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Exam Questions Harvard History of Economics

Harvard. Exams for history of economics to 1848. Bullock, 1907-1908

The semester exam questions for the fifth time Charles Jesse Bullock taught this history and literature of economics through 1848 at Harvard. He also covered the field of public finance. Guess which field is not really taught much any more…

__________________________

Earlier versions of the course
by year and instructor

1899-1900. The History and Literature of Economics to the close of the Eighteenth Century. [William James Ashley]

1901-02. History and Literature of Economics, to the opening of the Nineteenth Century. [Charles Whitney Mixter]

1903-04. History and Literature of Economics to the opening of the Nineteenth Century [Charles Jesse Bullock]

1904-05. History and Literature of Economics to the year 1848. [Charles Jesse Bullock]

1905-06. History and Literature of Economics to the year 1848. [Charles Jesse Bullock]

1906-07. History and Literature of Economics to the year 1848 [Charles Jesse Bullock]

__________________________

History and Literature of Economics to the year 1848

Course Enrollment
1907-08

Economics 15. Asst. Professor Bullock. — History and Literature of Economics to the year 1848.

Total 7: 7 Graduates.

Source: Harvard University. Report of the President of Harvard College, 1907-1908, p. 67.

ECONOMICS 15
HISTORY OF ECONOMIC THEORY
Mid-Year Examination, 1907-08

  1. Describe the development of theories of commerce from the time of Aristotle to that of the Schoolmen.
  2. Compare the Republic of Plato with More’s Utopia.
  3. Give an account of the economic opinions of Xenophon.
  4. Describe the development of the doctrine of usury from the time of Aristotle to the year 1500.
  5. What do you think of Ingram’s treatment of the economic thought of the Middle Ages?
  6. How did Aristotle classify the various branches of the art of acquisition?
  7. How far would Aristotle’s classification of the various branches of the art of acquisition harmonize with the views of the Schoolmen concerning the various branches of industry and trade?
  8. What is your opinion of the Scholastic doctrine concerning usury?

Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 8, Bound Volume: Examination Papers, Mid-Years 1907-08.

ECONOMICS 15
HISTORY AND LITERATURE OF ECONOMICS.
Year-end Examination, 1907-08

  1. What connection can be traced between the economic thought of the sixteenth century and that of the thirteenth and fourteenth centuries?
  2. What traces of Aristotle’s influence can be seen in the political and economic theories of Adam Smith?
  3. What doctrines concerning money can be found in the writings of Aristotle, the Schoolmen, Davanzati, and Hume?
  4. Write a brief account of economic thought in England, France, and Italy from 1540 to 1590.
  5. Write a brief survey of the condition of economic thought in England, France, Germany, and Italy about the middle of the eighteenth century.
  6. Compare the opinions of Thomas Mun with those of two earlier and two later English Mercantilists.
  7. What was Turgot’s theory of distribution?
  8. At what points did Smith’s theory of distribution differ from that of Turgot?
  9. Describe the progress of Smith’s doctrines in France and Germany up to the year 1850.

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09 (HUC 7000.25), pp. 38-39.

Image Source: Jean-Antoine Houdon’s bust of Anne Robert Jacques Turgot (1727-1781). Boston, Massachusetts, Museum of Fine Arts.

Categories
Biography Economists Industrial Organization Policy Yale

Yale. Appointment to Council of Economic Advisers. Merton J. Peck, 1968

 

In an earlier post that featured a 1955 reading list for a course on industrial organization at Harvard taught by Carl Kaysen and Merton J. Peck, I proudly introduced that artifact with a few details about my first Yale economics professor, Joe Peck. I worked as his “bursary boy” over the next three years, undertaking the tasks of library runs, photocopying, and light editorial work to finance some of the out-of-pocket expenses of my undergraduate life. 

Peck was freshly back from the Council of Economics Advisers in the last year of President Johnson’s administration (1968), when I first encountered him as my instructor in the double-credit introductory seminar “Early Concentration Economics” in the Fall of 1969. Incidentally, the seminar was co-taught by another Joe, Joseph Persky, then a visiting lecturer from Harvard, where he was completing his Ph.D. dissertation. From those earlier regional/urban economics research days, Joe Persky has become a distinguished historian of economics.

Two documents regarding Merton J. Peck’s appointment as a member of the President’s Council of Economic Advisers in 1968 are included in this post along with his obituary that was published in the Yale Daily News.

Fun Fact: In the obituary you will find a quote from yet another Joe, Joseph Altonji, now a Yale professor of economics, but then a fellow student with me in the graduate sequence of Statistics and Econometrics at Yale and my successor in the role of student assistant to Joe Peck.

_________________________

NOMINATION OF MERTON J. PECK
Monday, February 5, 1968

U.S. Senate, Committee on Banking and Currency
Washington, D.C.

The committee met pursuant to notice at 10:08 a.m., in room 5302, New Senate Office Building, Senator John Sparkman (chairman of the committee) presiding.

Present: Senators Sparkman, Proxmire, McIntyre, Spong, and Bennett.

The CHAIRMAN. The committee is meeting in open hearing on the nomination of Mr. Merton J. Peck of Connecticut to serve as a member of the Council of Economic Advisers.

Mr. Peck was born in Cleveland, Ohio, on December 17, 1925, and attended public schools in Shaker Heights and Medina, Ohio, as well as Evanston, Ill. He served in the Army from 1944 to 1946 with overseas duty in Okinawa and Japan. Mr. Peck graduated from Oberlin College in 1949 and took his graduate training in economics at Harvard, receiving his Ph. D. in 1954. He taught at Harvard College from 1954 to 1955, at the University of Michigan 1955-56, and the Harvard Graduate School of Business Administration 1956-61. During 1961 and 1962 Mr. Peck served as Assistant Deputy Controller and Director of System Analysis in the office of Charles J. Hitch, the Assistant Secretary of Defense.

In 1963 Mr. Peck was appointed professor of economics at Yale University. In July 1967 he was appointed chairman of the Yale Economics Department.

Mr. Peck, I welcome you to the committee. We are glad to have you with us this morning. We have a more complete biographical sketch which will be printed in the record.

(The information follows:)

BIOGRAPHICAL SKETCH OF MERTON J. PECK

Merton Joseph Peck was born in Cleveland, Ohio, on December 17, 1925, and attended public schools in Shaker Heights and Medina, Ohio, as well as Evanston, Illinois. He served in the Army from 1944 to 1946, with overseas duty in Okinowa and Japan.

Mr. Peck graduated from Oberlin College in 1949 and took his graduate training in economics at Harvard receiving his Ph. D. in 1954. He taught at Harvard College (1954-1955), University of Michigan (1955-1956), and the Harvard Graduate School of Business Administration (1956-1961).

During 1961 and 1962 Mr. Peck served as Assistant Deputy Controller and Director of System Analysis in the Office of Charles J. Hitch, the Assistant Secretary of Defense (Controller).

In 1963 Mr. Peck was appointed Professor of Economics at Yale University. In July 1967 he was appointed Chairman of the Yale Economics Department.

Mr. Peck has written Competition in the American Aluminum Industry, 1945–58 (Harvard University Press 1961), and he is a joint author of Economics of Competition in the Transportation Industry (Harvard University Press 1959), Weapons Acquisition: An Economic Analysis (Harvard Business School 1962), Technological Change, Economic Growth and Public Policy (Brookings Institution 1967). He has also contributed articles to various professional journals

Mr. Peck married Mary McClure Bosworth in 1949. They have four children: Richard, age 13; Katherine, age 11; Sarah, age 9; David, age 7. The Pecks reside in New Haven, Connecticut.

Mr. Peck’s parents died when he was young and he was raised by his aunts, Mrs. A. R. Lyon and Miss Olive S. Peck, who now reside in Arlington, Virginia.

Mr. Peck is a member of the American Economic Association, the Econometric Society, and the Association of American University Professors.

The CHAIRMAN. Mr. Peck, I also have a letter addressed to me which I shall read into the record.

“DEAR MR. CHAIRMAN: I regret that previous commitments prevent me from being present this morning to present the President’s nominee as a member of the Council of Economic Advisers, Mr. Merton J. Peck.

“It is an honor to introduce Professor Peck to this distinguished committee. Professor Peck was born in Cleveland, Ohio, in 1925. He graduated from Oberlin College in 1949, after serving 2 years in the Pacific theatre as a member of our Armed Forces. Upon receiving a Ph.D. degree in economics from Harvard, Professor Peck began a distinguished teaching career that led to his appointment last year as chairman of the Yale Economics Department. He now resides with his family in New Haven, Conn.

“Professor Peck combines a background of academic experience and public service, having served for 2 years in the Department of Defense as Assistant Deputy Controller and Director of Systems Analysis. Well known as an author on economic policy, he has published studies of competition in the aluminum and transportation industries. His latest book, published by the Brookings Institution, is “Technological Change, Economic Growth, and Public Policy.’

“I have touched only briefly on the accomplishments of Professor Peck, but they indicate the obvious ability and wide experience he would bring to the Council of Economic Advisers. I strongly urge that his nomination be favorably considered by this committee.

Sincerely,
ABE RIBICOFF.”

That letter will be printed in the record.

Senator BENNETT. Mr. Peck, is your official residence in Connecticut at the moment?

Mr. PECK. Yes, Senator; it is.

The CHAIRMAN. May I say we have the approval of both Senator Dodd and Senator Ribicoff. I may say for the record that accompanying Dr. Peck is Mr. Charles Warden, special assistant to the Chairman of the Council of Economic Advisers.

Senator BENNETT. Mr. Chairman, the official attitude of the Republicans on this committee has always been that the President is certainly entitled to select his economic advisers and we should under no circumstances raise any question about that privilege.
That is a kind of a negative endorsement, but in addition to that, I think Mr. Peck’s credentials are very impressive and I am sure all of the Republicans will be happy to vote for his approval.

The CHAIRMAN. Very well. Senator Spong?

Senator SPONG. I am impressed with Dr. Peck’s credentials. I would like to ask him a couple of questions, however.
Dr. Peck, have you ever been retained as a consultant by private industry?

Mr. PECK. Yes, I have.

Senator SPONG. Do you intend to end all such activities if you are confirmed and become a member of the Council of Economic Advisers?

Mr. PECK. Yes, I have.

Senator SPONG. You have ended it all?

Mr. PECK. Yes, sir.

Senator SPONG. Thank you.

The CHAIRMAN. Do you have any interest in any undertaking or activity which you feel would constitute a conflict of interest?

Mr. PECK. No, I do not.

The CHAIRMAN. Have you checked your situation with the General Counsel of the Council of Economic Advisers?

Mr. PECK. No, I have not, but I will do so. I have a financial statement that I filed.

The CHAIRMAN. You have filed a financial statement?

Mr. PECK. Yes.

The CHAIRMAN. With the Council?

Senator BENNETT. With us.

The CHAIRMAN. Oh, with our committee?

Mr. PECK. Yes, sir.

The CHAIRMAN. Very well; are there any further questions?

Senator BENNETT. No further questions.

The CHAIRMAN. Thank you very much Dr. Peck. I wish you a successful and happy tenure in office.

Mr. PECK. Thank you very much, Mr. Chairman. I look forward to this unusual post as a unique opportunity to serve and, if I am confirmed, I will do so to the best of my ability.

The CHAIRMAN. Thank you, and we shall hope to see you from time to time.

(Thereupon at 10:15 a.m., the committee went into executive session.)

*  *  *  *  *  *  *  *  *  *  *  *

(Excerpts from the Employment Act of 1946
and related laws follow):

EMPLOYMENT Act of 1946,
AS AMENDED, AND RELATED LAWS

(60 Stat. 23)
[PUBLIC LAW 304-79TH CONGRESS]

AN ACT To declare a national policy on employment, production, and purchasing power, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE

SECTION 1. This Act may be cited as the “Employment Act of 1946 “.

DECLARATION OF POLICY

SEC. 2. The Congress declares that it is the continuing policy and responsibility of the Federal Government to use all practicable means consistent with its needs and obligations and other essential considerations of national policy, with the assistance and cooperation of industry, agriculture, labor, and State and local governments, to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining, in a manner calculated to foster and promote free competitive enterprise and the general welfare, conditions under which there will be afforded useful employment opportunities, including self-employment, for those able, willing, and seeking to work, and to promote maxi mum employment, production, and purchasing power. (15 U.S.C. 1021.)

ECONOMIC REPORT OF THE PRESIDENT

SEC. 3. (a) The President shall transmit to the Congress not later than January 20 of each year an economic report (hereinafter called the “Economic Report”) setting forth (a) the levels of employment, production, and purchasing power obtaining in the United States and such levels needed to carry out the policy declared in section 2; (2) current and foreseeable trends in the levels of employment, production, and purchasing power; (3) a review of the economic program of the Federal Government and a review of economic conditions affecting employment in the United States or any considerable portion thereof during the preceding year and of their effect upon employment, production, and purchasing power; and (4) a program for carrying out the policy declared in section 2, together with such recommendations for legislation as he may deem necessary or desirable.

(b) The President may transmit from time to time to the Congress reports supplementary to the Economic Report, each of which shall include such supplementary or revised recommendations as he may deem necessary or desirable to achieve the policy declared in section 2.

(c) The Economic Report, and all supplementary reports transmitted under subsection (b) of this section, shall, when transmitted to Congress, be referred to the joint committee created by section 5. (15 U.S.C. 1022.)

COUNCIL OF ECONOMIC ADVISERS
TO THE PRESIDENT

SEC. 4. (a) There is created in the Executive Office of the President a Council of Economic Advisers (hereinafter called the “Council”). The Council shall be composed of three members who shall be appointed by the President, by and with the advice and consent of the Senate, and each of whom shall be a person who, as a result of his training, experience, and attainments, is exceptionally qualified to analyze and interpret economic developments, to appraise programs and activities of the Government in the light of the policy declared in section 2, and to formulate and recommend national economic policy to promote employment, production, and purchasing power under free competitive enterprise.1 The President shall designate one of the members of the Council as Chairman.

