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DISCOURSE
ON THE
RISE, PROGRESS, PECULIAR OBJECTS,
AND IMPORTANCE,
OF
POLITICAL ECONOMY
CONTAINING AN OUTLINE OF
A COURSE OF LECTUBES
OK THE
PRINCIPLES AND DOCTEINES OF THAT SCIENCE.
By J. R.\ M'CULLOCH, Esq.
SECOND EDITION,
CORRECTED AND ENLARGED.
— — Leges Leoum, ex quibus informatio peti possit quid in singulis
legibus bene aut perperam positum aut constitutum sit.— Bacok.
EDINBURGH :
PRINTED FOR ARCHIBALD CONSTABLE & CO. EDINBURGH;
AND HURST, ROBINSON, AND CO. LONDON.
1825.
c
\
V
Printed by John Stark.
My object in publishing the following
Discourse has been to furnish the Students
of Political Economy with a general view
of the principles on which the science is
founded; the distinguishing features of the
most celebrated theories that have been
advanced to explain its various results ; the
distinction between it and Politics ; the
utility of its study to all ranks and orders
of the community ; and the plan I follow
in teaching it, both in my public and pri-
vate classes. I had previously attempted
to do this in an Introductory Lecture to
the Course I have delivered here and in
London ; but it was impossible, in so nar-
row a space, to touch on many topics that
I have here discussed at considerable
length, or to treat others so fully as their
importance seemed to require. Though
the Discourse is chiefly intended for the
use of those who may attend my classes
I am not without hopes that it may be of
service to others.
Edinburgh,!
Oct. 1824.
DISCOURSE
ON THE SCIENCE OP
POLITICAL ECONOMY.
If the interest and importance of the subjects of
which it treats be any test of the interest and im-
portance of a science. Political Economy will be
found to have the strongest possible claims on the
public attention. Its object is to point out the
means by which the industry of man may be ren-
dered most productive of those necessaries, com-
forts,, and enjoyments, which constitute "wealth;
to ascertain the proportions in which this wealth is
divided among the different classes of the com-
munity ; and the mode in which it may be most
advantageously consumed. The intimate connec-
tion of such a science, with all the best interests of
A
^ DISCOURSE ON
society, is abundantly obvious. There is no other,
indeed, which comes so directly home to the every-
day occupations and business of mankind. The con-
sumption of wealth is indispensable to existence ;
but the eternal law of Providence has decreed, that
wealth can only be procured by industry, — that
man must earn his bread in the sweat of his brow.
This twofold necessity renders the production of
wealth a constant and principal object of the exer-
tions of the vast majority of the human race ; has
subdued the natural aversion of man from labour ;
given activity to indolence ; and armed the patient
hand of industry with zeal to undertake, and pa-
tience to overcome, the most irksome and disagree-
able tasks.
But when wealth is thus necessary, when the de- !
sire to acquire it is sufficient to induce us to sub-
mit to the greatest privations, the science which
teaches the means by which its acquisition may be
most eflPectually promoted, — by which we may be
enabled to obtain the greatest possible amount of
wealth with the least possible difficulty, — must cer-
tainly deserve to be carefully studied and meditated.
There is no class of persons to whom this know-
ledge can be considered as either extrinsic or su-
perfluous. There are some, doubtless, to whom it
may be of more advantage than to others ; but it
is of the utmost consequence to all. The prices
of all sorts of commodities— the profits of the manu-
POLITICAL ECONOMY. O
facturer and merchant — the rent of the landlord—
the wages of the day-labourer — and the incidence
and effect of taxes and regulations, all depend on
principles which Political Economy can alone as-
certain and elucidate.
Neither is the acquisition of wealth necessary
only because it affords the means of subsistence :
without it we should never be able to cultivate and
improve our higher and nobler faculties. Where
wealth has not been amassed, the mind being con-
stantly occupied in providing for the immediate
wants of the body, no time is left for its culture ;
^nd the views, sentiments, and feelings of the peo-
ple, become alike contracted, selfish, and illiberal.
The possession of a decent competence, or the being
able to indulge in other pursuits than those which
directly tend to satisfy our animal wants and de-
sires, is necessary to soften the selfish passions ; to
improve the moral and intellectual character, and to
ensure any considerable proficiency in liberal studies
and pursuits. And hence, the acquisition of wealth
is not desirable merely as the means of procuring
immediate and direct gratifications, but as being
indispensably necessary to the advancement of so-
ciety in civilization and refinement. Without the
tranquillity and leisure afforded by the possession
of accumulated wealth, those speculative and ele-
gant studies which expand and enlarge our views,
purify our taste, and lift us higher in the scale of
4 DISCOURSE ON
being, can never be successfully prosecuted. It is
certain, indeed, that the comparative barbarism and
refinement of nations depend more on the compa-
rative amount of their wealth than on any other
circumstance. A poor people are never refined,
nor a rich people ever barbarous. It is impossible
to name a single nation which has made any dis-
tinguished figure either in philosophy or the fine
arts, without having been at the same time cele-
brated for its wealth. The age of Pericles and
Phidias was the flourishing age of Grecian, as the
age of Petrarch and Raphael was of Italian com-
merce. The influence of wealth is, in this respect,
almost omnipotent. It raised Venice from the bo-
som of the deep, and made the desert and sandy
islands on which she is built, and the unhealthy
swamps of Holland, the favoured abodes of litera-
ture, of science, and of art. In our own country
its effects have been equally striking. The num-
ber and eminence of our philosophers, poets, scho-
lars, and artists, have ever increased proportionally
to the increase of the public wealth, or to the means
of rewarding and honouring their labours.
The possession of wealth being thus indispen-
sable to individual existence and comfort, and to
the advancement of nations in civilization, it may
justly excite our astonishment, that so few efforts
should have been made to investigate its sources ;
and that the study of Political Economy is not even
POLITICAL ECONOMY. O
yet considered as forming a principal part in a com-
prehensive system of education. A variety of cir-
cumstances might be mentioned, as occasioning the
unmerited neglect of this science ; but of these
the institution of domestic slavery in the ancient
world, and the darkness of the period when the
plan of education in the universities of modern Eu-
rope was first formed, seem to have had the great-
est influence.
The citizens of Greece and Rome considered it
degrading to engage in those occupations which
form the principal business of the inhabitants of
modern Europe. Instead of endeavouring to en-
rich themselves by their own exertions, they trust-
ed to the reluctant labour of slaves, and to subsi-
dies extorted from conquered countries. In some
of the Grecian States, the citizens were prohibited
from engaging in any species of manufacturing
and commercial industry; and in Athens and
Rome, where this prohibition did not exist, these
employments were universally regarded as unwor-
thy of freemen, and were, in consequence, exclu-
sively carried on either by slaves or by the very
dregs of the people. Even Cicero, who had
mastered all the philosophy of the ancient world,
and raised himself above many of the prejudices
of his age and country, does not scruple to af-
firm, that there can be nothing ingenuous in a
workshop ; that commerce, when conducted on
O , DISCOURSE ON
a small scale, is mean and despicable ; and when
most extended, barely tolerable — Non admodmn
'vituperanda ! * Agriculture, indeed, was treats
ed with more respect. Some of the most dis-
tinguished characters in the earlier ages of Ro-
man history had been actively engaged in rural af-
fairs ; but, notwithstanding their example, the cul-
tivation of the soil, in the flourishing period of the
Republic, and under the Emperors, was almost en^
tirely carried on by slaves, belonging to the land-
lord, and employed on his account. The mass of
Roman citizens were either engaged in the mili-
tary service, t or derived a precarious and depend-
ant subsistence from the supplies of corn furnished
by the conquered provinces. In such a state of
society the relations subsisting in modern Europe
* " Illiberales autem et sordid! questus mercenariorura,
omniumque quorum operae, non quorum artes emuntur. Est
enim illis ipsa merces auctoramentum servitutis. Sordidi
etiam putandi, qui mercantur a mercatoribus quod statim
vendant, nihil enim proficiunt, nisi admodum mentiantur !
Opificesque omnes in sordida arte versantur, nee enim quid-
quam ingenuum potest habere qfficina * * * Mercatura autem,
si tenuis est, sordida putanda est; sin autem magna et copi-
osa, multa undique apportans, multisque sine vanitate imper-
tiens, non est admodum vituperanda.'* {De Officiis, Lib. I.
sect. 42.)
t " Rei militaris virtus praestat caeteris omnibus ; haec po-
pulo Romano, ha^c huic urbi oeternam gloriam peperit."-rr
(Cicero pro Murena.)
POLITICAL ECONOMY. 7
between landlords and tenants, and masters and
servants, were unknown ; and the ancients were,
in consequence, entire strangers to all those inter-
esting and important questions arising out of the
rise and fall of rents and wages, which form so im-
portant a branch of economical science. The spirit
of philosophy in the ancient world was also ex-
tremely unfavourable to the cultivation of Political
Economy. The luxurious or more refined mode
of living, of the rich, was regarded by the ancient
moralists as an evil of the first magnitude. They
considered it as subversive of those warlike virtues,
which were the principal objects of their admira-
tion ; and they, therefore, denounced the passion
for accumulating wealth as fraught with the most
injurious and destructive consequences. It was
impossible that Political Economy could become
an object of attention to minds imbued with such
prejudices ; or that it could be studied by those
who contemned the objects about which it is con-
versant, and vilified the labour by which wealth
is produced.
At the establishment of our universities, the
clergy were almost the exclusive possessors of the
little knowledge then in existence. It is natu-
ral, therefore, that their peculiar feelings and pur-
suits should have a marked influence on the plans
of education they were employed to frame. Gram-
mar, rhetoric, logic, school divinity, and civil law.
o DISCOURSE ON
comprised the whole course of study. To have
appointed professors to explain the principles of
commerce, and the means by which labour might
be rendered most eflPective, would have been con-
sidered as equally superfluous and degrading to
the dignity of science. The ancient prejudices
against commerce, manufactures, and luxury, re-
tained a powerful influence in the middle ages.
None were then possessed of any clear ideas con-
cerning the true sources of national wealth, happi-
ness, and prosperity. The intercourse among states
was extremely limited, and was maintained rather
by marauding incursions, and piratical expeditions
iu search of plunder, than by a commerce founded
on the gratification of real and reciprocal wants.
These circumstances suflBciently account for the
late rise of this science, and the little attention
paid to it up to a very recent period. And since it
has become an object of more general attention
and inquiry, the differences which have subsisted
among the most eminent of its professors, have
proved exceedingly unfavourable to its progress,
and have generated a disposition to distrust its best
established conclusions.
It is clear, however, that those who distrust the
concllisions of Political Economy, because of the va-
riety of systems that have been advanced to explain
the phenomena about which it is conversant, might
on the same ground distrust the conclusions of al-
POLITICAL ECONOMY. 9
most every other science. The discrepancy between
the various systems that have successively been sanc-
tioned by the ablest physicians, chemists, natural
philosophers, and moralists, is quite as great as the
discrepancy between those advanced by the ablest
political economists. But who would therefore con-
clude that medicine, chemistry, natural philosophy,
and morals, rest on no solid foundation, or that they
are incapable of presenting us with a system of well-
established and consentaneous truths ? We do not
refuse our assent to the demonstrations of Newton
and Laplace, because they are subversive of the hy-
potheses of Ptolemy, Tycho Brahe, and Descartes ;
and why should we refuse our assent to the demon-
strations of Smith and Ricardo, because they have
subverted the false theories that were previously ad-
vanced respecting the sources and the distribution of
wealth ? Political Economy has not been exempted
from the common fate of the other sciences. None
of them has been instantaneously carried to perfec-
tion ; more or less of error has always insinuated it-
self into the speculations of their earliest cultivators.
But the errors with which Political Economy was
formerly infected have now nearly disappeared, and
a very few observations will suffice to show that it
really admits of as much certainty in its conclusions
as any science founded ow fact and experiment can
possibly do.
10 DISCOURSE ON
The principles on which the production and ac-
cumulation of wealth and the progress of civiliza-
tion depend, are not the offspring of legislative en-
actments. Man must exert himself to produce
wealth, because he cannot exist without it ; and the
desire implanted in the breast of every individual
of rising in the world and improving his condition,
impels him to save and accumulate. The princi-
ples which form the basis of this science make,
therefore, a part of the original constitution of man
and of the physical world ; and their operations,
like those of the mechanical principles, are to be
traced by the aid of observation and analysis. There
is, however, a material distinction between the phy-
steal and the moral and political sciences. The
conclusions of the former apply in every case, while
those of the latter apply only in the majority of
cases. The principles on which the production
and accumulation of wealth depend are inherent in
our nature, and exert a powerful, but not always
the same degree of influence over the conduct of
every individual ; and the theorist must, therefore,
satisfy himself with framing his general rules so
as to explain their operation in the majority of
instances, leaving it to the sagacity of the ob-
server to modify them so as to suit individual
cases. Thus, it is an admitted principle in the
science of Morals, as well as of Political Economy,
that by far the largest proportion of the human
10
POLITICAL ECONOMY. 11
race have a much clearer view of what is conducive
to their own interests, than it is possible for any
other man, or select number of men to have, and,
consequently, that it is sound policy to allow every
individual to follow the bent of his inclination, and
to engage in any branch of industry he thinks pro-
per. This is the general theorem ; and it is one
which is established on the most comprehensive ex-
perience. It is not, however, like the laws which
regulate the motions of the planetary system, — it
will hold good in nineteen out of twenty instances,
but the twentieth may be an exception. But it is
not required of the economist, that his theories
should quadrate with the peculiar bias of the mind
of a particular person. His conclusions are drawn
from observing the principles which are found
to determine the condition of mankind, as present-
ed on the large scale of nations and empires. He
has to deal with man in the aggregate — with states,
and not with families — with the passions and pro-
pensities which actuate the great bulk of the hu-
man race, and not with those which are occasion-
ally found to influence the conduct of a solitary in-
dividual.
It should always be steadily kept in view, that
it is never any part of the business of the econo-
mist to inquire into the means by which the fortunes
of individuals may have been increased or diminish-
ed, except to ascertain their general operation and
12 . DISCOURSE ON
effect. The public interests ought always to form
the exclusive objects of his attention. He is not
to frame systems, and devise schemes, for increasing
the wealth and enjoyments of particular classes ;
but to apply himself to discover the sources of na-
tional wealth, and universal prosperity, and the
means by which they may be rendered most pro-
xluctive.
Nothing, indeed, is more common than to hear
it objected to some of the best established truths in
political and economical science, that they are at
variance with such and such facts, and that, therefore,
they must be rejected. It is certain, however,
that these objections most frequently originate in
an entire misapprehension of the nature of the
science. It would be easy to produce a thousand
instances of individuals who have been enriched by
monopolies, as they are sometimes by robbery and
plunder ; but it would be not a little rash to con-
clude from thence, without farther inquiry, that the
community in general can be enriched by such
means ! This, however, is the single consideration
to which the political economist has to attend.
The question never is, whether a greater or smaller
number of individuals can be enriched by the adop-
tion of a particular measure, or by a particular in-
stitution, but whether its tendency is to enrich the
public. Admitting that monopolies and restrictive
regulations frequently enable individuals to accu-
POLITICAL ECONOMY. 1$
niulate ample fortunes, this is so far from being, as
is often contended, any proof of their real ad van -
tageousness, that it is distinctly and completely the
reverse. It is demonstrably certain, that if mono-
polies and exclusive privileges enrich the Jew, they
must, to the same extent, impoverish the man^ ;
and are, therefore, as destructive of that national
WEALTH, to promote which ought to be the princi-
pal object of every institution, as they are of the
natural freedom of industry.
To arrive at a well-founded conclusion in eco-
nomical science, it is not, therefore, enough to
observe results in particular cases, or as they affect
particular individuals ; we must further inquire
whether these results are constant and universally
applicable — whether the same circumstances which
have given rise to them in one instance, would in
every instance, and in every state of society, be
productive of the same or similar results A theo-
ry which is inconsistent with an uniform and con-
stant fact must be erroneous ; but the observation
of a particular result at variance with our custom-
ary experience, and when we may not have had
the means of discriminating the circumstances at-
tending it, ought not to induce us hastily to modi-
fy or reject a principle which accounts satisfactorily
for the greater number of appearances.
The example of the few arbitrary princes who
have been equitable, humane, and generous, is not
14 DISCOURSE ON
enough to overthrow the principle which teaches
that it is the nature of irresponsible power to de-
bauch and vitiate its possessors-^to render them
haughty, cruel, and suspicious : nor is the example
of those who, attentive only to present enjoyment,
and careless of the future, lavish their fortunes in
boisterous dissipation or vain expence, sufficient to
invalidate the general conclusion, that the passion
for accumulation is infinitely stronger and more uni-
versal than the passion for expence. Had this not
been the case, mankind could never have emerged
from the condition of savages. The multiplied and
stupendous improvements which have been made in
different ages and nations — the forests that have
been cut down — the marshes and lakes that have
been drained and subjected to cultivation — the
harbours, roads, and bridges that have been con-
structed — the cities and edifices that have been
raised — are all the fruits of a saving of income, and
establish, in despite of a thousand particular in-
stances of prodigality, the vast ascendancy and su-
perior force of the accumulating principle.
It is from the want of attention to these consi-
derations that much of the error and misapprehen-
sion with which the science of Political Economy
has been, and still is infected, has arisen. Almost
all the absurd theories and opinions which have
successively appeared have been supported by an
appeal to facts. But a knowledge of facts, without
POLITICAL ECONOMY. 15
a knowledge of their mutual relation — without be-
ing able to show why the one is a cause and the
other an effect — ^is, to use the illustration of M.
Say, really no better than the indigested erudition
of an almanack-maker, and can afford no means of
judging of the truth or falsehood of a general prin-
ciple.
