds… can collect the interest at his convenience in several different places without any effort.’ Bond issuance was by no means the only business the Rothschilds did, to be sure: they were also bond traders, currency arbitrageurs, bullion dealers and private bankers, as well as investors in insurance, mines and railways. Yet the bond market remained their core competence. Unlike their lesser competitors, the Rothschilds took pride in dealing only in what would now be called investment grade securities. No bond they issued in the 1820s was to default by 1829, despite a Latin American debt crisis in the middle of the decade (the first of many).
“With success came ever greater wealth. When Nathan died in 1836, his personal fortune was equivalent to 0.62 per cent of British national income. Between 1818 and 1852, the combined capital of the five Rothschild ‘houses’ (Frankfurt, London, Naples, Paris and Vienna) rose from £1.8 million to £9.8 million. As early as 1825 their combined capital was nine times greater than that of Baring Brothers and the Banque de France. By 1899, at £41 million, it exceeded the capital of the five biggest German join-stock banks put together. Increasingly, the firm became a multinational asset manager for the wealth of the managers’ extended family. As their numbers grew from generation to generation, familial unity was maintained by a combination of periodically revised contracts between the five houses and a high level of intermarriage between cousins or between uncles and nieces. Of twenty-one marriages involving descendants of Nathan’s father Mayer Amschel Rothschild that were solemnized between 1824 and 1877, no fewer than fifteen were between his direct descendants. In addition, the family’s collective fidelity to the Jewish faith, at a time when some other Jewish families were slipping into apostasy or mixed marriage, strengthened their sense of common identity and purpose as ‘the Caucasian [Jewish] royal family’.”³⁸
While Ricardian theory and Rothschildian practice enabled a few to get rich quick – mainly those with initial capital and entrepreneurial skills, - for the great majority of Englishmen the nineteenth century meant the horror and squalor of William Blake’s “satanic mills”. If “freedom” in liberal theory means “freedom from”, it certainly did not mean freedom from poverty, disease or death for the workers crowded together in filthy slums in Manchester.
In view of this, it is hardly surprising that not only the poor, but also many of the better-off who pitied them, came to see look upon these liberal “freedoms” with jaundiced eyes… Later, of course, largely under the pressure of humanitarian ideas and the labour movement, capitalism did begin to restrain itself, thereby disproving Marx’s prophecy of its imminent collapse. But the rise of collectivism was not checked by these concessions, but was rather strengthened, as we see throughout Europe as the nineteenth century progressed.
Free trade, the main principle of economic liberalism, was a very important concept, first in England, and then in other countries that followed the English way. “True,” writes J.M. Roberts, “it is almost impossible to find economic theorists and publicists of the early industrial period who advocated absolute non-interference with the economy. Yet there was a broad, sustaining current which favoured the view that much good would result if the market economy was left to operate without the help or hindrance of politicians and civil servants. One force working this way was the teaching often summed up in a phrase made famous by a group of Frenchmen: laissez-faire. Broadly speaking, economists after Adam Smith had said with growing consensus that the production of wealth would be accelerated, and therefore the general well-being would increase, if the use of economic resources followed the ‘natural’ demands of the market. Another reinforcing trend was individualism, embodied in both the assumption that individuals knew their own business best and the increasing organization of society around the rights and interests of the individual.
