determine one single phenomenon, the price of a commodity, say cotton. A manufacturer of calicoes has to decide whether he will increase his stock of raw material, at its current price. Before doing this, he must ascertain, as well as he can, the following data: -Whether the stocks of calico in the hands of manufacturers and wholesalers at home are large or small; whether by recent prices retailers have been led to lay in stocks or not; whether the colonial and foreign markets are glutted or otherwise; and what is now, and is likely to be, the production of calico by foreign manufacturers. Having formed some idea of the probable demand for calico, he has to ask what other manufacturers have done and are doing as buyers of cotton-whether they have been waiting for the price to fall, or have been buying in anticipation of a rise. From cotton-brokers' circulars he has to judge what is the state of speculation in Liverpool—whether the stocks there are large or small, and whether many or few cargoes are on their way. The stocks and prices at New Orleans and other cotton ports have also to be taken note of; and then there come questions respecting forthcoming crops in the States,' in India, in Egypt and elsewhere. Here are sufficiently numerous factors, but these are by no means all. The consumption of calico, and therefore the consumption of cotton, and the price, depend in part on the supplies and prices of other textile products. Surely the factors are now all enumerated? By no means. There is the estimate of mercantile opinion. The views of buyers and sellers respecting future prices, never more than approximations to the truth, often diverge from it widely. . . Nor has he got to the end of the matter when he has considered all these things. He has still to ask, what are the general mercantile conditions of the country, and what the immediate future of the money market will be; since the course of speculation in every commodity must be affected by the rate of discount. See then the enormous complication of causes which determine so simple a thing as the rise or fall of a farthing per

Mr. Spencer, of course, means "the United States," but we might fairly expect of well-informed English writers that they avoid this slovenly and inaccurate designation of our country, which originated with commercial travelers and other illiterate cads, and seems out of place except in their mouths. Even the term "United States," though commonly used, is in strictness no more appropriate than it is to speak ordinarily of "the United Kingdom," when there is no need to call attention to the fact of the Union. Our true name is that given us by all our Southward neighbors; we are Americans, and our country is America.—Ed. P. M.

pound in cotton some months hence.". To admit the assumption on which the abstract doctrine of the equality of profits rests—and on which, again, the doctrine of indirect taxation is based-one must be prepared to admit that men in business are able to make, and do make, similar calculations respecting every other commodity, and thus are enabled to estimate the relative profits of different businesses.

The only verification adduced in support of the assumption is, that capital and labor desert employments known to be comparatively unremunerative, for those which are known to yield better returns. Even this proposition is far from being universally true, and, if it proved the conclusion, would prove that the migration of labor from Europe to America must long ago have equalized European and American wages. Mr. Mill in stating the doctrine has granted that individual profits depend, among other things, "on the accidents of personal connection and even on chance," adding, "that equal capitals give equal profits, as a general maxim of trade, would be as false as that equal age or size gives equal bodily strength, or that equal reading or experience gives equal knowledge." He supposed, however, that bankers and other dealers in money, by lending it to the more profitable trades, put the various employments of capital "on such a footing as to hold out, not equal profits, but equal expectations of profit." In like manner, Mr Bagehot argues that "the capital of the country is by the lending capitalists transmitted where it is most wanted." If individual profits vary to the extent which Mr. Mill admitted, since there are no means of knowing what individual profits really are, it is hard to imagine how bankers and bill brokers can gauge the existing profits of different trades, and still harder to imagine how they can foreknow them. How much they really know of the matter has been recently exemplified by the transactions of the banks and bill brokers in the cases of Messrs. Overend and Gurney, and Messrs. Collie and Co.9 Mr. Bagehot himself, writing on the money market and joint-stock banks, has observed: "The old private

8 The study of Sciology. By Herbert Spencer, pp. 18-19.

9 On the failure of these firms a commercial writer observes: "The nation entrusted most of its floating capital to the bill brokers, and the public found that they had no check on their discretion: . . . Bankers took the bills as security because bill brokers did, and hardly stopped to test the bills or study their nature."-The Rationale of Market Fluctuations, pp. 52-3.

banks in former times used to lend much to private individuals; the banker formed his judgment, of the discretion, the sense, and the solvency of those to whom he lent. And when London was by comparison a small city, and when by comparison every one struck to his proper business, this practice might have been safe. But now that London is enormous, and that no one can watch any one, such a trade would be disastrous; it would hardly be safe in a country town."

"10

If there is one lesson which the history of trade and the money market in the last ten years ought to have brought home to us more clearly than another, it is that both the lending and the borrowing capitalists, both bankers and traders, are singularly ill-informed and short-sighted with respect even to the condition and prospects of their own business. The Deputy Governor of the Bank of England told a meeting of Turkish bondholders a few months ago, that he had gone into these bonds largely himself, and had advised others to do so. A man of business of considerable experience had asked my own opinion, as an economist, of that very security, and afterwards complained that I had dissuaded him from a good investment.

