Political Economy, properly, an exposition of the measures necessary for directing the movements of society so that man may act in harmony with those natural laws which control his efforts to improve his condition. Social science treats of the laws themselves. Prof. Robert 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, but as to the meaning of the various expressions used in treating of the subject, and even as to a general understanding of its scope. Some writers have treated it as a science, others as an art, and Sir James Steuart speaks of 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 Whately would give it the name of " catallactics, or the science of exchanges." J. R. McCulloch considers it " the science of the laws which regulate the production of those material products which have exchangeable value, and which are either necessary, 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 government or society as the object of political economy." Say defines it as "the economy of society; 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 dispute.
In 1844 De Quincey acknowledged that it did not advance, and that from the year 1817 it had "on the whole been stationary;" and he adds: "Nothing can be postulated, nothing can be demonstrated, for anarchy even as to the earliest principles is predominant." Amid all their discords and disagreements, it is possible to divide political economists 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. They may also be divided into those who' follow Ricardo with his fundamental doctrine of the theory of rent, and those who have given in their adhesion to Carey's law of the occupation of the earth. The adverse views as to the practical effects of the application of protection 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 underlying 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 doctrines. These doctrines or rules were however quite empirical, isolated, and not elaborated 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 important to recognize the fact of the origin of political economy in these early and imperfectly stated doctrines. The ancient code of India, the Institutes of Manu, contains provisions as to the revenues, usury, etc.; but these provisions are merely designed to establish and fix the respective rights and duties of the sovereign 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 branches of the public affairs, and the statesman who, like Aristides or Lycurgus, succeeded in placing them in a flourishing condition, gained the good will of the people and the admiration 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 throughout these laws is the establishment of the military power of Sparta. "Lycurgus, or the individual to whom this system is owing, whoever he was," says Grote, "is the lawgiver of a political community; his brethren live together 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 attributed to AEschines 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 division 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 toward a definition of money by tracing up the necessity, in a community of diversified employments aad wants, of "an established coinage as a symbol for the purposes of exchange," as most remarkable, partaking of the nature of most ingeuious art.
On the other hand, in the opinion of Say, Plato " has with tolerable fidelity sketched the effects of the separation of social employments, but solely with a view to point out man's social character, and the necessity 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 consequence 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. "Whenever he undertakes to analyze the operations of labor, to trace revenue to its source, to determine the utility of things, the clearness 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 countrymen that, in default of the domestic market for food that would have resulted from the proper development of the mineral treasures with which their soil abounded, agriculture had become impossible; many having been forced to abandon it, becoming usurers or brokers;" and he adds: "This is probably the earliest exhibit on record of the dependence of agriculture on the mining and manufacturing industries." 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 regulation of the individual man; "Politics," of the relation of man toward others in a social capacity, both private and public, the family and the state; and " Economics," of the relation of man toward property - constitute in a measure a connected work, each being dependent on and interwoven with the others. The expression political economy was first used by Aristotle, and is to be found in the "Economics," book ii. chap. i. • He lays down the dogma that the bounty of nature is the only true source of wealth, and he holds in great abhorrence 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 purpose for which it was intended." In his " Rhetoric " he lays down the most important principles of political policy as follows: finance, peace and war, the safeguard of the country, importation and exportation, and legislation. But little 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 employment involving labor, but even farm labor was performed almost entirely by slaves belonging to and employed by the landlords.
The light in which trade was regarded by the Romans may be gathered from Cicero, who in his De Officiis says: " The gains of merchants, as well as of all who live by labor and not skill, are mean and illiberal. The very merchandise is a badge of their slavery." "All artisans are engaged in a degrading profession," and "there can be nothing ingenuous in a workshop." Slavery was the very foundation of the industrial system of both Greeks and Romans, as war was of the national policy. The great Roman roads were built with a view to their military advantages, and not to trade and industry. Agriculture was the principal industrial occupation of the Romans, who were alike indisposed to diversified industries and foreign trade. Blanqui says: "All the Roman legislation, from the glorious days of the republic to the fall of the empire, is but the faithful reproduction of the unconquerable prejudices of this people against labor and industry." Augustus pronounced the penalty of death against the senator Ovinius for having degraded himself by conducting a manufactory.
