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Founder, owner, editor, political high-flyer – no other leader of the Economist wore as many hats as James Wilson. But the name most associated with the paper he started is not his, which faded after his death in India in 1860. Lasting fame instead awaited his son-in-law and successor, Walter Bagehot, who remains not only the best-known editor of the Economist, but a totemic figure in and beyond its pages. Drawn as much to religion, literature, art, history and political gossip as the effect of tariffs on the price of salt, Bagehot forms a vivid contrast to Wilson, with far broader interests. In addition to money market summaries, Bagehot wrote two and often three or four leading articles a week on current events for sixteen years; in 1861 he wrote at least thirty-one just on the American Civil War. From these anonymous articles, as well as signed essays in the National Review, Fortnightly Review and other journals, Bagehot spun three major works between 1865 and 1873: The English Constitution and Physics and Politics, describing the subtle and secret evolution of government in England, and the world; and Lombard Street, on the causes and management of financial crises. Economic Studies, a guide to political economy and the lives of its most famous theorists, was unfinished at his death in 1877.

This prospectus has landed Bagehot on the reading lists of the Anglo-American ruling class since the late Victorian period. The jurist James Bryce called Bagehot ‘one of the greatest minds of his generation’ and ranked his constitutional insights above those of Tocqueville and on a level with Montesquieu.¹ ‘The greatest Victorian’ pronounced the historian G. M. Young, after scanning a list that included Eliot, Tennyson, Arnold, Darwin and Ruskin.² While John Maynard Keynes had some doubts about his art criticism, he warmly recommended Bagehot’s behavioural studies of the middle-class men who flourished in nineteenth-century Britain. ‘Bagehot’, Keynes noted in 1915, ‘was a psychological analyser, not of the great or of genius, but of those of a middle position, and primarily of business men, financiers, and politicians.’³ More fulsome praise came from across the Atlantic, where Woodrow Wilson was a devoted reader. In 1895 and again in 1898 the future president enthused about Bagehot in the Atlantic as a sheer pleasure to read: witty, prophetic, and the basis for his own analysis of the flawed American Constitution. Wilson kept a portrait of Bagehot on his study wall at Princeton, deriving from it ‘much inspiration’.⁴

As the twentieth century progressed, so did Bagehot’s reputation. In 1967, Labour prime minister Harold Wilson fondly recalled his student days at Oxford, preparing for a prize essay, reading Economist articles on state regulation of the railways by Bagehot – ‘the most acute observer of the political and economic society in which he lived’.⁵ In 1978, Harold Macmillan addressed the staff of the Economist on the subject of Bagehot. The former Tory prime minister, now eighty-four, mulled over Bagehot’s virtues: ‘gifted amateur’, ‘solid, sensible, perfectly straightforward’ – ‘because if you want to become the editor of a newspaper what can you do better than marry the daughter of the proprietor’ – who didn’t go in for ‘theories and dreams’ or ‘extraordinary doctrines’. After losing the thread in a long complaint against the BBC, which had falsely reported Macmillan’s death the summer before, prompting a daydream about withdrawing his money from Coutts and disappearing to ‘a nice little estaminet’ in the south of France to play boules, Macmillan concluded: Bagehot was ‘the kind of man we’d awfully like to have known’.⁶

Today the picture is much as the elderly Macmillan left it. In 1992, the writer Ferdinand Mount still found Bagehot ‘full of manly common sense’ on the English Constitution; ‘often witty, very often charming, he is never silly’.⁷ A fictional memoir arrived in 2013 that was so true to life, the reviewers had trouble discerning its real author: historian Frank Prochaska, who presented Bagehot as ‘the Victorian with whom you’d most like to have dinner’.⁸ Bagehot’s biographers have seen him in the same candlelit glow, with one searing exception, and have generally had a personal or professional interest in doing so, usually connected to the Economist.⁹ That is hardly surprising. The Economist cannot be understood without Bagehot; neither can he, without it. Fifteen volumes of Collected Works make attributing authorship easier than for any other editor, and reveal three broad ways in which he changed the Economist, and through it, liberalism. The first was a sharper focus on the changing facets of finance; second, a comparative approach to political systems and institutions, with the explicit aim of discovering the ones best adapted to sustaining the phenomenal growth of finance – both at home, where the defeat or neutralization of the democratic demands of the working class was his top priority; and, finally, abroad, where he assessed the costs and benefits of empire.

Walter Bagehot: Born Banker

Bagehot was born into a prosperous, well-connected provincial banking family in 1826. Vincent Stuckey, his maternal uncle, ran the bank, and Thomas Bagehot, his father, was a partner whose marriage to the widow Edith Stuckey had merged the leading shipping, mercantile and financial families of Langport in Somerset. Banking formed a backdrop to their lives, but for their son and ‘greatest treasure’ the Bagehots hoped for even wider vistas. His father, a plainspoken Unitarian, assigned history and philosophy in English and French. When Walter turned five, a governess introduced novels and Latin. His Anglican mother took up his moral education, bringing him to church on Sunday afternoons, though she inadvertently taught him about ‘darker realities’ too, during ‘attacks of delirium’.¹⁰ Little Walter was unruly, rode a pony named Medora, and climbed trees and would not come down.

His formal schooling built upon this liberal home life. In 1839 he left Langport Grammar School for Bristol College, where he studied classics, math, German and Hebrew. Three years later, at sixteen, he enrolled at University College, London, where nonconformists sent their sons (unlike Oxford or Cambridge it had no doctrinal test). He chased down still more subjects: after history, poetry and math, he took a first in classics, followed by political economy, metaphysics and, two years later, a gold medal in philosophy. He and his friends started a debating society, wrote each other sonnets, and went to meetings of the Anti-Corn Law League.¹¹ At one gathering the biggest stars of the movement spoke. Bagehot was stunned by their oratorical skill. ‘I do not know whether you are much of a free-trader or not’, he told a friend. ‘I am enthusiastic about, am a worshiper of, Richard Cobden.’¹²

After graduating with his master’s in 1848, he studied law, and was called to the bar in 1852. In between he began to write articles on political economy for the Prospective Review. One of his most audacious assessed the brand-new treatise by John Stuart Mill, The Principles of Political Economy. ‘I am in much trouble about John Mill, who is very tough, and rather dreary’, he told his best friend, Richard Hutton. ‘I am trying to discuss his views about the labouring classes.’¹³ Bagehot’s own opinion of them was not high. He wrote to his mother of his duties as a volunteer constable in London, where a Chartist revolt was expected on 10 April 1848. Though unexcited at ‘muddling about Lincoln’s Inn field with an oak staff’, and by the Chartists, whose ‘very violent language is delivered to the world gratis by men in dirty shirts’, he found the government’s precautions prudent: ‘with the mass of wretchedness in London, the slightest spark is dangerous and must not be neglected.’¹⁴

It was a chance encounter in Paris, however, that led him to turn his back on the law, while also reinforcing his distrust of the popular political movements that flowered between 1848 and 1851, when artisans, workers and peasants supplied the thrust for the liberal revolutions that briefly shook the autocratic capitals of Europe.¹⁵ Bored in London, Bagehot left for the French capital in the fall of 1851, witnessing a last-ditch effort to defend the republican regime installed three years earlier. What Bagehot saw – uneducated workers building barricades to defend the Second Republic against Louis-Napoléon’s coup d’état, before they were crushed by the army – affected him deeply. He took notes, and seven ‘letters’ from Paris appeared in the Inquirer, a Unitarian journal. Their provocative intent was to justify the coup to liberal opinion in England, as a way to restore confidence among shopkeepers, tradesmen, housewives, ‘stupid people who mind their business, and have a business to mind’, acutely worried that ‘their common comforts were in considerable danger’. ‘Parliament, liberty, leading articles, essays, eloquence’ – he went down the list of liberal virtues – ‘all are good’, but in such a climate, ‘they are secondary’ for ‘the first duty of government is to ensure security of that industry which is the condition of social life’.¹⁶

Bagehot’s letters ‘were light and airy, and even flippant on a very grave subject’, Hutton recalled, and ‘took impertinent liberties with all the dearest prepossessions of the readers of the Inquirer’.¹⁷ In private, Bagehot was even glibber. ‘I was here during the only day of hard fighting’, he informed one correspondent, ‘and shall be able to give lectures on the construction of a barricade if that noble branch of Political Economy ever became a source of income in England.’¹⁸ ‘M. Buonaparte is entitled to great praise’, he told another. ‘He has very good heels to his boots, and the French just want treading down, and nothing else – calm, cruel, business-like oppression to take the dogmatic conceit out of their heads.’¹⁹

The stir caused by the letters kindled his ambition, but with no clear path into politics Bagehot heeded his father’s urgings and returned to Langport to work at the family bank in 1852. Luckily, the man who ran it, his uncle Vincent Stuckey, was no ordinary banker: a political career at the Treasury; friendships with two prime ministers, Pitt and Peel; three times mayor of Langport; and as a bonus, a taste for epigrams. ‘Bankers are mortal, but banks should never die.’ Stuckey had converted the bank into one of the first joint-stock operations and made it into a regional force. By 1909, when merged with Parr’s Bank of Lancashire, it had £7 million in deposits, and a note circulation second only to the Bank of England.²⁰ Heartened by the precedent, Bagehot slogged on for seven years in a variety of jobs, including as manager of the Bristol branch.

