regarded as a substitute for experiment: in physical investigation, on the other hand, as the required conditions can actually be produced, there is no need to assume them hypothetically, and accordingly this is never done. For what purpose then is hypothesis used in physical research? Always as a means of arriving at ultimate causes and laws. Such causes and laws not being susceptible of direct proof, through an appeal to the consciousness or senses; conjecture, guess, hypothesis, is the natural, as it is in truth the only possible, path by which they may be reached. Accordingly, the physicist frames an hypothesis as to the nature of those causes and laws, and having done so, proceeds to bring together conditions fitted to test the correctness of his guesses -that is to say, he institutes experiments to verify his hypothesis. Such a course would be obviously unsuitable in the analogous case in economic investigation. No one thinks of framing an hypothesis as to the motives which induce men to engage in industry, to prefer remunerative to unremunerative occupations, or to embark their earnings in investments which, ceteris paribus, promise the best returns; or, again, as to the causes which, in a given state of agricultural knowledge and skill, set a permanent limit to the application of capital and labour to the soil; any more than as to those on which depend the continuance and growth of population. Conjecture here would manifestly be out of place, inasmuch as we possess in our consciousness and in the testimony of our senses, as I have already shown,

direct and easy proof of that which we desire to know. In Political Economy, accordingly, hypothesis is never used as a help towards the discovery of ultimate causes and laws; just as in physical investigation it is never used as a substitute for experiment.1

Such then are the positions respectively of the economist and of the physical philosopher with reference to the logical nature of the problem with which each has to deal. And this being so, what can argue greater ignorance of the conditions of the case at once of the real nature of the precedents furnished by the physical sciences, and of the character of the economic problem, than to appeal to the former, as is constantly done, in justification of the exclusive use of the purely inductive method in economical research. It is to overlook alike the peculiar weakness and the peculiar strength of the economist's position. It is to advocate for Political Economy a method which is only powerful in physical investigation, because the physicist can employ it in connection with conditions from the realization of which the economist is from the nature of his inquiry precluded; and to refuse to employ an engine of discovery ready to our hands, which the physicist has spent centuries of laborious speculation in his efforts to attain, and which, once possessed, has proved the most potent of all his appliances. What the precedents of physical science, rightly understood, teach the economist is to regard

1 See Appendix C.

deduction as his principal resource; the facts furnished by observation and experience being employed, so far as circumstances permit, as the means of verifying the conclusions thus obtained, as well as, where discrepancies are found to occur between facts and his theoretical reasonings, for ascertaining the nature of the disturbing causes to which such discrepancies are due. It is in this way, and in this way only, that the appeal to experience is made in those physical sciences which have reached the deductive stagethat is to say, which in the logical character of their problems present any real analogy to economic science.

§ 5. In connection with the processes just referred to of verification and the discovery of disturbing causes, or (to express the same idea differently) the discovery of the minor influences affecting economic phenomena, we find the proper place of statistics in economic reasoning. Statistics are collections of facts arranged and classified with a view to particular inquiries; and it is by availing ourselves of this systematized method of observation that we can most effectually check and verify the accuracy of our reasoning from the fundamental assumptions of the science; while the same expedient offers also by much the most efficacious means of bringing into view the action of those minor or disturbing agencies which modify, sometimes so extensively, the actual course of events. The mode in which these latter influences affect the phenomena of wealth is, in general, unobvious, and often intricate,

so that their existence does not readily discover itself to a reasoner engaged in the development of the more capital economic doctrines. In order to their detection, therefore, attention must be drawn to the effects which they produce; and this, as I have said, can be best done by the use of statisties in constant connection with deductive ratiocination.

It is important to observe that the relation of statistics to Political Economy is in no respect different from that in which they stand to other sciences which have reached the deductive stage. The registered observations of the astronomer are the statistics of astronomy, which it is his business to compare with the conclusions theoretically evolved from the dynamical principles constituting the premisses of his science; and for purposes strictly analogous to those which have just been described.1 In those sciences, indeed, which admit of experiment, as e.g. chemistry, formal statistics are little used.

1 "For example: the return of the comet predicted by Professor Encke, a great many times in succession, and the general good agreement of its calculated with its observed place during any one of its periods of visibility, would lead us to say that its gravitation towards the sun and planets is the sole and sufficient cause of all the phenomena of its orbitual motion; but when the effect of this cause is strictly calculated and subducted from the observed motion, there is found to remain behind a residual phenomenon, which would never have been otherwise ascertained to exist, which is a small anticipation of the time of its reappearances or a small diminution of its periodic time, which cannot be accounted for by gravity, and whose cause is therefore to be inquired into. Such an anticipation would be caused by the resistance of a medium disseminated through the celestial regions; and as there are other good reasons for believing this to be a vera causa, it has therefore been ascribed to such a resistance."-Herschel's Natural Philosophy, p. 156.

Statistics here are unnecessary, because experiment affords, only in a more efficacious way, the means of instituting the same comparison. But what are known by the chemist as residual phenomena' are precisely analogous to those discrepancies between the conclusions of the economist and the facts of the statistician to which I have been adverting, and lead in the same way to the discovery of new elements or principles before overlooked.

Such is the method of investigation which the nature of the evidence available in economic inquiry, as well as the analogy of the physical sciences, so far as they correspond with it in the logical character of their problems, suggest as proper to be followed in Political Economy; and such also is the method which has in fact been followed, whether it has been distinctly stated or not, by all those writers, from Turgot and Adam Smith to Mr. Mill, who have contributed most effectually to the advancement of economic knowledge. The detailed evidence for this statement, however, may be fitly reserved for another lecture.