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Development of
Economic Analysis

Seventh Edition

Now in its seventh edition, Ingrid Rima’s classic textbook charts the development of
the discipline from the classical age of Plato and Aristotle, through the Middle Ages to
the first flowering of economics as a distinct discipline—the age of Petty, Quesnay, and
Smith—to the era of classical economics and the marginalist revolution.
The book then goes on to offer extensive coverage of the twentieth century—the rise
of Keynesianism, econometrics, the Chicago School, and the neoclassical paradigm.
The concluding chapters analyze the birth of late twentieth-century developments such
as game theory, experimental economics, and competing schools of economic thought.
This text includes a number of practical features:

• a “family tree” at the beginning of each section, illustrating how the different
developments within economics are interlinked;
• the inclusion of readings from the original key texts;
• a summary and questions to discuss, along with glossaries and suggestions for
further reading.

This book provides the clearest, most readable guide to economic thought that exists
and encourages students to examine the relevance of the discipline’s history to con-
temporary theory. It will appeal to students of political economics, the history of
economic thought, and other disciplines within the social sciences.

Ingrid Rima is Professor of Economics at Temple University, Philadelphia, USA.

Development of
Economic Analysis

Seventh Edition

Ingrid Rima
First published 2009
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN, UK

Simultaneously published in the USA and Canada

by Routledge
270 Madison Ave, New York, NY 10016

Routledge is an imprint of the Taylor & Francis Group, an informa business

This edition published in the Taylor & Francis e-Library, 2008.

“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”

© 2009 Ingrid Rima

All rights reserved. No part of this book may be reprinted or

reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Rima, Ingrid Hahne, 1925–
Development of economic analysis / Ingrid Rima.—7th ed.
p. cm.
Includes bibliographical references and Index.
1. Economics—History. I. Title.
HB75.R46 2009
300.09—dc22 2008020299

ISBN 0-203-88794-8 Master e-book ISBN

ISBN10: 0–415–77293–1 (hbk)

ISBN10: 0–415–77292–3 (pbk)
ISBN13: 0–203–88794–8 (ebk)

ISBN13: 978–0–415–77293–8 (hbk)

ISBN13: 978–0–415–77292–1 (pbk)
ISBN13: 978–0–203–88794–3 (ebk)
For Philip and the diamonds of our acres, my students.
Contents

Preface ix

Part I 11 Karl Marx: An inquiry into the “Law

Preclassical Economics 1 of Motion” of the capitalist system 230

12 First-generation marginalists:
1 Early masterworks as sources of Jevons, Walras, and Menger 254
economic thought 9
13 “Second-generation” marginalists 283
2 The origins of analytical economics 25
3 The transition to classical
economics 46 Part IV
The Neoclassical Tradition, 1890–1945 311
Part II
Classical Economics 67 14 Alfred Marshall and the neoclassical
tradition 318

4 Physiocracy: The beginning of 15 Chamberlin, Robinson, and other

analytical economics 72 price theorists 349
5 Adam Smith: From moral 16 The “new” theory of welfare and
philosophy to political economy 93 consumer behavior 373
6 Thomas Malthus and J. B. Say: The
political economy of population behavior 17 Neoclassical monetary and
and aggregate demand 123 business-cycle theorists 396

7 David Ricardo: Analysis of the

distributive shares, international trade and Part V
money 145 The Dissent from Neoclassicism,
8 Building on Ricardian foundations:
1890–1945 417
The Mills, W. N. Senior and Charles
Babbage 168 18 The dissent of American
institutionalists 423
9 Classical theory in review: From
the French theorists to J. R. McCulloch 185 19 The economics of planning:
Socialism without Marxism 442
Part III
20 J. M. Keynes’s critique of the
The Critics of Classicism 203
mainstream tradition 456

10 Socialism, induction, and the 21 Keynes’s theory of employment,

forerunners of marginalism 209 output and income 473

vii
Contents

Part VI Part VII

Beyond High Theory 497 Competing Economic Paradigms 565

22 The emergence of econometrics as 25 The challenge of competing

a sister discipline of economics 506 paradigms in contemporary economics 572
23 Neo-Keynesians, neo-Walrasians,
and monetarists 519 Index 593

24 The analytics of economic

liberalism: The theory of choice 541

viii
Preface to the seventh edition

When the first edition of Development of Economic Analysis was published in 1967,
economists had already established their discipline as “scientific” in the mathematical
style in which they presented their arguments, which were quite explicitly developed to
become joined to quantitative research. That the new style of economic discussion and
communication leaned in this direction was partly a reflection of the influx of math-
ematicians, physicists, and engineers into the profession. It also reflected the shift of
focus in the allocation of research funds during the Great Depression, by such well-
endowed organizations as the Rockefeller Foundation toward “scientific” endeavors.
Thus, by the late 1960s the discursive non-mathematical style of textbooks on the his-
tory of economic thought made them appear outmoded in comparison with the increas-
ingly formal presentations in other textbooks that had by then become focused on
micro- or macroeconomic analysis.
Because there was still a substantial interest in the history of economics, the idea of
writing a text that would focus on the development of the analytical tools of economics
seemed to offer a vehicle for narrowing the distance between books in economic theory
and the traditional book in the history of thought. Accordingly, the first chapter of
Development of Economic Analysis posed the question: “Why was the emergence of
economic analysis delayed until the latter part of the eighteenth century, when eco-
nomic ideas can be traced to the philosophical, legal, religious, ethical, and political
writings of the scholars of antiquity?” The chapters of Part I, therefore, are designed
to present the emergence of economics as a discipline that has become increasingly
“scientific,” partly in consequence of its greater reliance on the tools and perspective
of the natural sciences, and focusing less on the value judgments which characterized
the discipline before the days of “logical positivism.”
Lamentably, the preference which professional economists now have for the language
of mathematics and empirical testing is in no small measure responsible for the present
relative neglect of the history of economic ideas, economic history, and institutionally
oriented courses in contemporary graduate and undergraduate programs in economics.
The requirement for studying the history of economics has been substantially elimin-
ated, because it is widely believed time is better spent in mastering mathematics for
economists and econometrics. It thus seems essential to rethink how the history of
economic thought might best be presented to recapture the interest of graduate and
undergraduate readers who have either been mislead into thinking the historical
aspects of their discipline are an unnecessary frill that will not add much to their

ix
Preface to the seventh edition

expertise if they are, or plan to become, professional economists. It is even suggested

that the history of economic thought is not particularly useful for an educated person
who is simply seeking to understand how the economic world functions.
One vehicle for reviving student interest in the history of economics is to incorporate
selections from the original source readings into the text. Selections from the Master-
works of the history of economics have been so positively received in earlier editions
that this feature is carried over into this edition. Selections now include contributions
that relate specifically to numeracy in economics. These are introduced within the
context of the many controversial issues to which those who shaped economics quanti-
tatively gave their attention. The Masterwork format offers the double advantage of
providing easy access to original source readings while reinforcing reader appreciation
of the intensely practical concerns of our intellectual forebears as problem solvers.
The differing “answers” they offered to the issues they addressed makes it manifestly
clear that intellectual controversy has been a characteristic of economic inquiry from
its earliest days.
Adam Smith’s Wealth of Nations laid an important part of the groundwork for con-
troversy in economics by his lack of enthusiasm for Political Arithmetic, which
brought an early end to the first stage of numeracy in economics. The thinkers who
followed Adam Smith thus relied on the deductive method rather than empiricism to
establish the principles of the classical tradition. Part II explores the major themes of
Classicism in terms of the specific contributions of Smith, Malthus, Say, Ricardo, John
Stuart Mill, and Senior. The chapter titles are intended to convey the specific topical
areas of their contributions.
Part III, “The Critics of Classicism,” focuses on the writings of an extremely diverse
group of nineteenth century writers. Besides including Karl Marx’s alternative ana-
lytical system, the best known among these are the “first generation” marginalists—
William Stanley Jevons, Carl Menger, and Léon Walras. The German and English his-
torical schools, and the English socialists, were also part of the dissent against the
classical tradition. Several who worked in England were part of the new movement “to
collect, arrange and compare facts” relating to economic activities, events, and out-
comes, and present them in numerical form which laid the foundation for the new
science of statistics. Their mission culminated in the establishment of the Statistical
Section of the British Association for the Advancement of Science (subsequently
Section F) in 1833, and the Statistical Society of London (later the Royal Statistical
Society) in 1834. Within a few short years proponents of the science of fact-gathering
undertook to infer behavioral generalizations or economic “laws” from their data as a
basis for mounting public policies to gain compliance with standards of moral conduct
that would “promote the greatest good for the greatest number.” Especially in the work
of Jevons, this perspective led to the identification of mathematical expressions of
economic behavior and the view that, when supplemented by the empirical science
of statistics, economics might gradually be erected into an exact science.
Part IV, “The Neoclassical Tradition,” begins with the eclectic efforts of Alfred
Marshall to join marginalist techniques and thinking to the classical tradition. His
promotion of the use of diagrams as part of his effort to make economics “scientific” at
long last fully appreciated the possibilities recognized as long ago as René Decartes’
Geometria (1637), that the diagrams used in mathematics, meteorology, and engineering

