POLITICAL ECONOMY 
 
 BY 
 
 HENRY CAREY BAIRD. 
 
 IRE PRINTED FROM THE AMERICAN CYCLOPMJDIA.-] 
 
 NEW YOEK: D. APPLETON AND COMPANY. 
 
 1875 . 
 
 
 P OLITICAL EOOXOMY^ properly, an ex- 
 position of the measures necessary for 
 directing the moYements of society so that 
 man may act in harmony with those natu- 
 ral laws which control his efforts to improve 
 his condition. Social science treats of the 
 laws themselves. Prof. E. Thompson would 
 substitute for the name political economy 
 
 that of national economy. Great confusion 
 exists not only in regard to the definition 
 of political economy itself, hut as to the 
 meaning of the various expressions used in 
 treating of the subject, and even as to a 
 general understanding of its scope, v^ome 
 writers have treated it as a science, others 
 as an art, and Sir James Steuart speaks of 
 
POLITICAL ECONOMY 
 
 2 
 
 it as a combination of the two. Mr. Senior 
 considers it “ the science which treats of the 
 nature, the production, and the distribution of 
 wealth.” Archbishop Whatelv would give it 
 the name of “catallactics, or the science of ex- 
 changes.” J. E. McCulloch considers it “ the 
 science of the laws which regulate the produc- 
 tion of those material products which have 
 exchangeable value, and which are either ne- 
 cessary, useful, or agreeable to man.” Storch 
 says it “is the science of the natural laws 
 which determine the prosperity of nations, 
 that is to say, their wealth and civilization.” 
 Sismondi considers “the physical welfare of 
 man, so far as it can be the work of govern- 
 ment or society as the object of political econ- 
 omy.” Say defines it as “the economy of so- 
 ciety; a science combining the results of our 
 observations on the nature and functions of 
 the different parts of the social body.” John 
 Stuart Mill considers it “ the science which 
 treats of the production and distribution of 
 wealth, so far as they depend upon the laws of 
 human nature,” or “the science relating to the 
 moral or psychological laws of the production 
 and distribution of wealth.” The progress thus 
 far made in political economy has been slow 
 and uncertain, and in its entire range there is 
 hardly a doctrine or even the definition of an 
 important word which is accepted beyond dis- 
 pute. In 1844 De Quincey acknowledged that 
 it did not advance, and that from the year 
 1817 it had “on the whole been station- 
 ary;” and he adds: “Nothing can be postula- 
 ted, nothing can be demonstrated, for anarchy 
 even as to the earliest principles is predomi- 
 nant.” Amid all their discords and disagree- 
 ments, it is possible to divide political econo- 
 mists under two general heads: those who 
 treat the subject as a deductive science, “ in 
 which all the general propositions are in the 
 strictest sense of the word hypothetical;” and 
 those who treat it by the inductive method. 
 Tiiey may also be divided into those who fol- 
 low Ricardo with his fundamental doctrine of 
 the theory of rent, and those who have given 
 in their adhesion to Oarey’s law of the occu- 
 pation of the earth. The adverse views as to 
 the practical effects of the application of pro- 
 tection and free trade are quite inadequate to 
 serve the purpose of division, since many of the 
 believers in one or the other of these doctrines 
 quite disagree in regard to other and important 
 questions. The discordant state of this so- 
 called science therefore renders it necessary in 
 this place to trace out the history of economic 
 ideas, and to give an account of the views and 
 opinions at present held by the adverse schools 
 and their various teachers. — A science under- 
 lying the art of political economy was quite 
 unknown to the ancients, although they had 
 brought under observation many facts which 
 gave rise to true and valuable economic doc- 
 trines. These doctrines or rules were how- 
 ever quite empirical, isolated, and not elabo- 
 rated into broad and far-reaching principles. 
 
 and had in view far more the advancement of 
 the state, its treasury, and its military power, 
 than the prosperity, the happiness, and the 
 freedom of the people. Nevertheless it is im- 
 portant to recognize the fact of the origin of 
 political economy in these early and imper- 
 fectly stated doctrines. The ancient code of 
 India, the Institutes of Mann, contains provi- 
 sions as to the revenues, usury, &c. ; but these 
 provisions are merely designed to establish and 
 fix the respective rights and duties of the sov- 
 ereign and his subjects, and of the subjects 
 among themselves. In Attica agriculture was 
 commended and encouraged, and the price of 
 agricultural produce was generally low ; while 
 the products of various branches of diversified 
 industry were important, but the prices were 
 generally high. Foreign trade was carried on 
 extensively with the various countries on the 
 shores of the Mediterranean and Black seas. 
 Duties were levied upon foreign imports, but 
 almost if not quite wholly with a view to the 
 revenue of the state. Interest was high, and 
 money was scarce and hard to procure. “ In 
 every Greek state,” says Bockh, “ the finances 
 were in the hands of the sovereign power ; and 
 at Athens the legislation on financial matters 
 belonged to the people, the administration of 
 them to the supreme council. Then, as well 
 as now, the administration of the finances was 
 considered one of the most important branch- 
 es of the public affairs, and the statesman who, 
 like Aristides or Lycurgus, succeeded in pla- 
 cing them in a flourishing condition, gained 
 the good will of the people and tlie admira- 
 tion of posterity.” The laws of Lycurgus deal 
 with many economic questions, such as money, 
 usury, taxes, lands, and the employment of 
 the people ; but almost the sole idea through- 
 out these laws is the establishment of the mil- 
 itary power of Sparta. “ Lycurgus, or the in- 
 dividual to whom this system is owing, who- 
 ever he was,” says Grote, “ is the lawgiver of 
 a political community ; his brethren live to- 
 gether like bees in a hive, with all their feelings 
 implicated in the commonwealth, and divorced 
 from house and home.” The earliest treatise 
 on an economic subject is believed to be “ The 
 Eryxias, or About Wealth,” erroneously at- 
 tributed to ^'Eschines Socraticus, a disciple of 
 Socrates. Plato (“The Republic,” book ii.) 
 calls attention to the necessity for separate 
 employments, and in the opinion of Blanqui 
 “ he has pointed out the advantages of a di- 
 vision of labor with perfect clearness, and 
 appears to us to take from Adam Smith the 
 merit of this discovery.” He also regards the 
 passage in which Plato conducts his reader to- 
 ward a definition of money by tracing up the 
 necessity, in a community of diversified em- 
 ployments and wants, of “an established coin- 
 age as a symbol for the purposes of exchange,” 
 as most remarkable, partaking of the nature of 
 most ingenious art. On the other hand, in the 
 opinion of Say, Plato “ has with tolerable fidel- 
 ity sketched the effects of the separation of 
 

 POLITICAL ECONOMY 
 
 <sS 
 
 social employments, but solely with a view to 
 point out man’s social character, and the ne- 
 cessity he was in, from his multifarious wants, 
 of uniting in extensive societies, in which each 
 individual might be exclusively occupied with 
 one species of production. It is an entirely 
 political view, from which no other conse- 
 quence can be drawn.” Xenophon contributed 
 two brief essays to early political economy, 
 one “On the Revenues of Athens,” the other 
 “The Economist.” The political economy of 
 Xenophon, as Blanqui holds, “rests on no 
 other foundation than that of Plato. When- 
 ever he undertakes to analyze the opera- 
 tions of labor, to trace revenue to its source, 
 to determine the utility of things, the clear- 
 ness of this writer is admirable ; but as soon 
 as he touches the question of the distribution 
 of profits, the Greek prejudices reassume their 
 sway, and the author falls back into the politics 
 of Plato and Aristotle, faithful interpreters 
 of the contemporary oligarchy.” Carey says : 
 “ Xenophon urged upon his Athenian country- 
 men that, in default of the domestic market for 
 food that would have resulted from the prop- 
 er development of the mineral treasures with 
 which their soil abounded, agriculture had be- 
 come impossible ; many having been forced to 
 abandon it, becoming usurers or brokers ;” and 
 he adds: “This is probably the earliest ex- 
 hibit on record of the dependence of agricul- 
 ture on the mining and manufacturing indus- 
 tries.” Aristotle, however, in a greater degree 
 than any other of the ancients, contributed to 
 the foundation of political economy. His three 
 treatises — “Ethics,” which treats of the regu- 
 lation of the individual man; “Politics,” of 
 the relation of man toward others in asocial 
 capacity, both private and public, the family 
 and the state ; and “ Economics,” of the rela- 
 tion of man toward property — constitute in a 
 measure a connected work, each being depen- 
 dent on and interwoven with the others. The 
 expression political economy was first used by 
 Aristotle, and is to be found in the “ Econom- 
 ics,” book ii. chap. i. He lays down the dog- 
 ma that the bounty of nature is the only true 
 source of wealth, and he holds in great abhor- 
 rence trading and usury, which latter, he says, 
 “is most reasonably detested, as the increase 
 of our fortune arises from the money itself, 
 and not by employing it to the ])urpose for 
 which it was intended.” In his “Rhetoric” 
 he lays down the most important princijdes of 
 political policy as follows : finance, peace and 
 war, the safeguard of tbe counti'y, importa- 
 tion and exportation, and legislation. But lit- 
 tle attention was paid to economic studies for 
 many centuries after the time of Aristotle. 
 Agriculture was looked upon with much more 
 favor than any other emjdoyment involving 
 labor, but even farm labor was performed al- 
 most entirely by slaves belonging to and em- 
 ployed by the landlords. The light in which 
 trade was regarded by the Romans may be 
 gathered from Cicero, who in his Be Offieiis 
 
