method of interrogating nature itself was new, and the canons. of induction unsettled, conceived that the method of Montesquieu proved the truth of the theory of nature; in short, that nature, when interrogated, confirmed his anticipations of nature.

One cause of the misconception that Adam Smith's economic method was one of mere à priori deduction is the arrangement he has adopted in the order of the five books of the Wealth of Nations. In the order of logic the third and fourth books come before the first and second. They contain the induction on which is based the conclusion that the State has only to protect individual liberty and the natural effort of every individual to better his own condition-or, in one word (with which his first book begins), labour-will supply in the most ample manner all the necessaries and conveniences of life, will divide its functions spontaneously in the best manner, and will distribute its produce in a natural order, and with the utmost equality. It has already been suggested that no such complete organization for the distribution of wealth is made by individual action, or what Adam Smith called Nature. Mr. Mill has shown the fallacy of defining political economy as the science of exchanges; a definition which, besides omitting some of the most important conditions determining the production of wealth, overlooks the truth that human institutions, laws of property and succession, are necessarily chief agencies determining its distribution. And it affords an instructive exemplification of the two methods which Adam Smith combined, à priori deduction from supposed principles of nature, and inductive investigation of facts, that when the order of nature is present to his mind, he finds a complete natural organization for the distribution of wealth, and no function for the State in the matter; but when he traces the actual progress of opulence, his readers are confronted at once with laws of succession, to which he traces the slow and irrcgular course of European progress after the barbarian conquests; laws founded on those conquests, and designed to perpetuate the unequal distribution of wealth they effected; laws which are potent agencies in the distribution of wealth in England to this day, and in the determination of its whole social and industrial

economy.

But even while tracing in his first book the 'natural' distribution of wealth by exchange, or as he expresses it, 'the order according to which, the produce of labour is naturally distributed among the different ranks of the people,' Adam Smith has been preserved by the inductive method which he combined with à priori deduction from enormous fallacies into which the school of Ricardo has since been betrayed by their method of pure deduction. The ancient theory of natural law involved the idea of uniformity and equality; and this idea in Adam Smith's case was powerfully reinforced both by that of an ideal order deducible from the equity and equal benevolence towards mankind of the Author of Nature, and by the love of system, symmetry, and harmonious arrangement which plays a conspicuous part in the Theory of Moral Sentiments, because it did so in the author's own mind. With all these conceptions the theory of a complete equality of the advantages and disadvantages of different human occupations, and an equality, in that sense, of wages and profits, had obviously a powerful attraction for Smith. It affords surprising evidence of his true philosophical spirit of inquiry into facts that he should nevertheless have denied the actual equality of wages and profits, traced the great actual inequalities to their causes, and defined the conditions of equality and inequality, and the actual effect of industrial progress on these movements, in such a manner as to indicate the very progressive divergence which can be shown to have since taken place, and which a school of modern economists not only ignores, but sometimes angrily denies as inconsistent with its à priori deductions. Adam Smith, for his own part, not only limited ab initio the tendency to equality to what was practically the same neighbourhood, but pointed out that the kingdom was in fact divided into a number of different neighbourhoods with very different rates. Secondly, he traced many of the actual inequalities to pernicious institutions, a class of causes of inequality which later economists have done much to perpetuate by affirming a substantial equality. Thirdly, in place of insisting that competition alone determines the rate of wages, and gives the labourer the utmost value of what he produces, Adam Smith maintained that combination on one hand, tacit or open, on the part of employers, was the normal condition of

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things, while, on the other, the necessitous position of the labourer exposed him to the exaction of very unequal terms. Fourthly, he expressly confined the tendency to equality in the case of both wages and profits, even where competition was in full and free activity, to a stationary and simple condition of the industrial world. Fifthly, he showed that in place of equalizing wages, industrial progress had already produced great inequalities in England, and was beginning to do so in Scotland.

After observing that the price of labour varied much more in England than in Scotland, he adds: 'In the last century the most usual day wages of common labour through the greater part of Scotland were sixpence in summer and fivepence in winter. Three shillings a week, the same price very nearly, still continues to be paid in some parts of the Highlands. Through the greater part of the low country the most usual wages of common labour are now eightpence a day; tenpence, and sometimes a shilling about Edinburgh, in the counties which border upon England, and in a few other places where there has lately been a considerable rise in the demand for labour, about Glasgow, Carron, Ayrshire, &c. In England the improvements of agriculture, manufactures, and commerce began much earlier than in Scotland. The demand for labour, and consequently its price, must necessarily have increased with those improvements.'