After years cultivating his mind in London, however, Bagehot found bookkeeping a chore. He complained to a school friend of ‘being rowed ninety-nine times a day for some horrid sin against the conventions of mercantile existence’. ‘My family perhaps you know are merchants, ship-owners, and bankers, etc., etc.’, he continued. How much better if they ‘would admit that sums are a matter of opinion’.²¹ Among number crunchers, he was a poet. When confronted by intellectuals, however, he played the practical, no-nonsense philistine. On a business trip he was invited to a dinner party, where an aged scholar declared his intention to get at ‘the kernel of all the machinery by which we were governed’. Bagehot piped up after a pause, ‘My impression is that the kernel is the consolidated fund, and I should like to get at that!’ If someone was taking too long constructing an elegant phrase, he would interrupt them, asking, ‘How much?’²²

Bagehot’s articles from these years were mainly portraits of English writers: Cowper, Coleridge, Shakespeare, Macaulay, Shelley, Scott, Dickens, Milton and others. Aside from Bagehot’s interpretation of business success as a criterion of literary merit, what is striking is the relation of all these lives to his own. As an historian Scott was preferable to Macaulay, because the former gave the Cavalier his due: ‘a thrill of delight; exaltation in a daily event; zest in the “regular thing”.’ Shakespeare, meanwhile, was made to share in his view of common folk. It was fun to mix with the lowly, ‘the stupid players and the stupid door keepers’. But at the end of the day ‘it was enough if every man hitched well into his own place in life’, as in Much Ado About Nothing. For, ‘if every one were logical and literary, how could there be scavengers, or watchmen or caulkers, or coopers?’²³

Essay-writing in his spare hours from the bank was not enough. It was as a banker, though, and not an intimate of artists, that Bagehot freed himself from the daily chores of the counting house. Richard Hutton, now co-editor of the National Review, wrote from London in 1856 to say he had received a tentative offer from William Rathbone Greg to edit the Economist. Hutton was unsure, and thought of visiting the tomb of his wife in the West Indies before deciding: what did Bagehot think? ‘Offers of this kind are not to be picked up in the street every day’, Bagehot replied. ‘You have an opportunity of fixing yourself in a post, likely to be useful and permanent, and give you a fulcrum and position in the world which is what you have always wanted and is quite necessary to comfort in England. I do not think you ought to risk it for the sake of a holiday.’²⁴

Hutton set out for Barbados. Bagehot, however, wrote to their mutual friend James Martineau, who secured him an introduction to Greg, who in turn obtained an invitation to Claverton Manor, James Wilson’s pile in the country. After a visit in January 1857, Bagehot was asked to write a series of letters on banking. He also caught the eyes of the six girls in the house, for making fun of their German governess, ‘an egg’, and for his appearance: black wavy hair, long bushy beard, tall, thin, ‘very fine skin, very white’, a ‘high, hectic colour concentrated on the cheek bones … he would pace a room when talking and throw his head back as some animals do when sniffing air.’²⁵ A year later he was engaged to the eldest daughter, Eliza.

Hutton got to work as editor after his return, but it was Bagehot who quickly imposed himself as the heir apparent. Wilson liked Bagehot, and was so thrilled with an essay of his in the National Review in 1859 – warning of the dangers of any but the most limited extension of the franchise to the top layers of the working class – he threw him a dinner party in April, inviting Lord Grey, Lord Granville, Sir Richard Bethell, Sir George Cornewall Lewis, Edward Cardwell, Thackeray and Gladstone – ‘a very fine collection of political animals’, Bagehot observed contentedly.²⁶ And it was to Bagehot that Wilson turned in 1859 ‘to interpret his great work in India to the public in England through the pages of the Economist’ – even as Hutton remained nominal editor for two more years.²⁷ When Wilson died, Bagehot was offered his job in India. He declined, looking forward to greener and more pleasant political pastures at home. Though he resigned as bank manager, he stayed on as a director, and now oversaw all of Stuckey’s business in London.

Bagehot took after Wilson in another respect, with the clear intention to use the Economist as a springboard into politics. He stood for parliament four times as a Liberal: in Manchester in 1865, Bridgwater in 1866, and twice at London University, his alma mater, in 1860 and 1867. All were unsuccessful, but on his third try he came within a hair’s breadth – just seven votes behind his Tory opponent. Bagehot did not lose the Bridgwater by-election, however, as fable has it, ‘because he refused to bribe the electorate’. An 1869 investigative commission declared him ‘privy and assenting to some of the corrupt practices extensively prevailing’. Nor did he accept this censure with good grace. He blamed the voters, these rustics, and did a droll impersonation of them for the commissioners: ‘I won’t vote for gentlefolks unless they do something for I. Gentlefolks do not come to I unless they want something of I, and I won’t do nothing for gentlefolks, unless they do something for me.’²⁸ After admitting he had paid out £1,533 10s. 2d. via his solicitor to cover ‘retrospective’ campaign expenses, he wrote to Hutton in triumph, with news that his reputation had been ‘much raised’ by his examination. ‘They say, “Ah! Mr. Bagehot was too many for them. They broke Westropp but they could not break him.” They regard it as a kind of skill independent of fact or truth. “You win if you are clever, and lose if you are stupid,” is their idea at bottom.’ It was an idea Bagehot seemed to share.²⁹

While a seat in the Commons eluded him, Bagehot received ample confirmation of his standing outside it – elected to Wyndhams and Brooks’s, the Metaphysical Society, Political Economy Club and finally in 1875 the Athenaeum. As editor he was a trusted advisor to two Chancellors of the Exchequer. These varied and prominent roles in Victorian political, economic and cultural life came to an abrupt close in the spring of 1877. Bagehot, then fifty-one, came down with a cold. It was the last in a chain of respiratory ailments – caught, some believed, in the draughty drawing room at 8 Queens Gate Place in London, awaiting drapes custom-designed by William Morris. Bagehot returned to his family home at Herds Hill, where he died on 23 March, and was buried in the family vault beside his mother at All Saints Church.

Liberal Lines: Bagehot Steers the Economist

Bagehot became director of the Economist the year the Liberal Party emerged from its chrysalis among the Whigs in 1859. He was editor at the zenith of Victorian liberalism, with Liberals in power for thirteen out of seventeen years. At the Treasury, William Gladstone drafted one masterpiece of budgetary discipline after another – winning high praise from Bagehot for his ‘flowing eloquence and lofty heroism’, ‘acute intellect and endless knowledge’.³⁰ In the country at large, trade and employment picked up briskly after the downturn of 1848, while the threat of revolution receded along with it. Liberal rule seemed the benign backdrop to this era, to such an extent that Bagehot was stunned when Conservatives interrupted it in 1874.³¹ This context helps to explain a marked shift in tone and outlook at the Economist. Bagehot displayed the knowing nonchalance of a young banker, without the solemnity veering into bombast that had characterized Wilson or William Rathbone Greg. As editor, he brought his literary and professional tastes and interests to bear on the look and feel of the Economist, with tangible results.

In 1861 Bagehot added a Banking Supplement and in 1863 a Budget Supplement. A year later he hired William Newmarch to compile an Annual Commercial History and Wholesale Price Index; and in 1868 he brought Robert Giffen on board to assist him in expanding coverage of the money market, including an Investors Manual, which cost an extra sixpence a month. By 1873, with the Economist itself at eightpence and circulation at 3,600, Bagehot could boast that the previous year ‘was the most profitable in the history of the paper’. He made the link between its financial health and that of the markets in a confidential memorandum to the Wilson family, who held the paper and other assets in trust. It was both a business plan and manifesto.

Since 1859 net income had increased from just under £2,000 to £2,765, with Bagehot’s salary at £400 plus half of all profits over £2,000 – giving him, on average, £780 since 1862. Yet trustees should never mistake this ‘delicate’ source of income for ‘funded property or land’, Bagehot warned, pointing to the 1866 financial crisis, after which profits declined.³² At first he had feared that competition from other business papers, nearly non-existent in 1843, was to blame. But he had changed his mind. ‘I believe it to have been owing to the dull state of the money market which was so motionless for nearly four years that there was nothing to tell the public about it.’ When trading volumes picked up again the Economist ‘recovered its position’, while the ‘other papers made nothing of their chance at all’. This he attributed to the fact that, as a member of Stuckey’s, ‘which always has large sums in London, I have better means of knowing than a mere writer what is happening and what is likely to happen.’³³ Insider knowledge and a reputation for honesty (‘a reason why its management must never be left to a salaried Editor’, who might be bought off) set the Economist apart in the now crowded field of business journalism.

As for coverage, political analyses of the sort businessmen ‘would care to read’ were ‘a material support to the paper and strengthen its circulation’. ‘Indeed if politics were abandoned there wd. be a universal impression that the paper had changed its character and was going down.’ So far as profits were concerned, however, all subjects must be viewed in relation to changes in the money market, ‘because they affect all men of business, and all are anxious to see what will be their course’. What free trade and commercial legislation had been under Wilson, the money market would be for the era and editors that followed Bagehot.

The most remarkable change was not so much the sharper focus on finance, however, as the way this transformed the laissez-faire worldview of the Economist. Bagehot disliked the doctrinaire fanaticism he had found in the Economist in his youth, and as its editor showed a readiness to bend when it came to the basic principles of political economy. In 1871 he took stock of scientific developments since his youth – remembering Nassau Senior, and the school of political economy he represented, in a review of his journals. ‘I was myself examined by him years ago, at the time of the strict school, at the London University’, he wrote. ‘If it could have been revealed to him that persons of authority would dare to teach that profit had no tendency to become equal in different trades, – that the Ricardo theory of rent was a blunder and a misconception, – that it was unnecessary for bankers to keep a stock of gold or silver to meet their liabilities, but that they should buy gold in the market when they wanted it, I think Mr. Senior would have been aghast. Yet such is the present state of the science, and naturally the rise of the heresiarchs has diminished the dignity of the orthodox heads.’³⁴

Up to a point, innovation was welcome. As an undergraduate Bagehot had registered his own doubts about the strict school, which included Wilson. Laissez-faire was ‘useful and healthy when confined to its legitimate function – watching the government does not assume to know what will bring a trader in money better than he knows it himself,’ he argued in ‘The Currency Monopoly’ in the Prospective Review in 1848. He continued:

but it is a sentiment very susceptible of hurtful exaggeration: in the minds of many at this day it stands opposed to the enforcement of moral law throughout the whole sphere of human acts: to the legislative promotion of those industrial habits which conduce to the attainment of national morality or national happiness at a sacrifice of national wealth: to efforts at a national education, or a compulsory sanitary reform: to all national aid from England towards the starving peasantry of Ireland: to every measure for improving the condition of that peasantry which would not be the spontaneous choice of the profit-hunting capitalist. Whoever speaks against these extreme opinions is sure to be sneered at as a ‘benevolent sentimentalist’: and economists are perpetually assuming that the notion of government interference is agreeable only to those whose hearts are more developed than their brains: who are too fond of poetic dreams to endure the stern realities of science.³⁵

Wilson’s Economist was not only guilty of overstating the free trade case, it crudely caricatured any who asked ‘if there be no exception to it within the limits of political economy itself’. At twenty-two Bagehot thought he had uncovered such a case: government, not private entities, should enjoy a monopoly on coining precious metals and printing paper money – absent which, financial crises like the one just past in 1847 would be more frequent and severe.³⁶ ‘It is a duty of a wise state to secure the mass of the nation against evils produced by the selfishness of individuals so far as it is possible: to bring within government control even the most limited causes of commercial convulsion.’³⁷

