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is book presents a bold, engaging and updated history of economics the dramatic story of how the great economic thinkers built today’ s rigorous social science. Noted financial writer and economist Mark Skousen has revised this popular work, now in its third edition.
is comprehensive, yet accessible introduction to the major economic philosophers of the past 225 years begins with Adam Smith and continues through to the present day. e text examines the contributions made by ea individual to our understanding of the role of the economist, the science of economics, and economic theory. Boxes in ea apter highlight lile-known and entertaining facts about the economists’ personal lives that had an influence on their work.
Mark Skousen is an investment expert, economist, university professor, and author of more than 20 books. He earned his Ph.D. in monetary economics at George Washington University in 1977. He has taught economics and finance at Columbia Business Sool, Columbia University, Grantham University, Barnard College, Mercy College, Rollins College and as a Presidential Fellow at Chapman University.
e Making of Modern Economics
The Lives and Ideas of the Great Thinkers
THIRD EDITION
Mark Skousen
First published 2016 by Routledge
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e right of Mark Skousen to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, meanical, or other means, now known or hereaer invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.
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First edition published in 2001 by M.E. Sharpe. Second edition published in 2009 by M.E. Sharpe.
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Contents
ACKNOWLEDGMENTS
INTRODUCTION
1. It All Started with Adam
2. e Fren Connection: Laissez Faire Avance!
3. e Irreverent Malthus Challenges the New Model of Prosperity
4. Triy Ricardo Takes Economics Down a Dangerous Road
5. Milling Around: John Stuart Mill and the Socialists Sear for Utopia
6. Marx Madness Plunges Economics into a New Dark Age
7. Out of the Blue Danube: Menger and the Austrians Reverse the Tide
8. Marshalling the Troops: Scientific Economics Comes of Age
9. Go West, Young Man: Americans Solve the Distribution Problem in Economics
10. e Conspicuous Veblen Versus the Protesting Weber: Two Critics Debate the Meaning of Capitalism
11. e Fisher King tries to Cat the Missing Link in Macroeconomics
12. e Missing Mises: Mises (and Wisell) Make a Major Breakthrough
13. e Keynes Mutiny: Capitalism Faces Its Greatest Challenge
14. Paul Raises the Keynesian Cross: Samuelson and Modern Economics
15. Milton's Paradise: Friedman Leads a Monetary Counterrevolution
16. e Creative Destruction of Socialism: e Dark Vision of Joseph Sumpeter
17. Dr. Smith Goes to Washington: Market Economies Face New Challenges
INDEX
ABOUT THE AUTHOR
Anowledgments
No one ’ s work is entirely his own and in the case of this work, I want to especially thank two writers for their influence on my writing: first, John Chamberlain for his pioneering book The Roots of Capitalism, and inspiring account of economic ideas; and second, my uncle, W. Cleon Skousen, who transformed my thinking about Adam Smith and his profound doctrines of the invisible hand and natural liberty. I wish I could aieve the felicity of expression of these two authors.
In writing a history of ideas, it is always vital to seek the counsel of wise authorities. In addition to the above, I wish to thank the following, who helped with the first edition: Harry Beer (University of Chicago), Mark Blaug (University of Amsterdam), Don Boudreaux (George Mason University), William Breit (Trinity University), Eamonn Butler (Adam Smith Institute), Bruce Caldwell (University of North Carolina), David Colander (Middlebury College), Peter Druer (Claremont College), Riard Ebeling (Trinity College), Ken Elzinga (University of Virginia), Milton Friedman (Hoover Institution), Roger Garrison (Auburn University), Robert Heilbroner (New Sool for Social Resear), Robert Higgs (Independent Institute), Jesús Huerta de Soto (Complutense University), Steven Kates (Australian Chamber of Commerce), Greg Mankiw (Harvard University), Murray Rothbard (University of Nevada at Las Vegas), Paul A. Samuelson (Massauses Institute of Tenology), Robert Skideslsky, Eri Streissler (University of Vienna), Riard Swedberg (University of Stoholm), Ken Taylor (Rollins College), and Larry Wimmer (Brigham Young University). I also appreciate the extra efforts of the staff at the Olin Library at Rollins College, especially Pat, Pai, and Patricia.
For the second edition, I thank especially Jeremy Siegel (Wharton Sool), Roger Garrison (Auburn University), the late Milton Friedman, and Rob Bradley. Lynn Taylor, Mike Sharpe, and Elizabeth Granda at M.E.Sharpe have shown unwavering support in publishing a new edition. anks also to the meticulous efforts of the production group, including Angela Piliouras and copyeditor Debra E. Soled.
For the third edition, I wish to thank an editor and English professor who wields a ubiquitous mind and a mighty pen my wife, Jo Ann. She reviewed the entire new edition for corrections and style and improved all aspects of the third edition.
Introduction
I will tell you a secret. Economists are supposed to be dry as dust, dismal fellows. This is quite wrong, the reverse of the truth.
Paul Samuelson (1966: 1408)
e history of modern economics is a cunning plot that can mat the best of historical novels. e running story line is man ’ s sear for wealth and prosperity and the economic model that best serves the needs of the common man.
e main aracter is Adam Smith, a ild of the Scoish Enlightenment, and the philosophy he represents, the self-regulating system of natural liberty and competition. Our hero has gone through untold triumphs and tragedies in the unfolding of over 200 years of economic history. Sometimes he appears lifeless following the blows of his opponents. But he always recovers.
A
i Overview
e plot begins in dramatic fashion in 1776, when a London publisher printed Adam Smith’ s monumental work, The Wealth of Nations, the intellectual shot heard around the world. Smith’ s captivating philosophy of natural liberty and the invisible hand rapidly became the central aracter of modern economics as the industrial revolution and political liberty exploded on the scene, and created a new era of wealth and economic growth over the next two centuries. e enlightened Scoish model of prosperity quily spread to France (via J.-B. Say and Bastiat), America (via omas Jefferson), and the rest of the Western world.
Yet the optimistic world of Adam Smith was almost immediately allenged by Robert Malthus and David Ricardo, two serious solars who propound the gloomy doctrine of the iron law of subsistence wages and the permanent misery of the working class. ese pessimistic forecasts were followed by the appearance of John Stuart Mill, who vacillated between liberty and socialism as utopian communitarianism reaed its zenith of popularity. en, in the middle of the nineteenth-century industrial
revolution, Karl Marx suddenly strode onto the scene with talk of exploitation and alienation among the industrial workers, and plunged economics into a new dark age. e rise of socialism would be the biggest allenge Smithian capitalism would face over the next century.
e Marginal Revolution
Fortunately, a new light appeared to counter the dark forces of social engineering. is “marginal” revolution gave new life to our main aracter, the invisible-hand model of Adam Smith. It came from three sources in the early 1870s from Carl Menger in Austria, Léon Walras in Switzerland, and William Stanley Jevons in England. Eugen Böhm-Bawerk, a colleague of Menger, was the first economist to take on Marx with a devastating critique of his labor theory of value and exploitation. rough the textbooks of Alfred Marshall in England, and Frank Taussig and Irving Fisher in the United States, the Smithian model of modern economics was rebuilt. us resuscitated, it made an effective counteraa on the growing socialist movement. Scientific economics had come of age. Nevertheless, the late nineteenth century was the era of big business and the giant trusts of Carnegie and Roefeller. Institutionalists like orstein Veblen swayed the crowds of cynics with their warnings of conspicuous consumption and monopoly power, while German sociologist Max Weber wrote of the religious underpinnings and the “iron cage ” of capitalism.
