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Karl Marx read the Economist, starting at least as early as the summer of 1850, when he acquired a pass to the reading room of the British Museum.¹ The revolutionary surge of two years earlier, the ‘springtime of the peoples’, had fizzled, and to the author of the Communist Manifesto the back issues of the fiercely free trade Economist suggested why: after two years in which poor harvests and high grain prices, a downturn in trade and a credit crisis had fuelled popular and middle class discontent, the business climate began to improve in mid-1848, strengthening conservatism and dampening protests against it all over Europe. Yet Marx took more than raw economic data from the Economist. In it he identified a sector of liberal opinion with a distinct worldview and cosmopolitan wealth, so fearful of further popular upheaval that by 1851 it was ready to welcome an illiberal but orderly dictatorship in the revolutionary capital of the nineteenth century, France.

‘The position of the aristocracy of finance is most strikingly depicted in a passage from its European organ, the London Economist’, Marx wrote of events leading up to the coup d’état in the Eighteenth Brumaire of Louis Bonaparte in 1852. On 1 February 1851, the paper’s Paris correspondent had noted ‘the sensitiveness of the public funds at the least prospect of disturbance, and their firmness the instant the executive is victorious’. ‘In its issue of 29 November’, he continued, ‘The Economist declares in its own name: “The President is the guardian of order, and is now recognized as such on every Stock Exchange of Europe”.’² If its perspective – that of ‘the loan promoters and the speculators in public funds’ and ‘the whole of the banking business’ – was far from new, the scale of the invested capital was: ‘If in every epoch the stability of the state power signified Moses and the prophets to the entire money market, why not all the more so today, when every deluge threatens to sweep away the old states, and the old state debts with them?’³

Marx was, in short, in perfect agreement with Bagehot, the future editor then writing his letters from Paris, in claiming that market uncertainty was leading ‘even the most ordinary liberalism’ to be denounced as socialism by middle-class Frenchmen.⁴ In another sense, Marx was ahead of the curve, for it was not until Bagehot took the helm that the Economist truly articulated the political wisdom of the ‘financial aristocracy’ as such. The turbulent years that followed Bagehot’s death in 1877 saw an amplification of the dynamic that Marx had registered. Indeed, the advice Bagehot left behind, scrupulously adhered to by trustees and editors alike, was to focus on the frothy money markets of the City of London – and what seemed their most important new lines: settling ‘international bargains’ and floating foreign loans, with Britain (‘the country of banks’) pressing the latter upon ‘civilised’ and ‘half-finished’ nations much like ‘London money dealers’ on ‘students at Oxford and Cambridge’.⁵

The next two editors built on this blueprint. But their joint appointment, which was intended to re-create the twin talents of Bagehot, was troubled and brief. Daniel Conner Lathbury, graduate of Brasenose, Oxford, a trained barrister turned journalist, was tasked with writing political leaders. His liberalism pivoted on the politics of the Anglican High Church, however – and in contrast to Bagehot, who took an impish, intellectual interest in religious subjects, Lathbury was drawn deep into earnest debates on the Catholic revivalism of the Oxford movement.⁶ He was dismissed in 1881. Robert Harry Inglis Palgrave handled the money market and trade statistics, staying on two years after his ex-co-editor. Palgrave seemed exactly what Bagehot had in mind: his family were bankers from Great Yarmouth, who financed their four sons’ forays into poetry, history, imperial diplomacy, economics, and politics.⁷ The only son to go into the family business instead of to university after Charterhouse, a minor public school, Palgrave even sounded like Bagehot – at least when contemplating ‘the union of pecuniary sagacity and educated refinement’ that fell to the country banker, whose work left him free to contemplate Elizabethan sonnets on ‘the long winter evenings, the half hour in the shady garden in summer, the quiet times on the deck of the yacht’, or on the way to the office.⁸

The New Financial Press

Neither Lathbury nor Palgrave, alone or together, could achieve the lively synthesis of politics and finance the trustees wanted. There was a profit to be made reporting on the money market, and the paper was now attracting stiff competition. In 1859 a weekly Money Market Review began to appear; ten years on, in response to a rush of listings fuelled by the Companies Act, its owners started the daily Financier, and a monthly Bondholders Register. The rival Bullionist launched in 1866. The Daily News and the Times devoted increasing if not always disinterested space to the City of London.⁹ But the fiercest challenger arose from within: Robert Giffen, Bagehot’s assistant from 1868 to 1876, declined to succeed him, and instead founded the Statist, which fought the Economist for writers, advertisers, and statistical scoops until 1967.¹⁰ One difference between the Economist and these newcomers is hinted at by its address for most of this period: not Fleet Street, the traditional home of London’s newspapers, nor the bankers’ Square Mile, but the Strand, sandwiched between a cigar importer and a wine merchant, near music halls and literary magazines, in the bustling heart of London.

It took six years for the Economist trustees to agree on a new model, during which time Wilson’s brother George, sons-in-law Greg, Shipley and Barrington, and daughter Eliza played leading roles. At various points they consulted the economist Stanley Jevons, and contemplated offering the post to John Morley, then editor of the Pall Mall Gazette.¹¹ But in 1883 it was Edward Johnstone, veteran City hand for the Scotsman, and financial stringer for Bagehot, Palgrave, and Morley, who got the job – at first with the future Liberal prime minister Herbert Henry Asquith as his political editor – and held it, for a record twenty-four years.

