money market, we have a very difficult application of the same laws to capital in general. This separation of the concrete branches of the science is, however, sufficiently obvious and recognized, and I need not dwell further upon it. The general conclusion, then, to which I come is, that Political Economy must for the future be looked upon as an aggregate of sciences. A hundred years ago, it was very wise of Adam Smith to attempt no subdivision, but to expound his mathematical theory (for I hold that his reasoning was really mathematical in nature) in conjunction with concrete applications and historical illustrations. He produced a work so varied in interest, so beautiful in style, and so full of instruction, that it attracted many readers, and convinced those whom it attracted. But Economists are no more bound to go on imitating Adam Smith in the accidental features of his work than metaphysicians are bound to write in the form of Platonic dialogues, or poets in the style of the Shakespearean drama. With the progress of industry, how many hundreds, or even thousands, of trades have sprung up since Smith wrote! With the progress of knowledge, how many sciences have been created, and subdivided again and again! The science of electricity has been almost entirely discovered since 1776; yet now it has its abstract mathematical theories, its concrete applications, and its many branches; treating of frictional or static electricity, dynamic electricity or galvanism, electro-chemistry, electro-magnetism, magnetism, terrestrial magnetism, atmospheric electricity, and so forth. Within the same century, chemistry, if not born, has grown, and is now so vast a body of facts and laws that professors are appointed to teach different parts of it. Yet the Political Economist is expected to teach all parts of his equally extensive and growing science, and is lucky if he escape having to profess also the mental, metaphysical, and moral sciences generally." In striking contrast, however, to the above, and to what was said by Englishmen at the dinner referred to, was the brief account given by M. de Laveleye, of the new Continental or "Realist School;" which holds "production and distribution to be governed in part by free contract, but also, and still more, by civil and political institutions, by religious beliefs, by moral sentiments, by customs and traditions, that morals, justice, right, religion, history, altogether go to make up the tout ensemble of social or political science." After naming those esteemed worthy to be enrolled in the new school, having for its basis the whole nature of man, and whose method is investigation, not assumption, he, with matchless politeness and irony, left it to the Englishmen present to add their own illustrious names to the list. Echo was silent; and will remain silent till Adam Smith, with his deductive method ever genuine mercantile superstitions. The great authority, the man of millions, who is supposed to understand the theory of business precisely because he has made millions, revives in every age. Uno avulso, non deficit alter, aureus. The mercantile theory may be consigned by philosophers to the limbo of nursery toys; but it lives on all the same, is master of the mind of the city, is supreme over city articles, and regulates the barometer of commercial weather, and, above all, is held to know the great secret of trade, and to be able to show men the way to get rich. ... "The mercantile theory lives, and one of two inferences from this fact must be accepted. Either it is the true theory of trade, and Adam Smith is not the great benefactor of mankind which he is supposed to have been; or else, in the department of science which has for its object the wealth of the community, error possesses a vitality which is more than a match for the keenest logic and the strongest common sense. "The mercantile theory has given birth to a child to which the whole literature of the world affords no parallel, the doctrine of currency as exhibited in the nineteenth century. I fear, almost, to utter its name; and yet it will form the subject of the following lectures. The very sound of the word 'currency' makes every man turn his back or shut his ears. His immediate instinct is to fly from a subject with which he associates every kind of jargon and unendurable phraseology. Yet it was the very repulsiveness of currency which induced me first to embark upon its study. It seemed to me a marvellous phenomenon, well worth investigation, that there should be at this period of the world's history an article of the most universal use in daily life which seemed to defy explanation in plain and intelligible language. Other subjects of the most recondite abstruseness had been mastered. Hieroglyphics had been read, mysterious inscriptions cleared up, the profoundest depths of physics sounded, and the most subtle problems in mathematics conquered. Few, indeed, might be the hearers that these successful investigators could attract; but those hearers listened with delight, and could feel that they had made an acquisition of real knowledge. What, then, was this so-called science, from which all men seemed to turn away in disgust, even those whose lives were spent in handling the objects of which it treats? How was so astonishing an event to be explained? What