Keynes and the Great Depression
But the biggest blow to Adam Smith’ s world of free-market capitalism came with the 1929 crash and the Great Depression of the 1930s. Neoclassical economists comprehended the nuances of supply and demand, but failed to grasp the mysteries of the “ money nexus, ” the vital connection between the micro economy and the macro economy. e great Yale professor Irving Fisher made bold aempts at solving the missing link between micro and macro in the early twentieth century, and the Austrian Ludwig von Mises, relying on the profound work of the Swede Knut Wisell, finally bridged the gap in his Theory of Money and Credit. But the Mises-Wisell theories didn’t take hold in academia or the halls of government, and by the early
1930s, banks collapsed, businesses failed, and millions of workers begged for a living wage as governments around the globe struggled to overcome the decade-long financial nightmare.
Who would save capitalism? e bale lines were drawn between the classical economists who defended the policies of laissez faire, and the Marxists and socialists who demanded a revolutionary overthrow of the old order. Amid the global intellectual conflict appeared John Maynard Keynes, the economist as savior. is Cambridge don proposed a new, sophisticated model based on a “financial instability hypothesis” inherent to the capitalist system. is “ new economics” required government intervention in the monetary and fiscal arena to stabilize the market economy. Yet, unlike its ief rival, Marxism, the Keynesian model did not require nationalization or micro control of supply and demand. e classical model of thri, balanced budgets, low taxes, and the gold standard was relegated to periods of full employment, while the Keynesian prescription of consumer demand, deficit financing, progressive taxation, and fiat money played out during periods of economic recession and unemployment. It was viewed as the ideal compromise and soon college instructors, their heads buried in a popular new textbook by MIT wunderkind Paul Samuelson, were teaing students strange new tools the multiplier, the marginal propensity to consume, the paradox of thri, aggregate demand, and C + I + G. Keynesian economics reflected the high tide of macroeconomic theorizing and mathematical modeling.
e Return to Market Economics
e final apter in our story begins aer World War II. rough the monetarist counterrevolution, led by Chicago’ s Milton Friedman, economists began to focus more on the instability of government macro policies. Friedman, relying on empirical work more than abstract model building, demonstrated how the Federal Reserve, a government creation, was the principal culprit in causing the Great Depression. By adopting a stable monetary policy, the self-regulating market economy of Adam Smith could once again flourish. e Chicago Sool became the driving force behind the
return to classical economics and the need for empirical evidence to support theory. Soon other sools of free-market economics supply side, rational expectations, and Austrian allenged the Keynesian monolith.
e triumph of the market reaed its zenith of success with the collapse of the Soviet economic system in the early 1990s. e Austrian economists Ludwig von Mises and Friedri Hayek had predicted the demise of social istic central planning for years, and now their prediction was finally fulfilled. e failure of the socialist paradigm ushered in a new era of free trade, denationalization, and privatization throughout the developing world.
Our story of modern economics ends here on an optimistic note, even as bales are still being fought over the right kind of economic policies to pursue in the face of financial crises, war, uncertainty, and globalization. In many ways, this final apter of modern economics foreshadows the continuing bale between two paradigms, laissez faire versus socialist interventionism, and Adam Smith’ s world of imperfect capitalism appears to be allenged again.
Strange and Torrid Lives
Yet our story is not just an account of conflicting ideas. It is also an amazing tale of idle dreamers, academic scribblers, occasional quas, and madmen in authority. e lives of economists are oen just as exciting and unusual (even bizarre) as those of most famous people. In these pages, you will find the story of:
A professor of moral philosophy who burned his clothes, then burned his papers before dying;
A Cambridge economist who may have been a secret agent for the Soviet Union during World War II;
A revolutionary who, though his income was in the top 5 percent in Europe, constantly begged for money and speculated wildly in the sto market;
A government advisor who was so fascinated with people’ s palms that he had casts made of his friends’ hands;
A multimillionaire who lost everything during the sto market crash of 1929;
A wealthy economist who was murdered by his housekeeper;
A utilitarian thinker who demanded that his preserved body remain on display at the University College of London;
A free-market advocate who invented income tax withholding to help finance World War II;
A multimillionaire broker who gave all his wealth to his three sons;
An economist who spent two months in jail, arged with blasphemy against the Virgin Mary;
A philosopher who learned Greek at age three and suffered a mental breakdown at age twenty;
An economist who fancied himself as an informal consultant to Italian dictator Benito Mussolini;
A famous minister of finance who paraded around the streets of Vienna with two prostitutes and later became president of the American Economic Association;
An American economist who refused to use a telephone, make his bed, do the dishes, or clean his clothes, and gave all his students the same grade, regardless of their work;
A European professor who was determined not to use arts or graphs of any kind in his voluminous writings, and who was a confirmed baelor until age fiy-seven.
Welcome to the bizarre world of academic economists!
Why study the lives of the economists, and not just their ideas? It would be unfair to dismiss a philosopher’ s theories simply because he may have been a bad husband or a drunk. We may find Karl Marx’ s life reproaful, but does that mean his theories of alienation and exploitation are wrong? Ideas must stand on their own merit, not on the basis of who invented them. Yet we study and judge the actions of our heroes and villains, not just to prove or disprove their philosophies, but to beer understand them, and why they said what they said.
e history of economic thought is not normally taught this way, but then this book is not a normal history. It is, candidly, an irreverent, passionate, sometimes humorous, and oen highly opinionated account of the lives and theories of famous economists, from Adam Smith and Karl Marx to John Maynard Keynes and Milton Friedman.
To enhance the readers’ interest in the book, I’ ve added a variety of sidelights, including photographs, diagrams, boxed commentaries, and even classical music selections appropriate to the different apters.
e Need for a New History
But this book is more than a collection of biographical sketes and radical ideas. I wrote this book, in part, out of frustration. One of the most disappointing classes I took as an undergraduate was in the history of economic ideas. e course was convoluted, the textbook was dry, the lives of economists seemed uninteresting, and even the A students came away from the class wondering whether economists made any sense at all. It wasn ’t at all what Paul Samuelson promised in the quotation at the beginning of this apter. Certainly, there appeared no consensus about how the economy functions and what policies the government should pursue to ensure prosperity. Typically, students in economics are exposed to a wide number of sools of thought neoclassical, Keynesian, monetarist, Austrian, supply side, institutionalist, Marxist without any effort to determine the veracity of their theories, and how they are linked together. In short, we the students were le in a state of bewilderment.
