Charles Franklin Dunbar.

Economic essays online

. (page 4 of 40)
Online LibraryCharles Franklin DunbarEconomic essays → online text (page 4 of 40)
Font size
QR-code for this ebook

cussion of currency and finance formed no part of the training of
men for national politics. In the legislatures of the states
questions of this class were dealt with by men of inferior order,
or by those who were only anxious to make their mark and go up
into a broader field; but they had ceased to be national questions
which could repay the political aspirants to national office for any
considerable expenditure of time or thought. Congress had
nothing to do with the currency, except to settle the weight and
fineness of the coin, and government finance resolved itself into
paying all demands in gold from a treasury which generally over-
flowed, and borrowing upon easy credit in an exceptional case of
difficulty. It is not surprising that, when the war for the Union
compelled the government to deal comprehensively and at short
notice with questions of finance and currency in their most
threatening form and on a gigantic scale, we had no leading man
in public life who could speak upon them authoritatively or com-
mand general attention. The bald confessions of unfamiliarity with
what had become the vital topics of the hour are a humiliating


part of the record ; but what other outcome from our public his-
tory was possible? We need not characterize in detail the con-
sequences of this misfortune. Victory came in season to avert
the ruin with which the gross violation of the plainest economic
principles threatened the nation, and the task of repairing the
mischief and returning to specie was set before us. For eight
years, however, it was overshadowed by the business of Southern
reconstruction, and was habitually treated by men in public life
as a topic of the second order, which could wait for settlement
at a more convenient season, and as to which perhaps one need
not yet make up his mind. The financial catastrophe of 1873
suddenly brought the currency question to the front, as one which
must be answered if we would secure the return of stable pros-
perity ; and the number of men, either in legislative or in execu-
tive position, who were then able to show that they had fairly
investigated it and thought it out in the light of scientific prin-
ciples, might almost be counted upon the fingers. The discus-
sions which followed showed that the mass of public men were
dealing with it, either with the audacity of unconscious ignorance
or with the timidity of that which is conscious. The published
debates exhibit our Congress for two sessions laboring painfully
with sophisms which other countries disposed of half a century
ago, and finally resorting to action which fails to be mischievous
only because it has thus far been nugatory. The majority still
drift upon the sea of doubt, without compass and without any
directing impulse save such as may come from the veering gusts
of popular feeling ; and it is with this as the prevailing condition
of opinion among the majority of our most conspicuous leaders
on both sides, that we finish the first century of our national

But that our statesmen have been incapable of taking any con-
sistent action upon the currency question, and that every material
interest is thus placed at the mercy of chancCj is not, to our mind,
the most serious evil resulting from this state of things. What
appears to us most threatening is the sceptical turn thus given to
opinion among the mass of our people. What is the ordinary
voter to think of a subject which he himself finds dark, and as to
which those whose opinion he is apt to follow either talk anti-
quated nonsense to him, or tell him that nothing is settled ? Add


to this the fact that one-half of the present political generation
have come upon the stage since we abandoned specie, and
have had no other experience to enlighten them, and we cannot
wonder that the currency seems to the mass a subject on which
mankind have learned nothing, and that the plainest proposition
of reason confirmed by history may any day be talked about as
"an open question," The scepticism of searching inquiry is not
to be feared ; but the incredulity of ignorance multiplies tenfold
the difficulty of the task of restoring the financial health of the

In the case of the currency question, then, it appears that the
subject from the first came before our public men in a form which
seemed to make its political bearings too important to be sub-
ordinated to any scientific treatment. The same might be said of
the tariff discussion, which, apart from its inevitable complication
with individual interests, has never failed also to present itself in
such sectional or party relations as to make its settlement turn
largely upon far other considerations than those of general prin-
ciple. Whether this complication has been the result of some
untoward chance, or has come from the errors of our statesmen
themselves, we need not now inquire ; in either case the effect is
the same. Under our form of government these two questions of
currency and tariff cover most of the space within which those
charged with national affairs have been called upon to investigate
and apply economic laws. No doubt, important topics lie within the
domain of state legislation ; but there the adoption of any general
theory, however sound, has been impracticable from the nature of
the case. It is a part of the price which we necessarily pay for
the advantages of our federal system, that under it questions of
essentially general interest, such as those of taxation, education, or
poor-relief, are classed as merely local, and are therefore not sub-
ject to any one controlling authority. With the two great ques-
tions of national economy, then, prejudged or inextricably bound
up with other issues, it is hardly surprising that our statesmen
should have neglected the investigation of this subject, so that it
is to-day easier to find well-read economists among our men of
business than among public men of equally good general educa-
tion, although the inducement to such pursuits should not properly
be any stronger in one case than in the other.


