608 REPORT—1883. 
this position of Adam Smith which gave him his peculiar usefulness. He ful- 
filled two functions. On the one hand, he prepared the way for, though he did 
not found, the abstract science of Political Keconomy. In this sense he is the 
legitimate progenitor of Ricardo and John Stuart Mill, On the other hand, he 
was also the beginner of a great practical movement, and no man can head a great 
practical movement without knowledge of the affairs of ordinary life. There are, 
Mr. Bagehot truly observes, scarcely five consecutive pages in the ‘ Wealth of 
Nations’ which do not ‘contain some sound and solid observation, important in 
practice and replete with common sense. The most experienced men of business 
would have been proud of such a fund of just maxims fresh from the life, and it is 
wonderful that they should have occurred to an absent student, apparently buried 
in books and busied with abstractions.’ It is somewhat strange that the opposite 
qualities as to habit of mind are traceable in David Ricardo. He was the founder 
of abstract political economy, but his occupations were the reverse of those in 
which it might have been expected that such modes of thought would be encouraged. 
He was a shrewd, active man of business, constantly engaged in a very absorbing 
occupation. It is the fashion rather to decry Ricardo at this moment, but I think 
that those who desire to advance economic study among us may do well to fortify 
themselves by a study of his arguments, though they may not he able to accept 
all his conclusions. 
I have endeavoured, in what has been said thus far, to explain the principle of 
research by which we may hope to extend the bounds of the branch of science 
which we study, and the habits of thought we should desire to cultivate. We 
must follow the historical method of research, too little recently followed in this 
country.!. We must test economic conclusions by the evidence of facts. But 
while we thus accept the necessity of following a deductive method, we must bear 
in mind that it is not opposed to, but can only safely be carried out on the lines 
marked out by, inductive reasoning. Nor do I, in speaking thus of the historic 
method, wish to be understood to endorse without reserve the views of the historic 
school. But though I think in some respects their conclusions are incorrect, I can 
well believe that research carried out on the historic method, based on sound 
principles, would be very fruitful in results. It is rather, however, the art than the 
science of economics which has a hold on the popular mind at this moment. We 
must not overlook this feeling. 
In active, busy, hard-working England we are too much apt to neglect any 
mode of research from which we do not see immediate, marked, and tangible results. 
We shall do well to turn this habit of mind, if we can, into the service of economic 
inquiry. There are several branches of economic study, the investigation of which 
might be useful to our country at the present time. I will venture to indicate two 
or three of them. 
First, it is the opinion of some observers of contemporary events—men competent 
to form an opinion, from habit of mind and opportunity of observation—that the 
days of exuberant prosperity to this country—the days in which, to use an expres- 
sion now historic, prosperity advanced ‘by leaps and bounds’—are over. I shall 
not pause now to examine into the grounds upon which this opinion is founded. 
I do not intend to put it forward in an extreme sense, as if I believed it possible 
that all the brilliant and luxuriant growth of vigorous’ power by which we are 
surrounded is about immediately to pass into the‘ sere and yellow leaf, and to fade 
away at once. But it is, I think, quite possible, without expecting any change 
as marked as this to come on immediately, that the days when great profits were 
made by large and important classes in the community may be over. There may 
be and there probably are great inventions yet to be discovered, as great—possibly 
even greater—than those which have changed the face of this country, which 
1 T should, in passing, refer to Mr. James E. Thorold Rogers’s work, A History 
of Agriculture and Prices in England from the Year after the Oxford Parliament, 
1259, to the Commencement of the Continental War, 1793.’ Vols. i. to iv. 1259-1582. 
Oxford: Printed in the Clarendon Press. London: Oxford University Press Ware- 
house, 7 Paternoster Row. 