x
 Preface to the seventh edition

could become models for political economists. While Marshall was skeptical that
“statistical treatment alone can give us definitions and precision of thought” (Book V,
Chap XII, p. 461), it is he who led economists to posit that money can serve as a basis for
measuring human behavioral motives. This approach has made economics unique
among the social sciences with respect to quantification.
Marshall’s oral and written tradition was refined and embellished by his students
and colleagues, as well as by American scholars who came under their influence.
These developments are part of the stunning intellectual breakthroughs that were
achieved during the period George Shackle so colorfully called “the years of high
theory.” These years were also characterized by the dissenting voices of the institu-
tionalists, the theoretical socialists, and John Maynard Keynes, whose intent was
nothing less than to generate an intellectual revolution. The issues of their dissent
are examined in the three chapters that comprise Part V; these also set the stage for
Part VI, “Beyond High Theory,” which undertakes to provide an historical guide to
contemporary theory. Chapter 22, “The emergence of econometrics as the sister discip-
line of economics,” interprets econometrics as playing a key role in shaping not only
contemporary economics, but in defining critical areas of controversy and dissent. It is
intended for users who wish to examine the continuum of ideas that link contemporary
theory with the history of thought. This “mainstream” approach to economics consti-
tutes the professional core of the PhD degree in economics at virtually all of the
graduate schools in the United States, the United Kingdom, Canada, Australia, and
Western Europe. With the professionalization of economics via an international
community of scholars, who stay in close touch via journals, associations, society
conferences, FAX, e-mail, and the internet, the similarities among their programs are
typically greater than their differences.
There is currently a strong expression of dissent, especially among American and
British economists who categorically reject what each terms “the mainstream.” Thus,
in the first decade of the twenty-first century, economic inquiry reflects a competition
among different paradigms; institutionalism, the “new left” variant of Marxian theory,
and a rebirth of the Austrian school, transplanted (so to speak) via Vienna and the
London School of Economics to Chicago and numerous “Ivy League” institutions.
There are also at least two variants of post-Keynesian economics developed by indi-
viduals in the United States, the United Kingdom (in particular at Cambridge, Eng-
land), Canada, and to a lesser extent, Australia. Their teaching and research relates to
themes they consider consistent with the economics of Keynes and his The General
Theory of Employment, Interest and Money (1936). However, those who identify them-
selves as post-Keynesian are far from agreement in their interpretation of what pre-
cisely it means to be a post-Keynesian. Thus it is an important part of this revision to
articulate the nature of their dissent in a new Part VII, which chronicles a dissent
movement against neoclassical economics that was initiated by French students at the
Sorbonne, and followed by British students at Cambridge and Oxford. These were fol-
lowed by similar expressions of dissent at several leading economic departments at
American universities and colleges. Dissent now reflects an increasingly important
part of contemporary economics writings. It thus seems appropriate to conclude this
volume with a sufficiently detailed survey of writings directed against mainstream
theorizing and its methods, to provide at least some understanding of the possible

xi
Preface to the seventh edition

future direction of economics toward an integration of paradigms that is being called

“pluralism.”
A substantial intellectual debt in the preparation of this edition is to my many
friends and colleagues in the History of Economics Society, whose academic candor
and warm friendship provided a rare and positive stimulus to my efforts. Several
anonymous reviews were also important in helping me to think more carefully about
accommodating readers with different levels of background who are studying in
different English speaking countries. They were incredibly useful, and are gratefully
acknowledged. Finally, I wish to thank my editor, Mr. Robert Langham and his editor-
ial assistant Ms. Sarah Hastings for the creative ideas relating to a more modern format
for my volume, and for keeping me on schedule when my professorial instincts to
linger might have delayed the process. My special thanks to Ms. Elisabet Sinkie for her
care in seeing the manuscript through indexing and typesetting with special dispatch.
All of their efforts were coordinated with incredible skill by my husband Philip, with-
out whose comparative advantage in program management this volume would have
been considerably delayed.

Ingrid H. Rima
Temple University, Philadelphia

xii
Part I

Preclassical Economics
Key dates

c. 369–370 BC Plato The Republic

c. 355 BC Xenophon The Ways and Means to Increase the
Revenues of Athens
c. 300 BC Aristotle Politics, The Nicomachean Ethics
c. AD 1269–1272 Thomas Aquinas Summa Theologica
c. 1360 Nicholas Oresme Tractatus de origine natura jure, et
mutationibus monetarum
1613 Antonio Serra Breve trattato delle cause che possono
far abbondare li regni d’oro et
d’argento, dove non sono miniere con
applicazione al Regno di Napoli (A
Brief Treatise on the Causes Which
Can Make Gold and Silver Plentiful
in Kingdoms Where There Are No
Mines)
1664 Thomas Mun England’s Treasure by Forraign Trade
1690 Josiah Child Discourse about Trade
1690 Sir William Petty Political Arithmetick
1692 Dudley North Discourse upon Trade
1696 Nicholas Barbon A Discourse concerning making the
New Money Lighter
1714 Bernard de Mandeville The Fable of the Bees: or Private
Vices, Publick Benefits
1752 David Hume Political Discourses
1755 Richard Cantillon Essai sur la nature du commerce en
général
1767 James Steuart An Inquiry into the Principles of
Political Oeconomy
Part I Preclassical economics

Why study the history of economic sonal computers and the internet will
analysis in the twenty-first century? promote a rapid transfer of technical
knowledge and information about its use.
The first decade of the twenty-first cen- Nevertheless, problems to be confronted
tury marks the beginning of a globalized suggest that not only economists, but
economy. The free movement of infor- thinking non-economists will gain a sig-
mation made possible by the internet, nificantly better understanding of the
coupled with greater mobility across changing material world inherent in a
international boundaries aided by such globalized economy if they are familiar,
trading agreements as the North Atlantic not only with modern-day neoclassical
Treaty Agreement (NAFTA), the Euro- (or mainstream) principles, but also the
pean Economic Union (the EU), and the way in which it developed.
Asian Agreement, which facilitate less Many modern-day economists, espe-
restricted movements of commodities, cially in English-speaking countries,
services, and capital funds, presented believe that contemporary theory
practical men and women with a host of embodies all the valid intellectual break-
new problems. Despite the claims made for throughs and insights of earlier contri-
economics as a science of rigor and rele- butors to the discipline. If this is a valid
vance, there are numerous problems about viewpoint, it follows that younger
which economists are unable to agree, scholars ought to be taught these cumula-
either about theoretical explanations or tive “foundations” as a basis for progress-
policy agendas. High on the list are how ing toward the frontier of new economic
employment can be provided for all who knowledge. According to this view, time
are willing to work at the currently pre- spent studying the history of economics,
vailing level of wages and prices. Whether while interesting in its own right, does
and how can inflation be contained with- not advance the knowledge frontier.
out creating unemployment? Perhaps However, the latter is a view not shared
the most difficult question of all is “Can by all economists, if for no other reason
income be distributed to support a ‘middle than that it suppresses present-day chal-
class’ in post industrial economies, while lenges to the dominant neoclassical view.
also improving the status of impoverished Also, it is these heresies, criticisms of
workers in developing countries?” which provoked acknowledgement that
These problems are complicated by earlier theories embodied errors or
the fact that the economics of the “newly inconsistencies, that led to the refine-
emerging” industrial economies of Asia ments that characterize what might be
and eastern Europe have long histories of termed the “canon”; that is, the belief sys-
state management, to which the principles tem reflected by the neoclassical econom-
of capitalist economies do not apply. ics of the mainstream.
Replacement of the administered prices The neoclassicism that rules today
of a planned economy with market- reflects the intellectual marriage of the
determined prices requires complex legal, classical tradition that preceded it,
institutional, political, and cultural enriched by the traditions of general equi-
changes, which will no doubt require librium analysis, marginalism, and the
several generations to become realized, challenges they confronted over time
even though the process of globalization from thinkers like J. M. Keynes, Karl
promises that the combination of per- Marx, the Austrians, and members of the

