AdamSmithallowsinthreecasesthespecialprotectionof
internalindustry：firstly，asameasureofretaliationincasea
foreignnationimposesrestrictionsonourimports，andthereis
hopeofinducingitbymeansofreprisalstorepealthose
restrictions；secondly，forthedefenceofthenation，incase
thosemanufacturingrequirementswhicharenecessaryfordefensive
purposescouldnotunderopencompetitionbeproducedathome；
thirdly，asameansofequalisationincasetheproductsof
foreignersaretaxedlowerthanthoseofourhomeproducers。J。B。
Sayobjectstoprotectioninallthesecases，butadmitsitina
fourthcase——namely，whensomebranchofindustryisexpectedto
becomeafterthelapseofafewyearssoremunerativethatitwill
thennolongerneedprotection。
ThusitisAdamSmithwhowantstointroducetheprincipleof
retaliationintocommercialpolicy——aprinciplewhichwouldlead
tothemostabsurdandmostruinousmeasures，especiallyifthe
retaliatoryduties，asSmithdemands，aretoberepealedassoonas
theforeignnationagreestoabolishitsrestrictions。Supposing
GermanymadereprisalsagainstEngland，becauseoftheduties
imposedbythelatteronGermancornandtimber，byexcludingfrom
GermanyEnglishmanufacturedgoods，andbythisexclusioncalled
artificiallyintoexistenceamanufacturingpowerofherown；must
Germanythenallowthismanufacturingindustry，createdatimmense
sacrifice，tocometogriefincaseEnglandshouldbeinducedto
reopenherportstoGermancornandtimber？Whatfolly。Itwould
havebeententimesbetterthanthatifGermanyhadsubmitted
quietlytoallmeasuresofrestrictiononthepartofEngland，and
haddiscouragedthegrowthofanymanufacturingpowerofherown
whichmightgrowupnotwithstandingtheEnglishimport
prohibitions，insteadofstimulatingitsgrowth。
Theprincipleofretaliationisreasonableandapplicableonly
ifitcoincideswiththeprincipleoftheindustrialdevelopmentof
thenation，ifitservesasitwereasanassistancetothis
object。
Yes，itisreasonableandbeneficialthatothernationsshould
retaliateagainsttheEnglishimportrestrictionsontheir
agriculturalproducts，byimposingrestrictionsontheimportation
ofmanufacturedgoods，butonlywhenthosenationsarequalifiedto
establishamanufacturingpoweroftheirownandtomaintainitfor
alltimes。
Bythesecondexception，AdamSmithreallyjustifiesnotmerely
thenecessityofprotectingsuchmanufacturesassupplythe
immediaterequirementsofwar，suchas，forinstance，manufactories
ofarmsandpowder，butthewholesystemofprotectionaswe
understandit；forbytheestablishmentinthenationofa
manufacturingpowerofitsown，protectiontonativeindustrytends
totheaugmentationofthenation\'spopulation，ofitsmaterial
wealth，ofitsmachinepower，ofitsindependence，andofall
mentalpowers，and，therefore，ofitsmeansofnationaldefence，in
aninfinitelyhigherdegreethanitcoulddobymerely
manufacturingarmsandpowder。
ThesamemustbesaidofAdamSmith\'sthirdexception。Ifthe
burdenoftaxationtowhichourproductionsaresubjected，affords
ajustgroundforimposingprotectivedutiesOnthelesstaxed
productsofforeigncountries，whyshouldnotalsotheother
disadvantagestowhichourmanufacturingindustryissubjectedin
comparisonwiththatoftheforeigneraffordjustgroundsfor
protectingournativeindustryagainsttheoverwhelmingcompetition
offoreignindustry？
J。B。Sayhasclearlyperceivedthecontradictorycharacterof
thisexception，buttheexceptionsubstitutedbyhimisnobetter；
forinanationqualifiedbynatureandbyitsdegreeofcultureto
establishamanufacturingpowerofitsown，almosteverybranchof
industrymustbecomeremunerativeundercontinuedandpowerful
protection；anditisridiculoustoallowanationmerelyafew
yearsforthetaskofbringingtoperfectiononegreatbranchof
nationalindustryorthewholeindustryofthenation；justasa
shoemaker\'sapprenticeisallowedonlyafewyearstolearn
shoemaking。
Initseternaldeclamationsontheimmenseadvantagesof
absolutefreedomoftrade，andthedisadvantagesofprotection，the
popularschoolisaccustomedtorelyontheexamplesofafew
nations；thatofSwitzerlandisquotedtoprovethatindustrycan
prosperwithoutprotectiveduties，andthatabsolutelibertyof
internationalcommerceformsthesafestbasisofnational
prosperity。ThefateofSpainisquotedtoexhibittoallnations
whichseekaidandpreservationintheprotectivesystem，a
frightfulexampleofitsruinouseffects。ThecaseofEngland，
which，aswehaveshowninaformerchapter，affordssuchan
excellentexampleforimitationtoallnationswhicharecapableof
developingamanufacturingpower，isadducedbythesetheorists
merelytosupporttheirallegationthatcapabilityfor
manufacturingproductionisanaturalgiftexclusivelypeculiarto
certaincountries，likethecapabilitytoproduceburgundywines；
andthatnaturehasbestowedonEngland，aboveallothercountries
oftheearth，thedestinyandtheabilitytodevoteherselfto
manufacturingindustryandtoanextensivecommerce。
Letusnowtaketheseexamplesmorecloselyintoconsideration。
AsforSwitzerland，itmustberemarkedinthefirstplacethat
shedoesnotconstituteanation，atleastnotoneofnormal
magnitudewhichcanberankedasagreatnation，butismerelya
conglomerationofmunicipalities。Possessingnosea-coast，hemmed
inbetweenthreegreatnations，shelacksallinducementtostrive
toobtainanativecommercialmarine，ordirecttradewithtropical
countries；sheneedpaynoregardtotheestablishmentofanaval
power，ortofoundingoracquiringcolonies。Switzerlandlaidthe
foundationofherpresentverymoderatedegreeofprosperityatthe
timewhenshestillbelongedtotheGermanEmpire。Sincethattime，
shehasbeenalmostentirelyfreefrominternalwars，hercapital
hasbeenpermittedtoincreasefromgenerationtogeneration，as
scarcelyanyofitwasrequiredbyhermunicipalgovernmentsfor
dischargingtheirexpenses。Amidthedevastationsoccasionedbythe
despotism，fanaticism，wars，andrevolutions，withwhichEuropewas
perturbedduringthelastcenturies，Switzerlandofferedanasylum
toallwhodesiredtotransfertheircapitalandtalentstoanother
countrythantheirown，andthusacquiredconsiderablewealthfrom
abroad。Germanyhasneveradoptedstrongcommercialrestrictions
againstSwitzerland，andalargepartofthemanufacturedproducts
ofthelatterhasobtainedamarketinGermany。Moreover，the
industryofSwitzerlandwasneveranationalone，onecomprising
theproductionofarticlesofcommonuse，butchieflyanindustry
