The Wealth of Nations is a well-considered title. The economists anterior to Adam Smith conceived England as surrounded by a barrier impassable to property and money except by trade. In trade there was an exchange apparently on equal terms; but the old economists saw a difference in nature between imports and exports; when wool was sold to Flanders gold was received, and remained somewhere in the nation; it formed the national purchasing power, and could hire mercenaries or otherwise command foreign labour and productions. Inversely, when we imported wine or tea, we had to part with a portion of our national purchasing power, while the wine and tea went down our throats, leaving nothing in its place. It appeared clear that for any increase in national wealth the value of the exports must exceed that of the imports. Every well-prepared boy can now show in ten minutes' scribbling in a Government examination the ridiculous folly of the old economists; but several of them were experienced London merchants, and perhaps were not the complete idiots they are now triumphantly shown to be. If they had been asked whether wool was a part of the national wealth they might have returned an answer that their modern detractors are not quite prepared for.

Adam Smith and his followers, and still more closely Ricardo, divided their Political Economy into two parts: in the first they consider the wealth of the nation without the "complication" of foreign trade, i.e. they, in fact, contemplate no money or goods as going out or coming in whatever. They then in separate chapters, forming a big appendix, consider the effects of Foreign Trade as a series of exchanges. They do not discuss even the payment of a lump sum of gold to a victorious nation. Senior, in his Handbook of Political Economy, has considered, first, the economy of the world conceived as a solitary, island of small size in a world-covered sea; secondly, he treats foreign trade by conceiving two such islands. There is no better way of treating Political Economy than this; and it is well for the beginner to conceive the solitary island with fifty (or a limited number of) families only on it, and work through the ordinary theorems (with figures) in this restricted case. Whatever is true of the fifty families in a small island must be true for 5,000,000 families in a big island.

The facilities of modern communications have caused most countries to differ in their circumstances materially from the conditions assumed by Adam Smith and his successors as axioms. In the case of England, owing to its numerous wealthy colonies, gigantic foreign trade, and consequently world-over-spread capital, the circumstances are so completely altered that many results of the grammar of Political Economy no longer apply even in the rough to England. If Adam Smith had been asked what would happen to England if the imports for one year exceeded the exports by £150,000,000 sterling, he would have given the same answer as his predecessors, who reckoned wealth in gold and silver, or more probably he would have declined answer, pronouncing such a state of things an impossible conception. It is now as difficult to treat politico-economically the wealth of the nation as the wealth of Warwickshire—a difficulty that Adam Smith would have shrunk from.

It is true that every abstract proposition concerning rent, capital, and wages now (and always) holds true for the whole world; but, so conceived, the propositions give no practical result. These things do not lesson the value of the science of Political Economy, Mr. Ranken or Dr. Pole would estimate very highly the value of a knowledge of elementary mechanics to the humblest engineer, though such elementary mechanics might not extend to the consideration of friction, etc., and might not be applicable to any bridge or steam-engine.

Of this £150,000,000 that is now annually remitted to England, not in the way of exchange, some small portion is transferred by wealthy Australians returning to settle in England for purchase of houses, etc., in England; but by far the greater portion is the interest of capital owned by men resident in England, but invested abroad: it may be shortly termed tribute. This is mainly invested in the Colonies and India; New Zealand and Australia taking large shares. There is also much English capital invested in Continental railways, etc.; but it is noteworthy how capital (as well as commerce) follows the flag. The English capital invested in the United States is absolutely large, but relatively (to that invested in Canada, etc.) very small. It is certain that if the United States were under Queen Victoria the amount of English capital invested there would be far greater than at present.

As far as England is concerned this £150,000,000 a year is a tribute paid her by the rest of the world. New Zealand or South Australia may take up a million sterling in London (because they get the loan placed there at 5 or 6 per cent, while the local rate of interest in Australia is far higher) in order to make a railway which perhaps pays the local Government as much as the interest of the money they give to England. Still, the capital being once fixed in Australia while (by hypothesis) the stock is held in England, the result is equivalent to a tribute.

