Adam Smith's words, "almost perfectly free," although the want of adequate means of communication formed a serious hindrance to its development. But, in contrast with the inland trade,' the external commerce was hampered by a number of vexatious restrictions. It was regulated with a view to securing what was known as a 'favourable balance' of trade, by making, if possible, the exports greater than the imports, and by endeavouring to procure the amount due for this excess in actual bullion. "High duties,” and in some instances "absolute prohibitions," were employed as "restraints upon the importation of foreign goods," and exportation was encouraged, sometimes by drawbacks, sometimes by bounties, sometimes by advantageous treaties of commerce with foreign states, and sometimes by the establishment of colonies in distant countries." For these colonies were regarded as a field for the commercial 'monopoly' of the mother-country, and of the chartered companies to which in some instances their government had been intrusted.

On all sides, then; there were regulations and restrictions, when the season for restriction and regulation, which had once existed, was passing away. There is perhaps no more suggestive illustration of this than the story told of James Watt, the inventor of the steam-engine, who betook himself to Glasgow, and, after the local corporation of 'hammermen' had refused to give him permission to practise his trade, was admitted within the walls of the University, and allowed to set up his workshop.

The consideration, which was specially impressed upon Adam Smith's mind by these circumstances, was the paramount need of freedom. It has been said 1-not perhaps

1 Toynbee, Industrial Revolution, p. 14.

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without exaggeration-that this was the "first and the last word of his political and industrial philosophy "; and it is true that "every page of" his "writings is illumined" by the "passion for freedom." "Break down," he exclaims, "the exclusive privilege of corporations, and repeal the statute of apprenticeship, both which are real encroachments upon natural liberty, and add to these the repeal of the law of settlement."

But what does he mean by 'natural liberty'? Here we come upon another of the great moulding influences of his life. His 'passion for freedom' was not merely the practical outcome of a reaction against restrictive routine, but it had also a basis in theoretical speculation. He had, as we have seen, accepted at one period of his life what we may perhaps call a 'travelling tutorship,' and a considerable part of the time he spent abroad had been passed in Paris. At that date there was a group of philosophers and reformers in France, a few men," as Adam Smith called them, "of great learning and ingenuity," who are known by the name of the Physiocrats, or adherents of the rule of nature. They, like him, were impatient with the vexatious regulations which hampered trade, to a greater extent in their own country than in England, and like him they felt an ardent sympathy for the common people, who were robbed of the "free disposal" of their "most sacred and inviolable" property, the labour of their hands, by these restrictions. They held that, if they could once remove this overgrowth of artificial regulation, they would find beneath it the simplicity of nature. They believed in the current philosophy, which maintained that there had once been a state of nature, and that, when society was established, men had entered into an engagement— --a 'social contract,' as it was sometimes called

to surrender some of the individual rights they then enjoyed, which might conflict with the rights of their fellow-men. And they argued that existing human institutions should be made to conform, as far as was possible, to the original simplicity of nature, when all men were equal and free. This was what was meant by 'natural liberty.' "All systems," writes Adam Smith, who in this was their disciple, X although he was careful to point out the "capital error" of their "system" of political economy, which represented agriculture as the sole source of the revenue and wealth of every country," "all systems, either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord." It is scarcely an unmeaning coincidence that the same year which saw the publication of the Wealth of Nations witnessed the Declaration of American Independence, in which it was formally affirmed that all men were 'by nature equal and free.'

The belief, which was thus felt by Adam Smith in the supreme value and need of natural liberty,' was strengthened by his moral and religious opinions. It is as impossible with him, as it is with any man, to separate entirely one part of his nature from another; and his 'passion for freedom' was undoubtedly strengthened by the conviction, to which he gave emphatic expression in his moral treatise, that the benevolent government of the world by God would, in most cases, lead the individual, who was freely seeking his own interests, to advance the interests of the common weal. He would be "led by an invisible hand to promote an end which was no part of his intention."

Again he was a Scotchman, and he may be said to have possessed a full measure of a Scotchman's hard-headedness.

He could see through the specious and fallacious arguments which were frequently employed in support of the restrictive regulations of the times. And the national characteristics betrayed themselves in other ways; for it has been said with considerable truth that he "seemed to think that there was a Scotchman inside every man." If, indeed, every one who took part in industry possessed a Scotchman's canny acuteness and pertinacity, if they were all as fully and constantly alive to their interests, and as determined to seek them, as the proverbial Scotchman is, then we might with more complacency leave them to fight out a struggle for industrial existence in perfect freedom. Competition might be entirely free, for the competitors would be equal in power and intelligence. But it is because individuals sometimes allow the consideration of their immediate interests, or the passing influence of passion, to blind them to their true permanent interests, and it is because there are men, and at any rate there are women and children, engaged in industry, who start with a disadvantage, which no purely economic forces seem likely to remove, in strength of body or mind, or pecuniary resources-it is for these reasons that later experience has tended to enforce the conclusion that competition cannot, consistently with due regard to the real and lasting prosperity of a whole nation, be entirely unrestricted and free. It is precisely because there is not "Scotchman inside every man" that 'natural liberty' has been regulated in practice by Factory Legislation, by Co-operation, and by Trades Unions.

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But these considerations do not destroy the value of Adam Smith's work. Like his predecessors, the Physiocrats, he recognised exceptions to the rule of natural liberty,' though, like them, he did not lay much stress on those ex

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ceptions. The very phrase in which the principles of 'natural liberty' have since been so often summed up, "Laissez faire, laissez aller (or passer)," seems to have had originally a different meaning from that which was afterwards given to it. It meant that every one should be permitted to engage. in what occupation he pleased, and to produce his wares according to the fashion he himself selected, and not that which a government dictated; and it also meant that individuals and their wares should be allowed to pass through the length and breadth of a country without being subject to tolls and restrictions. It meant, in a wider interpretation, let everything alone which is injurious neither to good morals, nor to liberty, nor to property, nor to personal security."

And so Adam Smith will not leave education or banking entirely to the play of individual liberty, but will call in the regulating authority of the State. "Those exertions," he" expressly says, when dealing with the subject of banking, "of the natural liberty of a few individuals, which might endanger the security of the whole society are, and ought to be, restrained by the laws of all governments, of the most free, as well as of the most despotical." And his condemnation of the Mercantile System, and of the disadvantages it endeavoured to impose upon foreign as contrasted with home industry, is qualified by his exception of the Act of Navigation as a measure of national defence, which "is of much more importance than opulence," and by his recognition that in some cases, where industries have been encouraged by prohibitions on foreign goods to employ a "multitude of hands," "humanity" may "require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection."