Sir Walter Scott enters a strong protest against Smith's doctrine, that Authors are not productive labourers, as well he, and innumerable other authors, might.

So Advocates, Physicians, Actors, Opera Singers and Dancers, Professors, Managers of commercial institutions, and multitudes of others, whose labours do not realise themselves in any material products, are all productive labourers, because their labours are wanted, demanded, and paid for, and thus produce them a profit.

5. Locke, as far as we are aware, originated the unhappy doctrine that Labour is the cause of all Value. Smith unfortunately commences his work by inculcating the doctrine that the wealth of a country is the annual produce of its "land and labour,” and repeats this innumerable times through hundreds of pages. The doctrine that all Wealth and Value is the produce of Labour, and that working men are the creators of all Wealth, has been the canker and the ruin of English Economics, and, as the Socialists themselves admit, is the foundation of that Socialism which has now assumed such a menacing aspect in so many countries. The Socialists have failed to observe that Smith has quite contradicted himself in the latter part of his work, where he admits that Exchangeability is the real essence and principle of Wealth, in accordance with the unanimous doctrine of the ancients.

6. The confusion and contradiction of Smith's ideas on all the fundamental concepts of Economics has exercised a fatal influence on the whole of his work; it is nothing but a chaos of contradictions.

One of these only has attracted much attention. In one part he affirms that the payment of rent enters into price, and thus causes an increase in the price of corn. In another part, he affirms that the payment of rent is the effect of price, and, therefore, does not raise the price. Hume was on his death-bed when the Wealth of Nations reached him, and he at once wrote to Smith to tell him that the payment of rent does not raise the price of corn. The same doctrine also was proved by Anderson, a practical farmer, who was an extensive writer on agricultural subjects, but Smith never made any alteration in his work. It was this glaring self-contradiction, among countless others, which was another of the causes which stimulated Ricardo to write his Principles of Political Economy.

7. Smith admitted that one class of Rights, Rights of Action, Credits, or Debts, are Circulating Capital, but he took no notice of other classes of Rights, which in recent times have increased at a much greater ratio than material property, and at the present day amount to scores of thousands of millions of valuable property.

8. He never made any attempt to give an exposition of the principles and mechanism of commerce. Thus, while he admits that Bank-notes, Bills of Exchange, &c., are Circulating Capital, he never had the slightest idea of the great juridical principles and organisation of the system of Mercantile Credit, the colossal business of Banking, and the Theory of the Foreign Exchanges. Now, taking the very title of his own work as the Nature and Causes of the Wealth of Nations, it is impossible to develope this without an exposition of the principles and mechanism of Credit, by which all Commerce and Trade is carried on; and which, as Daniel Webster has said, has done more to enrich nations a thousand times than all the mines of all the world.

On two points Smith's sagacity has failed him, and he maintained doctrines which were directly contrary to his own general principles, and which subsequent experience has shown that he was in error.

He strongly supported the Navigation Laws, which he admitted were contrary to the principles of Free Trade. But subsequent experience showed that they had become an intolerable nuisance, and were totally repealed in 1849, which was immediately followed by an enormous expansion of British commerce.

He also strongly supported the Usury Laws. In this he was far behind his friends, the Economists Turgot, Quesnay, and others, who pointed out their utter futility, and advocated their total repeal. Smith's doctrines were refuted by Bentham, in his splendid Defence of Usury. It has been said that this tract convinced Smith of his error; but yet he made no change in his work. The Usury Laws were totally condemned by a Committee of the House of Commons in 1819, and have now been entirely repealed in this country.

The most important Economical problems of the present day— Commercial Crises and Monetary Panics-had not arisen in Smith's day, which indeed was not his fault. But to investigate these, and bring them under scientific control, requires a thorough inquiry to the nature of Economics and its fundamental concepts, and then it will be seen that they can only be treated scientifically by adopting the conception of Economics as the Science of Exchanges or of Commerce.

Smith's work, then, can in no respect be considered as a work of Science; it is, rather, a vast mass of raw material, to be subjected to strict Economical inquiry.

It is not necessary to take notice of the three latter books of the Wealth of Nations in this place, because we are only concerned here with Smith's notion of the nature and objects of Economics.

We have now to mention two writers-(1) Ricardo, who adopted the doctrine of the commencement of Smith's work that Labour is the cause of Value, and (2) Whately, who adopted the doctrine of the latter part of it, that Exchangeability is the sole essence and principle of Wealth and Value.

RICARDO.