 says : “ The gains of merchants, as well as of 
 all who live by labor and not skill, are nu'an 
 and illiberal. Tbe very mercbandise is a badge 
 of tbeir slavery.” “ All artisans are engaged 
 in a degrading profession,” and “ there can 
 be nothing ingenuous in a workshop.” Sla- 
 very was the very foundation of the industrial 
 system of both Greeks and Romans, as war 
 was of the national policy. The great Ro- 
 man roads were built with a view to their mili- 
 tary advantages, and not to trade and indus- 
 try. Agriculture was the principal industrial 
 occupation of tbe Romans, who were alike in- 
 disposed to diversified industries and foreign 
 trade. Blanqui says : “All the Roman legisla- 
 tion, from the glorious days of the republic to 
 the fall of the empire, is but the faithful repro- 
 duction of the unconquerable prejudices of this 
 people against labor and industry.” Augus- 
 tus pronounced the penalty of death against 
 the senator Ovinius for having degraded him- 
 self by conducting a manufactory. Tbe Jus- 
 tinian code (A. D. 528-535) takes cognizance 
 not merely of the laws but of the arts, the 
 industries, and agriculture, and has been pro- 
 nounced “ the first indication of a systematic 
 political economy.” The “ Capitularies ” of 
 Charlemagne, promulgated in 801, have an 
 economic interest from the fact that they take 
 account as well of the employment and con- 
 dition of the people as of the revenues of the 
 state and the mode of assessing and collecting 
 these latter. Yet the sovereign and the state 
 were subjects of far more solicitude than the 
 condition of the people. Hence for this am< rg 
 other causes Charlemagne failed to found an 
 enduring empire. — During the earlier parts of 
 the niicldle ages no advance was made either 
 in commercial adventure or in letters; but 
 “ the fortunate enterprises of tbe Portuguese 
 and Spaniards during the 15th century, tbe 
 active industry of Venice, Genoa, Florence, 
 Pisa, the provinces of Flanders, and the free 
 cities of Germany, about the same period, 
 gradually directed the attention of some phi- 
 losophers to the theory of wealth.” These 
 investigations originated in Italy. “As far 
 back as the 16th century,” adds Say, “Bote- 
 ro had been engaged in investigating the real 
 sources of public prosperity.” The real and 
 substantial foundation of systematic political 
 economy may be said to have been laid about 
 tbe close of the 16th century. Botero’s “ Cause 
 of the Greatness of Cities” (London, 1635), 
 translated from a work of his published in 
 Venice, 1598, is one of the earliest modern 
 treatises on an economic subject. McCulloch 
 says it “is principally worthy of notice from 
 its showing that the author was fully master 
 of all that is really true in the theory of l^lal- 
 thus.” The earliest general treatise of mod- 
 ern times, and the first bearing the title of 
 political economy, is the Traite de Veconomie 
 politique, by Antoine de Montchrestien (4to, 
 Rouen, 1613). This work treats of the util- 
 ity of mechanic arts and the regulation of 
 
 f 5011.0 
 
4 
 
 POLITICAL ECONOMY 
 
 luamifactures, the employment of men, the 
 trades most important to communities, com- 
 merce, transportation, money, &c. In 1613 
 Antonio Serra published in Naples a volume 
 on the causes which tend to aid an accumula- 
 tion of the precious metals in those countries 
 which do not produce th^ ; and in 1616 Gian 
 Donato Turbulo published in the same city a 
 treatise on the money of the country. About 
 this time treatises on commerce and the pro- 
 hibitive system were published by Duarte Go- 
 mez (Lisbon, 1622) and Juan de Castafiares 
 (1626). — The attention of the earliest English 
 writers on political economy was directed to 
 foreign trade. They saw that it was desirable 
 to have a metallic currency suited to the wants 
 of the business of their country, and while 
 advocating the extension of this trade they 
 recommended the adoption of such measures 
 as would cause gold and silver to flow into the 
 country, and not out. The policy advocated by 
 this school is known to economists as the mer- 
 cantile system. It was supported among oth- 
 ers by Thomas Mun in “A Discourse of Trade 
 from England unto the East Indies” (1621), 
 and by the same author in “ England’s Trea- 
 sure by Forraign Trade, or the Balance of our 
 Forraign Trade is the Rule of our Treasure” 
 (1664). The last named treatise was probably 
 written as early as 1635-’40. In 1663 appeared 
 “England’s Interest and Improvement,” by 
 Samuel Fortrey, who held that the trade with 
 France occasioned a clear loss equal to the 
 balance against England. This was attacked 
 by an anonymous author in “ England’s Great 
 Happiness” (London, 1677). Another writer 
 of this school was Misselden, who in 1623 
 published his “ Circle of Commerce.” In 
 1638 appeared Sir Josiah Child’s “Brief Ob- 
 servations concerning Trade and the Interest 
 of Money,” of which a new edition appeared 
 in 1690, entitled “A new Discourse of Trade.” 
 Its author is usually classed among the mer- 
 cantile school, but he did not regard a direct 
 examination of the comparative amount of 
 imports and exports, or even the movements 
 of the precious metals, as a proper test of the 
 advantages or disadvantages of a foreign trade; 
 he rather looked to its increase or decrease as 
 presenting the most tangible evidence. He 
 advocated reducing the rate of interest from 
 6 to 4 per cent., believing it to be the unum 
 magnum^ as he expressed it, and that it would 
 greatly facilitate business. He recommended 
 “the prevention of the exportation of our wool, 
 and encouraging our woollen manufactures,” 
 and that in Ireland the “linen rather than 
 the woollen manufacture be set up further, 
 that the trade of those countries “ that vend 
 most of our manufactures, or supply us with 
 materials to be further manufactured in Eng- 
 land,” be most encouraged. Andrew Yarran- 
 ton published England’s Improvement by Sea 
 and Land: to outdo the Dutch without Fight- 
 ing, to pay Debts without Moneys, to set at 
 Work the Poor of England with the Growth 
 
 of our own Lands,” &c. (2 parts, 1677-’81). 
 He designed to advance the prosperity and 
 power of England by the introduction of a 
 general system of banking, thus furnishing 
 “ the great sinews of trade, the credit thereof 
 making paper go in trade equal with ready 
 money,” a registry of real estate to facilitate its 
 transfer and mortgage, the improvement and 
 development of the production and trade in 
 linen, woollen goods, and iron, the introduction 
 of canals and the improvement of rivers and 
 harbors, with a view to facilitating internal 
 trade and intercourse. He held that a country 
 desiring to be rich, powerful, and happy must 
 introduce a diversified industry ; and he recog- 
 nized the necessary means for bringing about 
 its development. “Above all,” says Patrick 
 Edward Dove, who regards him as the founder 
 of English political economy, “ we must note 
 his prospective sagacity, for he points out in 
 detail the very course that England has pur- 
 sued, and the vpry elements that were to con- 
 tribute to her commercial superiority.” — An 
 important era in the history of political econ- 
 omy, as well as of industrial development, was 
 the year 1661, when Louis XIV. made Colbert 
 comptroller general of the finances of France. 
 He reduced the national finances to system and 
 order, and instituted a complete plan of checks 
 and balances ; reformed abuses in this depart- 
 ment, and punished those who had been guilty 
 of them ; increased the revenues of the state 
 while at the same time he decreased the bur- 
 dens of the people; provided for economical 
 expenditures, and abolished many of the inter- 
 nal taxes ; developed agriculture, manufactures, 
 the arts, and the sciences; improved roads and 
 rivers, built canals, and by every means fos- 
 tered and increased the internal commerce of 
 the country. By some writers certain features 
 of his tariff laAvs of 1664 and 1667' have been 
 condemned ; but on the other hand we are as- 
 sured that for several years before his adminis- 
 tration “ France swarmed with vagabonds and 
 mendicants,” and had reached “ the most pro- 
 found depth of commercial depression,” and 
 that under the laws of which he Avas the au- 
 thor she rose to “ a point of Avealth and in- 
 dustry far beyond any she had ever reached 
 since the foundation of the monarchy ;” and M. 
 Say says : “ It is not true that Colbert ruined 
 France,” but that, “ on the contrary, France 
 under Colbert’s administration emerged from 
 the distress in Avhich two regencies and a Aveak 
 reign had involved her.” — The various restric- 
 tions upon trade, especially upon the importa- 
 tion of manufactured goods and the exporta- 
 tion of the raw materials used in manufactures, 
 at this time, and even later, and especially in 
 England, Avere very onerous. The penalties 
 for the infringement of the laws were in many 
 cases cruel and even barbarous. This system, 
 Avith the policy pursued under it, was attacked 
 by various Avriters. Among the earliest and 
 ablest of these AA^as Sir Dudley North, Avho pub- 
 lished “Discourses on Trade” (4to, London, 
 
POLITICAL ECONOMY 
 
 
 1691). Among the doctrines held by him as 
 fundamental were: “That the whole world as 
 to trade is but as one nation ; that money is a 
 merchandise whereof there may be a glut as 
 well as scarcity, and that even to an inconve- 
 nience ; that a people cannot want money to 
 serve the ordinary dealing, and more than 
 enough they will not have ; and that money 
 exported in trade is an increase to the wealth 
 of a nation.” Sir William Petty, in “ Quantu- 
 lumcunque, or a Tract concerning Money,” had 
 in 1682 attacked the theory of “the balance of 
 trade;” and at a subsequent day there were 
 many champions on both sides 'of this vexed 
 question; among others, Dr. Davenant (1695- 
 1712) and the Rev. Josiah Tucker (1753), who 
 espoused the so-called mercantile theory, and 
 Sir Matthew Decker (1744) and Joseph Harris 
 (1757-’8), who opposed it. In 1698 appeared 
 in London “ Historical and Political Essays, 
 or Discourses on Several Subjects,” including 
 money, government, &c., by John Locke, com- 
 prising papers which had been previously pub- 
 lished, in which he had for the first time pro- 
 mulgated some of the favorite theories in re- 
 gard to money now held by European econo- 
 mists. He taught that men in their bargains 
 contract “ not for denominations or sounds, but 
 for the intrinsic value, which is the quantity of 
 silver by public authority warranted to be in 
 pieces of such denominations ;” and further, 
 that “one metal alone can be the money of ac- 
 count and contract, and the measure of com- 
 merce in any country ; ... all other metals, 
 gold as well as lead, are but commodities.” — In 
 1758 appeared at Versailles the Tableau econo- 
 mique^ et maximes genhales du gouvernement 
 economique^ by Francois Quesnay, followed 
 by Theorie de Vimpot^ by the elder Mirabeau 
 (1760), La pMlosopTiie rurale^ also by Mira- 
 beau (1763), and various other works by Ques- 
 nay and his disciples, expounding the physio- 
 cratic or agricultural system of economy. The 
 physiocrat! sts held that the earth is the sole 
 producer of wealth, and divided the industrial 
 members of society into three classes : 1, the 
 proprietors of the land; 2, the cultivators, 
 whom they regarded as a productive class ; 3, 
 the mechanics, manufacturers, and merchants, 
 whom they styled the unproductive class. That 
 portion of his income which the landlord laid 
 out in the improvement of his land they char- 
 acterized as productive expenses; and in so far 
 as the landlord by these expenditures aided the 
 farmer in increasing the amount of his produce, 
 the landlord became one of the productive class. 
 They maintained that the labor of mechanics, 
 manufacturers, and artisans was unproductive, 
 because it merely replaced the stock Avliich 
 employed them, together with the ordinary 
 profits of that stock ; and that mercantile stock 
 was unproductive because it merely continued 
 the existence of its own value. They admitted 
 that mechanics, manufacturers, and merchants 
 might augment the revenue and wealth of so- 
 ciety, but that it could only be accomplished 
 
 by parsimony or privation. They believed that 
 tlie most perfect freedom of trade with all na- 
 tions was the great desideratum for agricul- 
 ture. Dissenting entirely from the central idea 
 of this school and its logical deductions, Adam 
 Smith, in 1776, expressed the opinion that 
 “ with all its imperfections it is, perhaps, the 
 nearest approximation to the truth that has yet 
 been published upon the subject of political 
 economy.” Among the most eminent of the 
 physiocratists was Turgot, afterward comptrol- 
 ler general of finances, who early embraced the 
 views of Quesnay, and in 1771 published Re- 
 flexions sur la formation et la distribution des 
 richesses^ the ablest of the treatises of this 
 school. — A Spanish treatise well worthy of at- 
 tention is “ The Theory and Practice of Com- 
 merce and Maritime Affairs,” by Geronimo 
 de Ustariz (Madrid, 1724 ; English, 2 vols., 
 1751). “ Though imbued with the prejudices 
 
