From the Introduction of Peshine Smith's A Manual of Political Economy, 1853.

Printed in the Executive Intelligence Review, January, 1992

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In 1853, Smith wrote his A Manual of Political Economy (1853) as a means of popularizing the American System of economics, as opposed to the ``English economists.'' In 1871, Smith was officially appointed an adviser to the Japanese Meiji government's Foreign Ministry on issues of credit, tariffs, education, and bilateral treaty arrangements with the western powers. Smith's work was decisive in the passage of acts that were the basis for the industrial revolution that occurred in Japan during the period of 1876 through 1886. The Japanese National Bank Act (1872) and the Gold Notes Conversion Bonds Act (1873) were explicitly modeled on the Hamiltonian notions of credit and national banking. The educational reforms that were enacted during this period were specifically based upon Smith's ideas of creating scientific and technological optimism in a system of universal education that was to become integrally attached to Japanese industry and its development.

Ironically, Smith's work is still in print in Japan and he is more widely known there than in the United States. As his introduction beautifully displays, the idea that the real wealth of a nation comes from the multiplication and the intellectual, moral, and physical development of its population is the real basis upon which a science of economics must be constructed. Such a science is one of hope and progress, rather than the ``Dismal Science'' of the British apologists of usury and genocide. From the introduction to A Manual of Political Economy:

Starting from the central highlands of Asia--the loftiest habitable region of the globe, where the great rivers take their rise that flow into the Frozen Ocean, and the Bay of Bengal, the Mediterranean, and the Chinese Sea--the human race has descended in an ever-widening flood, to spread over the earth and to subdue it. Sacred history and Hindu tradition point to the same region as the cradle of mankind. They are confirmed by the reflection, that it must have been the first to emerge from the primal waste of waters; and the belief, that here it is that wheat and barley are of indigenous growth, and that the animals run wild who have been tamed by man, and have followed him in his migrations through every clime.... As the different offshoots of the race descended to the lower tracts that the receding waters gave up to culture, and as each little tribe waxed in numbers, it has taken a higher social organization, with a vast increase in the command of the individual members over the elements of physical comfort, a vast accession to their realized property, and to their power to elaborate yet more from the materials and the forces which nature gives without stint to those who know how to ask her. With diminished toil for the satisfaction of the material wants, and diminished fear of inability to meet them in the future, man has acquired leisure for the cultivation of his intellect, and increased freedom to indulge the social affections, which lift him out of the domain of selfishness, soften and refine his nature, and make it capable of moral improvement. Physical, intellectual, and moral progress, inseparably interdependent, is the historical fact characteristic of our species, and union in societies, its observed condition.

To investigate the laws which explain man's attainment, through association, of enlarged power over matter in all its forms, and the development of his intellectual and moral faculties, in virtue of that power, is the object of Political Economy....

Every accession to knowledge diminishes the catalogue of things thus regarded as outside the pale, within which certain effects are confidently anticipated to result from given causes, and arranges them in relations with each other, no longer imagined and fluctuating, but distinctly seen to be constant and invariable. Knowledge gives power, because when a law is once perceived and understood man can conform to it, for the purpose of producing an effect he desires, by arranging the ascertained causes in that method of grouping which the law dictates, instead of wasting his energies and missing his object, in blind endeavors to obtain it in a way other than that which the Lord of Nature has appointed....

Is it possible to construct a science of Political Economy? In other words, are there laws grounded in the constitution of things and of man, fixed and invariable succession of effects determined by the causes which precede them,--regulating the progress of men in association with each other, in extending their dominion over matter and their concurrent improvement in intellect and morals?--and are these laws discoverable? What and how many of them have been discovered, is a different question. What is unquestionable is, that there are professors of what is styled a science of Political Economy, teaching in the schools and through the press a body of precepts, tending more or less to the object we have assigned as that of its investigations. On the other hand, it is denied that there is yet such a science....

[The British System] would not, perhaps, be Political Economy such as we have described it. It would be, as it has been called, ``the Dismal Science,'' instead of a science of Progress and Hope....

The strongest instinct of man is that which leads to the increase of population. The European Economists, since Adam Smith, have very generally believed, that the laws of matter were such as to make the repression of this instinct essential to the prosperity of communities. Their system presents a controlling law of humanity as conflicting with the immutable laws of brute matter. It is impossible for them, upon this basis, to construct a science which contemplates the human faculties as acting freely in accordance with their own laws; and to contemplate them as acting under partial and uncertain restraints, is to clog the problem with an insurmountable difficulty. (In reading certain Economists, one might be led to think that the products of industry were not made for man, but that man was made for the products.) If the difficulty is purely suppositious we can proceed with good hope, regarding man as he is, and trusting that we may safely infer the uniformities of the future from the uniformities of the past....

We are to regard man then as the lord, not the slave of Nature, but no arbitrary lord--as acting in accordance with fixed laws of his own being, all of which exercise their due force, and none of which are suspended, any more than the law of gravitation--as securing freedom for that harmonious exercise of all his faculties, in which happiness consists, by means of the intelligence which enables him to apprehend the inevitable necessity that the physical laws must operate, and teaches him how to avoid opposing the irresistible, and how to make it work for him....

The preceding article is a rough version of the article that appeared in
Executive Intelligence Review. It is made available here with the permission of The Executive Intelligence Review. Any use of, or quotations from, this article must attribute them to The Executive Intelligence Review.

More on Erasmus Peshine Smith:

The following is from the bookjacket of Peshine Smith's A Manual of Political Economy, "Reprints of Economic Classics", Augustus M. Kelley, Publisher, New York, 1966.

E. Peshine Smith (1814-1882) came from an intellectual family of lawyers in Rochester, New York. His career was typical of enterprising Americans of the nineteenth century in its variety: he studied law and was active in journalism, editing several papers in Rochester. At one time, he was a professor of Mathematics at the University of Rochester. He was also for a time Superintendent of Public Instruction of the State of New York, and in another period, reporter of the New York State Court of Appeals.

On the recommendation of William H. Seward [Lincoln's Secretary of State], Peshine Smith went to Japan and held a post which in effect was equivalent to Secretary of State. He is supposed to have been one of the first to indulge in "shirtsleeve diplomacy"; at least, he went about Tokyo in a kimono armed with two huge swords.

In his journalistic capacity, he is credited with coining the word "telegram".

His Manual of Political Economy [1853] went through three printings by 1877. Smith was an important member of the Carey school of political economy, and in an extensive correspondence with Carey he is credited with helping to work out many of the ideas which went into The Principles of Social Science, Carey's final statement of his views.

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