in some provinces, particularly in Virginia and Maryland, belong many of them to merchants who reside in the mother country, and afford one of the few instances of the retail trade of a society being carried on by the capitals of those who are not resident members of it. Were the Americans, either by combination or by any other sort of violence, to stop the importation of European manufactures, and, by thus giving a monopoly to such of their own countrymen as could manufacture the like goods, divert any considerable part of their capital into this employment, they would retard instead of accelerating the further increase in the value of their annual produce, and would obstruct instead of promoting the progress of their country towards real wealth and greatness. This would be still more the case, were they to attempt, in the same manner, to monopolize to themselves their whole exportation trade.15

It is not finical nor hypercritical to abstract from this chapter the casual sentence: "But the great object of the political economy of every country, is to increase the riches and power of that country." 16 We need not comment upon, it at length. It is merely a confession of the strictly technological character of the discipline so designated. It is incidentally a proof that the modern economists who want to give their science

a

different scope have broken with with the tradition which The Wealth of Nations established. Some of them are tending toward

"

readjustment with the fundamental moral philosophy of which The Wealth of Nations was a specialization; others are tending toward specialization of a different sort, as, for instance, on the one hand, the theory of taxation, or finance, or currency, or banking, or transportation; or, on the other hand, the converting of economics into a psychology of economic valuations. This readjustment of the perspective of economic science cannot be complete until it brings economic activities into focus as merely one of the interdependent factors of the evolving purposes of persons.

V

ECONOMIC VS. SOCIOLOGICAL INTERPRETATION OF HISTORY

Book III of The Wealth of Nations treats of "The Different Progress of Opulence in Different Nations." More evidently than in any earlier section of The Wealth of Nations, the second of the two elements of the author's method now appears, the opposite tendencies of which were never fairly brought to light till the time of Cliffe Leslie. These are the deductive and the historical methods. Neither of these these two methods was developed to its extreme results. Neither was put in the form of a distinct thesis in methodology. There could consequently have been no formal doctrine of the relations between them. Both were mobilized for Smith's purposes, and each was worked out by Smith's successors as a methodology which implied precedence over the other. Perhaps it is easy to overestimate the credit due to Smith for the balance which his own thinking maintained between the two methods. Perhaps the very fact that each was semi-defined, semi-conscious, in his own mind, detracts from his individual merit

for the resulting sanity of his thinking. The fact remains, however, that, while Smith's analysis compares with the work of later economists, according to either program, merely as a beginning compares with a relatively finished product, yet it also appears in the same comparison like a great architectural design in contrast with elaborately finished parts of a structure not yet assembled in a completed building.

In other words, the deductive and the historical methods were not alternatives in Smith's system. They were partners. The historical or inductive method was appealed to so frankly that no one who goes back to Smith as a path-maker in economics can consistently disparage the historical factor of the method which he used. The deductive method was employed with equal frankness, but in the general plan of his argument the interdependence of the inductive and the deductive steps in the formation of conclusion was preserved in a way that forms a highly creditable approach to satisfaction of those canons of proof which John Stuart Mill formulated almost a century later. That is, Smith realized the necessity of deriving principles to be used deductively from inductive generalizations of previous experience. In this general form, his science was therefore more catholic

and more convincing than that of his successors who obviously overworked the one or the other element of proof, and in either case left the proof limping from the weakness of the neglected support. In subsequent economic theory the illustrations have been many and conspicuous, on the one hand of a-priori use of generalizations not supported by a sufficient induction, and on the other hand of historical data-collecting which became virtually an end unto itself, because not carried to a completeness that afforded credible generalizations.1

Speaking in the rough, there is only one source from which to derive principles of human conduct. That source is historical induction. Of course, this proposition extends the term "historical" beyond its ordinary meaning. Everything is past, and thus "historical," as soon as it has occurred, and thus made itself material for reflection. The present has become the past while the observer adjusts his attention to it. In this sense inductions from experience are the only positive source for generalizations of valid principles. Book III of The Wealth of Nations is, in the first instance, an attempt to show why wealth has increased in different ratios in different nations. This particular inquiry, strictly

1 Cf. Bagehot, above, pp. 67 ff.