7 JUNE 1873, Page 16


To Professor Cairnes' many friends and admirers, it will be a sincere pleasure to know that illness has not prevented him from collecting these valuable essays in a form in which they may be read once more. He is one of the few authors who have written too little, who have, almost culpably, kept back and left unused a large reserve of capacity, and whose achievements have always seemed the harbingers of still better performances. From his hands we expected to receive one day—and had not ill-health intervened, we might have received—a durable work, one worthy of the ripened powers of a thinker who, on the whole, foresaw the effects of the gold discoveries with more sagacity than any of his con- temporaries, and who, ten years ago, gave to the world one of the most profound and scientific works in English political literature. It is fair to speak in these terms of his work on the economy of the Slave States. It is one of the finest specimens of deductive political reasoning in the language. It may rank with Adam Ferguson's Civil Society or Professor Miller's Lectures. It stands on a plain not much lower than that occupied by De Tocqueville's Democracy. We do not, therefore, care to lose a morsel of the little which Professor Cairnes has written ; and we are grateful to Professor Fawcett for the suggestion which led to the collection, revision, and re-editing of essays scattered through Fraser and the Fortnightly Review, and remembered by many on account of their acuteness. They belong to the very highest class of periodical literature. The products of a mind of rare, almost unequalled, capacity for handling economical pro- blems, they are among the best specimens of English economical writings. Everywhere they show a firm hold of general principles, and a full knowledge of facts ; and less than most of the literature of Political Economy are they disfigured by a proneness to simplify the questions in discussion by suppressing some of the difficulties, and by a slavish bondage to certain honoured formulae which act as blinkers to the mind. Had Professor Cairnes only possessed a certain subtlety of observation, and had his perceptive powers been commensurate with his reasoning capacity, we do not know that he would have been surpassed as a political thinker.

Comte has based his well-known depreciation of Political Economy chiefly upon the assertion that it does not arm its

Essays in Political Economy. By J. E. Cairnes, M.A. London: Macmillan and Co.

students with the power of prediction. What does its sterile history reveal but "the reproduction of illusory controversies, ever renewed, never advancing "? Where do we find in the works of its expositors that "systematic prevision" which marks true science ? Professor Cairnes takes up and successfully meets this challenge thrown down by Comte. He shows how many accredited sciences would fail to comply with this test, fairly applicable only to a science in its perfect form, and far too severe for the majority of them. That is a fair and sufficient rejoinder to the criticism often spoken of by Comte's followers as triumphant and unanswered. But we, who are not barred by the reluctance of Professor Cairnes to refer to his own achievements, may joyfully accept the test, and submit these essays as proofs of the capacity of Political Economy to pre- dict with accuracy the outcome of phenomena of rare complexity_ Written fourteen years ago, when the gold discoveries of Australia and California were still fresh, and when their effects had not become fully perceptible, they anticipate with singular accuracy the chief consequences here and abroad, on the Continent and in the East, with respect to commodities and wages, of the opening of new supplies of gold. Not only did they foresee a depreciation in the value of gold, but, on the whole, they foreshadowed, witli a close approximation to correctness, the actual modus operandi. In an essay which dates from 1858, the lines along which the, movement has actually travelled are drawn in a manner which ap- pears, in the light of the results, somewhat remarkable. The world was then warned that the common notion that prices all round would rise uniformly was erroneous. It was pointed out that commodi- ties used by the working-classes would be the first to experience the new influence; next to rise in price would be manufactured) articles ; and then would come raw materials. The countries which would first feel the full force of the movement would. be England and France, where credit is developed ; only in a distant future would the Asiatic nations be influenced. Such were the surmises made by Professor Cairnes in 1858, and such, we may say, has been the course of events. M. Comte will with difficulty produce from the annals of physical science aclearer instance of "prevision with respect to problems of equal in- tricacy." The ablest of English political economists applied themselves to the investigation of a highly difficult question, and statistics have verified their solutions. It is idle, in the face of these clear instances of prediction, to denounce as barren or un- productive a science which in its youth enables one to foresee so. much.