inarticlesofluxury，theproductsofwhichcouldbeeasily
smuggledintotheneighbouringcountriesortransportedtodistant
partsoftheworld。Furthermore，herterritoryismostfavourably
situatedforintermediatetrade，andinthisrespectisinsome
measureprivileged。Again，theirexcellentopportunityofbecoming
acquaintedwiththelanguages，laws，institutions，and
circumstancesofthethreenationswhichadjoinhermusthavegiven
theSwissimportantadvantagesinintermediatecommerceandin
everyotherrespect。Civilandreligiouslibertyanduniversal
educationhaveevokedintheSwiss，activityandaspiritof
enterprisewhich，inviewofthenarrowlimitsoftheircountry\'s
internalagriculture，andofherinternalresourcesforsupporting
herpopulation，drovetheSwisstoforeigncountries，wherethey
amassedwealth，bymeansofmilitaryservice，bycommerce，by
industriesofeverykind，inordertobringithometotheir
fatherland。Ifundersuchspecialcircumstancestheymanagedto
acquirementalandmaterialresources，inordertodevelopafew
branchesofindustryforproducingarticlesofluxury，ifthese
industriescouldmaintainthemselveswithoutprotectivedutiesby
salestoforeigncountries，itcannotthencebeconcludedthat
greatnationscouldfollowasimilarpolicyunderwhollydifferent
circumstances。InhersmallnationalexpenditureSwitzerland
possessesanadvantagewhichgreatnationscouldonlyattainif
they，likeSwitzerland，resolvedthemselvesintomere
municipalitiesandthusexposedtheirnationalitytoforeign
attacks。
ThatSpainactedfoolishlyinpreventingtheexportationofthe
preciousmetals，especiallysincesheherselfproducedsuchalarge
excessofthesearticles，mustbeadmittedbyeveryreasonable
person。Itisamistake，however，toattributethedeclineofthe
industryandnationalwell-beingofSpaintoherrestrictions
againsttheimportationofmanufacturedgoods。IfSpainhadnot
expelledtheMoorsandJews，andhadneverhadanInquisition；if
CharlesVhadpermittedreligiouslibertyinSpain；ifthepriests
andmonkshadbeenchangedintoteachersofthepeople，andtheir
immensepropertysecularised，oratleastreducedtowhatwas
actuallynecessaryfortheirmaintenance；if，inconsequenceof
thesemeasures，civillibertyhadgainedafirmfooting，thefeudal
nobilityhadbeenreformedandthemonarchylimited；if，inaword，
Spainhadpoliticallydevelopedherselfinconsequenceofa
Reformation，asEnglanddid，andifthesamespirithadextendedto
hercolonies，aprohibitiveandprotectivepolicywouldhavehad
similareffectsinSpainasithadinEngland，andthisallthe
morebecauseatthetimeofCharlesVtheSpaniardsweremore
advancedthantheEnglishandFrenchineveryrespect，andthe
Netherlandsonlyofallcountriesoccupiedamoreadvanced
positionthanSpain，whoseindustrialandcommercialspiritmight
havebeentransferredtoSpainbymeansoftheprotectivepolicy，
providedthattheinstitutionsandconditionsofSpainweresuchas
wouldhaveinvitedforeigntalentsandcapitaltohershores，
insteadofdrivingherownnativetalentsandcapitalintoforeign
countries。
TowhatcausesEnglandoweshermanufacturingandcommercial
supremacy，wehaveshowninourfifthchapter。
Itisespeciallyowingtohercivil，mental，andreligious
liberty，tothenatureandexcellenceofherpolitical
institutions，thatthecommercialpolicyofEnglandhasbeen
enabledtomakethemostofthenaturalrichesofthecountry，and
fullytodeveloptheproductivepowersofthenation。Butwhowould
denythatothernationsarecapableofraisingthemselvestothe
samedegreeofliberty？Whowouldventuretomaintainthatnature
hasdeniedtoothernationsthemeanswhicharerequisitefor
manufacturingindustry？
Inthelatterrespectthegreatnaturalwealthincoalandiron
whichEnglandpossesseshasoftenbeenadducedasareasonwhythe
Englisharespeciallydestinedtobeamanufacturingnation。Itis
truethatinthisrespectEnglandisgreatlyfavouredbynature；
butagainstthisitmaybestatedthateveninrespectofthese
naturalproducts，naturehasnottreatedothercountriesmerely
likeastepmother；forthemostpartthewantofgoodtransport
facilitiesisthechiefobstacletothefullutilisationofthese
productsbyothernations；thatothercountriespossessenormous
unemployedwaterpower，whichischeaperthansteampower；that
whereitisnecessarytheyareabletocounterbalancethewantof
coalbytheuseofotherfuels；thatmanyothercountriespossess
inexhaustiblemeansfortheproductionofiron，andthattheyare
alsoabletoprocuretheserawmaterialsfromabroadbycommercial
exchange。
Inconclusion，wemustnotomitheretomakementionof
commercialtreatiesbasedonmutualconcessionsofduties。The
schoolobjectstotheseconventionsasunnecessaryanddetrimental，
whereastheyappeartousasthemosteffectivemeansofgradually
diminishingtherespectiverestrictionsontrade，andofleading
thenationsoftheworldgraduallytofreedomofinternational
intercourse。Ofcourse，thespecimensofsuchtreatieswhichthe
worldhashithertoseen，arenotveryencouragingforimitation。We
haveshowninformerchapterswhatinjuriouseffectstheMethuen
TreatyhasproducedinPortugal，andtheEdenTreatyhasproduced
inFrance。Itisontheseinjuriouseffectsofreciprocal
alleviationofduties，thattheobjectionsoftheschoolto
commercialtreatiesappearprincipallytobefounded。Itsprinciple
ofabsolutecommerciallibertyhasevidentlyexperienceda
practicalcontradictioninthesecases，inasmuchas，accordingto
thatprinciple，thosetreatiesoughttohaveoperatedbeneficially
tobothcontractingnations，butnottotheruinoftheone，andto
theimmenseadvantageoftheother。If，however，weinvestigatethe
causeofthisdisproportionateeffect，wefindthatPortugaland
France，inconsequenceofthoseconventions，abandonedinfavourof
Englandtheprogresstheyhadalreadymadeinmanufacturing
industry，aswellasthatwhichtheycouldexpecttomakeinitin
thefuture，withtheexpectationofincreasingbythatmeanstheir
exportationofnaturalproductstoEngland；that，accordingly，both
thosenationshavedeclined，inconsequenceofthetreatiesthus
concluded，fromahighertoalowerstandpointofindustrial
development。Fromthis，however，itmerelyfollowsthatanation
actsfoolishlyifitsacrificesitsmanufacturingpowertoforeign
competitionbycommercialtreaties，andtherebybindsitselfto
remainforallfuturetimedependentonthelowstandpointof
merelyagriculturalindustry；butitdoesnotintheleastfollow