It is necessary, however, to look deeper than this for the reason
of the general sterility of American thought upon this subject, and
the failure of our scholars as well as statesmen to contribute our
share in the progress made by the world. For the explanation
we must look to the causes which have made the progress of the
United States so slow in philosophy, in the pure mathematics,
and in abstract science generally, in philology, in the more recon-
dite historical investigations, and in the higher generalizations in
physics. Our position as a nation charged with the business of
subduing a new world, and the rapid material development which
has attended our success in this work, have given to our life for
the greater part of the century an intensely practical aspect.
Practical objects, and pursuits which are believed to be practical,
have occupied the first place, almost as a necessity of our external
conditions. It has been well remarked that some of our best
achievements in natural sciences have been in those directions in
which the promise of some material gain has afforded the stimu-
lus, — as, for example, in economic geology, to which so powerful
an impulse has been given by our eagerness to know the resources
offered by our vast territory. Under such an influence as this it
is but natural that the moral sciences should develop slowly. Nor
could we expect that among these sciences political economy
should outstrip the others. Broad as are its applications in the
actual affairs of life, it is mastered and fruitfully studied best as an
abstract inquiry. The thorough student soon finds that it is nec-
essarily an investigation as to the direction which human volitions
will take under given conditions, and that for its successful prose-
cution he must first direct his attention to the mind itself, finding
in the complex phenomena of society the test but not the grounds
for his conclusions. Especially has this been the necessary char-
acter of the study during the last century, while the work to be
done was that of determining the fundamental principles of the
science. Such a pursuit, at any rate in the stage from which it
has hardly yet emerged, must needs appear remote from the pres-
ent interests of a nation like ours, and could not offer an attractive
field for scholars under the influence of a young and vigorous
national life. Thus it has happened that not a few of our inquirers
have either been unwilling to recognize this essentially abstract
character of the investigation, and so have vainly sought to re-


model the science, or else have strained its conclusions by the
attempt to give them a practical bearing in advance of what their
development would allow. In either case the wrong road has
been taken, and the result has been failure and disappointment.
Hence, too, the occasional aspirations for an American political
economy, or for a peculiarly national economy under any name,
ending in nothing but fresh proof of the impossibility of stating
the apphcation of any scientific law under special conditions,
until the nature of the law has first been thoroughly investigated,
abstraction being made of all accidents of time, place, or disturb-
ing influences.

Indeed, the strongly practical direction given to every pursuit
in American life has not only served to turn our statesmen and
scholars away from work in the field of political economy, but
has also given a marked character to such work as they have
done in that field. In the application of settled or accepted prin-
ciples to special questions, particularly to questions of importance
in politics, many of our writers have shown great skill. Examples
of this kind of success in a narrowed field of definite practical
relations may be found in the writings of Hamilton and Gallatin
already referred to, in Henry Lee's report written in 1827 for the
Boston committee in opposition to an increase of duties, in the
valuable reports of Mr. Wells on the revenue system, in E. B.
Bigelow's strong presentation of the protectionist argument, and
in Grosvenor's apphcation of the crucial test, " Does Protection
Protect .'' " It is hardly too much to say that our best work is
to be found in our pamphlets and occasional essays, and not in
our systematic treatises, so powerful has been the stimulus of
practical objects, and so weak the inducements to abstract philo-
sophical inquiry. To the same influence must we ascribe the
exceptional success sometimes attained in statistical inquiry, from
the famous report of John Quincy Adams in 182 1 on weights and
measures, to some important discussions by Dr. Jarvis, and the
admirable work done by General Walker on the census of 1870.

The fact must be taken into account, moreover, that deficiency
in our comprehension of scientific reasoning and conclusions is
perhaps less readily realized in political economy than in any
other science. That its vocabulary is drawn from the language of
popular discourse, and is therefore peculiarly liable to equivocal


use and consequent vitiation of the whole process of reasoning,
unless strictly guarded, has not only been an abundant source of
misconception and error among economists themselves, but causes
those who are unfamiliar with the subject to think that they have
mastered its terms long before they can fairly claim any such
mastery. The conceptions with which political economy deals
are also subjects of everyday contemplation, on which every one
must needs reason more or less, and as to the bearing of which
in their broad scientific relations self-deception is peculiarly easy.
The senator who calmly announced a couple of years ago that he
had given his leisure for an entire fortnight to the currency ques-
tion, and had thus been enabled to sound its depths, presented,
after all, only an egregious type of the difficulty with which in
this subject one acquires the knowledge that he knows nothing.
This does not spring from any peculiar obscurity to be found in
the subject itself, but from the fact that in dealing with it the
mind is apt to begin with the tendency to misapprehension to
which we have referred, which must first be overcome; just as
the Copernican theory had to make its way against the supposed
ability of every man to determine its falsity by the seeming evi-
dence of his own eyes. And while this is not a peculiarity of the
study of political economy in our own country or our own lan-
guage, but everywhere impedes its progress, it is easy to say that
among a people who are predisposed to neglect, or to examine
only superficially, whatever does not offer directly practical re-
sults, a science which under the most favorable circumstances is
subject to such embarrassment, must lend itself with especial
readiness to the prevailing disposition. Americans are disposed
to neglect the higher mathematics as unpractical ; but they do not
imagine that they understand the subject. Political economy they
are disposed to neglect for the same reason, and all the more
because they flatter themselves that they already have it at

