The art of Political Economy now became more complex. Its object, indeed, was a very simple one, merely to increase the current coin of the country; but this was to be effected, not by restraining every trade which carried out bullion, but only those which carried out more than they brought in. But how were such trades to be detected? A test was supposed to be applied, by ascertaining whether their imports were intended for home consumption, or for re-exportation. In the former case, the trade, whether profitable or not to the merchant, was obviously mischievous to the country.

In the second case the trade, if profitable to the merchant, must also benefit the country, as it would receive more money than it sent out. "It is not," says Sir James Stewart, "by the importation of foreign commodities, and by the exportation of gold and silver, that a nation becomes poor; it is by consuming those commodities when imported. The moment the consumption begins, the balance turns. Nations which trade to India by sending out gold. and silver for a return of superfluities of a most consumable nature, the consumption of which they prohibit at home, do not spend their own specie, but that of their neighbours, who purchase the returns of it for their own consumption. Consequently a nation may become immensely rich by the constant exportation of specie and importation of consumable commodities. But she would do well to beware not

* An Inquiry into the Principles of Political Economy, book ii. ch. xxix. pp. 418, 419., and 422.

to resemble the milliner who took it into her head to wear the fine laces which she used to make up for her customers. While a favourable balance is preserved upon foreign trade, a nation grows richer daily; and when one nation grows richer, others must be growing poorer."

Sir James Stewart's work was published in 1767, and as he says that it was the work of eighteen years, it must have been written between that year and the year 1749. Though he calls Political Economy a science, he treats it as an art, and has the merit of having first given to it limits clearly separating it from the other moral and political arts. "Its object is," he says, "to secure a certain fund of subsistence for all the inhabitants, to obviate every circumstance which may render it precarious, to provide every thing necessary for supplying the wants of the society, and to employ the inhabitants in such a manner as naturally to create reciprocal relations and dependencies between them, so as to make their several interests lead them to supply one another with their reciprocal wants.” * This agrees with my second proposal, namely, to define Political Economy as "the art which points out the institutions and habits most conducive to the production and accumulation of wealth." As incidental to the art, he was forced to examine the science, and a considerable portion of his work consists of inquiries. into the laws which regulate the production and

*Book I. Introduction.

distribution of wealth. The extracts which I have read, show that he did not escape the prevalent errors of his times. And these errors were so grave, as to render the practical portion of his treatise not merely useless for its intended purposes, but positively injurious. A legislator following his precepts, would waste the wealth of the richest country, and destroy the diligence of the most industrious. But the scientific part of the work, particularly the chapters on population, and on the influence of taxation on wages, contains truths of great importance, which were unknown to his contemporaries, and cannot be said to be generally recognised even now.

Among the contemporaries of Stewart were the French Economists, or, as they have lately been called, the Physiocrats, forming the school founded by Quesnay. With the exception, however, of Turgot, they wrote on the whole art of government. Their works, indeed, contain treatises on Political Economy according to my third proposed definition, that is to say, on the institutions and habits most conducive to that production, accumulation, and distribution of wealth, which is most favourable to the happiness of mankind;" but they contain much more. Quesnay and his followers lived in a country subject to political institutions, of which many were mischievous, more were imperfect, and all were unsettled. That the existing system of government was bad, every one acknowledged. The economists believed that they had discovered why it was bad. They believed that they

wealth, and rent the only legitimate source of public revenue. And they proposed, therefore, to substitute for the innumerable taxes on importation, on exportation, on transit, on production, on sale, on consumption, and on the person of man, which then formed the fiscal system of France, a single tax on the rent of land. So far their precepts were founded on the science of Political Economy. But when they proposed the separation of legislative and judicial functions, and required the whole legislative power to center in an absolute hereditary monarch, they drew their premises from other branches of mental science. I have said that Turgot was an exception; and it is remarkable, that the only man among the disciples of Quesnay who was actually practising Political Economy as an art, is the only one who treated its principles as a science. His "Réflexions sur la Formation, et la Distribution des Richesses," published in 1771, is a purely scientific treatise. It contains not a word of precept; and might have been written by an ascetic, who believed wealth to be an evil.

We now come to Adam Smith, the founder of modern Political Economy, whether it be treated as a science or as an art. He considered it as an art. "Political Economy," he says, in the introduction to the fourth book, "proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people, or, more properly, to enable them to provide such a revenue or subsistence for themselves; and, secondly, to supply the state or common weal with a revenue sufficient for the public service. It proposes

to enrich both the people and the sovereign." The principal purpose of his work was to show the erroneousness of the means by which political economists had proposed to attain these two great objects. And in the then state of knowledge, this could be done only by proving that many of them mistook the nature of wealth, and all of them the laws according to which it is produced and distributed. The scientific portion of his work is merely an introduction to that which is practical.

Of the five books into which the work is divided, it occupies only the first and second. The third is an historical sketch of the progress of national opulence. The fourth, the longest in the whole work, considers the direct interferences by which governments have attempted to lead or force their subjects to become rich; and decides, "that every system which endea vours, either by extraordinary encouragements, to draw towards a particular species of industry a greater share of the capital of the society than would naturally go to it, or, by extraordinary restraints, to force from a particular species of industry some share of the capital which would otherwise be employed in it, is in reality subversive of the great purpose which it means to promote. It retards, instead of accelerating, the progress of the society towards real wealth and greatness; and diminishes, instead of increasing, the real value of the annual produce of its land and labour."

"All systems," he adds, "either of preference or