Once editor, he nudged the Economist in the same direction. In 1861 the paper came out in favour of a permanent, graduated income tax, on the grounds that in its form at the time the tax failed to distinguish between different kinds of wealth: a barrister who earned £1000 annually was not as well off as a landowner or fund holder who earned that amount. ‘People with secure incomes are richer than people with only precarious ones.’ Fairness was an issue: ‘People think that the more rich should be taxed more than the less rich.’³⁸ In 1864 the Economist reversed its earlier insistence under Wilson that all factory legislation, even to protect children from overwork or injury, amounted to an assault on free trade.³⁹ The next year it endorsed state ownership of railways, comparing the plan to the penny-post reform, which ensured a cheap, efficient, national parcel network.⁴⁰ Trade unions did restrain trade, but they were ‘real forces of the industrial world which the law did not make, and which it cannot unmake’; better to recognize them, with special laws to punish intimidation and sabotage by their members.⁴¹ Even women, after hesitations and qualifications, got some sort of break – though Bagehot’s admirers are stretching the truth when they call him an advocate of female suffrage. Votes for women on any wide basis was an absurdity that only John Stuart Mill took seriously, he wrote in 1865. Five years later, Bagehot was ready to concede only ‘a certain legal plausibility in the claim’ that unmarried female property owners might obtain the vote on the same grounds as men – even if he thought very little of the ‘political intelligence’ of the ‘spinsters’, ‘widows’ and other ‘lonely women’ that would exercise it.⁴²

For all this Bagehot did not count himself among the ‘heresiarchs’: by showing greater flexibility he hoped to update laissez-faire at the Economist, not overturn it. In the part of Economic Studies he had completed by 1876, he celebrated the ‘wonderful effect’ of ‘English political economy’ since the publication of Adam Smith’s Wealth of Nations a hundred years before. ‘The life of almost everyone in England – perhaps of everyone – is different and better in consequence of it. The whole commercial policy of the country is not so much founded on it as instinct with it.’ Indeed, ‘no other form of political philosophy has ever had one thousandth part the influence on us,’ he went on, ‘its teachings have settled down into the common sense of the nation, and have become irreversible’.⁴³ Bagehot criticized newer rivals to this ‘English-school’ of political economy: on the one hand, the ‘enumerative’ or ‘all case method’ of the German Historical School; on the other, the neo-classical or marginal revolution that was just starting to take off. ‘Mr Jevons of Manchester, and M. Walras of Lausanne, without communication, and almost simultaneously, have worked out a “mathematical” theory of political economy’, Bagehot wrote of the latter school; ‘and anyone who thinks what is ordinarily taught in England objectionable, because it is too little concrete in its method, and looks too unlike life and business, had better try the new doctrine, which he will find to be much worse on these points than the old.’⁴⁴

Bagehot’s mission as Economist editor was to teach a common sense science of political economy, ‘the science of business’, whose chief merit was its ability to adapt to changing circumstances – in his era, the increasing weight of global finance in Victorian capitalism. Export of capital on a large scale was a new phenomenon in Britain, coinciding with Bagehot’s career: from low levels of 1 to 1.5 per cent of gross national product in the forty years prior to 1850, average net foreign investment leapt to 2.1 per cent in the 1850s and to 2.8 per cent in the 1860s; and as Bagehot foresaw, it kept rising, averaging 4.3 per cent between 1870 and 1913, at which point net overseas assets accounted for 32 per cent of national wealth – a larger share than for any country before or since. If the surpluses for this boom arose in part from Britain’s early industrial monopoly, it soon developed dynamics of its own.⁴⁵ ‘Banking in England goes on growing, multiplying, and changing, as the English people itself goes on growing, multiplying, and changing. The facts of it are one thing today and another tomorrow.’⁴⁶ ‘England has become the settling place of international bargains much more than it was before’, he observed. ‘But whose mind could divine the effect of such a change as this, except it had a professed science to help it?’ A new wave of investment in ‘half-finished’ and ‘half-civilised communities’ flowed abroad. ‘Who can tell without instruction what is likely to be the effect of the new loans of England to foreign nations?’ Such easy access to credit, and on a global scale, was unprecedented in human history. It fell to Bagehot’s Economist to map this new world, tracing the theoretical insights of political economy to the people and places men of business were sending their money.⁴⁷

Central Banking Rules

It was in the halfway-house between theory and practice that Bagehot made his contributions to financial history, where the legacy of his editorship was the construction of a role and set of rules for central banking in the age of global capital. On these matters, his opinion carried great weight. Gladstone dubbed him a ‘supplementary Chancellor of the Exchequer’ and consulted him on policies such as the Bank Notes Issue Bill, with Bagehot promising ‘the entire assent and substantial support of the issuing bankers’.⁴⁸ Contemporaries credited him with inventing the Treasury Bill in 1877, when he advised Gladstone’s successor as Chancellor, Sir Stafford Northcote, to replace ‘Exchequer Bills’ with a modern, easily traded instrument, to ‘resemble as near as possible a Bill of Exchange’. ‘The Treasury has the finest security in the world, but has not known how to use it’, Bagehot explained privately. ‘Such a Bill would rank before a Bill of Barings.’⁴⁹

The Economist was the source of this authority as well as the most important outlet for his views on bringing stability to the financial system – which by all accounts needed more of it: crises were frequent, either beginning in the City of London or passing through it infinitely magnified, as the spoke around which international finance now turned. At home, the panic of 1866 was among the most spectacular, dominating Economist coverage of the money market long afterwards. In that year one of the City’s great wholesale banking houses, Overend, Gurney & Co., failed soon after it had raised large sums by incorporating as a company with limited liability. After the stock market crashed, a bank run ensued. For Bagehot, the episode demonstrated beyond a doubt that the Bank of England, which at first refused to intervene, was unlike all other banks and discount houses, and Bagehot told Gladstone as much during the crisis, over breakfast on 31 May.⁵⁰

Bagehot also developed this argument in countless Economist leaders, distilled into a standalone book in 1873, Lombard Street. Since it was backed by government and held the nation’s reserves, the Bank of England had an important duty. When credit dried up during a crisis like the one that felled Overend, Gurney & Co., it must act as lender of last resort, until confidence returned, using two guiding rules: advances must be at a ‘very high rate of interest’ and made on ‘all good banking securities’, thereby limiting the bailout pool to ‘solvent’ but ‘illiquid’ banks, and encouraging rapid repayment.⁵¹ The Bank of England’s directors were ‘trustees of the public’, whose actions had a major effect in and beyond Britain. ‘A large deposit of foreign money in London is now necessary for the business of the world.’ Yet this also meant that a rush to withdraw by foreign individuals, businesses or states could determine ‘whether England shall be solvent or insolvent’.⁵² The Bank of England would require larger reserves in the light of the vast new scale of British financial commitments and could no longer be governed by an elderly bench of part-timers, drawn from a class of reputable but amateur City merchants.⁵³

The French answer was nationalization. That, obviously, would not pass muster with the English. Such a move also had the demerit of exposing government to criticism in a crisis, or subjecting policy to political pressure, ‘as chance majorities and the strength of parties decide’.⁵⁴ In an ideal world, he conceded in Lombard Street – with a nervous glance over his shoulder at Wilson – the Bank of England would not even exist. Like any other trade, state meddling harmed the banking business. ‘The best thing undeniably that a Government can do with the Money Market is to let it take care of itself.’ Since it did exist, though, better not to upset markets by any too-radical change. ‘You might as well, or better, try to alter the English monarchy and substitute a republic’, he added archly. Yet the analogy between the function of credit and that of a constitutional monarch was deliberate – and revealing. Bankers had faith in the Bank of England as implicitly as ‘Queen Victoria was obeyed by millions of human beings’.⁵⁵ There was no good reason to accept either, in other words.

But since people did believe, and their belief was essential to the smooth running of the banking and political systems, Bagehot looked to the monarch as a model. The appointment of a permanent deputy director to the Bank with the requisite experience, sitting under a rotating, ceremonial governor, would ensure consistency and independence enough to instil confidence in the nation’s credit. But where to find the deputy? The custom by which bankers were excluded from the Bank’s governing body dated from an era in which all banks, including the Bank of England, were in competition. ‘This is a relic of old times.’⁵⁶ Now bankers could work together, and as the principal depositors, with an interest in a large reserve to safeguard their assets, they were ideal candidates.⁵⁷ The point was to remove the old commercial oligarchs from the board of the central bank as well as any threat of parliamentary interference. Major powers – to set interest rates, determine and maintain adequate reserves, and to bail one another out in a pinch – would fall to the bankers themselves.

For Bagehot, banking was the mirror image of politics. Both depended, in the final instance, on a powerful illusion from which everyone benefited – even if only a discerning few were able to chuckle about it. In his lifetime better known as a banker (Lombard Street took just three years to reach a sixth edition), Bagehot is more widely read today for what he had to say about the other side of this looking-glass. His writings on the English Constitution represent just a small sample of his political output, however. The Economist took him further afield, towards two political systems that contrasted with Britain: Louis-Napoléon’s imperial dictatorship in France, and the partisan democracy in America. By the 1870s both France and the US were just beginning to challenge the monopoly Britain had enjoyed over industrial production for the world market, while entirely new nation-states appeared alongside them, in Germany and Italy, whose leaders sought to unleash the productive forces latent in their own societies. The Economist cheered these developments, which would require ample investment capital to be realized. But it also identified a new problem, thanks to Bagehot, on which its comparative political judgments of them hinged. In an age where new and older nation-states were attempting to play catch-up to Britain, in part with British capital, the role of political institutions in fostering this growth – or hindering it – became pivotal; and for Economist readers, a way of evaluating the potential return on their investment, and its security. Historians have noted how this wave of capital transformed the world economy – pushing frontiers of food cultivation in North America and Eastern Europe, cotton production in India, mineral extraction in Australia, ranching in Argentina, and railways nearly everywhere, cheapening the transport cost of all these goods.⁵⁸ Fewer have remarked on the form of liberal politics that was its corollary, and which had no clearer tribune than Bagehot’s Economist.

Confidence Tricks: The English Constitution and the Dangers of Democracy

On its own the English Constitution, first released as a book in 1867, ensures that Bagehot is required reading for any soul bold enough to inquire into the arrangements by which Britain persists in being governed. In it, he presents an alternative view of the parliamentary system, in which it is divided into two parts, as opposed to three, and the traditional theory of checks and balances between them is discarded. There are the dignified parts, ‘which excite and preserve the reverence of the population’, and the efficient, ‘by which it in fact works and rules’.⁵⁹ The Queen and House of Lords belong to the former category, with the crown placed at the head of a ‘parade’ or ‘theatrical show’ meant to distract and gratify ‘the mob’ below. This ‘disguise’ allows the ‘real rulers’ – not the House of Commons but the Cabinet, a ‘committee of the legislature’ chosen by it – to conduct the business of the nation in relative peace and quiet.

