The Anxious Triumph

by Donald Sassoon

  The state began to intervene where the private insurance system was the most absent: accidents, sickness, old age, and unemployment.100 The 1904 programme of the Bulgarian Liberal Party called for free health care, a pharmacy in each community, free education.101 It may have been just propaganda, but it was a sign that such measures might be electorally popular even in the ‘periphery’ of Europe.

  Most capitalist countries had nation-wide insurance against industrial accidents before the First World War; the Americans and Canadians had to wait until the 1930s.102 In vain had President Theodore Roosevelt demanded a law to force employers to pay for injuries suffered by their employees in the course of their work, declaring in a message to Congress (31 January 1908) that congressional reluctance to approve such legislation was an ‘outrage’ and ‘humiliation’ to the United States, that ‘In no other prominent industrial country in the world could such gross injustice occur … Exactly as the working man is entitled to his wages, so he should be entitled to indemnity for the injuries sustained in the natural course of his labor.’103

  National health insurance schemes of varying coverage were introduced before 1914 in European countries including Austria, Italy, France, Sweden, Belgium, Switzerland, Norway, and the United Kingdom. Between 1914 and 1945 such schemes were introduced in Australia, New Zealand, Spain, the Netherlands, and much later in Finland, Canada, and Portugal. The United States still lacks a universal health insurance scheme.

  It is doubtful that public welfare, as is sometimes suggested, was introduced as a response to growing social unrest. It is equally possible that public assistance was, like the abolition of slavery in an earlier era, the result of the activities and pressures of enlightened reformers and activists. At the time the organized labour movement was not particularly interested in assistance for the poor, since its members were, prevalently, working men. Unions much preferred to fight for higher wages, the suffrage, and the eight-hour day, than the welfare demands contained in the 1889 programme of the Second International.

  Nordic nations were no more troubled by radicalism than others, yet by the end of the nineteenth century they had established the foundation for the substantial Scandinavian welfare state of the twentieth century.104 This early welfare legislation was the outcome of a political conflict between a rising agrarian bourgeoisie and, in Peter Baldwin’s words, ‘entrenched, but declining, bureaucratic and urban élites’.105 In other words the early welfare legislation was a victory for the middle classes of the countryside. Danish farmers, who wished to avoid paying for the local poor, favoured a new pension system which, being non-contributory, was in fact a state subsidy for both workers and employers.106 This is why Denmark produced, in 1891, an all-inclusive, non-contributory, tax-financed pension, the Alderdomsunderstøt-telsen (Old Age Compensation Act). All Danish citizens over the age of sixty and in need of help would be entitled to a pension, though there were stringent conditions attached. New Zealand followed in 1898, Australia in 1901, and England in 1908. The first truly universal pension, involving all citizens, regardless of means, past contributions, and gender, and applicable to all those who were over sixty-seven or unable to work because of disability, became law in Sweden in 1913 after a long campaign initiated in 1884 by the liberal politician and newspaper publisher Adolf Hedin.107

  In 1909 there was a political earthquake in Sweden. In previous Swedish elections the main division in politics had been between protectionists and free traders. Electoral turnout was usually very low, below 40 per cent: at most one-fifth of the all-male electorate voted. But in 1909, although the Liberal Party led by Karl Staaff, a progressive liberal, won with 40 per cent, the Social Democratic Party obtained 28.5 per cent and was for the first time represented in Parliament. The consensus was shifting to the left and it is this that led to the 1913 law. The principle of universalism embodied in this legislation became the cornerstone of the Scandinavian welfare model.

  The best-remembered early welfare state, however, was not Sweden’s but Germany’s, probably because of the central importance of the Reich in European history. It elicited widespread admiration among social reformers. A book published in England in 1890, William Harbutt Dawson’s Bismarck and State Socialism, was full of praise for Bismarck, regarded as the first European statesman who set out a grand strategy for resolving the ‘social question’.108 Bismarck, explained Dawson, ‘has dispersed to the four winds of heaven the old doctrine that the State has nothing to do with economics’.109 Bismarck was not quite as enthusiastic about social reform as Dawson makes out, but he certainly did not oppose it.

