will be confined within so narrow a district, or will divide the supply
of a district with so many other banks, that on the average each will
receive no larger amount of interest on his notes than will make up the
interest on his own capital to the ordinary rate of profit.

Even in this way, however, the competition has the effect, to a certain
limited extent, of lowering the rate of interest; for the power of
bankers to receive interest on more than their capital attracts a
greater amount of capital into the banking business than would otherwise
flow into it; and this greater capital being all lent, interest will
fall in consequence.

NOTE:

[7] It would be easy to go over in the same manner any other case. For
instance, we may suppose, that, instead of dispensing with the _whole_
of the fixed capital, material, &c, and taking on labourers in equal
number to those by whom these were produced, _half_ only of the fixed
capital and material is dispensed with; so that, instead of 60 labourers
and a fixed capital worth 6O quarters of corn, we have 80 labourers and
a fixed capital worth 30. The numerical statement of this case is more
intricate than that in the text, but the result is not different.

ESSAY V.

ON THE DEFINITION OF POLITICAL ECONOMY; AND ON THE METHOD OF
INVESTIGATION PROPER TO IT.

It might be imagined, on a superficial view of the nature and objects of
definition, that the definition of a science would occupy the same place
in the chronological which it commonly does in the didactic order. As a
treatise on any science usually commences with an attempt to express, in
a brief formula, what the science is, and wherein it differs from other
sciences, so, it might be supposed, did the framing of such a formula
naturally precede the successful cultivation of the science.

This, however, is far from having been the case. The definition of a
science has almost invariably not preceded, but followed, the creation
of the science itself. Like the wall of a city, it has usually been
erected, not to be a receptacle for such edifices as might afterwards
spring up, but to circumscribe an aggregation already in existence.
Mankind did not measure out the ground for intellectual cultivation
before they began to plant it; they did not divide the field of human
investigation into regular compartments first, and then begin to collect
truths for the purpose of being therein deposited; they proceeded in a
less