Thursday, December 26, 2013

AN ECONOMIC TOUR OF THE ENGLISH COUNTRYSIDE, STARRING DOWNTON ABBEY – ACT II


That is the thing about nature; there is so much of it. ~ Violet Crawley, Dowager Countess of Grantham

My first part of this tour (see here) recounted the centuries-old business model of the owners of England's countryside – landed-gentry like Lord Grantham of Downton Abbey – that was challenged by changing economics of the early 20th century. These changes had been building for a considerable time. Four (4) sets of events in the 19th and 20th centuries conspired to destabilize the steady world of the British aristocracy, including Lord Grantham.

First, Parliament passed the Corn Laws in 1815 that protected English and Irish farmers with significant tariffs on less expensive, imported grains, and thus raised the domestic price of bread and other agricultural products. Riots occurred in London and other cities after the laws' passage. The Corn Laws helped agricultural interests – that were squarely based on the landed gentry, including Lord Grantham's forebears – and who had reaped large financial benefit from an increase in land prices and agricultural products due to the Napoleonic Wars (1803-1815). But the emerging merchant/industrial class in England was strongly opposed to the Corn Laws because these laws kept the price of grain and bread high that in turn required wages to rise, so workers could afford necessities like bread.

After several decades of the Corn Laws and with the Industrial Revolution in full bloom in England, the balance of political power began to shift and these laws were repealed in 1846. The new "industrial elite class" had arisen. Grain imports into England from the US and other nations rapidly increased after repeal. England imported 2% of its grain in the 1830s, 24% in the 1860s. As a consequence, the British price of grain decreased by more than 30%. Britain's domestic grain producers (including most estate-based farms) could not compete with growers in Indiana, Illinois and elsewhere. By 1885, more than one million acres of domestic corn were withdrawn from production in England. Farm income for estates like Downton Abbey (DA) dropped greatly.

Lord Grantham does not seem to define his estate as acres of land subdivided into farms that produced foodstuffs. He mostly saw it as people whom he and his ancestors have taken care of forever. One doesn't dislodge trustworthy tenants simply to stay in business by dismissing them. In this sense, he obdurately went against the grain of modern agriculture. Furthermore, new, more efficient agriculture was (and continues to be) more capital-intensive – which requires more investment – something that Lord Grantham doesn't seem to have any talent at obtaining. Even if he could, he is not one to substitute cold capital for his honorable, loyal labor.

Second, the Panic of 1873 that included a stock market crash and a financial crisis added to the economic misery of investors (the landed gentry) in England and beyond. This bank panic created a deep recession and considerable poverty throughout Europe (and also the US) that reduced demand for agricultural products and other goods and services for at least 6 years. Both workers' and producers' incomes dropped as a consequence. This economic calamity, called the Long Depression, very likely added to DA's fiscal and personal woes.

Third, just as change in international trade patterns and macroeconomics were adversely influencing British estates' income stream, new residential technologies were emerging. Specifically, the telephone, central heating and electricity, not to mention the automobile, were altering what "comfortable living" entailed the late 19th and early 20th centuries. Abbeys, castles and manors built before the late 19th century – like Downton Abbey – required expensive alterations to incorporate these new standards of modern living. Just when Lord Grantham's wallet was less full, he had to pay a lot to keep up with the Lord Joneses.

Finally, there's World War 1, the "Great War". This 4-year conflict began in 1914 and killed about 15 million soldiers and civilians, including over 700,000 British soldiers. No one was spared its devastating effects, as we have already seen in DA. Beyond the horrific deaths and injuries, WW1 transformed the social order in Britain. The influence and power of the landed gentry were reduced. Not only were lords, prospective heirs and downstairs staff of the estates harmed and killed, but large numbers of those who provided service to the manors and abbeys never returned even if they survived the war. Instead, they cast their fates to new lives working in the cities.

Thus, by the 1920s the economics of many British country estates like DA had been inexorably altered. Very few were roaring at all; many were teetering on unstable fiscal ground. They needed an influx of income and capital as their traditional business model had been forever fractured.

After conducting contents auctions to raise funds, numerous estates were demolished. Indigent lords, like the 9th Duke of Marlborough (the first cousin of Winston Churchill), cast a wider eye and married wealthy American heiresses to finance and save their life style. In the TV show, Lady Mary's foreboding, nouveau riche marriage would have had a similar remunerative purpose; praise be for small emotional favors that it wasn't consummated. Fortunately, Matthew's unexpected inheritance from a far-away, forgotten uncle served the same, much-needed compensatory objective for DA.

With this backdrop, what will happen to DA in its 4th season? Will Tom take up the "modernist" scepter that Matthew held as necessary to insure DA's financial security? Will Tom thus consolidate the farms, dismiss many cottagers and ox-herds and watch Lady Edith operate one of the new tractors? Will Lord Grantham lie down across his driveway (but only after Mr Carlson has hurriedly placed a drop-cloth underneath him) to stop the dastardly tractors? Will Shirley MacClaine reappear having a change of fiscal heart and save the abbey with her foreign largesse? Does Lord Grantham head to London for a much-needed executive MBA at the London School of Economics? Will he pass the courses? And/or will the grieving Lady Mary toss aside her damp hankies and get her fingernails a bit dirty to revive her portion of the great, green English countryside as her dearly-departed husband championed? Tune in and find out starting on January 5. Onward to the past...

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