Business is the operative term. Bagehot repeatedly emphasized how much this committee resembled a ‘board of directors’ – its greatest virtue, in his eyes – with the royal family there to smooth out its one comparative shortcoming: the fact that cabinet members could be removed suddenly based on shifts in public opinion. Since most people, he said, ‘really believe that the Queen governs’, the real rulers came and went ‘without heedless people knowing it’, avoiding the unrest or uncertainty such reshuffles might otherwise provoke. The upshot was as cynical as it sounds. A vindication of the ‘plutocratic’ upper and lower houses and a strong executive shrouded in secrecy were the wonders of political science in England.⁶⁰

Yet Bagehot’s classic work – revered by jurist Albert Dicey as the first to explain ‘in accordance with actual fact the true nature of the Cabinet and its real relation to the Crown and Parliament’ – must be considered in the context of the Economist.⁶¹ For over five years before the serialization of the English Constitution, Bagehot had been writing on politics, evaluating constitutional structures in terms of their tendency to help or hinder different states on their paths of capitalist development. Wilson had first encouraged Bagehot to take on this role, expanding his original banking brief at the Economist, based on his 1859 National Review essay entitled ‘Parliamentary Reform’, which showed how far they agreed on the need to limit democracy. In it, Bagehot had argued that any extension of the franchise be limited to a top layer of rate-paying artisans in the largest towns – with artisans in smaller towns, farm workers and all unskilled labourers shut out, so as not ‘to deteriorate the general character of the legislature’. This was fair, he insisted, in his recalibration of natural law, for ‘every person has a right to so much power as he can exercise without impeding any other person who would more fitly exercise such power.’⁶²

From that point on, Bagehot used the Economist itself to denounce the democratic tendencies of reform plans put forward by both Tories and Liberals, which, he said, risked turning a sensitive deliberative body into ‘class-government’, ‘a mere reflex of the popular cry’. ‘True Liberalism’ was at odds with ‘the extreme left of the Liberal party’, he wrote in the spring of 1860, with its ‘superstitious reverence for the equality of all Englishmen as electors’ based on a ‘glaringly false assertion’, that ‘the talents and attainments of the lowest peasant and mechanic are the measure of the electoral capacity of the most educated man in the land’.⁶³

In a review of Mill’s Considerations on Representative Government, he hailed the first section, which he called ‘an exceedingly able protest, by the only living thinker of much authority among English Liberals, against that helpless and reluctant drifting of the Liberal party into pure democracy which is so melancholy a sign of their political imbecility.’⁶⁴ This rhetoric forced the Economist to defend itself against charges of being ‘impractical, doctrinaire, theoretic’ and of promoting ‘Tory views’ – a reminder that it was uncommon for Liberals to be quite so openly anti-democratic.⁶⁵ In 1860 Bagehot had even sent a signed letter to the editor, wishing to express himself categorically on the proper attitude of Liberals towards any further reform. ‘The question now is, what securities against democracy we can create; none are easy; none are perfect; which is the least defective and the least difficult to attain?’⁶⁶

Bagehot tinkered with his answer to this question in the Economist before folding the results into the English Constitution. Early on, he was prepared to accept a slightly wider suffrage, provided there was also ‘a double test of numbers and property, giving every householder a vote, but taking property as the index of social station, and giving higher classes, therefore, a number of votes.’⁶⁷ He soon had second thoughts about this, however. In a leader from 1864 he suggested a net transfer of members from ‘stagnant’ boroughs to industrial towns, which alone would enjoy a greater degree of popular participation.⁶⁸ ‘A Simple Plan of Reform’ then became the appendix to the 1867 edition of the English Constitution.⁶⁹

Here Bagehot gave a detailed rationale for the schemes he had posited in the Economist.⁷⁰ For the efficient secret of the constitution to be kept, two things were required: the lower classes must not know it, and the upper classes must fully understand it, not falling for pious ‘paper descriptions’ of their government as one of perfectly calibrated checks and balances. So Bagehot made clear just how wide the chasm was between rulers and ruled. With the exception of an educated and propertied elite amounting to no more than ten thousand men, most were ‘no more civilized than the majority of two thousand years ago, narrow-minded, unintelligent, incurious’ and ‘unable to comprehend the idea of a constitution’. Giving them votes would spell disaster, for that would mean ‘the rich and the wise are not to have, by explicit law, more votes than the poor and stupid’ – or, in big towns, the workers, whom he dubbed ‘the members for the public houses’ (i.e. pubs).

It is useless to pile up abstract words. Those who doubt should go into their kitchens. Let an accomplished man try what seems to him most obvious, most certain, most palpable in intellectual matters, upon the housemaid and the footman, and he will find that what he says seems unintelligible – that his audience think him mad and wild when he is speaking what is in his own sphere of thought the dullest platitude of cautious soberness. Great communities are like great mountains – they have in them the primary, secondary, and tertiary strata of human progress; the characteristics of the lower regions resemble the life of old times rather than the present life of the higher regions.⁷¹

Bagehot’s defeat in his third attempt to be elected a Liberal MP in 1866, just as he was finishing up the English Constitution, gave to it this very bitter edge, with masters advised to ‘go into their kitchens’ to confirm the witlessness of their servants. Passage of the Second Reform Act the next year – by the Tories, no less – surprised him and deepened his gloom. A change in tone is clear from the 1872 edition of the English Constitution. ‘What I fear is that both our political parties will bid for the support of the workingman.’ There was no worse misfortune ‘for a set of poor ignorant people than that two combinations of well-taught and rich men should constantly offer to defer to their decision’. Or, rather, there was one: the poor and ignorant conferring among themselves. ‘In all cases it must be remembered that a political combination of the lower classes, as such and for their own objects, is an evil of the first magnitude.’⁷²

Yet once again it was in the Economist that Bagehot first registered his shock and disgust at the bill that Benjamin Disraeli, the Conservative leader in the Commons, crafted and pushed through both Houses in 1867. The Second Reform Act increased the number of working-class male voters in the towns and cities by extending the vote to occupiers (renters) paying at least £10 a year – in a move that altered neither the basis of the franchise in property, nor the balance of class forces in parliament. ‘We shall not be supposed to like a Reform of the present pattern. We have opposed it for years’, ran an Economist leader, comparing the debate over reform to a botched shareholders’ meeting.⁷³ Bagehot’s constitutional theory was on the line, just a year after it was published. ‘We are not so great a political people as we thought,’ he wrote, ‘or we could not on a sudden change our deepest thoughts upon the most familiar and important of political questions.’⁷⁴ ‘Why has the “Settlement” of 1832 So Easily Melted Away?’ contained a mixture of bitterness, and swipes at the British elite for misunderstanding the constitution, despite his attempts to enlighten it:

The English people have been told by the received authorities on their Constitution, that it contains, apart from the House of Commons, and in a position to resist that House, great conservative forces on which they might rely. Most people believe that no great change could be effected in a democratic direction, because of these old powers. ‘The Queen would not let it,’ is believed by many more than a London politician fancies, and ‘Thank God we have a House of Lords’ has passed into a cry. But now when it comes to business, these book checks are of no use.⁷⁵

Bagehot cited the recently published correspondence between William IV and Lord Grey at the time of the 1832 Reform Bill, and commended the latter: here was a minister ‘able to manage his sovereign without a trace of artifice, and without impairing his peculiar patrician austerity’. But this only revealed how much had changed. ‘We talk of Mr. Disraeli’s wonderful manipulation both in the Cabinet and the House of Commons. But the very name of Victoria is not mentioned, though in 1832 William was prominent and constant in everyone’s mouth. The check of royalty upon democratic change has turned out to be a fancy.’

Yet this was exactly what Bagehot had been saying it was all along. In the English Constitution he had urged the Queen to remain ‘hidden like a mystery’, a relic, ‘not to be brought too closely to real measurement’. Now in the Economist even he lamented her powerlessness. ‘Who cares about managing the Queen? She goes away to Scotland, and the world hardly knows where she is.’⁷⁶ His objection to the ‘paper description’ of the constitution was that it took the idea of checks and balances at face value. His theory, however cheeky, was not so different: checks and balances were illusions, of course, but given the mental haze of the housemaids and footmen of England, he had counted on them being effective blocks on democratic change.⁷⁷

The French Constitution

The trade-offs between democracy and socioeconomic stability were even more glaring in France, where the Second Empire exercised a lifelong fascination for Bagehot. Indeed, no one in history has made the case for Louis-Napoléon – the portly, preening nephew of the first Emperor, whose rule over France ended in a catastrophic defeat to Prussia in 1870 – quite like him. Bagehot never shared the view of much of the press: that ‘Plonplon’, Louis-Napoléon’s nickname, was an adventurer and a slightly ridiculous facsimile of his famous uncle. The Economist, on the contrary, treated him as a genius, who understood the French better than an elected assembly ever could.

Bagehot began his complex love affair with Louis-Napoléon in 1851, excusing his coup d’état as the surest way to restore ‘confidence’ and ‘security of industry’ to France, in the Inquirer. At this time, Bagehot based his support for a regime in Paris that he would never have tolerated in London on the concept of ‘national character’. Frenchmen were too ‘excitable, volatile, superficial, over-logical, uncompromising’ to enjoy the same freedoms as the English.⁷⁸ What the aftermath of the 1848 revolutions in Europe had ‘taught men’ was just the opposite: ‘that no absurdity is so great as to imagine the same species of institutions suitable or possible for Scotchmen and Sicilians, for Germans and Frenchmen, for the English and the Neapolitans.’⁷⁹

As editor of the Economist, Bagehot was somewhat more sober in his praise of Louis-Napoléon, but consistently backed his regime in France – a restless, revolutionary nation, in need of a firm hand to force down the bitter medicine of political economy.⁸⁰ What nuance did enter the picture during the 1860s had more to do with the intellectual situation in England. Here disciples of the positivist French philosopher Auguste Comte were winning converts, Bagehot worried, with arguments that rapid material progress backed by a strong central state in France held lessons for overly individualistic, market-oriented England. In 1867 Bagehot attacked these thinkers, whose support for the Second Reform Bill was bad enough. They also believed, he said, ‘Parliamentary government is complex, dilatory, and inefficient. An efficient absolutism chosen by the people, and congenial to the people, is far better than this dull talking.’⁸¹ In Physics and Politics, he named ‘the secular Comtists, Mr. Harrison and Mr. Beesly, who want to “Frenchify English institutions” – to introduce here an imitation of the Napoleonic system, a dictatorship founded on the proletariat.’⁸² The Economist aimed at a similar audience of Francophiles, but tried to teach them different lessons: the point was to admire the view across the English Channel, not to import what they saw there.

