CHAPTER V. In the Glasgow Chair—the Lectures on Justice and Police

IN THE GLASGOW CHAIR—THE LECTURES ON JUSTICE AND POLICE

The finding of Adam Smith’s lectures on Justice, Police, Revenue, and Arms, 133 years at least after their last delivery and 105 years after the author had had his own folio notes of them destroyed, is not only one of the curiosities of literature, it is also the most important aid that has been afforded to the study of Smith’s economic, social, and juristic ideas since the appearance in 1793 of Dugald Stewart’s biographical sketch. From 1793 to 1896, hundreds of German students big with their epoch-making theses “über Smiths Entwicklung,” scores of Frenchmen eager to prove the superiority of Quesnai and Turgot, and perhaps half a dozen English critics had whetted their ingenuity on a brief account of the Glasgow lectures which was supplied to Dugald Stewart by Adam Smith’s old pupil and friend, John Millar. According to Millar, Smith’s course, while he occupied the chair of Moral Philosophy at Glasgow, fell into four parts, the first two of which consisted, as we have seen, of Natural Theology and Ethics. In the third part he treated at more length of that branch of morality which relates to justice. Here he followed the plan suggested by Montesquieu, “endeavouring to trace the gradual progress of jurisprudence, both public and private, from the rudest to the most refined ages.” This important branch of his labours he also intended to give to the public, but he did not live to fulfil his intention.

In the last part of his lectures he examined those political regulations which are founded not upon justice, but expediency, and considered the political institutions relating to commerce, to finance, to ecclesiastical and military establishments. “What he delivered on these subjects contained the substance of the work he afterwards published under the title of An Inquiry into the Nature and Causes of the Wealth of Nations.”

This was all that the world knew of Adam Smith’s lectures on jurisprudence and political economy, save that at the end of his Theory of Moral Sentiments he promised “another discourse” dealing with the general principles of law and government, and with the different revolutions they have undergone in the different ages and periods of society, “not only in what concerns justice, but in what concerns police, revenue, and arms, and whatever else in the subject of law.” On the first section of his lectures Adam Smith never even promised a book. He had no ambition to bring the kirk about his ears. The second section took shape, as we have seen, in the Theory of Moral Sentiments, after the publication of which in 1759 the plan of the lectures underwent a change, the ethical part being compressed and the economical part extended. The Wealth of Nations covers the subject of police, revenue, and arms, and so executes the promise in part. “What remains,” he wrote in 1790, “the theory of Jurisprudence, which I have long projected, I have hitherto been hindered from executing.” In the lectures now discovered and published we have therefore a first draft of the Wealth of Nations and also a first draft of the projected work on Justice, or Jurisprudence, “a sort of theory and history of law and government,” as he called it in a letter of 1785.

How, then, comes it to pass that we possess these legal and economic lectures just as Smith delivered them to his class at Glasgow, in spite of Dugald Stewart’s express statement that no part of them had been preserved “excepting what he himself published in the Theory of Moral Sentiments and in The Wealth of Nations”?

When Smith left Glasgow in 1764 his fame stood high, and probably there were many note-books containing his lectures floating about in the college. A good manuscript of useful lectures would pass from one student to another and might from time to time be found on a bookstall. In the session of 1762-3, or possibly of the previous year, an intelligent and attentive student took down Smith’s lectures with unusual accuracy. At least one copy was taken of it after Smith had left the University; for the manuscript so happily preserved is dated 1766, is clear, well written, and free from abbreviations, while some of the mistakes are evidently misreadings and not mishearings. That this fair copy was not made by the student who took the original notes is further shown, says the editor, “by the fact that, though the original note-taker must have been able and intelligent, the transcription is evidently the work of a person who often did not understand what he was writing.”

