he expressed truths which had only need to be firmly grasped to unlock for him the secrets of this most intricate order of phenomena. But he hardly lays hold on the key when he lets it go, and proceeds to exclude from the operation of the principle he had enunciated all stages of social existence except the earliest that "rude state of society which precedes the accumulation of stock and the appropriation of land." The doctrine of value, as he finally developed it, though vitiated by a defective analysis of the elements of cost, nevertheless, had the great merit of connecting the phenomena with cost as its governing principle, and the further still higher meritin which I think he was entirely original-of bringing into view the conception of "natural," as distinguished from "market" values that "central price towards which the prices of all commodities are continually gravitating." These were considerable achievements, as those will acknowledge who are acquainted with the failure. of even the most able of his predecessors to get beyond superficial generalisations—one might say the commonplaces of the subject— in this fundamental branch of Political Economy, or who observe the futile efforts to excogitate a theory of the numerous modern writers who rush into economic speculations with no better guidance than the light of nature. In this form the theory was accepted by Say without substantial change, but in the hands of Ricardo, it underwent important modifications, and in effect was recast. Starting from Adam Smith's conception of "natural price," and of cost as the regulator of this, he did much to elucidate the position by simply excluding from his exposition of the subject all that was inconsistent with these primary assumptions. But he did more than this. His clearer view of the nature of exchange value, and the firmer grasp he commerce où elle ne fournit rien qu'il ne paie par son travail, par l'emploi de ses facultés et de son temps."-Valeurs et Monnaies, quoted by M. Courcelle Seneuil, vol. i. 304, note.

2

(1) Turgot's exposition of the doctrine of value (Formation et Distribution des Richesses, § 33-35) does not go beyond proximate causes, namely, the reciprocal wants and means of buyers and sellers in a given market; in modern phrase, demand and supply. But incidentally in another part of his work (§ 61), he falls into a groove of thought which all but leads him up to the principle of "natural price" and "cost of production." "C'est lui" [the capitalist], he writes, "qui attendra que la vente des cuirs lui rende, non seulement toutes ses avances, mais encore un profit suffisant pour le dedommager de ce que lui aurait valu son argent s'il avait employé en acquisition de fonds; et de plus du salaire dû à ses travaux, à ses soins, à ses risques, à son habileté même; car sans doute, à profit égal, il aurait preféré vivre sans aucune peine d'un revenu d'une terre qu'il aurait pu acquérir avec le même capital." But having thus touched on the true solution, he afterwards (§ 67) recurs to his former position: "Ce sont toujours les besoins et les facultés qui mettent le prix à la vente," &c.

(2) M. Say's doctrine of value-so far as a distinct doctrine can be elicited from his very contradictory statements-differed in some respects from Adam Smith's; but Ricardo has shown (Works, p. 172), that where he differed, it was to go wrong. The essentials of Adam Smith's doctrine, that value was governed by cost of production, and that cost of production consisted of wages, profits, and rent, in such sense that a rise or fall of any of these elements necessitated a corresponding rise or fall of value-all this M. Say fully held.

had attained of the bearing of that "first price," that "original purchase-money," on all the secondary results in the play of industrial exchange flowing from the necessity of its payment, enabled him to show that the same principle which governed exchanges in primitive societies, and which Adam Smith imagined was peculiar to such societies, obtained equally, though masked by the more complicated machinery of advanced civilisation, in all stages of industrial development; and finally enabled him to bring within the scope of his general theory a class of phenomena of which the theory, as left by Adam Smith, failed to give any intelligible account-the phenomena of agricultural prices;-a generalisation from which he was immediately led to his celebrated doctrine of rent. From the facts of value, as presented within the limits of a single industrial community, Ricardo advanced to the more complicated phenomena presented by international exchange; and here, again, with unfailing instinct, he laid his hand on the salient elements of the problem; though it was reserved for Mr. Mill, by his theory of the "equation of international exchange," first propounded in his “ Essays on Unsettled Questions in Political Economy" to complete this portion of the doctrine. In the more important and fundamental speculation, however, on however, on the governing principle of "natural value" in domestic transactions, Ricardo left little for his successors to supply. Mr. Senior improved the exposition by giving a name-Abstinence to an element of cost, not unrecognised by Ricardo, and implied in his exposition, but not brought into sufficient prominence by him; and Mr. Mill, in his chapter on the "ultimate elements of cost of production," has effected some modifications in detail, and given greater precision to some of the conceptions involved; but in essentials the doctrine remains as it came from the master's hand.