4
 Part I Preclassical economics

historical school and their contemporary Alfred Marshall (1890). The latter was
followers who dissented from their views, subsequently joined by J. R. Hicks to
and carry on the pluralism of modern integrate John Maynard Keynes’s macro-
heterodoxy. The latter reflect other eco- economic principles into Marshallian
nomic belief systems that differ from the price theory. Subsequent to its mathe-
scarcity-equilibrium questions of neo- matical restatement by Paul Samuelson,
classical economics, and offer alternative this synthesis came to constitute the
explanatory hypotheses about economic “core” of contemporary economics. Even
phenomena. if one is persuaded that neoclassical
The difference between heterodox per- principles do offer the most robust and
spectives and neoclassical economics may sophisticated hypotheses articulated
be likened to the classic example of the until now to explain how modern econ-
sciences of astronomy. From the time of omies function and progress, it should be
the ancient Greeks until the fifteenth recognized that neoclassical principles
century, Ptolemaic theory (after the are themselves the product of consider-
Greek astronomer Ptolemy) maintained able intellectual change and challenge.
that the Earth is the center of the The neoclassical–neo-Walrasian tradition
universe. The counter-argument by the that rules today reflects the intellectual
Polish astronomer Nicolas Copernicus marriage of the classical tradition
(1473–1543) was that Earth is but one that preceded it and the traditions of
planet among many that revolve around Walrasian general equilibrium analysis,
the sun, which destroyed forever the old marginalism and the challenges they
Egyptian belief. confronted from Marxism, Historicism,
There has never been the equivalent Institutionalism, and the economics of
(nor is it likely that there ever will be) for J. M. Keynes. Familiarity with only con-
the Copernican revolution in economics. temporary economic theory, without any
Unlike the natural sciences in which new historical understanding of how it came
evidence totally supplants old theories, to be, is thus likely to be relatively un-
alternative paradigms in economics have sophisticated. The principles of modern
not only survived from the seventeenth, economics rest, in large part, on historical
eighteenth, and nineteenth centuries, conceptions about what the issues of eco-
but have become refined and modernized nomics are and what are the methods
doctrines known as Institutionalism, by which answers shall be sought. Eco-
post-Keynesianism, Modern Austrian, nomics has become a science of multiple
and Marxism (or Radicalism), which paradigms whose competing claims to
are the most prominent contemporary validity comprise the basis for contem-
challenges to the neoclassical or main- porary controversy. Thus, the concluding
stream paradigm. Part VII of this book concerns con-
One can, of course, study contem- temporary heterodox economics, which
porary economic issues and problems examines the leading competing para-
without any paradigmatic perspective digms that have emerged to challenge
other than the conventional wisdom of neoclassical theory.
the neoclassical theory that emerged While the history of economics is
when the classical tradition of Adam worth studying for its own sake, a more
Smith and David Ricardo was joined to positive reason for studying it as the
nineteenth century Marginalism by problems of the twenty-first century

5
Part I Preclassical economics

emerge is surely to understand what are nomic issue to have been subjected to
the questions that economists ought to formal inquiry: what sort of wealth-
ask, and by what methods shall they seek getting activity is necessary and honor-
to answer them? It is not an exaggeration able for humans to undertake? While
to say that economics did not exist as a Aristotle’s was an ethical and moral
separate field of study prior to the eight- question, it was answered by means of
eenth century. Even in advanced ancient reasoned inquiry. That one of the areas
civilizations, such as those achieved by about which knowledge should be sought
the Greeks and Romans, inquiry into concerns human relationships as they
economic matters was quite a minor relate to the material environment, was a
aspect of intellectual effort. Yet the major intellectual departure for which we
inquiries of many pre-eighteenth-century are indebted to early Greek thinkers like
writers are so profound, and continue Aristotle.
to have so great an impact on the way in Roman and medieval thinkers also
which human beings conceive of their adopted a problem-solving perspective,
relationship to one another and their particularly about practical applications
environment, that they are remembered in jurisprudence and animal husbandry.
as part of the intellectual heritage of Their concern was with solving specific
western civilization. problems and answering specific ques-
tions, many of which related to the
material environment. Their intellectual
An overview of pre-classical economics
legacy is pre-scientific and pre-classical
The writings of Aristotle, Plato, in the sense that it does not represent a
Aurelieus, Oresme, and Aquinas are body of general principles about eco-
among the masterworks of human know- nomic matters, but observations and pre-
ledge bequeathed by the ancients. While scriptions relating to the good life or
the inquiries of the ancients into eco- good citizenship embedded in writings
nomic questions are unsystematic, and concerned chiefly with religion, ethics,
in most cases little more than moral pro- politics, or law. Even inquiries made
nouncements, it is also the case that even during the vital era known as the Renais-
those thinkers who, like Aristotle, had a sance failed to produce anything in the
desire for knowledge for its own sake were way of systematic principles or analysis,
most concerned about the solution of and so these were substantially delayed
practical problems. The philosophical until seventeenth-century mercantilist
studies of the ancient Greeks and Romans thought.
were undertaken in the context of par- The development of quantifying con-
ticular issues and problems. It was they cepts and techniques has accompanied
who taught us to seek solutions for the growth of knowledge throughout
practical problems, including those that human history. In earliest times, their
arise in our complex present-day material principal use was rooted in such practical
environment. The modern word “eco- undertakings as the building of roads,
nomics” has its origin in the Greek dams, and canals, in particular by the
word oikonomia, which means the art of Romans, and magnificent burial sites,
household management. In studying the such as the pyramids of Egypt. The
nature of this art, Aristotle undertook ancient Greeks, as philosophers and
to examine what is probably the first eco- geometers, were generally less interested

6
 Part I Preclassical economics

in the practical application of numeracy. statecraft. Mercantilism’s chief goal was

