The American Economic Review

Somewhat more than twenty-five years ago some of us younger men who were interested in the study and teaching of political economy in the United States succeeded in organizing this Association.

The quarter of a century which has elapsed since that time has seen a great change in the standing of the professional economist. I think it is not too much to say that the voice of the student of economics as such is today more potent in the United States in the discussion and decision of public questions than it has ever been before.

I believe that this greater position of dignity and authority of the student and professor of economics is, in some degree, however small, due to the work which this Association, as a body, has accomplished; although, of course, any position of real influence or authority which economists as a class may have won has been due primarily to the actual merit of individual work— also perhaps in some measure to the increasing willingness of economic students to let purely abstract or academic questions drop into the background if thereby some positive practical advance could be made.

The policy of President Roosevelt and President Taft of selecting university men, and by way of preference, university men with economic training, for some of the most important expert positions at their disposal is a clear demonstration of the changed attitude of the people of the United States toward the scientific study of our political problems. And this policy which has been adopted by the federal government has been followed to a growing extent in our states and cities. There is a greater willingness to give the expert a hearing-at any rate, an increasing willingness to hear all sides of a problem before a decision is made, which certainly augurs well for the future welfare of the nation.

It is a source of legitimate gratification to us all that so many members of this Association have been drafted into the public

service. It is a source of still greater satisfaction that they have all made good in this field of work. Hadley, Emory, Jenks, Falkner, Rowe, Johnson, Kinley, are mere examples of a growing tendency which is full of promise for the future of economic studies and sound public policy.

At the time this Association was organized I felt that in the interest of economic and social progress there would be a decided advantage if economists could elaborate and support a positive program of economic and social advance.

My colleagues with whom I was associated in the preliminary and final work of organization did not share my views and this Association has remained, therefore, primarily a scientific body, pure and simple. I do not know, after all, that it has made any very great difference, and yet I am still of the opinion today, as I was then, that if our students of economics and politics and social science could find any questions of public moment and interest upon which they are in substantial agreement we might make a marked contribution to economic and social advance by taking a definite stand upon such questions of public policy. This consummation has indeed already been brought about in certain directions by the organization of specific associations for the study and promotion of positive economic and social problems; as, for instance, the Association for Labor Legislation which has grown out of this Association.

I think, however, that if the members of this Association could agree, for example (to take a concrete instance), upon the proper distribution of public and private expenditure in relation to national production and could work out a definite policy which would commend itself to the members of the Association, directed toward securing a more productive distribution of public expenditure, we might, without doing violence to our scientific character, produce a marked effect upon public sentiment and in the long run upon public policy.

For instance, no matter what theory we may have as to the social effects of war and the political advantage or disadvantage of settling questions of international scope by force, I think all students of economics agree that the modern world is spending an unreasonably large portion of the national wealth for purposes of war and preparation for war. No matter how high a value one may set upon the so-called moral benefits arising from an armed struggle among different nations to determine the survival of

national ideals—and I know that there are still people who maintain the moral value of such contests-no matter how high a value one may set upon the educational discipline which universal compulsory military service effects in the young men of a nation which adopts it and I am aware that there are some very estimable people who set a high value upon such training—still I think the overwhelming opinion of the students of economics is that we have long passed the point at which it is desirable to extend still further the war budget.

The statement has been made that of late the appropriations of the federal government are distributed in such a way that nearly seventy-five per cent may be properly classed as war expenditures, that is, preparation for war, pensions payable on account of war, interest on the public debt contracted because of war, etc., etc. My own estimate runs higher.

Some twenty-five years ago I made a rough estimate of the expenditures of the federal government up to that time from the year 1789, covering nearly the first century of our national existence. I found that the total expenditure for all purposes on the part of the federal government had been something like eighteen billions of dollars, and of that amount sixteen and onehalf billions had been spent for war, using the term again in its large sense, of money spent in preparation for war, in the conduct of war, and in settling the bills after the war was over. In other words, the expenditure of the federal government up to that time had been sixteen and one-half units for war and one and one-half for all other purposes whatsoever, including the so-called enormous expenditures for river and harbor improveEleven twelfths of the income of the federal government

spent on war!

And this is a peaceful nation!

Nobody can deny that a country which wishes to develop its civilization in an efficient way must protect itself from armed aggression and must maintain domestic order. Everyone will, furthermore, grant that if we propose, for example, to fortify our Atlantic and Pacific coasts in such a way that no fleet in the world could make a landing, it will take very much larger sums of money than we have thus far spent or have thought of spending upon war and war's alarms. But it is a long call from admitting that if we are intending to fortify our coasts in the manner suggested we must spend far more money than we are spending,

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The American Economic Review, Volume 1