(b) The Council is authorized to employ, and fix the compensation of, such specialists and other experts as may be necessary for the carrying out of its functions under this act, without regard to the civil service laws and the Classification Act of 1949, as amended, and is authorized, subject to the civil service laws, to employ such other officers and employees as may be necessary for carrying out its functions under this act, and fix their compensation in accordance with the Classification Act of 1949, as amended.

(c) It shall be the duty and function of the Council—

(1) to assist and advise the President in the preparation of the Economic Report;

(2) to gather timely and authoritative information concerning economic developments and economic trends, both current and prospective, to analyze and interpret such information in the light of the policy declared in section 2 for the purpose of determining whether such development and trends are interfering, or are likely to interfere, with the achievement of such policy, and to compile and submit to the President studies relating to such developments and trends;

(3) to appraise the various programs and activities of the Federal Government in the light of the policy declared in section 2 of this title for the purpose of determining the extent to which such programs and activities are contributing, and the extent to which they are not contributing, to the achievement of such policy and to make recommendations to the President with respect thereto;

(4) to develop and recommend to the President national economic policies to foster and promote free competitive enterprise, to avoid economic fluctuations or to diminish the effects thereof, and to maintain employment, production, and purchasing power;

(5) to make and furnish such studies, reports thereon, and recommendations with respect to matters of Federal economic policy and legislation as the President may request.

(d) The Council shall make an annual report to the President in December of each year.

(e) In exercising its powers, functions, and duties under this act—

(1) the Council may constitute such advisory committees and may consult with such representatives of industry, agriculture, labor, consumers, State and local governments, and other groups as it deems advisable;

(2) the Council shall, to the fullest extent possible, utilize the services, facilities, and information (including statistical information) of other Government agencies as well as of private research agencies, in order that duplication of effort and expense may be avoided.

(f) To enable the Council to exercise its powers, functions, and duties under this act, there are authorized to be appropriated such sums as may be necessary.

*  *  *  *  *  *  *  *  *  *  *  *

REORGANIZATION PLAN No. 9 of 1953

(Prepared by the President and transmitted to the Senate and the House of Representatives in Congress assembled, June 1, 1953, pursuant to the provisions of the Reorganization Act of 1949, as amended)

COUNCIL OF ECONOMIC ADVISERS

The functions vested in the Council of Economic Advisers by section 4 (b) of the Employment Act of 1946 (60 Stat. 24), and so much of the functions vested in the Council by section 4 (c) of that act as consists of reporting to the President with respect to any function of the Council under the said section 4 (c), are hereby transferred to the Chairman of the Council of Economic Advisers. ***

1 The Postal Revenue and Federal Salary Act of 1967 provides that the annual rates of basic compensation shall be $30,000 for the Chairman and $28,750 for the other two members of the Council of Economic Advisers.

Source: On the nomination of Merton J. Peck to be a member of the council of economic advisers, February 5, 1968. Hearing Before the Committee on Banking and Currency, United States Senate. Ninetieth Congress, Second Session.

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Remarks by President Lyndon B. Johnson at the Swearing in of Merton J. Peck as a Member, Council of Economic Advisers, and upon Designating Arthur M. Okun as Chairman

February 15, 1968

Dr. and Mrs. Peck and family, Mr. and Mrs. Okun and family, Secretary Wirtz, distinguished guests, ladies and gentlemen:

I want to welcome all of you to this ceremony this morning.

I stand here with one eye wet and one eye dry. Gardner Ackley’s departure saddens me. I would hope that he feels the same way.

When Gardner took the CEA chairmanship more than 3 years ago, the economy was already setting peacetime records. He has kept the curve climbing, turning a youthful boom into a mature and solid 8-year expansion.

Of all the good advice Chairman Ackley has given to me throughout the years, I was happiest to accept one of his fine recommendations to appoint Art Okun as his successor.

Art brings many special talents to this new job. His forecasts are so amazingly accurate that one newspaper once called him the administration’s secret weapon.

Far away from the limelight, he has been invaluable to international monetary policy — to the Treasury Department in developing the Rio Accord — to drafting the new system of Special Drawing Rights. And I am relying heavily on Chairman Okun and the Council to help us move this Nation and all nations towards swift acceptance of these new monetary arrangements.

To fill the Council vacancy, we have Merton Joseph Peck from Yale University.

I am delighted that he joins Jim Duesenberry and Art Okun at this particular time. One of our most urgent concerns in the Nation now is price stability. We have recently created a Cabinet committee to concentrate heavily on this problem. Dr. Peck is an expert on markets. He will bring special insights to price and wage problems arising from structural imperfections in labor markets, product markets, and markets for services.

Looking around us as we meet here this morning, we see more and more evidence of our economic strength. The January unemployment rate, we are pleased to say, was the lowest in more than 14 years. Corporate profits for the last quarter of 1967 were pointing upward again–to new records.

But we cannot rejoice without recognizing the dangers posed by price and cost increases. To preserve our record-breaking prosperity, we must combine it with a return to price stability.

As we have long emphasized, the first order of business is the prompt enactment by the Congress of the penny on the dollar tax increase that we will need to pay for part of our extraordinary defense costs.

Second, we need full cooperation and restraint from business and labor in their price and wage decisions. Excessive wage and excessive price increases can weaken the dollar. They cannot win lasting gains for any group. The short-run sacrifices that we ask promise long-term benefits to all of us.

Third, we must work through the new Cabinet committee for structural improvements in every market — for greater efficiency, greater productivity, and greater incentives for cost-reduction and price competition.

I will continue to look to the Council of Economic Advisers for advice on guarding our prosperity against inflation.

I was talking to someone last night and he was outlining for me the progress that our country has made throughout the years. He said, “Mr. President, there are two things that a leader must never take his mind off of in our political system. You will have many messages and many bills, but two simple rules, I suggest.”

I said, “Tell me what they are” — because he was a man of wisdom and experience and nonpartisanship.

He said, “The first one is the buck-that dollar — it must be sound. It must be stable and people must have some of them. The next one is–you don’t have to be told that one, but I want to remind you every day — the ballot. Because through the ballot people can gain the rewards they think they are entitled to. They can bring about the reforms that are essential. They can turn into motion the revolutions that are inside of all of us and they can bring them to reality and bring them to reality constitutionally and appropriately, and as we human beings should. We don’t have to act like animals to get our revolutions and reforms translated into action. That comes through the ballot.”

So, if my economic advisers are not trained counselors on the ballot, they are on the buck and that seems to be a major portion of a President’s problem. I am going to continue to look to them to guard our prosperity against inflation. They will have the help of the President and I hope they will have the help of the Cabinet and the Congress and the business and labor communities.

The Council today enjoys a worldwide reputation, I think, a reputation of three wise men who have been responsible and are responsible in the future for guiding the American economic miracle.

We expect great things from you, Dr. Peck. I am happy to welcome you officially into the world’s smallest, but the world’s most vital fraternity.

Gardner, you are on sabbatical leave, but we will expect you to carry on your good work across the ocean.

Note:
The President spoke at 1:15 p.m. in the Cabinet Room at the White House. In his opening words he also referred to Secretary of Labor W. Willard Wirtz. During his remarks he referred to James S. Duesenberry, member of the Council of Economic Advisers, and to Gardner Ackley, outgoing Chairman of the Council, whose nomination as Ambassador to Italy was announced by the President on January 1.

Establishment of the Cabinet Committee on Price Stability was announced by the President in his message to the Congress transmitting the Economic Report.

The tax increase referred to by the President was enacted as the Revenue and Expenditure Control Act of 1968.

Source:  Lyndon B. Johnson, Remarks at the Swearing In of Merton J. Peck as a Member, Council of Economic Advisers, and Upon Designating Arthur M. Okun as Chairman.
Online by Gerhard Peters and John T. Woolley, The American Presidency Project 

_________________________

Professor led the Economics Department during its ‘golden age’

by CYNTHIA HUA
Yale Daily News, 18 March 2013

Merton Peck, a devoted teacher who chaired the Economics Department during its “golden age,” died in Florida on March 1. He was 87 years old.

A respected scholar and administrator, Peck came to Yale as an economics professor in 1963 and served as chair of the Economics Department for several terms in the 1960s, 1970s and 1980s. His former colleagues remember him for his kind and patient nature and ability to foster compromise during his lengthy tenure. In addition to recruiting many prominent economists to his department, Peck strengthened the faculty by keeping peace and oversaw a period of growth in the department, said Richard Nelson GRD ’56, a former economics professor.

“One of the reasons he stayed in the chair [position] for so long is because he was able to push the department upward and avoided conflict,” said Gustav Ranis GRD ’56, a economics professor. “He didn’t have any enemies.”

When disputes arose in the department, Peck listened to both sides and gently brought arguments to a resolution, Ranis said. He frequently met with faculty individually and ensured that all professors felt their voices were heard, Ranis said, adding that nobody in the department was ever upset under Peck’s leadership.

William Brainard GRD ’63 said Peck was respected among colleagues for the care and attention he devoted to teaching economics. His undergraduate seminars, Brainard said, were often so popular that he had to teach more than one section of the same course.

“He embodied many of the characteristics a professor should strive for, in being both a great scholar and giving a lot to Yale in terms of leadership,” economics professor Joseph Altonji ’75 said.

Brainard said Peck’s congenial personality and clarity of thought made him a sought-after adviser. Altonji, who worked for Peck as a research assistant and took one of his undergraduate courses, said Peck was influential in his decision to pursue a doctorate in economics and, later, to become a professor.

An expert in the economics of technology, Peck specialized in industrial organization and government regulation, producing books and papers that touched on numerous disciplines, including defense, communications and transportation. He served as a member of Secretary of Defense Robert McNamara’s “Brain Trust” and on former President Lyndon Johnson’s Council of Economic Advisors in the 1960s.

Peck earned his bachelor’s degree at Oberlin College in the 1940s, during which time he met his wife, Mary Bosworth Peck, who died in 2004. The couple married in Oberlin, Ohio, in 1949, the year of Peck’s graduation from college. He went on to receive a doctorate in economics from Harvard.

During World War II, Peck served in the Signal Corps in Japan. His service abroad launched a lifelong interest in Japan that led to his later academic interest in the country and technology as an industry, said his son Richard.

Throughout his life, Peck remained modest about his intellectual and administrative achievements, Richard said. Outside of academics, Richard said Peck, who retired in 2002, cultivated a love of reading and jazz music.

Peck is survived by his children, Richard, Katherine, Sarah and David, and four grandchildren.

This article was updated to reflect the version published in print March 25.

Image Source: Chicago Tribune, Jan 4, 1968. Section 1B, p. 10. Newspaper image of Merton J. Peck touched-up at Economics in the Rear-view Mirror.

Categories
Distribution Harvard Suggested Reading Syllabus

Harvard alumnus. Extension course of six lectures on distribution. William M. Cole, 1896

During one of my recent scavenger hunts in the internet archive hathitrust.org I  scored the serendipitous discovery of a syllabus for six lectures given in 1896 by the recent Harvard economics A.M. alumnus and later professor of accounting, William M. Cole. His subject was the unequal distribution of wealth and the lectures were held under the auspices of the American Society for the Extension of University Teaching of Philadelphia. In previous years this subject was treated by  Richard T. Ely and John Bates Clark.

Cole had been a teaching assistant for Frank W. Taussig’s introduction to the principles of economics and one presumes much (if not all) of what Cole offered his public was theory à la Taussig, warmed up and perhaps somewhat dumbed down for popular consumption.

An earlier post provides more detail about the later career of William M. Cole.

___________________________

Homecoming, 1896

…Portland people will be interested to know that Mr. William M. Cole, who is in this city to represent the American University Extension Society at Assembly hall tonight, is a Portland boy. He was a Brown medical scholar at the High school, graduating from Harvard as one of the eleven Summa cum laude men of his class, has been instructor in political economy at Harvard and at Radcliffe, and was secretary of the Massachusetts commission on the unemployed. He is now a lecturer on economics for the American University Extension Society. Mr. Cole devotes his leisure largely to literary work. His latest work is “An Old Man’s Romance,” published last summer, and favorably reviewed by such literary papers as the Bookman, the Bookbuyer, the Boston Transcript and the Atlantic Monthly. It appeared under the pseudonym, Christopher Craigie. Mr. Cole had an article “Alone on Osceola,” in the August New England Magazine.

Source: The Portland Daily Press (Portland, Maine)
6 Feb 1896, p. 8.

___________________________

Cole Lectured on Wealth Distribution four times in 1896

  • Bangor, Maine. Mar. 16, 30 Apr. 13, 20, 27 May 4
  • Farmington, Maine. Feb 18 Mar. 17, 31 Apr. 14, 21, 28
  • Portland, Maine. Apr. 2, 9, 16, 23, 30 May 6
  • Saco, Maine. Feb. 19, Mar. 18, Apr. 1, 15, 22, 29.

Source: The American Society for the Extension of University Teaching, Philadelphia. The Citizen (April 1896) p. 72.

___________________________

[Series E.]

University Extension Lectures
under the auspices of
The American Society
for the
Extension of University Teaching.
Syllabus of a
Course of Six Lectures on

The Causes of the Unequal Distribution of Wealth Treated with Special Reference to the Principles Underlying the Problems of Labor, Land and Capital.

BY
WILLIAM MORSE COLE, A. B.
Late Instructor in Political Economy in Harvard University.

No. 16.
Price, 15 Cents.

Copyright, 1896, by
American Society for the Extension of University Teaching,
111 S. Fifteenth St., Philadelphia, Pa.

___________________________

The Causes of
the Unequal Distribution of Wealth.

CLASS.— At the close of each lecture a class is held for those students who wish to study the subject more thoroughly. All who attend the lectures may remain for the class discussion, whether desirous of participating in it or not. The object of the class is to give the students an opportunity of coming into personal contact with the lecturer, in order that they may, by conversation and discussion, the better familiarize themselves with the principles of the subject, and get their special difficulties explained.

