made the régime of inconvertible paper currency, otherwise “the rule of the rag baby", forever impossible in civilized countries. He has on the other hand extended the lawful domain of a convertible paper currency. Today in Canada, the currency for anything over a half dollar is a paper currency, resting on a quite invisible basis of gold sovereigns and American eagles and fine gold bars. This is an approach to Ricardo's 'Economical and Secure Currency." Whether, finally, it be a compliment or not, Ricardo has some claim to be considered the father of the Bank Charter Act of 1844.

Professor Hollander has shown us how complete is Ricardo's title to be credited with the "Ricardian" theory of rent. The idea of differential returns has been extended farther than he can ever have expected. There is, however, one passage in the chapter on Rent,19 which gives a fair text for a sermon on Final Utility: "The exchangeable value of all commodities, whether they be manufactured or the produce of the mines or the produce of land, is always regulated not by the less quantity of labor that will suffice for their production, under circumstances highly favorable and exclusively enjoyed by those who have peculiar facilities of production, but by the greater quantity of labor necessarily bestowed on their production by those who have no such facilities, by those who continue to produce them under the most unfavorable circumstances, the most unfavorable under which the quantity of produce required renders it necessary to carry on the production."

Such theories as that of Professor Taussig on wages seem far enough from Ricardo, but you will note that the ruling idea is "a competitive margin for capital"20 and it is the idea in Ricardo's mind in the passage last quoted.21

It was Ricardo's theory of value which from 1848 to 1871 seemed to John Stuart Mill "complete."22 The recasting of the theory of value has proceeded apace since then. Mill's was the last of the great textbooks to be almost purely Ricardian in theory. Not only the theory of value but the theory of capital and interest, and the theory of wages have all been modified; and there is probably no body of economists now, who would identify

1 In Political Economy and Taxation, p. 37.

20 Address to American Economic Association, New York, 1909.

21 Adam Smith, Wealth of Nations.

23 Political Economy III, i, § 1.

themselves with the Ricardian doctrines exactly in the form in which Ricardo taught them. That there are Ricardian ingredients wrought into the substance of modern economic doctrines, is shown by such examples as the passage quoted from Professor Taussig. But Ricardo's success in those departments has been rather in method, than in results. He has given the type of characteristic economic discussion, close set logical reasoning from premises clearly defined, the defects almost invariably lying in those premises, not in that reasoning. As Professor Hollander has hinted, such a discursive treatise as that of Adam Smith, however necessary at the beginning of the new English period of economic research, would not be now reckoned scientific; and woe to him who would try to be a second Adam Smith and plant a treatise of that kind on us now. Even Malthus, writing a general treatise a few years after Ricardo's, is found to be attempting a more rigorous logical discussion in the manner of his friend. In many matters Malthus may have been really nearer the truth; but in tenacity of grasp, in close reasoning, he was no match for his friend. We did not need the rather ill-natured account of their debates at the Political Economy Club to convince us of this fact.23

It would be vain to contend that Ricardo's writings or the writings of his friend, or even the two conjoined, contain the promise and potency of all the fruitful economical ideas of later date. He has left some departments of doctrine unillumined. Professor Hollander has shown how much more he has illumined than is generally recognized. For an economist to have succeeded it is enough that his work in whole, or in the main part, has been built into the fabric reared afterwards. As we cannot conceive public finance to be taught without aid from Adam Smith, or the theory of population without Malthus, so we cannot conceive currency or rent or taxation or the funding system to be taught without aid from Ricardo.

Ricardo thought that his disciples would put his case before the public better than he could himself, because in his modesty he fancied they knew how to write and he did not. For all that, it seems likely that economists will prefer to read him in the original. Not only are they securer then against the risk of taking a commentary for a text, but they are likely to find his defects of style to have been exaggerated. They were exaggerated (he Bain, Life of James Mill, p. 199.

confesses it) by the writer of these very lines. It is true that the "Political Economy and Taxation" reads like a series of essays, originally detached and not quite compactly built together. But the sentences in detail are seldom worse than those of other economists. Economists, in reviewing each other's books, usually attack the reasoning and leave the style alone. There are ungrammatical sentences in Adam Smith, traceable with the microscope; but, though he is not saved for them, he is not usually condemned for them. If McCulloch's style was better, this has not saved him from execration. Professor Hollander has shown us that this adoring disciple was a little unscrupulous in the editing of his master's writings. In his notes on Adam Smith he was often wrong about his author's omissions and commissions. He was also fallible like all of us in proof correcting. Ricardo is credited even by Professor Gonner, 24 with a hopeless phrase in the chapter on Foreign Trade, so often mentioned in this address. The phrase, as it stood in the first and second editions, was perfectly good and grammatical; it suffered misprint in the third edition, which McCulloch too nearly followed.

