this is only in other words to say that cost of production regulates value. But this is only true on the hypothesis that no other principle intervenes to disturb the direct operation of the two principles just described. For example, love of country may intervene to disturb their operation. An Englishman may prefer permanently to exchange a pound of manufactured cotton for a quantity of raw tobacco which costs less labour, rather than to go to America to grow tobacco for himself. In international dealings, therefore, a new principle, love of country, comes into play, and modifies the action of the primary principles from which the law of cost has been deduced; the result is a deviation of international values from the course which the elementary law would lead us to expect. To recur to the illustration just employed-let us suppose a weight to remain in equilibrio on an inclined plane. No one who understood the meaning of a physical law would say that there was here any failure of the law of gravitation: the law does not fail, but is counteracted by the intervention of another force, friction. And similarly there is no failure of the law of cost of production, when in international trade friction of another kind intervenes to modify the results of its operation. Diminish the friction of the plane in the physical example, and the weight will begin to descend in obedience to the law of gravitation. And, in precisely the same way, diminish the obstructions to international communication, diminish the force of international prejudices, and the general laws of value

will be found immediately to act, and international values will approach more nearly to the respective costs of production of the articles exchanged.

From this conception of an economic law, as expressing a hypothetical, not a positive, truth; as representing, not what actually takes place, but what tends to, or would take place in the absence of disturbing causes, we can have no difficulty in perceiving the kind of proof on which such a law rests, and the kind of arguments, therefore, by which alone, if questioned, it can be refuted.

Not being an assertion respecting the order of economic phenomena, it can neither be established nor refuted by an appeal to the records of such phenomena-that is to say, by statistical or documentary evidence bearing on the course of industrial or commercial affairs; but, expressing a tendency deduced from certain principles of human nature as they operate under certain physical conditions, it can be established only by proving the existence of such principles and conditions, and showing that the tendency asserted follows as a necessary consequence from these data; or, if questioned, can be refuted only by showing, either that the principles and conditions assumed do not exist, or that the tendency which the law affirms does not follow as a necessary consequence from this assumption. In economic reasonings, therefore, supposing the logical portion of the process to be sound, the appeal must in all cases ultimately be to consciousness or to some external fact-to some mental or physical law. And this, in fact,

has been the kind of proof by which all those principles of Political Economy that can be considered as received doctrines have been established, and the issue to which, in the works of its ablest cultivators, all controverted questions have been ultimately reduced.

§ 3. The readers of the Wealth of Nations' will remember the passage near the opening of the work, in which the existence of the division of labour is traced to certain principles in human nature coming into operation under the actual circumstances in which mankind are placed. Having referred to the means of persuasion employed by the lower animals in order to gain the favour of those whose services they require, Adam Smith continues :

"Man sometimes uses the same arts with his brethren; and, when he has no other means of engaging them to act according to his inclinations, endeavours, by every servile and fawning attention, to obtain their good will. He has not time, however, to do this upon every occasion. In civilized society, he stands at all times in need of the co-operation and assistance of great multitudes, while his whole life is scarce sufficient to gain the friendship of a few persons. In almost every other race of animals, each individual, when it is grown up to maturity, is entirely independent, and in its natural state has occasion for the assistance of no other living creature; but man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail, if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind proposes to do this. Give me that which I want and you

shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of." 1

Similarly, it was by appealing to the principle of self-interest as it operates in commercial transactions, and to the physical properties of the precious metals as portable commodities, that the same writer overthrew the dogmas of the mercantile system, and established the doctrines of free trade.

"No commodities," he tells us, "regulate themselves more easily or more exactly according to the effectual demand than gold and silver; because, on account of the small bulk and great value of those metals, no commodities can be more easily transported from one place to another-from the places where they are cheap to those where they are dear."

"A country," he continues, "that has no mines. of its own must undoubtedly draw its gold and silver from foreign countries, in the same manner as one that has no vineyards of its own must draw its wines. A country that has wherewithal to buy wine will always get the wine it has occasion for; and a country that has wherewithal to buy gold and silver will never be in want of those metals. They are to be bought for a certain price like other commodities, and as they are the price of all other commodities, so all other commodities are the price of those metals. We trust with perfect security that the freedom of trade, without any attention of government, will always supply us with the wine which we have occasion for; and we may trust with equal security that it will always supply us with all the gold and silver which we can afford to purchase or to employ, either in circulating our commodities or in other uses: 2

1 'Wealth of Nations,' McCulloch's ed., 1850, p. 7. 2 Ibid., p. 190.

the reason, though not expressed, being clearly implied, that the same self-interest which is sufficient to induce the wine producers in France and Spain to send us their wines, will be sufficient also to induce the producers of gold and silver to send us these metals, if, as in the former case, we are prepared to give them their value in return.

Again, reasoning against another doctrine of the same school-that the regulation of trade by a system. of duties and prohibitions was indispensable to the commercial prosperity of the country-Adam Smith thus argues :

"This is to direct private people in what manner they ought to employ their capitals, and must in almost all cases be either a useless or a hurtful regulation. If the produce of domestic can be bought there as cheap as that of foreign industry, the regulation is evidently useless. If it cannot, it must generally be hurtful. It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a tailor. The farmer attempts to make neither the one nor the other, but employs those different artificers. . . . What is prudence in the conduct of a private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage. The general industry of the country being always in proportion to the capital which employs it, will not thereby be diminished, no more than that of the above-mentioned artificers, but only left to find out the way in which it can be employed with the greatest advan