trol. M. Wolowski, in his admirable works on banking, has maintained that the issue of notes is a function distinct from the ordinary operations of a banker; and Mr. Gladstone has allowed that the distinction is a wholesome and vital one. Bankers enjoy the utmost degree of freedom in this country at present in every other point; so that it is wholly a confusion of ideas to speak of the unrestricted emission of paper representative money as a question of free banking." 1

The preceding paragraphs may serve as illustrations of the History of Monetary Theories.

A striking illustration of the present condition of the science of Political Economy is furnished by Mr. Jevons in his Introductory Lecture at the opening of the session of 1876-77, at the University of London, to be found in the "Fortnightly Review" for November, 1876. The hundredth anniversary of the publication of the "Wealth of Nations" was celebrated by a dinner given in London by the "Political Economy Club," which was founded in 1821 by Ricardo, Malthus, Tooke, James Mill, Grote, and others. Mr. John Stuart Mill was afterwards among its most prominent members. At the dinner, Mr. Gladstone occupied the chair; Mr. Lowe, and M. Léon Say, the French Minister of Finance, holding the seats next in honor. Mr. Jevons, in giving an account of this dinner, in the address referred to, says:

"I was much struck with the desponding tone in which Mr. Lowe spoke of the future of the science I have the honor to teach in this college. He seems to think that the work of the science is to a great extent finished. He said :—

"I do not feel myself very sanguine that there is a very large field at least, according to the present state of mental and commercial knowledge for Political Economy beyond what I have mentioned; but I think that very much depends upon the degree in which other sciences are developed. Should other sciences relating to mankind, which it is the barbarous jargon of the day to call "Sociology," take a spring and get forward in any degree towards the certainty attained by Political Economy, I do not doubt that their development would help in the development of this science; but, at present, so far as my own humble opinion goes, I am not very sanguine as to any very large or any very startling development of Political Economy. I observe that the triumphs which have been gained have been rather in demolishing that which has been found to be bad and erroneous, than in establishing new truth;

1 Money and the Mechanism of Exchange, pp. 316-318.

and imagine that, before we can attain new results, we must be furnished from without with new truths to which our principles may be applied. The controversies which we now have in Political Economy, although they offer a capital exercise for the logical faculties, are not of the same thrilling importance as those of earlier days: the great work has been done.'

"I am far from denying that there is much to support, or at any rate to suggest, this view of the matter. Some of the greatest reforms which Economists can point out the need of, have been accomplished, and there certainly is no single work to be done comparable to the establishment of free-trade. But this does not prevent the existence of an indefinitely great sphere of useful work which Economists could accomplish, if their science were adequate to its duties. To a certain extent, again, I agree with Mr. Lowe, that there is much in the present position of our science to cause despondency. A very general impression to this effect seems to exist. Some of the newspapers hinted, in reference to the centenary dinner, that the Political Economists had better be celebrating the obsequies of their science than its jubilee. The Pall Mall Gazette, especially, thought that Mr. Lowe's task was to explain the decline, not the consummation, of economical science. Perhaps with many people the wish was the father of the thought. I am aware that Political Economists have always been regarded as cold-blooded beings, devoid of the ordinary feelings of humanity, little better, in fact, than vivisectionists. I believe that the general public would be happier in their minds for a little time, if Political Economy could be shown up as imposture, like the greater part of what is called Spiritualism.'

"It must be allowed, too, that there have been for some years back premonitory symptoms of disruption of the old orthodox school of Economists. Respect for the names of Ricardo and Mill seems no longer able to preserve unanimity. J. S. Mill himself, in the later years of his life, gave up one of the doctrines on which he had placed much importance in his works. One Economist after another Thornton, Cairnes, Leslie, Macleod, Longe, Hearn, Musgrave - have protested against some one or other of the articles of the old Ricardian creed.

"At the same time foreign Economists, such as De Laveleye, Courcelle-Seneuil, Cournot, Walras, and others, have taken a course almost entirely independent of the predominant English school. So far has this discontent gone, that Mr. Bagehot has been induced to re-examine the fundamental postulates of economy from their very foundation, in his most acute papers published in the Fortnightly Review.' He remarks (p. 216, Feb. i, 1876):"Notwithstanding these triumphs, the position of our Political Economy is not altogether satisfactory. It lies rather dead in the public mind. Not only it does not excite the same interest as formerly, but there is not exactly the same confidence in it. Younger men either do not study it, or do not feel that it comes home to them, and that it matches with their most living ideas. They ask, often hardly knowing it, will this "science," as it

claims to be, harmonize with what we now know to be sciences, or bear to be tried as we now try sciences? And they are not sure of the answer.'

"In short, it comes to this: that, one hundred years after the first publication of the Wealth of Nations,' we find the state of the science to be almost chaotic. There is certainly less agreement now about what Political Economy is than there was thirty or fifty years ago. Under these circumstances, I will now draw your attention for a short time to the apparently rival sects which seem likely to arise from the break-up of the old Ricardian school.

