THIRD MODERN PHASE: SYSTEM OF NATURAL LIBERTY

Both in England and France the ruling powers had already begun to be alarmed by the subversive tendencies which appeared inherent in the modern movement, and took up in consequence an attitude of resistance. Reaction became triumphant in France during the latter half of the reign of Louis XVI, under the disastrous influence of Madame de Maintenon. In England, after the transaction of 1688, by which the government was consolidated on the double basis of aristocratic power and official orthodoxy, the state policy became not so much retrograde as stationary, industrial conquest being put forward to satisfy the middle class and wean it from the pursuit of a social renovation. In both countries there was for some time a noticeable check in the intellectual development, and Roscher and others in the intellectual development, and Roscher and others have observed that, the economic studies particularly, the first three decades of the 18th century were a period of general stagnation, eclecticism for the most part taking the place of originality. The movement was, however, soon to be resumed, but with an altered and more formidable character. The negative doctrine, which had risen and taken a definite form in England, was diffused and popularized in France, where it became evident, even before the decisive explosion, that the only possible issue lay in a radical social transformation. The partial schools of Voltaire and Rousseau in different ways led up to a violent crisis, whilst taking little thought of the conditions of a system which could replace the old; but the more complete and organic school, of which Diderot is the best representative, looked through freedom to reorganization. Its constructive aim is shown by the design of the encyclopédie,—a project; however, which could have only a temporary success, because no real synthesis was forthcoming, and this joint production of minds often divergent could possess no more than an external unity. It was with this great school that the physiocrats were specially connected; and, in common with its other members, whilst pushing towards an entire change of the existing system, they yet would gladly have avoided political demolition through the exercise of a royal dictatorship, or contemplated it only as the necessary condition of a new and better order of things. But, though marked off by such tendencies from the purely revolutionary sects, their method and fundamental ideas were negative, resting, as they did essentially on the basis of the jus naturae. We shall follow in detail these French developments in their special relation to economic science, and afterwards notice corresponding movements in other European countries which showed themselves before the appearance of Adam Smith, or were at least unaffected by his influence.


1. Before Adam Smith

France.—The more liberal, as well as more rational principles put forward by the English thinkers of the new type began, early in the 18th century, to find an echo in France, where the clearer and more vigorous intellects were prepared for their reception by a sense of the great evils which exaggerated mercantilism, serving of the instrument of political ambition, had produced in that country. The impoverished condition of the agricultural population, the oppressive weight and unequal imposition of taxation, and the unsound state of the public finances had produced a general feeling of disquiet, and led several distinguished writers to protest strongly against the policy of Colbert and to demand a complete reform.

The most important amongst them was Pierre Boisguillebert, whose whole life was devoted to these controversies. In his statistical writings (Détail de la France sous le régne present, 1697; Factum de la France, 1707) he brings out in gloomy colours the dark side of the age of Louis XVI., and in his theoretic works (Traité de la nature et du commerce des grains; Dissertations sur la nature des richesses de l’argent et des tributes; and Essai la rareté de l’arhent) he appears as an earnest, even passionate, antagonist of the mercantile school. He insists again and again on the fact that national wealth does not consist in gold and silver, but in useful things, foremost among which are the products of agriculture. He even goes so far as to speak of "argent criminal," which from being the slave of trade, as it ought to be, had become its tyrant. He sets the "genuinely French Sully" far above, the "Italianizing Colbert," and condemns all arbitrary regulations affecting either foreign or integral commerce, especially as regards the corn trade. National wealth does not depend on Governments, whose interference does more harm than good; the natural laws of the economic order of things cannot be violated or neglected with impunity; the interests of the several classes of society in a system of freedom are identical, and those of individuals coincide with that of the state. A similar solidarity exists between different nations; in their economic dealings they are related to the world as individual towns to a nation, and not merely plenty, but peace and harmony, will result form their unfettered intercourse. Men he divides into two classes—those who do nothing and enjoy everything, and those who labour from morning to night often without earning a bare subsistence; the latter he would favour in every way. Here we catch the breath of popular sympathy which fills the social atmosphere of the 18th century. He dwells with special emphasis on the claims of agriculture, which had in France fall into unmerited neglect, and with a view to its improvement call for a reform in taxation. He would replace indirect taxes on income, and would restore the payment of taxes in kind, with the object of securing equality of burden and eliminating every element of the arbitrary. He has some interesting views of a general character: thus he approximates to a correct conception of agriculture rent; and he points to the order in which human wants follow each other,—those of necessity, convenience, comfort, superfluity, and ostentation succeeding in the order named, and ceasing in the inverse order to be felt as wealth decreases. The depreciating tone in which Voltaire speaks of Boisguillebert (Siécle de Louis XVI., chap. 30) is certainly not justified; he had a great economic talent, and his writings contain important germs of truth. But he appears to have exerted little influence, theoretical or practical, in his own time.

