THE doctrines of the Physiocrats which, as we shall presently see, Adam Smith adopted almost in their entirety, cannot be given their proper place in the evolution of our subject without some passing reference to the doctrines of the Mercantilists who preceded them, and out of antagonism to whose doctrines the theories of the Physiocrats sprang with that one-sided energy and zigzag of reaction by means of which alone before the days of Evolution, like the tacking of sailing vessels before the days of steam, all truth seemed fated to advance. Now of this Mercantile System it may be said in general that up to the time of Adam Smith, although falling more and more into decay in the extremer form at least, - owing to the fact that the industrial conditions in which it took its rise had largely passed away, - it still remained not only the theory but the practice of most European States. And as it will serve to illustrate one or two of the main principles which it is the object of this volume to enforce, I may perhaps be permitted to dwell on it here for a moment.

These principles are, first, the impossibility of divorcing in practice the laws of Political Economy whether Pure or Applied from the larger considerations of Politics, Civilization and Sociology; secondly, that the theories of the Mercantile System were not only the germ from which Political Economy has hitherto developed, but that they mast be the guiding principle of its evolution so long as nations exist as separate entities struggling to maintain each its own individuality in the midst of other States.

I am of course aware that no system has been the theme of more gibes among the orthodox Economists who have followed in the footsteps of Adam Smith than that of the Mercantilists, which they have everywhere held up to ridicule as being not only from an economic but from a political point of view the most puerile and exploded of superstitions. It will be my aim in this chapter to reverse if possible, or at least to modify, this all too lightly entertained conviction.

To begin with, then, I would point out that until the millennium of peace and goodwill has arrived for mankind, each nation while co-operating with other nations as far as possible in the general work of civilization must have as its primary object to hold its own in the struggle for existence, to protect itself against the aggrandizements of other nations, as well as to increase among them its own authority, dominion, or prestige. If this be so, it is obvious that no nation can pursue a number of ends with equal indifference, as a man of means and leisure can in private life, but must arrange its affairs, like a thrifty housewife, in a scale or hierarchy of values, from the all important down through the various degrees of the less important to the comparatively or absolutely indifferent; and further, that the means employed, whether in curtailing the freedom of individuals or in relaxing it, must be chosen entirely with a view to their relative adaptability to these ends. At the present day no liberty for example can be permitted to individuals to desert to the enemy in time of war, or to hand over their arms or ships to them either for a pecuniary or any other consideration whatever; nor could it at any age of the world.

On the other hand anyone has perfect liberty to-day to sell or buy any of the ordinary articles of commerce as he sees fit, with no one to say him nay; or to move in and out among his neighbours in the street as he pleases, provided always he does not interfere with the equal liberty of others. But this was not always so; people could not move in and out among each other in the street as they pleased or where they pleased, but had to observe priority and degree of rank and position in order to minimise the danger of constant breaches of the peace. Nor could they buy and sell what they pleased, where they pleased, or how they pleased; the amount of liberty in this respect permitted them, whether much, little, or none at all, depending strictly on the extent to which that liberty would advance or retard the end to which the trading was the means.

Now in no system of Political Economy, I will venture to say, have the principles of the Science been better adapted to the end the nations had in view at the time than in the system of the Mercantilists. But in order that we may get the facts in the right focus for perceiving their general bearings, it is necessary to ask at the outset; - firstly, what was the end the nations had at heart when they all with one accord adopted the Mercantile System; and secondly, to what extent did the special economic expedients they employed enable them to realise that end - when compared, that is to say, with any other possible economic means or expedients, past, present, or prospective?

The first question presents no difficulty, for the supreme end of States then and now was national independence, solidarity, security, and prosperity, both in peace and war. As for the means employed, these would naturally follow out of the necessities imposed by the end, and were and still are, first, a sufficiency of armed men and stout hearts ready to respond when called upon; secondly, kings or other executive authorities to watch over and direct them; and lastly, the sinews of war to back them. Now these three factors are of supreme and equal importance, but it is in the sinews of war that the necessities of Politics come in contact with the Political Economy of the Mercantilists, and are seen exercising their control over the evolution and development of the methods, the principles, and the expedients of that system, precisely as these necessities of Politics prescribe the system of laws which mark out the duties, the responsibilities, the liberties, the restraints, and the relations of men in their internal civil affairs; the difficulties which attended the levying and collecting of the sinews of war prescribing the relative amount of restraint or freedom of trade.