In the field of foreign trade, Adam Smith achieved important results, though mainly of a negative kind. His onslaught on the mercantile theory of wealth, and his advance from the destruction of that fetish to the establishment of the doctrine of Free Trade, are among his best-known exploits. Yet it is nevertheless true that Adam Smith wholly failed to give a rational account of the principle which occasions and governs the interchange of commodities between nations, and by consequence to explain in what consists, or what measures, the gain of foreign trade. His language on this subject, in not a few passages, exhibits all the vacillation and contradiction of the mercantile school. While alive to the important and fundamental truth that "consumption is the sole end and purpose of production," and drawing the sound inference that "the interests of producers ought to be attended to only so far as they promote the

(1) "Un travail," says M. Cherbuliez of Geneva, "le plus important et le plus original dont la science économique se soit enrichie depuis une vingtaine d'années."

66

interests of consumers," the main tenor of his exposition of the nature and effects of foreign trade is nevertheless conceived distinctly from the producer's stand-point. Foreign markets are regarded as beneficial, because affording a "vent for surplus productions," and the gain of commerce is supposed to lie mainly in its conducing to maintain a high range of mercantile profit. On the whole, it must be said, in spite of some admirable maxims and pregnant hints which occur throughout the discussion, that the theory of foreign trade, as developed in the "Wealth of Nations," constitutes a mass of confused thought and misapprehended fact. The whole of this portion of the science was still essentially chaotic, and, notwithstanding the partial elucidations effected by M. Say in his exposition of the doctrine that "products are the markets for products," remained in this condition until here again the genius of Ricardo, by a few masterly generalisations, introduced order and light into the jarring elements. One of these, known to economists as the doctrine of 'comparative cost," set forth, for the first time, the fundamental conditions which determine the profitableness of international exchange. Adam Smith's negative conclusions were not only corroborated, but supplied with a basis in the general theory of the subject, while the small element of truth contained in the doctrine of the Mercantile school was ascertained and discriminated. Phenomena, moreover, which Adam Smith had wholly overlooked, and which his doctrine would have been powerless to explain-for example, the continued importation of a commodity produced under less favourable conditions than those available for its production in the importing country-were brought into view, and shown to be the necessary consequences of the fundamental law which governed this province of exchange. The theory of foreign trade, thus for the first time placed upon a rational foundation, has since been taken up by Mr. Mill, at whose hands it has received important additions and modifications, but additions and modifications, as Mr. Mill himself is careful to point out, all of them in the nature of developments of the original doctrine-all, therefore, of that kind which are the natural incidents and best evidence of progressive science.

more.

Let me briefly trace the history of one important economic doctrine The true nature and functions of money, as employed within the limits of a single country, were apprehended with great clearness by Adam Smith. When he distinguished the coin of a country, "the great wheel of circulation," from the goods which it circulates; when he likened the use of paper money to the substitution for this wheel of another, less costly and more convenient; and, by a still more apt image, to a road through the air which should enable the people of the country to turn to the purposes of cultivation the space previously occupied by the ordinary highway; when, following out this illustration, he showed how the conversion was effected through