The Justinian code (A. D. 528-535) takes cognizance not merely of the laws but of the arts, the industries, and agriculture, and has been pronounced "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 condition 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 among other causes Charlemagne failed to found an enduring empire. - During the earlier parts of the middle ages no advance was made either in commercial adventure or in letters; but " the fortunate enterprises of the Portuguese and Spaniards during the 15th century, the 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 philosophers 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 the 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 Mal-thus." The earliest general treatise of modern 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 utility of mechanic arts and the regulation of manufactures, the employment of men, the trades most important to communities, commerce, transportation, money, etc. In 1613 Antonio Serra published in Naples a volume on the causes which tend to aid an accumulation of the precious metals in those countries which do not produce them; 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 prohibitive system were published by Duarte Gomez (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 mercantile system. It was supported among others by Thomas Mun in "A Discourse of Trade from England unto the East Indies" (1621), and by the same author in " England's Treasure 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 1668 appeared Sir Josiah Child's "Brief Observations 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 mercantile 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 England," be most encouraged. Andrew Yarran-tonpublished "England's Improvement by Sea and Land: to outdo the Dutch without Fighting, to pay Debts without Moneys, to set at Work the Poor of England with the Growth of our own Lands," etc. (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 recognized 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 pursued, and the very elements that were to contribute to her commercial superiority." - An important era in the history of political economy, 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 department, and punished those who had been guilty of them; increased the revenues of the state while at the same time he decreased the burdens of the people; provided for economical expenditures, and abolished many of the internal taxes; developed agriculture, manufactures, the arts, and the sciences; improved roads and rivers, built canals, and by every means fostered and increased the internal commerce of the country.
By some writers certain features of his tariff laws of 1664 and 1667 have been condemned; but on the other hand we are assured that for several years before his administration " France swarmed with vagabonds and mendicants," and had reached "the most profound depth of commercial depression," and that under the laws of which he was the author she rose to " a point of wealth and industry 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 which two regencies and a weak reign had involved her." - The various restrictions upon trade, especially upon the importation of manufactured goods and the exportation of the raw materials used in manufactures, at this time, and even later, and especially in England, were very onerous. The penalties for the infringement of the laws were in many cases cruel and even barbarous. This system, with the policy pursued under it, was attacked by various writers.
Among the earliest and ablest of these was Sir Dudley North, who published "Discourses on Trade" (4to, London, 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 inconvenience; 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, etc, by John Locke, comprising papers which had been previously published, in which he had for the first time promulgated some of the favorite theories in regard to money now held by European economists.
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 account and contract, and the measure of commerce 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 generates du gouvernement economique, by Francois Quesnay, followed by Theorie de Vimpot, by the elder Mirabeau (1760), La philosophie rurale, also by Mirabeau (1763), and various other works by Quesnay and his disciples, expounding the physio-cratic or agricultural system of economy. The physiocratists 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 characterized 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 which 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 society, but that it could only be accomplished by parsimony or privation. They believed that the most perfect freedom of trade with all nations was the great desideratum for agriculture. 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 comptroller general of finances, who early embraced the views of Quesnay, and in 1771 published Reflexions sur la formation et la distribution des richesses, the ablest of the treatises of this school. - A Spanish treatise well worthy of attention is " The Theory and Practice of Commerce 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 respecting the internal policy, trade, and state of Spain from the reign of Charles V. downward." Montesquieu's De Vesprit des lois (Geneva, 1748) is worthy of note in the history of political economy, on account of its reference to such subjects, particularly in regard to foreign commerce, taxes, public debts, and money.
His theory of money very closely resembles the views of Hume upon the subject, which are now held by so many economists. - Among the contributions to political economy up to the end of the 18th century, none evince greater reasoning power than the " Political Discourses" of David Hume (1752). Among those essays which come within the limit of political economy are " Commerce," "Refinements in the Arts," "Money," "Interest," "The Balance of Trade," "The Jealousy of Trade," " Taxes," and " Public Credit." According to the doctrines of these essays, everything 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 redouble their industry and attention, the surplus produce 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 furnishes 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 the 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 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 of these little yellow or white pieces for everything he purchases." But he did not fail to observe in actual experience 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 formerly, everything takes a new face; labor and industry gain life; the merchant becomes more diligent and skilful, and even the farmer follows his plough with greater alacrity and attention." He then enters into a series of reasonings 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 interest 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 industry." While deprecating as unwise and illiberal 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 industry.