Most students would probably agree with Adam Smith, the founder of modern economics, who derided the “sham-lecture” professors who have only a slight knowledge of the subject and end up saying things that are “foolish, absurd, or ridiculous.” Smith noted in The Wealth of Nations, “It must too be unpleasant to [the professor] to observe that the greater part of his students desert his lectures; or perhaps aend upon them with plain enough marks of neglect, contempt, and derision” (1965 [1776]: 720).
Why does the economics profession suffer from su a propensity to confuse?
e fundamental reason is that the story of economics is traditionally told in a haphazard, disjointed manner. In a sense, it’ s not a story at all. ere is no running plot, no engaging drama, and no single heroic figure. Economists are presented on the pages of history, one aer another, with an account of their lives and their contributions, and that’ s it. Ea stands alone, isolated.
Today’ s histories of economics la a running thread of truth, a consistent point of view that allows the student to realize when an academic scribbler is heading off the strait and narrow path.
My approa is distinct. It is to tell how this new science called modern economics was built hence the title The Making of Modern Economics. It focuses on the aritects and the building they constructed. e leading aritect of this building is Adam Smith. His working model, “the system of natural liberty,” is found in The Wealth of Nations. e work he began wasn ’t perfect by any means and required extensive remodeling from time to time. But its foundation is sound.
In ea subsequent apter, I try to demonstrate how ea major subject added to or subtracted from Smith’ s edifice of modern economics. Many, su as Menger, Marshall, and Friedman, strengthened the foundation, remodeled where necessary, and added wings. Some, like Veblen and Galbraith, were cynics who stood ba and pointed their fingers in scorn at the building being built. Others, like Keynes, tried to reconstruct the building aer it was halfway complete. Finally, there were radicals like Marx who wanted to tear down the building and start over. e critics of the work did not aa in vain. eir assaults forced the builders of modern neoclassical economics to reexamine their fundamentals and work out new plans. e result was a newer, beer, more resilient economics.
Ultimately, the building is still being refurbished as we enter the twentyfirst century. It’ s not a perfect structure, there’ s more work to be done, but what has been created is worth admiring. Millions around the world have felt the power of neoclassical economic analysis, the house that Adam Smith built. In fact, economics has impacted so many other discipines history, law, politics, and finance, to name a few that critics no longer label it a “dismal” science, but an “imperial” science (see apter 17).
Figure A
e Pendulum Approa to Competing Economic eories Source: Maier and White (1998: 42). Reprinted by permission of McGraw-Hill.
Pendulum Versus Totem Pole History: Whi Is Better?
Historically, there have been two approaes to writing about the lives and ideas of economists: the pendulum and the totem pole.
In the pendulum formula, the historian categorizes ea economist along a political spectrum, from extreme le to extreme right. e history of economics may swing from one extreme to another, or may land in the middle, depending on the economist and the time. e diagram in Figure A, reproduced from a current history of economic thought, illustrates the pendulum type.
e problem with this pendulum approa is that Karl Marx and Adam Smith are treated as coequals; in this case, both economists are viewed as “extreme” in their positions. By implication, neither position is sensible. e “moderate,” middle-of-the-road position held by John Maynard Keynes appears to be more balanced and ideal. A pendulum that experiences friction will eventually come to rest in the middle, between the extremes. But is that the best way to go?
I prefer a bolder alternative, what I would call the top-down or “totem pole” approa. In Indian folklore, the most favored iefs are placed at the top of the totem pole, with less favored, though important, iefs below. If the goal is to discover whi economist maximizes economic freedom and the most rapid economic growth (rising standard of living), that economist
should be placed at the top of the totem pole. Others, who advocate less freedom and whose policies generate slower growth, should be placed below the man on the top. Instead of comparing economists horizontally on a pendulum or spectrum, one should rank them from top to boom according to this measure of liberty and growth.
Using this totem pole structure, I would reformulate the diagram (see Figure B, page 8).
Adam Smith advocated maximum economic freedom, in the microeconomic behavior of individuals and the firm, and minimal macroeconomic intervention by the state. e countries that have come the closest to adopting Smith’ s vision of laissez-faire capitalism have aieved the highest standards of living. Next on the list is John Maynard Keynes. He supported individual freedom, but frequently endorsed macroeconomic intervention and nationalization of investment. His big-government formula has resulted in slower, albeit more stable, economic growth. e low man on the totem pole is Karl Marx, who advocated command economies at both the micro and the macro level. Historically, centrally planned socialist regimes have vastly underperformed the market economies.
Figure B
e Totem Pole Approa: e Ranking of ree Economists (Smith, Keynes, and Marx) According to Economic Freedom and Growth Credit: Sculpture by James Saqui.
Few readers will be agnostic about my views in this book. You may not agree with me as far as my rankings of economists are concerned, but I have
tried to be consistent in my totem pole approa.
Recent Biographies Enhance the Story of Economics
e story of economics has been greatly enhanced by some excellent biographies published lately. Until recently, the only subject about whom numerous biographies had been wrien was Karl Marx. In fact, the amount of material on Marx’ s life is allenging if not overwhelming. ere are even full-scale biographies of his daughter, Eleanor. Meanwhile, there was lile wrien detail available on the lives of Adam Smith, Alfred Marshall, Irving Fisher, and other important economists. Now that is all anging, slowly but surely. e new biographers are digging deeply, studying private correspondence and unpublished manuscripts, and interviewing contemporaries if they are alive. e following works represent the future of biography: Robert Skidelsky’ s John Maynard Keynes (1992), Riard Swedberg’ s Schumpeter (1991), Robert Loring Allen’ s Irving Fisher (1993), Peter Groenewegen’ s A Soaring Eagle (1995), and William Stafford’ s John Stuart Mill (1998). It is to be hoped that additional in-depth biographies will be published in the future.
Western Economics Only?
Aer taking my course on the history of economics, one of my Rollins students asked, “Are there any famous economists outside the West?” He had correctly noted that Westerners have traditionally dominated, even monopolized, the history of economic thought. is bias is justified on two grounds: First, significant economic progress began in the West with the industrial revolution. Second, Western-style economics has directed mu of the economic thinking in Asia, Africa, and Latin America during the twentieth century. Pi up any book on the history of modern economics in Japan, India, or Argentina, and you will see the dominating influence of Smith, Keynes, and Marx.
