stated generally in today's treatise would have to be withdrawn or restated. Perhaps it would have to be said that they applied in the original form only so far as the banking system then in operation was still in force.

Something close to this is the case with much of Smith's work, which became part of the "Classical Political Economy." It is true, if certain presuppositions are granted. It is not true if those presuppositions fail to represent the social situation.

Partly as an excursus, and partly as a direct advance in the line of the proposed inquiry, I take this occasion to comment on a passage in Bagehot which has often been misunderstood.37 The point raised will be referred to less directly elsewhere in this essay.

Bagehot opens his chapter entitled "Adam Smith and Our Modern Economy," with this paragraph:

If we compare Adam Smith's conception of Political Economy with that to which we are now used, the most striking point is that he never seems aware that he is dealing with what we should call an abstract science at all. The "Wealth of Nations" does not deal, as do our modern books, with a fictitious human being hypothetically simplified, but with the actual concrete men who

37 Walter Bagehot, Economic Studies (2d ed., London, 1888).

live and move. It is concerned with Greeks and Romans, the nations of the middle ages, the Scotch and the English, and never diverges into the abstract world. Considering the natural progress of opulence as an item in greater studies, as part of the natural growth of human civilization, Adam Smith always thought how it had been affected by human nature, taken as a whole.

This paragraph has sometimes been cited as committing Bagehot to a judgment of Smith which was quite the opposite of his actual opinion. The truth appears when the language is interpreted in the light of an earlier passage, viz.: 38

in my judgment, there are three defects in the mode in which Political Economy has been treated in England, which have prevented people from seeing what it really is, and from prizing it at its proper value.

First, It has often been put forward, not as a theory of the principal causes affecting wealth in certain societies, but as a theory of the principal, sometimes even of all, the causes affecting wealth in every society. .

Secondly, I think in consequence of this defect of conception Economists have been far more abstract, and in consequence much more dry, than they need have been. If they had distinctly set before themselves that they were dealing only with the causes of wealth in a single set of societies, they might have effectively pointed their doctrines with facts from those societies. But, so long as the theory vaguely floated before them, they shrank from particular illustrations.

38 Loc. cit., pp. 16-18.

Thirdly,—It is also in consequence, as I imagine, of this defective conception of their science, that English Economists have not been as fertile as they should have been in verifying it. They have been too content to remain in the "abstract" and to shrink from concrete notions, because they could not but feel that many of the most obvious phenomena of many nations did not look much like their abstractions.

The particular Political Economy which I have been calling the English Political Economy, is that of which the first beginning was made by Adam Smith.

39

It is more than likely that in the above passage Bagehot had John Stuart Mill very clearly in his mind's eye. In the preface to his Political Economy Mill expressed a judgment of Smith's method less divergent from Bagehot's than appears at first glance. In stating the aims of his own book, Mill says:

The design of the book is different from that of any treatise on Political Economy which has been produced in England since the work of Adam Smith.

The most characteristic quality of that work, and the one in which it most differs from some others which have equalled or even surpassed it as mere expositors of the general principles of the subject [did the author refer to his father's textbook?], is that it invariably associates the principles with their application. This of itself implies a much wider range of ideas and of topics than are included in political economy, considered as a branch of abstract speculation. For practical purposes, political 39 Italics mine.

economy is inseparably bound with many other branches of social philosophy. Except in matters of mere detail, there are perhaps no practical questions, even among those which approach nearest to the character of purely economical questions, which admit of being decided on economical premises alone. And it is because Adam Smith never loses sight of this truth; because, in his applications of Political Economy, he perpetually appeals to other and often far larger considerations than pure Political Economy affords-that he gives that well-grounded feeling of command over the principles of the subject for purposes of practice, owing to which the Wealth of Nations, alone among treatises on Political Economy, has not only been popular with general readers, but has impressed itself strongly on the minds of men of the world and legislators.

It appears to the present writer, that a work similar in its objects and general conception to that of Adam Smith, but adapted to the more extended knowledge and improved ideas of the present age, is the kind of contribution which Political Economy at present requires.

Bagehot's more extended analysis of Adam Smith's economic method repays careful attention. The following is the remainder of the first section in the chapter of which the first paragraph was quoted above. 40

Adam Smith approximates to our modern political economists because his conception of human nature is so limited. It has been justly said that he thought "there was a Scotchman inside every man." His Theory of

40 Economic Studies, pp. 95 ff. (Cf. above, p. 67.)

Moral Sentiment [sic], indeed, somewhat differs in tone, but all through the Wealth of Nations the desire of man to promote his pecuniary interest is treated as far more universally intense, and his willingness to labour for that interest as far more eager and far more commonly diffused, than experience shows them to be." Modern economists, instructed by a larger experience, well know that the force of which their science treats

is neither so potent nor so isolated as Adam Smith thought. They consistently advanced as an assumption what he more or less assumes as a fact.

Perhaps a little unfairly, nothing has more conduced to the unpopularity of modern political economists, and to the comparative fame of Adam Smith, than this superiority of their view over his. Of course Adam Smith was infinitely too sensible a man to treat the desire to attain wealth as the sole source of human action. He much overrated its sphere and exaggerated its effect, but he was Iwell aware that there was much else in human nature besides. As a considerate and careful observer of mankind, he could not help being aware of it. Accordingly he often introduces references to other motives, and describes at length and in an interesting way, what we should now consider non-economic phenomena; and, therefore, he is more intelligible than modern economists, and seems to be more practical. But in reality he looks as if he were more practical, only because his analysis is less complete. He speaks as if he were dealing with all the facts of human nature, when he is not; modern

* Bagehot does not take the trouble to cite the title of Smith's Theory accurately. I find no evidence that he knew it at first hand. His comparison between the essay and The Wealth of Nations has the effect, therefore, of a random shot.