A tax on brandy increases the sale of rum and supports our southern colonies." - Among the earliest of the systematic books on political economy must be included Lezioni di com-mercio, o di economia civile, by the Abate Antonio Genovesi (2 vols., Naples, 1757). In the opinion of McOulloch, it "is one of the best that has been written on the narrow and hollow principles of the mercantile system;" but the denunciation here implied should be taken with much allowance for McCulloch's prejudices. 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 subject which had then been written in English. It treats in detail of population, agriculture, trade, industry, money, coin, credit, debts, interest, banks, exchange, public credit, and taxes. Economy in general Steuart 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 science; and among its important objects are " to provide everything necessary for supplying 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 great and powerful by trade, she must first apply closely to the manufacturing 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 undoubtedly exerts an influence upon the prices of certain commodities, prices are really regulated by " the complicated operations of demand 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 proposition 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 Inquiry into the Nature and Causes of the "Wealth of Nations." This remarkable book treats " of the causes of improvement in the productive 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 supply in the necessaries and conveniences of life; that the greatest improvement in the productive power, skill, and judgment of labor has arisen from the division of labor; that the extent 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 all times and in all places.
He says that the demand for labor can only increase in proportion 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 unnecessarily employed as when directed to watch over the preservation or increase of the quantity of money in any country." In his complicated 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 commerce," and adds that it "makes a part and a very valuable part of the capital" of a country 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 difficulty in making any other purchase." Here, it will be observed, he recognizes the important fact that money possesses a quality not to be found in any other commodity: its universal acceptability among men, its power to purchase anything which 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 inland country naturally fertile and easily cultivated 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 be difficult to send this surplus abroad." When then workmen 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 saving the expense of carrying it to the water side, or to some different 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 enabled 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 progress 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 inconsistencies, few books have exerted so great an influence upon the affairs of mankind. - In 1798 appeared anonymously "An Essay on the Principle of Population as it affects the Future Improvement of Society," the author of which was the Rev. T. R. Malthus. New revised and enlarged editions have since been published with the name of the author, the sixth in 1826. According to its preface, this publication " owes origin to a conversation with a friend on the subject of William Godwin's essay on avarice and profusion in his 'Inquirer.' " 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. Impressed 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 Justice " (1793), respecting the unequal distribution 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 subsistence increases only in an arithmetical ratio;" or, practically stated, that "in two centuries the population would be to the means of subsistence 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 without presenting proof in regard to the actual power of increase in man and food respectively, he proceeds to show what have been the checks to increase of population throughout the various countries of the world. Population, he holds, " is necessarily limited by the means of subsistence," and " invariably increases 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 " include 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 "unwholesome 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 epidemics, wars, plagues, and famine." The preventive checks include abstinence from marriage and sexual intercourse from considerations of prudence, and all vice and immorality tending to render women unprolific.
Few books have formed the subject of greater discussion and controversy than this; and it is difficult to say whether among economic writers 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. R. 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 population 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 prosperous career," "I cannot consent," he adds, "to close my eyes for ever, with the judgment, as the matter now seems to stand, recorded 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 addition to an elaborate answer to Malthus's theory, Mr. Sadler develops a doctrine of population. "The prolificness of human beings," he says, " otherwise similarly circumstanced, varies inversely as their numbers;" and he presents a mass of evidence to prove that nature has not " invested man with a fixed and unvarying 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 articles published in July, 1830, and January, 1831, and now included in the collection of his essays, Macaulay attacked Sadler's book with much severity, and at the same time indicated unmistakably his belief in the doctrines of Malthus. The Rev. 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). Fearing " 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 appeared in Edinburgh "The Principles of Population, and their Connection with Human Happiness," by Archibald Alison (2 vols. 8vo), the first draft of which, says the author, 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 population 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 demonstrate that " whenever a species or genus is endangered, a corresponding effort is invariably made by nature for its preservation and continuance, by an increase of fecundity or fertility; and that this especially takes place whenever such danger arises from a diminution of proper nourishment," and that consequently "the deplethoric state is favorable to fertility, 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 poorest." "The Westminster Review" for April, 1852, contains "A New Theory of Population," understood to be by Herbert Spencer, deduced from the general law of animal fertility.
