Alexander Hamilton, Daniel Raymond, Matthew Carey, Hezekiah Niles, and Frederick List. Hamilton's work and views are well known; Niles and Matthew Carey were pamphleteers of considerable note in the first third of the nineteenth century; and List, who, in the view of some authorities, planted the seeds of the German historical school, unquestionably obtained his distinctive nationalistic views about political economy in the United States, and first formulated them in his Outlines of American Political Economy, published in 1827.1

Daniel Raymond, however, of all the American writers noted, is the least known, and yet the author of the first American treatise on political economy in which a distinctively American system of economic thought is suggested. Raymond's first book, Thoughts on Political Economy, appeared in 1820; a second edition, under the title Elements of Political Economy, appeared in 1823, and the latter was reprinted with slight changes in 1836 and 1840. The essence of Raymond's system is found in his conception of wealth. Wealth, he maintained, is not an aggregate of exchange values but the opportunity to acquire the material comforts of life by labor., The English political economy, in Raymond's view, was a study of private as opposed to political or national economy. Raymond emphasized the distinction between individual and social wealth, and maintained that the laws of wealth laid down by Adam Smith were untrue of a nation conceived as a unit. The interests of particular individuals, or particular classes, he argued, do not always coincide with the interests of the nation as a whole, and the latter, he concluded, will be best advanced by developing all the national powers to their widest possible extent. He was thus a warm advocate of protection as opposed to laissez-faire.

Raymond's views had so impressed Matthew Carey that he offered to support a chair of political economy at the University of Maryland if the University would permit Raymond to fill it. Matthew Carey's son, Henry C. Carey (1793-1879), by far the most influential of the early American economists, was in like manner probably influenced by the teachings of Raymond. Carey was not only an earnest champion of protection, but an indefatigable critic of classical economic doctrines. He denied the truth of the Malthusian principle and the law of diminishing returns; objected to the Ricardian theory of rent; and maintained that the value of a commodity depends upon the cost of reproduction rather than the cost of production, as was, he thought, laid down in the classical theory of value. Carey entertained a concept of wealth very similar to that of Raymond, and in some parts of his work adopted methods of investigation which brought him in close touch with the sociologists and the German historical economists. The keystone of his economic system is the doctrine of association. The

1 List returned to Germany and was there a forceful writer and agitator for German unity, and is identified rather with the history of economic thought of Germany than with that of the United States.

increasing mastery of man over nature, or the increase of wealth, Carey held to be dependent upon the increasing efficiency resulting from a compact, homogeneous population, in which agriculture and manufacture are conducted side by side, in which the homemarket idea is carried out in the most complete way, and in which, to be brief, the association of industrial and social units is most intense and intimate. It can be readily understood why the economic philosophy of Carey was so inimical to free trade at every point.

The Austrian School. The protests against the classical economists which we have been considering were directed largely against the narrow scope and deductive methods of the classical school. The Austrian economists represent a reaction not against their methods, but against the conclusions, and particularly against the theory of value of the classical school. The great contribution of the Austrian school is the marginal utility theory of value, which has been most assiduously applied in economic analysis by a group of Austrian economists, among whom may be specially mentioned Menger, Wieser, Sax, and Böhm-Bawerk. But the marginal utility theory of value was advanced almost simultaneously, about 1871, by the English economist Jevons, the Austrian economist Menger, and the French economist Walras.1

The Austrians have been a leading force in producing what is not inaptly termed a renaissance in theory, although, as stated, they indorsed the deductive and abstract methods of the classical economists. The classical theory put the emphasis upon supply or the conditions of supply, maintained that cost of production determines value, and found the ultimate measure and explanation of value in the pain and sacrifice of labor. The Austrians maintain that utility, the pleasure or satisfaction derived from consumption, is the ultimate cause and measure of value; they emphasize demand as the English economists emphasized supply; and hold that value determines cost of production and not the cost of production, value. Capital, they conclude, receives its value from the finished product instead of giving value to that product. The work of this school has tended to put the consumer in the place primarily occupied by the capitalist as the center of discussion in economic theory. The work of the Austrians has had a profound influence upon economic writing in the United States.

Present Condition of Economic Thought. The net effect of all these protests against the classical English economists has been to introduce a welcome catholicity into the methods of economic investigation. The historical school emphasized the evolutionary standpoint and the necessity of minute investigation of the facts of industrial life, while the work of the Austrians operated to strengthen and explain the necessary place of deduction in economic analysis.

In reality the marginal utility theory had been explained many years before this by a number of obscure writers whose ideas, however, never affected the main current of economic thought.

Today the ordinary economist employs either method, or both, as the subject-matter demands, and the controversy about methods has become a thing of the past. With respect to the theory of value, neither supply nor demand, neither cost nor utility, neither the capi talist nor the consumer, is now said to exert a predominating influence in the determination of values. The Austrian school, it is now understood, supplied a needed corrective without revolutionizing the earlier theory of value. The Austrians themselves are seen to have been guilty of laying exaggerated emphasis upon the consumer's influence upon value and price, and there is reason to believe that their analysis is based in some degree upon a faulty psychology.

