Internet Archiveopen access

National system of political economy

NATIONAL SYSTEM

sf.

OF

POLITICAL ECONOMY.

BY

FREDERICK LIST.

TRANSLATED FROM THE GERMAN BY

G. A. MATILE,

DOCTOR OP CIVIL LAW; LATE PROFESSOR OF LAW AT NEÜFCHATEL ; MEMBER OF THE AMERICAN PHILOSOPHICAL SOCIETY, ETC.

INCLUDING THE NOTES OF THE FRENCH TRANSLATION, BY

HENRI EICHELOT

Chef du Bureau de la Législation des Douanes Etrangères au Ministère du Commerce de France ; Auteur de l'Histoire de la Réforme Commerciale en Angleterre, et de l'Association Douanière Allemande.

f nünümi ê$n% oft $aU$,

BY

STEPHEN COLWELL

PHILADELPHIA :

J. B. LIPPINC OTT & C 0. 1856.

Entered, according to the Act of Congress, in the year 1856, by

J. B. LIPPINCOTT & CO.,

in the Clerk's Office of the District Court of the United States in and for the Eastern District of Pennsylvania.

PREFACE

TO THE AMERICAN EDITION. (by the translator.)

Frederick List* was born, the 6th August, 1789, at Reutlingen, a free city of Suabia. His early education was incomplete. At the Classical School he exhibited so little taste for its studies, that his father withdrew him ; but as he showed equal indisposition to learn his father's business, he was subsequently left to shape his own education. This he did, however, to such purpose, that we find him, in 1816, hold- ing an appointment in the Central Administration of Wurtemberg, in which he justified the confidence placed in him by a distinguished statesman, the Minister Wangenheim, who offered his young assistant, in the following year, the chair of Political Economy, in the University of Tübingen. List accepted this position.

He tells us in the Preface to his National System, that the principle of free trade was one of the first encountered in his new career. " It seemed to me at first reasonable ; but gradually I satisfied myself that the whole doctrine was applicable and sound only when adopted by all nations. Thus I was led to the idea of nationality; I found that the theorists kept always in view mankind and man, never separate nations. It became then obvious to me, that between two advanced countries, a free competition must necessarily be advantageous to both, if they were upon the same level of industrial progress ; and that a nation,

* The sources of this biography are — 1st. List's life, by Professor Hausser, of Heidelberg, who was commissioned by our Author's family with the collec- tion and publication of List's works, and who has fulfilled Tiis task with zeal and talent. 2d. List's biography, written by his French translator, Henry Riche- lot. 3d. The article in the Dictionnaire de V Economie Politique, (Paris, 1853). 4th. The National System itself. 5th. We have made free use of the Author's Preface, which is therefore omitted in the translation.

I cannot omit here to express my obligations, in all that concerns this publica- tion, to Stephen Colwell, who has so kindly consented to be its Editor, and to point out some of my errors in a language with which I am yet far from being

(v)

VI PREFACE.

unhappily far behind as to industry, commerce and navigation, and which possessed all the material and moral resources for its development, must above every thing put forth all its strength to sustain a struggle with nations already in advance."

In his chair, as well, as in the periodicals, he advocated political re- forms design-ad to promote the welfare of his country ; but in his earnest advocacy, he failed to preserve a desirable caution and prudence ; hence, he was soon exposed to persecutions, the result of which rendered him restless and unhappy. This condition accompanied him almost all his life ; he had in many respects outstripped his age, and conscious of his genius, he could not easily bear to be trammelled in the range of his ideas. The reader of his book must be struck with his rapidity of thought, and the sagacity of his views.

Whilst in Tübingen, he conceived the idea of establishing an associa- tion of merchants and manufacturers, the aim of which was to obtain the suppression of customs on the interior boundaries of the German States ; then, by the aid of a common system of customs on the exterior frontiers of Germany, to attain the same industrial and commercial de- velopment which other nations had succeeded in obtaining by their commercial policy.

A change in the ministry, by which his friends ceased to be in power, induced him to tender his resignation as a professor. He withdrew to private life, and devoted his leisure to various literary works, espe- cially to an annotated translation of J. B. Say's Political Economy. Important events induced him to hasten from these labors to Paris. There, in 1823, he became acquainted with Lafayette, who offered to take him to America and to befriend him. The love of List for his country prevented him at that time from accepting a proposition so nattering; but when he found that he could no longer be of any service to it, he determined, in 1825, to join Lafayette in America. List found the General in Philadelphia, and received from him a most kind recep-

familiar. Mr. Colwell first turned my attention to the works of Frederick List, and recommended to me the translation of the " National System of Po- litical Economy," as a work which had been received with immense favor in Germany, and which, for its real merit and adaptation to our country, deserved like success here. My frequent conferences with Mr. Colwell first gave me a taste for Economical studies, which free access to his library, the largest on the subject of Political Economy I have seen in Europe or America, enabled me to gratify, to the full extent of all my leisure hours. This library contains many thousand volumes in the various departments of Social Economy, including works in the French, Italian, German, Spanish, and Latin languages.

PREFACE. VU

tion. At Lafayette's special request, List accompanied him on his triumphal tour among the American people, and on that occasion he became acquainted with many of the most distinguished statesmen in the United States.

After much inquiry and examination, List became an inhabitant of Pennsylvania, purchased a farm near Harrisburg, and lived there with his family ; but fever and other circumstances prevented success in his* agricultural labors. He went thence to Reading, where he published a G-erman paper. At the request of Charles J. Ingersoll, President of the Pennsylvanian Society for the Advancement of Manufactures and Arts, List published, in the National Zeitung, a series of letters, on the subject of free trade, which were republished in very many journals, and to the number of several thousand copies, in the form of pamphlets, by the above named Society, with the title : Outlines of a New System of Political Economy. These letters were favorably received by the most eminent men of the country, such as James Madison, Henry Clay, Edward Liv- ingston, etc. That Society expressed its thanks to List for the publica- tion of his Outlines of a System of American Political Economy, by which he had rendered a real service to the United States. The Society invited List to prepare two other works ; the one, elaborate and profound, in which his theory was to be fully developed ; the other, popular, and fitted to become a school-book. The Society undertook on its part to use every effort to give a wide circulation to these works, and invited the Legislatures of the States interested in the American system to follow its example.

From that time List gave himself up with ardor to the preparation of a work on Political Economy, of which he had completed the Intro- duction, when his labors were arrested by a fortunate occurrence.

This happy event was the discovery by List of the rich coal-measures since known as the Tamaqua mines. t A company with a capital of $700,000 was formed; the mines were opened; and to bring them into communication with the Schuylkill Canal, a railroad from Tamaqua to Port Clinton was projected by List. The business soon promised to be highly successful, and our Author's cares seemed to be at an end.

With more prosperous circumstances, List experienced the desire of revisiting his native country. Germany was at the bottom of all his plans. In the solitude of the Blue Mountains he dreamed of a network of railroads in a German Union. He left America in 1830, before the completion of the Tamaqua Ptailroad, undertaken at his suggestion.

Upon leaving, President Jackson gave him a mission in reference to

Vlll PKEFACE.

the commercial relations of the United States with France, and appointed him also American Consul for Hamburg.

Soon after his arrival at Paris, List opened a communication with several journals, and became actively engaged in discussing economical and commercial reforms in France. He resigned his Consulship, returned to America in 1831 to give an account of his mission, and re-embarked for Europe in 1832 with a fortune, regarded by him as an in- dependence, and with the honorary title of United States Consul for Leipzig. He began at once to disseminate his favorite idea of a network of railroads in G-ermany. But a little time, however, had elapsed when, upon his return from one of his frequent excursions, he received the intelligence that he was almost wholly ruined by a financial revulsion in the United States.

He again left Germany for Paris, and betook himself anew to the composition of his National System : but his restlessness soon carried him back to Germany. "I left France," he somewhere remarks, " because the French take no pleasure in anything but war and theatres."

His National System appeared in 1841, and its success was immense. He afterwards edited the Zoll-vereins Blatt, a periodical established at his instance in 1843 by Baron Cotta, in which he exhibited remarkable talent as a journalist. Without any official situation, without title or fortune, though his doctrines were attacked upon every side, he became a prominent m<m by the single prestige of his talent and character.

The dispatches of the English ministers on the continent signalized him to the London Cabinet as a dangerous enemy, on account of his endeavoring to rescue his country completely from the manufacturing monopoly of England. List denied positively that he harbored any hatred against England ; for he acknowledged that by attempting to reach manufacturing and commercial supremacy she had mightily con- tributed to increase the productive power of mankind ; but what he detested with all his heart, was that grasping temper of England which induces her to covet all the world for a market, which scarce allows any other nation to rise above dependence, and asks Germany to swallow the potion manufactured by her cupidity as a product of science and philanthropy.

He had reached the climax of his influence, when, at the age of nearly sixty, he wrote to a friend that, afflicted with infirmities, he looked to the future with anxiety, and, that if he was strong enough, he would for the third time visit America, whither his friends strongly invited him.

PREFACE. IX

In 1846, the league and free trade triumphed in England. List could not resist the desire of then visiting London ; he went there and soon found himself in communication with his three chief adversaries, Bowring, MacGregor, and Cobden. The coolness with which the statesmen of England received a paper which List prepared at the instance of the Prussian Minister, on the subject of an union between England and Germany, made his stay in England far from agreeable.

He returned to Germany in failing health, and soon after died at Kufstein, in the Tyrol, on the 30th November, 1846, on a journey un- dertaken for his health, and to find some relief from his sufferings. The alternations of fortune and misfortune had wholly absorbed the springs of that energetic and vigorous, but restless and feverish nature.

List enjoys high repute upon various grounds — as a politician, a pro- moter of rail-roads, and of the Zoll-verein ; but chiefly as an economist.

As a politician, he was ever a partisan of liberal ideas, local liberties, and a persevering antagonist of centralization.

As a promoter of rail-roads, few have done more. The dis- covery of the coal-mines of Tamaqua, and the construction of the rail- roads connected with it, gave a vigorous impulse to his studies on public economy : he says : — " I had not hitherto comprehended the importance of ways of communication, except according to the theory of values; I had not noticed their results except in their details, and with regard to the extension of markets, as well as to the diminution of the prices of material products. Then I commenced to consider them in view of the theory of productive power, and in their collective action as a National System of communications, consequently in relation to their influence upon the moral and political existence, upon the social con- nexions, the productive forces, and the power of nations."

To whomsoever may belong the first idea of the German Customs- Union, (the Zoll-verein) and many attribute it to List himself; it may be safely said that no unofficial man contributed more to further its pro- gress and secure its final establishment than List. For these labors Germany owes him a debt of gratitude, which the extraordinary success of his writings shows a willingness to acknowledge.

As an economist, he has distinguished himself by many works, but more especially by his National System of Political Economy, published with his other writings in Stuttgart and Tübingen, in 1850, by Louis Hausser, Professor of History in the University of Heidelberg", a friend of List's family. The National System has been annotated and

X PREFACE.

ably translated into French, and published in Paris, 1851, by Henry Richelot, a distinguished economist, author of several works, among ■which is one upon the " German Customs-Union." * The translation now made from the German, reproduces rather the spirit than the letter of List ; but it is faithful. List's notes have been retained, as well as Richelot' s, as far at least as they were considered appropriate to an American Edition.

The grand characteristic of List's system is nationality. His edifice is built upon the idea of nations as they are. Contrary to the usual course of economists, who study how mankind can attain to a condition of well-being, List shows how a nation in given circumstances, can by means of agriculture, manufacturing industry, and commerce, reach a state of prosperity, civilization and power. He protests against the empty theory which overlooks nationality and national interests; or which, if it considers, defaces them by cosmopolitical views. He con- tends that the School, by which term he designates the disciples of Adam Smith and Say, erroneously assumes a state of things as realized which is yet to come ; for, admitting the existence of an universal as- sociation and the certainty of perpetual peace, we cannot extract from such a false hypothesis the doctrine of free trade, as a principle or an economical theory. List insists upon the necessity of acknowledging that the nation intervenes between man and mankind, with its par- ticular language, its literature, its history, its habits, its laws, its insti- tutions, its right to existence, to independence, to progress, and to a distinct territory; in a word, its personality, and all the rights and duties it involves.

Thus nationality is the ruling idea of the book ; but with his vigo- rous mind and clear intelligence, he enlarges it until it comprehends every topic of human welfare. Upon that idea is based his National System of Political Economy. In Political Economy he includes that part of science which treats of international commerce. It is this very

* If this volume falls into the hands of Mr. Henry Richelot, whom I have the pleasure of knowing only through his writings, I take this means of in- forming him that the ire of Blanqui is not unknown to me, and that, as a translator, I am quite willing to share with him, and our common original, all the fury of criticisms inspired by wounded pride. The extremely bad taste ■which pervades Blanqui's article, greatly surprised me and others. It deserves signal rebuke ; and I felt disposed, distant from the scene as I am, to make some reprisals, but I soon learned that he was no more. — Requiescat in pace.

PREFACE. XI

idea of nationality which leads him, who has done so much for commer- cial liberty, to the restrictive system. With him, liberty is the end to which man must tend, but which cannot be reached at a bound, and should not be reached without carrying human welfare with it.

Restrictions, he acknowledges, impose at times an inconvenience in the increased price of commodities ; but that evil soon finds ample com- pensation in the durable increase of productive power; a power much more valuable than the values it creates.

As to the application of restrictive measures, it will be noted with what caution he proposes and would enforce them. They must be em- ployed, he says, with discretion, and be reserved for important indus- tries, the success of which is necessary to the national welfare; pro- tection must be accorded only so far as it is useful for the industrial education of a nation ; that end obtained, protection must cease. Pro- tection is the means, liberty, _the end.

List's idea has not its source in a theory, but in observation, in history; and this point of view is the right one. He was so little in- clined to make a theory, that he was perplexed about the title National System. He would have preferred one indicating that the conclusions to which he had arrived were the result of his researches in the domain of history. List does not pretend, like the School, to have furnished the world with a social panacea, or a new science.

We close by a quotation from the Author's Preface, in which, after having spoken of his studies and travels in the most important European States, he adds :

" My destiny having afterwards again conducted me to the United States, I left behind all my books ; they would but lead me astray there. The best book on Political Economy in that new country is the volume of life. There we see solitudes rapidly converted into rich and power- ful States. There only have I obtained a clear idea of the gradual development of the economy of a people. A progress, which in Europe required the lapse of centuries, is accomplished there under the eyes of a single observer ; there, society is seen passing from the savage state to pastoral life ; from this condition to agriculture ; and from agriculture to manufactures and commerce. There, one may easily observe how the rent of land rises gradually from nothing to its highest range. There, the plainest farmer knows better than the most sagacious of the learned men of the Old World the means of making agriculture prosperous, and augmenting rents; he endeavors to attract manufactures to Ms

XU PREFACE.

borliood. There the contrasts between agricultural and manufacturing countries are exemplified in the most decided manner, and cause the most disastrous revulsions. Nowhere are modes of communication for trade and travel, and their influence on the moral and material life of the people, better appreciated. That book I have read earnestly and assiduously, and lessons drawn from it I have tried to compare and arrange with the results of my previous studies, experience, and reflections."

He has given us a system which, however defective it may still appear, is at least not founded upon a vague cosmopolitism, but on the nature of things, upon the lessons of history and the wants of nations. This system offers a mode of reconciling theory with practice, and ren- ders Political Economy accessible to every cultivated mind; a science which has hitherto, by its pompous, scientific phraseology, its contradic- tions, and its vicious terminology, defied comprehension and resisted common sense.

GK A. Matile.

TABLE OP CONTENTS.

The Translator's Preface ▼

Preliminary Essay j^ji

National System of Political Economy. — Introduction 61

»0** t.—Otâ20JfcS.

CHAPTER & Italy 83

CHAPTER XX. Ilanse Towns 90

CHAPTER 1${, Flanders and Holland 103

CHAPTER IV. England 130

CHAPTER V. Spain and Portugal ftt

CHAPTER VI. France J4d

CHAPTER VII.

Germany %fff

(xiii)

XIV CONTENTS.

CHAPTER VIII.

Page

Russia 160

CHAPTER IX. United States of North America -. 166

CHAPTER X. Lessons from History 178

BOOK II. — THEORY.

CHAPTER I. Political Economy and Cosmopolite Economy 189 *

CHAPTER II. •i

The Theory of Productive Forces and the Theory of Values 208

CHAPTER III.

National Division of Labor and the Association of the Productive Forces of a Country 228

CHAPTER IV. Private Economy and National Economy 243

CHAPTER V. Nationality and the Economy of a Nation 262

CHAPTER VI.

The Economy of the People and the Economy of the State. — Political Economy and National Economy 281

CHAPTER VII.

Of Manufacturing Industry, and of the Personal, Social, and Political ^Productive Forces or Powers of a Country 282

CONTENTS. XV

CHAPTER VIII.

Page

Manufacturing Industry and the Natural Productive Forces of a Country 294

CHAPTER IX.

Manufacturing Industry and Instrumental Forces, or the Material Capital of a Country 306

CHAPTER X. Manufacturing Industry and Agricultural Interests 316

CHAPTER XI. Manufacturing Industry and Commerce -. . .-^- 338

CHAPTER XII.

Manufacturing Industry, Naval and Mercantile Marine, and Coloniza- tion 350

CHAPTER XIII. Manufacturing Industry and the Instruments of Circulation 353

CHAPTER XIV.

Manufacturing Industry and the Principle of Permanency and Progress. 373

CHAPTER XV.

Manufacturing Industry and Stimulants to Production and Consump- tion 380

CHAPTER XVI.

Duties upon Imports and Exports, considered as a powerful means of creating and strengthening the Manufacturing Industry of the Country 385

CHAPTER XVII. Import Duties and the Reigning School 394

XTL CONTENTS.

BOOK III. — SYSTEMS.

CHAPTER I.

Page

The Italian Economists 408

CHAPTER II.

The Industrial System, improperly called the Mercantile System 411

CHAPTER III. The School of the Physiocrats, or the Agricultural System 417

CHAPTER IV.

The System of Exchangeable Value, improperly called by the School the Industrial System. — Adam Smith 420

CHAPTER V. Continuation of the foregoing — J. B. Say and his School 426

BOOK IV. — PUBLIC POLICY.

CHAPTER I.

Insular Supremacy. — The Continental Powers. — North America and France 437

CHAPTER II. Insular Supremacy and the German Customs-Union 458

CHAPTER III. Continental Policy 476

CHAPTER IV. Commercial Policy of Germany 488

PEELIMINAET ESSAY,

(BY THE AMERICAN EDITOR.)

It is known to those conversant with the literature of Political Economy, that very great differences of opinion have existed not only in reference to the definitions, but to the terminology of this science. Its masters have not been in harmony as to the ground covered, nor as to the special terms in which its truths or laws were to be expressed. Certain Authors have attained higher repute than others, and the science has been taught, so far as it has been made a subject of special instruc- tion, chiefly from them, or abridgments of them. In the United States it has been taught either directly from Smith's Wealth of Nations or Say's Political Economy, or from books deriving their doctrines mainly from these two writers. The works now extant expressly de- voted to this subject are counted by hundreds, and the Authors are not only many of them of equal ability to the two named, but in not a few instances they are men of larger capacity, better preparation, and supe- rior advantages. Some of them are of high authority, and so regarded by the special disciples of that School of Political Economy, of which Adam Smith is the acknowledged head, and Say an authoritative exponent.

A very little attention to the current of these writings will satisfy any intelligent and candid inquirer that it is necessary to go far beyond the works of Smith and Say to ascertain what are at present the pre- vailing opinions of professed political economists; and a pretty extensive survey will be necessary to show what is the present condition of the science.

The discordant views of writers, and the want of agreement in the

use of terms, early attracted the attention of the leading writers, and

scarcely a volume or a tract appeared upon this topic in which some

effort was not made to harmonize repugnant positions, and settle the

B (xvu)

XVÜi PKELIMINARY ESSAY.

meaning of terms. In regard to the latter difficulty, an elaborate effort was made in 1827, by Archbishop Whateley,* in the Appendix to his work on Logic. He remarks that " the terms of this science are drawn from common discourse, and seldom carefully defined by the writers who employ them ; hardly one of them has any settled or inva- riable meanirjg, and their ambiguities are perpetually overlooked." The words to which he refers are Value, Wealth, Labor, Capital, Rent, Wages, Profits. Under each of these words he places the definitions of various writers, differing so widely that it seems strange a science could hold together cemented by such phraseology. The authors to whom he refers are Adam Smith, J. B. Say, Ricardo, Malthus, Storch, Sismondi, Mill, Torrens, McCulloch; and among these veterans in the science he finds occasion for this special effort to settle the meaning of the im- portant terms above mentioned. Archbishop Whateley was dissatisfied even with the name Political Economy, and proposed Catallactics as better designating the nature of the science. One work upon the subject, published in 1842, with the pseudoniin of Patrick Plough, has that title.

In the same year, 1827, T. R. Malthus, author of the work on Population, published " Definitions of Political Economy, preceded by the rules which ought to guide political economists in the definition and use of their terms, with remarks on the deviation from these rules in their writings." •' The differences of opinion among political economists have of late been a frequent subject of complaint," is the remark with which he commences his Preface ; and the work to which he addresses himself in the volume, is an examination of the definitions of the French economists, of Adam Smith, J. B. Say, Ricardo, James Mill, McCulloch, and Bailey. That the criticism bestowed by Malthus on these eminent writers is not yet out of season, and that the occasion for it has not passed away in twenty-five years, is shown by the appearance of a new edition in London, in 1853, with notes by John Cazenove.

" The Logic of Political Economy, by Thomas De Quincy," published in London, 1844, was written expressly to correct some errors in the logic and terminology of the science.^ In his estimation : —

" Political Economy does not advance. Since the revolution effected in that science by Ricardo, (1817), upon the whole it has been stationary.

* Archbishop Whateley was, for some time, Professor of Political Economy in the University of Dublin.

| McCulloch pronounces this " a very clever work," but complains of it as overlaid with the formula of logic.

PRELIMINARY ESSAY. XIX

But why ? It has always been my own conviction that the reason lies in the laxity of some, amongst the distinctions which are elementary to the science. For example, that one desperate enormity of vicious logic which takes place in the ordinary application to price of the relation between supply and demand, has ruined more arguments dispersed through speeches» books, journals, than a long life could fully expose. Let us judge by analogy drawn from Mathematics. If it were possible that but three ele- mentary definitions, or axioms, or postulates, should be liable to contro- versy and to a precarious use, (a use dependent upon petition, momentary consent), what would follow? Simply this, that the whole vast aerial syn- thesis of that science at present towering upwards towards infinity, would exhibit an edifice eternally, perhaps, renewing itself by parts, but eternally tottering in some parts, and in other parts mouldering eternally into ruins." After another illustration from the science of Astronomy, the author pro- ceeds : — " Such, even to this moment, as to its practical applications, is the science of Political Economy. Nothing can be postulated ; nothing can be demonstrated."

The whole work consists of an acute examination of the errors of Political Economy so far as they come within the range of his object. He devoted himself specially to the vindication of Ricardo.

Another effort to define this science, worthy of special mention, ia that of John Stuart Mill, whose "Essays on some unsettled questions of Political Economy" appeared in 1844.* They are the more worthy of attention, as Mr. Mill was not only an eminent Political Economist, but skilled in logic and precise in language.

He excuses the want of good definitions by saying that many of the acknowledged sciences are deficient in this respect, and that good defini- tions are among the last things to be looked for in the march of a science, "first principles being, in fact, last principles."

He gives the rationale of the distinction between physical and moral science :

" Everything," he says, " which can possibly happen in which man and external things are jointly concerned, results from the joint operation of a

* Mr. Mill is the well-known author of A System of Logic, Rationative and Inductive, in two volumes, 8vo., of very high repute and acknowledged merit, as a work on Logic. His sympathies, however, with the infidel philosophy of Comte are as visible as objectionable. He is also the author of the last great work on Political Economy which has appeared in the English language. It is in two volumes, 8vo., with the title, Principles of Political Economy with some of their Applications to Social Philosophy. Third English Edition, 1852. This work will be further noticed in the progress of these preliminary remarks.

XX PRELIMINARY ESSAY.

law or laws of matter and a law or laws of the human mind. Thus the production of corn by human labor is the result of a law of mind and many laws of matter." " The laws of the production of the objects which consti- tute wealth are the subject matter both of Political Economy and of almost all the physical sciences : such as are purely laws of matter belong to phy- sical science exclusively. Such of them as are laws of the human mind, and no others, belong to Political Economy, which finally sums up the result of both combined." "Political Economy presupposes all the physical sciences ; it takes for granted all such of the truths of those sciences as are concerned in production. It then inquires what are the phenomena of mind concerned in production and distribution ; it borrows from the pure science of mind the laws of those phenomena, and inquires what effects follow from these mental laws acting in concurrence with those physical ones."

Upon these considerations he furnishes the following definition of Po- litical Economy :

" The science which treats of the production and distribution of wealth so far as they depend upon the laws of human nature.''' " Or thus : The science relating to the moral or psychological laws of the production and distribution of wealth." The Essay continues to illus- trate the relations of mental science with Political Economy, and then proceeds :

" Pure mental philosophy, therefore, is an essential part or preliminary of political philosophy. The science of social economy embraces every part of man's nature in so far as influencing the conduct or condition of man in society." " It does not treat of the whole of man's nature as modi- fied by the social state, nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth, and who is capable of judging of the comparative efficacy of means for obtain- ing that end." After remarking at some length on the mixed motives which govern men in the affairs of life, he says : " But there are also cer- tain departments of human affairs in which the acquisition of wealth is the main and acknowledged end. It is only of these that Political Economy takes notice. The manner in which it necessarily proceeds is that of treating the main and acknowledged end as if it were the sole end." The author then arrives at another definition, which, in his view, " seems to be complete :" " The science which traces the laws of such of the phenomena of society as arise from the combined operations of mankind for the pro- duction of wealth in so far as those phenomena are not modified by the pursuit of any other object." — (pp. 130 to 140.)

This highly elaborated definition of J. S. Mill, drawn up after having freely admitted the pressure and full relation to the subject of its moral aspects, is under the cloud of seeming, if not to reject, at least to dis-

PRELIMINARY ESSAY. XXÎ

pense with all moral considerations. One of his preliminary definitions was, "The science relating to the moral or psychological laws of the production and distribution of wealth." It cannot but be noted that the final definition is of a very different tenor, and especially when taken with the principle, that for the purposes of the science the " acknow- ledged end" is to be regarded "as the sole end." We cannot but think that the author of these two definitions realized in the progress of his Essay, that the science of Political Economy, as received by himself and by many of the School of Adam Smith and J. B. Say, could not logically or consistently include any considerations of morality, humanity, or religion.

He remarks that it may be thought by some that his attempt to frame a stricter definition of Political Economy than those commonly received, can be of little use. " We think otherwise, and for this rea- son, that with the consideration of the definition of a science is insepa- rably connected that of the philosophic method of the science." " Where differences of principle exist as distinguished from differences of matter of fact or detail, the cause will be found to be a difference in the conception of the philosophic method of the science." After ex- plaining, at length, how such differences lead men astray, and how they involve the old feud between men of theory and men of practice, he says : " In the definition which we have attempted to frame of the science of Political Economy, we have characterized it as essentially an abstract science, and its method as the à priori." "It reasons, and as we contend, must necessarily reason from assumptions, not from facts." " The conclusions of Political Economy, consequently, like those of geometry, are only true as the common phrase is in the abstract, that is, they are only true under certain suppositions, in which none but general causes — causes common to the whole class of cases under con- sideration— are taken into the account." "That which is true in the abstract is always true in the concrete, with proper allowances." (145.)

" It is in vain to hope that truth can be arrived at either in Political Economy or in any other department of the social science, while we look at the facts in the concrete clothed in all the complexity with which nature has surrounded them, and endeavor to elicit a general law by a process of induction from a comparison of details ; there remains no other method than the à priori one, or that of abstract speculation."

He then proceeds to point out how this science is applied : " When the principles of Political Economy are to be applied to a particular case, then it is necessary to take into account all the circumstances of that

XX11 PRELIMINARY ESSAY.

case," and ascertain by examination what are the "disturbing causes." The difficulty of appreciating these disturbing causes, and of ascertain- ing whether the inquirer possesses full knowledge of them, " constitutes the only uncertainty of Political Economy." He concludes that portion of his Essay by saying, that " the mere Political Economist, he who has studied no other science but Political Economy, if he attempt to apply his science to practice will fail." Political Economy is not, then, according to Mill, a mere collection of laws by which men are to be governed in the affairs of life, but a collection of the truths or laws of abstract science intended for the information of practical men. The scien- tific political economist " stands in the same relation to the legislator as the mere geographer stands to the navigator, telling him the latitude and longitude of all sorts of places, but not how to find whereabout he him- self is sailing," and we may add, not pointing out where he is to sail nor the rocks and dangers in his track. He recommends to the mere economist " extreme modesty" in his opinions on practical politics, and in the practical applications of his doctrines to existing circumstances. — (pp. 140 to 155.)

We are indebted to another great authority for a special effort to state the progress of Political Economy, and to furnish a definition — N. W. Senior, Professor of the Science in the University of Oxford. One of his lectures is specially devoted to " the causes that have retarded the progress of Political Economy." * After some preliminary remarks, he puts the question : —

" Has the the progress of Political Economy been in proportion to the ardor with which it has been urged V He answers, " No : After so much and so long continued discussion, we might have hoped that its limits would have been accurately laid down, its terms defined, and its general principles admitted. It is unnecessary to prove formally that this is not the case. Every one is aware that Political Economy is in a state of im- perfect development, — I will not say characteristic of infancy, but cer- tainly very far from maturity. "We seldom hear its principles made the subject of conversation, without perceiving that each interlocutor has his own theory as to the object to which the inquiries of a political economist ought to be directed, and the mode in which they ought to be pursued. When we read the most eminent of the recent writers on the subject, we find them chiefly engaged in controversy. Instead of being able to use the works of his fellow-laborers, every economist begins by demolition, and erects an edifice, resting perhaps, in a great measure, on the same founda-

* " Four Introductory Lectures on Political Economy, delivered before the University of Oxford," London, 1852. — (p. 18.)

PRELIMINARY ESSAY. XX111

tions, but differing from all that has preceded it in form and arrange- ment."*—(p. 11.)

After discussing the subject at length, Senior decides that Political Economy is a mental, not a physical study — that it is concerned with the laws of mind, not with the laws of matter. What the political economist "reserves to himself," according to him, "is to explain the laws of mind which decide in what proportions the produce, or the value of the produce, is divided between the three classes by whose concurrence it has been obtained." (p. 34.) Having thus stated that Political Economy, as a subject, belonged to the department of mind, he proceeds to the question whether it is a science or an art. " If Po- litical Economy is to be treated as a science, it may be defined as " the science which states the laws regulatiug the production and distribution of wealth, so far as they depend on the action of the human mind."

" If it be treated as an art, it may be defined as ' the art which points out the institutions and habits most conducive to the production and accumulation of wealth.' Or, if the teacher venture to take a wider view, as the art which points out the institutions and habits most con- ducive to that production, accumulation, and distribution of wealth, which is most favorable to the happiness of mankind." — (p. 36.)

There is a degree of frankness implied in these definitions which does honor to Senior as a professed political economist : in such hands, the subject, whether a science or an art, is more likely to make progress than in those who regard it as already nearly, if not altogether, perfect. The reader will bear in mind, that our chief object in these remarks is to ascertain how far Political Economy, in its present state, is entitled, whether as a science or an art, to state truths to enlighten, or rules to govern statesmen. It is quite certain, that so long as it is undecided whether it is a science or an art, its teachings must be regarded with much distrust in what regards public administration or the actual busi- ness of life. After noticing the Mercantile System and its errors, the works of Sir James Stewart, who blends art and science together to the confusion of both ; the " Formation and Distribution of Riches," by Turgot, which is a purely scientific treatise; the writings of Quesnay and the Physiocratic School, which treat it as an art, Senior proceeds to

* N. W. Senior is the author of many works upon Political Economy, among "which is an " Outline of the Science of Political Economy, 4to., London, 1836, which is pronounced by J. R. McCulloch to be "an able, comprehensive, and admirable Essay." There are few living writers on the subject of higher authority.