The manuscript consists of 192 leaves octavo size, bound in calf, with the signature of “J. A. Maconochie, 1811,” on the front cover. This Maconochie, or perhaps his father Allan, the first Lord Meadowbank, who was appointed professor of Public Law at Edinburgh in 1779, must have picked up the book, and it has remained in the possession of the family ever since. In 1876 Mr. Charles C. Maconochie rescued it from a garret-room, and in 1895 happened to mention it to Mr. Edwin Cannan, who thereupon undertook the task of editing it for the press—a task which he has performed to perfection. One result of this lucky discovery is to dispose of the legend that Adam Smith was little more than a borrower from the French school, a mere reflector of the Reflexions of Turgot. By examining the lectures we shall inform ourselves in the political wisdom which Adam Smith used to teach his fortunate class at Glasgow long years before he met Quesnai or Turgot, and longer still before the Reflexions began to appear in the Éphémérides du Citoyen.

“Jurisprudence” was the title Adam Smith gave to this course of lectures, and he divided it under four heads: Justice, Police, Revenue, and Arms, taken in the order named. Natural Jurisprudence, he begins, is the science that inquires into the general principles which ought to be the foundation of the laws of all nations. It is, he says elsewhere in his Theory of Moral Sentiments, “of all sciences by far the most important, but hitherto perhaps the least cultivated.” Grotius’s treatise on the Laws of War and Peace—“a sort of casuistical book for sovereigns and states”—was still, he thought, the most complete work on this subject. After Grotius came Hobbes, who, from an utter abhorrence of ecclesiasticism and bigotry, sought to establish a system of morals by which men’s consciences might be subjected to the civil power. Then after a few words on Puffendorf and Cocceii, Adam Smith explained his own classification as follows:—

“Jurisprudence is the theory of the general principles of law and government. The four great objects of law are justice, police, revenue, and arms.

“The object of justice is the security from injury, and it is the foundation of civil government.

“The objects of police are the cheapness of commodities, public security and cleanliness, if the two last were not too minute for a lecture of this kind. Under this head we will consider the opulence of a state.

“For defraying the expenses of government, some fund must be raised. Hence the origin of revenue.... In general, whatever revenue can be raised most insensibly from the people ought to be preferred; and in the sequel it is proposed to be shown, how far the laws of Britain and of other European nations are calculated for this purpose.

“As the best police cannot give security unless the government can defend themselves from foreign attacks, the fourth thing appointed by law is for this purpose; and under this head will be shown the different species of arms, the constitution of standing armies, militias, etc.

“After these will be considered the laws of nations.”

Having thus divided his whole course, Adam Smith proceeded further in an introductory lecture to subdivide his first part, Justice. The end of justice is to secure from injury; and a man may be injured as a member of a state, as a private individual (in his body, reputation, or property), or as a member of a family. Adam Smith therefore treats of justice under the three heads of Public Jurisprudence, Domestic Law, and Private Law. Many of his juristic ideas are evidently derived from Grotius, Locke, Montesquieu, Hutcheson, and Hume; but the effect produced is that of a powerful and original thinker in close touch with the best minds of his day, who draws his illustrations freely and easily alike from ancient and modern history. He finds that men were induced to enter civil society by two principles, authority and utility, that is to say, by the instinct of obedience and the instinct of self-preservation.

“In a monarchy the principle of authority prevails, and in a democracy that of utility. In Britain, which is a mixed government, the factions formed some time ago, under the names of Whig and Tory, were influenced by these principles; the former submitted to government on account of its utility and the advantages they derived from it, while the latter pretended that it was of divine institution, and to offend against it was equally criminal, as for a child to rebel against its parent. Men in general follow these principles according to their natural dispositions. In a man of a bold, daring, and bustling turn the principle of utility is predominant, and a peaceable, easy turn of mind usually is pleased with a tame submission to superiority.”

In the same chair Hutcheson had taught that society is founded on an original contract. Adam Smith discards the theory for various reasons:—

“In the first place, the doctrine of an original contract is peculiar to Great Britain, yet government takes place where it was never thought of, which is even the case with the greater part of people in this country. Ask a common porter or day-labourer why he obeys the civil magistrate, he will tell you that it is right to do so, that he sees others do it, that he would be punished if he refused to do it, or perhaps it is a sin against God not to do it. But you never hear him mention a contract as the foundation of his obedience.”