Socrates, on the other hand (according to to increase the political power and wealth
Plato), even though he was not interested of nation-states with respect to one
in quantification per se, seems to have another.
anticipated the expectations of many con- Mercantilistic goals directed economic
temporary economists about the potential activity and thought in England, France,
power of quantification as a learning and northern Europe from the sixteenth
tool when he said “the arts of measuring century well into the eighteenth century.
and numbering and weighing come to Some theoretical ideas, and also what may
the rescue of human understanding, and be termed “the first stage” of numeracy,
the apparent greater or less, or more or date from this time. The transition
heavier, no longer have mastery over us, period of the mid-seventeenth to the
but give way before calculation and mid-eighteenth centuries was thus a time
measure and weight.”1 Given the present- that was animated by many inquiring
day reliance by economists on mathe- minds, and was a period of great economic
matics and on econometrics as the sister vitality during which a substantial middle
discipline of economics, the study of class engaged in industry and trade
the development of economic analysis is came into power, particularly in England,
quite appropriately extended to include but also in France and Holland. These
reliance on what may broadly be called economic developments were accom-
“numeracy,” as it came to be used during panied by an attitude of increasing
different historical stages of inquiry into liberality: people began to believe that
economic phenomena.2 greater freedom from governmental
A quantified or numerical variable is restrictions would be advantageous to
one whose values are expressed as num- themselves as well as to the economy.
bers which measure a particular property Economics had not yet become estab-
or characteristic using a specific ordinal, lished as a separate discipline, perhaps
cardinal, or ratio scale. By contrast, a because there was so much theological
non-quantified or qualitative variable is and political controversy and such great
one whose values do not lend themselves interest in the natural sciences. However
to numerical expression. We will use the the ground from which the classical
term “numeracy” as a convenient “catch- tradition subsequently germinated was
all” for all the techniques that have been being prepared.
used by political economists, and sub- The three chapters that follow examine
sequently by economists, to enumerate, the highlights of pre-classical economics
measure, and quantify, ranging from sim- and their legacy as masterworks in
ple arithmetic to contemporary econo- economics.
metric techniques.3
The revival of trade from the fifteenth
Notes
century onwards gave an impetus to
financial techniques such as double-entry 1 Keynes, J. M., The General Theory of
bookkeeping and bills of exchange. These Employment, Interest and Money (New
coincided with the era of mercantilism, York: Harcourt Brace and Company, 1936),
p. 383. Donald A. Walker offers a con-
which was characterized by strong temporary retrospective relating to the
national economies that pursued com- many present-day concerns for which past
mercial activity as an instrument of economic doctrine is not merely relevant,

7
Part I Preclassical economics

but essential to sophisticated understand- 3 The parallel development of economic

ing. See his “Relevance for present eco- theory and reliance on tools of numeracy
nomic theory of economic theory written to measure, quantify and lend greater pre-
in the past” in Journal of the History of cision to its concepts and relationships
Economic Thought, 21(1), March 1999. is examined in Rima, I. H. (ed.) Measure-
2 Plato, The Dialogues, Translated by ment, Quantification and Economic
B. Jowett, Great Books of the Western Analysis: Numeracy in Economics
World, vo1. 7, p. 431 (Chicago: Encyclopedia (London: Routledge, 1995).
Britannica, 1952).

8
Chapter 1

Early masterworks as sources of economic

thought

Not until the eighteenth century did of studying the reality of ideas, his
speculation about economic phenomena approach was to divide reality into the
begin to emerge as economic analysis several separate subjects of physics,
rather than as economic thought. The biology, ethics, and politics, each of which
reasons why economics did not exist as a he studied from observable facts. He clas-
separate subject in this pre-analytic stage sified them with such scrupulous care that
offer a useful departure point for studying after the rediscovery in the middle ages
the historical development of economic of works lost after Rome’s fall, Aristotle
analysis. There is much to be learned became revered as a “master of those who
about the history of economics by examin- know.” By starting with concrete obser-
ing the reasons why the focus of intel- vations about an empirically-based world
lectual inquiry was on politics, ethics, of knowledge, Aristotle established the
philosophy, and theology, but not on eco- principle that only knowledge derived
nomics qua economics. Yet the ancients from observation is true and certain. This
left a legacy of masterworks, two of led him to have greater faith in induction
which will be examined in this chapter. rather than in reason as the method for
Aristotle, in his book Politics, posed the understanding the world.
question of whether there is a difference Centuries later, during the Italian
between the art of acquisition, which is a Renaissance, the churchman Thomas
necessary part of the management of Aquinas posed questions relating to acts
the household, and the wealth-getting of cheating and other improper behaviors
activities of commerce. The answer he that are sometimes observed in buying
gave distinguished between two sorts of and selling, leading him to extend Aris-
wealth-getting activities in which house- totle’s principles into an ethical and
holds may engage; that which is “neces- religious context. The deep concern of
sary and honorable” and that which is those who wrote about ethical and
“unnatural.” Aristotle’s observational religious issues before the eighteenth cen-
experience led him to value private own- tury helped to impede the development
ership of property as most conducive to of an analytical approach to economics.
the preservation and the improvement of But, despite the non-analytical character
its productive powers. of their thinking about economic phen-
While Aristotle’s teaching started from omenon, they nevertheless expressed
his acceptance of the Ptolemaic tradition ideas about relationships, objects, and

9
Chapter 1 Early masterworks as sources of economic thought

sometimes persons, in terms of numbers merchant activity in Athens. He also

and measures. Human reliance on numer- urged increased production of silver
ical expression thus dates from antiquity. because he thought this metal would
never lose its value.
These recommendations are note-
Politics as economic thought
worthy from our point of view because
Greek thinkers believed that a good life they reflect the preoccupation with the
was the purpose of existence, and that it importance of the state that dominated
was best achieved within the city-state ancient Greek thought. Plato, especially,
(polis). To a Greek, the city-state was not believed that human happiness can be
merely a legal structure; it was a way of achieved only within the city-state. Thus,
life to which was connected every aspect the search for the good life was at one and
of daily existence. Individuals derived the same time the search for the ideal
their importance from their relation as state. While the emphasis on the state as
citizens to the state on which they an instrument to achieve socially optimal
depended, and to whose welfare they results is not incompatible with what has
could contribute. It was the state, rather come to be called social economics, it does
than the individual, that was omnipotent. preclude the emergence of economics as a
Thus, the attention of Greek thinkers was body of theory which seeks to explain how
primarily absorbed by political theory, socially optimal results can be achieved in
though the theory of the city-state the absence of a central authority that
embraced more than politics in the nar- directs the allocation of resources.
row sense. It encompassed, at one and the
same time, ethics, sociology, economics,
Philosophy as economic thought
and political science.
The absorption of Greek thinkers with After the disintegration of the Greek
the origin and functioning of the ideal city-states and the emergence of the
state and for Plato (though not for Aris- empires of Alexander and later of Rome,
totle) the subordination of the individual the belief that individuals as citizens are
to the state had the effect of limiting inseparable from the self-sufficient city-
the development of economic thought. state was replaced by new schools of
Consider, for example, the contribution of thought that separated the good life for
the Greek historian Xenophon (c. 431–352 persons from the good state as a political
BC). His work On the Means of Improving entity. Thus began the divorce of politics
the Revenue of the State of Athens begins from ethics and an appreciation of the
with a description of the natural advan- individual as a person rather than a social
tages of Athens as a commercial center being who is a part of the whole.
attractive to foreigners. Foreigners were Greek philosophy was introduced into
welcomed as a lucrative source of revenue the Roman world through Stoicism,
because as outsiders they were subject to which became the most influential of the
tax levies from which others were exempt. post-Aristotelian schools. Though first
In similar vein, merchants and ship- conceived by Zeno (c. 335–263 BC), the
owners were regarded as superior citizens philosophy of Stoicism received its most
because they brought wealth into the city. profound expression in the Meditations
Thus, Xenophon recommended various of the Roman emperor Marcus Aurelius
measures to the state to encourage (AD 121–180). According to the Stoics, the