XXIV PRELIMINARY ESSAY.

a critical examination of the Wealth of Nations. This he regards as a work upon the art, for " the scientific portion of his work is merely an introduction to that which is practical." "The English writers who have succeeded Adam Smith, have generally set out by defining Po- litical Economy as a science, and proceeded to treat it as an art." (45.) But this, by Senior's own showing, is precisely what their master had done before them, for the " scientific portion" of the " Wealth of Na- tions" bears a very small proportion to the remainder. An instance of this kind of definition is cited by Senior from J. E,. McCullocb, who defines it as a science, but in stating its object, converts it into an art. James Mill confuses his treatise in the same manner. Ricardo treats the subject as a science. "The modern Economists," continues Senior, " of France, Germany, Spain, Italy, and America, so far as I am ac- quainted with their works, all treat Political Economy as an art." (pp. 45-46.) Their opinion seems to be that Political Economy is a branch of the art of government, and that its business is to influence the conduct of a statesman, rather than to extend the knowledge of a philosopher." — (p. 46.)

It must be obvious, upon very little reflection, that speculations upon Political Economy can be of no great value until it is known whether they state abstractions of science, or give rules of conduct. The writer who has not understood or observed the distinction cannot, with safety, be trusted in either aspect of the subject, though be may be read with advantage by any one well versed in the two departments and able to keep the distinction in view. " It appears, from this hasty sketch, that the term Political Economy has not yet acquired a definite meaning, and that whichever of the three definitions I adopt, I shall be free from the accusation of having unduly extended or narrowed the field of inquiry." (p. 46.) It is remarkable, that in this " hasty sketch," no notice is taken of J. B. Say, to whose Treatise it is no doubt chiefly owing that this important question between the science and the art of Political Economy has arisen. We shall refer to Say in this aspect hereafter.

" The time I trust will come, perhaps within the lives of some of us, when the outline of the Science of Political Economy, as distin- guished from the art, will be clearly made out and generally recognized ; when its nomenclature will be fixed, and its principles form a part of elementary instruction. A teacher of the art of Political Economy will then be able to refer to the principles of the science as familiar and admitted truths. I scarcely need repeat how far this is from being the

PRELIMINARY ESSAY. XXV

case at present." (p. 52.) This opinion of Senior is cited for the benefit of many in the United States who have been taught to regard the science as fully treated by Say and the numerous compends of his work.

Senior pursues the discussion through another lecture, as to the ques- tion between science or art, referring specially to the work of John Stuart Mill (from which we have quoted so extensively above), and highly approving his views.

This distinction between science and art, as applied to Political Economy, has but recently been made prominent. Its application has revealed a fruitful source of error. The confusion consequent upon the blending of theory and practice, science and art, is complete and uni- versal throughout nearly the whole literature of Political Economy. Men of logical minds or scientific training speculated and observed with a view to ascertain abstract truths or the laws of science ; men of active life and a practical turn of mind, directed their attention chiefly to the actual processes of production and distribution, and many of them regarded these processes chiefly from the side of humanity and religion. Some writers have mingled all these views together, and there has been no limit to criticism and recrimination, argument, contradic- tion, and ridicule, between those who misunderstood each other, because their aims were different, their modes of thinking different, and because they had two distinct objects in their minds whilst they professed to be writing of one. This confusion of terms and ideas will be very appa- rent as we proceed.

G-EORGE K. RiCKARDS, a successor of Senior in the Professorship of Political Economy at Oxford, delivered three lectures before the Uni- versity in 1852, which were published the same year. To these we _resort for later opinions upon this much-vexed subject. He cuts the !;^Gordian Knot of the distinction between science and art with a single blow of his, weapon, and says that " Political Economy forms at all times and in all conditions of human advancement, a most important branch of the science of Government." — "All political rulers, indeed, whether they recognise the fact or not, are ex necessitate Political Econo- mists. On some principles of Economy, true or false, they must needs act." He admits that Political Economy labors under a degree of dis- credit, and that the prejudices and misconceptions with respect to its nature and office which beset it from the first, still keep their hold upon some otherwise well-informed and cultivated minds." In regard to the principles and oracles of Political Economy, " a considerable misconcep-

XXVI PRELIMINARY ESSAY.

tion exists, one which repels many from entering on the study, and in- duces many more to regard it with aversion or contempt." " It is well known," he admits, "that Napoleon Bonaparte, who possessed one of the most powerful understandings of modern times, entertained a rooted antipathy against Political Economy. It was a saying of his that 'if an empire were made of adamant, the Economists could grind it to powder.' But it is pretty evident in what light Napoleon really re- garded the science which he denounced, and it is the same in which it is still regarded by a large portion of the world. He looked upon the lucubrations of economical writers, as he looked on one of the ready- made political constitutions of the Abbé Sieyes, as an artificial creation of speculative brains. He regarded them as a collection of technical rules and dogmas, devised by ingenious theorists and men of the closet, setting up to instruct the rulers of mankind how to conduct the com- mercial and financial affairs of their governments. Confident in his ovtq political skill and genius, be put aside what he conceived the arbitrary prescriptions of philosophers, and branded the whole class with the im- putation of presumptuous folly/'

" I will not venture to assert on behalf of the whole catalogue of eco- nomical writers, at least in this country, that they have given no color or countenance to the misapprehension now referred to. An undue at- tachment to systems, an attempt to attain a scientific precision beyond what the nature of the subject-matter admits of, a proneness to gene- ralize too hastily, and to lay down as infallible and universal, laws which are subject to perpetual disturbance from causes beyond the sphere of Political Economy ; a reluctance to submit abstract reasonings to the correction of facts, and a tendency to controversies about terms, and the mere outward garb and nomenclature of science, — such infirmities, of a kind not unfrequently to be recognised in other departments of human knowledge, may have given color to the impression that political econo- mists care more for system than for facts, and are conversant with vague abstractions rather than with the realities of life. Still more might this prejudice be countenanced by a defect which appears to me even more frequently characteristic of economical writers. I mean the omis- sion to refer constantly for appeal and for correction to that primary source of all the conclusions of true Political Economy, the fixed laws of Providence exemplified in the constitution of man's nature and in the fundamental arrangements of society." — (Richards' s Lectures, p. 12, 13.)

Our object in this preliminary essay being two-fold — to justify the

PRELIMINARY ESSAY. XXVU

bringing forward a new work on Political Economy, and to create some distrust of the teachings upon that subject which have been most in vogue in this country, we might pause here in the belief that we had attained our object.

But as the future study of Political Economy cannot be pursued ad- vantageously without a still more extended knowledge of the confusion and want of harmony which reign among its leading authorities, we propose now to refer to these and to their appreciation of each other's labors. In this brief notice we confine ourselves chiefly to writers of that School which regards Adam Smith as its head. List has throughout the following work called it simply the School, for the reason that no other class of writers upon Political Economy makes pre- tensions to be the only safe expositors of the subject. Most others who regard Political Economy rather as an art, in some of its principal as- pects coming within the scope of public administration, look upon themselves as contributing their views, facts, experience, and specula- tions, to elucidate the true policy of nations in the matter of industry and trade, and the well-being of people. Regarded from this point of view, all the principal works upon Political Economy are valuable a3 materials for study and discussion, and it is only when some of them are put forth as teachers of a science, as the propounders of indisputable truths, to pass unquestioned at all times and places, that it becomes ne- cessary to look carefully into their pretensions. The space at our dis- posal will not permit an extended appreciation of the doctrines or merits of the authors to whom we shall refer; but as they belong mainly to one School, they may be safely treated as good authority against each other.

Adam Smith is the distinguished man, by common consent, referred to as the Father of that School which has long claimed pre-eminence in Political Economy. Whatever ground there may be for ascribing to him this paternity, it is very safe to say, that were he to revisit the world, he would find it difficult to recognise his offspring. We prefer giving all the honor of this fatherhood to J. B. Say, who, though he may have taken his inspiration from Adam Smith, was certainly the first to give the doctrines of Political Economy a shape and degree of consistency sufficient to form the rallying point of a School. Regarded as a treatise upon industry, wealth, and trade, and the other subjects to which it refers, and considering the time at which it appeared, the Wealth of Nations must be admitted to be one of the most successful works of modern times. It has, beyond question, been the chief stim-

i

XXviii PRELIMINARY ESSAY.

ulus to the extraordinary discussions which have since ensued upon the subjects of which it treats. Its leading ideas made a great impression, and have since been the subjects of interminable discussion; but the Wealth of Nations, though often referred to, is seldom studied. Some have attributed this to the subject itself, and others to its want of method. It has many editors and commentators; it has been analysed and abridged, and many other modes have been adopted of facilitating its study. It is, however, only a text-book for Economists, and not a work to be read. We have quite a circumstantial account of the dif- ficulty of reading it in the experience of Francis Horner, who rose in the early part of this century to very high repute as a Political Econo- mist, by his Parliamentary career and his contributions to the Edinburgh Review.* He informs us that he and Lord Seymour " were under the necessity of suspending progress in the perusal of the Wealth of Na- tions, on account of the insurmountable difficulties, obscurities, and embarrassments in which the reasonings of Chapter V. are involved." (Memoirs, Vol. I., p. 163.) He and his friend had engaged in a regular and deliberate study of the work thus given up. He asks (Ibid., p. 126) if " Smith did not judge amiss in his premature attempt to form a sort of system upon the Wealth of Nations, instead of pre- senting his valuable speculations to the world under the form of sepa- rate dissertations ? As a system, his work is evidently imperfect, and yet it has so much the air of a system, that we are apt to adopt his erro- neous opinions, because they figure in the same fabric with approved and important truths." In another place he says, in reply to a request to edit the Wealth of Nations, "I should be reluctant to expose Smith's errors before his work has operated its full effect. We owe much at present to the superstitious worship of Smith's name ; and we must not impair that feeling until the victory is more complete. There are few practical errors in the Wealth of Nations, at least of any great conse- quence ; and until we can give a correct and precise theory of the nature and origin of wealth, his popular, plausible, and loose hypothesis is as good for the vulgar as any other." — (Ibid., 229.)

Mr. Horner's delicacy about exposing Smith's errors, has had few imitators since his day, for seldom has any book been more eulogized in general, and more found fault with in detail, than the Wealth of Na- tions. The great reputation of Smith has made the Economists, in general, anxious to range themselves under his wing, and from that position

* He was alone, or as some say, in conjunction with Huskisson, the author of the celebrated Bullion Report of 1810.

PRELIMINARY ESSAY. Xxix

they have not hesitated to cut, and carve, and apply the caustic, until there is scarcely an important passage in the whole work which some one of his friends has not detached from his system as wrong, or branded as absurd. It would require volumes to specify the harsh treatment which this work has received from those who still appealed to it as the fountain of their own systems.

The English edition of the WeaJth__o/_JSfations, edited by J. K. McCulloch, and published in 1828 and in 1838, has been pronounced by Blanqui, UL 'edition classique par excellence." It is accompanied by a life of the author, an elaborate introductory discourse, notes, and supplemental dissertations. The eulogy of Smith in the introductory discourse is generous and full, warm, and positive ; his criticisms modest and few. It is such an appreciation as leaves on the reader a strong impression of the value and merits of the work. It is when he comes to details in the body of the work that the editor is impelled to expose the errors of his author. As it is far beyond our power to follow him in this severe process, we refer the reader to the edition of 1888, page 643, in the index under the name Smith, where he will find specifically stated and referred to, nearly one hundred important errors, all of which are treated fully in the notes. This might go far to deter the boldest student from entering upon the study of Political Economy by reading the Wealth of Nations.

We do not hesitate to- ascribe to J. B. Say the whole honor of taking the first important step towards developing the science of Political Economy, if, in its present position, it has good title to be regarded as a science. Struck by the reputation of Adam Smith, and the success of his work, he saw at once that the subject had a great hold on the public mind, and believing that if such an imperfect production could secure him so great a name, there was an opportunity of attaining a still higher reputation by producing a more perfect work upon the subject. His ambition rose to the point of founding a new science — the Science of Wealth. Upon this idea he labored with such success as to produce a work, which, if it has not placed its author as high on the roll of fame as Smith, it has at least been immeasurably more read, and its contents have exercised far more influence upon the public mind. It was intel- ligible and methodical. The subject was popular, and something of the kind was required, not only to satisfy the craving for knowledge upon the subject by statesmen and men of business, but also to serve as a text-book for Professors. It was received with immense favor, and soon appeared in nearly all the languages of Europe. Since the advent of

XXX PRELIMINARY ESSAY.

Say's Treatise, the science of Political Economy is referred to familiarly and commonly as Regularly admitted into the family of sciences. But whilst no one can dispute the ability of his contribution to the subject, tbere has subsequently been strong opinions that he has not founded a science. The distinction is very important; if a contribution only, then what Say writes rests upon his single authority ; if a science is set forth in his work, we are bound to receive what he says as the truths or laws of science. It becomes indispensable, then, to know when we take up Say's Treatise, whether his work is the teaching of a science, or the speculations of a Political Economist. That it is a work of great ability, all should admit; that its success and influence have far transcended its merits, is now plainly seen. Its claims to be a work of science have been successfully questioned. We have seen that the able Economist and logician, J. S. Mill (ante, p. 22), pronounces Political Economy to be an abstract science, constructed upon reasonings à priori. When he said this, he had all the advantage of an elaborate opinion by Say that it is an experimental science founded upon induction and obser- vation of facts, and upon reasoning à posteriori. Say appeals to the Baconian philosophy as applicable to his inquiries, and that upon which his work is founded. Mill rejects that method of reasoning as inappli- cable to the moral and mental sciences, and he does it upon grounds which cannot be shaken. For these grounds we refer to the work above cited. But we think it can require little reflection upon broader grounds than those taken by him to reach the same conclusion. We think that the events of human life, subject to the control of human. reason, influenced by human passions and feelings, and complicated by the very varying chances and changes of life, are not in their nature the subject of inductive philosophy. The mind which is capable of in- ductive reasoning is not itself the subject of such a process. Men are not like bees or ants, whose habits and laws are proper objects of this philosophy. It might as well be attempted to ascertain the laws or legislation of a people by their actions, as to determine the problems of their Political Economy by observation of their modes of business. Bacon himself foresaw this difficulty in the application of his system, and remarks, that in the sciences which relate to mind and morals, " it must be bounded by religion, else it will be subject to deceit and delu- sion." What makes the inapplicability very plain in the present case is, that in regard to wealth, which is stated to be the object of the sup- posed science, it is impossible to separate it from moral or religious considerations in any circumstance of its production or distribution. It

PRELIMINARY ESSAY. XXxi

is only of any possible importance as it concerns men • and men, in their relations with wealth and its production and distribution, cannot lay aside moral and religious considerations.

The argument of Say to prove that Political Economy is founded on a generalization of facts, will be found, at large, in the preliminary dis- course to his Treatise. It will be seen that he rests his system upon it. Now the least that can be said when such men as J. B. Say and J. S. Mill* differ widely as to the very basis of Political Economy, as to the processes of reasoning by which it is constructed, as to the fact of its being an abstract or an experimental science, is, that students and readers must wait with patience until the professors and other capable persons decide a question so vital to its authority. And this is the more necessary because there is, as we shall see, as much disagreement about matter as about form.

" When Smith is read as he merits to be," remarks Say,f " it is seen that before him there was no Political Economy." And Smith cannot have produced a science, for, according to Say, his work " can only be considered as an immethodical assemblage of the soundest principles of Political Economy, supported by luminous illustrations of highly inge- nious researches in statistics, blended with instructive reflections ; it is not, however, a complete treatise of either science, but an irregular mass of curious and original speculations, and of known demonstrated truths."

Say, in the introduction to the later editions of his Treatise, makes an elaborate effort to show that his system is founded upon the inductive processes of the Baconian philosophy. The reader who examines his process will see with what justice. As he was founding a science, he wished to avail himself of the sanction of a name like Bacon's : not dreaming that, according to the leading Economists of no distant day, this choice of Bacon as his guide would be regarded as a blunder. He did not discover that Bacon's system was inapplicable ; but that he met difficulties in the outset, is quite visible. He manipulates the term facts, which represent the things to be observed in the Baconian method, until he obtains an aspect which may answer his purpose. He first makes two classes of facts : objects that exist, and events that take place. " The manner in which things exist and take place is what

* Many other names might be mentioned on both sides of this question. We have seen above that Senior concurs with Mill, so also Tracy and Rossi, f Discours Préliminaire.

XXX11 PRELIMINARY ESSAY.

is called the nature of things, and a careful observation of the nature of things is the sole foundation of all truth." Hence, a two-fold classi- fication of science, the descriptive and experimental. Political Economy- belongs to the latter; in showing the manner in which events take place in relation to wealth, it forms a part of experimental science. But facts that take place are subdivided into general or constant, or par- ticular and variable. General facts are the results of the nature of things in all analogous cases : particular facts are the results of several operations modified by each other in a particular case. Objects that exist and events that take place, embrace two distinct sciences, Political Economy and Statistics. Political Economy, from facts always carefully observed, makes known to us the nature of wealth ; from the knowledge of its nature deduces the means of its creation, unfolds the order of its distribution and the phenomena of its destruction. It is, in other words, an exposition of the general facts observed in relation to this subject. — " General facts, or if you please, general laws, which facts follow, are styled principles when we speak of their application." — " Political Economy, in the same manner as the exact sciences, is composed of a few fundamental principles and a great number of corollaries or conclu- sions drawn from those principles. It is essential that those principles be strictly deduced from observation." — "A treatise on Political Economy will then be confined to the enunciation of a few general prin- ciples not requiring even the support of proofs or illustrations, because these will be but the expression of what every one will know." The sub- stance of Say's application of the Baconian system of induction, seems, then, to be this : — The science of Political Economy must be formed by an induction or observation of facts ; by facts is intended general facts, or the nature of things ; but by general facts is meant general laws, which facts follow ; and by these are intended principles which must be strictly deduced from observation; and Political Economy, like the exact sciences, is composed of a few fundamental or general principles not requiring the support of pi'oofs or illustrations, being the expression of what every one knows. It must be difficult to find any warrant for such philosophizing in the pages of Bacon. Say makes this long incursion into the field of inductive philosophy, and upon his return, instead of exhibiting an array of facts with his process of in- duction, he tenders us a few general principles requiring no proofs, being the expression of what every one knows. Could there be any need of invoking the aid of Bacon, if such were the premises upon which his system was to be built ?

PKELIMINARY ESSAY. XXXlll

We have already adverted to the fact that the work of Say was re- ceived with signal favor : this favor, however, was far from being uni- versal. Its method and general clearness of statement recommended it as a text-book, for which it was designed, upon a subject felt to be of importance, but upon which no book suitable for that purpose had ap- peared. It did not long escape severe criticism and even denunciation. Its hard materialism was soon detected; its attempt to construct a science of wealth apart from man, its sole possessor, and whom alone it concerns, and without any consideration of humanity, morals or reli- gion, was unsparingly denounced. A great discussion followed, which we cannot even refer to now. We select two opinions of Say, very deliberately expressed ; one by an eminent Economist of his own School, and the other by one who denied his whole system. The first is Adolphe Blanqui, who, in his history of Political Economy, after an appreciation of the merits of Say, in which he bestows the highest en- comiums, proceeds to offer some of the objections to which his work is exposed : —

" The subjects which affect us so nearly at present, such as Wages and Population, seem scarcely to affect him : He proceeds to their examination with a degree of coldness ; he adopts, without abatement, the opinions of Malthus, and it is here that his writings will be for ever vulnerable, and cannot fail of being surpassed by the School of Sismondi. He has con- sidered production far too independently of the producers. He was seduced by the prodigies of English production, and did not think of the human suffering which followed in their train. He looked upon wages as suffi- cient, not because they enabled the laborer to live, but because they kept him from dying. The utility of his works consists much more in the errors he has dissipated, than in the truths he has discovered. He failed in not regarding from a point of view more social and more elevated, the questions of pauperism and wages : we find, in reading, something hard and repulsive, which recalls the abstract formulas of Malthus and fii- cardo. His logic, when on the subject of succor to the unfortunate, is pitiless, and his severe rebukes of benevolence look as if he had more encouragements for misconduct than consolations for misfortune." *

The other opinion in regard to Say, is from Viscount Alban de Ville- neuve Bargemont's History of Political Economy. He belongs to what is sometimes called the Humanitarian School, which takes the well-being of men, and not wealth, as the starting point of its system : —

* Histoire d' Economie Politique, par A. Blanqui (aine), Professor of Political Economy in the Conservatory of Arts and Trades, and Director of the School of Commerce.

3

XXxiv PRELIMINARY ESSAY.

" This work (Say's Treatise), which placed its author in the first rank of the disciples of Smith, has greatly contributed to propagate in France and Europe the new English doctrines of Political Economy." — "He ad- vanced on these subjects propositions so bold and paradoxical that they endangered governments, religion, and the law of property itself; for, solely preoccupied with the increase of production, he seemed frequently to point at these institutions as more injurious than useful to public wealth." — " Imbued with the philosophy of the eighteenth century, habituated by the nature of his studies to seek for nothing beyond material utility, J. B. Say was the organ of a science which was developed at an epoch when there was no belief in any thing beyond the material interests of life." — " The first edition of his work was published in 1803 : it rapidly disap- peared. But theories so clearly repelling the intervention of government and the influence of civil and religious institutions, could not readily be tolerated by an overshadowing authority (Bonaparte) jealous of its power, and which was striving to place society upon a more solid basis. The author was not permitted to publish the second edition until ten years after, when it was dedicated to the Emperor Alexander." — "Whatever may be the talents of the author, there is the more reason to regret that abuse of science and that spirit of system which have drawn him, by a series of conclusions logically deduced from false and erroneous principles, to look upon man only as an instrument or a means of production, and to shed doubt, contempt, or sarcasm upon institutions which men feel it their duty to defend or respect." *

Two important works upon Political Economy appeared in 1815, in which this disposition to bow to the authority of Say is manifested, whilst the writers differ from him, not only widely, but radically ; we refer to Le Comte Desttjtt de Tracy, and Henry Storch. The work of the former, to which we refer, is the fourth volume of his " Treatise upon Ideology" of which Mr. Jefferson, who revised a trans- lation made in this country from the manuscript of the author,f before the publication in France, speaking of the original, said, " in which no word is unnecessary, no word can be changed for the better ; and severity of logic results in that brevity to which we wish all science reduced." As a logician, Destutt De Tracy would rank as far above Say as the latter is above Adam Smith. Say's error consisted in assuming wealth as the object of a science : Tracy, after a logical process of great length,

* Histoire d'Economie Politique; Vol. IL, Chap. XVI., pp. 264, 265, 266. He is also the author of Economie Politique Chrétienne; 3 Vols. 8vo., 1834. He no doubt regarded Say's work as an emanation of the infidel school.

| Traite d'Economie Politique, Paris, 1823. We quote from the translation, as in it we first examined the work. Published at Georgetown, in 1817.

PRELIMINARY ESSAY. XXXV

being, in fact, a supplement to his system of logic, finds the basis of Political Economy in Ideology, or the science of the mind. He wished, " to place the moral and political sciences on their true basis, a know- ledge of our moral and intellectual faculties."

It is impossible to give the reader any idea of such a work as that of Destutt Tracy by short, or even long extracts. It can only be said that, as he finds the basis of the moral and political sciences in a know- ledge of the intellectual faculties, he finds the basis of Political Economy in man, the owner of those faculties. In all his reasonings and obser- vations upon the subject, he keeps his eye on man as found in society; on men, rich and poor, strong and weak. He does not treat wealth as the chief topic : in his view, individual strength, or the power to labor, is the primitive riches ; the inequalities which arise, and inevitably exist in society, are motives for protecting those, who, from the accidents of life, or natural inability, fall behind, and become less able to make sure of a subsistence, — " the laws should always endeavor to protect weak- ness."— " I think that all must agree, that when a considerable portion of society is in a state of too great suffering, and consequently, too much brutalized, there is neither repose, nor safety, nor liberty possible, even for the powerful and rich ; and that, on the contrary, the first citi- zens of a State are really much greater or happier when they are at the head of a people, enjoying that honest ease which developed in them all their intellectual and moral faculties."

^Henry Storch was one of the tutors of the Grand Dukes Alexander and Nicholas, and it was to them he delivered a " Course of Political Economy," which we are about to notice.* Storch has attained, and deserves, a high rank, as a man of ability and a Political Economist. McCulloch places his writings " at the head of all the works on Po- litical Economy ever imported from the Continent into England." This opinion, deliberately expressed in 1825, and as deliberately repeated in 1845, places him above Say, exceedingly to the disparagement of the latter, who had published his work as the exposition of a complete sci- ence, to which all men should bow as to the truth. There is, however, a very wide and radical difference in their conception of the subject. The explanatory title of Storch is the exposition of the principles which determine the prosperity of nations, which gives a very different point of departure from that of Say. " Until now," he says in his preface,

* Cours d' Economie Politique ou exposition des principes qui déterminent la prospé- rité des nations; 1st Edition, 6 Vols. 8vo., 1815. We refer to the Paris edition of 1823, with notes by Say, in 4 Vols., 8vo. A fifth yolume has been added.

XXXVÎ PRELIMINARY ESSAY.

" Political Economy has been regarded as the science of the wealth of nations ; I have attempted to show that it embraces their prosperity, and that the theory of civilization is included, and is equally essential to the objects of the science." — "I have tried to sketch the outline of this new doctrine, for which the materials were in wide profusion." From the Reflections in the introductory portion of his work, we take the following passage : —

" The facts from which Political Economy is deduced, belong to the moral order; they are the result of the action of human nature. Man himself is the artisan of wealth and of civilization. It is he who subjects these to his wants and his enjoyments ; thus, all the phenomena which these objects present are founded upon human nature, and can only be explained by it. This leads us to an important remark, which weakens the analogy we have discovered between Natural Science and Political Economy. The former being based on physical facts which are susceptible of a rigorous appreciation, belong to the domain of the exact sciences; Political Economy, on the contrary, being based upon moral facts, that is to say, upon facts produced by the faculties, wants, and will of man, is not susceptible of calculation, and takes its place in the circle of the moral sciences."— (Vol. L, p. 22.)

In another portion of his introduction he says : — "At first glance it is seen how much this theory of Adam Smith is superior to that of the Economists (Physiocrats) ; these philosophers had made Political Economy a purely natural science ; Smith raised it to the rank of a moral science." These two passages excited the ire of Say, who, to the very great displeasure of Storch, had edited an edition of his work in Paris, with notes, in which he makes no small effort to lessen the repu- tation and authority of Storch's labors. In reference to the passage last cited, Say exclaims : — " He has done a great deal more, he has raised it to the rank of the experimental sciences!" The exhibitions of spleen or impatience which characterize these notes of Say, show how deeply his jealousy was roused by the power and truth of Storch's positions. His conduct is the less pardonable, as Storch had transcended even the demands of literary courtesy in concessions to Say's high position as a Political Economist.

We have the authority of McCulloch that the " Principles of the Science of Wealth," by Joseph Droz, is " one of the best elementary works on the science in the French language."* Droz is a writer of high moral tone and humane feelings. His work is either a strong

* Paris, 8vo., 1829.

PRELIMINARY ESSAY. XXXV11

specimen of the necessity of bowing to Say's supremacy in that day, even by those who differed from him, or it is conceived in a spirit of the deepest irony in reference to Say's system. He treats Say throughout with the most unbounded deference, as the head of the great School of Political Economy. Whilst his eyes are thus, however, deferentially fixed upon him, like a stout waterman, he is rowing the other way. Say's science is of wealth, that of Droz relates to men as they are con- cerned with wealth. " Political Economy is a science, the object of which is to render comfort as general as possible. All good men, even those who do not rise to the consideration of wise theories, endeavor to promote this good end." — "The activity or inactivity of labor, the good or bad apportionment of riches, depends, in many respects, upon the ideas, right or wrong, which governments form upon the subject of Political Economy. The science is essential to the work of ameliorating human condition." — "The study of Political Economy may dry up narrow minds and reduce their vision on earth to goods and sales and profits ; but this study must ever be for minds nobly endowed, a source of exalted meditation upon the means of ameliorating the lot of the human family, and upon the blessings vouchsafed by the Eternal Author of all good." (Chap. V., Booh I.) — "In studying the science of riches, it is essential never to lose sight of the relation between wealth and the amelioration of human condition, between wealth and human happiness. To consider riches in themselves and for themselves, is to denaturalize the science. By the habit of regarding only the production and distribution of riches, men come finally to see nothing in the world but commercial interests : many writers employ expressions which seem to materialize all our interests." — "Political Economy, well conceived must ever be the auxiliary of morals. We must not take riches for an end, they are a means ; their importance results from their power of relieving human necessities and soothing human suffering, and the most precious riches are those which are devoted to the well-being of multi- tudes." — " Some Economists speak as if they believed men were made for products, not products for men." The difference between this doc- trine and that of Say is, that the latter, so far as it notices human welfare at all, regards it as a means to increase production ; the wealth produced being the end.*

* In the Dictionary of Political Economy, Paris, 1853, this work of Droz is thus spoken of: — "In this precious volume, as in all the writings of this author, we find an elegant and clear style, sentiments of high and pure morality, which bespeak a lofty mind, a noble nature ; and that charming benevolence which is so apparent and so attractive in the conversation of that good man."

XXXVÜi PRELIMINARY ESSAY.

J. C. L. Simonde de Sismondi is well known and distinguished, both as a historian and as a Political Economist ; he was a prolific writer in the latter character. His first publication on the subject was made as early as that of Say. He was then a follower of Smith, but being an ardent friend of humanity, his views underwent a complete change in the progress of his investigations. No more pleasing task could be offered us than turning through the voluminous works of Sismondi for the evidences of his pare love of human welfare, and his detestation of the science of wealth apart from human well-being. In the discourse pronounced before the French Academy upon the occasion of the death of Sismondi, who was one of the five foreign Associates, M. Mignet, the perpetual Secretary, speaking of Sismondi's survey of the masses of the laboring population in Europe, represents him as * " Surprised and troubled, and as asking himself if a science which sacri- fices the happiness of man to the production of wealth, which oppresses millions of human beings with labor without providing them with bread, was the true science of Political Economy. He answered, no : and he ut- tered a cry of alarm to warn governments and nations of the danger which threatened them."

Mignet closes an eloquent notice of the life and works of Sismondi, with the following words : —

" M. De Sismondi is one of those men who have done most honor to lite- rature by the greatness of their labors, and the dignity of their lives. No one has more earnestly considered the duties of intellect. Amiable in his private relations, devoted in friendships, indulgent towards others, severe to himself, endowed with an activity which never at any time re- laxed, with a sincerity which never on any occasion belied itself, he pos- sessed in the highest degree the love of justice, and a passion for good. With these noble sentiments he has imbued politics, history, social economy ; to make these contribute to the cautious progress of the institutions of States, to the instruction and well-being of nations. For half a century he has thought nothing that was not honorable, written nothing that was not moral, wished nothing that was not useful ; thus has he left a glorious memory, which will be ever respected. In him the Academy has lost one of its most eminent associates, Geneva one of her most illustrious citizens, humanity one of its most devoted defenders. (" Political Economy, and Philosophy of Government," Essays from Sismondi ; London, 1847, pp. 15-24.)