The failure of the American mind to aid in the development
of political economy is not then necessarily the result of any lack
of original adaptation, but a natural effect of our environment.
And we must observe that while material conditions have thus led
to the neglect of the science, they have also led our people, schol-
ars as well as others, into some serious misconceptions as to the


direct bearing of economic laws. From our holding the position,
unique among the great powers, of a people developing a rich
and virgin territory, the conclusion often seems to be drawn that
if the operation of such laws be not actually suspended in the
United States, they can at any rate be disregarded with compara-
tive safety. Few men outside of Congress or off the political
stump will maintain the absurdity that for a new country like ours
there is a different set of such laws from those which obtain in
the Old World; but there is an unquestionably great amount of
mischief done by the knowledge that the lusty growth of the
nation will repair the injuries caused by economic blunders.
Whatever follies our statesmen commit, the bounty of nature and
the rapid increase of numbers incident to this stage of our growth
soon cure the evil ; its traces are soon overgrown, and we seem
to ourselves to have suffered nothing. " Are we not richer and
our states more populous than ever .'' " it is asked ; " how then
can we be said to have lost .'' " And it is not surprising that the
sense of risk to be incurred by the mistakes of ignorance should
be weakened, when it is found by experience that few such mis-
takes can bring our national expansion to an actual stop. " Where
the concerns of a nation are conducted in a deep, strong, favor-
able current of the national energies and impulses," writes a
critic in this review of the last generation, " progress may be
made, notwithstanding the mismanagement of the sails, oars,
and rudder. This is precisely and preeminently the case in the
United States, where the spontaneous, productive, onward ener-
gies are in greater activity than in any other country." The idea
thus frankly avowed, that the management of our resources is of
little account, so long as we find ourselves sweeping along with
the current of growth, has been for years the habitual consolation
of our public men, if not an article of their faith. That it easily
leads to indifference as to the monitions of economic law is suffi-
ciently obvious.

How complete our disregard of economic law has been, and
how little we owe our brilliant advance in wealth and power to
the wisdom with which we have used our fortunate position, may
easily be seen. The manner in which the currency, the life-blood
of industrial circulation, has from the first been left practically
to shift for itself has already been noticed. As a consequence


there is no evil incident to a vicious currency, from the inability
to procure the means of exchange for daily transactions on the
one hand, to the wildest abuse of depreciated paper on the other,
to which our body politic has not been subjected. And that the
vigor of youth has enabled it to survive such disorders and even
to recover its thriving condition has only seemed to give fresh
encouragement to rash experiments on its endurance. In the
matter of protection to manufactures neither protectionist nor
free-trader would be willing to take the responsibility for the
general result ; for in fact neither has been able to secure adhe-
rence to his system. Six radical changes of our customs tariff,
six reversals of policy, have occurred in the last sixty years. The
present tariff, dating from 1861, already approaches the extreme
of longevity, and, if we may judge from the past, must soon fol-
low its predecessors, each of whom once appeared as strong and
as firmly established as itself. In these successive revolutions we
have seen industries artificially excited to a premature and un-
healthy activity, and we have seen them laid waste by the
withdrawal of the stimulus. Who can measure the misdirected
labor, the destroyed capital, to repair which we have fallen back
after each change of tariff upon those natural resources which no
folly of management could exhaust ! If we turn from the tariff
to our internal taxation, where the adoption of sound principles
has rarely been embarrassed by sectional or political considera-
tions, the state of things is still more extraordinary. Down to the
year 1861 the United States appear to have learned nothing as to
taxation. Their burdens were generally too Hght to cause serious
uneasiness, except in some cities, and the average legislature is
tolerably well steeled against the complaints of city interests.
Since the year 1861 the rapid increase of taxes in every form
has attracted the attention of our people, but they are not yet
sensible that their methods of taxation are antiquated and the
machinery inefficient, that their systems lead to extraordinary
inequalities, and often rest upon theories which fail of being
ridiculous only because of their flagrant injustice. Ingenuity in
preventing the escape of any taxable person or thing has been
carried to a high point ; the art of adjusting the burden so *that
it may be most easily borne has never been studied by any state
legislature or by Congress. That our people have been able to