Smith was as fond as his master Aristotle of testing fine-spun theories by the coarse wear of daily life. He loved to march an army of common-folk through the cobwebs of political philosophy. A second objection was that, although a government may be entrusted to certain persons on certain conditions, the contract cannot bind their posterity. “It may indeed be said that by remaining in the country you tacitly consent to the contract, and are bound by it. But how can you avoid staying in it? You were not consulted whether you should be born in it or not. And how can you get out of it? Most people know no other language nor country, are poor, and obliged to stay not far from the place where they were born, to labour for a subsistence. They cannot therefore be said to give any consent to a contract, though they may have the strongest sense of obedience.”

In a remarkable book on English Government (1803), John Millar expresses his indebtedness to the “ingenious and profound author of the Wealth of Nations.” “I am happy,” he says, “to acknowledge the obligations I feel myself under to this illustrious philosopher by having at an early period of life had the benefit of hearing his lectures on the History of Civil Society, and of enjoying his unreserved conversation on the same subject.” And this indeed was the spacious topic which occupied most of the course on public jurisprudence. Nations of hunters and fishers, he began, had properly no government at all. They lived according to the laws of nature. Then he came to the patriarchs of the Old Testament and of the Homeric age, and compared the growth of republican government in Greece, Rome, and modern Italy. How liberty was lost is the next theme. The students were reminded of Cæsar and Cromwell, of the contrast between Western and Oriental despotisms, of the improvements in law which have often been introduced by military conquerors. They were then led to see by the history of the fall of the Roman Empire how “military monarchy came to share that fated dissolution that awaits every state and constitution.” After describing the fall of the Roman Empire, Smith gave an account of the origin of the modern governments of Europe.

Smith had Burke’s “salutary prejudice.” Despite a private partiality for republican institutions, he saw, like Montesquieu, in our constitution “a happy mixture of all the different forms of government properly restrained, and a perfect security to liberty and property.” The Commons in a great measure manage all public affairs, as no money-bill can take its rise except in that House. The judges are quite independent of the king. The Habeas Corpus Act and the methods of election are further securities of liberty. Lastly, “the law of England, always the friend of liberty, deserves praise in no instance more than in the careful provision of impartial juries.”

The first division of Justice concludes with an excellent description of the struggle between the English nation and King James II., who “on account of his encroachments on the body politic was with all justice and equity in the world opposed and rejected.”

In the second division of Justice, called Domestic Law, he examined the legal relations that had subsisted at different times and in different countries between husband and wife, parent and child, master and servant, guardian and ward. The treatment is concise without being dry. Philosophy corrects curiosity; humanity peeps through law, and humour spices humanity. We come upon his favourite proposition that “love, which was formerly a ridiculous passion,” has become “grave and respectable,” the proof being that love now influences all public entertainments, whereas no ancient tragedy turned upon it. He counters Montesquieu’s statement that at Bantam, in the East Indies, there are ten women born for one man, by a broad doctrine: If the laws of nature are the same everywhere, the laws of gravity and attraction the same; why not the laws of generation? He reminds his class that slavery is still “almost universal”; for a small part of Western Europe is “the only portion of the globe that is free from it.” Upon the evils of slavery he spoke as strongly as he wrote before in the Theory of Moral Sentiments or afterwards in the Wealth of Nations (Book I. chap. viii.). It is almost needless, he says, to prove that slavery is a bad institution. “A free man keeps as his own whatever is above his rent, and therefore has a motive to industry. Our colonies would be much better cultivated by free men.” That slavery is a disadvantage appears, he adds, from the state of colliers and salters in Scotland. These poor wretches indeed, whom he must have seen daily in Kirkcaldy (where Pennant noticed them with indignation thirty years afterwards), had some privileges which slaves had not. Their property after maintenance was their own, and they could only be sold with their work. They were allowed to marry and to choose their religion, and their wages were half a crown a day, as compared with the sixpence or eightpence earned by the ordinary day-labourers in the neighbourhood. Nevertheless “colliers often leave our coal-works” and run away to Newcastle, preferring liberty on tenpence or a shilling a day to slavery on half a crown.