Ricardo, a very wealthy and highly-esteemed member of the Stock Exchange, first attained distinction as a writer in 1809. In that year the market, or paper, price of gold rose greatly above the Mint Price, and the Foreign Exchanges fell greatly. Ricardo published a pamphlet, entitled, The High Price of Bullion a proof of the Depreciation of Bank Notes, in which he revived the doctrine published by Lord King in 1804. Although this work commenced with several highly-erroneous statements, it most decisively proved its thesis. This gave rise to the appointment of the celebrated Bullion Committee in 1810, and its Report entirely adopted Ricardo's doctrine. But it aroused the warmest opposition from the Bank of England and the merchants, because it would have curtailed the nefarious profits of the Bank from issuing torrents of depreciated paper, and also the accommodation to the merchants. Under their influence, the House of Commons rejected the Report, and resolved that in public estimation a £1 note and Is. were equal to a £1 note and 7s. ; or, that 21 was equal to 27. This was followed by a stupendous controversy which has now sunk into oblivion. Nevertheless, the Report gradually won the assent of the mercantile public, and the mercantile evidence before the Bullion Committees of 1819 was just as strong in its favour as it had been against it in 1810. Ricardo greatly distinguished himself by his masterly evidence before these Committees, and his doctrine is now universally accepted by all sane men. The Bullion Report is one of the great landmarks in Economics.

Ricardo then published some minor pamphlets, which are now totally forgotten, but in 1817, encouraged by the reputation he had acquired, he adventured upon a much more extensive work, The Principles of Political Economy and Taxation, for which, unfortunately, he was totally inadequate.

Ricardo knew no classics, which are indispensable to the study of Economics, because almost all the fundamental concepts of Economics are to be found in Aristotle, the Eryxias, Demosthenes, and the Pandects of Justinian. He knew nothing of Mercantile

Law, nothing of the great juridical principles and mechanism of the great system of Credit, nothing of the organisation of Banking. He had surprising quickness at figures and calculation, somewhat of the genius of the calculating boy, like Mr. Goschen. About twenty-five, he essayed mathematics, but he had no taste for it, and entirely abandoned it when he began to write on Economics, which was a fatal error, as he should just then have most deeply studied mathematics and natural philosophy, because Economics, according to his own view, being the Theory of Value, is a pure science of Variable Quantities, and its laws must be brought, as Bacon pointed out long ago, into strict harmony with the Laws of other sciences of Variable Quantities.

The incongruity of ideas on Wealth and Value in the Wealth of Nations, gave rise to two distinct classes of Economists, who adopt different halves of the work.

Ricardo gives no definition of what he means by the word Wealth, which is the basis of the whole Science. He plunges at once into Value.

In Chap. I., Sect. I., he defines the Value of a commodity as the quantity of any other commodity for which it will exchange." He then says, "Adam Smith, who so accurately defined the original source of exchangeable value, and who was bound in consistency to maintain that all things became more or less valuable in proportion as more or less labour was bestowed on their production, has himself another standard measure of value, and speaks of things being more or less valuable in proportion as they will exchange for more or less of this standard measure. Sometimes he speaks of corn, at other times of labour as a standard measure, not the quantity of labour bestowed upon the production of any object, but the quantity it can command in the market; as if these were two equivalent expressions, and as if because a man's labour had become doubly efficient, and he could therefore produce twice the quantity of a commodity, he would necessarily receive twice the former quantity in exchange for it."

Ricardo, therefore, deliberately rejects Exchangeability, and adopts Labour as the cause and measure of Value.

Now, the principles enforced by Bacon and common sense shew that if one wants to construct a general Theory it is necessary to collect all the facts of the case-because, if even one be omitted, the little David, as Bacon calls it-that single fact may upset a theory founded on all the others.

To construct, then, a Theory of Value it is necessary to begin by

collecting all instances of Value. Now, as is shown under Value, Value is found in (1) Material Commodities, (2) Personal Qualities, (3) Abstract Rights.

But Ricardo begins by confining his attention only to material commodities—and not even all material commodities, but only those which are the product of human labour. That is, he proceeds to construct a General Theory upon only one particular department of Economics. Now, it is evident that such a proceeding is directly contrary to the fundamental principles of Natural Philosophy, and its results may easily be foreseen.

Ricardo, then, having restricted his inquiry to material commodities the result of Labour, maintains that Labour is the cause of Value, and Quantity of Labour is the measure of Value.

Ricardo, then, having begun by defining the Value of a commodity as "the quantity of any other commodity for which it will exchange," lands himself in the conclusion that the "Quantity of Labour" embodied in producing a commodity is its Value!

He then says that "the quantity of labour bestowed on a commodity is, under many circumstances, an invariable standard, indicating correctly the variations of other things."

Ricardo then starts on the search of the Invariable Standard of Value, which should itself be subject to none of the fluctuations to which other commodities are exposed. He says that it is impossible to be possessed of such a measure, because there is no commodity which is not subject to require more or less labour for its production.

Afterwards he says, "If equal quantities of labour, with equal quantities of fixed capital, could at all times obtain from that mine which paid no rent, equal quantities of gold, gold would be as nearly an invariable measure of value as we could in the nature of things possess. The quantity would indeed enlarge with the Demand, but its value would be invariable, and it would be eminently well calculated to measure the varying value of all other things."

In a subsequent part of his work he says, "The labour of a million of men in manufactures will always produce the same value. ... That commodity is alone invariable which at all times requires the same sacrifice of toil and labour to produce it."

That is, Ricardo says, that the value of manufactures is always the same whether they sell for £100, for £10, for £5, or for nothing!

We doubt whether the manufacturers of Manchester would acquiesce in the doctrine that their manufactures are of just the same value whether they sell for large sums, or cannot be sold at all.