 of the mercantile system,” says McCulloch, “ it 
 is valuable for the information it affords re- 
 specting the internal policy, trade, and state of 
 Spain from the reign of Charles V. down- 
 ward.” Montesquieu’s Be V esprit des lois (Ge- 
 neva, 1748) is worthy of note in the history 
 of political economy, on account of its refer- 
 ence to such subjects, particularly in regard 
 to foreign commerce, taxes, public debts, and 
 money. His theory of money very closely re- 
 sembles the views of Hume upon the subject, 
 which are now held by so many economists. 
 — Among the contributions to political econ- 
 omy up to the end of the 18th century, none 
 evince greater reasoning power than the “ Po- 
 litical Discourses” of David Hume (1752). 
 Among those essays w'hich come within the 
 limit of political economy are “ Commerce,” 
 “Refinements in the Arts,” “Money,” “Inter- 
 est,” “ The Balance of Trade,” “ The Jealousy 
 of Trade,” “ Taxes,” and “ Public Credit.” Ac- 
 cording to the doctrines of these essays, every- 
 thing in the world is purchased by labor, and 
 our passions are the only causes of labor; 
 when a nation abounds in manufactures and 
 the mechanic arts, scientific agriculture becomes 
 possible, and the cultivators of the soil re.double 
 their industry and attention, the surplus pro- 
 duce being readily exchanged for the products 
 of those manufactures and mechanic arts, and 
 the land furnishes more than is needed for the 
 support of those who cultivate it ; while on 
 the other hand, where this diversified industry 
 does not flourish, there is no inducement for 
 the agriculturists to increase their skill and 
 industry, because of the difficulty of exchanging 
 any surplus. Foreign trade by its imports fur- 
 nishes raw materials for new manufactures, 
 and by its exports gives employment to labor, 
 which in the absence of this trade might be 
 wasted. Necessity is the great incentive to 
 industry and invention — rather the fears than 
 tlie hopes, the aspirations, and the ambition of 
 mankind. Money Hume considers not properly 
 one of the subjects of commerce, but “ only 
 the instrument which men have agreed upon 
 
6 
 
 POLITICAL ECONOMY 
 
 to facilitate the exchange of one commodity 
 for another.” He holds to the idea that “ an 
 increase in the amount of money in a country 
 is rather inconvenient than advantageous, the 
 influence which it exerts being to heighten the 
 price of commodities, and oblige every one 
 to pay a greater number ©f these little yellow 
 or white pieces for everything he purchases.” 
 But he did not fail to observe in actual expe- 
 rience an apparent departure from the course 
 here laid down. He had been led to notice 
 that ‘‘ in every kingdom into which money 
 begins to flow in greater abundance than for- 
 merly, everything takes a new face ; labor and 
 industry gain life ; the merchant becomes more 
 diligent and skilful, and even the farmer fol- 
 lows his plough with greater alacrity and at- 
 tention.” He then enters into a series of rea- 
 sonings to show that it is not immediately upon 
 the receipt of this money into a country that 
 a rise in prices takes place, but that “ some 
 time is required before the money circulates 
 through the whole state, and makes its effects 
 felt on all ranks of the people.” The rate 
 of interest, he holds, “ is not derived from the 
 quantity of the precious metals,” but “ high in- 
 terest arises from three circumstances : a great 
 demand for borrowing, little riches to supply 
 that demand, and great profits arising from 
 commerce.” “ I should as soon dread,” he 
 adds, “ that all the springs and rivers should 
 be exhausted, as that money should abandon 
 a kingdom where there are people and indus- 
 try.” While deprecating as unwise and illib- 
 eral all “ those numberless bars, obstructions, 
 and imposts,” which nations have laid with the 
 object of retaining the precious metals, he says 
 that “ all taxes upon foreign commodities are 
 not to be regarded as prejudicial or useless, 
 but those only which are founded upon the 
 jealousy” of the balance of trade. “A tax on 
 German linen encourages home manufactures, 
 and thereby multiplies our people and indus- 
 try. A tax on brandy increases the sale of rum 
 and supports our southern colonies.” — Among 
 the earliest of the systematic books on politi- 
 cal economy must be included Lezioni di com- 
 mercio, o di economia civile^ by the Abate An- 
 tonio Genovesi (2 vols., Naples, 1757). In the 
 opinion of McCulloch, it “is one of the best 
 that has been written on the narrow and hol- 
 low principles of the mercantile system ;” hut 
 the denunciation here implied should be taken 
 with much allowance for McCulloch’s preju- 
 dices. The book is celebrated, and has often 
 been reprinted. — In 1767 appeared in London 
 “ An Inquiry into the Principles of Political 
 Economy, being an Essay on the Science of 
 Domestic Policy in Free Nations,” by Sir James 
 Steuart, a countryman of Hume. This was the 
 largest and most elaborate book on the sub- 
 ject which had then been written in English. 
 It treats in detail of population, agriculture, 
 trade, industry, money, coin, credit, debts, in- 
 terest, banks, exchange, public credit, and 
 taxes. Economy in general Stciuirt defines as 
 
 the art of providing for all the wants of a 
 family with prudence and frugality. Political 
 economy he regards as an art, and also a sci- 
 ence ; and among its important objects are 
 “ to provide everything necessary for supply- 
 ing the wants of society, and to employ the 
 inhabitants in such a manner as naturally to 
 create reciprocal relations and dependencies, 
 so as to make their several interests lead them 
 to supply one another with their reciprocal 
 wants.” Population he considers limited by 
 the amount of food produced, and “ that when 
 too many of a society propagate, a part must 
 starve.” He holds that if a nation would aim 
 to be continuously gi-eat and powerful by trade, 
 she must first apply closely to the manufac- 
 turing of every natural product of the country; 
 and that when a people find the balance of 
 trade to be against them, it is to their interest 
 to take such measures as will correct the evil. 
 He attacks the theory of Locke and Hume 
 respecting the effect of an increased volume 
 in the circulating medium upon prices. He 
 argues that, while the wealth of a country un- 
 doubtedly exerts an influence upon the prices 
 of certain commodities, prices are really reg- 
 ulated by “ the complicated operations of de- 
 mand and competition ;” and that when Hume 
 says that “ the price of every commodity is in 
 proportion to the sum of money circulating* in 
 the market for that commodity,” it really means 
 that the money to be employed in the purchase 
 of it is a measure of the demand for it ; and it 
 in no wise interferes with Steuart’s own propo- 
 sition respecting the operation of supply, which 
 is fundamental. In 1772, at the request of the 
 East India company, the same author prepared 
 “ The Principles of Money as applied to the 
 Coin of Bengal,” in many respects a very able 
 treatise. — In 1776 appeared in London the first 
 edition of the great work of Adam Smith, 
 destined to exert so decided an influence on 
 political economy and legislation : “ An Inqui- 
 ry into the Nature and Causes of the Wealth 
 of Nations.” This remarkable book treats 
 “ of the causes of improvement in the produc- 
 tive powers of labor, and the order according 
 to which its produce is naturally distributed 
 among the different ranks of the people ; of 
 the nature, accumulation, and employment of 
 stock ; of systems of political economy; of the 
 revenue of the sovereign or commonwealth.” 
 Dr. Smith holds that the annual labor of every 
 nation is the fund which originally supplies it 
 with what it annually consumes, and that the 
 relative proportion which that produce bears 
 to the consumers is the measure of their sup- 
 ply in the necessaries and conveniences of life ; 
 that the greatest improvement in the produc- 
 tive power, skill, and judgment of labor has 
 arisen from the division of labor ; that the ex- 
 tent of the division of labor is limited by the 
 market for its products; and that labor is the 
 only universal as well as accurate measure of 
 value, or the only standard by which we can 
 compare the values of different commodities at 
 
POLITICAL ECONOMY 
 
 7 
 
 all times and in all places. He says that the 
 demand for labor can only increase in propor- 
 tion to the increase of the “funds destined for 
 the payment of wages;” and yet, while justly 
 holding that it is labor which supplies a people 
 with what they consume, he says that “ the 
 attention of government never was so unne- 
 cessarily employed as when directed to watch 
 over the preservation or increase of the quan- 
 tity of money in any country.” In his com- 
 plicated arguments respecting “stock” — which 
 he says consists of two parts, that which the 
 possessor “expects is to afford him revenue,” 
 which “is called his capital,” and also that 
 which supplies his “ immediate consumption ” 
 — he involves himself in some of the most 
 serious fallacies to be found in his book, the 
 deductions from which are fatal to much of 
 his system. Money he terms “the great wheel 
 of circulation, the great instrument of com- 
 merce,” and adds that it “makes a part and a 
 very valuable part of the capital ” of a coun- 
 try or people, and that when possessed of it 
 we can readily obtain whatever else we have 
 occasion for. “ The great affair is to get 
 money ; when that is obtained, there is no dif- 
 ficulty in making any other purchase.” Here, 
 it will be observed, he recognizes the impor- 
 tant fact that money possesses a quality not 
 to be found in any other commodity : its uni- 
 versal acceptability among men, its power to 
 purchase anything Avhich man desires to sell. 
 In tracing the general progress of wealth, he 
 illustrates the importance of the diversification 
 of industry to the farmer as follows: “An in- 
 land country naturally fertile and easily culti- 
 vated produces a great surplus of provisions 
 beyond what is necessary for maintaining the 
 cultivators ; and on account of the expense 
 of land carriage, and inconveniency of river 
 navigation, it may frequently he difficult to 
 send this surplus abroad.” When then work- 
 men engaged in other pursuits settle in the 
 neighborhood, “they work up the materials 
 of manufacture which the land produces, and 
 exchange finished work” “or the price of it 
 for more materials and provisions.” “ They 
 give a new value to the surplus part of the 
 rude produce, by sa^dng the expense of carry- 
 ing it to the water side, or to some differ- 
 ent market ; and they furnish the cultivators 
 with something in exchange for it that is 
 either useful or agreeable to them, upon easier 
 terms than they could have obtained it before. 
 . . . They are thus both encouraged and en- 
 abled to increase this surplus produced by a 
 further improvement and better cultivation of 
 the land; and as the fertility of the land had 
 given birth to the manufacture, so the prog- 
 ress of the manufacture reacts upon the land, 
 and increases the fertility.” As the work 
 improves, more distant markets are reached ; 
 “ for though neither the rude produce, nor 
 even the coarse manufacture, could without 
 the greatest difficulty support the expense of 
 a considerable land carriage, the refined and 
 