The same general line of thought was followed by the illustrious Vauban in his economic tracts, especially that bearing the title of Projet d’une dixme Royale, 1707. he is deeply impressed with the deplorable condition of the working classes of France in his day. He urges that the aim of Government should be the welfare of all orders of the community; that all are entitled to like favour and furtherance; that the often despised and wronged lower class is the basis of the social organization; that labour is the foundation of all wealth, and agriculture the most important species of labour; that the most essential condition of successful industry is freedom; and that all unnecessary or excessive restrictions on manufactures and commerce should be swept away. He protest in particular against inequalities of taxation, and the exemptions and privileges enjoyed by the higher ranks. With the exception of some duties on consumption he would abolish all the existing taxes, and substitute for them a single tax on income and land, impartially applied to all classes, which he describes under the mine of "Dixime Royale," that is to say, a tenth in kind of all agricultural produce, and a tenth of money income charheable on manufacturers and traders.

The liberal and humane spirit of Fénelon led him to aspire after freedom of commerce with foreign nations, and to preach the doctrine that the true superiority of one state over another lies in the number indeed, but also in the morality, intelligence, and industrious habits of its population. The Télémague, in which these views were presented in an attractive form, was welcomed and read amongst all ranks and classes, and was thus an effective organ for the propagation of opinion.

After these writers there is a marked blank in the field of French economic thought, broken only by the Réflexions Politiques sur les Finances et le Commerce, (1738) of Dutot, a pupil of Law, and the semi-mercantilist Essais Politiques sur le Commerce (1731) of Mélon, rill we come to the great name of Montesquieu. The Esprit des Lois, so far as it deals with economic subjects, is written upon the whole from a point of view adverse to the mercantile system, especially in his treatment of money, though in his observations on colonies and elsewhere he falls in with the ideas of that system. His immortal service, however, was not rendered by any special research, but by his enforcement of the doctrine of natural laws regulating social no less than physical phenomena. There is no other thinker of importance on economic subjects in France till the appearance of the physiocrats, which marks an epoch in the history of the science.

The head of the physiocrats school were François Quesnay (1694-1774) and Jean Claude Marie Vincent, sieur de Gournay (1712-1759). The principles of the school had been put forward in 1755 by Cantillon, a French merchant of Irish extraction (essai sur la nature du Commerce en general), whose biography Jevons has elucidated, and whom he regards as the true founder of political economy; but it was in the hands of Quesnay and Gournay that they acquired a systematic form, and became the creed of a united group of thinkers and practical men, bent on carrying them into action. The members of the group called themselves "les economists,’ but it is more convenient, because unambiguous, to designate them by the name "physiocrates," invented by Dupont de Nemours, who was one of their number. In this name, intended to express the fundamental idea of the school, much more is implied than the subjection of the phenomena of the social, and in particular the economic, world to fixed relations of co-existence and succession. This is the positive doctrine which lies at the bottom of all true science. But the law of nature referred to in the title of the sect was something quite different. The theological dogma which represented all the movements of the universe as directed by divine wisdom and benevolence to the production of the greatest possible sum of happiness had been transformed in the hands of the metaphysicians into the conception of a jus naturae, a harmonious and beneficial code established by the favourite entity of these thinkers, Nature, antecedent to human institutions, and furnishing the model to which they should be made to conform. This idea, which Buckle apparently supposes to have been an invention of Hutcheson’s, had come down through Roman juridical theory from the speculations of Greece. It was taken in hand by the modern negative school from Hobbes to Rousseau, and used as powerful weapon of assault upon the existing order of society, with which the "natural" order was perpetually contracted as offering the perfect type from which fact had deplorably diverged. The theory received different applications according to the diversity of minds or circumstances. By some it was directed against the artificial manners of the times, by others against contemporary political institutions; it was specially employed by the physiocrats in criticizing the economic practice of European Governments.

The general political doctrine is as follows. Society is composed of a number of individuals all having the same natural rights. If all do not possess (as some members of the negative school maintained ) equal capacities, each can at least best understand his own interest, and is led by nature to follow it. The social union is really a contract between these individuals, the objects of which is the limitation of the natural freedom of each, just so far as it is inconsistent with the rights of the others. Government, though necessary, is a necessary evil; and the governing power appointed by consent should be limited to the amount of interference absolutely required to secure the fulfillment of the contract. In the economic sphere, this implied the right of the individual to such natural enjoyment as he can acquire by his labour. That labour, therefore, should be undisturbed and unfettered; and its fruits should be guaranteed to the possessor; in other words, property should be sacred. Each citizen must be allowed to make the most of his labour; and therefore freedom of exchange should be ensured, and competition in the market should be unrestricted, no monopolies or privileges being permitted to exist.