"In the first place, it is impossible to ignore the fact, that there has been gradually rising into prominence a school of writers who take a very radical view of the reforms required in our science. They call in question the validity even of the deductive method on which Smith mainly relied. They hold that the science must be entirely recast in method and materials, and that it must take the form of an historical or archæological science. At the centenary dinner, this view of the matter was boldly stated by one of the most distinguished of European Economists, namely, M. de Laveleye. His own words, translated into English, will best explain his opinions:

"It is principally at this point that there has recently arisen a division in the ranks of Economists. Some, the old school, whom for want of a better name I will call the "Orthodox School," believe that every thing regulates itself by the effect of natural laws. The other school, which its adversaries have named the "Socialists of the Chair," the "Katheder Socialisten," but which we ought rather to call the "Historical School," or, as the Germans say, the "Realist School" this school holds that distribution is governed in part, doubtless, by free contract; but also, and still more, by civil and political institutions, by religious beliefs, by moral sentiments, by custom and historical tradition. You see that there opens itself here an immense field of studies; comprehending the relations of Political Economy with morals, justice, right, religion, history, and connecting it to the ensemble of social science. That, in my humble opinion, is the actual mission of Political Economy. This is the path pursued by nearly all German Economists, several of whom have a European reputation, such as Rau, Roscher, Knies, Nasse, Schäffle, Schmoller; in Italy, by a group of writers already well known, Minghetti, Luzzati, Forti; in France, by Wolowski, Lavergne, Passy, Courcelle-Seneuil, Leroy-Beaulieu; and in Eng land by authors whom it is unnecessary to name or estimate here, because you know them better than I.""

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Such is the sad picture of the condition of this great science. "At the end of one hundred years from the first publication of the Wealth of Nations,' we find," says Mr. Jevons, "the state of the science to be almost chaotic. There is certainly less agreement now about what Political Economy is than

there was thirty or fifty years ago. Rival sects seem likely to arise from the break-up of the old Ricardian" (Adam Smith) "school. . . . It must be allowed that there have been for some years back premonitory symptoms of disruption of the old orthodox school of Economists. Respect for the names of Mill and Ricardo seems no longer able to preserve unanimity. J. S. Mill himself, in the later years of his life, gave up one of the doctrines on which he placed much importance in his works." (Would that his life had been longer preserved!) "One Economist after another-Thornton, Cairnes, Musgrave, and others — have protested against some one or other of the articles of the old Ricardian creed." These extracts are not more significant of the breaking up of the old school than is the disgust universally felt for it. "I am aware," says Jevons, "that Political Economists have always been regarded as coldblooded beings, devoid of the ordinary feelings of humanity. I believe that the general public would be happier in their minds for a little while if Political Economy could be shown up as an imposture, like the greater part of what is called 'Spiritualism.'" "Happier" is a word far too weak to express the satisfaction which society would feel if those who have pestered it for a hundred years with their frivolous distinctions and inane talk, against which no seclusion, no bolts or bars, are proof, and who weigh like a nightmare upon the race, were never, as a class, to be heard of again. How great, therefore, must be the satisfaction of all to find that the centenary dinner, given in honor of the great apostle of the English system, became the melancholy occasion of its last obsequies! One does not know at which to be most struck, the sadness which weighed upon the Economists, or the still sadder irreverence of the greater part of those who surrounded the table, in whose thoughts Adam Smith had no more place than the "lost tribes." With the statesmen who did the chief part of the talking, Political Economy, as a science, was held to be pretty thoroughly functus officio. Mr. Lowe's melancholy refrain has already been given. Mr. Newmarch insisted upon a larger "negative development" of this science, by which the functions of the government were to be greatly abridged:

"On one of the points," he said, " mentioned by Mr. Lowe, with respect to Political Economy in its relation to the future, I am sanguine enough to think that there will be what may be called a

large negative development' of Political Economy, tending to produce an important and beneficial effect; and that is such a development of Political Economy as will reduce the functions of government within a smaller and smaller compass. The full development of the principles of Adam Smith has been in no small danger for some time past; and one of the great dangers which now hangs over this country is that the wholesome spontaneous operation of human interests and human desires seems to be in course of rapid supersession by the erection of one government department after another, by the setting up of one set of inspectors after another, and by the whole time of Parliament being taken up in attempting to do for the nation those very things which, if the teachings of the man whose name we are celebrating today is to bear any fruit at all, the nation can do much better for itself."

Mr. Forster, on the other hand, a member of the government, and who had had some experience of the weakness of our race, would still further invoke legislative action in social economy:

"I am strongly of the contrary opinion," he said, "that we cannot undertake the laissez-faire principle in the present condition of our politics, or of parties in Parliament, or in the general condition of the country. I gather from Mr. Newmarch's remarks that he is an advocate of the old laissez-faire principle. Well, if we were all Mr. Newmarches, if we had nothing to deal with in the country but men like ourselves, we might do this. But we have to deal with weak people; we have to deal with people who have themselves to deal with strong people, who are borne down, who are tempted, who are unfortunate in their circumstances of life, and who will say to us, and say to us with great truth, What is your use as a Parliament, if you cannot help us in our weakness, and against those who are too strong for us?""

6

Mr. Forster opened a pretty wide field, and disclosed the full antagonism which prevails in the English schools. On the subject of the interposition of government, its members are as wide apart as the poles. A person experienced in affairs soon learns that the motives or principles which guide him are no criterion of those by which others, and in fact the masses, may be swayed; and he may well feel, whether wisely or no, that the innocent weak would have good ground for complaint, unless protected from the criminal or grasping strong. The "Wealth of Nations" is hardly the work to be appealed to as arbiter in questions such as these.

Mr. Jevons was also much struck with the contracted view