If we compare these Essays with the volume written by M.. Chevalieron the same subject, we do not think that the com- parison will prove unfavourable to the former ; rather, we believe that it will redound greatly to the credit of Professor Cairnes' sagacity. M. Chevalier fastened his attention upon one- aspect of the gold discoveries, the probability of a general depre- ciation ; and he somewhat overrated the forces working in this- direction. It was clear to him that prices would rise swiftly all round so soon as France ceased to act as " a parachute," mode- rating their fall ; and he predicted that a depreciation of 50 per cent. would occur at no distant date. Later investigations have somewhat corrected these estimates, made in a time of excite- ment. Professor Jevons' estimate is that prices have experienced a rise of 18 per cent. ; Professor Cairnes puts the rise rather lower ; and the Economist thinks that 10 per cent. is the outside figure. The truth is, that the first investigators slurred over, or did) not take due note of, all the counterbalancing circumstances. La particular, they did not observe that there were reasons why the decline should not be uniform. Certain commodities—tobacco is one of them—have risen more rapidly than others ; and the rising wages of the working-classes have acted, like the markets of India. and China, as absorbents of the new gold. The great omission from M. Chevalier's volume is the absence of any reference to the law governing the rise in prices ; and the merit of Professor Cairnes is that he has accurately defined it. Very important,. socially, and politically, and morally—very perilous and very odd —are the effects of this law. Cheap gold seems to be the enemy of civilisation. It is in league with not a little that is worst in these times. According to Professor Cairnes, the movement of depreciation is arrayed against intelligence and enlightenment. The classes which are, without effort of theirs, benefited by the change are the working and commercial classes. Their remunera- tion steadily rises. A plutocracy and a democracy are erected and consolidated. On the other hand, it is the lot of the professional class—the doctor, the savant, the lawyer, the civil servant—to see their wages insidiously stolen from them by some invisible thief. It is the lot of the widow dependent on investments, the child whose fortune is in the funds, to suffer from the action of these discoveries. The rich grow richer, the poor poorer, and those whose capital is their brains or savings made long ago are hustled into a worse position.

Perhaps, in spite of his caution, Professor Cairnes over-estimates the influence of the gold discoveries on prices. It is to be observed that the tables which he produces as his pieces justificatives are vitiated by two or three defects. They start from 1849, a year of reaction, when prices were particularly low. They include years of speculation such as 1857, when prices rose by causes independent of the gold discoveries. Recognising a genuine advance in prices, we are nevertheless unable to say how far this is ascribable to the development of credit, which is as potent as gold to augment prices. The years which have furnished the data from which the deductions have been made have been years in which banking has been developed, in which payment by cheques has become common, and in which international transactions have been more and more performed without the aid of money. All these influences have acted upon prices and determined the averages. We shall perhaps be told that some of these changes—for example, the rise of the Clearing House—have enabled us to dispense with money, and have so far counteracted the discoveries. But this is a fallacy ; as has been actually proved, the Clearing House economises the use of notes, but does not diminish the use of sovereigns.

Only one part of the subject of any consequence has been ignored by Professor Cairnes, and that is the bearing of the discoveries upon the fitness of gold to be the chosen instrument of exchange. It seems pretty clear that gold, which was assumed to be the most stable commodity in regard to cost of production, and which was selected for coinage because of its supposed stability, is, in reality, among the articles most liable to fluctuations in value. Its production is a species of gambling. The aggregate amount of golddug in a year varies much. From its geological character, and its not being deposited in strata, the cost of production of gold must be ex- tremely liable to alter. And the question cannot but present itself, whether we are at all justified in assuming that gold will con- tinue to fulfil the conditions of an excellent instrument of exchange. For all large transactions it has ceased to be suitable. Copper, once the chief material of coin, was declared to be too cumbrous for large transactions ; gold has become so too. And looking at the uncertainties of mining, the occurrence of gold discoveries, the liability of these new mines to become exhausted, the completely speculative character- of the pursuit of the gold-miner, we are compelled to apprehend that the second quality which recommended it to the world is being lost also. For twenty years gold has been depreciating. Before 1853 it is probable that its value was, on the whole, rising. Who can predict what will be the tendency twenty years hence? It may go on falling ; it may, for aught we know, rise greatly. The passages in Adam Smith, and Ricardo, and almost every economist, which declare that the cost of pro- duction of gold varies less than that of most articles, must be erased or rewritten. The facts are the other way.

In this volume there is an estimate of Bastiat's services to science, and rarely have we read criticism more conclusive and destructive. Two pages of close reasoning are sufficient to demolish the economical theory of that brilliant but shallow thinker. The famous formula, Services pour services, which Bastiat represented as the cable which moored civilisation to its safe anchorings, is shown to be spun out of a fallacy, or verbal equivo- cation, and to be no better than a rope of sand. The new theory of Value with which Proudhon and Louis Blanc were refuted, is proved to be a mere pill prescribed for the cure of earthquakes. And Bastiat is assigned his true position,—that of a brilliant controversialist, fertile in wit and ingenuity, with great power of lucid and almost sensational exposition. Of the other essays, we can only here say that they are marked by vigour and finish in reasoning. One of them, entitled " Poli- tical Economy and Land," seems to us to be a very able defence of the views of Mr. Mill,—perhaps a more satisfactory statement of the theory of " unearned increment " than any put forward by Mr. Mill himself. We cannot accede to the propriety of Professor Cairnes' rather capricious tests of the portion of rent which is due to causes independent of the exertion of cultivators, —tests at once inaccurate and inapplicable. But never have the peculiarities of property in land been set forth with more force and lucidity.