tentionally, promote the public good. After his examination of the mercantile system, the object of which was to encourage manufactures, and of the agricultural system, which made agriculture of primary importance, he states his own position: "All systems of preference or of restraint therefore being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interests his own way, and to bring both his industry and capital into competition with those of any other man or orders of men." To assert against Adam Smith that, on the whole, the self-interest of individuals in matters of industry is necessarily inconsistent with public good, is to assert the worst form of pessimism, and, as the only conceivable remedy, the most extreme form of Socialism. But such a remedy is, on the assumption made, if possibly conceivable, certainly impracticable. No Government can be stable which professes to rule according to ideas not generally accepted by the community. If men are, as a matter of fact, principally actuated by self-interest in commercial affairs, it is suicidal to govern them as if they were wholly or in the main disinterested. If, on the other hand, they are naturally unselfish, they will probably promote the public good much better if left to themselves than if directed by a few wise men. Even in this case natural liberty appears to be the best rule of action. The various institutions in this country for public purposes, supported by voluntary contributions and conducted by individuals who are only concerned for the success of such institutions, effect in the main the object of their promoters much more efficiently than if they were directed and controlled with the best intentions by a central Government. To generalize a statement of Adam Smith in reference to capital, it may be asserted that "the statesman who should attempt to direct private people in what manner they ought to employ their wealth and abilities for the good of others would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it." In religion,

science, art, education, health, and even charity, civilization must trust principally to the efforts of individuals; the central authority can never be more than auxiliary. If it were not so, progress must cease, for no Government could overtake the work.

But whilst insisting always on the superiority of private enterprise to Government routine, Adam Smith is far from asserting that Government has no industrial functions, or that the whole business of Government is to enforce contracts and prevent crime and fraud. Besides the duties of defence and administration of justice, Adam Smith gives, as of co-ordinate importance, "the duty of creating and maintaining certain public institutions which it can never be for the interest of any individual or small number of individuals to create and maintain, because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society." It is quite in accordance with this view of the functions of Government that Smith should point out that the self-interest of the common people is not a sufficient guarantee for the education of their children, and that "for a very small expense the public can facilitate, can encourage, and can even impose upon almost the whole body of the people the necessity of acquiring the most essential parts of education." Again, it is only so long as an individual "does not violate the laws of justice" that he is to be left free to pursue his own interests his own way. No man more thoroughly carried out the teaching of Adam Smith, than Richard Cobden; and when the opponents of the Factory Legislation insisted on the sufficiency of freedom of contract, he was still true to the principles of "industrial liberty" when he replied that in some cases freedom of contract was freedom of coercion. Another illustration of the importance of the qualification under consideration is found in Adam Smith's criticism of what is now called "free banking":"To restrain private people, it may be said, from receiving in payment the promissory notes of a banker for any sum, whether great or small, when they themselves are willing to receive them, or to restrain a banker from issuing such notes when all his neighbours are willing to accept of them, is a manifest violation of that natural liberty which it is the proper

business of law not to infringe but to support. Such regulations may no doubt be considered as in some respects a violation of natural liberty. But those exertions of the natural liberty of a few individuals which might endanger the security of the whole society, are and ought to be restrained by the laws of all governments of the most free as well as of the most despotic." In brief, the opinion of Adam Smith on laissez faire may be expressed in two propositions-first, that the presumption is always against Government interference; and secondly, if a case is made out, that the presumption is in favour of local as against central government, since "even those public works which are of such a nature that they cannot afford any revenue for maintaining themselves, but of which the conveniency is nearly confined to some particular place or district, are always better maintained by a local or provincial revenue, under the management of a local and provincial administration, than by the general revenue of the state, of which the executive power must always have the management." Enough has been said to show that mere reiteration of the phrases "freedom of contract" and "natural liberty" is not, in the opinion of Adam Smith, a sufficient answer to those who maintain that in certain cases the interference of Government is desirable.*

Even on the question of Free Trade, with which the name of Adam Smith is always associated, the teaching of the "Wealth of Nations" is not nearly so unqualified as is generally imagined. It has already been pointed out that the celebrated American Protectionist Carey claims to be a true disciple of Adam Smith. It is perhaps not too presumptuous to hazard the opinion that Free Trade might have been more widely accepted if the reasoning of Adam Smith had not been replaced by dogmatism. It is quite true that the arguments by which Free Trade was established in this country were taken from Adam Smith; but it is equally true that the arguments advanced of late by the so-called Fair Traders are carefully stated and estimated by the same author. It seems, prima facie, even after making due allowance for "the pain of a new idea," rather extraordinary that it should have been necessary for a man of such genius to take ten years of unremitting labour

Compare Smith's "Mercantile Law," Introduction (passim), on the advantages the mercantile law of England has derived from being the "least fettered by legislative regulations,' ," "the most completely the offspring of usage and convenience."

