DR. TWISS'S PROGRESS OF POLITICAL ECONOMY.

PuovEssonsmrs, like the olden patronage, are frequently the cause of good works that would not otherwise be produced. Originality, at least in letters and philosophy, may not wait for this kind of stimulus. The Principia and the Wealth of Nations, if not irrespective of circum- stances in their production, were irrespective of artificial aid ; but branches of a subject, whose general principles have been established, will frequently be investigated with a completeness, under the responsi- bility of a duty, which without that stimulus might never have been attempted. The necessity of a course of lectures will force a man to survey the entire field of his science, noting those parts of it which have been least cultivated ; according to the natural bias of his mind and his course of study, he will select that part for which he feels him- self best qualified ; and research and meditation will often evolve capabilities in the subject which at first were unobserved. The works of Whately and Senior might possibly have appeared without the existence of a professorship ; but we suspect that Merivale's Colonization and Colonies, and are pretty well sure that Dr. Twiss's Certain Tests of a Thriving Population, as well as the work before us, would scarcely have been published without the necessity of delivering a course of lec- tures before the University of Oxford. Yet the Certain Tests was a striking illustration of the probable incorrectness of a very general opi- nion, that the condition of the people is getting worse; and it contained a useful collection of facts. The View of the Progress of Political Economy is still more valuable, because it really fills up a gap in eco- nomical literature.

Mr. M'Culloch, in the Introduction to his edition of the Wealth of Nations, had indeed furnished a literary or bibliographical sketch of the progress of economical science as indicated by publications ; but neither so elaborate, so complete, nor perhaps so well arranged, as this book of Dr. Twiss. The View of the Progress of Political Economy is not a mere history of opinions or of books ; it embraces statesmen and affairs as well. The administration of Sully, the friend of agriculture and the opponent of commerce as luxurious—the administration of Colbert, the encourager and protector of home manufactures—are considered at as much length as the theoretical writers of the seventeenth century, who respectively supported or opposed the principles those statesmen carried into effect. In the next century the views of ;Jaw, (for he was not a mere charlatan or speculator,) and that great currency bubble which reached its catastrophe in the Mississippi scheme, are expounded as completely as the writings of the different French economists who preceded Adam Smith. In fact, the theories of authors and the practice of statesmen, doubtless giving effect to the opinion of the age, more or less alternate throughout. After the condensed view of the leading originali- ties of Adam Smith's great work, the subject of population, and the notions, first taking a practical form on the French Revolution, touching the real misery and possible perfectibility of mankind, introduce

Malthus and the modern view of population in comparison with the an- .

cunt. The industrial revolution in England consequent upon the power of steam, which Watt "first disciplined" and Afkwright applied, leads to the Traits d'Economie Politique of Say, and to his theories of commercial outlets, and that scarcity of products, not plenty or " want of money," is the cause of stagnation, which M'Culloch narrowed into his theory of the impossibility of gluts. The change wrought by the use of steam, and the financial effects of the French Revolutionary wars, bring forward the subjects of public credit and currency, with the great financial crises, and the discussions thereupon, of the last half-century. And on these subjects it may be worth while to pause. Before the latter part of the seventeenth century, the practice of cur- rency-doctorism was simple, direct, and limited to the state. The way in which it was done was by depreciating the currency either in weight or quality, and then fixing its nominal value per proclamation. The dis- cussions as to how far money alone was wealth, arising from the laws against exporting coin and the theory of the "balance of trade," together with the circulation of deposit-notes by the Bank of Amsterdam and of bank-notes by the Bank of England, turned the celebrated John Law's at- tention to the subject of money and value. He published some tracts upon these questions, with the purpose of establishing a public bank in Soot- land ; and they contained some sound views of value in exchange as distinguished from value in use, with a plausible and popular theory on money.

" The value of things,' says Law, 'is not determined according to their more or less necessary uses, but according to the greater or less quantity of them in proportion to the demand. Water is of great use, yet of little value; because the quantity of water is much greater than the demand for it. Diamonds are of lit- tle use, yet of great value; because the demand for diamonds is much greater than the existing quantity of them.'