Neither should it be forgotten, that the alleged
facts so frequently brought forward to show the
fallacy of general principles, are, in most cases, so
carelessly observed, and the circumstances under
which they have taken place so indistinctly de-
fined, as to render them altogether unworthy
of attention. To observe accurately, requires a
degree of intelligence and acuteness, a freedom
from prejudice, and a patience of investigation be-
longing to a few only. " There is," to use the
words of the celebrated Ur CuUen, " a variety of
circumstances tending to vitiate the statements dig-
nified with the name of experience. The simplest
narrative of a case almost always involves some
theories. It has been supposed that a statement
is more likely to consist of unsophisticated facts,
when reported by a person of no education ; but
it will be found an invariable rule, that the lower
you descend in the medical profession, the more
hypothetical are the prevailing notions. Again,
how seldom is it possible for any case, however
minutely related, to include all the circumstances
l6 DISCOURSE ON
with which the event was connected. Hence, in
what is commonly called experience, we have only
a rule transferred from a case imperfectly known,
to one of which we are equally ignorant. Hence,
that most fertile source of error, the applying de-
ductions drawn from the result of one case to
another case, the circumstances of which are not
precisely similar. Without principles deduced
from analytical reasoning, experience is an use-
less and a blind guide.'' *
Every one who has had occasion to compare the
discordant statements of the mass of common ob-
servers, with respect to the practical bearing and real
operation of any measure affecting the public inter-
ests, must be convinced that Dr Cullen's reasoning
is still more applicable to political and economical
science than to medicine. Circumstances which al-
together escape the notice of ordinary observers, of-
ten exercise the most powerful influence over na-
tional prosperity; and those again which strike them
as being most important, are often comparatively in-
significant. The condition of nations, too, is affected
by so many circumstances, that without the greatest
skill and caution, joined to a searching and re-
fined analysis, and a familiar command of scienti-
fic principles, it is in most cases quite impossible
* Cullen's MS. Lectures.
POLITICAL ECONOMY. 17
to discriminate between cause and effect, and to avoid
ascribing results to one set qf causes that have been
occasioned by another set. No wonder, therefore,
when such is the difficulty of observing, that ** the
number of false facts, afloat in the world, should
infinitely exceed that of the false theories."* And
after all, however carefully an isolated fact may be
observed, still, for the reasons ah-eady stated, it
can never form a foundation for a general theorem
either in the moral or political sciences. Those,
indeed, who bring forward theories resting on
so narrow a basis, are almost invariably empirics,
whose vanity or interest prompts them to set up
conclusions drawn from their own limited and im-
perfect range of observation, in opposition to those
that are sanctioned by the general experience of
mankind.
But although we are not to reject a received
principle because of the apparent opposition of a
few results, with the particular circumstances of
which we are unacquainted, we can have no confi-
dence in its solidity unless it be deduced from a
very comprehensive and careful induction. To ar-
rive at a true knowledge of the laws regulating
the production, distribution, and consumption of
wealth, the economist must draw his materials
from a very wide surface. He should study man in
* A remark of Dr Cullen.
B
18 DISCOURSE ON
every different situation — he should have recourse
to the history of society, arts, commerce, and
civilization *— to the works of philosophers and
travellers— to every thing, in short, that can throw
light on the causes which accelerate or retard the
progress of civilization : He should mark the
changes which have taken place in the fortunes
and condition of the human race in different re-
gions and ages of the world : He should trace
the rise, progress, and decline of industry : And,
above all, he should carefully analyse and compare
the effects of different institutions and regulations,
and discriminate the various circumstances where*
* " History, if I may be allowed the expression, is now a
vast museum, in which specimens of every variety of human
nature may be studied. From these great accessions to
knowledge, law-givers and statesmen, but, above all, moralists
and poliiical philosophers, may derive the most important in •
structions. They may plainly discover in all the useful and
beautiful variety of governments and institutions, and under
all the fantastic multitude of usages and rites which have pre-
vailed among men, the same fundamental comprehensive
truths, the sacred master principles which are the guardians
of human society, recognized and revered (with few and
slight exceptions) by every nation upon earth, and uniform-
ly taught (with exceptions still fewer) by a succession of
wise men, from the first dawn of speculation to the present
moment." I have extracted this passage from Sir James
Mackintosh's most eloquent and masterly Discourse on ihs
Latv of Nature and Nations, p. 27-
8
POLITICAL ECONOMY. IQ
in an advancing and declining society diflPer from
each other. These investigations, by disclosing
the real causes of national opulence and refine-
ment, and of poverty and degradation, furnish the
economist with the means of giving a satisfactory
solution of almost all the important problems in
the science of wealth, and of devising a scheme of
public administration calculated to ensure the con-
tinued advancement of the society in the career of
improvement.
Such inquiries cannot fail to excite the deepest
interest in every ingenuous mind. The laws by
which the motions of the celestial bodies are regu-
lated, and over which man cannot exercise the
smallest influence or control, are yet universally
allowed to be noble and rational objects of study.
But the laws which regulate the movements of hu-
man society — which cause one people to advance in
opulence and refinement, at the same time that
another is sinking into the abyss of poverty and
barbarism — have an infinitely stronger claim on
our attention ; both because they relate to ob-
jects which exercise a direct influence over human
happiness, and because their effects may be, and in
fact are, continually modified by human interfer-
ence. National prosperity does not depend nearly
so much on advantageous situation, salubrity of cli-
mate, or fertility of soil, as on the adoption of mea-
sures fitted to excite the inventive powers of genius.
K
20 DISCOURSE ON
and to give perseverance and activity to industry.
The establishment of a vsrise system of public eco-
nomy can compensate for every other deficiency : It
can render regions naturally inhospitable, barren,
and unproductive, the comfortable abodes of an
elegant and refined, a crowded and wealthy popu-
lation ; but where it is wanting, the best gifts of
nature are of no value ; and countries possessed of
the greatest capacities of improvement, and abound-
ing in all the materials necessary for the production
of wealth, with difficulty furnish a miserable subsist-
ence to hordes distinguished only by their ignor-
ance, barbarism, and wretchedness.
When we reflect on the variety and extent of
the previous knowledge required for the construc-
tion of a sound theory of Political Economy, we
cease to feel any surprise at the errors into which
economists have been betrayed, or at the discre-
pancy of the opinions that are still entertained on
some important points. Political Economy is of
very recent origin. Though various treatises of
considerable merit had previously appeared on some
of its detached parts, it was not treated as a whole,
or in a scientific manner, until about the middle
of last century. This circumstance is of itself
enough to account for the number of erroneous
systems that have since appeared. Instead of de-
POLITICAL ECONOMY. 21
ducing their general conclusions from a compari-
son of particular facts, and a careful examination
of the phenomena attending the operation of dif-
ferent principles, and of the same principles in dif-
ferent circumstances, the first cultivators of almost
every branch of science have begun by framing
their theories on a very narrow and insecure basis.
Nor is it really in their power to go to work dif-
ferently. Observations are scarcely ever made or
particulars noted for their own sake. It is not
until they begin to be sought after, as furnishing the
only test by which to ascertain the truth or false-
hood of some popular theory, that they are made
in suflficient numbers, and with sufficient accu-
racy. It is, in the peculiar phraseology of this
science, the effectual demand of the theorist that
occasions the production of the facts or raw mate^
rials, which he is afterwards to work into a sys-
tem. The history of Political Economy strikingly
exemplifies the truth of this remark. Being, as
already observed, entirely unknown to the ancients,
and but little attended to by our ancestors up to a
comparatively late period, those circumstances
which would have enabled us to judge with the
greatest precision of the wealth and civilization of
the inhabitants of the most celebrated states of an-
tiquity, and of Europe during the middle ages,
have either been thought unworthy of the notice
of the historian, or have been very impierfectly
and carelessly detailed. Those, therefore, who
^2 DISCOURSE ON
first began to trace the general principles of tlie
science had but a comparatively limited and scan-
ty experience on which to build their conclusions.
Nor did they even avail themselves of the few his-
torical facts with which they might easily have be-
come acquainted ; but almost exclusively confined
their attention to such as happened to come within
the sphere of their own observation.
The once prevalent opinion, that wealth consists
exclusively of Gold and Silver, naturally grew out of
the circumstance of the money of all civilized coun-
tries being almost entirely formed of these metals.
Having been used both as standards whereby to
measure the relative value of different commodities
and as the equivalents for which they were most
frequently exchanged, gold and silver, or money,
acquired a factitious importance, not in the esti-
mation of the vulgar only, but in that of persons
of the greatest discernment. The simple and deci-
sive consideration, that all buying and selling is real-
ly nothing more than the bartering of one commo-*
dity for another — of a certain quantity of corn or
cloth, for example, for a certain quantity of gold or
silver, and vice 'versa — was entirely overlooked.
The attention was gradually transferred from the
money's worth to themoney itself ; and the wealth
of individuals and of states was measured, not by the
abundance of their disposable products — by the
quantity and value of the commodities with which
POLITICAL ECONOMY. <i3
they could afford to purchase the precious metals —
but by the quantity of these metals actually in their
possession — And hence the policy, as obvious as it
was universal, of attempting to increase the
amount of national wealth by forbidding the ex-
portation of gold and silver, and encouraging their
importation.
It appears from a passage in Cicero, that the ex-
portation of the precious metals from Rome had been
frequently prohibited during the period of the Re-
public ; * and this prohibition was repeatedly re-
newed, though to very little purpose, by the Em-
perors.f Neither, perhaps, has there been a state
in modern Europe whose early laws have not ex-
pressly forbidden the exportation of gold and sil-
ver. It is said to have been interdicted by the
law of England previously to the Conquest ; and
reiterated statutes were subsequently passed to the
same effect ; one of which, (3d Henry VIII.
cap. 1,) enacted so late as 1512, declared, that
all persons carrying over sea any coins, plate,
* " Exportari aururn non oportere, cum scepe antea senatus,
turn me consider gravissime judicavit." Orat. pro L. Flacco,
sect. 28.
+ Pliny, when enumerating tlie silks, spices, and other
Eastern products imported into Italy, says, " Minimaque
computatione millies centena mdlia sestertium annis omnibus,
India ct Seres, peninsidaque ilia {Arabia) imperia nostra de^
munt:' (Hist, Nat. Lib. xii. cap. 18.)
S4 DISCOURSE ON
jewels, &c. should, on detection, forfeit double
the value of these articles.
The extraordinary extension of commerce during
the fifteenth and sixteenth centuries occasioned the
substitution of a more refined and complex system
for increasing the supply of the precious metals in
place of the coarse and vulgar one that had pre-
viously obtained. The establishment of a direct
intercourse with India by the Cape of Good Hope,
seems to have had the greatest influence in effect-
ing this change. The precious metals have always
been one of the most advantaj^eous articles of ex-
port to the East : And notwithstanding the old and
deeply rooted prejudices against their exportation,
the East India Company obtained, when first in-
stituted, in 1600, leave annually to export fo-
reign coins, or bullion, of the value of L. 30,000 ;
on condition, however, that they should import,
within six months after the termination of every
voyage, except the first, as much gold and silver as
should together be equal to the value of the silver
exported by them. But the enemies of the Com-
pany contended, that this condition w^as not com-
plied with ; and that it was besides contrary to all
principle^ and highly injurious to the public inte-
rests, to permit gold and silver to be sent out of
the kingdom. The merchants, and others inte-
rested in the support of the Company, could not
controvert the reasoning of their opponents, without
POLITICAL ECONOMY. Q5
openly impugning the ancient policy of absolutely
preventing the exportation of the precious metals.
They did not, however, venture to contend, nor is
there indeed any good reason for thinking that it
really occurred to them, that the exportation of bul-
lion to the East was advantageous, on the ground
that the commodities purchased by it were of greater
value in England. But they contended, that the
exportation of bullion to India was advantageous,
because the commodities imported from thence were
chiefly re-exported to other countries, from which
-a much greater quantity of bullion was obtained than
had been required to pay them in India. Mr Thomas
Mun, the ablest of the Company's advocates, in-
geniously compares the operations of the merchant
in conducting a trade carried on by the exporta-
tion of gold and silver, to the seed-time and har-
vest of agriculture. ** If we only behold," says
he, " the actions of the husbandman in the seed-
time, when he casteth away much good corn into
the ground, we shall account him rather a mad-
man than a husbandman. But when we consider
his labours in the harvest, which is the end of his
endeavours, we shall find the worth and plentiful
increase of his actions," *
* Treasure by Foreign Trade, orig. ed. p. 50 Tliis work
was published in 1664', a considerable period after Mr Mun's
death. Most probably it iiad been written about 1635,
S6 DISCOURSE ON
Such was the origin of what has been called the
MERCANTILE SYSTEM : And, whcn compared with
the previous prejudice — for it hardly deserves the
name of system — which wholly interdicted the
exportation of gold and silver, it must be allow-
ed that its adoption was a considerable step in
the progress to sounder opinions. The support-
ers of the mercantile system, like their prede-
cessors, held that gold and silver alone constituted
wealth ; but they thought that sound policy dic-
tated the propriety of allowing their exportation
to foreigners, provided the commodities imported
in their stead, or a portion of them, were after-
wards sold to other foreigners for a greater amount
of bullion than had been originally laid out on their
purchase ; or, provided the importation of the fo-
reign commodities caused the exportation of so
much more native produce than would otherwise
have been exported, as would more than equal
their cost. These opinions necessarily led to the
celebrated doctrine of the Balance of Trade. It
was obvious that the precious metals could not be
imported into countries destitute of mines, except
or 1640. Mun had previously advanced the same doctrines,
and nearly in the same words, in his Defence of the East
India Trade, originally published in I609, and reprinted in
1621, and in a petition drawn up by him, and presented by
the East India Company to Parliament in 1 628.
POLITICAL ECONOMY. ^7
in return for exported commodities ; and the
grand object of the supporters of the mercan-
tile system was to monopolise the largest pos-
sible supply of the precious metals, by the adop-
tion of various complex schemes for encouraging
exportation, and restraining the importation of al-
most all products, except gold and silver, that were
not intended for future exportation. In conse-
quence, the excess of the value of tlie Exports
over that of the Imports came to be consider-
ed as being at once the sole cause and measure of
the progress of a country in the career of wealth.
This excess, it was taken for granted, could not be
balanced otherwise than by the importation of an
equal value of gold or silver, or of the only real
wealth it was then supposed a country could pos-
sess.
The principles and conclusions of the mercantile
system, though absolutely false and erroneous, af-
ford a tolerable explanation of a few very obvious
phenomena ; and what did more to recommend
them, they were in perfect unison with the popular
prejudices on the subject. The merchants, and
practical men, who were the founders of this sys-
tem, did not consider it necessary to subject the
principles they assumed to any very refined ana-
lysis or examination. But, reckoning them as
sufficiently established by the common consent
and agreement of mankind, they applied them-
28 DISCOURSE ON
selves almost exclusively to the discussion of the
practical measures calculated to give them the
greatest efficacy.
** Although a kingdom," says Mr Mun, " may
be enriched by gifts received, or by purchase taken,
from some other nations, yet these are things un-
certain, and of small consideration, when they
happen. The ordinary means, therefore, to in-
crease our wealth and treasure, is by foreign trade,
wherein we must ever observe this rule — to sell
more to strangers yearly than *we consume of theirs
in value. For, suppose, that when this kingdom
is plentifully served with cloth, lead, tin, iron,
fish, and other native commodities, we do yearly
export the overplus to foreign countries to the
value of L. 2,200,000, by which means we are en-
abled, beyond the seas, to buy and bring in foreign
wares for our use and consumption to the value of
L. 2,000,000 : By this order duly kept in our
trading, we may rest assured that the kingdom
shall be enriched yearly L. 200,000, which must
be brought to us as so much treasure ; because that
part of our stock which is not returned to us in
wares, must necessarily be brought home in trea-
sure." *
The gain on our foreign commerce is here sup-
posed to consist exclusively of the gold and silver
* Treasure by Foreign Trade, p. 11.
POLITICAL ECONOMY. 29
which, it is taken for granted, must necessarily be
brought home in payment of the excess of export-
ed commodities. Mr Mun lays no stress whatever
on the circumstance of foreign commerce enabling
us to obtain an infinite variety of useful and agree-
able products, which it would either have been im-
possible for us to produce at all, or to produce so
cheaply at home. We are desired to consider all
this accession of wealth — all the vast addition made
by commerce to the motives which stimulate, and
to the comforts and enjoyments which reward the
labour of the industrious, as iiothing, — and to fix our
attention exclusively on the balance of L. 200,000
of gold and silver ! This is much the same as if
we were desired to estimate the comfort and ad-
vantage derived from a suit of clothes, by the num-
ber and glare of the metal buttons by which they
are fastened. And yet the rule for estimating the
advantageousness of foreign commerce, which Mr
Mun has here given, was long regarded by the ge-
nerality of merchants and practical statesmen as
infjillible ; and such is the inveteracy of ancient
prejudices, that we are still annually congratulated
on the excess of our exports over our imports !
There were many other circumstances, however,
besides the erroneous notions respecting the pre-
cious metals, which led to the enactment of regula-
tions restricting the freedom of industry, and se-
cured the ascendancy of the mercantile system.
so DISCOURSE ON
The feudal governments established in the countries
that had formed the western division of the Ro-
man Empire, early sunk into a state of confu-
sion and anarchy. The princes, unable of them-
selves to restrain the usurpations of the greater
barons, or to control their violence, endeavour-
ed to strengthen their influence and consolidate
their power, by attaching the inhabitants of cities
and towns to their interests. For this purpose,
they granted them charters, enfranchising the in-
habitants, abolishing every existing mark of ser-
vitude, and forming them into corporations, or
bodies politic, to be governed by a council and
magistrates of their own selection. The order and
good government that were thus established in the
cities, and the security of property enjoyed by their
inhabitants, while the rest of the country was a
prey to rapine and disorder, stimulated their indus-
try, and gave them a decided superiority over the
cultivators of the soil. It was from the cities that
the princes derived the greater part of their supplies
of money ; and it was by their assistance and co-
operation that they were enabled to control and
subdue the pride and independence of the barons.
But the citizens did not render this assistance to
their sovereigns merely by way of compensation for
the original gift of their charters. They were con-
tinually soliciting and obtaining new privileges.
And it was not to be expected that princes, whom
POLITICAL ECONOMY. 31
they liad laid under so many obligations, and who
justly regarded them as forming the most indus-
trious and deserving portion of their subjects,
should feel any great disinclination to gratify their
wishes. To enable them to obtain cheap provi-
sions, and to carry on their industry to the best
advantage, the exportation of corn, and of the raw
materials of their manufactures, was strictly prohi-
bited ; at the same time that heavy duties and ab-
solute prohibitions were interposed to prevent the
importation of manufactured articles from abroad,
and to secure the complete monopoly of the home-
market to the home manufacturers. These, toge-
ther with the privilege granted to the citizens of
corporate towns of preventing any individual from
exercising any branch of business until he had ob-
tained leave from them ; and a variety of subor-
dinate regulations intended to force the importa-
tion of the raw materials required in manufactures,
and the exportation of manufactured goods, form
the principal features of the system of public
economy adopted, with the view of encouraging
7naniifaclimng industry, in every country in Eu-
rope, in the fourteenth, fifteenth, sixteenth, and
seventeenth centuries. The freedom of indus-
try recognised by their ancient laws was almost
totally destroyed. It would be easy to mention a
thousand instances of the excess to which this arti-
ficial system was carried in England and other
32 DISCOURSE ON
countries ; but as many of these instances must be
familiar to the reader, I shall only observe, as il-
lustrative of its spirit, that, by an act passed in
1678, for the encouragement of the English wool-
len manufacture, it v^as ordered that all dead bO'
dies should be wrapped in a woollen shroud !