Johnstone came to London in 1874. His university studies in Edinburgh had focused on political economy, and though he also qualified as an actuary, he seems not to have practised this trade.¹² At thirty, he was a ‘comely, fresh-faced young Southern Scot’, according to a Times editor who read his letter of introduction and sent him along to the manager of the Economist. There are few other remembrances. John St Loe Strachey – a cousin of the Bloosmbury biographer Lytton Strachey – described Johnstone as an editor ‘who told you exactly what he wanted’ and ‘made it so very clear that one was expressing not one’s own views, but the views of the Economist’ and that ‘whether they were in fact right or wrong they certainly deserved full consideration’. He remembered just one alteration Johnstone made to his writing in nine years: in a review of Bagehot’s collected works, Strachey compared Bagehot’s ‘perfection of style’ to Robert Louis Stevenson, ‘who at the time was held to be our greatest master of words’; Johnstone removed the passage, not for going too far, but because ‘he feared Mr Bagehot’s family might think that the writer was not properly appreciative of Bagehot’s work if he compared it to that of Stevenson!’ Though a great journalist – Strachey reported with mild understatement – Johnstone was ‘not a man who had paid any attention to literature’.¹³

Instead his focus was on the Economist, which also provides our main clues about Johnstone. Its obituary to him makes this seem almost intentional, noting his ‘direct, forcible, and unassuming’ prose and ‘retiring disposition’, roused by hatred of ‘tautology’, ‘hyperbole’, and those he suspected of ‘writing for lineage’. His ‘fidelity to the high traditions which he had received from Wilson and Bagehot’ kept the Economist distinct in an era of intense competition – where ‘there was a danger that the English press might become shallow and subservient’, a ‘mouthpiece of financiers and share-pushers, the enemy instead of the friend of the investing classes’.¹⁴ Johnstone sought not to make ‘readers fortunes’, but to recall ‘governing principles’ and ‘guide them clear of blunders’. As the Financial News and Financial Times, founded in 1884 and 1888 respectively, battled over which ‘puffed’ shares harder (both took their rough-and-tumble tactics from the Wall Street press), the Economist was coolly ‘devoted to the higher interests of finance’.¹⁵

The Foreign Investor’s Friend

Johnstone became editor in the midst of the first Great Depression, a worldwide fall in prices and profits, which lasted roughly from 1873 to 1896. The deflationary trend puzzled contemporaries, in part because production, investment and trade continued to grow. Too much of the latter was, in fact, likely to have been responsible for the former, as foreign industrialists began to battle Britain for control of markets, advances in railroad and marine transport opened up farmlands in North America and Russia, lowering food prices, and the gold standard limited the money supply.¹⁶ Alongside a class structure that favoured savers over consumers, this malaise may also have spurred further overseas investment – which rushed forward in spurts, towards higher rates of return. British assets abroad grew from £200 million in 1850 to £700 million in 1870, £2 billion in 1900, and £4 billion in 1913. Capital outflow averaged over 4 per cent of national income over this period, at its close generating about £200 million in interest, or 8 per cent of national income.¹⁷ Bagehot had wondered how British loans and investments might affect ‘half-finished’ civilisations abroad. In the end, Britain was itself transformed. No other country has ever sent such a large portion of its wealth abroad, or received such a large share of it back.

The Economist had no doubt that it was profitable to invest overseas, and its weekly, monthly, and annual data sets have always been central references for economists and economic historians trying to determine the overall quantity and direction of capital flows to and from late nineteenth-century Britain – not to mention their possible causes and effects.¹⁸ Yet few have paid attention to how the Economist itself interpreted the data – a significant oversight, given its instrumental role not just in purveying information, but in constructing knowledge about the world as an interlinked market, which it wished to expand in and beyond the formal empire. The paper circulated, after all, among the most powerful class of Victorian and Edwardian savers, the ‘gentlemanly capitalists’ clustered in south-east England, who made their livings in finance, banking, trade, and shipping, or as politicians, administrators, and landowners, and showed a marked preference for income derived from safe overseas assets like railway and government securities.¹⁹ They turned to the Economist not for news in the narrow sense but for political analysis to help them evaluate the risks and rewards of placing capital abroad. What did they learn?

Revenues and yields were calculated annually, in part to defend ‘liberal imperialism’ against both its critics and those who wanted to pursue it for frivolous ends. Total colonial investments of £620 million yielded an average return of 5 per cent in 1883. Charts abounded, calculating total interest payments by region – Australasia, North America, India, Africa – and type: government loans, railways, provincial cities, harbours and gas, banking, mortgage, agency, and others. Colonial government loans brought in only slightly more than 4 per cent, excusable because low in risk; railway and municipal bonds and stocks were excellent at over 5 per cent; banks and mortgage companies were galloping away at over 6 per cent. ‘Nearly one half of our subscriptions in 1883 were to colonial loans and to colonial enterprise’, it reminded readers, ‘and the growth is so certain to continue, that the whole question cannot be too carefully considered.’²⁰