"My life," says Sismondi, "has been divided between the study of Po- litical Economy and that of history ; — I have endeavored not to let those lessons be lost which are given by experience as to what contributes to create and maintain the prosperity of nations. But above all, I bave always con-

PRELIMINARY ESSAY. XXXIX

sidered wealth as a means, and not as an end. I hope it will be seen by my constant solicitude for the cultivator, for the artizan, for the poor, who gain theiT bread by the sweat of their brow, that all my sympathies are with the laboring classes." — " I experienced the deepest emotion in contemplating the commercial crisis which has just swept over Europe ; in beholding the cruel sufferings of the manufacturers and workmen, of which I was witness in Italy, in Switzerland, in France, and which authentic accounts testified not to have been less severe in England, in Germany, and in Belgium. I felt convinced that governments, that nations, were upon a false path, and that they were aggravating the distress they were endeavoring to remedy." * — " The physical well-being of men, in so far as it can be the work of govern- ment or society, is the object of Political Economy. All the physical wants of men, for which they are dependent upon their fellow-men, can be satisfied by means of wealth." — " Wealth is only a benefit when its blessings are diffused among all classes ; population is an advantage only when men are sure of finding in labor the resources of an honest existence." — "A single thought directs us in every portion of this work ; the inquiry for the greatest good of the human family, — that chief good which includes moral perfectibility with material happiness. A single rule suffices to classify the rights and claims of men. Society is intended for the greatest good of all." — " It may be seen at once, that more than any of my predeces- sors, I regard Political Economy, in its relations with the soul and intelli- gence. But to subsistence pertains life, and to life pertains all the moral and intellectual development of which the human race is susceptible." — " Social science ought always to have for its object men united in society — for in society everything proceeds from men, and everything relates to men, united by a common bond. But wealth — shall we call it an at- tribute of men or of things ? — wealth is a term of comparison which has no sense, unless we determine to what it refers." — "A science of wealth, apart from the interests of men, is a mere abstraction — an edifice without any real foundation." — "Wealth is the product of that human labor which procures for men all the material enjoyments they can attain : — it is the representation of these physical enjoyments, and of all the moral and in- tellectual gratifications which can flow from them. Certainly : but for whom ? This question should never be overlooked, and yet how seldom it occurs to or influences the mere theorists in Political Economy. For whom ? According to the response they make to that question, man him- self pertains to wealth, when the truth is, that riches are only riches be- cause they belong to man."f In another place, he exclaims, in reference to Ricardo: — "What, is wealth then everything, — is man absolutely nothing !"

* Nouveaux Principes d'Economie Politique; Tom. I., p 4. Paris edition, 1819. f Etudes sur L'Economie Politique; Vol. I., pp. 2, 3, 4-9.

xl PRELIMINARY ESSAY.

We regret being obliged to confine our extracts from Sismondi to the above, the originals of which are merely introductory paragraphs ; his works on Political Economy abound in lessons of wisdom, and in pro- tests of great force and eloquence against the materialism of the School of Smith and Say, which are regarded by him as equally dangerous and unphilosophical.

We return to J. B. Say to notice a work long subsequent to his Treatise. Whilst the latter was enjoying its high popularity in Europe and America, the author, as Professor of Political Economy, was en- gaged in delivering a course of lectures on the application of his science, which he afterwards published under the title, " A Complete Course of Practical Political Economy ." *

In the course of his further studies, he had the advantage of reading the innumerable criticisms and attacks made upon his system, and we now examine the work just mentioned, to ascertain if his views have undergone any change. It was difficult for Say to acknowledge that he had erred, when half the world was proclaiming that he was right. Yet we find evidence enough in the work now before us that he felt the pressure both of the logic and the eloquence which had been brought to bear against him. There is a strong and ingenious effort made by him to stretch his narrow system to the new basis, upon which alone he must have seen that the future growth of the science would take place. He gradually lengthened his cords as he felt this pressure coming upon him ; but he could not do this without weakening his staJtes, as will be apparent to those who have read the previous pages of this Essay. We almost fear that the concessions in the following extract are less strong than the impressions which the truth had made upon the author's mind. "The object of Political Economy," says Mr. Say in the " General Considerations" preliminary to his " Complete Course," " seems heretofore to have been restricted to the knowledge of the laws which govern the production, distribution, and consumption of riches. And it is so that I have considered it in my Treatise upon Political Economy, published first in 1803. Yet in that same work it can be seen that the science pertains to everything in society." Doubtless it can be seen by the reader who is sufficiently prepared by previous stu- dies, but how very large a proportion of his readers have understood the work according to the intent of the author when it was written ! How

* Cours Complet d'Economie Politique Pratique, suivi des Melanges, $c; 6 Vols. 8vo., Paris, 1828-9.

PRELIMINARY ESSAY. xli

few out of France have had the benefit of the explanations of the Complete Course, which has appeared only in French. How many have a right to complain that no editor of Say has made known these impor- tant modifications of his opinions ! In this country, Political Economy has been very generally taught according to the Treatise of Say, in which the science was restricted to the mere consideration of riches. But again, in close proximity with the foregoing, — "Political Economy, which seemed to have for its object merely material wealth, is found to embrace the entire social system." If this is not a virtual and definite surrender of all that is peculiar in the system of Say, it would be diffi- cult to find words to make it more strong. We do not mean that Say intended to surrender his system : the harvest of golden opinions which it was gathering for him, made an actual surrender almost impossible. His concessions to truth and humanity were designed to disarm opposition and conciliate support.

No one understood better than J. B. Say that his science of wealth could not be developed, from considerations involving the entire interests of the social system. He had felt himself obliged, by his own logic, in the construction of his system? to exclude politics and morals ; how could he then pretend to change the basis of that system without chang- ing the superstructure — that is, change his premises without changing his conclusions ! We cannot but think that unprejudiced and discrimi- nating minds who rightly estimate vjhat is peculiar to Say in his Trea- tise, and what has been said against his system in general, and his doctrines in particular, and what has been done to recast the whole subject, must conclude that Say has been substantially superseded. His work was never in such repute in Great Britain as in the United States, and it was complained there that he refused to avail himself of the teachings of the British Political Economists, Ricardo, Malthus, Tor- rens, and McCulloch. It was said that the last edition of his Treatise was little better than the first. But these neglected Economists might have solaced themselves with the observation that Say's Treatise never even received the benefit of the additional light on the subject which is to be found in Say's " Complete Course ;" Say refused to admit into his Treatise even his own discoveries and emendations. He perceived, doubtless, that his system would not bear emendations, many of which struck at his fundamental principles. His was a logical system, which could not endure the process of addition or subtraction without danger of crumbling to pieces.

A man of very commanding talents succeeded to Say's chair of Po-

m

XÎll PRELIMINARY ESSAY.

Htical Economy in the College of France, in the year 1833. Pelle- grino Rossi,* an Italian by birth, but for some time resident in Switzerland, could have had no claims to such a position but the power of his mind and his well-known acquirements. During the period of his Professorship, he was raised to the Peerage by the title of Count Rossi. His published lectures occupy four 8vo volumes. It is obvious to every reader that Rossi was embarrassed by the high repute of his predecessor. Whatever the points of difference between him and Say, he could not with propriety make those differences very prominent. It is quite visible, however, that if he has not made them offensively prominent, he has not been at much pains to conceal them. He did not teach the system of Say, but quite another system. Rossi, it is plain, appreciated more fully than Say the force of the objections urged against Say's doctrines; he knew that these objections not only endan- gered, if they did not destroy, the system of Say, but that they threat- ened even the position that Political Economy was, or could be, a science ; he addressed himself at once mainly to the task of vindicating the claims of the subject to be regarded as a science: —

"Doubtless," he says, "there is a science of Political Economy; for there is an order of facts, an order of particular ideas, of which this sci- ence has for its object to exhibit the origin, the development, the connec- tion, and the results. There is a Political Economy, because man, with his inclinations, his wants, his intelligence, and his power, is placed in presence of material nature, not only to know it, but to govern and appro- priate it to his wants."! — "As long as it was possible, its enemies denied the existence of any such science : when that was no longer possible, every one endeavored to turn it to the promotion of his own interests." — " In this conflict of private interests, some forcing facts for one purpose, some using arguments or influence for another, the science, as Rossi urges, could not but suffer." — " Need there be wonder," he asks, " if amidst such con- flicting claims, such opposing exigencies, such an inextricable mass of truths and ei'rors, the science has halted, if it has only felt its way, if its gait has been tottering and doubtful?" (p. 14.) In his discussion he promises his students that he will " endeavor not to add darkness to darkness."

We perceive that this is by no means the language of a man who had merely before him the task of teaching a settled science. And although Say's system had made the tour of Europe, and was domesti-

#• The same who, as Ambassador of France, was assassinated in the streets of Rome, on the 15th Nov., 1848. f Cours d'Economie. Politique, par P. Rossi; Tom. I., p. 21: Paris, 1843.

PRELIMINARY ESSAY. xliii

cated in the United States as a full-blown, if not a full-ripe, science. By a large number of educated men it was regarded as an established department of human knowledge, and the Treatise of Say was deemed its authoritative interpreter : —

"Need we blush for the science if we are obliged to avow in the outset that the first question which meets us is, What is Political Economy?* — And then, what are its objects, its extent, its limits ? We cannot select for our consideration the more important topics of Political Economy if we are not at first agreed as to the nature and extent of the science itself, and yet it must be admitted this agreement does not exist among Economists. Its definition is to this day, one of the most controverted questions of the science. Some, modest in appearance at least, assign it limits sufficiently restricted to be well defined ; the production and distribution of riches is with them the whole field of the science, — a field which it could not leave without ceasing to be itself.f Others proudly attempt to enlarge the boundaries and enrich the domain, by making Political Economy embrace the whole interests of society, — its organization, its tendencies, and its progress." — (p. 17.)

" The place it (Political Economy) ought to occupy in the domain of social science, is still (1834) a subject of doubt and dispute among Econo- mists, and nothing yet promises an early and satisfactory decision." (p. 18.) — " The limits fixed by the chief of the School were soon transcended ; they were not even respected by his most zealous disciples. I shall refer now but to three names justly celebrated, of whom one, although belonging to a living author, has, by the splendor which attaches to it, a right to be deemed an historical name. J And first, my illustrious predecessor J. B. Say. Although in his Treatise he takes the position that Political Economy is propeidy but the science of Riches; what does he say in his " Complete Course of Political Economy ?" I give you his own words : — ' The object of Political Economy seems hitherto to have been confined to a knowledge of the laws which regulate the formation, distribution, and consumption of riches.' He acknowledges that he so regarded it in his Treatise ; he goes on to say : — 'It may be seen, however, in this work, that this science pertains to everything in society, that it embraces the entire social system.'

4»In Say's life-time, how deeply would such a question, from such a source, have wounded him I

"f Say is here intended, but in a way to strike only the initiated ; for, although Say's definition included the consumption of wealth, Rossi had previously ex- plained that what is "called productive consumption, was nothing else than the employment of capital."

J; The living author here referred to, is Sismondi. The other, is Storch. We have already drawn so largely from them, that we need not repeat the quotations of Rossi.

Xliv PRELIMINARY ESSAY.

This is a virtual return to the idea of the Physiocrats. ' It embraces the entire social system.'" — (p. 23.)

This phrase, comprehensive enough to destroy the whole of Say's system, could not but strike the quick and discriminating mind of Rossi, who, if prevented by his position from plainly saying so, could not have thought less. After citing passages from Sismondi and Storch, Rossi remarks that Storch's including " civilization" within the domain of the science, instead of fixing its limits, has the effect of " effacing all limits." Speaking of the principal Economists, he says further : "In a general purvey of their writings, it would be difficult to find any two men eminent in the science, who agree as to its nature or its limits. There is then a real preliminary question to solve, and that is, to ascertain upon what principles the problems of Political Economy ought to be solved." — (p. 25.)

After a series of reasonings and siftings, Rossi ventures upon more definite ground : —

"Political Economy springs essentially from the following data: — Our power over things by means of labor ; our inclination to saving, if a suffi- cient interest stimulates us ; our inclination to unite our exertions for a common purpose ; our instincts of property and of exchange or trade." (p. 31.) — "These are facts of every time and of every place; these are the general facts of Political Economy. From these data result the science of riches, a science rational, general, invariable ; on the one hand, things and their properties ; on the other, man, his intelligence, his physical powers ; these elements, blended together by the inclinations and the wants of our nature, inclinations and wants of which the force may vary, but which, in some degree, are common to the whole human family. This sci- ence, thus considered, has for its theatre the whole world." — (p. 32-.)

We find that Rossi is driven, by the severe process of his rigid analysis, to the four main facts he has stated. The science becomes henceforth, in his view, one of reasoning, one of abstraction, and not of induction, and of course he is found side by'side with Tracy, Senior, and J. S. Mill. This is the very reverse of the position of J. B. Say : —

" Such," he says, " is the science in its generality." — "I boldly affirm that the science of Political Economy, regarded thus in that which is its general and invariable aspect, is rather a science of reasoning than one of observation. The contrary has been asserted by those who, as we shall see directly, have blended rational Political Economy with Political Eco- nomy applied — the science with the art. The science, properly so called, is constructed upon a small number of general facts ; it is only by deduc- tion that it arrives at any conclusions." (p. 33.) — "Again; we have more ends than one to gain in this world; Political Economy can ferve as a

PRELIMINARY ESSAY. xlv

guide in attaining only one of these, and it has no mission to constrain any one to do this or to do that, for, I repeat it, science has no other direct end but to seek the truth. It is in the application of this truth that we are to keep our eyes upon all the principles which concur in the solution of social questions. The error arises from the supposition that every social question may be solved by the application of a single principle. It results from this, that whenever a principle of Political Economy is found to be involved in a question, an attempt is made to put the practical solution of that question to the account of Political Economy. That is wrong. Po- litical Economy only furnishes economical conclusions — the consequences of an economical principle. It is for legislators, for men of business, to take account of all the other principles which should concur to make the solution of a question conformable to the highest interests, whether of nations or individuals." — "I say the highest interests: when, on any question the highest interest of the nation is wealth, then Political Economy should have the control ; when the contrary is the case, when higher or stronger interests are involved, as the national dignity, economical conside- rations are but a secondary order of motives, and such as must yield to political considerations." — "I believe, then, that it is proper to distinguish at the outset, between rational Political Economy and applied Political Economy, and that afterwards, in every question which arises, it is not proper to blend even considerations of applied Political Economy with other considerations, moral and political, which control the solution which is required." — (pp. 39, 40, 41.)

" Finally," summing up his previous remarks on this head, he ob- serves " that it was not proper to confound the results of the science of riches with the requirements of morals, for the just and the good cannot coincide with the useful nor with the exigencies of politics, which represent an order of utilities superior in degree to the utilities of Political Economy." — (p. 44.)

We refrain from the remarks suggested by these passages, trusting that their importance will not fail to strike the attentive reader. We have extended these quotations in preference to occupying the space with anything of our own. If Rossi's careful scrutiny of the state of the science, and if his logical acumen are at all reliable, a great task is yet to be accomplished by Political Economists before their sci- ence assumes a position of authority. The overthrow of Say's system has produced a confusion which time and patience only can remedy. We say the overthrow of his system, or the main doctrine of his Treatise, for we regard that as having been effected by the united labors of Count Tracy, Sismondi, Rossi, Senior, and J. S. Mill. Blanqui had foreseen that the School of Sismondi was destined to supersede that of Say. But

xlvi PRELIMINARY ESSAY.

the coup de grace was given to Say's system by the demonstration of the four great Economists just named, that Political Economy is an abstract science, or a science of reasoning, and not a science of observation or experiment. In this strong position Say had planted himself, in- voking the shade' of Bacon to favor his inductive system of Political Economy.

If Say has been thrust from this position by these great adversaries, his Treatise can no longer be regarded as an expositor of science, but must, as we have already remarked, take its place among numberless other treatises upon this topic, to be regarded as a portion of the mate- rials from which future Political Economists may draw in the progress of the science. One more passage from Rossi before we part with him. After furnishing many illustrations of the difficulties and perils of the science, he proceeds : —

" These instances inform us amply that the gravest questions meet us on the very threshold of the science. They are met in the domain of the pure science when we attempt to ascertain the general facts on which it is founded ; they are met in still greater force, as might be expected, when we descend from these general facts to the deductions and corollaries which are to be derived from them. They are met in still greater number in the domain of Political Economy applied, for there they are augmented by all the contrarieties in the statement and observation of particular facts which so constantly occur in addition to what we have already indicated, — those legitimate moral and political influences, which, although strangers to the science of Political Economy, yet mingle in its decisions." (p. 51.) — "In seeking to discover the true principles of the science, and to obtain them pure from all alloy, we shall have more than one error to reject, more than one theory to rectify or complete, and that we may not reject the authority of reason, we must be ready to decline, with respectful firmness, the authority of our masters." — (p. 52.)

Rossi observes too well the decencies of his position to attack more openly the authority of his predecessor, whose son-in-law, Charles Comte, had been his antagonist for the professorship ; but he is ever too frank and independent to leave his hearers in doubt of the antagonism to Say indicated in the closing words of the foregoing citation.

The rise of Rossi in France, was not only rapid, but high, and well sustained by his whole career. His abilities were regarded as of the highest order in a city where there is at all times a congregation of the first men in the world. He was looked upon in France as one of the most eminent Political Economists of his day. " By the clearness of his mind," remarks J. Gamier, one of the most distinguished Econo-

PRELIMINARY ESSAY. xlvii

mists of France, "the sagacity of his reason, the transparency and elegance of his style, he has elucidated every question he has touched, and specially contributed to restore economical studies to their proper dignity." " He was one of the finest intelligences of our time. France has lost in him a savant of the first order." Mignet closes the eulogy of Rossi as a member of the Academy of Moral and Political Sciences, with these words : — " He will be known in history by the elevation of his ideas, the splendor of his talents, the usefulness of his works, the moderation of his conduct, and the grandeur of his end." *

* If an examination of most of the Treatises upoli Political Economy be made under the guidance of Rossi's firmly established distinction between the science in the abstract and the science applied, it exhibits a confusion of ideas, statements, and conclusions, for which it would be difficult to find a parallel. The science and the art, the science abstract and the science applied, are jumbled together in such hopeless conjunction, that neither clear views nor safe conclu- sions seem possible. We have had authors, reviewers, and orators in abundance, who have thought it sufficient to master a few of the leading positions of Say and some of his phraseology, to enable them to give law to governments and statesmen; who applied the laws of the so-called science as precepts of art without qualification, and without giving thought to numberless considera- tions involving human interests of various kinds and of the highest import; who called upon legislators and authorities, as well as upon all others interested, to bow down to the authority of the science; who said to rulers, "Let com- merce alone;" to all they said, "Buy in the cheapest market;" "Let supply and demand regulate prices ;" " There can be no over-production ;" " Let trade be free;" "Obey these laws and prosperity will follow ; all will go right with the people." Now this direct and naked application of these general laws or truths of the science of Political Economy to the affairs of nations or individuals, without due consideration of the attending circumstances, betrays ignorance, instead of knowledge, and folly, instead of wisdom. Say explained or applied his system in a work larger than his system itself. His disciples apply his system without the least reserve, without a word of explanation or alleviation. The results have in many cases shown the most disastrous quackery the world has ever seen. Rossi has distinctly placed the responsibility upon statesmen, and not upon Political Economists; he has exalted their responsibilities who have the welfare of the people in their charge, far above the efforts of those who are endeavoring to state the abstractions of science ; he holds that the states- man who only regards the science of Political Economy as one of the numberless guides he has to consult in ascertaining a safe and wise national policy, would be guilty of great neglect of duty, if he were to shut his eyes and ears to all dictates but those of the science of Political Economy. The extent to which this blind subserviency to the abstractions of Political Economy has been urged upon the public in books and speeches, would be amusing if it had never been successful. These simple laws of Political Economy were so easily understood,

xlviii PRELIMINARY ESSAY.

We are compelled, for want of space, to return again to the Political Economists of Great Britain, although it would be both instructive and interesting to have pursued our studies among those of France.* The writings of David Ricardo gave a great impulse to economical studies. His publication of "The Principles of Political Economy Taxation" in 1817, gave him at once a high rank among the thinkers and writers of that day. His range of inquiry was not comprehensive, his efforts being confined more to correcting the errors of others than to the con- struction of any systematic work. He demonstrated to the satisfaction

the prevalent teaching of Say's system having contributed to give them extended circulation, that they took possession of the public mind to a wide extent, and were by multitudes looked upon, not merely as truths of a settled science, but precepts evincing the profoundest skill in government. The tone of superior knowledge assumed by those who were most affected by this delusion, was fre- quently ridiculous in the highest degree. The British journals furnish some exquisite specimens of this mode of teaching Political Economy ; so also do many of the continental periodicals, but chiefly the "Journal des Economistes.''' But if we were to go into particulars of this false teaching, we could find no richer mine than the "Southern Review" of our own country — whilst in this Review are many papers from which we might dissent more or less, yet, with a high opinion of the powers and acquirements of the writers, there are others of a character so different as to create surprise that they could find admission into such a periodical. These articles probably emanated from one source, for it would be difficult to find their parallel in flippancy, shallowness, and inordinate self-complacency. This "Southern Reviewer" (we trust there is but one), armed like a porcupine at all points, lets off a shower of smart things when any one approaches his domain of Political Economy, or steps upon his little nest of straws gathered from Adam Smith and J. B. Say. This writer (assuming there is but one), winds up a review of one of H. C. Carey's works, which, in his in- effable self-conceit, he imagines himself to have utterly demolished with a story, in the application of which he plays the part of General Jackson and the victo- rious Americans at New Orleans, and gives to Mr. Carey that of the routed and used-up British army. The modesty and good taste of this application may be fairly taken as the measure of the writer's knowledge of Political Economy, and his capacity for deciding upon such works. Mr. Carey's reputation as a Political Economist in Europe and America, is far beyond the reach of the sapient writer in the "Southern Review," whose knowledge of Political Economy is not suffi- cient to inform him that, whilst he was revelling in the conscious delight of having used up Mr. Carey's works, they were being translated into various lan- guages of Europe, and were placing their author at the head of a distinct School of Economists, respectable at once for numbers and intelligence, both abroad and at home.

* There are many eminent Political Economists in France whom we do not notice in this sketch.

PRELIMINARY ESSAY. xlix

of the leading Economists that Adam Smith's theory of value was defective. He had a controversy with Say, which did not terminate to the full satisfaction of either party. He adopted the theory of Kent, attri- buted to West, Malthus and Anderson, made it a hinge on which many of his special views turned, and employed it so constantly in his reason- ings, that it is often called Ricardo' s theory. It is the same which has been attacked with such power and success by our eminent Economist, H. C. Carey. It is doubtful where Ricardo will be placed in the final adjustment of this vexed and unsettled subject, but his writings must be always valuable to those who may continue the effort to construct a pure science of Political Economy. They do not come within the range of our present inquiries, because they do not profess to embrace the whole science. In the preface to his Principles, however, Ricardo gives us, if not a definition, at least an indication of his view of the scope of Political Economy. " The produce of the earth, — all that is derived from its surface- by the united application of labor, machinery and capital, — is divided among three classes of the community ; — the proprietor of the land ; the owner of the stock or capital necessary for its cultivation; and the laborers by whose industry it is cultivated." "To determine the laws which regulate this distribution is the principal problem in Political Economy ; much as the science has been improved by the writings of Turgot, Stuart, Smith, Say, and Sismondi, they afford very little satisfactory information respecting the natural course of rent, profit and wages." Ricardo informs his readers in many other places, that he was far from being satisfied with Political Economy as it stood in his day. The whole tenor of his works shows a fondness for close and severe abstraction, confining and narrowing his views to the mere sub- ject of wealth, which he does not consider in its connection with human welfare. His perfect coolness in the discussion of the subject, may be seen in his definition of the natural price of labor, as " that price which is necessary to enable the laborers, one with another, to subsist and perpetuate their race without either increase or diminution." One with another, that is, a kind of average chance of living or not starving is regarded as all that the natural price of labor gives to the working- man ! This is one of the laws of that science of wealth which regards man as merely a producer.

In 1820, the Rev. T. R. Malthus, previously distinguished as the author of the celebrated work on Population, published his Principles of Political Economy, considered with a view to their practical Applica- tion. He was, at that time, Professor of that Science in the East India

1 PRELIMINARY ESSAY.

College. The introduction reveals, modestly but distinctly, the fact that he is far from content with the actual state of Political Economy. He represents nearly all its important positions as controverted. " There are, indeed, great principles to which exceptions are rare," — "but even these, when examined, will be found to resemble in most particulars, the great general rules in morals and politics, founded on the known passions and propensities of human nature/' — " and we shall be compelled to acknowledge that the science of Political Economy bears a nearer resem- blance to the science of morals and politics, than to that of mathema- tics."— " Among those writers who have treated the subject scientifically, there is not, perhaps, at the present moment, so general an agreement as would be desirable to give effect to their conclusions." He re- garded the subject as too unsettled then, to admit of a "new syste- matic treatise." He thought the various subjects of Political Economy had better be treated singly, until the discussion and "collision of opinions, and the appeal to experience separates the true from the false, and then the different parts may be combined into a consistent whole, which may carry with it such weight and authority, as to produce the more useful practical results." " The treatise which we already possess, is still of the very highest value, and till a more general agreement shall be found to take place, both with respect to the controverted points of Adam Smith's work, and the valuable extent of the additions to it," he recommends that the " different subjects which admit of doubt should be treated separately."* This is certainly disposing of the great preten- sions of J. B. Say very summarily ; the first edition of his treatise had appeared in 1803, and the second in 1815. It may not have been in- tended as a slight thus to pass over the work of Say, but if not so in- tended, it is impossible to avoid the conclusion that it was not regarded as occupying the position claimed for it by Say and his school. Say subsequently addressed five letters to Malthus, in which, though he could not complain of this slight, he very decidedly, but in very courteous terms, dissented from his doctrines. It is plain that Malthus did not regard the science as by any means so complete as claimed by Say then, and his disciples since. He speaks of it as " manifestly incomplete." He says, " It is impossible to observe the great events of the last twenty- five years in their relation to Political Economy, and sit down satisfied with what has been already done in the science." The whole work of

* These passages are taken from the Introduction to the Principles of Politic cal Economy, by T. R. Malthus. Second edition, London, 1886.

PRELIMINARY ESSAY. Il

Malthus is, in a considerable degree, a development of the opinions just cited, but no small part is devoted to the differences between him and Mr. Ricardo.

James Mill, the author of a history of British India, published his " Elements of Political Economy" in 1821. He treated the science as being more advanced than was admitted by Malthus, and the object of his small volume was to furnish such a summary as would be suitable for schools. McCulloch says of this work, that it is " a resume of the doctrines of Smith and Eicardo with respect to the production and dis- tribution of wealth, and of those of Malthus with respect to popula- tion."— u But it is of too abstract a character to be either popular or of much utility." — " The science is very far from having arrived at the perfection which. Mr. Mill supposed."* It is observable that Say is again overlooked in a general survey and summary of the science. Mr. Mill confines his view to the works of Adam Smith, Ricardo and Mal- thus. Perhaps no two works have been more found fault with than the former, and upon no book extant are the opinions of intelligent men more divided than on that of Malthus on Population.

In 1821, appeared an " Essay on the Production of Wealth" by E. Torrens, who has, since that time, continued to be a writer upon subjects of Political Economy. His works have always commanded attention and respect. This too was an attempt to produce a systematic treatise upon a subject which he regarded as far more advanced towards the certainties of science, than its subsequent history has justified. Col. Torrens ventures the prediction, that twenty years will leave " scarcely a doubt of its fundamental principles." This shows that he had no idea of the obstacles which were obstructing the progress of Political Economy. He must be a hopeful student who will now say that the science will be reduced to certainty within half a century from the date of Col. Torrens's prediction. And many are now confident it never can be settled upon the basis upon which he treated it. After some criticisms upon Smith, Eicardo and Malthus in his preface, he infers that a " general treatise upon Political Economy, combining with the principles of Adam Smith so much of the more recent doctrines as may be conformable to truth," — "is a desideratum in our literature." His work is not founded upon that of Say, to whom, however, he refers, and from whom he takes some of the positions included in his work. He distinctly points out and rejects, some of Say's doctrines. His pre-

* Literature of Political Economy, p. 17.

lii PRELIMINARY ESSAY.

face specifies many errors of previous economists, as, in part, a reason for the production of his systematic treatise. After all this effort, pro- bably there are few of the many pamphlets published by Col. Torrens, which have not been more read and appreciated than this treatise. It has never been acknowledged as a satisfactory work upon Political Economy, and has long since been placed on the list of the unsuccessful efforts to settle this subject. We cannot but say in passing, that an undertaking in which men of such undoubted talent as Ricardo, Mal- thus, James Mill and Col. Torrens, fail signally, must be difficult indeed. True, their failure is only partial — they have failed in settling the science of Political Economy, but their works are of value as contributions to the subject. Their failure is calculated to awaken doubts whether the elements of a science can be well chosen when such men cannot suc- ceed in a satisfactory development. We cannot but think their labors would now be more valuable, if each one had set out in his speculations unembarrassed by those of any previous writer

No Political Economist, for the last thirty years, has been more pro- minent than J. K. McCulloch, the author of the article on Political Economy in the Supplement to the Encyclopedia Brittanica, which was published separately, with additions, in 1825.* Since that time he has published a Dictionary of Commerce and Navigation; A Statistical Account of the British Empire ; A new Edition of Smith's Wealth of Nations, with an Introduction, Notes and Supplementary Dissertations ; A Treatise on Taxation ; The Literature of Political Economy ; A His- tory of Commerce; Treatises on Economical Policy; Essays on Inte- rest, Exchange and Money ; and many other important works. Besides these, McCulloch has been a large contributor to the Edinburgh Review on the topic of Political Economy, and is the author of many pamphlets on that subject. These voluminous works, some of which are standard authorities, and found in the hands of multitudes who give no attention to Political Economy as such, have made McCulloch more known than any economist of his time. It cannot but be ad- mitted, that the course of his studies has made him better acquainted with the facts and events connected with labor, commerce, money and wealth, than any other writer upon the subject of Political Economy. His Geographical Dictionary ; his Commercial Dictionary ; his Statis- tical Account of the British Empire, brought distinctly and fully before him the great facts of industrial and commercial progress; his Litera-

* The fourth edition greatly enlarged, appeared in 1849.

PRELIMINARY ESSAY. lüi

ture of Political Economy, and his numerous Reviews, brought before him very fully the whole authorship of Political Economy ; so far, there- fore, as preparation goes, it must be conceded that McCulloch was well fitted to speak on the subject, and fairly entitled to be heard. It be- comes a matter of interest to know where a man of such advantages has taken his stand, and on what side he has declared himself upon topics so controverted. It is quite impossible here to furnish the reader with any adequate view of McCulloch's opinions upon the more important points of Political Economy. We find no difficulty in ascertaining that he walks not in the footsteps of Smith or Say, and that he is under few obligations to them. Say's treatise being an attempt to construct a pure science of Political Economy, was never regarded with favor by McCulloch, nor indeed, as we have seen by other British Economists, who, whatever praise they accorded to Say, did not acknowledge the claim of his system to be what it purported to be.

