shews the application of Inductive Logic to determine which are the true General Conceptions. The chapter after that investigates the General Theory of the Science, or the General Law which governs the relations of Economic Quantities. It also states and discusses the different theories that are current, and shews the application of Inductive Logic to determine which is the true General Theory. This completes the Inductive, or Theoretical, portion of the Science, in which true Conceptions and Axioms are obtained by genuine Induction from nature itself. We then come to the Deductive, or Practical, portion of the Science, which exhibits the application of these principles to explain the phenomena of Economics; thus giving an example of the complete formation of a great Moral Science, both Inductive and Deductive, after the strictest model of a Physical Science, on rigorous Baconian principles. CHAPTER III. ON THE HISTORY OF IDEAS AS TO THE NATURE AND LIMITS OF THE SCIENCE OF POLITICAL ECONOMY, OR ECONOMICS. SECTION I. HISTORY OF ECONOMICAL IDEAS UNTIL THE RISE OF THE ECONOMISTS IN FRANCE. SECTION II. THE FIRST SCHOOL OF MODERN ECONOMISTS IN SECTION III. THE SECOND SCHOOL OF ECONOMISTS. 1. The first thing to be done in the study of any science is to endeavour to form a proper conception of its nature and limits then to examine it in its whole extent up to those limits, and to refrain rigidly from all discussions and inquiries which transgress them. In many sciences this is no easy task, but in none is it so difficult as in Political Economy, or Economics. In no other science have eminent writers taken so different and various views of its nature and extent: have differed so much as to what should be included in it; or have so varied in their treatment of it. There is nothing in the name of the science which would appear to mark out its precise limits. Seeing then the wide division of opinion on the subject, the best way will be to give a succinct History of the Ideas which have prevailed as to its nature and extent, and to point out the philosophic reasons which shew the superiority of one system. Aristotle the founder of the Science of Political Economy, or Economics. 2. Aristotle may be considered as the founder of the science of Economics. He treats of Man in his relation to himself, or ETHICS; in his relation to other men, both in his private and his public capacity, or POLITICS; and in his relation to property, or ECONOMICS. And he considered Economics as the method by which a revenue is acquired. In the second book of the Economics, which, though it is supposed by the best critics not to be by him, is yet of his school, four species of Economy are described, the Regal, the Satrapical, the Political, and the Domestic. The first two relate to the manner in which a Monarchical and a Satrapical Government raise a revenue. The third how a Free State (TM) raises a revenue; and the fourth | and last, how a private person earns an income. Thus we see that the expression POLITICAL ECONOMY in this treatise, the first in which it occurs, denotes the method in which a Free State raises a revenue. 3. In his Ethics and Politics several of the true general Conceptions of Economics are given, such as Wealth, Currency, Value, to which men have at length come back, after having strayed away from them for many centuries. And it would have been well for mankind had they never abandoned them, as their having done so has been the cause of incredible calamities. We may observe here that Aristotle defines WEALTH to be anything whose value can be measured in money; VALUE to be the relation which anything bears to something else; and MONEY to be a pledge for future payment, which are the true fundamental conceptions of the science. 4. Xenophon has left us a Dialogue, in which he makes Socrates discourse on Economy, which he says is a distinct science like medicine, and architecture, in which he points out that Oikos, did not mean a house which was oikia, but all that a man possessed, all his substance, or estate. And this was the meaning of the word in Attic Law, as we have shewn in a subsequent section. 5. Among the few remaining Economical treatises of the Ancients, a very remarkable one may be mentioned. It is entitled the Eryxias, and passes under the name of Eschines Socraticus, though the best authorities deny its genuineness. It is a Socratic dialogue On Wealth. Socrates asks what Wealth is. He mentions the Carthaginian leather money, the Spartan iron money, the Ethiopian pebble money, and says that each of these was wealth in its own place, and the more any one possessed of them in these places respectively, the more wealthy he was. wealth anywhere else. only wealth where they as But they were of no use, and were not Socrates then points out that things are are wanted, and that nothing is wealth which is not wanted. But, if we can purchase what we want with anything as well gold and silver, that thing is wealth, whatever its nature be. Thus he says that, if a person gains a living and can purchase necessaries by teaching music, science, or grammar, then such music, science, and grammar are as much wealth as gold and silver. This dialogue is for the express purpose of shewing that the idea of wealth depends exclusively upon Exchangeability, and that whatever is exchangeable, or has the power of purchasing, is wealth, no matter what its nature be, and that materiality is in no way necessary to constitute a thing wealth. This species of wealth in modern times is usually called Immaterial Wealth. 6. We now come to Roman Law. In the Institutes of Justinian, Property or Wealth is divided into two sorts-Corporeal and Incorporeal. Corporeal property is tangible, as lands, slaves, clothes, gold, silver, and other things. Incorporeal property is what is not tangible, but consists in Rights only, as, for instance, obligations of all sorts. It is said by Ulpian that Property or Wealth is anything which may be bought and sold. And it is expressly declared in the Pandects of Justinian that, "Rights are included under the name of Wealth;" and again, "Under the name of Money, or Wealth, not only ready money, but every thing moveable and immoveable, corporeal as well as Rights, are included." So also merx, or merchandize, included every thing capable of being bought and sold, moveable or immoveable, corporeal or incorporeal. We merely notice these two latter species of wealth here, and shall enter into the question more fully in the next chapter, under the Definition of Wealth. 7. We thus see that in ancient times the principle of Wealth was held to reside exclusively in the quality of ExCHANGEABILITY: and that whatever was exchangeable was WEALTH. We also see that ancient writers had noticed three different species of exchangeable quantities; first, Material or Corporeal things, such as gold, silver, lands, houses, &c.; secondly, Immaterial things, such as sciences, or labour; and, thirdly, Incorporeal things, such as Rights of all sorts. Rise of Economical Ideas in Modern Times. 8. In modern times Economic treatises have generally sprung from the public misery caused by the violations of the true principles of the science, just as the science of medicine sprung from human diseases. The first and readiest resource of despotic princes was to tamper with the coinage-to defraud the public by reducing the established weight and fineness of the money. The mischievous consequences of this were already noticed by Dante, and proceeded to great length in France, Italy, Spain, Germany, and Scotland, and to not so great length in England. These violations of true principles called forth a long series of able treatises in France, Italy, Germany, and England, which are more particularly noticed in the chapter on the Coinage, and we may say that the Theory of the Coinage was the first great branch of Economics which was firmly established in modern times. The History of Economical Ideas until the rise of the Economists, or Physiocrates, in France-the First School of modern Economists. 9. Up till the beginning of the 16th century there had been many capricious and contradictory laws in all countries regarding the importation and exportation of products, sometimes prohibiting their entrance, sometimes letting them go free: but there had been no definite theory, or fixed principles suggested, upon which legislation should be founded with a determinate object. About that period, however, certain ideas began to prevail about public Wealth, and legislation was framed to effect certain national objects by certain definite means. Thus attention was directed to establish principles, and distinct systems, which after undergoing several mutations and revolutions of opinion, have finally terminated in the modern science of Economics. We now propose to give a succinct sketch of these changes of opinion and revolutions in national policy. The Mercantile System and the Balance of Trade. 10. Once on a time, say the poets, the Phrygian peasants captured Seilenus, the teacher of Bacchus, and took him before their king Midas, who entertained him jovially for ten days, E |