insurance against risk; and, if ill success continues. a loss of capital will result. The converse would apply where the history of a company was more favourable than had been expected at the time when the investment was made; and there might well be an appreciation of capital altogether independent of the provision available in insurance against risk.

will replace the value of the machines by the time they are worn out. But machines suffer not only from wear and tear, but from the risk of being superseded. In so far as this contingency differs from that due to variations in trade, a further provision will be required, and depreciation and a contribution towards obsolescence together constitute a species of insurance resembling life insurance as applied to inanimate things. In fact, this analogy has been so fully recognized that it is usual to speak of the life of a mine,' and the process just described is often termed 'amortization' -i.e. the formation of a fund which will make good the capital outlay when the source of income will have expired. In like manner, any use of capital in a business which is subject to risk may be described as having only a limited life. The principle of the spreading of risks has been applied here, partly through the agency of the joint-stock system, whereby the investor, instead of risking his resources in one enterprise which may result in a total loss of his capital, distributes his funds in several investments, and, if he displays equal judgment in each case, both his income and his capital are likely to fluctuate less on a system of dividing the risk. The same result is attained by Investment Trust companies, where the stock-insured, but to the community. Besides, there are holder who makes only a single investment has the advantage of participating in the united results of many employments of capital. In addition he should gain by the specialized knowledge of the officials, though the practice of forming investment trusts in order to place capital in a certain country or a certain industry may lessen the full gain from a system of averaging. It is obvious that, in these instances, the method adopted is an application of the principles of insurance.

If one asks, Why should people risk their capital in enterprises of a hazardous nature?' the answer is not quite so easy as it might appear at first sight. A little consideration will show that the gains in appreciation of investments must at least balance the losses in depreciation, after allowance is made for the interest which would have been received on a first class security. But, as is well known, uses of capital, which are subject to business risks, commonly return a higher rate of income per cent than those that are more secure. Accordingly, the difference between the rate of interest on a perfectly secure investment (known as 'interest proper' or 'economic interest') and that returned by capital employed subject to hazard constitutes a fund as against depreciation of the capital. This difference is known as 'insurance against risk.' Such insurance, it should be noted, is only a partial one. It may be supposed to suffice to make good wastage of capital (after allowance is made for increments to capital value of other investments) on the whole and over long periods. Thus it is insurance against depreciation of trading capital over the whole community. But this is not insurance for the individual. If what may be termed the expectation of life of his investment at the time he makes it is exactly borne out by events, even though at the end of that time his original capital will have disappeared, he will have received not only economic interest but, in excess of that, a sufficient amount to replace at least the amount of his first investment. Such a phenomenon is rare : the prospects of undertakings subject to business risks change from day to day. Even though, after the investment is made, these become less favourable, he has no opportunity of increasing his insurance against risk, since its rate is determined, once for all, by the price paid for the stock, the dividend then paid, and the rate of economic interest at that time. The decline in prosperity will contract the estimated sum available for

VOL. VII.-24

Insurance, both in its common forms and in its wider signification, has important advantages, both for the individual and for the community. It lessens the dislocation of industry which would otherwise arise through the cessation of production by some firm that has sustained a sudden calamity through a fire which destroyed all its works, or any other similar disaster. In fact, in so far as insurance tends to make production more uniform, it tends to augment its efficiency. Similarly it makes labour more efficient also, since it relieves all those workers who have persons depending on their earnings from the harrowing anxiety as to the pecuniary position of those persons in the event of the early death of the earner of the income. Further, the system undoubtedly prevents cases of actual poverty which would otherwise have arisen. It is thus beneficial not only to the families of persons important psychological effects. The necessity of the punctual payment of premiums tends to form habits of saving, which are valuable towards the accumulation of capital in a country. For these reasons Governments are disposed to encourage life insurance as well as certain other forms of insurance. The encouragement takes various forms, such as the provision of statistical material and departmental supervision. In Great Britain income tax is rebated on that part of an income, otherwise subject to it, which is employed in the payment of life insurance premiums. These aids are of the nature of indirect bounties on insurance, and on the Continent cases occur where direct bounties are paid by the State. In the National Insurance Act, the principle of a double direct bounty to the insured (i.e. in the contributions of the State and the employer) is adopted, reinforced by compulsion. The latter element conflicts with some of the accessory advantages of insurance, e.g. in the formation of habits of thrift. At the same time, even in the case of ordinary life insurance, while the person who insures himself is free in law to discontinue the payment of his premiums and to obtain the surrender value (if any) of his policy, once a policy has been begun, in the great majority of cases there is a feeling almost amounting to compulsion towards the maintaining of the insurance. The problem in relation to the insurance of the working classes is in reality a choice of the line of least disadvantage. Bounties would maintain the voluntary principle, and would extend its appli cations under a certain artificial stimulus. Compulsion secures at once that, in a properly devised scheme, a greater number of persons obtain the benefits. Every effort has been made to conserve as much individual action as is possible, within a scheme of general compulsion, by associating Friendly Societies with the actual working of the Act.