fromthis，thatthosetreatiesarealsodetrimentaland
objectionablewherebythereciprocalexchangeofagricultural
productsandrawmaterials，orthereciprocalexchangeof
manufacturedproducts，ispromoted。
Wehavepreviouslyexplainedthatfreetradeinagricultural
productsandrawmaterialsisusefultoallnationsatallstages
oftheirindustrialdevelopment；fromthisitfollowsthatevery
commercialtreatywhichmitigatesorremovesprohibitionsand
restrictionsonfreedomoftradeinsucharticlesmusthavea
beneficialeffectonbothcontractingnations，ase。g。aconvention
betweenFranceandEnglandwherebythemutualexchangeofwinesand
brandiesforpig-ironandcoal，oratreatybetweenFranceand
Germanywherebythemutualexchangeofwine，oil，anddriedfruit，
forcorn，wool，andcattle，werepromoted。
Accordingtoourformerdeductions，protectionisonly
beneficialtotheprosperityofthenationsofarasitcorresponds
withthedegreeofthenation\'sindustrialdevelopment。Every
exaggerationofprotectionisdetrimental；nationscanonlyobtain
aperfectmanufacturingpowerbydegrees。Onthataccountalso，two
nationswhichstandatdifferentstagesofindustrialcultivation，
canwithmutualbenefitmakereciprocalconcessionsbytreatyin
respecttotheexchangeoftheirvariousmanufacturingproducts。
Thelessadvancednationcan，whileitisnotyetabletoproduce
foritselfwithprofitfinermanufacturedgoods，suchasfine
cottonandsilkfabrics，neverthelesssupplythefurtheradvanced
nationwithaportionofitsrequirementsofcoarsermanufactured
goods。
Suchtreatiesmightbestillmoreallowableandbeneficial
betweennationswhichstandataboutthesamedegreeofindustrial
development，betweenwhich，therefore，competitionisnot
overwhelming，destructive，orrepressive，nortendingtogivea
monopolyofeverythingtooneside，butmerelyacts，ascompetition
intheinlandtradedoes，asanincentivetomutualemulation，
perfection，andcheapeningofproduction。Thisisthecasewith
mostoftheContinentalnations。France，Austria，andtheGerman
Zollvereinmight，forinstance，anticipateonlyveryprosperous
effectsfrommoderatelylowreciprocalprotectiveduties。Also，
betweenthesecountriesandRussiamutualconcessionscouldbemade
totheadvantageofallsides。Whattheyallhavetofearatthis
timeissolelythepreponderatingcompetitionofEngland。
Thusitappearsalsofromthispointofview，thatthe
supremacyofthatislandinmanufactures，intrade，innavigation，
andinhercolonialempire，constitutesthegreatestexisting
impedimenttoallnationsdrawingnearertooneanother；although
itmustbeatthesametimeadmittedthatEngland，instrivingfor
thissupremacy，hasimmeasurablyincreased，andisstilldaily
increasing，theproductivepoweroftheentirehumanrace。
EndThirdBook
TheSystems
Chapter28
TheNationalEconomistsofItaly
Italyhasbeentheforerunnerofallmodernnations，inthe
theoryaswellasinthepracticeofPoliticalEconomy。Count
Pechiohasgivenusalaboriouslywrittensketchofthatbranchof
Italianliterature；onlyhisbookisopentotheobservation，that
hehasclungtooslavishlytothepopulartheory，andhasnotduly
setforththefundamentalcausesofthedeclineofItaly\'snational
industry——theabsenceofnationalunity，surroundedasshewasby
greatnationalitiesunitedunderhereditarymonarchies；further，
priestlyruleandthedownfallofmunicipalfreedomintheItalian
republicsandcities。Ifhehadmoredeeplyinvestigatedthese
causes，hecouldnothavefailedtoapprehendthespecialtendency
ofthe\'Prince\'ofMacchiavelli，andhewouldnothavepassedthat
authorbywithmerelyanincidentalreferencetohim。1*
ThrougharemarkofPechio，thatMacchiavelliinaletterto
hisfriendGuicciardiniin1525hadproposedaunionofallthe
PowersofItalyagainsttheforeigner，andthatasthatletterwas
communicatedtoPopeClementVIIhehadthusexercisedconsiderable
influenceintheformationofthe\'HolyLeague\'in1526，wewere
ledtoimaginethatthesametendencymustunderliethe\'Prince。\'
Assoonaswereferredtothatwork，wefoundouranticipation
confirmedatfirstsight。Theobjectofthe\'Prince\'writtenin
1513wasclearlytoimpresstheMediciwiththeidea，thatthey
werecalledupontounitethewholeofItalyunderonesovereignty；
andtoindicatetothemthemeanswherebythatendmightbe
attained。Thetitleandformofthatbook，asthoughitsgeneral
intentionwastotreatofthenatureofabsolutegovernment，were
undoubtedlyselectedfrommotivesofprudence。Itonlyalludes
incidentallytothevarioushereditaryPrincesandtheir
governments。EverywheretheauthorhasinviewonlyoneItalian
usurper。Principalitiesmustbeoverthrown，dynastiesdestroyed，
thefeudalaristocracybroughtundersubjection，libertyinthe
republicsrootedout。Thevirtuesofheavenandtheartificesof
hell，wisdomandaudacity，valourandtreachery，goodfortuneand
chance，mustallbecalledforth，madeuseof，andtriedbythe
usurper，inordertofoundanItalianempire。Andtothisenda
secretisconfidedtohim，thepowerofwhichhasbeenthoroughly
mademanifestthreehundredyearslater——anationalarmymustbe
created，towhomvictorymustbeassuredbynewdisciplineandby
newlyinventedarmsandmanoeuvres。2*
Ifthegeneralcharacterofhisargumentsleavesroomfordoubt
astothespecialbiasofthisauthor，suchdoubtwillberemoved
byhislastchapter。Thereheplainlydeclaresthatforeign
invasionsandinternaldivisionsarethefundamentalcausesofall
theevilsprevailinginItaly；thattheHouseoftheMedici，under
whosedominionwerefortunatelyTuscanyandtheStatesofthe
Church，werecalledbyProvidenceitselftoaccomplishthatgreat
work；thatthepresentwasthebesttimeandopportunityfor
introducinganewr間ime，thatnowanewMosesmustariseto
deliverhispeoplefromthebondageofEgypt，thatnothing
conferredonaPrincemoredistinctionandfamethangreat
enterprises。3*
Thatanyonemayreadbetweenthelinesthetendencyofthat
bookintheotherchaptersalso，maybebestseenbythemannerin
whichtheauthorinhisninthchapterspeaksoftheStatesofthe
Church。Itismerelyanironywhenhesays，\'Thepriestspossessed
landsbutdidnotgovernthem，theyheldlordshipsbutdidnot
defendthem；thesehappiestofallterritoriesweredirectly
protectedbyGod\'sProvidence，itwouldbepresumptiontouttera
criticismuponthem。\'Heclearlybythislanguagemeantittobe
understoodwithoutsayingsoinplainwords：Thiscountrypresents
nospecialimpedimenttoaboldconqueror，especiallytoaMedici
whoserelativeoccupiesthePapalchair。