PAPERS.— Students are urged to send to the lecturer at regular intervals papers on the topics set. These papers are returned with corrections and comment.

EXAMINATIONS.— Those students whose papers and attendance upon the class exercises have satisfied the lecturer of the thoroughness of their work will be admitted to an examination at the close of the course. Each student who passes the examination successfully will receive from the society a certificate in testimony thereof.

STUDENTS’ ASSOCIATION.— The formation of a Students’ Association for the reading and study before and after the lecture course, as well as during its continuance, is strongly recommended. In the case of fortnightly lectures the sessions of the Association may be held on the same evening of the alternate week.

REFERENCES.

NOTE.— Since Economics is a comparatively new science, the amount of new literature of which the permanent value has not yet been determined is very great. Much of the new doctrine, moreover, is incorporated in general text-books and set forth in detail rather for the specialist than for the general reader and thinker. It is deemed wise, therefore, to refer for this course to a few only of the standard books. These will familiarize the student with recognized doctrine so that he may read new literature with discrimination.

LECTURE I.

Wealth.— J. S. Mill, Political Economy, first ten pages of Preliminary Remarks; or J. L. Laughlin’s Abridgment of Mill, Preliminary Remarks.

Agents in Production.— Mill [The reference “Mill” will mean J. S. Mill, Political Economy.], Bk. I, Chaps. I to VII (incl.); or, Laughlin [The reference “Laughlin” will mean J. L. Laughlin’s Abridgment of Mill’s Political Economy.], Bk. I. F. A. Walker, Political Economy, Part. II.

Rent.— Mill, Bk. II, Chap. XVI; or Laughlin, Bk. II, Chap. VI. Walker, Polit. Econ., Part II, Chap. I, §§ 44, 45; Part IV, Chap. II.

Law of Diminishing Returns.— Walker, Wages Question, Chap. V.

LECTURE II.

Unearned Increment.— Mill, Bk. V, Chap. II, §§ 5, 6; or, Laughlin, Bk. V, Chap. I, § 5. Henry George, Progress and Poverty, Bk. VII, Chap. III; Bk. VIII, Chap. II. Walker, Polit. Econ., Pt. IV, Chap. II, §v258; Pt. VI, Chap. VII (3d Ed., Chap. X).

LECTURE III.

Wages and Profits.— Mill, Bk. II, Chap. XI, §§ 1, 2, 3; Chap XV; or, Laughlin, Bk. II, Chap. II, §§ 1, 2, 3; Chap. V. Walker, Polit. Econ., Pt. IV, Chaps. III. IV. V.

LECTURE IV.

The Increase of Capital.— Mill, Bk. I, Chap. XI and Chap. VIII; or, Laughlin, Bk. I, Chap. VIII and Chap. VI.

Trusts.— E. von Halle, Trusts (Macmillan & Co., 1895).

Railroads.— A. T. Hadley, Railroad Transportation, (G. P. Putnam’s Sons, 1890) Chaps. III, IV, V.

LECTURE V.

Wages in Different Employments.— Mill, Bk. II, Chap. XIV; or, Laughlin, Bk. II, Chap. IV. J. E. Cairnes, Political Economy, Part I, Chap. III, § 5. Report Mass. Commission on Unemployed, Pt. IV, p. 1 to lii. Walker, Wages Question, Chap. XIV.

Trade Unions.— J. E. Cairnes, Political Economy, Pt. II, Chaps. III, IV. Walker, Wages Question, Chap. XIX.

Profit Sharing.— N. P. Gilman, Profit Sharing (Houghton, Mifflin & Co., 1889) Chaps. IX, X.

The Question of Population.— Mill, Bk. II, Chap. XI, § 6; Chaps. XII, XIII; or Laughlin, Bk. II, Chap. II, §§ 4, 5; Chap. III. Walker, Wages Question, Chap. VI; Chap. XVIII, § 3.

The Wages Fund.— J. E. Cairnes, Pt. II, Chap. I. Walker, Wages Question, Chaps. VIII, IX.

LECTURE VI.

International Trade.— Mill, Bk. III, Chap. XVII; or Laughlin, Bk. III, Chap XIII. J. E. Cairnes, Political Economy, Pt. III, Chap. I.

The Classical View of Laissez Faire.— Mill, Bk. V, Chap. XI. J. E. Cairnes, Polit. Econ., Pt. II, Chap. V.

Instability of Modern Conditions.— Walker, Polit. Econ., Pt. III, Chap. VI. C. F. Dunbar, The Theory and History of Banking, (G. P. Putnam’s Sons, 1891) Chaps. I, II. Report Mass. Commission on Unemployed, Pt. IV, Introduction.

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LECTURE I.
The Agents in the Production of Wealth and the Primary Principle of Rent.

The field of economic study is the production, distribution, and exchange of wealth in civilized society and among men actuated by normal motives and conducting their operations in the normal manner. Economics, therefore, does not offer its conclusions to be applied directly to abnormal conditions or transactions. It is highly practical, for it furnishes the general, fundamental principles which give an insight into all economic activity. Its relation to politics, or the art of government, is like that of physiology to hygiene. It does not decide between policies, —it furnishes the knowledge of principles which enables one possessed of facts and having certain aims to decide for himself. (See Quarterly Journal of Economics, July, 1891, “The Academic Study of Political Economy,” by C. F. Dunbar.)

A knowledge of the primary laws of production and distribution is essential for a comprehension of the problems of wealth and poverty. Not all things useful or agreeable are wealth, but only those which are also transferable, capable of accumulation, and limited in quantity.

Man’s only physical power is that of moving things. His mechanical agency in producing wealth is therefore small. Without the forces and materials supplied by nature, man would be helpless. Yet, in modern times, even with the maximum assistance of nature, few men unassisted by capital could produce a tithe of what they consume. Thus land and labor are the requisites of production: and capital, though not always absolutely necessary, is a necessity if modern methods are used, and in any case increases the produce many fold.

Not all labor is productive of wealth; but some which seems at first sight unproductive is in reality highly productive and much that is unproductive is of far greater importance to the community than it could be if it were devoted to production.

Capital, in the economic sense of the word, is wealth set apart to assist further production. The owner has sacrificed his immediate satisfaction in the use of it by devoting it to increase the productive forces of the community. It serves its use by being consumed, but would be valueless to the community if it were hoarded. Recompense for its consumption is furnished in the product which it assists in producing.

Of the three parts into which the produce of industry is commonly divided, we shall first consider rent. Rent owes its origin to the diversity of lands. If all land were like all other land and there were enough to satisfy everyone, there would be no rent. At one time in every country there was enough good land to satisfy everyone, and therefore no one paid rent. The poor lands were not cultivated. As the community grew and required a greater produce, however, the law of diminishing returns came into effect and forced cultivation down on poorer lands or induced more expensive processes of cultivation on the old lands. As the community was thus obliged to pay more for its produce, the better lands, producing as cheaply as before, yielded more than enough to pay the normal wages and profit. The owner demanded this surplus in rent, and the cultivator not only was able to pay it, but was forced to do so by the competition of others. Rent, then, is payment made to the owner of superior land for its use, and the amount of rent is measured by the superiority of that land over land which yields only normal wages and profits, i.e., the superiority of that land over the poorest land which must be cultivated to supply the needs of the community. A change in the demand for products which affects the margin of cultivation therefore affects rents.

Not only fertility, but accessibility, surroundings, etc., determine rent. These are the chief elements in the rental price of stores, offices, wharves, factories and residences. Yet a part of this is not rent but profit on the capital invested in the buildings.

Rent forms no part in the cost of production, for it is paid for superior advantages.

LECTURE II.
The Land Question.

Rent arises not only from superior fertility or productiveness, but from superior accessibility and superior surroundings. These are variable and are often the result of the growth of society, independent of effort on the part of the owners of land. Yet the owners appropriate the increase in rental or selling value without recompense to the society which produced it. Such appropriation of “unearned increment” is the origin of many fortunes in every community. Though legally and politically just, such appropriation is morally unjust. Yet there is no apparent way of remedying the injustice by any political machinery now in operation. A man who refused to appropriate the unearned increment would simply leave it for another’s benefit. The advocates of the single tax recommend the abolition of all injustice arising from appropriation of unearned increment by seizing for public benefit without compensation to the owner, except for improvements made, all land now privately owned. This would secure for society not only all present and future but also all past unearned increment. This would bring great wealth to the public treasury and thus make it possible to relieve poverty, but it would perpetrate an injustice much greater than that which it would correct; for the greater part of the unearned increment has been appropriated by past owners, and to confiscate the property of present owners would be to take away from them property for which they have already paid a presumably fair price. The single tax advocates say that there never was properly any valid title to land, since the land was created for all and no man made it, —and that therefore it is a man’s own fault if he buys and pays for a right which the seller did not possess.

This raises the question whether the right to exclusive control over land is a moral right. The usual answer is summed up in the phrase, “Give a man an insecure tenancy of a garden, and it will become a desert; but give him a nine years’ lease of a desert, and he will convert it into a garden.” Private ownership is considered necessary for a proper care and cultivation of landed property. This, however, is solely on the ground of policy. Yet, justice demands as much. In many localities population is excessive, crowds closer and closer together, and thereby not only raises the cost of living, but destroys much that makes the pleasure of the old inhabitant. If he, and his ancestors before him, or anyone from whom he may purchase, have chosen a place for their habitation or their work, no justice can demand that he be caused to suffer by the encroachment of a new population or an increased population for which he is not responsible. If population is to grow, as some predict, until it is pressed for means of subsistence, there is the more reason for sustaining, now while the world is big enough for all, the right of anyone to secure for himself and his descendants land which shall be their allotted space. Certain incompetent classes of population can grow in excess of all usefulness for themselves or others, and as their growth involves evil to those who are innocent of irresponsible growth, the one protection in the right of private property in land cannot justly be withdrawn.

This right of private property in land, however, does not include the right to appropriate the “unearned increment” which is the creation of society. The assumption of it by society would be both just and politic. The difficulty is one of practicability. The assumption could not cover the unearned increment of the past, for that cannot be traced; it could not cover all that in the present and future, for many of the present land owners have already compensated past owners for expected increment, and would thus suffer from injustice; and the line between earned and unearned increment, and the amount of increment, are not always apparent. Justice demands this assumption, however, and ways of making it practicable will be devised.

In one class of land, no private right of ownership should be recognized at all. Much of the world’s mineral wealth, for example, is locked up in few localities. This belongs to society at large. All mines, therefore, should be public property, and managed for society’s interest.

In the same category belong all lands having special narrowly-limited properties, such as that comprising grand scenery and natural transportation routes. Permanent private control of them constitutes monopoly, which is counter to public justice.

LECTURE III.
The Relation of Profits and Wages.

No man works in these days without the assistance of capital; and even his wages are paid out of capital. Temporarily, therefore, the rate of wages will depend upon the number of persons desiring employment and the number of commodities suitable for their use which are offered them by persons desiring their services. An increase in the number of persons desiring employment, without a corresponding increase in the capital available for their payment, produces lower wages, and an increase in the capital offered as wages, without corresponding increase in the number desiring employment, produces higher wages. A sudden rise in the value of commodities produced does not necessarily bring with it the ability to pay higher immediate wages, for as wages are usually paid out of capital, the wage-paying power is not immediately affected.

Labor is required by capital. The rate of wages, therefore, cannot permanently remain below the point which suffices to supply a working population. The amount which will supply population is determined largely by the workers themselves. If workers are unwilling to undertake the support of families at a given rate of wages, the number of marriages declines, the birth rate is reduced, and the population fails to supply the demand of capitalists for workers. Then the competition of employers for workers raises wages until the point at which workers are willing to marry and assume the support of families is reached. This point is in the long run the minimum limit of wages. Though there is no maximum limit, there is in most communities a natural force which tends to keep wages from reaching a very high range. The tendency of population to increase is generally manifest, and in most communities there appears to be a marked connection between the rate of increase and the wages of labor. An increase of wages among certain classes of workers often results in a larger population; and this, when unaccompanied by a proportionally increased capital, results in a reduction of wages. Thus the rise in wages counteracts itself. This increase in population, however, is by no means universal, and is in no case necessary. An important check on sudden fluctuations in wages is found in migration of laborers.

As capital greatly increases the world’s produce, and is a necessary element in carrying on business by modern methods, the possessor of it receives a share of the produce. This share is called profit, or, more strictly speaking, interest. The justification of this share lies in the fact that capital is the result of self-denial on the part of someone at sometime, in devoting to productive use wealth which might have given him immediate personal gratification if spent. Similar self-denial is involved also on the part of an inheritor of wealth who devotes it to productive use. Interest is not only just, but its payment is dictated by policy, for capital would not increase rapidly enough to assist the growing population if this inducement were withdrawn.

Chronologically, interest or profit is a residue. It consists of the balance of production after wages are paid. If the total amount of production is fixed, the greater the share of labor, the smaller that of capital, and vice versa. The rate of profit cannot permanently remain below that point at which it is worth the while of possible capitalists to save rather than to spend their wealth; for the moment it falls below that point expenditure increases and the fund for paying wages decreases, until laborers are obliged to accept lower wages or go without work. Then this reduction of wages increases profits, and it thus restores the rate at which wealth will be saved. A very high rate of profit, on the other hand, stimulates saving, and thus, by increasing the amount of capital seeking to hire laborers, raises wages and partially counteracts itself. The migration of capital is an important check upon extreme variations.

Yet high wages and high profits are not inconsistent. The interests of laborers and of capitalists are conflicting only in the act of dividing the produce of industry. They have a common ground in the desire to increase the produce so that the share of each may be larger.

The distinction between interest and profits is wide. One is the share of the owner of capital as such, and the other is the share of a manager, — or, strictly speaking, wages of superintendence. Thus, profits though usually associated with capital, are really reward for labor; and they form the usual path by which men pass from the rank of laborer to that of capitalist.

LECTURE IV.
The Problems of Capital.

