Thoughts on economics and liberty

Anyone thinking of “universal basic income” should think of the DISASTROUS effects of the Poor laws of pre-1834 England

I’ve discussed UBI here. [Also see my note here]

But I chanced upon a chapter in Roger Watson’s 1969 book, Edwin Chadwick, Poor Law & Public Health. It holds a salutory lesson about human incentives. The chapter in PDF.

The Old Poor Law

The state of the poor had been worrying the government for some time. The cost of looking after them had been rising dramatically, from £1,500,000 in 1775 to about £7,000,000 in 1832, and the poor themselves were growing more and more discontented. In 183o there were serious riots by country labourers in the South; ricks were burned and machines were destroyed. The Government put down this ‘labourers’ revolt,’ hanging nine people and deporting hundreds more. Clearly, something more permanent had to be done.

The Poor Law Commission

In February 1832 the Government announced that there would be a ‘Royal Commission for Enquiring into the administration and practical operation of the Poor Laws.’ The Royal Commission had eight distinguished members, including the Bishops of London and Chester, and Chadwick’s friend Nassau Senior. At this stage Chadwick himself was not a member, but Nassau Senior asked him to be one of the Assistant Commissioners. His job was to find out how the Poor Laws worked in North and East London. It was not long, however, before he was also studying Berkshire, which was a very poor rural county.

After ten months work the group of Assistant Commissioners had gathered a mass of information, but the Commission was nowhere near being able to report. The Government and the public were becoming restive. So the Government asked each Assistant Commissioner to send in a selection from his evidence, and this was to be published immediately, in order to prepare public opinion for the changes which would be suggested in the full Report. Chadwick’s evidence was a complete report in itself. It took up one third of the volume, and ended with several clear, practical, suggestions. The members of the Commission were most impressed, and asked the Lord Chancellor to appoint him a full Commissioner, so that he could help to draw up the final report. His name was added to the Commission, and in fact the Report which was published in February 1834 was written by Chadwick and Nassau Senior together.

First, the 1834 Report described how the existing Poor Laws worked. It was a very confusing and unsatisfactory situation. There was no one system in the country. Each parish, and there were 15,000 of them, looked after its own poor out of the poor rates, which were paid by householders. The old and sick were usually given money or food and some medical attention in their own homes. Those were not a problem, and the Report found that ‘allowances to the aged and infirm are moderate,’ and that ‘medical attendance seems in general to be adequately supplied, and economically.’

The major problem was the relief which was given to the able-bodied poor. These were labourers who were fit enough to work but who for one reason or another did not earn enough money to keep themselves and their families. Here, the Report found a chaotic state of affairs, and the reason why the poor rates cost the country so much. In the year ending 25th March 1832 over £7 million was spent on the poor. This was one fifth of the entire national expenditure.

The able-bodied poor were given relief in several different ways. Those who had no job were usually paid money or given food. Sometimes the parish paid local farmers to employ those who applied for relief (this was called the roundsman system); sometimes the parish itself employed them, and sometimes a system called the labour-rate was used, by which the ratepayers (usually farmers) agreed to employ a number of labourers, not because they needed them, but in proportion to the amount of poor rates which they paid.

The Speenhamland System

Under the commonest system, particularly in the agricultural areas of the South, the able-bodied poor were paid an allowance to make up their low wages to an agreed minimum. This is often called the Speenhamland system. It was named after the Berkshire magistrates who met at Speenhamland in 1795 to decide what to do about wages for the agricultural labourers, since food prices were rising very quickly at that time. There were two plans before the magistrates. Either they could insist on a minimum wage for labourers, or they could make up the labourers’ wages, so that they were enough to live on. The magistrates rejected the first plan, and agreed to make up wages according to a scale which rose with the price of bread and the number of children a labourer had.

Here is part of the table of weekly wages which the Speenhamland magistrates published. [deleted]

Notice that when the gallon loaf of bread cost 1 /-, a married man with two children was entitled to 7/6 a week. If his income only came to 6/-, he would have an extra 1/6 from the parish. As the price of bread rose, or as the family grew, so his weekly income would rise, whatever work he did or whatever his employer paid him.

This system spread very quickly through the agricultural areas of the South while food prices continued to rise because of the war with France. The Royal Commission also found that it was spreading in the North of England, though we now know that it was not very common there.

The Effect on Labourers

The spread of the allowance system kept labourers reasonably quiet at a time of high prices and low wages, but by 1834 it was becoming obvious that the system had very unfortunate effects in the long run. In particular, the Commission found that it had a bad effect on the labourers. It encouraged idleness, since there seemed no point in working if you could get the same amount of money without working or by working for the parish, which was often very nearly the same thing. It also took away much of the pride which good labourers had taken in their work, since they were made to feel fools for working hard when others got the same money for doing very little. Here is how Thomas Pearce, a Sussex labourer, described the situation, when he was interviewed.

‘In your parish are there many able-bodied men upon the parish?’

‘There are a great many men in our parish who like it better than being at work.’

‘Why do they like it better?’

‘They get the same money and don’t do half so much work. They don’t work like me; they be’ant at it so many hours, and they don’t do so much work when they be at it; they’re doing no good, and are only waiting for dinner-time and night; they be’ant working, it’s only waiting.’

‘How have you managed to live without parish relief?’ ‘By working hard.’

‘What do the paupers say to you?

‘They blame me for what I do. They say to me, “what are you working for?” I say “For myself’ They say “You are only doing it to save the parish, and if you didn’t do it, you would get the same as another man has, and would get the money for smoking your pipe and doing nothing.” Tis a hard thing for a man like me.’

Labourers under the allowance system were often idle, and, even worse, they did not care much about the future. They were discouraged from saving and trying to buy themselves a little land or a pig because if it became known that they had put something by they would not be allowed relief when they were unemployed. Labourers were also encouraged to marry and have a lot of children, because a man with a big family would always get a fair wage according to the scales. On one occasion Mr. Villiers, one of the Assistant Commissioners, went out to test this theory by asking the first labourers he met about it. ‘The opportunity soon occurred; four men were working together near a farmhouse; upon questioning them as to the wages each was earning, one among them, who informed us that he was 30 years of age and unmarried, complained much of the lowness of his wages and added, without a question on the subject being put to him “That if he was a married man, and had a parcel of children, he should be better off, as he should either have work given him by the piece or receive allowances for his children. He was immediately joined by two of the other men who said: “Yes, Sir, that is how it is; a man has no chance now unless he is a family man.”

You can well imagine that if a man married simply to get a better allowance or more work it was not likely to be a particularly happy marriage, and children who were born simply to raise the allowance would probably not be well looked after.

The Effect on Wages

Another important result of the system was that it kept wages low. Obviously farmers felt no need to increase wages when they knew that a labourer’s low wages would be ‘made up’ out of the poor rates. Of course, farmers and others employers also paid the poor rates, but if you employed a number of men you saved more on their wages than you paid out in poor rates. Not all employers kept wages down like this, but it was quite  common. Also, in areas where the roundsman system was used, the farmers could always get paupers from the parish, and their wages were paid entirely out of the poor rates.

The Commission was worried not only because the poor rates were high, and the allowance system had a bad effect on the labourers, but also because of the effect which this in turn had on the country’s wealth. They believed that the country could only get richer if labourers were honest and hardworking. So, clearly, if the Poor Laws were making the labourers idle and dishonest this would eventually make everybody poorer.