ButhowcanweexplaintheadvicewhichMacchiavelligivesto
hisproposedusurperrespectingtherepublics，consideringhisown
republicansentiments？Andmustitbesolelyattributedtoadesign
onhisparttoingratiatehimselfwiththePrincetowhomhisbook
isdedicated，andthustogainprivateadvantages，whenhe，the
zealousrepublican，thegreatthinkerandliterarygenius，the
patrioticmartyr，advisedthefutureusurperutterlytodestroythe
freedomoftheItalianrepublics？Itcannotbedeniedthat
Macchiavelli，atthetimewhenhewrotethe\'Prince，\'was
languishinginpoverty，thatheregardedthefuturewithanxiety，
thatheearnestlylongedandhopedforemploymentandsupportfrom
theMedici。AletterwhichhewroteonOctober10，1513，fromhis
poordwellinginthecountrytohisfriendBettori，atFlorence，
placesthatbeyonddoubt。4*
Nevertheless，therearestrongreasonsforbelievingthatheby
thisbookdidnotmerelydesigntoflattertheMedici，andtogain
privateadvantage，buttopromotetherealisationofaplanof
usurpation；aplanwhichwasnotopposedtohis
republican-patrioticideas，thoughaccordingtothemoralideasof
ourdayitmustbecondemnedasreprehensibleandwicked。His
writingsandhisdeedsintheserviceoftheStateprovethat
Macchiavelliwasthoroughlyacquaintedwiththehistoryofall
periods，andwiththepoliticalconditionofallStates。Butaneye
whichcouldseesofarbackwards，andsoclearlywhatwasaround
it，mustalsohavebeenabletoseefarintothefuture。Aspirit
whichevenatthebeginningofthesixteenthcenturyrecognisedthe
advantageofthenationalarmingofItaly，mustalsohaveseenthat
thetimeforsmallrepublicswaspast，thattheperiodforgreat
monarchieshadarrived，thatnationalitycould，underthe
circumstancesthenexisting，bewononlybymeansofusurpation，
andmaintainedonlybydespotism，thattheoligarchiesastheythen
existedintheItalianrepublicsconstitutedthegreatestobstacle
tonationalunity，thatconsequentlytheymustbedestroyed，and
thatnationalfreedomwouldonedaygrowoutofnationalunity。
Macchiavellievidentlydesiredtocastawaytheworn-outlibertyof
afewcitiesasapreytodespotism，hopingbyitsaidtoacquire
nationalunion，andthustoinsuretofuturegenerationsfreedomon
agreaterandanoblerscale。
TheearliestworkwrittenspeciallyonPoliticalEconomyin
Italy，isthatofAntonioSerraofNaplesin1613，onthemeans
ofproviding\'theKingdoms\'withanabundanceofgoldandsilver。
J。B。SayandM\'Cullochappeartohaveseenandreadonlythe
titleofthisbook：theyeachpassitoverwiththeremarkthatit
merelytreatsofmoney；anditstitlecertainlyshowsthatthe
authorlabouredundertheerrorofconsideringthepreciousmetals
asthesoleconstituentsofwealth。Iftheyhadreadfartherinto
it，anddulyconsidereditscontents，theymightperhapshave
derivedfromitsomewholesomelessons。AntonioSerra，althoughhe
fellintotheerrorofconsideringanabundanceofgoldandsilver
asthetokensofwealth，neverthelessexpresseshimselftolerably
clearlyonthecausesofit。
Hecertainlyputsmininginthefirstplaceasthedirect
sourceofthepreciousmetals；buthetreatsveryjustlyofthe
indirectmeansofacquiringthem。Agriculture，manufactures，
commerce，andnavigation，are，accordingtohim，thechiefsources
ofnationalwealth。Thefertilityofthesoilisasuresourceof
prosperity；manufacturesareastillmorefruitfulsource，for
severalreasons，butchieflybecausetheyconstitutethefoundation
ofanextensivecommerce。Theproductivenessofthesesources
dependsonthecharacteristicqualificationsofthepeopleviz。
whethertheyareindustrious，active，enterprising，thrifty，andso
forth，alsoonthenatureandcircumstancesofthelocality
whether，forinstance，acityiswellsituatedformaritime
trade。Butaboveallthesecauses，Serrarankstheformof
government，publicorder，municipalliberty，politicalguarantees，
thestabilityofthelaws。\'Nocountrycanprosper，\'sayshe，\'
whereeachsuccessiverulerenactsnewlaws，hencetheStatesof
theHolyFathercannotbesoprosperousasthosecountrieswhose
governmentandlegislationaremorestable。Incontrastwiththe
former，onemayobserveinVenicetheeffectwhichasystemof
orderandlegislation，whichhascontinuedforcenturies，hason
thepublicwelfare。\'Thisisthequintessenceofasystemof
PoliticalEconomywhichinthemain，notwithstandingthatits
objectappearstobeonlytheacquisitionofthepreciousmetals，
isremarkableforitssoundandnaturaldoctrine。TheworkofJ。B。
Say，althoughitcomprisesideasandmatteronPoliticalEconomyof
whichAntonioSerrahadinhisdaynoforeknowledge，isfar
inferiortoSerra\'sonthemainpoints，andespeciallyasrespects
adueestimateoftheeffectofpoliticalcircumstancesonthe
wealthofnations。HadSaystudiedSerrainsteadoflayinghiswork
aside，hecouldhardlyhavemaintainedinthefirstpageofhis
systemofPoliticalEconomythat\'theconstitutionofcountries
cannotbetakenintoaccountinrespecttoPoliticalEconomy；that
thepeoplehavebecomerich，andbecomepoor，undereveryformof
government；thattheonlyimportantpointis，thatits
administrationshouldbegood。\'
Wearefarfromdesiringtomaintaintheabsolute
preferablenessofanyoneformofgovernmentcomparedwithothers。
OneneedonlycastaglanceattheSouthernStatesofAmerica，to
beconvincedthatdemocraticformsofgovernmentamongpeoplewho
arenotripeforthemcanbecomethecauseofdecided
retrogression。inpublicprosperity。OneneedonlylookatRussia，
toperceivethatpeoplewhoareyetinalowdegreeofcivilisation
arecapableofmakingmostremarkableprogressintheirnational
well-beingunderanabsolutemonarchy。Butthatinnowayproves
thatpeoplehavebecomerich，i。e。haveattainedthehighestdegree
ofeconomicalwell-being，underallformsofgovernment。History
ratherteachesusthatsuchadegreeofpublicwell-being，namely，
aflourishingstateofmanufacturesandcommerce，hasbeenattained
inthosecountriesonlywhosepoliticalconstitutionwhetherit
bearthenameofdemocraticoraristocraticrepublic，orlimited
monarchyhassecuredtotheirinhabitantsahighdegreeof
personallibertyandofsecurityofpropertywhoseadministration
hasguaranteedtothemahighdegreeofactivityandpower
successfullytostrivefortheattainmentoftheircommonobjects，
andofsteadycontinuityinthoseendeavours。Forinastateof
highlyadvancedcivilisation，itisnotsoimportantthatthe
administrationshouldbegoodforacertainperiod，butthatit
shouldbecontinuouslyandconformablygood；thatthenext