The lack of movement on the Stock Exchange over the same period gave rise to similar formulas. An encomium to speculative virtues praised the social utility of the risk-taker who ‘will subscribe for new securities – such as the Indian gold mines and electricity companies already mentioned – which without him would certainly never have been subscribed at all’. In the midst of stagnating prices, one was obliged to wait until ‘the savings of the investing classes increase’. A dazzling securitized vista would then open up: ‘New Guinea and the Western Pacific may someday be pictured as teeming with wealth; South America, where we have already sunk over £150,000,000, will offer an indefinite field; so will all our colonies.’ ²¹

Weekly reports on the money market moved to the front page for the fin de siècle. Subsequent sections tied political news to investment. The headlines from 13 January 1883 were typical: ‘Suez Canal Dues and Traffic’, ‘The Finances of Eastern Roumelia’, ‘The Condition of the Peasantry of the Deccan’, ‘Roumanian Progress’, ‘Industrial Enterprise in Turkey’. Links were explicit. In the 1880s the Economist regularly assessed the creditworthiness of Russia and Italy, then embarking on major railway expansions. On Europe’s fringe, the instability of the Sublime Porte was a source of acute anxiety, even after it emerged from default in 1881 under the budgetary supervision of foreign bondholders. One appraisal of the Imperial Ottoman Bank concluded that its holding of government securities – despite high annual dividends and a stake in the profitable state tobacco monopoly – made it vulnerable in the event of political turmoil. ‘When the crash does come, it will be best for those institutions standing most clear.’²²

Still greater scrutiny was reserved for Central and South America, where 20 per cent of British foreign investment was tied up by the 1880s.²³ Brazilian and Uruguayan deficits it eyed warily on behalf of European bondholders.²⁴ Past mistakes in Mexico were forgiven; the growth in railway stock revived hopes that, ‘with its vast natural resources, it would speedily become an orderly State, and therefore a State in which English capital might profitably be invested.’²⁵ It anxiously watched Peru’s borders lest supplies of phosphorus-rich bat guano be disrupted.²⁶ In Argentina it fretted not only over the government’s ability to finance its external debt – incurred largely through railway loans from England – but also at the erosion of British exports faced with goods emanating from France and Germany.²⁷

News arrived regularly from Buenos Aires, as its share of British overseas investment bounded ahead between 1880 – when General Roca became president, pledged to ‘order and progress’ after his genocidal ‘Conquest of the Desert’ – and 1890, to 40–50 per cent of the total.²⁸ Although the Economist hailed Roca’s administration, doubts grew under his successor, if not soon enough about the famed British merchant bank floating his loans.²⁹ Baring Brothers actually blandished a politician with a free subscription to the Economist, and the governor of Buenos Aires with a stallion, to win this business. The horse, ten years older than advertised, and bandy-legged, turned out the wiser bet. The Economist rebuked the bank’s partners when the collapse of the property boom in Argentina revealed the extent of the risks they had taken: the bank was highly leveraged, invested in unstable mortgage-backed bank bonds, and overexposed, with 75 per cent of its portfolio in the River Plate region. As the value of its assets sank, Barings secretly approached the Bank of England – which spearheaded a huge £17.1 million guarantee fund with the City’s largest firms and joint-stock banks, to slowly liquidate Barings’ liabilities.³⁰ Johnstone played a direct role in devising this plan, which avoided panicking money markets. ‘So great was the public desire to become acquainted with its opinion of the event’, recorded the Bankers’ Magazine, that ‘numerous reprints were required of the issue of the Economist following the announcement of the breakdown.’³¹

Nor was this the only display of its standing in the City. The Barings Crisis also signalled the end of a long investment boom in Australia, which for the next decade struggled to export enough to service its debt.³² In 1898 an Economist report exposing gold mining companies in West Australia, one of the few bright spots in the economic picture, as a ‘conspiracy to deceive investors’ led to a libel case against it. Johnstone agreed to withdraw any aspersions on Scott Lings, a Manchester cotton promoter and chairman of Golden Link Mines, but maintained the report had ‘been fully justified by events’ since the much-touted ‘main lode’ had still not been struck. Both parties, strangely enough, confirmed the special status of the paper. A simple retraction would not do, explained Lings’s lawyer, for ‘the very fact that the Economist has never had a libel action brought against it, and that it is a highly respectable and responsible newspaper, made it imperative’ that its statements ‘should be withdrawn in the most public way possible’.³³

The Economist may have been more prudent than the competition, but it was no less optimistic about the overall direction of investment. It could become downright sanguine, in fact, when the capital in question was in good hands – a tone set by Bagehot, for whom the emigration of young men ‘with English capital’ to ‘manage English capital’ was one of ‘the great instruments of world-wide trade’ and ‘binding forces of the future’.³⁴ South American investments had not only been profitable, but from this perspective, quite secure: it reminded readers that most of the ‘railways, tramways, gas, mining, improvement’ and other companies ‘in which our money has been sunk are purely English, in so far as the directorates and shareholders are concerned’.³⁵

These statements hinted not only at the scale of British holdings, if direct investments are added to the portfolio type, but at the potential threats to them from rival national capitals.³⁶ The problem was practical. Between 1878 and 1914, European territorial empires expanded massively, adding 8.6 million square miles throughout Asia, the Middle East and Africa. Germany, Italy, Japan, the US and even Belgium, as latecomers to the imperial stage, now joined older powers such as France and Russia to compete with Britain for land, resources and markets; the risks involved in the ‘new imperialism’ were manifestly higher. For Johnstone’s Economist, analyzing investment prospects also meant deciding what limits, if any, to place on this growth; when and where inter-imperial conflict could make way for cooperation; and how newly subject peoples ought to be treated.