If his style had really been one of the worst we should hardly have found ourselves bound to his phrases. An author may well be a little flattered when people who discourse on his favorite topics use his favorite terms about them. Of course, it may be obscurity that drives us to this, but it may be just the opposite. Ricardo's mistake in authorship, was his agreeing against his better judgment to try to cover the whole ground at one swoop in a single treatise, as if a lyric poet should write an epic. His own inclination led him to attack one subject at a time in a pamphlet. None of the pamphlets are strikingly defective in arrangement, and, if he had gone on letting them grow, one out of the other as they seemed likely to do, the result would have had coherence of thought in it. As it stands, the large treatise is not to be recommended as a model for our young economists to imitate. They ought not to imitate anybody; but it would be cause for rejoicing if an increasing number of them wrote pamphlets of his quality and in his manner, emulating him too throughout their controversies in the art of polite letter writing, of which he is a master.

24 Ricardo's Political Economy, 1891, p. 123. McCulloch's ed. of Ricardo's Works, p. 81, near foot: "to the fact"; 1st ed. 1817 and 2nd ed. 1819 "in fact"; 3rd ed. 1821, "to fact".

THE RICARDO CENTENARY-DISCUSSION

ALVIN S. JOHNSON: The work of Ricardo is in need of no further appreciation; it has received even justice at the hands of Professors Hollander and Bonar, the authorities best qualified to pass judgment upon it. In a sense, we are all, undoubtedly, Ricardians. The content of our teaching is influenced greatly by the work of Ricardo, and our methods of theoretical investigation are influenced by it still more. Where we succeed it is largely because we are Ricardians; where we fail it is partly because we are human and partly because we are Ricardians.

Ricardo's habit of thought—what gives it its abstract character is not that of the schoolman, who searches for the most general phenomena in his field, and seeks to explain them. Ricardo selects practical issues, interesting to him and to his age, and pursues their explanation relentlessly, discarding the facts that do not bear upon them, not as unimportant, but as irrelevant.

This method of theoretical construction, although perhaps more characteristic of Ricardo than of any other economist, can not properly be called Ricardian. It was a method used by Aristotle and William James, and in the intervening centuries, by all who were both philosophers and wise men. It is the pragmatic method, lately rechristened and popularized. Now, whatever the merits of this method, the positive results attained by it are valid and important only with respect to the needs of a given time. So long as the practical problems which give rise to a theoretical construction of this nature live and hold the center of interest, so long will the construction remain worth while and no longer.

The practical problems that attracted the attention of Ricardo were the related problems of international trade, currency, and taxation. Other problems did indeed confront him, but most readers of Ricardo will admit that they appear incidentally compared to those which I have mentioned. For problems of this nature, it is obvious that a theory laying stress, not upon quantities, but upon proportions, will be effective. Not absolute value but relative value, not absolute incomes but relative incomes, are the significant phenomena. We ask, how does the imposition of a certain tax affect the relative price of commodities? How does a rise in the value of corn affect relative incomes?

These practical problems are still with us, and it is significant that the theoretical system that best enables us to deal with them is the classical, or Ricardian. After all, the contributions made by the newer theory to the analysis of international trade, taxation, and currency are of doubtful significance. The facts have changed somewhat; the treatment of these subjects has undergone modification, but its basis is still Ricardian.

We have, however, other problems, in which the present age is perhaps more interested than in the ones I have mentioned. We are interested in distribution, not as a mere matter of proportions, but as one of absolute quantities. We desire to understand the forces making for the improvement or deterioration in the absolute welfare of the laborer. We can get no satisfaction from the view that as the portion of labor increases that of capital diminishes. Nor can we get any satisfaction from the Ricardian formulation of the supposed ultimate minima of wages and profits. What is given in our problem is a value mass to be distributed; how far quantitative relations of the productive factors, how far personal strategic relations, determine this distribution are among the questions we are compelled to raise. And just as Ricardo abstracted, so far as possible, from distributive relations, in his value analysis, so we are justified in abstracting from value relations, except in so far as they give a clue to the constitution of the value mass to be distributed.

And here, I believe, is the place we must accord to the psychological theorists. Their function is to explain, not the exchange relations of commodities as such-a work better done, for practical purposes, by Ricardian economists-their function is to explain the constitution of the value mass or distribuendum. Whether they do this satisfactorily or not need not concern us here. What does concern us is that they do not represent "a minor tributary" to the main stream of Ricardianism; they represent a new stream, an attempt at a new formulation, to meet new practical needs. As our practical problems, then, are subject to a twofold grouping, so we are justified in supporting two different formulations of theory. We are likely to succeed just so far as we apply to our problems the theoretical system, Ricardian or non-Ricardian, that is constructed with special reference to them.

LEWIS H. HANEY: In considering the learned and interesting