administrationshouldnotdestroythegoodworkoftheformerone；
thatathirtyyears\'administrationofColbertshouldnotbe
followedbyaRevocationoftheEdictofNantes，thatfor
successivecenturiesoneshouldfollowoneandthesamesystem，and
striveafteroneandthesameobject。Onlyunderthosepolitical
constitutionsinwhichthenationalinterestsarerepresentedand
notunderanabsoluteGovernment，underwhichtheState
administrationisnecessarilyalwaysmodifiedaccordingtothe
individualwilloftherulercansuchasteadinessandconsistency
ofadministrationbesecured，asAntonioSerrarightlyobserves。On
theotherhand，thereareundoubtedlycertaingradesof
civilisationinwhichtheadministrationbyabsolutepowermay
provefarmorefavourabletotheeconomicalandmentalprogressof
thenationandgenerallyissothanthatofalimitedmonarchy。
Werefertoperiodsofslaveryandserfdom，ofbarbarismand
superstition，ofnationaldisunity，andofcasteprivileges。For，
undersuchcircumstances，theconstitutiontendstosecurenotonly
theinterestsofthenation，butalsothecontinuanceofthe
prevailingevils，whereasitistheinterestandthenatureof
absolutegovernmenttodestroythelatter，anditisalsopossible
thatanabsoluterulermayariseofdistinguishedpowerand
sagacity，whomaycausethenationtomakeadvancesforcenturies，
andsecuretoitsnationalityexistenceandprogressforallfuture
time。
Itisconsequentlyonlyaconditionalcommonplacetruthonthe
faithofwhichJ。B。Saywouldexcludepoliticsfromhisdoctrine。
Ineverycaseitisthechiefdesideratumthattheadministration
shouldbegood；buttheefficiencyoftheadministrationdependson
theformofgovernment，andthatformofgovernmentisclearlythe
bestwhichmostpromotesthemoralandmaterialwelfareandthe
futureprogressofanygivennation。Nationshavemadesome
progressunderallformsofgovernment。Butahighdegreeof
economicaldevelopmenthasonlybeenattainedinthosenations
whoseformofgovernmenthasbeensuchastosecuretothemahigh
degreeoffreedomandpower，ofsteadinessoflawsandofpolicy，
andefficientinstitutions。
AntonioSerraseesthenatureofthingsasitactuallyexists，
andnotthroughthespectaclesofprevioussystems，orofsomeone
principlewhichheisdeterminedtoadvocateandcarryout。He
drawsacomparisonbetweentheconditionofthevariousStatesof
Italy，andperceivesthatthegreatestdegreeofwealthistobe
foundwherethereisextensivecommerce；thatextensivecommerce
existswherethereisawell-developedmanufacturingpower，but
thatthelatteristobefoundwherethereismunicipalfreedom。
Theopinionsofbeccariaarepervadedbythefalsedoctrinesof
thephysiocraticschool。Thatauthorindeedeitherdiscovered，or
derivedfromAristotle，theprincipleofthedivisionoflabour，
eitherbefore，orcontemporaneouslywith，AdamSmith；he，however，
carriesitfartherthanAdamSmith，inasmuchashenotonlyapplies
ittothedivisionoftheworkinasinglemanufactory，butshows
thatthepublicwelfareispromotedbythedivisionofoccupation
amongthemembersofthecommunity。Atthesametimehedoesnot
hesitate，withthephysiocrats，toassertthatmanufacturesare
non-productive。
Theviewsofthegreatphilosophicaljurist，Filangieri，are
aboutthenarrowestofall。Imbuedwithfalsecosmopolitanism，he
considersthatEngland，byherprotectivepolicy，hasmerelygiven
apremiumtocontrabandtrade，andweakenedherowncommerce。
Verri，asapracticalstatesman，couldnoterrsowidelyas
that。Headmitsthenecessityofprotectiontonativeindustry
againstforeigncompetition；butdidnotorcouldnotseethatsuch
apolicyisconditionalonthegreatnessandunityofthe
nationality。
NOTES：
1。DuringajourneyinGermanywhichtheauthorundertookwhile
thisworkwasinthepress，helearnedforthefirsttimethat
DoctorsVonRankeandGervinushavecriticisedMacchiavelli\'s
Princefromthesamepointofviewashimself。
2。EverythingthatMacchiavellihaswritten，whetherbeforeor
afterthepublicationofthePrince，indicatesthathewas
revolvinginhismindplansofthiskind。Howotherwisecanitbe
explained，whyhe，acivilian，amanofletters，anambassadorand
Stateofficial，whohadneverbornearms，shouldhaveoccupied
himselfsomuchinstudyingtheartofwar，andthatheshouldhave
beenabletowriteaworkuponitwhichexcitedthewonderofthe
mostdistinguishedsoldiersofhistime？
3。FredericktheGreatinhisAnti-MacchiaveltreatsofthePrince
assimplyascientifictreatiseontherightsanddutiesofprinces
generally。Hereitisremarkablethathe，whilecontradicting
Macchiavellichapterbychapter，nevermentionsthelastor
twenty-sixthchapter，whichbearstheheading，\'ASummonstofree
ItalyfromtheForeigners，\'andinsteadofitinsertsachapter
whichisnotcontainedinMacchiavelli\'sworkwiththeheading，\'On
thedifferentkindsofNegotiations，andOnthejustReasonsfora
DeclarationofWar。\'
4。Firstpublishedinthework，Pensieriintornoalloscopodi
NicoloMacchiavellinellibro\'IlPrincipe。\'Milano，1810。
Chapter29
TheIndustrialSystemFalselyTermedbytheSchool\'TheMercantile
System\'
Attheperiodwhengreatnationalitiesarose，owingtothe
unionofentirepeoplesbroughtaboutbyhereditarymonarchyandby
thecentralisationofpublicpower，commerceandnavigation，and
hencewealthandnavalpower，existedforthemostpartaswehave
beforeshowninrepublicsofcities，orinleaguesofsuch
republics。Themore，however，thattheinstitutionsofthesegreat
nationalitiesbecamedeveloped，themoreevidentbecamethe
necessityofestablishingontheirownterritoriesthesemain
sourcesofpowerandofwealth。
Undertheconvictionthattheycouldonlytakerootand
flourishundermunicipalliberty，theroyalpowerfavoured
municipalfreedomandtheestablishmentofguilds，bothwhichit
regardedascounterpoisesagainstthefeudalaristocracy，whowere
continuallystrivingforindependence，andalwayshostileto
nationalunity。Butthisexpedientappearedinsufficient，forone
reason，becausethetotaloftheadvantageswhichindividuals
enjoyedinthefreecitiesandrepublicswasmuchgreaterthanthe
totalofthoseadvantageswhichthemonarchicalgovernmentswere
abletooffer，orchosetooffer，intheirownmunicipalcities；in
thesecondplace，becauseitisverydifficult，indeedimpossible，
foracountrywhichhasalwaysbeenprincipallyengagedin
agriculture，successfullytodisplaceinfreecompetitionthose
countrieswhichforcenturieshaveacquiredsupremacyin