McCulloch belongs neither to the School of Say nor to the still more refined and strict School of Tracy, Rossi, and Senior. He persists in considering all the topics of Political Economy from a practical point of view. He speaks of the science, it is true, but only in that popular sense in which men speak of the science of politics, which is a very different sense from that in which it is employed by Eossi, Senior, and J. S. Mill. " The Economist," says McCulloch, in the Preface to the third edition of his "Principles" "who confines himself to the mere enunciation of general principles or abstract truths, may as well address himself to the pump in Aldgate, as to the British public. If he wish to be anything better than a declaimer, or to confer any real advantage upon any class of his countrymen, he must leave general reasoning, and show the extent of the injury entailed upon the community by the neglect of his principles." In the same preface, he says that Mr. Senior is in error in affirming "that the facts on which its general principle s rest may be stated in a very few sentences, or rather, in a very few words, and that the difficulty is merely in reasoning from them." — "We greatly doubt whether the general principles can be so easily established as Mr. Senior supposes." — " Mr. Senior, the ablest and most distinguished defender of what may be called the restricted system of Political Economy, says ' that wealth, not happiness/ is the subject with which the Economist has to deal." McCulloch contends that in speaking of wealth ascertain latitude must be allowed, or if not, the Economist will have "done little more than announce a few barren generalities of no real utility." It is quite evident that McCulloch does

UV PRELIMINARY ESSAY.

not appreciate the distinction upon which his compeers insist, between science and art, and that for want of this appreciation there is great confusion of ideas in the introduction to his "Principles." And indeed, the same confusion follows him wherever he indulges in remarks about the science. He loves to regard Political Economy as a science, but not such a science as Say develops, nor such as that of Rossi or Senior. It is apparent, in fact, that McCulloch produced his first work more under the influence of this idea of science than is exhibited in later productions. It would be easy to point out inconsistencies arising from this change ; but they are to be found throughout his works wherever he endeavors to give his speculations on the subject of Political Eco- nomy a scientific form, or connect them with the science. His real merit consists in his acquaintance with the subject on which he writes, his faults and inconsistencies arise from his concessions to a science which did not exist, and could not upon the elements which were in his mind.

The change of McCulloch's views between his earlier and later career, may be estimated by the following extracts : — " But the errors with which this science was formerly infected," (Introduction to "Princi- ples" published in 1828), "are now fast disappearing; and a few observa- tions will suffice to show that it really admits of as much certainty in its conclusions as any science founded on fact and experiment can pos- sibly do." From the preface to the third edition of the same work, published in 1842, we take the following: — " Notwithstanding the pretensions so frequently put forward by Politicians and Economists, some of the more interesting portions of the sciences which they profess, are still very imperfectly understood ; and the important art of applyiûg them to the affairs of mankind, so as to produce the greatest amount of permanent good, has made but little progress, and is hardly, indeed, advanced beyond infancy. Initiates nos credimus dum in vestibido hœremus." — " However humiliating the confession, it is certainly true, that owing to the want of information, not a few of the most interesting problems in economical legislation are at present all but insoluble, and it must be left to the Economists of future ages, who will no doubt be able to appeal to principles which have not yet developed themselves, to perfect the theoretical, and to complete, or reconstruct the practical part of the science." These two passages keep their place in the fourth edition, 1849.

To show that he does not accept the celebrated maxim of the Physio- crats, and which afterwards became the central doctrine of Say's

PRELIMINARY ESSAY. lv

School, Laissez faire, laissez passer, McCulloch inserts in the third edition of his " Principles" a whole chapter, in which he elaborately argues the right of government to intervene in matters of private con- cern, for individual, as well as for public good. As he has treated Political Economy it is inseparable from Politics, although he makes the attempt to distinguish them. So far as the science of Political Economy is concerned, it has suffered greatly in the hands of McCulloch ; but so far as Economical knowledge is concerned, his contributions are of more value than those of any other Economist, and even of many of them combined. His writings will be consulted with advantage when very many of the treatises upon Political Economy will only keep their places on the shelves of libraries as events in its history.*

We have already spoken in high terms of N. W. Senior, the author of many publications upon Political Economy. That which we shall now notice is the one in which he summed up his views with much clearness. It was first published as the article on Political Economy, in the "Encyclopedia 31etropolitani," in 1835, and subsequently in a separate form. In the scientific distribution of that great work it was placed among the "pure sciences." It was no doubt the intention of the writer of the article to keep within the bounds of pure science : if he has not succeeded, he has at least shown the great error of those who called Political Economy a science, and treated it without any re- gard to the primary idea of a science. In the form of this work, con- sidering his aim, Senior has shown himself superior in distinctness and power of generalization, to the author of any other system of Political Economy. In special points he may have been surpassed by Eossi. After having in his Introduction restricted his subject to Wealth, he adds, " The questions, To what extent, and under what circumstances, is the possession of wealth, on the whole, beneficial or injurious to its possessor, or to the society of which he is a member ? What distribution of wealth is most desirable in each different state of society ? And what are the means by which any given country can facilitate such a distribu- tion ? all these are questions of great interest and difficulty, but no more form a part of the science of Political Economy, in the sense in

* Our commendation of McCulloch is not without knowledge of the attack to which he exposed himself, and which appeared with the title, "Some Illustrations of Mr. McCulloch's Principles of Political Economy, by Mordecai Mullion" 1826. "We had frequently noticed the facts there dwelt upon, but without that asperity of feeling which is displayed by him, who takes the nom du guerre of M. Mullion.

lvi PRELIMINARY ESSAY.

which we use that term, than Navigation forms a part of Astronomy." The science in his hands is not of

" Happiness, but wealth ; his premises consist of a very few general propositions, the result of observation or consciousness, and scarcely re- quiring proof, which almost every man, as soon as he hears them, admits as familiar to his thoughts ; and his inferences are nearly as general, and if he has reasoned correctly, as certain, as his premises. Those which re- late to the nature and the production of wealth, are universally true ; and though those which relate to the distribution of wealth are liable to be affected by the peculiar institutions of particular countries ; in the cases, for instance, of slavery, legal monopolies, or poor-laws, the natural state of things can be laid down as the general rule, and the anomalies produced by particular disturbing causes, can be afterwards accounted for. But his conclusions, whatever be their generality and their truth, do not authorize him to add a single word of advice. That privilege belongs to the writer or statesman who has considered what may promote or impede the general welfare of those whom he addresses, not to the theorist who has considered only one, though among the most important, of those causes. The business of a Political Economist is neither to recommend, nor to dissuade, but to state general principles, which it is fatal to neglect, but neither advisable, nor perhaps practicable, to use as the sole, or even the principal guides in the actual conduct of affairs." Mr. Senior is well aware, however, of the " imperfect state of the science, although, long and intensely studied."

One of his prominent objects in the work before us was to improve the nomenclature of the science, which he admits to be in a very bad condition. " The English work which has attracted the most attention during the present century, Mr. Eicardo's "Principles, &c," is de- formed by a use of words so unexplained, and yet so remote from ordi- nary usage and from that of other writers on the same subject, and frequently so inconsistent, as to perplex every reader, and not unfre- quently to have misled the eminent writer himself." *

These passages suggest an obvious, but important remark, applicable to all the writings upon Political Economy : very great confusion of ideas, premises, and conclusions, exists not only in works upon that subject, owing to the very general disregard of the distinction between science and art, but also to the disregard of the corresponding distinction between men who are qualified to instruct us in science and those who are qualified to teach us art ; between the men who may be qualified, by their powers of reasoning, observation, and logical discrimination, to

* These citations are from the Introduction to Political Economy, by N. W. Senior.

PRELIMINARY ESSAY. lvÜ

perceive and state those few main propositions or generalizations, which are the alleged elements of the science of Political Economy, and those who, while they can readily comprehend the import and teaching of these general propositions, can, from their experience of the world, em- ploy them in connection with all the facts and considerations touching public and individual welfare, which go to influence the minds of states- men and legislators. Now, according to an illustration of Senior, a writer may be master of the science of Political Economy, but be as unfit to be a Statesman as a mere Astronomer would be to navigate a ship. It will scarcely be denied, we presume, that whatever knowledge of the science of Political Economy was possessed by a large majority of the writers upon that subject, very few could lay any pretensions to being statesmen. Adam Smith was a College Professor, and so have been most of these writers since his day. The life of a professor may be favorable to intellectual studies, but it certainly is not an adequate preparation for statesmanship. We think then that the conclusions of Political Economy have been pressed upon the attention of nations and public men, with a zeal and an importunity in the inverse ratio of their impor- tance. The men who have attempted to elaborate the science of Politi- cal Economy, have been more or less successful, as may be variously judged by those who review their labors; but clearly, the men who have attempted to apply these unsettled principles to the actual affairs of nations have been unsuccessful, both because the principles to be applied were uncertain, and because, if these principles had been ever so clear, the parties making the attempt had not the requisite practical knowledge to enable them to make the application. If these principles were not only well defined, but admitted, they would form but a very small part of the knowledge needful for wise and successful statesmanship. Not- withstanding these reasons for modesty in the application of the prin- ciples of Political Economy, there has been no quarter from which the ear of public men has been more assailed than from recluse fledglings of this science. How many, ignorant of Senior's advice, but having got hold of some of those general propositions which he announced, have regarded themselves as not only qualified to advise all men in high sta- tion, but to undertake the government of any nation or all nations ! The truth is, not a few of this School announce the doctrine of free trade as sufficient to cover the whole ground of human welfare. The question of free trade belongs not to the science of Political Economy, according to the theory of Senior, Rossi and Tracy, but to the conside- ration of the statesman, or the domain of government and politics ; and 3

IviÜ PRELIMINARY ESSAY.

all that Political Economists have urged on that subject has been ex cathedra.

The most important work published in England recently upon the sub- ject of Political Economy, is that of J. Stuart Mill, entitled, "Prin- ciples of Political Economy, with some of their applications to Social Phi- losophy," which appeared in two large volumes, 8vo., in 1848. We have already made the name and some of the labors of J. S. Mill, familiar to our readers. We regard him as eminently qualified to pursue the sub- ject of Political Economy, with a view to ascertain its actual condition as a science, and the claims of the various writers to authority. By referring to the citations already made from a former work, the pre- cision of his language and the closeness of his thinking, will be seen. His work on rationative and inductive logic,* a treatise of high repute, is a further warrant for his capacity to pursue the science of Political Economy as he understood it ; the doubt which meets us in taking up this voluminous effort is, whether J. S. Mill was a practical statesman. We see that he has undertaken to deal with the application of the science ; but it is true, his application is not said to be to the actual affairs of life and of nations, but to Social Philosoph?/. If this phi-ase means or includes the art of government, then he has undertaken the regular application of the science. Now the confidence which we might accord to Mr. Mill in logic, in mental science, in criticism, abandons us when he enters upon a career demanding such large experience of public life and national affairs, as this application of Political Economy. We know that this kind of experience and knowledge is not found, nor is it attainable in the chambers of philosophers. Mr. Mill had a position in the Home Office of the East India Company, which, if it afforded him leisure for study, gave him little opportunity of becoming versed in the affairs of the world outside of the concerns of the Company, in whose office he held a place.

It strikes us that J. S. Mill, after his very searching Essay on the " Definitions of Political Economy, and on the method of Investigation proper to it," owed it to the public to furnish us a treatise on the pure science for which he was more particularly qualified, before he undertook to enlighten the world upon its applications, for which he could not be so well prepared. He seems to have feared that such a work would be re- garded by the British public in no more favorable light than that sug-

* The logical ability displayed in this work is, we believe, universally con- ceded. It is accused, however, of belonging to Comte's School of Philosophy.

PRELIMINARY ESSAY. lix

gested by MeCulloch, of an Address to the pump in Aldgate, and there- fore he preferred to mingle the science and the application together in the same volume, leaving the majority of his readers to that hopeless confusion of ideas which has hitherto reigned on this ill-fated topic. As a reason for his publication, he says, " that no existing treatise on Political Economy contains the latest improvements which have been made on the theory of the subject." — "The design of the book is dif- ferent from that of any treatise of Political Economy which has been produced in England, since the work of Adam Smith." The charac- teristics of the work of Smith which he wished to imitate, are " the in- variable association of principles with their applications." — " This, of itself, implies a much wider range of ideas and topics than are included in Political Economy, considered as a branch of abstract speculation. For practical purposes, Political Economy is inseparably intertwined with many other branches of social philosophy. Except in matters of mere detail, there are, perhaps, no practical questions, even among those which approach nearest to the character of purely economical questions, .which admit of being decided on economical premises alone." J. S. Mill thinks it is because Adam Smith never loses sight of this truth, but always blended his applications with his theory, that he has im- pressed his ideas so strongly upon men of the world and legislators. We think his success in this respect is owing to the direct manner in which he treats his various topics ; he does not assume to be developing a science, he proceeds neither by induction nor by abstraction, he merely addresses himself to his readers, public and private, with his best thoughts on the subject before him, allowing his opinions and specula- tions to go for what they are worth. But since the Treatise of Say, we are taught to look for something more. We have now a science of Political Economy, or we have not. If we have a science, we wish to have it distinctly set forth by capable men, and then we desire to have our treatises upon politics and government ; upon public and private welfare ; upon industry and commerce ; make such use of this science, and draw from it such light as it affords for the conduct of public affairs, and the amelioration of human condition. We do not expect our men of science to become all at once our men of business or of art; but we expect our public men and men of art to overlook no progress made in the sciences which can furnish them aid. We think, therefore, that if J. S. Mill, instead of aiming at the popularity of Adam Smith, had bent his whole mind to the elucidation of the science, he would have rendered more essential service to the world. This was the consistent

lx PRELIMINARY ESSAY.

course of Senior, who now stands in England, foremost in the pure science of Political Economy, so far as it is entitled to take rank among the pure sciences.

J. S. Mill says, that " The Wealth of Nations, is, in many parts, obsolete, and in all imperfect;" and he is, therefore, of opinion, that a work on that plan is timely and desirable. He proposed to supply it, and we think has by this exposed himself to a similar fate with that to which he consigns Adam Smith, that of being at no distant day pro- nounced obsolete and imperfect. When we say this, we are far from insensible to the merits of the work before us. In method, it sur- passes any previous work of equal dimensions, and it contains a great variety of clear and distinct reasonings upon the several divisions of his subject. But its authority as a work must ever suffer from its double character, and from the fact which cannot be gainsayed, that J. S. Mill was not a practical statesman, however profound a logician and phi- losopher.

Although Germany may have been less prolific in writings upon Politi- cal Economy than France and England, and less fruitful than its gene- ral literature would have warranted us in expecting, yet German Pro- fessors and public men have, by no means, withheld their views upon this subject from the world. Their works upon the various kindred topics of Political Economy, would make a library of themselves. Ac- cording to the tendency of the German mind, the most of these are Eclectic. There are, however, some supporters of all the leading schools, and Smith and Say have their full share. At the present moment, List's School is believed to be the most influential and respectable in every point of view, although the whole weight of English influence is opposed to it, as well as the remaining strength of the School of Smith and Say. The work of List, herewith given to the American public, although imperfect and inartificial in many respects, is yet one of the most original and valuable which Germany has produced, and in not a few respects superior to any previous work. The German Eclectic works furnish a vast amount of well arranged information, and they may always be consulted with advantage. We would refer especially to the works of Schmalz, Jacob Vollgraff, Krauze, K. H. Rau, Lotz, Herman, and Schfen ; but there are others of equal merit to some of these.

Political Economy has long been a favorite subject in Ttaly. No series of writings upon the subject can justly be placed before those of the Italian peninsula.

These were much less known, until within the present century, than they deserved. They were sources from which the writers of other

PRELIMINARY ESSAY. lxi

countries could draw without much danger of detection. The subject has been generally treated in Italy as within the domain of politics. A selection of the Italian Economists was, at the instance of Napoleon, made and republished in fifty volumes, 8vo., at Milan, under the direc- tion of Baron Custodi. This publication was commenced in 1803, and completed in 1816. It did not, by any means, embrace all the meri- torious writers upon that subject in the Italian language. Since that publication, a great number of important and able works have appeared in Italy, very few of which belong to the School of Smith and Say. Another collection of Italian Economists, and of foreign works upon Political Economy, translated, is now in process of publication at Turin» which will probably contain as much as the collection of Custodi.*

There is one Italian author to whom we are pleased to draw the atten- tion of the reader. Melchior Gioja is not only well known as an Economist in Italy, but is distinguished by many works upon other kindred topics, one of which is the Philosophy of Statistics. The work now before us, was published in Milan, in 1815-19, in six quarto volumes, with the title ; " A new Prospectus of the Economical Sciences, containing a summary of the ideas, historical and practical, in every branch of administration, public and private." This great work has been called an Encyclopedia of Public Economy, and has been com. pared to those great lakes into which all the streams and rivers of a country empty themselves. Large as this work is, it may be consulted as a model of condensation. Its synoptical tables are the wonder of all who examine them. The method throughout is so rigid, that tbo whole work would be forbidding, if the style were not as lively as the method is vigorous. His analysis of writers upon Political Economy is searching, and his criticisms merciless. He spares none who have ex- posed themselves to the lash, be they renowned or obscure. He ranges over the whole subject from the laws which refer to animals of labor, to those which regulate the affairs of the most civilized nations. One of the most remarkable of his Tables is that at the close of the fifth volume, in which he arranges the contradictions of the principal Economists in

* This enterprise reflects the highest honor upon editors and publishers, and deserves the patronage of all who are interested in the progress of Political Economy. The editor is Francesco Ferrara, Professor of Political Economy in the University of Turin. The publishers are Cugini, Pomba and Co., Turin.

We have the works of Gianni, 2 volumes, 8vo., and the works of Fabbroni, 2 volumes, 8vo., constituting 4 volumes of a collection of Tuscan Economists. (Raccolta degli Economisti Toscani.) How many more are published we know not.

lxii PRELIMINARY ESSAY.

parallel columns, quoting each passage, and indicating its page with full marginal notes of his own. This Table occupies 122 pages, 4to. The names of Smith and Say figure conspicuously in this extraordinary docu- ment— far more space being allowed them in this exposition than any other two writers.

In accordance with the general opinion of the Italian School, Gioja favored the intervention of a government in the affairs of its people, when- ever their interests could be promoted by such intervention. At the close of the sixth volume he appends an instructive table, which sets forth 54 cases or occasions, in which a government may beneficially interpose to assist the progress of industry, or specially promote human welfare, placing in a parallel column 52 instances in which intervention is injurious. The manly courage of the author is very conspicuous in this Table, in which he distinctly specifies the injury inflicted by governments in encouraging that policy of the Papal Church which has been so fatal to the progress and industry of Italy.

A few specimens from this Table may be interesting : — " The influence of government is useful : — 1. In the construction of good roads and canals, which by diminishing the expense of transporta- tion, leaves to individuals a greater disposable capital."

2. "In the concession of public aid by money or credit, to enter- prising and capable men introducing new branches of industry, either with or without interest, or upon long terms of payment, a policy which may be very beneficial, as the history of England shows."

3. " In the exempting from taxes for a certain number of years, lands recently reclaimed or newly brought into cultivation."

4. " In the construction of public works, the income of which may not only facilitate the progress of industry, but assist in keeping taxation at the lowest possible point."

5. "■ In the location and number of tribunals of justice, so as to save the time of suitors and witnesses."

6. " In the establishment of libraries containing rare and expensive works of science and taste; museums of natural history, formed of the productions of every portion of a country; cabinets of machinery, an- cient and modern, with privileges to workmen and artists to examine them daily ; and similar liberty to students in the libraries."

7. " In the establishment of botanic gardens for the purpose of accli- mating exotic plants, and testing their value; inobservations to ascertain the influence of the seasons upon agriculture ; in Medical Institutions so situated, and in such mutual correspondence, that they can observe and record the general movement of mortality and disease."

PRELIMINARY ESSAY. lxiii

8. " In free schools for the ordinary branches of common education, and for instruction in agriculture, and in the common arts and trades."

9. "In academical institutions for the promotion of every kind of knowledge, for the removal of prejudices, and for stimulating emula- tion."

10. " In the free publication of books, only so controlled as that the reputation of the people, good morals and the public peace, may have nothing to fear."

11. "In the liberty of the press, to the credit of which Independence is necessary."

12. " In sending men of skill and science to every part of the world where information useful to commerce and industry may be obtained, that all the discoveries, inventions and useful processes, may be imme- diately introduced at home."

These twelve propositions stand first in the Table under the heads of Power and Knowledge. There are twelve more heads, under which are 42 propositions. Among which it may be noted is one proposing a repeal of all restrictions upon rates of interest ; one to allow the pre- cious metals to fluctuate according to their market value, without fixing that value by a law of legal tender; one providing for restrictions in the commerce of gold and silver, and of drugs and medicines; one for se- curing patent-rights and also copy-rights ; one for uniform weights and measures ; one regulating the post-office ; one for a special mining code ; one upon the subject of the locality of factories, the operation of which may be prejudicial to the health or comfort of those residing in the vicinity ; one limiting the quantity of ground which may be held for the mere purposes of game ; and the surface of water which may be appropriated as a fishery."*

* We add some specifications in which governments intervene to the injury of their people.

1. "In the imposition of taxes so heavy as to diminish disposable capital, hinder improvement and check production."

2. " In the bestowal of public funds upon monastic corporations, which keep men's tongues employed instead of their hands ; in which men live in happy idleness, and aspire to wealth after having made a vow of poverty ; insensible on the one hand to all improvements, and on the other, persuaded that they can acquit themselves of what they owe to this world, by bills of exchange upon the world to come."

3. " In the exemption from taxation of the property of the nobility and clergy, casting that much greater burden upon the other classes, and rendering the nobles and priests, as a class, without stimulus to production."

kiv PRELIMINARY ESSAY.

The vast work of Gioja is wholly unlike any of the great works upon Political Economy in French, English, or German. It discusses the same topics, but always with a practical view, and the only pretensions to -science is a scientific arrangement of the subject. He speaks at all times of an art, the art of administering a government, and in his hands the subject in no place assumes the form of an abstract or experi- mental science. His leaning is undoubtedly to the system of industry in England at the period of his writing, from 1814 to 1819.*

4. " In imposing burdens of public services upon individuals and classes, without regularity or justice in the apportionment."

5. "In compensating judges and officers by fees levied upon the parties liti- gant, whereby it is made the interest of officers to favor litigation, and promote disputes in place of allaying them, and whereby one or both parties are often wholly ruined."

6. "In allowing the existence of the Inquisition, which promotes genuflection instead of preaching, which lets him alone who robs, and persecutes him who thinks : which is equally the foe of kings and people, and inflicts punishments severe in proportion to the refinement and moral worth of its victims."

7. " In permitting false miracles and superstitious impostures to be used in leading people astray, &c."

8. "In permitting occult arts, magic and astrology, to be practised to the in- jury of the weak and unwary."

9. In allowing Monastical Institutions to be charged with the business of edu- cation, whilst they are strangers to the wants and ideas of the mass of the popu- lation, to the affections and habits which govern them ; that is, committing those who have eyes, to be educated by those who are blind."

10. " Relates to the Index Expurgatorius."

11. "Taxing all sorts of printing, rendering books, &c, dear, and diminish, ing the number of readers."

12. " In permitting various orders of monks to traverse the country, vending superstition and ghostly terror, receiving corn and wine in exchange, a contract in which there is great loss, because one part gives a real value, the other, only a shadow."

* Gioja is called the Colossus of Political Economy in Italy, and it is believed his work has had a great share in the reforms which now distinguish the public administration of Sardinia, a country in which more freedom, more firmness, and greater intelligence has been exhibited by the government in the last few years, than in any other existing nation. Let the King of Sardinia be awarded a place among kings according to his real merit, and who could stand before him ? There are some who might surpass him ; we trust they may. At present he stands first as a good king, — the real father of his people.

A bibliographical notice in Blanqui's History of Political Economy, says of Gioja's great work: — "It would appear long, if the author, who was a man of fine mind, had not made it a real encyclopedia of Political Eco-

PRELIMINARY ESSAY. lxv

It has not been our intention to notice specially American writers upon Political Economy. For the most part, they have assumed that the science was settled, and to be found in the works of Adam Smith, J. B. Say, and a few other writers ; these productions are chiefly pre- pared by Professors, and intended for the use of Colleges. The object of the writers was not so much original research, as the making the best use they could of the materials on hand. To examine and appreciate those American Political Economists who have left the beaten path, would require both time and space, which, as the task does not come within our plan, we cannot now spare. Without prejudice to others, we may refer specially to Carey, Raymond, Rae, Colton, and E. Peshine Smith."}" Of these, one has made himself so widely known, both in Europe and America, that we cannot, even in this brief reference to our Economists, omit a special notice. Henry C. Carey inherited from his father, Mathew Carey, a tendency to Economical studies. The son, however, departed, in his early career, from his father's views, and pub- lished several works decidedly in the traces of the Say School. Severe thinking, however, and close observation of the progress and condition of nations, carried him clear of the fallacies of the science of wealth. Mr. Carey became an original writer of such power, that his merit was soon acknowledged, even by those who disputed his doctrines. To show how completely he was emancipated from the narrow views of those who confine the subject to wealth, we need only point to the table of contents of his " Past, Present and Future," where we find that two chapters of fifteen are on the subject of wealth. We see there, — "Man and Land;" "Man and Food;" "Man and his Standard of Value;" "Man and his Fellow-man;" "Man;" "Man and his Help- mate;" "Man and his Family." It would be difficult to present a stronger contrast than is offered by this mode of considering the subject of Political Economy, and that pursued by J. B. Say. Mr. Carey's more recent works have been translated into several languages, and are

noniy, rich in documents the most precious, and in citations the most curious. His criticism is severe, and respects not even the highest. Adam Smith and J. B. Say have in turn received the fire of his epigrams. He is the Geoffroy of Political Economy ; his darts are chiefly pointed at those who are not of his own country, and yet his great erudition gives his criticisms every appearance of justice. His work is too little known and studied in France."

f We do not regard Francis Lieber as a writer upon Political Economy. His distinguished writings occupy another field. We imagine that he is too little satisfied with their doctrines to belong to any of its Schools.

lxvi PRELIMINARY ESSAY.

employed as text-books in several of the European Universities. He has, in fact, placed himself at the head of a School of Political Eco- nomy highly respectable for intelligence and numbers. His writings upon the subject of Banks, Credit, and Money, have been especially appreciated. Differing widely upon many points from Mr. Carey, we yet feel bound to say, that among those who are now engaged in the work of perfecting this science, he must be placed in the first rank. To the future belongs the task of awarding the prize of complete success to him who shall surmount difficulties which have hitherto baffled the efforts of men of as great and varied powers of mind as have ever been brought to bear upon any subject.

Carey and McCulloch, both with great knowledge of details, unite in regarding the subject from a practical point of view; but, while McCul- loch gives himself little concern about the formula or strictness of sci- ence, Carey persists in the belief that Political Economy is susceptible of being reduced to the form of a pure science. In this respect Carey partakes of the faith of Rossi and Senior, without, however, using the same elements. His science, when completed, from present indications, will not correspond in form or statement with the system of either. We cannot doubt that if a pure science shall ever be developed and univer- sally received, Carey will be found to have contributed his full share to the work.

It is a fact of special notoriety in the history of Political Economy, that whilst its great authorities differed both upon the elements and the nature of the science, upon its laws and upon its applications, and whilst taken as a whole, no subject could be more unsettled, and no instruction more unsatisfactory, it was thrust upon the attention of legislators and statesmen, with a zeal and perseverance which only the clearest demon- strations could have warranted. Whether the disciples of Say, who were most conspicuous in this pressure upon public men, were merely inspired by confidence in their doctrines, or were actuated by the desire of promoting the science by a course of national experiments, may never be known. As Say had proclaimed the science to be one of experiment, it is most probable that the experimental career was the dictate of that School. Yet how little was there to justify the supercilious tone which has been adopted towards those who are inclined to doubt both the soundness of their doctrine, and the wisdom of its teachers. These pre- tensions have had more sway than was due to them. There has been an increasing effort of these theorists to influence governments, and con- trol society, for the last half century. France, Germany, and the

PRELIMINARY ESSAY. lxvü

United States, have been the chief theatre of their efforts. Russia broke away from them in 1821, and applied her whole attention to building up her infant industry and civilization, and with a success which all the world has seen and acknowledged. It is true, neither France nor Germany, nor the United States, have given their entire sanction to this divorce of wealth from politics, morals and religion, because men in power and with the responsibilities of government upon their shoulders, however strongly urged in this false direction, could see mischiefs in the path ; and however misled by theory, could not but hesitate to adopt a policy of which the first step portended ruin to mul- titudes. In this state of mind, the governments of these countries have merely inflicted upon their several populations, the very great evil of an uncertain and fluctuating industrial policy. They have appeared to falter undecided between the authoritative demands of the so-called science of Political Economy, and what appeared to be the plain dictates of common sense, in regard to the interests of the people. The mis- chiefs of this halting between two opinions it is impossible to weigh, but they have been an obstacle to the progress of human welfare, fearful to contemplate.

Unhappily for the cause of truth and sound statesmanship, Malthus' theory of population intervened in the same half century as a prop to the theorists in Political Economy. As the latter desired to build up a system of wealth, industry and trade, distinct from political, moral and religious considerations, that is apart from the highest human interests, this theory of population appeared to justify the attempt, by proving that men were coming into the world too fast for its capacity to feed them, and propounding as a remedy for this undue obedience to the command, to "multiply and replenish the earth/7 starvation for those who had already " come unbidden to the banquet of life ," and some sufficient check to such multiplication of human beings hereafter. The effect of these two theories in a vast number of minds, was to accom- plish an entire severance between the industrial interests of men and Christianity. In other words, neither kindness nor charity, nor high moral interests, nor religion, had any voice in the view of such men in adjusting the industrial position of that immense class of men who not only work for their own living, but actually produce the articles by which other men live. Whatever of truth may have been mingled in their views, there could be no safety in their conclusions. Their starting point of wealth could not, by any possibility, be a logical, any more than a humane guide to sound conclusions.

lxviii PEELIMIXAEY ESSAY.

The absurdity of divorcing wealth from its indispensable union with human interests, and from its dependence upon considerations and motives higher than wealth, is, in no aspect, more striking than in the attempt to separate it from national policy and politics. Whether this serious mistake arose from the exigencies of logic, or from neglecting the distinction between science and art, it was equally fatal to clear per- ceptions. The assumption that the whole range of interests and subjects usually embraced in Political Economy, that is, all that relates to in- dustry, to trade and social amelioration, should be withdrawn from the domain of politics, and from the discretion of statesmen and legislators, and be committed to Political Economists, was so bold, if not so pre- sumptuous, that it could never have been made, except by men laboring under some great delusion. And when we reflect upon the extremely unsettled state of the science, by the light of which, Political Econo. mists in their closets were to decide upon the well-being of millions upon millions of people, and upon the fate of nations, we cannot but wonder that such an idea was ever entertained for a moment by men of intelligence. Yet this doctrine has had its day, and even now prevails to some extent. There is a certain order of minds, which, abhorring details, and feeling unable to grapple with them, gladly takes refuge in rules and generalities; and to this must belong those who imagine that the science of Political Economy is entitled to take precedence of politi- cal wisdom and experience.

Nations are associations designed to obtain and realize all the advan- tages which united power and wisdom can secure for a people. How- ever this object may be modified or limited by forms of government, or ancient customs and legislation, the same great motive remains. The legislation of civilized countries, the skill, knowledge and experience of statesmen, are, or should be, chiefly directed to this point. No govern- ment is so restricted in its powers, as to be a mere negation in regard to the social interests of the country, and none should be so blind as not to see that it must be vain to attempt securing any higher interests of a people, while their material or industrial interests are neglected or suf- fered to languish. The extent to which governments have already gone, and must necessarily go, in protecting and promoting industry, clearly con- tradicts the idea, that men can be let alone to manage their private busi- ness entirely in their own way. Such is the legislation in regard to cor- porations, partnerships, banks, brokers, railways, canals, roads, mechanics' liens, apprenticeships, inspections, patent-rights, copy-rights, hours of labor, licences, auctions, conveyances of real estate, coinage, weights and

PRELIMINARY ESSAY. lxix

measures, promissory notes, and insolvency ; all such enactments, of which there is a vast mass, are designed to regulate the course of busi- ness, and control men in their private affairs. The extent to which this intervention may be advantageously carried, is not, and cannot be deter- mined in advance, but must be left with the institutions of a country, to the sound discretion of those in whom its power is vested.

