This column is increasingly convinced that economic policy peaked in quality some 200 years ago, to give us the Industrial Revolution. Contrary to Whig historians’ fantasy, the government that produced that policy was elected on a relatively broad franchise, of property-holders possessing a “40-shilling freehold” – a fairly low requirement. While returning to such a franchise is outside today’s practical politics, one can imagine it becoming a possibility, perhaps after a crisis. It is therefore worth looking at why it is desirable and how it could work.
The ”40-shilling freehold” franchise, by which owners of freehold property with a rental value of 40 shillings (2 pounds) had the vote, dated from Edward I’s Model Parliament of 1295 and was codified into law in 1430. It was at that time fairly restrictive – 40 shillings was a fair chunk of money in 1295 or even 1430. It was not universal – some constituencies vested the franchise only in the local borough council, while other constituencies, especially those created in the 15th and 16th centuries, had almost universal “potwalloper” franchises of those who had a hearth on which a pot could be placed.
Over the centuries after 1295, the coinage was repeatedly debased, so that after 1717, when Isaac Newton put the country on what effectively became the Gold Standard, 40 shillings was worth perhaps a tenth of its value in 1295, and the franchise in those constituencies had become correspondingly broad, with almost every workman’s cottage qualifying for the vote.
In practice in the pre-1832 electoral system there were two anomalies. One was that, if a local landowner owned a majority of the 40-shilling freeholds in a borough, he controlled its votes – it was as simple as that; the vote went with the property. By the eighteenth century, heavily contested elections often involved frantic building projects, as new cottages would be built on subdivided land plots within the borough boundaries and registered in time for the ballot. It made some elections remarkably expensive but look on the bright side – it created new housing!
The other anomaly derived from simple demographic change – in 500 years population centers moved. Thus, the substantial town of Sarum (Salisbury) had become depopulated quite quickly when Salisbury Cathedral was built several miles away, its spire being completed in 1320 – by the time William Pitt the elder represented “Old Sarum” the remaining tumbledown cottages contained only 7 voters. Dunwich was still a fine flourishing port in 1295 but had already suffered coastal erosion; most of the remainder of it fell into the sea in the Great Storm of 1362, and its economic rationale was then lost when the local river shifted its estuary three miles northwards. By the eighteenth century, only the ghosts of its voters could be heard, ringing the drowned church bells on stormy nights. These things happen.
Reform of the electoral system was needed in 1832, no question. What should have happened was a disfranchisement of the worst anomalies like Old Sarum and Dunwich, removing some of Cornwall’s 44 Parliamentary constituencies which had been created by James I in a bid to control his very recalcitrant Parliaments (as events under his son would prove, the remedy didn’t work) and replacing them with some of the new cities like Manchester and Birmingham, both of which had grown to 100,000 population with no Parliamentary representation. The 40-shilling freehold franchise of most constituencies should have been kept – it basically enfranchised all properties except the worst slums and hovels.
Instead, the ruling Whigs took an extreme and purely partisan approach. They sharply restricted the franchise, to 10-pound householders (10 pounds is 5 times 40 shillings), disfranchising vast numbers of modest dwellers in small towns and the countryside, most of whom were Tory, and at the expense of historic villages enfranchised not just the big manufacturing towns, but endless expensive-housing jerry-built suburbs full of Whig clerks. Overall, the number of voters increased by some 15%, but because of seat redistribution not franchise extension. As the “Poor Man’s Guardian” remarked after it passed: “Our English Whigs extended the franchise to the small middlemen in order the more effectively to keep down the working classes. Of all governments, a government of the middle classes is the most grinding and remorseless.” Contrary to incessant subsequent Whig-historian propaganda, the 1832 Reform Act was a substantial step AWAY from democracy, suppressing the natural sound Toryism of the small-town and country working people.
