dustry, i.e. of a desire for material improvement, the adoption of free trade will be followed by material prosperity, while every act which hinders the voluntary energies of men is pro tanto a bar to material progress. The rise follows the other as certainly as vegetation springs from light, heat, and moisture, and as the cessation of organic growth is the result of cold, darkness, and drought. Free exchange, in short, is a fundamental condition in political economy. We can indeed interpret, in the presence of limitation violently put on economical action, what will be the material consequences, but we cannot judge or predict the benefits of free action, unless we have experience of the results which ensue from its unshackled adoption. The real benefits of freedom can be understood only by its extension, and as yet the most advanced public policy has only entered upon the vestibule of its temple, and had experience of a part of its operation.

The elements with which economical action deals, are those which reside in materials bestowed by nature. If these elements are limited, as those of land in settled countries, water in motion, and the like, a demand may arise for them on their appropriation, from the very fact of their being limited, and this appropriation may take place, irrespectively of the quantity which may be used, by any municipal regulations which prevent occupation. If they are unlimited, their value is derived from the labour bestowed on their appropriation. Thus the force of wind, the power of steam, and the like are unlimited elements; but in order that they may be rendered available, labour must be bestowed upon their use, and thus they become valuable, not in themselves, but because they have become products of labour. The forces which stimulate the faculties to make such an appropriation, are partly personal and partly social; personal in so far as self-interest is the motive principle of all economical labour, social because the largest individual benefit is derived from the most complete reciprocity of services. Hence the true growth of economical principles leads to the fullest international association, and the closest identity of all such interests as can possibly be made of reciprocal benefit. Every man who wishes to exchange comes with a benefit to the other man with whom the exchange is to be effected; each person is a buyer, each a seller, and each values that which he receives at a higher rate than he values that which he bestows. If the object received be of no greater value than that which is offered, no exchange takes place; and therefore the doctrine that a foreigner's gain in trade with any country is a loss to the country trading with him, is a position as false as it is mischievous. In order that the object should be desirable, it must needs have had labour expended on it. No man will give of his own, in order to obtain some other thing which is as much in his possession as it would be in any other man's. Under certain circumstances,

indeed, it does not follow that the individual's labour must be hard; it may be exceedingly slight; but the value of the article which he offers must be proportioned to the average amount of labour expended on its production. A man may procure, perhaps, by the mere labour of stooping to pick it up, a diamond worth 10,000, but it is worth so much, not because of the amount of labour which he has bestowed, but because it takes on an average ten thousand pounds' worth of labour in order to obtain a similar stone.

This

Furthermore, the utility or service or benefit, must be appraised by some standard. is, as we know, familiarly, money. Not that money itself is useful to the individual; it is a pledge, taken because certain to be redeemed, that the future demands of the recipient can be satisfied with it. But the use of a measure (even though no money actually passes, but only à debt or credit in behalf of the seller is created) is necessary for commercial transactions. It may be doubted whether any progress can be made in civilisation without some such medium, that is, at least, without some habitual estimate of values by a recognised standard. At any rate, the existence of such a standard is discoverable in the earliest civilisation. Many services may be rendered to mankind, the value of which is immense, but the commercial estimate of which is necessarily wanting. No compensation can be made for wise statesmanship, for sound instruction in public and private duty, for rectitude and integrity of life, for the qualities which we venerate and trust. [LIBERTY.] Without them, the world would be a desert inhabited by a few savages; with them it becomes possible that the maximum number of the human race should subsist with the maximum of comfort and convenience. They are therefore postulates of the best economical state, but they are not appreciable values, because no measure of the service can be rendered in money or money's worth, because moreover they are not subsequent on any demand, but precede it, by the fact that they enlighten society as to the fundamental and permanent advantage of moral goodness. Truth, honour, and virtue cannot be taken into account by an economist, because, valuable as they are, they cannot be economically estimated; but no one except a doctrinaire would forget or ignore them.

