BAGEHOT, WALTER (baj'ot) (1826-1877), English economist, editor of the Economist newspaper from 186o to his death, was born at Langport, Somerset, his father being a banker at that place. 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 and 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 by a person or persons acting on his behalf.
Bagehot's connection 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 connection he was brought into the inside of the political life of the time. He was an intimate friend of Sir George Come wall 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 inti mate with the governor and directors of the Bank of England, and with leading magnates in the banking and commercial world; while his connection 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 ab sorbing 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 conversa tional epigrammatic style, which gives a peculiar zest to the writ ing, is the quality of scientific, dispassionate description of mat ters which were hardly thought of previously as subjects of scien tific study. This is specially the case with the two books which perhaps brought him the most reputation, The English Constitu tion (1867), and Lombard Street (1873) . They are both books of observation and description. The English constitution is described, not from law books as a lawyer would describe it, but from the actual working, as Bagehot himself had witnessed it, in his con tact 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 1850-7o, and as Bagehot saw it with philosophic eyes.
Lombard Street was based on a series of articles which Bagehot wrote in 1858 in the Economist, though it was not published till the early '7os, after it had been twice rewritten and re vised 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 "appre hension 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 Eng land and throughout the world has been infinitely better and safer in consequence. A like note is also struck in Physics and Politics (1860, which is a description of the evolution of com munities of men. The materials here are derived mainly from books, the surface to be observed being so extensive, but the at titude is precisely the same, that of a scientific observer. To a certain extent the Physics and Politics had even a more remark able 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 (188o), published of ter his death, there is more scope than in the books already mentioned for other charac teristics 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 perma nent heads of departments who consulted him. His death oc curred at Langport very suddenly.
See the "Life" prefixed by R. H. Hutton to his edition of the Literary Studies (19o5) ; the introduction by Hartley Withers to Lombard Street (ed., with notes, by A. W. Wright, 1915) ; and the biography by Mrs. Russell Barrington in her Works and Life of Walter Bagehot (1915). (R. G1.)