His third book is the most interesting in the work. It is mainly historical, and deals with the progress of opulence in different nations. He first explains the natural progress of opulence; then the state of agriculture in Europe after the fall of the Roman Empire; the rise and progress of cities after the fall of the Empire; and, finally, how the commerce of the towns contributed to the improvement of the country. On all these subjects, though his evidence was necessarily incomplete, Smith manifested a wonderful sagacity and accuracy in his general conclusions.
Within the compass of little more than forty pages, he presents a luminous exposition of the important topics indicated in the preceding paragraph; and in no part of his work was his peculiar powers and insight exhibited to better advantage. In subjects on which I have made special inquiries, I find his statements, in general, very accurate. But it is in the clear explanation of the causes of change and progress, that this book specially excels.
The fourth book treats on systems of political economy――that is, the mercantile system――and those systems which represent land as either the sole or the principal source of the revenue and wealth of every country. In this book also he dealt with the subject of colonies; the advantages which Europe has derived from the discovery of America, and from the discovery of a passage to the East Indies by the Cape of Good Hope, and treaties of commerce.
He discusses the mercantile system then in vogue with great force, and exposed its errors and inconsistencies most effectively. The prevailing notion was that wealth consisted in money, in pieces of metal, and therefore the great affair always was to get money; to grow rich was to get money, and wealth and money were, in common language, considered exactly synonymous. “In consequence of these popular notions, all the different nations of Europe have studied, though to little purpose, every possible means of accumulating gold and silver in their respective countries.” Accordingly, they have either prohibited their exportation, or subjected it to a considerable duty. He shows the fatuity of these notions, and exposes the common theory of commerce or protection at great length, and with a weight of argument and a fullness of illustration as yet unmatched. He discusses the subjects of drawbacks, of bounties, the corn trade, and the corn laws; and throughout argues in favour of free trade.1
1 Book IV., chapters 1, 2, 3, 4, 5; Volume II., pages 2‒3, 62‒63, 108‒109, _et seq._
It was in this book also that Smith made his memorable attack upon the East India Company. For once he thoroughly exposed the pretentions of this Company, the mischievous character of its government, and the wrongs which it was committing, in the most fearless and effective style. He showed that something more and higher was required of the rulers of a great country with a dense population, than the mere mercantile spirit of buying and selling――making profits and paying large dividends. He demonstrated that the selfish interests of the Directors of the Company as merchants and traders utterly disqualified them for being wise and just rulers of the vast population under their sway; moreover, all the servants of the Company, from the highest to the lowest, were actuated by the same self-seeking, money-making, and trading spirit. These servants all traded more or less on their own account, as Smith puts it:――
“All the members of the administration, besides, trade more or less upon their own account, and it is vain to prohibit them from so doing. Nothing can be more foolish than to expect that the clerks of a great counting-house at ten thousand miles’ distance, and consequently almost quite out of sight, should, upon a simple order from their masters, give up at once doing any sort of business upon their own account, abandon for ever all hopes of making a fortune, of which they have the means in their hands, and content themselves with the moderate salaries which those masters allow them, and which, moderate as they are, can seldom be augmented, being commonly as high as the real profits of the company’s trade can afford. In such circumstances, to prohibit the servants of the Company from trading upon their own account can have scarce any other effect than to enable the superior servants, under the pretence of executing their master’s orders, to oppress such of the inferior ones as have had the misfortune to fall under their displeasure. The servants naturally endeavour to establish the same monopoly in favour of their own private trade as of the public trade of the Company. If they are suffered to act as they could wish, they will establish the monopoly openly and directly, by fairly prohibiting all other people from trading in the articles in which they choose to deal; and this is, perhaps, the best and least oppressive way of establishing it. But if, by an order from Europe, they were prohibited from doing this, they will, notwithstanding, endeavour to establish a monopoly of the same kind, secretly and directly, in a way that is more destructive to the country. They will employ the whole authority of the Government, and pervert the administration of justice, in order to harass and ruin those who interfere with them in any branch of commerce, which, by means of agents, either concealed, or at least not publicly avowed, they chose to carry on.”