Non-Western economics has flourished over the ages, but has seldom been associated with material progress in any meaningful way. Max Weber
observed this fact in his worldwide study of economics and religion. E.F. Sumaer (1973) has a famous apter entitled “Buddhist Economics” in his ever-popular Small Is Beautiful. In many ways, Sumaer ’ s glorification of Buddhist economics explains this failure to aieve material prosperity. According to Sumaer, traditional Buddhism rejects laborsaving mainery, assembly-line production, large-scale multinational corporations, foreign trade, and the consumer society (Sumaer 1973: 44–51).
ere are, of course, many bright non-Western economists, and their prestige is growing as Asia expands. Amartya Sen (India) and Miio Morishima (Japan) are two prime examples. In 2006, Muhammad Yunus, an economics professor from Bangladesh, won the Nobel Peace Prize. Robert Ozaki’ s Human Capitalism (1991) explains how the West can learn beer business–labor management relations from the East; but in a one-volume work, one must focus primarily on the principal movers and shakers in the making of modern economics.
How I Came to Write is Book
Before we begin our adventures, let me tell you a story relevant to this book. In 1980, I asked libertarian economist Murray N. Rothbard to write an alternative to Robert Heilbroner’ s The Worldly Philosophers (1999). Heilbroner’ s lile history was immensely popular (over 4 million sold) and well wrien, but the content and context le mu to be desired. Heilbroner, reflecting his bias, focused heavily on the economics of socialists, Marxists, and Keynesians, and spent less space on free-market sools, the followers of Adam Smith. Heilbroner essentially ignored, for example, the Fren laissezfaire sool of Say and Bastiat, the monetarist sool of Irving Fisher and Milton Friedman, and the Austrian sool of Mises and Hayek. Free-market advocates cried out for a more balanced approa to the history of economics.
Rothbard heartily agreed to my proposal, whi included an enticing advance of $20,000. I made several specific requirements in our contract: the book should address the general public (economists and laymen). Like
Heilbroner’ s book, it should be around a dozen apters, starting with Adam Smith and ending with modern times. It should not exceed 300 pages in published form. And the manuscript must be finished in a year.
Rothbard and I signed the contract.
One year passed. Two years. ree years. No completed manuscript. No 300 pages. No layman’ s discourse. No Adam Smith. Oh, Rothbard was writing all right, but he wasn ’t writing a 300-page book for the general public. He was writing what we in the economics profession call a Sumpeterian tome: a several-volume, dense history of economic thought for professionals and advanced students of economics. In the 1940s, Joseph Sumpeter, the iconoclast Harvard professor, wrote his voluminous History of Economic Analysis, whi reaed 1,260 pages by the time it was published. Rothbard’ s laborious work began with the Greeks and the tenuous writings of Aristotle, moved slowly along to the Catholic Fathers and the Enlightenment, and finally, by apter 16, reaed the celebrated Adam Smith. I was a great admirer of Murray Rothbard as an iconoclastic economist and radical historian, but I could see this was not what I had contracted for. Years later, aer tiring of asking the question, “Have you reaed Marx yet?” I sent Rothbard a copy of a statement made by Joseph Sumpeter in an interview with the Harvard Crimson in 1944: “My resear program grows longer and my life shorter. My History of Economic Analysis drags, and I am always hunting other hares” (Swedberg 1991: 167). It reminded me of Rothbard’ s dragging history.
Fieen years later (!) 1995 Edward Elgar (the publisher, not the composer) published the first two volumes of Rothbard’ s history, Economic Thought Before Adam Smith (556 pages) and Classical Economics (528 pages). Rothbard’ s second volume ends with his apters on Marx. I have enjoyed studying Rothbard’ s stimulating and oen critical remarks, and agree with most of what he wrote (with the strong exception of his negative assessment of Adam Smith). But he never finished the job.
I frequently commented to friends that Rothbard was writing a Sumpeterian tome, whi also meant that he would probably die before completing the book, it was taking so long. Aer Sumpeter’ s death in
1950, Sumpeter’ s devoted wife, Elizabeth, tried to get the almost finished manuscript ready for publication, but also passed away before completing the task, and the manuscript was prepared for publication by Harvard colleagues.
Sadly, my concern became prophetic. Rothbard died suddenly of a heart aa in New York City in January 1995, at the age of sixty-nine, only a few weeks before the first copies of his two-volume work appeared. He never got to the next two planned volumes.
One of my motives in writing The Making of Modern Economics was to publish something along the lines of what I asked Murray Rothbard to write. Now, here it is, twenty years later.
References
Allen, Robert Loring. 1993. Irving Fisher: A Biography. Cambridge: Blawell.
Groenewegan, Peter. 1995. A Soaring Eagle: Alfred Marshall 1842–1924. Cheltenham: Edward Elgar.
Heilbroner, Robert L. 1999 [1953]. The Worldly Philosophers, 7th ed. New York: Simon & Suster.
Maier, Mark, and Steven White. 1998. The First Chapter: Foundations of Economic History and the History of Economic Thought, 3d ed. New York: McGraw-Hill.
Ozaki, Robert. 1991. Human Capitalism. New York: Kodansha International. Samuelson, Paul A. 1966. Collected Scientific Papers of Paul A. Samuelson, vol. 2. Cambridge, MA: MIT Press.
Sumaer, E.F. 1973. Small Is Beautiful. London: Penguin. Skidelsky, Robert. 1992. John Maynard Keynes: Economist as Savior, 1920–1937. London: Macmillan.
Smith, Adam. 1965 [1776]. The Wealth of Nations. New York: Modern Library.
Stafford, William. 1998. John Stuart Mill. London: Macmillan.
Swedberg, Riard. 1991. Schumpeter: A Biography. Princeton, NJ: Princeton University Press.
1
It All Started with Adam
Adam Smith was a radical and a revolutionary in his time just as those of us who preach laissez faire are in our time.
Milton Friedman (Glahe 1978: 7)
e story of modern economics began in 1776.
Prior to this famous date, six thousand years of recorded history had passed without a seminal work being published on the subject that dominated every waking hour of practically every human being: making a living.
For millennia, from Roman times through the Dark Ages and the Renaissance, humans struggled to survive by the sweat of their brow, oen only eking out a bare existence. ey were constantly guarding against pre mature death, disease, famine, war, and subsistence wages. Only a fortunate few primarily rulers and aristocrats lived leisurely lives, and even those were crude by modern standards. For the common man, lile anged over the centuries. Real per capita wages were virtually the same, year aer year, decade aer decade. During this age, when the average life span was a mere forty years, the English writer omas Hobbes rightly called the life of man “solitary, poor, nasty, brutish and short” (1996 [1651]: 84).
1776, a Prophetic Year
en came 1776, when hope and rising expectations were extended to the common workingman for the first time. It was a period known as the Enlightenment, what the Fren called l’Âge des lumières. For the first time in history, workers looked forward to obtaining a basic minimum of food, shelter, and clothing. Even tea, previously a luxury, had become a common beverage.
Music selection for this apter: Aaron Copland, “Fanfare for the Common Man”
e celebration of America’ s Declaration of Independence on July 4 was one of several significant events of 1776. Imitating John Loe, omas
Je
fferson ’ s proclamation of “life, liberty, and the pursuit of happi ness ” to be inalienable rights, thus establishing the legal framework for a struggling nation that would eventually become the greatest economic powerhouse on earth, and provided the constitutional foundation of liberty whi was to be imitated around the world.