Moralists are well acquainted with the influence of two coexistent springs of action: (1) that which lays down an external standard of action, which impels towards community of sentiment and action, which acts upon conscience and conviction; and (2) that which is a mere logical interpretation of objects according to the dictates of personal interest or convenience. To say that both are equally busied with the interpretations of personal utility is an abuse of terms, for the distinction between the two is fundamental in civilised thought and language. To say that they coincide in the best practice of human life is to admit what all would anticipate, the fact, namely, that natural impulses

are capable of mutual harmony. It is part, therefore, of the great analytical utility and the wide practical sagacity of Adam Smith, that while he developed an economical theory from the personal or selfish instincts of man, he framed an ethical theory of human nature by ascribing morality to the force of human sympathy. It is true that this theory seems and is one-sided, but taken in conjunction with the economical aspect of man's nature, it will be found to give a more coherent estimate of ethics than is commonly found.

Political economy is to history what logic is to morals-the analysis, namely, of the conscious process by which a nation or an individual thinks and acts. Hitherto, indeed, the economical interpretation of history has made but little progress, partly because materials have been wanting, partly because the habit of historical enquiry has tended rather, in so far as the philosophy of history has been developed, towards legal, military, and diplomatic researches. But to take a few examples, the great political position of the Italian republics in the middle ages was entirely due to their economical position, to the fact of their being the financiers of Europe. Their rivals, the popes of the same epoch, were capitalists, whose resources were freely used for purposes of personal ambition or of diplomatic influence. The trade of Europe with the East, passing partly through Egypt, and partly through the valleys of the Tigris and Euphrates, over the highlands of Armenia to Trebizond, or southwards to Licia (i.e. Seleucia) was monopolised by the Genoese and Venetians. All this supremacy passed away with the simultaneous discovery of the Cape passage and the New World; and the voyages of Vasco da Gama and Columbus, purely commercial in their beginning, tended as much to the Reformation and the downfall of the ancient diplomatic centres, as any theological speculations or political changes. Similarly, the great position occupied by this country during the thirteenth and early part of the fourteenth centuries, is to be assigned far more truly to economical causes than to the disintegration of the French monarchy, and the decline of Italian liberty. During the long and obscure reign of Henry III., great social progress had been made in England. The harsher features of villenage had been effaced; and in all likelihood a minute search among the abundant materials existent for the economical and social history of the century contained in the reigns of the three Edwards would fail to discover any trace of actual slavery in England, or, indeed, anything but fixed labour rents commutable for money, and coupled with permanent tenure. A contrast between the condition of the English peasants and the material of the population of France would be quite sufficient to account for the military preponderance of this country during the period adverted to. Between the insurrection of the Jacquerie in the middle of the fourteenth century, and that of the English peasants at its close, there was,

though they are regarded as similar events by Hallam, only a slight external resemblance the former having been the uprising of desperate misery, the latter the attempted revolution of a prosperous class. In consequence the French peasant was forced back into still more abject servitude; the English occupier, baffled for a time, achieved his independence by the election statute of Henry IV.

In modern times, the laws and maxims of political economy are gradually becoming the staple of legislative and administrative politics, the business of government being more and more persistently directed towards the progress of economical prosperity, and the gradual extinction of practical errors. It is true that partly in consequence of the difficulty of persuading interests whose prosperity is likely in appearance to be compromised by changes, partly by the inherent conservatism of all administrations, and especially of those which are most despotic, and therefore most timid, the progress made is comparatively small; but to have begun at all is of no small consequence, and the general ventilation of economical questions is evidence that changes, the benefits of which are manifest and uniform, cannot long be delayed. Still more satisactory, in this country at least, is the fulness with which economical laws are interpreted by society at large. For example, the cessation of supply from the cotton-producing districts in the United States, consequent upon the four years' war, completely paralysed the industry of a tenth part of the people in this country, and injured all by raising the price of a necessary of life. It may be confidently stated, that twenty years ago a like cessation of supply would have been followed by such discontent among the sufferers, as would have induced insubordination and riot, and the country would have witnessed on a large scale, during the recent cotton famine, excesses similar to the agrarian outbreaks of twenty or thirty years ago. As it was, all classes bore testimony to the patience with which the suffering was endured. It was endured, because the parties most interested were aware that the deficiency was caused by circumstances with which all administrative or diplomatic skill would be perfectly incompetent to deal-because, in other words, they were generally acquainted with the economical conditions of supply and demand. It may be hoped that, hereafter, the same acquaintance with the true relations of labour and capital will put an end to the unjust and mischievous operation of trades' unions, and that protected labour will be seen to occupy as immoral and indefensible a position as protected capital.