Bonapartism, or Caesarism, as Bagehot often called it, ensured stability now, but in the long run no one could predict what would happen after Louis-Napoléon – now Napoleon III – died; and it was too democratic, cutting out the urban educated middle class, in favour of direct appeals to the ‘dumb majority’, the ‘populace, the peasantry and the army’.⁸³ The ultimate sign of its shaky foundations? A few times a year the Economist was confiscated in Paris. ‘At one time any article with “French despotism” in it was seized, no matter what followed, and though it were laudatory’, Bagehot complained of censors too dim to tell a friendly editor from a subversive. ‘If the Economist would make a revolution, what would not make a revolution?’⁸⁴ The English system was better, then, provided the people living under it were English. Any country would be wise to adopt the ‘true British constitution’, he said – that is, the secret one – but few could.

Yet despite his attempts to warn ‘young Englishmen’ off Bonapartism, its appeal in England had a lot to do with the Economist, where each week Bagehot reported the progress of France under Napoleon III in vivid detail. In 1863 ‘The Emperor of the French’ informed English Liberals of the popularity of this ‘Crowned Democrat of Europe’.⁸⁵ In 1865 it hailed him as a progressive, vastly superior not just to the ancient ‘democratic despot’ Julius Caesar but the old monarchs of Europe as well. ‘Louis Napoleon is a Benthamite despot. He is for the “greatest happiness of the greatest number.”’ His regime was renowned for ‘orderly dexterity’, his ‘bureaucracy is not only endurable but pleasant.’ And whereas the English intellect was freer than the French, and better able to ‘beat the ideas of the few into the minds of the many’, it ‘has rarely been so unfinished, so ragged’. In Parisian society ‘higher kinds of thought are better discussed than in London, and better argued in the Revue des deux Mondes than in any English periodical.’

Above all Napoleon III had kindled an economic miracle to ‘amaze Europe and France itself’. ‘No government has striven to promote railways, and roads, and industry, like this government. France is much changed in twelve years.’⁸⁶ The usual objection to despotism was that it made property insecure. But the modern model erected in France had nothing to do with this ‘coarse Asiatic despotism’. The Emperor handled property rights with ‘ostentatious care’, being ‘too wise to kill the bird which lays the golden egg’, and ‘is as good a free trader as there is in France’. As for a ‘common English notion that such freedom stimulates the demand for political freedom’, Bagehot wrote, with a wink, he ‘is aware that very often it does nothing of the kind’.⁸⁷

Readers could be forgiven for wondering what if anything was wrong with ‘Caesareanism as It Now Exists’, the title of one Economist leader. To Bagehot there was a major flaw, which he identified in 1865. ‘Credit in France, to an Englishman’s eye, has almost to be created.’⁸⁸ In the summer of 1867 the French and Austro-Hungarian emperors seemed to be plotting a war against Prussia. ‘Every bourse in Europe is trembling’, he wrote in ‘The Mercantile Evils of Imperialism’, for their intentions were ‘incalculable’. Parliaments had their uses, after all: furnishing businessmen with ‘data to spell the future’. The Economist brimmed with illustrations of what this stunted financial development meant for France. ‘An English traveller sees nothing incalculably inferior to England. Means of communication, trade, agriculture, are all excellent.’ Only, ‘the French banking system is childish.’ Napoleon III had merely postponed the day of political reckoning that retarded the growth of financial capitalism. ‘A French banker, in answer to all comments upon his timidity, has a single reply: he says, “It is all very well for you to talk in England; but we in Paris, have revolutions; you were not here in 1848, I was.”’ Paris ‘is a great place of pleasure, – she is an inferior place of lending business.’⁸⁹

Nations, Nationalism and the Franco-Prussian War

If Bagehot was clear in his political prescriptions for France, his predictions went hopelessly astray. His evaluation of the emperor suggested a war was impossible between France and Prussia. ‘A singular mixture of tenacity and hesitation, of daring and timidity’, Napoleon III was, the Economist assured readers, the last statesman liable to do something rash. ‘We may feel very confident that he will never face Europe, or run any risk of acting in such a fashion as to combine all Europe against him.’⁹⁰ In 1867 it counted on his ‘sagacity and self-interest’ to hold back the warlike masses. While the Italian liberal nationalists Mazzini and Garibaldi crafted ‘mischievous projects’ in Italy, the wise rulers of France and Prussia beamed at one another from across the Rhine.⁹¹ Just months before Napoleon III was duped into a war in which he allowed his army to be trapped and himself taken prisoner, Bagehot wrote that the future would judge him the greater of the two Napoleons. The career of his uncle was ‘more sudden and brilliant and meteoric’ but though ‘an exciting story’ it did ‘not to our minds furnish one half so singular and unexampled in history as that of the present Emperor’s plodding, painstaking, uphill, intellectual efforts to gauge and adapt himself to both the superficial tastes and permanent demands of the French people.’⁹²

Bagehot was momentarily chastened at the outbreak of hostilities. Maybe those who had called Plonplon ‘a gambler and a desperado’ had been right after all.⁹³ Just a month later, however, he noted that what had failed in France was not ‘personal government’ – since Prussia was ruled by a military autocracy at the pleasure of a king. It was Caesarism: a plebiscitary despotism that had cut out the middle classes, courting ‘the favour of the ignorant peasantry’.⁹⁴ Bagehot remembered Napoleon III fondly at his death in exile three years later. His defeat at Sedan was excused, attributed to a painful bladder stone that had impaired his usual ‘clearness of insight’. The muse of history blessed the fallen hero. ‘To declare him a great man may be impossible in the face of his failures, but to declare him a small one is ridiculous. Small men dying in exile do not leave wide gaps in the European political horizon.’⁹⁵

What of those gaps? Just before the collapse of the Second Empire, Bagehot had advised Liberals to refrain from trying to topple it, to ‘defer all ideas of a republic’.⁹⁶ Rather, ‘thinking Liberals’ should ‘engraft upon it rational and liberal principles’ because the republic they wanted – sober, ‘with no nonsense in it’ – was impossible in France. Under pressure from workers it would turn red, demanding ‘equal division of property’.⁹⁷ After the fall of the Empire, socialists took power in Paris in 1871, declaring a revolutionary republic and vowing to fight on against the Prussian invaders in defiance of their own government, which had surrendered. The Economist, predictably enough, recoiled in horror. The Paris Commune was a gang of ‘artisans and working men’, ‘desperate poor’, ‘mad with rage and envy’. It only prayed they could be stopped before their ‘settled design to destroy the Tuileries, the Louvre, the Palais Royal’ was realized.⁹⁸

The Economist was thus grateful to Adolphe Thiers, provisional president of the French national government, for marching 60,000 loyal troops on Paris, aided by the Prussian chancellor Otto von Bismarck, who released them for this task at Thiers’s urgent plea. In the ensuing bloodbath, around 20,000 civilians were killed – many shot without trial, to be burnt or dumped in open graves, as the opening act of the French Third Republic. The fact that Thiers, a self-avowed republican, had given orders to massacre so many fellow citizens was encouraging. France owed 5 million francs in reparations to a newly united Germany and needed to show markets, where it would have to raise much of the cash, who was in control.⁹⁹ Above all, the defeat of the Commune ‘effectively severed the name of the Republic from the creed of the delirious Republicans. It left it perfectly open to M. Thiers to identify the idea of the Republic with the soberest possible conceptions.’¹⁰⁰

Till the end Bagehot never thought a republic could succeed, however, and welcomed signs of a return to enlightened dictatorship. ‘Why an English Liberal May Look without Disapproval on the Progress of Imperialism in France’, a leader from 1874, argued that while a parliament was just right for England – where a new ministry ‘does not change consols an eighth’, and a monarch sits ‘behind the ministry, to preserve at least an appearance of stability’ – this would never do for the French.¹⁰¹ In a friendly mood, he nevertheless offered to advise the National Assembly meeting at Versailles. He printed his own constitutional template in the Economist, ‘drawn up by one who has great experience in such matters’.¹⁰² In it, Bagehot urged the French delegates to vest power in a strongman, elected by an assembly, but who could in turn dissolve it – reminding readers that this was the secret ‘mainspring’ of the English Constitution. The document the Assembly actually adopted in 1875 earned his admiration on this basis. The ‘Conservative Republic’ looked forward – incorrectly, as the history of the Third Republic would show – to an executive more powerful than the US president and British prime minister combined. ‘Indeed, it is not very easy to conceive, outside Russia, a position of more influence and grandeur’, he wrote, thinking the model of the Czar to be an appropriate outer limit for a leader whose aim was to liberalize France.¹⁰³

National character may have been a key category in comparative explorations of political order for Bagehot. But to nationalism as a leading force of the period he was relatively blind. A necessary precondition for a great nation was, of course, he granted, ‘accordance in sentiment, language and manners’ – but he was unwilling to endorse the existence of pure nationalities, or place them above these looser categories of national belonging. The term was unscientific, ‘a vague sort of faith to vast multitudes – a vague sort of implement to some plotters’. Yet it was also useful, so long as it was helping to build modern states – as in Germany and Italy. As a rallying cry for ‘alien fragments of old races’, however, nationalism was pernicious. ‘To set up the Basque nationality, or the Breton, or the Welsh, would be injurious to the Basque, the Bretons, and Welsh, even more than to Spain, France and England.’¹⁰⁴ Its point was to release talented men cooped up in the administration of tiny nations (‘small politics debase the mind just as large politics improve it’), into larger ones, somehow leading to smaller, efficient government – and peace, with big countries less tempted to go to war to snap up weaker neighbours.¹⁰⁵

What interest Bagehot’s Economist did take in nationalism was usually focused on its leading proponents. In Mazzini, the founder of Young Italy and champion of Italian unification, it saw a ‘true zealot’, more in love with himself than Italy, obsessed with the name of a republic, and too stubborn to accept its reality under the guise of a constitutional monarch. The brilliant military commander Garibaldi was a dimwit, who fought ‘with windmills instead of giants’. In both cases Bagehot refused to recognize the popular forces backing Mazzini and Garibaldi up and down the Italian peninsula.¹⁰⁶ The Economist registered patriotic fervour in France and Prussia, meanwhile, but thought statesmen there would act to restrain lowborn passions at the last moment; in reality, Bismarck manipulated them – while Louis-Napoléon tried and failed to do the same, at home and as far afield as Mexico.¹⁰⁷

Nowhere was the misreading of nationalism more pronounced, however, than in America, and the form this drive took in Lincolnism. And here the stakes were highest: of the 800 million pounds of cotton British mills consumed each year, 77 per cent came from the slave plantations of the American South, in which one-tenth of British capital was sunk. The outbreak of the Civil War in April 1861 cut off these supplies, endangering the most important industry in Britain, which added up to near half of exports. Anxious industrialists, merchants and investors turned to the Economist not just for analysis of the American situation, but for reports on markets as far afield as Egypt and India, where capital raced to open up new sources of cotton cultivation, leading to a cycle of boom and bust that transformed peasant agriculture and merchant trading networks around the world.¹⁰⁸ For Bagehot the conflict also prompted a third constitutional investigation, setting the efficient secret of the English system against the grim realities of the American.

