and especially those of Lord Overstone, Mr. Palmer, Mr. Norman, and Mr. Leatham'. Of the rest I shall only name those of Colonel Torrens, with whom before now I have broken a lance with my vizor down, yet I hope in all courtesy. In his case I have found the maxim to be true that our adversary is our helper. His analyses of banking operations, though not always satisfactory to my mind, have been often suggestive. His definition of money as that which can not only

1

I mention separately, in a note, the name of Lord Ashburton as a practical writer and witness always worth hearing, for the purpose of acknowledging a former error with regard to him. He had the fault, if it be one, most uncommon in a practical man, of seeing disputed questions on both sides; and this gave an unsteadiness to his life and opinions which contrasted unfavourably with the narrow consistency of inferior minds. But it was his fairness that made him successful at Washington, for it was a great success, and averted many evils. At that time I did not think so, but concurred fully in the attacks made upon the treaty by the Morning Chronicle, with which I was then connected. Now, however, that the party heats of that period have cooled down, it appears to me that the importance of the concessions made by Lord Ashburton was exaggerated, and his difficulties much under-estimated, not only in those attacks, but in the criticisms passed upon the treaty by its most distinguished opponent, in the House of Commons. Lord Ashburton certainly violated the maxims of the old diplomacy, but he did so in obedience to other principles which are much more deserving of respect. It was no doubt this necessity which dictated the selection of such an envoy. The exigency was original and perilous, "the file affording no precedent," and history will probably do justice to the statesman-like courage of him who, at such a time, broke through the official routine, and went outside the diplomatic circle to find the fittest man. The famous reproach of "shooting out the whole bag of equivalents" at the feet of the American Minister, was a eulogium. Whenever international morals come to be placed on the right footing, shooting out the whole bag of equivalents will be the golden rule for negotiators.

It is right for me to add, that my connection with the Morning Chronicle ceased soon after the beginning of 1848.

effect the purchase of a commodity, but close the transaction, is his own. It is an arrow in the white.

A tract called "Labour Defended from the Claims of Capital," published in 1825, requires notice, as containing the first clear conception of capital as a mere power distinct from the possession of commodities. This remarkable tract is attributed to Mr. Thomas Hodgskin, well known as an able and accomplished journalist; but a general appreciation of the acuteness and originality of thought which his publication displays was prevented, apparently by the erroneous practical inferences which were prominent in its pages. Some extracts from this pamphlet will be found in the Appendix.

I have yet to name three writers, whose contributions to monetary science appear to me to be only less important than those of Mr. Tooke himself. The first is Mr. Pennington, who, in his paper annexed to the second volume of the "History of Prices," shows how credits in the books of the London bankers operate with the same effect as gold and bank-notes, simply by means of transfer. The second is a writer in the Quarterly Review', on "Accumulations of Capital," unknown to me, but who, in attractiveness of style, rivals Mr. Fullarton. The reviewer describes with perfect accuracy the periodical growth and destruction of money capital as it takes place in England, and if he had pushed the matter a little further my purpose would have been served by taking up and

1 No. 163, December, 1847.

applying his conclusions. The last of the three is Mr. Blake, well known as the author of the first clear account of the working of the foreign exchanges, but who deserves still better to be known for his pamphlet on the effects of the Government expenditure during the late war, a work of such masterly clearness and force, at least in respect to that particular point, that I cannot explain how it should have failed, as it did, to produce general conviction, except from the resistance offered to it by that inveterate prejudice which looks to the amount of the currency as a cause operating upon prices. Mr. Blake's service to the science of money was his exhibition of the manner in which capital, being converted into income, as it was in the most rapid manner, by the Government expenditure, became a new source of demand, and operated instantly upon prices and the whole of the national industry. This, I think, is a foundation stone which no logic will be able to disturb, and the conclusions of these various writers are materials which must enter into the structure of a true theory of money.

In taking my stand with Sismondi, Malthus, and Chalmers, and, I ought to add, a high living authority, Mr. Gibbon Wakefield, as to the tendency of capital to accumulate in excess, and with Blake as to the preeminent importance of every extension of demand, or what is commonly called the "market," upon prices and industry, I find myself opposed to the greatest name in English political science, with perhaps the single exception of Burke, and to that of one whose

range of thought on all the kindred sciences, wider and more powerful than Burke's, must give his writings an influence upon future generations which no living man can estimate. Every reader will anticipate the name of Mr. John Stuart Mill. It is the opposition, I may say, of the pupil to the master, for during about eighteen years the writings of Mr. Mill have constituted my chief political discipline. That with such aid it should be possible for inferior powers to see a little further in a particular direction, cannot be thought extraordinary. It is the privilege of minds of the highest order to raise the whole level upon which succeeding inquirers carry on their operations.

If, however, the principles maintained in the following pages be found correct, it will still appear strange that, involving as they do a radically different conception of the working of the social machine from that presented by the old political economy and sanctioned by Mr. Mill, they should yet be only slight developments of thoughts to be found in Mr. Mill's own writings. The error of Say, and those who followed him, arose from arguing upon assumptions applicable to a state of barter, and overlooking the effects produced by the introduction of a currency. Now that effect of a currency which includes all others, namely, the separation of the power of purchase from the sale, which goes along with it in a state of barter, was explained (I believe then for the first time) and worked out into some of its most important consequences by Mr. Mill, in the essay on the “Influ

ence of Consumption upon Production," which was written by him more than twenty years ago'. In the same essay the effect of demand in calling capital into activity is distinctly recognised, and practical conclusions in perfect harmony with these two great principles are to be found in several parts of his more recent work. But in contact, as it were, with this large body of profound and original thought, is a considerable portion of deductive reasoning taken from the old political economy, and of such a nature that no effort of my mind is able to work a reconciliation between the two.

Whatever may be the ultimate decision of competent judges with respect to the amount of error to be found in those arguments of previous writers which Mr. Mill has retained, there can be little difference of opinion as to the value of that more important portion of Mr. Mill's great work, which is wholly his own, and which has already done so much to change the whole spirit of economical reasonings. It has indeed effected, scientifically and conclusively, that subordination of the doctrine of wealth to the doctrine of human welfare, which was the object so

1 This essay, however, was not published until the year 1844, in the volume called "Essays on some unsettled Questions of Political Economy." The last essay in that volume had been published previously, and is referred to at page 129 in the present work as if it had appeared in 1830. This is a mistake of which I did not become aware until it was too late to correct it in the proper place. The important paper in question first appeared in 1836, and therefore “sixteen years" should be spoken of as the time during which it has been before the public without producing its proper effect.