But the exclusion of foreign competition, and the
monopoly of the home-market, were not enough to
satisfy the manufacturers and merchants. Having
obtained all the advantage they could from the public,
they next attempted to prey on each other. Such of
them as possessed most influence, procured the pri-
vilege of carrying on particular branches of industry
to the exclusion of every other individual. This
abuse was carried to a most oppressive height in
the reign of Elizabeth, who granted an infinite
number of new patents. At length, the grievance
became so insupportable, as to induce all classes to
join in petitioning for its abolition : which, after
much opposition on the part of the Crown, by
whom the power of erecting monopolies was con-
sidered a very valuable branch of the prerogative,
was effected by an act passed in 1624. This act
has been productive of the greatest advantage ; but
it did not touch any of the fundamental principles
of the mercantile or manufacturing system ; and
the exclusive privileges of all bodies-corporate
were exempted from its operation.
In France the interests of the manufacturers
POLITICAL ECONOMY. 33
were warmly espoused by the justly celebrated M.
Colbert, minister of finances during the most splen-
did period of the reign of Louis XIV. ; and the
year 1664, when the famous tariff, compiled under
his direction, was first promulgated, has been some-
times considered, by the Continental writers,
though, as we have seen, most erroneously, as the
real era of the mercantile system. *
The restrictions in favour of the manufacturers
were all zealously supported by the advocates of
the mercantile system, and the balance of trade.
The facilities given to the exportation of goods
manufactured at home, and the obstacles thrown in
the way of importation from abroad, seemed pecu-
liarly well fitted for making the exports exceed the
imports, and procuring a favourable balance. In-
stead, therefore, of regarding these regulations as
the offspring of a selfish monopolizing spirit, they
looked on them as having been dictated by the
soundest policy. The interests of the manufactur-
ers and merchants were thus naturally identified ;
and were held to be the same with those of the pub-
lic. The acquisition of a favourable balance of pay-
ments was the grand object to be accomplished j
and heavy duties and restrictions on importation,
and bounties and premiums on exportation, were
the means by which this object was to be attained.
* See Mengotti^ Disserlazione sid Colberlismo, cap. 11.
C
34 DISCOURSE ON
It cannot excite our surprise that a system having
so many popular prejudices in its favour, and which
afforded a plausible apology for the exclusive pri-
vileges enjoyed by the manufacturing and commer-
cial classes, should have early attained, or that it
should still preserve, notwithstanding the over-
throw of its principles, a powerful practical influ-
ence.*
" It is no exaggeration to affirm," says a late
foreign writer, " that there are very few poli*
tical errors which have produced more mischief
than the mercantile system. Armed with power,
it has commanded and forbid where it should
only have protected. The regulating mania which
it has inspired has tormented industry in a thou-
sand ways, to force it from its natural chan-
nels. It has made each particular nation re-
gard the welfare of its neighbours as incompatible
with its own ; hence the reciprocal desire of injur-
ing and impoverishing each other ; and hence that
spirit of commercial rivalry which has been the
immediate or remote cause of the greater number
of modern wars. It is this system which has sti-
* Melon and Forbonnais in France, — Genovesi in Italy, —
Mun, Sir Josiah Child, Dr Davenant, the authors of the
British Merchant, and Sir James Stewart, in England — are
the ablest writers who have espoused, some with more and
some with fewer exceptions, the leading principles of the
mercantile system. 'Q r^i-,.,
\
T-^^jdST -^t •
POLITICAL ECONOMY. 35
mulated nations to employ force or cunning to ex-
tort commercial treaties, productive of no real ad-
vantage to themselves, from the weakness or igno-
rance of others. It has formed colonies, that the
mother country might enjoy the monopoly of their
trade, and force them to resort exclusively to her
markets. In short, where this system has been
productive of the least injury, it has retarded the
progress of national prosperity ; every where else
it has deluged the earth with blood, and has depo-
pulated and ruined some of those countries whose
power and opulence it was supposed it would carry
to the highest pitch." *
The shock given to previous prejudices and sys-
tems by those great discoveries and events, which
will for ever distinguish the fifteenth and sixteenth
centuries, and the greater attention which the pro-
gress of civilization and industry naturally drew to
the sources of national power and opulence, pre-
pared the way for the downfall of the mercantile
system. The advocates of the East India Com-
pany, whose interests had first prompted them to
question the prevailing doctrines as to the expor-
tation of bullion, began gradually to assume a
higher tone ; and at length boldly contended that
bullion was nothing hut a commodity , and that its
exportation ought to be rendered as free as the
* Storch, Cours (VEconoime Politique, Tome I- p. 1 22.
36 DISCOURSE ON
exportation of any other commodity. Nor were
these opinions confined to the partners of the East
India Company. They were gradually communi-
cated to others ; and many eminent merchants were
taught to look with suspicion on several of the
most received maxims ; and were thus led to ac-
quire more correct and comprehensive views in
respect to the just principles of commercial inter-
course. The new ideas ultimately made their way
into the House of Commons ; and in 1663, the
f statutes prohibiting the exportation of foreign
coin and bullion were repealed, and full liberty
given to the East India Company, and to private
traders, to export these articles in unlimited quan-
tities.
In addition to the controversies respecting the
East India trade, the discussions to which the foun-
dation of the colonies in America and the West
Indies, the establishment of a compulsory provision
for the support of the poor, and the acts prohibit-
ing the exportation of wool, &c. gave rise, attracted
an extraordinary portion of the public attention to
questions connected with the domestic policy of the
country. In the course of the seventeenth century,
a more than usual number of tracts were published
on commercial and economical subjects. And al-
though the greater number are strongly tinctured
with the prevailing spirit of the age, it cannot be
(lenied, that several of them rise above the preju-
POLITICAL ECONOMY. 37
dices of their contemporaries, and have an unques-
tionable right to be regarded as the foundation of
the modern theory of commerce — as the earliest
exposition of those sound and liberal doctrines, by
which it has been shown, that the prosperity of
states can never be promoted by restrictive regu-
lations, or by the depression of their neighbours
— that the geniune spirit of commerce is incon-
sistent with the dark, selfish, and shallow policy of
monopoly — and that the self-interest of mankind,
not less than their duty, requires them to live in
peace, and to cultivate a fair and friendly inter-
course with each other.
Sir Josiah Child,* whose work, though it is found-
ed on the principles of the mercantile system, con-
tains many sound and liberal views. Sir William
Petty, I and Sir Dudley North, are the most dis-
tinguished of the economical writers of the seven-
teenth century. The latter not only rose above
the established prejudices of his time, but had sa-
gacity enough to detect the more refined and less
obvious errors that were newly coming into fashion.
His tract, entitled, " Discourses on Trade y princi--
* A New Discourse of Trade, first published in 1668, but
greatly enlarged and improved in the second edition, pub-
lished in I69O.
f Quantuliimcunque, published in l682; Political Anatomjj
of Ireland, published in lG72 ; and other works.
38 DISCOURSE ON
pallT/ directed to the Cases of Interest^ Coinage^
Clipping, and Increase of Monei/,'^ published in
1691, contains a much more able statement of the
true principles of commerce than any that had then
appeared. He is throughout the intelligent advo-
cate of all the great principles of commercial free-
dom. He is not, like the most eminent of his pre-
decessors, well informed on one subject, and erro-
neous on another. His system is consistent and
complete. He shows, that in commercial matters,
nations have the same interests as individuals ; and
forcibly exposes the absurdity of supposing, that
any trade which is advantageous to the merchant can
be injurious to the public. His opinions respect-
ing the imposition of a seignorage on the coinage
of money, and the expediency of sumptuary laws,
then very popular, are equally enlightened.
I shall subjoin, from the preface to this tract, an
abstract of the general propositions maintained in
it:
** That the whole w^orld as to trade is
but as one nation or people, and therein na-
tions are as persons.
** That the loss of a trade with one nation is not
that only, separately considered, but so much of
the trade of the world rescinded and lost, for all is
combined together.
" That there can be no trade unprofit-
able TO the public 5 for if any prove so, men
POLITICAL ECONOMY. 39
LEAVE IT OFF ; AND WHEREVER THE TRADERS
THRIVE, THE PUBLIC, OF WHICH THEY ARE A PART,
THRIVE ALSO.
" That to force men to deal in any prescribed
manner may profit such as happen to serve them ;
but the public gains not, because it is taking from
one subject to give to another,
" That no laws can set prices in trade, the rates
of which must and will make themselves. But
when such laws do happen to lay any hold, it is so
much impediment to trade, and therefore prejudi-
cial.
" That money is a merchandise, whereof there
may be a glut, as well as a 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.
" That no man will be the richer for the mak-
ing much money, nor have any part of it, but as he
buys it for an equivalent price.
" That the free coynage is a perpetual motion
found out, whereby to melt and coyn without ceas-
ing, and so to feed goldsmiths and coyners at the
public charge.
" That debasing the coyn is defrauding one an-
other, and to the public there is no sort of advan-
tage from it ; for that admits no character, or va-
lue, but intrinsick.
40 DISCOURSE ON
" That the sinking by alloy or weight is all one.
" That exchange and ready money are the same^
nothing but carriage and re-carriage being saved.
" That money exported in trade is an increase
to the wealth of the nation ; but spent i?i war, and
payments abroad, is so much impoverishment.
" In short, that all favour to one trade, or
INTEREST, IS AN ABUSE, AND CUTS SO MUCH OF
PROFIT FROM THE PUBLIC,"
Unluckily this admirable tract never obtained
any considerable circulation. There is good reason,
indeed, for supposing that it was designedly sup-
pressed. * At all events, it speedily became ex-
cessively scarce ; and I am not aware that it has
ever been referred to by any subsequent writer on
commerce.
The same enlarged and liberal views that had
found so able a supporter in Sir Dudley North,
were subsequently advocated to a greater or less
extent by Locke, t the anonymous author of a
pamphlet on the East India Trade, J Vander-
* See the Honourable Roger North's Life of his Brother,
the Honourable Sir Dudley North, p. 179.
\ Considerations on the Lowering of Interest and Raising
the Value of Money y 1691; and Further Considerations on
Raising the Value of Money y l695.
\ Considerations on the East India Trade^ 1701. This is
a very remarkable pamphlet. The author has successfully
POLITICAL ECONOMY. 41
lint,* Sir Mattliew Decker,! Hume,t and Harris. §
But their efforts were ineffectual to the subversion
of the mercantile system. Their opinions respect-
ing the nature of wealth were confused and con-
tradictory ; and as they neither attempted to in-
vestigate its sources, nor to trace the causes of na-
tional opulence, their arguments in favour of a li-
beral system of commerce had somewhat of an em-
pirical aspect, and failed of making that impres-
sion which is always made by reasonings logically
deduced from well established principles, and shown
to be consistent with experience. Mr Locke un-
questionably entertained very correct opinions re-
specting the paramount influence of labour in the
production of wealth ; but he did not prosecute his
investigations with the view of elucidating the prin-
ciples of this science, and made no reference to
them in his subsequent writings. And though
Mr Harris adopted Mr Locke's views, and deduced
from them some practical inferences of great im-
refuted the various arguments advanced in justification of
the prohibition against importing East India manufactered
goods ; and has given a very striking illustration of the ef-
fects of the division of labour.
* Money Ansxvers all Things, 1734.
f Esiay on the Causes of the Decline of Foreign Trade,
I744.
X Political Essays, 1752.
§ Essay on Money and Coins, 1757-
4^ DISCOURSE ON
portance, his general principles are merely intro-
duced by way of preface to his Treatise on Money,
and are not explained at any length, or in that
logical and systematic manner that is necessary in
scientific investigations.
But, what the English writers had left undone
was now attempted by a French philosopher, equal-
ly distinguished for the subtlety and originality of
his understanding, and the integrity and simplici-
ty of his character. This was the celebrated M.
Quesnay, a physician, attached to the court of
Ix)uis XV. It is to him that the merit unques-
tionably belongs of having first attempted to in-
vestigate and analyze the sources of wealth, with
the intention of ascertaining the fundamental prin-
ciples of FoUtlcal Economy ; and who thus gave
it a systematic form, and raised it to the rank of a
science. Quesnay 's father was a small proprietor,
and having been educated in the country, he was
naturally inclined to regard agriculture with more
than ordinary partiality. At an early period of
his life he had been struck with its depressed state
in France, and had set himself to discover the
causes which had prevented its making that pro-
gress which the industry of the inhabitants, the
fertility of the soil, and the excellence of the cli-
mate, seemed to insure. In the course of this in-
quiry he speedily discovered that the prevention
of the exportation of corn to foreign countries,
POLITICAL ECONOMY. 43
and the preference given by the regulations of Col-
bert to the manufacturing and commercial classes
over the agriculturists, had formed the most pow-
erful obstacles to the progress and improvement
of agriculture. But Quesnay was not satisfied
with exposing the injustice of this preference, and
its pernicious consequences. His zeal for the in-
terests of agriculture led him, not merely to place
it on the same level with manufactures and com-
merce, but to raise it above them, — by endea-
vouring to show that it was the only species of
industry which contributed to increase the riches
of a nation. Founding on the indisputable fact,
that every thing that either ministers to our wants
or gratifies our desires, must be originally de-
rived from the earth, Quesnay assumed as a self-
evident truth, and as the basis of his system, that
the earth is the only source of wealth ; and held
that industry was altogether incapable of produc-
ing any new value, except when employed in a-
griculture, including under that term fisheries and
mines. His observation of the striking effects of
the vegetative powers of nature, and his inability
to explain the real origin and causes of rejity con-
firmed him in this opinion. The circumstance, that
of those who are engaged in industrious undertak-
ings, none but the cultivators of the soil paid rent
for the use of natural agents^ appeared to him an
incontrovertible proof, that agriculture was the on-
44 DISCOURSE ON
ly species of industry which yielded a net surplus
Cproduit net J over and above the expences of pro-
duction. Quesnay allowed that manufacturers and
merchants were highly useful ; but, as they realis-
ed no net surplus in the shape of rent, he contend-
ed they did not add any greater value to the raw
material of the commodities they manufactured or
carried from place to place, than was just equiva-
lent to the value of the capital or stock consumed
by them during the time they were necessarily en-
gaged in these operations. These principles once
established, Quesnay proceeded to divide society
into three classes ; the Jirst, or productive class, by
whose agency all wealth is produced, consists
of the farmers and labourers engaged in agricul-
ture, who subsist on a portion of the produce of
the land reserved to themselves as the wages of
their labour, and as a reasonable profit on their ca-
pital ; the second^ or proprietary class, consists of
those who live on the rent of the land, or on the
net surplus produce raised by the cultivators after
their necessary expences have been deducted ; and
the thirds or unproductive class, consists of manu-
facturers, merchants, menial servants, &c., whose
labour, though exceedingly useful, adds nothing
to the national wealth, and who subsist entirely on
the wages paid them by the other two classes. It
is obvious, supposing this classification made on
just principles, that all taxes must fall on the land-
rOLTTICAL ECONOMY. 45
lords. The third, or unproductive class, have no-
thing but what they receive from the other two
classes ; and if any deduction were made from the
fair and reasonable profits and wages of the hus-
bandmen, it would have the effect to paralyse their
exertions, and consequently to spread poverty and
misery throughout the land, by drying up the only
source of wealth. It necessarily follows, therefore,
on M. Quesnay's theory, that the entire expences
of government, and the various public burdens,
must, howsoever imposed, be ultimately defrayed out
of the produit net, or rent of the landlords ; and,
consistently with this principle, he proposed that
all the existing taxes should be repealed, and that a
single tax, (Impot unique,) laid directly on the
net produce, or rent, of the land, should be impos-
ed in their stead.
But, however much impressed with the import-
ance of agriculture over every other species of in-
dustry, Quesnay did not solicit for it any exclu-
sive favour or protection. He successfully con-
tended that the interests of the agriculturists, and
of all the other classes, would be best promoted by
establishing a system of perfect freedom. " Qu'on
maintienne," says he in one of his general Maxims,
" I'entiere liberte du commerce ; car la 'police du
commerce interieicr et ea:terieur la plus sure, la plus
ejcacte, la plus profitable a la nation et a Vetat,
cons is te dans la pleine liberte' de la concur-^
46 DISCOURSE ON
BENCE.'^ * Quesnay showed that it could never
be for the interest of the proprietors and cultiva-
tors of the soil to fetter or discourage the industry
of merchants, artificers, and manufacturers ; for the
greater the liberty they enjoy, the greater will be
their competition, and their services will, in conse-
quence, be rendered so much the cheaper. Neither,
on the other hand, can it ever be for the interest
of the unproductive class to harass and oppress the
agriculturists, either by preventing the free expor-
tation of their products, or by any restrictive regu-
lations whatsoever. When the cultivators enjoy the
greatest degree of freedom, their industry, and,
consequently, their net surplus p?vduce — the only
fund from which any accession of national wealth
can be derived — will be carried to the greatest pos-
sible extent. According to this " liberal and ge-
nerous system," f the establishment of perfect li-
berty, perfect security, and perfect justice, is the
only, as it is the infallible, means of securing the
highest degree of prosperity to all classes of the so-
ciety.
** On a vu," says the ablest expositor of this sys-
tem, M. Mercier de la Riviere, " qu'il est de I'es-
sence de I'ordre que Tinteret particulier d'un seul
ne puisse jamais etre separee de I'interet commun
* PJiysiocratie, Premiere Partie, p. 11 9.
t Wealth of Nations, Vol. HI. p. 17.
POLITICAL ECONOMY. 47
de tous; nous en trouvons une preuve bien con-
vaincante dans les effets que produit naturellement
et necessairement la plenitude de la liberte qui doit
regner dans le commerce, pour ne point blesser la
propriete. L'interet personnel encouragee par cette
grande liberte, presse vivement et perpetuellement
chaque homme en particulier, de perfectionner, de
multiplier les choses dont il est vendeur ; de grossir
ainsi la masse des jouissances qu'il pent procurer
aux autres hommes, afin de grossir, par ce moyen,
la masse des jouissances que les autres hommes peu-
vent lui procurer en echange. Le monde alors va
de lui meme ; le desir de jouir, et la liberte de jouir,
ne cessant de provoquer la multiplication des pro-
ductions et Taccroissement de Pindustrie, ils impri-
ment a toute la societe, un mouvement qui devient
une tendance perpetuelle vei*s son meilieur etat pos-
sible." ♦ ^^ ^^/:. '^<
It would greatly exceed the limits of this Dis-
course, to enter into a full examination of the prin-
ciples of this very ingenious theory. It is sufficient
for my present purpose to remark, that, in assum-
ing agriculture to be the only source of wealth, be-
cause the matter of which all commodities are com-
posed must be originally derived from the earth, M.