 improved manufacture easily may. In a small 
 bulk it frequently contains the price of a great 
 quantity of rude produce.” With all its in- 
 consistencies, few books have exerted so great 
 an influence upon the affairs of mankind. — In 
 1798 appeared anonymously “An Essay on the 
 Principle of Popula^on as it affects the Future 
 Improvement of Society,” the author of which 
 w-as the Eev. T. 11 . Malthus. New revised 
 and enlarged editions have since been pub- 
 lished with the name of the author, the sixth 
 in 1826. According to its preface, this pub- 
 lication “ owes origin to a conversation with 
 a friend on the subject of William Godwin’s 
 essay on avarice and profusion in his ‘In- 
 quirer.’ ” In addition to an examination of 
 the principle of population, and as a part of 
 his subject, Malthus reviews the doctrines of 
 Godwin as well as those of Condorcet, both of 
 whom held to the possible progress of man 
 toward future perfection, and a consequent 
 reign of equality, peace, and justice. Impress- 
 ed with the force of Godwin’s protest against 
 the defects and failures of the existing social 
 organization, in the essay above referred to 
 and in his “Inquiry concerning Political Jus- 
 tice ” (1793), respecting the unequal distribu- 
 tion of property, Malthus aimed to overthrow 
 it by presenting evidence that the inequality 
 among mankind was due to a natural law. His 
 principle is that “population when unchecked 
 increases in a geometrical ratio, while subsis- 
 tence increases only in an arithmetical ratio ;” 
 or, practically stated, that “in two centuries 
 the population would be to the means of sub- 
 sistence as 256 to 9, in three centuries as 4,096 
 to 13, and in 2,000 years the difference would 
 be almost incalculable.” He does little more 
 than state his proposition, when, almost with- 
 out presenting proof in regard to the actual 
 power of increase in man and food respective- 
 ly, he proceeds to show what have been the 
 checks to increase of population throughout 
 the various countries of the world. Popula- 
 tion, he holds, “is necessarily limited by the 
 means of subsistence,” and “invariably in- 
 creases where those means increase, unless 
 prevented by some very powerful and obvious 
 check.” These checks he divides into the 
 positive and the preventive. The former “in- 
 clude every cause, whether arising from vice 
 or misery, which in any degree contributes to 
 shorten the natural duration of human life,” 
 among which maybe enumerated “unwhole- 
 some occupations, severe labor, exposure to 
 the seasons, extreme poverty, bad nursing of 
 children, great towns, excesses of all kinds, the 
 whole train of common diseases, and epidem- 
 ics, wars, plagues, and famine.” The pre- 
 ventive checks include abstinence from mar- 
 riage and sexual intercourse from considera- 
 tions of prudence, and all vice and immorality 
 tending to render women unprolific. Few 
 books have formed the subject of greater dis- 
 cussion and controversy than this; and it is 
 difficult to say whether among economic wri- 
 
8 
 
 POLITICAL ECONOMY 
 
 ters those who do or who do not now accept 
 its doctrines form the larger number. Yet it 
 must be acknowledged that these doctrines 
 have taken a hold upon the minds of men 
 which it is difficult to shake off. According 
 to Prof. E. E. Thompson, Malthus’s main 
 position was anticipated by Herrenschwand 
 in his Discours fondamental sur la population 
 (1786). In 1820 Godwin published his work 
 “On Population, an Inquiry concerning the 
 Power of Increase in the Numbers of Mankind, 
 being an Answer to Mr. Malthus’s Essay on 
 that Subject.” The “ Inquiry ” comprises a 
 careful examination of the progress of popula- 
 tion throughout the world, and of the causes 
 which tend to prevent its increase, of the 
 means of subsistence of man, and a review of 
 Malthus’s doctrines from a moral as well as a 
 philosophical standpoint. Godwin gives as his 
 reason for producing his book, that Malthus 
 had said in his preface that the “ Essay on 
 Population ” was indebted to his writings for 
 its existence ; and as “ it still holds on its pros- 
 perous career,” “I cannot consent,” he adds, 
 “to close my eyes for ever, with the judg- 
 ment, as the matter now seems to stand, re- 
 corded on my tomb, that in attempting one 
 further advance in the route of improvement, 
 I should have brought on the destruction of all 
 that Solon, and Montesquieu, and Sidney . . . 
 had seemed to have effected for the redemption 
 and the elevation of mankind.” He says that 
 Malthus’s book had then been before the public 
 20 years without any one, so far as he knew, 
 attempting a refutation of his main principle. 
 One of the most detailed examinations of the 
 work of Malthus which have been published 
 is “ The Law of Population,” by Michael 
 Thomas Sadler, M. P. (London, 1830). In ad- 
 dition to an elaborate answer to Malthus’s 
 theory, Mr. Sadler develops a doctrine of popu- 
 lation. “The prolificness of human beings,” 
 he says, “ otherwise similarly circumstanced, 
 varies inversely as their numbers and he pre- 
 sents a mass of evidence to prove that nature 
 has not “ invested man with a fixed and un- 
 varying measure of prolificness,” but that the 
 Creator has “ regulated the prolificness of his 
 creatures in reference to the circumstances in 
 which his providence shall place them, instead 
 of leaving that regulation to the busy, selfish, 
 and ignorant interference of men.” In arti- 
 cles published in July, 1830, and January, 1831, 
 and now included in the collection of his es- 
 says, Macaulay attacked Sadler’s book with 
 much severity, and at the same time indicated 
 unmistakably his belief in the doctrines of 
 Malthus. The Kev. Thomas Chalmers, D. D., 
 who had thoroughly imbibed these doctrines, 
 published a volume on “Political Economy in 
 connection with the Moral State and Moral 
 Prospects of Society ” (Glasgow, 1832). Fear- 
 ing “ a sweeping, headlong anarchy,” he aimed 
 to present the evidence of the “ tremendous 
 evil” of over population, and at the same time 
 to appeal to his countrymen to take steps to 
 
 “avert it from their borders.” In 1840 ap- 
 peared in Edinburgh “The Principles of Pop- 
 ulation, and their Connection with Human 
 Happiness,” by Archibald Alison (2 vols. 
 8vo), the first draft of which, says the au- 
 thor, was composed in 1809 and 1810, while 
 the treatise was rewritten between 1819 and 
 1828. This book is wonderfully rich in facts 
 and illustrations, and deduces a "theory of self- 
 adjustment in the power of increase in popula- 
 tion which may be briefly stated as follows : 
 There is a rapid increase of numbers in the 
 early stages of society, a gradual retardation 
 as society advances, and an ultimate stationary 
 condition in its last stages. It need hardly be 
 added that Mr. Alison is an uncompromising 
 adversary of Malthus, and that he sees nothing 
 in this question which can give any cause for 
 alarm for the future of mankind upon the 
 earth. In 1841 Thomas Doubleday published 
 in London “ The true Law of Population shown 
 to be connected with the Food of the People ” 
 (new ed., 1854), in which he undertakes to de- 
 monstrate that “ whenever a species or genus 
 is endangered, a corresponding effort is inva- 
 riably made by nature for its preservation and 
 continuance, by an increase of fecundity or fer- 
 tility ; and that this especially takes place when- 
 ever such danger arises from a diminution of 
 proper nourishment,” and that consequently 
 “ the deplethoric state is favorable to fertili- 
 ty, and that on the other hand the plethoric 
 state is unfavorable to fertility.” Thus “ there 
 is in all societies a constant increase going on 
 among that portion of it which is the worst 
 supplied with food ; in short, among the poor- 
 est.” “The Westminster Eeview ” for April, 
 1852, contains “ A New Theory of Popula- 
 tion,” understood to be by Herbert Spencer, 
 deduced from the general laAv of animal fer- 
 tility. It argues that an antagonism exists be- 
 tween individuation and reproduction; that 
 matter in its lower forms, that of vegetables 
 for instance, possesses a stronger power of 
 increase than in all higher forms ; that the 
 capacity of reproduction in animals is in an 
 inverse ratio to their individuation ; that the 
 ability to maintain individual life and that of 
 multiplication vary in the same manner also. 
 He further demonstrates that “the ability to 
 maintain life is in all cases measured by the 
 development of the nervous system.” In 
 Spencer’s “Principles of Biology” the doc- 
 trines here stated have been further elaborated 
 and illustrated. “ Population and Capital,” 
 consisting of lectures delivered before the uni- 
 versity of Oxford in 1853-’4, by George K. 
 Rickards (London, 1854), contends by careful 
 induction from facts that the trutli is the very 
 reverse of Malthus’s theory; “that the pro- 
 ductive power of a community tends to increase 
 more rapidly than the number of its inhabi- 
 tants.” W. R. Greg, in “Enigmas of Life” 
 (London, 1872), has taken issue with Malthus, 
 and says one influence tending to reduce the 
 rate of increase “ may be specified with con- 
 
POLITICAL ECOTOMY 
 
 9 
 
 siderable confidence, namely, the tendency of 
 cerebral development to lessen fecundity,” and 
 approvingly cpiotes Herbert Spencer’s views. 
 But lie says that some years ago he had hoped 
 to be able to show that Maltlms’s premises 
 were imperfect and his conclusions in conse- 
 quence unsound. “ It is with sadness,” he adds, 
 “ 1 am now compelled to admit that further 
 investigation and deeper thought have shaken 
 this confidence. I now only venture to suggest 
 as eminently probable what I once fancied I 
 could demonstrate to be certain.” — Probably 
 no work on political economy has been more 
 extensively read or studied, or has exerted a 
 larger influence in the formation of opinions 
 in the United States at least, than Jean Bap- 
 tiste Say’s “Treatise on Political Economy, 
 or the Production, Distribution, and Con- 
 sumption of Wealth” (Paris, 1803; 6th ed., 
 1841). This treatise is in form the most scien- 
 tific and methodical which at the time of its 
 publication had appeared in any language. 
 “If,” says Say, “ we take the pains to inquire 
 what that is which mankind in a social state 
 of existence denominates wealth, we shall find 
 the term employed to designate an indefinite 
 quantity of objects bearing inherent value, as 
 of land, of metal, of coin, of grain, of stuffs, of 
 commodities of every description. When its 
 signification is further extended to landed se- 
 curities, bills, notes of hand, and the like, it is 
 evidently because they contain obligations to 
 deliver things possessed of inherent value. In 
 point of fact, wealth can only exist where there 
 are things possessed of real and intrinsic value. 
 Wealth is proportionate to the quantum of that 
 value ; great when the aggregate of component 
 value is great, small when that aggregate is 
 small. . . . The knowledge of the real nature 
 of wealth, thus defined, of the difficulties that 
 must be surmounted in its attainment, of the 
 course and order of its distribution among the 
 members of society, of the uses to which it may 
 be applied, , and further, of the consequences 
 resulting respectively from these several cir- 
 cumstances, constitute that branch of science 
 now entitled political economy.” Subsequent- 
 ly Say published his lectures on the applica- 
 tion of the science, under the title of Coiirs 
 complet d?econow.ie politique pratique^ suivi 
 de melanges (6 vols., Paris, 1828-’30; 3d ed., 
 edited by Horace Say, 1852). An examination 
 of this book will show that he had materially 
 altered his views, and was now disposed to treat 
 political economy as something higher and 
 better than a mere science of wealth. “ The 
 object of political economy,” he says in this 
 later book, “ seems heretofore to have been 
 restricted to the knowledge of the laws which 
 govern the production, distril)ution, and con- 
 sumption 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 per- 
 tains to everything in society.” In the same 
 year in which Say’s first treatise appeared, 
 