All Liberal stump-orators now agree in telling the agricultural population that their improved position is due to Free Trade (in wheat), and that therefore they should vote for the Liberals. Nothing is done more confidently in politics and history than the settling the causes of events, or predicting what would have been the course of events had some result been different, as, for instance, had the separation of the United States from England not occurred. The truth is that in politics causes are many; they act and react on each other in their operations; and to say exactly how much is due to one cause, or how much that cause acting alone would have effected, is impossible. To get some judgment how much of the present prosperity of the agricultural labourers (admitted on all sides as compared with their position in 1846) is due to free importation of wheat alone, let us (merely as a scientific artifice) imagine that a regular sliding-scale duty on wheat were put on now, bringing wheat to 48s. a quarter permanently. What would be the effect on the agricultural population? We may suppose that the produce of the duty, were it five or eight millions, or any other sum, was employed in remitting the duties on tea or other productions generally consumed by agricultural labourers. The placing of wheat at 48s. a quarter permanently would at once recall a good deal of capital to the land, it would carry out further the margin of cultivation, and at the same time cause a higher farming of that within the non-existing margin; in both ways it would raise the demand for agricultural labour, and would raise wages.

On the whole, I incline to think that a sliding-scale duty on wheat up to 48s. a quarter would not perceptibly alter the position of the agricultural labourer, or might possibly improve it: it would lower the wages and diminish the profits of capital in other trades. This is not (as before explained) a fair way of arguing the question; because it is impossible to calculate the indirect effects of Free Trade in wheat, which ultimately came round to benefit the agricultural labourer.

But considering how the efficiency of the agricultural labourer has been improved by improved machines since 1846, it is hardly possible to doubt that the agricultural labourer is much more indebted to the engineers than to the Corn Law League for his improved position. Under "machines" too may be included railway communications: also let us not forget how much the agricultural labourer owes, not only to drills and mowing-machines, but to boot-sewing machines, improved tea-ships, etc.

If we look to the general increase of wealth in England since 1846, the first thing that strikes us is the increase in the tribute, which is about thrice what it was. This increase is largely imperial, i.e. due to colonisation, annexation, etc. But here again we must not overlook the reaction of causes on each other: our Free Trade in corn, our improvements in machinery and ships, have so largely contributed to spread our empire that it becomes impossible to disentangle the separate work, or indeed to speak of any one cause as a simple element: the causes all act together.

England is the most comfortable country in the world for a rich man to live in, and consequently rich men congregate there; or, if they travel, keep a headquarters there. In this way we have congregated a disproportionate population in England. It may be argued that it would be a healthier economic state if the exports and imports balanced, and if the population of England was no larger than the country itself could grow wheat for, at a price not exceeding 40s. a quarter. However that may be, the important point for the working men of England to mark is, that every loss of rich men resident, every loss of tribute, every reduction of the wage-fund, every pressure on the population to emigrate, everything that leads in the direction of a self-supporting England, means immediate pressure on the poor, with reduction of wages. That is the only way emigration could be by natural law enforced. It is the poor, the labouring population, who are so hugely interested in the empire. Of all the follies taught to the labouring man the most foolish is the doctrine that the empire abroad is maintained to provide incomes for the rich, at the cost of the taxes paid for wars by the poor. It matters comparatively little to the rich whether they live at Florence or Dresden four or eight months in the year, whether the population of England is to be maintained stationary, to increase at its present rate of increase, or to be squeezed down to half its present number: but it matters vitally to the poor. Whether, ultimately, after our empire is gone and the population of England is stationary at fifteen millions say, the poor in England would be better off than now is a very difficult question, concerning which doctors differ; but it is absolutely certain that during the Banting process, in the reduction of the population down to that fifteen millions by a process of starvation and emigration, continued for two generations of men, the poor would have to go through experiences altogether novel. It is a thing that would revolutionise England; and in spite of the superior education of our labourers might lead to a break up of society. Starvation and bankruptcy make any and every man a Radical if not a Communist.

To keep the poor comfortable for the present and for many years immediately in front of us, we require a continual increase in the wealth laid out in England annually in the purchase of labour. The growth of the empire, the profitable investment of capital in foreign countries (whereof the interest is paid and consumed in England), is one great resource: the profitable investment of capital in England itself is the other great, probably safer, resource. To effect this we require every acre of land to fall into the hand of the man (or company) who can make most of it: we require a Universal Free Trade that shall render our hold on the commerce of the world secure until all nations adopt Universal Free Trade (when we shall gain so much in other ways that we shall be able to afford to share our monopoly with others); we require the removal of all restraints on railways, tramways, electric lights, etc., that hamper or prevent the employment of capital in England (in other words, that send English capital abroad). Finally, underlying the whole, and as the prime cause that shall induce capitalists to employ their capital in England rather than to send it abroad, we require the labour of every working man to be in the highest degree efficient: this retards the fall of the natural rate of profits to a minimum, and the attainment of the stationary state. Whatever ideal beauty has been discovered in the stationary state by J. S. Mill, it is pretty clear that England is not approaching it. It is as difficult for us to stand still as it is impossible to go back; and our only (third) course open (for the present and for many years to come) is to progress.