Friday, July 25, 2014

One Lesson, Ad Nauseum

John Quiggin tells Crooked Timber readers that he's been working on a book that will reply to Henry Hazlitt’s Economics in One Lesson. Hazlitt's book was one of the first places I looked back in 1997 when I began my quest for the origin of the lump-of-labor fallacy claim. The word "fallacy" and its plural appears in the book twice as often (44 times) as the word "economist" and its plural (22 times).

In Quiggin's interpretation, Hazlitt’s one lesson is that prices are opportunity costs. According to Hazlitt, his one lesson is that economics consists of looking beyond the immediate effects of an action or policy, or "what is seen," to the longer term effects that remain unseen. Quiggin objects that there is nothing specifically economic about Hazlitt's avowed lesson, "it merely assumes what is to be proven, that a complete assessment of policy will yield free-market conclusions."

I posted a short comment on Quiggin's post, pointing out that Frederic Bastiat's "Parable of the Broken Window," which Hazlitt presents as an application of his one lesson, is simply a storified version of "supply creates its own demand." I would like to illustrate that point -- and indicate its connection with the lump-of-labor -- here with a  few excerpts from Economics in One Lesson. On page 15 (2007 edition), Hazlitt made explicit the connection between the broken window fable and Say's alleged Law:
Those who think that the destruction of war increases total “demand” forget that demand and supply are merely two sides of the same coin. They are the same thing looked at from different directions. Supply creates demand because at bottom it is demand. The supply of the thing they make is all that people have, in fact, to offer in exchange for the things they want. In this sense the farmers’ supply of wheat constitutes their demand for automobiles and other goods. All this is inherent in the modern division of labor and in an exchange economy.
Again, on page 152:
The real purchasing power for goods, however, as we have seen, consists of other goods. It cannot be wondrously increased merely by printing more pieces of paper called dollars. Fundamentally what happens in an exchange economy is that the things that A produces are exchanged for the things that B produces.
Hazlitt's footnote for the argument cites Benjamin Anderson's "A refutation of Keynes' attack on the doctrine that aggregate supply creates aggregate demand," which Hazlitt later reprinted, with effusive praise for the author, in The Critics of Keynesian Economics.

Hazlitt doesn't use the term "lump-of-labor" in the book, but that fallacy argument recurs frequently. On page 45:
I have referred to various union make-work and featherbed practices. These practices, and the public toleration of them, spring from the same fundamental fallacy as the fear of machines. This is the belief that a more efficient way of doing a thing destroys jobs, and its necessary corollary that a less efficient way of doing it creates them.  
Allied to this fallacy is the belief that there is just a fixed amount of work to be done in the world, and that, if we cannot add to this work by thinking tip more cumbersome ways of doing it, at least we can think of devices for spreading it around among as large a number of people as possible. This error lies behind the minute subdivision of labor upon which unions insist. In the building trades in large cities the subdivision is notorious. 
Page 49:
The spread-the-work schemes, in brief, rest on the same sort of illusion that we have been considering. The people who support such schemes think only of the employment they might provide for particular persons or groups; they do not stop to consider what their whole effect would be on everybody.  
The spread-the-work schemes rest also, as we began by pointing out, on the false assumption that there is just a fixed amount of work to be done. There could be no greater fallacy. There is no limit to the amount of work to be done as long as any human need or wish that work could fill remains unsatisfied. In a modern exchange economy, the most work will be done when prices, costs and wages are in the best relations with each other. What these relations are we shall later consider.
Page 131:
Most of these policies have been followed under the assumption that there is just a fixed amount of work to done, a definite “job fund” which has to be spread over as many people and hours as possible so as not to use it up too soon. This assumption is utterly false. There is actually no limit to the amount of work to be done. Work creates work. What A produces constitutes the demand for what B produces. 
But because this false assumption exists, and because the policies of unions are based on it, their net effect has been to reduce productivity below what it would otherwise have been. Their net effect, therefore, in the long run and for all groups of workers, has been to reduce real wages -- that is, wages in terms of the goods they will buy -- below the level to which they would otherwise have risen.
Note that in the last quote, Hazlitt rehearses the same "what A produces constitutes the demand for what B produces" argument that he later credits to B. M. Anderson. Hazlitt's juxtaposition of the "supply creates demand" doctrine and the "fixed amount of work" fallacy was not an idiosyncrasy but standard, textbook usage. 

