in the circumstances, and that he even sometimes demands rent for what is utterly incapable of human improvement. He adduces telling evidence of this, in connection with the kelp trade and the fishing trade, in Scotland, thus :-" Kelp is a species of sea-weed, which, when burnt, yields an alkaline salt, useful for making glass, soap, and several other purposes. It grows in several parts of Britain, particularly in Scotland, upon such rocks only as lie within the highwater mark, which are twice every day covered with the sea, and of which the produce, therefore, was never augmented by human industry. The landlord, however, whose estate is bounded by a kelp-shore of this kind, demands a rent for it as much as for his corn-fields.

"The sea in the neighbourhood of the Islands of Shetland is more than commonly abundant in fish, which make a great part of the subsistence of their inhabitants. But in order to profit by the produce of the water, they must have a habitation upon the neighbouring land. The rent of the landlord is in proportion, not to what the farmer can make by the land, but to what he can make both by the land and by the water. It is partly paid in sea-fish; and one of the very few instances in which rent makes a part of the price of that commodity is to be found in that country.

"The rent of land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give.” 26

In the second book, he treats of the nature, the accumulation, and the employment of stock; and through five chapters expounds this division of political economy. He explicates the nature of stocks, the effects of its accumulation into capitals of different kinds; the effect of the different employments of these kinds of capital; the nature and operation of money, considered as a particular branch of the general stock of society; and the different effects which the different employments of capital immediately produce upon the quantity both of national industry and of the annual produce of land and labour.

26 Book I., chaps. 6, 7, Vol. I., pp. 52, 153, 171, 175, et seq. Smith treats the subject of land rent at great length, and with marked ability; although his exposition in some points is defective, still he comes much nearer the truth than Ricardo, who accounts for the origin of rent on merely abstract and imaginary grounds.

His exposition of these matters is minute and exhaustive. Commencing with the man of the most limited means, or the individual who has no income but what he derives from his labour, he then proceeds to show how the man who possesses stock and capital, after reserving a sufficient quantity for his own immediate consumption, may employ his capital in manufacturing wares, producing goods, and selling them again for a profit. Or it may be employed in the improvement of land, and in many other ways.

Extending his view, he states that the general stock of any civilised country is the same with that of all its inhabitants, and naturally divides itself into three portions, each of which has a different function. The first portion is reserved for immediate consumption, and its characteristic is, that it affords no profit, as it consists of the stock of food, clothes, household furniture, and so on. The second portion of the general stock is the fixed capital, and its characteristic is that it affords a revenue without circulating or changing masters. It consists chiefly of the following things:-(1) All useful machines and instruments which facilitate or abridge labour; (2) all those profitable buildings which are the means of procuring a revenue, not only to their proprietor, who lets them for a rent, but to the person who occupies them, and pays that rent for them-such as shops, warehouses, workshops, halls, farmhouses, and so on; (3) improvements of land, by clearing, draining, enclosing, manuring, and reducing it to the fittest condition for tillage; (4) the acquired and useful abilities of all the members of the community, which represent a considerable amount of fixed capital, yielding income. The third and last portion of the general stock is the circulating capital, and its characteristic is that it affords profit only by circulating or changing masters. He explains the functions of money at great length, and shows that it is merely a circulating medium of convenience and exchange. "The great wheel of circulation, the great instrument of commerce, like all other instruments of trade, though it makes a part of the capital, makes no part of the revenue of the society to which it belongs; and though the metal pieces of which it is composed, in the course of their annual circulation, distribute to every man the revenue which properly belongs to him, make themselves no part of that revenue.'

27

Book II., chaps. 2, 5; Vol. I., pp. 287, 289, 290, 379. Mr. Rogers gives some very interesting notes on capital, of which the following is a part :-"Most writers on political economy, misled by the fact that the advances of the capi

His third book is the most interesting in the work. It is mainly historical, and deals with the progress of opulence in different nations. He first explains the natural progress of opulence; then the state of agriculture in Europe after the fall of the Roman Empire; the rise and progress of cities after the fall of the Empire; and, finally, how the commerce of the towns contributed to the improvement of the country. On all these subjects, though his evidence was necessarily incomplete, Smith manifested a wonderful sagacity and accuracy in his general conclusions.

Within the compass of little more than forty pages, he presents a luminous exposition of the important topics indicated in the preceding paragraph; and in no part of his work was his peculiar powers and insight exhibited to better advantage. In subjects on which I have made special inquiries, I find his statements, in general, very accurate. But it is in the clear explanation of the causes of change and progress, that this book specially excels.

The fourth book treats on systems of political economy-that is, the mercantile system-and those systems which represent land as either the sole or the principal source of the revenue and wealth of every country. In this book also he dealt with the subject of colonies; the advantages which Europe has derived from the discovery of America, and from the discovery of a passage to the East Indies by the Cape of Good Hope, and treaties of commerce.