manufactures，commerce，andnavigation；lastly，becauseinthe
greatmonarchiesthefeudalinstitutionsactedashindrancestothe
developmentoftheirinternalagriculture，andconsequentlytothe
growthoftheirinternalmanufactures。Hence，thenatureofthings
ledthegreatmonarchiestoadoptsuchpoliticalmeasuresastended
torestricttheimportationofforeignmanufacturedgoods，and
foreigncommerceandnavigation，andtofavourtheprogressof
theirownmanufactures，andtheirowncommerceandnavigation。
Insteadofraisingrevenueastheyhadpreviouslydoneby
dutiesontherawmaterialswhichtheyexported，theywere
henceforthprincipallyleviedontheimportedmanufacturedgoods。
Thebenefitsofferedbythelatterpolicystimulatedthemerchants，
seamen，andmanufacturersofmorehighlycivilisedcitiesand
countriestoimmigratewiththeircapitalintothegreat
monarchies，andstimulatedthespiritofenterpriseofthesubjects
ofthelatter。Thegrowthofthenationalindustrywasfollowedby
thegrowthofthenationalfreedom。Thefeudalaristocracyfoundit
necessaryintheirowninteresttomakeconcessionstothe
industrialandcommercialpopulation，aswellastothoseengaged
inagriculture；henceresultedprogressinagricultureaswellas
innativeindustryandnativecommerce，whichhadareciprocally
favourableinfluenceonthosetwootherfactorsofnationalwealth。
WehaveshownhowEngland，inconsequenceofthissystem，and
favouredbytheReformation，madeforwardprogressfromcenturyto
centuryinthedevelopmentofherproductivepower，freedom，and
might。WehavestatedhowinFrancethissystemwasfollowedfor
sometimewithsuccess，buthowitcametogriefthere，becausethe
institutionsoffeudalism，ofthepriesthood，andoftheabsolute
monarchy，hadnotyetbeenreformed。Wehavealsoshownhowthe
Polishnationalitysuccumbed，becausetheelectivesystemof
monarchydidnotpossessinfluenceandsteadinessenoughtobring
intoexistencepowerfulmunicipalinstitutions，andtoreformthe
feudalaristocracy。Asaresultofthispolicy，therewascreated
intheplaceofthecommercialandmanufacturingcity，andofthe
agriculturalprovincewhichchieflyexistedoutsidethepolitical
influenceofthatcity，theagricultural-manufacturing-commercial
State；anationcompleteinitself，anharmoniousandcompact
whole，inwhich，ontheonehand，theformerlyprevailing
differencesbetweenmonarchy，feudalaristocracy，andcitizenhood
gaveplacetooneharmoniousaccord，and，ontheotherhand，the
closestunionandreciprocallybeneficialactiontookplacebetween
agriculture，manufactures，andcommerce。Thiswasanimmeasurably
moreperfectcommonwealththanthepreviouslyexistingone，because
themanufacturingpower，whichinthemunicipalrepublichadbeen
confinedtoanarrowrange，nowcouldextenditselfoverawider
sphere；becausenowallexistingresourceswereplacedatits
disposition；becausethedivisionoflabourandtheconfederation
oftheproductivepowersinthedifferentbranchesofmanufactures，
aswellasinagriculture，weremadeeffectualinaninfinitely
greaterdegree；becausethenumerousclassesofagriculturists
becamepoliticallyandcommerciallyunitedwiththemanufacturers
andmerchants，andhenceperpetualconcordwasmaintainedbetween
them；thereciprocalactionbetweenmanufacturingandcommercial
powerwasperpetuatedandsecuredforever；andfinally，the
agriculturistsweremadepartakersofalltheadvantagesof
civilisationarisingfrommanufacturesandcommerce。The
agricultural-manufacturing-commercialStateislikeacitywhich
spreadsoverawholekingdom，oracountrydistrictraiseduptobe
acity。Inthesameproportioninwhichmaterialproductionwas
promotedbythisunion，thementalpowersmustnecessarilyhave
beendeveloped，thepoliticalinstitutionsperfected，theState
revenues，thenationalmilitarypower，andthepopulation，
increased。Henceweseeatthisday，thatnationwhichfirstofall
perfectlydevelopedtheagricultural，manufacturing，andcommercial
State，standingintheserespectsattheheadofallothernations。
TheIndustrialSystemwasnotdefinedinwriting，norwasita
theorydevisedbyauthors，itwassimplyacteduponinpractice，
untilthetimeofStewart，whodeduceditforthemostpartfrom
theactualEnglishpractice，justasAntonioSerradeducedhis
systemfromaconsiderationofthecircumstancesofVenice。
Stewart\'streatise，however，cannotbeconsideredascientific
work。Thegreaterpartofitisdevotedtomoney，banking，the
papercirculation——commercialcrises——thebalanceoftrade，and
thedoctrineofpopulation：——discussionsfromwhicheveninour
daymuchmaybelearned，butwhicharecarriedoninavery
illogicalandunintelligibleway，andinwhichoneandthesame
ideaistentimesrepeated。Theotherbranchesofpoliticaleconomy
areeithersuperficiallytreated，orpassedoveraltogether。
Neithertheproductivepowers，northeelementsofprice，are
thoroughlydiscussed。Everywheretheauthorappearstohaveinview
onlytheexperiencesandcircumstancesofEngland。Inaword，his
bookpossessesallthemeritsanddemeritsofthepracticeof
England，andofthatofColbert。ThemeritsoftheIndustrial
Systemascomparedwithlaterones，are：
1。Thatitclearlyrecognisesthevalueofnativemanufactures
andtheirinfluenceonnativeagriculture，commerce，and
navigation，andonthecivilisationandpowerofthenation；and
expressesitselfunreservedlytothateffect。
2。Thatitindicateswhatisingeneraltherightmeanswhereby
anationwhichisqualifiedforestablishingamanufacturingpower，
mayattainanationalindustry。1*
3。Thatitisbasedontheideaof\'thenation，\'andregarding
thenationsasindividualentities，everywheretakesintoaccount
thenationalinterestsandnationalconditions。
Ontheotherhand，thissystemischargeablewiththefollowing
chieffaults：
1。Thatitdoesnotgenerallyrecognisethefundamental
principleoftheindustrialdevelopmentofthenationandthe
conditionsunderwhichitcanbebroughtintooperation。
2。Thatitconsequentlywouldmisleadpeopleswholiveina
climateunsuitedformanufacturing，andsmallanduncivilised
statesandpeoples，intotheadoptionoftheprotectivesystem。
3。Thatitalwaysseekstoapplyprotectiontoagriculture，and
especiallytotheproductionofrawmaterials——totheinjuryof
agriculture——whereasagriculturalindustryissufficiently
protectedagainstforeigncompetitionbythenatureofthings。
4。Thatitseekstofavourmanufacturesunjustlybyimposing
restrictionsontheexportofrawmaterials，tothedetrimentof
agriculture。
