ment, especially in his own country, and in connection therewith his views of the relation of politics to trade and commerce and the distribution of property. Harrington's theory that the balance of power depends on the balance of landed property seems to him unsupported, Government is always founded on the "opinion" of the governed, their opinion that it is for their interest, and their opinion that it is supporting ancient rights and justice.1

Therefore, though the balance of power be not that of property, the government may be unchanged for years. When the depression of the nobility and the rise of the commons, and the statutes of alienation, and the growth of trade, had really altered the old balance of property and power in England, the readjustment was only made slowly and gradually by the House of Commons. Besides, " property" may mean either accumulated or dispersed property engrossed by a few or extended to many; and, if it be the former, a much less amount of it would involve greater power than a much greater amount dispersed in many hands. Combination of small owners is difficult, and engrossment in a single hand gives much. greater influence over dependants. Peace and security, too, are valued by men even more than wealth; and, as they can get them only from government, they are not often willing to risk the loss of them by a change which may weaken government. The interests of classes are often at one when they seem divergent; trade and agriculture have the same political interests. The character of a government is not indeed indifferent, especially to foreign trade. Unlike the Fine Arts, commerce can only flourish under a free government, not because property is less secure under despotism (for "avarice, the spur of industry," would not be scared by fancied dangers of confiscation) but because commerce has less honour under an absolute government than under a popular. Yet the decline in the prosperity of France, which was observable

1 Essays, I. 31 (Principles of Government).

2 Ibid., I. 34 (Principles of Government).

3 Ibid., I. 50 (Of Parties).

Ibid., I. 100 (Of Civil Liberty).

5

+ Ibid., 55 (Of Parties).

in Hume's days, was due (he says) not to the amount of taxation but to the arbitrariness and inequality of it. France was the standing instance of an absolute monarchy which had prospered; and he himself saw no reason why all the advantages of a free government should not be obtained under a limited monarchy in England. If the government of England was to change, he would rather see it become absolute than become republican.1

But, as usual, after pointing the contrast as keenly as possible, Hume ends by representing the rival governments as differing much less than might be thought. The most important feature (for our present purpose) of his political reasoning is his subordination of the economical element to the rest. It was left to Adam Smith to take up Harrington's assertion of its predominance and state it in his own way, with clearer consciousness of the bearings of the position and greater mastery over the proofs.

NOTE.

The ethics of Hume are treated by Hasbach, Untersuchungen über Adam Smith (1891). Readers may compare with Professor Hasbach's the account of Hume's views given by Professor T. H. Green in his introduction to the 2nd vol. of Longman's reprint of Hume's Philosophical Works, pp. 42 seq., esp. 57, 58. The economics are estimated perhaps too highly by Hill Burton, in vol. I., 355, and vol. II. p. 520 of his Life and Correspondence of David Hume (1846)-the most charming of the many books written on the subject. Economists are indebted to Hill Burton also for Letters of Eminent Persons addressed to David Hume (1849), where letters of Turgot, Tucker, Morellet, etc., are given, and hints on economical subjects abound.

1 Essays, I. 102, cf. 49 (The British Government).

K

CHAPTER VII.

THE MERCANTILE SYSTEM AND THE PHYSIOCRATS.

Ir is impossible to understand the position of Adam Smith in the history of Economics without forming some idea of the two economical systems which influenced him most (the one by attraction, the other by repulsion), and which were identified neither with Hume nor with any other of the writers already considered. These were the Mercantile System and the Agricultural System. The latter was the body of doctrine taught by the French Economists or Physiocrats, who formed the first school of Economists in the strict sense of the term and first gave the whole study its place among the sciences.

