TWO PER CENT.
WE cannot agree with the Times as to the cause of the great rise in the price of Console, and, there- fore, of all other first-class securities. That the purchases for the Sinking-Fund and for the savings-banks greatly affect that stock is no doubt true, as it is also true that Consols serve the purpose of a financial barometer, but we cannot believe that they are the only or even the main cause of the rise, still less that they force up all other absolutely safe stocks. If it is so, how does it happen that after the Chancellor of the Exchequer had announced his intention of reducing the interest on the larger Savings. Bank deposits, and thus of restricting purchases of Con- sols on account of the State, the price went up in one week from 110 to 114 ? It should, on the Times' theory, have fallen automatically. We believe, on the contrary, that the rise is a natural one, and that it proceeds from an enormous increase in the disposable savings of the country —marked also in the returns per penny of the present heavy Income-tax, as well as by the excessive cheapness of the loans made by the banks for short periods—and that if peace is maintained the process will go on until Mr. Goschen's prophecy made some fifteen years ago is realised, and the "regular" interest on secure investments is re- duced to 2 per cent. The reduction may go even farther until we hear of 11 per cent. being accepted, but that it will reach 2 per cent. we feel assured. There is an im- mense increase of population, there is no reduction in their opportunities of employment, their energy in money- getting has grown by leaps and bounds with the development of communications, the profits in 80010 branches of business are greater in volume than ever, though made from larger sales instead of more profitable sales, and the means of secure investment of the kind which involves neither risk nor trouble scarcely grow at all. The State does not borrow, and though the municipalities and some railways do, it is not upon any gigantic scale. We should doubt, for instance, if the whole of the borrowings of the last ten years fill up the chasm pro- duced by the reluctance to regard mortgages on agri- cultural land as a gilt-edged security, by the hesitation in the purchase of the beet foreign stocks caused by the anti- c'pation of war, and by the increased distrust of the distrustful in everything which even savours of un- certainty. A good many City editors will smile at that last expression, but they habitually leave human nature out of their calculations. They forget to notice that the wild burst of speculation which used invariably to follow a period of cheap money has this time not arrived,—a change which can only have proceeded from a growth of caution in the general public ; that is, in other words, of distrust. An increasing proportion of those who have money and who make money will not put that money into anything which is not, as they think, absolutely secure, and the consequence is a competition for everything to which that description applies. At the same time they must invest, or leave their money absolutely idle, and as they are sure, with a rising market, that in- vestment will cost them nothing in the way of loss of capital, they go on buying. It comes to this, in fact, that men who hold capital which in the aggregate is enormous are competing for an article of prime neces- sity, the supply of which has not proportionately in- creased, and, of course, the price of that article goes up. We cannot, we confess, see what is to stop the process except war, and it is not impossible that even the influence of war may be overrated by financial calculators. So enormous has been the increase in the disposable capital of Europe in the last twenty years, that it is doubtful—we say this on better authority than our own—if the creation of a thousand millions of new securities would prove more than a temporary check, whether, in fact, any cause whatever short of a long suspension of European industry would make 3 per cent. once more the minimum interest for a large sum of secure money. A war like that of 1870 would not suspend that industry, and a war that would, that is a long war of many campaigns, an indecisive war, in fact, keeping whole nations in the field for years instead of months, is hardly a subject for reasonable apprehension.
We believe that the effect of this great change, the im- portance of which is not yet realised by the public, will, on the whole, be beneficial throughout Europe. Educa- tion is every year increasing the number of men com- petent to direct industry, competition is making them terribly energetic, and a vast supply of cheap money will be to them what a good supply of water is to the owner of a water-mill. More wheels will be turned, and turned quicker, the output will be greater, and so will be the capacity for paying higher wages. Men will venture on new experiments in work, on trying new and more powerful motors, on great and but slightly productive undertakings like ship-canals, on new cultivations, and, above all, on new efforts to utilise the advantages offered by other climates and other soils. It is not only that all the mineral districts of the world will be thoroughly worked —they are hardly touched yet in Spanish America—but that agriculture will be pursued under new conditions and over new and vaster areas. We shall get nothing to eat better or cheaper than wheat, but new fibres may be made to support millions ; there are whole countries adapted to the growth of better fruits—just compare Californian oranges with the older varieties—and there are scores of products of the tropics which no European has ever yet attempted to grow. The world, for example, is being ransacked, often with horrible cruelty, for india- rubber, but there is no reason why india-rubber, for which the demand is and must remain practically limitless, should not be grown designedly over entire provinces. There is plenty to be done, and with cheap money, assured peace, and the wide diffusion of an education which, so to speak, blows working men out of their old ruts, it will be done on a scale of which as yet even the men of this generation who have lived through economic changes so far-reaching can scarcely form an idea. The world will not be injured by money at 2 per cent., with the exception of a single class over whose fate amidst the new hurly- burly we confess we are inclined to sigh. The whole pro- fessional class, including in that name all who live by intellectual labour, is going to suffer terribly. They are already pressed severely by a competition, resulting from the spread of education, to which there appears to be no limit, the time limit prevents them from indefinitely increasing their work—indeed, in practice, from increasing it. at all—and their thrift, which has always been excep- tionally marked, is becoming comparatively useless. The doctor, the lawyer, the ecclesiastic, the journalist, the soldier, the sailor, even the engineer, cannot raise his prices, cannot get more hours into his day, and cannot invest his savings except in securities which, as he piti- fully affirms, begin to yield him nothing a year. He cannot, that is, unless he is exceptionally fortunate, hope to accumulate by the labour of a life an independence sufficient to make his old age comfortable or to give his children any security in their battle with life. It is non- sense to talk to such men in this country of the fall in the price of bread and shirtings. They say, and say truly, that the rise in rent, rates, and the cost of education—because that last item now includes the daughters—eats up the whole of that advantage, while for every £10,000 of money saved they now receive £240 a year instead of £500. They see nothing for it except, as they say, to "die in harness," the effect of which is that the young do not begin to earn living incomes until they are past forty years of age. With the new health, and especially the new intellectual health, which is the mark of our age, the old stand in the way of the young at least twelve years longer than they did. The total result, therefore, even among those who succeed, is harder work, less of the amenities of life, and a vast increase in the hope-. lessness, or as we call it, the " pessimism," which at present spreads like a poison among the cultivated alone, while the lot of those who do not succeed is dis- tinctly worse, as far at all events as mental pain is con- cerned, than that of the uneducated. We suppose a remedy will be found at last, for society always so adjusts itself that brain-work is fairly paid for ; but we confess that we do not see whence it is to come. There will be no decline in the competition, for education will not recede, nor will the reflective give up seeking pro- fessional careers, and, as we have said, we see no chance except of a farther decline in the interest of money. With ten applications for every vacancy, with work for the cultivated expanding more slowly than any other kind of work, and with £5,000 yielding only £100 a year, the lot of the men now escaping from the colleges of the world will, we may be certain, be a hard one. And as they wield all the pens, and in the long-run govern all opinion, there will, we may rest assured, during the first half of the next century be enough of audible dis- content.
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