"This is a clearer statement of value, as distinguished from utility, than we meet with in any earlier writer. "Law, in another publication, objected to Locke's statement, referred to in a previous lecture, namely, that the value of goods was ' according to their quantity in proportion to their vent,' on the ground that the vent of goods cannot be greater than the quantity, but the demand may be greater. Certainly Law's ter- minology is more precise, and carries us a step farther than Locke's• but Locke's language was meant to denote the same fact, the vent being considered the index of demand. After all, the phrase ' demand for an article' is a conventional mode of expression, by which, in reality, the relative supply of other articles of ex- change is denoted, the demand for any one article being governed by the supply of other articles.

" Law goes on to say, The value of thingsvaries from two distinct causes—the greater or less quantity of products, and the greater or less quantity of money. Of these two causes, the one is beyond the control of man, whilst the other may be subjected to his regulation. We cannot, indeed, secure that the quantity of corn, wine, &c., shall at all times be sufficient for men's wants; but we may provide that the quantity of money. shall always bear a proper relation to the demand, provided this money has no intrinsic value, does not consist of gold and

silver.' • " There would be,' Law continues, in such a state of things an immense ad- vantage, as money is the originating principle of labour, the cultivation of the soil, the growth of population. Rich countries are such as have plenty of money; poor countries, those where it is scarce.'

"The meaning of the first of these two sentences is made more clear elsewhere, in another work, where he says, Domestic trade depends on money. A greater quantity employs more people than a lesser quantity. A limited sum can only set a number of people to work proportioned to it; and it is with little success laws are made for employing the poor and idle in countries where money is scarce. Good laws may bring money to the full circulation it is capable of, and force it to those employments that are most profitable to the country; but no laws can make it go further, nor can more people be set to work, without more money to circulate, so as to pay the wages of a greater number. They may be brought to work on credit; and that is not practicable unless the credit have a circulation, so as to supply the workman with necessaries. If that is supposed, then that credit is money, and will have the same effects on home and foreign trade.'

"Troth and error run aide by side through this entire passage. With the la- bourer, indeed, money passes current for so much food, clothing, or other necessa- ries, in the representative character which general usage has sanctioned; but the wages of the workman might be paid in those articles themselves, in lieu of which he adcepts money. Money doubtless simplifies very much the relations of the workman to his employer-' but it is not necessary to enable those relations to be maintained. Circulating credit would answer precisely the same purpose, where it is adequately guaranteed; but a similar guarantee will be requisite to enable credit to circulate to that which causes money to circulate universally, namely, the assurance that it may be exchanged at any time for food, clothing, &c. Law might have said, rich countries are such as have plenty of credit; just as he said, rich countries are such as have plenty of money: but countries are not rich be- cause they have credit or because they have money, but they have credit and have money because they are rich. "'Nothing; continues Law, 'is more appropriate for the purposes of money than paper. In addition to the advantages which recommend tile precious metals, it has.qualities which they do not possess. 1. It is more easy to count, and to transport. 2. The material costs nearly nothing, whilst gold and silver are very dear. 3. It is consequently. not exported, and the supply may be always regulated to suit the demand. This is a most import'ant consideration!'"

The awful crash of the Mississippi scheme, (for which, however, the Regent Orleans was quite as responsible as Law, though first led in this direction by Law's guidance,) and the jogtrot manner in which affairs went on during the first half of the century, seem to have prevented any great efforts of speculation in the currency direction. The stimulus given in England during the latter half of the century by Clive's conquest of Bengal, and the extension of manufactures consequent upon the application of steam and machinery, induced a greater spirit of enterprise, which, after the close of the American war and under Pitt's peaceful ad- ministration, led to the establishment of numerous banks, a full currency, (with no other security than the issuer's promise to pay,) and all the other signs of " prosperity."