The great advantage supplied by an acquaintance with the laws of political economy lies in the fact that it determines distinctly what must happen from a course of commercial or social policy which is consonant with its precepts, or repugnant to them. It is a science, because it can predict with certainty the phe

The various terms employed by economists, as CAPITAL, EXCHANGE, LABOUR, PROFIT, RENT, TAXATION, WAGES, will be found treated under their proper heads. The remainder of this article will be devoted to a short history of the progress of political economy, and its position in ancient and modern systems of practical philosophy, and to a summary of the causes and conditions of comparative wealth.

It was not likely that this branch of social science would escape the investigation of the Greek thinkers. It was not likely that it would, except to a very limited extent, form a material for original thought under the despotism of the Roman empire, or even of the Roman republic. The Greeks did not, it is true, separate this portion of ethical and political science, and erect it into a distinct subject of enquiry. For, in the first place, the sphere of individual action, and that of political obligation, were far more closely identified by the Greeks than they are with us. [LIBERTY.] They held that man exists for the community, while we in modern times are far more disposed to hold that the community exists for the developement of individual purposes, and for the harmony of individual ends. Hence they controlled the conduct, the occupations, and opinions of men more severely than would be thought consistent with that liberty which we know to be the only guarantee of a true civilisation. And in the next place, the Division of Sciences, though commenced by Aristotle, was not, in the comparative scantiness of human information, ever carried out as it is now. Such a division of science, like the division of labour, is the result of accumulated information gathered from large and varied fields of enquiry. But the chief and most central axioms of political economy can be found in the works of these fathers of mental science. The magnificent romance of Plato, his ideal republic, is founded on the familiar economical law, that the best results are procured by a progressive division of occupations. The

The downfall of the Roman empire is traceable in no slight degree to the practical defiance of economical principles. M. Guizot, in his History of Civilisation, has shown how the fiscal regulations of the empire were fatal to the prosperity of the provincials, and we all know how wide-spread was the evil of slavery in the ancient world. It would seem, too, that any economical reform in the public policy of the Romans was dangerous in the highest sense to those who proposed and furthered it. The fate of the Gracchi and of the schemes which they furthered for the social improvement of Italy furnished a stern warning to all innovators. The authors of a necessary reform, and of a set of economical changes which were absolutely obligatory for the preservation of the national life, were murdered by the aristocracy, and by a most perverse destiny their names have been thenceforward identified with sedition, confiscation, and robbery.

In this country, the history of the science of political economy is one of a perpetual contest against administrative error. The earliest writing on the subject is perhaps the essay once ascribed to Shakspeare, but now known to be the composition of one Stratford, in which the high prices prevailing in England are discussed and traced to tamperings with the currency, as well as to a general rise in money values. The works of Mun, the author of the mercantile system, and long the great authority in that branch of political economy which deals with commerce and the exchanges, were directed against the unwise prohibitions on the exportation of the precious metals, the absolute inability of the enactments against those who were indifferent to breaking the law, and the vexatious and mischievous interference of the officers who succeeded to the functions of the king's exchanger. This great officer (the first, appointed by Edward III., being William de la Pole, an eminent merchant, and ancestor of those dukes of Suffolk who played so important a part in the civil broils of the fifteenth century) was regularly nominated by patent, and entrusted with the duty of prohibiting the export of the precious metals. The last who had a valid patent was Lord Burleigh, but he never

the earl of Holland in 1628, but the goldsmiths petitioned against the appointment, and Selden in the House of Commons disputed the validity of the patent.

