Principles of Political Economy / Abridged with Critical, Bibliographical, and Explanatory Notes, and a Sketch of the History of Political Economy

by John Stuart Mill

Footnotes

[1.]Yet Blanqui diffusively gives nearly one half of his “History of Political Economy” to the period before the sixteenth century, when politico-economic laws had not yet been recognized. A. L. Perry, “Political Economy” (eighteenth edition, 1883), also devotes thirty-five out of eighty-seven pages to the period in which there was no systematic study of political economy.[2.]Xenophon, “Means of increasing the Revenues of Attika,” ch. ix; also see his “Economics;” and Aristotle, “Politics,” b. i, ch. vi, b. iii, ch. i.[3.]“Republic,” b. ii.[4.]Roscher exhumed this book, entitled “De Origine, Natura, Jure et Mutationibus Monetarum,” and it was reprinted in 1864 by Wolowski at Paris, together with the treatise of Copernicus, “De Monetae Cudendae Ratione.”[5.]Sermon at St. Paul's Cross, 1549 (also see Jacob, “On the Precious Metals,” pp. 244, 245).[6.]1530-1596. See II. Baudrillart's “J. Bodin et son temps” (Paris, 1853). Bodin wrote “Réponse aux paradoxes de M. de Malestroit touchant l'enchérissement de toutes les choses et des monnaies” (1568), and “Discours sur le rehaussement et la diminution des monnaies” (1578).[7.]“A Briefe Conceipte of English Policy” (1581). The book was published under the initials “W. S.,” and was long regarded as the production of Shakespere.[8.]For information on this as well as a later period, consult Jacob “On the Precious Metals” (1832), a history of the production and influences of gold and silver from the earliest times. He is considered a very high authority. Humboldt's “Essay on New Spain” gives estimates and facts on the production of the precious metals in America. A very excellent study has been made by Levasseur in his “Histoire des classes ouvrières en France jusqu'à la Révolution.” For pauperism and its history, Nicholl's “History of the Poor Laws” is, of course, to be consulted.[9.]See Cossa, “Guide,” p. 119.[10.]See Antonio Serra, “Breve Trattato delle Cause che possono fare abbondare li Regni d' Oro e d' Argento,” Naples, 1613.[11.]Thomas Mun, “England's Treasure by Foreign Trade” (published in 1640 and 1664); “Advice of the Council of Trade” (1660), in Lord Overstone's “Select Tracts on Money”; Sir William Petty, “Political Arithmetic,” etc. (about 1680); Sir Josiah Child, “New Discourse of Trade” (1690); Sir Dudley North, “Discourse on Trade” (1691); Davenant's Works (1690-1711); Joshua Gee, “Trade and Navigation of Great Britain” (1730); Sir Matthew Decker (according to McCulloch, William Richardson), “Essay on the Causes of the Decline of Foreign Trade” (1744); Sir James Steuart, “An Inquiry into the Principles of Political Economy” (1767). For this period also consult Anderson's “History of Commerce” (1764), Macpherson's “Annals of Commerce” (1803), and Lord Sheffield's “Observations on the Commerce of the American States” (1783).[12.]The English Navigation Act of 1651 is usually described as the cause of the decline of Dutch shipping. The taxation necessitated by her wars is rather the cause, as history shows it to us. Sir Josiah Child (1668 and 1690) speaks of a serious depression in English commerce, and says the low rate of interest among the Dutch hurts the English trade. This does not show that the acts greatly aided English shipping. Moreover, Gee, a determined partisan of the mercantile theory, says, in 1730, that the ship-trade was languishing. Sir Matthew Decker (1744) confirms Gee's impressions. It looks very much as if the commercial supremacy of England was acquired by internal causes, and in spite of her navigation acts. The anonymous author of “Britannia Languens” confirms this view.[13.]This was, in substance, the whole teaching of one of the leading and most intelligent writers, Sir James Steuart (1767), “Principles of Political Economy.” See also Held's “Carey's Socialwissenschaft und das Merkantilsystem” (1866), which places Carey among the mercantilists.[14.]Forbonnais, “Récherches sur les finances de la France” (1595-1721); Pierre Clément, “Histoire de Colbert et de son administration” (1874); “Lettres, instructions et mémoires de Colbert” (1861-1870); “Histoire du système protecteur en France” (1854); Martin, “Histoire de France,” tome xiii.[15.]“Dîme royale” (1707).[16.]“Factum de la France” (1707).