The American Constitution and the Civil War

Of all the politicians whose portraits Bagehot painted, his estimate of the US president, Abraham Lincoln, was at first lowest. ‘The President is unequal to the situation in which he is placed’, judged the Economist flatly at the end of 1861. ‘He has received the training of a rural attorney, and a fortuitous concurrence of electioneering elements have placed him at the head of a nation.’¹⁰⁹ The federal government had ‘fallen into the hands of the smallest, weakest and meanest set of men who ever presided over the policy of a great nation at the critical epoch of its affairs.’ Their collective wisdom was a ‘concatenation of paltry arts which their own word “dodge” and no other will describe’.¹¹⁰ By the time of his re-election in 1864 Bagehot considered Lincoln the best candidate but made it clear this was not saying much. ‘It is not even contended that Mr. Lincoln is a man of eminent ability. It is only said that he is a man of common honesty, and it seems, this is so rare a virtue at Washington that at their utmost need no other man can be picked out to possess it and true ability also.’¹¹¹ Bagehot did not even value his literary style, the ultimate insult, comparing ‘the dignified and able State Papers of Jefferson Davis to the feeble and ungrammatical prolixity of Abraham Lincoln’.¹¹²

Bagehot looked down his nose at Lincoln, but it was the American Constitution he blamed for putting him in charge, and for the seeming inability of the more prosperous and populous North to suppress a rebellion of eight million backward Southerners.¹¹³ The contrast with the efficient political reflexes of the English system was constant in his leaders for the Economist, and formed a considered corpus of work beyond it. ‘The American Constitution has puzzled most persons in this country since the remarkable course of recent events has attracted a real attention to American affairs.’¹¹⁴ Bagehot would explain its mysteries. Indeed, his disclosure of the efficient secret of English parliamentarianism depended on a prior act of exposure in America, where the Civil War revealed the horrific administrative, military, and financial consequences of wrong constitutional theories.

The US founding fathers had built upon an interpretation of the English Constitution that Bagehot would attack as false – with the perverse result that, here, checks and balances were real, limiting efficient government without restricting the suffrage. Americans had trusted to ‘paper checks and constitutional devices’ to ‘resist the force of democracy’ but ‘either could not or did not take the one effectual means of so doing; they did not place the substantial power in the hands of men of education and of property’.¹¹⁵ Congress, meanwhile, lacked the dynamic powers that might have made it an effective check either on the people or the president. With respect to the latter, it had an ‘extreme remedy’ only, ‘the power of refusing supplies’. The Founders had misunderstood their model. For ‘the framers of this clause in the American Constitution copied it from the traditional theory of the English Constitution.’ They had not understood that though it was ‘a deadly sleeping weapon’, in practice ‘a lesser instrument had been annexed to it, and was always used instead of it – that of choosing the executive’.¹¹⁶ Their mistaken reading meant the president had a ‘lease for years’ and stayed for all four no matter how ‘unfit, incompetent, and ignorant’.¹¹⁷

Congress, with a power almost ‘too terrible to use’, put America at a disadvantage in the new age of global capitalism. ‘The use of it stops the whole machinery of government, and the mere fear of its use annihilates public credit. Since the creation of large national debts, which did not exist in the times when the English House of Commons acquired its power, it is questionable whether a successful use of the power of withholding supplies could be effectually made with safety to the state.’¹¹⁸ The evils were legion: presidential impunity, the poor quality and limited ‘educating capacity’ of Congress, and apathy even among those supposed to be leading citizens.¹¹⁹ To Englishmen this was the most astonishing facet of the Northern character. ‘They bear defeat in their armies, fraud in their contractors, incompetence in their generals and statesmen, with a stoicism which would be admirable if it rested on philosophy or reason, if it were anything but ignorant patience.’¹²⁰

Given this barrage of bad press, readers must have been stunned to open the Economist at the end of April in 1865 and find an encomium to Lincoln, after he was shot by an assassin during a performance in Washington, D.C. ‘We do not know in history such an example of the growth of a ruler in wisdom as was exhibited by Mr. Lincoln. Power and responsibility visibly widened his mind and elevated his character.’ In taking a second look at the dead president Bagehot found his hidden greatness to have been his ability to make the constitution work – a document even more wretched than he had imagined at the outset of the Civil War.

‘The difficulty of creating a strong government in America’, able ‘to do great acts very quickly, is almost insuperable.’ The national character was dead set against both efficiency and dignity. ‘The people in the first place dislike government, not this or that administration, but government in the abstract, to such a degree that they have invented a quasi philosophical theory, proving that government, like war or harlotry, is a “necessary evil.”’ States impeded any central initiative. ‘To make this weakness permanent they have deprived even themselves of absolute power, have first forbidden themselves to change the Constitution, except under circumstances which never occur, and have then, through the machinery of the common schools, given to that Constitution the moral weight of a religious document.’ Lincoln seemed the one man, ‘by infinitesimal chance’, capable of managing this infernal machine. ‘The President had, in fact, attained to the very position – the dictatorship – to use a bad description, required by revolutionary times.’¹²¹

The Economist made a post-mortem exception for Lincoln, but it entertained few doubts about the low character of his compatriots and hoped that one outcome of the Civil War would be to humble them. Above all it had called for a speedy end to the conflict, and resumption of cheap and unrestricted flows of raw cotton to the shuttered mills of Lancashire, cut off from their supplies by the blockade of Southern ports. While Bagehot stopped just short of calling for Britain’s Royal Navy to reopen them, he had welcomed the dissolution of the Union in 1861 and looked forward to a future with two ‘less aggressive, less insolent, and less irritable’ trading partners.¹²² In many ways a lucid critic of American politics, he was less perceptive about the impact of the ultimate victory of the North, in part because the Economist had a profound interest in the economic and imperial consequences of the outcome for Britain.

Bagehot had personally sympathized with the Confederacy and maintained it could not be defeated, scoffing at the idea that ‘5 or 6 millions of resolute and virulent Anglo-Saxons can be forcibly retained as citizens’.¹²³ He urged Russian or French or English mediation, for ‘there is not the slightest prospect of their forcible subjugation’. The brilliant victories of the South had earned it ‘the right to be admitted into the society of the world as a substantive and sovereign State. Certainly, neither Belgium, nor Greece, nor the Spanish colonies of the New World, manifested in anything like the same degree the qualities and resources which enable nations to maintain freedom and command respect.’¹²⁴ With the Confederate capital of Richmond in flames, he saluted its ‘vanquished gallantry which appeals to the good side of human nature’.¹²⁵

Southern courage contrasted with Northern cowardice. ‘They are a wholly untried people, they have never yet faced a really formidable foe.’ In the war of American independence, it was true, they had shown ‘pluck’, but ‘the indescribable imbecility of their enemies was yet more wonderful than their own vigour’. The only triumph since 1783 had been in the War of 1812, a short conflict in a minor theatre of Britain’s war against Napoleonic France, when the future president Andrew Jackson ‘defended a walled city against an inadequately-provided invading force lodged in an unhealthy swamp’ outside New Orleans – not exactly bad odds. ‘All their other contests have been against naked Indians and degenerate and undisciplined Mexicans: these were raids rather than wars.’¹²⁶ The Economist flew into a rage at US interference with British shipping, which was ‘very like insanity’ for Northern officials to condone.¹²⁷ When two Confederate diplomats aboard the Trent were taken prisoner en route to London in 1861, it demanded their release and an apology, ‘or we have no alternative save war’. The incident was blamed on ‘the voting, electioneering, spouting, rowdying public’ in the North, which actually believed it could beat the South, ‘lick Great Britain in the bargain’, and add ‘Canada to Texas’. ‘The depth of their ignorance is unfathomable. The height of their frenzy is inconceivable.’¹²⁸

The Economist repeatedly predicted the collapse of the Northern war effort at the turn of 1862 for lack of funds. ‘With a revenue of twelve millions they are spending one hundred and twenty millions; indirect taxes bring in next to nothing; direct taxes are not even yet voted; the loans required are not taken up; and already they have resorted to the desperate, ruinous, and speedily exhausted contrivance of inconvertible paper money.’ There was no need to intervene: ‘mere want of funds must almost infallibly bring them to a stand in twelve months – probably in six.’¹²⁹

Nor did Bagehot accept the casus belli of the Union, and he steadfastly denied the charge levelled against the Economist as a result – that it was condoning slavery. Lincoln had made it quite clear, he reminded readers, that the North was not fighting to extinguish this peculiar institution. If the choice were ‘between the preservation of the Union and the perpetuation of slavery; if “Union” meant negro emancipation as surely as “secession” means negro servitude, – then, indeed, we should be called upon to take a very different view of the subject.’¹³⁰ He scoffed at the Emancipation Proclamation a year later, a strategic ploy to stir slave rebellions behind enemy lines and score humanitarian points abroad. ‘Half-hearted and inconsistent’, it would disgust public opinion in Europe. This ‘shibboleth of Emancipation’, which freed slaves in enemy but not loyal states, ‘is so curiously infelicitous, so grotesquely illogical, so transparently un-anti-slavery, that we cannot conceive how it could have emanated from a shrewd man.’ Lincoln had confirmed ‘the servitude of those whom he might set free, and he decrees the freedom of those whom neither his decree nor his arm can reach!’