the substitution, by means of interchange with foreign countries, of productive capital for the barren gold; when he set the subject of a mixed currency in this light, he supplied or suggested principles adequate to explain the most important phenomena of domestic circulation. These principles have all been accepted by his successors, and are to be found in all good text-books of Political Economy: some of their consequences, too, have been embodied in legislative measures. But the same weakness of his general doctrine on the side of international exchange which excluded him from clear insight into the movements of cosmopolitan commerce, disabled him also in his attempt to deal with the phenomena of international money. On the causes regulating the distribution of gold and silver throughout the world, and the relative range of prices amongst commercial nations, Adam Smith has thrown little or no light; but, as the reader will anticipate, his shortcomings were here again supplemented by the same able thinker, who had solved the general problem of international trade-a. problem of which the question of international money was but a part. In other directions, also, monetary doctrines have progressed since the time of Adam Smith. It would be strange indeed were it otherwise. The disturbance of monetary relations caused by the great wars following on the French Revolution, the suspension of cash payments for twenty years by the Bank of England, the immense development of credit which has signalised the last half century, have brought to light monetary phenomena of a range and complexity unknown in the earlier period. The investigations of the Bullion Committee of 1810, and the admirable labours of Mr. Tooke, preserved in his "History of Prices," have turned these opportunities to excellent account, and shed new light over the whole of this extended and intricate field; which has been still further elucidated by the discussions arising out of the controverted question of the policy of the Bank Act of 1844.

1

Such then, in four capital departments of Political Economy, has been the course of speculation since the publication of the "Wealth of Nations;" and there would be no difficulty in extending the illustration to other doctrines of the science. But I think I may stop here, and ask if there is nothing in all this but "the reproduction of sterile controversies, ever renewed, never advancing?" Is this a spectacle of purely theological and metaphysical dissertation? Is it true that the successors of Adam Smith have nothing

(1) In the foregoing argument I have drawn my illustrations mainly from the works of English economists, not that I have any wish to ignore what has been done by other schools, but because the capital discoveries in the science have, so far as I know, been made by Englishmen. This, I observe, is freely admitted by one of the most eminent of recent contributors to economic speculation on the Continent. M. Cherbuliez, of Geneva, writes:—“On peut considérer Adam Smith comme la fondateur d'une école, de cette école Anglaise, à laquelle la science est redevable de presque tous les théorèmes importants dont elle s'est enrichie depuis le commencement de ce siècle."-Précis de la Science Economique, vol. i. p. 30.

to show of effective contribution to the doctrines of their master, no really new discoveries to add to his "felicitous aperçus?" Are we not, on the contrary, justified in affirming that Political Economy presents, and that in a very eminent degree, one at least of those symptoms which M. Comte has declared to be among the least equivocal evidences of really scientific conceptions—continuity of doctrine?

The other criterion by which M. Comte proposes to try Political Economy is fecundity, or the test of fruit. And here it is probable many people would meet his challenge by adducing the general results of modern industrial and commercial legislation— such results, for example, as the extinction of trade corporations, the abolition of usury laws, the more or less extensive adoption by the leading nations of Europe of the principle of free trade, English colonial policy, English financial, monetary, and poor-law reforms— achievements which, it will scarcely be denied, may be fairly credited to Political Economy. They are unquestionably in general conformity with its principles; and they were carried into effect by men more or less under the influence of, some of them deeply imbued with, the spirit of its teaching. Nevertheless I must demur to the test of fecundity as thus understood. More than one even of the physical sciences might find themselves in straits if required to make good their pretensions by a criterion of this sort. Geology is counted a science, yet amongst practical miners, whether in Wales and Cornwall or in California and Australia, empirical experience, coupled with native sagacity, stands, if I have not been misinformed, for much more than the most profound geological knowledge. Zoology, Botany, perhaps also Biology, if brought to the same test, might find themselves in similar difficulties; and I rather think Professor Max Müller would find it no easy matter to establish the scientific character of those philological studies of which he is the learned advocate, by the criterion of fruit in this sense of the word. Are we then to say that these several branches of scientific knowledge have borne no fruit?-that they have no results to show in evidence of their scientific pretensions? Rather, I think, it behoves us to consider whether such results as those of which examples have been given above-applications, that is to say, of scientific principles to the practical arts of life—constitute the proper fruit of a science. It is in this sense that M. Comte applies the test to Political Economy, and even in this sense, as has been seen, Political Economy emerges triumphant from the ordeal; but the criterion, as thus understood, is vicious, and ought not to be accepted. Practical applications of scientific principles are, I submit, not the proper fruit, but the accidental consequences of scientific knowledge; or if fruit, then fruit of the kind typified by the apple of Atalanta, against the attractions of which Bacon warns the aspirant