address pungent by picturesque phrases and keen thrusts at his antagonists.

A last word must be given to Huxley as a man. He was one of the most distinguished and striking personalities of his day in England. Hardly any character will better repay study. Let the reader turn to his "Collected Essays," and especially to the two volumes of his "Life and Letters," edited by his son. There he will find a portrait, sharply drawn. It is the portrait of a passionate seeker of truth, fearless in its defense against all odds, and at any cost to himself a man ruggedly honest and straightforward, big of mind, broad of vision, the soul of simplicity, sincerity, and honor.

T

Public
(Political
Economy)

manage its

own affairs) Public Expenditure

HE term Economics, as originally used by the Greeks, meant the art of household management, or the principles which govern the wise management of the household. Xenophon's treatise on this subject is a description of the management of a simple agricultural household where problems of revenue and expenditure, of business and home life, are not very sharply separated. In modern times, particularly in urban life, the business, or the source of income, is so sharply separated from the home, where the income is utilized, that we now have two distinct branches of the subject instead of one. To one branch we

now give the name business economics, business management, or business administration. The other is known by such names as home economics, household economics, household management, domestic science, etc. That these two branches are now so sharply separated as to seem unrelated is a commentary on how far we have departed from the simple conditions of the self-sufficing rural household, and how thoroughly we have divorced business from life.

Xenophon also wrote a treatise on the Revenues of Athens. While this cannot be regarded as a general treatise on public finance, it serves at least to show that he had some interest in that field, which may not inaptly be called public housekeeping. Every government, considered as a corporate body, has needs of its own apart from those of the people whom it governs. Whether it be a city, a state, or a smaller governing unit, it must solve the problems of revenue and expenditure just as a private household. Later writers applied the term economics mainly to this group of problems to which we now apply the name public finance, rather than to that group which in the diagram above are included under Private Economics. In a monarchy the providing of revenues for the king's household, and the expenditure of those revenues in the support of the household, may approximate very closely to the character of private economics, as when the chief source of revenue is the royal demesne, or to public economics when the chief source of revenue is taxation, and the king is regarded merely as a public official to be supported as other public officials are.

EARLY CONCEPTIONS OF PUBLIC ECONOMICS

In the medieval and early modern period, the chief interest in economics had shifted from the private to the public aspects of the science, but was still centered mainly in problems of public revenue and expenditure, or, as we should now say, public finance. The chief students in this field were the finance ministers, who were charged with the office of raising revenue for the royal household and the enterprises both constructive and military of the king. It was

soon apparent that the amount of royal revenue was strictly limited by the wealth of the people. If larger revenues were needed, the people must be made more prosperous in order that they might pay heavier taxes. From that time forward students gave increasing attention to the problems of national prosperity, until, at the present time, that is the primary object of interest, problems of public revenue and expenditure being strictly subordinated. That is to say, instead of trying to promote national prosperity in order that there may be more taxes and other forms of public revenue, the modern policy is to promote general prosperity for its own sake, and to raise revenue for the government only when, and to the extent that, it is necessary to do so in order to promote the general welfare.

MERCANTILISTS AND PHYSIOCRATS

Even when students began to focus their attention upon general economic prosperity, it took them some time to develop a really broad view of that problem. One school, known as the mercantilists, emphasized commerce, particularly foreign commerce, to such an extent as to make it seem that they identified prosperity with foreign trade. Writers of this school, for example, were accustomed to point out that an abundant supply of cheap labor was one factor in the development of foreign trade, because with cheap labor the country could compete with rival nations in international trade. This was obviously not intended to promote the prosperity of the laborers who were to supply the cheap labor. Another school, the physiocrats, emphasized the importance of agriculture as the industry which really produced a surplus over and above the cost of production.

Both these schools made the mistake of assuming an analogy between public prosperity and private prosperity. A private business which sells more than it buys, or takes in more money than it pays out, is said to be prosperous. The mercantile school assumed the same to be true of the nation at large, overlooking the fact that in the nation at large what is profit to one man may be cost to some one

else, as in the case of the merchants who exported goods at a profit because they paid the laborers so little for their work. Again, a private business may be said to be prosperous when its products are greater than its costs. In agriculture there is the rent of land, which is not, strictly speaking, a cost, but a surplus income to the owner. This surplus income is the surplus value of the produce over and above the cost of producing it. Since very little rent was produced by the handicraft manufacturers of the day, the physiocrats assumed that these were not very profitable industries for the country at large, but that its main prosperity came from agriculture, where the main surplus, namely rent, accrued. Like the mercantilists, they overlooked the fact that this surplus might be the result, in part at least, of the poverty of the farm laborers. With a given efficiency, the cheaper they would work the lower the cost of growing crops and the higher the rent of the land.

It was not until Adam Smith's epoch-making work, the "Wealth of Nations," was given to the world that students began to take a really broad and comprehensive view of the problems of national welfare. Different students naturally have different special interests, but they generally realize the bearing of their specialties upon the larger problem. It has seemed at times that too many were focusing their attention upon production or exchange, and too few upon problems of distribution. For the last twenty-five years the problem of distribution has attracted more attention than all the others; but now the idea is beginning to dawn that consumption is the most important field of all, though it has been receiving the least attention of any.

THE MEANING OF WEALTH

Now that economics is definitely focusing attention upon. problems of national prosperity, it is important that the student should understand clearly the leading concepts of the science before proceeding to study its literature. The leading concept is that of wealth, but this is a term with

1 See Harvard Classics, x, and Lecture III in this Course.