Raymond Bye's Principles of Economics, first published in 1924 became one of the most widely adopted college introductory economics textbooks in the United States during the interwar period. In it, Bye presented an atypically clear exposition of the "'lump-of-labor' or 'make work" fallacy," which he defines as "very similar to the general overproduction fallacy..." "The reader," Bye assures, "will see the error in this sort of thinking if he understands the true nature of exchange." So what is the "true nature" of exchange?
Every laborer creates a product which is offered in exchange for the products of other laborers. The demand for labor thereby grows as fast as its supply; the one cannot be greater or less than the other, for they are the same thing. Every addition to the labor force of a community gives other laborers work to do providing for the needs of the newcomers, while the latter can find occupation catering to the ungratified desires of those who were already employed.
Of course, "supply creates its own demand" was the classical doctrine that Keynes likened to "an optical illusion, which makes two essentially different activities appear to be the same." No, those "two essentially different activities" Keynes referred to were not producing and consuming. They were "decisions to abstain from present consumption" and "decisions to provide for future consumption," the two of which are activated, Keynes argued, by different motives.
It is, then, the assumption of equality between the demand price of output as a whole and its supply price which is to be regarded as the classical theory’s ‘axiom of parallels’. Granted this, all the rest follows — the social advantages of private and national thrift, the traditional attitude towards the rate of interest, the classical theory of unemployment, the quantity theory of money, the unqualified advantages of laissez-faire in respect of foreign trade and much else which we shall have to question.
Why Say's Law did not "sink without trace" in the wake of Keynes's refutation is the topic of the final episode of the supply creates its own demon series.

Tuesday, July 22, 2014

Will Automatons Take Economists' Jobs?

For some reason, economists think it's a good idea to keep asking the same hackneyed question over and over again and keep giving the same hackneyed answers.

"Will automation take our jobs?" is a perennial favorite. The answer, of course is "technology creates more jobs than it destroys," "a cheap market will always be full of customers," "supply creates its own demand" and "CREATIVITY!" All of which is bullshit (or parrot droppings).

The real answer is that waste and war and immiseration can always be counted on to keep people toiling away no matter what. Hooray for waste and war and immiseration!

My question is a little different. What will it take to automate economists's jobs? It was observed long ago that one could teach a parrot to say "supply and demand." Here is my answer that doesn't require the frequent changing of the newspaper at the bottom of the cage:



Congenital ironists might want to note that the textbook lump enunciated by the "Keynesian" Samuelson is the self-same "supply creates its own demand" version of "Say's Law" of which Keynes remarked:
Thus Say’s law, that the aggregate demand price of output as a whole is equal to its aggregate supply price for all volumes of output, is equivalent to the proposition that there is no obstacle to full employment. If, however, this is not the true law relating the aggregate demand and supply functions, there is a vitally important chapter of economic theory which remains to be written and without which all discussions concerning the volume of aggregate employment are futile.
The "vitally important chapter of economic theory" that Keynes referred to was, of course, "the theory of employment to be worked out in the course of the following chapters..."

Thursday, July 10, 2014

View Page Source: "Are Jobs Obsolete?"

The other day, Sandwichman posted a passage from an interview with Google co-founder and CEO Larry Page in which he mentioned working less as a response to worries about technological unemployment. Page cited Peter Diamandis's book Abundance so I thought I would track down the source for Page's musings.