It argues that an antagonism exists between 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 doctrines here stated have been further elaborated and illustrated. " Population and Capital," consisting of lectures delivered before the university of Oxford in 1853-'4, by George K. Rickards (London, 1854), contends by careful induction from facts that the truth is the very reverse of Malthus's theory; "that the productive power of a community tends to increase more rapidly than the number of its inhabitants." "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 considerable confidence, namely, the tendency of cerebral development to lessen fecundity," and approvingly quotes Herbert Spencer's views.
But he says that some years ago he had hoped to be able to show that Malthus's premises were imperfect and his conclusions in consequence unsound. " It is with sadness," he adds, "I 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 Consumption of Wealth" (Paris, 1803; 6th ed., 1841). This treatise is in form the most scientific 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 securities, 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 circumstances, constitute that branch of science now entitled political economy." Subsequently Say published his lectures on the application of the science, under the title of Cours complet d'economie politique pratique, suini 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, distribution, and consumption of riches.
And it is so that I have considered it in my treatise upon political economy, published first in 1803; yet in that same work it can be seen that the science pertains to everything in society." In the same year in which Say's first treatise appeared, Sismondi published in Geneva his Traite de la richesse commerciale. At this time Sismondi 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 wealth apart from human well-being." - At the request of Alexander I. of Rus-sia H. Storch prepared his Cours d'economie politique, ou exposition des principes qui de-terminent la prosperite des nations (St. Petersburg, 1815). " The emperor Alexander, having 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 Russian gold flowed out; and the government was paralyzed, while the manufacturers were ruined. . . . Count Nesselrode issued a circular preliminary to a change of system, in which it was declared that Russia 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 were exceedingly depressed; that the coin of the country was rapidly flowing out to distant nations; that the most solid mercantile establishments had become endangered; and that agriculture and commerce as well as manufacturing industry were not only paralyzed, but had been brought to the brink of ruin." In 1824 Russia 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 work are the theory of rent and the consequent theory of value.
The former, with which the name of Ricardo is now always associated, was announced in 1777 by James Anderson, a Scotchman, in a tract entitled "An Inquiry into the Nature of the Corn Laws;" and it seems to have been so completely overlooked and forgotten, that "when in 1815," says an English economist, "Mr. Malthus and Sir Edward West published their tracts exhibiting the nature and progress of rent, they were universally believed to have for the first time discovered the laws by which 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 will be no rent; for no one would pay for the use of land when there was an abundant quantity not yet appropriated. If all land had the same properties, if it were boundless in quantity and uniform in quality, no charge could be made for its use, unless where it possessed peculiar advantages of situation. It is only then because land is not unlimited in quantity and uniform in quality, and because in the progress of population land of an inferior 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 commences 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 capital and labor. " The most fertile and favorably situated land will be first cultivated, and the exchangeable value of its produce will be adjusted in the same manner as the exchangeable 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 exchangeable value of raw produce will rise, because more labor is required to produce it." " This," says one of Ricardo's followers, "is the fundamental theorem of the science of value, and the clue which unravels the laws that regulate the distribution of wealth." By reason of these theories of rent and value, if in accordance with the facts, the landlord would be enabled 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 increased.
Starvation and wretchedness could not fail to be the lot of the mass of mankind under such a condition of things. These theories seemed to aid in accounting for the JVfal-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 Ricardo-Malthu-sianism. - In 1825 Samuel Bailey, author of " Essays on the Formation and Publication of Opinions," published "A 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 those of Malthus respecting population. - One of the most widely known writers on political economy and statistics for the last generation was J. R. McCulloch, who prepared the article for the supplement to the " Encyclopaedia Bri-tannica," a separate edition 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, with some Inquiries respecting their Application, 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 practical 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 Metropolitan" in 1835, and subsequently in a separate form, appeared " Political Economy" by Nassau 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 within these bounds. " We propose in the following treatise," he says in opening, " to give an outline of the science which treats of the nature, the production, and the distribution of wealth. To that science we give the name of political economy." He insists too on limiting his inquiries to these subjects as the only true and legitimate ones, and adds that political economy does not treat of " happiness, but wealth." 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 which any peculiar distribution can be carried into effect by legislation.
