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the　consideration　of　the　great　advantage　which　England　had　drawn



from　it。　if　the　king　had　not　undertaken　the　support　of　it　by



granting　many　privileges　to　the　undertakers；　and　by　laying　strict



prohibitions　on　all　foreign　cloths？　Is　there　any　other　way　of



establishing　a　new　manufacture　anywhere？'







Chapter　30







The　Physiocratic　or　Agricultural　System







　　　　Had　the　great　enterprise　of　Colbert　been　permitted　to　succeed



　had　not　the　Revocation　of　the　Edict　of　Nantes；　the　love　of



splendour　and　false　ambition　of　Louis　XIV；　and　the　debauchery　and



extravagance　of　his　successors；　nipped　in　the　bud　the　seeds　which



Colbert　had　sown　　if　consequently　a　wealthy　manufacturing　and



commercial　interest　had　arisen　in　France；　if　by　good　fortune　the



enormous　properties　of　the　French　clergy　had　been　given　over　to　the



public；　if　these　events　had　resulted　in　the　formation　of　a　powerful



lower　house　of　Parliament；　by　whose　influence　the　feudal



aristocracy　had　been　reformed　　the　physiocratic　system　would



hardly　have　ever　come　to　light。　That　system　was　evidently　deduced



from　the　then　existing　circumstances　of　France；　and　was　only



applicable　to　those　circumstances。



　　　　At　the　period　of　its　introduction　the　greater　part　of　the



landed　property　in　France　was　in　the　hands　of　the　clergy　and　the



nobility　It　was　cultivated　by　a　peasantry　languishing　under　a　state



of　serfdom　and　personal　oppression；　who　were　sunk　in　superstition；



ignorance；　indolence；　and　poverty　The　owners　of　the　land；　who



constituted　its　productive　instruments；　were　devoted　to　frivolous



pursuits；　and　had　neither　mind　for；　nor　interest　in；　agriculture。



The　actual　cultivators　had　neither　the　mental　nor　material　means



for　agricultural　improvements。　The　oppression　of　feudalism　on



agricultural　production　was　increased　by　the　insatiable　demands



made　by　the　monarchy　on　the　producers；　which　were　made　more



intolerable　by　the　freedom　from　taxation　enjoyed　by　the　clergy　and



nobility。　Under　such　circumstances　it　was　impossible　that　the　most



important　branches　of　trade　could　succeed；　those　namely　which



depend　on　the　productiveness　of　native　agriculture；　and　the



consumption　of　the　great　masses　of　the　people；　those　only　could



manage　to　thrive　which　produced　articles　of　luxury　for　the　use　of



the　privileged　classes。　The　foreign　trade　was　restricted　by　the



inability　of　the　material　producers　to　consume　any　considerable



quantity　of　the　produce　of　tropical　countries；　and　to　pay　for　them



by　their　own　surplus　produce；　the　inland　trade　was　oppressed　by



provincial　customs　duties。



　　　　Under　such　circumstances；　nothing　could　be　more　natural　than



that　thoughtful　men；　in　their　investigations　into　the　causes　of　the



prevailing　poverty　and　misery；　should　have　arrived　at　the



conviction；　that　national　welfare　could　not　be　attained　so　long　as



agriculture　was　not　freed　from　its　fetters；　so　long　as　the　owners



of　land　and　capital　took　no　interest　in　agriculture；　so　long　as　the



peasantry　remained　sunk　in　personal　subjection；　in　superstition；



idleness；　and　ignorance；　so　long　as　taxation　remained　undiminished



and　was　not　equally　borne　by　all　classes；　so　long　as　internal



tariff　restrictions　existed；　and　foreign　trade　did　not　flourish。



　　　　But　these　thoughtful　men　（we　must　remember）　were　either



physicians　to　the　King　and　his　Court；　Court　favourites；　or



confidants　and　friends　of　the　aristocracy　and　the　clergy　they　could



not　and　would　not　declare　open　war　against　either　absolute　power　or



against　clergy　and　nobility：　There　remained　to　them　but　one　method



of　disseminating　their　views；　that　of　concealing　their　plan　of



reform　under　the　obscurity　of　a　profound　system；　just　as；　in



earlier　as　well　as　later　times；　ideas　of　political　and　religious



reform　have　been　embedded　in　the　substance　of　philosophical



systems。　Following　the　philosophers　of　their　own　age　and　country；



who；　in　view　of　the　total　disorganisation　of　the　national　condition



of　France；　sought　consolation　in　the　wider　field　of　philanthropy



and　cosmopolitanism　（much　as　the　father　of　a　family；　in　despair　at



the　break…up　of　his　household；　goes　to　seek　comfort　in　the　tavern）；



so　the　physiocrats　caught　at　the　cosmopolitan　idea　of　universal



free　trade；　as　a　panacea　by　which　all　prevailing　evils　might　be



cured。　When　they　had　got　hold　of　this　point　of　truth　by　exalting



their　thoughts　above；　they　then　directed　them　beneath；　and



discovered　in　the　'nett　revenue'　of　the　soil　a　basis　for　their



preconceived　ideas。　Thence　resulted　the　fundamental　maxim　of　their



system；　'the　soil　alone　yields　nett　revenue'　therefore　agriculture



is　the　sole　source　of　wealth。　That　is　a　doctrine　from　which