causes had rendered currency the reproach of our age? What was there in sovereigns and bank-notes so inscrutable as to baffle the sharpest intellect, and to be incapable of clear and simple exposition? The cause of this strange spectacle presently became evident. The philosophic spirit had been absent; the right method of investigation had been, I will not say neglected, but absolutely despised; the method of Bacon, to which modern science owes its strength, patient and accurate analysis, had been scorned, as if fit only for physical subjects, but too mechanical for such subtle substances as the instrument of finance. A priori assumptions prevail on every side, in the discussion of currency. Every one starts with some arbitrary hypothesis. Can we wonder, after that, to find universal con propounded and acted on doctrines of the most elaborate kind. The more directly engaged in business was the speaker, the more complicated, the more artificial, the more mysterious, have been the rules he laid down for the attainment of wealth. Monopolies were proclaimed to be the infallible means for creating good and trustworthy quality in manufacture. . . . Then, again, when the discovery of the New World enlarged geography with colonies of a novel kind, the practical man speedily stepped forward with his theory, and taught the statesman that the secret of the new and boundless wealth engendered by colonies lay in the exclusive appropriation of their trade by the mother country. His teaching was adopted by every civilized country, and became the recognized policy of all Europe. Great wars were waged in the name of the practical man's ideas: his views were supreme over all colonial relations. . . . The practical man's ascendency thus rose ever higher and higher, till it reached its culminating point in the famed mercantile theory, the crowning embodiment of the wisdom which practical prudence and experience had inspired. The precious metals were held up as the one supreme object of industrial ambition. ... ... "I am constrained to acknowledge that Political Economy finds itself, even at this time of day, in a most unsatisfactory position. Two causes, it seems to me, have mainly brought about this result. The first and most influential is the singularly undefined character of the boundary line which encloses the subject-matter of Political Economy. The example set by the illustrious expounder of Political Economy has not been faithfully observed by his successors. In the Wealth of Nations,' the frontier line which separates Political Economy from cognate sciences is rarely transgressed. Adam Smith seldom runs away from his true subject, or mixes it up with foreign elements. His followers have too often written in a less philosophical spirit. Political Economy is infested with an incessant tendency to commingle with general politics. The confusion was natural: for wealth and finance form a large part of the business which occupies every government; and a philosophy which augmented the riches of a people, stimulated their industry, poured expanding streams into the national exchequer, and spread contentment with prosperity over the country, could not fail to look exceedingly like the science of good government. And so it is, in a sense; but still only within the limits of its appropriate province. But to identify Political Economy with statesmanship, with the science of government, to suppose that a great Political Economist is ex vi termini a great statesman, is as absurd as to identify the science of jurisprudence, or the building of ironclads, with politics, or to imagine that a great general is infallibly a scientific statesman. This confusion has shown itself in other branches of knowledge which are largely made use of by governments; but nowhere has it prevailed so widely or worked so much mischief as in Political Economy. Its name is unfortunate, and only too well calculated to precipitate its writers into this delusion. They never seem quite able to escape the impression that Political Economy is a branch of politics. . . . It may be very important; it may furnish more occupation to the statesman than any other province of human life; it may have to be consulted more frequently, and its suggestions may be very closely connected with the happiness of the whole people, - nevertheless, it is the knowledge of a single department only. They may be overridden, modified, or rejected at the dictation of a yet more universal science, by the order of a still wider and higher knowledge. The function of the Economist is solely to report, on matters within his cognizance, to the statesman; but it is the statesman, and the statesman alone, whose prerogative it is to judge of their application. - - "So much for the first of the two great difficulties which weigh on the pursuit of Political Economy, the one, namely, which is derived from its own nature, and the subject-matter which it explores. I now come to the second, the one which assails it from without, and which, as far as I am aware, Political Economy alone, of all the sciences, is compelled to endure. It never seems to make a final and permanent lodgement of any of its truths in the public mind. They float on a tide which often carries the vessel backward as fast as it progresses forward. The tendency to