All of these questions are " of great interest and difficulty, 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 consisting " 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 premises." The fundamental propositions in political economy Mr. Senior thus states: 1, every man desires to obtain additional wealth with as little sacrifice as possible; 2, the population of the world, or in other words the number of persons inhabiting it, is limited only by moral and physical evil, or by the fear of a deficiency of those articles of wealth which the habits of the individuals of each class of its inhabitants lead them to require; 3, the powers of labor, and of the other instruments which produce wealth, may be indefinitely increased by using their products as the means of further production; 4, agricultural skill remaining the same, additional labor employed on the land within a given district produces in general a less proportionate return; or in other words, though with every increase of the labor bestowed the aggregate return is increased, the increase of the return is not in proportion to the increase of labor.
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 during the present century has attracted more attention or been regarded as higher authority than John Stuart Mill. He defines it to be "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." 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 phenomena 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 priori."" "It reasons," he contends, and "must necessarily reason, from assumptions, not from facts." " The conclusions of political economy, consequently, like those of geometry, are only true, as the common phrase is, in the abstract." "That which is true in the abstract is always true in the concrete with proper allowances." Not only "the method a priori is the legitimate mode of philosophical investigation in the moral sciences," but " it is the only mode." The a posteriori method, or that of specific experience, " is altogether inefficacious," 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 department of the social science, while we look at the facts in the concrete, clothed in all the complexity with which nature has surrounded them, and endeavor to elicit a general law by a process of induction from a comparison .of details, there remains no other method than the a priori one, or that of abstract speculation." " In all the intercourse of man with nature," proceeds Mr. Mill, " whether we consider him as acting upon it or as receiving impressions from it, the effect or phenomenon depends upon causes of two kinds, the properties of the object acting and those of the object acted upon.
Everything which can possibly 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 depend exclusively upon the laws of mind; even the phenomena of the mind itself being partially dependent upon the physiological laws of the body." Mr. Mill acknowledges thai " 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 political 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 operate. Mr. Mill's design in writing his " Principles of Political Economy " was to produce "a work similar in its object and general conception to that of Adam Smith; to exhibit the economical phenomena of society in the relation in which they stand to the best social ideas of the present time." He was a full believer 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 " protectionism," but holds that there is one, and only one case, "in which, on mere principles of political economy, protecting duties can be defensible;" that is, "when they are imposed temporarily (especially in a young and rising nation), in hopes of naturalizing a foreign industry,, in itself perfectly suitable to the circumstances 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 Review," is briefly as follows: " There is supposed to be, at any given instant, a sum of wealth which is unconditionally devoted to the payment of wages of labor. This sum is not regarded 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 defender, 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 TV. T. Thornton published a volume " On Labor, its Wrongful Claims and Rightful Dues," in which he also assailed the wage-fund theory, but, as is believed, by no means so ably as Longe had done. Mill, in the magazine article above cited, entirely recanted his belief in the theory, on the ground that Thornton had completely refuted it. But Prof. Cairnes, among other English economists, has refused to accept the acknowledgment of Mill as evidence of the falsity of the theory. A careful examination of this theory will show that it is but an elaboration of the doctrine of Adam Smith quoted above, to the effect that the demand for labor can only increase in proportion to the increase of the "funds destined for the payment of wages." - Among the'most prominent of English political economists at the present day is Prof. J. E. Cairnes, whose most elaborate 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 antagonistic in its attitude toward the science built up by the labors of Adam Smith, Malthus, Ricardo, and Mill." " Nor do the final conclusions which I have reached ditjer very widely 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 intermediate principles by means of which the detailed 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 received, no small proportion of faulty material." Prof. W. Stanley Jevons, M. A., published in 1871 " The Theory of Political Economy," 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, etc. Prof. Henry Fawcett's " Manual of Political economy " (1863), which has passed through several editions, is very decided in its advocacy 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, Montesquieu, 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 volume of money. He takes ground against the wisdom and expediency of Sir Robert Peel's bank-charter act. (See Bank.) - Herbert Spencer has projected "Principles of Sociology," as a part of his system of philosophy, the publication of which was begun in 1860. In 1873 he published "The Study of Sociology." " Several years since," says Prof. E. L. Youmans, "Mr. Spencer foresaw the difficulty 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 elaborated these facts must be systematically and exhaustively collected;" and he quotes Spencer as early as 1859 to show how clearly he then "perceived the nature, diversity, and extent 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 " Sophisms 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 record; he published at Philadelphia in 1729 " A Modest Inquiry into the Nature and Necessity of a Paper Currency," of which at a subsequent period he said: "It was well received by the common people in general, but the rich men disliked it, for it increased and strengthened the clamor for more money; and as they happened to have no writers among them that were able to answer it, their opposition slackened, and the point was carried by a majority in the house." This was followed by " Observations 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 partaking somewhat of those of the school of Quesnay; in others he is shown to have presented in advance of Adam Smith views such as were elaborated and brought into prominence by that author. " A Discourse concerning 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 promoting manufactures among themselves, and other questions of this character, are examined. In 1791 appeared in Philadelphia " Political Essays on the Nature and Operations of Money, Public Finances, and other Subjects, published during the American War and continued up to the Present Year," by Pelatiah Webster. These essays are full of facts, figures, and vigorous reasoning. The author was a violent opponent of paper money, and especially of-its issue in the manner in which it had been done by the continental congress, almost without limit, and without the necessary taxation to withdraw it from circulation.