wonderful　consequences　might　be　inferred　　first　feudalism　must



fall；　and　if　requisite；　landowning　itself；　then　all　taxation　ought



to　be　levied　on　the　land；　as　being　the　source　of　all　wealth；　then



the　exemption　from　taxation　enjoyed　by　the　nobility　and　clergy　must



cease；　finally　the　manufacturers　must　be　deemed　an　unproductive



class；　who　ought　to　pay　no　taxes；　but　also　ought　to　have　no



State…protection；　hence　custom…houses　must　be　abolished。



　　　　In　short；　people　contrived　by　means　of　the　most　absurd



arguments　and　contentions　to　prove　those　great　truths　which　they



had　determined　beforehand　to　prove。



　　　　Of　the　nation；　and　its　special　circumstances　and　condition　in



relation　to　other　nations；　no　further　account　was　to　be　taken；　for



that　is　clear　from　the　'Encyclop閐ie　M閠hodique；'　which　says；　'The



welfare　of　the　individual　is　conditional　on　the　welfare　of　the



entire　human　race。'　Here；　therefore；　no　account　was　taken　of　any



nation；　of　any　war；　of　any　foreign　commercial　measures：　history　and



experience　must　be　either　ignored　or　misrepresented。　The　great



merit　of　this　system　was；　that　it　bore　the　appearance　of　an　attack



made　on　the　policy　of　Colbert　and　on　the　privileges　of　the



manufacturers；　for　the　benefit　of　the　landowners；　while　in　reality



its　blows　told　with　most　effect　on　the　special　privileges　of　the



latter。　Poor　Colbert　had　to　bear　all　the　blame　of　the　sufferings　of



the　French　agriculturists；　while　nevertheless　everyone　knew　that



France　possessed　a　great　industry　for　the　first　time　since



Colbert's　administration；　and　that　even　the　dullest　intellect　was



aware　that　manufactures　constitute　the　chief　means　for　promoting



agriculture　and　commerce。　The　Revocation　of　the　Edict　of　Nantes　



the　wanton　wars　of　Louis　XIV　　the　profligate　expenditure　of　Louis



XV　　were　utterly　ignored　by　these　philosophers。



　　　　Quesnay　in　his　writings　has　adduced；　and　replied　to；　point　by



point；　the　objections　which　were　urged　against　his　system。　One　is



astonished　at　the　mass　of　sound　sense　which　he　puts　into　the　mouth



of　his　opponents；　and　at　the　mass　of　mystical　absurdity　which　he



opposes　to　those　objections　by　way　of　argument。　Notwithstanding；



all　that　absurdity　was　accepted　as　wisdom　by　the　contemporaries　of



this　reformer；　because　the　tendency　of　his　system　accorded　with　the



circumstances　of　France　at　that　time；　and　with　the　philanthropic



and　cosmopolitan　ideas　prevalent　in　that　century。











Chapter　31







The　System　of　Values　of　Exchange　（Falsely　Termed　by　the　School；　The



'Industrial'　System）　　Adam　Smith







　　　　Adam　Smith's　doctrine　is；　in　respect　to　national　and



international　conditions；　merely　a　continuation　of　the　physiocratic



system。　Like　the　latter；　it　ignores　the　very　nature　of



nationalities；　seeks　almost　entirely　to　exclude　politics　and　the



power　of　the　State；　presupposes　the　existence　of　a　state　of



perpetual　peace　and　of　universal　union；　underrates　the　value　of　a



national　manufacturing　power；　and　the　means　of　obtaining　it；　and



demands　absolute　freedom　of　trade。



　　　　Adam　Smith　fell　into　these　fundamental　errors　in　exactly　the



same　way　as　the　physiocrats　had　done　before　him；　namely；　by



regarding　absolute　freedom　in　international　trade　as　an　axiom



assent　to　which　is　demanded　by　common　sense；　and　by　not



investigating　to　the　bottom　how　far　history　supports　this　idea。



　　　　Dugald　Stewart　（Adam　Smith's　able　biographer）　informs　us　that



Smith；　at　a　date　twenty…one　years　before　his　work　was　published　in



1776　（viz。　in　1755）；　claimed　priority　in　conceiving　the　idea　of



universal　freedom　of　trade；　at　a　literary　party　at　which　he　was



present；　in　the　following　words：



　　　　'Man　is　usually　made　use　of　by　statesmen　and　makers　of



projects；　as　the　material　for　a　sort　of　political　handiwork。　The



project　makers；　in　their　operations　on　human　affairs；　disturb



Nature；　whereas　people　ought　simply　to　leave　her　to　herself　to　act



freely；　in　order　that　she　may　accomplish　her　objects。　In　order　to



raise　a　State　from　the　lowest　depth　of　barbarism　to　the　highest



degree　of　wealth；　all　that　is　requisite　is　peace；　moderate



taxation；　and　good　administration　of　justice　；　everything　else　will



follow　of　its　own　accord　in　the　natural　course　of　things。　All



governments　which　act　in　a　contrary　spirit　to　this　natural　course；



which　seek　to　divert　capital　into　other　channels；　or　to　restrict



the　progress　of　the　community　in　its　spontaneous　course；　act



contrary　to　nature；　and；　in　order　to　maintain　their　position；



become　oppressive　and　tyrannical。'



　　　　Adam　Smith　set　out　from　this　fundamental　idea；　and　to　prove　it



and　to　illustrate　it　was　the　sole　object　of　all　his　later　works。　He



was　confirmed　in　this　idea　by　Quesnay；　Turgot；　and　the　othe