In October 1883 Edith Nesbit and Hubert Bland decided to form a socialist debating group with their Quaker friend Edward Pease. They were also joined by Havelock Ellis and Frank Podmore and in January 1884 they decided to call themselves the Fabian Society. Podmore suggested that the group should be named after the Roman General, Quintus Fabius Maximus, who advocated the weakening the opposition by harassing operations rather than becoming involved in pitched battles.
Hubert Bland chaired the first meeting and was elected treasurer. By March 1884 the group had twenty members. In April 1884 Edith Nesbit wrote to her friend, Ada Breakell: "I should like to try and tell you a little about the Fabian Society - it's aim is to improve the social system - or rather to spread its news as to the possible improvements of the social system. There are about thirty members - some of whom are working men. We meet once a fortnight - and then someone reads a paper and we all talk about it. We are now going to issue a pamphlet. I am on the Pamphlet Committee. Now can you fancy me on a committee? I really surprise myself sometimes."
George Bernard Shaw joined the Fabian Society in August 1884. Nesbit wrote: "The Fabian Society is getting rather large now and includes some very nice people, of whom Mr. Stapelton is the nicest and a certain George Bernard Shaw the most interesting. G.B.S. has a fund of dry Irish humour that is simply irresistible. He is a clever writer and speaker - is the grossest flatterer I ever met, is horribly untrustworthy as he repeats everything he hears, and does not always stick to the truth, and is very plain like a long corpse with dead white face - sandy sleek hair, and a loathsome small straggly beard, and yet is one of the most fascinating men I ever met."
Over the next couple of years the group increased in size and included socialists such as Sydney Olivier, William Clarke, Eleanor Marx, Edith Lees, Annie Besant, Graham Wallas, J. A. Hobson, Sidney Webb, Beatrice Webb, Charles Trevelyan, Arthur Ransome, Cecil Chesterton, Ada Chesterton, J. R. Clynes, Harry Snell, Clementina Black, Edward Carpenter, Clement Attlee, Ramsay MacDonald, Emmeline Pankhurst,Walter Crane, Arnold Bennett, Sylvester Williams, H. G. Wells, Hugh Dalton, C. E. M. Joad, Rupert Brooke, Clifford Allen and Amber Reeves.
Early talks at the Fabian Society included: How Can We Nationalise Accumulated Wealth by Annie Besant, Private Property by Edward Carpenter, The Economics of a Postivist Community by Sidney Webb and Personal Duty under the Present System by Graham Wallas.
In 1886 Frank Podmore and Sidney Webb carried out an investigation into unemployment. In the Fabian Society pamphlet, The Government Organisation of Unemployed Labour they advocated the funding of rural land armies but declined to endorse large-scale public employment as they feared it would encourage inefficiency.
By 1886 the Fabians had sixty-seven members and an income of £35 19s. The official headquarters of the organisation was 14 Dean's Yard, Westminster, the home of Frank Podmore. The Fabian Society journal, Today, was edited by Edith Nesbit and Hubert Bland.
The Fabians believed that capitalism had created an unjust and inefficient society. They agreed that the ultimate aim of the group should be to reconstruct "society in accordance with the highest moral possibilities". The Fabians rejected the revolutionary socialism of H. M. Hyndman and the Social Democratic Federation and were concerned with helping society to move to a socialist society "as painless and effective as possible".
The Fabians adopted the tactic of trying to convince people by "rational factual socialist argument", rather than the "emotional rhetoric and street brawls" of the Social Democratic Federation. The Fabian group was a "fact-finding and fact-dispensing body" and they produced a series of pamphlets on a wide variety of different social issues.
In 1889 the Fabian Group decided to publish a book that would provide a comprehensive account of the organisations's beliefs. Fabian Essays in Socialism included chapters written by George Bernard Shaw, Sydney Webb, Annie Besant, Sydney Olivier, Graham Wallas, William Clarke and Hubert Bland. Edited by Shaw, the book sold 27,000 copies in two years.
William Morris, a former member of the Social Democratic Federation, and founder of the Socialist League, strongly criticised the Fabian Essays in the journal Commonweal. Morris disagreed with what he called "the fantastic and unreal tactic" of permeation which "could not be carried out in practice, and which, if it could be, would still leave us in a position from which we should have to begin our attack on capitalism over again".
The success of Fabian Essays in Socialism (1889) convinced the Fabian Society that they needed a full-time employee. In 1890 Edward Pease was appointed as Secretary of the Society. His duties included keeping the minutes at meetings, dealing with the correspondence, arranging lecture schedules, managing the Fabian Information Bureau, circulating book-boxes and editing and contributing to the Fabian News.
In 1890 Henry Hutchinson, a wealthy solicitor from Derby, decided to give the Fabian Society £200 a year to spend on public lectures. Some of this was used to pay Fabian members such as Harry Snell, Ramsay MacDonald, Graham Wallas, Catherine Glasier and Bruce Glasier to travel around the country giving lecturers on subjects such as 'Socialism', 'Trade Unionism', 'Co-operation' and 'Economic History'.
Hutchinson died four years later leaving the Fabian Society £10,000. Hutchinson left instructions that the money should be used for "propaganda and socialism". Hutchinson selected his daughter as well as Edward Pease, Sidney Webb, William Clarke and W. S. De Mattos as trustees of the fund, and together they decided the money should be used to develop a new university in London. The London School of Economics (LSE) was founded in 1895. As Sidney Webb pointed out, the intention of the institution was to "teach political economy on more modern and more socialist lines than those on which it had been taught hitherto, and to serve at the same time as a school of higher commercial education".
The Webbs first approached Graham Wallas, now one of the most prominent members of the Fabians, to become the Director of the LSE. Wallas agreed to lecture there but declined the offer as director, and W. A. S. Hewins, a young economist at Pembroke College, Oxford, was appointed instead. With the support of the London County Council (LCC) the LSE flourished as a centre of learning.
On 27th February 1900, Edward Pease represented the Fabian Society at the meeting of socialist and trade union groups at the Memorial Hall in Farringdon Street, London. After a debate the 129 delegates decided to pass Hardie's motion to establish "a distinct Labour group in Parliament, who shall have their own whips, and agree upon their policy, which must embrace a readiness to cooperate with any party which for the time being may be engaged in promoting legislation in the direct interests of labour."
To make this possible the Conference established a Labour Representation Committee (LRC). This committee included two members from the Independent Labour Party, two from the Social Democratic Federation, one member of the Fabian Society, and seven trade unionists. Some members of the Fabian Society had doubts about this and Edward Pease personally paid the affiliation dues.
In 1912 Beatrice Webb established he Fabian Research Department. Its first secretary was Robin Page Arnot. He was later replaced by William Mellor. As Paul Thompson pointed out in his book, Socialist, Liberals and Labour (1967): "Its secretary was William Mellor and another leading member G. D. H. Cole, both young Oxford Fabians and both Guild Socialists. Together in April 1913 and March 1914 they led two attempts to disaffiliate the Fabian Society from the Labour Party. They failed, but when Cole resigned in 1915 he was able to take the Research Department with him, thus depriving the Fabian Society of its most talented younger members and resulting in its subsequent stagnation in the 1920s."