A Monumental Book Appears
Illustration 1.1
Memorial Print of Adam Smith, 1790 "I am a beau in nothing but my books." Reprinted by permission of Glasgow University Library. Four months earlier, an equally monumental work had been published across the Atlantic in Mother England. On Mar 9, 1776, the London printers William Strahan and omas Cadell released a 1,000-page, twovolume work entitled An Inquiry into the Nature and Causes of the Wealth of Nations. It was a fat book with a long title destined to have gargantuan global impact. e author was Dr. Adam Smith, a quiet absentminded pro fessor who taught “moral philosophy” at the University of Glasgow. The Wealth of Nations was the intellectual shot heard around the world. Adam Smith, a leader in the Scoish Enlightenment, had put on paper a universal formula for prosperity and financial independence that would, over the course of the next century, revolutionize the way citizens and
leaders thought about and practiced economics and trade. Its publication promised a new world a world of abundant wealth, ries beyond the mere accumulation of gold and silver. He promised that new world to everyone not just the ri and the rulers, but the common man, too. The Wealth of Nations offered a formula for emancipating the workingman from the drudgery of a Hobbesian world. In sum, The Wealth of Nations was a declaration of economic independence.
Certain dates are turning points in the history of mankind. e year 1776 is one of them. In that prophetic year, two vital freedoms were proclaimed, political liberty and free enterprise, and the two worked together to set in motion the industrial revolution. It was no accident that the modern economy began in earnest shortly aer 1776 (see Figure 1.1).
Figure 1.1
e Rise in Real Per Capita Income, United Kingdom, 1100–1995 Courtesy of Larry Wimmer, Brigham Young University.
e Importance of the Enlightenment
e year 1776 was significant for other reasons as well. For example, it was the year the first volume of Edward Gibbon’ s classic work, History of the Decline and Fall of the Roman Empire (1776–88), appeared. Gibbon was a principal advocate of eighteenth-century Enlightenment, whi embodied
unbounded faith in science, reason, and economic individualism in place of religious fanaticism, superstition, and aristocratic power.
To Smith, 1776 was also an important year for personal reasons. His closest friend, David Hume, died. Hume, a profound philosopher, was a great influence on Adam Smith. (See “Pre-Adamites” in the appendix to this apter.) Like Smith, he was a leader of the Scoish Enlightenment and an advocate of commercial civilization and economic liberty.
e Rumblings of Economic Progress
For centuries, the average real wage and standard of living had stagnated, while almost a billion people struggled against the harsh realities of daily life. Suddenly, in the early 1800s, just a few years aer the American Revolution and the publication of The Wealth of Nations, the Western world began to flourish as never before. e spinning jenny, power looms, and the steam engine were the first of many inventions that saved time and money for enterprising businessmen and the average citizen. e industrial revolution was beginning to unfold, real wages started climbing, and everyone ’ s standard of living, ri and poor, began rising to unforeseen heights. It was indeed the Enlightenment, the dawning of modern times, and people of all walks of life took notice.
Advocate for the Common Man
As George Washington was the father of a new nation, so Adam Smith was the father of a new science, the science of wealth.
e great British economist Alfred Marshall called economics the study of “the ordinary business of life.” Appropriately, Adam Smith would have an ordinary name. He was named aer the first man in the Bible, Adam, whi means “out of many, ” and his last name, Smith, signifies “ one who works.” Smith is the most common surname in Great Britain. In fact, Adam Smith’ s father was also named Adam Smith, as were his guardian and his cousin.
e man with the pedestrian name wrote a book for the welfare of the average working man. In his magnum opus, he assured the reader that his model for economic success would result in “universal opulence whi extends itself to the lowest ranks of the people” (1965 [1776]: 11).1
It was not a book for aristocrats and kings. In fact, Adam Smith had lile regard for the men of vested interests and commercial power. His sympathies lay with the average citizens who had been abused and taken advantage of over the centuries. Now they would be liberated from sixteenhour-a-day jobs, subsistence wages, and a forty-year life span.
Adam Smith Faces a Major Obstacle
Aer taking twelve long years to write his big book, Smith was convinced he had discovered the right kind of economics to create “universal opulence.” He called his model the “system of natural liberty.” Today economists call it the “classical model.” Smith’ s model was inspired by Sir Isaac Newton, whose model of natural science Smith greatly admired as universal and harmonious.
His biggest hurdle would be convincing others of his system, especially legislators. His purpose in writing The Wealth of Nations was not simply to educate, but to persuade. Very lile progress had been aieved over the centuries in England and Europe because of the entrened system known as mercantilism. One of Adam Smith’ s main objectives in writing The Wealth of Nations was to smash the conventional view held by the mercantilists, who controlled the commercial interests and political powers of the day, and to replace it with the real source of wealth and economic growth, thus leading England and the rest of the world toward the “greatest improvement” of the common man ’ s lot.
e Appeal of Mercantilism
e mercantilists believed that the world’ s economy was stagnant and its wealth fixed, so that one nation grew only at the expense of another. e economies of all ancient and Middle Age civilizations were based either on slavery or different forms of serfdom. Under either system, wealth was acquired largely at the expense of others or through the exploitation of man by man. As Bertrand de Jouvenel observes, “Wealth was therefore based on seizure and exploitation” (1999: 100). Consequently, they established government-authorized monopolies at home and supported colonialism
abroad, sending agents and troops into poorer countries to seize gold and other precious commodities.
According to the established mercantilist system, wealth consisted entirely of money per se, whi at the time meant gold and silver. e primary goal of every nation was always to aggressively accumulate gold and silver, and to use whatever means necessary to do so. “e great affair, we always find, is to get money, ” Smith declared in The Wealth of Nations (1965: 398).
How to get more money? First, nations su as Spain and Portugal sent their emissaries to faraway lands to discover gold mines, and to pile up as mu as of the precious metal as they could. No expedition or foreign war was too expensive when it came to their thirst for bullion. Other European countries, imitating the gold seekers, frequently imposed exange controls, forbidding, under the threat of heavy penalties, the export of gold and silver.
Second, mercantilists sought a favorable balance of trade, whi meant that gold and silver would constantly fill their coffers. How? “e encouragement of exportation, and the discouragement of importation, are the two great engines by whi the mercantilist system proposes to enri every country,” reported Smith (page 607). Smith carefully delineated the host of high tariffs, duties, quotas, and regulations that aimed at restraining trade, production, and ultimately a higher standard of living. Su commercial interferences naturally led to conflict and war between nations.
Smith Denounces Trade Barriers
In a direct assault on the mercantile system, the Scoish philosopher denounced high tariffs and other restrictions on trade. Efforts to promote a favorable balance of trade were “absurd,” he declared (page 456). He talked of the “natural advantages” one country has over another in producing goods. “By means of glasses, hotbeds, and hotwalls, very good grapes can be raised in Scotland,” Smith said, but it would cost thirty times more to produce Scoish wine than to import wine from France. “Would it be a reasonable law to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?” (page 425).
