This Report was summarily rejected by Parliament in 1811: but it gradually won the assent of all competent men, and in 1819 the Committees of both Houses of Parliament adopted its doctrines. The Bank of England alone issued a protest against them; but the Bank itself was converted in 1827, and made some attempts to adopt these principles, but they all failed.
The last attempt was that of the . This Act is expressly founded on the dogma that Bank Notes payable to bearer on demand are alone Currency, to the exclusion of all other forms of Credit: and it is intended to carry out a particular Theory of Currency: and the method it adopted was that of imposing a strict numerical limit on the Notes issued by the Bank.
This opinion was fully verified in the monetary crisis of 1847: the only one which took place after the passing of the Act and before the publication of this work: and also in the subsequent crises of 1857 and 1866: when, if the Act had not been suspended, not only the Bank of England itself, but every Bank in England would have stopped payment, and all commerce been thrown into the most terrible convulsions.
Thus it will be seen that, as devised by its originators, the expression "Production, Distribution, and Consumption" is one, entire, and indivisible: and it must not be separated into its component terms.
J. B. Say, who first defined Political Economy to be the Science of the Production, Distribution, and Consumption of Wealth, unfortunately totally overlooked this fact, and has divided his work into separate parts relating to these terms. He has been followed in this by his disciple, John Stuart Mill, who, however, varies from his master in adopting the term Production, Distribution, and Exchange of Wealth.
Each of these works... have been utterly destructive of the scientific character of the subject. Each of these writers, like Smith, recognises Personal Qualities and Rights as Wealth. And how can we speak of the "Production, Distribution, and Consumption" of Labour and Rights? But it is quite usual to speak of the Supply and the Demand for Labour and Bills, which are mere Rights.
In 1858 I published the Elements of Political Economy, in which, for the first time, it was treated as the Science of Exchanges, or of Commerce, in accordance with the conception of its founders, and of Whately. Upon sending this work to M. , who was at that time the most distinguished Professor of Political Economy in Europe, he... used all his influence to popularise my doctrines in France.
In 1875, when I had published [an] improved edition of the Elements... the Principles of Economical Philosophy, he wrote to me—"It is your book which serves me as the guide for all the Philosophy of my teaching at the Collége de France."
In the article Credit in my Dictionary of Political Economy, I explained the Juridical Theory of Credit, and showed the real meaning of the term Negative as applied to Debts: and showed the application of the principles of Law and Algebra to the great system of Credit and Banking; and also showed the strange self-contradictions of Say and Mill on the subject of Credit.
In 1863 M. Rouher, ...Minister of Commerce and Agriculture ...one of the most distinguished Economists in France ...instructed M, Henri Kichelot one of the heads of Departments in his Ministry to draw up an account of my system of Political Economy, which he ordered to be distributed to all the Chambers of Commerce in the Empire.
The Royal Commissioners, who included the most eminent Lawyers of the day, Lord Cranworth, Lord Westbury, Lord Cairns, Lord Hatherley, Lord Selborne, Lord Penzance... upon an examination of my Paper, unanimously selected me to prepare the Digest of the Law of Instruments of Credit.
Being therefore invested by the Commissioners with the duty—not of making a mere Digest of Cases and Statutes—but of making an authoritative declaration of "the Law," I formally excluded from the Digest the whole series of cases upon which the modern opinion of the Judges had been founded, as not being Law; I stated that, in fact, the Act of 1705 was entirely unnecessary to legalise Promissory Notes, as they were legal at Common Law.
Fortified... by the private approbation of the Commissioners, I introduced the apparently new, but in reality the old and true, doctrines relating to Credit into my Principles of Economical Philosophy, published in 1872.
At this time I had not read a line of any work on Political Economy; but the circumstances I have mentioned enabled me to acquire a store of facts from original knowledge and observation, which were of the greatest use to me when I was obliged to take up the subject.
The case being submitted to me... Upon reading the case I had prepared, the Attorney and Solicitor General decided, without the slightest hesitation, that my contention was right...
In the preparation of this case I was led to examine thoroughly the works of Adam Smith and John Stuart Mill, and I soon perceived that whatever merits in other respects they may possess, they were extremely defective in all matters relating to Credit, Banking, and the Foreign Exchanges.