  Without quite putting down his anti-socialist stick, Bismarck waved the carrot, promulgating strong social welfare policies, particularly in the sphere of pensions. From the point of view of the Reich these policies had the advantage of strengthening both financially and politically central government at the expense of the German states (since some of the funding for welfare would be through national federal, or Reich, taxes).110 In June 1883 a means-tested health insurance scheme was introduced. It would pay medical expenses and replace the portion of income lost because of illness (two-thirds of the cost of the insurance paid by the workers and one-third by their employers). In July 1884 a law on industrial accidents was passed whereby employers would be obliged to pay the full contribution. Finally, in 1889, the Invalidity and Old-Age Insurance Law provided old age and disability pensions for all those over seventy. At the time very few people lived much longer than that, so it did not cost much and some workers were fired before they retired, thus losing their pensions.111

  The three schemes were consolidated in 1911 in the so-called National Insurance Code. Paradoxically this welfare legislation, widely regarded as Bismarck’s most significant achievement in domestic policy, does not receive a single mention in his memoirs.112

  One of the main proponents of the principle of compulsory insurance was an industrialist, Carl Ferdinand Stumm, who was the main employer in the mining and the steel and iron industries in the Saarland. Mining already had compulsory insurance for invalidity and old age because mining had been a state monopoly. Stumm, a conservative deputy in the Reichstag, proposed that the principle should be extended to all industrial workers. Other reformers, such as Theodor Lohmann, the real protagonist in the construction of the German welfare system, thought that if the employers were forced to pay for the cost of accidents then they would make more efforts to ensure the safety of their workers.113 Lohmann was a liberal who regarded workers as citizens to be reconciled through social reform, whereas Bismarck, a conservative, regarded them as subjects to be attached to the existing order. Bismarck eventually accepted a compromise in an empire-wide insurance scheme, realizing that it would strengthen the Reich.114 Nation-building was never far from Bismarck’s mind. Eventually his proposal was approved thanks to the support of the Catholic Zentrum, in spite of its hostility towards Bismarck for his anti-Catholic legislation.115

  One effect of German welfare laws was to slow down the rate of emigration. Germans had emigrated in great numbers until the 1860s; after 1880 very few crossed the oceans.116 By 1890, Germany was ahead of Britain in social legislation and had caught up in the industrial race. By some standards it was as democratic as (if not more democratic than) Britain. A virtuous circle – Capitalism plus Democracy plus Welfare – seemed now to be the perfect recipe for the new modern state.

  Bismarck was a conservative forced to become revolutionary. He had started out with the intention of preserving Prussia; he ended up as the architect of German unity. He had started out to preserve the power of his class, the Junker or landed aristocracy, and ended up overseeing the triumph of German capitalism. He had started out trying to block the emergence of popular parties; he ended up witnessing the rise of the Catholic Zentrum and the socialist SPD. The unintended consequences of policies might not have surprised him. Deep down he was only too aware of the illusory nature of politics. As he wrote to his wife in 1859: ‘it is all merely a matter of
time; nations and individuals, folly and wisdom, war and peace, they come and go like waves, and the sea remains’.117

  Bismarck’s successor as Chancellor, Leo von Caprivi (1890–94), built on the social policy of his predecessor, calling it, as is often the case with politicians who claim to innovate (even when they don’t), the Neuer Kurs (New Course). He banned the employment of children under thirteen, restricted the number of hours worked by thirteen- to eighteen-year-olds and by women, and established a minimum wage and arbitration in industrial disputes (with trade union representatives). Neither the Social Democrats nor the Catholics of the Zentrum were fobbed off with such mild reform.118 But it went too far for the Conservatives. Everyone was dissatisfied, particularly the Kaiser, Wilhelm II. Caprivi further alienated farming interests by lowering duties on imported grain. All of this and particularly the hostility of the Junker contributed to Caprivi’s fall. His successors were more hesitant in challenging the Junker, at least until the 1930s when Hitler crushed them definitively.