According to Smith, mercantilist policies only imitate real prosperity and benefit only the producers and the monopolists. Because it did not benefit the consumer, mercantilism was antigrowth and shortsighted. “But in the mercantile system, the interest of the consumer is almost always constantly sacrificed to that of the producer” (page 625).
Smith argued that trade barriers hurt the ability of both countries to produce and thus must be torn down. By expanding trade between Britain and France, for example, both nations would gain. “What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom,” declared Smith. “If a foreign country can supply us with a commodity eaper than we ourselves can make it, beer buy it of them” (page 424).
Real Source of Wealth Revealed
e accumulation of gold and silver might have filled the poets of the ri and the powerful, but what would be the origin of wealth for the whole nation and the average citizen? at was Adam Smith’ s paramount question. The Wealth of Nations was not just a tract on free trade, but a world view of prosperity.
e Scoish professor forcefully argued that the keys to the “wealth of nations” were production and exchange, not the artificial acquisition of gold and silver at the expense of other nations. He stated, “the wealth of a country consists, not of its gold and silver only, but in its lands, houses, and consumable goods of all different kinds” (page 418). Wealth should be measured according to how well people are lodged, clothed and fed. In 1763, he said, “the wealth of a state consists in the eapness of provisions and all other necessaries and conveniences of life” (1982 [1763]: 83).
Smith began his Wealth of Nations with a discussion of wealth. He asked, what could bring about the “greatest improvement in the productive powers of labour”? A favorable balance of trade? More gold and silver?
No, it was a superior management tenique, "the division of labor." In a well-known example, Smith described in detail the workings of a pin factory, where workers were assigned eighteen distinct operations in order
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king of this world of subterranean labor—he sat waiting, motionless, save for his moving eyes.
Suddenly from the undefined noises, the beat of an advancing footfall detached itself. He gave a low, inarticulate sound, and drew himself upright, a hand falling on either knee, his dark face full of a grim fixity of attention. Down one of the tunnels the figure of Jerry came into view, walking rapidly.
He was smiling, for this summons made his escape from the mine easier than it would otherwise have been. A word or two from Black Dan and then up on the cage, and then—away into the night where love and a woman were waiting. The culminating excitement of the day made his eye brilliant and deepened the color of his face. Full of the joys and juices of life, triumphantly handsome even in his rough clothes, he was a man made for the seduction of women. Black Dan felt it and it deepened his hate.
“Did you want me?” he called as he drew near. “One of the pick-boys said you sent for me.”
“Yes, I want to see you for a moment. I want to ask you about something.”
The elder man rose slowly from his box. His eyes were burning under the shadow of his hat brim.
“Come over here near the light,” he said. “I’ve something I want to show you.”
Near the entrance to the shaft there was a large lantern, backed by a tin reflector It cast a powerful light on the muddy ground and the plates of iron that made a smooth flooring round the landing. Black Dan walked to it and stood there waiting. As Jerry approached he drew June’s letter from his pocket and handed it to him.
Jerry was taken completely off his guard, and for a moment was speechless. He took the letter and turned it over.
“What’s this? Where—where’d you get it?” he faltered, his tongue suddenly dry.
For answer a terrible burst of profanity broke from the older man. He fell on Jerry like a lion. In the grip of his mighty muscles the other was borne back toward the opening of the shaft, helpless and struggling. He clutched at the iron supports, for a moment caught one and clung, while the cry of his agony rang out shrill as a woman’s. In the next his hands were torn away and the slippery iron plates slid beneath his feet. For one instant of horror he reeled on the edge of the abyss, then went backward and down. A cry rose that passed like a note of death through the upper levels of the mine.
Black Dan ran back toward the nearest tunnel mouth. The thud of the picks had stopped. The miners, men who work with death at their elbow, came pouring down and out, scrambling from stopes, running from the ends of drifts, swarming up ladders from places of remote, steaming darkness. White-faced, wild-eyed, not knowing what horror of sudden death awaited them, they came rushing toward the place where their chief stood, a grim-visaged figure at the mouth of the tunnel.
He checked them with a raised hand, even at such a moment able to assert his command over them.
“Keep cool, boys. You’re all right. There’s been an accident. It’s Barclay. For God’s sake, tell Marsden to keep those women back.”
In the shaft house above, Rion, tired of waiting, was lounging up and down when the bell of one of the compartments gave an imperious summons for the cage to descend.
“They’re coming up at last,” said Rion, moving to the edge of the shaft and stretching himself in yawning relief. “I never knew Easterners to stand the heat so long.”
CHAPTER IX HOME
On the Friday morning June rose with an oppression of death-like dread weighing on her. Jerry had only told her to hold herself in readiness for that day; she knew nothing further. But the morning was not half spent when a letter came from him, naming the time and place of their departure. As she read her dread deepened. The ardent words of love with which the letter began and ended had no power to overcome her sickened reluctance. She was moving onward toward an action which she contemplated with despair and yet toward which she continued inevitably to advance.
There are many women like June, who, without the force to resist the importunities of conquering lovers, never lose their sense of sin. In the arms of the man they have surrendered to it is heavy at their hearts. The years do not lift it, and the men who have brought them to ruin grow to feel its chill and despise the woman who has not been strong enough to resist or completely give herself up.
During the rest of the morning she remained in her room trying to sort her clothes and pack her bag. Her mind was in a state of stupefied confusion. She could find nothing, could not remember where anything had been placed. At times a sensation of nausea and feebleness swept over her, and she was forced to stop in the work she was doing, and sit down. When at midday the servant summoned her to lunch, the gathered possessions and souvenirs of years were scattered over the furniture and about the floor.
In the afternoon she wrote the letter to the Colonel. She wrote rapidly, not letting herself pause to think, the pen flying over the paper. When it was finished, she sealed it without reading it over.
The rest of the day passed with lightning swiftness. As she roamed from room to room, or sat motionless with drawn brows and rigidly clasped hands, the chiming of the hours from clocks in various parts of the house struck loud on her listening ear. The clear, ringing notes
of three seemed hardly to have sounded when four chimed softly The hours were rushing by. With their headlong flight her misery increased. There was now no sitting quiet, spellbound in waiting immobility. She moved restlessly from window to window looking out on the desolation that hemmed her in. It had no pity for her. Her little passion, a bubble on the whirlpool of the mining town, was of that world of ephemera that the desert passed over and forgot.
At sunset the landscape flushed into magical beauty and then twilight came, and suddenly, on its heels, darkness. The night was a crystalline, deep blue, the stars singularly large and lustrous. As she put on her hat and jacket she felt that her mouth was dry, and if called upon to speak she would have had difficulty in articulating. Over her face she draped a thin, dark veil sufficient at this hour to obscure her features entirely. On the way out she called the Chinaman and gave him the letter for the Colonel, whom she did not expect back before Wednesday.