The third division (nearly fifty pages in all), on Private Law, summarises the Roman law of property, and compares the usages of Scotland and England. Smith had evidently consulted many law reports and statutes as well as some of the standard authorities in both kingdoms, such as Lord Kames’s Law Tracts, Dalrymple’s Feudal Property, Bacon’s New Abridgment of the Law, and Hawkins’s Pleas of the Crown. Smith was wonderfully free from legal obsessions. He condemned the excessive punishments of his time, and explained that they were founded not upon regard to public utility, but upon the spectator’s resentment against the offender and his sympathy with the injured party. The English laws of real property he regarded as unnatural and mischievous. He had mastered the theory of entail without being fascinated by it. “Upon the whole, nothing can be more absurd than perpetual entails. Piety to the dead can only take place when their memory is fresh in the minds of men; a power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity; such extension of property is quite unnatural.”

A similar but less pithy condemnation appears in the Wealth of Nations, and was one of the passages which led Cobden to declare shortly before his death that if he were a young man he would take Adam Smith in hand, and preach free trade in land as he had formerly preached free trade in corn.

Having considered “man as a member of a state, as a member of a family, and as a man,” Smith turned to Police, which is “the second general division of Jurisprudence.” At that time the word “police” was only half-way on its voyage from Greece. It “properly signified the policy of civil government, but now it only means the regulation of the inferior parts of government, viz. cleanliness, security, and cheapness or plenty.” “Cleanliness,” ninety years before the first Public Health Act, was only “the proper method of carrying dirt from the street,” while the term “security” exactly corresponded with police in the modern sense, being defined by Adam Smith as “the execution of justice, so far as it regards regulations for preventing crimes or the method of keeping a city guard.”

But cleanliness and security, “though useful,” were “too mean to be considered in a general discourse” of the kind which Adam Smith was delivering. Accordingly, after briefly comparing the amount of crime then prevalent in Paris, London, Edinburgh, and Glasgow—a comparison favourable to Glasgow and London—and inferring that the establishment of commerce and manufactures is the best police for preventing crimes, he passes to the consideration of cheapness or plenty—“or, which is the same thing, the most proper way of procuring wealth and abundance.” Then follows in a hundred pages what Mr. Cannan has well called a rough draft of the Wealth of Nations, containing (with some noteworthy exceptions) the main arguments and many of the illustrations which appeared a dozen or more years later in the book. By the student who would trace the growth of an idea and the history of a theory the value of the report can hardly be exaggerated. In Mr. Cannan’s words, “it enables us to follow the gradual construction of the work from its very foundation, and to distinguish positively between what the original genius of its author created out of British materials on the one hand, and French materials on the other.”

When we consider that this course of political economy was necessarily brief, and could not possibly contain all the arguments and illustrations he had already hammered out in the great workshop of his mind, we are inclined to wonder not that the lectures, when compared with the full body of doctrine, show many gaps, but rather that they correspond so closely with the final treatise evolved after twelve or fourteen years more of meditation, study, and travel. When we reach the crowning year of Adam Smith’s life with its laureate wreath we shall have something to say upon later accretions, such as his colonial policy, his view of expenditure, and that intensely practical theory of taxation which taught so many wholesome lessons to contemporary and succeeding statesmen. Oddly enough, the lecturer began by supplying the very thing his critics have missed in the Wealth of Nations—a theory of consumption. He had therefore, if we combine the lectures with the treatise, mapped out in his mind the entire scope of economic science in its natural order. First there is the demand that leads to productive labour, the desire which is satisfied by and therefore induces toil. Then comes his central theme, the division of labour and the subsidiary topic of its distribution (almost ignored in the lectures), with an appendix on revenue or taxation.