The physiocrats then proceed with the economic analysis as follows. Only those labours are truly "productive" which add to the quantity of raw materials available for the purposes of man; and the real annual addition to the wealth of the community consists of the excess of the mass of agricultural products (including, of course, metals) over their cost of production. On the amount of this "produit net" depends the wellbeing of the community, and the possibility of its advance in civilization. The manufacturers merely gives a new form to the materials extracted from the earth; the higher value of the object, after it has passed through his hands, only represents the quantity of provisions and other materials used and consumed in its elaboration. Commerce does nothing more than transfer the wealth already existing from one hand to another; what the trading classes gain thereby is acquired at the cost of the nation, and it is desirable that its amount should be as small as possible. The occupations of the manufacturer and merchant, as well as the liberal professions, and every kind of personal service, are "useful" indeed, but they are "sterile," drawing their income, not from any fund which they themselves create, but from the superfluous earnings of the agriculturist. Perfect freedom of trade not only rests, as we have already seen, on the foundation of natural right, but is also recommended by the consideration that it makes the "produit net," on which all wealth and general progress depend, as large as possible. "Laissez faire, laissez passer" should therefore be the motto of Governments. The revenue of the state, which must be derived altogether from this net product, ought to be raised in the most direct and simplest way,—namely, by a single impost of the nature of a land tax.





The special doctrine relating to the exclusive productiveness of agriculture arose out of a confusion between "value" on the one hand and "matter and energy" on the other. Smith and others have shown that the attempt to fix the character of "sterility" on manufacturers and commerce was founded in error. And the proposal of a single impôt territorial falls to the ground with the doctrine on which it was based. But such influence as the school exerted depended little, if at all, on these peculiar tenets, which indeed some of its members did not hold. The effective result of its teaching was mainly destructive. It continued in a more systematic form the efforts in favour of the freedom of industry already begun in England and France. The essential historical office of the physiocrats was to discredit radically the methods followed by the European Governments in their dealings with industry. For such criticism as their there was, indeed, ample room: useful, had been abusively extended and intensified; Governmental action had intruded itself into the minutest details of business, and every process of manufacture and transaction of trade was hampered by legislative restrictions. It was to be expected that the reformers should, in the spirit of the negative philosophy, exaggerate the vices of established systems; and there can be no doubt that they condemned too absolutely the economic action of the state, both in principle and in its historic manifestations, and pushed the "laissez faire" doctrine beyond its just limits. But this was a necessary incident of connexion with the revolutionary movement, which they really formed one wing. In the course of that movement, the primitive social contract, the sovereignty of the people, and other dogmas now seen to be untenable were habitually invoked in the region of politics proper, and had a transitory utility as ready and effective instruments of warfare. And so also in the economic sphere the doctrines of natural rights of buying and selling, of the sufficiency of enlightened selfishness as a guide in mutual dealings, of the certainty that each member of the society will understand and follow his true interests, and of the coincidence of those interests with the public welfare, though they will not bear a dispassionate examination, were temporarily useful as convenient and serviceable weapons for the overthrow of the established consecrate the spirit of individualism, and the state of non-government. But this tendency, which may with justice be severely condemned in economists of the present time, was then excusable because inevitable. And, whilst it now impedes the work of reconstruction which is for us the order of the day, it then aided the process of social demolition, which was the necessary, though deplorable condition of a new organization.

These conclusions as to the revolutionary tendencies of the school are not at affected by the fact that the form of government preferred by Quesnay and some of his chief followers was what they called a legal despotism, which should embrace within itself both the legislative and the executive function. The reason for this preference was that an enlightened central power could more promptly and efficaciously introduce the policy they advocated than an assembly representing divergent opinions, and fettered by constitutional checks and limitations. Turgot, as we know, used of his measures for the liberation of industry, though he ultimately failed because unsustained by the requisite force of character in Louis XVI. But what the physiocrats idea with the respect to the normal method of government was appears from Quesnay’s advice to the dauphin, that when he became king he should "do nothing, but let the laws rule," the laws having been of course first brought into conformity with the jus naturae. The partiality of the school for agriculture was in harmony with the sentiment in favour of "nature" and primitive simplicity which then showed itself in so many forms in France, especially in combination with the revolutionary spirit, and of which Rousseau was the most eloquent exponent. It was also associated in these writers with a just indignation at the wretched state in which the rural labourers of France had been left by the scandalous neglect of the superior orders of society—a state of which the terrible picture drawn by La Bruyére is an indestructible record. The members of the physiocratic group were undoubtedly men of thorough uprightness, and inspired with a sincere desire for the public good, especially for the material and moral elevation of the working classes. Quesnay as physician to Louis XV., and resided in the palace at Versailles; but in the midst of that corrupt court he maintained his integrity, and spoke with manly frankness what he believed to be the truth. And never did any statesman devote himself with greater singleness country than Turgot, who was the principal practical representative of the school.