Finally, the tendency to the more exact gradation and valuation of general business risks has important social effects. Here, too, there is a development in averaging, and thus the hazard of uncertainty tends, on the whole, to be reduced. The element of uncertainty-bearing' in production thus becomes more efficient. Hence, on the whole, the provision required for insurance against risk can be reduced with safety; and, therefore, pro tanto there is an economy in production. Further, external circumstances co-operate in increasing the

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As Beare sayı

saving. Outside the risks insured by underwriters, New York, 1888, p. 256, note).
there remain many uncertainties, which are gradu-
ally being reduced by improvements in organiza-
tion, by increase in commercial knowledge and
experience, and by developments in communication.
The last two always afford increased opportunities
of averaging, while the first lessens the amount of
uncertainty, and in favourable circumstances may
remove large classes of transactions from this
category altogether.

(Greek Theories of Elementary Cognition, p. 273),
'It may help us to understand Plato's distribution better if,
distinguishing alonois as we have done into two elements, the
element of feeling and the element of cognition, we refer the
which has its seat in the cranium.'

LITERATURE.-A. A. Cournot, Exposition de la théorie des chances et des probabilités, Paris, 1843; F. Y. Edgeworth, Metritike, or the Method of measuring Probability and Utility, London, 1887; J. Venn, The Logic of Chance, do. 1888; H. Westergaard, Grundzüge der Theorie der Statistik, Jena, 1890; J. Kozák, Grundlehren der Wahrscheinlichkeitsrechnung, als Vorstufe für das Studium der Fehlerausgleichung, Schiesstheorie, und Statistik, Vienna, 1912; H. Poincaré, Calcul des probabilités, Paris, 1912; L. Bachelier, Calcul des probabilités, do. 1912; A. L. Bowley, Elements of Statistics, London, 1907; H. C. Emery, The Place of the Speculator in the Theory of Distribution (Publications of American Economic Association, 3rd ser., vol. ì. no. 1); A. H. Willett, Economic Theory of Risk and Insurance, New York, 1901; J. Haynes, Risk as an economic Factor, Quarterly Journal of Economics, ix. (Boston, 1888); A. C. Pigou, Wealth and Welfare, London, 1912. In addition to the above works, reference may be made to the standard works on the theory of Political Economy, in which references to insurance against risk will be found-e.g., the treatises of Bullock, Chapman, Ely, Fetter, Flux, Gide, Hadley, Marshall, Nicholson, Seager, Seligman, Taussig, Walker, and W. R. SCOTT.

Wicksteed.

INTELLECT.-A. Bain says: Thought, Intellect, Intelligence, or Cognition includes the powers known as Perception, Memory, Conception, Abstraction, Reason, Judgment, and Imagination. It is analyzed, as will be seen, into three functions, called Discrimination or Consciousness of Difference, Similarity or Consciousness of Agreement, and Retentiveness or Memory' (Mental and Moral Science, London, 1884, p. 2).

Sully (Human Mind, i. 64) objects to the inclusion of retentiveness among the functions of intellect, on the grounds that it is not confined to the phenomena of intellect, but underlies the processes of feeling and willing as well; that the representation, like the sense-impression, is nothing but material for the process of intellection; and that the revival of past impressions takes place according to laws of association which are closely connected with the processes of assimilation and integration. Sully substitutes for retentiveness, as the third function of intellect, associative integration or the connecting of a given material with its concomitants in time and place.

If we exclude the presentations of sense and the representations of memory and imagination, 'intellect' is the name given to the higher cognitive powers of the mind. It may be considered as identical with what Sir W. Hamilton called Thought Proper, the Faculty of Comparison, and also to include what he called the Regulative Faculty-the Faculty of Principles. So understood, it includes the voûs and diávoia of the Greeks, and stands opposed to merely sensitive knowledge, although always regarded as standing in close inter-connexion with the latter.

While the above may be taken as roughly describing what intellect means in almost any system of philosophy or psychology, yet the whole significance of the description depends on the way in which intellect is conceived to stand to sensation, feeling, will, and the psychic principle itself.