Looking now only at the lectures, we find that of the hundred pages into which this first discourse on the Wealth of Nations falls, eighty, or four-fifths, are concerned with “cheapness or plenty,” in other words, with “the most proper way of procuring wealth or abundance.” Cheapness is synonymous with plenty, as dearness is synonymous with dearth. Water is only cheap because it is plentiful, diamonds are costly only because they are scarce. If we wish to find wherein opulence consists, we must first consider what are the natural wants of mankind which are to be supplied; “and if we differ from common opinions, we shall at least give the reasons for our nonconformity.” So he sets about his task with a theory of consumption simple, intelligible, and adequate. Food, clothes, and lodgings are the threefold necessities of animal life. But most animals find these wants sufficiently provided by nature. Man alone has so delicate a constitution that no object is produced to his liking. So he improves his food by cookery, and protects himself by fire, clothes, and huts from the inclemency of the weather.

But as man’s physical delicacy requires much more provision than that of any other animal, so does the same, or rather the much greater, delicacy of his mind. Such is the nicety of his taste, that the very colour of an object hurts or pleases. He is tired by uniformity, and loves variety and change. The Indians gladly barter gems for the cheap toys of Europe. Thus besides the threefold necessities of life a multitude of wants and demands spring up to which agriculture, manufactures, arts, commerce, and navigation are subservient; while the establishment of law and government, “the highest effort of human prudence and wisdom,” enables the different arts to flourish in peace and security.

Thus Smith arrives at the point from which the Wealth of Nations was to start. In an uncivilised nation, where labour is undivided, the natural wants of mankind are provided for. But as civilisation advances with the division of labour, the provision becomes more liberal, so that “a common day-labourer in Britain has more luxury in his way of living than an Indian sovereign.” The labourer’s comfort, indeed, is nothing to that of the noble. Yet a European prince does not so far exceed a commoner as the latter does the chief of a savage nation. “In a savage nation,” he added, with a prophetic glance at Marx, “every one enjoys the whole fruit of his own labour.” It is therefore the Division of Labour that increases the opulence of a country. This is the kernel of political economy, the inner keep round which this great architect of a new science has built a fortress strong enough to protect society and to preserve the fruit of men’s toil from the well-meaning unwisdom of their governments. Not that Smith was insensible to the hardness of economic laws, to the cruel inequalities of industry:—

“In a civilised society,” he reminds his class, “though there is a division of labour, there is no equal division, for there are a good many who work none at all. The division of opulence is not according to the work. The opulence of the merchant is greater than that of all his clerks, though he works less; and they again have six times more than an equal number of artisans who are more employed. The artisan who works at his ease within-doors has far more than the poor labourer who trudges up and down without intermission. Thus, he who, as it were, bears the burden of society, has the fewest advantages.”

Division of labour multiplies the product of labour and so creates opulence. He takes a pin manufactory as an illustration. If one man made all the parts of a pin it would take him a year, and the pin would cost at least six pounds. By dividing the process of manufacture into eighteen operations, each man employed can make 2000 pins a day. When labour is thus divided, a much larger surplus is left over and above the labourer’s maintenance, and of this surplus the labourer will get a share. “The commodity becomes far cheaper and the labour dearer.” The less the labour that can procure abundance, the greater the opulence of society. But coin is not a safe criterion of wages. Twopence in China will buy more than five shillings in the sugar colonies. By dividing labour you increase dexterity. A boy nailmaker will easily make 2000 good nails while a country smith unaccustomed to the job is making 400 bad ones. You also save time; for time is always lost in going from one kind of work to another. “When a person has been reading, he must rest a little while before he begin to write”; and a country weaver with a small farm will saunter as he goes from the loom to the plough. By fixing each man to an operation the product is sure to be increased. Again, the quantity of work done is much augmented by the invention of machinery. Two men and three horses can do more with a plough than twenty men with spades. The miller and his servant will do more with the water-mill than a dozen men with the hand-mill. Horse-power and water-power had been brought to the assistance of man by philosophic invention; and even fire had been called in to aid him by the mechanical and chemical discoverers. The lecturer was doubtless thinking of his colleague Joseph Black, and of James Watt, who was at this time working within the precincts of Glasgow College, and was just developing what Smith calls “the philosopher’s invention of the fire machine.”