10
 Chapter 1 Early masterworks as sources of economic thought

universe is systematic and rational, being both economic progress and the develop-
governed by the all-pervading laws of ment of economic thought than that
nature. Wise individuals live according to which originated in Europe.
nature; reason guides their conduct so The ancient Hebrews, while consider-
that their actions conform to the dictates ably less ascetic than the oriental phil-
of natural necessity. “Be satisfied with osophers, also believed that happiness is
your business and learn to love what you not dependent on wealth and that the
were bred to do, and as to the remainder pursuit of riches would lead to sin. The
of your life, be entirely resigned, and let lives of these people were circumscribed
the gods do their pleasure with your body by the rules of conduct set forth in the
and soul.” This is the essence of the stoic commands of Moses and the prophets.
philosophy. It is clearly not conducive These minutely regulated every phase of
to improvements in the production or dis- human existence, guiding individuals in
tribution of wealth, and thus did not their relationships with one another as
encourage individuals to think about well as in their personal lives. The rules
improving their material well-being. On were detailed and complex and also
the contrary, the belief that happiness is extended to the economic aspects of life.
achieved by conforming to the inevit- For example. charging interest to fellow
ability of destiny or of fate suggests a Hebrews for the use of money or goods
perspective similar to the belief of Arab- was strictly forbidden as usury. The term
Islamic scholars in kismet. It is probably “usury” refers here not to an excessive
also the case that the intellectual values interest rate, which is its present-day
of the Middle Ages of Western Europe meaning, but to any interest charge. Since
cannot be fully understood without the loans were made primarily for charitable
background influence of Islam.1 reasons, the Old Testament proscription
against the taking of usury introduced a
moral standard into economic behavior.
Ethics as economic thought
There are many other directives of an
Economics did not emerge as a separate economic nature in the Old Testament,
field of inquiry until the satisfaction of such as the rules concerning the restitu-
material needs became a desirable goal of tion of property, the remission of debt,
human activity. The thousands of years and the production and harvesting of
during which the pursuit of wealth was agricultural output. Many of these rules
regarded with disdain could scarcely have commemorate events of religious sig-
produced a systematic body of principles nificance such as the seventh day in
to explain acquisition. A negative attitude the story of the creation. These are
toward wealth among the ancient peoples typical of the economic aspects of the
is perhaps most clearly in evidence in the Mosaic law and are of interest to us
thinking of the Hindus and Chinese, because they demonstrate that a separate
although it is typical of Oriental thought science of wealth is incompatible with
in general. Oriental philosophy regards adherence to a religious and philo-
a state of mind in which material wants sophical code which completely dictates
are negligible as essential to happiness. It economic behavior. The religious signifi-
accepts poverty with fatalistic passivity cance of the seventh year illustrates an
and views wealth with indifference. early recognition of the need to measure
Oriental philosophy was less conducive to the passage of time.

11
Chapter 1 Early masterworks as sources of economic thought

Even Greece, with its highly developed of making money, is unnatural, as are all
culture, did not produce a separate body commercial activities for the acquisition
of economic thought. This is not because of coin. The most unnatural among these
the Greeks were disdainful of material is to demand interest for a loan, for money
goods. On the contrary, Plato and Aris- is intended only as a medium of exchange.
totle believed that a minimum amount of Usury, which is the use of the loan to
wealth is essential to the good life. beget money, is a perversion of the loan’s
According to Aristotle, the household proper function. Aristotle’s Politics
(oikos) exists for the purpose of satis- endures as a masterwork of economics
fying natural wants by producing useful because it shaped the thinking of succes-
commodities or acquiring them by sive generations about the distinction
exchange for consumption. Thus retail between natural and unnatural economic
trade, which is exchange for the purpose activities and forms of wealth.

Issues and Answers from the Masterworks 1.1

Issue
What sort of wealth-getting activity is necessary and honorable for individuals to
undertake?
Aristotle’s answer
From Politics (c. 300 BC), Book I, chapters 3, 4, 8, 9, 10.

Chapter 3
Seeing then that the state is made up of households, before speaking of the state we must
speak of the management of the household. The parts of household management correspond
to the persons who compose the household, and a complete household consists of slaves and
freemen . . . And there is another element of a household, the so-called art of getting wealth,
which, according to some, is identical with household management, according to others, a
principal part of it; the nature of this art will also have to be considered by us . . .

Chapter 4
Property is a part of the household, and the art of acquiring property is a part of the art of
managing the household; for no man can live well, or indeed live at all, unless he be provided
with necessaries. And as in the arts which have a definite sphere the workers must have their
own proper instruments for the accomplishment of their work, so it is in the management of a
household. Now instruments are of various sorts; some are living, others lifeless; in the rudder,
the pilot of a ship has a lifeless instrument, in the look-out man, a living instrument; for in the
arts the servant is a kind of instrument. Thus, too, a possession is an instrument for maintaining
life. And so, in the arrangement of the family, a slave is a living possession, and property a
number of such instruments; and the servant is himself an instrument which takes precedence
of all other instruments.

Chapter 8
Of the art of acquisition then there is one kind which by nature is a part of the management
of a household, in so far as the art of household management must either find ready to

12
 Chapter 1 Early masterworks as sources of economic thought

hand, or itself provide, such things necessary to life, and useful for the community of the
family or state, as can be stored. They are the elements of true riches; for the amount of
property which is needed for a good life is not unlimited, although Solon in one of his poems
says that

“No bound to riches has been fixed for man”

But there is a boundary fixed, just as there is in the other arts; for the instruments of any art
are never unlimited, either in number or size, and riches may be defined as a number of
instruments to be used in a household or in a state. And so we see that there is a natural art
of acquisition which is practiced by managers of households and by statesmen, and what is the
reason of this.

Chapter 9
There is another variety of the art of acquisition which is commonly and rightly called an art of
wealth-getting, and has in fact suggested the notion that riches and property have no limit.
Being nearly connected with the preceding, it is often identified with it. But though they are not
very different, neither are they the same. The kind already described is given by nature, the
other is gained by experience and art.
Let us begin our discussion of the question with the following considerations:

Of everything which we possess there are two uses: both belong to the thing as such, but
not in the same manner, for one is the proper, and the other the improper or secondary use
of it. For example, a shoe is used for wear, and is used for exchange; both are uses of the
shoe. He who gives a shoe in exchange for money or food to him who wants one, does
indeed use the shoe as a shoe, but this is not its proper or primary purpose, for a shoe is not
made to be an object of barter. The same may be said of all possessions, for the art of
exchange extends to all of them, and it arises at first from what is natural, from the circum-
stance that some have too little, others too much. Hence we may infer that retail trade is not
a natural part of the art of getting wealth; had it been so, men would have ceased to
exchange when they had enough. In the first community, indeed, which is the family, this art
is obviously of no use, but it begins to be useful when the society increases. For the
members of the family originally had all things in common; later, when the family divided into
parts, the parts shared in many things, and different parts in different things, which they had
to give in exchange for what they wanted, a kind of barter which is still practiced among
barbarous nations who exchange with one another the necessaries of life and nothing more;
giving and receiving wine, for example, in exchange for corn, and the like. This sort of barter
is not part of the wealth-getting art and is not contrary to nature, but is needed for the
satisfaction of men’s natural wants. The other or more complex form of exchange grew, as
might have been inferred, out of the simpler. When the inhabitants of one country became
more dependent on those of another, and they imported what they needed, and exported
what they had too much of, money necessarily came into use. For the various necessaries of
life are not easily carried about, and hence men agreed to employ in their dealings with each
other something which was intrinsically useful and easily applicable to the purposes of life,
for example, iron, silver, and the like. Of this the value was at first measured simply by size
and weight, but in process of time they put a stamp upon it, to save the trouble of weighing
and to mark the value.

13
Chapter 1 Early masterworks as sources of economic thought

When the use of coin had once been discovered, out of the barter of necessary articles
arose the other art of wealth-getting, namely, retail trade; which was at first probably a simple
matter, but became more complicated as soon as men learned by experience whence and by
what exchanges the greatest profit might be made. Originating in the use of coin, the art of
getting wealth is generally thought to be chiefly concerned with it, and to be the art which
produces riches and wealth; having to consider how they may be accumulated. Indeed, riches
are assumed by many to be only a quantity of coin, because the arts of getting wealth and
retail trade are concerned with coin. Others maintain that coined money is a mere sham, a
thing not natural, but conventional only, because, if the users substitute another commodity
for it, it is worthless, and because it is not useful as a means to any of the necessities of
life, and, indeed, he who is rich in coin may often be in want of necessary food. But how
can that be wealth of which a man may have a great abundance and yet perish with hunger,
like Midas in the fable, whose insatiable prayer turned everything that was set before him
into gold?
Hence men seek after a better notion of riches and of the art of getting wealth than the mere
acquisition of coin, and they are right. For natural riches and the natural art of wealth-getting
are a different thing; in their true form they are part of the management of a household;
whereas retail trade is the art of producing wealth, not in every way, but by exchange. And it is
thought to be concerned with coin; for coin is the unit of exchange and the measure or limit of it.
And there is no bound to the riches which spring from this art of wealth-getting. As in the art of
medicine there is no limit to the pursuit of health, and as in the other arts there is no limit to the
pursuit of their several ends, for they aim at accomplishing their ends to the uttermost (but of
the means there is a limit, for the end is always the limit), so, too, in this art of wealth-getting
there is no limit of the end, which is riches of the spurious kind, and the acquisition of wealth.
But the art of wealth-getting which consists in household management, on the other hand, has
a limit; the unlimited acquisition of wealth is not its business. And, therefore, in one point of
view, all riches must have a limit; nevertheless, as a matter of fact, we find the opposite to be
the case; for all getters of wealth increase their hoard of coin without limit. The source of the
confusion is the near connection between the two kinds of wealth-getting; in either, the instru-
ment is the same, although the use is different, and so they pass into one another; for each is a
use of the same property, but with a difference; accumulation is the end in the one case, but
there is a further end in the other. Hence some persons are led to believe that getting wealth is
the object of household management, and the whole idea of their lives is that they ought either
to increase their money without limit, or at any rate not to lose it. The origin of this disposition in
men is that they are intent upon living only, and not upon living well; and, as their desires are
unlimited, they also desire that the means of gratifying them should be without limit. Those who
do aim at a good life seek the means of obtaining bodily pleasures; and, since the enjoyment of
these appears to depend on property, they are absorbed in getting wealth: and so there arises
the second species of wealth-getting.