A Liberal Scramble for Empire?

The imperial landscape was already shifting rapidly – and taking more newsprint to cover – in the years leading up to Johnstone’s tenure. In 1877, Disraeli made Queen Victoria Empress of India, a move intended to rally India’s princelings to the British Raj. The Economist did not see what difference it made to Indians what she was called – ‘a great army and navy was behind the name, and that is enough for them’ – but it did wonder at a Conservative prime minister tinkering with the ‘magic’ of the English Constitution.³⁷ The ‘Eastern Question’ re-emerged at the same time, as Russia launched a new war against the Ottomans that threatened to redraw the map of south-eastern Europe in its favour, and undermine British naval predominance in the Mediterranean. The Economist favoured intervention to avoid this outcome in 1878 – first welcoming a diplomatic convention to backstop Ottoman rule in Asia, then endorsing the Congress of Berlin, which divided up most of the Balkans between the Europeans, and handed Cyprus to Britain.³⁸ A new skirmish with Russia irrupted almost immediately, however, when the Tsar sent his ‘envoys’ to Afghanistan. Britain promptly invaded, with the paper calling for an ‘irresistible demonstration of our power’ to depose ‘Ameer Shere Ali’ in Kabul and shore up the north-western frontier with India in the Second Anglo-Afghan War.³⁹ At the same time, Britain also pressed forward in Africa, brutally uprooting the Zulu nation in 1879, clearing a path for white settlers hungry for its land and labourers. The Dutch-descended Boers in the neighbouring Transvaal then rebelled against the prospect of being annexed too, temporarily checking British expansion at Majuba in 1880 during the First Boer War.⁴⁰

The Economist tried to take stock of the frenetic pace of imperial activity the year Johnstone took full control of the paper in 1883, sounding a more prudent note than before: London needed room for manoeuvre in imperial affairs, but should carefully weigh further territorial commitments. ‘The air is thick with projects of annexation. In Africa, in Asia, and in Australasia, schemes of conquest or of colonisation are being pressed forward.’ Though some chances could not be passed up – ‘to such enterprises as the opening up of the Congo we cannot, of course, be indifferent’ and there could be no red lines ‘where we can say thus far and no farther’ – on the whole, ‘consolidation and development rather than fresh adventure’ was the wisest course. It reminded readers of the vast possessions already under British sway – an expanse sixty-five times the size of the British Isles, twice the area of Europe, with an estimated populace of 217,695,000. ‘Our interests will be better promoted by international agreements as to freedom of trade, than to extend our dominion over new land.’⁴¹ Let latecomers, ‘under an emotion of tropical territory’, fight for leftovers, as Britain and the Economist focused on the invisible bonds of capital being laid by the City of London. This was not because territory was unimportant to the paper, but because Britain already had the best bits, ‘holds all coaling stations on the two routes to the far East’ and the ‘keys of the Mediterranean, of the Red Sea, of the Persian Gulf, the Straits of Malacca, the Eastern Archipelago, and rules in unquestioned and practically lonely sovereignty the people of India’.⁴²

If the paper favoured indirect forms of imperial control based on trade and investment, it recognized the necessity of the territorial strings often attached to them. After Egypt had followed Turkey into default in 1876, its main creditors, Britain and France, had imposed a ‘Dual Control’ over its budget.⁴³ This violation of Egypt’s sovereignty stoked a nationalist movement, led by Colonel Arabi Pasha, which the creditor nations promptly resolved to crush. The Economist had pondered a joint expedition even before the deaths of fifty Europeans in Alexandria in June 1883, during riots that broke out when British and French warships appeared off the coast.⁴⁴ Now that law, order and European lives were at stake, action could not wait. Admiral Seymour’s shelling of the city the next month was ‘an act not of aggression, but of self-defence’, while the ‘burning and pillaging’ it triggered among the Egyptians – ‘pure vandalism’, ‘no strategic purpose’ – showed that Arabi and his followers were ‘not high-minded patriots’ but ‘military adventurers, capable of any excesses, and caring little what injury they inflict on their country’.⁴⁵

The Economist considered the ‘preservation of our right of way through the Suez Canal’ a matter of life and death for Britain. But in making the case for a swift invasion of Egypt, it also insisted on unselfish motives: dutifully reporting on the risks of disorder to ‘the City and businessmen’, it dismissed these as a casus belli. Britain was acting on liberal principles. Egyptians had registered anger at their ‘“exploitation” by bondholders’. ‘But bad as some of its features may have been’, surely they ‘would be glad to return to it’ – given the ‘paralysis of industry’, ‘growth of official corruption’, ‘revival of torture’, ‘diminishing security of life and property’, and ‘other Oriental abominations’.⁴⁶ Any new regime in Cairo would, meanwhile, be submitted to all the powers of Europe for ‘sanction’ – a point to which it returned even as it cheered the rout of Arabi by 31,000 Anglo-Indian troops in September.⁴⁷ Here tutelage proved unavoidable: ‘we have tried to govern Egypt through its treasury, and the attempt has failed.’⁴⁸ So during the ‘temporary occupation’ that followed, the paper tinkered with different policies to make ‘financial control’ both inconspicuous and inescapable.⁴⁹