The publications in which Quesnay expounded his system were the following:—two articles, on "Fermiers" and on "Grains," in the Encyclopédie of Diderot and D’Alembert (1756, 1757); a discourse on the law of nature in the Physiocratie of Dupont de Nemours (1768); Maximes générales de gouvernement économique d’un royaume agricole (1758), and the simultaneously published Tableau Économique avec son explication, ou Extrait des Économies Royales de Sully (with the celebrated motto "pauvres paysans, pauvre royaume; pauvre royaume, pauvre roi"); Dialogue sur le commerce et les travaux des artisans; and other minor prices. The Tableau Économique, though on account of its dryness and abstract form it met with little general favour, may be considered the principal manifesto of the school. It was regarded by the followers of Quesnay as entitled to a place amongst the foremost products of human wisdom, and is named by the elder Mirabeau, in a passage quoted by Adam Smith, as one of the three great inventions which have contributed most to the stability of political societies, the other two being those of writing and of money. It’s object was to exhibit by means of certain formulas the way in which the products of agriculture, which is the only source of wealth, would in a state of perfect liberty be distributed among the several classes of the community (namely, the productive classes of the proprietors and cultivators of land, and the unproductive class composed of manufacturers and merchants), and to represent by other formulas the modes of distribution which take place under systems of Governmental restraint and regulation, with the evil results arising to the whole society from different degrees of such violations of the natural order. It follows from Quesnay’s theoretic views that the one thing deserving the solicitude of the practical economist and the statesman is the increase of the net product; and he infers also what Smith afterwards affirmed on not quite the same ground, that the interest of the landowner is "strictly and indissolubly connected with the general interest of the society."

Jean V. Gournay, as we have seen, was regarded as one of the founders of the school, and appears to have exercised some influence even upon the formation of Quesnay’s own opinions. With the exception of a translation of Sir Josiah Child, Gournay wrote nothing but memoirs addressed to ministers, which have not seen the light; but we have a full statement of his views in the Éloge dedicated to his memory by his illustrious friend Turgot. Whilsts Quesnay had spent his youth amidst rural scenes, and had been early familiar with the labours of the field, Gournay has been bred as a merchant, and has passed from the counting-house to the office of intendant of commerce. They thus approached the study of political economy from different sides and this diversity of their antecedents may in part explain the amount of divergence which existed between their views. Gournay softened the rigour of Quesnay’s system,. And brought it nearer to the truth, by rejecting what Smith calls its "capital error"—the doctrine, namely, of the unproductiveness of manufactures and commerce. He directed his efforts to the assertion and vindication of the principle of industrial liberty, and it was by him that this principle was formulated in the phrase, since so often heard for good and for evil, "Laissez faire, laissez passer." One of the earliest and most complete adherents of the physiocrats school, as well as an ardent and unwearied propagator of its doctrines, was Victor Mirabeau, whose sincere and independent, though somewhat perverse and whimsical, character is familiar to English readers through Carlyle’s essay on his more celebrated son. He had expressed some physiocratic views earlier than Quesnay, but owned the latter for his spiritual father, and adopted most of his opinions, the principal difference being that he was favourable to the petite as opposed to the grande culture, which latter was preferred by his chief as giving, not indeed the largest gross, but the largest net product. Mirabeau’s principal writing’s were Amides Hommes, ou traitésur la population (1756, 1760), Théorie de l’impôt (1760), Les economiques (1769), and Philosophie rurale, ou Économie générale et polotique de ‘l’ Agriculture (1763). The last of these was the earliest complete exposition of the physiocratic system. Another earnest and persevering apostle of the system was Dupont de Nemours (1759-1817), known by his treatsies De l’exportation et de l’importation des progress d’une science nouvelle (1767), Du commerce de la Compagnie des Indes (1767), and especially by nhis more comprehrensive work Physiocratie, ou Constitution naturalle dy gouvernement le plus avantageux au genre humain (1768). The title of this work gave, as has been already mentioned, a name to the school. Another formal exposition of the system, to which Adam Smith refers as "the most distinct and best connected account" of it, was produced by Mercier-Lariviére, under the title L’Ordre naturel et essential des sociétés politiques (1767), a title which is interesting as embodying the idea of the jus naturae. Both he and Dupont de Nemours professed to study human communities, not only in relation to their economic, but also to their political and general social aspects; but, notwithstanding these larger pretensions, their views were commonly restricted in the main to the economic sphere; at least material considerations decidedly preponderated in their inquiries, as was naively indicated by Lariviére when he said, "Property, security, liberty—these comprise the whole social order; the right of property is a tree of which all the institutions of society are branches."

The most eminent member of the group was without doubt Anne Robert Jacques Turgot (1727-1781). This is not the place to speak of his noble practical activity, first as intendant of Limoges, and afterwards for a brief period as finance minister, or of the circumstances which led to his removal from office, and the consequent failure of his efforts for the salvation of France. His economic views are explained in the introductions to his edicts and ordinances, in letters and occasional papers, but essentially in his Réflections sur la formation et la distribution des richesses (1766). This is a condensed but eminently clear and attractive exposition of the fundamental principles of political economy, as they were conceived by the physiocrats. It embodies, indeed, the erroneous no less than the sound doctrines of that school; but several subjects, especially the various forms of land-economy, the different employments of capital, and the legitimacy of interest, are handled in a generally just as well as striking manner; and the mode of presentation of the ideas, and the luminous arrangement of the whole, are Turgot’s own. The treatise, which contains a surprising amount of matter in proportion to its length, must always retain a place among the classes of the science.

