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UNIVERSITY OF CALIFORNIA
AT LOS ANGELES




y



SOCIAL SCIENCE



NATIONAL ECONOMY.






ROBT. ELLIS THOMPSON, M. A.,

PROFESSOR OF SOCIAL SClE>CE 'l}T t6e' UNIVERSITY OF" PENNSYLVANIA.

I I



" The true greatness of kingdoms and estates, and the means thereof, is an argument fit for
great and mighty princes to have in their hand ; to the end that neither by overmeasuring
their forces, they lose themselves in vain enterprises, nor on the other side, by undervaluing
them, they descend to fearful and pusillanimous counsels."— Lord Bacon.



PHILADELPHIA:
PORTER and COATES.

1875.









.:,,,,



Entered according to Act of Congress, in the year 1875, by

PORTER ?c COATES,
in the Office cf tho L'l/i-anan of Congress, at "Washington.



MEARS * DUSENBERY,

Electrotypera and Stereotypers.



SHERMAN * CO.
Printers.



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■ •
» *■ t *



1 G /



PREFACE.



The author of this book has had a twofold purpose in its
preparation, — -first, to furnish a readable discussion of the
subject for the use of those who wish to get some knowledge
of it, but have neither the time nor the inclination to study
elaborate or voluminous works ; secondly, and more especially,
to provide a text-book for those teachers — in colleges and else-
where — who approve of our national policy as in the main the
right one, and who wish to teach the principles on which it
rests and the facts by which it is justified. Of course the
book is not exactly what it would have been had either of
these purposes been kept singly in view. Some explanations
are given, which are here only because this is meant to be a text-
book ; there are discussions of a political kind, for instance,
in the second chapter, whose presence is necessitated by the
fact that no specific instruction in political philosophy is
ordinarily given in our college courses, and the teacher of
National Economy cannot always assume that his classes are
already familiar with the conception of the state in its full
significance. On the other hand, in the closing chapters, what
the theological controversialists used to call "the present
truth " has been stated and defended with a fulness which
would ordinarily be needless in a text-book, and it is sug-

4 <w



IV PREFACE.

gested ' that in the use of those chapters a selection be made,
and the rest omitted. But it is believed that nothing has been
inserted, and it is hoped that nothing has heen omitted, whose
insertion or omission will interfere with either purpose of the
book.

As a text-book for instruction prepared by an actual teacher,
who holds what he has called Nationalist views, the book
comes into comparison with very few others, because the writers
who hold those views have seldom been engaged in teaching.
Prof. Bowen of Harvard University is the only exception that
occurs to the writer, and the exception is more formal than
real. The present work embodies the results of an experiment
carried on for several years in the actual instruction of classes
in the University of Pennsylvania, and with a view .to ascer-
tain on what side the subject could be most successfully ap-
proached, and what form of statement would best convey
the lecturer's meaning. AVhile it covers much more ground
than was possible in a course of dictated lectures, those lectures
themselves, after having been repeatedly re-written and recon-
structed, form the basis of this book, and much of what is
here said grew out of questions asked and discussions started
during recitation.

The form of the book is entirely different from the ordinary
arrangement under the three rubrics, " Production, Distribu-
tion and Consumption." The method pursued of itself ex-
cludes that artificial and symmetrical distribution of its parts,
which — the author believes — sacrifices life and reality to
system. Whatever interest or other merits the book possesses
it owes to the method which underlies its construction. In so
far as the author has succeeded in being faithful to that
method, he must have succeeded also in showing that this
science is not or.3 that is " up in the clouds," but one that
touches on human life and the world's history at all points.



PREFACE. V

The author lias had access to the library of the late Stephen
Colwell, Esq., now in possession of the University, and only
regrets that he has not been able to use its treasures more
freely. It contains some eight thousand books and pamphlets,
whose collection occupied Mr. Colwell 's leisure till his death in
18G9, and it embraces nearly every important book, periodical
or pamphlet on the subject that had appeared in the English,
French or Italian languages, besides a large number in German
and Spanish.

Of the books that the author has drawn upon, the writings
of Mr. Henry C. Carey hold the first place. Then come those
of his school — Dr. Wm, Elder, Hon. E. Peshine Smith (es-
pecially in chapter III.), Dr. E. Diihring (chapter XL) and
Stephen Colwell (chapter VIIL). Free use has also been made
of the writings of Sir Henry S. Maine and Rev. E. Mulford
(chapter II.), W. R. Greg (chapter IV.), Cliffe Leslie, Maine
and E. Laveleye (chapter V.), W. T. Thornton (chapter VII.),
R. H. Patterson (chapter VIII,), J. Noble (chapter IX.), and
Edward Youug (chapter XII.). Other authorities are specified
in the notes appended to various paragraphs.