The property franchise of the pre-1832 British political system had a very important effect: it gave small property owners substantial political power, thus ensuring that property rights would be properly respected. Before 1295, the barons dominated British politics, as they did elsewhere in Europe, and non-baronial property rights were treated with contempt. In continental Europe, this contempt continued; the ancien regime in France gave no significant rights to any but the nobility and the church, who were exempted from taxes, while non-nobles were unable to turn to the court system to secure property rights. In Spain, the bias towards the nobility and against property rights was even more extreme – there was also a strong social bias against commerce. In the Holy Roman Empire, full of diligent German engineers with excellent educations, property was not fully transferable and in its eastern provinces, serfdom remained in force – the political system had been modernized by Maximilian I in 1495, but thereafter stagnated.
In Britain, with its property-oriented political system, property rights became sacrosanct, and after the Tenures Abolition Act of 1660, property was no longer subject to feudal dues, becoming fully transferable. John Locke, writing in his 1690 Two Treatises of Government that “Life, Liberty and Property” were the basis of a civilized society hit the nail on the head — Thomas Jefferson made the United States substantially less free than it could have been with his childish French preference for the meaningless “pursuit of happiness” (his tolerance of slavery, outlawed in Britain, didn’t help either).
The British assurance of solid property rights for all property owners, not just the rich and politically connected, was the most important element in the policy mix that gave Britain and the world the Industrial Revolution. With property rights assured, an ordinary working man could devote years of his life to some advance in the technology he knew and be confident that the idea would not be stolen from him, nor his business seized by a richer man armed with an unscrupulous lawyer. Lord Liverpool, the best economic leader Britain ever had, understood that property rights of ordinary people were the key to the industrial development that was burgeoning all over Britain, in industry after industry, during his tenure of power. He also understood that the British property franchise, set at a modest level to include all but the poorest, was essential to securing those property rights.
The 1832 Reform Act weakened and then destroyed the link to property ownership that had safeguarded the unique British constitution for hundreds of years. First, it deprived many small property-owners of their voting rights. Those who had previously voted were theoretically “grandfathered” in the new system, but any working man who moved, or died and left his property to his son, was thereby deprived of the franchise, or his son was. Then the Second Reform Act of 1867 enfranchised middle-class tenants who did not own property, and subsequent legislation enfranchised everybody.
Human beings being what they are, the un-propertied soon started voting to deprive the propertied of their property, an eventuality forecast by the future Lord Salisbury in great and accurate detail in 1859’s “Quarterly Review.” It was not simply a matter of the poor attacking the rich; as time wore on “reformers” invented new “rights” out of thin air, all of which undermined the security of property-owners large and small, whether their property was physical, like land or coal-mines, or intellectual, like new ideas that contravened the fashionable zeitgeist.
It must surely be clear that the unlimited ability of random politicians today to deprive people of their property rights, through punitive taxation, regulation and oppressive bureaucracy, is in the process of killing the goose that has laid golden eggs for two centuries. The resurgence in inflation, and last quarter’s drop of 5.2% in U.S. productivity, are simply indicators of what a switch from the moderately meddling Trump administration to the fanatically meddling Biden administration can do. In the United States, our losses since the 1970s from governmental attacks on our property rights have, as I set out in previous columns, left us at least 30-40% poorer than we should be. This process of economic self-abasement is only growing stronger.
A property franchise, set at a low level and with suitable safeguards to prevent shenanigans that would doubtless be worse than in the days of rotten boroughs, would ensure the full representation of people with sufficient stability in their lives to buy property. The urban young and rootless, often with bizarre Marxist ideologies from their “woke” colleges, would be the main group disfranchised – as they grew to maturity, lost their Marxism and bought property, they would get the vote.
If it were combined with an end to “funny money” interest rate policies, such a franchise would further ensure that government policy was properly oriented towards allowing the market and human ingenuity to make us all richer. (Without such a condition, experience in the last 30 years has shown that asset-bubble games might be too tempting). Let us ensure that the idea is out there, so that if the current system decays sufficiently, as it may well do, a properly designed system of property franchises will be available to restore our prosperity and above all our freedoms.
(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)