  Reformers everywhere were particularly exercised by the housing question. The dismal housing conditions and the dangers this posed for the stability of society had been discussed throughout much of Europe for most of the nineteenth century, not only in highly urbanized and industrialized countries such as Britain and Germany, but also in the more industrial parts of Spain such as the Asturias. Fear of the workers was often a factor. For instance, the Asturian folklorist Aurelio de Llano in his 1906 pamphlet Hogar y Patria. Estudio de casas para obreros (‘Home and Motherland. Study of Homes for Workers’) thought that one should not isolate workers in working-class districts so that, by being near civilized people, they will be less likely to commit unjust acts against the ruling classes.119 In Germany, Lujo Brentano, a left-liberal economist admirer of Britain (see Chapter 7), was strongly in favour of public housing to rectify the unsanitary conditions of the workers caused by rapid urbanization and pressed for legislation to help trade unions deal with such problems.120 In France, according to a government survey of 1910 (Statistique générale de France), workers spent between one-tenth and one-fifth of their earnings in rent for dwellings deprived of simple hygiene.121

  In Britain, Gladstone’s radical 1881 Irish Land Acts protected tenants against unfair evictions and gave them rights on the land. Opponents saw this as the first step in a popular attack on property, an attack soon labelled ‘collectivism’ or ‘state socialism’.122 Yet it was a Conservative government (under Lord Salisbury) which, with the Purchase of Land (Ireland) Act (1885), set up a fund to lend money to tenants who wanted to buy their land – a real volte-face for the Conservatives.123

  Lord Salisbury, though far from being a progressive conservative (we saw how opposed he was to the extension of the suffrage), was perturbed by the housing question. On 22 February 1883 (when leader of the opposition) he delivered one of the most important speeches on housing reform in the history of Victorian England.124

  Later in November, shortly after the publication of the Reverend Andrew Mearns’s pamphlet The Bitter Cry of Outcast London, in a lengthy and detailed article published in the new conservative journal the National Review, Salisbury denounced the overcrowding in working-class housing that caused ‘grave injury, both to morality and health’ for the thousands of families who ‘have only a single room to dwell in, where they sleep and eat, multiply, and die’.125 He advocated not only cheap government loans, but also the regulation of speculative builders whose houses:

  are built upon dust heaps; their drainage is not connected with the main sewer … they are unwholesome from damp; the bricks are put together with mortar which is little more than mud or sand … In short, they are the production of the jerry builder, the representative and the creature of fierce competition.126

  The liberal Manchester Guardian denounced Salisbury’s proposals as ‘State Socialism pure and simple’. To combat his ‘socialism’, the Manchester Guardian was joined by the recently formed ultra-liberal Liberty and Property Defence League. Its 1884 pamphlet The State and the Slums (written by Edward Robertson) declared that overcrowding was much exaggerated, that better ventilation would not make much difference to the workers, it ‘would only be a change in their discomfort. Foul air and evil smells they are used to.’127 Salisbury was not deterred: sanitary legislation on its own, he declared, would not resolve the overcrowding. One needed more houses. But who should build them? The Liberty and Property Defence League and many liberals thought that housing should be left to the market. Salisbury, though not in favour of ‘wild schemes of State interference’, proposed a Royal Commission on the Housing of the Working Classes chaired by Sir Charles Dilke, a radical-liberal politician. The spirit of this report, in a somewhat watered-down version, led to the Housing of the Working Classes Act (1885), which was one of the first bills introduced by Salisbury as Prime Minister.

  Salisbury’s vital role in the housing reform movement of 1883 to 1885 has long been ignored by his biographers, though more recently Andrew Roberts devoted three pages to this in a 900-page-long biography.128 Was Salisbury moved by fear of the masses or by moral outrage at the idea of people living in promiscuity or by Christian charity?129 Probably all of these, especially the last (he affected a staunch Christianity) because in the 1880s he could not have been particularly worried about social unrest.130 However, he was pressed from various sides (the recently formed Fabian Society, the Land Nationalization Society, and the English Land Restoration League) for greater government intervention.

