Walter Bagehot (1826-1877), English publicist and economist, editor of the Economist newspaper from 1860 to his death, was born at Langport, Somerset, on the 3rd of February 1826, his father being a banker at that place. Bagehot was altogether a remarkable personality, his writings on different subjects exhibiting the same bent of mind and characteristics, - philosophic reflectiveness, practical common-sense, a bright and buoyant humour, brilliant wit and always a calm and tolerant judgment of men and things. Though he belonged to the Liberal party in politics he was essentially of conservative disposition, and often spoke with sarcastic boastfulness to his Liberal friends of the stupidity and tenacity of the English mind in adhering to old ways, as displayed in city and country alike. His life was comparatively uneventful, as he early gave up to literature the energies which might have gained him a large fortune in business or a great position in the political world. He took his degree at the London University in 1848, and was called to the bar in 1852, but from an early date he joined his father in the banking business of Stuckey & Co. in the west of England, and during a great part of his life, while he was editor of the Economist, he managed the London agency of the bank, lending its surplus money in "Lombard Street," and otherwise attending to its London affairs.
He became also an underwriter at Lloyd's, taking no part, however, in the active detailed business, which was done for him by proxy.
Bagehot's connexion with the Economist began in 1858, about which time he married a daughter of the first editor, the Right Hon. James Wilson, at that time secretary of the treasury, and afterwards secretary of finance in India. Partly through this connexion he was brought into the inside of the political life of the time. He was an intimate friend of Sir George Cornewall Lewis, and was afterwards in constant communication with many of the political chiefs, especially with Gladstone, Robert Lowe and Grant Duff, and with the permanent heads of the great departments of state. In the city in the same way he was intimate with the governor and directors of the Bank of England, and with leading magnates in the banking and commercial world; while his connexion with the Political Economy Club brought him into contact in another way with both city and politics. His active life in business and politics, however, was not of so absorbing a kind as to prevent his real devotion to literature, but the literature largely grew out of his activities, and of no one can it be said more truly than of Bagehot that the atmosphere in which he lived gave tone and colour and direction to his studies, one thing of course acting and reacting on another.
The special note of his books, apart from his remarkable gift of conversational epigrammatic style, which gives a peculiar zest to the writing, is the quality of scientific dispassionate description of matters which were hardly thought of previously as subjects of scientific study. This is specially the case with the two books which perhaps brought him the most reputation, The English Constitution (1867) and Lombard Street (1873). They are both books of observation and description. The English constitution is described, not from law books and as a lawyer would describe it, but from the actual working, as Bagehot himself had witnessed it, in his contact with ministers and the heads of government departments, and with the life of the society in which the politicians moved. The true springs and method of action are consequently described with a vivid freshness which gives the book a wonderful charm, and makes it really a new departure in the study of politics. It is the same with Lombard Street. The money market is there pictured as it really was in 1850-1870, and as Bagehot saw it with philosophic eyes.
Beginning with the sentence, "The objects which you see in Lombard Street are the Bank of England, the joint stock banks, the private banks and the discount houses," he describes briefly and clearly the respective functions of these different bodies in the organism of the city, according to his own close observation as a banker himself, knowing the ways and thoughts of the men he describes, and as a man of business likewise in other ways, knowing at first hand the relation of banking to the trade and commerce of the country. Lombard Street is perhaps a riper work than The English Constitution, as its foundation was really laid in 1858 in a series of articles which Bagehot then wrote in the Economist, though it was not published till the early 'seventies, after it had been twice rewritten and revised with infinite labour and care. Lombard Street, like The English Constitution in political studies, is thus a new departure in economic and financial studies, applying the same sort of keen observation which Adam Smith used in the analysis of business generally to the special business of banking and finance in the complex modern world.
It is, perhaps, not going too far to say that the whole theory of a one-reserve system of banking and how to work it, and of the practical means of fixing an "apprehension minimum" below which the reserve should not fall, originated in Lombard Street and the articles which were the foundation of it; and the subsequent conduct of banking in England and throughout the world has been infinitely better and safer in consequence. A like note is also struck in Physics and Politics (1869), which is a description of the evolution of communities of men. The materials here are derived mainly from books, the surface to be observed being so extensive, but the attitude is precisely the same, that of a scientific observer. To a certain extent the Physics and Politics had even a more remarkable influence on opinion, at least on foreign opinion, than The English Constitution or Lombard Street. It "caught on" as a development of the theory of evolution in a new direction, and Darwin himself was greatly interested, while one of the pleasures of Bagehot's later years was to receive a translation of the book into the Russian language.
In Literary Studies (1879) and Economic Studies (1880), published after his death, there is more scope than in the books already mentioned for other characteristics besides those of the scientific observer, but observation always comes to the front, as in the account of Ricardo, whom Bagehot describes as often, when he is most theoretical, really describing what a first-rate man of business would do and think in actual transactions. The observation, of course, is that of a type of business man in the city to which Ricardo as well as Bagehot belonged, though Ricardo could hardly look at it from the outside as Bagehot was able to do.
Bagehot had great city, political and literary influence, to which all his activities contributed, and much of his influence was lasting. In politics and economics especially his habit of scientific observation affected the tone of discussion, and both the English constitution and the money market have been better understood generally because he wrote and talked and diffused his ideas in every possible way. He was unsuccessful in two or three attempts to enter parliament, but he had the influence of far more than an ordinary member, as director of the Economist and as the adviser behind the scenes of the ministers and permanent heads of departments who consulted him. His death, on the 24th of March 1877, occurred at Langport very suddenly, when he was in the fullest mental vigour and might have looked forward to the accomplishment of much additional work and the exercise of even wider influence.
It is impossible to give a full idea of the brightness and life of Bagehot's conversation, although the conversational style of his writing may help those who did not know him personally to understand it. With winged words he would transfix a fallacy or stamp a true idea so that it could not be forgotten. He was certainly greater than his books and always full of ideas. The present writer recalls two notions he had, not for writing new books himself, but as something that might be done. One was that there might be a history of recent politics with new lights if some one were to do it who knew the family connexions and history of English politicians. This was apropos of the passage of a certain bill through parliament, when the head of the department in the House of Commons failed and the management of the measure was taken by the chancellor of the exchequer himself, a relative of the permanent head of the department concerned, who was thus able to carry his own ideas in legislation notwithstanding the failure of his political chief.
Another book he wished to see written was an account of the differences in the administrative systems of England and Scotland, by which he had been greatly impressed, the differences not being in detail, but in fundamental idea and in form, so that no judicial or other officers in the one were represented in the other by corresponding functionaries. Many other illustrations might be given of his fulness of ideas which helped to make him an ideal editor. Reference must also be made to the assistance which Bagehot gave as a journalist to the study of statistics. From the manipulation of figures he was most averse, and he rather boasted that he was unable to add up. But he was a most excellent mathematician, and no one could be so careful as he was about the logic of the figures got together for his articles, which he always most carefully scrutinized. He would frequently point out that his figures were illustrative merely, and did not by themselves establish an argument. He was always anxious, again, to impress on those about him that a subject could not be studied with the help of figures and accounts alone. Whether it was insurance, or banking, or underwriting, or shipowning, he insisted that some one who knew the business should see the writing before it was published.
Knowing so many departments of business from actual experience, he was a host in himself as referee, but when in doubt he would always consult some one who knew the facts; and he used his great influence so well that in subsequent years it inspired indirectly not a few who were hardly aware of his claims to be a statistician at all.