Mun was far from doubting the general truth of the popular theory, that wealth consisted in gold and silver, and that the only way in which communities which had no mines of the precious metal could become rich, was by taking care that an excess of payments in these metals should form the characteristic of successful trade. But his experience had taught him that trade with the East was impossible, unless permission were given for the exportation of specie. The East had always supplied, by an expensive and precarious route, those tropical commodities which the fashion of the time, and the hardships of social life in the middle ages, rendered in the greatest degree convenient, if not almost necessary. But the producing countries could be led to acts of exchange only by the offer of the precious metals, particularly silver, for India produces these metals in very small quantities, and has always absorbed a vast amount for purposes of currency, of display, and still more largely, in all likelihood, for hoarding. Thus Mun argued that the relaxation of these prohibitions, as far as the Indian trade was concerned, was not only essential to the trade with those regions, but also in the highest sense advantageous to the country, because the sale of these imported commodities in European markets would certainly procure a far larger amount of specie than had been previously exported. Hence Mun has been considered the author of the balance of bargains or mercantile system, in which it was admitted that the business of trade was to enforce and support the theory that the precious metals are wealth, though the means whereby this wealth should be secured were to be circuitous. At any rate, the theory was accepted, and for more than a century acted on.

The works of Petty, Davenant, and Gregory King are rather statistical than economical, and though the writings of the first and last of these authors are full of sagacious and practical observations, they can hardly be said to have contributed much to the progress of the science. The same criticism may be applied to the speculations of the various writers on banking and the currency, speculations which led, when sound, to such an establishment as the Bank of England, at Paterson's instance, and when unsound, to the wild schemes of Chamberlayn and Law, and the fraudulent jobbery of the

South Sea scheme.

The true founder of the modern system of political economy was Adam Smith. The Enquiry into the Nature and Causes of the Wealth of Nations was published in 1776. It was aimed specially at the refutation of the mercantile theory, the protective system, the regulation of commerce by protective enactments, and the colonial theories then in full

modern economists to show what are the true functions of money, and what is the consequence of those errors which identify it with wealth; he proved incontestably that the protective method then and long afterwards supposed to be the only just and patriotic course of policy, was neither just nor expedient, that the notion of government being able to direct an individual's commerce or expenditure more discreetly than he ordinarily could himself, would be utterly absurd, if it were not exceedingly mischievous, and that by the system of colonial trade, which strove to execute the invidious and malignant project of excluding other nations as much as possible from any share in it, England had not only sacrificed a part of the absolute advantage which she, as well as every other nation, might have derived from that trade, but had subjected herself both to an absolute and relative disadvantage in every other branch of trade. Adam Smith was also the first to lay down a consistent theory of taxation, and to determine from an economical point of view the functions of government; and though it cannot be asserted that he was invariably right either in his principles or in his inferences from them, yet his work possessed not only the great merit of being the foundation of the most important and significant of the practical sciences, but also that of presenting the largest amount of novel but complete refutations of inveterate prejudices that ever perhaps had been collected in any single volume, together with the most lucid illustrations of the principles and inferences laid down and deduced. But among the other merits of this great work we must not lose sight of its geniality and warmth. It is true that the point of view necessarily taken by Smith was the existence and stimulus of personal and material interests. But he finds these interests not in a narrow and selfish satisfaction, but in the harmony and reciprocity of all men's good. It is in this way only that the science can be freed from those repulsive traits which have been made_too prominent in its treatment by less comprehensive and generous minds. For unless the mutual service of men, and the mutual duty of all the units of which society is composed, be understood and enforced, there is no escape from that passion for personal advantage, that protection to particular interests, and that selfish and suicidal disregard for the good of others, of which the Enquiry into the Wealth of Nations is the happiest, the most energetic, and the most complete refutation. 'Adam Smith,' says one of the ablest and most profound of modern philosophers, Mr. Goldwin Smith, understood the value, moral as well as material, of property, but he also understood the relative value of property and affection.' (Lectures on the Study of History, 2nd edit. p. 162.)