No adequate understanding of economic problems is possible without some appreciation of the amount of capital involved in modern industries. Formerly, labor was assisted by capital; now the function of labor is chiefly directing capital. Dividing capital into two parts, the auxiliary (which the laborer employs in his work), and the remuneratory (which supports the laborer while he is engaged in production), the remuneratory will be found in many industries but a tithe as much as the auxiliary. Man has acquired and accumulated great control over the forces and supplies of nature, and converting these into capital he increases many fold the production of wealth. Whatever, therefore, affects the amount of capital in a community is of great importance.

No judgment upon the value of the service of capital is adequate unless it takes into account the element of risk involved in modern investment. A turn of fashion, a change of government policy, a new discovery in science, a new invention in machinery, may annihilate not only expected profits but capital itself. New investments are often surrounded with great risk. As it is the expectation rather than the actual existence of profit that determines the conversion of wealth into capital, a rate of profit extraordinarily high is justified if the possibility of it was needed to induce capitalists to enter a venture clearly for the public good.

Great combinations of capital result often from the risks of business. The prosperity of each business firm is dependent not only on the ability of its manager, but also, in a certain degree, upon that of competitors. An ill-judged move by one firm often brings disaster to its bitterest enemies as well as to itself. A union of interest so that the wisest counsel will prevail among all concerned is a natural step. Moreover, the union forms an insurance of each against the monopoly of special privileges and improvements by the others.

Much of the gain from the combination of capital arises from the conduct of business upon large scales. Too much emphasis can hardly be placed upon this element. Great saving arises from cheaper purchase of material in large quantities; from better utilization of material through a larger range of methods, machines and facilities; and through economy in purchasing, selling and directing agencies. Each member of a combination has the advantage of the best knowledge of every other member. Whether the goods produced are sold cheaper in consequence or not, society is richer, because the energy and capital saved are available for other things.

Combinations of capital to control the markets and exact tribute from consumers have no such economic basis. They are analogous to the monopoly of rich mines discovered by accident. It will be found, moreover, that combinations of capital to force unduly high prices are seldom permanently successful unless they are founded on a natural monopoly. In such cases it is the monopoly of things which should be the property of society at large, and not the combination of capital, that brings evil. Though a powerful combination having no natural monopoly may for a time control the market, it cannot long keep prices above the point at which they would be maintained without the combination; for whenever they raise prices artificially beyond that point a large profit can be made by any outside producer, and such will not be wanting.

One is not accustomed to consider crime an element in economics. Yet we find a species of it an important element in our discussion of capitalism. Unfortunately, the great combinations are not free from evidence of it. Many of them have been known to commit robbery and bribery. Their facilities for such work in bankrupting railroads, robbing stockholders, bribing legislatures, securing unjust discrimination, and the like, are great. Though their economic power gives them this political power, the question is not properly one of economics. Justice will not suffer any economic consideration, whatever it may be, to issue the final word in the matter of combinations of capital, if it is found that they create moral degradation and political corruption.

LECTURE V.
The Problems of Labor.

Though the wages of labor are found to differ in different employments in consequence of the conditions of each trade (as, e.g., the cost of learning, steadiness of employment, agreeableness, etc.,) the differences are often found much greater than can be accounted for by such causes. The explanation lies in the existence of barriers setting off non-competing groups, — the wages of the members of each group being determined largely by the economic position of the commodity which they produce. The wages of workers above the lowest class are determined partly by the principles that govern rent. This is especially clear of the entrepreneur or manager’s class.

The steady growth of improvements, adding to the productive power of capital, decreases the proportional though not the absolute share of the laborer in the product of industry. A great hope for the laborer lies in the possibility of becoming a capitalist. The law of minimum wages shows that a laborer who begins his career with determination may become a capitalist.

Co-operation is specially directed toward the realization of interest and profits for the laborer. Its failures have been due largely to inadequate appreciation by the co-operators of the functions of the entrepreneur.

Profit sharing, though aiming less high directly, may, when scientifically conducted, give the laborer as good opportunities. In principle, it furnishes the laborer opportunity to use his employer’s facilities for producing wealth, and to share with his employer the produce resulting.

The most popular agency for improving the worker’s lot is the trade-unions. Associations of workers to gather and spread information concerning trade conditions, to set high standards of workmanship, to stir up public opinion against inhuman employers, and to perform other like functions, are economic agents of good; but trade-unions have often defied natural law and involved themselves in inevitable destruction. Their danger is the blind following of unintelligent leaders, but a knowledge of fundamental economic principles is spreading among them.

Trade-unions, co-operation and profit-sharing are at best but palliatives. The ultimate labor problem lies deeper. Three fundamental questions must be asked. What does the laborer do for society? What does society do for the laborer? What does society owe the laborer?

The grades of labor are infinite, — from him who has brute strength and will work faithfully when under supervision, to him who has executive ability to direct and combine the varied works of a thousand others. The first can barely without aid support himself, and he cannot render to society much that it desires. The service of this man is hardly greater than that of his ancestors two centuries ago: if he does more, he does so through the help of inventions or the capital of others. It is the work of others, therefore, and not his work which is of increased utility.

The worker who is able by quick mind and nimble fingers to operate a delicate machine — the manipulation of which has been taught him — contributes somewhat individually to society; but the greater part of the gain here, also, lies in the machine which he operates. If, however, he can devise new methods, acquire versatility to operate several machines and thus economise time or labor, or invent a new machine or process, he has contributed something to economic progress. The services which may be rendered to society are infinite, and society’s wants are infinite.

Wages are higher in this generation than ever before in the history of the world. The poorest laborer counts as necessities articles of consumption which were luxuries for the well-to-do a century ago . Poverty to-day is rather relative than absolute. Fluctuations in circumstance rather than continued distress constitutes present-day poverty . For the fluctuations society is largely responsible, but the opportunities for success to make a fair average are continually growing.

Society does not owe more than it has received. A proper aim of life is development, which must proceed from generation to generation. A class of population industrially as incapable as its ancestors of two hundred years ago is a drag on society. Its labor is hardly more valuable to society than to itself. The highest grades of labor, utilizing the advance in knowledge and accumulated wealth, are able to render greater service to society than to themselves, and their reward is greater in consequence.

Though society may not owe more to the laborer, can she afford to give more? Clearly the advance of wealth renders high wages possible for all. Yet, even if society owes a living to every man of this generation, it does not owe a living to all the children he may beget. Whether one accepts the so-called Malthusian theory or not , one comes face to face with poverty which is clearly due to excessive population in certain classes. The growth of these classes is out of proportion to the growth of the services which they render society, and society cannot afford to assume the responsibility for their support and for the support of their increase.

The positive check to population has but infrequent play in our civilization. The preventive, though obvious, is alarmingly absent in the classes most needing a check. The true remedy for poverty, therefore, is a combination of the preventive check, operating in these classes, with an improvement in the character of the population which, through proper conditions of birth and education, shall lift the new generations into more efficient industrial classes.

LECTURE VI.
Modern Tendencies.

Not many years ago the wealth of the community depended largely upon its own industrial conditions. As the means of transportation were improved, the natural advantages of one section were reaped in part by others, through a division of labor. Division of labor sprang up internationally as well as locally, determined by comparative rather than absolute cheapness.

Nowadays though trade is continuing between different sections of the world, it is not merely international. The inhabitants of other continents obtain some of the advantages of the natural resources of America by coming personally to our shores. This change, though not wholly economic, had its origin in economic changes.

The natural resources of America are great only relatively: great because the population is unusually energetic and has not been numerous. As America absorbs more and more of the rest of the world, and becomes more and more like it, she loses more and more of her economic advantage.

Though the tendency is for greater correspondence in the industrial condition of different countries, the tendency is for greater inequality in the distribution of wealth in each country. Every year sees new control over the forces of nature, and this control is not universally shared. The man who by executive or inventive ability can add to the comfort or pleasure of many others is usually able thereby to secure a fair income. The number of men who can and do render service to society in such manner is yearly increasing. The ignorant laborer, on the other hand, has not, as a rule, ability or capital either to make or to use new discoveries, methods or combinations. The maximum productiveness of mere obedient brute force was reached many hundred years ago, and there is no economic reason why the man who has now nothing but obedient brute force to offer society should receive more for his work than such a man received several hundred years ago. Thus as society grows both in numbers and in wealth, the difference in income between the most serviceable member of society and the least serviceable member, economically speaking, becomes greater and greater.

Not only is the distribution of wealth tending to greater inequality, but to greater instability. Commercial transactions were formerly carried on largely with money. To day, money plays practically no part except in the retail trade. Its chief use is as a common measure of value. The world’s financial work is carried on almost wholly by credit. Merchants buy goods largely with notes or with checks; these notes and checks are discounted or deposited with banks, and in return bank credits are given. With these bank credits in the form of checks other payments for goods or notes are made, and thus the circuit is completed without the use of money. Though the banks hold money in reserve for the payment of their obligations, it is in small proportion to the amount of them; and much of this money, moreover, is either bank-bills or government legal tender, — both of these being paper based almost entirely on government credit. In international relations, finally, most payments are made in drafts (which correspond in nature to notes or checks), and international balances are settled largely in bonds, which are themselves forms of credit. The failure of any person concerned in these transactions to meet his obligation may precipitate difficulty on others, who again involve a new circle, and a financial crisis may result. In such a crisis not only speculative but real values collapse, and able, careful men of high financial standing may be rendered penniless by the misjudged steps of men across seas of whom they have never heard. Labor as well as capital may be involved in these disasters, for commercial stagnation often results temporarily. With most barriers broken down between nations, each is partly involved in the disasters of others, whether those disasters result from unpredictable circumstances or from mis judged or short-sighted policy.

One of the premises of economics is freedom from artificial restrictions. Until one realizes that natural laws are in operation, one is surprised to see how wages and profits, values, prices, etc., work themselves out to equilibrium. The conclusions of economics show that things must be thus and so. Yet we must not assume too readily that they are actually so in real life. All logic is based on premises, and therefore before applying the logic of economics to any particular phase of life, we must see that the premises correspond with the actual conditions. As a matter of fact, few communities realize the freedom which economics assumes. Whether one believes that this or that is the true fundamental principle for improving the condition of man- kind, one must know that a particular individual can never be judged wholly by that which is true of his class, that the hazards of modern industrial life have rendered generalization useful only for large classes, and that individual duty toward other individuals is greater than ever before.

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Questions.

LECTURE I.

  1. Which, if any, of the following persons are agents in increasing the wealth of the community: a pianist, a piano maker, a soldier, a dress maker, an architect, a hairdresser, a teamster, the captain of an excursion steamer? In each case, give your reason for including or excluding the person named.
  2. Would the total wealth of the community be increased immediately or ultimately, or both, if you sold to your neighbor for $9000 a house which cost you $8000, thus compelling him to save $1000 on the expense of a trip to Europe, and you devoted your profit to establishing a harness shop?
  3. Explain fully the cause of rent and show how rent may be estimated.
  4. How does Mr. Walker’s treatment of the law of “diminishing returns” differ from Mr. Mill’s?

LECTURE II.

  1. Explain the nature of the “unearned increment” from land.
  2. State the grounds for the assumption of “unearned increment” by the State
  3. What do you think of the justice of Mr. George’s single tax on land?
  4. What do you think of General Walker’s objections to the public assumption of the “unearned increment?”

LECTURE III.

  1. What do you understand to be the minimum rate of wages that may prevail in any community?
  2. Is there any economic reason for paying women lower wages than men?
  3. Explain by what process wages and profits are kept at an equilibrium.
  4. What is the difference between interest and profits?

LECTURE IV.

  1. Explain the chief advantages of production upon a large scale.
  2. What is the effect upon labor of the sudden conversion of large amounts of remuneratory capital into auxiliary capital? Is this a necessary result?
  3. What do you think of Karl Marx’s statement that capital is unproductive, and interest is mere confiscation of the product of laborer’s industry?
  4. What, in your opinion, are the comparative dangers in a combination of steel manufacturers and a combination of cotton cloth manufacturers?

LECTURE V.

  1. Do you believe that the restriction of population is the only fundamental remedy for poverty in the laboring classes?
  2. What would you give as the law of the differences of wages in different employments?
  3. Would you say that the failures of profit-sharing militate against it as a practicable palliative for the condition of laborers?
  4. What do you think of a proposition to “make work” by inaugurating an eight-hour day?

LECTURE VI.

  1. Do you look upon restriction of immigration as an economic necessity in the near future?
  2. Explain the effect of changes in transportation upon the growth of cities.
  3. What do you understand to be the conditions under which international trade will spring up?
  4. What is your attitude toward the doctrine of “Laissez-faire?

Source: University Extension Lectures under the auspices of The American Society for the Extension of University Teaching. Syllabus. Series E. Number 16.

Image Source: William Morse Cole faculty portrait in Radcliffe College, Book of the Class of 1913-14. Colorised at Economics in the Rear-view Mirror.

Categories
Exam Questions Harvard History of Economics

Harvard. History of Economics through 1848. Bullock, 1905-1906

For some reason this course was inadvertently skipped over when I was posting the 1905-06 Harvard exams earlier. Charles Jesse Bullock was responsible for the fields of public finance and the history of economic thought in the department during the first decades of the twentieth century. There’s more to come.

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Earlier history of economics exams
by year and instructor

1899-1900. The History and Literature of Economics to the close of the Eighteenth Century. [William James Ashley]

1901-02. History and Literature of Economics, to the opening of the Nineteenth Century. [Charles Whitney Mixter]

1903-04. History and Literature of Economics to the opening of the Nineteenth Century [Charles Jesse Bullock]

1904-05. History and Literature of Economics to the year 1848. [Charles Jesse Bullock]

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Course Enrollment
1905-06

 Economics 15. Asst. Professor Bullock. — History and Literature of Economics to the year 1848.

Total 7: 7 Graduates.

Source: Harvard University. Report of the President of Harvard College, 1905-1906, p. 73.