On Jan. 14, 1790, Alexander Hamilton, the first secretary of the treasury under the federal constitution, presented to the house of representatives a report on finance, which was followed on April 23 by one on duties upon imports; Dec. 13, on public credit; Dec. 14, on a national bank; Jan. 28, 1791, on the establishment of a mint; and Dec. 5, on manufactures. It would be difficult to find, among all the state papers or treatises on political economy which appeared before the close of the 18th century, any productions of this character surpassing these in a thorough knowledge of the subjects, clearness and precision of statement, and logical exactness. The report of Alexander J. Dallas, secretary of the treasury, to the house of representatives, 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 emanated from this government. The "Addresses of the Philadelphia Society for the Promotion 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 agriculture, 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 escape from the complications and inconsistencies of the economists.
His examination of some of the arguments of Adam Smith in regard to stock are original, vigorous, 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 attention the promotion of the happiness of nations." 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 commodities of the same description previously existing; that in all advancing countries accumulated capital has a constant tendency to fall in value when compared with labor; labor therefore steadily growing in its power to command capital, and e converso the power of capital over labor as steadily diminishing; labor and capital in their combined action continually 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 occupation 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 return to labor. Here was a complete reversal of the doctrines of Malthus and Ricardo. In his "Principles of Social Science" (3 vols. 8vo, Philadelphia, 1858-'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 operation of those laws may be removed. He defines his subject as being "the science of the laws which govern man in his efforts to secure for himself the highest individuality and the greatest power of association with his fellow 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 association and combination, the more rapid the progress, and the more perfect the responsibility for the proper use of the faculties which have been developed.
Here, 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 various 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 branches of science constitute but one great and harmonious whole, the social parts demanding the same methods of study and investigation. The methodical study of nature does, and of necessity 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 residence and support of vegetable, animal, and human life in the order of their respective appearances 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 disintegrated rock in its simplest forms, and thence ascending through vegetable and animal organisms 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 perfectly balanced system of universal exchange; . an incessant flux of the forms of matter in their ascent from the simple to the most complex, adjusted precisely to the growing requirements of the successive orders of being in the great scale of vital development, the higher forms of being never outgrowing or overtopping the lower from which they spring, and to which they must of necessity return.
Such are the reciprocities of motion, force, and function, in which Carey finds an order and a system which, as he believes, put to flight the doctrine 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 developed centre themselves in man, with constant 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 production, water being consumed in the production of air, air being consumed in the production of water, both being consumed in the production 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, animals, 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 enabled 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 regarded 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 commodity as measured by money. Prices of land, labor, and all raw materials tend to rise with every increase in the power of association, 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 civilization.