In practice, the Economist rarely paused to draw a critical breath between colonial wars, even when these arose from the unintended consequences of a previous one. Invading Egypt further weakened the Khedival ruling structure, for example, opening the door to a rebellion in Egypt’s own southern colony of Sudan. When the capital Khartoum fell to the jihadi forces of the Mahdi in 1885, the paper demanded vengeance – in uncharacteristically shrill tones – for a no less messianic figure, General Gordon, who had stayed in the city despite orders to evacuate: ‘The Englishmen in the Soudan have shown the best qualities of the national character, and their achievements will always hold a conspicuous place in the annals of British heroism.’⁵⁰

More typical of the Economist’s justification of British imperial greed was the case it made a few months later for the seizure of the rest of Burma not already coloured red, and the destruction of a monarchy and monkhood that had structured its society for over a millennium. King Thibaw could not be allowed to defy Westminster by pursuing independent policies, whether with France, Russia or China, on the north-eastern border of India, or in commercial matters – where a fine levied on the Bombay Burma Trading Co. amounted to a violation of free trade.⁵¹ Lord Dufferin, viceroy of India, who had amassed an army to carry this last point home to Thibaw in October 1885, was ‘a moderate man’, who ‘must be trusted’.⁵² As in Egypt, ‘opening up new outlets for trade’ was unacceptable as an official motivation for conquest. What was at stake, however, was the sacred right of contract, and contrary to the harrumphs of radicals like John Bright, ‘we are surely bound to guard against arbitrary and illegal spoliation of our subjects.’⁵³

Getting the rationale for imperial expansion right was important for the Economist, since narrowly nationalistic, commercially self-interested arguments played into the hands of Britain’s rivals – already liable to pursue empire for the wrong reasons, and with increasing assertiveness. Germany could be a productive partner on the world stage – as in 1884, when Bismarck worked to settle the status of the Congo and the Niger at the Berlin Conference.⁵⁴ But in 1888 the paper questioned if its leader ‘directed or utilised the national desire for colonies with any wisdom’, having selected neither places where surplus population could settle, ‘nor ones which promise to greatly increase the volume of national trade’.⁵⁵ Russia was untrustworthy, madly expansionist, and backward.⁵⁶ France, with whom Russia allied in 1894, was tetchy and impulsive – a portrait that grew darker towards end of century, as Paris and London clashed repeatedly throughout Africa and Asia.

France’s Tonkin Expedition of 1883 was a foolish land-grab, which was bound to ignite a war with China and damage trade, causing a rise in the price of tea ‘felt in every English cottage’ and an interruption to flows of Indian opium, product of ‘a century of care and skill, akin to Lafitte among clarets, or Havannah cigars among tobaccos’.⁵⁷ In 1898 it asked if French behaviour in the Fashoda Crisis was ‘worthy of a great nation’ – for, besides ‘annoying England’, why would Major Marchand, ‘with his 120 negroes from Timbuctoo’, dare tangle with General Kitchener’s mighty army over a ‘swamp at the bottom of Ethiopia’?⁵⁸ Anglo-Egyptian forces had marked out this terrain in blood, tracking the Nile up to Omdurman – where they finally avenged Gordon by killing 11,000 dervishes, and exhuming and torching the remains of the Mahdi.⁵⁹ ‘France has an enormous colonial empire’, it granted after the crisis was defused, ‘but she makes so little of it that it is a burden rather than a source of profits’, since it was ‘overrun by officials and soldiers, and hampered by unwise tariffs’.⁶⁰

The Economist was ambivalent about American imperialism, which also reared its head in 1898 during the Spanish-American War. It advised Europe to let ‘second-rate’ Spain nurse its losses, and accept America’s seizure of Cuba, Puerto Rico, the Philippines, not to speak of Hawaii, Guam and Wake Island; at least the US would promote economic development – or ‘the interests of humanity and the higher civilisation’ – in these places.⁶¹ But the paper harboured few illusions about American exceptionalism, pointing to the wide gap between the country’s constitution and its territorial ambitions, which made it ill-suited to be an empire. Under President McKinley the US was taking a ‘momentous step’ that was ‘not in harmony with the spirit or letter of American institutions’, in ‘violating the inalienable right to liberty’ of the native populations of the islands it had seized. More fundamentally, for the Economist the US was compromised by the character of its national political economy. For if it resembled ‘the mother country’ in seeking a commercial empire (a need for new markets was ‘the fundamental economic fact’ in the US), its ‘people have never been guided by free trade principles’.⁶²