I. The principles of the MERCANTILE SYSTEM were not taught by any School; there was no master, there were no disciples. From one of its aspects it was a popular economics and not in the best sense of the term. Though Adam Smith turned to Mun' when he looked for a discriminating statement of the Mercantile views, it is clear from his various criticisms on them in the 4th book of the Wealth of Nations that he does not regard them as a body of arguments and conclusions. carefully worked out by thoughtful men from desire of truth, but rather as a scheme of commercial policy 2 which different governments had adopted on the advice of interested merchants and manufacturers. Its principles, so far as they were ever elaborated into a system, seem to him to be the maxims of practical

England's Treasure by Foreign Trade, published 1664, though written perhaps thirty years earlier.

2 See W. of N., IV., Introd., p. 187 (MacCulloch's edition) :— "Political Economy considered as a branch of the science of a statesman or legislator."

men of business, who know how trade benefits themselves and have no concern how it benefits the nation at large. On the other hand, the motive of governments in adopting the Mercantile policy could hardly have been disinterestedly to benefit the merchants and manufacturers. The time of its first appearance and the time of its decline will help us to understand the matter. It is usually said to have begun with the Reformation and ended with the French Revolution; and this means that it began when foreign commerce was becoming a power in Europe and ended when governments were beginning to be constitutional and popular. The common notion of Mercantilism represents it as confusing wealth with money, or at least with the precious metals. The charge thus blankly stated is not strictly true; but it is true that views were adopted and made the ground of political action for more than two centuries which might fairly be represented as logically involving the fallacy in question. The intelligible motive for adopting a policy which promised to multiply the precious metals in a country was clearly the desire of the rulers to have a full treasury for warlike and other purposes. There was also a belief that for general reasons (the reasons of the "merchants and manufacturers") it was good for the country that as much of the precious metals as possible should be attracted into it. The measures adopted to secure this end were the prohibition to export gold and silver "forth of the kingdom," the careful watching of the balance of trade, to see that our exports should in value exceed the imports, in order that there might be a balance in money to come into the country, restraints (by duties or prohibitions) on importation from foreign countries, and encouragement (by bounties and drawbacks) of exportation, special encouragements of home manufacture and of the growth of a home population to labour on it, treaties of commerce to secure privileges for our exporters, and finally the foundation of Colonies and the retention there of our monopoly of trading.

1 See, e.g., Cunningham, Growth of Engl., Industry, and Commerce, p. 150 (1st ed.). Miaskowsky, Die Anfänge der National-Oekonomie (1891).

It has been stated that Mercantilists agreed in displaying an exaggerated care for the mere numbers of the people. The fallacy of considering a large population to be of itself a source of strength to a nation may indeed be connected with the military view in which the Mercantile System seems to have originated; but it is not necessarily of a piece with the rest of the policy. Not only the adherents of the Mercantile policy but nearly all economical writers before the Physiocrats were more or less tainted with this fallacy; and it is no more safe to identify this view with Mercantilism than it is to identify Mercantile theorists with the supports of an absolute monarchy. No doubt the policy arose at a time when Monarchies in Europe were becoming strong, and the regulation of trade may have seemed as natural in an absolute monarchy as the regulation of religion, morals and literature. But the Mercantile System prevailed even under the Commonwealth; and it survived the expulsion of the Stuarts. Its absence in Holland was due rather to its impracticability there than to the popular form of the Dutch government. It is true that Colbert, the great bugbear of the Physiocrats, was the minister of an absolute monarch; but the Physiocrats who successfully contended against the continuation of his policy were themselves suspected of inclining to an absolute form of government. The Mercantile system was no immediate consequence of the decay of feudalism and the rise of powerful monarchies. The first efforts of these monarchs were rather in the direction of sumptuary measures; their interference with foreign importation was meant not to bring money into the country but to prevent their own people from being corrupted by foreign luxuries. It is not till a century after the discovery of America and the fall of feudalism that we find Mercantile views coming forward with authority. All we can safely say seems to be that, when the separate States became more conscious of their own national life than of the ties that bound them to their neighbours, they were easily led

1 E.g. by Roscher, Gesch. der. Deutschen Nat. Oekonomik (1874). Roscher treats the Mercantilists as if they were really a "School." He is closely followed by Ingram, Hist. of Pol. Econ. (1888), p. 229.