The physiocratic school never obtained much direct popular influence, even in its native country, though it strongly attracted many of the more gifted and earnest minds. Its members, writing on dry subjects in an austere and often heavy style, did not find acceptance with a public which demanded before all things charm of manner in those who addressed it. When Morellet, one of their number, entered the lists with Galiani, it was seen indeed, but clumsy in the movements. The phsyiocratic tenets, which were in fact partially erroneous, were regarded by many as chimerical. And were ridiculed in the contemporary literature, as, for example. the impôt unique by Voltaire in the L’homme aux quarante écus, which was directed in particular against Mercier-Lariviére. It was justly objected to the group that they were too absolute in speaking of Quesnay, that the body politic could thrive only under one precise régime,—that, namely, which they recommended,—and thought their doctrines universally and immediately applicable in practice. They did not, as theorists, sufficiently take into the account national diversities, or different stages in social development; nor did they, as politicians, adequately estimate the impediment which ignorance, prejudice, and interested opposition present to enlightened statesmanship. It is possible that Turgot himself, as Grimm suggests, owed his failure in part to the too unbending rigour of his policy and the absence of any attempt at conciliation. Be this as it may, his defeat helped to impair the credit of his principles, which were represented as having been tried and found wanting.





The physiocratic system, after guiding in some degree the policy of the Constituent Assembly, and awakening a few echoes here and there in foreign countries, soon ceased to exist as a living power; but the good elements it comprised were not lost to mankind, being incorporated into the sounder and more complete construction of Adam Smith.

Italy—In Italy, as in the other European nations, there was little activity in the economic field during the first half of the 189thc century. It was then, however, that really remarkable man appeared, the archdeacon Salustio Antonio Bandini (1677-1760), author of the Discorso sulla Maremma Sienese, written in 1737, but not published till 1775. The object of the work was to raise the Maremma from the wretched condition into which it had fallen through the decay of agriculture. This decay he showed to be, at least in part, the result of the wretched fiscal system which was in force; and his took led to important reforms in Tuscany, whre his name is held in high honour. Not only by Pecchio and other Italian writers, but by Roscher also, he is alleged to have anticipated some leading doctrines of the physiocrats, but this claim is disputed. There was a remarkable renascence of economic studies in Italy during the latter half of the century, partly due to French influence, and partly, it would appear, to improved government in the northern states.

The movement of first followed the lines of the mercantile school. Thus, in Antonio Broggia’s Trattati dei tribudi e delle monete e del governo politico della societa (1743), and Girolamo Belloni’s Dissertazione sopra il commercio (1750), which seems to have had a success and reputation much above its merits, mercantilist tendencies decidedly preponderate. But the most distinguished writer who represented that economic doctrine in Italy in the last century was Anotonio Genovesi, a Neapolitan (1712-1769). He felt deeply the depressed intellectual and moral state of his fellow-countrymen, and aspired after a revival of philosophy and reform of education as the first condition of progress and wellbeing. With the object of protecting him from the theological persecutions which threatened him on account of his advanced opinions, Bartolomeo Intieri, of whom we shall hear again in relation to Galliani, founded in 1755, expressly for Genovesi, a chair of commerce and mechanics, one of the monk. This was the first professorship of economics established in Europe; the second was founded at Stockholm in 1758, and the third in Lombardy ten years later, for Beccaria. The fruit of the labours of Genovesi in this chair was his Lezioni di commercio, ossia di economia civile (1769), which contained the first systematic treatment of the whole subject which has appeared in Italy,. As the model for Italian imitation he held up England, a country for which, says Pecchio, he had a predilection almost amounting to fanaticism. He does not rise above the false economic system which England then pursued but he rejects some of the grosser errors of school to which he belonged; he advocates the freedom of the corn trade, and deprecates regulation of the interest on loans. In the spirit of his age, he denounces the relics of mediaeval institutions, such as entails and tenures in mortmain, as impediments to the national prosperity. Ferdinando Galiani was another distinguished disciple of the mercantile school. Before he had completed his twenty-first year he published a work on money (Della moneta libri cinque, 1750), the principles of which are supposed to have been dictated by two experienced practical men, the marquis Rinuccini and Bartolomeo Intieri, whose name we have already met. But his reputation was made by a book written in French and published in Paris, where he was secretary of embassy, in 1770, namely, his Dialogues sur le commerce des blés. This work, by its light and pleasing style, and the vivacious wit which it abounded,delighted Voltaire, who spoke of it as a book in the production of which Plato and Moliére might have been combined!

The author, says Pecchio, treated his arid subject as Fontenelle did the vortices of Descartes, or Algarotti the Newtonian system of the world. The question at issue was that of the freedom of the corn trade, then much agitated, and, in particular, the policy of the royal edict of 1764, which permitted the exportation of grain o long as the price had not arrived at a certain height. The general principle he maintains is that the best system in regard to this trade is to have no system,—countries differently circumstanced requiting, according to him, different modes of treatment. This seems a lame and impotent conclusion from the side of science; yet doubtless the physiocrats, with whom his controversy lay, prescribed on this as on other subjects, rules too rigid for the safe guidance of statesman, and Galiani may have rendered a real service by protesting against their absolute solutions of practical problems. He fell, however, into some of the most serious errors of the mercantilists,—holding, as indeed did also Voltaire and even Verri, that one country cannot gain without another losing, and in his earlier treatise going so far as to defend the action of Governments in debasing the currency.