Quesnay and his followers mistook altogether the
* VOrdre Naturcl et Essentid des Societes PolkiqucSf
Tome II. p. 4'1'4'.
48 DISCOURSE ON
nature of production, and really supposed wealth to
consist of matter ; whereas, in its natural state, mat-
ter is very rarely possessed of immediate and direct
utility, and is alinays destitute of value. It is only
by means of the labour which must be laid out in
appropriating matter, and in fitting and preparing
it for our use, that it acquires exchangeable value,
and becomes wealth. Human industry does not
produce wealth by making any additions to the mat-
ter of our globe ; this being a quantity susceptible
neither of augmentation nor diminution. Its real
and only effect is to produce wealth hy giving uti-
lity to matter already in existence ; * and it has
* This point has been strongly and ably stated by M, Des-
tult Tracy. " Non-seuleaient,'* says he, '' nous ne creons
jamais rien, mais 11 nous est meme impossible de concevoir
ce que c'est que creeVy ou anneantir, si nous cntendons ri-
goureusement par ces mots, faire qudqiie chose de rien, ou
reduire quelque chose a rien ; car nous n'avons jamais vu un
(ptre quelconque sortir du neant ni y rentrer. De la cet axi-
ome admis par toute I'antiquite : rien ne vient de ne«, et ne
^ peut redevenir rien. Que faisons-nous done par notre tra-
vail, par notre action sur tous les etres qui nous entourent ?
Jamais rien, quoperer dans ces etres des changemens de forme
pu de lieu qui les appropricnt a notre usage, qui les rejideni
utiles a la satisfaction des nos hesoins. Voila ce que nous dc-
vons entendre par produire ; c'est donner aux choses une
utilite qu'elles n'avoient. Quelque soil notre travail, s*il n'en
resulte point d'utilite, il est infructeux, s'il en requite, il est
pruductjf''
POLITICAL ECONOMY. 49
b^en repeatedly demonstrated, that the labour em-
ployed in manufactures and commerce is just as
productive of utility, and consequently of wealth,
as the labour employed in agriculture. The opi-
nion of M. Quesnay, that the labour of man in ag-
riculture is powerfully assisted by the productive!
powers of nature, but that in manufactures and com-
merce, he has to perform every thing himself with-
out any such co-operation, is wholly destitute of
foundation. It is unquestionably true, that nature
renders the most important services to the agricul-
turist : The husbandman prepares the ground for
the seed, and deposits it there ; but it is nature
that unfolds the germ, that feeds and ripens the
growing plant, and brings it to a state of maturity.
It is easy, however, to see that nature does quite
as much for us in every other department of indus-
try. The powers of water and of wind, which move
our machinery, support our ships, and impel them
over the deep, — the pressure of the atmosphere,
and the elasticity of steam, which enable us to
I have extracted this passage from M. Destutt Tracy's
Traite d'Ideologie, (Tom. IV. p. 162,) the fourth volume of
which is almost wholly devoted to Political Economy, and
forms, indeed, one of the very best treatises on the science
that has ever appeared in France. This volume was publish-
ed separately in 12mo, in 1823, under the title of Traite
d'Economie Politique.
D
50 DISCOURSE ON
work the most stupendous engines, are they not
the spontaneous gifts of nature ? In fact, the
single and exclusive advantage of machinery con-
sists in its having enabled us to press the powers of
nature into our service, and to make them perform
the principal part of what must have been otherwise
wholly the work of man. In navigation, for ex^
ample, is it possible to doubt that the powers of na-
ture, — the buoyancy of the water, the impulse of
the wind, and the polarity of the magnet, contri-
bute fully as much as the labour of the sailor to
waft our ships from one hemisphere to another ?
In bleaching and fermentation, the whole pro-
cesses are carried on by natural agents. And it is to
the effects of heat in softening and melting metals,
in preparing our food, and in warming our houses,
that we owe many of our most powerful and con-
venient instruments ; and that these northern cli-
mates have been made to afford a comfortable habi-
tation. Neither is the cultivation of the soil, as
M. Quesnay supposed, the only species of industry
which yields a surplus produce after the expences
of production are deducted. When agriculture is
most productive, that is, when none but the best
of the good soils are cultivated, no rent, or produit
net, is obtained from the land ; and it is only
after recourse has been had to poorer soils, and
when, consequently, the productive powers of the
POLITICAL ECONOMY. 51
labour and capital employed in cultivation begin
to diminish, that rent begins to appear : So that,
instead of being a consequence of the superior
productiveness of agricultural industry, rent is real-
ly a consequence of its becoming less productive
than others ! *
The Economical Table, a. formula constructed
by M. Quesnay, and intended to exhibit the va-
rious phenomena attendant on the production of
v^^ealth, and its distribution among the productive,
proprietary, and unproductive classes, was pub-
lished at Versailles, with accompanying illustra-
tions, in 1J58 J and the novelty and ingenuity of
* " It is singular that this quality in the land, which should
have been noticed as an imperfection, compared with the
natural agents by which manufacturers are assisted, should
have been pointed out as constituting its peculiar pre emi-
nence. If air, water, the elasticity of steam, and the pres-
sure of the atmosphere, were of various qualities ; if they
could be appropriated, and each quality existed only in mo-
derate abundance, they, as well as the land, would afford a
rent, as the successive qualities were brought into use. With
every worse quality employed, the value of the commodities,
in the manufacture of which they were used, would rise, be-
cause equal quantities of labour would be less productive —
Man would do more by the sweat of his brow, and nature
perform less ; and the law would be no longer pre-eminent
for its limited powers." — Principles of Political Economy/
and Taxation, 1st edit. p. 63.
52 DISCOURSE ON
the theory which it expounded, its systematic and
scientific shape, and the liberal system of commercial
intercourse which it recommended, speedily obtain-
ed for it a very high degree of reputation.* It is to be
regretted that the friends and disciples of Quesnay,
among whom we have to reckon the Marquis de
Mirabeau, Mercier de la Riviere, Dupont de Ne-
mours, Saint Peravy, Turgot, and other distin-
guished individuals, in France, Italy, and Ger-
many, should, in their zeal for his peculiar doc-
trines, which they enthusiastically exerted them-
selves ta defend and propagate, have exhibited
more of the character of partizans, than of (what
there is the best reason to think they really were)
sincere and honest inquirers after truth. Hence
it is that they have always been regarded as a sect,
known by the name of Economists, or Fhysiocrats ;
— and that their works are characterised by an un-
usual degree of sameness, f
But, in despite of all these defects, there can
be no question that the labours of the French
* See Appendix, Note A, for some further remarks on the
Economical theory.
t The following are the principal works published by the
French Economists : —
Tableau Economique, et Maximes Generales du Gouveme-
ment Economique^ par Francois Quesnay, 4to, Versailles,
1758.
POLITICAL ECONOMY. 53
Economists powerfully contributed to accelerate
the progress of economical science. In reason-
ing on subjects connected with national wealth,
it was now found to be necessary to subject its
Theorie de I'lmpot^ par M. de Mirabeau, 4to, 1760.
La Philosophie Rurale, par M, de Mirabeau, 4to, and
3 Tomes, 12mo, 1763.
L'Ordre Naturel et Essentiel des Societes Politiques, par
Mercier de la Riviere, 4to, 2 Tomes 12rao, 1767.
Sur I'Origine et Progres d'une Science Nouvelle, par Du-
pont de Nemours, 1767.
La Physiocraliey ou Constitution Naturelle du Gouverne-
ment le plus avantageux aux Genre Humaiuf Recueil des
Principaux Guvrages Economiques de M. Quesnay, redige
et public par Dupont de Nemours, 2 Parties, 176?.
Leitres d'un Citoyen a un Magistrat, sur les Vingtiemes
et les autres Impots, par 1' Abbe Baudeau, 1 768.
Memoire sur les Effets de VImpot indirect ^ qui a remporte
le Prix propose par la Societe Royale d' Agriculture de Limo-
ges, par Saint Peravy, 12mo, 1768.
Reflexions sur la Formutiony€t la Distribution des Richesses,
par Target, 8vo, 1771. This is the best of all the works
founded on the principles of the Economists ; and is, in some
respects, the best work on Political Economy published pre-
viously to the Wealth of Nations.
The Journal d' Agriculture ^ S^c and the Ephemerides du
Citoyen, contain a variety of valuable articles by Quesnay
and other leading Economists. The Ephemerides was begun
in 1767, and was dropped in 1775; it was first conducted by
;the Abbe Baudeau, and then by Dupont.
54* DISCOURSE ON
sources, and the laws which regulate its production
and distribution, to a more accurate and searching
analysis. In the course of this examination, it
was speedily ascertained that both the mercantile
and economical theories were erroneous and defec-
tive ; and that, to establish the science of Political
Economy on a firm foundation, it was necessary to
take a much more extensive survey, and to seek
for its principles, not in a few partial and distorted
facts, or in metaphysical abstractions, but in the
connection and relation subsisting among the va-
rious phenomena manifested in the progress of ci-
vilization. The Count di Verri, whose Medita-
tions on Political Economy were published in I77I,
demonstrated the fallacy of the opinions entertain-
ed by the French Economists respecting the supe-
rior productiveness of the labour employed in agri-
culture ; and showed that all the operations of in-
dustry really consist of modifications of matter aU
ready in existence. * But Verri did not trace the
* Accostare et seperare sono gli unici elementi che I'ingeg-
ro umano ritrova analizando I'iclea della riproduzione ; e
tanto e riproduzione di valore e di richezza se la terra,
I'aria, e I'aqua ne' campi si trasmutino in grano, come se
colla mano dello uomo 11 gluttine di un insetto si trasmuti
in velluto, vero alcuni pezzetti di metallo si organizzino a
formare una TepeUzione,^~-Meditazipni sulla Economia Po-'
litica, § 3.
POLITICAL ECONOMY. 65
consequences of this important principle ; and,
possessing no clear and definite notions of what
constituted wealth, did not attempt to discover
the means by which labour might be facilitated.
He made some valuable additions to particular
branches of the science, and had sufficient acute-
ness to detect errors in the systems of others ; but
the task of constructing a better system in their
stead required talents of a far higher order.
At length, in 177^5 our illustrious countryman
Adam Smith published the " Wealth of Nations'*
— a work which has done for Political Economy
what the Essay of Locke did for the philosophy
of mind. In this work the science was, for the
first time, treated in its fullest extent ; and the
fundamental principles, on which the production of
wealth depend, placed beyond the reach of cavil
and dispute. In opposition to the French Econo-
mists, Dr Smith has shown that labour is the only
source of wealth, and that the wish to augment our
fortunes and to rise in the world — a wish that comes
with us from the womb, and never leaves us till we
go into the grave — is the cause of wealth being
saved and accumulated : He has shown that labour
is productive of wealth when employed in manufac-
tures and commerce, as well as when it is employ-
ed in the cultivation of the land : He has traced
the various means by which labour may be render-
ed most effective j and has given a most admirable
♦56 DISCOURSE ON
analysis and exposition of the prodigious addition
made to its powers by its division among different
individuals, and by the employment of accumulated
wealth, or capital, in industrious undertakings. Dr
Smith has also shown, in opposition to the common-
ly received opinions of the merchants, politicians,
and statesmen of his time, that wealth does not
jponsist in the abundance of gold and silver, but in
the abundance of the various necessaries, conve-
niences, and enjoyments of human life : He has
shown that it is in every case sound policy, to
leave individuals to pursue their own interest in
their own way; that, in prosecuting branches of
industry advantageous to themselves, they neces-
sarily prosecute such as are, at the same time, ad-
vantageous to the public ; and that every regu-
lation intended to force industry into particular
channels, or to determine the species of commer-
cial intercourse to be carried on between different
parts of the same country, or between distant and
independent countries, is impolitic and pernicious
— injurious to the rights of individuals — and ad-
verse to the progress of real opulence and lasting
prosperity.
The fact that the distinct statement of several
of the most important of these principles, and that
traces of them all, may be found in the works of
previous writers, does not in the least detract
from the real merits of Dr Smith. In adopting
POLITICAL ECONOMY. 57
the discoveries of others, he has made them his
own ; he has demonstrated the truth of principles
on which his predecessors had, in most cases,
stumbled by chance ; has separated them from
the errors by which they were previously incum-
bered ; has traced their remote consequences, and
pointed out their limitations ; has shown their
practical importance and real value — their mutual
dependence and relation ; and has reduced them
into a consistent, harmonious, and beautiful sys-
tem.
But, however excellent in many respects, still it
cannot be denied that there are errors, and those
too of no slight importance, in the " Wealth of
Nations." Dr Smith does not say that in prose-
cuting such branches of industry as are most ad-
vantageous to themselves, individuals necessarily
prosecute such as are at the same time most ad-
vantageous to the public. His leaning to the sys-
tem of the Economists — a leaning perceptible in
every part of his work — made him so far swerve
from the principles of his own system, as to admit
that individual advantage is not alwa-ys a true
test of the public advantageousness of different em-
ployments. He considered agriculture, though
not the only productive employment, as the most
productive of any ; and he considered the home
trade as more productive than a direct foreign
trade, and the latter than the carrying trade. Ij;
58 DISCOURSE ON
is clear, however, that all these distinctions are
fundamentally erroneous. A state being nothing
more than an aggregate collection of individuals, it
necessarily follows, that whatever is most advan-
tageous to them must be most advantageous to the
state ; and it is obvious, that the self-interest of
those concerned will always prevent them from en-
gaging in manufacturing and commercial undertak-
ings, unless when they yield as large profits, and are,
consequently, as publicly beneficial as agriculture.
His opinion with respect to the unproductiveness of
all labour, not realized in a fixed and vendible com-
modity, appears, at first sight, to rest on no better
foundation than the opinion of the Economists with
respect to the unproductiveness of commerce and
manufactures ; and its fallacy has been fully esta-
blished by several late writers. . These, however,
are blemishes of inferior importance. The radical
defect of the " Wealth of Nations'* consists in the
erroneous doctrines Dr Smith has advanced with
respect to the invariableness of the value of corn,
and the effect of fluctuations in the rate of wao:es
on prices : These have prevented him from acquir-
ing any clear and accurate notions respecting the
nature and causes of rent, and the laws which go-
vern the rate of profit ; and have, in consequence,
vitiated all that part of his work which treats of
the distribution of wealth, and the principles of
taxation.
POLITICAL ECONOMY. 59
But, after every allowance has been made for
these defects, enough still remains to justify us in
considering Dr Smith as the real founder of the
modern system of Political Economy. If he has not
left us a perfect work, he has, at all events, left us
one which contains a greater number of useful
truths than have ever been given to the world by any
other individual ; and he has pointed out and smooth-
ed the route, by following which, subsequent phi-
losophers have been enabled to perfect much
that he had left incomplete, to rectify the mis-
takes into which he had fallen, and to make
many new and important discoveries. Whether,
indeed, we refer to the soundness of its leading
doctrines, to the liberality and universal applicabi-
lity of its practical conclusions, or to the powerful
and beneficial influence it has had on the progress
and perfection of economical science, and still more
on the policy and conduct of nations, Dr Smith's
vs^ork must be placed in the foremost rank of those
that have helped to liberalise, enlighten, and en-
rich mankind.
Mr Malthus's Essay on the " Principle ofPopu-
/«^/o7Z," published in 1798, was the first great con-
tribution made to the science subsequently to the
publication of the ** Wealth of Nations.'^ The
fact that the population of every country has a na-
tural and constant tendency not only to rise to the
level of the means of subsistence, but to exceed them,
(iO DISCOURSE ON
had been frequently obseiTed by previous writers,
and had been very strikingly illustrated by the
late Mr Townsend in his " Dissertation on the
Poor LawSy'* published in 1786.* But though
not the original discoverer of the principle of po-
pulation, Mr Mai thus was certainly the first to
establish it on a secure foundation, and to sliow
its vast consequence to a right understanding of al»
most all the great questions connected with the
essential interests of society ; and especially of those
respecting the governing causes of the rate of wages
and the condition of the poor. He has demonstrated,
by an extensive and careful examination of the
state of population in different countries, and in
every stage of society, that an increase in the
means of subsistence is the only sure criterion of a
real, and permanent, and beneficial increase in the
numbers of any people ; that, so far from there be-
ing the least risk of population falling below the
level of subsistence, the danger is all on the other
side ; that, instead of there being a deficiency, there
is, generally speaking, an excess of numbers in
every country, as compared with the means of sub-
sistence ; and that, if population were not kept down
to its level by the prevalence of moral restraint, or
of a proper degree of prudence in the formation of
matrimonial connections, it would necessarily be
* See 'Note B at the end.
POLITICAL ECONOMY. Ol
kept down by the prevalence of vice, want, and
misery.
From the remotest antiquity down to our own
times, it had been the uniform policy of legislators
to give an artificial stimulus to population, by en-
couraging early marriages, and bestowing rewards
on those who had reared the greatest number of
children. But the doctrines of Mr Malthus show
the mischievous nature of all interference with the
natural progress of population, and have in this re-
spect effected a complete change in the public opi-
nion. They have shown, that every increase in
the numbers of the people, occasioned by artificial
expedients, and which is not either preceded or
accompanied by a corresponding increase in the
means of subsistence, can be productive only of mi-
sery, or of increased mortality ; — that the difficul-
ty never is to bring human beings into the world,
but to feed, clothe, and educate them when there ;
— and that, so far from attempting to strengthen
the principle of increase, we should invariably en-
deavour to control and regulate it.
A few words only will be required to satisfy the
most sceptical, that the well-being and happiness of
society must ever necessarily depend on the degree
in which the principle of increase is subjected to
prudential control and regulation. Those who are
least conversant with the principles of the science
are aware, that the market rate of wages is ex-
62 DISCOURSE ON
clusively dependent on the proportion which the
capital of the country, or the means of employing
labour, bears to the number of labourers. There
is plainly, therefore, only one way of really im-
proving the condition of the great majority of the
community, or of the labouring class, and that is,
hy increasing the ratio of capital to population.