He states that the interests of the masters of the Company are the same as that of the country which they govern, but that the greed of the mercantile spirit prevents them from seeing this. The real interests of the servants of the Company, however, were very different from the interests of the country: the sole aim of these servants was to make fortunes to themselves by whatever means they could. “It is a very singular government in which every member of the administration wishes to get out of the country, and consequently to have done with the government, as soon as he can, and to whose interest, the day after he has left it, and carried his whole fortune with him, it is perfectly indifferent though the whole country was swallowed up by an earthquake.”1
1 Book IV., chapter 7, Volume II., pages 221‒225.
The fifth and last book of this great work treats of the revenue of the Commonwealth, and in connection with this Smith handles many important subjects, such as the defence of the State, which leads him into a discussion of military organisation and standing armies, the administration of justice, and the expense of public works. In relation to the latter subject, he treats at length on education; and following his usual historical method on this subject, he is exceedingly interesting. He gives a clear and instructive account of educational institutions, the systems of thought taught in the Universities and schools, including the Church and religious instruction. Space will not permit me to follow him into details, but a quotation or two will indicate some of his views.
The common course of philosophical education in the greater number of the Universities of Europe was this:――“Logic was first taught; ontology in the second place; pneumatology, comprehending the doctrine concerning the nature of the human soul, and the Deity, in the third; and in the fourth followed a debased system of moral philosophy, which was considered as immediately connected with the doctrine of pneumatology, with the immortality of the human soul, and with the rewards and punishments which, from the justice of the Deity, were to be expected in a life to come: a short and superficial system of physics usually concluded the course.
“The alterations which the Universities of Europe thus introduced into the ancient course of philosophy, were all meant for the education of ecclesiastics, and to render it a more proper introduction to the study of theology. But the additional quantity of subtlety and sophistry, the casuistry and the ascetic morality which these alterations introduced into it, certainly did not render it more proper for the education of gentlemen or men of the world, or more likely to improve the understanding or to mend the heart.”1
1 “This course of philosophy is what still continues to be taught in the greater part of the Universities of Europe, with more or less diligence, according as the constitution of each particular University happens to render diligence more or less necessary to the teachers. In some of the richest and best endowed Universities, the tutors content themselves with teaching a few unconnected shreds and parcels of this corrupted course; and even these they commonly teach very negligently and superficially.
“The improvements which, in modern times, have been made in the several different branches of philosophy, have not, the greater part of them, been made in Universities; though some no doubt have. The greatest part of Universities have not even been very forward to adopt those improvements after they were made; and several of these learned societies have chosen to remain for a long time the sanctuaries in which exploded systems and obsolete prejudices found shelter and protection, after they had been hunted out of every corner of the world. In general, the richest and best endowed Universities have been the slowest in adopting these improvements, and the most averse to permit any considerable change in the established plan of education. These improvements were more easily introduced into some of the poorer Universities, in which the teachers, depending upon their reputation for the greater part of their subsistence, were obliged to pay more attention to the current opinions of the world.”――Book V., chapter 1, Volume II., pages 356‒357.
He touches on the question whether the State ought to give any attention to the education of the people, and if so, in what manner should it be attempted. In connection with this, he notices a very serious result of the minute division of labour――namely, that it reduces the greater part of workers physically and mentally to a comparatively helpless state; in fact, to be incapable of doing anything, save the one or two simple operations to which they have been accustomed. “But the understanding of the greater part of men is necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.... The uniformity of his stationary life naturally corrupts the courage of his mind ... and even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilised society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless the government takes some pains to prevent it.”1
1 Book V., chapter 1; Volume II., pages 364‒366. The manufacturing population of our large towns are not quite so bad as they seem to have been in Smith’s time; still there is no doubt of the truth of the tendency of the minute division of labour which he points out.
He argues that the public should encourage and assist the education of the whole people, but he does not say that it should be made compulsory. He insists upon its utility from various points of view, especially from the political side.
He treats at length on the institutions for the religious instruction of the people in all ages, and his long article on this is especially well worth reading and study. Smith himself was singularly free from prejudice, sectarian or narrow views, and in this respect he is greatly superior to Hume.
The concluding chapters deal with the revenue of the State, taxes, and national debts. His treatment of the general subject of taxation is comprehensive and enlightened, and, like the other parts of his work, full of information, suggestion, and instruction. He has good articles on taxes upon land.
Finally, we may aver that few works have had more influence in stimulating industry, controlling legislation, and promoting reform than the _Wealth of Nations_. But whether this influence will be permanent in its results――whether capital will still continue to dominate labour as it has done in the past――is a social problem, which is constantly coming more and more to the front, and it must ere long be resolutely met.