Those Who Did Well Out of the Old Poor Law

If the effects of the Poor Laws were so bad, why had they not been changed before this? Partly it was because nobody knew what to put in their place. Some people wanted all poor relief abolished, but most people feared that then there would be even worse riots and burnings than there had already been when times were bad. But also a lot of people did well out of the Poor Laws, though this only made them more costly and inefficient. Many labourers, particularly the idle ones, liked the allowance system. Many farmers, as we have seen, found that they could save more on wages than they paid in poor rates. There were also the many people who helped to spend the £7 million of poor rates.

We have seen that each parish was responsible for its own poor. So the parish vestry had to collect the poor rates and appoint an overseer for the poor. The vestry was a committee composed either of all the ratepayers who chose to attend, or a group elected by all the ratepayers. Usually the most regular attenders were those who had something to gain, often farmers or shopkeepers. Here is how the Report describes some of the temptations for the vestryman:

‘If he is the owner of cottages, he endeavours to get their rent paid by the parish; if he keeps a shop, he struggles to get allowance for his customers or debtors; if he deals in articles used in the workhouse, he tries to increase the workhouse consumption.’ The Report concluded that vestries were ‘the most irresponsible bodies that ever were entrusted with the performance of public duties or the distribution of public money.’

The overseer was the man appointed by the vestry to collect the poor rate and dole out relief to those whom he thought needed it. The job was unpaid, and usually lasted a year, though sometimes only for six or three months. If the man was dishonest, the opportunities for fraud or favouritism were almost unlimited. Even when the overseer was honest it was almost impossible for him to be efficient. Usually he could not afford to spend much time on this unpaid work, and because he only did the job for a short time, he could not get enough knowledge or experience to be sure that he was giving relief to those who really needed it. In the few cases where a parish had a permanent, paid overseer, this was found to be much more efficient.

The Commission’s Recommendations

The Commission’s Report was not in favour of the existing Poor Laws. It showed that the system was inefficient, enormously costly, and in the long run was very bad for the labouring classes. What did it suggest should be done about it? The ‘Remedial Measures’ which form the last half of the Report were written by Chadwick himself, and the principles on which they are based were his own suggestions. They are very simple and extremely ingenious. When they were put into the Poor Law Amendment Act (1834.) they produced what was probably the most hated single law of the nineteenth century.

First Chadwick wanted to restore the self-respect of the independent labourer which had been destroyed by the allowance system. He proposed to do this by making it less attractive to be a pauper than even the worst paid independent labourer.

Secondly, Chadwick wanted to develop a foolproof system to make sure that relief was only given to those who were really in need. His answer to this problem was the workhouse-test. Anyone who applied for relief would only be able to get it by going into the workhouse. If the workhouse was made sufficiently unattractive, the very fact that someone was prepared to go into it would prove that he or she really needed help. In this way there would be no need for complicated rules to decide when someone should get relief; all outdoor relief, that is, all relief given to people who were still living outside the workhouse in their own homes, could be abolished, and the millions of pounds which were spent on people who were not really in need would be saved. This sounds very sensible but it meant one thing which would be a bitter blow to many: fathers, mothers and children would be separated and put in separate parts of the workhouse.

These were the two main changes which the Commission suggested. The rest of the ‘Remedial Measures’ suggest the arrangements for working the new ideas. First the Report proposed a Central Board of Poor Law Commissioners who would make sure that the law was properly carried out throughout the country, and not bent by local pressures. Next it proposed that numbers of parishes should be formed into groups to be known as Unions, because individual parishes could not afford the separate workhouses for the young, the sick, and the able-bodied men and women which the Report recommended. The Unions would be run by Boards of Guardians, elected by the ratepayers, who would be responsible for working the Poor Law in their Unions. The Board of Guardians would in turn be responsible to the Central Poor Law Commissioners. The Guardians would have to appoint permanent paid overseers, workhouse masters, medical officers, etc. This scheme with its central control and staff of full-time paid employees was in itself a revolutionary suggestion, and many people complained bitterly about the spread of ‘bureaucracy’ and ‘centralisation’, but it is in fact the basis of our system of local government today.


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Sanjeev Sabhlok

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