So, similarly, with respect to the scope of economics. The attempt of the classical economists to isolate an economic man ruled entirely by an enlightened self-interest and unaffected by political, ethical, and humanitarian impulses, is recognized to have been a mistake. But economics has never given itself to a complete study of politics or ethics. It considers ethical and political phenomena when these cannot be dissociated from economic phenomena, but insists, nevertheless, upon the separation of economics from ethics, politics, and sociology. We recognize that these fields are not wholly or clearly differentiated, but we recognize just as clearly that a division of labor is necessary if accurate results are to be achieved. Furthermore, this division of labor is showing itself progressively within the limits of economics itself, as it has shown itself in all growing sciences. Indeed, the present condition of economic thought was so accurately predicted by W. S. Jevons, in 1876, that his words written in the midst of the controversy among the adherents of the deductive, historical, mathematical, and sociological methods of investigation - may well be employed to picture the condition of the science of economics as it exists today:

"As I have previously explained, the present chaotic state of economics arises from the confusing together of several branches of knowledge. Subdivision is the remedy. We must distinguish the empirical element from the abstract theory, from the applied theory, and from the more detailed art of finance and administration. Thus will arise various sciences, such as commercial statistics, the mathematical theory of economics, systematic and descriptive economics, economic sociology, and fiscal science. There may even be a kind of cross subdivision of the sciences; that is to say, there will be division into branches as regards the subject, and division according to the manner of treating the branch of the subject. The manner may be theoretical, empirical, historical, or practical; the subject may be capital and labor, currency, banking, taxation, land tenure, etc., not to speak of the more fundamental division of the science as it treats of consumption, production, exchange, and distribution of wealth. In fact, the whole subject is so extensive, intricate, and diverse, that it is absurd to suppose it can be treated in any single book, or in any single manner." i

1 Jevons, Theory of Political Economy, 3d ed., [ pp. xv, xvi.

APPENDIX B

SUGGESTIONS FOR STUDENTS AND TEACHERS

SOME teachers of economics rely chiefly upon classroom discussions of assignments in a textbook, supplemented, possibly, by certain other reading requirements. Others make large use of lectures and of problems and brief reports assigned in connection with particular subjects discussed in the class. Some require the student to write one or more longer essays or themes on specific topics. In this book specific references, questions, and problems have been appended to each chapter. The aim has been to list only books and papers that have value in themselves and that have a direct bearing upon the subject matter of the respective chapters. References to parallel discussions in other elementary textbooks have for the most part been avoided, the aim being to enable the student to extend his inquiries by reading more advanced and comprehensive treatments of particular problems.

There is no one "best way " of teaching economics, for the methods used must depend very largely upon the size of the classes and the maturity of the students. It has been the experience of the writers, however, that whatever the relative degree of emphasis put upon lectures, classroom discussions, and assigned problem work of different sorts, mastery by the student of one book on general economics, or at least of so much of it as treats of fundamental economic principles, is an essential part of every introductory course in the subject. When pressed for time, the teacher using this book may find it desirable to omit all of it save Book II, "Principles and Problems." When more time is available, it may be deemed wise to include discussions of certain subjects not treated in this volume. "The economic problems of municipalities," "the elements of statistical method," "the problems of poor relief," "the general principles of market organization," are a few among many possible supplementary topics.

Valuable suggestions on the teaching of elementary economics will be found in various papers and discussions printed in the Journal of Political Economy, Vols. xvii-xxii (1909-1914). Some help may also be gained from papers by C. J. Bullock (Education, Vol. xi); F. R. Clow (Economic Studies, Vol. iv); R. F. Hoxie (Journal of Political Economy, Vol. ix); H. R. Mussey (Educational Review, Vol. xi); and H. W. Thurston (School Review, Vol. iv).

The problem of making an adequate amount of supplementary reading available to students in large classes has been made easier to solve by the publication of volumes of excerpts, designed for this particular use. (W. H. Hamilton, Current Economic Problems; L. C. Marshall, C. W. Wright, and J. A. Field, Materials for the Study of Elementary Economics; C. J. Bullock, Selected Readings in Economics; F. A. Fetter, Source Book in Economics.) Similar volumes have been made up of material on special economic problems. References to many of these will be found among the reading lists appended to the different chapters in this book.

General Works on Economics. — Other American textbooks on economics, of college grade, are: C. J. Bullock, Introduction to the Study of Economics; H. J. Davenport, Outlines of Economic Theory; F. A. Fetter, Principles of Economics; Irving Fisher, Elementary Principles of Economics; H. R. Seager, Introduction to Economics; and E. R. A. Seligman, Principles of Economics. Larger in scope or more detailed in their treatment of the general principles of economics are H. J. Davenport, Economics of Enterprise; F. A. Fetter, Economics (2 vols.); A. T. Hadley, Economics; F. W. Taussig, Principles of Economics (2 vols.). F. A. Walker's Political Economy (" advanced course "), although presenting a somewhat antiquated view of economic principles, will be found still to possess much interest for the reader.

Among English books, Alfred Marshall's Principles of Economics occupies a peculiarly authoritative position. It is characterized by an unusually intimate grasp of the facts of modern economic life and by a rare degree of ability in critical analysis. It attempts to reconcile many of the modern developments in economic analysis with the fundamental tenets of the political economy of David Ricardo and John Stuart Mill. Critics differ with respect to the degree of success with which Marshall has accomplished this reconciliation. Marshall's Principles is difficult for any but the mature student, and his own attempt at an abridgement, his Economics of Industry, is distinctly inferior to the larger work. Two excellent books that are based in large measure on Marshall's Principles are S. J. Chapman, Outlines of Political Economy, and A. W. Flux, Economic Principles. The comprehensive English work of J. S. Nicholson (Principles of Political Economy, 3 vols.) is even more conservative in matters of economic theory than is Marshall's. Edwin Cannan's Wealth is a small manual with an original and suggestive point of view. Distinctly the most readable and in many respects one of the best recent English works is P. H. Wicksteed's The Common Sense of Political Economy.

Special mention can be made of only a few of the more important German and Austrian works on general economics. Adolf Wagner's Grundlegung der politischen Oekonomie (2 vols.) is characterized by great