 Sismondi published in Geneva his Traite de 
 la rich esse commerciale. At this time Sis- 
 mondi was a decided follower of Adam Smith ; 
 “but,” says Colwell, “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 pure love 
 of human welfare, and his detestation of the 
 science of v'ealth apart from human well-be- 
 ing.” — At the request of Alexander 1. of Kus- 
 sia H. Storch prepared his Cours d^economie 
 politiq'iie^ ou exposition des principcs qui de- 
 terminent la qorosph'ite des nations (St. Peters- 
 burg, 1815). “The emperor Alexander, hav- 
 ing taken his lessons in political economy from 
 M. Storch,” says Carey, “determined to carry 
 out in the administration of the empire the 
 lessons he had learned in the closet ; but the 
 result proved most disastrous. British goods 
 flowed in in a constant stream, and Knssian 
 gold flowed out; and the government was par- 
 alyzed, while the manufacturers were ruined. 
 . . . Count Nesselrode issued a circular prelim- 
 inary to a change of system, in w hich it was 
 declared that Kussia found herself forced to 
 resort to a system of independent commerce; 
 that the products of the empire no longer found 
 markets abroad ; that the manufactures of the 
 country w^ere exceedingly depressed ; that the 
 coin of the country was rapidly floAving out to 
 distant nations; that the most solid mercantile 
 establishments had become endangered ; and 
 that agriculture and commerce as well as manu- 
 facturing industry w^ere not only paralyzed, but 
 had been brought to the brink of ruin.” In 
 1824 Kussia again imposed heavier duties in 
 opposition to the theories of Storch. — “ The 
 Principles of Political Economy and Taxation,” 
 by David Ricardo, appeared in London in 1817 
 (3d ed., 1821). The most noted doctrines of 
 this wmrk are the theory of rent and the con- 
 sequent theory of value. The former, Avith 
 Avhich the name of Ricardo is noAv ahvays as- 
 sociated, Avas announced in 1777 by James An- 
 derson, a Scotchman, in a tract entitled “An 
 Inquiry into the Nature of the Corn LaAvs;” 
 and it seems to have been so completely over- 
 looked and forgotten, that “ Avhen in 1815,’' 
 says an English economist, “Mr. Malthus and 
 Sir Edward West published their tracts exhib- 
 iting the nature and progress of rent, they were 
 universally believed to have for the first time 
 discovered the laws by Avhich it is governed.” 
 The theories of rent and value, abridged from 
 Ricardo’s own statement, are as follows: On 
 the first settling of a country in which there 
 is an abundance of rich and fertile land, there 
 Avill be no rent; for no one Avould pay for 
 the use of land Avhen there Avas an abundant 
 quantity not yet appro])riated. If all land 
 had the same properties, if it Avere boundless 
 in quantity and uniform in quality, no charge 
 could be made for its use, unless Avhere it pos- 
 sessed peculiar advantages of situation. It is 
 
10 
 
 POLITICAL ECONOMY 
 
 only then because land is not unlimited in 
 quantity and uniform in quality, and because 
 in the progress of population land of an infe- 
 rior quality or less advantageously situated is 
 called into cultivation, that rent is ever paid 
 for the use of it. When in the progress of 
 society land of the second degree of fertility 
 is taken into cultivation, rent immediately 
 commences on that of the first quality; and 
 the amount of that rent will depend on the 
 difference in the quality of these two portions 
 of land. When land of the third quality is 
 taken into cultivation, rent immediately com- 
 mences on the second, and it is regulated as 
 before by the difference in their respective 
 productive powers. At the same time the rent 
 of the land of the first quality will rise, for 
 that must always be above the rent of the 
 second, by the difference between the produce 
 which they yield with a given quantity of cap- 
 ital and labor. “ The most fertile and favora- 
 bly situated land will be first cultivated, and 
 the exchangeable value of its produce will be 
 adjusted in the same manner as the exchange- 
 able value of all other commodities, by the 
 total quantity of labor necessary in various 
 forms, from first to last, to produce it, and 
 bring it to market. When land of an inferior 
 quality is taken into cultivation, the exchange- 
 able value of raw produce will rise, because 
 more labor is required to produce it.” “ This,” 
 says one of Eicardo’s followers, “is the fun- 
 damental theorem of the science of value, and 
 the clue which unravels the laws that regu- 
 late the distribution of wealth.” By reason of 
 these theories of rent and value, if in accor- 
 dance with the facts, the landlord would be en- 
 abled to command a steadily increasing rent as 
 the yield per acre declined, until he absorbed 
 the entire product of the land ; and food would 
 as steadily increase in cost as population in- 
 creased. Starvation and wretchedness could 
 not fail to be the lot of the mass of mankind 
 under such a condition of things. These theo- 
 ries seemed to aid in accounting for the Mal- 
 thusian principle of population, and they at 
 once took their positions as logically anterior 
 to that doctrine, and became the foundation 
 of the system now known as Eicardo-Malthu- 
 sianism. — In 1825 Samuel Bailey, author of 
 “ Essays on the Formation and Publication of 
 Opinions,” published “ xi Critical Dissertation 
 on the Nature, Measure, and Causes of Value,” 
 in which he attacked Ricardo’s theory of value. 
 In 1821-’2 James Mill published “Elements of 
 Political Economy,” which is to some extent 
 a statement and abstract elaboration of some 
 of the doctrines of Adam Smith and Ricardo 
 in regard to production and distribution, and i 
 those of Malthus respecting population. — One 
 of the most Avidely known writers on political 
 economv and statistics for the last generation 
 was J. R. McCulloch, Avho prepared the article 
 for the supplement to the “Encyclopaedia Bri- 
 tannica,” a separate e'lition of which appeared 
 in 1825, and which has since passed through 
 
 several editions, the last in 1864 under the 
 title of “ The Principles of Political Economy, 
 Avith some Inquiries respecting their Appli- 
 cation, and a Sketch of the Rise and Progress 
 of the Science.” “ McCulloch,” says Colwell, 
 “ 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 prac- 
 tical point of view. He speaks of a 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 Rossi, Senior, and J. 
 S. Mill.” — In the “ Encylopaedia Metropoli- 
 tana” in 1835, and subsequently in a separate 
 form, appeared “ Political Economy ” by Nas- 
 sau W. Senior, professor in the university of 
 Oxford ; the subject being, by the plan of the 
 “Encyclopaedia,” classed as among the pure 
 sciences. But the author of this treatise failed 
 to confine his investigations strictly Avithin 
 these bounds. “We propose in the following 
 treatise,” he says in opening, “to give an out- 
 line of the science which treats of the nature, 
 the production, and the distribution of Avealth. 
 To that science Ave give the name of political 
 economy.” He insists too on limiting his in- 
 quiries to these subjects as the only true and 
 legitimate ones, and adds that political econo- 
 my does not treat of “ happiness, but Avealth.” 
 He even declines to examine into the effects 
 upon society of the possession of wealth, what 
 distribution is most desirable, or what are the 
 means by Avhich any peculiar distribution can 
 be carried into effect by legislation. All of 
 these questions are “ of great interest and diffi- 
 culty, but no more form part of the science of 
 political economy, in the sense in which we 
 use that term, than navigation forms part of 
 the science of astronomy.” The premises of 
 the political economist he regards as consist- 
 ing “ of a few general propositions, the result 
 of observation or consciousness, and scarcely 
 requiring proof or formal statement, which 
 almost every man, as soon as he hears them, 
 admits as familiar to his thoughts, or at least 
 as included in his previous knowledge ; and 
 his inferences are nearly as general, and, if he 
 has reasoned correctly, as certain as his prem- 
 ises.” The fundamental propositions in po- 
 litical economy Mr. Senior thus states : 1, every 
 man desires to obtain additional Avealth Avitli 
 as little sacrifice as possible; 2, the population 
 of the world, or in other Avords the number of 
 persons inhabiting it, is limited only b}” moral 
 and physical evil, or by the fear of a deficiency 
 of those articles of Avealth Avhich the habits of 
 the individuals of each class of its inhabitants 
 lead them to require; 3, the poAvers of labor, 
 and of the other instruments Avhich produce 
 Avealth, may be indefinitely increased by using 
 their products as the means of further ])roduc- 
 tion ; 4, agricultural skill remaining the same, 
 additional labor employed on the land Avithin a 
 given district produces in general a less propor- 
 
POLITICAL ECOJiTOMY 
 
 11 
 
 tionate return ; or in other words, though with 
 every increase of the labor bestowed the aggre- 
 gate return is increased, the increase of the re- 
 turn is not in proportion to the increase of la- 
 bor. Mr. Senior belonged, as can be seen, to the 
 school of Ricardo and Malthus, and believed 
 with them in the limited powers of the earth, 
 although in reality he took issue with Malthus 
 in the consideration of his theory of population. 
 — No English writer on political economy du- 
 ring the present century has attracted more 
 attention or been regarded as higher author- 
 ity than John Stuart Mill. He defines it to 
 be ‘‘ the science which treats of the produc- 
 tion and distribution of wealth, so far as they 
 depend upon the laws of human nature; or 
 the science relating to the moral or psycho- 
 logical laws of the production and distribu- 
 tion of wealth.” Again he says ; “ Political 
 economy may be defined as follows, and the 
 definition seems to be complete : The science 
 which traces the laws of such of the phe- 
 nomena of society as arise from the combined 
 operations of mankind for the production of 
 wealth, in so far as those phenomena are not 
 modified by the pursuit of any other object.” 
 Political economy is “essentially an abstract 
 science,” and its method “is the a 'prioriP 
 “ It reasons,” he contends, and “ must ne- 
 cessarily reason, from assumptions, not from 
 facts.” “ The conclusions of political econo- 
 my, consequently, like those of geometry, are 
 only true, as the common phrase is, in the ab- 
 stract.” “That which is true in the abstract 
 is always true in the concrete with proper al- 
 lowances.” Not only “the method a p>'f'iori 
 is the legitimate mode of philosophical investi- 
 gation in the moral sciences,” but “it is the 
 only mode.” The a posteriori method, or that 
 of specific experience, “is altogether ineffica- 
 cious,” although it may be “ usefully applied 
 in aid of the a priori?'' Therefore, “ since it 
 is vain to hope that truth can be arrived at, 
 either in political economy or in any other de- 
 partment 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 a priori one, or that of abstract specula- 
 tion.” “ In all the intercourse of man with 
 nature,” proceeds Mr. Mill, “ whether we con- 
 sider him as acting upon it or as receiving im- 
 pressions from it, the effect or i)henomenon 
 depends upon causes of two kinds, the proper- 
 ties of the object acting and those of the ob- 
 ject acted upon. Everything which can pos- 
 sibly happen, in which man and external things 
 are jointly concerned, results from the joint 
 operation of the law or laws of matter, and 
 the law or laws of the human mind.” “ There 
 are no phenomena,” he continues, “ which de- 
 pend exclusively upon the laws of mind ; even 
 the phenomena of the mind itself being par- 
 tially dependent upon the physiological laws 
 