She made her way to the end of the town through the upper residence streets. They were quite dark at this hour and she slipped by, a slim shadowy shape, touched now and then into momentary distinctness by the gleam of a street lamp. Outside the clustering lights of the city, she turned downward toward where the Geiger grade, looping over the shoulder of the mountain, enters the town. Once on the road itself she walked with breathless speed, the beating of her heart loud in her own ears. She passed the last of the hoisting works, the sentinel of the great line that was stirring the world, and saw the road stretch gray and bare before her.
Her light footfall made no sound in the dust. Straining to penetrate the darkness with a forward gaze she advanced, less rapidly. The dim form of the deserted cabin loomed up, and then, just beyond it, gradually taking shape out of the surrounding blackness, a buggy with a muffled figure in the seat.
For a moment she stopped, feeling faint, her clearness of reason and vision becoming blurred. But in an instant the weakness passed and she walked on hesitatingly and softly, staring at the indistinct figure and drawn irresistibly forward. As she approached, she saw
that the man sat motionless, his back toward her She was close to the buggy when the soft padding of her footsteps in the dust caught his ear. He turned with a start, revealing by the faint starlight that section of a coarse, strange face to be seen between the peak of a woolen cap and the edge of an upturned coat collar.
“Pardon, lady,” he said in a hoarse voice, “Mr. Barclay hasn’t come yet.”
June came to an abrupt halt by the side of the carriage. She stood without movement or sound, paralyzed by the unexpectedness of the unknown voice and face. For the first dazed moment following on the shock there was a complete suspension of all her faculties.
There had been much surreptitious speculation in the livery stable as to whom Jerry Barclay was driving into Reno. The man now in the buggy had been sure it was a woman. Seeing his suspicions verified he tried to distinguish her features through the darkness and the veil she wore. He leaned forward, eying her keenly, but making out nothing beyond a slender shape, the face concealed by a film of gauze.
“He’s probably been detained at the mine,” he said cheeringly. “They’ve that gang of Easterners goin’ down this afternoon.”
The girl made no answer, but drew back a step or two from the carriage.
“If you’ll get in I’ll drive you up and down for a spell,” he said. “It’s cold work standin’ round on a night like this.”
“No,” she answered in a muffled voice; “no.”
“Put your bag in, anyway,” he suggested, stretching a hand for it.
She drew back another step and moved the hand holding the bag behind her.
“Just as you like,” he returned, the familiarity of his manner suddenly chilled by annoyance. “It’s for you to say.”
She retreated still farther until stopped by a growth of sage at the edge of the road. The man, seeing he could discover nothing from
her, gathered up his reins.
“Well,” he said, “I can’t run no risks with the finest team in the state of Nevada. I’ll have to walk ’em up and down till Mr Barclay gets here. He said he’d be before time, and he’s nearly fifteen minutes late now.”
He chirped to the horses, who immediately started on a gentle trot. The dust muffled their hoof-beats, and noiselessly, with something of stealth and mystery in the soft swiftness of their withdrawal, they receded into the blackness of the night.
June stood for a moment looking after them, then turned to where the town sparkled in descending tiers of streets. Its noise came to her ears, the hum of human voices, and suddenly the misery that had held her in a state of broken acquiescence all day, that had been growing in her for weeks, rose into a climax of terrified revolt. The full horror of her action burst upon her. In a flash of revelation she saw it clearly, unblinded by passion. Her repulsion toward Jerry’s wooing surged up in her in a frantic desire to escape, to get away from him. She feared him, she longed to creep away and hide from him—the terrible Jerry, her merciless master, before whom she cowered and trembled.
She cast a fearful look into the darkness behind her and made out the shape of the buggy just turning for the backward trip. It would be beside her again in a few minutes. In front, stretching to the town, the road lay dark and deserted. She gripped her bag and started out toward the blinking lights, running at first, lightly and noiselessly on the trodden vegetation that edged the path.
Her engrossing thought was that she might meet Jerry. In the condition of nervous exhaustion to which the long strain of the past months had reduced her, she had lost all confidence in her power to direct her own actions, and resist the dominating man who had had her so completely under his control. If she met him now it would be the end. He would not cajole and kiss her. He would order her into the buggy and ride away with her into the night.
Several times she met men, dark figures against the lights beyond. At the first glance she could see by their build or gait that they were not Jerry. One, of lighter mold and more elastic walk, caused her to pause for a stricken moment and then shrink back in the shadow of a cabin till she saw her fears were unfounded. As the lights grew brighter and she entered the sparsely settled end of C Street, she slackened her speed and gazed ahead, alertly wary. She did not see but that he must come this way, unless he chose the longer and more secluded route, among the miners’ lodging houses and cabins, climbing up from there to the road above.
She had started to return without any fixed idea of her goal. As she advanced she thought of this and immediately the Colonel arose to her mind as a rock behind which there was shelter, his lodgings as the one place where she would find protection. In the bewilderment of her mind she forgot that he was not due to return yet, only remembering his original statement that he would be back on Friday night. If she could reach his rooms without meeting Jerry she would be safe. She felt like a child who has run away to find adventures and is suddenly stricken with the horror of strangeness and the wild and piercing longing for the familiar things of home.
The evening turmoil of C Street had begun. Looking up its length, roofed by its wooden arcade, was like looking into a lighted tunnel, swaying with heads. The glare from the show-windows, the lights from lamps, and the agitated flaring of lanterns on the street hawkers’ barrows, were concentrated within this echoing tunnel and played on every variety of face, as the crowd came sweeping down on June. It seemed to catch her in its eddies and whirl her forward, a dark shape, furtive-eyed and stealthy-footed in the fierce, bubbling buoyancy of the throng, silent amid its hubbub.
There seemed to her more noise to-night, more of a seething, whirling froth of excitement than she had ever noticed before. She thought it a reflection of her own fever and hurried on, her eyes gleaming through her veil in peering looks sent ahead for Jerry. She was nearing the short street which led down to the Cresta Plata, when from two miners, almost running past her, she heard his name. Her heart leaped, and for a second she flinched and shrank back
into the doorway As she stood there a group of men brushed by in the opposite direction and from these, as they paused for a second at her side, she heard a question and answer:
“How did he come to fall? Did he slip?”
“Yes, on the iron plates. He stepped back and then slipped, and before Black Dan could get him he was gone. It was all done in a minute.”
“Lord!” came the ejaculation in a tone of horror.
She started on and from a cluster of men standing in a saloon doorway she again heard his name. The perspiration broke out on her face. At the mouth of the lane that led to the Cresta Plata a crowd with restless edges, that moved down toward the hoisting works and swayed out into the roadway, made a black mass, expanding and decreasing as its members dispersed or drew together. It was too early for the day shift to be coming up, and she looked at it with sidelong alarm. It was part of the unusualness of this weird and awful night. And again as she threaded her way through the scattering of figures on its outskirts she heard his name, twice in the moment of passing.