Page's source can be found in an appendix: "Dangers of the Exponentials" and is contained in an extended quotation from a 2011 CNN article, "Are Jobs Obsolete," by media theorist, Douglas Rushkoff. Here is Rushkoff in an 2011 Wall Street Journal interview, discussing the question, "Does America Really Need More Jobs?":

Tuesday, July 8, 2014

"A Very Complicating Influence on the Theory of Distribution"

Google co-founder and CEO, Larry Page:
I totally believe we should be living in a time of abundance, like Peter Diamandis' book. If you really think about the things that you need to make yourself happy - housing, security, opportunities for your kids - anthropologists have been identifying these things. It's not that hard for us to provide those things. The amount of resources we need to do that, the amount of work that actually needs to go into that is pretty small. I'm guessing less than 1-percent at the moment. 
So the idea that everyone needs to work frantically to meet people's needs is just not true. I do think there's a problem that we don't recognize that. I think there's also a social problem that a lot of people aren't happy if they don't have anything to do. So we need to give people things to do. We need to feel like you're needed, wanted and have something productive to do. 
But I think the mix with that and the industries we actually need and so on are-- there's not a good correspondence. That's why we're busy destroying the environment and other things, maybe we don't need to be doing. So I'm pretty worried. Until we figure that out, we're not going to have a good outcome. 
One thing, I was talking to Richard Branson about this. They don't have enough jobs in the UK. He's been trying to get people to hire two part-time people instead of one full-time. So at least, the young people can have a half-time job rather than no job. And it's a slightly greater cost for employers. I was thinking, the extension of that is you have global unemployment or widespread unemployment. You just reduce work time. 
Everyone I've asked-- I've asked a lot of people about this. Maybe not you guys. But most people, if I ask them, 'Would you like an extra week of vacation?' They raise their hands, 100-percent of the people. 'Two weeks vacation, or a four-day work week?' Everyone will raise their hand. Most people like working, but they'd also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, is if you had a coordinated way to just reduce the workweek. And then, if you add slightly less employment, you can adjust and people will still have jobs.
It's not a new idea. Sandwichman has been on this file for a couple of decades. As some media commentators observed, Keynes mooted the idea of a 15-hour workweek back in 1930. But it wasn't a new idea then, either.
Prince's Tavern, Princess-street, Manchester,
Monday, Nov. 25, 1833. At a meeting called, at the above time and place, of the Working People of Manchester, and their Friends, after taking into their consideration—
That society in this country exhibits the strange anomaly of one part of the people working beyond their strength, another part working at worn-out and other employments for very inadequate wages, and another part in a state of starvation for want of employment;
That eight hours' daily labour is enough for any human being, and under proper arrangements, sufficient to afford an amply supply of food, raiment, and shelter, or the necessaries and comforts of life, and that to the remainder of his time every person is entitled for education, recreation, and sleep ;
That the productive power of this country, aided by machinery, is so great, and so rapidly increasing, as from its misdirection, to threaten danger to society by a still further fall in wages, unless some measure be adopted to reduce the hours of work, and to maintain at least the present amount of wages:— It was unanimously Resolved, 
1. That it is desirable that all who wish to see society improved and confusion avoided, should endeavour to assist the working classes to obtain ' for eight hours' work the present full day's wages,' such eight hours to be performed between the hours of six in the morning and six in the evening; and that this new regulation should commence on the first day of March next. 
2. That in order to carry the foregoing purposes into effect, a society shall be formed, to be called 'the Society for Promoting National Regeneration.' 
3. That persons be immediately appointed from among the workmen to visit their fellow-workmen in each trade, manufacture and employment, in every district of the kingdom, for the purpose of communicating with them on the subject of the above Resolutions, and of inducing them to determine upon their adoption. 
4. That persons be also appointed to visit the master manufacturers in each trade, in every district, to explain and recommend to them the adoption of the new regulation referred to in the first Resolution. 
5. That the persons appointed as above shall hold a meeting on Tuesday evening, the 17th of December, at eight o'clock, to report what has been done, and to determine upon future proceedings.
O.K., but it wasn't yet a respectable idea when just a bunch of working people and their friends thought it up. Thirty-nine years later, Thomas Brassey Jr. made it respectable, with the publication of his book, Work and Wages, which was based on the extensive empirical evidence accumulated in the account books of the worldwide railroad engineering firm established by his father, Thomas Brassey Sr. Chapter Six of Work and Wages was titled "Hours of Labour" and presented the empirical observation that, no more than wages are an adequate measure of the cost of labor, "the hours of work are no criterion of the amount of work performed."
Thomas Brassey, Senior