If this be done, the rate of wages will be propor-
tionally augmented, and the labourers will rise in
the scale of society ; whereas, if the ratio of capi-
tal to population be diminished, wages will be pro-
portionally reduced, and the condition of the la-
bourers changed for the worse. Unfortunately, the
labourers have very little power over the increase
or diminution of the national capital, but they
are all-powerful in respect to the increase or dimi-
nution of the supply of labour. And if they had
only good sense and intelligence sufficient to avail
themselves of this power, they might, by under-
stocking the market with labour, render their wages
high, notwithstanding the demand for their services
should happen to be diminished ; while, if they do
not avail themselves of this power, but allow the
principle of population to exert its natural tenden-
cy to overstock the market with labour, wages will
be low, to whatever extent the demand for la-
bour may be increased. It appears, therefore,
that the lower classes are in a very great degree
the arbiters of their own fortune. What others
POLITICAL ECONOMY. 63:
can do for them is really, to use Mr Malthus's
words, but as the dust of the balance compared
with what they can do for themselves. Nor is
there any very great reason to tliink that their
condition will ever be materially improved, until
they are made acquainted with the circumstances
which govern the rate of wages, and are impress-
ed with an intimate conviction of the important
and unquestionable truth, that they are themselves
the masters of the only means by which their com-
mand of the necessaries and comforts of life can be
materially extended.
These statements, though necessarily very brief
and imperfect, are yet sufficient to show the utter
fallacy of the opinions advanced by those who
argue that the principles and conclusions of the
Essay on Population are unfavourable to Imman
happiness. The ignorant abuse with which Mr
Malthus has been so perseveringly assailed, dis-
graceful as it is to its authors, can have but little
influence in retarding the adoption of juster views:
and the more general dissemination of the elemen-
tary principles of the science afford good grounds
for hoping, that the period is not very far distant,
when the prejudices and misrepresentations, so in-
dustriously propagated on this subject, will have
lost much of their influence, and when it will be
generally admitted, that it is by the condition of
the people — by the extent of their command over
64 DISCOURSE ON
the necessaries and enjoyments of human life, and
not by their numbers, that their happiness is to be
estimated ; and that the extent of this command
must, generally speaking, depend on the prudence
and discretion displayed in supplying the market
with labour. *
The Traits d'Economle Politique of M. J. B.
Say of Paris, the first edition of which appeared in
1802, would deserve to be respectfully mentioned
in a sketch of the progress of Political Econo-
my, were it for nothing else than the effect that
his well-digested and luminous exposition of the
principles of Dr Smith has had in accelerating
the progress of the science on the Continent. But
in addition to the great and unquestionable merit
that it possesses from its clear and logical arrange-
ment, and the felicity of many of its illustrations,
" it is enriched with several accurate, original, and
profound discussions." t Of these, the explana-
tion of the real nature and causes of gluts is de-
* These observations apply exclusively to the doctrines
respecting population advocated by Mr Malthus, and are
not meant to express any approbation of that system of Po-
litical Economy, to which he has given his support. On the
contrary, many of the principles of that system seem to me
fundamentally erroneous, and to be pregnant with the most
pernicious consequences.
f Preface to Mr Ricardo's Principles of Political Econo-
my..
POLITICAL ECONOMY. 65
cidedly the most important and valuable. M.
Say has shown that no conceivable increase of
the powers of production can ever occasion a ge-
neral glut, or overloading of the market. — Too
much of one commodity may occasionally be pro-
duced ; but it is quite impossible there can be
too great a supply of every species of commo-
dities. For every excess there must be a cor-
responding deficiency. A man is stimulated to
produce, when he finds a ready market for the
products of his industry, that is, when he can
readily exchange them for other products. And
hence it is that the true and only genuine en-
couragement of industry consists, not, as was
formerly supposed, in the increase of unpro-
ductive and wasteful expenditure, but in the in-
crease of production. Every new product ne-
cessarily forms a new equivalent, or a new means of
purchasing some other commodity. It must bp
remembered, that the mere existence of a demand,
how intense soever it may be, cannot of itself be
a means of encouraging production. To become
a real demander, a man must not only have the
will, but he must also have the power, to purchase
the commodity he wishes to possess ; or, in other
words, he must be able to offer an equivalent for
it. There never has been, nor is it in the na-
ture of things that there ever can be, any limits
68 DISCOURSE ON
to our wish to possess the products of art and in-
dustry. —
Nee Crcesifortuna U7iquam, nee Persica Regna
S?ifficient animo!
It is the power to give effect to our wishes, or to
furnish other products in exchange for those we
are desirous to obtain, that is the real and only
desideratum. The more, then, that this power is
increased, — that is, the more industrious every in-
dividual becomes, his means of offering equivalents
for the products of others will be so much the
more increased, and the market rendered so much
the more extensive. It is clear, therefore, that a
glut cannot originate in over-production, but that
it is in every case a consequence of the wrong ap-
plication of productive power, — of the production
of commodities which either do not suit the tastes
of those with whom we wish to exchange them,
or which we cannot ourselves consume. If we
attend to these two grand requisites — if we pro-
duce such commodities only as can be taken off by
those to whom we oflPer them for sale, or such as
are directly available to our own use, we may
increase the power of production a thousand
or a million of times, and we shall be just as
free of all excess as if we diminished it in the
same proportion. Miscalculation, and the too great
ardour of speculation, will occasionally divert capi-
tal into channels in which it ought not to have
POLITICAL ECONOMY. 67
flowed ; but, if Government do not interfere to
relieve the parties concerned from the effects of
their improvidence, a regard to their own interest
will make them withdraw from the losing businesses
in which they have engaged ; and will, sooner
than any artificial remedy, correct the improper
distribution of capital, and reproduce the natural
equilibrium between the price and the cost of pro-
ducing commodities. Unproductive expenditure is
not, therefore, necessary to prevent the overloading
of the market ; and to maintain that it contributes to
increase national wealth in any other way, is really
quite the same thing as to maintain, that wealth
would be increased by throwing a portion of it into
the sea or the fire !
While M. Say was thus successfully cultivating
the science in France, it was every day rising in
importance, and acquiring fresh converts in Eng-
land. The extraordinary changes occasioned by
the late war in every department of the public eco-
nomy, deeply affecting, as they necessarily did, the
interests of all classes, created the most anxious and '
universal attention. The experience of previous
centuries was crowded into the short space of thirty
years ; and new combinations of circumstances not
only served as tests whereby to try existing theo-
ries, but enabled even inferior writers to extend
the boundaries of the science, and to become the
discoverers of new truths. It is not too much
to say, that the discussions that grew out of the
68 DISCOURSE ON
enactment of the restriction on cash payments by
the Bank of England, and the consequent depre-
ciation of the currency, have perfected the theory
of money : and the discussions respecting the po-
licy of restrictions on the corn trade, and the causes
of the heavy fall of prices which took place subse-
quently to the late peace, by inciting some of the
ablest men that this country has ever produced
to investigate the laws regulating the price of
raw produce, the rent of land, and the rate of
profit, have elicited many most important and uni-
versally applicable principles, and have given birth
to a work rivalling the " Wealth of Nations" in
importance, and excelling it in profoundness and
originality.
The first considerable step towards the successful
investigation of the laws which regulate the distri-
bution of wealth among the various classes of so-
ciety was made in 1815, when the real nature,
origin, and causes of rent were, for the first time,
explained in two pamphlets of extraordinary me-
rit, published nearly at the same moment, by " A
Fellow of University College, Oxford," * and Mr
Malthus.f But the investigations of these gentle-
men, though of great importance, were compara-
* Essay on the Application of Capital to Land, by a Fellow
of University College, Oxford. (Mr West, a Barrister.)
f An Inquiry into the Nature and Progress of Rent, by
the Rev. T. R. Malthus.
POLITICAL ECONOMY* 69
tively limited in their object ; and it was reserved
for Mr Ricardo to carry his researches into every
department of the science, to correct errors sanc-
tioned by the highest authority, and to elucidate and
establish many hitherto undiscovered, and most
important principles. The appearance of his
work on the " Principles of Political Economy
and Taxation,''^ in 1817, forms a new and memor-
able era in the history of the science. Exclusive of
many admirable correlative discussions, Mr Ricardo
has here analyzed the principles which determine the
exchangeable value of commodities, and has given
a full view of the science of the distribution of
wealth. The powers of mind displayed in these
investigations, — the dexterity with which the most
abtruse and difficult questions are unravelled, —
the unerring sagacity with which the operation of
general and fixed principles is investigated, — the
skill with which they are separated and disentangled
from such as are of a secondary and accidental na-
ture, — and the penetration with which their re-
motest consequences are perceived and estimated,
have never been surpassed ; and will for ever secure
the name of Ricardo a high and conspicuous place
in the list of those who have done most to un-
fold the complex mechanism of society, and to carry
this science to perfection.
The fundamental principle maintained by Mr
Ricardo in this great work is, that the exchange-
70 DISCOURSE ON
able value, or relative worth of commodities, as
compared with each other, depends exclusively on
the quantities of labour necessarily required to
produce them,^ Dr Smith was of opinion, that
this was the principle which determined the ex-
changeable value of commodities in the earliest
stages of society, before land had been appropriated
and capital accumulated ; but he supposed that,
after land had become property, and rent began to
be paid, and after capital had been amassed, and
workmen began to be hired by capitaHsts, the va-
lue of commodities would necessarily fluctuate,
not only according to the variations in the quantity
of labour required to produce and bring them to
market, but also according to the rise and fall of
* Sir William Petty had stated, so early as 1667, that the
value of commodities is always regulated by the quan-
tity of labour required to produce them. *' If,'' says he,
" a man bring to London an ounce of silver out of the
earth in Peru, in the same time that he can produce a
bushel of corn, the one is the natural price of the other ;
«otu, if, hy reason of nerj and more easie mines, a man can
get two ounces of silver as easily as formerly he did one,
then corn will be as cheap at ten shillings the bushel as it ivas be-
fore at Jive shillings, center is paribus" ( Treatise of Taxes and
Contributions, ed. 1679, p. 31.) This is a remarkable state-
ment ; but there is the same difference between it and the ana-
lysis and investigations of Mr Ricardo, that there is between
the conjectures of Pythagoras respecting the true system of
the world and the demonstrations of Newton.
11
POLITICAL ECONOMY. 71
rents and wages. But Mr Ricardo has shown that
Dr Smith erred in making this distinction ; and
that the same principle which determines the va-
lue of commodities in the earliest and rudest stages
of society, continues to determine it in those that
are most cultivated and refined. In establishing
this novel and most important doctrine, Mr Ri-
cardo derived considerable assistance from the pre-
vious inquiries of Mr Malthus and Mr West on the
subject of rent ; but he had no precursor on the far
more difficult and complicated inquiries respecting
the effects of the accumulation of capital, and of
fluctuations in the rate of wages on value. Inas-
much, however, as the merest outline of the analysis
and reasonings of Mr Ricardo, in the prosecution
of these inquiries, would far exceed my present li-
mits, I can do no more than state their results,
which may be thus summed up — 1st, That rent is
altogether extrinsic ta the cost of production ; 2d,
That capital being the produce of previous labour,
and having no value except what it derives from
that labour, the fact of the value of the commo-
dities produced by its agency being always deter-
mined by the quantities of capital laid out or wast-
ed in their production, shows that it is really deter-
mined by the qua?itities of labour bestowed on
them ; and 3d, That a rise of wages occasions a
Jail of profits, and not a rise in the price of com-
7^ DISCOURSE ON
modities, and B.faU of wages a rise of profits, and
not a fall of prices.
These conclusions are all of the last degree of
importance ; and by establishing them, Mr Ricar-
do gave a new aspect to the whole science. But
these form a part only of the truths brought to
light in his work. Having ascertained that pro-
fits vary inversely as wages, Mr Ricardo applied
himself to discover the circumstances which deter-
mine the rate of wages, and which consequently
determine profits. These he found to depend on
the cost of producing the articles required for the
consumption of the labourer. However high the
price of such articles may rise, the labourer, it is
plain, must always receive such a supply of them as
is sufficient to enable him to exist, and continue
his race. And, as raw produce must ever form a
principal part of the subsistence of the labourer,
and as its price has a constant tendency to rise, be-
cause of the constantly increasing sterility of the
soils to which recourse must be had in advancing
societies,* it follows that wages must also have a
♦ The rise in the price of raw produce, occasioned by the
decreasing fertility of the soils to which every advancing
society must resort, was, I believe, first distinctly shown in
a work, in which there are many just and ingenious, inter-
mixed with many fanciful and erroneous views, entitled,
Principes de tout Gouvernement, in two vols. 12mo, published
POLITICAL ECONOMY. 73
constant tendency to rise, and profits to fall, with
the increase of wealth and population. That such
a fall of profits invariably takes place in the pro-
gress of society, is a fact of which there neither
is nor can be any doubt. It had, however, been
universally supposed that this fall was a consequence
of the increase of capital, or rather of the increased
competition of its possessors, or of their efforts to
undersell ea^h other. But Mr Ricardo has shown
the fallacy of this opinion ; and has proved that all
permanent reductions in the rate of profit are a
consequence of an increase in the rate of wages,
caused by the greater cost of the raw produce ob-
tained from the poorer soils successively brought
under cultivation as population is augmented.
Such will be found to be the import of the lead-
ing doctrines promulgated by Mr Ricardo. In
in 1766. The author has, on one occasion, hit upon the
real origin of rent — " Quand les cuttivateurs, devenus nom-
hreu£" says he, *' auront defriche toutes les bonnes terres ;
par leur augmentation successive, et par la continuite du de-
Jrichementj il se trouvera un point ou il sera plus avantageux
h un nouveau colon de prendre a ferme des terres fecondes, que
d'en dejricher de nouvelles beaucoup moins bonnes." — (Tome
I. p. 126.) It is plain, however, from his not reverting to the
subject, that he was not at all aware of the importance of
the principle he had stated ; and it is apparent, indeed, from
other passages of the work, that he supposed rent entered
into price.
74 DISCOURSE Ox\
establishing them he has made a very great addi-
tion to the mass of useful and universally inter-
esting truths ; and has exhibited some of the
finest examples to be met with of discriminating
analysis and profound and refined discussion.
His doctrines are not, as has sometimes been
stated, merely speculative. On the contrary, they
enter deeply into almost all the investigations of
the science. That part of Mr Ricardo's work, in
which he apphes his principles to discover the real
incidence and effect of taxes on rent, profit, wages,
and raw produce, is altogether practical ; and must
always be a subject of careful study to those who
wish to render themselves thoroughly acquainted
with this great department of economical science.
The brevity with which Mr Ricardo has stated
some of his most important propositions, the few-
ness of his illustrations, and the mathematical cast
he has given to his reasoning, render it somewhat
difficult for readers, unaccustomed to such inves-
tigations, readily to follow him. Those, however,
who give to his works the attention of which they
are so worthy, will find them to be no less logical
and instructive than they are profound and im-
portant. It was the opinion of Quintilian, that
the students of eloquence who were highly delight-
ed with Cicero had made no inconsiderable pro-
gress in their art ; and the same may without hesi-
tation be said of the students of Political Economy
POLITICAL ECONOMY. 75
who find pleasure in the works of Mr Ricardo. —
Sciat se non parum profecisse cui Ricardo valde
placebit.
The study of Mr Ricardo 's work, and of the
science in general, has been much facilitated by
the labours of late writers. ' Without touching on
any of the difficult or controverted points, Mrs
Marcet has, in her " Conversations on Political
Kconomy^^^ illustrated and explained the element-
ary and leading principles, established by Dr
Smith, Mr Ricardo, and others, with singular skill
and perspicuity, and in such a way as cannot fail,
while it facilitates the progress of the student, to
interest him in the science, and to excite his at-
tention. Mr Mill's " Elements of Political EcO"
noniy" is a work of a higher order ; and is, perhaps,
better calculated for the use of those who are
considerably advanced in the science than of be-
ginners. Mr Mill touches on almost every topic
of discussion : He has disentangled and simplified
the most complex and difficult questions ; has
placed the various principles which compose the
science in their natural order ; and has shown their
connection with and dependence on each other.
Mr Mill's object being only to give a strictly logi-
cal deduction of the principles of Political Eco-
nomy, he has not attempted to illustrate his doc-
trines by references either to past or present cir-
cumstances or institutions; and though his work
76 DISCOURSE ON
may on that account be less generally interesting,
it is so much the better calculated to fix the con-
nection of the great truths of the science in the
mind of those who have already studied them in
detail.
The science of Political Economy was long con-
founded with that of Politics ; and it is undoubt-
edly true that they are very intimately connected,
and that it is frequently impossible to treat those
questions which strictly belong to the one with-
out referring more or less to the principles and
conclusions of the other. But, in their leading
features, they are sufficiently distinct. The laws
which regulate the production and distribution
of wealth are the same in every country and
stage of society. Those circumstances which are
favourable or unfavourable to the increase of
riches and population in a republic may equally
exist, and will have exactly the same effects, in a
monarchy. That security of property, without
which there can be no steady and continued exer-
tion — that freedom of engaging in every different
branch of industiy, so necessary to call the various
powers and resources of human talent and ingenuity
into action — and that economy in the public ex-
penditure, so conducive to the accumulation of na-
tional wealth — are not the exclusive attributes of
POLITICAL ECONOMY. 77
any particular species of government If free states
generally make the most rapid advances in wealth
and population, it is an indirect rather than a di-
rect consequence of their political constitution.
It results more from the greater probability that
the right of property will be held sacred — that the
freedom of industry will be less fettered and re-
stricted, — and that the public income will be more
judiciously levied and expended under a popular
government, than from the mere circumstance
of a greater proportion of the people being per-
mitted to exercise political rights and privileges.
Give the same securities to the subjects of an ab-
solute monarch, and they will make the same ad-
vances. Industry does not require to be stimulat-
ed by extrinsic advantages. The additional com-
forts and enjoyments which it procures have al-
ways been found sufficient to ensure the most per-
severing and successful exertions. And whatever
may have been the form of government, those
countries have always advanced in the career of
improvement, in which the public burdens have
been moderate, the freedom of industry permitted,
and every individual enabled peaceably to enjoy the
fruits of his labour. It is not, therefore, so much
on its political organization, as on the talents and
spirit of its rulers, that the wealth of a country is
principally dependent. Economy, moderation, and
intelligence on the part of those in power, have
78 DISCOURSE ON
frequently elevated absolute monarchies to a very
high degree of opulence and of prosperity ; while,
on the other hand, all the advantages derived from
a more liberal system of government have not been
able to preserve free states from being impoverish-
ed and exhausted by the extravagance, intolerance,
and short-sighted policy of their rulers.