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ECONOMICS 15
HISTORY OF ECONOMIC THEORY
Mid-Year Examination, 1905-06

  1. What did Aristotle say concerning the following topics: commerce, money, usury, value?
  2. What economic topics were discussed by the Roman writers?
  3. Trace briefly the development of the political and economic theories of the Schoolmen.
  4. Upon what grounds do modern writers defend the prohibition of usury during the Middle Ages?
  5. What is your opinion of the theories by which the prohibition was upheld?
  6. Give some account of the economic opinions of Carafa.
  7. In the economic writings of the sixteenth century, so far as you are acquainted with them, what evidence do you find of continuity in the development of economic doctrine?
  8. Give an account of the economic opinions of John Hales?

Source: Harvard University Archives. Harvard University. Mid-year Examinations, 1852-1943. Box 7, Bound Volume: Examination Papers, Mid-Years 1905-06.

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ECONOMICS 15
HISTORY OF ECONOMIC THEORY
Year-end Examination, 1905-06

  1. What traces of Aristotle’s influence have you found in the economic literature of the sixteenth, seventeenth, and eighteenth centuries?
  2. What traces of Scholastic influence can be found in the economic literature of the sixteenth and seventeenth centuries?
  3. Give a brief account of the writings and economic opinions of any three of the following men: Misselden, North, Locke, Vanderlint, Decker, and Hume.
  4. Write a brief account of the progress of economic thought in Italy from 1500 to 1770.
  5. Write a brief account of the rise and progress of Cameral Science in Germany.
  6. To what extent were the Physiocrats indebted to previous economic thought?
  7. What were the chief influences that contributed to the development of Adam Smith’s system of economic doctrine?
  8. Compare the “Wealth of Nations” with the “Lectures upon Justice, Police, Revenue, and Arms.”

Source: Harvard University Archives. Harvard University, Examination Papers 1873-1915. Box 8, Bound volume: Examination Papers, 1906-07; Papers Set for Final Examinations in History, Government, Economics,…,Music in Harvard College (June, 1906), pp. 40-41.

Categories
Exam Questions Harvard Transportation

Harvard. Railroad economics. Daggett, 1907-1908

Stuart Daggett (1881-1954) wrote his Harvard economics dissertation under William Z. Ripley and went on to become Professor of Transportation on the Flood Foundation at Berkeley.

While at Harvard Daggett co-taught the survey course on the economics of corporations with Ripley a couple of times and the economics of transportation with him several times. Daggett taught the course on railroad practice by himself which was offered for the first time 1906-07.

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Ph.D. Thesis

Stuart Daggett. A.B. [Harvard] 1903, A.M. [Harvard] 1904. Instructor in Economics. Ph.D. in Economics 1906. Thesis: Railroad Reorganization.
Source: Harvard University. Report of the President of Harvard College 1905-1906, p. 147.

Railroad Reorganization by Stuart Daggett, Ph.D. Instructor in Economics in Harvard University. Boston: Houghton, Mifflin and Company, 1908.

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From the 1927 Berkeley Yearbook

A personal interest in the affairs and problems of the students enrolled in the College of Commerce has characterized the administration of Stuart Daggett, who was appointed Dean of that College in 1918.

Not only have individuals received assistance and encouragement from him, but many of the college organizations have benefited by his interest and suggestions. The Commercia, the monthly publication of the Commerce students, first moved from a needed storeroom in Budd Hall to a single desk in the Commerce office, and finally found a permanent home through the efforts of Dean Daggett. When the Physics Department was moved to its present quarters, leaving South Hall to be occupied by the Department of Economics and College of Commerce, the present Commerce Club Rooms building was being used as the physics machine shop. This Dean Daggett succeeded in procuring as an office for the Commercia, and as club rooms for the Commerce Association, the foremost social organization of the college. By some effort, the club house has been kept sacred to the students of the College of Commerce. During the campaign for Amendment 10, when the University was looking for some central location from which to conduct the drive, the Commerce Association offered the use of their rooms to President Campbell, thus furnishing a convenient location.

Dr. Daggett attended Harvard University, from which institution he received the degrees of A.B in 1903, and M.A. the next year, and a Ph.D. in 1906. He instructed in economics at the same university for two years after receiving the last degree. In 1909, he became an assistant professor on the University of California faculty; in 1913 was made associate professor; and finally, in 1917, became professor of railway economics on the Flood Foundation. The next year he succeeded Henry R. Hatfield as Dean of the College of Commerce.

Source: University of California, Berkeley. Blue and Gold 1927, p. 25.

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Railroad Practice
1907-08
 

Course Enrollment
1907-08
 

Economics 17 2hf. Dr. [Stuart] Daggett. — Railroad Practice.

Total 34: 2 Graduates, 11 Seniors, 16 Juniors, 4 Sophomores, 1 Other.

Source: Harvard University. Report of the President of Harvard College, 1907-1908, p. 67.

ECONOMICS 17
Year-end Examination, 1907-08

  1. The following items appear on the balance sheet of a Boston & Maine agent located at one of that road’s junction points:—
    1. Advanced charges on freight forwarded.
    2. Prepaid charges on freight forwarded.
    3. Prepaid beyond on freight forwarded.
    4. Prepaid beyond on freight received.
    5. Cash remitted treasurer.
    6. Collect charges on freight received.
    7. Drafts on treasurer for advances.

Arrange the above to show the debits and credits to the agent. How would the charges on a collect shipment sent to an interior junction point, such as Nashua, be handled in the station accounts of that junction point?

  1. The following waybills from Providence, R.I., may have been reported to the Boston & Maine by the New Haven as representing freight turned over to the former at Boston for delivery to Boston & Maine stations:—
Destination Articles Weight Rate Freight Advance Prepaid
Portsmouth, N.H. Blackboards, boxed 30,000 16 $48.00 $4.00 $52.00
Portland, Me. Hods 20,000 19 38.00 2.00
North Adams, Mass. Lamps 5,000 30 15.00 3.00 8.00

Assume that the New Haven is entitled to one-half the through rate on (1), to one-third of the through rate on (2), and to one-quarter of the through rate on (3), and that settlements between the two roads have been made on this basis. It subsequently is discovered that the shipments reported never reached the Boston & Maine. What money must be refunded in each case, and to which road is the refund due?

  1. Suppose the shipments referred to in (2) had come to the Boston & Maine from the Maine Central or from the New York Central. Could the same mistake have occurred? If from the Maine Central, how would the balances between the handling roads have been ascertained and settled? Explain fully.
  2. How would a car record have been kept if the shipment had been between two points on the Great Northern Railway? How if the shipment had been of manifest fast freight on the Illinois Central Railroad?
  3. At what speed, according to some recent estimates, could this freight most economically have been handled? Explain the way the estimates were arrived at, and discuss the principal elements of cost due to high speed.
  4. How might the shipment have been handled after its arrival
    1. at the terminal yards at point of destination;
    2. at the terminal station?

Draw a diagram of an infreight and of an outfreight house, and explain the reasons for any difference in construction.

  1. Would the shipment between Providence and Portland have come under the jurisdiction of any railroad traffic association? Describe the organization and scope of
    1. The American Railway Association;
    2. The Southeastern Freight Association;
    3. The Western Classification Committee?
  2. How far do the arguments for demurrage charges justify the imposition of reciprocal demurrage charges? Describe
    1. The method by which demurrage charges are kept watch of and collected.
    2. The present situation in the matter of reciprocal demur-rage.
  1. Analyze the statistics of accidents on railways in the United States. What measures have been taken to reduce accidents, and with what results?

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09 (HUC 7000.25), pp. 41-43.

Image Source: University of California, Berkeley. Blue and Gold 1927, p. 25. Colorized at Economics in the Rear-view Mirror.

Categories
Exam Questions Harvard Public Finance

Harvard. Public finance and taxation exams. Bullock, 1907-1908

Early twentieth century public finance and taxation courses at the Harvard economics department belonged to the domain of Charles Jesse Bullock (1869-1941). He regularly examined economics graduate students to certify that they demonstrated having a reading knowledge of French and German.

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Bullock’s earlier public finance exams
at Harvard

1901-02. Economics 7a and 7b. Financial administration; taxation [undergraduate]

1903-04. Economics 16.  Financial history of the United States

1904-05. Economics 7a. Introduction to public finance [undergraduate]

1904-05. Economics 7b. Theory and methods of taxation [undergraduate]

1904-05. Economics 16. Financial history of the United States.

1905-06 Economics 7.  Public finance [undergraduate]

1905-06 Economics 16. Public finance [advanced]

1906-97 Economics 16. Public finance and taxation

*  *  *  *  *  *  *  *  *  *  *  *  *  *

From 1906: Selected Readings in Public Finance edited by Charles Jesse Bullock (Boston: Inn & Company).

From 1910: Short bibliography on public finance “for serious minded students” by Bullock

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Course Enrollment, Public Finance
1907-08

Economics 16a 1hf. Asst. Professor Bullock. — Introduction to Public Finance

Total 33: 6 Graduates, 12 Seniors, 7 Juniors, 7 Sophomores, 1 Other.

Source: Harvard University. Report of the President of Harvard College, 1907-1908, p. 67.

 

ECONOMICS 16a
INTRODUCTION TO PUBLIC FINANCE
Mid-year Examination, 1907-08

  1. What were the causes of the increase of public expenditures in the nineteenth century?
  2. Compare the opinions of Adam Smith and Rau concerning public domains.
  3. Discuss the financial results of the United States Post Office.
  4. What have been the financial results of public ownership of railroads?
  5. Describe the organization of the United States Treasury Department.
  6. Describe the budgetary practice of American municipalities.
  7. For what purposes is it proper that a municipality should borrow money?
  8. Discuss the proposition that loans are drawn from the capital of a country and that taxes come from income.
  9. State and criticise Dr. Price’s theory of sinking funds.

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09 (HUC 7000.25), p. 39.

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Course Enrollment, Taxation
1907-08

Economics 16b 2hf. Asst. Professor Bullock. — The Theory and Methods of Taxation

Total 59: 7 Graduates, 18 Seniors, 22 Juniors, 9 Sophomores, 3 Others.

Source: Harvard University. Report of the President of Harvard College, 1907-1908, p. 67.

ECONOMICS 16b
THEORY AND METHODS OF TAXATION
Year-end Examination, 1907-08

  1. From a practical point of view what is to be said concerning progressive taxation?
  2. What can be said concerning the incidence of the following taxes: the property tax levied by Massachusetts upon machinery, upon merchandise, and upon livestock; and the corporate franchise tax on street railways?
  3. Discuss the experience of American states in taxing: (a) tangible personal property; (b) intangible personal property.
  4. State and discuss three cases of double taxation which often occur in the United States.
  5. What do you think of the proposition that a tax on the income of land is a tax on land, and therefore a direct tax under the provisions of the Constitution of the United States?
  6. What taxes would be paid by a French manufacturer who owned all the property, real and personal, employed in his business? What would be paid by an English manufacturer similarly situated?
  7. Compare excise taxation in Great Britain with excise taxation in France.
  8. Enumerate and discuss four constitutional limitations upon the taxing power of the legislature of Massachusetts.
  9. Compare national taxation in Great Britain with national taxation in the United States.
  10. What do you think of the expediency of employing taxation as an instrument of social reform?

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09 (HUC 7000.25), p. 40.

Image Source: Library of Congress. Puck, 23 June 1909. “The fountain of taxation”. Published by Keppler & Schwarzmann, Puck Building.

A large fountain with four basins, at top, supported by a crown and scepters, is a basin labeled “Millionaire”, next resting on a cornucopia is “Well-To-Do”, then the “Middle Class” basin supported by an octopus, and at the bottom is the largest basin labeled the “Laboring Class”. The fountain is standing on a platform labeled “Tax System”; the water, cascading from top down is labeled “Burden of Taxation”.

Categories
AEA Economists History of Economics Johns Hopkins

Johns Hopkins. Essay on Political Economy in America. Ely, 1887

 

NORTH AMERICAN REVIEW.
FEBRUARY, 1887.

POLITICAL ECONOMY IN AMERICA.
by RICHARD T. ELY

At a meeting of political economists held at Saratoga in the month of September, 1885, in order to form an economic society — finally called the American Economic Association — Professor Alexander Johnston, of Princeton College, defined the purposes of the contemplated organization, as understood by him, in these words:

“This is an effort to stop the formation of any ‘crust’ on the development of economics, to assert the economic right of attempts to develop in every direction, unhampered by any accusation of heterodoxy, with the assurance that unlimited freedom of individual attempt to develop will bring about the truest, most natural, and healthiest development.”

Other ideas were brought out in the interesting discussion about the aims which should animate a body of American economists at the present time, and valuable suggestions were derived from men like Hon. Andrew D. White; Rev. Dr. Washington Gladden; Professor Henry C. Adams, of Michigan University; Professor E. J. James, of the University of Pennsylvania; Dr. Herbert B. Adams, of the Johns Hopkins University; Dr. Edwin R. A. Seligman, of Columbia College; Professor Andrews, of Brown University; and President Charles Kendall Adams, of Cornell University.

There can be no doubt, however, that all present agreed with Professor Johnston, and it is equally certain that he struck the key-note of future progress in economics.

But what did the undertaking signify? What did it mean to remove the “crust” already formed on the development of economics and to prevent its formation in the future? It is necessary for us to get a clear idea of this, if we would understand the past history and present condition of economic science in America.

The word “heterodoxy” uttered by Professor Johnston is one which throws a whole flood of light on the situation. The utterly unscientific conceptions, orthodoxy and heterodoxy, had crept into political economy; and men had with their aid attempted to check every advance in the science with a strong hand. What was orthodox? What was heterodox? Certain Englishmen, Ricardo, Malthus, Mill, Senior, successors of Adam Smith, had developed an à priori political economy which was well-pleasing to influential social elements. This was still further purified by later successors until the strong and mighty could find in it nothing to terrify “or make afraid,” nothing to disturb their calm repose. This at last became the political economy of the most conservative portion of the press, and as such gave us, to use the words of Professor Gustav Cohn, not a description of actual life, but at best a picture of the life of men in society such as one might expect to find in the “Dream of the Millionaire.” It was a Utopia as dangerous as it was pleasing. Imported to this country, it acquired a strength in certain educated circles — particularly in the North and East — to which it could scarcely aspire, even in England. It was always ready with its little tests of orthodoxy to mete out praise or condemnation, to accord honor or shame. Acceptance of its creed was often a condition of academic preferment. A small clique of men, not without newspaper influence, constituted themselves its special guardians and, still maintaining that position, even now attempt to exercise a sort of terrorism over the intellect of the country. Any deviation from the straight and narrow path laid down by them was deeply damned. Was there not, indeed, that never-failing refuge of incompetence and malignity, the epithet “socialism,” ready to hurl at all offenders?