Every nation must have a system, mainly, its own. It is literally im- possible, that a population occupying an extensive territory, can be de- pendent upon other countries for any considerable portion of its con- sumption, without great sacrifice. However one country may be disposed to look to others for its supplies, it can only obtain them to the extent that other countries need its products. Its consumption will then be, not in proportion to the power of domestic production and the peoples' wants, but to the desire of other conntries to have their commodities. In point of fact, it is found that every nation mainly supplies its own wants. This country is the most profuse consumer of goods manufac- tured and grown in other countries, of any in the world. We import nearly ten per cent, of our consumption; the imports of Great Britain are equal to ten per cent, of her consumption, but a very large proportion of these imports consists of cotton, wool, silk, and other raw materials of those manufactures, which form the bulk of the exports; the imports of Belgium, including raw material, are also ten per cent. ; those of France, raw materials included, scarcely exceed five per cent. ; but Russia, Austria, Germany and Italy, do not import one per cent, of their consumption. In looking then at the system of domestic industry, by which the wants of a people are mainly supplied, the portion brought from other countries may be left out of view, whilst the attention is specially fixed upon the mode in which from ninety to ninety-nine per cent, of the commodities consumed are produced. The foreign trade, its object, scope and interest, can be better understood after what concerns the home industry is fully apprehended. And it cannot be doubted, that the industry on which a people are dependent for ninety to ninety-nine per cent, of their consumption, must be a more important interest than that which furnishes only from one to ten per cent.

Four-fifths of every population are engaged in the actual work of production. Food, raiment, habitations, and the furniture within them, are the chief objects of their labor. The other fifth is made up of classes not actually engaged in this work of production, but necessary for the proper constitution of civilized society ; this class furnishes the officers of government, men of the professions, of science, and of every

IXX PRELIMINARY ESSAY.

intellectual calling, all who minister to mental gratifications, merchants of every grade, and those engaged in the business of transportation by land or sea; to these, we must add the men of capital, who live upon invested wealth, contributing in no way actively to the general welfare; and the paupers and criminals, who are a dead weight upon society.

It is apparent, at the first glance, that there is a state of mutual de- pendence among the millions thus classified. Every individual receives for his own consumption some of the labors of all the others. The ag- riculturists, manufacturers, and mechanics, are the sole producers, but they cannot carry on their work without the aid of the others. These producers are also dependent upon each other. This whole scene of industry, production, and mutual dependence, resolves itself in its largest aspects, as well as in its minutest details, into an exchange of labor. Knowledge, experience, and civilization, have brought about such a division of labor, that scarcely a man produces any special com- modity. Men contribute their labor, and skilful combinations convert the results of this divided labor into the commodities which men need. To avoid complication, we may overlook money and other devices by which men exchange their individual labor for the products of the labor of hundreds of others. The system of domestic industry and internal trade is that by which men produce and exchange commodities and services with each other to the extent of from ninety to ninety-nine per cent, of their consumption. They accomplish this by a price fixed upon every commodity and every service, which price is expressed in money of account. It is obvious that the peculiar circumstances of every country must combine to fix an average price of labor in each country, through all the various ramifications of employment and industry. It is, in fact, known that every country has a different price of labor, and every different scale may be found, from one dollar per day in the United States, to five cents per day in India. The rates of labor in any country must mainly regulate the price of all its commodities and all the services which men render to each other, and also the expenditure of government. If this great internal exchange is favored by public authority, and facilitated by the removal of all obstacles and friction, it may move with that regularity which is indispeneable to the general well-being; the comfort, and welfare, nay, the lives of multitudes, are dependent upon it. The special scale of prices following upon the price of labor, is one which tends towards justice for all, for all have a voice in fixing the price of their own labor or services. If undisturbed, this scale of prices will bring a fair remuneration to all ; the agricultu^

PRELIMINARY ESSAY. lxxi

rists, manufacturers, and mechanics, will estimate their respective com- modities, or the labor which produced them, by the same money of account, and at the same average price of labor; their exchanges then, as among themselves, will be just. In proportion to the price of the articles of consumption will be the taxes of government, the profits of merchants, and the charges of professional men and others for their services. So far as such a complicated adjustment can be so, it tends to become fair and complete. The prices may be high or low compared with those of other countries, but as among the parties chiefly interested, they are neither high nor low, but right, and cannot be suddenly changed without immense confusion and injustice.

The most important consideration then in reference to this scene of domestic labor and production, is not the nominal prices or rates at which their mutual exchanges are made, but the efficiency and skill of the labor, the obtaining the largest quantity of commodities, and of the best quality. But even this result is subordinate to the consideration of the distribution. The great aim then, is a large quantity of commo- dities of the best quality, produced under such conditions that the labor- ers or producers receive their full share of these commodities as a com- pensation for their labor. There need be no limit to that consumption which depends upon mutual industry, but the productive power of the labor. It is the interest of governments, of capitalists, of employers, and of all the useful, though not directly producing classes of society, that the work of production should be carried to such a point of success, as will ensure a high degree of comfort to the producing classes. Active industry sharpens the intellects, and quickens the energies of the pro- ducers, that is, of four-fifths of the whole population, and thus carries vigor and intelligence into every branch of production. The degree of skill and knowledge necessary to produce any article, is a productive power, which may be increased indefinitely by keeping it in action, and by improving the physical and mental energies of those who wield that power. The whole industry of a nation constitutes a system of these productive powers in a state of mutual dependence ; for they feed upon each other; each prospers as the others prosper, and all suffer when one languishes. The individuals of every class, or which make up any par- ticular productive power, are consumers more or less of the products of every other class. The efficiency of their power depends greatly on their vicinity to each other, and the facility with which they communi- cate. Agriculture flourishes in proportion to the vicinity of its con- sumers ; a district which can feed a million of men, diffused over its own

\

lxxii PRELIMINARY ESSAY.

surface, besides its agriculturists, could not sustain 250,000 men at the distance of 100 miles. That agriculture, which is provided with a market close at hand for its entire product, the heavy and perishable, as well as that which would bear transportation, is many times more pro- ductive than that which has only a distant market. Land in the vicin- ity of large cities, or upon which there is a numerous population of manufacturers, is five or sis times more valuable than that where the population is sparse, and agriculture confined to the cereal or light crops. But whether the population of a country is heavy or sparse, its industry, if active and profitable, is a system bound together by common interests, and its prosperity and progress depend upon the strength and efficiency of that system as a whole. A prosperous agriculture induces a large consumption of clothing and furniture, and a large demand for buildings and for agricultural implements; activity in manufacturing and in the mechanical arts, enables those engaged to consume freely the products of agriculture; the activity of the whole of the producing classes is reflected upon every other class and interest, with like benefit to all. Now this whole system of home industry, existing under the same laws, under control of the same government, and under the watch- ful eye of every true friend of the country, can be promoted and aided as a whole, only by a public policy which extends to the whole, or by measures strengthening and promoting particular branches of indus- try, important to the system as a whole. In such a system, if the rates of labor are high, the prices paid for commodities may appear high com- pared with those paid for corresponding articles in other countries ; but the criterion of the benefits enjoyed by the inhabitants of two countries, is not the price of the articles they consume, but the quantity of articles they consume ; the price of labor and the price of goods, must be taken together. That system of industry is the best which affords the largest consumption to the masses, and the best opportunities of moral, mental and physical improvement. Such a system can only be secured by wise legislation, by a true regard for the rights of humanity, and a true conception of the utility and necessity of employing national power and unity for this greatest national object.

It is not, however, enough that the producing classes should be indus- trious : it is indispensable that there should exist a distributing or com- mercial agency. This is a task so complex, involving so much labor, skill and intelligence, that it gives employment in various ways to the tenth of a population. The commodities which are the product of home industry, and designed for consumption, are purchased by merchants,

PRELIMINARY ESSAY. lxxiii

assorted, carried to their various destinations, or distributed over the whole country, as the demand for them indicates. This necessary agency is a heavy expense, and a severe tax upon producing industry, but it is unavoidable, because the goods cannot be consumed unless they are distributed. It is cheaper for consumers to pay others for distribution, than to attempt it themselves. It is, nevertheless, an agency, and how- ever needful, it should do its work at the least expense to those for whom it acts, which is practicable, consistent with ample compensation to those who are engaged in it. It differs from producing industry in this im- portant respect, that while the one may and should be developed to the highest point, the other should not be developed nor increased beyond the point of performing adequately a limited task. It is desirable to keep the agency effective, but it should not in expense or numbers engaged, transcend the limits of economy or necessity. There are strong tendencies connected with the business which beget many abuses and much hardship; facts which are not to be overlooked nor underrated in every consideration of the commercial agencies.

It being the interest of the merchant to purchase at the lowest rate he can, whatever may have been the labor bestowed upon a commodity, and whether the producers are remunerated or not, and to sell his com- modities at the highest rate he can obtain, whether the consumers can afford to pay or not; so far as this temptation influences the action of merchants, it deranges the regular exchanges of society, and is highly mischievous. It weakens productive power by taking from the pro- ducing classes, not merely some portion of that wealth which belongs to them, but often withholds from them the comforts, and even the neces- saries of life. And a further evil is, that the greater the accumulation of wealth in the hands of merchants, the more able are they to avail themselves of their position, to exact great profits or impose heavy bur- dens upon industry. Rich merchants do not indicate a rich population, for the annual gains of merchants are taken from the annual labor of the people. They can refuse to purchase from those who are under the necessity of selling, until they make their own terms of purchase ; they can retain goods which are in great demand, until they make their own terms of sale. Where there are such temptations, many will yield to them. The whole subject is worthy of attention, and should, at the least, be the object of a right public sentiment.

But industry encounters, in the progress of this exchange of com- modities, and in the operations of the commercial agency by which it is effected, other checks and obstacles still more important. And whilst 4

lxxiv PRELIMINARY ESSAY.

it is true that production owes no little of its success to the aid of mer- chants and the great capital which they accumulate, it is very evident that commercial fluctuations, speculations, and revulsions, inflict more serious injuries upon labor than all other causes together. Fluctuations in price may, and sometimes do, proceed from other causes, but they ate generally due to irregular commercial movements. These fluctua- tions and irregularities are calamities to labor, disturbing its progress, and checking the regular process of consumption. The whole credit and money system, the whole banking and paper currency system, in- tervene in the operation of this commercial agency. A vast amount of legislation has been expended upon these branches of trade, and yet it is conceded that all efforts have hitherto failed in reacbing the true policy. We venture to suggest, in passing, that the main imperfection of banking and money systems, and of the regulations which have been applied to them, is, that they have been regarded too much as indepen- dent systems and subjects, and not merely and strictly in the light of agencies of the industrial system. They have no independent aspects; they are expensive agencies, to be reduced or got rid of whenever pos- sible. The work which they are called to assist in performing is simply to enable men to make their exchanges of labor, commodities, and services with each other in the shortest time, at the least expense, and with the least trouble or friction. The credit system, in its largest sense, is that by which payment for commodities sold is deferred for the time expressed on the face of bills of exchange and promissory notes, until, by the operation of bank credits, checks, and book ac- counts, the debts are set off one against another. The whole transac- tions between two countries are settled by set-off on the books of the drawers of bills, except the balance, which may fall either way, which remains to be paid. It is the same between different parts of the same country, and it is the same between individuals. A man may, without money or bank-notes, have all the debts he owes paid by the debts which others owe him : the balance only remaining to be paid. It is this set-off which our present banking system and exchange operations accomplish, but with an amount of friction and fluctuation which be- long not to the thing done, but are inherent in the mode of doing it. That this vast system of credit, founded on the actual sale of commo- dities, the consumption of which must proceed year after year with inevitable certainty, and the payments for which are as certain as that commodity and labor will pay for commodity and labor; that in this country all these thousands of millions of credit should, like an inverted

PRELIMINARY ESSAY. lxXV

pyramid, be made to stand upon less than a hundred millions of specie, is an absurdity too often felt and too little comprehended. It is not well understood that the banking system of this country is not tha credit system, it is only one of its. chief instruments. However, legislation may be needful to restrain the banks or prevent abuses, it should not affect the credit system at large. The banks of this country have seventy millions in gold, and if a quarter of it be taken from them the mere removal of this gold will inflict a positive loss upon thousands of millions of legitimate credit operations, in no way con- nected with the movement of the gold. Although banks have in past times been of eminent advantage here, it may admit of question whether, constituted as they now are, their usefulness is not more than neutralized. We refer not to their management, nor even to their abuses, but to their constitution. The legitimate credit operations of the country are mainly, and, in some respects, with great advantage, performed on their books; yet, by this means -so brought into contact with bank notes and bank circulation, as to be subjected to the sama legislative restraints. There is no reason why bank credits should be payable in gold or silver, however necessary it may be that bank notes should be so payable. The Clearing House in London pays off millions of sterling daily by set-off, the banks in New York and Philadelphia do the same thing; individuals in all these cities are constantly doing the same thing on the books of the banks. The efficiency of this set-off is in no way dependent upon gold or silver. The whole movement of specie in Great Britain or in the United States, does not amount to one mill per cent, of the whole payments.

The credit system of the country should not be saddled with the whole burden of the banking system. No doubt the latter has been, and is at times, a very efficient implement of the credit system ; but banking is a corporate or private business, subject to very great abuses, and necessarily placed under strict supervision and rigid restraints. The credit system is the spontaneous action of individual confidence between men over the whole country. It is a great public concern, aa interest which extends, until by minute ramifications, it reaches the whole population. It is not only not dependent on the present banking system for its successful operation, but it can have no worse injury in- flicted upon it, than being subjected to the inflations and contractions to which the banks are obliged to resort for profit and for safety. Let the credit system rest simply on the industry of the country, and on the mutual confidence of the people, and let such modes of adjusting its

lxxvi PRELIMINARY ESSAY.

accounts be devised, as will not fall under the influence of bank fluctuations.

We have seen that, apart from foreign trade, the population of every country supply their own wants to the extent of from ninety to ninety- nine per cent, of their whole consumption ; that the business of furnish- ing this supply is by extreme division of labor, apportioned among four- fifths of a people ; that their internal trade consists in distributing these products of industry ; that this distribution is substantially an exchange among the whole individuals of a population, of products for products, or products for services, or, in the last analysis, of labor for labor; that this exchange is made by the agency of merchants, and takes the shape of sales and purchases, that is, leaving out of view the medium of ex- change, men pay with their own labor for what they need of the labor of others ; that all the agency of merchants, brokers, banks and credit is merely a means of effecting this exchange ; that the commodities or labor thus exchanged, are estimated at prices expressed in money of ac- count, which prices are mainly governed by the price of labor ; that upon the regular movement of this exchange, mainly depends the well-being and comfort, the energy and productiveness of labor; that if this move- ment proceeds rapidly and undisturbed, production and consumption will go hand in hand, until individuals reach the full power of both, and a greater degree of general comfort and competency be enjoyed than has yet been known. We have seen, that one of the great disturbing causes of this system of domestic distribution, of the comforts and necessaries of life, was found in the occasional derangement of the commercial agencies by which it is effected ; and we have remarked upon the neces- sity of reforming that agency with a view to the interests of humanity.

We now proceed to consider another disturbing cause. We remark first, however, that neither the labor nor the products of labor, nor the distribution nor the means by which it is effected, are the primary objects of consideration. The first consideration is the people, then, in their order, their labor, their products, and the distribution of them. The whole object of their industry is their well-being. As they can only purchase by their own labor what they need of the labor of others, it is absolutely necessary for all to work ; whatever deprives men of the op- portunity of labor, deprives them of bread, and of every other comfort and necessary of life. Men consume freely and largely when they are fully paid for their labor; that is, when they can purchase for their labor an equal quantity of the labor of others ; in this case, the nominal rate is of little account, because it is labor for labor. If the 25

PRELIMINARY ESSAY. lxxvii

millions of people in the United States, are consuming ten dollars worth each of domestic woollen goods annually, upon the manufacture of which, 250,000 of the people are dependent for their entire living and if it be found that these same goods, which cost at home three dol- lars, can be purchased at two dollars per yard in Europe, then at first sight it would seem but reasonable, that the cheaper article should be imported from Europe. To import 250 millions of dollars worth is im- possible, because we cannot pay for them, as we are constantly importing more than we can pay for, and that sum is the figure of our whole im- ports. "We import then, say ten per cent., or 25 millions of dollars worth of woollen goods, and sell them in our great commercial marts, where prices are chiefly made, thirty-three per cent, cheaper than the domestic article. Consumers fly to the cheaper article, and the domes- tic goods must come down to the same price. The annual domestic product must fall in price thirty-three per cent., and instead of bringing its manufacturers 250 millions, it will only bring them 166 millions; their consumption of the products of others must be reduced one-third. The effects of this reduction will extend until they are felt throughout a whole nation. The importation of 25 millions of cheaper woollens, would thus inflict a direct loss by reduction of price upon the woollen manufacturers of 83 millions of dollars, and this loss is multiplied many times by indirect results in the reduction of consumption. The average consumption of cotton goods is about the same as that of woollens, and the same illustration is applicable. The introduction of cheaper goods, of a kind which our country must, after all, chiefly manufacture for itself, is introducing against our own labor, the price of which is one dollar per day, the labor of other countries, the price of which is less than half a dollar per day. This cannot but inflict a serious blow upon the whole system of our internal industry, and if continued, must lead to the utter prostration of the domestic manufacture thus attacked, and the utter poverty and ruin of the hundreds of thousands depending on it for a living. The effect of this in the case of woollen goods, would be a re- duction in the average consumption of woollens, of from ten to five dollars, for the whole population, and a rise in the prices above the original domestic rates. Whilst, therefore, it may at first sight appear to be very plainly better to import certain goods which can be offered to con- sumers at lower prices than the corresponding domestic article, several questions must be asked before such a policy is adopted. As ; — will the importation seriously injure any home manufacture ? Will it throw many people out of employment ? It is a great mistake to suppose that

lxxviÜ PRELIMINARY ESSAY.

such measures affect only employers : in woollen and cotton manufac- tories, there are hundreds of men, women and children, depending upon every employer. If we lessen our domestic production, will not our in- creased demand produce speculation, and a higher foreign price for the article imported? If we resolve upon importing our whole supply of a necessary article, are we sure that we can increase our exports to a suffi- cient extent to pay for the additional importation ? Are we sure that we shall not, hy this policy, deprive the poor of their supply of a needful domestic product, and convert it into a foreign product, chiefly supplied for the consumption of the rich ? What mode can be adopted to secure a supply of these needful articles in time of war, or interrupted commer- cial intercourse ? All these, and many more inquiries, should be made and faithfully studied, before any branch of domestic industry is broken up, under the temptation of buying cheaper goods abroad. On the con- trary, it should be well understood in every country, that many sacrifices may, with advantage, be endured, to introduce the manufacture of any article of general consumption, even though it cannot be made as cheap as elsewhere. A manufacture can only grow and flourish in a country where the people are willing to consume its products, and they can only consume them when their labor will purchase them. A people can con- sume largely of a domestic product even at a high price, but may not be able to consume even a small proportion of a corresponding foreign article at a low price. Let any one think of the innumerable articles which figure in our internal trade, and which go to pay for, as well as to make up our consumption of home commodities, and he will see the difference between purchasing abroad and at home.

The Indian corn, hay, oats, butter, and potatoes of our agriculture, are worth at home more than double the value of our whole foreign imports. If our farmers can exchange these and such articles for the manufactured products they need, their consumption will be limited only by their industry. If they derive their manufactured commodities from foreign countries, they can consume only to the extent to which their products can be exported in payment. Pennsylvania can consume goods manufactured in New England freely, even at much higher prices than the foreign article, because she pays for them in coal, iron, Indian corn, oats, and flour. The prices on both sides being adjusted at the dollar a day average, the exchange is equitable, and proceeds to the full limit of the wants of the parties. An interior county in Pennsylvania whilst a purely agricultural county, has but little that can find its way to foreign countries to pay for manufactured goods. But when furnaces

PRELIMINAKY ESSAY. lxxix

are built, and hundreds or thousands of men are employed in mining and making iron, the agricultural commodities which before were pro- duced in small quantities, or not sent abroad on account of their bulk or perishable nature, are now sold and consumed on the spot. These agricultural articles being converted into iron, can be carried to any of our cities, or to New England, and the value brought back in any desired article of consumption. The people of that county, before confined to the products of household industry, now appear in the very best products of American manufacture. The price of this exchange is not important ; it is only necessary that it should be fixed upon the same elements, and that it should be satisfactory to both parties. Goods are cheaper in England, but the hay, oats, butter, or turnips of an interior district cannot be sent there to pay for them ; neither can they send iron : iron is cheaper in Scotland, but the people of New England can- not purchase iron in Glasgow or Liverpool with the product of their looms or factories.

The worst element which can be introduced into our system of do- mestic industry is the element of foreign prices. It deranges and diminishes domestic production to such extent, that in many cases it would be very bad policy, nay, great injustice, to the industrial classes, to accept and distribute the goods to every consumer free of charge. The entire foreign trade of the United States, or of any other country, is of small consequence, compared with the regular movement of the labor of the country; 100,000 persons thrown out of employ- ment for a year is a loss to the wealth of the country equal to the value of the whole foreign trade. Yet, so little has this aspect of the subject been regarded, so little has the importance of our domestic industry been understood, that it will be safe to say, that there are more than 500,000 laborers idle, or but partially employed, every year in the United States, because they cannot work in competition with the cheaper labor which is let in from other countries. Our' domestic production, now estimated by some at 2500 millions of dollars, might, whether the above be the true amount or not, be increased one-half under a firmly sustained domestic system, and our population, instead of consuming one hundred dollars worth for each head, might consume a hundred and fifty dollars each. It would be the result of a domestic exchange of commodities, the prices of which would range according to the domestic price of labor; and the benefits, instead of being confined mainly to the rich, would extend to every grade of laborers. The effect of foreign importations upon this great system is to check, derange, and diminish

y

IXXX PRELIMINARY ESSAY.

the domestic production to many times the amount imported. "We re- ceive from abroad 250 millions worth of foreign goods, and the people probably make and consume 500 millions worth less than they would if they imported none at all. We believe that a domestic system of industry, thoroughly built up and defended, would in the end sustain a larger foreign trade than can ever be reached by the path of national competition. Foreign trade should be the overflowing of domestic industry, and not a machine to cramp its powers and paralyze its efficiency.

We are not unfriendly to foreign trade or international commerce. We advocate not the prohibition of foreign commodities, nor high duties upon foreign goods. We merely avoid beginning at the wrong end of our subject. Knowing that the people of every nation must provide mainly for their own wants, that they must live mainly upon the pro- ducts of their own industry, that the labor which supplies a civilized people with food, raiment, shelter, and furniture, suitable for civilized men, must be subdivided to be efficient and productive; that a whole popu- lation can only be abundantly supplied by a mutual exchange of labor or its products, by which each man has an opportunity of exchanging his own labor for the articles he needs; that production can only be large and consumption great where the consumers are near to their food, that is, where agriculturists, manufacturers, mechanics, and laborers, are not too widely separated, and where the other classes are near enough to the agriculturists to consume every product of the soil which skilful farming produces : we believe the first question in regard to any nation is not whether its foreign trade is free, whether duties upon foreign goods are high or low, but whether its people are well supplied with the necessaries and comforts of life ; whether domestic industry is so ar- ranged that no considerable number of persons willing to labor are without employment ; whether all are able, whilst earning a comfortable subsistence for themselves, to contribute by their labor to that abundance which is enjoyed by all; these are more important considerations than any belonging to foreign trade, or duties, or tariffs.

If we have failed in making our views of the importance and efficacy of a system of domestic production plain and acceptable to the common sense of our readers, we shall resort to an illustration, for which we need not leave our own country. The great planting States of our confederacy have not cherished, and do not possess, what we call a system of domestic industry. They rely upon trade to carry off their surplus products to the North or to Europe, and bring back to them an

PRELIMINARY ESSAY. Ixxxi

equivalent in such articles as they require. Theirs is not a domestic system. That we may see the effects of the two systems thus in opera- tion side by side, we shall place some of the results face to face. We compare the Eastern and Middle States with the Northern and Southern ; that is, Maine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, New Jersey, Pennsylvania, Delaware, Mary- land, and the District of Columbia, with Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, Texas, Arkansas, and Tennessee. We take the facts relied upon from the census of 1850 : —

Eastern and Middle Southern and South-

States. Western States.

Population 9,353,104 7,273,954

Territory in square miles 179,662 733,144

Land under culture, acres 37,350,000 42,000,000

Valuation of cultivated lands $959,000,000 $243,000,000

Average value of cultivated land per acre $24.17 $5.80

Annual product of manufactures, min- > $746j715>000 $79,958,000

ing and mechanic arts S

Average crop per acre of Indian corn, ) 07 .._

bushels S

Average crop of Irish potatoes ; bushels 119 116

Let this comparison be extended to the whole range of agricultural products, including cotton, sugar and tobacco, the staples of the South; it will be found that, though the labor of the South is mainly applied to agriculture, and though there is in the South nearly five millions of acres more of land under culture, yet the product of the two regions is widely different in value, a great advantage in point of quantity and variety being on the side of the North ; a variety not only conducive to comfort, but a great stimulus to exchange and increased production. The South, with the advantage of a superior climate, more fertile lands, a larger breadth in cultivation, and more labor applied to it, is only able for the supply of all its wants to equal the agricultural products of the North ; and is, therefore, only able to import from the North and from Europe, to the extent she can spare of that agricultural product. The Eastern and Middle States have, however, in addition to their agricul- tural product equal to that of the South in value, and far superior in its fitness to promote human comfort, been able by their own labor, to produce a quantity of manufactures valued at $746,715,000. This is clear gain to the people of the North over those of the South. By mingling manufacturing with agricultural industry, Northern labor has

lxxxii PRELIMINARY ESSAY.

been so stimulated, and so aided by steam and water-power with in- creasing skill and intelligence, that the product of Northern industry is now more than double that of the South.

Imperfect as the figures of the last census are admitted to be, and es- pecially unfavorable to the North, from the increased difficulty of reach- ing all the variety and ramifications of Northern industry, enough is shown to satisfy the most cautious inquirer, that the agricultural pro- ducts of the two regions, now the subject of comparison, are about equal for each head of the population. This will not be thought strange, when we note that the crops of hay, wheat, wool, and the products of the dairy in the North, together exceed in value the great staples of the South, cotton, sugar, rice and tobacco. If we take the agricultural pro- duction in these two great sections at $60 per head, which was about the average of the United States in 1850, we find the whole agricul- tural product of the South and South-western States, to be worth $435,180,000. To this, add $79,958,000, the value of Southern manu- factures, and we have the sum of Southern industry, $515,138,000 ; which, divided by the population of 1850, gives an annual consump- tion for each individual of $73.59. This includes, of course, the value of all articles imported from the North, or from any other part of the world, for they were obtained by the export of a portion of the agricul- tural commodities valued at the above sum of $435,180,000.

At the same rate of $60 per head of the population, the agricultural production of the Eastern and Middle States, amounts to $561,180,000. Add to this, the product of their manufacturing industry, stated above at $746,715,000, and we obtain the sum of Northern industry for the same year, $1,307,895,000 ; which, divided by the population of those States, gives a consumption for each individual of $145.32, or nearly double the consumption of individuals in the South. This is a result due chiefly to a domestic system of industry, by which the articles con- sumed are mainly supplied at the place of consumption ; it is due to the difference on the one hand, between sending the raw materials of agriculture to a market hundreds or thousands of miles from the soil on which they are grown, between paying for needful articles with the proceeds of such sale ; and on the other hand, manufacturing the raw materials where they are grown, and paying for other articles of con- sumption by an exchange of products of labor between agriculturists and manufacturers.

But the people of the North enjoy another striking advantage derived from their system. The value of their cultivated lands is $959,000,000 ;

PRELIMINARY ESSAY. lxxxiÜ

which, divided by the population, gives for each individual of the North- ern population, the value of $106. The Southern lands are valued at $243,000,000, which gives for each individual $34.

Without running the parallel farther, which might be done with in- structive results through the whole field of Northern and Southern in- dustry, we may sum it all up in a few words.

The North is thrice as rich in land as the South, ten-fold as rich in manufacturing power, and possesses an immense capital, capable of being applied with facility to any branch of industry; a capital for which there is no equivalent in the South. The North is independent, self- sustaining, and powerful ; the South is the opposite of this. The North has great maritime wealth and power; the South, nothing of the kind. The North is yearly growing richer ; the South, as a whole, is yearly becoming poorer. Northern industry flourishes on the same spot, and its poor lands become richer and more valuable; Southern industry only flourishes on new lands, and its poor lands become poorer.

This comparison is not counteracted by placing the value of slaves to the account of the Southern States. Northern laborers are worth more in the view we are taking, than Southern slaves. The difference is that Northern men are owners of their own labor, which is, in part, the capi- tal we are estimating; and in the South, the labor of most of the laborers belongs to capitalists.

Whatever disadvantages are connected with the labor of African slaves, as compared with that of civilized men of the white race, we are far from believing that the great contrast in the wealth and annual con- sumption of the people of the North and South, is due to the fact of slave labor. We place it, without hesitation, to the infatuation which possesses the people of the South for foreign commerce, — an infatuation which induces men to act as if exchanging half a million in goods, for half a million in goods, the export and import amounting to a million, were equally as advantageous as the actual production of a million of goods. One Lowell would be worth to the South three times the in- vestment of a similar amount in shipping for the foreign trade, whether clippers or steamers. The great want of the South is not so much the means of sending products to market, as an increase of production and a home maaket. So long as the South relies upon an European market for cotton, cultivated land there will average not over $6 per acre. When the South manufactures one-half the crop of cotton and the North manu- factures the other half, Southern lands will average thirty dollars per acre. If the South will but increase the annual product of her manu-

Ixxxiv PRELIMINARY ESSAY.

factures to $500,000,000, the increased price of Southern lands will pay for the whole investment involved in this increased production.

The South has almost every assistance the world can give, to become a people of great wealth and power. These States have it in their power to double the value of their agricultural production, and increase their manu- facturing power ten-fold. This could be done in twenty-five years. The result of this policy would be a white population far superior to the present, and a blessing to the African race in the South, beyond any speck of hope now in their horizon. The next generation of slaves would grow up civilized, and being civilized, their masters would eman- cipate them as rapidly as their best friends could desire. Their owners would find it cheaper to hire them than to keep them, and they would find in them, safe purchasers of their estates. This would be the solu- tion of the slave question. The masters would have been paid for their slaves by civilizing them.

S. C. Philadelphia, February 14, 1856.

NOTE.

