Quakers & Capitalism — Evangelical Political Economy
March 9, 2011 § 2 Comments
How evangelicalism shaped 19th century Quaker economics – Part 1
In 1825, Great Britain entered an economic depression comparable in severity to the crash of 1929 in America. Hundreds of firms went bankrupt and the Bank of England itself came close. The collapse came out of the blue. Thomas Robert Malthus, of ‘Malthusian theory’ fame, an evangelical cleric and pioneer economist, had predicted cyclical collapses, but no one had seen this one coming. Theories about its causes and ideas for its cure buzzed in the parlors of the business and intellectual elites and occupied the journalists and pamphleteers.
In his journal, Joseph John Gurney recorded “feeling the Lord to be near to us” during that time. (Descended from Hugh de Gournay, one of the Norman nobleman who came to England with William the Conqueror, his family had started with huge land grants from William in Norwich and Suffolk. They founded the Bank of Norwich in 1770, which was for a time the second largest bank in England after the Bank of England. Around 1809, the family bought a large billbrokering business, a firm that either lends money or finds lenders for borrowers; for forty years, Overend, Gurney and Company was the largest broker of loans in the world. In 1896, Gurney’s Bank merged with Backhouse’s Bank and Barclays Bank of London and several other Quaker provincial banks to form what is now Barclays Bank.)
The two schools of political economy current at the time—classical and evangelical—approached these cyclical downturns differently, in terms of how they analyzed their causes, how they would manage the system in times of crisis, and how they treated those who suffered from their fallout. In 1825, evangelical thinkers dominated this economic discourse.
Gurney himself believed, along with his evangelical peers, in a providential God who watched human events and sometimes intervened according to a divine plan. Like them, mindful of judgment, he watched out for temptation and hoped for atonement. The financial crisis of 1825-26 was surely a moral test; but mostly it was seen as a judgment against those who had already surrendered to avarice and ambition. Gurney no doubt experienced God’s nearness as, first, the searing heat of financial losses, which naturally turned him inward to reflect on his own moral character; and then, when his fortune ultimately survived, as the cool refreshing draught of escape from ruin and at least partial reassurance of his moral uprightness. His fortune was saved; he was saved. Many of his fellow capitalists were not.
For moderate evangelicals like Gurney, God’s providence was systemic: both nature and markets ran according to God’s plan for the world’s government and for human judgment, but not every little event was an act of specific divine intervention. Adam Smith’s famous “invisible hand”—the natural tendency of markets to efficiently set prices on their own, without government interference—this was actually the invisible hand of God at work. The fact that the actions of individuals powered the mechanisms of the market and gave it direction made the system an inherently moral one. Market policy therefore required a moral philosophy and this evangelical philosophy required not only that you leave God’s mechanisms alone but also that you leave individuals to choose their actions and suffer their judgment.
Such a moral philosophy naturally encouraged moral speculation, especially when bad things happened: cholera epidemics and market downturns pointed toward sins as causes, so the evangelical economists would search for the culprit sins behind these events. As the system tended to be general in its chastising effects, hurting lots of people and society in general, so the more moderate evangelical political economists tended to be somewhat general in their attributions of moral cause and they tended to differ when they got down to specifics.
More radical evangelicals believed, however, that God micro-managed the system, intervening directly and with specific purpose in virtually all events. Thus, they saw every outbreak of cholera or market downturn as a deliberate visitation for some specific sin(s) and this emboldened them to get serious and specific with their condemnations and exhortations.
All evangelical political economists agreed, though, that, squirming under God’s plan, and always defying its purposes, lurked human sin. Every human problem had its ultimate root in sin. Social ills, like poverty and economic recessions, personal problems, like poverty and bankruptcy—you could trace them all back to sin, not just sinfulness in general, but often a particular act, trait or policy. Sin and its consequences for the immortal soul gave evangelical political economists a sense of emotional urgency that heated the discourse up far more than the rational theories of the classical economists.
The sins behind economic downturns were clear: greed, primarily, ambition, and pride. Bull markets encouraged borrowing and speculation. Encouraged by their winnings, investors got overextended. Then, when everyone realizes that they are sitting on a bubble, panic ensues, people start calling in their notes, and the system collapses. Chastised for a time, businessmen (sic) recommit themselves to prudence. But then they forget the pain, greed plants its seeds again, and the cycle starts over.
The sins behind poverty were also clear: improvidence and licentious habits—laziness, gambling, drinking, wantonness of all kinds—and, of course, sex. Sex led to overpopulation among the working classes, which led to poverty.
The cure for both poverty and what we now call the business cycle was moral tuition. The cure for economic depressions was collective repentance and a nation that hewed more closely to God’s law. The cure for poverty was personal repentance and strengthened moral character. The evangelical worldview rejected most practical approaches to poverty relief and turned instead to moral paternalism. Poor relief was actually cruel in its consequences because it encouraged idleness, and suffering was actually salutary, because it led to repentance. Far better to suppress vice and encourage industry, economy and discipline. Their material charity thus tended toward things like good clothing that could support self-respect, rather than grants of money. And, of course, Bibles, plus enough education to enable the poor to read their Bibles. One thinks immediately of Elizabeth Fry, Gurney’s sister, ministering to the inmates of Newgate Prison.
In the next post, we’ll return to Gurney and his friendship with the greatest evangelical political economist of the age, Thomas Chalmers, as a window into the distinctive evangelical mutation in the Quaker double culture of religious withdrawal and economic engagement—how it drew Friends back into the world of social and political action in crucial ways without seriously threatening the distinctives of Quaker culture.