endure this neglect of one of the first duties of good government,
is due solely to the abundance of their resources, which for the
present are able to withstand the effects of such waste by taxa-
tion as, in a country with lower profits, would be a serious check
upon industry. Here, again, we rely for impunity on the rude
health of youth. And as a final illustration of our easy-going
defiance of sound principle, we may cite the continuance of slav-
ery as the industrial system of the Southern states, until its un-
expected destruction by war. Nothing can be more certain than
that slavery was an economic blunder of the first magnitude. It
notoriously stunted the social development of the communities
where it existed, checked all tendency to diversification of em-
ployments by discouraging all pursuits except those least ad-
vanced, and craved, for its successful working, constant transfer
of its exhausting cultivation to fresh soil. Leaving out of view
its moral aspect, there can be no doubt that slavery, economically
considered, was the most efficient system yet seen for simply
taking the cream from productive powers which under wise
management are of unlimited duration. What this perseverance
in a wasteful use of our resources has cost us, directly and indi-
rectly, may be partly seen by comparing the splendid natural
advantages of the Southern states with their present impoverished

It may doubtless be said that we are not the only people
who in the past century have committed errors of this kind and
on a great scale. But we are the only people who with a light
heart have trusted to the energy of growth to insure us against
the effects of present mistake, and have therefore steadily neg-
lected to cultivate one of the most important branches of the
science of government. As a consequence, we find ourselves
to-day absolutely incapable of following out, for example, such a
firm and judicious course of management as that by which France
is reestablishing her finances on a solid basis, after a calamity
in which all but the name of the French nation seemed to have
disappeared. Not forced like others to count closely with our
resources, we have in effect forgotten how to count with them at
all, and are every day confessing our inability to deal with a prac-
tical problem, which has been promptly answered by others, far
less favored, either in material or political conditions, than our-


selves. That under such circumstances we should have added
nothing to the world's knowledge of political economy is not
surprising. The surroundings have not been incompatible with
the prosecution of such a study, but they have not been such as
to promote it. For that purpose something more is needed than
the mere presence of great resources and of rapidly increasing
wealth. The profound significance of the investigation as bear-
ing upon the right use of resources must be realized, as it has not
been among us, before we can expect that it will be pursued with
much effect. Elsewhere this lesson has been impressed upon
statesmen and scholars by the sternness of nature or the approach
to the limits of her bounty, or by the necessity of dealing with
the consequences of generations of misrule. But it is a lesson
no more easily learned by a nation in the full luxuriance and
strength of its early growth, than is that of obedience to the laws
of physical health in the first flush of youth.

As the result of our failure to reckon closely with forces which
will finally assert their presence, we find ourselves, at the close of
our first century, falling manifestly short of the development to
which our exuberant vitality might easily have carried us. In
every case it was with seeming impunity that we offended against
the laws of our well-being ; but as the consequence of the whole,
our statisticians are now accounting for missing millions of popu-
lation, and for the slackening of the growth of wealth. The youth
to which we owe our power of ready recovery from the effects of
all transgressions is also passing away, and it is with a sort of
angry surprise that our people note their increasing sensitiveness
to the penalties with which economic error is visited. This leads
us to the remark, in conclusion, that most of the conditions to
which we have ascribed the failure of the United States to con-
tribute to the progress of political economy, being incident to the
earUer stages of national life, may henceforth be expected to act
with diminishing force. The period of the most rapid develop-
ment of wealth once passed, we may expect the practical pursuits
of life, or those which now seem to be such, to become less absorb-
ing, and the tendency to enter upon deeper and more abstract inves-
tigations to strengthen. Already in our older states, which are
farthest removed from the special conditions which characterize
the United States as a whole, we may trace the effects of this


tendency in their increased devotion to sound learning and the arts
for which the newer states, still in the hurry of swift growth, seem
to have little leisure. As this movement strengthens, we may
expect to see the moral sciences generally rising towards that pro-
portionate development with respect to physical science which
obtains in older countries, and among the moral sciences poHtical
economy advancing at least as rapidly as any. To this we shall be
driven by material considerations as powerful as those which have
thus far restrained our progress in this subject. As our condition
approaches more and more to that of old countries, our ability to
rely upon the increasing abundance of our resources to cure all
mistakes will disappear, and the mistakes themselves will become
obviously costly and formidable. In our case, indeed, they may
easily become more formidable in their consequences than else-

Online LibraryCharles Franklin DunbarEconomic essays → online text (page 4 of 40)