Such is the stability of the main proposition of abstract political economy. The nature of the superstructure built on it may be judged from the doctrine that all special taxes on production fall, not on the producer but on consumers, the former receiving the tax with "average" profit on its advance; although in fact the producer may make no profit, may never sell the articles taxed, may even be driven from the trade and ruined. by the impost, as the last load which breaks the back of the camel, for taxation has notoriously contributed to drive the smaller capitalists from several branches of business, for example, distilling and brewing. I must leave it to physicists, geologists, and naturalists to judge of the analogy for which Mr. Bagehot contends, of reasoning of this kind to the processes by which their sciences have been built up; nor may I attempt to pass judgment on the sufficiency. of the method which Mr. Darwin in particular has followed. But where it is urged that the abstract economist, like Mr. Darwin, reasons deductively from "one vera causa," the rejoinder is obvious that the "desire of wealth," which in abstract political economy

10 Lombard-street. By Walter Bagehot. 6th ed., p. 251. "Fortnightly Review. February, 1876, p. 223.

occupies the place of gravitation in astronomy, and of natural selection in Mr. Darwin's theory, so far from being a vera causa, is an abstraction, confounding a great variety of different and heterogeneous motives, which have been mistaken for a single homogeneous force; and that Mr. Darwin's hypothesis was based on many previous inductions, and followed by minute and elaborate verification, for which the sole substitute in political economy has been an ignoratio elenchi. Mr. Cairnes, indeed, emphasizes in Italics the proposition that "the economist starts with a knowledge of the ultimate causes;" 12 adding: He is already, at the outset of his enterprise, in the position which the physicist only attains after ages of laborious research. If anybody doubts this, he has only to consider what the ultimate principles governing economic phenomena are." First among these "ultimate principles" he places "the general desire for physical well-being, and for wealth as the means of obtaining it." Yet the desire for physical well-being is so far from being identical with the desire of wealth that they are often in direct antagonism to each other. And the title of such an abstraction as the desire for wealth to rank as an ultimate principle has been, it is hoped, sufficiently refuted.

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The abstract a priori method, it ought not to be overlooked, has almost entirely lost credit in Germany, and has never had undisputed possession of the field in either England or France. It is repudiated by M. de Laveleye, and by some of the most eminent economists in Italy. Malthus and Say, the two most eminent contemporaries of Ricardo, emphatically protested against it. Mr. J. S. Mill's treatise on the Principles of Political Economy often departs from it, and in his later writings he showed an increasing tendency to question its generalizations. Nor did the founders of political economy, either in England or France, intend to separate. the laws of the economical world from the general laws of society. Their error lay in the assumption of a simple harmonious and beneficent order of nature, in accordance with which human wants and propensities tend to the utmost amount of wealth, happiness and good. Mercier de la Rivière, whom Adam Smsth calls the best expositor of the doctrines of the Economistes, entitled his work L'Ordre Naturel et Essentiel des Sociétés Politiques; and with Adam Smith himself political economy was part of a complete system of social philosophy, comprising also natural theology, moral 12 Logical Method, &c., p. 75.

philosophy, and jurisprudence. He regarded the economical structure of the world as the result of a social evolution, but the dominant idea of a natural order of things disposed him to dwell chiefly on "the natural progress of opulence;" and led him to regard its actual progress as "unnatural and retrograde" wherever it diverged from the imaginary natural order, in place of being the result of the real laws of nature at work. He followed nevertheless the historical, as well as the a priori, method, the latter being simply an offshoot of the eighteenth century theory of Natural Law; and the same language may be used in reference to political economy, which Sir H. Maine has employed in describing the influence of that theory on jurisprudence: "It gave birth or intense stimulus to vices of mental habit all but universal, disdain of positive law, impatience of experience, and the preference of a priori to all other reasoning. There is not much presumption in asserting that what has hitherto stood in the place of a science has, for the most part, been a set of guesses, the very guesses of the Roman lawyers."13

Ricardo's fundamental assumption is a "guess" respecting the natural principle regulating value and the distribution of wealth in the early stages of society, or in a state of nature; and he proceeds to determine by the same process the "natural" course of wages, profits, and prices in advanced society. In proof that every improvement in the processes of manufacture which abridges labor is attended with a corresponding fall in the price of the product, his argument is: "Suppose that, in the early stages of society, the bow and arrows of the hunter were of equal value and of equal durability with the canoe and implements of the fisherman, both being the produce of the same quantity of labor. Under such circumstances, the value of the deer, the produce of the hunter's day's labor, would be exactly equal to the value of the fish, the produce of the fisherman's day's labor. The comparative value of the fish and the game would be entirely regulated by the quantity. of labor realized in each, whatever might be the quantity of production, or however high or low general wages or profits might be." To prove that profits are equalized in the modern world by the flow of capital into the more profitable trades, he resorts, in like manner, to a "guess:"-"It is, perhaps, very difficult to trace the steps by which this change is effected: it is probably by a manufacturer not actually changing his employment, but only lessening 13 Ancient Law, pp. 91-113.