In the Platonic philosophy, the soul is, so to speak, externally related to the body. It exists in the body as a detached principle, which directs and controls it, as the charioteer the chariot. Although Plato distinguishes various parts of the soul, or even various kinds of soul, still it is only through the soul considered as intellect, as pure thought, that the passions of the irrational part are known (R. D. Archer-Hind, Phado, London, 1883, Introd. p. 30). The same holds true of sensu ous perception (Archer-Hind, Timæus, London and

latter element of aigenous uniformly to the intellectual soul,

Sensation, therefore, as known, is an affection of the pure psychic principle, and is not to be regarded as something sui generis, distinct from intellect. It is rather to be regarded as a phase of intellectual activity itself-intellect entering into relation with phenomena.

In the philosophy of Aristotle, the psychic prin ciple occupies a different position. It is not related to the body as agent to instrument, but as form to matter, as relatum to correlate, as entelechy, actualization of what the body potentially is. It is not, in itself, purely intellectual. Not only do the merely vital activities proceed from the same principle which exerts the cognitive activities, but the latter also, at least those which belong to sense and imagination, stand in the same conditioning and conditioned relation to the organism in which the vital activities stand. If Aristotle had remained at this standpoint, he would have held a position substantially identical with modern Sensationism, as we find it, for example, in Bain, which reduces intellect to a mere self-elaboration of the fundamental attributes of sensation-assi milation, discrimination, retention-a system in which relations of similarity and difference between sensations are conceived to become the conscious apprehension of resemblance and difference as such.

Aristotle, however, did not remain at this position. He postulated the presence of a Divine element in the human soul-the vous, emanating from the Divine vous, and constituting the really im mortal part of man. It enters from without. Aristotle's doctrine of voûs has been a problem from his day until now. What is its relation to sensitive knowledge? The answer to this question is con tained in the celebrated doctrine of the active and passive vous — intellectus agens and intellectus patiens. The active intellect is that which illuminates the sensitive phantasm and transmutes what is there apprehended into the intelligible form which is then received by the passive intellect. But this process may be conceived in different ways. Of what nature is the transmuting process? On the one hand, the active intellect may be thought to create the form, as light does colours-in other words, to generate it on the occasion of the sensuous phantasm, so that the passive intellect does not really receive anything from the phantasmata or sensible species, but rather an entirely new creation produced from itself by the active intellect. In the Middle Ages it was maintained that no material agency could act on this immaterial intellect, nor could the latter fabricate intellectual species from the material phantasm (cf. Maher, Psychology, p. 308; and Hamilton, Reid's Works, p. 953 f., and the references there given). The species intelligibilis impressa is thus elaborated by the active intellect, and received by the passive intellect, where, together with the act of intellection, it constitutes the species intelligibilis expressa. It is consonant with this view that the active intellect and the passive intellect should be regarded as two powers or faculties, as was held by the majority of the scholastic philosophers. On the other hand, the active intellect may be regarded as playing a far less important rôle, as not producing the intelligible species, but as simply supplying the illumination, as it were, through which the passive intellect receives the intelligible form abstracted from the sensuous phantasm. From this point of view the passive

combines both active and passive intellect (see Hicks' de Anima, note 430, a. 22).

A solution of these difficulties in Aristotle's doctrine may possibly be found if we view him as regarding vous in its relation to the human soul as a Divine-human faculty or power-on the human side active and passive at once, on the Divine ever active, for the activity of intellect is life. This agrees with the language of the Nic. Ethics (x. 7), that vous is 'something Divine' -'the true self.'

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conception of intellect which we find in the Association school. This school makes feeling, sensation, the fundamental phenomenon of psy. chical and of rational life. Intellect, intelligence, is only the development of the most fundamental features of sensation. Similarity, discrimination, retention, beget by means of the continued action of association the cognitive apprehension of objects distinct, or apparently distinct, from sensations themselves. It is unnecessary to repeat the wellknown criticisms to which this doctrine is exposed. The unity of consciousness, through which similarity and difference are recognized, and which imparts significance to retention, is unexplained. In general, Associationists put the cart before the horse. In the most important activities of mind, phenomena are associated because they are cogcertain psychical events are associated. The same applies to the Herbartian school. As Höffding says, 'Consciousness is not merely a platform on which ideas carry on their struggle for existence; it acts itself in and through the individual ideas' (Outlines of Psychology, Eng. tr., London, 1896, p. 144).

Owing perhaps to the influence of A. Schopenhauer and F. Nietzsche, a tendency has shown itself in recent philosophy, especially in Pragmat ism, to regard intellect no longer as the refined product of Association, but as the creature and instrument of the will.