The author has everywhere sacrificed mere symmetry and
literary form to his conception of what the practical uses of
the book called for. The desire to be terse and brief has in
some places interfered with the flow and the evenness of the
style, and has made their perusal resemble a ride on a corduroy
road. This will be corrected, as far as possible, in a revised
edition, should any be issued.

A necessity of avoiding delay in publication has prevented
the preparation of an index, but it will be prepared if there
be opportunity for its use. To the same cause it is due that
some unimportant mistakes, in the spelling of names and the
like, have not been corrected.

For the correction of many small and some large errors,



VI PREFACE.

and for suggestions which have contributed to whatever com-
pleteness of discussion or other merits the book possesses, the
author is greatly indebted to the kindness of Cyrus Elder,
Esq., of Johnstown, to Joseph Wharton, Esq., and especially
to his friend Wharton Barker, Esq., to whose encouragement
this book owes its existence.

University of Pennsylvania,
March \bth 1875.



CONTENTS.



CHAPTER I.

(§§ 1-17.)
Definition and History of the Science .... 11

gg 1-6 : Definition ; gg 7-17 : History (g 7 : The Mercantile School ; g 8 :
The Physiocrates; gg 9-13: Adam Smith and the Cosmopolitical
School ; gg 14—17 : The Nationalist School).

CHAPTER II.

(§§ 18-35.)
The Development of Society. — The Nation ... 32

gg 1S-22 : The Growth of Society; gg 23-29 : The Nation, its Nature, its
Origin and its Vocation; gg 30-35: The Method and Goal of National
Progress.

CHAPTER III.

(§§ 36-48.)

"Wealth and Nature 41

g 36: Wealth and Value defined; gg 37, 38: Man's need of Nature;
gg 39-43 : Fertility a Process ; gg 44-48 : Human Stupidity may defeat
Nature's Beneficence.

CHAPTER IV.

(§§ 49-73.)
T he Science and Economy of Population .... 49

gg 49-52: The Growth of Wealth through the Growth of Numbers;
gg 53-55: The State* s Stewardship of Health and Life; gg 56-61:

(vii)



Viii CONTENTS.

Malthus's " Law of Population ;" gg 62-66 : It is refuted by expe-
rience ; gg 67-73 : It is against the reason of things.

CHAPTER V.

(§§ 75-100.)
The National Economy op Land 70

gg 74—77: Agriculture first extensive, then intensive; gg 78, 79: Petty
Tillage and its Antiquity; gg 80-83: History of English Land
Tenure; gg S4-S7 : The Causes and Consequences of the Decay of the
Yeomanry ; gg 8S-91 : The Land Tenures of France, Belgium, Prussia,
etc.; gg 92, 93: The Farmer's need of a Home Market; gg 94-97: Ri-
cardo's Theory of Kent; gg 98-100 : It is refuted by experience.

CHAPTER VI.

(§§ 101—129.)

The National Economy of Land (continued) : How
the Earth was occupied . 98

gg 100, 101 : The History of the Earth's Occupation refutes Ricardo ;
g 102: China: g 103: Egypt; g 104: The Shemites; g 105 : The
Sanskrit and Dravidic Races in India and Ceylon; g 106: The Per-
sians and Medes : ^ 1 U 7 : The Caucasus ; g 108 : Italy and its Islands ;
g 109: Greece; g 110 : Gaul (and France) ; g 111: Spain; gg 112-116 :
England; gg 117, 118: Scotland and its Islands; g 119: Ireland;
gl20: Belgium: g 121: Holland; g 122: Germany; g 123: Scandi-
navia; gg 124-127: The United States; g 128: Spanish America;
g 129 ; Conclusions.

CHAPTER VII.

(§§ 130-156.)

Tin: National Economy of Labor 129

g<> 130-135: The Rate of Wages and the "Wage-Fund" Theory;
\\ 136-141: The History of Labor; g 142: Labor gains more and
faster than Capital; gg 143-148: Some Obstacles to its Welfare;
gg 149-151 : Trades' Unions and Strikes: g 152: Arbitration; g 153:
Cooperation : g 154 : Industrial Partnerships; g 155 : Labor Banks;
g 150: Woman's Work and Wages.