Another 35 years would pass before Sydney J. Chapman would provide the theoretical explanation for Brassey's observation, published in the Economic Journal in an article conspicuously titled, "Hours of Labour." Chapman, who had been one of Alfred Marshall's star pupils at Cambridge, also collaborated with Brassey on a three-volume "continuation" of Work and Wages, with Brassey providing the introduction to each volume.

Chapman's collaboration with Brassey wasn't "out of the blue." In The Wages Question (1876), General Francis Amasa Walker, credited Brassey's Work and Wages as containing "by far the most important body of evidence on the varying efficiency of labor..."
Mr. Brassey's father was perhaps the greatest "captain of industry" the world has ever seen… The chief value of Mr. Brassey, Jr.'s work is derived from his possession of the full and authentic labor-accounts of his father's transactions.
Fifteen years later, in his Principles of Economics, Alfred Marshall praised "the lead taken by General Walker and other American economists" for its effect in:
...forcing constantly more and more attention to the fact that highly paid labour is generally efficient and therefore not dear labour; a fact which though it is more full of hope for the future of the human race than any other that is known to us, will be found to exercise a very complicating influence on the theory of Distribution." 
What those complications are can only be fully comprehended in the context of Chapman's analysis of the hours of labor. Brassey to Walker to Marshall to Chapman (to Pigou to J. M. Clark to Kapp) OR (to Robbins to Hicks to oblivion).

Sunday, June 29, 2014

"Say's Law sank without trace."

