displayed in this tract may entitle the writer to the credit of having anticipated the doctrines of a later generation with a clearness very seldom exhibited in any sphere of speculation. It seems as if he required nothing but a greater command of style, a greater confidence in his powers, and a higher estimate of the importance of his speculations, to have anticipated Adam Smith by just three-quarters of a century. He is not content with the sufficiently conclusive argument advanced by North, but takes the further and more difficult step of thoroughly working out the mode in which Free Trade operates. Beneath the fallacy of the balance of trade and the identification of money and wealth lay another fallacy, apparently more transparent, and yet so obstinately persistent, that its roots must clearly strike very deep in the minds of most observers. The fallacy is that which was made celebrated by Mandeville, and the complete confutation of which lies in the doctrine-so rarely understood, that its complete apprehension is, perhaps, the best test of a sound economist -that demand for commodities is not demand for labour. The argument of North implicitly recognises the fact that the value of Free Trade consists essentially in increasing the general efficiency of human labour. It tends to the best distribution of the forces of the race by encouraging each nation to devote itself to producing the articles in which it has the greatest advantage. But even whilst admitting this truth, most writers, till a much later period, and many at the present day, allow the old fallacy to reappear. For one moment they reach an elevation from which they can contemplate the planet as a whole, and at the next moment their vision is confined to the horizon visible from an English shopwindow. They cannot bear some of the corollaries, though they can assert the general proposition. Commerce, they admit in general terms, implies a reciprocity of advantages; but in each particular case they fancy that one side must lose and the other gain. That both sides to a bargain should be gainers sounds like a silly paradox. Commerce is regarded not as the means by which forces may be redistributed, and therefore applied more efficaciously, but as the shifting of a burden from one side to the other.

13. At the root of the whole system of fallacies lies a

confusion between the true relations of exchange and production--a confusion which, as we shall presently see, the French economist endeavoured unsuccessfully to clear up. There is a vague conviction that to destroy the demand for any particular commodity is to destroy the demand for the labour which produces it, instead of to alter the distribution of the national energy. It is not perceived that the capital employed constitutes the demand for labour, and that it need not, in the long run, be diminished when a change is effected in its application, which makes labour, in general, more efficient. Foreign commerce, in short, is taken for a process of direct nutrition or waste, when its real character is a reciprocation of advantages which indirectly facilitates nutrition. The removal of restrictions is regarded as analogous to the opening of a sluice which enables the wealth accumulated on one side to drain off to the lower levels, instead of being analogous to the removal of a ligature which facilitates the process of nutrition on both sides. The confusion might be abundantly illustrated from the writings of many authors who could at times grasp the general principle. Thus, for example, a later advocate of Free Trade, Dean Tucker, who fully appreciates North's argument, begins his first tract upon the trade between England and France, published about 1750, by this curious inversion of argument. If, he says, 10,000 people in England make goods for the French, and 40,000 Frenchmen make goods for England, we must pay the 30,000 French in gold and silver, that is, be at the charge of maintaining them.' 'This,' he goes on to say, 'is the clearest and justest method of determining the balance between nation and nation; for though a difference in the value of the respective commodities may make some difference in the sums actually paid to balance accounts, yet the general principle, that labour, not money, is the riches of a people, will always prove that the advantage is on the side of the nation which has most hands employed in labour.' The conclusion of this ingenious and often sound thinker is, therefore, that a nation will be richer in proportion to the amount of labour employed on a given product, which is, in fact, nothing else than Mandeville's doctrine that the fire of London was useful,

1

Tracts of Pol. Economy Club,' p. 315.

because it caused a demand for labour; and which would make it an advantage to turn our fields into a wilderness, and grow cotton in England in defiance of the climate.

14. The fallacy, though so palpable in such extreme conclusions, is, as I have said, one of the most persistent in Political Economy, and it is important to notice it in view of some theories still to be considered. Meanwhile, it is the special merit of the anonymous author of the 'Considerations' that he exposes it thoroughly and irrefutably. He had to meet the inference that the manufacture of English silk would be destroyed by the admission of Indian silk. Most writers, like Davenant, tried to shirk this difficulty, or to meet it by erroneous reasons. The author shows that the apparent injury really meant nothing more than the diversion of labour to functions which it could more efficiently discharge. Not only does he show this conclusively, and meet all the objections which could be suggested, but he is led to explain the advantages of machinery and of the organisation of labour. His illustration, taken from the many processes involved in watchmaking, is as clear and striking as Adam Smith's pins, and the few errors which are mixed with his sound arguments are not more conspicuous than in the case of his greater predecessor. No economical writer of the century showed more of that power of close reasoning which is so admirably displayed in the writings of Ricardo. Unfortunately, the oblivion in which his name and essay are buried is a sufficient proof of the futility of clear argument when brought into conflict with the sheer stupidity and selfishness of mankind.