Chapter 10
There are two sorts of wealth-getting, as I have said; one is a part of household management,
the other is retail trade; the former necessary and honourable. while that which consists in
exchange is justly censured; for it is unnatural, and a mode by which men gain from one
another. The most hated sort, and worth the greatest reason, is usury, which makes a gain out
of money itself, and not from the natural object of it. For money was intended to be used in

14
 Chapter 1 Early masterworks as sources of economic thought

exchange, but not to increase at interest. And this term interest, which means the birth of
money from money, is applied to the breeding of money because the offspring resembles the
parent. Wherefore of all modes of getting wealth this is the most unnatural.

Summing up: Aristotle’s key point The long interval between the fall of
Rome (AD 426) and the fall of Constanti-
Aristotle addressed, for the first time in nople to the Turks in 1453 is generally
recorded human history, the following known as the “Dark” or Middle Ages. For
issue “What sort of individual wealth- roughly 1000 years of human existence
getting activity is necessary and honor- the barbarians who invaded from the
able for humans to undertake?” In his north imperiled civilized society. Two
view, there is a difference between the art institutions provided relief: feudalism
of acquisition, which is a necessary part and the Christian church. Feudal lords
of the management of the household, and provided law and order on the landed
the wealth-getting activities of retail estates or manors over which their rule
trade. Retail trade and usury are ensured that everyone, freemen included,
unnatural, for their purpose is the acqui- had a place in society and a function
sition of coin (i.e. money), which is “not to perform. Custom perpetuated these
useful as a means to any of the necessities arrangements from generation to gener-
of life.” The issue Aristotle posed was a ation until approximately the twelfth
major intellectual departure in the sense century. By then, the revival of trade and
that it clearly established that economic the emergence of town life lured freemen,
questions are often also ethical and moral as well as serfs, away from the manors.
questions. These developments encouraged indi-
viduals to acquire material goods by
engaging in money-making activities that
Church doctrine as economic thought included commerce and money lending.
Church scholars, among them Thomas
Christianity was but one religion among Aquinas (1225–74) and Nicholas Oresme
many during the Roman era, and its fol- (1320–82) who viewed these pursuits as
lowers were often victims of persecution. compromising people’s spiritual lives,
It was not until the fourth century that added to the conflicts about which Augus-
emperor Constantine declared Christian- tine wrote. They undertook to resolve
ity the official religion of the empire. these moral problems by trying to recon-
Father Augustine’s (354–439) The City of cile the scholarship of the ancients
God, written during this early Christian with their own Christian theology. They
era, taught that humans belong to two studied the rediscovered works of the
kingdoms—the kingdom of man and the Greeks, especially Aristotle and Claudius
kingdom of God. Unlike earthly king- Ptolemy, that had been lost when Rome
doms, the kingdom of God will endure fell.
forever to reward those who follow its Ptolemy was the greatest of the Greco-
teachings with life everlasting. He attri- Roman astronomers who lived during the
buted the fall of Rome to the barbarians second century. He is know for his com-
to conflicts between the City of God and plex mathematical system to account for
the City of Man. the motion of the stars and planets

15
Chapter 1 Early masterworks as sources of economic thought

(known as wandering stars), based on Readers acquainted with Chaucer’s

the widely held belief that the earth is at Canterbury Tales will, perhaps, remember
rest at the center of the universe. The the words of the Parson, who observes,
churchmen adopted Ptolemy’s model and “God has ordained that some folk should
added their own interpretation that the be more high in estate and in degree, and
universe is a hierarchy leading to God. some folk more low, and that everyone
God’s creatures occupy Earth, which is at should be served in his estate and in his
the center between Heaven above and Hell degree.” By putting these words into the
below. Thus, the studies of the Schoolmen, Parson’s mouth, Chaucer achieves a syn-
or Scholastics, as these church scholars thesis of philosophy and theology—the
are sometimes called, succeeded in their essence of medieval thought.
task of joining the Ptolemaic conception The view of the churchmen, like Aris-
of the universe to Christian theology. totle’s before them, was that it is essential
Their interpretations of Aristotle’s that human affairs be conducted in
ethics undoubtedly also reflect the treat- accordance with the principles of dis-
ises of Arabian philosophers with whom tributive and commutative justice. Distri-
they were familiar, and which they also butive justice is concerned with the cri-
used as a basis for interpreting Aristotle’s teria for allocating honors, income, and
work, and to reconcile his ethics with wealth to particular persons or classes.
their own positions. The Churchmen con- Commutative justice (from commutates or
sidered avarice or lust for earthly things transaction) is concerned with equity,
as one among the seven deadly sins; only or fairness, in transactions among indi-
those economic activities that maintain viduals. From Thomas’s perspective,
individuals in the rank order into which which reflected the influence of Roman
God has placed them were regarded as civil law, it is necessary to determine
proper. Within this framework, society whether an action that is not unlawful
was seen as an integrated whole in which may, nevertheless, be sinful. While modern
God, nature, and man each had a pre- economists are not interested in matters
ordained place. The good life required such as these, the Summa Theologica
that each class—farmer, artisan, priest, survives as a masterwork of economics
and nobleman—perform its proper work because it confronts the co-existence of
according to the laws by which God and ethical and economic questions in human
nature would preserve the class structure. behavior as a seminal issue.

Issues and Answers from the Masterworks 1.2

Issue
Are the civil contracts governing individual relationships also consistent with a higher
natural law? Specifically, is it lawful to sell a thing for more than it is worth? What are
the obligations of buyers and sellers with regard to transactions? Is it a sin to take
usury for money lent?
Aquinas’s Answer
From Summa Theologica (1269–90), Part 11, Questions 77 and 78.

16
 Chapter 1 Early masterworks as sources of economic thought

Question: 77 Of cheating, which is committed in buying and selling

We must now consider those sins which relate to voluntary commutations. First, we shall
consider cheating, which is committed in buying and selling; secondly, we shall consider usury,
which occurs in loans. In connection with the other voluntary commutations no special kind
of sin is to be found distinct from rapine and theft.
Under the first head there are four points of inquiry: (1) Of unjust sales as regards the price;
namely, whether it is lawful to sell a thing for more than its worth? (2) Of unjust sales on the part
of the thing sold. (3) Whether the seller is bound to reveal a fault in the thing sold? (4) Whether it
is lawful in trading to sell a thing at a higher price than was paid for it?

Source: Summa Theologica (l269–90 AD) Translated by the Fathers of the English
Dominican Province (London: Washborne, 1911), pp. 1513–14, 1518–19

First Article: Whether It Is Lawful to Sell a Thing for More Than Its Worth ?

