736 - REPORT— 1897. 



substance, and to assume that the importance of all subsequent researches lies in 

 their connection with it, and that their function is its general verification and 

 further development, whereas they may bring about its actual subversion. 



A survey of the results achieved in a particular branch of Economics affords 

 an excellent opportunity for examining the mutual interaction of various methods 

 of study, and their combined progress. The work of the economists of the 

 period extending over the close of last century and the earlier portion of the 

 present one, a period which, as a living economist has well said, has been in- 

 aptly and unfortunately termed classical, was mainly occupied in preliminary 

 discussion and in its formulation of tlieories, some of which dealt with quali- 

 tative relations, and many of which must be viewed as working theories only. 

 They dealt, among other matters, with such questions as the connection between 

 the various classes of remuneration and their relation with value, the distinction 

 between utility and material, the causes necessitating payment, and the eflect of 

 condition upon the agents of production ; but in nearly every one of these 

 respects very much was left for subsequent generations of students to accomplish, 

 and the way for inductive research was but prepared. And much has been 

 accomplished. Theories have been modified, theories have been recast, and new 

 theories have been formulated. 



But this gradual advance in study, necessary though it be and common though 

 it is to all sciences and subjects, stands at a peculiar disadvantage in the case of 

 social science, and, to take our particular case, in that of Economics. Here every- 

 thing is claimed, not only as a working theory for the investigator, but as one for 

 practical people and the statesman, and error is invested with grave, positive con- 

 sequences. Incorrect theories as to taxation led to the separation between England 

 and those colonies which now form the United States of America ; unsound eco- 

 nomic and social theories lit throughout Europe the cleansing if devouring fires of 

 the French Revolution ; unsound economic theories threatened to sap the vigour 

 of England in the third and fourth decade of the present century, and, to take a 

 specific instance, embodied themselves in the opposition to Factory Reform. This 

 peculiar gravity is at once the difficulty and the importance of economic study. 

 But when the mistakes of Economics, thus sadly illustrated, are cited in its dis- 

 paragement, does it never occur to those kindly anxious to enforce the salutary 

 lesson, how grave would have been the result had like importance been attached 

 to other sciences in their earlier stages? Have they not had their working 

 theories and made their mistakes ? A review of the course of any one of these 

 shows that the difl'erence between such a one and Economics is not in greater 

 immunity from error, but in the degree of importance attaching to the error. This 

 in its turn has its lesson, or rather its lessons. We in this generation have to pay 

 for the wrong attitude assumed in previous times by those who confused working 

 and tentative theories applicable to one time and one place with truths of universal 

 application, proclaiming their belief with a trying absence of misgiving and hesita- 

 tion. On the other hand, the immense importance of sound economic knowledge, 

 the danger of that which is unsound, coupled with the fact that all legislation and 

 every person must have and will proceed on some economic theory, emphasises 

 the need of stimulating economic research and economic teaching. Other sciences 

 are needed by those training for particular professions ; this is needed by all those 

 who, either by action, word, or vote, have a part in the direction of the destinies 

 of a country. It has been suggested with cheap cynicism that differences among 

 economists disprove the utility and need of the study. "What a pitiable con- 

 fusion between the spheres of physical and social science. The majority of men 

 are none the worse in their daily life for a general ignorance of chemistry or 

 biology, but in the case of Economics matters are far otherwise. An average 

 citizen can do and does without a knowledge of theories of chemistry ; but some 

 economic theory he will have and some basis for economic action he has or assumes 

 that he has. The only point at issue is whether he should form his opinions after 

 study or in ignorance. Difi'er though they may on many points of detail and 

 method, economists at any rate will agree in the belief that study is a better 



