SEPTEMBER 18, 1902] 
NATURE 
509 
there were no fallacy involved in it, the stoppage of each 
import taken separately would benefit home producers and 
damage foreign producers. Even if some of the imported com- 
modities could not be produced at all at home, substitutes, more 
or less efficient, could be produced and give all the more em- 
ployment. Having acquired some notion of the advantages of 
cooperation and the territorial division of labour, the consumers 
would regard this as a veductio ad absurdum, and after thinking 
a little further they would soon see that, after all, there is 
another set of producers, actual or potential, within the country 
who will gain—namely, the producers, present or future, who 
will supply the articles which are to go abroad in exchange for 
the new import. They will see that what they are asked to do 
is not to maintain the amount of national production, but merely 
to prevent a change in its character which will be accompanied 
by an increase in its amount. 
Take another example of Chinese obstructiveness to desirable 
change. As great cities grow, it becomes convenient that their 
centres should be devoted to offices, warehouses and shops, and 
that people who work in these places, and still more their 
families, should live in the outskirts. I do not know that anyone 
has denied this. Certainly the great majority are willing to 
admit it. At one time it is believed that a quarter of a million 
people lived in the square mile comprised within the City of 
London; no one supposes that would be convenient now. 
There is no reason to suppose that further change in the same 
direction will not be desirable in the future. Yet, incredible as 
it will appear to future generations, public opinion, the House 
of Commons, the London County Council and some town 
councils think, or at anyrate act as if they thought, that the 
process has now gone far enough and ought to be stopped ; as if 
the state of things reached about the year 1891 was to be per- 
manent, to last for ever and ever. Private owners are indeed 
still allowed to pull down dwelling-houses and erect shops and 
offices, but they are abused for doing so, and their liberty is at 
least threatened. But if a new railway or a new street is made 
—in all probability with the intention of increasing the accessi- 
bility of the centre from the suburbs—if even a new London 
Board School is built, and houses inhabited by persons who have 
less than a certain income are pulled down in any of these pro- 
cesses, it is required by law or parliamentary resolution that 
other houses for these people must be built in the neighbour- 
hood. So it comes about that there are in quarters of London 
most unsuitable for the purpose enormous and repulsive barrack 
dwellings, the sites of which are devoted 27 secula seculorum to 
the housing of the working classes ; while the immense cost of 
devoting them to this instead of to their proper purpose is 
debited to the cost of improving the facilities for locomotion 
or to education, and is defrayed principally by the rates on 
London property, which chiefly consists of houses, and to some 
extent by the higher charges on the railways consequent on the 
restriction of facilities for extension. Fifty pounds a head is the 
average loss involved to the rates of London on every man, 
woman and child for whom these dwellings are provided. 
Such is the wisdom of practical men uninformed by instruction 
in economic theory. 
This palpable absurdity could never have been perpetrated if 
the general working of the economic organisation had been 
understood. In that case it would have been seen at once that 
the extrusion of over 200,000 inhabitants from the City of 
London in the past, which is admitted to have been desirable, 
was effected by the quiet operation of the laws of value. It 
would have been seen that as it became desirable to turn the 
City to other purposes, the ground in the City became too valu- 
able to use as bedrooms and as living-rooms for mothers and 
children, and this increase of value drove out the 200,000 in- 
habitants. It would have been seen that the change had not 
come to an end, and no responsible body would have dreamt of 
putting themselves in opposition to it by buying sites and 
writing them down to 2 per cent. of their actual value in order 
that they might be tied up for ever and ever to be the homes of 
a certain number of persons with less than a certain income. If 
some unusually dense individual who had failed after many 
attempts to pass his examination in economic theory had pro- 
posed the policy which has been adopted, he would have been 
asked two questions: first, ‘*‘ What peculiar sanctity is there 
about the position: occupied in the closing years of the nine- 
teenth century? Why should this. be stereotyped for all time ? 
