THE POLITICAL ECONOMY OF DEMOCRACIES.
TBEdoctrine that the exercise of political right developes political capacities, that men who are allowed to blunder along their own way will at length learn to walk upright in the paths of political wisdom, is the mainstay of faith in de- mocracy. Every popular government in the world blunders, and the more popular the government, the more conspicuous are the blunders, but we bear with them because we take them as the indispensable discipline of the school of experience. But sometimes faith and patience are sorely tried by the perversity of democratic communities. True, the infant will never learn to walk if he be always dandled in the nurse's arms, but what are we to say if the infant grows up to childhood, boyhood, and youth still stumbling every day and all day long into the same open ditches, and missing the same plain cross-roads ? Should we not conjecture some rooted defect of vision or some weakness of intelligence So with democracies in which the proletariat rules ; we are perplexed and disheartened by their unteachable- ness about common and simple questions of policy. No ex- perience, no practical education in public functions, no general diffusion of information seems to be able to raise thoroughly democratic countries above the level of a few elementary delusions that have been over and over again exploded. The fundamental doctrines of political economy are mastered easily enough by the dullest bourgeoisie, but the working-classes have apparently an invincible incapacity for taking them in. Yet the workmen in most countries are quite the equals of the lower ranks of the bourgeoisie,—the small shopkeepers, the small farmers, and so forth,—in intellectual powers, and even in intellectual culture. Moreover, the subject-matter of the doctrines which they reject is familiar to them ; they have not to soar into the regions of high policy, but simply to understand the nature and use of the money they handle daily, the incidence of the taxes they pay upon the things they consume, and upon the business they carry on. If practical instruction is to be gained by the constant handling of such questions, an American or a Colonial democracy which has dealt with them both in the concrete and in the abstract for a whole generation ought to have attained to a high degree of sagacity. But though these communities have had the regulation of their own currency and finances, and the levying of their own taxation entirely in their own hands for a long period of years, though they have blundered and partly repaired their blundering, though their mistakes have been repeatedly pointed out to them by their newspapers and their politicians, they plunge, whenever they get a chance, into the old absurdities, are caught by the old fallacies, and seem never to have advanced to the point at which it becomes impossible to dispute the fact that two and two make four.
The persistence with which Democracies in America and Australia cling to Protectionist principles long after not only economic theory, but practical disasters, have refuted the notion that producers can be enriched by a system of artifici- ally high prices or by bounties on production, without taking
the money out of somebody's pocket, is a very remarkable phenomenon. But it is perhaps more remarkable that the Protectionists, while smarting from such refutations, the cogency of which they cannot contend against, stop short in their admissions by a feat of logical agility that merits admiration. Thus in the United States they confess, as the readers of the last volume of "The Cobden Club Papers" will remember, that the Protectionist tariff was mainly respon- sible for the commercial disasters of 1873-4, but they stop short of the inference that Free-trade is a good thing because Protection has been shown to be a bad thing. At the present moment, however, it is not the tariff question that excites the greatest amount of interest in the United States. The cur- rency question engages all the attention that men can spare from their private business, which is making a little recovery, or from the high-flavoured, personal controversies whether this or that " statesman " has robbed the public treasury or not. The avidity with which the Western States of the Union have fastened upon the nostrums of quacks who pretend that they can cure all the ills of the body politic—stagnation of trade, low prices, bad harvests, inundations, and all their con- sequences—by a profuse issue of inconvertible paper-money, and the abolition of that part of the National Debt which is chiefly held by foreigners, substituting for the Five-twenties a new sort of bonds, bearing 3.65 per cent, interest, payable both as to interest and principal in the said inconvertible paper- money,—is alarming. The deletion of the bondholder— "honestly, if you can, but if not, anyhow "—is preached to the farmers and the working-men of Ohio, Iowa, Indiana, and the other Western States, by all the cleverest talkers of the Demo- cratic party, as the first article of financial salvation. Yet the bondholder, being an Englishman, is content with less than five per cent, for his money, while the American capi- talist wants to turn over at least seven per cent. It is plain that, consistently with national honour, the existing Debt can- not be refunded in the manner desired by Mr. Kelley and his allies without a heavy loss, which the projectors of the scheme must look to recoup by the double-faced transaction of creat- ing bonds payable in green-backs and green-backs redeemable with bonds. Such a notable stroke of financial policy de- serves, indeed, to have its genealogy traced, and the New York Nation has traced it to the ingenious bill-transactions of Mr. Wilkins Micawber. The financial genius of Mr. Mica wber idealised the common trick of jugglers, who, flinging two or three brass balls rapidly from hand to hand, seem to handle an unlimited —certainly an uncomfortable—number of balls. But it is surely amazing that the keen citizens of Ohio should be deluded by any such ingenious play of words. For them money is a reality, and yet shrewd politicians think that they can be made to believe that by shifting the burdens of the country from shoulder to shoulder, the weight will never be felt, and may be borne without effort. This strikes us as even more astounding than that the people of the Western States should be taken in by the notion that if you issue ten paper dollars instead of one, a holder of this diluted currency will be able to buy more for ten dollar notes than he previously bought for one. The "shackles of specie" are, no doubt, painful to those who are not plentifully provided with the keys that un- lock the links ; but if every one were given sham keys of paste- board, no man would be any better off, except in his own imagi- nation, and then only until he had tested the value of the gift.
There can be no doubt that the projects of the Inflationists have worked upon the popular restlessness in the Western States in a very dangerous manner, and that the hope of adding to every man's income by some legerdemain at Washington is closely linked with more dangerous, because more practicable notions, that some people have incomes that are too large, and that from their superfluity the incomes of those who are poorer might be, and ought in an ideal State to be, increased. The contemplation of such an ideal is dangerous to men who have given proof by listening to Mr. Kelley's Inflation schemes that they cannot apply either common-sense or the rules of arithmetic to politics. Unfor- tunately the denunciation of "hard money," of bondholders, and so on, has been taken up by the Democrats, who are de- termined to win next year if they can, but who will not find it easy to resume their Conservative attitude, if they should be unfortunate enough to carry Ohio on an inflation platform. But American politicians are wonderfully quick in their back- ward movements, when once they see they have made a mis- take. Have the Democrats made a mistake in the West? It is impossible at present to say, but in little more than a week hence we shall be able to determine a question which touches
many English interests. If the Democrats carry Ohio, the fact will prove that Democratic institutions leave the people uneducated and restless and incapable of seeing the enor- mous injury they inflict on themselves for a small and merely imaginary gain.
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