[17.]When Quesnay was sixty-one years old he wrote the article, “Fermiers,” in the “Encyclopædia” (of Diderot and D'Alembert) in 1756; article “Grains,” in the same, 1757; “Tableau économique,” 1758; “Maximes générales du gouvernement économique d'un royaume”; “Problème économique”; “Dialogues sur le commerce et sur les travaux des artisans”; “Droit natural” (1768). “Collection des principaux économistes,” edited by E. Daire (1846), is a collection containing the works of Quesnay, Turgot, and Dupont de Nemours. See also Lavergne, “Les économistes françaises du 18e siècle” (1870); and H. Martin, “Histoire de France.” Quesnay's “Tableau économique” was the Koran of the school.[18.]From χράτησις τῆς φύσεως, as indicating a reverence for natural laws.[19.]The words were not invented by Quesnay, but formed the phrase of a merchant, Legendre, in addressing Colbert; although it was later ascribed, as by Perry, “Political Economy” (p. 46), and Cossa (p. 150), to one of the Economists, Gournay. (See Wolowski, in his Essay prefixed to “Roscher's Political Economy,” p. 36, American translation.)[20.]The Margrave Karl Friedrich was the author of “Abrégé des principes de l'économie politique” (1775), and applied the physiocratic system of taxation to two of his villages with disastrous results.[21.]He published a first work on “Population” (1756); the “Théorie de l'impôt” (1760); and “Philosophie rurale” (1763). In this latter work Mirabeau adopted the “Tableau économique” as the key to the subject, and classed it with the discovery of printing and of money.[22.]In 1742 Turgot, when scarcely twenty, appeared as a sound writer on Paper Money in letters to Abbé Cicé. The physiocratic doctrines were presented in a more intelligible form in his greater work, “Réflexions sur la formation et la distribution des richesses” (1766). Three works of Turgot, on mining property, interest of money, and freedom in the corn-trade, bear a high reputation. For works treating of Turgot, see Batbie, “Turgot, philosophe, économiste et administrateur” (1861); Mastier, “Turgot, sa vie et sa doctrine” (1861); Tissot, “Turgot, sa vie, son administration et ses ouvrages” (1862).[23.]He was the editor of the works of Quesnay and Turgot, and wrote a “Mémoire de Turgot” (1817). He opposed the issue of assignats during the French Revolution, and, falling into disfavor, he barely escaped the scaffold. Having been a correspondent of Jefferson's, when Napoleon returned from Elba, he came to America, and settled in Delaware, where he died in 1817. The connection between the Economists and the framers of our Constitution is interesting, because it explains some peculiarities introduced into our system of taxation in that document. The only direct taxes recognized by the Supreme Court under our Constitution are the poll and land taxes; and it is in this connection that the constitutionality of the income-tax (a direct tax) is doubted.[24.]One of the earliest is that of Roger Coke (1675), in which he argues for free trade, and attacks the navigation acts. Sir Dudley North's “Discourse on Trade” (1691) urges that the whole world, as regards trade, is but one people, and explains that money is only merchandise.[25.]Joseph Harris, an official in the London Mint, published a very clear exposition of this subject in his “Essay upon Money and Coins” (1757); but, eighty years before, Rice Vaughan had given a satisfactory statement in his “Treatise of Money.”[26.]“Contemporary Review,” January, 1881, “Richard Cantillon.” Adam Smith had quoted Cantillon on his discussion of the wages of labor, b. i, ch. viii, and evidently knew his book.[27.]Born in 1723, and died 1790; he was eleven years younger than Hume. A Professor of Logic (1751) and Moral Philosophy (1752) at Glasgow, he published a treatise on ethical philosophy, entitled the “Theory of Moral Sentiments” (1739). Dugald Stewart is the authority as to Smith's life, having received information from a contemporary of Smith's, Professor Miller (see Playfair's edition of Smith's works); for Adam Smith destroyed all his own papers in his last illness. His lectures on political economy at Glasgow outlined the results as they appeared in the “Wealth of Nations”; it was not until 1764 that he resigned his professorship, and spent two years on the Continent (twelve months of this in France). On his return home he immured himself for ten years of quiet study, and published the “Wealth of Nations” in 1776. (See also McCulloch's introduction to his edition of the “Wealth of Nations,” and Bagehot's “Economic Studies,” iii.)[28.]A glance at Sir James Steuart's treatise (1767) with the “Wealth of Nations” shows Adam Smith's great qualities; the former was a series of detached essays, although of wide range, but admittedly without any consistent plan.[29.]