This was a major shortcoming in what looked likely to be the next inter-imperial feeding frenzy, over China, a ‘dying nation’ after its drubbing by Japan in the Sino-Japanese War in 1895, whose corpse the Western powers hungrily circled – including America, its ‘Open Door Policy’ in East Asia mere window dressing, in the Economist’s opinion.⁶³ The Economist’s response to the 1899 Boxer Rebellion – an anti-Western uprising that swept through north China, cresting in Beijing, where a rebel siege of foreign legations lasted for months – was at once an admission of Britain’s overreach elsewhere, and an illustration of what distinguished its Empire from the others. Boxers ought to be ‘extinguished’ for killing Western diplomats and missionaries, but unlike in Africa, Europeans could cooperate in this stern duty. The aim was to restore order with a multi-national armed response, but to avoid partition: not just because the Chinese were clearly better able to resist than, say, Egyptians, but because the ruling Manchu dynasty was not to be jeopardised.⁶⁴ Foreign investment in railways, mines, banks and the like required political stability, which outright control, in China, would undermine. If the Economist deplored the treaty that ended the expedition, it was not for exacting a huge indemnity from the ‘bloodthirsty’ Empress Dowager, but because it did so in violation of liberal precepts, on the back of higher customs duties. Afterwards, the paper deplored the protectionist leanings of the French, German, Russian and Italian businessmen who poured into China, and their cynical reasoning that if the country were ‘really and honestly thrown open’ – ‘the Anglo-Saxon will beat us in the Chinese market as he has in every other market in Asia’. In the end, it was a little disappointed with this inter-imperial experiment, which ‘future historians will describe as without precedent … the first time since the Crusades the whole white world joined in an attempt to punish an Asiatic power for a grave outrage’.⁶⁵

In all these instances British imperialism was peerless, avoiding the vainglorious preening of the French, the shifting Weltpolitik of Germany, or the hypocrisies of America. What distinguished it was liberalism, a talent for promoting trade, investment and ‘higher civilization’. Yet as the scramble for territory reached fever pitch in the late nineteenth century, obscuring this civilizing commercial mission, criticism of imperialism was never to be found in the Economist. It could not be, since the reproduction of national as well as international wealth was inconceivable for the paper under Johnstone outside the imperial framework, and the invasions, pacifications, occupations and annexations necessary to construct, preserve and extend it. Whether imperialism was an ‘urge’ or a ‘tension’ internal to liberalism, or one twist in its ‘convoluted trajectory’, as several scholars would have it, what is abundantly clear is that in the second half of the nineteenth century it was central to the mainstream of liberalism – to which the Economist gave authoritative expression.⁶⁶ Empire structured the world economy and made it safe for capital, even outside the zones under its direct control. And though the Economist faced criticism from radical Liberals over the policies this governing reality led it to endorse, such voices only looked (even momentarily) strong enough to challenge its dominance after 1899, when the Second Boer War shook the British Empire.

As Beijing burned, Britain faced a war in South Africa entirely on its own, in what turned into its costliest military engagement since the time of Napoleon. Not only was its performance in the Second Boer War unsteady, so was its pretext for the war, which seemed to many critics at home and abroad like a plot to grab the gold and diamond mines of two small independent Boer republics, the Transvaal and Orange Free State.⁶⁷ The Economist had doubts about the official reason offered by its erstwhile contributor, High Commissioner Alfred Milner. At Bloemfontein in June 1899 it was Milner, not the Boer leaders, who refused compromise over the status of Britain’s Uitlander expatriates in their territory, provoking the paper in a rare burst of candour to call the issue of their voting rights in the Transvaal a red herring, ‘moneyed interests standing in ambush behind a political movement’. Cecil Rhodes, at once prime minister of the neighbouring British Cape Colony, director of the British South Africa Company, speculator in diamond and gold, and the architect of the botched Jameson Raid four years earlier, symbolized this ‘unhappily close connection between politics and capitalist interests’.⁶⁸ Rhodes’s enablers in London were nearly as bad, especially Colonial Secretary Joseph Chamberlain, whose brash style unsettled diplomacy and markets.⁶⁹ The annexation these men were pushing for was above all short-sighted. For surrounded by British colonies, inundated by British migrants bearing British capital, both Boer republics would be absorbed into a British-controlled Union of South Africa inside a generation.⁷⁰ ‘Do not let an exaggerated Imperialism make us ridiculous before the world’, the paper initially remonstrated. ‘Our Empire was not built up that way.’⁷¹

But in a trice the Second Boer War proved no different from the other colonial conflicts – for the Economist abruptly changed tack when the Transvaal’s president Kruger served an ultimatum to the British to halt their troop build-up in October 1899. No matter how just their cause, if the Boers ‘once presume to attack a British colony’, the country ‘would be united in a war which would be literally waged saigner à blanc. There would be no compromise, as in 1881; the Boer State would be wiped out of existence by general consent.’⁷² From ‘stock-breeders of the lower type’, such a ‘horrible blunder’ might have been expected: average Boers ‘knew less than people like the Afghans’; but their leaders believed ‘as Muslim fanatics believe’, and were ‘possessed with the idea that Englishmen want their mines – which, we may remark, Englishmen own already’. Boers may have thought like ‘Orientals’ but counted on being treated as white men, in a ‘war with limited liability’. ‘They know perfectly well that the English will neither execute them, nor take their farms, nor subject them to special taxation.’⁷³ When this proved untrue, and revelations about the use of concentration camps emerged, the Economist fell silent. Thereafter, criticism was confined to calls for more and better guns, more and swifter transport, and a larger, better-paid standing army.⁷⁴