According to Schopenhauer, nature has produced the intellect for the service of an individual will: therefore it is destined only to know things so far as they furnish the motives of such a will but not to fathom them or apprehend their essence in itself' (Werke, ed. J. Frauenstädt, Leipzig, 1877, iii. 156). To Nietzsche Reason is only a tool' (Jenseits von Gut und Böse, do. 1896, p. 122).

The relation of the Aristotelian doctrine of in-nized as related, not cognized as related because tellect to the question of the immortality of the soul depends on the relation in which intellect and sense are conceived to stand to consciousness and memory. Hamilton (Reid's Works, p. 878) cites a passage from Aristotle (Probl. xi. 33) which he translates: To divorce Sensation from Understanding, is to reduce Sensation to an insensible process; wherefore it has been said-Intellect sees, and Intellect hears.' This would lead to a Platonic view, essentially identifying consciousness with the immaterial intellect. On the other hand, if the lower animals are not mere machines, their sensuous life implies some kind of consciousness. Balmes was consequently led to attribute to them an immaterial self and some sort of possible immortality (Fundamental Philosophy, bk. ii. ch. 2). That the mere animal soul is a simple immaterial substance, originating and perishing with the body, was held by S. Tongiorgi, and opposed by Stöckl, who held that matter was the substrate of the organic life of brutes (Lehrbuch der Philos.' ii. 168). Unless, therefore, intellect and sensibility can be regarded as still united in some common root, to use Kant's expression, the separability of intellect from the body seems to involve the division of consciousness itself. The doctrine of Aquinas regarding memory seems to involve a similar division of that faculty, the cognition of the past object in itself belonging to sense, and intellect preserving only the intelligible species, yet having, nevertheless, in relation to the act of intellect, though not to the object, a cognition of the past as such (Summa, I. qu. lxxix. art. 6). The real significance of Aristotle's doctrine of the intellect in its bearing on the immortality of the human soul has been disputed in every age. W. Archer Butler says:

It it not sufficient to satisfy the demands of human anxiety on this subject, that an eternity should be pronounced essential

to an active intellectual principle, which itself seems described

as unable to exercise any conscious energies apart from the bodily structure; a quickening essence whose very existence retreats into nothingness when it is left nothing to quicken (Lectures, p. 558).

The changed point of view from which intellect is regarded in modern philosophy appears in Spinoza. The intellect, whether finite or infinite, is regarded by him as only in actuality, not in potentiality; but then this intellect belongs, not to active but to passive nature, not to natura naturans but to natura naturata (Ethics, I. prop. xxxi.). Hence it does not represent a power standing over against nature, but one which is identical with nature. The same changed standpoint shows itself in Leibniz's addition to the scholastic formula, Nihil est in intellectu quod non fuerit in sensu, nisi intellectus ipse.' Intellect or reason is conceived in Leibniz and Kant as possessing a content essentially related to the objects of nature.

We have already had occasion to mention the

The possibility of conceiving the force in nature as will, impulse, does not directly concern us here, but the possibility of so conceiving the fundamental principle in mind does. When it was thought that we had in the sense of effort an immediate consciousness of energy expended, it was not unreasonable to regard the consciousness of effort not only as determinative of many of our most intellectual perceptions, but even as affording a glimpse into the metaphysical nature of reality. But, now that the existence of such a feeling is generally rejected, it is difficult to conceive the stream of consciousness merely as such as presenting a conative aspect. According to G. F. Stout, the process of consciousness is in part selfdetermining. There is in it a current, a current which it feels, a tendency towards an end (Manual of Psychology, London, 1907, p. 64 f.). Through this conative tendency the presentations of consciousness acquire objective meaning, and in general through conative continuity the processes of consciousness acquire meaning and significance. This theory seems exposed to the same objections as the Association theory. Such consciousness of an end, however vague, implies the presence of an intellectual power which already differentiates such end from the current tending towards it. Only so can the current feel itself to be tending towards

an end.

A much more decidedly voluntaristic explanation of intellect is involved in H. Münsterberg's Action Theory' (Grundzüge der Psychologie, Leipzig, 1900, i. 525). According to that theory, the liveliness of a sensation depends on the strength of the centrifugal excitation propagated from it. Sensory excitation is not in itself accompanied by psychical processes, whether the excitation proceed from the periphery or from associated centres. The afferent process is thus wholly unconscious; only in its passage into motor discharge does it give rise to consciousness. The cerebral cortex,