In the apparently hasty survey of some of the leading works upon Political Economy submitted to the reader in the foregoing Essay, we have attempted to give the results of a previous examination of much wider compass. Having had in preparation for some time a Survey of Political Economy, with a view to ascertain its value as a science and as an art, we found it could not be completed short of two volumes. This, of course, included the principal topics of Political Economy, as well as its general scope. The dif- ferences of opinion among writers can no more be reconciled upon the subjects of labor, production, value, rent, distribution, money, credit, banking, prices, trade, population, and other important topics, than upon the nature of the science and its general scope. In the further prosecution of this subject, there is no more interesting task than the appreciation of the labors of that very distinguished School of Political Economists which has its centre in Pans. If industry, zeal, talents, learning, and great ability, could have carried Po- litical Economy out of its labyrinth of inconsistencies, these writers must ere now have succeeded. We are indebted to them for the "Journal des Economistes" begun in 1841. and now in its forty-sixth volume; it has been conducted with a fairness and ability, to which the most remarkable exception which occurs to us was the attack upon Henry Richelot. Having been a subscriber from its beginning, we can testify to its merits, though we by no means partake of the leading opinions of its contributors. Our casual exception to some of its articles, on a previous paae, was not intended as a reproach to the Journal. The same School, which sustains this Journal and the same eminent publisher, Guillaumin, has given to the world the " Col- lection des Principaux Economistes,'' in fifteen large volumes, equal to fifty ordinary 8vo. volumes; the " Annuaire de l'Economie Politique," commencing with the year 1844. and regularly continued, being an in- valuable repository of economical and statistical information ; the " Dictionnaire dit Commerce," in two thick 8vos. ; the " Collection des Economistes et Publicistes Cotemporains," in upwards of thirty volumes, 8vo. ; and lastly, the " Dictionnaire de Economie Politique," in two royal 8vos., of nearly nine hundred pages. This work confers an obligation upon students of Political Economy which can never be too highly appreciated. In the hands of the men who have edited, written, or aided the publisher in the Herculean task of giving to the world such a mass of works, original and selected, upon the subject of Political Economy, it would seem as if the subject, or the science, should have made vast progress. But this great force of talent, this wonderful industry, this mass of publications, have accomplished much less for Political Economv than might have been expected from the power exerted. Read the article, " Economie Politique," in the Dictionary of Political Economy, and the complaints of the editor of the "Journal des Economistes," at page nine of the number for January, 1856. He laments, that, whilst Political Economy speaks by millions of voices in Eng- land, only one or two Professorships are devoted to it in France. The Political Economy here spoken of is free Trade, which, being the true policy of England, is the voice of millions. The millions of France, under the teaching of common sense, reject it. The error of these French Economists is, that they desert the very elements of their science for the sake of Free Trade, which can neither be a principle nor a law of science. It belongs to the domain of public authority and public policy. Their views are thus developed from an unstable element which does not belong to the science. The well-being of men is not to be sought through Free Trade, though Free Trade may be reached through human well-being. The Political Eco- nomy of this School "would grind France to powder" as rapidly now as in the days of the First Napoleon. We trust the present wise .Ruler of France may see this as plainly as did his illustrious predecessor.

INTRODUCTION.

Et la patrie et l'humanité!

No branch of political economy presents a greater diversity of views between men of theory and men of practice, than that which treats of international commerce and commercial policy. There is, however, in the domain of this science no topic, which, in regard to the well-being and civilization of nations, as well as to their independence, power and duration, presents the same degree of importance. Poor, weak, and uncivilized countries have not unfrequently attained power and wealth by a judicious ] commercial system, whilst others have sunk from a high rank for want of such a system ; nations have even lost their inde- pendence, and their political existence, because their commercial policy had not aided the development and the consolidation of their nationality.

In our day, more than at any former period, among all the questions which belong to political economy, that of international commerce has acquired a preponderant interest; for the more rapidly the genius of discovery and of industrial improvement, as well as that of social and political progress advances, the more rapidly is the distance between stationary nations and those which are progressive increased, and the greater is the peril of remaining behind. If in time past it required centuries to mo- nopolize that important branch of industry, the manufacture of wool, some ten years have sufficed in our time to obtain ascen- dency in the much more considerable manufacture of cotton ; and now the start of a few years may enable England to absorb all the flax industry of the continent of Europe.

(61)

62 INTRODUCTION.

At no other epoch has the world seen a manufacturing and commercial power possessing resources so immense as those in the control of the power which now holds sway, pursuing de- signedly a system so consistently selfish, absorbing with such untiring energy the manufacturing and commercial industry of the world, the important colonies, the domination of the seas, and subjecting so many people, as in the case of the Hindoos, to a manufacturing and commercial yoke.

Alarmed by the consequences of that policy, nay, con- strained by the convulsions it has occasioned, we have seen in our century, Prussia, a continental nation, as yet imperfectly prepared for manufacturing industry, seeking her welfare in the prohibitory system so condemned by theorists. And what has been her reward ? National prosperity.

On the other hand, encouraged by promises of theory, the_ United States of America, which had made a rapid growth under the protective system, have been induced to open their ports to the manufactures of England; and what fruits has this competi- tion borne ? A periodical visitation of commercial disaster.

Such experience is well calculated to provoke doubts of the infallibility which theory arrogated to itself, and of the absurdity it imputes to practice ; to create fears lest our nationality be in danger of perishing by an error of theory, like the sick man, who by conforming to a printed prescription died of an error of the press : to arouse suspicion that this boasted theory has at- tained its large growth only for the Trojan-Horse purpose of concealing arms and soldiers, and inducing us to take down, with our own hands, the walls which protect us.

At least this truth is evinced : during the half century in which this great question of commercial policy has been dis- cussed in all civilized nations, in books and in legislative halls, by the shrewdest minds, the abyss, which, since Quesnay and Smith has separated theory from practice, not only has not dis- appeared, but has actually grown wider every year. What_kind of ^cience Js that which sheds no light upon the path which practice must follow ? Is it reasonable to suppose that the pro- fessors of this science, by the mighty power of their intelligence,

INTRODUCTION. 63

have everywhere become exactly acquainted with all that per- tains to social life and industry, whilst the men of the world, mingling freely in all the outward concerns of life, unable to comprehend the truth discovered and brought to light by the former, have continued from generation to generation to mistake evident errors for truth ? Is it not better to acknowledge that practical men, too much inclined in general to adhere to the actual, would not so long and so obstinately have resisted theory, if theory itself had not been in opposition to truth and nature. <. ,

Indeed we do not hesitate to aver that the contradiction be- tween theory and practice in regard to commercial policy, is as much the fault of theory as of J^ractice.

Political economy, in matters of international commerce, must draw its lessons from experience ; the measures it advises must be appropriate to the wants of our times, to the special condi- • tion of each people ; it must not, however, disavow the exigen- cies of the future nor the higher interests of the whole human race. Political economy must rest consequently upon Philosophy, Policy, and History.

For the interests of the future and the welfare of men, phi- losophy requires a more intimate union and communion of na- tions, a renunciation of war so far as possible, the establishment and development of international law, transition of the jus gentium to a federal law, freedom of communication among nations, as well in moral as in material concerns ; lastly, J the union of all nations under some rule of law, or in some / aspects of the subject, a universal association.

In the case of any particular people, a wise administra- tion, with extended views, pursues special objects, seeking guarantees for independence and for duration, measures cal- culated to hasten progress in civilization, well-being, and power, and to improve social condition so that the body politic shall be completely and harmoniously developed in all its parts, perfect in itself, and politically independent.

History, for its part, assists in no equivocal manner in pro- viding for the exigencies of the future, by teaching how, in every epoch, progress, material and intellectual, has kept pace with

64 INTRODUCTION.

the extent of political association and commercial relations. But it justifies at the same time the exigencies of government and nationality, showing how nations have perished for not having sufficiently watched over the interests of their culture and power ; how a commerce entirely free with nations more ad- vanced has been of advantage to those still in the first phases of their development ; also how those which had made some pro- gress have been able by proper regulations in their foreign trade, to make still greater progress and to overtake those which had preceded them. History thus shows the way of reconciling the ^respective exigencies of philosophy and government.

But practice and theory, such as actually exhibited, take their sides, the former exclusively for the particular exigencies of nationality, the latter for the absolute requirements of cosmopolitism.

That practice, which is called by the theorists the mercantile system, commits the grave error of maintaining the universal utility and necessity of restrictions, because they have been useful and necessary in certain nations and in certain periods of their development. Its votaries fail to see that restrictions are but means, and that liberty, in its proper sense, is the end. Considering the nation by itself, and not humanity at large, the present alone, and not the future, it is exclusively political and national ; it has no philosophical comprehension, no cosmo- politan tendency.

The prevailing theory, on the contrary, as it has been sug- gested by Quesnay, and elaborated by Adam Smith, is exclu- sively preoccupied with the cosmopolitan exigencies of even the most remote future. Universal association and abso- \ lute free trade, may possibly be realized centuries hence ; their theory regards them as realizable now. Overlooking the necessities of the present and the idea of nationality, they lose sight of the nation, and consequently of the education of a nation with a view to its independence. In its exclusive cosmopo- litism, this theory always regards the whole family of nations, the well-being of the whole race, never the nation nor national prosperity; it abhors government, it condemns experience and

A

hA

INTRODUCTION. 65

practice as mere routine. Not considering historical facts, ex- cept so far as they respond to its particular tendencies, it knows not or disfigures the lessons of history which are opposed to its system ; it is under the necessity of denying the effects of the Aj3i jiLJSaxigation, of the Treaty of Methuen, of the commer- t— cial policy of England in general, and of maintaining against all truth that England has arrived to wealth and power in spite of that policy and not by it.

Once fully acquainted with what is exclusive in the one or in the other of these systems, we cannot be astonished if, in spite of its grave errors, practice has not acquiesced in any reform proposed by theory ; and we shall comprehend why theory has not been willing to heed the voice of history or of experience, or of government, or of any particular nation. If this vague theory has been proclaimed in all our streets and upon the house-tops, and especially among the nations of which it has most endangered the existence, it may account for the decided propensity of the age for philanthropic experiments and the the study of philosophical problems.

But in the life of nations, as well as in that of individuals, there are two powerful remedies for the illusions of ideology, experience and necessity. If^e_mistakje not, the nations wrhich recently hoped to find their advantage in free trade with the great manufacturing and trading powers, are on the verge of / important experiences.

It is merely impossible for the United States, if they perse- vere in their actual commercial system, to maintain even tolerable order in their national economy. There is no effective remedy but a return to the doctrine of protecting their own industry. In vain will the States of the South resist and a dominant party object : the power of events must prevail. We fear that soon or late, war will solve a question which proves a Gordian knot for legislatures. America may possibly pay a future balance *s with powder and lead ; the prohibitions which must accompany war may remedy a defective tariff, and the conquest of Canada may for ever terminate the vast system of English contraband traffic announced by Huskisson. 5

66 INTRODUCTION.

/ ( Would we were mistaken ! but if our prophecy should be ful- rS ") filled, the theory of free trade must be made accountable for (^that war.* Strange irony of fate ! if a theory, based upon the . grand idea of an everlasting peace, should kindle war between two nations so well fitted, according to theorists, for mutual trade, it would only be comparable with that philanthropic abo- lition of the slave trade by which thousands of negroes were doomed to the bottom of the sea.f

In the course of the fifty, or rather, of the last twenty-five years (for it is difficult to take into account the period of revo- lution and war), France has resorted, upon a grand scale, to the system of restriction, with its errors, its exuberances, and its exaggerations. Its success is obvious to every observer. The- ory may question it, nay, it must question it, unless it be incon- sistent with itself. If it has had the boldness to assert and to persuade the world that England has become rich and powerful in spite of, and not in virtue of her commercial policy, how can it hesitate to maintain a position much easier of proof, that is, that without protection for her manufactures, France would be

* Our Author is not the only political economist who has ventured this prediction. Who can say that it would not have been verified but for the important events now transpiring in Europe. Indications of quarrel are not wanting. — S. C.

t Would it not have been more appropriate to take this occasion to re- commend to planters a slavery less severe, the yielding to slaves some portion of the soil they cultivate, a certain degree of personal liberty ; in a word, the establishment of a servitude softened by the prospect of future emancipation, and the gradual preparation of the negro for the plenitude of liberty? Were the negroes less slaves in Africa than they are in the American plantations ? Is the transition from a state of nature to a state of civilization possible for a barbarous people without some intermediate rigorous discipline ? Is it possible by acts of parliament to transform the black slaves of the West Indies into free laborers ? Have men been trained in that way in the past history of the world for liberty and labor ? The Eng- lish are no such strangers to the history of civilization as not to have con- sidered that question satisfactorily for themselves long since. It is evident that what they have done and what they are doing for the abolition of slavery has had very different motives from those of pure philanthropy, as we shall yet have occasion to show. — H. R.

INTRODUCTION. 67

incomparably richer and more flourishing than she is at this mo- ment. Although enlightened and experienced statesmen deny the correctness of this conclusion, many reputed to be well- informed and judicious, receive it for sound doctrine ; and, truth to say, in France at this very hour, not a few seem to sigh for the blessings of free trade with England. It would be difficult to dispute, and upon that subject we shall go into some details hereafter, that greater activity in their commercial relations must prove in many respects an advantage to both nations. It is, however, obvious that England desires an exchange, not merely of raw materials, but rather a trade by which she may furnish a great quantity of manufactured goods of general con- sumption, in exchange for the agricultural products and the fancy goods of France. If the government of France is dis- posed to come into these views, if it is in fact yielding to them, it is certainly not anxious to let it be known. But if in the end it does adopt this English doctrine, it will only thereby fur- nish one more experiment towards the solution of this great, question. In the actual state of things, can two great manu- facturing nations, one of which has decidedly the advantage of the other as to the cost of production and in the extent of its external market, freely compete with each other in their respec- tive home markets ? And what must be the results of such a^, competition ?

In Germany these questions have become, in consequence of the Zollverein or Customs-Union, national and practical ques- tions. Whilst in France wine is the attraction which tempts England to seek a commercial treaty, in Germany wheat and timber furnish the temptation. Here, however, all is still hy- pothesis, for it cannot actually be ascertained whether the too selfish tories of England can ever be induced to make such concessions as will enable their own government to effect an arrangement with the German Customs-Union securing the admission into Great Britain of corn and timber from Germany. The Germans are, however, sufficiently advanced in commercial matters to regard as ridiculous, if not impertinent, the supposition that they would be satisfied with illusions and

X

68 INTRODUCTION.

hopes in the place of gold and silver money. Should such concessions be made by the British Parliament, very serious questions of commercial policy would become immediately in Germany matter of public discussion. The last report of Dr. Bowring * has given us a foretaste of the tactics which England would adopt in such a case. England will not regard the admis- sion of German corn and timber as an equivalent for the exorbitant advantages which her manufactured products now enjoy in the German markets ; nor as a means of preventing Germany from learning by degrees to spin her own cotton, and to import it directly for that purpose from cotton-growing countries, exchanging for it the products of her own manufac- tures ; nor as a method of reforming the enormous disproportion existing between the importations and exportations of both countries. By no means ! England regards the export to Germany of cotton-yarn as an acquired privilege ; she will claim a new equivalent for her concessions, nothing less than the sacrifice of the German manufactures of cotton, wool, &c. England will offer for admission of German corn and timber into her markets a mess of pottage, as a price, not merely for the renunciation of the birth-right of the infant German industry, but as a price for strangling it in the cradle. If Dr. Bowring was not deceived during his stay in Germany, if, as we strongly surmise, he has not taken too much in earnest the Prussian courtesy which was lavished upon him, the people in those regions, where the policy of the German Customs-Union is elaborated, are still in the tracks of the cosmopolitan theory. There is, for instance, no distinction made between the exporta- tion of manufactured and of agricultural products; they believe they are promoting national interests by developing the latter at the expense of the former ; they have not yet compre- hended the principle of the industrial training or education of the country as a basis for the regulation of duties ; they scruple not to sacrifice to foreign competition manufactures, which, after enjoying protection for several years, and flourishing sufficiently

* The reader will find in the second Chapter of the Fourth Book an explanation of the allusions to Dr. Bowring.

INTRODUCTION. 69

to beget internal competition and a consequent large reduction of prices, they suffer to be destroyed, and with them the spirit of enterprise in Germany, in its germ. Every manufacture ruined by the reduction or withdrawal of protection, and especially by a governmental measure, is a dead body so exposed as to injure every living industry of the same kind. We cannot shut our eyes to such facts, let us give them rather our earnest atten- tion; it is an evil that they have been, that they could be made public ; for by shaking confidence in the permanence of needful protection, no light blow has fallen upon the indus- trial energy of the country. We are thus shown in what mode German manufactures may receive the deadly poison in such manner as not to reveal too distinctly the cause of their destruc- tion. This is a sure method of attacking industry in the very sources of its life. Under this mode of attack, duties by weight (specific) would give place to duties ad valorem, which opens the door to English smuggling, and to frauds in the valuation of articles of general consumption having the least relative value and the greatest total bulk, being the very articles which form the basis of manufacturing industry.

The practical importance of the great question of free trade between nations is generally felt in our day, as also the necessity of investigating, with impartiality, once for all, how far theory and practice have erred on this subject, and how far any recon- ciliation between them is possible. It is at least needful to discuss seriously the problem of such a reconciliation.

It is not indeed with any assumed modesty, it is with the feeling of a profound mistrust of his power, that the author ventures upon this attempt ; it is after resisting many years his inclination, after having hundreds of times questioned the correctness of opinions and again and again verifying them ; after having frequently examined opposing opinions, and ascer- tained, beyond a doubt, their inaccuracy, that he determined to enter upon the solution of this problem. He believes himself free from the empty ambition of contradicting old authorities and propounding new theories. If the author had been an I Englishman, he would probably never have entertained doubts J

70 INTRODUCTION.

of the fundamental principle of Adam Smith's theory. It was the condition of his own country which begot in him, more than twenty years since, the first doubts of the infallibility of that theory ; it was the condition of his country which, since that time, determined him to develop, first in anonymous arti- cles, then in more elaborate treatises, not anonymous, contrary opinions. At this moment, the interests of Germany alone give him the courage to publish the present work; he will however not dissemble, that a personal motive is connected with those interests ; that is, the necessity in which he is placed of showing by a treatise of some extent, that he is not quite incompetent to treat of political economy.

The author will begin, as theory does not begin, by interro- gating History, and deducing from it his fundamental principles ; this being done, an examination of former systems will follow, and his tendency being especially practical, he will, in conclu- sion, furnish a sketch of the later phases of commercial policy.

For greater clearness, we give here a cursory view of the principal results of his researches and meditations :

The association of individuals for the prosecution of a common end, is the most efficacious mode towards ensuring the happiness of individuals. Alone, and separated from his fellow-creatures, man is feeble and destitute. The greater the number of those who are united, the more perfect is the association, and the greater and the more perfect is the result, which is the moral and material welfare of individuals.

The highest association of individuals now realized, is that of the state, the nation ; and the highest imaginable, is that of the whole human race. Just as the individual is happier in the bosom of the state than in solitude, all nations would be more prosperous if they were united together, by ]aw, by perpetual peace, and by free interchange.

Nature leads nations gradually to the highest degree of as- sociation ; inviting them to commerce by variety of climate, soil, and productions; and by overflowing population, by super- abundance of capital and talents, it leads them to emigration and the founding of distant colonies. International trade, by

INTRODUCTION. 71

rousing activity and energy, by the new wants it creates, by the propagation among nations of new ideas and discoveries, and by the diffusion of power, is one of the mightiest instruments of civilization, and one of the most powerful agencies in promoting national prosperity.

The association of nations, by means of trade, is even yet very imperfect, for it is interrupted, or at least weakened by war or selfish measures on the part sometimes of one and sometimes of another nation.

A nation may by war be deprived of its independence, its wealth, its liberty, its constitution, its laws, of its own special features, of that degree of culture and national well-being to which it may have attained ; it may be wholly enslaved. Nations are thus the victims of each other, and selfish policy is continually disturbing and delaying the economical development of nations.

To preserve, to develop, and to improve itself as a nation is consequently, at present, and ever must be, the principal object of a nation's efforts. There is in that nothing false or selfish ; it is a reasonable tendency, agreeing perfectly with the real interests of humanity ; for it leads naturally to universal asso- ciation, which is an advantage to men, so far as nations have reached the same degree of culture and power, and, consequently, so far as it may be realized, by way of association or confedera- tion.

A universal association, proceeding from the overbearing influence and wealth of a single nation, based, consequently, upon the subjection and dependence of all others, would result in the annihilation of separate nationalities, and national emulation ; it would hurt the interests and wound the feelings of nations which deem themselves on the way to independence and the attainment of great wealth, as well as of high political importance ; such an association would be only a repetition of what has already oc- curred in the attempt to subjugate the world, made by the Romans ; an attempt that would be more successful in our days, \ by means of manufactures and commerce, instead of, as formerly, by the sword ; though either mode would restore the world to barbarism.

72 INTRODUCTION.

The civilization, political education and power of nations, depend chiefly on their economical condition and reciprocally ; the more advanced their economy, the more civilized and pow- erful will be the nation, the more rapidly will its civilization and power increase, and the more will its economical culture be developed.

In the economical development of nations, it is necessary to distinguish the following principal stages : the savage state, the pastoral state, the agricultural state, the agricultural and manufacturing state, and finally, the agricultural, manufac- turing, and commercial state.

It is obvious that a nation possessing an extensive territory, enriched with varied resources and a numerous population, uniting agriculture and manufactures with an external and internal trade, is beyond comparison more civilized, politically more developed and more powerful than any merely agricultural country. But manufactures constitute the basis of external and internal trade, of navigation, of an improved agriculture, con- sequently of civilization and political power ; and should any nation succeed in monopolizing all the manufacturing activity of the world, and in checking all other nations in their economical development by reducing them to the mere produc- tion of agricultural commodities and raw materials, and other indispensable local productions, it would undoubtedly attain to * ! very wide, if not to universal dominion.

A nation that greatly values its independence and its safety, must make a vigorous effort to elevate itself as fast as possible, from an inferior to a higher state of civilization, uniting and perfecting as quickly as possible, its own agriculture, manufac- tures, navigation, and commerce.

The transition from the savage to the pastoral, and from the pastoral to the agricultural state, as well as the first progress in agriculture, is very efficiently promoted by free intercourse among manufacturing and commercial nations.

The elevation of an agricultural people to the condition of countries at once agricultural, manufacturing, and commercial, can only be accomplished under the law of free trade, when the

INTRODUCTION. 73

various nations engaged at the time in manufacturing industry shall be in the same degree of progress and civilization ; when they shall place no obstacle in the way of the economical development of each other, and not impede their respective progress by war or adverse commercial legislation.

But some of them, favored by circumstances, having dis- tanced others in manufactures, commerce, and navigation, and having early perceived that this advanced state was the surest mode of acquiring and keeping political supremacy, have adopted and still persevere in a policy so well adapted to give them the monopoly of manufactures, of industry and of commerce, and to impede the progress of less advanced nations or those in a lower degree of culture. The measures enforced by such nations, taken as a whole, the prohibitions, the duties on imports, the maritime restrictions, premiums upon exports, &c, are called the protective system.

The anterior progress of certain nations, foreign commercial legislation and war have compelled inferior countries to look for special means of effecting their transition from the agricultural to the manufacturing stage of industry, and as far as practi- cable, by a system of duties, to restrain their trade with more advanced nations aiming at manufacturing monopoly.

The system of import duties is consequently not, as has been said, an invention of speculative minds ; it is a natural conse- quence of the tendency of nations to seek for guarantees of their existence and prosperity, and to establish and increase their weight in the scale of national influence.

Such a tendency is legitimate and reasonable only so far as it renders easy, instead of retarding, the economical development of a nation ; and it is not in opposition to the higher objects of society, the universal confederation of the future.

As human association ought to be considered under two points of view, that is to say, the cosmopolitan, embracing all the human race, and the political or merely national, every economy, private or public, ought to be considered under two different aspects, the individual, social and material power, by means of

74 INTRODUCTION.

•which, riches are produced, and the interchangeable value of the products of industry.

There is, consequently, a cosmopolitan economy and a political economy, a theory of interchangeable value, and a theory of pro- ductive power. These doctrines are distinct in their essence, and require to be developed separately.

The productive power of nations is not solely dependent on the labor, the saving, the morality, and the intelligence of individuals, or on the possession of natural advantage and material capital ; it is dependent also upon institutions and laws, social, political, and civil, but, above all, on the securities of their duration, their independence, and their power as nations. Individuals would be in vain laborious, economical, ingenious, enterprising, intelli- gent, and moral, without a national unity, without a division of labor and a co-operation of productive power. A nation cannot otherwise attain to a high degree of prosperity and power, nor maintain itself in the permanent possession of its intellectual, social, and material riches.

The principle of the division of labor has been hitherto but imperfectly understood. Industrial production depends much less on the apportioning of the various operations of a manufac- ture among several individuals, than on the moral and material association of those individuals for a common end.

This principle applies not only to a manufacture or to a rural industry; it extends also to every kind of national industry, agricultural, manufacturing, and commercial.

The division of labor and the combination of productive power take place in a nation when the intellectual power is applied so as to co-operate freely and efficiently with national production, when manufacturing industry and trade are equally and har- moniously developed.

A merely agricultural people in free intercourse with manu- facturing and trading nations, will lose a considerable part of their productive power and natural resources, which must remain idle and unemployed. Its intellectual and political culture, and its means of defence, will thus be limited. It can possess neither an important navigation, nor an extensive trade; its prosperity,

INTRODUCTION. 75

as far as it results from external commerce, may be interrupted, disturbed, or annihilated by foreign legislation or by war.

On the other hand, manufacturing industry is favorable to science, art, and political progress ; it promotes the general wel- fare, increases population, public revenue, and the power of the country ; it enables the latter to extend its influence to all parts of the world, and to found colonies ; it sustains fisheries and navies, mercantile and national. By it only, can agricul- ture rise to any high degree of efficiency and perfection.

Agriculture and manufacturing industry united in the same nation, under the same political power, live in perpetual peace ; they are disturbed in their reciprocal action, neither by war, nor by foreign legislation ; they ensure to a nation the continued development of its prosperity, civilization, and power.

Agriculture and manufacturing industry are subjected by nature to special conditions.

The countries of the temperate zone are especially fit for the development of manufacturing industry ; for the temperate zone is the region of intellectual and physical effort.

If the countries of the torrid zone are little favored in refer- ence to manufactures, they possess, on the other hand, the natural monopoly of many precious commodities which the in- habitants of the temperate climates greatly prize. The exchange of the manufactured products of the one for the commodities of the other, constitutes a division of labor and a co-operation of productive power throughout the chief commercial nations, and mainly constitutes the great international trade of the world.

A country of the torrid zone would make a very fatal mistake, should it try to become a manufacturing country. Having received no invitation to that vocation from nature, it will progress more rapidly in riches and civilization if it continues to exchange its agricultural productions for the manufactured products of the temperate zone.

It is true that tropical countries sink thus into dependence upon those of the temperate zone, but that dependence will not be without compensation, if competition arises among the nations of temperate climes in their manufacturing industry in their

76 INTRODUCTION.

trade with the former, and in their exercise of political power. This competition will not only ensure a full supply of manufac- tures at low prices, but will prevent any one nation from taking advantage by its superiority over the weaker nations of the torrid zone. There would be danger and damage in this de- pendence only so far as manufactures, important branches of trade, foreign commerce, and maritime power should become the monopoly of a single nation.

Nations of the temperate zone possessing extensive territory enriched with varied resources, have lost one of the richest sources of prosperity, civilization and power, if they do not succeed in realizing a national division of labor and a co-ope- ration of national productive power, as soon as they possess the necessary conditions, economical, intellectual, and social, for accomplishing it.

By economical conditions, we understand an advanced stage of agriculture, which cannot be sensibly stimulated by the export of its products ; by moral conditions, a high moral culture among individuals ; by social conditions, we mean legal security to citizens for their persons and properties, and the free exercise of their moral and physical faculties; institutions regulating and facilitating trade, and suppressing all restraints upon industry, liberty, intelligence, and morality, as for instance, feudal institutions.

It is of the utmost concern for a nation uniting such advan- tages, first fully to supply its own wants, its own consumption, with the products of its own manufactures, then to form direct connections progressively with the countries of the torrid zone, transmitting to them, upon its own vessels, its manufactured products, receiving in exchange their commodities.

In comparison with this exchange of the manufactured pro- ducts of the temperate, for the agricultural productions of the torrid zone, other international trade is of a secondary import- ance, if we but except the trade in a few special articles ; wine, for instance.

The production of raw materials and commodities among the great nations of temperate climes, has no real importance but in

INTRODUCTION. 77

regard to internal trade. An uncultivated nation may at the beginning advance its agriculture by the exportation of wheat, wine, flax, hemp, and wool ; but no great nation ever arrived at wealth, civilization, and power, by such policy.

It may be stated as a principle, that a nation is richer and more powerful, in proportion as it exports more manufactured products, imports more raw materials, and consumes more tropical commodities.

Productions of the tropics serve to manufacturing countries of temperate climes, not only as raw materials and alimentary commodities, but also, and especially, as stimulants for agricul- tural and industrial labor. The nation which consumes the greatest quantity of tropical commodities, will always be that of which the agricultural and manufacturing production is rela- tively the most considerable, and that which consumes the greatest quantity of its own products.

In the economical development of nations by means of external trade, four periods must be distinguished. In the first, agricul- ture is encouraged by the importation of manufactured articles, and by the exportation of its own products ; in the second, manufactures begin to increase at home, whilst the importation of foreign manufactures to some extent continues ; in the third, home manufactures mainly supply domestic consumption and the internal markets ; finally, in the fourth, we see the exporta- tion upon a large scale of manufactured products, and the importation of raw materials and agricultural products.

The system of import duties being considered as a mode of assisting the economical development of a nation, by regulating its external trade, must constantly take as a rule the principle of the industrial education of the country.

To encourage agriculture by the aid of protective duties is

- -

vicious policy ; for agriculture can be encouraged only by pro- moting manufacturing industry ; and the exclusion of raw materials and agricultural products from abroad, has no other result than to impede the rise of national manufactures.

The economical education of a country of inferior intelligence and culture, or one thinly populated, relatively to the extent

78 INTRODUCTION.

and the fertility of its territory, is effected most certainly by free trade, with more advanced, richer, and more industrious nations. Every commercial restriction in such a country aim- ing at the increase of manufactures, is premature, and will prove detrimental, not only to civilization in general, but the progress of the nation in particular. If its intellectual, political, and economical education, under the operation of free trade, has advanced so far, that the importation of foreign manufactures, and the want of markets for its own products has become an obstacle to its ulterior development, then only can protective measures be justified.

A nation without extensive territory and of otherwise limited resources, which does not control the mouths of its rivers, or which has not suitable boundaries, cannot resort to the protective system, or at least cannot employ it with full success. It must be first enlarged by way of conquest or negotiation.

Manufacturing industry is concerned with so many branches of science and art, it implies so much experience, practice, and adaptation, that the industrial training and education of a country can proceed but slowly. All excessive or premature protection is expiated by a diminution of national prosperity.

No commercial policy is more dangerous and reprehensible than a sudden resort to absolute prohibition of foreign products. It may, however, be justified, when a country, separated from others by a long war, finds itself almost in a compulsory state of prohibitions in regard to foreign products, and under the absolute necessity of offering a high premium to the industry which will enable it to supply its own wants.

The return from such a condition must be by gradual transi- tion from the prohibitive to the protective system, and should be effected by means of duties fixed by anticipation, and de- creasing gradually. On the other hand, a nation which is to pass from free trade to the . protective system should commence with low duties to be afterwards raised by degrees according to a suitable scale.

Duties thus fixed by anticipation must be strictly maintained by the government ; it must be careful not to diminish them

INTRODUCTION. 79

before the appointed time, and equally careful to raise them if they should prove insufficient.

Duties upon imports so high as absolutely to exclude foreign competition are prejudicial to the country which adopts them ; for they suppress all rivalry between domestic and foreign manufacturers, and encourage indolence among the former.

When, under the rule of suitable and progressive duties, the manufactures of a country do not thrive, it is an evidence that the country does not yet possess the conditions requisite to a manufacturing people. *

Duties designed to favor an industry should never be put so low as to endanger the existence of the latter from foreign com- petition. It should be a rule to preserve what exists — to protect national industry in its trunk and in its roots.

Foreign competition should not have more than its share in the annual increase of consumption. Duties should be raised when foreign commodities supply the greatest part or the whole of the increased annual consumption.

A country like England, which is far in advance of all its competitors, cannot better maintain and extend its manufac- turing and commercial industry than by a trade as free as possible from all restraints. For such a country, the cosmopoli- tan and the national principle are one and the same thing.

This explains the favor with which the most enlightened economists of England regard free trade, and the reluctance of the wise and prudent of other countries to adopt this principle in the actual state of the world.

A quarter of a century since, the prohibitive and protective system of England operated to her detriment and to the advan- tage of her rivals.

Nothing could be more prejudicial to England than her restrictions upon the importation of raw material and food.