Smith puts forward a queer idea—and he stood to it in the Wealth of Nations—that what gives occasion to the division of labour is not a perception of the advantage to be gained thereby, but a direct propensity in human nature for one man to barter with another. This love of barter is one of those natural instincts which distinguish us from animals. The division of labour and the material wealth of society are greatly perfected by improvements of communication which extend markets; for division of labour must always be proportioned to extent of commerce. “If ten people only want a certain commodity, the manufacture of it will never be so divided as if a thousand wanted it.” But where communications are bad the cost of transit hinders the distribution of goods. If roads are “deep” or infested with robbers, the progress of commerce is stopped. “Since the mending of roads in England forty or fifty years ago, its opulence has increased extremely.” Water carriage also effectively promotes public opulence; for five or six men will convey three hundred tons by water more quickly than a hundred men with a hundred wagons and six hundred horses can take the same weight by land.

A distinction is drawn between the natural and market price of commodities. A man has the natural price of his labour when he has enough to maintain him during its continuance, to defray the cost of his education, and to compensate the risk of failure or of premature death. When a man can get this natural price he will have sufficient encouragement and will produce in proportion to the demand. The market is regulated by the momentary demand for a thing, by its abundance or scarcity. When a thing is very scarce the price depends upon the fortune of the bidders. “As in an auction, if two persons have an equal fondness for a book, he whose fortune is the largest will carry it.” The conclusion drawn from these and other arguments is that whatever “police” (i.e. policy) tends to raise the market price above the natural, tends also to diminish public opulence. The cheaper the conveniences of life, the greater is the purchasing power of the poor and the happier will a society be. Any policy which raises and keeps the market price of goods above their natural price, and so raises the national, as it were, above the international price, diminishes the nation’s opulence. This impoverishing policy took various forms, which admitted of a triple classification:—

1. Taxes on industry and necessities.

2. Monopolies.

3. Exclusive privileges of corporations, and combinations, like those of bakers and brewers, which kept the price of bread and beer above the natural level.

Further, as taxes or regulations which raise the market price above the natural price diminish public opulence, so do bounties like those upon corn and coarse linen, which depress the market price below the natural price. A bounty stimulates the production of a particular commodity, and makes it cheaper for foreigners at the expense of the public at home. Another serious objection to the system is that people are diverted from other employments, and thus “what may be called the natural balance of industry” is disturbed. “Upon the whole, therefore, it is by far the best police to leave things to their natural course and allow no bounties nor impose taxes on commodities.”

In a subsequent lecture he arrived at the same conclusion by an analysis of the true nature of money. At that time money was almost universally identified with wealth. Though Hume had exposed the fallacy ten years before, his essay had not affected national policy. Treaties of commerce were always based upon the theory of the balance of trade, which again rested on the notion that if a country’s exports could be made to exceed its imports, it would receive the balance in gold and so become wealthy. By way of refuting this strange dogma of the mercantilists, Smith used a very felicitous illustration. He compared money to the highroads of a country “which bear neither corn nor grass themselves but circulate all the corn and grass in the country.” If we could save some of the ground taken up by highways without diminishing the facilities of carriage and communication, we should add to the wealth of the country; and the case would be the same if by such a device as paper-money we could reduce the stock of coin required without impairing its efficiency as a medium of exchange. For the ground saved could be cultivated, and the money saved could be sent abroad in exchange for useful commodities. Thus the nation would be enriched; for its opulence “does not consist in the quantity of coin, but in the abundance of commodities which are necessary for life.”

In deference to the mercantilists the government had prohibited the exportation of coin, “which prohibition has been extremely hurtful to the commerce of the country,” for every unnecessary accumulation of money is a dead stock. The same idea that wealth consists in money had also led to fiscal discrimination against France and in favour of Spain and Portugal. Why was this policy absurd? The reason, said Smith, will appear on the least reflection, and he thereupon put to the students in a few telling sentences those elementary truths about the nature of foreign trade which seem too simple even to have been discovered, yet are still sometimes but imperfectly applied by the most enlightened statesmen, and have not always been apprehended by trained economists:—