“These were the sources of the long-enduring association between industrialism and liberalism; they were deplored by conservatives who regretted a hierarchical, agricultural order of mutual obligations and duties, settled ideas, and religious values. Yet liberals who welcomed the new age were by no means taking their stand on a simply negative and selfish base. The creed of ‘Manchester’, as it was called because of the symbolic importance of that city in English industrial and commercial development, was for its leaders much more than a matter of mere self-enrichment. A great political battle which for years preoccupied Englishmen in the early nineteenth century made this clear. Its focus was a campaign for the repeal of what were called the ‘Corn Laws’, a tariff system originally imposed to provide protection for the British farmer from imports of cheaper foreign grain. The ‘repealers’, whose ideological and political leader was a none-too-successful businessman, Richard Cobden, argued that much was at stake. To begin with, retention of the duties on grain demonstrated the grip upon the legislative machinery of the agricultural interest, the traditional ruling class, who ought not to be allowed a monopoly of power. Opposed to it were the dynamic forces of the future which sought to liberate the national economy from such distortions in the interest of particular groups. Back came the reply of the anti-repealers: the manufacturers were themselves a particular interest who only wanted cheap food imports in order to be able to pay lower wages; if they wanted to help the poor, what about some regulation of the conditions under which they employed women and children in factories? There, the inhumanity of the production process showed a callous disregard for the obligations of privilege which would never have been tolerated in rural England. To this, the repealers responded that cheap food would mean cheaper goods for export. And in this, for someone like Cobden, much more than profit was involved. A worldwide expansion of Free Trade untrammelled by the interference of mercantilist governments would lead to international progress both material and spiritual, he thought; trade brought peoples together, exchanged and multiplied the blessings of civilization and increased the power in each country of its progressive forces. On one occasion he committed himself to the view that Free Trade was the expression of the Divine Will (though even this did not go as far as the British consul at Canton who had proclaimed that ‘Jesus Christ is Free Trade, and Free Trade is Jesus Christ’)…
“Only in England was the issue fought out so explicitly and to so clear-cut a conclusion. In other countries, paradoxically, the protectionists soon turned out to have the best of it. Only in the middle of the century, a period of expansion and prosperity, especially for the British economy, did Free Trade ideals get much support outside the United Kingdom, whose prosperity was regarded by believers as evidence of the correctness of their views and even mollified their opponents; Free Trade became a British political dogma, untouchable until well into the twentieth century. The prestige of British economic leadership helped to give it a brief popularity elsewhere, too. The prosperity of the era in fact owed as much to other influences as to this ideological triumph, but the belief added to the optimism of economic liberals. Their creed was the culmination of the progressive view of Man’s potential as an individual, whose roots lay in Enlightenment ideas.”³⁹
The difference between the old patriarchal attitude towards social and economic relations and the new liberal attitude is seen in the contrast between Lord Ashley and Richard Cobden: “Lord Ashley, the Christian Tory philanthropist who did so much to campaign for the improvement of working conditions for the poor, hated the competitive atmosphere of factories. Visiting his ancestral seat, St. Giles in the county of Dorset, he noted in his diary on 29 June 1841, ‘What a picture contrasted with a factory district, a people known and cared for, a people born and trained on the estate, exhibiting towards its hereditary possessors both deference and sympathy, affectionate respect and a species of allegiance demanding protection and repaying it in duty.’ To the Northern factory-owners such patronizing attitudes led only to stultification. There was no movement, no struggle, in Ashley’s view of society. Cobden, the Corn Law reformer par excellence, hated Ashley’s attempts to set limits to an employer’s powers – the length of hours he could make factory hands work, or the limiting of the age of his employees. ‘Mine is that masculine species of charity which would lead me to inculcate in the minds of the labouring classes the love of independence, the privilege of self respect, the disdain of being patronised or petted, the desire to accumulate and the ambition to rise.’”⁴⁰
In fact, Cobden had still wider, international aims in campaigning for the repeal of the Corn Laws. “It was expected not merely to destroy the domestic bases of British militarism by crushing landlord power, but also to link states commercially through what we would today call ‘interdependence’, thus making war all but impossible. Free trade, Cobden predicted, would inaugurate ‘the greatest revolution that ever happened in the world’s history’, destroy ‘the antagonism of race, and creed and language’, and make ‘large and mighty empires… gigantic armies and great navies’ redundant.”⁴¹
Cobden’s “masculine species of charity” was imitated by other industrial employers and landlords, who felt much less bound by custom and morality to protect their employees than had the feudal landlords of previous ages. Trevelyan writes: “Throughout the ‘forties nothing was done to control the slum landlords and jerrybuilders, who, according to the prevalent laissez-faire philosophy, were engaged from motives of self-interest in forwarding the general happiness. These pioneers of ‘progress’ saved space by crowding families into single rooms or thrusting them underground into cellars, and saved money by the use of cheap and insufficient building materials, and by providing no drains – or, worse still, by providing drains that oozed into the water supply. In London, Lord Shaftesbury discovered a room with a family in each of its four corners, and a room with a cesspool immediately below its boarded floor. We may even regard it as fortunate that cholera ensued, first in the years of the Reform Bill and then in 1848, because the sensational character of this novel visitation scared society into the tardy beginnings of sanitary self-defence.”⁴²
What legislation there was in this period of “unrestrained capitalism” (Popper) only exacerbated the plight of the poor. This was especially true of the Poor Law Act of 1834, which prescribed the building of workhouses designed to be as unattractive as possible. Thus the Reverend H.H. Milman wrote to Edwin Chadwick: “The workhouses should be a place of hardship, of coarse fare, of degradation and humility; it should be administered with strictness – with severity; it should be as repulsive as is consistent with humanity.”⁴³
The Poor Law, as John Gray writes, “set the level of subsistence lower than the lowest wage set by the market. It stigmatised the recipient by attaching the harshest and most demeaning conditions to relief. It weakened the institution of the family. It established a laissez-faire regime in which individuals were solely responsible for their own welfare, rather than sharing that responsibility with their communities.
