FOR the diagnosis, then, of the economic condition of any particular nation, the following are the points that must be elicited.

1. To what extent have the powers of Nature, gratuitously given to man, in any one or more of the great industries - whether of Agriculture, Mines, Manufactures, Shipping, or what not, - been transferred to the foreigner through stress of competition?

2. To what extent has the loss in one department been compensated by the supremacy which the nation still retains in the others?

3. To what extent do these latter still enjoy a supremacy in the world-market in spite of competition; and what proportion of them can only keep their supremacy either in the home market or in some of the more outlying and less industrially developed regions?

4. Is the existing supremacy, whether at home or abroad, one in the production of luxuries for the few, - as wine, tobacco, fruit, and precious stones, - depending on special peculiarities of soil or climate which are inherent and inalienable, and so not transferable to other nations; or is it a supremacy in the production of necessities of universal demand, - as food, clothing, and household materials and utensils, - which can be produced in many different countries, but where the prizes will go to the nation that can deliver them at least cost, whether from natural fertility, easy accessibility, facilities of transport, the skill and invention of the organizers and workers, or, as is most usual, from that particular combination of all these qualities which is best adapted to the purpose?

5. Given that the supremacy depends on a happy combination of the materials and qualities best adapted to the production of articles of necessity in world-wide demand, - as in the case of England, of coal, manufactured cotton, wool, iron and steel, machinery, etc., - does the combination which gives the supremacy rest, when analyzed, on a supremacy in the home supply of raw materials, - on home coal and iron, home cotton, home wool, etc., - or is it the superior organization and skill, hereditary or acquired, of the masters and workmen which have turned the scale in the balance of supremacy? For if the raw material, either wholly or in part, has to be imported from other lands, as in the case of cotton in England; or if the supremacy rests on the special products of the East and West, such as those by which Venice and Spain and Holland rose to supremacy; or if the home supply, although fairly rich, can be confronted by a competitor with still richer natural resources: then, like a pyramid on its apex, the supremacy is unstable and in time must topple; for in a regime of absolute Free Trade, a rich natural resource is as useless when confronted in the same market by a richer, as if it did not exist at all; provided always the question is not one of definite grades of the same general article which have select and definite classes of customers; - with this exception, it may be laid down in general terms, that no manufacturing skill can avail a nation in the long run if the raw material on which it operates has to be imported from abroad, and especially when once the nations in possession of this material have reached the stage of all-round industrial development when they can work it up for themselves.

For manufacturing skill, invention, organization, etc., where the stakes are great enough and the end justifies it, can he transferred in batches from one country to another at any time, if the wages or salaries are made sufficiently tempting.

6. And this leads to the further question as to whether the nation under discussion is a young nation industrially immature and undeveloped, but with the richest natural resources in its soil and mines, with the best natural facilities for transport in its geographical situation, with an absence of natural barriers, and with an abundance of natural water-ways communicating within its own territory with the sea - and so demanding some form of protection during its youth or immaturity; or whether, on the other hand, it is an old nation, industrially speaking, fighting on great but declining natural resources; and especially whether it is handicapped and hampered by political, religious, and social institutions unfavourable to a purely industrial supremacy, but which from age, and national tradition have become fixed, immovable, and irreversible. In a word, whether it is a nation or people like America and the Colonies with the richest natural resources of all kinds still partially or, - in the case of the greater Colonies, - almost entirely, undeveloped, and with their citizens still unhampered by any untoward conditions, political, religious, or social, possessed of the greatest natural abilities for industrial employments, and with the most eager desire for industrial supremacy; or whether, like Turkey and other Eastern countries, the richest natural resources are prevented from bearing fruit by political tyranny and extortion.

Or, turning to the religious side; - whether it is hampered, as in Mahommedan nations, by a creed which practically proscribes scientific knowledge, either pure or in its application to the industrial arts; or on the social side, again, like Spain, who stands immovably on the dreams of her past dignity and greatness, on her feudal pride, and contempt for the modern industrial spirit; or like England, who while enjoying an unrivalled industrial supremacy sustained on the twin pillars of commerce and war, still by her peculiar, and (for a great nation) unexampled disregard of knowledge as such, and by the want of honour accorded to scientific pursuits of all kinds and in every department, as well as by her equally peculiar devotion to certain kinds of occupation and sport, keeps herself industrially old and rigid and slow, and so by the restraints imposed on the industrial equipment of the most energetic spirits in their prime, handicaps herself in competition with her younger rivals; - thus teaching us that Political Economy can never be divorced as a mere specialism from the larger outlooks of Civilization in general.