 of the body.” Mr. Mill acknowledges that 
 “the laws of the production of objects which 
 constitute wealth are the subject matter both 
 of political economy and of almost all the 
 physical sciences;” but he considers that po- 
 litical economy “presupposes all the physical 
 sciences,” and adds that “it takes for granted 
 that the physical part of the process takes 
 place somehow.” In other words, it matters 
 not to political economy why, how, or under 
 what circumstances these laws of matter oper- 
 ate. Mr. Mill’s design in writing his “Princi- 
 ples of Political Economy ” was to produce “a, 
 work similar in its object and general concep- 
 tion to that of Adam Smith ; to exhibit the 
 economical phenomena of society in the rela- 
 tion in which they stand to the best social 
 ideas of the present time.” He was a full be- 
 liever in the views of Locke, Montesquieu, 
 Hume, and Smith in regard to money ; in those 
 of Ricardo on rent, and Malthus on population. 
 He combats with much energy “protection- 
 ism,” but holds that there is one, and only one 
 case, “in which, on mere principles of politi- 
 cal economy, protecting duties can be defensi- 
 ble;” that is, “when they are imposed tem- 
 porarily (especially in a young and rising na- 
 tion), in hopes of naturalizing a foreign indus- 
 try, in itself perfectly suitable to the circum- 
 stances of the country.” Mill was long among 
 the ablest and most distinguished supporters 
 of the wage-fund theory, which, stated by him 
 so lately as May, 1869, in the “Fortnightly Re- 
 view,” is briefly as follows : “ There is supposed 
 to be, at any given instant, a sum of wealth 
 which is unconditionally devoted to the pay- 
 ment of wages of labor. This sum is not re- 
 garded as unalterable, for it is augmented by 
 saving, and increases with the progress of 
 wealth ; but it is reasoned upon as at any given 
 moment a predetermined amount. More than 
 that amount it is assumed that the wages- 
 receiving class cannot possibly divide among 
 them ; that amount, and no less, they cannot 
 but obtain. So that, the sum to be divided 
 being fixed, the wages of each depend solely 
 on the divisor, the number of participants.” 
 This theory, with Mill as its especial defend- 
 er, was very vigorously attacked in 1866 by 
 Francis D. Longe, a London barrister, in a 
 pamphlet entitled “ A Refutation of the Wage- 
 Fund Theory of Modern Political Economy ” 
 (2d ed., 1869). In 1869 W. T. Thornton pub- 
 lished a volume “On Labor, its Wrongful 
 Claims and Rightful Hues,” in which he also 
 assailed the wage-fund theory, but, as is be- 
 lieved, by no means so ably as Longe had 
 done. Mill, in the magazine article above 
 cited, entirely recanted his belief in the the- 
 ory, on the ground that Thornton had com- 
 pletely refuted it. Hut Prof. Cairnes, among 
 other English economists, has refused to ac- 
 cept the acknowledgment of Mill as evidence 
 of the falsity of the theory. A careful exam- 
 ination of this theory Avill show that it is but 
 an elaboration of the doctrine of Adam Smith 
 
12 
 
 POLITICAL ECONOMY 
 
 quoted above, to the effect that the demand for 
 labor can only increase in proportion to the 
 increase of the “funds destined for the pay- 
 ment of wages.” — zlmong the most prominent 
 of English political economists at the present 
 day is Prof. J. E. Cairnes, whose most elabo- 
 rate production, “ Some leading Principles of 
 Political Economy newly Expounded,” was 
 published in 1874. While the author says that 
 it is “ an attempt to recast some' considerable 
 portion of political economy,” he would “ be 
 sorry it were regarded as in any sense antag- 
 onistic in its attitude toward the science built 
 up by the labors of Adam Smith, Malthus, 
 Kicardo, and Mill.” “ Nor do the final con- 
 clusions which I have reached differ very wide- 
 ly on any important points from those at 
 which they have arrived. The points on which 
 I have ventured to join issue with them are 
 what, in Bacon’s language, may be called the 
 axiomata media of the science — those interme- 
 diate principles by means of which the de- 
 tailed results are connected with the higher 
 causes, which produce them. If I have not 
 deceived myself, there is in this portion of 
 political economy, as at present generally re- 
 ceived, no small proportion of faulty mate- 
 rial.” Prof, W. Stanley Jevons, M. A., pub- 
 lished in 1871 “ The Theory of Political Econ- 
 omy,” in which he endeavors to construct a 
 theory of the subject on a mathematical or 
 quantitative basis, believing that many of the 
 commonly received theories are perniciously 
 erroneous. He treats political economy as the 
 calculus of pleasure and pain, and he applies the 
 differential calculus to wealth, utility, value, 
 demand, supply, capital, interest, labor, &c. 
 Prof. Henry Fawcett’s “ Manual of Political 
 economy” (18G3), which has passed through 
 several editions, is very decided in its advo- 
 cacy of Ricardo’s theory of rent and Malthus’s 
 of population. The book, like almost all of 
 its school, treats solely of a science of wealth. 
 While the author is in the fullest sense of the 
 word a believer in the doctrines of Locke, Mon- 
 tesquieu, and Hume in regard to the effect of the 
 volume of money on prices, he maintains that 
 the use of the various forms of credit and of 
 checks and clearing houses may increase prices 
 in a like manner with an increase in the vol- 
 ume of money. He takes ground against the 
 wisdom and expediency of Sir Robert Peel’s 
 bank-charter act. (See Bank.) — Herbert Spen- 
 cer has projected “Principles of Sociology,” as 
 a part of his system of philosophy, the publica- 
 tion of which was begun in 1860. In 1873 he 
 published “The Study of Sociology.” “ Several 
 years since,” says Prof. E. L. Youmuns, “Mr. 
 Spencer foresaw the difticulty that would arise 
 in working out the principles of social science, 
 from a lack of the data or facts necessary as 
 a basis of reasoning upon the subject, and he 
 saw that before the philosophy could be elabo- 
 rated these facts must be systematically and 
 exhaustively collected;” and he quotes Spen- 
 cer as early as 1859 to show how clearly he 
 
 then “perceived the nnture, diversity, and ex- 
 tent of the facts upon which a true social 
 science must rest.” — Almost the entire existing 
 school of English political economists advocate 
 “ free trade ” as the rule of intercourse between 
 nations. Exceptions may be named in the Rt. 
 Hon. Sir John Barnard Byles, author of “ So- 
 phisms of Free Trade and Popular Political 
 Economy” (London, 1849; 9th ed., 1870), and 
 Sir Edward Sullivan, “Protection to Native 
 Industry” (London and Philadelphia, 1870). — 
 Dr. Franklin is the earliest American politico- 
 economic writer of whom we have any rec- 
 ord; he published at Philadelphia in 1729 “A 
 Modest Inquiry into the Nature and Necessity 
 of a Paper Currency,” of which at a subse- 
 quent period he said: “It was well received 
 by the common people in general, but the rich 
 men disliked it, for it increased and strength- 
 ened the clamor for more money ; and as they 
 happened to have no writers among them that 
 were able to answer it, their opposition slack- 
 ened, and the point was carried by a majority 
 in the house.” This was followed by “ Obser- 
 vations concerning the Increase of Mankind 
 and the Peopling of Countries” (1751), other 
 papers on paper money before and during the 
 revolution, and various other productions. In 
 some of these he maintained doctrines par- 
 taking somewhat of those of the school of 
 Quesnay; in others he is shown to have pre- 
 sented in advance of Adam Smith views such 
 as were elaborated and brought into promi- 
 nence by that author. “ A Discourse concern- 
 ing the Currencies of the British Plantations 
 in America, especially with regard to their 
 Paper Money,” published in Boston in 1740 
 and reprinted in Lord Overstone’s volume of 
 “ Scarce and Valuable Tracts on Paper Currency 
 and Banking ” (1857), is a valuable production, 
 evincing much research. In a “Letter from a 
 Gentleman in Philadelphia to his Friend in 
 London,” published in 1765, known to have 
 been written by John Dickinson, afterward 
 president of Pennsylvania, and a member of 
 congress during the revolution, the current of 
 trade with the mother country, the extent to 
 which that trade had exhausted the colonies of 
 coin, the importance of an emission of paper 
 money properly secured, the policy of pro- 
 moting manufactures among themselves, and 
 other questions of this character, are exam- 
 ined. In 1791 appeared in Philadelphia “Po- 
 litical Essays on the Nature and Operations of 
 Money, Public Finances, and other Subjects, 
 published during the American War and con- 
 tinued up to the Present Y"ear,” by Pelatiah 
 AVebster. These essays are full of facts, fig- 
 ures, and vigorous reasoning. The author was 
 a violent opponent of paper money, and espe- 
 cially of its issue in the manner in which it 
 had been done by the continental congress, 
 almost without limit, and Avithout the neces- 
 sary taxation to withdraw it from circula- 
 tion. On Jan. 14, 1790, Alexander Hamil- 
 ton, the first secretary of the treasury un- 
 
POLITICAL ECONOMY 
 
 der the federal constitution, presented to the 
 Iiouse of representatives a report on finance, 
 which was followed on April 23 by one on 
 duties upon imports ; Dec. 13, on public cred- 
 it ; Dec. 14, on a national bank; Jan. 28, 
 1791, on the establishment of a mint; and 
 Dec. 5, on manufactures. It would be dif- 
 ficult to find, among all the state papers or 
 treatises on political economy which appeared 
 before the close of the 18th century, any pro- 
 ductions of this character surpassing these in 
 a thorough knowledge of the subjects, clear- 
 ness and precision of statement, and logical 
 exactness. The report of Alexander J. Dallas, 
 secretary of the treasury, to the house of rep- 
 resentatives, Oct. 17, 1814, on the national 
 finances, and that of Feb. 12, 1816, in regard 
 to a general tariff of duties, are among the 
 able economic state papers which have emana- 
 ted from this government. The “Addresses 
 of the Philadelphia Society for the Promo- 
 tion of National Industry” (1819), and “The 
 New Olive Branch” (1820), subsequently with 
 other papers collected and published under the 
 title of “Essays on Political Economy ” (1822), 
 by Mathew Carey, dealt almost entirely in 
 facts, figures, and references to history; and 
 thus Carey reached the conviction that “there 
 is a complete identity of interest between agri- 
 culture, manufactures, and commerce.” The 
 first formal treatise on the subject written 
 in the United States is Daniel Raymond’s 
 “ Thoughts on Political Economy ” (Baltimore, 
 1820). The author endeavors, and with some 
 success, to escajie from the complications and 
 inconsistencies of the economists. His exam- 
 ination of some of the arguments of Adam 
 Smith in regard to stock are original, vigor- 
 ous, and conclusive. John Rae, a Scotchman, 
 published in Boston in 1834 a “Statement 
 of some New Principles on the subject of 
 Political Economy,” which has been quoted 
 and highly commended by John Stuart Mill 
 in his “ Principles of Political Economy,” 
 and he says of it: “In no other book known 
 to me is so much light thrown, both from 
 principles and history, on the causes which 
 determine the accumulation of capital.” — In 
 1835 appeared at Philadelphia an “Essay on 
 the Rate of Wages,” the first of the works 
 of Henry C. Carey. He took ground against 
 regarding political economy as the science of 
 wealth, and insisted upon considering its 
 “great object” and “its chief claim to atten- 
 tion the promotion of the happiness of na- 
 tions.” This -was followed by his “Principles 
 of Political Economy” (3 vols., 1837-’40), 
 in which he holds that value is determined 
 by the cost of reproduction, and that every 
 improvement in the mode of producing any 
 commodity tends to lessen the value of com- 
 modities of the same description previously 
 existing; that in all advancing countries ac- 
 cumulated capital has a constant tendency to 
 fall in value when compared with labor ; labor 
 therefore steadily growing in its power to 
 