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to prove that it is advantageous to buy in the cheapest market; that whatever is bought must be paid for; and that, since this country produces no gold, exported must pay for imported commodities. It seems still more extraordinary, even after making allowance for "the passionate confidence of interested falsehood," that any merchant of ordinary modesty should be bold enough to maintain the opposite, and almost incredible that any merely speculative philosopher should fail to grasp propositions of such simplicity; and it is the reverse of surprising that the plan of the Wealth of Nations" should appear confused and the style { tediously profuse. But as Mr. Henry Sidgwick has observed, the popular opinion that Free Trade is in all cases theoretically the best, although in particular cases it may practically be the best course to make exceptions, is exactly the reverse of the teaching of Adam Smith and the leading English economists.* The truth is, that it is easy theoretically to point out exceptions, but that for practical purposes it is best to adhere to Free Trade pure and simple. Nor does the admission of such exceptions weaken the position of Free Trade as a rule of practical politics, at any rate in this country. Our whole system of government is full of anomalies and theoretical imperfections; and the strength of the system lies in the fact that the most plausible theory is disregarded if, under existing conditions, it cannot be put into practice. Theoretically the system of direct taxation is, both as regards justice and economy, superior to the indirect system. What can be simpler than that every man should pay a portion of his revenue directly to the state? Theoretically the system of cooperative production would effect the reconciliation of labour and capital. Are not profits wages of superintendence? Theoretically it is absurd to make contracts for long periods in terms of a measure of value which is liable to extreme fluctuations. Is not the only use of "gold" to give command over "things in general"?.

But if the wheels of government must be arranged in "cycles on epicycles" to effect these objects, the practical instinct of the nation acquiesces in a more imperfect but simpler machinery. Free Trade has in its favour the overwhelming advantage of perfect

* Compare Ricardo, ch. xxv.:-"It may, I think, be doubted whether a mother country may not sometimes be benefited by the restraints to which she subjects her colonial possessions."

simplicity, whilst the modifications which have recently been urged are either quite inadequate for the purposes proposed or impracticable. It is useless to retaliate on manufactures; to retaliate on food is impossible. The recent controversy has in this country made the policy of Free Trade still more firmly established. The merit of Adam Smith lies not in the mere enunciation of the very obvious propositions just quoted, and which he was by no means the first to bring to light, but in the careful examination he made of conflicting principles and interests, and in the reasoned judgment at which he arrived that Free Trade is the working system most conducive to national prosperity. There is not a single argument advanced by Fair Traders which is not stated much more clearly by Adam Smith. He looked at the question on all sides-from the point of view of labourer, capitalist, landlord; he was fully aware of the importance of political independence, of variety of industries, and of the danger of disturbing a long-established system; he even considered the employment of capital in the home trade as much more advantageous than in the foreign trade. But he possessed a mind not merely capable of seeing the elements of industrial life in isolation, but of grasping that life as a whole, and assigning to each factor its due proportion. Above all, he made a careful investigation of the working power of government; he did not rush to the conclusion that what was badly done by private enterprise would be better done by authority.

The theory of Free Trade given in the fourth book of the "Wealth of Nations" rests upon certain propositions expounded in the former books, and the limitations can only be understood when taken in connection with these propositions: the investigation of the economic system of an isolated society must precede any inquiry on foreign trade. Taking then, first, the simpler case, the problem of the production of wealth is this:-Given a society with certain wants, and with an established order in the claims of individuals, what is the best method of employing the land, the labour, and the capital? The answer to this question involves the discussion of the principle of division of labour, and this discussion forms naturally the introduction to the "Inquiry." The society in which division of labour is carried to the greatest extent will, cæteris paribus, be the most productive. But it is obvious that