carefully, he should have arrived at the same conclusion.

As we have already stated in a previous work, Smith set himself out to destroy the Mercantile System, which was the economic system prevailing in the country at the time, the essence of which, as we all know, was the granting of monopolies and bounties to privileged companies. He held that in this particular respect it was not necessary for Governments to interfere in Industry and Commerce; on the contrary, that every man and every firm should be left alone to trade each in its own way. In other words, he held that there should be no monopoly, and that, in modern parlance, competition was the life of trade. But nearly every writer has misconstrued Smith's simple doctrine, some in ignorance, and some, as in the case of List, to suit their own ends.1

1 I admit that without the chart published in my last book and republished in this one Smith is difficult to follow. It was after I invented the chart that I found the key to Smith's system. In my search to find if I had been anticipated I was disappointed in one sense but pleased in another, in finding it fully developed in Smith's Wealth of Nations. Smith's chief fault was that he did not appreciate the significance of developing the system by compartments, i. e. in sequence, hence it appears to lie throughout the book like a plate broken in fragments. But a complete National System is there nevertheless. It was perhaps for this reason that Francis Horner wrote as follows: "Smith did not judge amiss in his premature attempt to form a sort of system upon the wealth of nations instead of presenting his valuable speculations to the world

Our interpretation of Smith is confirmed by the many quotations we have given from his work, but particularly from the following which we quote here for the first time.

In his criticism of Colbert, the famous minister of Louis XIV, Smith observes :—

"The industry and commerce of a great country he endeavoured to regulate upon the same model as the departments of a public office; and instead of allowing every man to pursue his own interest in his own way, upon the liberal plan of equality, liberty and justice, he bestowed upon certain branches of industry extraordinary privileges, while he laid others under as extraordinary restraints.

"The French philosophers, i. e. the physiocrats, who have proposed the system which represents agriculture as the sole source of the revenue and wealth of every country, seem to have adopted this proverbial maxim; and, as in the plan of M. Colbert, the industry of the towns was certainly over-valued in comparison with that of the country, so in their system it seems to be as certainly under-valued." 1

under the form of separate dissertations. As a system, his work is evidently imperfect, and yet it has so much the air of a system, that we are apt to adopt his erroneous opinions, because they figure in the same fabric with approved and important truths" (N.S.P.E., p. 229).

i Wealth of Nations, p. 526.

H

"The greatest and most important branch of the commerce of every nation, it has already been observed, is that which is carried on between the inhabitants of the town and those of the country.

"Whatever, besides, tends to diminish in any country the number of artificers and manufacturers, tends to diminish the home market, the most important of all markets for the rude produce of the land, and thereby to still further discourage agriculture.

"Those systems, therefore, which, preferring agriculture to all other employments, in order to promote it, impose restraints upon manufactures and foreign trade, act contrarily to the very end which they propose, and indirectly discourage that very species of industry which they mean to promote. They are so far, perhaps, more inconsistent than even the mercantile system." 1

"The taxes which at present subsist upon foreign manufactures, if you except those upon the few contained in the foregoing enumeration, have the greater part of them been imposed for the purpose, not of revenue, but of monopoly, or to give our own merchants an advantage in the home market. By removing all prohibitions, and by subjecting all foreign manufactures to such moderate taxes, as it was found, from experience, 1 Wealth of Nations, p. 544.

afforded upon each article the greatest revenue to the public, our own workmen might still have a considerable advantage in the home market, and many articles, some of which at present afford no revenue to the Government, and others a very inconsiderable one, might afford a very great one.

"High taxes, sometimes by diminishing the consumption of the taxed commodities, and sometimes by encouraging smuggling, frequently afford a smaller revenue to the Government than what might be drawn from more moderate taxes." 1

"1

"If by such a change of system the public revenue suffers no loss, the trade and manufactures of the country would certainly gain a very considerable advantage. The trade in the commodities not taxed, by far the greatest number, would be perfectly free, and might be carried on to and from all parts of the world with every possible advantage. Among those commodities would be comprehended all the necessaries of life and all the materials of manufacture." 2

And the following thrust might very well be taken to heart by the Internationalists and Bolshevists:

"Man . . . must not expose himself to the 2 Ibid., p. 705.

1 Wealth of Nations, pp. 703-4.

charge which Avidius Cassius is said to have brought, perhaps unjustly, against Marcus Antoninus, that while he employed himself in philosophical speculations, and contemplated the prosperity of the universe, he neglected that of the Roman Empire." 1

Even the great Frederick List himself could not write a clearer exposition of the principles of National Economy than that quoted from Smith. Smith consistently writes, throughout his great work, in favour of moderate taxes upon foreign manufactures, as it was found from experience that they afforded the greatest revenue to the public, and with this gave the greatest security to home labour, and of the importation of natural materials and the necessaries of life free of all taxes whatsoever. In view of these facts, how could an intelligent mind like Frederick List's, if we may use his own phraseology, classify Smith as an absolute free trader?

In the following observation List rather overstrains his objective: "It is easy to see that Adam Smith perfectly understood that the welfare of nations depends chiefly on the amount of their productive power. But it appears not to be in the order of nature that a science shall come forth complete from the head of any single philosopher." 2 In view of this admission, how 1 Theory of Moral Sentiments, Vol. II, p. 102. 2 N.S.P.E., p. 240.