“Eric Hobsbawm captures the background, character and effects of the welfare reforms of the 1830s when he writes: ‘The traditional view, which still survived in a distorted way in all classes of rural society and in the internal relations of working-class groups, was that a man had a right to earn a living, and, if unable to do so, a right to be kept alive by the community. The view of middle-class liberal economists was that men should take such jobs as the market offered, wherever and at whatever rate it offered, and the rational man would, by individual or voluntary collective saving and insurance make provision for accident, illness and old age. The residuum of paupers could not, admittedly, be left actually to starve, but they ought not to be given more than the absolute minimum – provided it was less than the lowest wages offered in the market, and in the most discouraging conditions. The Poor Law was not so much intended to help the unfortunate as to stigmatize the self-confessed failures of society… There have been few more inhuman statutes than the Poor Law Act of 1834, which made all relief ‘less eligible’ than the lowest wage outside, confined it to the jail-like work-house, forcibly separating husbands, wives and children in order to punish the poor for their destitution.’
“This system applied to at least 10 per cent of the English population in the mid-Victorian period. It remained in force until the outbreak of the First World War.
“The central thrust of the Poor Law reforms was to transfer responsibility for protection against insecurity and misfortune from communities to individuals and to compel people to accept work at whatever rate the market set. The same principle has informed many of the welfare reforms that have underpinned the re-engineering of the free market in the late twentieth century…
“No less important than Poor Law reform in the mid-nineteenth century was legislation designed to remove obstacles to the determination of wages by the market. David Ricardo stated the orthodox view of the classical economists when he wrote, ‘Wages should be left to fair and free competition of the market, and should never be controlled by the interference of the legislature.’
“It was by appeal to such canonical statements of laissez-faire that the Statute of Apprentices (enacted after the Black Death in the fourteenth century) was repealed and all other controls on wages ended in the period leading up to the 1830s. Even the Factory Acts of 1833, 1844 and 1847 avoided any head-on collision with laissez-faire orthodoxies. ‘The principle that there should be no interference in the freedom of contract between master and man was honoured to the extent that no direct legislative interference was made in the relationship between employers and adult males… it was still possible to argue for a further half-century, though with diminishing plausibility, that the principle of non-interference remained inviolate.’
“The removal of agricultural protection and the establishment of free trade, the reform of the poor laws with the aim of constraining the poor to take work, and the removal of any remaining controls on wages were the three decisive steps in the construction of the free market in mid-nineteenth century Britain. These key measures created out of the market economy of the 1830s the unregulated free market of mid-Victorian times that is the model for all subsequent neo-liberal policies.”⁴⁴
The industrial bourgeoisie who formed the core of the new “middle class” were, as Eric Hobsbawm writes, “self-made men, or at least men of modest origins who owed little to birth, family or formal higher education. (Like Mr. Bounderly in Dickens’ Hard Times, they were not reluctant to advertise the fact.) They were rich and getting richer by the year. They were above all imbued with the ferocious and dynamic self-confidence of those whose own careers prove to them that divine providence, science and history have combined to present the earth to them on a platter.
”’Political economy’, translated into a few simple dogmatic propositions by self-made journalist-publishers who hymned the virtues of capitalism… gave them intellectual certainty. Protestant dissent of the hard Independent, Utilitarian, Baptist and Quaker rather than the emotional Methodist type gave them spiritual certainty and a contempt for useless aristocrats. Neither fear, anger, nor even pity moved the employer who told his workers:
“’The God of Nature has established a just and equitable law which man has no right to disturb; when he ventures to do so it is always certain that he, sooner or later, meets with corresponding punishment… Thus when masters audaciously combine that by an union of power they may more effectually oppress their servants; by such an act, they insult the majesty of Heaven, and bring down the curse of God upon themselves, while on the other hand, when servants unite to extort from their employers that share of the profit which of right belongs to the master, they equally violate the laws of equity.’
“There was an order in the universe, but it was no longer the order of the past. There was only one God, whose name was steam and spoke in the voice of Malthus, McCulloch, and anyone who employed machinery…
“A pietistic Protestantism, rigid, self-righteous, unintellectual, obsessed with puritan morality to the point where hypocrisy was its automatic companion, dominated this desolate epoch. ‘Virtue’, as G.M. Young said, ‘advanced on a broad invincible front’; and it trod the unvirtuous, the weak, the sinful (i.e. those who neither made money nor controlled their emotional or financial expenditures) into the mud where they so plainly belonged, deserving at best only of their betters’ charity. There was some capitalist economic sense in this. Small entrepreneurs had to plough back much of their profits into the business if they were to become big entrepreneurs. The masses of new proletarians had to be broken into the industrial rhythm of labour by the most draconian labour discipline, or left to rot if they would not accept it. And yet even today the heart contracts at the sight of the landscape constructed by that generation.
