‘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,