Money: Whence It Came, Where It Went, J. K. Galbraith (1975), pp. 218-220:
The belief that the economy would find its equilibrium at full employment depended partly on what had long been called Say's Law — for J. B. Say, the French counterpart and interpreter of Adam Smith — and partly on the corrective movement of wages, prices and interest rates when there was unemployment. Say's Law, not a thing of startling complexity, held that, from the proceeds of every sale of goods, there was paid out to someone somewhere in wages, salaries, interest, rent or profit (or there was taken from the man who absorbed a loss) the wherewithal to buy that item. As with one item, so with all. This being so, there could not be a shortage of purchasing power in the economy. Movements in prices, wages and interest rates then validated J. B. Say and also ensured that the fundamental tendency of the economy would be to operation at full employment. People and firms saved from their income, and this saving had, obviously, to be spent. This happened when it was invested in housing, plant, capital equipment. If people saved more than was invested, the surplus of savings would bring down interest rates. Investment would thus be stimulated and saving (at least in theory) discouraged. So the excess of savings would be eliminated and Say sustained. Prices of goods would also fall in consequence of any short-fall in purchasing power that resulted from an excess of savings. This would encourage buying and, by reducing the income from which savings were made, also reduce savings. Again Say was sustained. Until Keynes, Say's Law had ruled in economics for more than a century. And the rule was no casual thing; to a remarkable degree acceptance of Say was the test by which reputable economists were distinguished from the crackpots. Until late in the '30s no candidate for a Ph.D. at a major American university who spoke seriously of a shortage of purchasing power as a cause of depression could be passed. He was a man who saw only the surface of things, was unworthy of the company of scholars. Say's Law stands as the most distinguished example of the stability of economic ideas, including when they are wrong. 
Supplementing Say, as noted, were the forces that kept the economy at full employment. These too were relatively straightforward. Were there unemployment, the competition for jobs would bring a fall in wage rates. Prices would be less immediately affected by the unemployment. The relationship of prices to costs would thus be made more attractive — real wages would fall — and workers whose employment was previously unprofitable to employers would now be hired. The fall in wages would not affect purchasing power; because of Say, that was always sufficient. Employment would continue to expand until the approach to full employment raised wage costs and arrested the hiring. Thus did the economy find its equilibrium at or very near full employment. From this also came the one decisive recommendation of the orthodox economists for ending unemployment. Do nothing to interfere with the reduction of wages in a depression. Resist all siren voices, including that of Herbert Hoover, who, it will be recalled, urged against wage cuts. On no matter was compassion so softheaded, for to keep up wages merely perpetuated the sorrow of unemployment and the sorrows of the unemployed. This was the doctrine, perhaps more accurately the theology, that Keynes brought to an end. There are numerous points of entry on his argument; perhaps the easiest is by way of the rate of interest. Interest, he held, was not the price people were paid to save. Rather it was what they got for keeping their assets in plant, machinery or similarly unliquid forms of investment — in his language, what was paid to overcome their liquidity preference. Accordingly, a fall in interest rates might not discourage savings, encourage investment, ensure that all savings would be used. It might cause investors to retreat into cash or its equivalent. So interest rates no longer came to the support of Say's Law to ensure that savings would be spent. And if Say's Law was no longer a reliable axiom of life, the notion of a shortage of purchasing power could no longer be excluded from calculation. It might, among other things, be the consequence of a reduction in wages. 
What people sought to save, in Keynes's view, had still to be brought to equal what they wanted to invest. But the adjustment mechanism, he argued, was not the rate of interest but the total output of the economy. If efforts to save exceeded the desire to invest, the resulting shortage of purchasing power or demand caused output to fall. And it kept falling until employment and income had been so reduced that savings were also reduced or made negative. In this fashion savings were brought into line with investment — which also, meanwhile, would have fallen but by not so much. The economic equilibrium so established, it will be evident, was now one in which there was not full employment but unemployment. Thus unemployment for Keynes was a natural condition of the economy. There was much else. And not all of Keynes's argument survived. The liquidity-preference theory of interest, for example, though it served Keynes's argument, did not gain permanent acceptance as a description of reality. But on two things Keynes was immediately influential. Say's Law sank without trace. There could, it was henceforth agreed, be oversaving. And there could, as its counterpart, be a shortage of effective demand for what was being produced. And the notion that the economy could find its equilibrium with unemployment — a thought admirably reinforced by the everyday evidence of the '30s — was also almost immediately influential.






Saturday, June 28, 2014

Supply Creates Its Own Demon II: You Don't, Say!

