Note A.-Nature of Money Capital-Mr. Hodgskin's Pamphlet PREFACE. THE following pages begin with an attempt to overthrow one of the fundamental principles of the reigning system of Political Economy. That principle is, that the accumulation of capital cannot proceed too fast, and its governing law is supposed to be that of uniform increase, retarded only by the diminishing returns obtained from new investments in the cultivation of the soil. It is here attempted to show that the true law is wholly different. The increase and changes of the capital which consists of real commodities are entirely regulated by the fluctuations in the quantity of that other kind of capital which is commonly known as money (quite a different thing from the currency); and the law of the increase of money, where habits of thrift are so strong as they are in England, is, that it constantly tends to excess, which excess passes off periodically in some more or less delusive industrial excitement, in the progress of which it, for a time, and only for a time, disappears. The working of this law was discerned and expressed as a law by Lord Overstone, in his well-known passage descriptive of the cycles of alternate commercial ex citement and depression. With him, however, it was only what Mr. Mill calls an "empirical generalization,” a generalization, indeed, which none but a scientific mind could have made; but still empirical, because it was not traced back to its causes. But then it was a reality. He, a man of high intellect and great practical insight, placed at the very best point for observation, saw the facts. Science is good for nothing if she cannot explain them. Hitherto she has not explained them. Very near approaches to the truth, however, had been previously made, on the side of abstract speculation, by Sismondi, Malthus, and Chalmers, all of whom were, as I conceive, better observers of social phenomena than either Say or Ricardo, and even than one who was in some respects greater than any of them—James Mill. That great philosopher, who is yet so far from being appreciated in England; whose most important scientific work, the "Analysis of the Human Mind," has not even been reprinted; and whose worst, the angry critique on Mackintosh, however grievously unjust to the subject of the criticism, was but the overflowing of a soul that hated cant and the petty arts that raise mean men to eminence; deserves for the rugged strength and immense grasp of his intellect to stand side by side with Hobbes, whom he loved and defended. But, like Hobbes, his dogmatic preconceptions did not suffer him to see truly the complex, delicate, and varying phenomena of living society. The mind of Sismondi, on the other hand, was not dog matic, but historical, and was enriched with a vast treasure of facts derived from actual observation in Italy, Switzerland, France, and England. Glowing in unison with all the nobler emotions of man, it was also full of the finer filaments of sympathy with common joys and sorrows, essential to him who attempts to trace or teach laws directly bearing upon human life. Malthus, I conceive, has higher claims to a place in economical history than those derived from his celebrated theory of population, which seems to be already tottering'. And Chalmers, with his keen perception of real social evils, and his strong clear intellect, rendered doubly effective by his moral energy, was the man who began that baptism, so to speak, of political economy into Christianity, which was the main thing needful to bring about its regeneration. The authority of these, or of any one of them, would with me outweigh that of Say, clear expositor as he was, or that of the amiable and admirable, but much overrated, Ricardo2. But it is scarcely just to those eminent ' I speak without any decided opinion upon the attacks of Mr. Doubleday, Mr. Hickson, and, more formidable than either, the judicially impartial statement of the hostile evidence in the Morning Chronicle of March and April, 1850, in some very able papers, which were attributed to Mr. Newmarch. 2 Of course I refer only to his intellect. A man who could inspire attachment in others, as he did, must have had the noblest personal qualities. Here is a passage in which Mr. M'Culloch first gives his own opinion, and then quotes that of Mr. James Mill: "His works have made a very great addition to the mass of useful and universally interesting truths, and afford some of the finest examples to be met with of discriminating analysis, and of profound and refined discussion. The brevity with which he has stated some of his most import b |