“‘You saw nothing in Coketown but what was severely useful. If the members of a religious persuasion built a chapel there – as the members of eighteen religious persuasions had done – they made it a pious warehouse of red brick, with sometimes (but this only in highly ornamented examples) a bell in a bird-cage on the top of it… All the public inscriptions in the town were pained alike, in severe characters of black and white. The jail might have been the infirmary, the town-hall might have been either, or both, or anything else, for anything that appeared to the contrary in the graces of their construction. Fact, fact, fact, everywhere in the material aspect of the town; fact, fact, fact, everywhere in the immaterial… Everything was fact between the lying-in hospital and the cemetery, and what you couldn’t state in figures, or show to be purchaseable in the cheapest market and saleable in the dearest, was not and never should be, world without end, Amen.’
“This gaunt devotion to bourgeois utilitarianism, which the evangelicals and puritans shared with the agnostic eighteenth-century ‘philosophic radicals’ who put it into logical words for them, produced its own functional beauty in railway lines, bridges and warehouses, and its romantic horror in the smoke-drenched endless grey-black or reddish files of small houses overlooked by the fortresses of the mills. Outside it the new bourgeoisie lived (if it had accumulated enough money to move), dispensing command, moral education and assistance to missionary endeavour among the black heathen abroad. Its men personified the money which proved their right to rule the world; its women, deprived by their husbands’ money even of the satisfaction of actually doing household work, personified the virtue of their class: stupid (‘be good, sweet maid, and let who will be clever’), uneducated, impractical, theoretically unisexual, propertyless and protected. They were the only luxury which the age of thrift and self-help allowed itself.
“The British manufacturing bourgeoisie was the most extreme example of its class, but all over the continent there were smaller groups of the same kind: Catholic in the textile districts of the French North or Catalonia, Calvinist in Alsace, Lutheran pietist in the Rhineland, Jewish all over central and eastern Europe. They were rarely quite as hard as in Britain, for they were rarely quite as divorced from the older traditions of urban life and paternalism. Leon Faucher was painfully struck, in spite of his doctrinaire liberalism, by the sight of Manchester in the 1840s, as which continental observer was not? But they shared with the English the confidence which came from steady enrichment…”⁴⁵
Even the Anglican Church, which hardly penetrated into the new industrial slums, seemed to be on the side of the exploiters. “A typical representative of this kind of Christianity was the High Church priest J. Townsend, author of A Dissertation on the Poor Laws, by a Wellwisher of Mankind, an extremely crude apologist for exploitation whom Marx exposed. ‘Hunger,’ Townsend begins his eulogy, ‘is not only a peaceable, silent, unremitted pressure but, as the most natural motive of industry and labour, it calls forth the most powerful exertions.’ In Townsend’s ‘Christian’ world order, everything depends (as Marx observes) upon making hunger permanent among the working class; and Townsend believes that this is indeed the divine purpose of the principle of the growth of population; for he goes on: ‘It seems to be a law of nature that the poor should be to a certain degree improvident, so that there may always be some to fulfil the most servile, the most sordid, the most ignoble offices in the community. The stock of human happiness is thereby much increased, whilst the more delicate… are left at liberty without interruption to pursue those callings which are suited to their various dispositions.’ And the ‘delicate priestly sycophant’, as Marx called him for this remark, adds that the Poor Law, by helping the hungry, ‘tends to destroy the harmony and beauty, the symmetry and order, of that system which God and nature have established in the world.’”⁴⁶
With the official Church effectively on the side of the exploiters, it was left to “Christian socialists”, individual preachers and philanthropists, and, above all, novelists to elicit the milk of human kindness from the hard breasts of the rich. The realistic novel in the hands of great writers such as Dickens and Balzac acquired an importance it had not had in earlier ages, teaching morality without moralising. Thus Mrs. Elisabeth Gaskell’s North and South not only brought home to readers in the rural south the sufferings of the industrial north: it also showed how the philosophy of Free Trade tended to drive out even the Christian practice of almsgiving. For the novel describes how the industrialist Thornton, though not a cruel man at heart, is against helping the starving families of his striking workers on the grounds that helping them would help prolong the strike, which, if successful, would force him out of business, which would mean unemployment and starvation for those same workers. But in the end he is led by the woman he loves to see how a thriving business and kindness to the workers can be combined…