The sciences of Politics and of Political Econo-
my are, therefore, suflSciently distinct. The poli-
tician examines the principles on which govern-
ment is founded ; he endeavours to determine in
whose hands the supreme authority may be most
advantageously placed ; and unfolds the reciprocal
duties and obligations of the governing and govern-
ed portions of society. The political economist
does not take so high a flight. It is not of the
constitution of the government, but of its acts on-
ly, that he is called upon to judge. Whatever mea-
sures affect the production or distribution of wealth,
necessarily come within the scope of his observation,
and are freely convassed by him. He examines whe-
ther theyare inunison with the just principles of eco-
nomical science. If they are^ he pronounces them
to be advantageous, and shows the nature and ex-
tent of the benefits of which they will be produc-
tive ; if they are not, he shows in what respect
they are defective, and to what extent their opera-
tion will be injurious. But he does this without
inquiring into the constitution of the government
rOLITICAL ECONOMY. 79
by which these measures have been adopted. The
circumstance of their having emanated from the
privy council of an arbitrary monarch, or the repre-
sentative assembly of a free state, though in other
respects of supreme importance, cannot affect the
immutable principles by which the economist is to
form his opinion upon them.
Besides being confounded with Politics, Poli-
tical Economy has sometimes been confounded
with Statistics ; but they are still more easily se-
parated and distinguished. The object of the
statistician is to describe the condition of a par-
ticular country at a particular period ; while the
object of the political economist is to discover the
causes which have brought it into that condition^
and the means by which its wealth and riches may
be indefinitely increased. He is to the statistician
what the physical astronomer is to the mere ob-
server. He takes the facts furnished by the re-
searches of the statistician, and after comparing
them with those furnished by historians and travel-
lers, he applies himself to discover their relation.
By a patient induction — by carefully observing the
circumstances attending the operation of particular
principles, he discovers the effects of which they
are really productive, and how far they are liable
to be modified by the operation of other principles.
It is thus that the relation between rent and pro-
fit — between profit and wages, and the various ge^
80 DISCOURSE ON
neral laws which regulate and connect the appa-
rently conflicting, but really harmonious interests of
every different order in society, have been discover-
ed, and established with all the certainty of demon-
strative evidence.
Such is the peculiar situation of this country,
that economical questions must long continue to
occupy a very prominent place in almost every dis-
cussion on public affairs, both in and out of Parlia-
ment. Some of these questions are as refined and
delicate as they are intimately and closely con-
nected with the public interests. And it is the
duty of all who do not voluntarily choose to relin-
quish the noblest and most valuable privilege en-
joyed by the citizens of a free state — that of ex-
pressing their opinion on the conduct of public af-
fairs — to qualify themselves for its proper exer-
cise. Neither must it be supposed, that it is pos-
sible for any one to prepare himself for the dis-
cussion of a particular branch of Political Eco-
nomy, without being previously well acquainted
with its general and fundamental principles. There
is no short road — no via regia — to conduct the
student to it^ results, any morp than to those pf
mathematics. It is not a science in which it is
practicable to jump to conclusions. It has no one
insulated point. Its truths all partake of one com-
POLITICAL ECONOMY. 81
mon essence ; they are all deduced from the same
fundamental principles; and necessarily depend
upon and grow out of each other. An over anxie-
ty to grasp at its ultimate results and practical con-
clusions, is the natural and common error of those
who are beginningthe study; and it isone that ought
to be most particularly guarded against ; for it is
abundantly certain, that those who are not thorough-
ly conversant with the principles of the science, and
with their connection and relation, will never be
able to form even a probable conjecture as to the
efiPects of any new measure, or to distinguish be-
tween the truth or falsehood of any new opinion or
theory.
It is almost unnecessary to say how indispensable
it is, to the ends of good government, that Legis-
lators should be well instructed in this science.
Hcec cogiiitio ad virus civile s proprie speciat. la
financial and commercial legislation, it is impossible
to make a single false step, — to impose a single in-
judicious tax or restriction, — without materially af»
fecting the interests of every individual, and actually
endangering the subsistence of many families. Rec-
titude of purpose affords no security against error.
The want of acquaintance with sound scientific
principles, has often frustrated the best intentions ;
and has rendered measures intended to hasten the
progress of improvement productive only of disas*
ter and disgrace.
F
82 DISCOURSE OTiJ
The principles of Political Economy really fonn
the " LEGES LEGUM, eo: qu'ihus^^^ to use the expres-
sive language of Lord Bacon, " inform alio peti
possiU quhl in singulis legihus bene aut perperam
positum aut constitutum sit," The destiny of a na-
tion, governed by ministers ignorant of this science,
is made wholly to depend on accident or caprice.
They may adopt a good system of policy, or they
may adopt a bad one : If they adopt a good sys-
tem, being ignorant of the cause of the prosperity
and happiness that will result from it, they can have
nothing, better than official routine, to induce them
steadily to persevere in the course on which they
have fortuitously entered. And if, on the other
hand, they adopt a bad system, they will be equally
ignorant of the cause of the misery it must infalli-
bly occasion, and consequently of the means of es-
caping it.
It is a profound and intimate, not a superfi-
cial and general, knowledge of the just principles
and conclusions of economical science, that can
alone enable the statesman to appreciate the bear-
ings and effect of different institutions and mea-
sures, and consequently to adopt those that are most
for the national advantage. A person may be able
to declaim with spirit and eloquence on the advan-
tages of free trade, and unrestricted competition
in all the departments of industry, and yet be
miserably ignorant of many fundamental and most
POLITICAL ECONOMY. 83
important principles. It is a vulgar error to
suppose that these principles all lie on the sur-
face : many of them eluded the observation of
Quesnay and Smith ; and these, we may be as-
sured, are not to be understood without serious
study and patient attention. Neither is there so
much as the shadow of a foundation for supposing,
as is sometimes done, that the new doctrines respect-
ing value, rent, profits, &c. though extremely well
fitted to exercise the ingenuity of speculative men,
are foreign from the business of real life, and
do not lead to any useful practical conclusion.
Without being acquainted with the principles
which determine exchangeable value, it is im-
possible ever to form a clear conception of the
effect of fluctuations in the rate of wages on
prices and profits ; and without being acquainted
with the laws which govern rent and wages, it will
be found to be equally impossible to determine the
real incidence of any tax, or to arrive at any sound
conclusion in the questions that are every day
arising in commercial and financial legislation.
How wide a range of scientific principle is ne-
cessary to the proper discussion of the restrictions
on the corn trade ! No one, indeed, who is in-
structed in the elementary doctrines with respect
to commerce, can hesitate about laying it down
broadly, that the national wealth will be more effec-
tually promoted, by permitting corn, like any other
84.
DISCOURSE ON
commodity, to be bought wherever it can be had
for the least price. But if you wish to ascertain the
actual effect of the restriction on importation on
the rate of wages and of profits — or to know how
much of the increased price of corn which it oc-
casions goes into the pockets of the landlords, and
how much is absolutely lost, you must call to your
aid all the principles of the science.
It has frequently been argued, that though the
study of Political Economy be essentially necessary
to Legislators, and to individuals of rank and for-
tune, it can be of comparatively little use to those
in the middle and lower walks of life. But this
poor apology for ignorance is entirely founded on
a most mistaken and fallacious idea. The great
and increasing influence of public opinion — an in-
fluence which gives an impress to all the acts of
government, and to which, when firmly and deli-
berately expressed, the proudest minister must con-
sent to bow, renders it of the utmost importance
that the public should be well informed on all
matters affecting the best interests of the state.
So long, however, as the bulk of the people are
unacquainted with the elementary doctrines and
conclusions of this science, so long must they con-
tinue wholly ignorant of the principal causes of
national wealth and national poverty, and, conse-
quently, of the circumstances which really deter-
mine their condition in life. A people thus unin-
POLITICAL ECONOMY. 85
structed must, if they express any opinion on pub-
lic affairs, necessarily express one that has been
taken up blindly and capriciously. The judg-
ments of such as are ignorant of principle can be
dictated only by prejudice ; and having no means
of distinguishing between the immediate and tran-
sitory and the ultimate and lasting effects of any
measure, they become the ready and unsuspecting
dupes of the shallowest artifices. If those who
have not endeavoured to inform themselves respect-
ing the circumstances which determine the various
degrees of national happiness and prosperity were
to remain mere passive spectators of events, their
want of information would not be so extremely
pernicious. But ignorance is not more blind than
presumptuous. Those who are least qualified for
the task invariably take a share in the discussion
of public measures ; and by their misdirected zeal,
numbers, and energy, have often insured the tri-
umph of such as were most destructive to them-
selves.
There is a peculiarity in the political and econo-
mical sciences which deserves to be noticed, inas-
much as it serves to show the superior necessity
and importance of general instruction in their prin-
ciples. The peculiarity in question originates in the
circumstance of the politician or economist being
extremely apt to be influenced by other considera-
tions than a regard to the interests of truth and
86 DISCOURSE ON
the public welfare. The cultivators of the mathe-
matical and physical sciences can very rarely have
any motive to bias their judgments, or to induce
them to conceal or pervert the truth. But such is
not the case with those who discuss political or
economical questions. Every abuse, and every vi-
cious and unjust institution and regulation, operates
as a bounty on the production of false theories ;
for, though injurious to the public, they are almost
always productive of advantage to a greater or
smaller number of individuals, who, to preserve
this advantage, enlist a portion of the press into
their service, and labour, by means of perverted
and fallacious statements, to make the public be-
lieve that the abuse is really beneficial to them, and
that they are interested in its support. These at-
tempts to make the worse appear the better cause,
or to make the most flagrant abuses be viewed as na-
tional benefits, have very often been attended with
complete success. And there are plainly no means
of obviating this evil, of correcting what is really
disadvantageous in the influence of the press, and
of preventing the public from being misled by the
specious sophistry of those whose interest and ob-
ject is to delude them, except by making them
generally acquainted with the elementary and fun-
damental truths of this science. Few can honestly
say with the poet, Video meliora proboque deteri-
or a sequor ! Ignorance is the impure and muddy
fountain whence nine-tenths of the vice, misery,
POLITICAL ECONOMY. 87
and crime, to be found in the world are really de-
rived. Make the body of the people once fully aware
of the circumstances which really determine their
condition, and you may be assured that an immense
majority will endeavour to turn that knowledge to
good account. If you once succeed in convincing
a man, that it is Jor his interest to abandon one
line of conduct and follow another, the chances
are ten to one that he will do so. I do not mean
to say, that there is much reason to expect that
any measures, which it is in the power either
of government or individuals to adopt, for diffus-
ing a knowledge of the principles of Political Eco-
nomy, can have any very material immediate effect
on the habits of the multitude. The seeds of in-
struction, though sown under the most favourable
auspices, most frequently require many seasons to
bring them to their full maturity. But if there be
little room for the formation of eager hopes of
early improvement, there is none for despondency.
The harvest of sound instruction, though late,
will, in the end, be most luxuriant ; and will am-
ply reward the labours of those who are not dis-
couraged in their patriotic efforts to make educa-
tion embrace objects of real and palpable utility,
by the difficulties and obstacles they must expect to
encounter in the commencement and progress of
their labours.
In my Course of Lectures, I have frequent oc-
casion to refer to various instances, among the
88 DISCOURSE ON
innumerable variety that might be pointed out,
both in the history of this and other countries, to
show the injurious effects of popular ignorance on
national prosperity. How often, for example,
have all the evils of scarcity been aggravated by the
groundless prejudices of the public against corn-
dealers, and the injudicious interference of govern-
ment ? How often have restrictions and prohi-
bitions been solicited by those to whom they prov-
ed productive only of ruin ? How often have
the labouring classes endeavoured to prevent the
introduction and improvement of machines and pro-
cesses for abridging labour, and reducing the cost
of production, though it is certain that they are
uniformly the greatest gainers by them? How
much has the rate of wages been reduced, and
the condition of the lower classes deteriorated,
by the prevalence of mistaken opinions respecting
the principle of population ; and the mistaken
application of public charities ? The object of the
famous Excise scheme, proposed by Sir Robert
Walpole in 1733, was not to raise the duties on
any commodity whatever, but to introduce the
warehousing and bonding system — " To make
London a free port, and by consequence the mar-
ket of the worW^' And yet the mere proposal of
* Sir Robert Walpole's speech on the introduction of the
Excise scheme.—Coxe's Life of Sir R. Walpole, Vol. I.
p. 372, 4to ed.
POLITICAL ECONOMY. 89
this scheme had well nigh lighted up the flames of
rebellion in the country, and its abandonment by the
minister was hailed with the most earnest and en-
thusiastic demonstrations of popular rejoicing : And
such is the strength of vulgar prejudice, that it was
not until 1803 that the warehousing system — -the
greatest improvement that has perhaps ever been
made in the financial and commercial policy of the
country — could be safely adopted.
But where examples of this sort are so numerous
and striking as to arrest the attention of every one,
it is unnecessary to specify them. I shall only,
therefore, further observe, that the war of 1756,
the American war, and the greater part of the
wars of last century, with the exception of those
that grew out of the French Revolution, were
waged for the purpose of preserving or acquiring
some exclusive commercial advantage. But does
any one suppose that these contests could have
been carried on, at such an infinite expence of
blood and treasure, had the mass of the people
known that their object was utterly unattainable ?
— had they known that it is impossible for any one
country to monopolize wealth and riches ; and that
every such attempt must ultimately prove ruinous
to itself, as well as injurious to others ? It is to
Political Economy that we owe an incontrovertible
demonstration of these truths ; — truths that are
destined to exercise the most salutary influence on
90 DISCOURSE ON
humanity — to convince mankind that it is for their
interest to live in peace, to deal with each other on
fair and liberal principles, and not to become the
dupes of their own short-sighted avarice, or the
willing instruments of the blind ambition, or petty
animosities, of their rulers.
" A commercial war," says a writer who had
the honour to be employed to compose a treatise
on trade for the particular use of his late Majesty,
" whether crowned with victory or branded with
defeats, can never prevent another nation from be-
coming more industrious than you are ; and if they
are more industrious, they will sell cheaper ; and,
consequently, your customers will leave your shop
and go to theirs. This will happen though you
covered the ocean with fleets and the land with
armies. The soldier may lay waste, the privateer,
whether successful or unsuccessful, will make poor ;
but it is the eternal law of Providence, that ' the
hand of the diUgent can alone make rich J "*
England is the native country of Political Eco-
nomy ; but she has not treated it with a kind and
fostering hand : She cannot boast of being the first
to perceive the advantage of rendering it a branch
* DeaD Tucker's Four Tracts on Commercial and Political
Subjects, p. 41, Sd edit.
10
POLITICAL ECONOMY. 91
of popular instruction, or to form establishments for
that purpose. It is to Italy, or rather to an Italian
citizen, Bartholomew Intieri, a Florentine, cele-
brated by his countrymen for the variety of his use-
ful attainments, and the benevolence of his charac-
ter, that this honour is due. Having resided long
in Naples, in the capacity of manager of the estates
of the Corsini and Medici families, Intieri ne-
cessarily became familiar with many of the abuses
with which every part of the internal administra-
tion of that country w^as infected ; and being
strongly impressed with a conviction, that the
easiest, safest, and most effectual reform of these
abuses, would be produced by rendering the pub-
lic generally acquainted with the genuine sources
of national wealth and prosperity, and of poverty
and misery, he determined to show his grati-
tude to the Neapolitans for the kindness he
had experienced during his residence amongst
them, by instituting a course of lectures on this
science. For this purpose, Intieri applied to the
Neapolitan government to be permitted to found a
professorship of Political Economy in the University
of Naples, to which a salary of 300 scudi should be
attached, stipulating that the lectures should be
given in the Italian language ; that his distin-
guished friend Genovesi should be the first pro-
fessor ; and that, after his death, no individual in
holy orders should be appointed to the chair.
DISCOURSE ON
The Government having, greatly to its credit,
agreed to these conditions, Genovesi opened his
class on the 5th of November 17-54. His lec-
tures, which v^ere very successful, were published
in 1764, in two volumes octavo, under the title of
Lezioni di Commercio sia di Economia Civile.^
In 1769, the Empress Maria Theresa founded a
similar chair in the University of Milan, and ap-
pointed the justly celebrated Marquis Beccaria its
first professor. But it is not in countries subject-
ed to arbitrary governments, and deprived of the
freedom of the press, that lectures on Political
Economy can be of any considerable service. The
timid and jealous rulers of Naples and Austria
speedily took fright at the existence of institutions
which the enemies of improvement taught them to
fear might have the effect to excite dissatisfaction ;
and the chairs founded by Intieri and Maria The-
resa were in consequence suppressed.
It is due, however, to the Emperor Alexander to
state, that he has given considerable encouragement
. to the study of Political Economy in Russia. M.
Henri Storch composed, at his request, a course of
* See the article Genovesi, written by Salfi, in the Bio'
gtapkie Universelle ; and the notice of his life prefixed to
his economical works in the 14?ih volume of the Scrittori
Classici Itdiani di Economia Politica. Intieri died in l?-*??^
in hii 80th year.
POLITICAL ECONOMY. 93
lectures for the Grand Dukes Nicholas and Mi-
chael, which were published in 1815 under the
title of Cours d'Economie Politique,^ This work
reflects the greatest credit on its author, and
does honour to the liberality of the government,
at whose expence it was published. Besides a clear
and able exposition of the most important princi-
ples respecting the production of wealth and the
freedom of commerce and industry, M. Storch's
work contains many excellent disquisitions on sub-
jects that have engaged but little of the attention
of the English and French Economists. His ac-
counts of the slave system of ancient Rome and
modern Russia, and of the paper money of the
different continental states, are exceedingly inter-
esting and instructive. Without the remotest in-
tention of depreciating the labours of others, I con-
ceive that I am fully warranted in placing the work of
M. Storch at the head of all the works on Political
Economy ever imported from the Continent into
England.
But while arbitrary princes have appointed pro-
fessors to instruct their subjects in the principles of
this master science of civil life, it has been left to
struggle in this country without any public patron-
* The Petersburgh edition of this work is in 6 vols. 8vo.
An edition was published at Paris in 1823, with notes by M.
Say, in 4 vols.
