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The World in 1913 – Part II: The Economy

What follows is based on a talk I gave at the end of August at one of Brian’s Fridays. See also Parts I, III, IV, V & VI.

Little is said about the economy – not that that was a term in common use at the time. Unemployment – known as idleness – seems non-existent but there is some inflation – referred to as an “advance in prices” or “an increase in living costs”. Seeing as the pound was tied to gold at a rate of about £4 per troy ounce this seems surprising although the enormous gold finds in South Africa may have had something to do with it. Inflation may have been the cause of the many strikes at the time and it may have been the effect. The tax take is about 10%. Today it is over 40%. Northerners are better off than Southerners.

In 1912 the Titanic, the largest moving object in the world, set sail on its maiden voyage. Most people are aware that it sank, which is notable enough. But the really amazing part is that it got out of port at all. There had been a month-long national coal strike immediately beforehand and supplies were extremely low. Strikes are extremely common. In addition to the national coal strike, recent years have seen a national rail strike, a London dock strike and a Hull dock strike. London is currently undergoing a painters and decorators’ strike and Dublin a tramworkers’ strike.

In a previous coal strike, in 1910 in South Wales, troops had been used to put down a riot. At about the same time troops were also used to put down a riot in Liverpool.

The state is starting to nationalise things. In 1911 it nationalised the National Telephone Company. I should explain that this isn’t quite as dramatic as it sounds. The state already owned the trunk lines. The National Telephone Company owned everything else and operated them under licence. In 1911 the licence simply wasn’t renewed. In London, the County Council, late in the day, built an electric tram network. It was completed just in time for motor buses to take their market away from them.

It is difficult to detect any class, race or sex prejudice in the pages of the Times.

In 1913, the world is undergoing a transportational revolution. The horse is being swept from the streets of London to be replaced by electric trams, motor buses, motor lorries and motor cars. Below the streets, the deep-level, electrified tube lines are being built while steam trains are being replaced by electric ones on the older cut and cover lines. We are seeing the beginnings of surburban electrification.

Buses, in particular, are allowing people to travel much further to work and to shop. The only downside is that a lot of people are getting killed on the road.

Talking of buses, this is still a time when entrepreneurs are able to think big. Flushed from their success in London, the London General Ominbus Company, which incidentally bought up most of the Underground in 1911, is selling shares in a planned national bus company.

30 comments to The World in 1913 – Part II: The Economy

  • […] What follows is based on a talk I gave at the end of August at one of Brian’s Fridays. See also Part II. […]

  • Jaded Voluntaryist

    I’m aware some will regard this as a shocking opinion, but I’ve come to the conclusion that one of the major events that eroded personal liberty in the UK was the final acts enfranchisement of the working classes and the formation of the Labour party. Personal liberty had remained relatively static for hundreds of years up to that point, but after all working class males were enfranchised in the 1910’s that began to change rapidly. Many of the working classes, on getting their first taste of voting, immediately voted for boiler plate socialism, Bolshevism, the politics of envy and perpetual victimhood status. Say what you will about Edwardian upper and middle classes, they don’t seem to have been quite so easily led as the working classes. I think a benign dictatorship can be better for personal liberty than a populist democracy.

    As you can perhaps tell one freedom I don’t much care about is the freedom to vote, providing all the others are arranged in such a way that the government is not allowed to bypass them.

  • AKM

    IMO it’s not just that the working class had a tendency to vote for the socialists, but that it also allowed the House of Commons to claim a mandate from “the people” and to use that to overrule the other institutions of the state. While Separate of Powers still existed in theory in the UK, in practice all the other elements of the state bowed down to the elected politicians.

  • Richard Thomas

    Capitalism is just another word for “what is” and the economy is something that best happens of its own accord. Surprisingly perhaps, it should be hardly surprising that in a free economy, there should be little cause for a high level of focus.

  • Richard Thomas

    Jaded: I’m a little less concerned about the working class but I am somewhat concerned about the vote for women. Before I get accused of sexism, let me refine that and say that it is not the vote for women per se that bothers me but rather the sudden increase in the vote of people who are not directly participating in the labour economy. (And let me again fend off more criticism by stating that this is not to discount the value of women’s work in the home nor to say that all women do or should work in the home, merely an observation of the state of affairs at the time women gained suffrage).

    Once you give non-earners power over earners, nothing good can happen. Then once the non-earners manage to start to get their sway, their actions will, as likely unintentionally as not, only serve to swell their ranks both directly and by co-opting other segments of the population. Before too long, you are in an irreversible slide. And here we are.

    WRT the working class, there are surely many who run with the politics of envy but there are also many who recognize from their own experience, the sweat needed to bring home a wage at the end of the week and look to better themselves and advance and create a better situation for their children. I am the son of such a man. If nothing else, they would be the ones fighting and dying in a war that elections are a proxy for. I think they deserve the vote. I don’t think women should be disbarred from voting but I do think it’s time to bring an end to universal suffrage. It’s time that those who receive money from the government either through benefits or employment lost their right to vote.