We proceed thus to the First Article:

Objection 1. It would seem that it is lawful to sell a thing for more than its worth. In the
commutations of human life, civil laws determine that which is just. Now according to these
laws it is just for buyer and seller to deceive one another (Cod., IV, xliv, De Rescind. Vend. 8, 15);
and this occurs by the seller selling a thing for more than its worth, and the buyer buying a thing
for less than its worth. Therefore it is lawful to sell a thing for more than its worth.

Obj. 2. Further, that which is common to all would seem to be natural and not sinful. Now
Augustine relates that the saying of a certain jester was accepted by all. You wish to buy for
a song and to sell at a premium, which agrees with the saying of Prov. xx. 14, It is naught, it is
naught, saith every buyer: and when he is gone away, then he will boast. Therefore it is lawful to
sell a thing for more than its worth.

Obj. 3. Further, it does not seem unlawful if that which honesty demands be done by mutual
agreement. Now, according to the Philosopher (Ethics, viii, 13), in the friendship which is based
on utility, the amount of the recompense for a favor received should depend on the utility
accruing to the receiver; and this utility sometimes is worth more than the thing given, for
instance if the receiver be in great need of that thing, whether for the purpose of avoiding a
danger, or of deriving some particular benefit. Therefore, in contracts of buying and selling, it is
lawful to give a thing in return for more than its worth.
On the contrary, It is written (Matth. vii, 12): All things . . . whatsoever you would that men
should do to you, do you also to them. But no man wishes to buy a thing for more than its worth.
Therefore no man should sell a thing to another man for more than its worth . . .
It is altogether sinful to have recourse to deceit in order to sell a thing for more than its just
price, because this is to deceive one’s neighbor so as to injure him. Hence Tully says (De Offic.
iii, 15): Contracts should be entirely free from double-dealing: the seller must not impose upon
the bidder, nor the buyer upon one that bids against him.
But, apart from fraud, we may speak of buying and selling in two ways. First, as considered
in themselves, and from this point of view, buying and selling seem to be established for the
common advantage of both parties, one of whom requires that which belongs to the other and
vice versa, as the Philosopher states (Polit. i, 3). Now whatever is established for the common

17
Chapter 1 Early masterworks as sources of economic thought

advantage, should not be more of a burden to one party than to another, and consequently all
contracts between them should observe equality of thing and thing. Again, the quality of a thing
that comes into human use is measured by the price given for it, for which purpose money was
invented, as stated in Ethic. v, 5. Therefore if either the price exceed the quantity of the thing’s
worth. or, conversely, the thing exceed the price, there is no longer the equality of justice; and
consequently, to sell a thing for more than its worth, or to buy it for less than its worth, is in itself
unjust and unlawful.
Secondly we may speak of buying and selling, considered as accidentally tending to the
advantage of one party, and to the disadvantage of the other; for instance, when a man has
great need of a certain thing, while another man will suffer if he be without it. In such a case
the just price will depend not only on the thing sold, but on the loss which the sale brings on the
seller. And thus it will be lawful to sell a thing for more than it is worth in itself, though the price
paid be not more than it is worth to the owner. Yet if the one man derive a great advantage by
becoming possessed of the other man’s property, and the seller be not at a loss through being
without that thing, the latter ought not to raise the price, because the advantage accruing to the
buyer, is not due to the seller, but to a circumstance affecting the buyer. Now no man should sell
what is not his, though he may charge for the loss he suffers.
On the other hand if a man find that he derives great advantage from something he has
bought, he may, of his own accord, pay the seller something over and above; and this pertains
to his honesty.

Reply Obj. 1. As stated above (I–II, Q. 96, A. 2) human law is given to the people among
whom there are many lacking virtue, and it is not given to the virtuous alone. Hence human law
was unable to forbid all that is contrary to virtue. Accordingly, if without employing deceit
the seller disposes of his goods for more than their worth, or the buyer obtain them for less
than their worth, the law looks upon this as licit, and provides no punishment for so doing,
unless the excess be too great, because then even human law demands restitution to be made;
for instance, if a man be deceived in regard to more than half the amount of the just price of
a thing.
On the other hand the Divine law leaves nothing unpunished that is contrary to virtue. I add
this condition, because the just price of things is not fixed with mathematical precision, but
depends on a kind of estimate, so that a slight addition or subtraction would not seem to destroy
the equality of justice.
Question 78. Of the Sin of Usury
We must now consider the sin of usury, which is committed in loans; and under this head
there are four points of inquiry: (1) Whether it is a sin to take money as a price for money
lent, which is to receive usury? (2) Whether it is lawful to lend money for any other kind of
consideration, by way of payment for the loan? (3) Whether a man is bound to restore just gains
derived from money taken in usury? (4) Whether it is lawful to borrow money under a condition
of usury?

First Article: Whether It Is a Sin to Take Usury for Money Lent?

We proceed thus to the First Article:

Objection 1. It would seem that it is not a sin to take usury for money lent. For no man sins
through following the example of Christ. But Our Lord said of Himself (Luke xix, 23): At My

18
 Chapter 1 Early masterworks as sources of economic thought

coming I might have exacted it [i.e. the money lent] with usury. Therefore it is not a sin to take
usury for lending money.

Obj. 2. Further, according to Ps. xviii, 8, The law of the Lord is unspotted, because, to wit, it
forbids sin. Now usury of a kind is allowed in the Divine law, according to Deut. xxiii, 19, 20.
Thou shalt not fenerate to thy brother money, nor corn, nor any other thing, but to the stranger;
nay more, it is even promised as a reward for the observance of the Law, according to
Deut. xxviii, 12; Thou shalt fenerate to many nations, and shalt not borrow of any one. There-
fore it is not a sin to take usury.

Obj. 3. Further, in human affairs justice is determined by civil laws. Now civil law allows usury to
be taken. Therefore it seems to be lawful.

Obj. 4. Further, the counsels are not binding under sin. But, among other counsels we find
(Luke vi, 35): Lend, hoping for nothing thereby. Therefore it is not a sin to take usury . . .
It is written (Exod. xxii: 25), If thou lend money to any of thy people that is poor, that dwelleth
with thee, thou shalt not be hard upon them as an extortioner, nor oppress them with usuries . . .
To take usury for money lent is unjust in itself, because this is to sell what does not exist, and
this evidently leads to inequality which is contrary to justice.
In order to make this evident, we must observe that there are certain things the use of which
consists in their consumption; thus we consume wine when we use it for drink, and we consume
wheat when we use it for food. Accordingly if a man wanted to sell wine separately from the use
of the wine, he would be selling the same thing twice, or he would be selling what does not exist,
wherefore he would evidently commit a sin of injustice. In like manner he commits an injustice
who lends wine or wheat, and asks for double payment, viz. one, the return of the thing in equal
measure, the other, the price of the use, which is called usury.
Now money, according to the Philosopher (Ethics. v, 5; Polit. i, 3) was invented chiefly for
the purpose of exchange; and consequently the proper and principal use of money is its
consumption or alienation whereby it is sunk in exchange. Hence it is by its very nature unlawful
to take payment for the use of money lent, which payment is known as usury; and just as a man
is bound to restore other ill-gotten goods, so is he bound to restore the money which he has
taken in usury.

Reply Obj. 1. In this passage usury must be taken figuratively for the increase of spiritual goods
which God exacts from us, for He wishes us ever to advance in the goods which we receive from
Him; and this is for our own profit not for His.

Reply Obj. 2. The Jews were forbidden to take usury from their brethren, i.e. from other Jews.
They were permitted, however, to take usury from foreigners, not as though it were lawful, but in
order to avoid a greater evil, lest, to wit, through avarice to which they were prone according to
Is. Ivi, 11, they should take usury from the Jews who were worshippers of God.
Where we find it promised to them as a reward, Thou shalt fenerate to many nations, etc.,
fenerating is to be taken in a broad sense for lending, as in Ecclus. xxix, 10, where we read:
Many have refused to fenerate, not out of wickedness, i.e. they would not lend. Accordingly the
Jews are promised in reward an abundance of wealth, so that they would be able to lend to
others . . .