94 DISCOURSE ON
age against the prejudices of ignorance, interest,
authority, and fashion. The nation which of all
others is most interested in the progress of Politi-
cal Economy, — whose finanical and commercial
system is most complicated, and where public opi-
nion has the greatest influence on the conduct of
government, — is almost the only one in Europe
that has made no effort to facilitate its general ac-
quisition ; or to introduce it, under the superin-
tendence of separate professors, into those esta-
blishments where it would be recommended by so
many old associations, and adventitious attractions
to the future Legislators of the country. This de-
fect in our system of public education is undoubt-
edly the cause why so many of those who have fill-
ed the highest stations, and who have had to de-
cide on the most important financial and commer-
cial questions, should, though otherwise possessed of
the greatest talents and acquirements, have been so
very ill acquainted with the principles and doc-
trines of this science. It is not their fault, but the
fault of their instructors, if it may be truly said of
them, that Flerique ad ho7iores adipiscendos, etad
Rempublicam gerendam nudi venirent atque iner^
mes ; nulla cognatione rerum, nulla scientid ornatL
There is good reason, however, for thinking that Po-
litical Economy will not be much longer subjected
to such unmerited neglect. The public have, on
many recent occasions, derived the most essential
POLITICAL ECONOMY. 95
benefit from the labours and researches of its
cultivators ; and its paramount importance is now
universally admitted. The ascendancy, too, which
those statesmen who are supposed to be familiar
with its principles have obtained in Parliament
and in the country, is a most gratifying circum-
stance. It shows that science is at last meeting
with that consideration to which it has so many
and such powerful claims ; that the taste for decla-
mation is on the wane ; and that it is now begin-
ning to be thought quite as necessary to under-
stand the principles on which the decision of all
questions connected with the public economy of
the country ought to depend, as it is to be able to
embellish them with the choicest and most splendid
diction.
The foundation of the Ricardo Lecture on
Political Economy is another circumstance which
may be expected to contribute to accelerate its pro-
gress. The motives which led to the formation of
that Institution are, I believe, pretty generally
known. It is sufficient, therefore, to observe, that
it was intended to do honour to the memory of one
of the greatest Economists and most enlightened
Legislators that this country ever produced, by as-
sociating his name with the future progress of the
science of which he was so great a master ; and to
facilitate the acquisition of a knowledge of that
science, by the establishment of a course of lectures
96 DISCOURSE ON
in the metropolis, in which its leading principles
and conclusions should be briefly, popularly, and
clearly explained. The situation in which the
partial kindness of the Managers of this Institu-
tion has placed me will not allow me to say more
respecting it, than that its foundation is equally
honourable to the memory of Mr Ricardo, and to
the judgment of his friends ; and that, so long as
I have the honour to be connected with it, my
most anxious efforts shall be directed to render it
effectual for the dissemination of a knowledge of
the just principles of the science.
It is unnecessary to say much on the question,
whether Political Economy may be most advanta-*
geously learned from oral instructions, or by pri-
vate reading. It cannot be doubted, that it is in
the power of any one, by an attentive perusal and
comparison of the works of the great masters of
the science, to obtain a perfect command over its>
principles ; and it is also certain that no oral in-
structions can entirely supersede private study and
reading. Still, however, it seems to me that very
great advantage may be derived from a judicious
course of public prelections. " The hour of lec-
ture enforces attendance ; attention is fixed by the
presence, the voice, and the occasional questions
of the teacher ; the most idle will carry something
away ; and the more diligent will compare the in-
structions which they have heard in the school
POLITICAL ECONOMY. 97
with the volumes they peruse in their chambers."*
A course of lectures has the farther advantage of
being easily made to keep pace with the progress
of the science ; while the discussion of principles
and conclusions, bearing directly on the various
questions that are daily emerging into importance,
excites an unusual interest in the auditors, and
gives the lecture a degree of freshness, and a prac-
tical and immediate incidence, which no published
treatise can possibly possess.
After defining the objects and limits of the
science, I proceed at the outset of my course to
show that labour is the only source of wealth — to
prove, in the words of Dr Smith, that " it was not
by gold or by silver, but by labour, that all the
wealth of the world was originally purchased."!
* Gibbon's Memoir of his own Life, Miscellaneous Works,
Vol. I. p. 51, 8vo ed.
f Wealth of Nations, I. p. 44. — The writer of a late ar-
ticle in the Quarterly Review (>so. 60, Art. L) contends,
that the earth is a source of wealth, because it supplies us
with the matter of commodities. But this, it is obvious, is
just the old error of the Economists reproduced in a some-
what modified shape. Wealth is in no degree dependent on
quantities of matter, but exclusively on value. Nature gra-
tuitously supplies us with the matter of which all commo-
dities are made ; but until labour has been expended in ap-
propriating matter, or in adapting it to our use, it is wholly
destitute of value, and is not, nor ever has been, con-
G
98 DISCOURSE ON
This fundamental principle once established, it ne-r
cessarily follows, that the great practical problem in-
volved in that part of the science which treats of the
production of wealth, must necessarily resolve itself
into a discussion of the means whereby the great-
est amount of necessary y useful, and desirable 'pro-
ducts may he obtained with the least possible quan-
tity of labour. Every measure which has any ten-
dency to add to the power of labour, or to reduce
the cost of the commodities produced by its agency,
must add proportionally to our power of obtaining
wealth and riches, while every measure or regula-
tion that has any tendency to waste labour, or to
raise the cost of producing commodities, must
equally lessen this power. This is the simple and
decisive test by which we are to judge of the ex-
pediency of every measure affecting the wealth of
the country, and of the value of every invention.
If they render labour more productive — if they
have a tendency to reduce the exchangeable value
sidered as forming wealth. We do not call a man wealthy
because he has an indefinite command of atmospheric air, or
of any other gratuitous product ; but we call him wealthy
when, and only when, he possesses the produce of a large
quantity of labour. It would, in truth, be just as correct to
say, that the earth is a source of pictures and statues, be-
cause it supplies the materials made use of by painters and
statuaries, as to say, that it is a source of wealth, because it
supplies the matter of commodities !
POLITICAL ECONOMY. 99
of commodities, to render them more easily ob-
tainable, and to bring them within the command
of a greater portion of society, they must be ad-
vantageous ; but if their tendency be different,
they must as certainly be disadvantageous. Con-
sidered in this point of view, that great branch of
the science of Political Economy which treats of
the production of wealth, will be found to be a-
bundantly simple, and easily understood.
I may here observe, that labour, according as it
is applied to the raising of raw produce — ^to the fa-
shioning of that raw produce, when raised, into ar-
ticles of utility, convenience, or ornament — and to
the conveying of raw and wrought produce from
one country and place to another — is said to be ag-
ricultural, manufacturing, and commercial. An ac-
quaintance with the particular processes, and most
advantageous methods, of applying labour in each
of these grand departments of industry, forms the
peculiar and appropriate study of the agriculturist,
manufacturer, and merchant. It is not consistent
with the objects of the Political Economist to enter
into the details of particular businesses and profes-
sions. He confines himself to an investigation of
the means by which labour in general may be ren-
dered most productive, and how its powers may be
increased in all the departments of industry.
The most careless and inattentive observer of the
progress of mankind from poverty to affluence.
100 DISCOURSE ON
must have early perceived that there are three cir-
cumstances, without whose conjoint existence and
co-operation they never could have emerged from
barbarism. The first, and most indispensable, is
the security of property ; the second, is the intro-
duction of exchange or barter, and the consequent
appropriation of particular individuals to particular
occupations ; and the third, is the accumulation
and employment of the produce of previous labour,
or, as it is more commonly termed, of capital or
stock. Without the Jirst, or security of property,
we can have neither riches nor civilization ; for no
one would ever engage in any laborious or diflBcult
undertaking, without a thorough conviction that he
was labouring for his own advantage, and not for
that of others, and that he was to be permitted to
enjoy the fruits of his labour without molestation : *
Without the second, or the introduction of barter
and the division of employments, no one would be
able constantly to employ himself in a particular
branch of industry ; his time would be wasted in
shifting from one thing to another ; and it would
be impossible for him to attain that peculiar sleight
of hand, and that degree of skill and dexterity in
any particular calling, so truly astonishing to those
* La surete de la propriete est le fondement essev-
iiel de I'ordre economique de la societc. Quesnay, Fhysiocratie,
p. 108.
POLITICAL ECONOMY. 101
who have lived in places where the division of la-
bour was but imperfectly established : And without
the ihirdi or the possession and employment of ca-
pital, the labourer would be destitute of provisions
far his subsistence, and of tools and machines to as-
sist him in his work, and would consequently be
unable to engage in any species of industry that did
not promise an almost immediate return, or that
might not be carried on by the hand alone, without
the aid of any instrument. All the means that ei-
ther have been, or that ever can be, devised for fa-
cilitating the production of wealth, by adding to
the power and efficacy of labour, must be classed
under one or other of these three heads. It is in-
dispensable, therefore, that principles so import-
ant, and which lie at the very bottom of the
science, should be well understood. I endeavour
to set them in the clearest point of view ; to ex-
hibit their mutual action and reaction ; and to treat
fully the various important questions to which their
discussion necessarily gives rise.
Besides that sort of division of labour which en-
ables each individual in a limited society to confine
himself to a particular employment, there is another
and most important branch of the division of labour,
which not only enables particular individuals, but
the inhabitants of entire districts, and even nations,
to addict themselves, in preference, to certain
branches of industry. It is on this territorial di^
102 DISCOURSE ON
•vision of labour, if I may so term it, that the com-
merce which is carried on between different dis-
tricts of the same country, and between different
countries, is founded. The various soils, climates,
and capacities of production, possessed by the dif-
ferent districts of an extensive country, fit them
for being appropriated in preference to certain
species of industry. A district where coal is abund-
ant, which has an easy access to the ocean, and a
considerable command of internal navigation, is the
natural seat of manufactures. Wheat and other
species of grain are the proper products of rich ar-
able soils ; and cattle, after being reared in moun-
tainous districts, are most advantageously fattened
in meadow and low grounds. Nothing is more
obvious than that an infinitely greater aggregate
quantity of useful and desirable commodities will
be produced, by the inhabitants of these dijBPerent
districts, separately confining themselves to the
particular branches of industry for the successful
prosecution of which they have some peculiar na-
tural capahility, than if they attempted, indiscri-
minately, to carry on every difiPerent employment.
"Who can doubt that vastly more manufactured
goods, corn, and cattle, are produced by the in-
habitants of Glasgow, the Carse of Gowrie, and
Argyleshire, respectively confining themselves to
manufactures, agriculture, and the rearing of cattle,
than if those of each district had endeavoured di-
POLITICAL ECONOMIC,
103
rectly to supply themselves with these various pro-
ducts, without the intervention of an exchange ?
But it is easy to see that foreign trade, or the
territorial division of labour between different and
independent countries, contributes to increase the
wealth of each in precisely the same manner that
the trade between different provinces of the same
kingdom contributes to increase their wealth.
There is a still greater difference between the pro-
ductive powers wherewith nature has endowed dif-
ferent and distant countries, than there is between
the productive powers of the provinces of the same
country.
Heic segetest illic veniuntfelicius woes :
Arborei fetus alibi, atque injussa mrescunt
Gramina. Nonne vides, croceos ut Tmolus odores,
India mittit ebur, molles sua ihura Sabcei ?
At Chalybes nudiferrum, virosaque Pontus
Castorea, Eliadum palmas Epeiros equarum f
Continuo has leges, cBternaque foedera certis
Imposuit natura locis. —
Georg. lib. i. lin. 54.
The establishment of a free intercourse between
countries possessed of such an infinite variety of pro-
ducts must, therefore, be proportionally advanta-
geous. It would evidently cost an infinitely greater
expence to raise the wines of France or Spain in
England than to make Yorkshire yield the same
104 DISCOURSE ON
products as Devonshire. Indeed, there are a mul
titude of products, and some of them of the very
greatest utility, which cannot possibly be raised ex-
cept in particular situations. Were it not for com-
mercial intercourse, we should not be able to ob-
tain the smallest supplies of tea, coffee, raw cotton*
raw silk, gold bullion, and a thousand other equally
useful and valuable commodities. Providence, by
giving different soils, climates, and natural produc-
tions, to different countries, has evidently provided
for their mutual intercourse and civilization. By
permitting the people of each to employ their capi-
tal and labour in those departments in which their
geographical situation, the physical capacities of
their soil, their national character and habits fit
them to excel, foreign commerce has a wonderful
effect in multiplying the productions of art and in-
dustry. When it is not subjected to restrictions,
each people naturally devote themselves to such
employments as are most beneficial to each. This
pursuit of individual advantage is admirably con-
nected with the good of the whole. By stimulat-
ing industry, by rewarding ingenuity, and by using
most efficaciously the particular powers bestowed
by nature, commerce distributes labour most effec-
tively and economically 5 while, by increasing
the general mass of necessary and useful products,
it diffuses general opulence, and binds together the
universal society of nations by the common and
POLITICAL ECONOMY. 105
powerful ties of mutual interest and reciprocal obli-
gation.
" On peut dire," it has been eloquently ob-
served, " sans crainte d'etre soup^onne d'exag-
geration, que le commerce est le plus solide fon-
dement de la societe civile, et le lien le plus neces-
saire pour unir entr'eux tous les hommes de quel-
que pays et de quelque condition qu'ils soient. Par
son moyen le monde en tier semble ne former qu'une
seule ville et qu'une seule famille. II y fait regner
de toutes parts une abondance universelle. Les ri-
chesses d'une nation deviennent celles de tous les
autres peuples. Nulle contree n'est sterile, ou du
moins ne se sent de sa sterilite. Tous ses besoins
lui sont apportes a point nomme du bout de I'uni-
vers, et chaque region est ettonee de fruits etran-
gers, que son propre fonds ne pouvoit lui fournir,
et enrichie de mille commodites qui lui etoient
inconnues, et qui cependant font toute la douceur
de la vie." * Commerce has given us new tastes
and new appetites, and it has also given us the
means and the desire of gratifying them. It has
enabled each particular people to profit by the in-
ventions and discoveries of all the rest. It has
forced routine to give way to emulation ; and has
stimulated the industry and ingenuity of the hom^
* Rollin, Hisioire Ancieiwef Tome V. p. 509, 4fto ed.
106 DISCOURSE ON
producers by bringing them into competition with
foreigners. It is the grand engine by which the
blessings of civilization are diffused, and the trea-
sures of knowledge and of science conveyed to the
remotest corners of the habitable globe. Its hu-
manizing influence is in this respect most import-
ant. Nothing, indeed, has ever done so much to
soften and polish the manners of men. By mak-
ing each particular people depend for the means of
supplying a considerable portion of their wants on
the assistance of others, it has gone far to remove
a host of the most destructive prejudices, and
forms a powerful principle of harmony, of union,
and of concord. It cannot indeed be denied, that
mistaken views of commerce, like the mistaken views
that have been so frequently entertained of reli-
gion, have been the cause of many wars and of
much bloodshed. But the folly of the monopo-
ly system, and the ruinous nature of the contests
to which it has given rise, have been fully demon-
strated. It is now ascertained that nothing can
be more irrational and absurd, than that dread
of the progress of others in wealth and civiliza-
tion that was once so prevalent ; and that the true
glory and real interest of every people will be
more certainly advanced by endeavouring to emu-
late and outstrip their neighbours in the ca-
reer of science and civilization, than by labouring
POLITICAL ECONOMY. 107
to attain a barren pre-eminence in the bloody and
destructive art of war.
In treating this most important branch of the
science, I first endeavonr to present a general view
of the effects of commercial intercourse ; to exhibit
the principles on which it is founded ; and to give
a sketch of the principal epochs in its history. I
then proceed to examine, in detail, the various
reasons which have been urged in defence of those
regulations by which the freedom of commerce be-
tween certain countries and in particular commo-
dities has been fettered and restricted. Of these,
the restrictions on the importation and exportation
of the precious metals, on the trade in corn and
provisions, on the colony trade, and on the free-
dom of navigation, are among the most important.
I treat them in succession, with that degree of
minuteness, and fulness of illustration, which their
great practical interest and importance imperious-
ly require.
When the division of labour was first introduc-
ed, barter was the only method by which commo-
dities were exchanged. But as society advanced,
as the division of employments was extended, and
as exchanges became more numerous, the advan-
tage of using some one commodity as a common
medium of exchange — as an equivalent for all other
commodities, and as a standard whereby to esti-
mate their relative values — gradually became ob-
108 DISCOURSE ON
vious. The benefits resulting from the use of this
common medium, or of money, were so great, that,
as previously stated, gold and silver, of which it has
been chiefly formed, were, for many ages, alone
supposed to form wealth. The error of this opi-
nion has been long since demonstrated ; but money
is still very generally considered in a different light
from other commodities ; and the importance of its
functions, and the necessity of being intimately ac-
quainted with the principles which determine its
exchangeable value, have induced me to treat it at
considerable length.*
The first grand division of the science, or that
which treats of the production of wealth, being thus
*The Roman jurists have given a very distinct statement
of the circumstances which led to the use of money : Origo
emendi vendendique a permutationibus coepit Olira enim non
ita erat nummus ; neque aliud merx, aHud pretium vocaba-
tus ; sed unusquisque secundum necessitatem temporum, ac
rerum, utihbus inutilia permutabat, quando plerumque evenit,
ut quod alteri superest, alteri desit. Sed quia non semper,
nee facile concurrebat, ut, cum tu haberes, quod ego deside-
rarera, invicem haberem, quod tu accipere velles, electa nia-
teria est, cujus publica ac perpetua estimatio difficultatibus
permutationum, aequalitate quantitatis subveniret : eaque ma-
teria forma publica percussa, usum dominiumque non tam ex-
substantia praebet, quara ex quantitate ; nee ultra merx utrum-
que, sed alterum pretium vocatur. — Digest, lib. xvjii. tit. i.
De contrahenda emptione, ^c.
POLITICAL ECONOMY. 10[)
disposed of, I proceed to the second^ or that which
has for its object to discover and unfold the laws
regulating the distrihulion of the various products
of art and industry among the different classes of
the community.
It is abundantly obvious, that in the early pe-
riods of society, before capital was accumulated
and land appropriated, the whole produce of in*
dustry must have belonged to the labourer, and
that the quantity of labour necessary to produce
commodities, and bring them to market, must have
formed the only standard by which their ex-
changeable worth, or relative value, could be esti-
mated.* As soon, however, as capital has been
accumulated, those who possess it find it to be for
their advantage to supply industrious individuals
with food and other articles necessary to enable
them to produce commodities, on condition of their
getting back a greater quantity of such articles, or
a greater value in their stead : And after land
has been appropriated, and cultivation extended,
the proprietors of the superior lands will not allow
them to be cultivated, unless they receive a por-
tion of the produce as rent. Instead, therefore, of
belonging, as in the earlier stages of society, ex-
* There is no difference whatever of opinion respecting this
position : It is equally assented to by Dr Smith, Mr Mal-
thus, and Mr Ricardo.
