Excerpt from Political Economy

The art of providing for all the wants Of a family with prudence and frugality. Political economy he regards as an art, and also a sci ence; and among its important objects are to provide everything necessary for supply ing the wants of society, and to employ the inhabitants in such a manner as naturally to create reciprocal relations and dependencies, so as to make their several interests lead them to supply one another with their reciprocal wants. Population he considers limited by the amount of food produced, and that when too many of a society propagate, a part must starve. He holds that if a nation would aim to be continuously great and powerful by trade, she must first apply closely to the manufac turing of every natural product of the country; and that when a people find the balance of trade to be against them, it is to their interest to take such measures as will correct the evil. He attacks the theory of'locke and Hume respecting the effect of an increased volume in the circulating medium upon prices. He argues that, while the wealth of a country un doubtedly exerts an influence upon the prices of certain commodities, prices are really reg ulated by the complicated operations of de mand and competition and that when Hume says that the price of every commodity is in proportion to the sum of money circulating in the market for that commodity, it real] y means that the money to be employed in the purchase of it is a measure of_ the demand for it; and it in no wise interferes with Steuart's own propo sition respecting the operation of supply, which is fundamental. In 1772, at the request of the East India company, the same author prepared The Principles of Money as'applied to the Coin of Bengal, in many respects a very able treatise. - In 1776 appeared in London the first edition of the great work of Adam Smith, destined to exert so decided an influence on political economy and legislation: An Inqui ry into the Nature and Causes of the Wealth of Nations. This remarkable book treats of the causes of improvement in the produc tive powers of labor, and the order according to which its produce is naturally distributed among the difierent ranks of the people; of the nature, accumulation, and employment of stock; of systems of political economy; of the revenue of the sovereign or commonwealth. Dr. Smith holds that the annual labor of every nation is the fund which originally supplies it with what it annually consumes, and that the relative proportion which that produce bears to the consumers is the measure of their sup ply in the necessaries and conveniences of life; that the greatest improvement in the produc tive power, skill, and judgment of labor has arisen from the division of labor that the ex tent of the division of labor is limited by the market for its products; and that labor is the only universal as well as accurate measure of value, or the only standard by which we can compare the values of different commodities at.

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