15. Between the time of Davenant and the time of Adam Smith various writers, of more or less ability, dealt with economical questions; but none of them worked out a general theory of sufficient coherence to make an epoch in the study. There is a mixture of palpable error with occasional glimpses of sounder principles. An essay, for example, upon the 'Doctrine of Foreign Trade,' published in 1750 by a Mr. Richardson, and erroneously attributed by Adam Smith to Sir Matthew Decker, has been noticed for its unqualified demonstration of the evils of monopoly generally. Yet it begins with a statement of the Balance of Trade theory, and is full of economical errors. Franklin, in whom the

acuteness of the philosopher was 'curiously blended with the cunning of the trader, has left some keen remarks upon the evils of protection.' He adopts the formula said by him to have been used by some French merchants to Colbert: laissez-vous faire (sic.); but, in the same breath he adduces a palpable fallacy in favour of a system of bounties.3 In a few essays devoted to economical questions Hume shows his usual perspicuity. He was little likely to be deluded by the gross sophistry, or seduced by the narrow prejudices, of the supporters of the mercantile system. His point of view was too elevated, and his logical sensibility too acute, for him to sanction blunders worthy of a tradesman in a country town. He saw with perfect clearness, and explained with admirable precision, that domestic commerce meant simply an 'intercourse of good offices' between the different classes of a people, and the different districts which were fitted by nature to supply each other's wants. The principle was as applicable to nations as to provinces. The mercantile theory, in prescribing the accumulation of money as an ultimate end, aimed at a result as chimerical as the attempt to heap up water above the proper level. From such principles, he says, 'we may learn what judgment we ought to form of those numberless bars, obstructions, and imposts, which all nations of Europe, and none more than England, have put upon trade from an exorbitant desire of amassing money which will never heap up beyond its proper level whilst it circulates; or from an ill-founded apprehension of losing their specie, which will never sink below it. Could anything scatter our riches it would be such absurd contrivances. The general ill effect, however, results from them that they deprive neighbouring nations of that free communication and exchange which the Author of the world has intended by giving them soils, climates, and geniuses so different from each other.' He denounces the silly jealousy to which these restrictions pandered; and ventures to acknowledge that not only as a man but as a British subject' he prays for the flourishing com

See e.g. 'Note respecting Trade and Manufactures' (Works, vi. 61), which is identical nearly with an argument in Richardson's tract ('Scarce Tracts,' p. 255). 2 Franklin, vi. 87. Hume's Works, iii. 324, Interest.' Ib. iii. 343. • Ib. vi. 88.

Ib. iii. 333, 'Balance of Trade.'

merce of Germany, Spain, Italy, and even France itself. am at least certain,' he adds, 'that Great Britain and all those nations would flourish more did their sovereigns and ministers adopt such enlarged and benevolent sentiments towards each other."1

16. Even Hume had not emancipated himself from some characteristic errors. He has an odd impression, though nobody had explained so clearly the true functions of money, that a State ought to aim at keeping its cash on the increase.2 He could see the effect, that is, of rising prices in stimulating production, whilst the effect on discouraging demand escaped his notice. Similarly, whilst attacking the Balance of Trade theory, he is yet in favour of some protective duties.3 His keen insight required to be corrected and checked by the general principles which only revealed themselves on a more systematic treatment of the whole subject. But, in spite of these errors, Hume's acute remarks, appearing, as they did, in his most successful book, should have dissipated some of the prejudices which he asserted had never been governed in such matters by reason. It may, indeed, be taken for granted that they had a considerable effect upon Adam Smith, who is said to have taught similar doctrines at Glasgow in 1753, the year, that is, after the publication of these essays. Smith speaks of Hume with affectionate reverence, and must have been confirmed, if not indoctrinated, in the new principles by the authority of his master.

17. One writer already mentioned demands some further notice before we pass to a different school. The doctrine of Free Trade was generally associated with the new philosophy of the time. Prohibition was not merely injurious economically, but was an infringement of the rights of man. Yet one sturdy opponent of the new ideas must be reckoned amongst its advocates. Josiah Tucker was given to odd combinations of theory. Nature had designed him for a shrewd tradesman ; fate had converted him into a clergyman. His residence at Bristol, then the second city in the kingdom, had stimulated his commercial tendencies. He was chosen by one of the tutors of George III. to write a treatise called the 'Elements Ib. iii. 344, 'Balance of Trade.'

Hume, iii. 348, 'Jealousy of Trade.' 2 lb. iii. 315, 'Money.''