  • Mr Ed

    The whole purpose of politics is to reward failure and to punish success. Politicians exist to take from those who own property, income or capital, and to use it to those who wish to seize others’ wealth for their own ends. This was the express purpose of the Labour Party.

    If non-taxpayers can vote themselves (or others) incomes or benefits, then they might be so tempted. If there are, say 60,000,000 in the UK and a foreign aid budget of £12,000,000,000, with £200 per person going for this, if every persn had a tax demand for that, with state enforcement and children having parents pay, with joint liability, one wonders what a family of four might say to a bill for £800 arriving, and so on, or taxpayers being given the individual responsibility and liability for paying benefits to long-term unemployed, like an adopted penguin, but compulsory.

  • Laird

    This issue isn’t the “working class” per se or women as a group getting the vote; the problem is giving the franchise to those who have no direct interest in the economy (either as property owners or as taxpayers). Eliminate that and much of the impetus for governmental growth disappears. A related issue is the diminution of the role of the upper house of the legislature (through direct popular election of Senators in the US and the thorough emasculation of the House of Lords in the UK), which previously had provided something of a check on the popular passions of the lower house. The combination of those two factors has proven to be catastrophic.

  • Laird, as our friend Paul likes to put it, ‘I wouldn’t start from here’ – what you are suggesting is dealing with the symptom rather than the root of the problem. The correct way to go about this is to make sure there are no people without a direct stake in the economy – which would be achieved through the elimination of the direct cause of the existence of such people, namely the welfare state.

    That said, I would prevent any kind of government employees from voting.

  • Sam Duncan

    Alisa, Laird: I’m still fond of the idea, which I think I first heard voiced here, of replacing the Lords with a House of Taxpayers. The Commons would remain unchanged, but would be reined in by the people who actually have to pay for it all. (While we were at it, I’d turn the Scottish Parliament into the Scottish Commons, and require all its legislation to be passed by the Taxpayers too. A unicameral parliament is a very dangerous thing.)

    The difficulty might come in assessing – or rather, agreeing upon – who is, in fact, a net taxpayer, what with all the universal benefits, Brownian Credits and whatnot. But yes, certainly no government employees.

  • Sam, I think most of your problems would solve themselves. Reducing the tax take (as would surely happen when taxpayers have to approve things) combined with taking the vote away from government bureaucrats would allow the abolition of phony tax-credit schemes, as these merely give people’s own money back to them providing jobs for bureaucrats in the process.

  • James Hargrave

    The problem with the LCC tramways, a very efficient organisation operationally, was the use of a conduit system of current collection – massively more expensive than the ordinary overhead wiring. That wa a political decision. And it was the Underground Group that took over the General and some other bus companies (and the private tram companies), not the General taking over the tubes.

  • Richard Thomas

    Sam: I can see that working. As to how to calculate who is a net taxpayer? Why bother? If you receive any government benefit or take any kind of deduction, you’re out. No back-doors or incentives to pervert legislation.

  • James, I had to look that one up and, er, um, it turns out you’re right: the underground did indeed take over the buses. Which was remarkable given that the buses were much more financially stable than the tubes.

  • The difficulty might come in assessing – or rather, agreeing upon – who is, in fact, a net taxpayer, what with all the universal benefits, Brownian Credits and whatnot.

    Sam, that is precisely one of my objections to what Laird proposed – it is too intrusive, given to too much interpretation etc. I simply see the law of unintended consequences unavoidably kicking in, one way or another. My rule of thumb is always address the underlying problem, not its consequences – and this case, it is welfare state.

  • A cowardly citizen

    The defeat was intellectual.

    The problem is the lesson learned by English rulers after 1789: clever thinkers and ideas get lots of people killed. Therefore, ignore ideas and clever people.

    Engineering survived as a discipline because it generated short-term tangible profits. Other disciplines were abandoned to the Marxists and their appeasers. It is telling that the Times had an engineering supplement in 1913.

  • Antoine Clarke

    Patrick, I very much enjoyed your talk.

    What especially strikes me as valuable are the writings of people whose views of the First World War are known to us in hindsight.

    One important point is who was talking sense and being listened to. It would be fine to produce a copy of a pamphlet published in 1903 (before the Russo-Japanese War!) that predicted the Battle of the Somme of 1916. But unless we look at contemporary sources like The Times, we don’t really know if these writings were sitting in the Bodleian Library unread, until a later historian chanced on them and said “Aha! This proves the generals should have known better!”

  • Laird

    Alisa, while I agree with your objective of attacking the cause, not the symptom, in this case I think you have it backwards. At least in the US, the welfare state, and in large measure the massive growth of the federal government, was the result of near-universal suffrage, not its cause.