CONTEXTS. IX

CHAPTER VIII.

(§§157-185.)
The Science and Economy of Money 156

% 157, 158: The Function of Money; gg 158-160: The "Precious
Metals" and their History; gg 161-104: The Theory of the Passivity
of Money ; gg 105-107: Paper-money; gg 108-171: Money of Ac-
count, Banking and Panics ; gg 172-176 : Banking in England : g 177:
Scotland: g 178: France; g 179: Land Banks; gg 180-185: Banking
in the United States.

CHAPTER IX.

(§§ 186—204.)
National Economy of Finance and Taxation . . 191

gg 186, 187 : The need of a Revenue ; § 1SS : Old Methods of getting it;
g 1S9 : The Sorts of Taxation : gg 190, 191 : Indirect Taxes : gg 192-
195: Direct Tnxation; g 196: Economy of Taxation; gg 197-200:
War Debts; gg 201-204: Our Treasury Notes.

CHAPTER X.

(§§ 205—225.)
The Science and Economy of Commerce .... 209

gg 205, 206 : The Function of the Trader: gg 207-210 : His Profits and
his Power; gg 211-213 : The Reform of Commercial Methods ; gg2l4-
218: The English Theory of International Exchanges; gg 219-223:
Refutation of its Current Form; gg 224, 225: True and False Com-
merce.

CHAPTER XI.

(§§ 226—268.)

The Science and Economy of Manufactures. — The
Theory 231

gg 226-228: The Natural Growth of a Varied Industry; gg 229-231 : The
Interferences with this Growth: gg 232-230: Political Theorists object
to State Resistance to these Interferences ; gg 237-239 : Tariffs, their
Methods and the Incidence of their Duties; \\ 240-243: Protection
benefits the Laborer; gg 244-251 : Protection benefits the Farmer;



X CONTENTS.

§§ 252-254: Protection makes Commerce equitable; §§ 255-261: Pro-
tection fosters Manufactures and reduces the Prices of their Products,
§§ 262-26S : Objections to Protection answered.

CHAPTER XII.

(§§ 269—329.)

The Science and Economy of Manufactures. — The
Practice 279

§ 269 : The Relation of Theory to Practice; § 270 : Protection in Anri-
quity; §271: Mediajval and Spanish; g^ 272-274 : France; §§275-
288: England; §287: Canada; §§ 288-290: Australia; §§291-297:
Ireland; §§298,299: India; §300: Belgium; §§301-304: Germany;
§305: Russia: §306: Sweden and Denmark; §307: Spain; §308:
Portugal; § 309: Turkey; §§ 310-329: The United States (§' 310:
Colonial Times; § 311 : The Revolution and the Constitution ; § 312:
Federalist Times; §§ 313, 314: AVar of 1812: §§ 315-317: Three
Democratic Tariffs ; § 318 : Hays, the Whig and Dallas Tariffs ; § 318 :
The Morril Tariff and the Rebellion ; §§ 319-329 : The Results of Pro-
tection).

CHAPTER XIII.

(§§ 330-346.)

The Science and Economy of Intelligence and
Education 383

§§ 330, 331 : The Need and Nature of a National Education; §§ 332-
335 : History of National Education ; § 336 : Our Public Schools ;
'0 337 : National Education has three Aspects ; §338: For the Culture
State; §§ 339, 340 : For the Jural State; §§ 341-346 : For the Indus-
trial State (§ 341 : Agricultural Education; §§ 342-6: Technical
Tra ; n;ng for Workmen engaged in Manufactures).



SOCIAL SCIENCE



AND



NATIONAL ECONOMY.



' CHAPTER 'FIRST;
Definition and History of the Science.

§ 1. Social Science (in the sense in which we shall use that
term) is that branch of the science of man which treats of man as
existing in society, and in relation to his material wants and
welfare. The related art by which this science is carried into
practice is the art of national or political economy. For sake
of definiteness, we prefer the former name.

§ 2. It has been objected by some that there can be no such
thing as a science of man. " Science," they say, " deals only
with things whose actions and reactions can be foretold, after we
have mastered the general laws by which they are governed.
The test of science, as Comte says, is the power of prediction.
There is a science of Chemistry, because there is a possibility
of foretelling what compound will be produced by the union of
any two elements or known compounds. But man is not
governed by laws of that sort ; he is a being possessed of affec-
tions and a will, which often act in the most arbitrary way, — in
a way that no one can foresee or predict."