Manifestly, the first need of the hour was to break this “crust,” and this was a worthy object for the American Economic Association. “Orthodox” and “heterodox” must be as completely driven out of economic discussion as out of biology and mineralogy. Those who use these phrases must necessarily look back to the past to discover the belief of others, whereas science should ever keep its glance directed to the future and press on to the discovery of new truth.

This determination “to assert the right of attempts to develop in every direction, unhampered by any accusation of heterodoxy,” is of particular importance in political economy, because, in the nature of things, economists worthy of the name always have been, and always will be, in opposition to current opinion. What is an economist? An economist is a man who studies the economic life of men as members of society. Now, if the science of economics is not a humbug, he must know more about industrial society than others, and that is simply saying, in other words, that he holds opinions not generally received. The true economist is a guide who always keeps in advance, who marks out new paths of social progress. This explains why the “heterodox” economist of one age becomes the “orthodox” economist of a succeeding one. Social development has gone on in the direction in which he foresaw it must move. An American writer [Daniel Raymond, Thoughts on Political Economy] in 1820, for example, speaks of the “gross heresies” of Adam Smith’s “Wealth of Nations,” and even this great “Father” of English political economy did not escape the reproach of socialism. Could that progressive, far-seeing man know that his name was now used to retard the advance of his favorite study, he surely could not rest easy in his grave!

All articles on political economy in America written before 1880 are chiefly concerned with the question: Why have Americans done comparatively nothing to advance the science of industrial society? This is the nature of Professor Dunbar’s article on “Political Economy in the United States from 1776 to 1876,” which appeared in the NORTH AMERICAN REVIEW in the latter year; it is also the nature of T. E. Cliffe Leslie’s article on “Political Economy in the United States,” which appeared in the Fortnightly Review, in 1880. The main thought brought out is the preponderating importance attached to the pursuit of wealth rather than to an inquiry as to its philosophy in this new country. The absence of obviously pressing economic questions is also dwelt upon by both writers. All this is true. The two chief causes of research in economics are large financial questions, and wide-spread dissatisfaction among the masses with existing social arrangements, coupled with a determination to change these radically. Our late civil war brought us one of these two chief causes of economic study; events of the past ten years have brought us the other. Thus has a mighty impulse been given to the development of political economy. But there is another aspect of the situation — not unrelated to what has already been said about economic orthodoxy — which deserves mention. The chairs of political economy in the United States have in the past been filled, to large extent, by men who were not appointed, like professors of chemistry, as searchers after truth, but as advocates — chiefly of free trade or protection as the case might be. This has been sufficiently understood, and it has acted injuriously in several ways. It has kept the best men out of the academic career, and it has repressed aspirations looking in the direction of new scientific explorations. Finally, it has reduced the influence of political economists to a minimum. Business men have despised them, while their power to guide and direct the thought of the laboring classes has been less than nothing. It has been so generally felt that professors of political economy in America were mere advocates of existing institutions, that the masses have turned away from them in angry impatience, and have been prejudiced even against the important and unassailable doctrines which they did teach. Thus has the task been rendered more difficult for those truly scientific men who with the impartiality of all science, tell the plain truth to all classes and would thus benefit all alike  — for a lie is of no permanent benefit to any one! And what about the politicians? Well, every one knows they have given themselves little concern about political economy, and the political economists often censure them severely on this account. While the politicians doubtless deserve it, there is another side to the case, brought out by my good friend Professor Jesse Macy in those felicitous words: “A political science which does not at least honestly seek to give direction to actual politics is an unmitigated nuisance. Colleges and universities have in the past been treated with contempt by practical politicians simply because their work has been contemptible. Politicians are the last men in the world to treat with contempt a respectable and efficient political power and influence.”

The present time is one in which the evolution of society is proceeding with more than its usual rapidity, and it is evident that we need a positive constructive political economy, and this requirement the old political economy cannot meet. Let the reader consider for a moment the age in which its great masters, Quesnay, Turgot, and Adam Smith, lived. It was the latter half of the eighteenth century, when the progress of industry was retarded by a multitude of old institutions, good in their day, doubtless, but then antiquated. The cry of men who understood their time was, “Remove the barriers! clear the way for new social forms!” The work which the great economists advocated during that period was very properly negative and destructive. It ought not then to surprise us that when we go to our old text books of political economy to seek advice in reference to practical measures, the one chief lesson which we learn is “DON’T.” Manifestly, the call of our age is DO.

A new movement in economics was then inevitable, and it has already come. Its precise beginning cannot, perhaps, be ascertained, but the writings of the distinguished head of the Massachusetts Institute of Technology, General Francis A. Walker, first made it a clearly recognized accomplished fact in America. Probably, his works have inspired more of the American economists under thirty-five-possibly under forty-than those of any other man. He sowed seed which is now springing up and bearing fruit in all parts of our land. The movement was furthered by the establishment of new chairs of political economy in American colleges and universities, which was due to the wonderful impulse given to the study by the undeniable existence of those two classes of economic phenomena to which reference has already been made; namely, large financial problems and pressing social questions. Before 1876 one might have counted on one’s fingers the institutions where any serious instruction in political economy was given, whereas provision is now made for its study in every one of the more prominent colleges of the country; and although it is still inadequate in most cases, this is a remarkable advance. There are now a few colleges with two or three instructors, even, and it is not foolish to hope that in a not remote future we shall have as completely developed departments of political economy as we now have of physics and chemistry in our best universities.

Another good sign is the growing faith, both within and without our institutions of learning, in truth. People value the searcher for truth more than formerly, the mere advocate less. It is a significant fact that the youngest of the great American universities, the Johns Hopkins, founded in 1876, took for its motto, “Veritas vos liberabit.” [“Truth will set you free”] Another equally significant fact is this: The Johns Hopkins University assumed a non-partisan attitude in natural science. Its biological laboratory was instituted solely for the search of truth, regardless of consequences. Darwinian and anti-Darwinian doctrines, as such, could not be considered. Some good people were prejudiced against the University at the start on this account, and looked with much trepidation upon its teachings; but in ten years this has for a large part disappeared, and no college has warmer, more devoted friends among the clergy. This means faith in truth and a conscious recognition of the fact that one truth can not clash with another. One other illustration of this all-important point must follow, if the reader will pardon a personal allusion. When the writer’s name was brought forward for the position of teacher of political economy in the Johns Hopkins University five years ago, the authorities of the institution, true to their motto, asked no questions about his opinions in regard to free trade and protection or anything else, although these were then as unknown as he himself. There was simply an endeavor to ascertain his qualifications for the position. This is an experience which is probably almost unique.

People are learning, both in political economy and natural science, that truth alone can make them free; that truth alone has in it the power of life; that truth — not error — is able to conserve the good, and that to fear it is unworthy of an enlightened people.

There has been the same remarkable progress in the development of an economic literature in America, which has been noted elsewhere. To confine ourselves to the past few months, such works may be mentioned as James on “The Relation of the Modern Municipality to the Gas Supply;” Shaw on “Co-operation in a Western City” — two remarkable publications of the American Economic Association — Hudson on “Railways and the Republic;” Hadley on “Railroad Transportation,” and Laughlin on “Bi-metallism in the United States.” These are all based on investigations in the rich field of American economic life. We have also bold endeavors to reconstruct fundamental principles in economics, like Patten’s “Premises of Political Economy,” and J. B. Clark’s “Philosophy of Wealth.” All these are works of international importance.

One year ago there was no economic periodical in the United States. To-day there are three, and all evidently rest on a permanent basis. They are the bi-monthly monographs of the American Economic Association, published in Baltimore; the Political Science Quarterly of Columbia College, and the Quarterly Journal of Economics, published under the auspices of Harvard University.

A change in the conception of political economy must not fail to be noticed in this place. Its scope has become enlarged, and it is not quite the same thing which it was once. It has become a distinctively ethical science, and necessarily includes purpose within its province. It is clearly recognized that the will of man is a chief factor in economic life, and that, within certain limits, we can have just such a social system as we choose — always, be it observed, however, within certain limits. Accordingly, ideals for the individual, for the State, for society, for the church, are placed before men, and they are urged to strive for them in every practicable way. It is on this account, also, that the new political economy lays so much stress on ethical education, for it is seen that errors as often proceed from the heart as from the head.

It must not be supposed that the new political economy has gained exclusive sway even in the colleges and universities of the United States — much less outside of them. Still it is making its way rapidly; it is accepted by the teachers in most of our colleges, and it is beginning to permeate the thought of our time, as may be seen in the utterances of press and pulpit.

The economists of the older school cannot, either, be denied their use. They are not mere drags on the car of progress, but with their criticism, sharp and ungracious though it sometimes be, they render the advance surer.

In conclusion, however, it is undeniable that the prime need of the hour is increased light in economics, a further development of the new political economy, and the qualities indispensable in the men who would carry on the work already so auspiciously begun are these: a good heart, a strong intellect, and dauntless courage.

Source:  North American Review, Vol. 144, No. 363 (February, 1887), pp. 113-119.

Image Source: Universities and their sons; history, influence and characteristics of American universities, with biographical sketches and  of alumni and recipients of honorary degrees, Vol. IV (1900), p. 505. Image was smoothed and colorised at Economics in the Rear-view Mirror.

Categories
Exam Questions Harvard Socialism

Harvard. Exam questions for Social Reform, Socialism, Communism. Carver, 1907-1908

Harvard’s Thomas Nixon Carver, individualist to a fault, played less a devil’s advocate in his courses on social economic reform than he engaged with the theories behind the social movements of his time to disabuse his students’ of the economic schemes of reformers and revolutionaries that attracted them like moths to a flame. 

While  Bakunin, Marx and George are seen in the Rear-view Mirror of today, they were still objects seen in the side-view mirrors of Carver’s time — objects he probably believed to be closer than they appeared. In any case, objects to avoid for safety’s sake.

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Previously posted

Pre-Carver:
Carver’s courses

Post-Carver:

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Course Enrollment
1907-08

Economics 14b 2hf. Professor Carver. — Methods of Social Reform. Socialism, Communism, the Single Tax, etc.

Total 20: 5 Graduates, 7 Seniors, 7 Juniors, 1 Sophomore.

Source: Harvard University. Report of the President of Harvard College, 1907-1908, p. 67.

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ECONOMICS 14b
Mid-year Examination, 1907-08

  1. In what particulars does the socialist movement resemble a religious rather than a rationalistic movement?
  2. What are the leading doctrines of “Orthodox Socialism”?
  3. In what particulars are socialism and anarchism alike, and in what particulars are they unlike?
  4. State and comment upon Karl Marx’s theory as to the origin of capital and of interest.
  5. Compare the single tax movement and the socialist movement.
  6. Have you any clearly defined conclusion as to the proper, or logical, limits of state enterprise? If so, explain. If not, state the difficulty in the way of arriving at such a conclusion.

Source: Harvard University Archives. Harvard University, Examination Papers, 1873-1915. Box 8, Bound vol. Examination Papers 1908-09 (HUC 7000.25), p. 38.

Images: Mikhail Bakunin, Karl Marx, Henry George from the Manuscripts and Archives Division, The New York Public Library.  New York Public Library Digital Collections.

 

 

Categories
Economists Race

How Black-Lives Mattered to Wesley Clair Mitchell’s Immediate Ancestors. Mid 19th Century

                  In preparing Wesley Clair Mitchell’s remarks on his empirical approach to economics, I became curious about his grand-aunt with whom he, as a precocious boy, delighted to dispute deep theological issues. Mitchell wrote (emphasis added):

Concerning the inclination you [John Maurice Clark] note to prefer concrete problems and methods to abstract ones, my hypothesis is that it got started, perhaps manifested itself would be more accurate, in childish theological discussions with my grand aunt. She was the best of Baptists, and knew exactly how the Lord had planned the world. God is love; he planned salvation; he ordained immersion; his immutable word left no doubt about the inevitable fate of those who did not walk in the path he had marked. Hell is no stain upon his honor, no inconsistency with love. — I adored the logic and thought my grand aunt flinched unworthily when she expressed hopes that some back-stairs method might be found of saving from everlasting flame the ninety and nine who are not properly baptized. But I also read the bible and began to cherish private opinions about the character of the potentate in Heaven. Also I observed that his followers on earth did not seem to get what was promised them here and now. I developed an impish delight in dressing up logical difficulties which my grand aunt could not dispose of. She always slipped back into the logical scheme, and blinked the facts in which I came to take a proprietary interest.

                  To find out more, I sought detail in the biography/autobiography written by Wesley Clair Mitchell’s wife, Lucy Sprague Mitchell, Two Lives — The Story of Wesley Clair Mitchell and Myself (New York, 1953). There I was able to harvest plenty of information about Wesley Clair Mitchell’s family and identify the grand-aunt in question, Beulah McClellan Seely, a.k.a. “Grandma Seely.” I even learned that Beulah had put her reminiscences into writing and had them privately printed as A Story of My Life (1901), 73 pages. As the link indicates, there even happens to be a digital copy of Beulah’s memoir (originally from the Oberlin College library) that one can download from the internet. So between Lucy Sprague Mitchell and Beulah McClellan Seely, we have Wesley Clair Mitchell’s maternal and paternal sides fairly well-covered. A few dates and places have been added or checked using information found at the ancestry.com website that I subscribe to.

