The Age of Elegance (54 page)

financial policy. The indispensable means in a free society to set the wheels of the new machines turning was buying power in the pockets of those who needed their products. If, through a restriction of currency, this was lacking, the increased wealth which mechanical science offered could not be brought into existence. Those who had been drawn by the demands of war into the service of the machines and had become dependent on them, were left workless and, having no alternative means of employment, deprived of the power of buying bread. This in turn halted an expanding agricultural economy and left farmers unable to sell their produce at a time when the industrial population was starving.

In their noble belief in the validity of human freedom and the inevitability of all things operating for the best, Adam Smith and the early economists had failed to foresee this. Nor had they reckoned on the disturbing passions, destruction and dislocation of a generation of global war financed by State borrowing. They supposed that, through the operation of a just and divinely-inspired law of supply and demand, profits, prices and wages must invariably find their true level; that it was only necessary to remove artificial restrictions on freedom of trade and contract to ensure a beneficial and progressive equilibrium. If under free conditions wages for any reason fell, prices must automatically fall too, and employers, enabled thereby to sell a correspondingly greater quantity of goods, would be able and anxious—seeing it was their interest to increase production—to pay out, not less, but more in wages. If a labour-saving machine threw men out of work, it would soon, by reducing the price of the goods they and others needed, recall them to the same or other work through the greater demand it created. But it was now found on trial that men who were thrown out of work by new machinery, or whose wages were reduced below a certain level, could buy nothing at all and starved or grew demoralised before the operation of the laws of supply and demand had time to restore things to their proper balance. So did their children.

These laws did not, therefore, appear to be so providential as Adam Smith had supposed. They were merely inevitable. Even though machinery offered man a swifter means of satisfying his needs, their operation involved impoverishment, hunger and degradation. The less sanguine successors of Adam Smith explained this by Malthus's melancholy theory of population and by a new law which that kindly and ingenious clergyman expounded to the world for the first time in 1814 and 1815. By an inescapable dispensation of arithmetic, he explained, there existed at any given moment a fixed sum or fund out of which wages—and taxes—could alone be paid. It was useless for workmen to agitate for, or for employers to wish to pay, more, since the only result of their succeeding must be to diminish the amount available for wages elsewhere. This thesis, explaining and vindicating the terrible economic phenomena of postwar Britain, was expanded by Ricardo, who, in a work published in 1817 that became the capitalist's Bible, concluded, by a process of unanswerable deduction from false premises, that wages invariably depended on a ratio between population and capital. Any rise in wages, by automatically stimulating an increase in population, must not only defeat its own end but lead to a general decline of the wage-level.

What manufacturers who accepted this theory overlooked was that on this seemingly insufficient wa
ge-fund depended, not only the li
velihood of the starving weaver and sweated mill-hand, but the purchasing-power which could alone keep their own factories in full operation. It was its inadequacy to feed, house and clothe workers who were also buyers that damped down their furnaces, stopped their revolving wheels, emptied their order-books, and threatened them with periodic bankruptcy and the nation with social misery and unrest. Out of this rigid wage-fund had to come, too, the capital needed to install new machinery or the interest on it, which, while increasing
future productive potential, di
minished still further the existing purchasing-power that could alone, in the wage-earners' hands, afford an effective and continuous demand for maximum current production. It was because the workers did not receive a proper share of the wealth they helped to create that such wealth did not increase to the extent the means for creating it admitted. By using their ever-growing bargaining-power to keep the wages of their employees below the maximum level production justified, manufacturers, without realising what they were doing, put a brake on production.

The Government was responsible in that it took no steps to restrain such greed and enforce a reasonable standard of social justice. However understandably, it failed to perceive that, with the novel means afforded by machinery for increasing real wealth, the
credit of the State might be used simultaneously to reduce taxation and enlarge consuming-power to a point that would equalise it with the power to produce. With agricultural and industrial production lagging behind both capacity and demand, an expansive financial policy might have changed the whole course of the nineteenth century. By using direct taxation to check inflation in boom periods and judiciously expanding the currency to facilitate reduction of taxation in a depression, a far-seeing Government might have raised the workers' standards of living step by step with the rising wealth of the capitalists. Britain might then have emerged from the Industrial Revolution one nation instead of two.

But both the economic experience and administrative machinery for doing anything so revolutionary were wholly lacking. The nation's only resort in the
impasse
in which it so unexpectedly found itself was usury. Like a private subject in straitened circumstances, it resorted to the pawnbroker and the banker. The era of the Regency, under all its glittering brilliance, was the age
par excellence
of the moneylender; almost everyone was borrowing or lending. "This declining age," Mary Mitford called it, "when too many worthy members of the community seem to have an alacrity in sinking." Across rich, victorious England stalked a shadow: that of the seedy individual pinched for "the needful," whom Charles Lamb called "the deep insolvent." It was no accident that to this deflationary era —that of the young Dickens's martyrdom in the blacking factory— belongs the genesis of Micawber. The shadows behind countless humble English homes were the dun, the tipstaff and the debtors' prison. They menaced the great too; Rawdon Crawley's fate was not uncommon. Any man might be "blown up at Point Non-Plus"; John Doe, Richard Roe and the "leary Bum-trap" were waiting at the end of many an avenue of promise. Even Lord By
ron, who inherited an estate worth £
140,000 and married an heiress, had an execution in his house. There were bailiffs discreetly disguised as footmen in ducal, spendthrift Blenheim; the Horsemonger Lane gaoler remarked to Leigh Hunt of the royal brothers: "They knows me very well, mister, and, mister, I knows them!"
¹

¹
Leigh Hunt,
Autobiography,
II,
2.
See
idem, 26;
Keats, IV,
21;
Leslie,
Constable,
97-8;
Lamb, VI,
578;
Lockhart, IV,
218, 236;
Mitford,
Our Village,
71;
Life in London,
274-8;
Real Life in London,
I,
328, 373.