Idle and crude as now seem many of the fancies which were exploded by the appearance

of Adam Smith's great work, it would be an error to imagine that the first refutation was unattended with difficulty. It costs very much to shake off prejudices in thought as well as it does to correct unseemliness or uncouthness in action. It needs great courage, complete abstraction, and cautious attention to meet and go counter to the current of popular opinion. The convictions of one generation commonly become, it is true, manifest errors to another; yet not less ingenuity is needed for the first refutation of a vulgar error, than for the discovery of a physical law or a mathematical method. We should measure the value of Adam Smith's labours not by a comparison between the results of his argument, and the shape into which his successors have put the science of which he was the author, but by contrasting the science as he left it, and the host of fallacies which, universally accepted before his time, were destroyed at once by his sagacity. Mr. Mill has done justice to the intrinsic power of his predecessor by acknowledging the great progress made by Smith, and the epoch which it forms in human thought.

Many systems of political economy have followed that of Adam Smith. We may mention among continental writers J. B. Say and Sismondi; while in England the first to carry on the enquiry into economical science were Malthus and Ricardo. But in this country, these and other writers have been rather distinguished as promulgating views more or less accurate on special points connected with the general subject, than for any fresh arrangement of the science itself. Thus, for a reason already adverted to the fact, namely, that political economy has been developed more from a polemical than from a constructive impulse, and that its growth has been due more to assaults directed against real or supposed errors in practice, than to positive elaboration and synthesis-Malthus is distinguished rather as the author of the theory of population, Ricardo as an authority on the subject of rent and

taxation.

It would be tedious to recount the names of the several persons who have handled with various success the general theory of the science, and still more difficult to enumerate those who have made large additions in detail to the several divisions under which the material is arranged, or have contributed cognate or auxiliary information and reasoning. Enquiries into subjects which have an economical value and are open to an economical estimate, are of great importance in the progress of the science, not only because they serve to elucidate and interpret the various and intricate problems which perpetually recur, and furnish material for debate and decision, but because political economy needs to be constantly illustrated, and (if need be) corrected by facts, while there is and probably will be a continual disposition to transport it into the domain of abstract thoory, and thus very often to avoid the limitations and corrections by which a theory must

be constantly attended. Mr. M'Culloch's work on the Literature of Political Economy is one of great value, and might be advantageously continued to the present time.

Mr. Mill has avowedly proposed in his valuable and important work to remodel the theory of Adam Smith, on the principle which clearly guided the first founder of the science; i. e. to unite abstract reasonings with abundant illustrations, and to associate the subject with social and political philosophy. We cannot here attempt any criticism of Mr. Mill's method or principles, nor would it be possible to enquire how far he has carried out the plan with which he prefaces his work. It is sufficient to say that the great and undoubted merits of this author have given him almost the position of an arbiter on economical questions, and have caused his authority to be eagerly appealed to in support of a course of temporary or permanent policy.

The Conditions and Causes of Comparative Public Wealth.-It is plain that wealth is not a quantity but a ratio. The wealth of mediæval Italy was great when compared with that of the decline of the Roman empire, and small when contrasted with the command possessed over the necessaries and conveniences of life by the poorest European nation at the present time. Similarly the wealth of no European state is comparable with that of England, and yet few European states possess less foreign trade and home manufacture than England possessed sixty years ago. And, again, wealth lies in the distribution, not in the appearance, of riches. One of the most coherent and long-lived delusions which has occupied the world, is the general impression of the wealth of India. Travellers and traders saw the accumulation of gold and precious stones possessed by the native princes and the wealthier classes, and concluded that the country was exceedingly rich. In fact, it is very poor, the great mass of the community subsisting on the smallest amount of the cheapest kind of grain. On the other hand, we have been continually informed by persons who have had no economical experience beyond European states, that the American government would inevitably collapse in consequence of the pressure of taxation and the drain upon the resources of the community by the enormous expenses of the war. critics have ignored the fact that wealth in the United States is very widely distributed, that the rate of wages and the rate of profit are very high, that the necessaries of life are abundant and cheap, and that therefore the margin of the income possessed by every one in excess of the requisite expenditure of the individual is wider perhaps than has ever been known at any other period of economical history in any state, and that therefore the means available for government expenditure were practically unlimited.

Such

The first condition of wealth is personal freedom. There was great apparent wealth in ancient Rome; but wealth was in the hands of