Union of customs and commercial treaties are the most effi- cient means of facilitating national exchanges.

But treaties of commerce are legitimate and durable only when the advantages are reciprocal. They are fatal and illegitimate when they sacrifice one country to another ; when one country,

80 INTRODUCTION.

to purchase advantage for its agriculture, sacrifices a manu- facturing industry already well advanced; such a treaty was that of Methuen, a compact in which one party took the lion's

share.

The treaty concluded between England and France in 1786 was one of those leonine treaties. And all the propositions made since by England and France to other countries are of the same nature.

If protective duties enhance for a time the price of domestic manufactures, they secure afterwards lower prices by means of internal competition; for an industry that has reached its full development can safely reduce its prices far below those which were necessary to ensure its growth, and thus save to its consumers the whole expense of transportation and the whole profits of trade, which are consequent upon imports of the same articles from other countries.

The loss occasioned by protective duties consists, after all, only in values ; whilst the country thus acquires a power, by which it is enabled to produce a great mass of values. This loss in values must be considered as the price of the industrial training of the country.

Protective duties upon manufactured products do not press heavily upon the agriculture of a country. By the development of manufacturing industry, the wealth, population, consumption of agricultural products, rent, and exchangeable value of real estate are vastly increased, whilst the manufactured products consumed by farmers gradually fall in price. The gain, thus realized, exceeds, in the proportion of ten to one, the loss which agriculturalists incur by the transient rise of manufactured products.

Internal and external trade flourish alike under the pro- tective system; these have no importance but among nations supplying their own wants by their own manufacturing industry, consuming their own agricultural products, and purchasing foreign raw materials and commodities with the surplus of their manufactured articles. Home and foreign trade are both insig- nificant in the merely agricultural countries of temperate climes,

INTRODUCTION. 81

and their external commerce is usually in the hands of the manufacturing and trading nations in communication with them.

A good system of protection does not imply any monopoly in the manufacturers of a country ; it only furnishes a guarantee against losses to those who devote their capital, their talents, and their exertions to new branches of industry.

There is no monopoly, because internal competition comes in the place of foreign competition, and every individual has the privilege of taking his share in the advantages offered by the country to its citizens ; it is only an advantage to citizens as against foreigners, who enjoy in their own country a similar advantage.

But this protection is useful not only because it awakens the sleeping energies of a country and puts in motion its productive power, but because it attracts the productive power of foreign countries, including capital, both material and moral, and skilful masters as well as skilful men.

On the other hand, the absence of manufacturing industry in a nation long civilized, the productive powers of which cannot be sensibly excited by the export of raw materials and agricul- tural products, and, by the importation of foreign manufactures, exposes it to numerous and serious inconveniences.

The agriculture of such a country must necessarily suffer ; for the surplus population, which, in a great manufacturing develop- ment, finds means of living in factories and creates a large demand for agricultural products, thus affording substantial profits to agriculture, will be reduced to the labor of the fields, and thence will follow a subdivision of farms and a small culture, both as prejudicial to the power and the civilization of a country as to its wealth.

An agricultural people consisting chiefly of proprietors of small estates, can neither fill the channels of internal trade with large quantities of commodities, nor furnish a large consumption for manufactured goods ; in such a country, every one is limited almost to his own production and his own consumption. In cir- cumstances like these, no complete system of communications can 6

82 INTRODUCTION.

be established, and the immense advantages which they afford are lost to the country.

Hence ensues necessarily, moral and material, individual and political weakness. The danger is aggravated when neighbor- ing nations pursue a different policy : some making progress in every respect, others retrograding ; some hoping for a brighter future, the courage and enterprise of their people being aroused ; the absence of hope extinguishing by degrees in others all courage, intelligence, and enterprise.

History is not without examples x)f entire nations having perished, because they knew not and seized not the critical moment for the solution of the great problem of securing their moral, economical, and political independence, by the establish- ment of manufacturing industry, and the formation of a powerful class of manufacturers and tradesmen.

NATIONAL SYSTEM

OP

POLITICAL ECONOMY. BOOK L— HISTOEY.

CHAPTER I.

ITALY.

At the revival of civilization in Europe, no country was more favored as to commerce and manufactures than Italy. Barbarism had not wholly rooted up the culture of ancient Rome. A pro- pitious climate and a fertile soil, even with an unskilful agricul- ture, furnished abundant sustenance for a numerous population. The more necessary arts and trades had no more disappeared than the old Roman municipalities. A productive coast fishery was a good school for seamen, and the navigation of an extended coast supplied, in a good degree, the want of better communica- tions in the interior. The vicinity of Greece, Asia Minor, and Egypt, and the facility of communication by sea with those coun- tries, secured to Italy considerable advantages for the trade of the East, a trade which formerly, though upon a small scale, had been carried on through Russia and by a northern route. With these advantages, Italy became necessarily conversant with those arts and manufactures which Greece has saved from ancient civilization.

Since the emancipation of the Italian cities by Otho the Great, a truth, of which history offers many proofs, had received fresh confirmation, that liberty and industry are inseparable com- panions, though it be not rare that one is born before the other.

(83)

84 HISTORY.

Where commerce and industry appear, we may be sure that liberty is not far off; where liberty unfurls her flag, it proves a sure harbinger of industry. For it is in the nature of things, that men who have achieved the possession of material and moral benefits, seek guarantees for the transmission of these benefits to their posterity ; so, after having enjoyed liberty, they exert themselves earnestly to improve their moral and material condition as the natural impulse of freedom.

For the first time since the fall of the free cities of antiquity, the Italian cities gave to the world the spectacle of free and rich communities. Cities and countries united their efforts fox* mutual advantage, and were greatly aided in their labors by the crusades. The transportation of the crusaders and their sup- plies, not only promoted navigation, but stimulated the establish- ment of profitable commercial relations with the East, the intro- duction of new manufactures, new processes, new plans, and the knowledge of new sources of enjoyment. On the other hand, the oppression of the feudal system was to some extent removed, to the great benefit of free agriculture, and to the marked advantage of the cities.

As compared with Venice and Geneva, Florence became distinguished especially for its manufactures and its operations in money and exchange. From the twelfth and thirteenth centuries its manufactures of silk and woollen goods were flour- ishing; the corporations which carried on those industries had their share in the government; the republic itself was formed under their influence.

The woollen manufacture employed no less than 200 factories ; 80,000 pieces of cloth, the raw material of which was imported from Spain, were manufactured there every year. Common cloths were also imported into Florence to the annual value of 300,000 gold florins from Spain, France, Belgium, and Ger- many, which, after being dressed in her factories, were sent to the East. Florence was the banker of all Italy, there being no less than 80 banks. The State had a yearly income of 300,000 golden florins, [$5,000,000], and was much richer than the co-

ITALY. 85

temporary kingdoms of Naples and Arragon, and than Great Britain and Ireland at the time of Queen Elizabeth.

In the twelfth and thirteenth centuries, Italy possessed all the elements of national prosperity ; commerce and industry were there greatly in advance of all other countries. Her agri- culture and manufactures were models for imitation and emula- tion among other nations. Her roads and canals were the most perfect then existing in Europe. The civilized world is indebted to Italy for banks, for the compass, for improvements in naval construction, for bills of exchange, and for a multitude of valu- able regulations and commercial laws, as well as for innumerable municipal and political institutions. Her merchant marine and her navy were by far the most considerable in the Southern Seas. The trade of the world was in her hands ; for, except a movement of business, still unimportant, in the Northern Seas, that trade did not extend beyond the Mediterranean and Black Seas. Italy supplied all other countries with manufactured articles and superfluities as well as with tropical commodities, and received from them raw materials. She lacked only one thing to be what England has become in our days, and in default of that one thing all the rest was lost ; she lacked national unity, and the power which this unity gives.

The cities and the lords of Italy did not regard themselves as members of one and the same body ; they battled against and destroyed one another as if they were independent powers. Be- sides those external contests, each commune was a prey to intes- tine struggles between democracy, aristocracy, and monarchy. Those calamitous wars were stimulated, kept up, and envenomed by the influence and the invasions of foreign powers, as well as by their domestic theocracy and its fulminations, which still divides each city into two hostile factions.

Italy achieved her own ruin ; the history of her maritime power furnishes the evidence. From the eighth to the eleventh century Amalfi flourished in wealth and power. i Her ships swarmed upon the seas, and her money circulated almost exclusively in Italy and in the East. The maritime code of Amalfi was in very high esteem, and being Tegarded as among

86 HISTORY.

the best extant, it was adopted in all the ports of the Mediterra- nean. In the twelfth century this maritime power was destroyed by Pisa, which in turn fell beneath the power of Genoa, and Genoa, after a severe struggle, was compelled to yield to Venice.

The fall of Venice shows also an indirect consequence of this narrow policy. It would have been easy for a league of the maritime powers of Italy to have maintained Italian pre- ponderance in Greece, in the Archipelago, in Asia Minor, and in Egypt; nay, even to have enlarged and strengthened this ascendency, to have arrested the progress of the Turks and their piracies, to have disputed with the Portuguese the new route to the Indies by the Cape of Good Hope. But in the actual circumstances, Venice was reduced to her unaided strength, and was paralysed without, not only by the other Italian states, but by the neighboring European powers.

It would not have been difficult for a well-organized league of the Italian continental powers to have defended the indepen- dence of Italy against the greatest monarchies of the time. The establishment of such a league was attempted in 1526, but in a moment of danger, and only for the purpose of temporary de- fence. The lukewarmness and treason of its members and its chiefs resulted in the growth of the Milanese, and the fall of the Tuscan republic. From that moment may be dated the decline of commerce and industry in Italy.

Before, as well as after that time, Venice had aimed to be an independent nation. So long as she had to do only with the fragments of Italian nationality, or with defunct Greece, she could maintain, without serious trouble, her manufacturing and commercial supremacy along the shores of the Mediterranean and Black Seas. But when whole nations full of vigor, appeared upon the political arena, it was discovered that Venice was but a city, and its aristocrary only a municipal aristocracy. Venice had indeed subjugated many islands and vast provinces, but she had always governed them as conquered countries, and each of her conquests, according to the testimony of history, had been a source of weakness and not of strength.

The spirit to which Venice owed her grandeur was at the

ITALY. 87

same time gradually extinguished in the heart of the republic. Her power and her prosperity, the work of a patriotic and brave aristocracy, itself the product of an energetic democracy, jealous of its liberty, endured and increased, so long as this liberty retained its democratic energy, and so long as this energy was directed by the patriotism, wisdom, and heroism of the aristoc- racy ; but in proportion as the aristocracy degenerated into a despotic oligarchy, extinguishing all liberty, all popular energy, the roots of that power and that prosperity dried up, though the limbs and the top of the tree continued for a time to flourish.

"A nation in a state of servitude," says Montesquieu, "la- bors rather to preserve than to acquire. A free nation labors rather to acquire than to preserve." To this just remark he might have added : " And whilst people think only of pre- serving, and never of acquiring, they are overtaken by ruin ;" for a nation which does not advance, retrogrades, and must finally perish. Very far from extending their trade and making new discoveries, the Venetians had not even the sagacity to take advantage of the discoveries of the others. Excluded from the trade of the East by the discovery of a new route, they scarce so much as admitted, much less admired, the discovery. What every- body saw they refused to believe. And when they began to sus- pect the fatal consequences of the change to be accomplished, they tried to maintain the old instead of taking their share in the benefits of the new route : they employed miserable intrigues to preserve and to acquire what they could only obtain by enter- prise and courage applied to the new circumstances in which they were placed. And when, finally, they had lost every thing, when the riches of India flowed into Cadiz and Lisbon, and not into their port, they betook themselves, like idlers and spendthrifts, to alchemy.*

When the republic of Venice was in a condition of progress and prosperity, an inscription in the Golden Book was considered as a reward for eminent services in commerce, industry, govern-

* A vulgar charlatan, who pretended to the art of making gold, was re- ceived by the aristocracy as a Saviour. Daru, History of Venice, vol. iii., chap. xix.

88 HISTORY.

ment, or in war ; this honor was accessible, upon these terms, to foreigners, the most distinguished of the silk manufacturers, who emigrated from Florence, having obtained that favor. But the book was shut when people began to regard public distinc- tions and the public revenue as the hereditary patrimony of the patricians. Later, when the necessity of restoring an effete and degenerate nobility was admitted, the book was again opened. Public services were no longer regarded as the principal titles to an inscription, but wealth and ancient origin. Under this policy the golden book fell into such discredit, that it remained uselessly open for a century.

If we should interrogate history as to the causes of the fall of that republic and its trade, the answer would be, that the principal causes were the folly, inactivity, and want of energy in a degenerate aristocracy, the apathy of a nation sunk into the condition of servitude. The trade and the manufactures of Venice must have perished, even if the route by the Cape of Good Hope had never been discovered.

The fall of Venice, as well as that of all the other Italian republics, is also explained by the want of national unity, by foreign preponderance, by the pressure of the Romish Church, and by the establishment in Europe of vast, powerful, and compact nationalities.

If we study -specially the commercial policy of Venice, we perceive at once that the policy of modern manufacturing and commercial nations is, upon a large scale, or, in national propor- tions, little else than the adoption of the Venetian policy. Maritime restrictions and import duties favored the ship-owners and manufacturers of the country ; and we find that even then the rule prevailed of importing raw materials and exporting manufactured products.

It has been recently asserted, in support of the principle of absolute free trade, that the fall of Venice was caused by com- mercial restrictions. This proposition contains a little truth mingled with much error. Whoever studies without prejudice the history of that republic, will find that there, as in greater nations, international trade — whether with or without restric-

ITALY. 89

tions, has proved advantageous or injurious to public power and prosperity, according to the peculiar circumstances of the time.

Unlimited free trade was the true policy of the republic in the first period of its elevation, for otherwise how could a hamlet of fishermen become a commercial emporium ? Restrictions became advantageous to Venice after she had attained a certain degree of power and wealth ; for by them she attained her manufacturing and commercial supremacy. Restrictions became injurious after she had reached this ascendency ; for they removed all rivalry between her citizens and those of foreign countries, and thus destroyed the stimulus to excellence and industry. It was therefore not the establishment of such restric- tions, it was" rather persevering in them after they had ceased to be applicable, which was- prejudicial to the Venetians.

That proposition was false also in this respect, that it left out of view the great hereditary monarchies. Although maintaining rule over provinces and islands, Venice was still but an Italian city ; she had encountered in her growth only other cities of Italy, and her exclusive commercial policy could only extend so long as it remained unchecked by more powerful nations. When this event began to be realized, Venice could only pre- serve her supremacy by placing herself at the head of the whole of Italy, and extending her commercial policy over the whole peninsula. It was not possible to maintain for a very long period any system embracing the commercial supremacy of a single city, however skilfully devised, as against all other nations.

The example of Venice, so far as it can be invoked against the restrictive system, proves only this, neither more nor less, that an isolated city or a small state, as against great empires, cannot apply or maintain beneficially that system, and that a power having once, by the help of restrictions, attained manu- facturing and commercial ascendency, must return to the principle of free trade as soon as it becomes safe to do so.

We meet in this, as in all discussions upon this subject of international free trade, a confusion of ideas, productive of grave mistakes. Commercial liberty is spoken of in the same terms as religious and civil liberty. The friends and champions of

90 HISTORY.

liberty in general, regarding themselves as the defenders of liberty under all its forms and names, rally to the defence of liberty of trade, making no distinction between the liberty of domestic trade, and that of international trade ; both of which, in their essence and in their results, differ widely from each other. For if restraints upon international trade are but in a very few cases compatible with individual liberty, the highest degree of individual liberty is not incompatible in foreign trade with heavy restrictions. It may even happen that foreign commerce wholly free may lead to national servitude, as we intend to show in the instance of Poland.

It is in this sense that Montesquieu says : " It is in free countries that men of trade encounter innumerable obstacles ; they are never less hampered by laws than in countries not. free."*

CHAPTER II. HANSE TOWNS.

Having attained ascendency in Italy, the genius of industry, of commerce, and liberty, passed the Alps, traversed Germany, and constructed for itself a new throne upon the shores of the Northern Sea.

Henry the First, the father of the liberator of Italian Com- munes, had already encouraged the building of new, and the enlargement of existing cities, some of which were built upon the very sites of Roman colonies or upon imperial domains.

He and his successors, and later, the Kings of France and England, found cities to be the most effectual counterpoise of the aristocracy, the most fertile source of public revenue, and a new means of public defence. By commercial relations with the cities of Italy, by emulation of Italian industry and

* Spirit of Laws ; Book xs., chap. xii.

HANSE TOWNS. 91

free institutions, the German cities soon reached a high degree of prosperity and civilization.

Municipal life gave birth to a spirit of progress in the arts, and to the desire of becoming distinguished by wealth and enterprise at the same time that material well-being gave origin to a desire for political ameliorations.

The maritime cities of Northern Germany, strong as they were with their rising liberty and their flourishing industry, were soon obliged to conclude a close defensive alliance to protect themselves from brigands who disturbed their trade by land and by sea. With this view, Hamburg and Lübeck formed in 1241 a league, which, in the course of that century, united all the cities of any importance upon the coast of the Northern and Baltic Seas, upon the shores of the Oder, the Elbe, the Weser and the Rhine, to the number of eighty-five. That confederation was called The Hanse, which, in low German, means a union.

The Hanse Towns soon discovered the advantages to be derived by private industry from their association, and were not slow in conceiving and developing a commercial policy from which sprang a prosperity without previous example. Convinced that in acquiring and preserving a great maritime trade, a powerful navy was necessary for its protection, the Hanseatic cities pro- vided for this exigency ; and knowing that the maritime power of a country rises or falls with its trade, navigation and fisheries, they determined that their goods should be transported only in their own vessels. They established many great maritime fisheries. The Navigation Act of England was modelled upon that of the Hanse Towns, which had for its model that of Venice.*

England only followed those who preceded her in maritime supremacy. Even at the period of the long Parliament, the proposition of an Act of Navigation was anything but new.

In his appreciation of that measure, Adam Smith f seems not to have known, or to have suppressed the fact that, centuries before, and at different times, attempts had been made to intro-

* Anderson's History of Commerce, f "Wealth of Nations Book iv., chap. ii.

92 HISTOEY.

duce similar restrictions. Proposed by the Parliament of 1461, they were rejected by Henry VI. ; proposed by James L, they were rejected by the Parliament of 1622.* Long previous to these two attempts, in 1881, they had actually been applied by Richard II. ; but having soon ceased to be operative, they were forgotten. The country was evidently not yet ripe for such a measure. Acts of Navigation, as well as the protection of industry by import duties, are so material to nations having a presentiment of future commercial and industrial grandeur, that the United States were no sooner emancipated than they adopted maritime restrictions, at the instance of James Madison ; this was done, too, as will be seen in a following chapter, with infi- nitely greater success than in England a century and a half before.

The Northern princes, to whom a trade with the Hanse Towns promised great advantages in the opportunity it afforded, not only of selling the surplus productions of their soil, receiving in exchange manufactured articles very superior to their own, but of filling their treasuries from the avails of import and export duties, and of inuring to habits of labor people previously ad- dicted to indolence, debauchery and dissensions, looked upon it as a fortunate circumstance when the Hanse Towns established their commercial houses among them, and, to encourage this, they granted them many privileges and important favors. The kings of England distinguished themselves particularly in this respect.

" The trade of England had anciently been carried on alto- gether by foreigners, chiefly the inhabitants of the Hanse Towns, or Easterlings, as they were called; and in order to encourage those merchants to settle in England, they had been erected into a corporation by Henry III., had obtained a patent, were en- dowed with privileges, and were exempted from several heavy duties paid by other aliens. So ignorant were the English of commerce, that this company, usually denominated the merchants of the Steel Yard, engrossed, even down to the reign of Edward, almost the whole foreign trade of the kingdom; and as they

* Hume's History. Part, iv., chap. xxi.

HANSE TOWNS. 93

naturally employed tue shipping of their own country, the navi- gation of England was also in a very languishing condition." *

Long before that period, German merchants, and especially those of Cologne, had occasionally dealt with England ; but in 1250 they established in London, upon the invitation of the king, the renowned commercial association referred to by Hume as the Steel Yard, which at first exercised so favorable an influence upon the development, culture, and industry of England, but which afterward excited such an intense national jealousy, and which, in the 375 years that elapsed from its rise to its dissolu- tion, furnished occasion for such long and acrimonious debates.

England was then to the Hanse Towns what Poland was later to Holland, and what Germany was to England ; she supplied them with wool, tin, skins, butter, and other productions of her mines and her agriculture ; she received from them in exchange manufactured articles. The raw materials which the merchants of the League purchased in England and in other Northern kingdoms were transported by them to their colony of Bruges, founded 1252, and exchanged for cloths and other manufactured goods of Belgium, and for various products of the East coming from Italy, which they distributed among the countries situated around the North Sea.

A third agency established in 1272 at Novogorod, in Russia, dealt in furs, flax, hemp, and other raw materials, in exchange for manufactured products.

A fourth agency established in 1278 at Bergen, in Norway, was chiefly devoted to fisheries and to a trade in oil and fish.

The experience of all countries and all times teaches that so long as a nation is in a state of barbarism, an entirely free trade, which carries off the products of its hunting-grounds, its pastures, its forests, and its fields, in a word, its raw materials of every kind, and brings in return better clothing and furniture, as well as more perfect tools, with a supply of the grand instrument of exchange, the precious metals, confers immense advantages. A people in that condition may well rejoice in free trade so long as it advances them in the career

* Hume's History of England, ch. xxxv. 10.

94 HISTORY.

of civilization. But experience teaches also that in proportion as such a nation makes progress in industry and civilization, it must experience a change in its internal economy which will show that free trade is no longer its policy or its advantage. It was so with the trade between England and the Hanseatic cities. A century had not elapsed since the foundation of the Steel Yard agency, when it occurred to Edward III. that possibly a wiser and more useful policy might be pursued than to export raw wools and to import cloths. He began by offering induce- ments of every kind to the manufacturers of wool in Flanders to attract them to England ; and, having succeeded with a goodly number, he prohibited the importation of foreign cloths.

The wise measures of that sovereign were marvellously pro- moted by the foolish policy of other rulers, a thing not uncom- mon in the history of industry. Whilst the ancient masters of Flanders and Brabant had exerted themselves to increase and reward industry around them, the new counts seemed to make it their study to excite the distrust and enmity of tradesmen and manufacturers, and to drive them out of their dominions.*

After 1413 the woollen industry of England made such progress, that Hume could say of that period, "A great jealousy then existed with regard to foreign merchants: they had to encounter a multitude of difficulties ; for instance, they were obliged, with the money they obtained from their imports, to buy domestic productions."

Under Edward IV., this jealousy increased to such a degree that the importation of foreign cloths and many other articles, was entirely prohibited.

Though the King was afterwards compelled by the Hanse Towns to revoke that prohibition and to restore their ancient privileges, English industry seems to have been vastly advanced by that measure ; for Hume, referring to the reign of Henry VII., which was subsequent to that of Edward IV. by half a century, says : — " The increase of the arts, more effectually than all the severities of law, put an end to this pernicious practice. The nobility, instead of vying with each other in the

* ftymer's Fœdera. De Witte. Interests of Holland.

HANSE TOWNS. 95

number and boldness of their retainers, acquired by degrees a more civilized species of emulation, and endeavored to excel in the splendor and elegance of their equipage, houses and tables ; the common people, no longer maintained in vicious idleness by their superiors, were obliged to learn some calling or industry,

and become useful both to themselves and to others

Laws were made against the exportation of money, plate, or bullion : a precaution which serves no other purpose than to cause more to be exported. But so far was the anxiety on this head carried, that merchants alien, who imported commodities into the kingdom, were obliged to invest in English commodities all the money acquired by their sales, in order to prevent their conveying it away in a clandestine manner."*

In the reign of Henry VIII. the number of foreign manufac- turers had become so great in London, as visibly to enhance the value of food thereby, furnishing a manifest proof of the ad- vantages which the agriculture of a country derives from the development of domestic and manufacturing industry.

The King, however, mistaking the causes and the consequences of this fact, gave ear to unfounded complaints of English manu- facturers against foreign manufacturers, more skilful, laborious and economical than themselves, and ordered fifteen thousand Belgians to be expelled, because they increased the cost of living, and exposed the country to the danger of a famine. To destroy the evil to the very root, sumptuary laws, regulations for clothing, tariffs fixing the price of food, and the rates of wages, were immediately issued and enforced.

This policy was fully approved by the Hanse Towns, and their ships of war were placed at the disposal of the King with the same promptitude they had shown when previous kings of England had favored them. England in our day shows the same favor, and for the same reason, to the Kings of Portugal. During all that reign the commerce of the Hanse Towns with England continued to be very active. They had ships and money, and knew how, as do the English of our time, to employ them skilfully in acquiring influence over nations and govern-

* Hume, History of England ; chap. xxvi. 14.

96 HISTOKY.

ments not shrewd enough to comprehend their own interests; their arguments, however, rested upon different grounds from those of our commercial monopolists. The Hanseatic merchants claimed their privilege of furnishing nations with manufactured articles, in virtue of treaties and immemorial usage : but the English now claim this right in virtue of a theory, the author of which was one of their Custom-House officers. They claim in the name of a pretended science, what was formerly claimed in virtue of compact and as a matter of right.

In the reign of Edward VI. the Privy Council sought and found pretences for the withdrawal of the privileges granted to the merchants of the Steel Yard. " Several remonstrances were made against this innovation by Lubec, Hamburg, and other Hanse Towns ; but the Privy Council persevered in their resolution, and the good effects of it soon became visible to the nation. The English merchants, by their very situation as natives, had advantages above foreigners in the purchase of cloth, wool, and other commodities ; though these advantages had not hitherto been sufficient to rouse their industry, or engage them to become rivals to this opulent company : but when aliens' duty was also imposed on all foreigners indiscrimi- nately, the English were tempted to enter into commerce ; and a spirit of industry began to appear in the kingdom." *

After having been for several years wholly excluded from a market of which they had enjoyed for three centuries almost exclusive possession, like that enjoyed by the English of our day in the United States, and in Germany, they were reinstated by Queen Mary in their ancient privileges, at the instance of the Emperor of Germany.

But this time their joy was of a short duration.-}" " With the view not only of preserving, but of increasing these privileges, they complained loudly at the beginning of the reign of Eliza- beth of the treatment they had met under the reigns of Edward and Mary. The Queen replied very adroitly that it was not in

* Hume, History of England, chap, xxxv., 10. f Hume, History, chap, xxxvii.

HANSE TOWNS. 97

her power to make changes, but that she would cheerfully leave the Hanse merchants in possession of all the privileges and immunities then enjoyed by them. This response did not satisfy them. A short time after, their commerce was again suspended, to the great profit of the English merchants, who had then an opportunity of showing of what they were capable. The English merchants soon acquired the whole foreign commerce, and their industrial efforts were crowned with complete success. They separated into two classes ; one taking the home trade, the others seeking their fortune abroad, by exporting cloths and other English productions. This success excited the envy of the Hanseatics to such a point that they spared no pains to discredit the English merchants. They even obtained an imperial edict which interdicted to the English commerce with the interior of Germany ; in reprisal for which measure the Queen ordered sixty of the Hanseatic vessels engaged in smuggling in concert with the Spaniards, to be seized. Her intention was at first only to bring the Hanseatic merchants to an amicable arrange- ment. But on receipt of the news that a Diet of Hanse mer- chants was then in session at Lubec, deliberating on the means of placing obstacles in the way of English foreign commerce, she confiscated these ships with their cargoes ; two, however, were released and sent to Lubec with this message, that she had the most profound contempt for the Hanseatic League, its deliberations, and its measures."*

Such was the treatment received from Elizabeth by those merchants, from whom her father and many other kings of England had borrowed ships of war for the defence of their country, merchants to whom all the Protestants of Europe had paid court, whose vassals for several centuries were the kings of Denmark and Sweden, who had according to their fancy dis- posed of thrones and powers, who had colonized and civilized all the south-eastern coasts of the Baltic, and banished piracy from all the seas of Europe ; who at a period not very remote had drawn the sword to compel a king of England to respect the privileges of his subjects ; who more than once had the crowns

* Lives of the Admirals ; vol. p. 410.

98 HISTORY.

of English kings in pledge ; and who had carried their insolence and cruelty towards England so far as to drown an hundred English fishermen for venturing too near their fisheries. The Hanseatic cities were still powerful enough to avenge themselves upon the Queen ; but their ancient courage, their noble enter- prise, the power they derived from liberty and their league — all that had vanished. They were becoming constantly more enfeebled, until at last, in 1630, they dissolved formally their League, after having begged at the door of every European power the privilege of free trade, and having met in every instance an humiliating refusal.

Various external causes, independently of those internal, of which we shall have occasion hereafter to speak, contributed to their fall. Denmark and Sweden meaning to avenge their long subjection to the League, placed every possible obstruction in the way of the commerce of the Hanse Towns. The Czars of Russia had granted privileges to an English company. The order of Knights, their secular allies, and the very children of the League, were in a state of decline and fast tending to their dis- solution. The Dutch and the English had thrust them out of their markets, and supplanted their influence in the courts of Europe. The discovery of the route to the East by the Cape of Good Hope was also a blow to their commercial supremacy.

The Hanse Towns, which, in the days of their power and prosperity, almost forgot that they belonged to the Empire of Germany, in their present distress applied to the Diel;, and urged that the English yearly exported 200,000 pieces of cloth, a large portion of which went to Germany, and that the only means of recovering their ancient privileges in England was prohibition of English cloths by Germany. Anderson informs us that a resolution to this effect was offered in the Diet, and perhaps agreed to ; but he adds that Gilpin, the English ambassador to the German diet, succeeded in preventing its being enforced.

One hundred and fifty years after the official dissolution of the Hanseatic League, the cities which formed it had lost all recollection of their past grandeur. Justus Moser somewhere remarks that if he should describe to the merchants of these

HANSE TOWNS. 99

cities the power and grandeur of their ancestors, they would hardly believe it. Hamburg, formerly the terror of pirates in every sea, celebrated throughout all Christendom by the services it had rendered in the destruction of the Corsairs, had fallen so low as to be compelled to purchase from Algiers by a yearly tribute the safety of her own ships ; for, the sceptre of the seas having passed to the hands of the Dutch, another policy pre- vailed in regard to piracy. When the Hanse Towns were at the height of their power, they treated pirates as the enemies of the civilized world, and gave themselves earnestly to the work of their extermination. The Dutch, on the contrary, looked upon the Corsairs of Algiers as important co-operators, by whose aid the foreign commerce of their rivals, in time of peace, was para- lyzed until it gradually fell into their hands. Referring to an observation of De Witte upon that policy, Anderson merely remarks, fas est et ab hoste doeeri, a monition which, though brief, has enjoyed a long acquiescence on the part of England, where this doctrine was fully appreciated ; for, to the shame of Christendom, England tolerated the piracies of the infamous Algerine corsairs down to our time. The signal merit of de- stroying them had been reserved for France.

The commerce of the Hanseatic cities was not a national one ; it was neither established upon an equilibrium, nor upon a com- plete development of the productive power of the country, nor was it sustained by adequate political power. The bonds which united the members of the confederation were too weak ; their desire of separate preponderance and private advantage was so strong as to banish federal patriotism, which alone could excite a national feeling and place the interests of the entire League above those of the respective cities. Hence jealousy and often treachery; thus Cologne took advantage of the enmity of England to the League, and Hamburg tried to make profit out of a quarrel between Denmark and Lubec.