Amongst the Italian economists who were most under the influence as indeed did also Voltaire and even Verri, that one country cannot gain without another losing, and in his earlier treatise going so far as to defend the action of Governments in debasing the currency.

Amongst the Italian economists who were most under the influence of modern spirit, and in closest harmony with the general movement which was impelling the Western nations towards a new social order, Cesare Beccaria (1738-1794) holds a foremost place. He is best known by his celebrated treatise Dei delitti e delle pene, by which Voltaire said he had made himself a benefactor of all Europe, and which, we are told, has been translated into twenty-two languages. The express Catherine having invited him to fix his residence at St Petersburg, the Austrian Government of Lombardy, in order to keep him at home, established expressly for him a chair of political economy; and in his Elementi di economia pubblica (1769-1771; not published, however, till 1804) are embodied his teachings as professor. The work is unfinished: he had divided the whole subject under the heads of agriculture, manufactures, commerce, taxation, government; but he has treated adequately only the first two heads, and the last two not at all, having been called to take part in the councils of the state. He was in some degree under the influence of physiocratic ideas, and holds that agriculture is the only strictly productive form of industry, whilst manufacturers and artisans are a sterile class. He was strongly opposed to monopolies and privileges, and to corporations in arts and trades; in general he warmly advocated internal industrial freedom, though in regard to foreign commerce a protectionist. In the special case of the corn trade he was not, any more than Galiani, a partisan of absolute liberty. His exposition of economic principles is concise and sententious, and he often states correctly the most important consideration relating to his subject without adding the developments which would be desirable to assist comprehension and strengthen conviction. Thus on "production capital" (capitali fondatori), as distinct from "revenue capital," in its application to agriculture, he presents in a condensed form essentially the same explanations as Turgot about the same time gave; and on the division of labour and the circumstances which cause different rates of wages in different employments, he in substance come near to Smith, but without the fullness of illustration which is so attractive a feature of the Wealth of Nations. Pietro Verri (1728-1797), an intimate and life-long friend of Beccaria, was for twenty-five years one of the principal directors of the administration of Lombardy, in which capacity he originated many economic and other reforms. In his Riflessioni sulle leggi vincolanti, principlamente nel commercio de’ grani (written in 1769, printed in 1796), he considers the question of the regulation of the corn trade both historically and in the light of theoretic principles, and arrives at the conclusion that liberty is the best remedy against famine and against excessive fluctuations of price. He is generally opposed to Governmental interference with internal commerce, as well as to trade corporations and the attempts to limit prices or fix the rate of interest, but is in favour of the protection of national industry by a judiciously framed tariff. These views are explained in his Meditazioni sull’ economia politica (1771), an elementary treatise on the science, which was received with favour, and translated into several foreign languages. A primary principle with him is what he calls the augmentation of reproduction—that is, in Smith’s language, of "the annual produce of the land and labour" of a nation; and by its tendency to promote or to restrict this augmentation he tests every enactment and institution. Accordingly, unlike Beccaria, he prefers the petite to the grande culture, as giving a larger total produce. In dealing with taxation, he rejects the physiocratic proposal of a single impôt territotial. Giovanni R. Carli (1720-1795), also an official promoter o the reforms in the government of Austrian Lombardy, besides learned an sound treatises on money, was author of Ragionamenti spra I bilanci economici delle nazioni, in which he shows the falsity of the notion that a state gains or losses in foreign commerce according to the so-called balance of trade. In his letter to Pompeo Neri Sul libero commercio de’ grani (1771), he takes up a position similar to that of Galiani, regarding the question of the freedom of the corn trade as not so much a scientific as an administrative one, to be dealt with differently under different local or other conditions. Rejecting the physiocratic doctrine of the exclusive productiveness of agriculture, he illustrates in an interesting way the necessity of various economic classes in a society, and the reflex agency of manufacturers in stimulating the cultivation of the soil. Giambattista Vasco (1733-1796) wrote discourses on several questions proposed by academies and sovereigns. In these he condemns trade corporations and the attempts by Governments to fix the price of bread and to limit the interest on loans. In advocating the system of a peasant proprietary, he suggests that the law should determine the minimum and maximum portions of land which a citizen should be permitted to process. He also, with a view to prevent the undue accumulation of property, proposes the abolition of the right of bequest, and the equal divisionm of the inheritance amongst the children of the deceased. Gaetano Filangieri (1752-1788), one of the Italian writers of the last century whose names are most widely known throughout Europe, devoted to economic questions the second book of his Scienza della legislazione (5 vols., 1780-1785). Filled with reforming ardour and a passionate patriotism, he employed his vehement eloquence in denouncing all the abuses of his time. Apparently without any knowledge of Adam Smith, he insists on unlimited freedom of trade, calls for the abolition of the mediaeval institutions which impeded production, and national wellbeing, and condemns the colonial system then followed by England, Spain, and Holland. He prophesies, as Roynal and Genovesi had done before him, that all America would one day be independent, a prediction which probably helped to elicit Benjamin Franklin’s tribute of admiration for his work. Rather a propagator than a discoverer, he sometimes adopted from others erroneous opinions, as, for example, when he approves the impôt unique of the physiocrats. On the whole, however, he represents the most advanced political and social tendencies of his age; whilst strongly contrasted with Beccaria in temperament and style, he was a worthy labourer in the same cause of national and universal progress. Ludovico Ricci (1742-1799) was author of an able report Sulla riforma degli istituti pii della citta di Modena (1787). He treated the subject of poor relief and charitable institutions in so general a way that the work possesses a universal and permanent interest. He dwells on the evils of indiscriminate relief as tending to increase the misery it seeks to remove, and as lowering the moral character of a population. He exposes especially the abuses connected with lying-in and foundling hospitals. There is much in him which is akin to the views of Malthus: like him he is opposed to any state provision for the destitute, who ought, he thinks, to be left to voluntary private beneficence. Ferdinando Paoletti (1717-1801) was an excellent and public-spirited priest, who did much for the diffusion of intelligence amongst the agricultural population of Tuscany, and for the lightening of the taxes which pressed upon them. He corresponded with Mirabeau ("Friend of Men), and appears to have accepted the physiocratic doctrines, at least in their general substance. He was author of Pensieri sopra l’agricoltura (1769), and of I veri mezzi di render felice le società (1772); in the latter he advocates the freedom of the corn trade. The tract Il Colbertismo (1791) by Count Francesco Mengotti is a vigorous protest against the extreme policy of prohibition and protection, which may still be read with interest. Mengotti also wrote (1791) a treatise Del commercio de’ Romani, directed mainly against the exaggerations of Huet in his Histoire du coimmerce el de la navigation des anciens (1716), and useful as marking the board difference between the ancient and modern civilizations.