“All commerce that is carried on betwixt any two countries must necessarily be advantageous to both. The very intention of commerce is to exchange your own commodities for others which you think will be more convenient for you. When two men trade between themselves it is undoubtedly for the advantage of both. The one has perhaps more of one species of commodities than he has occasion for, he therefore exchanges a certain quantity of it with the other, for another commodity that will be more useful to him. The other agrees to the bargain on the same account, and in this manner the mutual commerce is advantageous to both. The case is exactly the same betwixt any two nations. The goods which the English merchants want to import from France are certainly more valuable to them than what they give for them. Our very desire to purchase them shows that we have more use for them than either the money or the commodities which we give for them. It may be said, indeed, that money lasts for ever, but that claret and cambrics are soon consumed. This is true. But what is the intention of industry if it be not to produce those things which are capable of being used, and are conducive to the convenience and comfort of human life?”

In short, imports are just as advantageous as exports, and one is the necessary complement of the other. All jealousies and wars between nations are extremely bad for commerce. If preferential trade is to be established at all, it should be with France, a much richer and more populous country than Spain, and also our nearest neighbour. “It were happy both for this country and France that all national prejudices were rooted out and a free and uninterrupted commerce established.” Foreign trade, if wisely and prudently carried on, can never impoverish a country.

“The poverty of a nation proceeds from much the same causes with those which render an individual poor. When a man consumes more than he gains by his industry, he must impoverish himself unless he has some other way of subsistence. In the same manner, if a nation consume more than it produces, poverty is inevitable; if its annual produce be ninety millions and its annual consumption an hundred, then it spends, eats and drinks, tears, wears, ten millions more than it produces, and its stock of opulence must gradually go to nothing.”

He proceeds to uproot that hardy perennial of fiscal culture—the opinion that no expenditure at home can be injurious to public opulence. Let us suppose, he says, that my father leaves me a thousand pounds’ worth of the necessaries and conveniences of life. “I get a number of idle folks around me, and eat, drink, tear and wear till the whole is consumed. By this I not only reduce myself to want, but certainly rob the public stock of a thousand pounds, as it is spent and nothing produced for it.” In the same way money spent on war is wasted wherever the war is waged and wherever the money employed in preparations is laid out. Finally, he sums up for free imports in language that could not be strengthened:—

“From the above considerations it appears that Britain should by all means be made a free port, that there should be no interruptions of any kind made to foreign trade, that if it were possible to defray the expenses of government by any other method, all duties, customs, and excise should be abolished, and that free commerce and liberty of exchange should be allowed with all nations, and for all things.”

Holding, then, that all taxes upon exports and imports, as well as all excise duties, hinder commerce, discourage manufactures, and hamper the division of labour, Smith was inclined in his rather meagre treatment of taxation to favour direct imposts. He was not one of those who think that taxation is the royal road to prosperity, and insist that the only way to save the nation is by picking its pocket. On the contrary, believing that the best method of raising revenue is to save it, he introduced taxation as one of the causes that retard the growth of opulence. But as the thriftiest government has some expenses, and therefore some taxes, an economist was bound to weigh the merits and demerits of each. Though in comparison with the corresponding chapters in the Wealth of Nations his paragraphs on taxation seem raw, the doctrine is already far in advance of Hume’s. He dwells on the immense advantage of the land-tax, which only cost the government about eight or ten thousand pounds to collect, over the customs and excise, which produce such immense sums, but “are almost eaten up by the legions of officers that are employed in collecting them.” Another advantage of the land-tax over taxes on consumption was that it did not raise prices; and it was better than a tax on capital or income (“stock or money”), in that, land being visible property, the sum required could be assessed without very arbitrary proceedings. “It is a hardship upon a man in trade to oblige him to show his books, which is the only way we can know how much he is worth. It is a breach of liberty, and may be productive of very bad consequences by ruining his credit.” Yet Smith was far from being a single taxer. “If on account of this difficulty you were to tax land, and neither tax money nor stock, you would do a piece of very great injustice.”