(a.) He went into a vague discussion upon labor as a measure of value. (b.) A legal rate of interest received his support, and his argument was answered effectually by Bentham (“Defense of Usury”). (c.) While not agreeing with the French school that agriculture is the only industry producing more than it consumes, and so land pays rent, yet he thinks that it produces more in proportion to the labor than other industries; that manufactures came next; and exportation and commerce after them. This error, however, did not modify his more important conclusions. Thorold Rogers and even Chevalier, however, claim that Adam Smith drew his inspiration from the French school. (d.) In the discussion of rent, he failed to follow out his ideas to a legitimate end, and did not get at the true doctrine. While hinting at the right connection between price and rent, he yet believed that rent formed a part of price. Of the fundamental principle in the doctrine of rent, the law of diminishing returns, he had no full knowledge, but came very close to it. He points out that in colonies, when the good soil has all been occupied, profits fall. (e.) In saying that every animal naturally multiplies in proportion to, and is limited by, the means of subsistence, Adam Smith just missed Malthus's law of population. In fact, Cantillon came quite as near it.

Book III in his “Wealth of Nations” is concerned with the policy of Europe in encouraging commerce at the expense of agriculture, and has less interest for us. Book V considers the revenue of the sovereign, and much of it is now obsolete; but his discussion of taxation is still highly important.

Among the English Liberals carried away by the French Revolution, and by such theories as those of Condorcet, was William Godwin, the author of “Political Justice” (1793) and the “Inquirer” (1797), who advocated the abolition of government and even marriage, since by the universal practice of the golden rule there would come about a lengthening of life. Malthus tells us that his study was brought forward as an answer to the doctrines of the “Inquirer,” and he applied his principles to Condorcet's and Godwin's ideas. It was a period when pauperism demanded attention from all. Malthus favored the repeal of the old poor-laws, as destroying independence of character among the poor.

Malthus also wrote “Principles of Political Economy” (1821) and “Definitions in Political Economy” (1827), but the former did not increase his reputation. He believed in taxing imported corn, and he gave in his adherence to the doctrine of over-production. But, on the other hand, he was one of several writers who, almost at the same time, discovered the true theory of rent. His father was a friend of Godwin, and a correspondent of Rousseau. (See Bagehot, “Economic Studies,” p. 135.)

The first division of Roscher's (born 1817) treatise, also known under the title of “Grundlagen der Nationalökonomie,” has been translated here by J. J. Lalor, in two volumes, “Principles of Political Economy” (1878), with an essay by Wolowski on the historical method inserted. In 1840 he was made Privat-Docent at Göttingen, and professor extraordinary in 1843. In 1844 he was called to a chair at Erlangen, but since 1848 he has remained at Leipsic. A list of Roscher's works is as follows:

“Grundriss zu Vorlesungen über die Staatswirthschaft nach geschichtlicher Methode” (1843); “Kornhandel und Theuerungspolitik” (third edition, 1852); “Untersuchungen über das Colonialwesen”; “Verhältniss der Nationalökonomie zum klassischen Alterthume” (1849); “Geschichte der englischen Volkswirthschaftslehre im 16. und 17. Jahrhunderts”; “Ein nationalökonom. Princep der Forstwirthschaft”; “Ansichten der Volkswirthschaft aus dem geschichtlichen Standpunkte” (second edition, 1861); “Die deutsche Nationalökonomie an der Grenzscheide des 16. und 17. Jahrhunderts” (1862); “Gründungsgeschichte des Zollvereins” (1870); “Betrachtungen über die Währungsfrage der deutschen Müntzreform” (1872); “Geschichte der Nationalökonomie in Deutschland” (1874); “Nationalökonomie des Ackerbaues” (eighth edition, 1875). His histories of political economy in England and Germany are particularly valuable (see review by Cliffe Leslie, “Fortnightly Review,” July, 1875). But he does not rightly estimate the English writers when he takes McLeod as a type; and Carey is the only American to whom he refers.

By far the ablest is Adolph Wagner, of Berlin, editor of Rau's “Lehrbuch der politischen Oekonomie” (1872). He also published “Die russische Papierwährung” (1868); “Staatspapiergeld, Reichs-Kassen Scheine, und Banknoten” (1874); “Unsere Müntzreform” (1877); “Finanzwissenschaft” (1877); and “Die Communalsteuerfrage” (1878).