                  What I found particularly interesting were two clear indicators of progressive racial views held by Wesley Clair Mitchell’s immediate ancestors:

  • Wesley Clair’s father volunteered to serve as surgeon to the 4th United States Colored Infantry  for the last three years of the war because he believed it was not right to have different medical care for soldiers of color defending the Union in the Civil War.
  • On his mother’s side we find activist abolitionists and direct participation in the Underground Railroad to smuggle escaped slaves to Canada.

But first a fun fact:

Naming and Nicknaming Mitchell

I always called my husband “Robin.” That needs a word of explanation. When he was born, his parents had his name “Wesley Clair” waiting for him — so his mother wrote me. “Wesley” was for his father, John Wesley Mitchell, but was never used for the boy, perhaps because it was used for his father. He was never called “Wesley” until he began to be known professionally and signed himself Wesley C. Mitchell. His family and early friends called him “Clair.” They still do — his two sisters and four brothers and all his California friends. It was a name chosen by his mother for her first son. In her first letter to me she explains her choice:

… I hope you will like Clair’s name. It meant to me purity and strength and infinite beauty and the very essence of God’s love — all of which we believe you will find embodied in the spirit we feel sure the eternal years will only render more dear to you.

But I didn’t like either of his names — “Wesley” had rather grim associations and “Clair” seemed oversweet. So, when we were in the California Sierra before we were married, and in public, according to the mores of the day, were still saying “Mr. Mitchell” and “Miss Sprague,” I gave him a private name — “Robin.”

Source: Lucy Sprague Mitchell, Two Lives The Story of Wesley Clair Mitchell and Myself (New York, 1953), p. xx.

The Paternal Side of the Family

Father: John Wesley Mitchell (b. 30 Dec 1837 in Avon, Maine; d. 12 Jan 1915, New Orleans, Louisiana).He had four siblings.

Grandparents (paternal):

John Wesley Mitchell. Born 19 Jan 1798 in Durham, Maine; died 26 Mar 1889 in Strong, Maine)
Lydia Spaulding (b. 29 May 1799 in Fairfield, Maine; d. 16 Nov 1889 in Strong, Maine)

John Wesley Mitchell’s Civil War Service

[John Wesley Mitchell] went through the Medical School of Maine — affiliated with Bowdoin College — and received his M.D. in 1863 — Civil War days. He was then twenty-five years old. On a visit to his home soon after this, his mother extracted a promise from him that he would not volunteer for war service. But when he was in Boston, he learned of the desperate need of doctors, took the army examinations and, according to his children, passed with the highest grade on record. He entered service as surgeon of the 21st Massachusetts Infantry. But when he found that the Negro troops were not receiving the same medical care as the white, he resigned his commission and requested that he be transferred to the 4th United States Colored Infantry, where he served for the last three years of the war.

Source: Lucy Sprague Mitchell, Two Lives The Story of Wesley Clair Mitchell and Myself (New York, 1953), p. 9.

                  John Wesley Mitchell was married to Lucy Medora (Dora) McClellan who received his proposal in 1867 at her adopted parents’ home in Chicago. Lucy Sprague Mitchell notes “…she was not as impulsive as he” and she was a mere 19 years old at the time anyway. John Wesley left Chicago to go to the New York Medical College and then practiced medicine in Chicago and later Des Moines. According to Lucy Sprague Mitchell, John Wesley was married and divorced twice before re-proposing to Medora. His first marriage was with a woman he married while practicing medicine in Des Moines. The second woman was a redhead who took care of Dr. Mitchell “during one of his many illnesses”. But according to Lucy Sprague, who is vague about her sources here, John Wesley’s second wife wanted to become a stage actress. . Despite my amateur gumshoe genealogical search of the ancestry.com resources, I am unable to confirm either of John Wesley Mitchell’s two strikes in the mating game that were reported by his daughter-in-law, Lucy Sprague Mitchell.

                  John Wesley said, ‘All right, but I won’t be married to you.’” And so they divorced. It was at a chance meeting with Medora’s brother-in-law that John Wesley learned Medora was not yet married, he decided to try his luck again, and in May 1872 they were married in Mrs. Beulah McClellan Seely’s home

John Wesley Mitchell’s Obituary

JOHN WESLEY MITCHELL, son of John and Lydia (Spalding) Mitchell, was born 30 Dec. 1837 at Avon, Me. He received his early education in his native town and began the study of medicine after attaining his majority. He attended two courses of lectures of which the second was at the Medical School of Maine where he received his degree in 1863. He at once entered the service of his country as assistant surgeon of the 21st Massachusetts Infantry, but resigned his commission to become in September of that year, surgeon of the 4th United States Colored Infantry. This position he held throughout the war, being mustered out of service in May 1866. He received in March 1865 the rank of colonel by brevet for meritorious service. While before Petersburg, Va., he received an injury to his thigh from the fall of his horse, an injury from which he never fully recovered and which was a source of no little suffering throughout his life. On leaving the army he took special post-graduate courses in the New York Medical College and then settled in the practice of his profession at Chicago, Ill. He soon removed to Rushville, Schuyler County, where he had an extensive practice, too great for his physical strength. He then took up his residence in Decatur, Ill., where he remained till 1900. The closing years of his life were spent at New Orleans, La. Here he died of arteriosclerosis, 12 Jan. 1915.

Dr. Mitchell possessed unlimited ambition and great determination, yet the effects of the injury alluded to above seemed ever to shatter his hopes. There was granted him, however, a gentleness and sweetness of spirit superior to untoward circumstances. In purity of life and in brotherly affection to all men, he followed closely in the footsteps of the Great Physician.

Dr. Mitchell married in 1872 Lucy Medora, daughter of James and Eunice McClellan of Chicago, Ill., who survives him with their seven children, Prof. Wesley Clair Mitchell of Columbia University, New York City, Leonard McClellan Mitchell, a merchant of Chicago, Roy Purrington Mitchell and Lucius Sherman Mitchell, both of New Orleans, Dr. James Francis Mitchell of Berkeley, Cal., Beulah Mitchell, wife of the Chicago artist Walter Marshall Clute, and Eunice Mitchell, wife of Prof. D. N. Lehmer of the University of California.

Source: Bowdoin College Bulletin, Obituary Number (June, 1915), pp. 333-334.

The Maternal Side of the Family

The following chart provides an overview of Wesley Clair Mitchell’s immediate ancestors on his mother’s side to give a visual impression of how his grand-aunt fit into the family picture.

Mother: Lucy Medora (Dora) McClellan (b. 5 Mar 1847 in Illinois; d. 7 Sep 1922 in Berkeley, California)

Lucy Medora McClellan was adopted at age five by her Aunt Beulah following the death of her mother Eunice Clark Sherman McClellan in 1850. Medora’s father James McClellan and Beulah McClellan were brother and sister, having at least 7 siblings.

Thus Wesley Clair Mitchell’s mother was raised by her adoptive parents, Francis Tuthill Seely (b. 13 Apr 1820 in Orange County, NY; d. 25 May 1891 in Decatur, Illinois) and Beulah McClellan Seely (b. 26 Dec 1824 in New York; d. 16 Nov 1906). They had been married Feb. 17, 1843 but were unable to have children of their own.

About Beulah McClellan Seely

“She was a tall, impressive figure, a ‘handsome dresser,’ and carried herself with an authoritative air.’” According to Wesley Clair Mitchell’s wife, Lucy Sprague.

Beulah Seeley in 1903

From Beulah’s reminiscences we learn that she and her husband first lived two months at his father’s home and then moved to a farm three miles from him. However, a cyclone came and blew their house down forcing them to move back to Father Seely’s house until the 1843 harvest was done. Next the young couple moved to her parents’ home to help care for her mother who had suffered a severe stroke. A fatal stroke followed that winter (1843-44). They lived the next five years in Bristol, a quarter of a mile from her father, and where her husband Francis Seely set up a shoemaking business.

….Several years later [ca 1849?] we became dissatisfied with our prospects in Bristol and moved to Chicago, where my brother James [Wesley Clark Mitchell’s grandfather] had just settled. He was interested in the first abolition paper published there, for which my husband did the presswork. These were the times when the “Underground Railway” was in full operation and our house was a station for fugitives. Dr. Seely, my husband’s father, near Bristol, was a prominent member of the organization and brought slaves to our house, where they could be smuggled onto the boats for Canada. This was soon after Lovejoy’s murder [1837] and excitement was great. I remember that in the case of one man who came to father Seely, a trial and sale were held and father bid the man off for a dollar and a half and sent him over the line.”

Source:Beula McClellan Seely, A Story of My Life (1901), 73 pages p. 37.

… my brother James lost his second wife, Eunice [d. 1850; note— James’ first wife was Eunice’s sister Edit who had died earlier], who left him with six children, the oldest ten years old, the youngest, Florence, only a few weeks. Soon after he gave Medora to me. She was not yet six years old and has always been the greatest comfort and blessing to me.

Source:  Ibid., pp. 40-41.

Image Source: 1907 portrait of Medora and John Wesley Mitchell and 1903 detail of Beulah Seeley are posted in the “Spencer/Forbes/Adkins/Lehmer” Family Tree at the ancestry.com genealogical website.

Categories
Business Cycles Columbia Economists Methodology

Columbia. Wesley Clair Mitchell Reflects on his Personal Research Style. 1928

This post provides a transcription of Wesley Clair Mitchell’s original reply to methodological questions posed to him by his younger Columbia colleague John Maurice Clark in 1928. Clark was so impressed with Mitchell’s reply that he had it published in 1931 and later then reprinted in 1952 (see links below). For autobiographical context I have included a brief statement by Mitchell, one of Decatur, Illinois’ favorite sons, that was written shortly after his methodological reflections.

Fun Fact: Adolph C. Miller, who was one of Mitchell’s teachers at the University of Chicago and later his colleague at Berkeley, was married to Mary Sprague, older sister of Mitchell’s wife, Lucy Sprague.

Coming attraction: We will learn more about Wesley Clair Mitchell’s parents and the Baptist grand-aunt who raised his mother in a later post.

______________________

Decatur Herald (Decatur, Illinois)
7 July 1929, p. 44

Mitchell One of First To Prove Business Cycle

Every business man in the United States is familiar now with the theory of the business cycle. Comparatively few, even in Decatur, probably know that it was a former Decaturian, Dr Wesley C. Mitchell, who did the pioneer work in economic research establishing the theory of a business cycle.

“My father and mother were John Wesley Mitchell and L. Medora McClellan Mitchell.

“After living several years opposite the Stapps Chapel, we moved out to a ten-acre place on what later became Leafland avenue. There were seven children and we all went through Decatur schools. My High school class was 1893; but I dropped out in the fourth year in order to push more rapidly my preparation for taking college entrance examinations. In that way I entered the University of Chicago in the autumn of ’93. From that time forward I returned to Decatur only during vacations until the time when my parents moved to Louisiana about 1902.

Studied In Germany

“My undergraduate work was done at the University of Chicago. Graduating in 1896, I received a fellowship which permitted me to go on immediately with postgraduate work. The year ’97-98 I spent on a traveling fellowship in Germany and Austria. The next year I was back at Chicago receiving the degree of Doctor of Philosophy summa cum laude in ’99. My chief subjects were economics and philosophy.

“No more congenial opening turning up, I spent 1900 in the Census Office at Washington in a small Division of Analysis and Research presided over by Walter F. Willcox of Cornell. Next year I was appointed instructor at the University of Chicago and taught there in 1900-02. The end of this period I published my first book, “A History of the Greenbacks.”

“One of my teachers at Chicago, Professor A. C. Miller, now a member of the Federal Reserve board, was called to the University of California as head of the Department of Economics. He asked me to go with him. As a result I lived from 1902 to 1912 in Berkeley as an assistant, associate and finally full professor of economics. While there I published a second volume of my monetary studies called “Gold Prices and Wages in the United States”(1908), and also a book called “Business Cycles” (1913). I also spent one of these years lecturing at Harvard.

Helped to Launch School

“In 1912 I married Lucy Sprague a daughter of Otho S. A. Sprague of Chicago. We went to Europe for a year and then came to live in New York city where I became attached to Columbia University. During the war I was chief of the Price Section in the Division of Planning and Statistics in the War Industries board. After the war I helped organize the New School for Social Research in New York and later the National Bureau of Economic Research, with which I am still connected as one of the directors.

“In these later years my investigations have been carried on very largely in conjunction with the National Bureau’s programs. My latest book, “Business Cycles: The Problem and Its Setting,” was published in 1927, and I am now working upon the supplementary volume to be called “Business Cycles: The Rhythm of Business Activity.”

“It is many years since I have been in Decatur or had an opportunity to talk with any of my old friends, aside from Will Westerman who graduated from the Decatur High school a little before my time, and who is now one of my colleagues at Columbia, where he is a professor of ancient history.

“It will be a great pleasure to get the records of other old friends which your Centenary number will doubtless contain. Accept my congratulations upon this enterprise.

WESLEY C. MITCHELL

______________________

NBER Memorial Volume
for Wesley Clair Mitchell

Wesley Clair Mitchell: The Economic Scientist, National Bureau of Economic Research, New York, 1952.

______________________

Backstory:

Memorial Address
by John Maurice Clark.

“I had undertaken to analyze his methods of studying business cycles, for a volume of such analyses, edited by Stuart Rice; and as part of my preparations I had written to Mitchell, asking him some rather searching questions. In reply, he sent me an autobiographical sketch of his intellectual development, starting with his adolescent arguments over theology with his grandaunt. The letter was close to three thousand words long and so beautifully written as to be fit for publication without the change of a comma. Much against his desires, Mitchell was persuaded to allow this correspondence to be published, as part of the study which had occasioned it.* Its great value, naturally, lay in the fact that it had been written without a thought of publication, merely in a characteristically generous response to my request for inside information. More than anything else I know in print, it gives not only his typical mental attitudes, but the flavor of his genially pungent personality.”

Source: Wesley Clair Mitchell: The Economic Scientist, National Bureau of Economic Research (New York, 1952), p. 142.