The only advantage to taxpayers of taxes on commodities is that they are paid in small sums at a time, whereas taxes on possessions are paid in large lump sums. But to the government there is the all-important fact that they are paid insensibly and are not so much murmured against. “When we buy a pound of tea we do not reflect that the most part of the price is a duty paid to the government, and therefore pay it contentedly, as though it were only the natural price of the commodity. In the same manner, when an additional tax is laid upon beer, the price of it must be raised, but the mob do not directly vent their malice against the government, who are the proper objects of it, but upon the brewers, as they confound the tax price with the natural one.”

In Holland the consumer first paid the price to the merchant and then (separately) the tax to the excise officer. “We in reality do the very same thing, but as we do not feel it immediately we imagine it all one price, and never reflect that we might drink port wine below sixpence a bottle were it not for the duty.” His general objection to duties on imports is that they divert capital and industry into unnatural channels, while the effects of export duties are still more pernicious in confining consumption and diminishing industry. Uztariz, a well-known Spanish writer of that day, had observed in his book on commerce:—

“I have found ministers and others, both in their conversation and writings, maintain the erroneous maxim that high duties are to be laid upon commodities exported, because foreigners pay them; and, on the contrary, very moderate ones on such as are imported, because his majesty’s subjects are at the charge of them.” This policy, says Smith, is one great cause of the poverty of Spain. Yet the Spaniards were wiser than some moderns who have sought to persuade the public that both export and import duties are paid by the foreigner.

Apart from their extraordinary power and originality as contributions to a new science, we are struck in these lectures by two qualities, freedom from prejudice, with the accompanying desire for reformation, and a tolerance of things that are tolerable. Even when he is exposing the absurdities of the Mercantile System, and the evils of the scheme of taxation which it had produced in England, he readily concedes that things might have been far worse, and is glad to confess that upon the whole “the English are the best financiers in Europe, and their taxes are levied with more propriety than those of any country whatever.” Elsewhere, indeed, he shows that the fiscal system of Holland was in some important respects superior; and in the Wealth of Nations his language cooled:—“Our state is not perfect, but it is as good or better than that of most of our neighbours.”

Yet neither tolerance, nor patriotic bias, nor the improbability of reform prevented him from criticising bad institutions. He saw how evil was the system of unpaid magistracies which Bentham burned and Gneist adored. He saw how advantageous was the famous excise scheme which ruined Walpole. He objected to large farms and entailed estates, and was not afraid to declare that a thousand acres ought to be purchased as easily as a thousand yards of cloth. He laughed at the notion, still strangely prevalent, that agriculture is injured by manufactures. “It is always a sign,” he says, “that the country is improving, when men go to town. There are no parts of the country so well inhabited nor so well cultivated as those which lie in the neighbourhood of populous cities.” He described how Philip IV. went to the plough himself to set the fashion, and did everything for the farmers except bringing them a good market; how he conferred the titles of nobility upon several farmers, and very absurdly endeavoured to oppress manufacturers with heavy taxes in order to force them to the country.

Smith concluded his discourse upon Cheapness or Plenty with a few remarks on the influence of commerce on manners; and having thus laid the foundations of a new science, a true system of political economy, he went on to “Arms” (Part IV.), and treated of Militias, Discipline, and Standing Armies. His course ended with a survey (Part V.) of the Laws of Nations. The rules, he remarks, which nations ought to observe, or do observe, with one another cannot be stated with precision. It is true that the rules of property and of justice are pretty uniform in the civilised world. But with regard to international law, what Grotius had said was still true. It was hard to mention a single regulation that had been established with the common consent of all nations and was observed as such at all times. Smith, as usual, sought for the reason, and as usual found it. “This must necessarily be the case; for where there is no supreme legislative power nor judge to settle differences we may always expect uncertainty and irregularity.”

The pope, indeed, as the common father of Christendom, had introduced more humanity into warfare; but except for this hint Smith seems to have made no proposal for filling up the blank. We can only imagine how one who so loved peace and hated war would have rejoiced to see nations moving slowly but surely towards the idea of an international judge, and learning that, as the Duel is not the last word of civilisation in individual quarrels, so the Battle is not the last or the best trial of disputes between nations.