Britain and the Economist sincerely desired to see slavery abolished, without a thought as to the price of raw cotton, Bagehot insisted. Still, the paper made some surprising claims about what would tend to that end – perhaps reflecting the fact that, as one biographer puts it, its editor ‘did not take a high principled abstract view on slavery’.¹³¹ The surest route to abolition, argued the Economist, was the success of the South. ‘It is in the independence of the South, and not in her defeat, that we can alone look with confidence for the early amelioration and the ultimate extinction of the slavery we abhor.’¹³² The paper was no friend of ‘the fanatics who hope to found a great empire on the basis of slavery’, it clarified, for ‘we do not believe that predial slavery such as exists in the slave states is a possible basis for a good and enduring commonwealth’. But it was unclear why, in that case, Southern independence was desirable. ‘We wish the area of slavery should be so small that, by the sure operation of economical causes, and especially by the inevitable exhaustion of the soil which it always produces, slavery should, within a reasonable time, be gradually extinguished.’¹³³

In the end slavery was a side note, however. Far more important in the paper’s warnings about a Northern victory was the intertwining logic of empire and economics. Two states were better than one, and would balance the naturally grasping character of each: ‘reckless Southerners may talk of seizing on Mexico, Nicaragua, and Cuba; unprincipled and inflated Northerners may talk of seizing on Canada; but there will be some hope that we may leave them to each other’s mutual control, and smile at the villainous cupidities of both.’¹³⁴ Harriet Beecher Stowe and her abolitionist ilk were thus wrong to accuse London of rooting for the South: ‘The effectual discomfiture of either party would answer our purpose equally well.’¹³⁵ If the Economist looked slightly more favourably on the South, this was because it had a right to leave the Union, was ‘more decent and courteous’ to Britain, and because it desired ‘to admit our goods at 10 per cent duty, while their enemies imposed 40 per cent’.¹³⁶ Not just a geopolitical check, then, but freer trade would flow from the Southern states’ independence. In articles for the New York Daily Tribune, Marx had mocked the Economist up to this point for rationalizing slavery; now he gave it an ironic salute, as ‘honest enough to confess at last that with it and its followers sympathy is a mere question of tariff’.¹³⁷

Bagehot continued to push British Liberals to acknowledge that, despite their distaste for slavery, ‘the experiment of one nation for one continent has turned out on the whole far from well.’ America was an only child, with ‘no correct measure of its own strength’, and having never played with others, ‘indulges in the infinite braggadocio which a public school soon rubs out of a conceited boy’.¹³⁸ It was, in other words, a dangerous imperial rival, a point nicely captured by his image of the English public school, where playground bullying was preparatory to a career in the Empire. By the turn of 1865 the victory of the North looked imminent, ‘exciting the brains of Americans’, based on a mania for ‘empire and exclusive possession of a continent’. Bagehot was hostile to this outcome. The rest of the world, he wrote ruefully, ‘could not look with much favour or anticipated comfort on the formation of a new power thus motivated and thus clenched – a power whose two fundamental rules of action and raisons d’être would be, to defy its neighbour, and to annex its neighbour’s land.’¹³⁹

The British Empire

If Bagehot viewed America through the prism of the British Empire and its interests, what did he have to say about the latter? Bagehot’s editorship was less rich in incident than Wilson’s – sitting between bursts of warfare and annexation in the 1850s and 1880s–1890s – and Bagehot showed the same breezy, flexible confidence in imperial destiny as he did in English political economy. Whether in Canada, the Cape, New Zealand or Australia, he admitted that colonists could be difficult, demanding, costly, and confrontational with natives. But he opposed the idea of cutting them loose. ‘We are pre-eminently a colonizing people. We are, beyond all comparison, the most enterprising, the most successful, and in most respects the best, colonists on the face of the earth.’¹⁴⁰ He countenanced force wherever that valiant spirit was obstructed by recalcitrant subjects, or non-Westerners, though in such cases he preferred it to be moderate, and directed from London.

Closest to home, he backed Gladstone’s efforts to ‘pacify Ireland’ after 1868: disestablishing the Church of Ireland – Protestant, in a country four-fifths Catholic – and passing very limited tenure reform to give evicted farmers compensation for their improvements to the land. Any step outside the 1801 Act of Union, however, was anathema. The Economist attacked both the Fenian Brotherhood, made up of armed republicans in America and Ireland, as well as the Home Rule League, which sought greater autonomy through conventional parliamentary forms. Gladstone was right to ‘tread out the Fenian folly’ following an uprising in 1867, which proved that the organization preferred sowing strife to practical politics. But since Home Rule was a ‘gigantic and impossible constitutional revolution’, it was hardly less of a folly. A parliament for Ireland would tear down the entire edifice of the British state, creating a federal instead of imperial parliament in London, unable to override the Irish one ‘without provoking something like a rebellion on every separate occasion’. Home Rulers would ‘be imprudent, but they would be far more logical, if they were to raise a cry at once for an independent Irish Republic’.¹⁴¹ The one consolation for the defeat of the Liberals in 1874 that so shocked Bagehot was, ‘at least it delivers us from the rule of the faction which is anti-English in essence, and which wishes to destroy the Empire’.¹⁴² His idea for political reform in Ireland was to suppress the office of viceroy: concentrating the symbolic majesty of the British state in such a person lent credence to the claim of Irish nationalists to live in a subjugated colony – as if Dublin were no different than Delhi.¹⁴³

Perhaps the most far-reaching colonial crisis during the period was not in Ireland, but in the West Indian colony of Jamaica. Here, in 1865, Governor Edward John Eyre responded to an uprising of former slaves in Morant Bay with brutal force, declaring martial law and deploying troops, who burned and looted over a thousand homes, and killed several hundred black Jamaicans, including a mixed-race member of the Jamaica Assembly. This looked like an organized lynching designed to shore up the power of white sugar planters, whose fortunes had declined since the advent of free labour, free trade and lower-cost sugar a generation earlier – and these events caused massive controversy when news of them reached Britain. Though Bagehot rebuked black rebels as ‘negro Fenians’, he was much more critical of Governor Eyre. For a time he made common cause with John Stuart Mill, who in 1866 set up the Jamaica Committee to press for Eyre to be put on trial; a host of liberals joined Mill, including John Bright, Charles Darwin, Herbert Spencer and many others. Opposite them stood Thomas Carlyle and the members of the Governor Eyre Defence and Aid Committee. Bagehot attacked Carlyle in the Economist for defending Eyre’s ‘carnival’ of violence as ‘the worship of brute force’, and a threat to law, justice and liberty – not just in Jamaica, but in England. ‘On Mr. Carlyle’s principles of judging human actions, as exemplified in this Eyre case, Philip II and Alva have a right to the honour and thanks of posterity.’¹⁴⁴ But as might be expected, his objection was not primarily moral. Bagehot agreed that blacks were inferior to whites, and acknowledged the importance of maintaining order in the Empire. To assure this in keeping with the needs of capital, however, required some cooperation from subject peoples. The Economist pointed to the tantalizing investments to be made in China’s railways, canals, tea planting, silk growing, and steam navigation, ‘beyond any experience we have yet acquired’, and similar opportunities in ‘Japan, Indochina, Persia, Asiatic Turkey’ and Africa, ‘from Abyssinia to the Cape’. To unlock these treasures, one point had be kept in mind – ‘that very large bodies of dark laborers will work willingly under a very few European supervisors’.¹⁴⁵

As it turned out, gaining access to these markets involved more than investment prospectuses. It required armed compulsion, especially in East Asia. Bagehot saw British and French interventions in China to prop up the tottering Qing dynasty against Taiping rebels – a radical millenarian rebellion that spread from rural Guangxi to convulse the country, in part due to prior Western wars to force it open – as a regrettable necessity; but with Englishmen ‘leading the fleets and armies, and administering the finances of the Celestial Empire’, soon to be ‘Governors and Viceroys over vast provinces’, its violent repression had a silver lining. Farther east in Japan, trade – and the sort of extra-territorial legal treatment that British merchants should expect – was also at stake, in a nation that had shown still stronger distrust of Westerners than China. The Economist was unsure if the Royal Navy had legitimate grounds to bombard Kagoshima in 1863, to punish the ‘Daimio Satsuma’ for the death of a British merchant. But once begun, the paper pushed for widening the war. ‘Possibly we may have to bombard the Spiritual Emperor as well as the Feudal Baron, if his palace lie within a mile or two of the shore. Anyhow we are in for it: we must now hold our ground and make good our position; and we must do this by force and at the cost of blood.’¹⁴⁶ As the smoke settled afterwards, it worried that in continuously shelling a town of 150,000 (‘as large as Sheffield’) for over forty-eight hours ‘we do seem to have outstepped all the now recognized boundaries of civilized and credible warfare’. Satsuma’s representatives later put the death toll at 1,500.¹⁴⁷

Not all imperial undertakings were military during these years. Bagehot grumbled in 1875 when Disraeli, as prime minister, opted to buy 176,602 shares in the Suez Canal from the Khedive of Egypt, bringing the total Britain owned to just under half. As an investment yielding 5 per cent it was sound, and would allow the Khedive to ‘reform his finances’. But Bagehot was unsure if it would solve the problem it was meant to address – making sure the passage to India stayed open, and in British hands. ‘We do not know what will be the course of history or the necessities of future times.’ ‘If we are prepared to take hold of Egypt, will this share in the Suez Canal help us in so doing? Will it not be better to take the country when necessary, without making public beforehand our intention to do so?’¹⁴⁸ India itself was non-negotiable, whatever route was taken there, as Bagehot affirmed in 1863 at the death of Elgin – the man sent east to break Chinese resistance in the Second Opium War and open Japan, subsequently appointed viceroy of India. His successor, Sir John Lawrence, had the ‘single quality’ needed to ‘keep a vast population which wants to recede, perpetually advancing’. What was that? ‘Force’.¹⁴⁹

Perhaps the most revealing example of the open-ended imperialism of the Economist under Bagehot was its enthusiasm for the least successful of all such ventures: the invasion of Mexico at the end of 1861 by France, with support from Spain and Britain. It applauded Napoleon III for rebuilding a failed state unable to pay its creditors in Europe, and for balancing the US, with its back turned fighting the Civil War. The installation of an Austrian archduke, Maximilian, on Mexico’s throne three years later, was a particular stroke of brilliance – a better administrator than ‘any obtainable half-caste or Indian president’, whose rule would ensure the export of everything from silver to apples, and timely interest payments on Mexico’s sovereign debt.¹⁵⁰ Three years later Maximilian was executed by firing squad in Querétaro, after French forces hastily withdrew.

In Physics and Politics, Bagehot explained his approach to empire in more theoretical terms, as a complement to these snapshots in the Economist. Applying his take on positivism and the natural sciences to human societies around the world, he divided them into three evolutionary epochs: a ‘preliminary age’, primitive, tribal and customary; a ‘fighting age’, in which some nations prevailed over others thanks to their martial qualities; and a third, progressive, industrial and peaceful ‘age of discussion’, where the ‘higher gifts and graces have rapid progress’. This, of course, was Victorian Britain: the class rule of the ten thousand educated members of society that Bagehot had outlined in the English Constitution found an evolutionary basis in ‘adaptation’ and ‘natural selection’. Bagehot added that some law of imitation must operate inside nations to account for their success in the world – a copying process, working its way from ‘predominant manners’ down and then inherited, in a Lamarckian sense. Bagehot was himself copying social evolutionists – not least Herbert Spencer and John Lubbock – by making such claims, and then extending them outwards. British wars were justified in China, for example, since its ancient civilization had been arrested at an earlier stage of development. There, to ‘crack the cake of custom’ might indeed require cannonballs.¹⁵¹

Bagehot and the Faces of Liberalism

Bagehot endowed the Economist with his tone as well as his point of view. ‘He is not only clever himself’, wrote one biographer, but he ‘gives a distinct impression that he is one of a band of like-minded conspirators, to which the reader is invited to attach himself.’¹⁵² What was this band of conspirators, and where did Bagehot’s editorial positions place the Economist on the spectrum of liberalism in the 1860s and ’70s? Other liberals were far more open to democratization of the British political system, more critical of the Second Empire in France, less hostile to the American republic, and less complicit with imperialism. These stances reinforced each other, so that the radicals within the Liberal Party – the same men with whom Wilson had so spectacularly fallen out in the 1850s – continued to embody all that Bagehot and the Economist opposed.

