§10. _Interest and Distribution_. It is unavoidable that this interest should accrue to whoever it is that supplies the capital. If the capital were supplied, as it might conceivably be, collectively by the community, the interest would accrue to the community, and all would be well. But as things are, the capital is supplied mainly by the savings of individuals, and largely by individuals confined to a relatively narrow class. The profits of Capital have thus a vital influence on the very serious matter of the distribution of wealth between social classes. Now, as experience shows, there is no element in profits which is capable of such radical change in so short a space of time, as is the rate of interest. Even before the war it had become hard for people in Great Britain to realize that 3 per cent Consols had stood at 114 as late as 1896. "How blest," wrote two cynical satirists of society in the same period: "How blest the prudent man, the maiden pure, Whose income is both ample and secure, Arising from Consolidated Three Per cent Annuities, paid quarterly."[1] It is impossible to read those lines now without a sense of irony, different from that which they were intended to convey. Not only is the rate of interest now double what it was a generation ago; we have no good reason to suppose that the present high level will quickly be reduced. The havoc of the war, of which the widespread poverty of Europe and the huge debts of Governments are but two different aspects, makes it almost inevitable that the rate should rule high in the present decade. This cannot but exercise a profound influence, of a most disquieting character on the general level of profits, and to a lesser extent (for here we must allow for the effects of high taxation) on the distribution of real wealth between social classes. Here we are on the threshold of tremendous issues. We almost feel the earth quake beneath our feet. We hear the muffled roar of far-reaching social controversy: "And 'mid this tumult Kubla heard from far Ancestral voices prophesying war." [Footnote 1: _Narcissus_, by Samuel Butler and Henry Festing Jones.] CHAPTER IX LABOR §1. _A Retrospect on Laissez-faire_. When, a century and a half ago, the foundations were being laid in the Western world of systematic economic theory, the public attention was much occupied with a subject, which indeed has not ceased to hold it: that of the failings of Governments. The general interest in that topic was shared by the pioneers of economic thought, of whom, in Great Britain, Adam Smith was the most notable. It was indeed their practical concern with the concrete economic issues of the day which very naturally gave the impetus to their scientific quest. It was hardly less natural that they should have expressed their opinions on these concrete issues with considerable emphasis.