backslide seems to be incessant and irresistible, not from any fault of its own, or from want of ability and demonstrating power in its teachers, but from the strength of the adverse forces which every one of its conclusions is ceaselessly obliged to encounter. A centrifugal force is ever acting on some large section of society, - sometimes, even, on a whole population, which makes it forget all that it has learned, and draws it back into the darkness of ignorance. In other sciences, a truth once won is won for ever. No one challenges the principle, or acts in defiance of its law: no one slides back into the belief that the sun revolves round the earth; no one contradicts the truths once established by the chemist or hydraulist. The reason of this difference of fortune does not consist in the certainty attached to the subject-matter of the one, and the inherent uncertainty of the other. Some of the positions reached by Political Economy attain the quality of demonstration; and yet they are denied or ignored as readily as if they were the hypothesis of an empiric. They are not argued against and refuted; no second trial is summoned to retest their value: they are simply passed over; and then the error which they were supposed to have dispelled resumes its possession of the public mind, just as if it were the infallible suggestion of instinct. It seems like lost labor to waste instruction on those who listen and are convinced, and then, under some indescribable impulse, rebel against the light. And what is this impulse? How is a phenomenon apparently so discreditable to the human understanding to be explained? How comes Political Economy to have been born under so unlucky a star as to be doomed to teach and persuade, only to be repudiated? The explanation is to be found in the ceaseless action of selfishness, in the never-dying force of class and personal interests, in the steady and constant effort to promote private gains at the cost of the whole community. The foremost lessons of Political Econ omy are directed against narrow visions of private advantage; and they strive to show how the welfare of each man is most effectually achieved by securing the welfare of all. But it seems otherwise to the natural mind. The immediate gain lies before it, can be seen and handled; and the law which demands its sacrifice, in order to arrive at a wider and more prolific result, appears to contradict the senses, and to bring ruin and not benefit in its train. . . . "And, now, what is the moral to be drawn from these ever-recurring sins against light and knowledge? That Political Economy is in possession of no truth? that the experience of life, and the surer intelligence of the whole people, refute the illusions with which a few subtle thinkers bewilder themselves in the closet? that practice is wiser than theory? Nothing of the kind. Such practice contains no refutation of theory; it puts forward no argument; it makes no appeals to reason; it pretends to no better thought-out opinions. We can trace here only the action of disturbing influences, the power of selfishness in combination with the most limited narrowness of vision. The moral to be drawn is the importance of thoroughly imbuing the mind with accurate principles, before prejudice has had time to build itself up, whilst the mind is impressible by reason, and truths firmly implanted retain their hold for life. The moment you see nations and legislatures carried away by the strength of the tide into narrow empiricism, determine resolutely to be a good Political Economist. . . . Here, then, is the mercantile theory. Let us now take up the newspapers of to-day. Read the city articles of every one of them. Look at the cast of thought, at the style of literature, at the principles proceeded upon, at the whole spirit of the language. What is thought most deserving of record? The sums of gold taken to the Bank of England, or taken away from it; the amount of bullion; the vessels laden with gold on their passage to England from California and Australia; the state of the exchanges. The beloved phrase of the mercantile theory, 'favorable exchanges,' is dwelt upon with satisfaction; unfavorable exchanges, and the departure of gold to foreign countries, are bemoaned with anxiety as a loss; prognostications are made of a languishing or flourishing trade, according to the influx or reflux of bullion; and weekly returns are proclaimed of ingots buried out of sight in the cellars of the Bank. The doctrine that gold is wealth- the doctrine which Mr. Mill paints as an absurdity so palpable that the present age regards it as incredible, as a crude fancy of childhood-breathes in every line of the city articles of all our daily newspapers. . . . What is this, I ask, but the mercantile theory, pure and fresh, as you heard Mr. Mill describe it? What is it but the resurrection of the Practical Man, the reassertion of himself, of his experience, his appeal to outward form, to what may be touched and handled? The world fondly imagined that he was vanquished and gone; that Adam Smith had finally disposed of him; that boys and students had learned to pity him, and to pride themselves on having been born after the great Scotch genius: never was there a greater mistake. It takes many Adam Smiths in Political Economy to kill off for |