Manufactures and trade on a great scale were only beginning in Scotland; the steam-engine had not yet been brought to bear on the mine or the loom when the Wealth of Nations was composed; and the great inequalities in the local demand for labour throughout the kingdom, which have followed in the wake of steam, were yet to appear. Adam Smith, in truth, lived in a very early industrial world; the only steam-engine he refers to is Newcomen's; the word manufacture' had not lost its true meaning and become as inappropriate as hideous. In the clothing manufacture, he expressly says, the division of labour was nearly the same as it had been for a century, and the machines employed were the same; adding that only three improvements in them of any importance had taken place since the reign of Edward IV. In place of the infinite diversities of

complexity and difficulty in the different employments of capital which have followed the progress of mechanics and chemistry, all modes of employing capital were, he says, about equally easy. The foreign trade of the kingdom was so small, that he computed the annual importation of corn at only 23,000 quarters; and concluded that the freest importation never could sensibly affect prices in the home market.

In short, he applied the doctrine of equality only to a simple and almost stationary condition of industry and neighbourhood trade, in which few changes in the mode of production or the channels of trade took place from one century to another, and in which the inhabitants of each neighbourhood might comparatively easily estimate the profits and prospects of each different employment; and even to such a world, only with many modifications and exceptions. To such a world, in positive terms, he limited the tendency to equality which has been made by his successors, not only an unconditional assumption, but the basis of finance. The truth is, that the doctrine of a tendency to equality is a mere theorem in political economy; and a theorem which imports the tendency only under special conditions well enunciated by Adam Smith-conditions the opposites of those which prevail in the present industrial world.

A state of the industrial world which was exceptional in Adam Smith's time is the normal state in our own; and it is certain, both from his positive doctrine and from his close attention to the realities of life, that had he lived even two generations later, his general theory of the organization of the economic world and the results of the competition for economic life would have been cast in a very different mould. Alike in the theory of Nature which pervades his entire philosophy of society, and in his general conceptions of the industrial world, we trace the influence of the early world in which he lived. One striking example of this is that one-half of society has been almost entirely overlooked in his philosophy. His language appears at first sight to point to unrestricted liberty as the unconditional principle of a true political economy, and the indispensable requisite of the full development of the economic resources of nature; but on closer inspection it will be found that where he speaks of 'the natural effort of every individual

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to better his own condition, when suffered to exert itself with freedom and security,' as the cause of national wealth and prosperity, he had only the half of the nation denoted by the masculine pronoun in his mind; he meant only what he elsewhere says, the natural effort of every man.' He seems to have been perfectly content-though it involves an inconsistency which is fatal to his whole theory-with the existing restraints on the energies of women; and the only effort on the part of a woman to better her own condition which he has in view is 'to become the mistress of a family.' In the only passage in the Wealth of Nations in which women are referred to, we discover at once how far was he from having developed universal laws of industry and wealth, how far he was from escaping from the ideas of a primitive world. There are,' he said, no public ' institutions for the education of women, and there is accordingly nothing useless, absurd, or fantastical, in the common course of their education. They are taught what their parents or guardians judge it necessary or useful for them to learn, and they are taught nothing else. Every part of their education tends evidently to some useful purpose,—either to improve the natural attractions of their person, or to form their minds to reserve, to modesty, to chastity, and to economy; to render them both likely to become the mistresses of a family, and to behave properly when they have become such. In every part of her life a woman feels some convenience or advantage from every part of her education.'

Although the obvious and simple system of natural liberty' is the foundation of Smith's whole system, though he regarded it as the law of the beneficent Author of Nature, it turns out that he applied it only to one-half of mankind. The reason is that the law and the exception alike came to him from the age in which he lived, and the ideas of a yet earlier state of society. The insurrection against the oppressive and unequal economic régime of the past was as yet only on the part of men, and the very theory of the Law of Nature which men invoked for their own emancipation, as it was the offspring of the speculation of the ancient world, so it bore the impress of its narrowness and injustice.