5。Thatitdoesnotteachthenationwhichhasalreadyattained
manufacturingandcommercialsupremacytopreserveherown
manufacturersandmerchantsfromindolence，bypermittingfree
competitioninherownmarkets。
6。Thatintheexclusivepursuitofthepoliticalobject，it
ignoresthecosmopoliticalrelationsofallnations，theobjectsof
thewholehumanrace；andhencewouldmisleadgovernmentsintoa
prohibitorysystem，whereaprotectiveonewouldamplysuffice，or
imposingdutieswhicharepracticallyprohibitory，whenmoderate
protectivedutieswouldbetteranswerthepurpose。
Finally。
7。Thatchieflyowingtohisutterlyignoringtheprincipleof
cosmopolitanism，itdoesnotrecognisethefutureunionofall
nations，theestablishmentofperpetualpeace，andofuniversal
freedomoftrade，asthegoaltowardswhichallnationshaveto
strive，andmoreandmoretoapproach。
Thesubsequentschoolshave，however，falselyreproachedthis
systemforconsideringthepreciousmetalsasthesoleconstituents
ofwealth，whereastheyaremerelymerchandiselikeallother
articlesofvalue；andthathenceitwouldfollowthatweoughtto
sellasmuchaspossibletoothernationsandtobuyfromthemas
littleaspossible。
Asrespectstheformerobjection，itcannotbetrulyallegedof
eitherColbert\'sadministrationorofthatoftheEnglishsince
GeorgeI。thattheyhaveattachedanunreasonabledegreeof
importancetotheimportationofthepreciousmetals。
Toraisetheirownnativemanufactures，theirownnavigation，
theirforeigntrade，wastheaimoftheircommercialpolicy；which
indeedwaschargeablewithmanymistakes，butwhichonthewhole
producedimportantresults。WehaveobservedthatsincetheMethuen
Treaty1703theEnglishhaveannuallyexportedgreatquantities
ofthepreciousmetalstotheEastIndies，withoutconsidering
theseexportsasprejudicial。
TheMinistersofGeorgeIwhentheyprohibitedin1721the
importationofthecottonandsilkfabricsofIndiadidnotassign
asareasonforthatmeasurethatanationoughttosellasmuchas
possibletotheforeigner，andbuyaslittleaspossiblefromhim；
thatabsurdideawasgraftedontotheindustrialsystembya
subsequentschool；whattheyassertedwas，thatitisevidentthat
anationcanonlyattaintowealthandpowerbytheexportofits
ownmanufacturedgoods，andbytheimportfromabroadofraw
materialsandthenecessariesoflife。Englandhasfollowedthis
maximofStatepolicytothepresentday，andbyfollowingithas
becomerichandmighty；thismaximistheonlytrueonefora
nationwhichhasbeenlongcivilised，andwhichhasalreadybrought
itsownagriculturetoahighdegreeofdevelopment。
NOTES：
1。Stewartsaysbook1。chapterxxix。：\'Inordertopromote
industry，anationmustactaswellaspermit，andprotect。Could
everthewoollenmanufacturehavebeenintroducedintoFrancefrom
theconsiderationofthegreatadvantagewhichEnglandhaddrawn
fromit。ifthekinghadnotundertakenthesupportofitby
grantingmanyprivilegestotheundertakers，andbylayingstrict
prohibitionsonallforeigncloths？Isthereanyotherwayof
establishinganewmanufactureanywhere？\'
Chapter30
ThePhysiocraticorAgriculturalSystem
HadthegreatenterpriseofColbertbeenpermittedtosucceed——
hadnottheRevocationoftheEdictofNantes，theloveof
splendourandfalseambitionofLouisXIV，andthedebaucheryand
extravaganceofhissuccessors，nippedinthebudtheseedswhich
Colberthadsown——ifconsequentlyawealthymanufacturingand
commercialinteresthadariseninFrance，ifbygoodfortunethe
enormouspropertiesoftheFrenchclergyhadbeengivenovertothe
public，iftheseeventshadresultedintheformationofapowerful
lowerhouseofParliament，bywhoseinfluencethefeudal
aristocracyhadbeenreformed——thephysiocraticsystemwould
hardlyhaveevercometolight。Thatsystemwasevidentlydeduced
fromthethenexistingcircumstancesofFrance，andwasonly
applicabletothosecircumstances。
Attheperiodofitsintroductionthegreaterpartofthe
landedpropertyinFrancewasinthehandsoftheclergyandthe
nobilityItwascultivatedbyapeasantrylanguishingunderastate
ofserfdomandpersonaloppression，whoweresunkinsuperstition，
ignorance，indolence，andpovertyTheownersoftheland，who
constituteditsproductiveinstruments，weredevotedtofrivolous
pursuits，andhadneithermindfor，norinterestin，agriculture。
Theactualcultivatorshadneitherthementalnormaterialmeans
foragriculturalimprovements。Theoppressionoffeudalismon
agriculturalproductionwasincreasedbytheinsatiabledemands
madebythemonarchyontheproducers，whichweremademore
intolerablebythefreedomfromtaxationenjoyedbytheclergyand
nobility。Undersuchcircumstancesitwasimpossiblethatthemost
importantbranchesoftradecouldsucceed，thosenamelywhich
dependontheproductivenessofnativeagriculture，andthe
consumptionofthegreatmassesofthepeople；thoseonlycould
managetothrivewhichproducedarticlesofluxuryfortheuseof
theprivilegedclasses。Theforeigntradewasrestrictedbythe
inabilityofthematerialproducerstoconsumeanyconsiderable
quantityoftheproduceoftropicalcountries，andtopayforthem
bytheirownsurplusproduce；theinlandtradewasoppressedby
provincialcustomsduties。
Undersuchcircumstances，nothingcouldbemorenaturalthan
thatthoughtfulmen，intheirinvestigationsintothecausesofthe
prevailingpovertyandmisery，shouldhavearrivedatthe
conviction，thatnationalwelfarecouldnotbeattainedsolongas
agriculturewasnotfreedfromitsfetters，solongastheowners
oflandandcapitaltooknointerestinagriculture，solongasthe
peasantryremainedsunkinpersonalsubjection，insuperstition，
idleness，andignorance，solongastaxationremainedundiminished
andwasnotequallybornebyallclasses，solongasinternal
tariffrestrictionsexisted，andforeigntradedidnotflourish。
Butthesethoughtfulmenwemustrememberwereeither
physicianstotheKingandhisCourt，Courtfavourites，or
confidantsandfriendsofthearistocracyandtheclergytheycould
notandwouldnotdeclareopenwaragainsteitherabsolutepoweror
againstclergyandnobility：Thereremainedtothembutonemethod
ofdisseminatingtheirviews，thatofconcealingtheirplanof
reformundertheobscurityofaprofoundsystem，justas，in
earlieraswellaslatertimes，ideasofpoliticalandreligious
reformhavebeenembeddedinthesubstanceofphilosophical
systems。Followingthephilosophersoftheirownageandcountry，
who，inviewofthetotaldisorganisationofthenationalcondition
ofFrance，soughtconsolationinthewiderfieldofphilanthropy