Karl Marx could hardly bring himself to utter the name of J. B. Say without affixing to it some contemptuous description or sarcastic remark:
"Say’s earth-shaking discovery…" 
"…adopted by Ricardo from the tedious Say (and to which we shall return when we discuss that miserable individual)…" 
"…his authority, Say, is playing a trick on him here... " 
"…we shall criticise Say’s theories later, when we deal with this humbug himself." 
"The constant recurrence of crises has in fact reduced the rigmarole of Say and others to a phraseology which is now only used in times of prosperity but is cast aside in times of crises." 
"This is the childish babble of a Say…" 
"Say, who tries to hide his dull superficiality by repeating in absolute general phrases Smith’s inconsistencies and blunders…" 
"Storch says of this trash of Say’s… 
"After Garnier appeared the inane Jean-Baptiste Say’s Trait√© d’√©conomie politique." 
"This is his kind of originality, his kind of productivity and way of making discoveries, And with his customary logic, he refutes himself again…" 
"Say replies with his characteristic profundity…"  
"…the absurdity of J. B. Say, who pretends to account…" 
"…as it does to J. B. Say in the vulgarisation of Adam Smith." 
"The result he arrives at, is precisely that proposition of Ricardo that he aimed at disproving. After this mighty effort of thought, he triumphantly apostrophises Malthus…" 
"A disciple of Ricardo, in reply to the insipid nonsense uttered by J. B. Say…"
Curiously, in "The compensation theory, with regard to the workers displaced by machinery," Section 6, Chapter 15, Volume 1 of Capital, Marx performed the ultimate insult by snubbing Say, almost entirely. The first sentence includes "James Mill, McCulloch, Torrens, Senior and John Stuart Mill" among those bourgeois political economists claiming that machinery sets free enough capital to reabsorb the workers displaced by it. Say is relegated to a footnote citing the anonymous pamphlet in which the author refutes "the insipid nonsense uttered by J. B. Say" by pointing out:
Where division of labour is well developed, the skill of the labourer is available only in that particular branch in which it has been acquired; he himself is a sort of machine. It does not therefore help matters one jot, to repeat in parrot fashion, that things have a tendency to find their level. On looking around us we cannot but see, that they are unable to find their level for a long time; and that when they do find it, the level is always lower than at the commencement of the process.
Thus, the anonymous author of An Inquiry into Those Principles Respecting the Nature of Demand, and the Necessity of Consumption, Lately Advocated by Mr. Malthus, neatly summed up in a paragraph the rebuttal to the so-called compensation theory. This succinct reply makes a mystery of Marx's exclusion of Say from his listing, at the start of the section, of bourgeois political economists.

The mystery is solved in Chapter 20 of Theories of Surplus Value, "Disintegration of the Ricardian School," where Marx discussed the pamphlet he described as "one of the best of the polemical works of the decade." "What the author writes about Say is very true," Marx observed. Following a quotation from the pamphlet about the hazard arising from the difference in timing between consumption by workers and their production, Marx exclaimed that this was, "indeed the secret basis of glut." Several paragraphs later, Marx concluded:
Over-production, the credit system, etc., are means by which capitalist production seeks to break through its own barriers and to produce over and above its own limits. Capitalist production, on the one hand, has this driving force; on the other hand, it only tolerates production commensurate with the profitable employment of existing capital.

Friday, June 27, 2014

An Inquiry into those Principles, respecting the Nature of Demand and the Necessity of Consumption, &c.


"Up to this time, things passed off without any noise; and, thank Heaven! nobody kicked against my prescriptions: — but, however excellent is the practice of a physician, somebody or other is always sure to find fault with it." This was the sage remark of that very learned professor of medicine, Gil Blas, after his quarrel with the fiery little doctor Cuchillo. They had both been called to visit a grocer's son in the last stage of dropsy; Gil Blas, on the authority of his great master, the illustrious Sangrado, prescribed copious bleedings, and immeasurable draughts of hot water; while Cuchillo quoted Celsus in favour of abstinence from liquids under this disorder, and called Sangrado a fool. Gil Blas returned the civility with interest; and the two doctors, forgetful of their dying patient, soon came to fisty-cuffs by his bed-side, so that it was not an easy matter for the grocer, with the assistance of his shopman, to separate them.

To see the country sinking under a chronic disorder which is daily exhibiting more aggravated and alarming symptoms, while the attendant physicians, both in and out of parliament, are quarrelling about the nature of it, and about the efficacy of their respective prescriptions, may well remind us of the disputes between Gil Blas and Cuchillo. One set of doctors attributes the present disease of the country to deficient consumption; a second, to excessive production; while a third calls them both fools, and contends that there can be no such thing as excess of production or deficiency of consumption, because the one is of necessity a measure of the other, since production, M. Say asserts, always opens a market for production. When there is a glut of commodities, the way to cure it is to produce more; when you are dropsical, drink, drink: "chaque produit cree est un debouche ouvert, et chaque produit detruit ou consomme est un debouche ferme." — "Tout ce qui petit se produire peut trouver des consommateurs!"