  Salisbury was building on a previous Conservative housing act, Disraeli’s Artisans’ and Labourers’ Dwellings Improvement Act (1875), which allowed (but did not compel) local councils to clear slums and rebuild them. In reality few local authorities took advantage of the law and most were unable or unwilling to raise the finances (and taxes). The most famous exception was Birmingham under the leadership of Joseph Chamberlain, then a prominent Liberal.

  These reforms were facilitated by the difficulties facing the British government in the Boer War (1899–1902) in southern Africa against the Dutch settlers who resisted British annexation of the Transvaal: it was felt that the British soldiers had been poor fighters because of the impoverished conditions in which they had been brought up. Rudyard Kipling, famously, in his poem ‘The Islanders’ (first published in The London Weekly Times, 3 January 1902) denounced the cricket-playing upper classes (‘the flannelled fools at the wicket’) who had sent unprepared and unfit volunteers to the war: ‘Sons of the sheltered city – unmade, unhandled, unmeet – / Ye pushed them raw to the battle as ye picked them raw from the street.’

  The Boer War and its outcome helped to stir the Conservatives towards an increase in state expenditure and a less antagonistic attitude towards trade unions. This led to the passing of the Conciliation Act (1896), the foundation stone of a voluntary arbitration service that would advise employers and unions on industrial relations. The Liberal Party, having been out of power for ten years following a spectacular defeat in 1895, returned to office in 1906, after campaigning on free trade rather than on welfare and trade union issues. They faced two threats to their position as one of the two main parties. The first was the election of twenty-nine Labour MPs. The second, a threat to the unity of the country, was the election of eighty-two MPs from the nationalist Irish Parliamentary Party, heir to the Home Rule League. Sometimes threats work and the new Liberal government turned out to be the most reforming British government of the period, perhaps of the century, the 1945–51 Labour government being a close rival. Taking a leaf from the German model, they introduced a non-contributory universal pension scheme (1908), unemployment insurance (1908–11), labour exchanges, holidays for some categories of workers, and minimum wages in mines (1912). In 1909 the Trade Board Act created Trade Boards (which became Wages Council in 1945) in industries where low wages were concentrated. Much of this was to be paid for by raising taxes on the rich.

  The debates about how to eliminate poverty in Britain pe
rturbed the nation. Anxieties are never far from politics. The economic problems of the 1880s (itself part of the wider so-called ‘Long Depression’ of 1873–96) had increased the threat not from the organized working class but the ‘disorganized’ one: the poor, the lumpen proletariat, the outcast, the underclass, the ‘residuum’. And what if, somehow, the ‘dangerous’ class coalesced with the ‘respectable’ working class?131 After all, what happens in periods of economic crisis is precisely that many of the ‘respectable’ workers are forced into the underclass, but without losing the capacity to organize and protest that they possessed before. Such anxieties were boosted by the London ‘riots’ of 1886. These may not have been on the scale of continental riots, but in the United Kingdom private property had not been so disturbed since 1832.132 The riots scared The Times (never a difficult enterprise), which was alarmed at the fact that ‘the West End’ of London ‘was for a couple of hours in the hands of the mob’. The poor were a problem not just because they were poor but because they constituted a ‘social plague’. The diseases attributed to poverty, it was said, weakened the population and imperilled national security. Reformers even exaggerated the figures of those affected by tuberculosis by reclassifying bronchitis as TB.133

  Poverty, some reformers argued, could be alleviated by education. In the 1870s the education of the English poor had become the direct concern of the nation, and the state attempted to oblige parents to provide their children with elementary knowledge. The Elementary Education Act (1880) made school attendance compulsory. By 1891 primary education had become free.134

  Other solutions were touted. Some social reformers suggested that the colonies could be used as a recipient for local undesirables. Charles Booth, the social investigator of the London poor, wrote that ‘To the rich the very poor are a sentimental interest: to the poor they are a crushing load. The poverty of the poor is mainly the result of the competition of the very poor.’ The solution was to send the very poor into labour colonies where they would work in a disciplined way, under some form of state slavery, in other words unpaid, in exchange for their sustenance.135 Little came of such proposals, which were not the product of the imaginations of some ultra-reactionaries but of social reformers.