It was the age of the great bankers—the Barings, Hopes, Coutts, Hoares and higher Smiths,
¹
negotiating loan after loan and mortgaging and buying up everything around them, prototypes of that "morose and rigid millionaire" who Charles Greville believed would never rest till he had stripped him of his property. It was the age, above all, of the Jews who, pouring into England from Italy, Spain, Holland and Germany, found themselves with the wealth of a confused and warring world running—not without some of it remaining—through their skilful, sensitive fingers:

"But let us not to own the truth refuse,

Was ever Christian land so rich in Jews? . . .

All states, all things, all Sovereigns they control

And waft a loan from Indus to the pole."
²

Money was their medium—the invisible river that flowed beneath the Emperor's palace and the weaver's hut. Wherever there was trade, luxury and power and men stood in need of "the ready," they were to be found with their whispered accommodations and the shekels under their gabardines or genteel modern equivalents. The persecution which had been their age-long lot but which in England they passed out of—the ghetto garb, the locked gates at night, the jeering Gentile children, the Bashaw's dungeon, the hunter's shouts of "Hepp!" "Hepp!", the brutal Slav or Teuton mob
³
—had made them quick, apprehensive, cunning, ruthless, and brothers to one another all the world over. It was remarkable how swiftly in this tolerant land of opportunity the Jewish trader, chaffering old clothes or tramping the roads selling trinkets—"cringing, chattering and showing his teeth," like the poor pedlar in
Lavengro
—was transformed through his genius for adaption and the handling of money into the man of property, the banker and country gentleman. The greatest phenomenon of the age after Napoleon were the

¹
"Tom Smith lives here Who is made a peer And takes the pen from behind his ear." Lines pinned on Lord Carrington's door. Holland,
Journal,
I,
335.
See
idem,
44;
Clapham, I,
266;
Cobbett,
Rural Rides,
I,
83, 85, 235;
Farington, II,
110-11;
VIII,
113;
Greville, I,
24;
Simond, I,
85, 235;
II,
173.

3
"When we got nearly through the town, we saw a surly-looking German driving a poor Jew forward with foul language and making frequent use of a stick he had in his hand. The countenance of the Jew expressed neither anger nor surprise nor agitation; he spoke with meekness and, unresisting, pursued his way. . . . The soldiers who are stationed at the draw-bridge looked very surly at him, and the countenance of the bystanders expressed cold, unfeeling cruelty."—Dorothy Wordsworth. De Selincourt, I,
93-4.

Rothschild brothers. Meyer Amschel Rothschild, who started his career in "the filthy Judengasse" of Frankfurt,
¹
trading old coins and making himself useful to the rich Elector of Hesse in his money-lending transactions, set up his five sons, born in the seventeen-seventies, in the commercial capitals of war-divided Europe. Lacking the graces of the aristocratic societies they
served, and contending against constant hum
iliations, these astonishing brothers possessed courage, energy, resource and a profound knowledge of human nature. Never missing any opportunity of profit or of what they valued more than profit—a new connection—they made themselves indispensable to those with wealth and power, discounting bills, collecting interest, making advances, acting as intermediaries between court and court, and spiriting bullion through the blockade and armies. Their greatest service, and their own chief source of profit, was the transmission from capital to capital, and from currency to currency, of the loans and subsidies with which Britain armed her allies. Ingratiating themselves with everyone, for they could afford neither friends nor foes, they used their family network, transcending frontiers, as an unofficial international clearing-house. With governments tumbling about their ears and armies crashing through their gossamer webs of usury, they never failed to fulfil, exactly and punctually, every obligation. In a time of universal impecuniosity the House of Rothschild, whose trading profits when the war began were only a few hundreds a year, raised themselves to a position of dominating credit in almost every capital of Europe.

The English representative of the family, Nathan, started business at Manchester in his early twenties with a few thousand pounds and without a word of English. In just over twelve years he built up a vast fortune by the skill with which he used the balances sent him for investment in England by his father's European clients, by conveying bullion through the heart of France to Wellington's armies, and by transmitting to the Continent the subsidies which armed the Grand Alliance.
²
Acting as agent for the paymaster of Europe, he

¹
Meidinger,
cit.
Clapham, I,
37.
See Brownlow,
5;
Castlereagh, DC,
156;
Clapham, I,
37;
Corti,
passim; English Spy,
II,
123-5, 220;
Espriella,
II,
149, 181-3;
Farington, II,
109;
Gronow, I,
132, 136;
II,
264-5;
Lavengro,
8;
Lockhart, IV,
342;
Romany Rye,
422-3;
Roth,
237-41;
Smith, I,
209-10.
Forty years later Charles Greville saw the old mother of the Rothschilds, then the richest men in Europe, emerging from the wretched tenement in the Judengasse, which nothing would induce her to leave, leaning on the arm of her granddaughter, the Baroness Charles Rothschild, whose smart
caldche,
attended by liveried footmen, was waiting at the end of the street. Greville (Suppl.), I,
205-6.