The question, which is the more immediate subject of investigation in the pamphlet before us, has already been introduced in our notice of Mr. Malthus's work on political economy in a preceding portion of this Number; where we stated, briefly, but we trust with tolerable correctness, his views of the nature of demand and supply, and the opposite ideas of M. Say. We cannot spare room to renew the discussion; and indeed the market is so glutted with publications on political economy, that, notwithstanding M. Say's notion that consumption always keeps pace with production, we should anticipate the nausea of a surfeit in devoting a larger portion of our pages to these interminable disputes. Any person, however, who is disposed to fathom the question, will do well to read the present Inquiry, which is written with considerable ability and acuteness; and we must say that the inference which Mr. Malthus has chosen to draw from his view of it, so convenient and acceptable to the "powers that be," (namely, that taxation and the maintenance of unproductive consumers are conducive to the progress of wealth,) is here refuted with great precision and force of argument.

With respect to the general distress which prevails in this kingdom, if a rapid depreciation of the products of the earth may be fairly considered as one of the proximate causes of it, we must look to other and more remote sources for its origin. All climates and countries have their own peculiar productions, and the industry of every people shoots out in its own favourite and peculiar directions. The consequence is that all possess a superabundance of certain articles of product and manufacture, which they are glad to exchange for other articles that they want. All Europe, and indeed the whole civilized world, is thus supplied: the deficiencies of some countries being remedied by the superfluities of others; and the wants and the consumption of each encouraging the productions of all others, as well as of its own. Any long-continued obstruction, therefore, must derange this salutary circulation, this beneficial system of interchange and reciprocal accommodation. During the last unhappy war, not only was every link in the commercial chain which had previously connected together the various nations of Europe, even during their hostilities, snapped asunder, but the intercourse also of Europe with America was violently interrupted. The ball which we fired at the enemy rebounded,

"And, like a devilish engine, back recoiled
Upon ourselves."

Before that time, neutral bottoms always made neutral goods: but, in our impolitic zeal to destroy the entire commerce of France by means of our maritime superiority, we assumed the right of search; and, after having annihilated the fleets of our enemy, we refused to allow any European neutral nation to hold commerce with France, or even to suffer America to carry on the commerce between that country and her own West-Indian colonies. If, however, we were omnipotent at sea, France was equally powerful on land; and Bonaparte, turning our own weapons against us, endeavoured hermetically to close every market on the Continent against British manufactures. Even this was not all: our measures drove America to war with us, and the consequence was that we lost one of the largest outlets for our commodities.

Peace came at last: but hitherto it has afforded us only "a death-like silence and a dread repose;" a melancholy leisure for contemplating, in all its extent and horror, the devastation of war. While the hurricane rages, the mind is absorbed in a state of tumult and agitation between hope and fear; — it is in the calm of evening, and when the contending elements are hushed, that we walk abroad and mourn over the desolation around us, the shattered forest, the uprooted canes, the ripened ears of corn, cut from their brittle stems, and lying on the earth,

"Thick as autumnal leaves, that strew the brooks
in Valambrosa."

It must be evident, observed the Marquess of Lansdown in his motion for the appointment of a committee on foreign-trade, that when, for a number of years, twenty or thirty millions (or whatever the amount might be, but always a large sum) had been taken from the capital of the country to be used in the expenditure of the government, a great additional demand must necessarily be created. The natural consequence of that demand was to cause an increased supply, which would be still farther augmented by the consumption of those individuals who would derive a great part of their support, indirectly, from that increased expenditure. When this enlarged expenditure ceased, it was followed of course by a great decrease of demand, and a proportionate diminution of consumption; while, by bringing back the standard to its original value, the amount of taxation pressed more heavily on the diminished means of the community. The only remedy, therefore, for the distress thus occasioned, is to be found in economy, and retrenchment of the public expenditure. Economy, however, is a foe to patronage; and patronage, being a first favourite at court, keeps its enemy at a distance.