Here lastly may be mentioned another Italian thinker who eminently original and even eccentric, cannot easily be classed among his contemporaries, though some Continental writers of our own century have exhibited similar modes of thought. This was Giammaria Ortes (1713-1790). He is opposed to the liberalist tendencies of his time, but does not espouse the doctrines of the mercantile system, rejecting the theory of the balance of trade and demanding commercial freedom. It is in the Middle Ages that he finds his social and economic type. He advocates the maintenance of church property, is averse to the ascendancy of the money power, and has the mediaeval dislike for interest on loans. He entertains the singular idea that ten wealth of communities is always and everywhere in a fixes ratio to their population, the latter being determined by the former. Poverty, therefore, necessarily waits on wealth, and the rich, in becoming so, only gain what the poor lose. Those who are interested in the improvement of the condition of the people labour in vain, so long as they direct their efforts to the increase of the sum of the national wealth, which it is beyond their power to alter, instead of to the distribution of that wealth, which it is possible to modify. The true remedy for poverty lies in mitigating the gain-pursuing propensities in the rich and in men of business. Ortes studied in a separate work the subject of population; he formulates its increase as "geometrical," but recognizes that, as a limit is set to such increase amongst the lower animals by mutual destruction, so is it in the human species by "reason"—the "prudential restraint" of which Malthus afterwards made so much. He regards the institution of celibacy as no less necessary and advantageous than that of marriage. He enunciates what has since been known as the "law of diminishing returns to agricultural industry." He was careless as to the diffusion of his writings; and hence they remained almost unknown till they were included in the Custodi collection of Italian economists, when they attracted much attention by the combined sagacity and waywardness which marked their author’s intellectual character.

Spain—The same breath of a new era which was in the air elsewhere in Europe made itself felt also in Spain.

In the earlier part of the 18th century Geronimo Ustariz had written his Teorica y Practica del Comercio y Marina (1724; published, 1740; Eng. Transl. by John Kippax, 1751; French by Forbonnais, 1753). In which he carries mercantile principles to their utmost extreme.

The reforming spirit of the latter half of the century was best represented in their country by Pedro Rodriquez, count of Campomanes (1723-1802). He pursued with ardour the same studies and in some degree the same policy as his illustrious contemporary Turgot, without, however, having arrived at so advanced a point of view. He was author of Respuesta fiscal sobre abolir la tasa y establecer el comercio de granos (1764), Discurso sobre el fomento de indsutria popolar (1774), and Discurso sobre la educacion de los artesanos y su fomento (1775). By means of these writings, justly eulogized by Robertson, as well as by his personal efforts as minister, he ought to establish the freedom of the corn trade, to remove the hindrances to industry arising from mediaeval survivals, to give a large development to manufacturers, and to liberate agriculture from the odious burdens to which it was subject. He saw that, notwithstanding the enlightened administration of Charles III., Spain still suffered form the evil results of the blind confidence reposed by her people in her gold mines, and enforced the lesson that the real sources of the wealth and power of his country must be sought, not in American, but in her own industry.