Imperial Unity and Liberal Splits

Johnstone presided over a less predictable political scene than past editors, as the old quarrels over empire between the Economist and its onetime backers, Cobden and Bright, suddenly took hold of the entire Liberal Party; the succession of far-flung colonial wars, joined to the simmering of nationalism in Ireland, added up to a full-blown crisis. The paper remained militantly hostile to any hint of ‘radical pacifism’ and any Liberals who espoused such views in parliament. Sir Wilfrid Lawson, the temperance campaigning MP, and a ‘small knot’ of ‘advanced Liberals’ were inexcusable in their ‘blind’ and ‘mischievous’ opposition to Gladstone’s seizure of Egypt in 1882–83.⁷⁵ Bright was dismissed for ‘denouncing our interference’ in Burma in 1885 since he was merely venting ‘his favourite dogma on the essential criminality of war’.⁷⁶ John Morley, who had nearly become editor of the Economist, was admirably Cobdenite when it came to free trade, but took the likeness too far – asking ‘foolish’ and ‘illogical’ questions about British scorched earth tactics in the Sudan.⁷⁷

Critiques of empire that hadn’t had much impact in the past now seemed to be gaining ground in the Liberal Party and straining its unity. So much so that when Gladstone himself announced a belated conversion to Home Rule for Ireland in 1885, the party imploded – nearly one hundred of its MPs formed a breakaway Unionist faction. In this crisis, the Economist knew where it stood, and expressed itself without hesitation. Almost overnight Gladstone turned from a great Liberal hero into an ageing demagogue, dragging his party and country down a sinkhole. Liberals that stood with him over Home Rule had struck a ‘fanatical alliance’ with nationalist Irish Parnellite MPs, fomenting ‘a war against all payment of rent in Ireland’, the ‘very foundations of contract’, to ‘hand that unhappy country over to the strife of rival factions, the bitter play of religious animosities, and the keener conflict of class hatreds’.⁷⁸ By 1893, the split between the Liberal Unionists and the Liberals was so severe that the Economist stopped calling for a reconciliation between them: Unionists needed to throw their full force behind the Conservatives to stop Gladstone’s second Home Rule Bill – a ‘step towards the disintegration’ of the Empire, this time crushed only by the merciful intervention of the House of Lords.⁷⁹

The early editors of the Economist, Wilson and Bagehot, had been pillars of the Liberal Party, both of them intimates of Gladstone. Under Johnstone, the Economist now issued its liberalism from a distance, as the paper switched to support for the Conservatives, who soon absorbed the Liberal Unionists (the latter agreeing to drop the prefix ‘Liberal’ in 1890), and ruled Britain with brief interruptions for the next twenty years.

Disraeli stepped down in 1880 and was remembered with surprising fondness at his death a year later, given that the Economist had ‘resisted half his proposals’ – for he had a sharp mind, ‘fought his way amidst great disadvantages to the top’, and showed the country and the Liberals (with their ‘tendency to forget the importance of force in human affairs’) that ‘a small nation which governs a great Empire must make sacrifices’ and ‘occasionally do high-handed things’.⁸⁰ Salisbury, the most powerful Conservative statesman of the last third of the nineteenth century, enjoyed even better press, at least by his third stint as prime minister, as the paper acquired a taste for this strangely ‘sardonic man’. The marquis had stood up to Germany in South Africa, France in Egypt, and all of Europe over Crete; and he had held fast to his Liberal Unionist allies on Irish Home Rule, living down an earlier reputation for weakness – while resisting ‘injudicious adventures’.⁸¹ His nephew and protégé seemed at first a disappointing contrast. Arthur Balfour, who became prime minister in 1902, possessed his uncle’s hauteur and ‘scant respect for popular government’, without his political instincts, or a grasp of economics.⁸²

The Liberal politicians of the period faced much harsher criticism, in part because the Economist doubted their hold over the party – with the 1886 split having by no means settled imperial policy outside Ireland. The paper backed the Unionists-cum-Conservatives in 1886, 1892, 1895, and 1900. In the last, a ‘khaki election’ during the Second Boer War, it found the official Liberal opposition in a ‘sad way’ – ‘incurably divided by personal dislike, with followers who upon the leading question of Imperialism really form two, if not three, parties’.⁸³ Henry Campbell-Bannerman, the leader of the Liberals, was ‘obviously not the man to govern this particular situation’; his infamous 1901 speech, denouncing the farm burnings and concentration camp roundups inflicted on Boer civilians as ‘methods of barbarism’, made him a pariah at the Economist. It praised the Liberal Imperialists who defied his leadership to walk out of the House of Commons rather than support a radical motion condemning these camps. Their parliamentary leader, the erudite, horse-racing Lord Rosebery, was far superior – but, for reasons it could not fathom, refused to mount a serious challenge to Campbell-Bannerman for control of the party.⁸⁴

Not until 1906 did the paper break with the Unionists and Conservatives – and then reluctantly, at the last minute, driven to it only when the leader of the former, Joseph Chamberlain, forced the latter, under Arthur Balfour, to adopt ‘tariff reform’ as the price of an electoral pact between them. This swerve away from free trade and towards protection turned out to be as suicidal in the ensuing general election as the Economist predicted. The remarkable fact, however, is that on the eve of the greatest electoral triumph for Liberalism, when it won 400 out of 670 Commons seats, the Economist failed to endorse it. Conservatives, under a Chamberlainite ‘delusion’ the Empire could be bound with reciprocal tariffs, were no longer trustworthy on free trade; sound on trade, Liberals seemed to lack the nerve to defend the Empire, most damningly in Ireland.⁸⁵ So far as the paper was concerned, the election of 1906 was a choice between the devil and the deep blue sea.