Why should not the position at the end of the seventeenth cen- 
tury have been maintained? Why should we not endeavour to 
NO. 1716, VOL. 66] 
restore the working classes to their old home in the City, and 
remove the Bank of England to Tooting?” Secondly, “* Whom 
do you imagine you will benefit by the policy you propose 2” 
It is difficult to conceive of any answer to the first question. 
To the second the reply of the dunce would of course be that he 
thought the policy proposed would benefit the people housed on 
these expensive sites. This answer would at once be condemned 
as unsatisfactory. To build houses on land worth 100,000/,, and 
let them to the :first-comers of respectable antecedents at rents 
which would pay if the land were worth 2000/., would be a very 
stupid sort of almsgiving if these respectable first-comers actually 
got the difference between the interest on the 100,000/. and the 
2000/7. But no one supposes that they do get this difference or 
any considerable part of it. The difference is almost entirely 
pure loss to the community. The chief immediate effects of the 
policy are, first, to retain in the centre the men, women and 
children who inhabit the dwellings ; secondly, to retain other 
workers who perform various offices for these inhabitants; and 
thirdly, to ensure a supply of labour for factories which would 
otherwise (to the advantage of everyone concerned) be driven 
into the country by the pressure of the high wages necessary to 
bring workmen to the centre or to pay their house rent if they 
lived there. 
So much for the utility of economic theory in preventing 
obstruction of desirable changes. My second claim on its 
behalf is that it serves to hinder the adoption of specious but 
illusory projects. This, I think, may be illustrated by examples 
closely connected with those which we have already considered, 
under the head of obstruction. 
The people who are most anxious to obstruct changes in the 
channels of trade which are coming about of themselves because 
they are profitable, are often extremely anxious to promote 
changes which will not come about of themselves because they 
are not profitable. For this end one of their most favourite 
devices at present is a State or municipal subsidy to locomotion 
or transport between particular points. So we have shipping 
subsidies, free grants to light railways, the construction of un- 
profitable telegraph lines by the Post Office, and the advo- 
cacy, at any rate, of the construction of unprofitable tram- 
ways by municipalities. The practical man, uninstructed 
in economic theory, feels uneasy about such projects 
because he does not see where he is to stop, and he feels 
obscurely that a universal subsidisation would mean ruin. But 
he does not see why he should not go a little way, and he goes 
sufficiently far to involve a loss quite worth considering. A 
knowledge of economic theory would come to his assistance by 
showing him that, as a rule, the most profi able enterprises are 
those which it is most desirable to undertake first, and that the 
subsidisation of the less profitable does not create new enter- 
prises, but merely changes the order from the more desirable to 
the less desirable. I suppose that if in 1830 Parliament had 
offered a sufficient subsidy a railway might have been at once 
made and worked from Fort William to Fort Augustus, to the 
great satisfaction of the inhabitants of Fort Augustus and the 
intermediate places. But itis obvious that it was more desirable, 
in the interests of the whole community, that the railway from 
Fort William to Fort Augustus should wait for seventy years, 
and that the railway from Manchester to Liverpool, and many 
others, should be made first. 
Then, too, we find people who are not quite so stupid as to 
think the working classes should always remain in the places 
where they were at the end of the nineteenth century, alleging 
that the way to cure overcrowding is for local authorities to 
enter the building trade in a general way, and build houses in- 
side or outside their districts, wherever it seems most convenient. 
To the mind uninstructed in economic theory it seems obvious 
that the larger amount of housing there is the less overcrowding 
there will be, and that the more housing local authorities provide 
the more housing there will be. Economic theory, with its 
explanation of the general working of the organisation of pro- 
duction, suggests two objections. First, an addition to the 
housing in any locality will not be effectual in diminishing over- 
crowding, in so far as it attracts new inhabitants to the spot; a 
policy which assumes that the comparative plentifulness of houses 
is not a factor in the determination of the enormous and per- 
petual migration of people from place to place which is indicated 
in the tables of birthplaces and births and deaths in the census, 
is doomed to failure. Secondly, economic theory suggests the 
reflection that the mere fact of a local authority building some 
houses will not cause the whole number to be greater, if for 