In both Italy and Spain, as is well observed by Comte, the impulse towards social change took principally the direction of economic reform, because the pressure exercised by Governments prevented so large a measure of free speculation in the fields of philosophy and general politics as was possible in France. In Italy, it may be added, the traditions of the great industrial past of the northern cities of that country also tended to fix attention chiefly on the economic side of public and legislation.

Germany—We have seen that in Italy and England political economy had its beginnings in the study of practical questions relating chiefly to money or to foreign commerce. In Germany it arose (as Roscher has shown) out of the so-called cameralistic sciences. From the end of the Middle Ages there existed in most German counties a council, known as the Kammer (Lat. camera), which was occupied with the management of the public domain and the guardianship of regal rights. The emperor Maximilian found this institution existing in Burgundy, and established, in imitation of it, aulic councils at Innsbruck and Vienna in 1498 and 1501. Not only finance and taxation, but questions also of economic police, came to be intrusted to these bodies. A special preparation became necessary for their members, and chairs of cameralistic science were founded in universities for the teaching of the appropriate body of doctrine. One side of the instruction thus given borrowed its materials from the sciences of external nature, dealings, as it did, with forestry, mining, general technology, and the like; the other related to the conditions of national prosperity as depending on human relations and institutions; and out of the latter German political economy was at first developed.

In no country had mercantilist views a stronger hold than in Germany, though in none, in the period we are now considering, did the system of the balance of trade receive a less extensive practical application. All the leading German economists of the 17th century—Bornitz, Besold, Klock, Becher, Horneck, Seckendorf, and Schröder—stand on the common basis of the mercantile doctrine. And the same may be said of the writers of the first half of the 18th century in general, and notably of Justi (d. 1771), who was the author of the first systematic German treatise on political economy, a work which, from its currency as a text book, had much a effect on the formation of opinion. Only in Zincke (1692-1769) do we find occasional expressions of a circle of ideas at variance with the dominant system, and pointing in the direction of industrial freedom. But these writers, except from the national point of view, are unimportant, not having exercised any influence on the general movement of European thought.

The principles of the physiocrats system met a certain amount of favour Germany. Karl Friedrich, margrave of Baden, wrote for the use of his sons an Abrégé des principes d’ Économie Politicque, 1772, which is in harmony with the doctrines of that system. It possesses, however, little scientific value. Schlettwein (1731-1802) and Mauvillon (1743-1794) were followers of the same school. Theodor Schmalz (1764-1831), who is commonly named as "the last of the physiocrats," may be here mentioned, though somewhat out of the historic order. He compares Colbertism with the Ptolemaic system, physiocratism with the Copernican. Adam smith he represents as the Tycho Brahe of political economy,—a man of eminent powers, who could not resist the force of truth in the physiocrats, but partly could not divest himself of rooted prejudices, and partly was ambitious of the fame of a discoverer and a reconciler of divergent systems. Though Smith was now "the fashion," Schmalz could not doubt that Quesnay’s doctrine was alone true, and would ere long be triumphant everywhere.

Just before the appearance of Smith, as in England Steuart, and in Italy Genovesi, so in Austria Sonnenfels (1733-1817), the first distinguished economist of that country, sought to present the mercantile system in a modified and more enlightened form; and his work (Grundsätze der Polizei, Handlung, und Finanz, 1765; 8th ed., 1822) exercised even during a considerable part of the present century much influence on opinion and on policy in Austria.

But the greatest German economist of the 18th century was, in Roscher’s opinion, Justus Möser (1720-1794), the author of Patriotische Phantasieen (1774), a series of fragments, which, Goethe nevertheless declares, form "ein wahrhaftes Ganzes." The poet was much influenced by Möser in his youth, and has eulogized in the Dichtung und Wahrheit his spirit, intellect, and character, and his thorough insight into all that goes on in the social world. Whilst others occupied themselves with larger and more prominent public affairs and transactions, Moser observed and reproduced the common daily life of his nation, and the thousand "little things" which compose the texture of popular existence. He has been compared to Franklin for the homeliness, verve, and freshness of his writings. In opinions he is akin to the Italian Ortes. He is opposed to the whole spirit of the "Aufklärung," and to the liberal and rationalistic direction of which Smith’s work became afterwards the expression. He is nor merely conservation but reactionary, manifesting a preference for mediaeval institutions such as the trade guilds, and, like Carlyle in out own time, seeing advantages even in serfdom, when compared with the sort of freedom enjoyed by the modern drudge. He has a marked antipathy for the growth of the money power and of manufacturers on the large scale, and for the highly developed division of labour. He is opposed to absolute private property in land, and would gladly see revived such a system of restrictions as in the interest of the state, the commune, and the family were imposed on mediaeval ownership. In his wayward and caustic style, he often criticizes effectively the doctrinaire narrowness of his contemporaries, throws out many striking ideas, and in particular sheds real light on the economic phenomena and general social conditions of the Middle Ages.


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