What was the matter? Why were they all talking of him? The sense of horror that weighed on her seemed to increase until it became threatening and tragic. She felt as if she were in a nightmare, with the Colonel’s rooms and the Colonel the only place of safety and means of escape. She forgot to be cautious and started to run, pushing her way through the crowd, dodging round the edges of excited groups, brushing by knots of women collected at the foot of stairways, and from every group the name of Jerry followed her. Suddenly, between the massed and moving figures she saw the glare of the colored bottles in the window of Caswell’s drug store. It was over this store that the Colonel lived. At one side, outside the brilliant radiance of the bottled transparencies, a small, dark door gave on the stairs that led to the floor above. From its central panel a bell-handle protruded. She tried the knob first and found that it yielded. Opening it softly she looked up the dim stairway and saw in
the hall above a light burning She ran up, her steps subdued on the worn carpet. A narrow corridor divided the floor, passing from a door that opened on the front balcony back to an anterior region where the landlady lived and let rooms to less illustrious lodgers. Of the two suites in the front that on the left was occupied by Rion Gracey, the other by the Colonel. June had often been in these rooms. She opened the door and looked in.
The door gave into the sitting-room, empty of occupants and unlit. But the Colonel’s landlady had not been advised of his change of plans, and in expectation of his return a fire burned in the grate and cast a warm, cheering light over the simple furnishings and the armchair drawn up in front of it. June crept in and shut the door. She fell into the arm-chair with her hands over her face and sat limp and motionless in the firelight. The noise of the town came dulled to her ears. She had escaped from Jerry and the pursuing echo of his name.
A half-hour later the Colonel found her there. After a hurried search for her through the town he had been seized by the hope that she might have sought shelter with him.
As the opening of the door fell on her ear she raised her head and looked up. He saw her in the firelight, all dark in the half-lit room, save for her white face and hands. An exclamation of passionate relief broke from him, and as she rose and ran to him he held out his arms and clasped her. They said nothing for a moment, clinging mutely together, her face buried in his shoulders, his hand pressing her head against his heart. Then she drew herself away from him and tried to tell him the story in a series of broken sentences, but he silenced her and put her back in the chair.
“Wait till to-morrow,” he said, kneeling down beside her to stir up the fire into a redder blaze. “You can tell it all to-morrow. And, anyway, there’s no necessity to tell it. I know it now.”
“Do you know what I was going to do—nearly did?”
“Yes, all about it. I got your letter.”
“Do you despise me?” she said faintly
“No,” he answered.
The fire began to burn brightly. They sat for a moment looking into it; then leaning toward him over the arm of the chair, she said, almost in a whisper,
“Where’s Jerry?”
“Jerry?” he answered with a sudden slowness of utterance. “Jerry? Jerry’s somewhere.”
“As I came along everybody seemed to be talking of him. I heard his name all along the street. It seemed as if it was following me. I’m afraid of Jerry.”
“You needn’t be any more. You won’t see him again. There’s—he’s— I’ll tell you about that to-morrow, too.”
“Will you let me stay with you?” she continued. “Will you let me live here, somewhere near you? Will you take care of me?”
He took her hand and pressed it, then held it out, cold and trembling, to the blaze, nodding his answer without looking at her.
“I have nowhere else to go. I don’t know where my father is. Uncle Jim, I can’t live up in the Murchison mansion alone. It’s full of ghosts and memories. I’m afraid of it. I’m afraid of Jerry. I’m afraid of myself.”
“You needn’t be afraid any more. I’m going to take care of you now. We’ll get some rooms for you back here with the landlady, and by and by we’ll get something better. You’re never going back to the Murchison mansion.”
“I was so close to dreadful things there,” she murmured. “It was so —”
A man’s step sounded on the stairs, mounted quickly and then struck a resonant response from the wooden flooring of the hall.
“Who’s that?” she whispered, with hurried alarm, her figure drawn alertly upright as if to rise and fly. “Is that some one coming in? Don’t let them. I don’t want to see any one now.”
The Colonel, after a listening moment, reassured her
“That’s only Rion,” he said. “You needn’t bother about him. He lives just across the hall.”
She murmured an “Oh!” of relieved comprehension and fell back in the chair.
They were silent for a space, both looking into the heart of the fire, its red light playing on their faces, the woman leaning back languidly, sunk in an apathy of exhausted relief; the man possessed by a sense of contentment more rich and absolute than he had hoped ever again to feel.
THE END
A LIST of IMPORTANT FICTION
THE BOBBS-MERRILL COMPANY
A ROMANCE OF AMERICAN CHIVALRY
THE LAW OF THE LAND
Of Miss Lady, whom it involved in mystery, and of John Eddring, gentleman of the South, who read its deeper meaning
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Illustrated by Arthur I. Keller 12mo, cloth, price, $1.50
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ZELDA DAMERON
By MEREDITH NICHOLSON
Author of The Main Chance
Zelda Dameron is in all ways a splendid and successful story. There is about it a sweetness, a wholesomeness and a sturdiness that will commend it to earnest, kindly and wholesome people.
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The whole story is thoroughly American. It is lively and breezy throughout—a graphic description of a phase of life in the Middle West.
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A love story of a peculiarly sweet and attractive sort,—the interpretation of a girl’s life, the revelation of a human heart.
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With portraits of the characters in color
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12mo, cloth, price, $1.50
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LOVE IN LIVERY
THE MAN ON THE BOX
By HAROLD M GRATH
Author of The Puppet Crown and The Grey Cloak
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The best novel of the year.
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Satire that stops short of caricature, humor that never descends to burlesque, sentiment that is too wholesome and genuine to verge upon sentimentality, these are reasons enough for liking The Man on the Box, quite aside from the fact that it is a refreshing novelty in fiction.
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Illustrated by Harrison Fisher 12mo, cloth, price, $1.50
The Bobbs-Merrill Company, Indianapolis
HEARTS, GOLD AND SPECULATION
BLACK FRIDAY
By FREDERIC S. ISHAM
Author of The Strollers and Under the Rose
There is much energy, much spirit, in this romance of the gold corner. Distinctly an opulent and animated tale.
New York Sun
Black Friday fascinates by its compelling force and grips by its human intensity. No better or more absorbing novel has been published in a decade.
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The love story is handled with infinite skill. The pictures of “the street” and its thrilling, pulsating life are given with rare power.
Boston Herald
Illustrated by Harrison Fisher 12mo, cloth, price, $1.50
The Bobbs-Merrill Company, Indianapolis
WANTED: A COOK
B ALAN DALE
An uproariously funny comedy-novel of a self-conscious couple in contact with the servant question. Their ludicrous predicaments with their cooks are described with a light, farcial quality and a satire that never fail to entertain.
“A good story well told. In every sentence a hearty laugh and many an irrepressible chuckle of mirth.”
