“How blest the prudent man, the maiden pure,
Whose income is both ample and secure,
Arising from Consolidated Three
Per cent Annuities, paid quarterly."[1]

It is impossible to read those lines now without a sense of irony, different from that which they were intended to convey.

Not only is the rate of interest now double what it was a generation ago; we have no good reason to suppose that the present high level will quickly be reduced.  The havoc of the war, of which the widespread poverty of Europe and the huge debts of Governments are but two different aspects, makes it almost inevitable that the rate should rule high in the present decade.  This cannot but exercise a profound influence, of a most disquieting character on the general level of profits, and to a lesser extent (for here we must allow for the effects of high taxation) on the distribution of real wealth between social classes.  Here we are on the threshold of tremendous issues.  We almost feel the earth quake beneath our feet.  We hear the muffled roar of far-reaching social controversy: 

“And ’mid this tumult Kubla heard from far Ancestral voices prophesying war.”

[Footnote 1:  Narcissus, by Samuel Butler and Henry Festing Jones.]

CHAPTER IX

LABOR

Sec.1. A Retrospect on Laissez-faire.  When, a century and a half ago, the foundations were being laid in the Western world of systematic economic theory, the public attention was much occupied with a subject, which indeed has not ceased to hold it:  that of the failings of Governments.  The general interest in that topic was shared by the pioneers of economic thought, of whom, in Great Britain, Adam Smith was the most notable.  It was indeed their practical concern with the concrete economic issues of the day which very naturally gave the impetus to their scientific quest.  It was hardly less natural that they should have expressed their opinions on these concrete issues with considerable emphasis.

Now the keynote of their practical conclusions was that Governments were doing immense mischief by meddling with a great many matters, which they would have done better to leave alone.  In this they were in general agreement with one another; incidentally—­let there be no mistake about it—­they were right.  But, as invariably happens in public controversy, their opinions became crystallized in a compact formula, or cry, with unduly sweeping implications.  This was the cry of “laissez-faire.”  Let Governments preserve law and order; and leave the economic sphere alone.  The economists picked no quarrel with this formula; it served well enough for workaday purposes to indicate the lines of policy which they rightly thought essential in their day.