All this is directly the reverse of what is taught by the modern British economists; and we have thus two distinct schools, that of Adam Smith and that of his successors. The one taught that labour directly applied to production was most advantageous, and that by bringing the consumer to take his place by the side of the producer, production and the consequent power to trade would be increased. The other teaches, that every increase of capital or labour applied to production must be attended with diminished return, whereas ships and steam-engines may be increased _ad infinitum_ without such diminution: the necessary inference from which is, that the more widely the consumer and the producer are separated, with increased necessity for the use of ships and engines, the more advantageously labour will be applied, and the greater will be the power to trade. The two systems start from a different base, and tend in an opposite direction, and yet the modern school claims Dr. Smith as founder. While teaching a theory of production totally different, Mr. McCulloch informs us that "the fundamental principles on which the _production_ of wealth depends" were established by Dr. Smith, "beyond the reach of cavil or dispute." The difference between the two schools may be thus illustrated: Dr. Smith regarded commerce as forming a true pyramid, thus-- Exchanges abroad. Exchanges at home. Conversion into cloth and iron. Production of food and other raw materials. This is in exact accordance with what we know to be true; but according to the modern school, commerce forms an inverted pyramid, thus-- Exchanges with distant men. Exchanges at home. Conversion. Production. The difference between these figures is great, but not greater than that between two systems, the one of which regards the earth as the great and perpetually improving machine to which the labour of man may be profitably applied, while the other gives precedence to those very minute and perpetually deteriorating portions of it which go to the construction of ships, wagons, and steam-engines. An examination of these figures will perhaps enable the reader to understand the cause of the unsteadiness observed wherever the modern system is adopted. * * * * *