 13 
 
 command capital, and e converso the power of 
 capital over labor as steadily diminishing; la- 
 bor and capital in their combined action con- 
 tinually producing a larger return for the same 
 outlay, of which larger return an increasing 
 proportion goes to the laborer, while the share 
 of the capitalist diminishes in its proportion, 
 but increases in amount, being taken from a 
 larger yield. In 1848 appeared Mr. Carey’s 
 work entitled “ The Past, the Present, and the 
 Future.” Its object was that of demonstrating 
 the existence of a simple and beautiful law of 
 nature in virtue of which the work of occupa- 
 tion and cultivation of the earth had always of 
 necessity begun upon the higher, drier, and 
 poorer lands, passing thence, with the growth 
 of wealth and population, to the lower and 
 richer soils, with constant increase in the re- 
 turn to labor. Here was a complete rever- 
 sal of the doctrines of Malthus and Ricardo. 
 In his “ Principles of Social Science ” (8 vols. 
 8 VO, Philadelphia, 185’8-’9), he most clearly 
 draws the distinction between the science, 
 which treats of the natural laws governing 
 the subject, and the art, political economy, by 
 means of which the obstructions to the opera- 
 tion of those laws may be removed. Lie de- 
 fines his subject as being “the science of the 
 laws which govern man in his efforts to se- 
 cure for himself the highest individuality and 
 the greatest power of association with his fel- 
 low man.” The more numerous the differences 
 in the demands of society, the more, complete 
 becomes the development of the individualities 
 of its members, the greater is the power of as- 
 sociation and combination, the more rapid the 
 progress, and the more perfect the responsi- 
 bility for the proper use of the faculties which 
 have been developed. Llere, as everywhere, 
 it is shown that in variety there is unity, and 
 that the nation which would have peace and 
 harmony at home and abroad must adopt a 
 policy which shall develop the infinitely va- 
 rious faculties of its people — the plough, the 
 loom, and the anvil working together, each for 
 the advantage of the others. The social laws 
 are thus, according to Carey, identical with 
 those which govern matter in all its various 
 forms ; differences everywhere exciting forces, 
 forces exciting heat in matter and impulse in 
 mind, and heat and impulse reexciting motion. 
 Nature’s laws being thus universal, the branch- 
 es of science constitute but one great and har- 
 monious whole, the social parts demanding the 
 same methods of study and investigation. The 
 methodical study of nature does, and of neces- 
 sity must, take the place of the metaphysical. 
 The third chapter of the book is devoted to an 
 exposition of the great series of changes which 
 the earth must undergo in furnishing the resi- 
 dence and support of vegetable, animal, and 
 human life in the order of their respective ap- 
 pearances upon it, the relation and dependence 
 of their various subsistence upon each other, 
 and the circulation of the common elements 
 of their structure, beginning with the disinte- 
 

 POLITICAL ECONOMY 
 
 grated rock in its simplest forms, and thence 
 ascending through vegetable and animal organ- 
 isms to that of man, in which their greatest 
 complexity and highest sphere are reached, and 
 whence they are again set free to pass through 
 that never ending circuit which constitutes the 
 entire organic and inorganic creation, one per- 
 fectly balanced system of universal exchange ; 
 an incessant flux of the forms of matter in 
 their ascent from the simple to the most com- 
 plex, adjusted precisely to the growing require- 
 ments of the successive orders of being in the 
 great scale of vital development, the higher 
 forms of being never outgrowing or overtop- 
 ping the lower from which they spring, and 
 to which they must of necessity return. Such 
 are the reciprocities of motion, force, and func- 
 tion, in which Carey finds an order and a sys- 
 tem which, as he believes, put to flight the doc- 
 trine of discords and disproportions announced 
 by Malthus, and since adopted by so many of 
 the economists of Europe. A chapter on the 
 new doctrine of the occupation of the earth, 
 already referred to, is followed by one devoted 
 to an examination of the question of value. 
 Utility, according to Carey, is the measure of 
 man’s power over nature. All the utilities de- 
 veloped centre themselves in man, with con- 
 stant increase of his power, and as constant 
 decline of values, which are but the measure 
 of nature’s resistance to the gratification of 
 man’s desires. Wealth consists in man’s power 
 to command the always gratuitous services 
 of nature. Production consists in directing 
 the forces of nature to the service of man. 
 Every act of consumption is also an act of pro- 
 duction, water being consumed in the produc- 
 tion of air, air being consumed in the production 
 of water, both being consumed in the produc- 
 tion of plants, which in their turn are consumed 
 in the production of men and animals, all of 
 which are finally resolved into the elements of 
 which they are composed, to go their round 
 again in the reproduction of plants, apimals, 
 and men. Capital is the instrument by the aid 
 of which the work is done, whether existing 
 in the form of land and its improvements, 
 ships, ploughs, mental development, books, or 
 corn. Trade is the performance of exchanges 
 for other persons, and is the instrument used 
 by commerce, which consists in the exchange 
 of services, products, or ideas by men with their 
 fellow men. As men are more and more en- 
 abled to associate, commerce increases, but the 
 power of trade declines ; the growth of the one 
 being here, as in the case of utility and value, 
 in the inverse ratio of the other. Money is re- 
 garded as the great instrument of association, 
 power growing everywhere with increase in 
 the ability to command the services of the 
 precious metals. Price is the value of a com- 
 modity as measured by money. Prices of 
 land, labor, and all raw materials tend to rise 
 with every increase in the power of associa- 
 tion, that increase being attended by decline 
 in the prices of finished commodities. They 
 
 tend therefore to approximate, and it is in the 
 closeness of that approximation that Carey 
 finds the highest evidence of advancing civili- 
 zation. In his opinion trade appears first, to 
 be followed by manufactures; and it is not 
 until the latter have been develoi)ed, and a 
 market has been thus made in the neighbor- 
 hood of the farm, that any real agriculture 
 makes its appearance. The more complete the 
 development of diversified industries, including 
 agriculture, the greater is the tendency toward 
 an influx of the precious metals, which like 
 other raw materials tend always toward those 
 places at which finished commodities are cheap- 
 est. Circulating notes diminish the value of 
 the precious metals, but increase their utility, 
 with constant diminution in the rate of inter- 
 est, and equally constant increase in the tenden- 
 cy toward equality among men, and strength in 
 the communities of which they are a part. The 
 power of accumulation is in the direct ratio of 
 the rapidity of the societary movement. Pow- 
 er grows with every increase in the numbers 
 that can obtain food from any given space; 
 and here we reach the law of population pro- 
 pounded by Carey. Agriculture, as has been 
 seen, becomes more productive as men are 
 more and more enabled to combine. The more 
 they can combine, the less is the waste of hu- 
 man power in the search for food, and the less 
 the muscular effort required for producitjg any 
 given effect; the locomotive of civilized soci- 
 ety doing the work that in savage life is done 
 by the shoulders of the man, and the great 
 steam mill grinding the grain that before had 
 required the severest labor. Vegetable food is 
 largely substituted for animal food ; the ten- 
 dency toward this substitution being always 
 greatest in those communities in which grow- 
 ing wealth most manifests itself in the clear- 
 ing, drainage, and culture of those rich soils 
 which, according to Ricardo, are cultivated 
 when men are poor, wmak, and scattered, but 
 which, according to Carey, are last brought 
 under human power, tlieir very wealth forbid- 
 ding their occupation by the early cultivator. 
 The more perfect the development of the la- 
 tent powers q| the earth, and the greater the 
 development of man’s peculiar faculties, the 
 greater is the competition for the purchase of 
 labor, the greater is the freedom of man, the 
 more equitable is the distribution of the prod- 
 ucts of labor, and the greater is man’s feeling 
 of responsibility for his action in the present 
 and of hope in the future. The higher that 
 feeling, the greater the tendency toward matri- 
 mony as affording the means of indulging af- 
 fection for wife and children, and the love of 
 home. The Malthusian theory Carey holds to 
 be irreconcilably inconsistent with the real laws 
 of nature as seen in the occupation of the earth, 
 and the relative powers of increase in vegeta- 
 ble life and in the lower forms of animal life 
 and in man. The sphere of action of govern- 
 ment in directing the commerce of the state is 
 strictly limited to the removal of the obstacles 
 
