A free state--a state with liberty--means a state, call it republic or call it monarchy, in which the sovereign power is divided between many persons, and in which there is a discussion among those persons.
Bagehot defines a free state as one where sovereign power is shared and discussion occurs among its leaders.
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More from Walter Bagehot
He could have found the truth as a statesman just as he found it when a judge; but he never did find it.
Thirdly, we see why so few nations have made rapid advance, and how many have become stationary.
The moderate people of every party must combine to support the Government which, on the whole, suits every party best.
If those persons be people of different temperaments, different ideas, and different educations, you have an almost infallible security that nothing, or almost nothing, will be done with excessive rapidity.
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