Regarded from the theoretic side,the characteristic features of the new direction were the following.The view of at least theextreme mercantilists that national wealth depends on the accumulation of the precious metals is proved to be false,and thegifts of nature and the labour of man are shown to be its real sources.The exaggerated estimate of the importance of foreigncommerce is reduced,and attention is once more turned to agriculture and the conditions of its successful prosecution.Onthe side of practical policy,a so-called favourable balance of trade is seen not to be the true object of a nation's or astatesman's efforts,but the procuring for the whole population in the fullest measure the enjoyment of the necessaries andconveniences of life.And --what more than anything else contrasts the new system with the old --the elaborate apparatus ofprohibitions,protective duties,bounties,monopolies,and privileged corporations,which the European Governments hadcreated in the supposed interests of manufactures and trade,is denounced or deprecated as more an impediment than afurtherance,and the freedom of industry is insisted on as the one thing needful.This circle of ideas,of course,emerges onlygradually,and its earliest representatives in economic literature in general apprehend it imperfectly and advocate it withreserve;but it rises steadily in importance,being more and more favoured by the highest minds,and finding an increasingbody of supporters amongst the intelligent public.
Some occasional traits of an economic scheme in harmony with these new tendencies are to be found in the De Cive and Leviathan of Hobbes.But the efficacy of that great thinker lay rather in the general philosophic field;and by systematising,for the first time,the whole negative doctrine,he gave a powerful impulse towards the demolition of the existing socialorder,which was destined,as we shall see,to have momentous consequences in the economic no less than in the strictlypolitical department of things.
A writer of no such extended range,but of much sagacity and good sense,was Sir William Petty,author of a number ofpieces containing germs of a sound economic doctrine.A leading thought in his writings is that "labour is the father andactive principle of wealth,lands are the mother."He divides a population into two classes,the productive and theunproductive,according as they are or are not occupied in producing useful material things.The value of any commoditydepends,he says,anticipating Ricardo,on the amount of labour necessary for its production.He is desirous of obtaining auniversal measure of value,and chooses as his unit the average food of the cheapest kind required for a man's dailysustenance.He understands the nature of the rent of land as the excess of the price of its produce over the cost ofproduction.He disapproves of the attempt to fix by authority a maximum rate of interest,and is generally opposed toGovernmental interference with the course of industry.He sees that a country requires for its exchanges a definite quantityof money and may have too much of it,and condemns the prohibition of its exportation.He holds that one only of theprecious metals must be the foundation of the currency,the other circulating as an ordinary article of merchandise.Petty'sname is specially associated with the progress of statistics,with which he was much occupied,and which he called by thename of political arithmetic.Relying on the results of such inquiries,he set himself strongly against the opinion which wasmaintained by the author of Britannia Languens (1680),Fortrey,Roger Coke,and other writers,that the prosperity ofEngland was on the decline.
The most thoroughgoing and emphatic assertion of the free-trade doctrine against the system of prohibitions,which hadgained strength by the Revolution,was contained in Sir Dudley North's Discourses upon Trade ,1691.He shows that wealthmay exist independently of gold or silver,its source being human industry,applied either to the cultivation of the soil or tomanufactures.The precious metals,however,are one element of national wealth,and perform highly important offices.