He discusses the mercantile system then in vogue with great force, and exposed its errors and inconsistencies most effectively. The prevailing notion was that wealth consisted in money, in pieces of metal, and therefore the great affair always was to get money; to grow rich was to get money, and wealth and money were, in common language, considered exactly synonymous. "In consequence of these popular notions, all the different nations of Europe have studied, though to little purpose, every possible means of ac

talist are the means by which labour is for a certain present period supported, have given excessive prominence to the doctrine of a 'labour fund,' and have exaggerated the importance of this fund to those who live by wages. The fact is, the capitalist employer is nothing but a representative of the division of labour, or of employments. The capitalist is only a convenience to labourer and consumer. This distinction is very important. There is no fund,

..

Both are paid

except temporarily, between the capitalist and the labourer. wages, one for producing, the other distributing; and the consumer pays the wages of both."-Note by Rogers, Vol. I., p. 362,

cumulating gold and silver in their respective countries." Accordingly, they have either prohibited their exportation, or subjected it to a considerable duty. He shows the fatuity of these notions, and exposes the common theory of commerce or protection at great length, and with a weight of argument and a fullness of illustration as yet unmatched. He discusses the subjects of drawbacks, of bounties, the corn trade, and the corn laws; and throughout argues in favour of free trade. 28

It was in this book also that Smith made his memorable attack upon the East India Company. For once he thoroughly exposed the pretentions of this Company, the mischievous character of its government, and the wrongs which it was committing, in the most fearless and effective style. He showed that something more and higher was required of the rulers of a great country with a dense population, than the mere mercantile spirit of buying and selling-making profits and paying large dividends. He demonstrated that the selfish interests of the Directors of the Company as merchants and traders utterly disqualified them for being wise and just rulers of the vast population under their sway; moreover, all the servants of the Company, from the highest to the lowest, were actuated by the same self-seeking, money-making, and trading spirit. These servants all traded more or less on their own account, as Smith puts it:

"All the members of the administration, besides, trade more or less upon their own account, and it is vain to prohibit them from so doing. Nothing can be more foolish than to expect that the clerks of a great counting-house at ten thousand miles' distance, and consequently almost quite out of sight, should, upon a simple order from their masters, give up at once doing any sort of business upon their own account, abandon for ever all hopes of making a fortune, of which they have the means in their hands, and content themselves with the moderate salaries which those masters allow them, and which, moderate as they are, can seldom be augmented, being commonly as high as the real profits of the company's trade can afford. In such circumstances, to prohibit the servants of the Company from trading upon their own account can have scarce any other effect than to enable the superior servants, under the pretence of executing their master's orders, to oppress such of the inferior ones as have had the misfortune to fall under their displeasure. The servants natur

28 Book IV., chaps. 1, 2, 3, 4, 5; Vol. II., pp. 2-3, 62-63, 108-109, et seq.

ally endeavour to establish the same monopoly in favour of their own private trade as of the public trade of the Company. If they are suffered to act as they could wish, they will establish the monopoly openly and directly, by fairly prohibiting all other people from trading in the articles in which they choose to deal; and this is, perhaps, the best and least oppressive way of establishing it. But if, by an order from Europe, they were prohibited from doing this, they will, notwithstanding, endeavour to establish a monopoly of the same kind, secretly and directly, in a way that is more destructive to the country. They will employ the whole authority of the Government, and pervert the administration of justice, in order to harass and ruin those who interfere with them in any branch of commerce, which, by means of agents, either concealed, or at least not publicly avowed, they chose to carry on."

He states that the interests of the masters of the Company are the same as that of the country which they govern, but that the greed of the mercantile spirit prevents them from seeing this. The real interests of the servants of the Company, however, were very different from the interests of the country: the sole aim of these servants was to make fortunes to themselves by whatever means they could. "It is a very singular government in which every member of the administration wishes to get out of the country, and consequently to have done with the government, as soon as he can, and to whose interest, the day after he has left it, and carried his whole fortune with him, it is perfectly indifferent though the whole country was swallowed up by an earthquake." 29

The fifth and last book of this great work treats of the revenue of the Commonwealth, and in connection with this Smith handles many important subjects, such as the defence of the State, which leads him into a discussion of military organisation and standing armies, the administration of justice, and the expense of public works. In relation to the latter subject, he treats at length on education; and following his usual historical method on this subject, he is exceedingly interesting. He gives a clear and instructive account of educational institutions, the systems of thought taught in the Universities and schools, including the Church and religious instruction. Space will not permit me to follow him into details, but a quotation or two will indicate some of his views.

29 Book IV., chap. 7, Vol. II., pp. 221-225.