POLITICAL ECONOMY 
 
 15 
 
 to perfect combination and association. Real 
 freedom of trade consists in the power to main- 
 tain direct commerce with the outside world. 
 To reach it there must be a diversity of em- 
 ployments, enabling the exporting country to 
 send its commodities abroad in a finished 
 shape. Centralization, such as is established 
 by the British system, is opposed to this, and 
 therefore it is that that system is resisted by 
 all the advancing communities of the world, 
 they being enabled to advance in the precise 
 ratio with their power to resist it. Protection 
 being the form assumed by that resistance, its 
 object may be properly defined as being that 
 of establishing perfect freedom of commerce 
 among the nations of the world. Societary 
 organization furnishes additional evidence of 
 the universality of nature’s laws, for through- 
 out her realms dissimilarity of parts furnishes 
 conclusive evidence of the perfection of the 
 whole — the highest organization presenting the 
 most numerous differences. The higher the 
 organization the more complete the subordina- 
 tion of parts, and the more harmonious and 
 beautiful their interdependence ; and the more 
 complete that interdependence the greater the 
 individuality of the whole, and the more per- 
 fect the power of self-direction. In 1873 Mr. 
 Carey published “The Unity of Law as exhib- 
 ited in the Relations of Physical, Social, Men- 
 tal, and Moral Science.” The writers who 
 have adopted in whole or in part the doctrines 
 of Carey, and have published books or papers 
 on the subject, are: in the United States, E. 
 Peshine Smith, “A Manual of Political Econo- 
 my ”(1853); Dr. William Elder, “Questions of 
 the Day, Economic and Social ” (1870) ; Robert 
 Ellis Thompson, “ Social Science and Nation- 
 al Economy” (1875); in Germany, Prof. Eu- 
 gene Duhring of Berlin, Carey'' s Umwdlzungder 
 Volhswirthschaftslehre and Socialwissenschaft 
 (1865), Gayital und Arheit^ neue Antworten 
 avf alte Fragen (1865), Die Verhleinerer Ca- 
 rey'' s und die Krisis der Nationalolconomie 
 (1867), Kritische GescJiichte der Nationaldlco- 
 nomie und des Socialismus (1871), and Cursus 
 der National- und Socialokonomie p873); in 
 France, M. de Eontenay, M. Ra|[pi^, and M. 
 Clapier ; in Italy, Signor Ferrara,"late min- 
 ister of finance and editor of Biblioteca delV 
 economista. — American writers other than those 
 ' already named are Prof. Francis Bowen, Con- 
 dy Raguet, Prof. Way land. Prof. H. Vethake, 
 George Opdyke, Prof. Amasa Walker, Prof. 
 A. L. Perry, and David A. Wells. Prof. 
 Bowen published in 1856 “ Principles of Po- 
 litical Economy,” which was revised and re- 
 published in 1870 under the title “American 
 Political Economy, including Strictures on the 
 Management of the Currency and Finances 
 since 1866.” He says with much truth : “ The 
 entire science of English political economy 
 may be said to be built upon three leading 
 theories, that of Adam Smith concerning free 
 trade, that of Malthus in regard to population, 
 and that of Ricardo in regard to rent.” In 
 
 none of these does he agree with the English 
 school, although he recognizes that they con- 
 tain a mixture of truth and falsehood. Condy 
 Raguet was a decided follower of the English 
 school, especially in regard to free trade and 
 the theory of money. Profs. Way land and 
 Vethake mainly followed the English writers. 
 Mr. Opdyke believes that “free trade, abso- 
 lute, unconditional free trade, and direct tax- 
 ation, is the true policy of all nations, and of 
 each nation regardless of the course pursued 
 by all others.” He holds that bank deposits 
 payable on demand are money, and is opposed 
 to paper money made convertible with coin, 
 but thinks that the government of the United 
 States should issue inconvertible paper money 
 to the amount of $10 a head of the population, 
 which should circulate in common with coin, 
 each being equally a legal tender. These views 
 were promulgated in 1851 in “A Treatise on 
 Political Economy.” In 1866 Dr. Amasa Walk- 
 er published “The Science of Wealth, a Man- 
 ual of Political Economy, embracing the Laws 
 of Trade, Currency, and Finance,” which has 
 been repeatedly revised and republished. Dr. 
 Walker is a decided adherent of the views of 
 Montesquieu and Hume on money, holds to 
 Ricardo’s theory of rent, but not to Malthus’s 
 law of population, and is strongly in favor of 
 free trade. Prof. Perry published his “ Ele- 
 ments of Political Economy” in 1865, and it 
 has passed through several editions. He re- 
 gards the “word wealth” as “the bane of 
 political economy,” “the bog whence most of 
 the mists have arisen which have beclouded 
 the whole subject.” He adds that the defini- 
 tion given by Archbishop Whately, “the sci- 
 ence of exchange,” or “its precise equivalent, 
 the science of value, gives a perfectly definite 
 field to political economy.” Value, he holds, 
 “is always and everywhere the relation be- 
 tween two services exchanged,” while utility he 
 regards as the “ capacity which anything or any 
 service has to gratify any human desire what- 
 ever.” In regard to Malthus’s law of popula- 
 tion, he holds “that the alleged laws of nature 
 in respect to the increase of population and 
 food, which are said to be antagonistic, have 
 never yet been proved.” In regard to distri- 
 bution he says : “ I wish at this point to bear 
 testimony to his (Carey’s) great merit as the 
 original discoverer of the beautiful law of dis- 
 tribution, in the light of which the future con- 
 dition of the laboring classes of all countries, 
 if they are only true to themselves, seems 
 hopeful and bright.” In regard to the occupa- 
 tion of the earth and to rent, he takes a middle 
 ground between Ricardo and Carey. On the 
 subject of money he is a decided follower of 
 Locke, Montesquieu, and Hume, and upon this 
 and foreign trade is utterly opposed to the 
 doctrines of the mercantile school of former 
 days and the protectionists or the national 
 school of the present. Mr. Wells has princi- 
 pally devoted his attention to the subject of 
 foreign trade, tariffs, and taxation generally, 
 
1 () 
 
 POLITICAL ECONOMY! 
 
 3112 062289852 
 
 and is fully in accord with the English school 
 of the present time. — The names and doctrines 
 of most of the leading economists of Great 
 Britain and the United States, other than those 
 who confine themselves to the examination of 
 questions of finance and hanking, have been 
 already mentioned. In this class Henry Dun- 
 ning McLeod, Prof. Bonamy Price, R. H. Pat- 
 terson, and R. H. Inglis Palgrave now hold a 
 prominent position in England. The late Ste- 
 phen Colwell of Philadelphia published in 18o9 
 (2d ed., 1860) “The Ways and Means of Pay- 
 ment, a full Analysis of the Credit System, 
 with its Various Modes of Adjustment,” which 
 is still the most exhaustive examination of this 
 entire field in the English language, giving 
 both his own views and those of his prede- 
 cessors, and a fuller and more complete state- 
 ment of moneys of account than any previous 
 writer. — In France, among the more distin- 
 guished writers on political economy are Blan- 
 qui, Tracy, Louis Say, Droz, Rossi, Cheva- 
 lier, Dunoyer, Gamier, Baudrillart, Bastiat, 
 Fontenay, Ooquelin, Faucher, Reybaud, and 
 Wolowski. One of the most noted of these 
 was Frederic Bastiat, whose works were pub- 
 lished collectively after his death (6 vols., Pa- 
 ris, 1855 ; new ed., 1862). He was a strong par- 
 tisan of free trade, and a decided follower of 
 Locke, Montesquieu, and Hume in regard to 
 money, holding that “it is quite unimportant 
 whether there is much or little money in the 
 world. If there is much, much will be used ; 
 if there is little, little is required; that is all.” 
 His most important work is his Harmonies 
 economiques (1850), maintaining the doctrine 
 that “all legitimate interests are harmonious,” 
 which he sought to demonstrate by doctrines 
 greatly resembling Carey’s theory of value, 
 and the consequent law of distribution, enunci- 
 ated in 1837. Speaking of the law of distribu- 
 tion, he says : “ Thus the great law of capital 
 and labor, as regards the distribution of the 
 products of their joint labors, is settled. The 
 absolute quantity of each is greater, but the 
 proportional part of capital constantly dimin- 
 ishes, as compared with that of labor.” It 
 need hardly be added that he took issue with 
 the theories of Ricardo and Malthus. M. Michel 
 Chevalier has principally devoted himself to 
 the questions of policy growing out of inter- 
 national trade, and is a thorough partisan of 
 free trade, having taken a leading part in the 
 reciprocity treaty between Great Britain and 
 France in 1860. — Germany has produced many 
 works on all branches of the subject. The 
 formation of the German Zolherein or customs 
 union, establishing entirely free inter-state 
 trade among the states composing it, with 
 such a policy as should protect their domes- 
 tic production from external disturbance, was 
 due to no man more than to Friedrich List. 
 His “National System of Political Economy” 
 (Stuttgart, 1841 ; English by G. A. Matile, 
 Philadelphia, 1856) is built upon observation 
 and history. “ Nationality,” says the English 
 
 translator, “is the ruling idea of the book; 
 but with his vigorous mind and clear intelli- 
 gence, he enlarges it until it comprehends 
 every topic of human welfare.” “The Ger- 
 man eclectic works,” says Colwell, “ furnish a 
 vast amount of well arranged information, and 
 they may always be consulted with advantage. 
 We would refer,” he adds, “especially to the 
 works of Schmalz, Jakob Volgriiff, Krause, 
 K. H. Rau, Lotz, Hermann, and Schon; but 
 there are others of equal merit.” To these 
 names may be added K. A. Struensee, K. F. 
 Nebenius, J. G. Busch, Schdnberg, Wappaus, 
 Schaflle, Scheel, Hermann, Walcker, and Bren- 
 tano. — In Italy much attention has been given 
 to political economy from an early period, and 
 a collection of Italian economists in 50 vols. 
 8vo was published at Milan in 1803-’! 6. The 
 Biblioteca delV eeonomista^ another collection 
 of Italian and foreign writers, edited by Fran- 
 cesco Ferrara, professor of political economy 
 in the university of Turin, and an adherent to 
 the school of Adam Smith, has been for several 
 years in course of publication. “In 1764,” 
 says Say, “Genovesi commenced a public 
 course of lectures on political economy from 
 the chair founded by the care of the highly 
 esteemed and learned Intieri. In consequence 
 of his example, other professorships were af- 
 terward established at Milan, and more recent- 
 ly in most of the universities in Germany and 
 Russia.” The disciples of the most recent 
 school of political economy in Italy treat it 
 as a science of observation based on the in- 
 vestigation and study of history and actual 
 life, and reject the notion that it consists sim- 
 ply of deductions from the principle of indi- 
 vidual interest. The first number of their 
 monthly periodical, entitled Giornale degli 
 economist^ appeared in Padua in April, 1875. 
 Among the leading members of this school 
 are Luzzatti, Lampertico, Forti, and Boccar- 
 do. — Among the best books of reference on 
 this subject are: “History of Prices, 1793 to 
 1856,” by Thomas Tooke (6 vols. 8vo, Lon- 
 don, 1838-’57), which argues strongly against 
 the theory of the economists in regard to the 
 effect of aij, increased volume of money on 
 prices, as maintained by Locke, Montesquieu, 
 and Hume ; “ The Literature of Political Econ- 
 omy,” by J. R. McCulloch (London, 1845) ; 
 Dictionnaire de Veconomie politique (2 vols. 
 8 VO, Paris, 1852-’3), a most complete, trust- 
 w'orthy, and valuable w^ork ; Histoire de Veco- 
 nomie politique, by A. Blanqui (4th ed., 2 vols. 
 12mo, Paris, 1860), containing a catalogue rai- 
 sonne of political economy, wTiich is full and 
 valuable; “ A Dictionary of Political Economy, 
 Biographical, Historical, and Practical,” by 
 Henry Dunning McLeod (vol. i., London, 1863) ; 
 “History of Agriculture and Prices in Eng- 
 land,” by J. E. T. Rogers (2 vols. 8vo, 1866); 
 Dilhring, Kritische Gescliichte der Nationalo- 
 Iconomie und des Socialismus (Berlin, 1871); 
 and Roscher, Gescliichte der Kationalohono- 
 mie in Deutschland (Munich, 1874).