Economics

The economic ideas of Adam Smith, as Pultenay said in 1797, convinced the thoughtful of the living generation and ruled the next. But before we find a political application of them in the repeal of the corn laws and English free trade, the system had been more minutely developed and several important new ideas had bccn added.

In 1791 Alexander Hamilton in his Report on Manufactures reviewed the question of protection and free trade. It is the first great argument,—and a classical one,—for protection, since it was forced to defend itself against Smith’s doctrines. Hamilton argues for the greater productiveness of manufactures, for the national necessity of their existence, and for the superiority of a tariff for protection as against a tariff for revenue. His "Report" is given in the first of this volume.

In 1798 Malthus developed his principle of population—that population naturally increases far faster than food, and that it always increases up to the very limit of sustenance. The importance of this idea in its applications is enormous. It has been used to explain such diverse things as the poverty of the lowest classes and the evolution of species.

Ricardo (1772-1823) is perhaps the most abstract theorist of the Adam Smith school. The principle for which he is particularly noted is his theory of rent—that rent is the difference between the production of any given land and the poorest forced into use. Rent would not, therefore, affect the price of the product. He considered that price depends upon the quantity of labor required in production. Capital he treats as accumulated labor. Starting from Malthus’ theory of theincrease of population, he developed his "iron law of wages" that the lowest wages will always be just sufficient to sustain life.

Jean Baptiste Say (1767-1832) was probably the first French writer to disseminate the views of the new school. One idea traceable to him is the denial of the possibility of a general over-production.

Sismondi (1773-1842) protested against the doctrine of laissez faire and believed in some sort of government intervention to regulate the progress of wealth.

Taken altogether, political economy, in the first third of the century, is marked by a rapidly growing popularity and dissemination, and by the development of these few important principles. It must be remembered, however, that it is often the work of a century to develop one great idea in a given field.