" The result of this was the establishment of a bank of circulation in every market-town; which discounted bills of exchange as readily, or I may say as greedily, as the drawers could present them. All sorts of notes were thus put into circulation, and were held in nearly the same estimation; and as they were not issued in exchange for money, but in the form of loans, the notes of indivi- duals and the coin of the country circulated side by side. The first and inevitable result of this was a rise of prices • and as prices rose the spirit of speculation was further stimulated, as all purchases for the purpose of resale would be advan- tageous. This tendency of profits to rise would dispose persons to purchase readily. The general rise of prices would meanwhile render it profitable to im- port many foreign commodities, which hitherto would not have borne the expense of transport; whilst many articles of home produce would no longer be in demand for foreign markets, from their enhanced price. The necessary result would be, that the exports of produce would fall off; the exchange become what is termed unfavourable, and gold and silver would, be exported to make up the balance, the more so as these commodities would be depreciated in the home market. Such seems to have been the condition of things in 1792. The currency had become redundant, the exchanges were unfavourable, and the Bank of England was obliged in consequence to contract its issues. The check which this measure gave to the accommodation, hitherto so recklessly afforded, entailed a stoppage of payments upon one or two large firms; their failure created a panic, and the re-

salt was what is termed a ran upon the country banks. When this reaction commenced, there are said to have been about 350 country bankers in England and Wales, of which not fewer than 100 stopped payment, and of these more than SO were totally rained."

The system of assignats, whose basis rested upon Law's theory of land, but of land with a discredited title, or the various phases of depretiation of Bank-of-England notes during the war, we shall not enter upon; but we must not omit the crashes that took place tinder the old systems of currency whenever a stress came. In the panic of 1793, more than a hundred banks stopped payment ; during 1814-15-16, a similar catas- trophe overtook two hundred and forty ; in 1825-26, no fewer than seventy were swept away in six weeks. In the panic or pressure of 1839 there were few country banks of issue to be destroyed ; but the opinion is widely spread that it was only assistance from France which prevented the failure of the Bank of England itself; and high author- ities conceive that the Bank had risked stoppage. What conse- quences would have ensued from such an event it is impossible to con- ceive, or from a Government restriction of cash payments to avert the stoppage. With these money epochs before us, however, it is impossible not to revert to the results under Peel's Bank Act. The " prosperity" of 1845 was equal to that of 1825, and the railway mania nearly or quite as bad; yet the settlement passed without other ruin or even material injury than to the gamblers themselves. In despite of railway gambling, a dearth on the Continent, the famine in Ireland, and the destruction for any pro- ductive purpose of ten millions of borrowed capital, the soundness of the present state of monetary affairs is not denied. If the Bank of England had been able to stimulate the " prosperity " of '45 as (in conjunction with the country banks) it did that of '25, or to play over again the game of 1839, where should we have been last winter and spring, had bankruptcy and ruin been spread over the land in 1846, and the gold previously drained away ? We think Dr. Twiss scarcely comprehen- sive enough in his view of the effects of the mischief brought about by "full currencies "; but his test of Sir Robert Peel's bill seems to be ful- filled already.

"These appear to be the distinguishing features of Sir Robert Peel's bill, and the present condition of monetary affairs in England appears likely to test most severely the working of it. If it should be found by experience that no monetary panic takes place after the extravagant speculation of last year, (1846,) it would seem that one great evil at least has been obviated by it: bat it seems probable that a greater benefit may result from it, namely, that the difficulty of procuring money will be recognized sooner than heretofore, and that the spirit of rash spe- culation will thereby be controlled, so that amidst the general pressure which must follow the reaction, the disastrous cases of individual rain will be less nu- merous than on any of the previous occasions above alluded to."

Besides the obvious uses of this volume, it is curious how it suggests the strictly practical character of economical science—how much of it has arisen from a struggle against vicious practices or social necessities, bow little from mere speculation or invention. The adulteration of coin, and the laws against its exportation, first roused the Italian and English economists to investigate the consequences of such practices ; and it was a similar growing necessity which stimulated them down even to the present day : the immediate and pressing subject is ever the most fully discussed,—as of late corn-laws, the protective system, and the currency. In a literary point of view, this volume may be praised for the order of its arrangement, the clearness with which the subjects are presented, and the same knowledge of rare literature which was displayed in Dr. Twise's work on the Oregon question. Perhaps it might be objected that the survey is sometimes too rapid : but Dr. Twigs can reply that his object was not so much to discuss at large the principles of certain economical questions, as to present a "view of the progress of political economy."