In his opinion trade appears first, to be followed by manufactures; and it is not until the latter have been developed, and a market has been thus made in the neighborhood 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 cheapest. Circulating notes diminish the value of the precious metals, but increase their utility, with constant diminution in the rate of interest, and equally constant increase in the tendency 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. Power grows with every increase in the numbers that can obtain food from any given space; and here we reach the law of population propounded 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 human power in the search for food, and the less the muscular effort required for producing any given effect; the locomotive of civilized society 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 tendency toward this substitution being always greatest in those communities in which growing wealth most manifests itself in the clearing, drainage, and culture of those rich soils which, according to Ricardo, are cultivated when men are poor, weak, and scattered, but which, according to Carey, are last brought under human power, their very wealth forbidding their occupation by the early cultivator. The more perfect the development of the latent powers of 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 products 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 matrimony as affording the means of indulging affection 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 vegetable life and in the lower forms of animal life and in man. The sphere of action of government in directing the commerce of the state is strictly limited to the removal of the obstacles to perfect combination and association. Real freedom of trade consists in the power to maintain direct commerce with the outside world. To reach it there must be a diversity of employments, 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 throughout 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 subordination 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 perfect the power of self-direction. In 1873 Mr. Carey published " The Unity of Law as exhibited in the Relations of Physical, Social, Mental, 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, "AManual of Political Economy " (1853); Dr. "William Elder, " Questions of the Day, Economic and Social" (1870); Robert Ellis Thompson, " Social Science and National Economy" (1875); in Germany, Prof. Eugene Duhring of Berlin, Carey's Umwalzung der Volkswirthschaftslehre und Socialwissenschqft (1865), Capital und Arbeit, neue Antworten avf alte Frag en (1865), Die Verkleinerer Carey's und die Krisis der Nationalokonomie (1867), Kritische Geschichte der Nationalolconomie und des Socialismus (1871), and Cursus der National- und Socialokonomie (1873); in France, M. de Fontenay, M. Raspail, and M. Clapier; in Italy, Signor Ferrara, late minister of finance and editor of Biblioteca dell' economista. - American writers other than those already named are Prof. Francis Bowen, Con-dy Raguet, Prof. Wayland, Prof. H. Vethake, George Opdyke, Prof. Amasa Walker, Prof. A. L. Perry, and David A. Wells. Prof. Bowen published in 1856 " Principles of Political Economy," which was revised and republished 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 contain 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. Wayland and Vethake mainly followed the English writers. Mr. Opdyke believes that "free trade, absolute, unconditional free trade, and direct taxation, 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 Walker published " The Science of Wealth, a Manual 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 " Elements of Political Economy" in 1865, and it has passed through several editions.
He regards 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 definition given by Archbishop Whately, " the science 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 between two services exchanged," while utility he regards as the " capacity which anything or any service has to gratify any human desire whatever." In regard to Malthus's law of population, 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 distribution 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 distribution, in the light of which the future condition of the laboring classes of all countries, if they are only true to themselves, seems hopeful and bright." In regard to the occupation 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 principally devoted his attention to the subject of foreign trade, tariffs, and taxation generally, 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 banking, have been already mentioned. In this class Henry Dunning McLeod, Prof. Bonamy Price, R. H. Patterson, and E. H. Inglis Palgrave now hold a prominent position in England. The late Stephen Colwell of Philadelphia published in 1859 (2d ed., 1860) " The Ways and Means of Payment, 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 predecessors, and a fuller and more complete statement of moneys of account than any previous writer. - In France, among the more distinguished writers on political economy are Blan-qui, Tracy, Louis Say, Droz, Rossi, Chevalier, Dunoyer, Gamier, Baudrillart, Bastiat, Fontenay, Coquelin, Faucher, Reybaud, and Wolowski. One of the most noted of these was Frederic Bastiat, whose works were published collectively after his death (6 vols., Paris, 1855; new ed., 1862). He was a strong partisan 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, enunciated in 1837. Speaking of the law of distribution, 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 diminishes, 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 international 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 Zollverein or customs union, establishing entirely free inter-state trade among the states composing it, with such a policy as should protect their domestic 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 intelligence, he enlarges it until it comprehends every topic of human welfare." "The German 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 Yolgraff, 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, Schonberg, Wappaus, Schaffle, 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-'16. The Biblioteca dell' economista, another collection of Italian and foreign writers, edited by Francesco 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 afterward established at Milan, and more recently 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 investigation and study of history and actual life, and reject the notion that it consists simply of deductions from the principle of individual 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, London, 1838-'57), which argues strongly against the theory of the economists in regard to the effect of an increased volume of money on prices, as maintained by Locke, Montesquieu, and Hume; " The Literature of Political Economy," by J. R. McCulloch (London, 1845); Dictionnaire de l'economie politique (2 vols. 8vo, Paris, 1852-'3), a most complete, trustworthy, and valuable work; Histoire de Veconomie politique, by A. Blanqui (4th ed., 2 vols. 12mo, Paris, 1860), containing a catalogue rai-sonne of political economy, which 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 England," by J. E. T. Rogers (2 vols. 8vo, 1866); Dtihring, Kritische Geschichte der Nationalo-honomie und des Socialismus (Berlin, 1871); and Roscher, Geschichte der Nationalohono-mie in Beutschland (Munich, 1874).