Asquith, Ireland and the New Radicalism

One of the editors responsible for leading the Economist to this impasse had, paradoxically, just assumed high office in the new Liberal government. Herbert Henry Asquith, as Chancellor of the Exchequer and then as prime minister from 1908, would lead the party during the legislative battles that defined New Liberalism in power. Asquith had begun writing at least one leader a week for the Economist in 1880, as a young barrister in need of extra money. He got the job, which paid £150 a year, through Bagehot’s old friend and co-editor, Richard Hutton, for whom Asquith also wrote at the Spectator. Before crossing the Strand to the Economist offices, Asquith would wax on classical themes – ‘The Art of Tacitus’, say, or ‘The Age of Demosthenes’ – as well as on contemporary topics like fair trade, land reform and Ireland.⁸⁶ At the Economist he set down his ideas on the future of liberalism, at this stage under the heading of ‘New Radicalism’, intended to head off the very schism that precipitated his own exit from both the Spectator and the Economist in 1885.

A Liberalism fit for the times would, Asquith argued, take on board some progressive social demands without endangering international free trade, while banishing any concerted opposition to interventions overseas, which was as unrealistic as it was unpopular. In the first place, the idea was to revise the strict laissez-faire injunction the Economist had laid down under Wilson: ‘that the duty of the State begins and ends with protection of life and property and the enforcement of contracts’.⁸⁷ To Asquith, fresh from Balliol at Oxford, where the idealist philosopher T. H. Green was a tutor and the art critic John Ruskin had engaged students in social experiments like digging roads, this sounded out of date. That point was underscored at the time by Asquith’s meetings with Herbert Spencer, once Wilson’s assistant editor at the Economist. Spencer was still writing essays, Asquith recalled, ‘with such titles as “The Coming Slavery” and “The Great Political Superstition,” attacking, with all the fervour of an uncompromising Individualist, the Liberal party for having forsworn its faith in personal freedom’.⁸⁸

In advanced industrial societies the state now had a positive responsibility, Asquith replied in his Economist pieces, ‘to some undefined degree, for the distribution of comfort and social well-being’. Old radicals like Mill, Macaulay, Bright, Cobden and Wilson, were in a way responsible for this turnabout: after their victory in the ‘crusade against the follies of paternal government’ at mid-century, the ensuing ‘generation of perfect industrial freedom’ had stimulated new wants and new evils at the century’s close. Free education, sanitation, well-mannered, apolitical trade unions – insofar as these were possible, it was by ‘direct action of the State alone’.⁸⁹ This Asquithian prospectus included a wider franchise and some redistribution of seats from country to town. The 1884–85 Reform Bills were, after all, far from the populist earthquakes Bagehot had feared back in 1864: even after their passage, at least 4.5 million adult males could not vote, in what remained a franchise system tied to property, not universal rights. Democracy could act as a hedge against disorder, Asquith argued. But that was because he still understood democracy in such a limited sense: ‘universal suffrage, which so fetters continental politicians, takes little hold on Englishmen.’⁹⁰

New Radicalism was meant, on the other hand, to sever once and for all the connection between free trade and peace posited by the ‘Manchester School of foreign policy’. Abolition of war was not on the cards; ensuring uninterrupted flows of capital, goods, and people within and among the empires actually required such ‘shows of force’. Thankfully, ‘younger Radicals are obviously indisposed to the idea of non-intervention’ – having accurately taken the pulse of the ‘new constituencies’ created by the latest Reform Bills. Popular opinion not only grasped how important it was to secure the route to India: ‘No anxiety is shown to reduce the numbers of the Army; strong measures, like the dispatch of a fleet to Smyrna, to secure the surrender of Thessaly to the Greeks, are not resisted; and in recent Egyptian difficulties the country has been, on the whole, in favour of high-handed action.’⁹¹

Ireland was the pivot on which both sides of this New Radical realignment – social reform at home, imperial unity abroad – hinged: it was thus significant for both the Economist and for liberalism that Asquith grew so exasperated with the place, backing a wave of repression that set the tone at the paper long after he departed. The Land League, which began to urge Irishmen on to economic disobedience in 1880, calling for rent strikes, boycotts and bank runs, was the object of his special hatred. To eradicate these ‘terrorists’ posing as ‘public benefactors’, responsible for all kinds of ‘agrarian outrages’, no measures were too harsh: indefinite suspension of habeas corpus and jury trials, curfews, round-the-clock police and army patrols, deportations, collective punishment. ‘Nor do we feel much sympathy with the rather pedantic constitutionalism’ of those Liberals who objected to the results: about six hundred Irishmen in jail without trial by 1882, including Charles Parnell, leader of the Irish Home Rulers in parliament.⁹²