This objection expresses a truth which can never be left out
of sight. If we ignore it we shall miss the conditions under
which man's material welfare is to be achieved. Men can never
be put to a good use of any sort, while they are regarded or

(xi)



12 SOCIAL SCIENCE AND NATIONAL ECONOMY.

treated as things. To do so will be to keep them poor, as well
as to degrade them morally; for the best work and the wisest
economy can be got out of them, only by bringing their free
will into play in the desirable direction.

But the possibility of constructing a science of man does not
rest upon the power to foresee the line of action that each indi-
vidual man will pursue. Man lives in a world which his will
did not create, and whose " constitution and course of nature "
he cannot change. If he act in violation of its laws, he must
take the penalty.; Thus if. he Jildftlge'in habits that contravene
the constitution of his moral nature* then moral degradation,
unhappiness and re.taor^e: w.ili;be tfie.'keces'sary results. Because
there is such a moral '" constitution and course of nature,"
there is a science of ethics, which enables us to predict, not the
conduct of each individual man, but the consequences of such
conduct, whatever it may be. And there exists equally for
society an economic "constitution and course of nature ;" the
nation that complies with its laws attains to material well-being
or wealth, and the nation that disobeys them inflicts poverty
upon itself as a whole, or upon the mass of its people. To learn
what those laws are, is the business-of the student of social
science ; to govern a nation according to them is the business
of the statesman, and is the art of national economy.

While men are beings possessed of a will, they ordinarily act
from motives. This is especially true of their conduct in re-
gard to their material welfare; in this connection the same
motives act with great uniformity upon almost all men. The
same wants exist for all ; the same welfare is desired by
all ; so that in this department of the science of man there
is so little caprice, that there is nearly as much power to foresee
and foretell what men will do, as in some of the sciences to fore-
see the actions of things. Nearly, but not quite so much ; for
while men are agreed as to the end here, there is room for dif-
ference of opinion as to the means, and consequently for variety
of action — for wise and unwise ways of procedure.

§ 3. What Social Science lacks in certainty, as compared with



SOCIETY A PRIMARY FACT. 13

the sciences of nature, it more than makes up in the higher
interest that it excites. Whatever science deals with our own
species and its fortunes, comes very close to each one of us.
Whatever it can tell us of the probable future of our nation,
or our race, concerns us more than predicted eclipses or chemical
discoveries. The most brilliant chemical or astronomical cer-
tainty could not move an Englishman so deeply as that bare
conjecture of Macaulay, that the time may come " when some
traveller from New Zealand shall take his seat on a broken arch
of Westminster bridge to sketch the ruins of St. Paul's." The
other sciences have an independent value ; but they interest us
most when we see that they have a bearing upon this, when
they open still larger utilities of nature to human possession,
and add to the welfare of mankiud. We ask the chemist:
" Will the time ever come when we will be no longer dependent
upon our coal deposits for light and warmth, but will be able to
produce both from the decomposition of water V We ask the
physicist: "Will we soon be able to use this subtle, omnipresent
electric force as a motive power ? Will we ever be able to
move through the air in manageable balloons, with speed and
safety ?" These are not the greatest problems that science has
to solve, hut they have an interest for us all that more abstract
questions can never possess.

§4. Our Science considers man as existing in society; we
find him, indeed, nowhere else. The old lawyers and political
philosophers talked of a state of nature, a condition of savage
isolation, out of which men emerged by the social contract,
through which society was first constituted. But no one else
has any news from that country; everywhere men exist in more
or less perfectly organized society ; — they are born into the
society of the family without any choice of their own ; and they
grow up as members of tribes or nations, that grew out of
families. All their material welfare rests upon this fact, and
must be considered in connection with it. The cooperation by
which they emerge from the most utter poverty to wealth, is
possible only within society and under its protection. Upon



14 SOCIAL SCIENCE AND NATIONAL ECONOMY.

the wise management of its general policy, and the efficiency
of its government, the welfare and the security of the indi-
vidual depend. The natural right to property, by which that
welfare is perpetuated from day to day, is realized only in
society. The transmission of the things that contribute to ma-
terial welfare from one generation to another — of real and per-
sonal property, of knowledge, skill and methods of industry —
would be impossible but for the existence of bodies that outlive
the single life, and aim at their own perpetuation. Vita brevis,
ars long a, or else each new generation would have to begin at
the foundation. Hence it is that this science begins with the
conception of social state ; not with the study of wealth in the
abstract, nor of the individual man and his desires.