Bagehot’s views brought him into conflict with various shades of liberal thinkers, journalists and statesmen. Frederic Harrison, a barrister and one of the English Comtists whom Bagehot despised, was a radical who gave free courses to workers as well as refugees from the Paris Commune. In 1867 he used the Fortnightly Review to attack the Economist editor, that ‘able constitutionalist’ who ‘in these pages could scarcely defend without a smile’ the House of Lords, the bench of bishops and the throne, ‘as the “theatric part” of the constitution’. But that, Harrison pointed out, was itself a mystification: ‘a fiction which covers a fiction’, for behind all ‘parliamentary play’ was ‘the hard fact of an aristocratic regime’. Where was the ‘efficient secret’ Bagehot described? It had scarcely a single significant accomplishment since the repeal of the Corn Laws (and that had been ‘forced on the House of Commons at the price of revolution’, he noted): ‘no national education, no efficient poor law, no reorganised army, no law reform, no contented Ireland’. Bagehot was unconscionably embellishing a moneyed, undemocratic status quo. ‘If we are going to tear down shams, let us be consistent, and know where we are going.’¹⁵³

Bagehot, for his part, evaluated other liberals – even allies – in terms of their proximity to radical elements of the Liberal Party. Gladstone, drafting his budget of 1860, was told that to become a great statesman he must learn ‘not to object to war because it is war, or to expenditure because it is expenditure’ – to reject, in other words, the liberalism of Cobden and Bright. ‘It may be that the defence of England … is one of our duties; if so, we must not sit down to count the cost.’¹⁵⁴ Bagehot may have praised Cobden as a ‘sensitive agitator’ at his death in 1865, but he still used the occasion to sharply rebuke the former leader of the Anti-Corn Law League: ‘his mind was very peculiar and had sharp limits’, in particular an ‘insufficient regard for the solid heritage of transmitted knowledge’ contained in the ‘dignified’ parts of the constitution.¹⁵⁵ Cobden had also been wrong to oppose the Crimean War. ‘There are occasions when a war itself does its own work, and does it better than any pacification. The Crimean War was an instance of this’, which, Bagehot argued, ‘destroyed the prestige and the pernicious predominance of Russia. At the end of it, what were to be the conditions of peace were almost immaterial.’¹⁵⁶

The richest, most revealing comparison between Bagehot and a compatriot thinker is with John Stuart Mill – who Bagehot read more carefully than any other, and whose liberalism troubled him greatly the more it diverged from his own. At twenty-two, the future Economist editor praised Mill’s Principles of Political Economy as a thoroughly modern foundation for the dismal science, combining all that was logical about Ricardo with the worldliness of Smith. Bagehot was already puzzled, however, by Mill’s plans to improve the labouring poor, which placed too much stress on their ‘intellectual cultivation’. What workers needed was not so much education – especially in those ‘depots of temptation’, the great towns – than a ‘restraining discipline over their passions and an effectual culture of their consciences’.¹⁵⁷ As 1848 rolled on, and revolutions swept the capitals of Europe, the gap between them widened. Mill was thrilled, seeing the uplift of workers and democratic reform in Britain as tied to the republican experiment in France.¹⁵⁸ Inspired by the Fourierist socialists, Mill quickly revised his Principles to emphasize support for workers’ co-operatives, and hailed ‘the capacity of exertion and self-denial in the masses of mankind’ when ‘appealed to in the name of some great idea’.¹⁵⁹ Writing from Paris in 1851, Bagehot saw these associations as bad jokes or worse – a polarization that only grew more marked two decades later during the worker-led Paris Commune, which Mill defended and the Economist denounced.¹⁶⁰

If the paper endorsed Mill when he stood for parliament in 1865, it was because of the crucial ways in which their conceptions of liberalism did coincide: on empire. ‘Differing as we do in the strongest manner from many of Mr Mill’s political opinions’ – including a franchise that would extend to the labouring classes almost half of national representation – ‘we should vote for him in preference to any other candidate’. Why? In his address to the electors of Westminster, it saw an indictment of the ‘official creed of the advanced Liberals’, ‘shattering into dust those Radical fallacies’ of ‘Mr. Bright and the Manchester School’. Mill promised to vote for defence outlays, and in contrast to the radicals – who argued that ‘England must never interfere in foreign affairs’ except in ‘her own national interest’ – declared that ‘interposition on the side of liberty, to countervail interposition on the side of oppression, is a right and may become a duty.’¹⁶¹ As the Governor Eyre controversy gripped parliament, Bagehot took Mill’s side against Eyre. But this was not only because his rampage in Jamaica undermined the rule of law: both Mill and Bagehot accepted that white colonial administrators should continue to rule over black Jamaicans, treating the episode as an isolated infraction. Shared support for the imperial order as given went beyond one event or policy. Bagehot’s civilizational hierarchy in Physics and Politics, in which Britain might force societies at arrested stages of development to advance, echoed Mill’s voluminous writings on the backwardness of Indians and Irish and the progressive purpose behind London’s unrepresentative rule over them.¹⁶²

But even here, Bagehot found Mill too easily swept along by revolutionary currents. In 1868, the latter responded to the Irish nationalist upsurge of the year before with a proposal that addressed what he considered the root grievances of the Fenians, whom he wished to stamp out: creation of quasi-peasant proprietors, with fixity of tenure, via state guarantee or purchase – as much out of moral obligation for past misrule by England as to maintain that rule, through the imperial Act of Union.¹⁶³ Scathing in his review of Mill’s pamphlet, Bagehot pointed to the contradictions that undermined the ultimate goal he shared with it. Not only was possession of land in itself unlikely to cure the misery of Irish peasants, given their ingrained habits of idleness, but it handed them a potent new weapon. ‘Suppose that at a moment of political excitement – at such a crisis, say, as this of Fenianism – the whole Irish people do not pay their rent to the English Government. What is to be done? You cannot serve a writ of eviction upon a whole nation.’ In Bagehot, the cause of liberal imperialism had a harsher, but also a more consistent and unfussed champion, who prided himself on this temperamental contrast with the great philosophic radical. On Ireland, Mill had shown himself to be ‘easily excitable and susceptible; the evil that is in his mind at the moment seems to him the greatest evil, – for the time nearly the only evil – the evil which must be cured at all hazards’, wrote Bagehot.¹⁶⁴ ‘Mr Mill is, of course’, he could muse in 1871, ‘the standing instance of a philosopher spoilt by sending him into Parliament, and the world.’¹⁶⁵

Perhaps the most revealing international comparative insight into the liberalism of the Economist under Bagehot comes from France – only fitting given the coverage devoted to it. ‘The English thinker with whom Tocqueville can be most properly compared is Bagehot’, wrote A. V. Dicey, and the two men are still often classed together on account of an allegedly shared distrust of democracy.¹⁶⁶ In fact, they had less in common on democracy than they did in according a central importance to empire in the competitive environment of mid-nineteenth century Europe. Indeed, it was in part his recognition that democratic change could not be halted – in contrast to Bagehot, who bitterly resisted it – that led Tocqueville to advocate the merciless conquest and colonization of Algeria, as a ‘great task’ capable of unifying France in a post-revolutionary and egalitarian age. Elected to the Chamber of Deputies in 1839, Tocqueville applied himself with singular energy to erecting a French empire in North Africa, and fulminated against just the sort of radical critics that Bagehot excoriated in the pages of the Economist – for John Bright, read Amédée Desjobert.¹⁶⁷ As foreign minister for the Second Republic, he showed no qualms about using force in Europe either, if the end of national prestige justified it – overseeing the dispatch of troops to revolutionary Rome in 1849 to topple a sister republic on behalf of Pope Pius IX, in violation of the French constitution; in the aftermath, he connived at the illegal prolongation of powers of Louis-Napoléon that ended in his overthrow of the republic in France itself.

In reacting to this coup d’état, however, Tocqueville and Bagehot did hint at ways in which their liberalism differed. In his Recollections Tocqueville offered a vivid account of the revolution of 1848 right up to the moment of the coup in December 1851. In contrast to Bagehot’s sarcasm in the Inquirer, Tocqueville earnestly participated in the February uprising – upbraiding his fellow national guardsman, observing with approbation the handiwork of barricadiers, being lectured at by a working-class man outside the National Assembly (without, however, rendering his speech in cockney), and deploring the pious egotistical ravings of his sister-in-law, ‘concerned only with the good God, her husband, her children and especially her health, with no interest left over for other people’.¹⁶⁸ Bagehot’s ode to ‘common comforts’ and ‘stupid lives’ in a national emergency was, for Tocqueville, selfishness. Though he helped pave the way for the coup that displaced the moderate republic he claimed to defend, when it came he denounced Louis-Napoléon in a letter smuggled out of France. ‘If the judgment of the people of England can approve these military saturnalia’, wrote Tocqueville, addressing the same audience of middle-class liberals that Bagehot was also trying to reach, ‘I shall mourn for you and for ourselves, and for the sacred cause of legal liberty throughout the world.’¹⁶⁹

For Bagehot, crippling commercial uncertainty awaited societies unable to contain the democratic elements in their constitutions. Tocqueville, more concerned with moral and religious liberties and whether these could survive in democracies, was less intransigent. The spread of democracy to the ‘Christian nations of our day’ might be cause for anxiety, but for the author of Democracy in America it was also inevitable, an edict of providence that might even – provided it did not put equality above liberty, as he accused socialists in France of doing – be beneficent.¹⁷⁰ Bagehot read and admired Tocqueville, and met him at least once in 1857. Yet he could not help suspecting that a man who took such a dim view of ‘money-making’, even criticizing the individualism it bred as a threat to the preservation of liberty, ‘might be thought to be the expression, if not of a disappointed man, then of a disappointed literary class’.¹⁷¹ Where was liberalism headed? Tocqueville was an aristocrat with a manor in Normandy, Bagehot a banker, whose favourite pastime was riding to hounds. The coup d’état of 1851 obliged the former to retire from politics, and set the latter on his path to the Economist.