The commerce of the Hanse towns was not founded upon production and consumption, nor upon the agricultural and manufacturing industry of the countries to which they belonged. They had neglected to develop the agriculture of their own

100 HISTORY.

territories, although, by their commerce, they gave a great impulse to that of foreign countries. They found it more con- venient to buy manufactured articles in Belgium than to estab- lish manufactures of their own; they promoted agriculture in Poland, they encouraged the rearing of sheep in England, the production of iron in Sweden, and they stimulated general industry in Belgium. They exemplified for several centuries the maxim of the theorists of our day ; they purchased goods where they could purchase them cheapest. But when they were excluded from the countries where they bought and where they sold, their agriculture and manufactures had not sufficient de- velopment to absorb and employ the overplus of their commercial capital. This capital emigrated to Holland and England, where it increased the industry, the wealth, and the power of their enemies. In this fact we have clear proof that private industry, left to itself, does not always select the true path to national prosperity and power, nor even to its own eventual success.

In their exclusive pursuit of material wealth those cities com- pletely lost sight of their political interests. When their power was at its height, they seemed scarcely to belong to Imperial Germany. That narrow-minded, selfish, and haughty common- ality was flattered by the attentions of princes, kings, emperors, and by their acknowledged position as sovereign of the seas. How easy had it been for the League, at the time of its mari- time supremacy, to form in concert with the confederate cities of Upper Germany a powerful House of Commons, as a counter- poise to the aristocracy of the Empire, to establish, by the aid of the emperors, a national unity ; to combine in one nation all the sea coast from Dunkirk to Riga, and thus to seize and secure for Germany a supremacy in industry, in commerce, and in navigation.

But when the sceptre of the seas fell from the hands of the League, it did not retain in the German Diet sufficient influence to have its commerce regarded as a national interest. On the other hand, the aristocracy applied themselves earnestly to the work of its humiliation. The cities of the interior fell, one by

HANSE TOWNS. 101

one, into the hands of absolute monarchs, and those on the coast thus lost their trade with the interior.

These mistakes were all avoided in England. There, external commerce and navigation laid the foundation for home agri- culture and manufacturing industry; there the interior trade increased concurrently with the external commerce, and in- dividual liberty increased without prejudice to national unity and power; there were consolidated and united in the most happy manner the interests of the crown, of the aristocracy, and of the commons.

In face of these historical facts how can it be maintained, that England, without her peculiar policy, could have so exalted the success of her manufacturing industry, or have attained the commercial and maritime ascendency she now enjoys ? No : the proposition that England has not reached her actual commercial grandeur by virtue of, but in despite of her commercial policy, is in our belief one of the greatest fallacies of our time. If the English had abandoned business to its own channels, if they had refrained from all regulation, {laissez faire), as required by the reigning school, the merchants of the Steel-Yard would still monopolize the foreign trade of London, and the Belgians would still manufacture cloths for the English markets ; England would be still the sheep-pasture of the League, as Portugal, by virtue of the strategems of diplomatic cunning, became and continues to be the vineyard of England.

Nay, it is more than probable, that but for her past commer- cial policy, England would not, at this day, enjoy the degree of civil liberty for which she is now so distinguished; for that liberty is the child of industry and competence.

After this glance at history, we have reason to wonder that Adam Smith did not attempt to trace from their origin the industrial and commercial struggles between the League and England. Some passages of his work show, however, that the causes of the fall of the League and its consequences were not unknown to him.

" A merchant, it has been said, very properly, is not neces- sarily the citizen of any particular country. It is, in a great

102 HISTORY.

measure, indifferent to him from what place he carries on his trade, and a very trifling disgust will make him remove his capital, and together with it all the industry which it supports, from one country to another. No part of it can be said to belong to any particular country, till it has been spread, as it were, over the face of that country, either in buildings or in the lasting improvements of lands. No vestige now remains of the vast wealth said to have been possessed by the greater part of the Hanse Towns, except in the obscure histories of the thir- teenth and fourteenth centuries. It is even uncertain where some of them were situated, or to what towns in Europe the Latin names given to some of them belong." *

It is strange that Adam Smith, with so clear a comprehension of the secondary causes which had produced the fall of the League, had not been led to seek for the first causes. He had no need for that purpose to inquire where those Hanseatic cities were placed which have disappeared, nor by what Latin names they are designated in obscure chronicles ; his countrymen, Anderson, Macpherson, King, and Hume, would have given him ample instruction on this subject.

But how and why could a mind so penetrating abstain from so interesting and fruitful an investigation ? The only motive we can suggest, was that it would have conducted him to results little suited to confirm his principle of absolute free trade. He could not have failed to perceive, that after free trade with the Hanseatic cities had raised English agriculture above its early imperfections, the restrictive policy adopted afterwards by the government had raised England at the expense of the League, of the Belgians, and of the Dutch, to undisputed manufacturing and commercial supremacy.

It appears that Adam Smith was unwilling to know or to admit these facts ; they belonged apparently to that class of stubborn events which J. B. Say confesses to have been rebels to his system.

* Wealth of Nations, Book iii., chap. 4.

FLANDERS AND HOLLAND. 103

CHAPTER III. FLANDERS AND HOLLAND.

Genius and manners, origin and language, as well as political relations and geographical position, connected the people of Holland, Flanders, and Brabant, with the German empire. Those provinces had experienced the benefit of frequent and prolonged visits from Charlemagne, and also from the proximity of his residence ; in this they were more fortunate than more distant countries of Germany. Flanders and Brabant were indeed particularly favored by nature for agriculture and manu- facturing industry, as Holland for pasturage and commerce. In no province of Germany could a vast maritime and river navi- gation promote internal communication so successfully as in those countries. The salutary influence of water transportation in the promotion of agriculture and in the growth of cities, necessarily gave early stimulus to the progress of such works as were fitted to increase the facilities of internal navigation.

Flanders was especially indebted for its splendor to its Counts, who understood better than other German princes the value of public security, the advantage of roads, manufactures, and prosperous cities. Aided by the nature of the soil, their favorite occupation was to -purge the country of a nobility scarcely better than brigands, and of noxious animals. A natural consequence was the establishment of a lively intercourse between the cities and the country, and the development of agriculture in the department of live stock, and particularly of sheep, as well as in the culture of flax and hemp. Where raw materials are pro- duced in great abundance, labor and skill will soon bring them into use if property and commerce enjoy security. The Counts of Flanders did not wait until chance or the current of events brought them weavers of woollens, but history informs us that they invited them from foreign countries.

Through the intermediate commerce of the Hanse Towns and Holland, Flanders soon became, by her woollen manufactures,

104 HISTORY.

the commercial centre of the North, as Venice, by its industry and maritime trade, became the commercial centre of the South. The navigation and the intermediate commerce of the League and Holland, formed, with the Flemish manufactures, a whole, a system of national industry. The manufacturing industry of Flanders, encountering no rivalry, commercial restrictions could not come in question. The Counts of Flanders, without having read Adam Smith, understood that in their condition free trade was exactly suited to their circumstances. It was entirely in the spirit of this theory, that Count Robert III., when requested by the king of England to exclude the Scotch from his markets, answered, that in the view of his people, Flanders was always to be an open market for all nations, and that their own interest did not permit any departure from that rule.

After Flanders had been for several centuries the chief manu- facturing country, and Bruges the chief market of Northern Europe, industry and commerce, to which the Counts had failed to make the concessions always due to them when they have attained a certain degree of prosperity, emigrated to Brabant. Antwerp became then the chief commercial city, and Louvain the chief manufacturing city of Northern Europe. This revolu- tion gave agriculture an immediate upward impulse in Brabant. The change effected at an early day, from taxes in kind into taxes in money, and especially a modification of the feudal system, contributed also largely to its development.

In the meanwhile, the Dutch, by a wise combination of their resources and their power, and by constant competition with the League, had laid the foundation of their future maritime su- premacy. The advantages and disadvantages of their position had been alike to that people a source of blessings. A perpetual struggle against invasion by the sea, forcibly developed among them a spirit of enterprise, activity, and economy; a soil rescued by art and industry from the waves, and only to be held from the dominion of the sea by ceaseless vigilance, became for them a precious possession, upon which they could not lavish too much labor. Limited by nature to navigation, fishing, the pasturage of cattle, the production of butter and cheese, the Dutch neces-

FLANDERS AND HOLLAND. 105

sarily turned their attention to the carrying trade, to interme- diate commerce, to the export of cheese and fish, thus earning wherewithal to purchase their bread, building materials, fuel, and clothing.

We find in these circumstances the chief cause by which the Hanseatic cities were gradually supplanted by the Dutch in the trade with the Northern States. The Dutch needed far more considerable quantities of agricultural products and the products of the forest than the cities of the League, which, for the main part, found their supplies in their respective vicinities. The proximity of Belgian manufactures, and those of the Rhine, with its vast and fertile valley, rich in wine, and with a naviga- tion extending to the mountains of Switzerland, was also a very great advantage to them.

It is a general rule that the commercial activity and prosperity of the seabord, depend upon the greater or less importance of the river navigation with which it is connected.* A glance at the map of Italy shows that the fertility and great extent of the valley of the Po explains the decided superiority of the com- merce of Venice over that of Pisa and Genoa. The commerce of Holland was sustained by the valley of the Rhine and its tributaries ; and therefore exceeded that of the Hanseatic cities in proportion as its valley surpassed in wealth and fertility those of the Weser and the Elbe.

A happy discovery added to those advantages: the art of curing and preserving herrings with salt. The processes of this fishery and this mode of curing, discovered by Peter Boeckel, remained long a secret with the Dutch; they succeeded thus -in giving to a production of their fishery qualities not found in the herrings of other nations, and which ensured them everywhere a certain market and better prices. Anderson affirms that several centuries after these new processes had been used in Holland, the English and Scotch fisheries, although enjoying large premiums upon exportation, could not find a market in foreign countries for their herrings, even at lower rates. Now, if we consider the importance, before the Reformation, of the

* Railroads have materially modified this rule.

106 HISTORY.

consumption of sea-fish, it will be easy to understand how, in a period when the navigation of the League began to decline, the Dutch were able to build every year two thousand ships.

The Union of all the Belgian and Batavian provinces under the dominion of Burgundy, procured for that country the great benefit of national unity, a circumstance not to be overlooked in the study of the causes which gave to the Dutch advantages over the rival cities of Northern Germany. Under Charles V., the Netherlands comprised an union of power and resources which more certainly assured him supremacy by land and sea than all the mines of gold in the world, more certainly than the favor of the Pope and all his bulls, if he had but understood the nature of that power, and known how to seize and to use it.

If Charles V. had thrust from him the crown of Spain, as a man thrusts away a stone which threatens to carry him into an abyss, how different would have been the destiny of the Nether- lands as a part of Germany ! As sovereign of the Netherlands, emperor of Germany, and chief of the Reformation, Charles had in his hands all the means, moral and material, for founding the most powerful industrial and commercial nation, the widest maritime and continental authority which had ever existed, a maritime supremacy which would have united under one Hag every sail from Dunkirk to Riga.

It needed but one idea, but the will of one man, to render Germany the richest and most important empire of the world, to extend its manufacturing and commercial rule over all parts of the earth, and to give it, perhaps, centuries of duration. Charles V. and his gloomy son, Philip II., adopted a different policy; becoming the leaders of the fanatics, they strove to make the Netherlands a Spanish country. The consequences are well known. The Northern provinces, defended by the sea, of which they made themselves master, achieved their independence ; in the Southern, industry, arts, and commerce, as they could not escape by flight, perished by the hand of the executioner, and Am- sterdam took the place of Antwerp as the centre of the commer- cial world. The cities of Holland, where formerly, after the troubles of Brabant, a great number of Belgian weavers had taken

FLANDERS AND HOLLAND. 107

refuge, could scarce now find room for the new fugitives, many being obliged to emigrate to England and Saxony. The struggle for independence gave birth in Holland to that naval courage, which overcame all difficulties and all dangers at the very time when Spain was sinking under fanaticism. By means of her navy, Holland enriched herself with the spoils of Spain, and especially by the capture of her galleons ; she carried on also an immense contraband trade with the Peninsula and Belgium. After the annexation of Portugal to Spain, she seized the most important Portuguese colonies in the East Indies, and conquered a part of Brazil. Down to the middle half of the seventeenth century, we find the Dutch as superior to the English in manufactures, colo- nies, and shipping, as the English are in our time superior to the French.

But the revolution of England involved great changes. The spirit of liberty had begun to flag in Holland. As in all aris- tocracies of merchants, so long as life and goods had been in peril, so long as undoubted material benefits were in question, they were capable of performing great things ; but their views failed in depth. They did not comprehend that the supremacy of conquest could only be maintained upon the basis of a large nationality, and an energetic national spirit. On the other hand, in the midst of states in which monarchy had established nations on a large scale, but without bringing them forward in commerce and industry, it was a subject of mortification that so small a territory should occupy the chief place in manufactures, in trade, in fisheries, and in shipping. That feeling was connected in England with the energy of a young republic. The Act of Navigation was the glove which the future supremacy of England threw at the feet of the existing supremacy of Holland. And when these parties grappled with each other, it was discovered that the nationality of England was of far greater power and calibre than that of Holland. The result could not long be doubtful.

The example of England was followed by France. Colbert had calculated that the whole of the maritime trade of France employed about twenty thousand sail, and that of these, sixteen

108 HISTORY.

thousand were Dutch ; which was out of proportion to the size of the country to which they belonged. The Bourbons having reached the throne of Spain, France extended her commerce over the Peninsula to the prejudice of the Dutch. She did the same in the East. At the same time the encouragements given in France to manufactures, to the merchant marine, and to maritime fish- eries, inflicted upon the industry and the commerce of the Dutch incalculable detriment.

Holland had lost by the policy and rivalry of England the greatest part of her trade with the Northern countries, the con- traband trade with Spain and her colonies, the chief part of her commerce in the East and West Indies, and her fisheries. But the treaty of Methuen, in 1703, gave her the finishing stroke by completing the ruin of her commerce with Portugal and her colonies, and with the East Indies.

When the external commerce of Holland began thus to escape from her hands, one could see a renewal of what had taken place in the Hanse Towns and at Venice ; that portion of her material and moral capital, which was no longer in demand at home, passed by the emigration of the people, or in the form of loans, to those who had succeeded to the commercial ascendency of Holland.

If Holland, reunited with Belgium, had formed the valley of the Rhine and Northern Germany into a single nation, England and France could not without difficulty, either by war or by commercial policy, have struck so fatal a blow at her shipping interests, her foreign trade, or her industry. A nation thus constituted would have been in a position to oppose its own com- mercial policy to that of other States. If its industry had suffered from the development of their manufactures, its internal resources must have furnished ample compensation for the injury. Holland succumbed to her rivals because, with a narrow territory of sea-coast, inhabited by a small population of fishermen, seamen, merchants, and cattle-breeders, she could not sustain herself as an independent nation, a distinct power, treating that part of the continent with which she was geographically con- nected as a foreign country.

FLANDERS AND HOLLAND. 109

The example of Holland, as well as that of Belgium, that of the Hanse Towns, and that of the Italian republics, shows that the activity of individuals is powerless to preserve the commerce, industry, and wealth of a State, if the general conditions of society are not favorable ; and that individuals owe the greatest part of their productive power to the political organization, and to the power of the country in which they reside.

The agriculture of Belgium flourished anew under Austrian rule. Whilst connected with France, her manufacturing indus- try resumed its former gigantic progress. Holland, isolated, was not in a position to adopt and sustain, in reference to great nations, an independent commercial policy. From the day of her union with Belgium, after the restoration of general peace, when her resources, her population, her territory, had so in- creased as to enable her to maintain a distinct national policy, as against rival nations, and to experience the benefit of in- creasing internal wealth and productive power, we see the pro- tective system appear in the Netherlands, and, under its influ- ence, we find agriculture, manufactures, and commerce taking a remarkable development and growth. The union between the two countries was dissolved by causes not within the scope of our subject ; the protective system was undermined in Holland, whilst it subsists in full vigor in Belgium.

Holland is now living upon her colonies and her carrying trade between the different states of Germany. But the first war may deprive her of those colonies, and in proportion as the German Customs Union, \_Zoll- Verein], shall better understand its interests, and learn more perfectly how to use its power, it will assuredly perceive the necessity of drawing Holland into the League.

110 HISTORY.

CHAPTER IV. ENGLAND.

We have shown, in speaking of the Hanse Towns, how agricul- ture and breeding of sheep were stimulated in England by foreign commerce ; how, later, the emigration thither of manufacturers persecuted in their own country, and the encouragement afforded them by the government, had, by degrees, carried the industry of woollens there to a state of prosperity ; how by reason of that progress and of the measures of Queen Elizabeth, as skilful as energetic, the external trade of the country, previously monopo- lized by foreigners, passed into the hands of the natives.

After adding a few observations upon the origin of English industry, we shall resume the history of the economical develop- ment of England at the point where we left it in the second chapter.

The industrial and commercial grandeur of England had its origin chiefly in the breeding of cattle and in woollen manufac- tures. When the merchants of the Hanseatic League landed in England, agriculture was at a very low stage, and even the rearing of cattle was then of little importance. Winter forage not being produced in sufficient quantities, a large portion of the domestic animals were necessarily killed in the autumn, and there could, of course, be neither stock of cattle, nor abundance of manure. As in all uncultivated countries, like Germany in former times, and the solitudes of America at the present day, the people subsisted, for very obvious reasons, mainly upon pork. Swine require but little attention ; they find their own provender in the native forests, and in uncultivated fields ; but little care sufficed to perpetuate the race of animals upon which it was safe to rely for a large portion of their food. Foreign commerce turned the attention of the people from swine to sheep, from pork to mutton and wool, and to other improvements in agriculture.

ENGLAND. Ill

We find in Hume's History of England very interesting details of English agriculture at the beginning of the fourteenth century. In 1327, Lord Spencer numbered on sixty-three estates, twenty- eight thousand sheep, one thousand oxen, twelve hundred cows, five hundred and sixty horses, and two thousand hogs ; or upon each farm about four hundred and fifty sheep, thirty-five head of cattle, nine horses, and thirty-two hogs. Even at that early period, we notice how large the proportion of sheep compared with that of other animals. The great profits derived by the English aristocracy from the breeding of sheep gave them a liking for that business, and turned their attention strongly to agricultural improvement at a time when almost everywhere on the continent the nobility knew no better use of their estates than keeping quantities of deer, nor a more reputable occupation than preying upon cities and their commerce in every mode of hostile movements.

Sheep multiplied then as we have recently seen them increase in Hungary ; on many estates they numbered from ten thousand to twenty-four thousand. In this state of things the manufac- ture of wool, already well advanced in preceding reigns, could not fail of attaining rapidly a high degree of prosperity under the fostering policy of Queen Elizabeth.*

In the memorial above-mentioned, by which the cities of the League demanded of the German Diet measures of retaliation, the I export of cloth from England is stated at two hundred thousand pieces, and as, early as the reign of James I. the value of cloths exported from England had attained the enormous figure of two millions of pounds sterling, whilst in 1354 the value of wool' exported was but two hundred and seventy-seven thousand pounds, and that of other articles, sixteen thousand four hundred pounds. Previous to the reign of that prince, the chief part of the cloths were sent to Belgium to be there dyed and finished ; but in consequence of the measures of protection and favor

* The prohibition to export wool, and the restrictions upon the coasting trade in reference to wool, were vexatious and unjust measures : they were, however, none the less effective in advancing English and in prostrating Flemish industry.

112 HISTORY.

adopted by James I. and Charles I. the dyeing and finishing were carried to such perfection in England that the export of undressed cloths was almost entirely discontinued, and from that period the export was only of finished cloths.

To give an exact and complete idea of these results of English, commercial policy, we should remark that, previous to the great progress in later times in the manufacture of flax, cotton, silk, and iron, that of cloth constituted by far the most important item of exchange, not only with the European countries, espe- cially those of Northern Europe, but with the East and West Indies. This is clearly evinced by the fact that in the time of James I., woollen articles constituted nine-tenths of the entire value of English exports.*

That industry gave to England the means of supplanting the Hanse Towns in the markets of Russia, Sweden, Norway, and Denmark, and of attracting to England the best part of the trade of the Levant and the two Indies. It was that which de- veloped mining industry and the use of coal ; hence a considerable coasting trade and an active fishery, these two being the base of that maritime power which made the Act of Navigation possible, and thus founded the naval supremacy of England. Around this department of industry, as around a common trunk, gathered successively the other branches of manufacture, and thus it became the centre of the industrial, commercial, and maritime power of England.

Other branches of industry were not, however, neglected, or left to spontaneous growth. As early as the reign of Queen Elizabeth, the importation of metals, wrought leather, and a variety of other manufactured articles had been prohibited, f whilst the immigration of German miners and smiths had been encouraged. Previously the English had purchased Hanseatic ships constructed in the ports of the Baltic ; Elizabeth, by the aid of restrictions and encouragements, introduced the art of ship-building into England. The timber for that purpose was imported from Northern countries, largely increasing the exports

* Hume: year 1603. Macpherson's History of Commerce: year 1651. t Anderson's History of Commerce : year 1564

ENGLAND. 113

of English goods to those countries. The English had learned from the Dutch the art and mystery of the herring, fishery; they were initiated by the Basques in the whale fishery, andj both these fisheries had been promoted by premiums. James I. had particularly at heart the art of naval construction and the success of his fisheries. However ridiculous the interminable exhortations to eat fish addressed by this king to his subjects appear to us, we must do him the justice to say that he under- stood upon what depended the future prosperity of the English people. The emigration thither of the manufacturers expelled from Belgium and France by Philip II. and Lewis XIV., added immensely to the industrial skill and the manufacturing capital of England. To these events she owes her production of fine woollen goods, also great success in the manufacture of hats, glass, paper, watches, linen, and silk, and a portion of her skill in metallurgy. All these branches of industry she learned how to establish and build up to prosperity by means of prohibitory or high duties.*

Great Britain borrowed from all the countries of the contir; nent their special arts, and gave them a home under the shelter of her protective system. Among other ornamental branches of industry thus imported, Venice found here a rival in the manufacture of glass, and Persia itself, one in that of carpets.

Once in possession of an industry, England surrounded it for centuries with her solicitude, as a young plant requiring con- stant support and attention. He who knows not that by dint of labor, skill, and economy, an industry becomes in the lapse of time a public advantage ; that in a country well advanced in agriculture and general civilization, new manufactures suitably protected, however imperfect and costly their products in the beginning, may, by the aid of experience and the stimulus of domestic competition, rival in all respects the products of older factories in foreign countries ; he who knows not that the pros- perity of any particular commodity is subordinate to that of very many others, and who does not comprehend to what degree a nation can raise its productive power by unremitting care, that

* Anderson's History of Commerce : year 1685.

114 HISTORY.

each generation will pursue the work of industrial progress by taking it up where it had been left by its predecessors, must learn, all this by studying the History of English industry ; a I study which should precede the construction of systems, or the giving of advice to statesmen who hold in their hands the destiny of nations.

In the reign of George I. the statesmen of England were fully aware of the real basis of the power of their country. The min- isters of that King put in his mouth these words at the opening of the parliament in 1721. " It is very obvious that nothing would more conduce to the obtaining so public a good than to make the exportation of our manufactures and the importation of the commodities used in the manufacturing of them, as prac- ticable and easy as may be." * Such had been for centuries the governing principle of English commercial policy; such had been previously that of Venice. It is even now, as it was in the time of Queen Elizabeth. The fruits which that principle has borne are visible to all. Theorists have since pretended that England has become rich and powerful, not on account, but in , spite of her commercial policy. It might as well be maintained that a tree becomes stronger and more productive, not on account, but in spite of the attention and helps which it received in its early growth.

/ The history of England exhibits also the intimate relation • existing between politics and political economy. Evidently the establishment of manufactures in England and the consequent increase of population begot an increased demand for salted fish and pit-coal, the use of which begot an increase of fishing vessels and enlarged the coasting trade. The fisheries and coasting trade were at first in the hands of the Dutch. Encouraged by high duties and premiums, the English turned their attention to fish- ing. Their Act of Navigation secured to their own vessels the transportation of coal and the general maritime carrying trade. The commercial marine of England increased, and her naval power was proportionately extended, and this soon enabled her to cope with the Dutch fleet. Shortly after the promulgation

* Ustaritz : Theory and Practice of Commerce, ch. xxviii.

ENGLAND. 115

of the Act of Navigation, a maritime war broke out between England and Holland, in which the trade of the Dutch with the countries on the other side of the Channel, was almost entirely broken up, and their navigation in the Northern and Baltic Seas nearly annihilated by English cruisers. Hume estimates the number of the Dutch vessels which fell into the hands of the English at sixteen hundred, and Davenant affirms, in his work on public income, that twenty years after the publication of the Act of Navigation the commercial marine of England had doubled.

Among the most remarkable consequences of the Act of Navigation, we may place : —

1. The extension of the commerce of England with all the Northern States, with Germany and Belgium, consisting in the exportation of manufactured articles and in the importation of raw materials, a commerce from which, as we are informed by Anderson, they had been almost excluded by the Dutch.

2. An extraordinary development of contraband trade with Spain and Portugal and their West Indian colonies.

3. A considerable increase on the part of the English in the herring and whale fisheries, of which the Dutch had previously nearly a monopoly.

4. The conquest by England in 1655 of Jamaica, the most; important of the West India colonies, and with it the possession of the trade in sugar.

5. But chiefly the conclusion with Portugal in 1703 of the treaty of Methuen, of which we shall have occasion to speak in connection with Spain and Portugal. By this treaty, the Dutch and the Germans lost entirely an extensive trade with Portugal and her colonies. Portugal was rendered completely subservient to England, and England was enabled, with the gold and silver drawn from her commerce with that country, to increase im- mensely her trade with the East Indies and China, to establish, at a later period, her vast empire in India, and to expel the Dutch from their principal positions.

The two results last specified are very closely connected. The art with which the English succeeded in making Portugal and

116 HISTOKY.

India the instruments of their power is particularly worthy of attention. Portugal and Spain had scarcely any means of payment except the precious metals ; the East received nothing in payment but the precious metals, except cloths. So far, very Avell ; but the East had almost nothing to sell except silk and cotton goods, and the importation of these did not harmonize with the English policy above mentioned, to import only raw materials and to export only manufactured products. What then was their course ? Were they content with the profits on the one hand of a trade in cloths with Portugal, and on the other hand with the trade in silk and cotton goods with the East ? By no means. The English ministers looked farther than such advan- tages. Had they permitted the free importation into England of cotton and silk goods from the Indies, the manufactures of cotton and silk in England would have been destroyed at once. India had in her favor not only the low price of the raw material and cheaper labor, but also long practice and traditional dex- terity or skill. Under the system of competition, the superiority was necessarily with India ; but England was not willing to build up manufacturing establishments in Asia, to fall after- wards under their yoke. She aspired herself to commercial dominion, and comprehended that of two countries which deal freely with each other, that which sells the product of her own manufactories, gains, and governs, whilst the other, which ex- ports only agricultural products, obeys and suffers.* With regard

* The nation which exports manufactured products is generally more advanced in civilization than that which produces only raw materials. Manufactured articles have a far more extensive market ; everybody uses the latter, whilst manufacturers alone use the former. But that alone could not ensure the superiority for which the author contends. List, how- ever, contradicts himself in speaking of England and the United States. He exhibits the first of these powers as dependent upon the second, which furnishes almost exclusively the cotton she spins and weaves. The domination in fact belongs to the monopoly, be it exercised by the manu- facturer or by the producer of raw material. — [H. K]

The qualification of Richelot is proper enough, but List is, in the main, right. In the present state of England and the United States, they are mutually dependent as regards cotton. It is notorious, however, that

ENGLAND. 117

to her North American colonies, England had already announced the same policy, declaring that not even a nail should be manu- factured there, still less the importation of nails manufactured in those colonies be permitted. How could she then give up to a people so numerous, so frugal, and so favorably situated for manufacturing industry as the Hindoos, her internal market, the very foundation of her rising industrial power.

England therefore 'prohibited the articles competing with those of her own factories, the silk and cotton goods of the East.* This prohibition was absolute and under severe penalties, she would not consume a thread from India, and firmly rejecting these beautiful and cheap products, preferred to use the inferior and dearer goods produced by her own laborers ; she sold the cheap goods to the continental countries, — these much-desired commodities of the East ; thus giving them the benefit of that cheapness denied to her own consumers. Did England, in so doing act unwisely? Undoubtedly, according to Adam Smith and J. B. Say, and their theory of values. For, according to that theory, as she was obliged to purchase the goods she needed where they could be had the cheapest and of the best quality, it was the height of folly to manufacture and consume inferior articles at a higher price, giving to other countries the whole benefit of the différence.

We hold to a different theory, which we call the theory of pro- ductive power ; a theory which the English ministers obeyed,

England has more agency in fixing the price of cotton than the planters ■who produce it. They take what she offers, and they have always been unwilling that England should have a competitor for their cotton. The real state of the case is that England now employs our planters to produce raw cotton for her factories, for which she pays only that price which compétition among her own manufacturers fixes. England governs the price and the quantity. At the same time she is stimulating the production elsewhere. There will be cotton produced for the English factories in other countries long before there will be another England to bid for our cotton. If the cotton-planters had been as clear-sighted in commercial matters as the English rulers, there would now be as much or more cotton manufactured in the United States than in England. — S. C. * Anderson : year 1720.

118 HISTORY.

•without fully comprehending, when they determined upon their industrial policy : to buy raw materials, and sell manufactured products. The English ministers thought it less important to purchase perishable goods at a low price, than to establish, at some sacrifice, a durable manufacturing power.

Their policy has been attended with the most splendid success. England now produces cotton and silk goods to the value of seventy millions of pounds ; she supplies largely the markets of Europe, and all the world : even India now receives the products of English labor. Her own production is now from fifty to a hundred times greater than her former commerce in the manu- factured articles of India.

What would have been her condition, had she purchased for these last hundred years the cheap goods of India ? What have those people gained who purchased these cheap goods ? The English have acquired power, an immense power ; the contrary has been the lot of the consumers of the cheap goods.

How Adam Smith, against the evidence of such results, could hold unshaken the"opinion he expresses upon the Navigation Act, is difficult to explain. It is perhaps only to be referred, as we shall explain in a subsequent chapter, to his hatred of com- mercial restrictions in general. These results were opposed to his favorite idea of unlimited free trade ; he was obliged, conse- quently, to obviate the objections which the results of the Navi- gation Act furnished against his principle, by distinguishing the political from the economical object, and by maintaining that politically speaking, the Navigation Act was necessary and useful, but economically, prejudicial and hurtful. According to the view of this subject which we have presented, neither the nature of things nor experience justify any such distinction. Without being enlightened, as he ought to have been, by the experience of North America, J. B. Say, upon this topic, as upon all others where liberal and restrictive principles came in question, goes even beyond his predecessor. He calcu- lates the wages in France of a sailor, in consequence of the premium enjoyed by the fisheries, with the view of proving the absurdity of premiums. The subject of restrictions upon foreign navigation is generally a stumbling-block to the champions of

ENGLAND. 119

absolute free trade ; they pass over it m silence, especially if connected with the commerce of maritime cities.

The truth is, that it is with a commercial marine as with com- merce. Free navigation and free trade are of advantage to nations in the earlier stages of their existence, and before they have sufficiently advanced in their agriculture and manufacturing industry. For want of capital and skilful navigators, such nations willingly surrender the business of maritime transporta- tion and foreign trade. In a more advanced stage of their pro- gress, when they have developed in a good degree their produc- tive power, and when they have made progress in the arts of naval construction and navigation, the desire is felt of extending their foreign commerce, of employing their own vessels, and of becoming a maritime power. By degrees the mercantile marine acquires sufficient importance to suggest the idea of excluding foreign vessels from their carrying trade, and of transporting their own goods to the most distant ports in their own ships.

The moment has then arrived to have recourse with advantage to restrictions for the purpose of excluding from this shipping business, rich, experienced, and powerful foreigners. But when the merchant marine and maritime power have reached their height, a new epoch commences, in reference to which Dr. Priestley says, it would be as politic to abolish all impediments to navigation as