At the fall of the civilized societies that made up the ancient world,
the useful arts and sciences would have perished in Western Europe
with the polities under which they were developed, had not the great
Benedictine order gathered both into their monasteries. These were
at once schools of learning and industrial establishments, and the only
places safe from the barbarous intrusions of half-Christianized bar-
barians.

§ 5. Social science reduced to practice is the art of national
economy. The term ecouomy, or house-thrift, does not mean
here wise saving, any more than it means wise spending. It is
borrowed from the management of the first and simplest of all
human societies, the unit out of which all other societies have
grown — the family. The adjective national prefixed indicates
the transfer of the conception of thrift to the society which
exists that justice may be done and natural rights be realized, and
which for that purpose is put in trust with the lives and the
material possessions of the whole people.

§ 6. National economy is much older than social science.
The former came into existence with the first nation, the latter
began to be studied about the time of the discovery of America,
and first gained a place as a recognised science a century ago.
There is nothing utmsual in this, for nearly every science lags
for a time behind its related art. Themistocles knew " how to
make a small city great" lung before Plato and Aristotle



ART BEFORE SCIENCE. 15

founded the science of politics. Dyeing, cooking, and a thousand
other applications of chemistry were in use from the earliest
historic periods; but the first centennial of Dr. Priestley's dis-
covery of oxygen, that laid the foundation of that science, has
been celebrated in our own time. Sometimes the two — the
science and the art — exist together, with little or no influence
upon each other, for a long period. Thus there was for centu-
ries a science of music, taught and studied by men who were
not practical musicians ; while those that were, pursued their art
without giving the slightest heed to the science.

All human experience shows that science can be of the
greatest service to its related art. As chemistry has improved
and simplified the industrial methods that existed before Priest-
ley and Lavoisier, so the discovery of the economic laws that
govern the advance of society in wealth, has greatly changed
for the better the economic methods of the nations. Some of
the older empirical rules it has vindicated as right ; others it
has condemned and set aside as wrong ; it has suggested new
and extended the applications of others that were old. It runs
the risk, indeed, of rejecting some methods that were clearly
right ; and it must guard against this, by making the most
careful and thorough survey of all the facts of the case.

In the first stages of a science, which we may call the mechan-
ical, empirical rules predominate among the doctrines ; but
gradually the simpler and far less numerous scientific principles
that underlie these rules are perceived. When these are once
grasped, the process of submitting rules to the test of principles
is an easy and safe one. The science has then passed into its
dynamical stage.

The ancients knew no science of political or national economy.
Commonplace remarks and moralizing reflections on the subject
are found scattered here and there through their literatures.
Single facts that could hardly escape their notice, such as the
advantage of the division of labor, and of the transition from
barter to the use of money, and the difference between value
and utility, were remarked upon, especially by Aristotle. In



16 SOCIAL SCIENCE AND NATIONAL ECONOMY.

these hints lay the possible germs of social science, but they
were not followed up, nor the underlying laws investigated.

§ 1. The rivalry excited in other parts of Europe, by the
prosperity of Venice and Genoa, first led men to study the sub-
ject, and we find it occupying a place in the literatures of Italy
and Spain, France and England, from the sixteenth century.
The circumstances of the times gave shape to these studies.
This was the nationalist period of history. Europe had revolted
against all the schemes of a universal monarchy ; and independ-
ent sovereign kingdoms, with national languages and literatures,
and even churches, divided its area among them. That a thing
was Spanish or was English, was praise enough in the ears of
Spaniard or Englishman. How to aggrandize to the utmost their
own country, at whatever expense to others, was the great
problem of statesmanship, especially after the religious heats,
that had divided Europe into two hostile camps, cooled off"
somewhat. And of all means to that end, the possession of an
abundance of money seemed the best and readiest. After a
money-famine that had begun with the Christian era, and had
grown in intensity for fifteen centuries, the discovery of America
and the East Indies had brought in a vast and sudden supply,
which had given Spain for a time an undue preponderance in
European politics, and had everywhere bettered the condition of
the people. How to acquire it by a foreign trade that would give
a balance in favor of our own country, — how to keep it here at
home for general circulation and national uses in case of need,
was the question. The Mercantile school of writers, as they are
now called, set themselves to find methods. As a rule their
books were corrective of common errors ; they showed that the



Online LibraryRobert Ellis ThompsonSocial science and national economy → online text (page 1 of 38)