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