Atwater gives the two general rules:

Rule of Agreement: "If, whenever a given object or agency is present, without counteracting forces, a given effect is produced, there is a strong evidence that the object or agency is the cause of the effect."

Rule of Disagreement: "If when the supposed cause is present the effect is present, and when the supposed cause is absent the effect is wanting, there being in neither case any other agents present to effect the result, we may reasonably infer that the supposed cause is the real one."

Rule of Residue: "When in any phenomena we find a result remaining after the effects of all known causes are estimated, we may attribute it to a residual agent not yet reckoned."

Rule of Concomitant Variations: "When a variation in a given antecedent is accompanied by a variation of a given consequent, they are in some manner related as cause and effect."

Atwater says, of the above rules, that "whenever either of these criteria is found, free from conflicting evidence, and especially when several of them concur, the evidence is clear that the cases observed are fair representatives of the whole class, and warrant a valid universal inductive conclusion."

We now come to what is known as Hypothesis or Theory, which is an assumed general principle—a conjecture or supposition founded upon observed and tested facts. Some authorities use the term "theory" in the sense of "a verified hypothesis," but the two terms are employed loosely and the usage varies with different authorities. What is known as "the probability of a hypothesis" is the proportion of the number of facts it will explain. The greater the number of facts it will explain, the greater is its "probability." A Hypothesis is said to be "verified" when it will account for all the facts which are properly to be referred to it. Some very critical authorities hold that verification should also depend upon there being no other possible hypotheses which will account for the facts, but this is generally considered an extreme position.

A Hypothesis is the result of a peculiar mental process which seems to act in the direction of making a sudden anticipatory leap toward a theory, after the mind has been saturated with a great body of particular facts. Some have spoken of the process as almost intuitive and, indeed, the testimony of many discoverers of great natural laws would lead us to believe that the Subconscious region of the mind is most active in making what La Place has called "the great guess" of discovery of principle. As Brooks says: "The forming of hypotheses requires a suggestive mind, a lively fancy, a philosophic imagination, that catches a glimpse of the idea through the form, or sees the law standing behind the fact."

Thomson says: "The system of anatomy which has immortalized the name of Oken, is the consequence of a flash of anticipation which glanced through his mind when he picked up in a chance walk the skull of a deer, bleached and disintegrated by the weather, and exclaimed, after a glance, 'It is part of a vertebral column.' When Newton saw the apple fall, the anticipatory question flashed through his mind, 'Why do not the heavenly bodies fall like this apple?' In neither case had accident any important share; Newton and Oken were prepared by the deepest previous study to seize upon the unimportant fact offered to them, and show how important it might become; and if the apple and the deer-skull had been wanting, some other falling body, or some other skull, would have touched the string so ready to vibrate. But in each case there was a great step of anticipation; Oken thought he saw the type of the whole skeleton in a single vertebra, whilst Newton conceived at once that the whole universe was full of bodies tending to fall."

Passing from the consideration of Inductive Reasoning to that of Deductive Reasoning we find ourselves confronted with an entirely opposite condition. As Brooks says: "The two methods of reasoning are the reverse of each other. One goes from particulars to generals; the other from generals to particulars. One is a process of analysis; the other is a process of synthesis. One rises from facts to laws; the other descends from laws to facts. Each is independent of the other; and each is a valid and essential method of inference."