110 DISCOURSE ON
clusively to the labourers, the produce of industry
is, in every advanced and civilized community, di-
vided into three portions, whereof one goes to the
labourers as wages, another to the capitalists as
profit, and a third to the landlords as rent. It be-
comes, therefore, essential to ascertain the laws
which regulate wages, profit, and rent ; that is,
the laws which determine the proportions in which
the produce of industry, or the sum of the various
necessaries, conveniences, and enjoyments of human
life, is divided among the great classes, of which
every civilized society is made up.
But this does not exhaust the whole of this de-
partment of the science. We have farther to inquire,
whether the employment of capital in production,
and the payment of rent, have any effect on the ex-
changeable value of commodities ; or whether their
value is determined in cultivated and refined so-
cieties by the quantities of labour necessarily requir-
ed to produce and bring them to market, as in the
earliest and rudest periods. I have endeavoured
to simplify this rather difficult, but fundamentally
important inquiry ; and have entered into a pretty
full discussion of the correlative questions with re-
spect to the influence of supply and demand, mo-
nopolies, &c. on price.
It is not, however, enough to know the constituent
elements of value, and the proportions in which
the produce of industry is distributed. We ought
POLITICAL ECONOMY. Ill
farther to render ourselves acquainted with the
principles which determine the increase and di-
minution of those sentient, social, and accounta-
ble beings, for whom, and by whom, all wealth is
produced. For this purpose, I endeavour to give
a pretty full, and I hope satisfactory, exposition
of the theory of population. I also inquire in-
to the effects that would most probably result
from the establishment of a national system
of education, or of parochial schools, where the
children of the poor should be furnished, at a
cheap rate, with instruction in the arts of reading,
writing, and arithmetic ; in the duties enjoined by
religion and morality ; and in the elementary prin-
ciples of this science, more especially in those
which show on what the rate of wages, and conse-
quently the condition of the poor, must always de-
pend : I also examine, in this part of my course,
the effect of the establishment of a compulsory pro-
vision for the support of the poor.
The thh^d and last division of the science of
Political Economy is that which treats of the cow-
sumption of wealth.
Consumption, in the sense in which the word is
used by Political Economists, is synonymous with
use. We produce commodities only that we may
be able to use or consume them. Consumption is
the great end and object of all human industry.
Production is merely a means to attain an end.
112 DISCOURSE ON
No one would produce were it not that he might
afterwards consume. All the products of art and
industry are destined to be consumed, or made use
of; and when a commodity is brought into a state
fit to be used, if its consumption be deferred, a loss
is incurred. All products are intended either ta
satisfy the immediate wants, or to add to the en-
joyments of their producers ; or they are intended
to be employed as capital, and made to reproduce
a greater value than themselves. In the Jirst case,
by delaying to use them, it is plain we either refuse
to satisfy a want, or deny ourselves a gratification
it is in our power to obtain ; — and in the second,
by delaying to use them, it is equally plain we al-
low the instruments of production to lie idle, and
lose the profit that might be derived from their
employment.
But^ although all commodities are produced only
to be consumed, we must not fall into the error of
supposing, that all consumption is equally advan-
tageous to the individual, or the society. If an in-
dividual employs a set of labourers to build him a
house the one summer, and to pull it down the
next, their labour, or rather the capital he gave
them in exchange for their labour, and which they
have consumed during the time they were engaged
in this futile employment, is evidently destroyed
for ever, and absolutely lost both to himself and the
public ; whereas, had he employed them in the
POLITICAL ECONOMY. 113
raising of corn, or in the production of any species
of valuable produce, he would have obtained com-
modities of equal, or more than equal, value to the
capital he gave them. The value of the return^ or
the advantage obtained from the consumption^ is,
therefore, the true and only test of advantageous
and disadvantageous, or, as it is more commonly
termed, of productive and unproductive consump-
tion. Commodities are consumed productively
when the advantage or benefit accruing in conse-
quence to their possessors, or when the value of
the products obtained in their stead exceeds their
value ; and they are consumed unproduciively
when the value of the advantage or benefit, or the
value of the new commodities, is less than their
value. It is on this balance of consumption and
reproduction, and not, as was long supposed, on
the balance of trade, that the prosperity or decay
of every nation depends. If, in given periods, the
commodities produced in a country exceed those
consumed in it, the means of increasing its capital
will be provided, and its population will either in-
crease, or the actual numbers will be better ac-
commodated, or both. If the consumption in such
periods fully equals the reproduction, no means
will be afforded of increasing the stock or capital
of the nation, and society will be at a stand. And
if the consumption exceeds the reproduction, every
succeeding period will see the society worse sup-
H
114 DISCOURSE ON
plied 'y its prosperity and population will evidently
decline, and pauperism will gradually and progres-
sively . spread itself over the whole country. It
must plainly, therefore, be an object of great im-
portance to acertain how the balance between con-
sumption and reproduction may be made to incline
in favour of the last.
To be able to solve this problem satisfactorily,
we must endeavour to render ourselves acquainted,
not only with the circumstances which influence
individual consumption, and the means by which it
may be rendered most advantageous, but also with
the nature and effects of the consumption carried
on by government. And hence, it is in this
department of the science that I investigate the
principles of Taxation, and of the Funding Si/stem^
for the purpose of determining the manner in which
the revenue necessary to defray the expences of the
state, both in periods of peace and war, may be
raised and collected with the least injury to indivi*
duals. Many of my readers will probably be inclin-
ed to think that this is the most important of all
the inquiries involved in this science. But, how-
ever important, those who have not previously
made themselves masters of the laws which regu-
late the production and distribution of wealth, need
not expect to be able to acquire any accurate
knowledge of the ultimate incidence and real ef-
fect of any tax or loan. What Lord Bacon has
POLITICAL ECONOMY. 115
SO beautifully said of physical will be found to be
equally true of economical science — Qui autem Ju-
dicium cohibere, et gradatim ascendere, et rerum^
veluti montiumjuga, unum primo, deinde alterum^
ac rursus alterum superare cum sapientia vera et
indefessa sustinuerit, ille ad summitates et ver^
tices scientics mature perveniet, ubi et statio se^
rena, et pulcherrimus rerum prospectus^ et de-
scensus MOLLI CLIVO DUCENS AD OMNES PRAC-
TICAS.
I have also endeavoured to facilitate the study
of the science, by forming conversational classes,
limited to a small number of pupils, which may be
attended by those who do not, as well as by
those who do, attend my public class. The vari-
ous branches of the science are taken up in these
classes in the order followed in the lectures. The
pupils having previously read such portions of some
popular work as treat of the subject of a conversa-
tion, I examine them, to ascertain whether they
have a clear iqjprehension of the doctrine laid down
by the author : If this doctrine be either erro-
neous in principle or defective in statement, I
tell them so, and the pupils apply themselves
to find out wherein the error or defect consists,
or I explain it to them. Having in this way
made them thoroughly masters of what I con-
116 DISCOURSE ON
ceive to be the true theory of the subject under
discussion, I desire them to state such difficulties
as may occur to them in respect to it ; which I ex-
plain, should they not be explained, as is generally
the case, by some of the pupils. This done, I
next state such objections, not already stated, by
themselves, as either are or might be made to the
doctrines I have taught them, setting them in the
strongest light possible, and requiring them to shov^r
how they can be solved, or, in the event of their
not doing this, solving them myself. The atten-
tion of the student is thus perpetually excited ; he
is stimulated to exert all his powers ; to think and
reason for himself; to probe every question to the
bottom ; and to investigate the grounds on which
every conclusion rests. The principles of the
science being gone over in this way, and short
abstracts of the whole committed to paper, they
are indelibly impressed on the memory ; and that
readiness is acquired in the resolution of a complex
question into its elements, in the detection of so-
phistry and error, and in the application of general
principles to particular cases, which characterise an
able and expert economist, but which it is difficult
to acquire by the most extensive reading.
Such is a brief, and, I am afraid, very imper-
fect sketch of the objects of the science of Politi-
cal Economy ; the species of evidence on which it
is founded ; the principal theories that have been
POLITICAL ECONOMY. 117
formed to explain its various phenomena ; the im-
portance of its study to all classes of society ; and
the mode I follow in teaching it in my public
and private classes. I endeavour to set the fun-
damental principles of the science in the clearest
point of view, to show the intimate dependence
of its different parts on each other, to point out
its more important practical applications, and to
illustrate the doctrines advanced by examples drawn
from the history of this and other countries. At
the same time, I am most ready to admit, that no
skill on the part of a teacher, though it were in-
finitely greater than any I can pretend to, will ever
enable the student to obtain a perfect command of
such a science as this, without considerable indus-
try and attention on his part. But no ingenuous
or liberal mind will ever grudge that labour and
application, which has for its object to unfold the
real sources of private and public opulence, and of
poverty and degradation — to discover
what makes the nations smile,
Improves their soil, and gives them double suns,
And why they pine beneath the brightest skies,
In Nature's richest lap.
APPENDIX.
Note A, p. 52.
That M. Qiiesnay is entitled to the merit of originality
cannot be disputed. It is certain, however, that he had
been anticipated in several of his peculiar doctrines by some
English writers of the previous century. The fundamental
principles of the economical system are distinctly and clear-
ly stated in a tract entitled Reasons Jbr a limited Exportation
of Wooly published in 1677- .*' That it is of the greatest
concern and interest of the nation^*' says the author of the
tract, " to preserve the nobility, gentry, and those to whom
the land of the country belongs, at least, much greater than
a few artificers employed in working the superfluity of our
wool, or the merchants who gain by the exportation of our
manufactures, is manifest — 1. Because they are the masters
and proprietaries of the foundation of all the wealth in this
nation, all profit arising out of the ground which is theirs.
2. Because they hear all taxes and public burdens ; which, in
truth, are only borne by those who buy, and sell not ; all
sellers, raising the price of their commodities, or abating of
their goodness, according to their taxes." — p. 5.
In I696, Mr Asgill published a treatise entitled Several
Assertions Proved, in order to Create Another Species of Mo^
120 APPENDIX.
ney than Gold, in support of Dr Chamberlayne's proposition
for a Land Bank, The following extract from this treatise
breathes, as Mr Stewart has justly observed, in his Life of
Dr Smith, the very spirit of Quesnay's philosophy : —
" What we call commodities is nothing but land severed
from the soil — Man deals in nothing but earth. The mer-
chants are the factors of the world, to exchange one part of
the earth for another. The king himself is fed by the la-
bour of the ox : and the clothing of the army and victualling
of the navy must all be paid for to the owner of the soil as
the ultimate receiver. All things in the world are originally
the produce of the ground, and there must all things be rais-
ed/' — (This passage has been quoted in Lord Lauderdale's
Inquiry into the Nature and Origin of Public Wealth, 2d ed.
p. 109.)
These passages are interesting, as exhibiting the first germs
of the theory of the Economists. But there is no reason
whatever to suppose that Quesnay was aware of the existence
of either of the tracts referred to. The subjects treated in
them were of too local a description to excite the attention
of foreigners ; and Quesnay was too candid to conceal his
obligations, had he really owed them any. It is probable
he may have seen Mr Locke's treatise on Raising the Value
of Money y where the idea is thrown out that all taxes fall
ultimately on the land. But there is an immeasurable dif-
ference between the suggestion of Locke and the well di-
gested system of Quesnay.
I subjoin from the work of Dupont, Sur VOrigine et Pro-
gres d'une Nouvelle Science, a short statement of the various
institutions the Economists held to be necessary for the good
government of a tountry.
" Voici le resume de toutes les institutions sociales fon-
dees sur Tordre naturel, sur la constitution physique des
hommes et des autres etres dont ils sent environnes.
APPENDIX. 121
" Propriete personelle, etablie par la nature^ par la neces-
site physique dont il est a chaque individu de disposer de
toutes les faculies de sa personne, pour se procurer les choses
propres a satisfaire ses besoins, sous peine de soufFrance et de
mort.
" Liberie de travail^ inseparable de la propriete personnelle
dont elle forme une partie constitutive.
" Propriete mobiliairey qui n'est que la propriety person-
nelle merae, consideree dans son usage, dans son objet, dans
son extension necessaire sur les choses acquises par le tra-
vail de sa personne.
*' Liberie d'echange, de commerce, d'emploi de ses riches-
ses, inseparable de la propriete personelle et de la propriete
roobiliaire.
** Culture y qui est un usage de la propriete personnelle, de
la propriete mobiliaire et de la liberte qui en est inseparable :
usage profitable, necessaire, indispensable pour que la popu-
lation puisse s'accroitre, par une suite de la multiplication
des productions necessaires a la subsistance des hommes.
" Propriete fancier e^ suite necessaire de la culture, et qui
n'est que la conservation de la propriete personnelle et de la
propriete mobiliaire, employees aux travaux et aux depenses
preparatoires indispensables pour mettre la terre en etat
d'etre cultivee.
'* Liberte de Vemploi de sa terre, de I'espece de sa culture,
de toutes les conventions relatives a I'exploitation, a la con-
cession, a la retrocession, a I'echange, a la vente de sa terre,
inseparable de la propriete fonciere.
" Partage naturel des recoltes, en reprises des cullivateurs,
ou richesses dont I'emploi doit indispensablement etre de per^
petuer la culture, sous peine de diminution des recoltes et
de la population et produit net, ou richesses disponibles dont
la grandeur decide de la prosperity de la societe, dont Vevor
ploi est abandonne a la volonte et a i'interet des proprietaires
fonciers, et qui constitue pour eux le prix naturel et legiti-
1^2 APPENDIX.
me des depenses qu'Ils on faites, et des travaux auxquels ils
se sont livres pour mettre la terre en etat d'etre cultivee.
" Surete, sans laquelle la propriety et la liberte ne serai-
ent que de droit et non de fait, sans laquelle le produit net
serait bientot aneanti, sans laquelle la culture meme ne pour-
rait subsister.
*^ Autorite tuielaire et sowoerainej pour procurer la surete
essentiellement necessaire a la proprike et a la liberte ; et
qui s'acquitte de set important ministere, en promulguant et
faisant executer les loix de I'ordre naturel, par lesquelles la
propriety et la liberte sont etablies.
'* MagistratSj pour decider dans les cas particuliers quelle
doit etre I'application des loix de I'ordre naturel, reduites en
loix positives par I'autorite souveraine ; et qui ont le devoir
imperieux de comparer les Ordonnances des Souverains avec
les loix de la Justice par essencCj avant de s'engager a pren-
dre ces Ordonnances positives, pour regie de leurs jugemens.
" Instruction publique et favoriseey pour que les citoyens,
I'autorite et les Magistrats, ne puissent jamais perdre de vue
les loix in variables de I'ordre naturel, et se laisser egarer
par les prestiges de I'opinion, ou par I'attrait des interets
particuliers exclusifs qui, des qu'ils sont exclusifs sont toujours
malentendus.
'* Revenu puhlic, pour constituer la force et le pouvoir
necessaire a I'autorite Souveraine ; pour faire les frais de son
ministere protecteur, des fonctions importantes des Magi-
strats, et de I'instruction indispensable des loix de I'ordre
•naturel.
" Impot direct, ou partage du produit net du territoire,
entre les proprietaires fonciers et I'autorite Souveraine ; pour
former le revenu public d'une maniere qui ne restraigne
ni la propriete ni la liberte, et qui par consequent ne soit
pas destructive.
" Proportion essentielle et necessaire de Vimpot direct, avec
le produit net, telle quelle donne a la societe le plus grand
APPENDIX. l^S
revenu public qui soit possible, et par consequent le plus
grand degre possible de surety, sans que le sort des propri^-
taires fonciers cesse d'etre le meilleur sort dont on puisse'
jouir dans la soci6te.
" Monarchie hereditairey pour que tous les interets present
et futurs du depositaire de I'autorite Souveraine, soient inti-
mement lies avec ceux de la societe par le partage propor-
tionnel du produit net,'*
Note B, p. 60.
The true doctrine of population has been most clearly
and ably laid down by M. Herbert, in his Essai sur la Po-
lice des Grains, published in 1755. As this work is not so
well known as its very great merit entitles it to be, I shall
make a short extract from it. " II est evident," says M.
Herbert, " que le nombre des hommes augmenteroit a
rinfini, sans des obstacles physiques, politiques, et moraux.
II nous suffit de savoir, que les hommes sont toujours en
abondance, par-tout ou ils se trouvent bien : que des pays
ont ete successivement bien ou mal peuples, suivant la nature
du gouvernement ; et Ton remarque aisement, que les etats
ne se peuplent point suivant la progression naturelle de la
propagation ; mais en raison de leur Industrie, de leurs pro-
ductions, et des differentes institutions.
«* La guerre, la famine, les maladies epidemiques, ont sou-
vent ravage la terre : ces maux se reparent ; et une nation
renait de generations en generations, paries soinsdu Legisla-
teur. Ces fleaux si terribles sont moins redoutables que
des vices interieurs, qui ruinent un ^tat par degres impercep-
tibles. Un peuple s'aneantit, si Ton ne remedie aux maladies
de langueur, qui affoiblissent I'agriculture ; et les sujets se
dissipent ou deperissent, sans que Ton s'en apper9oive.
" Les hommes en effet se muliiplient comme les productions
du soly et a proportion des avantages et des ressources quih
124 APPENDIX.
trouvent dans leurs travaux. Leur premier soin est celui des
besoins ; quand ils trouvent a les satisfaire, nulle inquietude
ne s'oppose a leur augmentation. Le colon n'apprehende
point de voir croitre sa famille, quand il prevoit pouvoir la
soutenir : mais des gens decourages, ou dans la misdre,
prisent trop peu la vie, pour avoir soin de celle des autres.
On ne songe point a arroser des plantes, quand on a besoin
d'eau pour soi-meme. Le peuple saugmente a. proportion de
la Jacilite qu'il trouve a vivre ; et les hommes se multiplient
naturellement comme les denrees, quand leur vie nest point
traverse par les besoins ou par la crainte." p. 319, &c.
Mr Townsend states the principle at much greater length ;
and successfully applies it to account for the inability of the
poor laws of England to banish poverty from that country.
Mr Townsend's pamphlet was reprinted in 1817, with a pre-
face ascribed to Lord Grenville.
EDINBURGH :
rniNTEI) BY JOHN STARK.
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