    I would have three rules of thumb on voting: (1) No one gets to vote in a jurisdiction in which he is employed (i.e., federal government employees would be barred from voting in federal elections but would still be allowed to vote in state and municipal ones; school employees could not vote for School Board but could vote in everything else; etc.) (2) No one gets a vote in any jurisdiction in which he is not a net taxpayer (i.e., if you pay no federal income taxes [net of deductions and credits] you get no vote in federal elections but might still vote in state or local ones; someone who pays no city or property taxes gets no vote in municipal elections, but if he pays any positive amount of state or federal taxes he can still vote in those elections; etc.) (3) As a corollary to #2, one gets a vote in every jurisdiction in which he is a net taxpayer (i.e., if you live in one state and work in another and pay income taxes to both, you get to vote in both; if you own properties in several municipalities you get to vote in all of them, regardless of your “primary” residence; etc.). These rules would properly align obligations while eliminating conflicts of interest.

  • Tedd

    Sam:

    The difficulty might come in assessing – or rather, agreeing upon – who is, in fact, a net taxpayer, what with all the universal benefits, Brownian Credits and whatnot.

    You might be able to use voluntary taxation to solve that problem. You’d have a bicameral system in which everyone is eligible to vote for representatives in one house but only those who choose to pay tax are eligible to vote for representatives in the other house. (I’m assuming here that putting universal suffrage back in the box is not an option.)

    Related prediction: the “commons” would create lotteries to fund programs that the “taxpayer” house won’t approve.

  • Laird, could you elaborate on the historical point?

    In any case, while welfare in the US may well have been the historical result of universal suffrage (I certainly defer to your knowledge on that), in my view it still remains a major incentive for voting among welfare recipients – and as such, it is the material (if not historical) root of the problem.

    That said, I do not really disagree with any of your following points – provided we make the ‘deductions and credits’ part totally moot. In other words, I’d be fine with your proposition under a flat tax, and a tax code that was shrunk and simplified to the barest minimum. That would greatly reduce (albeit not entirely eliminate) my concern about government intrusion and about unintended consequences.

  • Laird

    Tedd, why do you think the “taxpayer” house wouldn’t approve lotteries? I love lotteries (although I never play them myself). Voluntary taxation at its finest!

  • Laird

    Alisa, the welfare state as we know it didn’t really get started until the 1930s, long after universal suffrage was adopted. There were elements of government welfare in place long before that, of course, but those were entirely at the state level and in any event most charitable functions were carried on by churches, friendly societies and other private groups. Welfare from the federal government was the spawn of the New Deal.

    Giving all male citizens the vote was a gradual process continuing throughout the late 18th and early 19th centuries (prior to that only property owners voted). Black males got the vote (at least theoretically) in 1870, and women didn’t get the vote (at the federal level; in some states it might have been earlier) until 1920. The chronology is clear. The causality may be less so, but I firmly believe that once enough people without direct involvement in the economy were enfranchised they proceeded to vote themselves largess out of government coffers which they had done nothing to fill. That was the start of the massive welfare state.

    I would be OK with a true “flat tax”, eliminating all deductions and credits, but if it’s based on income (as opposed to a simple “head tax”) you’ll find that it’s much more difficult to define “income” than you think. (And don’t get me started on that dishonestly-named “Fair Tax”, which is so full of distortions, and so ripe for political manipulation, that in many ways it’s less “fair” than what we have now. But that’s another conversation.)

  • Tedd

    Laird:

    I didn’t mean to imply that it wouldn’t, only that the “commons” would go ahead with its own lottery scheme, for its own purposes, even if the “taxpayer” house didn’t support it.

  • but if it’s based on income (as opposed to a simple “head tax”) you’ll find that it’s much more difficult to define “income” than you think.

    Oh, I do think that it would be very difficult indeed, and very much prone to manipulation and abuse. That is in fact part of the reason why I was not comfortable with your proposition to begin with.

    At the risk of further derailing Patrick’s thread (and with due apology): that is also the reason I have lately come to favor a simple sales tax over taxes based on income or property. But I’m sure that idea will also raise no small amount of legitimate objections.

    (And yes, I am familiar with your views on “Fair Tax”, and you had me at least convinced).

  • raginnick

    That said, I would prevent any kind of government employees from voting.

    including the military?

  • raginnick: yes. But I am open to hearing objections.

  • Nick (nice-guy) Gray

    Well, I object!
    My form of minarchism involves time-share government. I propose that would-be citizens need to perform some acts of community service (like being in the militia, or the fire service, etc.) for 11 months of the year, and then being the government for one month out of 12. According to you, none of them could vote!

  • Nick, I’ll wait for raginnick’s objections (if any) – in the meantime you are invited to clean up the straw.

  • […] Al Gore, call your office    The World in 1913 – Part II: The Economy […]

  • […] is based on a talk I gave at the end of August at one of Brian’s Fridays. See also Parts I, II, III & […]

  • […] is based on a talk I gave at the end of August at one of Brian’s Fridays. See also Parts I, II, III, IV & […]