andcosmopolitanismmuchasthefatherofafamily，indespairat
thebreak-upofhishousehold，goestoseekcomfortinthetavern，
sothephysiocratscaughtatthecosmopolitanideaofuniversal
freetrade，asapanaceabywhichallprevailingevilsmightbe
cured。Whentheyhadgotholdofthispointoftruthbyexalting
theirthoughtsabove，theythendirectedthembeneath，and
discoveredinthe\'nettrevenue\'ofthesoilabasisfortheir
preconceivedideas。Thenceresultedthefundamentalmaximoftheir
system，\'thesoilaloneyieldsnettrevenue\'thereforeagriculture
isthesolesourceofwealth。Thatisadoctrinefromwhich
wonderfulconsequencesmightbeinferred——firstfeudalismmust
fall，andifrequisite，landowningitself；thenalltaxationought
tobeleviedontheland，asbeingthesourceofallwealth；then
theexemptionfromtaxationenjoyedbythenobilityandclergymust
cease；finallythemanufacturersmustbedeemedanunproductive
class，whooughttopaynotaxes，butalsooughttohaveno
State-protection，hencecustom-housesmustbeabolished。
Inshort，peoplecontrivedbymeansofthemostabsurd
argumentsandcontentionstoprovethosegreattruthswhichthey
haddeterminedbeforehandtoprove。
Ofthenation，anditsspecialcircumstancesandconditionin
relationtoothernations，nofurtheraccountwastobetaken，for
thatisclearfromthe\'Encyclop閐ieM閠hodique，\'whichsays，\'The
welfareoftheindividualisconditionalonthewelfareofthe
entirehumanrace。\'Here，therefore，noaccountwastakenofany
nation，ofanywar，ofanyforeigncommercialmeasures：historyand
experiencemustbeeitherignoredormisrepresented。Thegreat
meritofthissystemwas，thatitboretheappearanceofanattack
madeonthepolicyofColbertandontheprivilegesofthe
manufacturers，forthebenefitofthelandowners；whileinreality
itsblowstoldwithmosteffectonthespecialprivilegesofthe
latter。PoorColberthadtobearalltheblameofthesufferingsof
theFrenchagriculturists，whileneverthelesseveryoneknewthat
Francepossessedagreatindustryforthefirsttimesince
Colbert\'sadministration；andthateventhedullestintellectwas
awarethatmanufacturesconstitutethechiefmeansforpromoting
agricultureandcommerce。TheRevocationoftheEdictofNantes——
thewantonwarsofLouisXIV——theprofligateexpenditureofLouis
XV——wereutterlyignoredbythesephilosophers。
Quesnayinhiswritingshasadduced，andrepliedto，pointby
point，theobjectionswhichwereurgedagainsthissystem。Oneis
astonishedatthemassofsoundsensewhichheputsintothemouth
ofhisopponents，andatthemassofmysticalabsurditywhichhe
opposestothoseobjectionsbywayofargument。Notwithstanding，
allthatabsurditywasacceptedaswisdombythecontemporariesof
thisreformer，becausethetendencyofhissystemaccordedwiththe
circumstancesofFranceatthattime，andwiththephilanthropic
andcosmopolitanideasprevalentinthatcentury。
Chapter31
TheSystemofValuesofExchangeFalselyTermedbytheSchool，The
\'Industrial\'System——AdamSmith
AdamSmith\'sdoctrineis，inrespecttonationaland
internationalconditions，merelyacontinuationofthephysiocratic
system。Likethelatter，itignorestheverynatureof
nationalities，seeksalmostentirelytoexcludepoliticsandthe
poweroftheState，presupposestheexistenceofastateof
perpetualpeaceandofuniversalunion，underratesthevalueofa
nationalmanufacturingpower，andthemeansofobtainingit，and
demandsabsolutefreedomoftrade。
AdamSmithfellintothesefundamentalerrorsinexactlythe
samewayasthephysiocratshaddonebeforehim，namely，by
regardingabsolutefreedomininternationaltradeasanaxiom
assenttowhichisdemandedbycommonsense，andbynot
investigatingtothebottomhowfarhistorysupportsthisidea。
DugaldStewartAdamSmith\'sablebiographerinformsusthat
Smith，atadatetwenty-oneyearsbeforehisworkwaspublishedin
1776viz。in1755，claimedpriorityinconceivingtheideaof
universalfreedomoftrade，ataliterarypartyatwhichhewas
present，inthefollowingwords：
\'Manisusuallymadeuseofbystatesmenandmakersof
projects，asthematerialforasortofpoliticalhandiwork。The
projectmakers，intheiroperationsonhumanaffairs，disturb
Nature，whereaspeopleoughtsimplytoleavehertoherselftoact
freely；inorderthatshemayaccomplishherobjects。Inorderto
raiseaStatefromthelowestdepthofbarbarismtothehighest
degreeofwealth，allthatisrequisiteispeace，moderate
taxation，andgoodadministrationofjustice；everythingelsewill
followofitsownaccordinthenaturalcourseofthings。All
governmentswhichactinacontraryspirittothisnaturalcourse，
whichseektodivertcapitalintootherchannels，ortorestrict
theprogressofthecommunityinitsspontaneouscourse，act
contrarytonature，and，inordertomaintaintheirposition，
becomeoppressiveandtyrannical。\'
AdamSmithsetoutfromthisfundamentalidea，andtoproveit
andtoillustrateitwasthesoleobjectofallhislaterworks。He
wasconfirmedinthisideabyQuesnay，Turgot，andtheother
coryphaeiofthephysiocraticschool，whoseacquaintancehehad
madeinavisittoFranceintheyear1765。
Smithevidentlyconsideredtheideaoffreedomoftradeasan
intellectualdiscoverywhichwouldconstitutethefoundationofhis
literaryfame。Hownatural，therefore，itwasthatheshould
endeavourinhisworktoputasideandtorefuteeverythingthat
stoodinthewayofthatidea；thatheshouldconsiderhimselfas
theprofessedadvocateofabsolutefreedomoftrade，andthathe
thoughtandwroteinthatspirit。
Howcoulditbeexpected，thatwithsuchpreconceivedopinions，
Smithshouldjudgeofmenandofthings，ofhistoryandstatistics，
ofpoliticalmeasuresandoftheirauthors，inanyotherlightthan
astheyconfirmedorcontradictedhisfundamentalprinciple？
InthepassageabovequotedfromDugaldStewart，AdamSmith\'s
wholesystemiscomprisedasinanutshell。ThepoweroftheState
canandoughttodonothing，excepttoallowjusticetobe
administered，toimposeaslittletaxationaspossible。Statesmen
whoattempttofoundamanufacturingpower，topromotenavigation，
toextendforeigntrade，toprotectitbynavalpower，andtofound
ortoacquirecolonies，areinhisopinionprojectmakerswhoonly
hindertheprogressofthecommunity。Forhimnonationexists，but
merelyacommunity，i。e。anumberofindividualsdwellingtogether。
Theseindividualsknowbestforthemselveswhatbranchesof
occupationaremosttotheiradvantage，andtheycanbestselect
forthemselvesthemeanswhichpromotetheirprosperity。