*Appendix: “The Author’s Own Account of His Methodological Interests” to John Maurice Clark’s “Preface to Social Economics” in Methods in Social Science: A Case Book. Edited by Stuart A. Rice for the Social Science Research Council, Committee on Scientific Method in the Social Sciences. University of Chicago Press, 1931. Pages 673 ff.

______________________

Typed copy of Wesley Clair Mitchell’s Response to Questions
posed him by John Maurice Clark

[Handwritten note: “Revised Feb 11, 1929”]

Huckleberry Rocks, Greensboro, Vt.
August 9, 1928.

Dear Maurice:

                  I know no reason why you should hesitate to dissect a colleague for the instruction, or amusement, of mankind. Your interest in ideas rather than in personalities will be clear to any intelligent reader. Nor is the admiration I feel for you skill as an analyst likely to grow less warm if you take me apart to see how I work. Indeed, I should like to know myself!

                  Whether I can really help you is doubtful. The questions you put are questions I must answer from rather hazy recollections of what went on inside me thirty and forty and more years ago. Doubtless my present impressions of how I grew up are largely rationalizations. But perhaps you can make something out of the type of rationalizations in which I indulge.

*  *  *  *  *  *  *  *  *  *  *

                  Concerning the inclination you note to prefer concrete problems and methods to abstract ones, my hypothesis is that it got started, perhaps manifested itself would be more accurate, in childish theological discussions with my grand aunt. She was the best of Baptists, and knew exactly how the Lord had planned the world. God is love; he planned salvation; he ordained immersion; his immutable word left no doubt about the inevitable fate of those who did not walk in the path he had marked. Hell is no stain upon his honor, no inconsistency with love. — I adored the logic and thought my grand aunt flinched unworthily when she expressed hopes that some back-stairs method might be found of saving from everlasting flame the ninety and nine who are not properly baptized. But I also read the bible and began to cherish private opinions about the character of the potentate in Heaven. Also I observed that his followers on earth did not seem to get what was promised them here and now. I developed an impish delight in dressing up logical difficulties which my grand aunt could not dispose of. She always slipped back into the logical scheme, and blinked the facts in which I came to take a proprietary interest.

                  I suppose there is nothing better as a teething-ring for a child who likes logic than the garden variety of Christian theology. I cut my eye-teeth on it with gusto and had not entirely lost interest in that exercise when I went to college.

                  There I began studying philosophy and economics about the same time. The similarity of the two disciplines struck me at once, I found no difficulty in grasping the differences between the great philosophical systems as they were presented by our text-books and our teachers. Economic theory was easier still. Indeed, I thought the successive systems of economics were rather crude affairs compared with the subtleties of the metaphysicians. Having run the gamut from Plato to T. H. Green (as undergraduates do) I felt the gamut from Quesnay to Marshall was a minor theme. The technical part of the theory was easy. Give me premises and I could spin speculations by the yard. Also I knew that my “deductions” were futile. It seemed to me that people who took seriously the sort of articles which were then appearing in the Q.J.E. might have a better time if they went in for metaphysics proper.

                  Meanwhile I was finding something really interesting in philosophy and in economics. John Dewey was giving courses under all sorts of titles and every one of them dealt with the same problem — how we think. I was fascinated by his view of the place which logic holds in human behavior. It explained the economic theorists. The thing to do was to find out how they came to attack certain problems; why they took certain premises as a matter of course; why they did not consider all the permutations and variants of those problems which were logically possible; why their contemporaries thought their conclusions were significant. And, if one wanted to try his own hand at constructive theorizing, Dewey’s notion pointed the way. It is a misconception to suppose that consumers guide their course by ratiocination — they don’t think except under stress. There is no way of deducing from certain principles what they will do, just because their behavior is not itself rational. One has to find out what they do. That is a matter of observation, which the economic theorists had taken all too lightly. Economic theory became a fascinating subject — the orthodox types particularly — when one began to take the mental operations of the theorists as the problem, instead of taking their theories seriously.

                  Of course Veblen fitted perfectly into this set of notions. What drew me to him was his artistic side. I had a weakness for paradoxes — Hell set up by the God of love. But Veblen was a master developing beautiful subtleties, while I was a tyro emphasizing the obvious. He did have such a good time with the theory of the leisure class and then with the preconceptions of economic theory! And the economists reacted with such bewildered soberness: There was a man who really could play with ideas! If one wanted to indulge in the game of spinning theories who could match his skill and humor? But if anything were needed to convince me that the standard procedure of orthodox economics could meet no scientific tests, it was that Veblen got nothing more certain by his dazzling performances with another set of premises. His working conceptions of human nature might be a vast improvement: he might have uncanny insights; but he could do no more than make certain conclusions plausible — like the rest. How important were the factors he dealt with and the factors he scamped was never established.

                  That was a sort of problem which was beginning to concern me. William Hill set me a course paper on “Wool Growing and the Tariff.” I read a lot of the tariff speeches and got a new sidelight on the uses to which economic theory is adapted, and the ease with which it is brushed aside on occasion. Also I wanted to find out what really had happened to wool growers as a result of protection. The obvious thing to do was to collect and analyze the statistical data. If at the end I had demonstrated no clear-cut conclusion, I at least knew how superficial were the notions of the gentlemen who merely debated the tariff issue, whether in Congress or in academic quarters. That was my first “Investigation” — I did it in the way which seemed obvious, following up the available materials as far as I could, and reporting what I found to be the “facts.” It’s not easy to see how any student assigned this topic could do much with it in any other way.

                  A brief introduction to English economic history by A. C. Miller, and unsystematic readings in anthropology instigated by Veblen reenforced  the impressions I was getting from other sources. Everything Dewey was saying about how we think, and when we think, made these fresh materials significant, and got fresh significance Itself. Men had always deluded themselves, it appeared, with strictly logical accounts of the world and their own origin; they had always fabricated theories for their spiritual comfort and practical guidance which ran far beyond the realm of fact without straining their powers of belief. My grand aunt’s theology; Plato and Quesnay; Kant, Ricardo and Karl Marx; Cairnes and Jevons, even Marshall were much of a piece. Each system was tolerably self-consistent — as if that were a test of “truth”! There were realms in which speculation on the basis of assumed premises achieved real wonders; but they were realms in which one began frankly by cutting loose from the phenomena we can observe. And the results were enormously useful. But that way of thinking seemed to get good results only with reference to the simplest of problems, such as numbers and spatial relations. Yet men practiced this type of thinking with reference to all types of problems which could not be treated readily on a matter-of-fact basis — creation, God, “just” prices in the middle ages, the Wealth of Nations in Adam Smith’s time, the distribution of incomes in Ricardo’s generation, the theory of equilibrium in my own day.

                  There seemed to be one way of making real progress, slow, very slow, but tolerably sure. That was the way of natural science. I really knew nothing of science and had enormous respect for its achievements. Not the Darwinian type of speculation which was then so much in the ascendant — that was another piece of theology. But chemistry and physics. They had been built up not in grand systems like soap bubbles; but by the patient processes of observation and testing — always critical testing — of the relations between the working hypotheses and the processes observed. There was plenty of need for rigorous thinking, indeed of thinking more precise than Ricardo achieved; but the place for it was inside the investigation so to speak — the place that mathematics occuped in physics as an indispensable tool. The problems one could really do something with in economics were problems in which speculation could be controlled.

                  That’s the best account I can give off hand of my predilection for the concrete. Of course it seems to me rather a predilection for problems one can treat with some approach to scientific method. The abstract is to be made use of at every turn, as a handmaiden to help hew the wood and draw the water. I loved romance — particularly William Morris’ tales of lands that never were — and utopias, and economic systems, of which your father’s when I came to know it seemed the most beautiful; but these were objects of art, and I was a workman who wanted to become a scientific worker, who might enjoy the visions which we see in mountain mists but who trusted only what we see in the light of common day.

*  *  *  *  *  *  *  *  *  *  *

                  Besides the spice of rationalizing which doubtless vitiates my recollections — uncontrolled recollections at that — this account worries me by the time it is taking yours as well as mine. I’ll try to answer the other questions concisely.

                  Business cycles turned up as a problem in the course of the studies which I began with Laughlin. My first book on the greenbacks dealt only with the years of rapid depreciation and spasmodic wartime reaction. I knew that I had not gotten to the bottom of the problems and wanted to go on, so I compiled that frightful second book as an apparatus for a more thorough analysis. By the time it was finished I had learned to see the problems in a larger way. Veblen’s paper on “Industrial and Pecuniary Employments” had a good deal to do with opening my eyes. Presently I found myself working on the system of prices and its place in modern economic life. Then I got hold of Simmel’s Theorie des Geldes — a fascinating book. But Simmel, no more than Veblen, knew the relative importance of the factors he was working with. My manuscript grew — it lies unpublished to this day. As it grew in size it became more speculative. I was working away from any solid foundation — having a good time, but sliding gayly over abysses I had not explored. One of the most formidable was the recurring readjustments of prices, which economists treated apart from their general theories of value, under the caption “Crises.” I had to look into the problem. It proved to be susceptible of attack by methods which I thought reliable. The result was the big California monograph. I thought of it as an introduction to economic theory.

*  *  *  *  *  *  *  *  *  *  *

                  This conception is responsible for the chapter on “Modern Economic Organization.” I don’t remember precisely at what stage the need of such a discussion dawned upon me. But I have to do everything a dozen times. Doubtless I wrote parts of that chapter fairly early and other parts late as I found omissions in the light of the chapters on “The Rhythm of Business Activity.” Of course, I put nothing in which did not seem to me strictly pertinent to the understanding of the processes with which the volume dealt. That I did not cover the field very intelligently, even from my own viewpoint, appears from a comparison of the books published in 1913 and 1927. Doubtless before I am done with my current volume, I shall be passing a similar verdict upon the chapter as I left it last year.

*  *  *  *  *  *  *  *  *  *  *

                  As to the relation between my analytic description and “causal” theory I have no clear ideas — though I might develop some at need. To me it seems that I try to follow through the interlacing processes involved in business expansion and contraction by the aid of everything I know, checking my speculations just as far as I can by the data of observation. Among the things I “know” are the way in which economic activity is organized in business enterprises, and the way these enterprises are conducted for money profits. But that is not a simple matter which enables me to deduce certain results — or rather, to deduce results with certainty. There is much in the workings of business technique which I should never think of if I were not always turning back to observation. And I should not trust even my reasoning about what business men will do if I could not check it up. Some unverifiable suggestions do emerge; but I hope it is always clear that they are unverified. Very likely what I try to do is merely carrying out the requirements of John Stuart Mill’s “complete method.” But there is a great deal more passing back and forth between hypotheses and observation, each modifying and enriching the other, than I seem to remember in Mill’s version. Perhaps I do him injustice as a logician through default of memory; but I don’t think I do classical economics injustice when I say that it erred sadly in trying to think out a deductive scheme and then talked of verifying that. Until a science has gotten to the stage of elaborating the details of an established body of theory — say finding a planet from the aberrations of orbits, or filling a gap in the table of elements — it is rash to suppose one can get an hypothesis which stands much chance of holding good except from a process of attempted verification, modification, fresh observation, and so on. (Of course, there is a good deal of commerce between most economic theorizing and personal observation of an irregular sort  — that is what has given our theories their considerable measure of significance. But I must not go off into that issue.)

*  *  *  *  *  *  *  *  *  *  *

                  Finally, about the table of decils. One cannot be sure that a given point on the decil curves represents the relative price of just one commodity or the relative wage of just one industry. For it often happens, particularly near the center of the range covered, that several commodities and industries have identical relatives in a certain year and these identical relatives may happen to be decil points. But I think the criticisms you make of my interpretations of the movements of the decils are valid. Frederick C. Mills makes similar strictures in his Behavior of Prices, pp. 279 following, particularly p. 283 note. The fact is that when writing the first book about business cycles I seem to have had no clear ideas about secular trends. The term does not occur in the index. Seasonal variations appear to be mentioned only in connection with interest rates. Of course certain rough notions along these lines may be inferred; but not such definite ideas as would safeguard me against the errors you point out. What makes matters worse for me, I was behind the times in this respect. J.P. Norton’s Statistical Studies in the New York Money Market had come out in 1902, I ought to have known and made use of his work.

                  That is only one of several serious blemishes upon the statistical work in my 1913 volume. After Hourwich left Chicago, and that was before I got deep into economics, no courses were given on statistics in my time. I was blissfully ignorant of everything except the simplest devices. To this day I have remained an awkward amateur, always ready to invent some crude scheme for looking into anything I want to know about, and quite likely to be betrayed by my own apparatus. I shall die in the same sad state.

*  *  *  *  *  *  *  *  *  *  *

                  I did not intend to inflict such a screed upon you when I started. Now that I have read it over, I fell compunctions about sending it. Also some hesitations. I don’t like the intellectual arrogances which I developed as a boy, which stuck by me in college, and which I shall never get rid of wholly. My only defense is that I was made on a certain pattern and had to do the best I could — like everybody else. Doubtless I am at bottom as simple a theologian as my grand aunt. The difference is that I have made my view of the world out of the materials which were available in the 1880’s and ’90’s, whereas she built, with less competent help than I had, out of the material available in the farming communities of the 1840’s and ’50’s. Perhaps you have been able to develop an outlook on the world which gives you a juster view than I had of the generations which preceded me and of the generation to which I belong. If I did not think so, I should not be sending you a statement so readily misunderstood.

Ever yours,
Wesley C. Mitchell.
(Copy by J.M.C. )

Source: Columbia University Libraries, Special Manuscript Collections. Mitchell, W.C. Collection. Box C8, Ch-Ec. Folder “Clark, John Maurice v.p., 8 Apr 1926 & 21 Apr 1927 to Wesley C. Mitchell 2 a.l.s. (with related material)”.

Image: Wesley Clair Mitchell.  Detail from a departmental photo dated “early 1930’s” in Columbia University Libraries, Manuscript Collections, Columbiana. Department of Economics Collection, Box 9, Folder “Photos”. Colorized at Economics in the Rear-view Mirror.