19
Chapter 1 Early masterworks as sources of economic thought

Reply Obj. 3. Human laws leave certain things unpunished, on account of the condition
of those who are imperfect, and who would be deprived of many advantages, if all sins were
strictly forbidden and punishments appointed for them. Wherefore human law has permitted
usury, not that it looks upon usury as harmonizing with justice, but lest the advantage of many
should be hindered. Hence it is that in civil law it is stated that those things according to natural
reason and civil law which are consumed by being used, do not admit of usufruct, and that the
senate did not (nor could it) appoint a usufruct to such things, but established a quasi-usufruct,
namely by permitting usury. Moreover the Philosopher, led by natural reason, says that to make
money by usury is exceedingly unnatural.

Reply Obj. 4. A man is not always bound to lend, and for this reason it is placed among the
counsels. Yet it is a matter of precept not to seek profit by lending; although it may be called a
matter of counsel in comparison with the maxims of the Pharisees, who deemed some kinds of
usury to be lawful, just as love of one’s enemies is a matter of counsel. Or again, He speaks
here not of the hope of usurious gain, but of the hope which is put in man. For we ought not to
lend or do any good deed through hope in man, but only through hope in God.

Summing up: Aquinas’s key points selling an item at a higher price than was
paid for it. His object was to establish a
The questions to which Aquinas gave standard for commutative justice to
his attention in the Summa Theologica guide people in their dealings with one
were intended to provide guidance for another.
Christian behavior under circumstances The moral necessity for justice applies
that arose as a result of expanding also to monetary transactions. Since
commercial activities. These led him to Aquinas, like Aristotle, saw money only
examine the civil law in the light of as a medium of exchange, he condemns
Christian teaching and the then recently most interest charges on loans as usury
rediscovered works of Aristotle. Aqui- and as unjust, even though he entertained
nas’s studies had their basis in theology the possibility that such a charge is per-
or, more precisely, Christian ethics. In missible if there is a delay in repayment or
contrast with modern economics, which if there is restitution of stolen money. The
seeks to explain economic phenomena, latter exception subsequently provided a
Aquinas and the Schoolmen sought to basis for rationalizing the legitimacy of
lay down rules of conduct for Christian all interest payments.
behavior and salvation. Among these The Scholastics’ insistence on ethics as
conduct rules, none are of greater a basis for reaching conclusions about
importance than those that relate to issues that relate to the material world
cheating, either in the sale of goods or the gives them relevance beyond their use as
lending of money. There are specific an instrument for teaching Christian pre-
transgressions that Aquinas identifies as cepts. Yet the intellectual focus of church
examples of cheating: selling a thing for scholars precluded the development of a
more than it is worth, failing to reveal a systematic body of economic analysis,
fault in an item that is being sold, and such as that which developed from the

20
 Chapter 1 Early masterworks as sources of economic thought

mid-eighteenth century onward into resources were allocated required no

modern times. The interest to medieval special explanation. It was, simply, a mat-
scholars in economic questions was per- ter of law or tradition. Ancient Greek,
ipheral to their interest in theology and Jewish, and Roman philosophers, priests,
philosophy, just as for the ancient Greeks, and law givers were concerned with
it was peripheral to philosophy and explaining misfortune, which was some-
politics. times economic, and prescribing proper
human behavior as part of their teaching
about ethics, religion, and politics. Nat-
Concluding comments ural phenomena and mathematics were
also of interest to them. But there was
Every society must establish priorities neither opportunity nor necessity to
among the material desires of its citizens, explain economic events or behavior
for scarcity of resources universally because, in ancient societies, decision
imposes the necessity of choice. The making about economic activities was
common characteristic of all societies outside the scope of individual action.
before the eighteenth century is that Also, these societies were not yet oriented
decisions about the priority of wants to thinking in terms of the ever-
and the allocation of resources to satisfy expanding abundance of physical goods
them were dictated by central authority that later technical skills, organization,
and reinforced by custom. How well a and capital accumulation were to make
particular group or individual could fare possible. Consuming units—among them
relative to others depended on one’s household estates such as the Greek oikos,
status in the social hierarchy, and this the Roman latifundium, and the feudal
status reflected the importance attached manor—were typically self-sustaining.
to one’s function by society. Soldiers, The goods that society required were pro-
scholars, priests, artisans, farmers, and duced according to time-honored methods
tradespeople have performed their func- and distributed for consumption accord-
tions from time immemorial, but different ing to custom or the regulations of the
societies have accorded them varying ruling authority This method of want sat-
degrees of status. The source of authority isfaction left little need for economic
and the criteria according to which wants explanation. Tradition and law explained
were given priority differed from one virtually everything. Thus, it was not
ancient society to another. But there was until the eighteenth century that specula-
an essential similarity: the prime mover of tion about economic phenomena began to
economic activity was determined by cus- develop as economic analysis rather than
tom and command, and was a reflection of as economic thought.
the prevailing philosophical or theo-
logical standard for social and moral well-
being. Economic decision making was Notes
thus outside the scope of individual 1 It is worth noting that there is disagree-
action and individual acquisition. Taking ment between two major history of eco-
interest (or usury) was especially cen- nomic thought scholars, Karl Pribram and
Joseph Schumpeter concerning the contri-
sured. This framework was incompatible
butions of Arabic thinkers. Whereas
with the development of economics in Schumpeter disputes that Islamic scho-
the modern sense. Thus, the way that lars made substantive contributions

21
Chapter 1 Early masterworks as sources of economic thought

(Schumpeter, 1954, Chapter 2, p. 12), Pri- history. Among the entries relating
bram recognizes the influence on the scho- specifically to this chapter are M. I. Finley
lastics, not only of Aristotle, but also “the
on Aristotle, vol. 1, pp. 112–13; Barry
treatises in which Arabian philosophy
interpreted Aristotle’s work in light of Gordon on St. Thomas Aquinas, vol. 3,
their own reasonings” (Pribram 1983,4). pp. 754–55; N. E. Simmonds on Natural
Modern scholars increasingly accept Pri- Law, vol. 3, pp. 602–03; Henry W. Spiegel
bram’s interpretation as expressed in his on Xenophon, vol. 4, pp. 935–36; and
posthumously published work.
P. R. Stein on Jurisprudence, vol. 1,
pp. 1037–39.
Questions for discussion and further
research
General references
1 How is economic analysis different from
Of special note, Wesley Mitchell’s Types of Eco-
economic thought? What characteristics of nomic Theory: From Mercantilism to Insti-
early societies (e.g. Greek, Judaic, Roman, tutionalism, vols. I and II, with an introduction
Egyptian) inhibited the development of by Joseph Dorfman (New York: Augustus
analytical economics? Kelley, 1967, 1969) is the classic contribution by
an European scholar.
2 How does the excerpt from Aristotle’s Mark Perlman and Charles R. McCann, Jr.
Politics, reprinted above, substantiate the are the authors of The Pillars of Economic
point that early scholars addressed eco- Understanding (Ann Arbor, MI: University of
nomic questions within the context of larger Michigan Press, 1998). Theirs is the most
recent among interpretations of the history
concerns? What specific issue does Aristotle
of economic thought in the grand tradition of
address in the selection above? Do his Schumpeter, Mitchell, and Pribram by Ameri-
insights have any contemporary relevance? can scholars.
3 What are the major economic questions The magnum opus of the late Professor J. A.
Schumpeter, History of Economic Analysis
that Thomas Aquinas addressed in Summa (1954) is the most comprehensive and sophisti-
Theologica? How does this work reflect the cated treatise by a European scholar. A more
influence of Aristotle on philosophy and how recent posthumously published contribution,
does it relate to the theological concerns of also conceived on a grand scale, is Karl
church scholars? Pribram’s A History of Economic Reasoning
(Baltimore, MD: Johns Hopkins University
4 Is it appropriate to describe the Summa Press, 1983).
Theologica as an early contribution to There are also numerous textbooks on the
economic analysis? Why or why not? history of economic thought that can serve as
useful collateral reading, either because they
include contributions of a less theoretical
nature than those that are the focus of this
Notes for further reading book, or because they provide interpretations
and examine the impact of economic ideas in a
The New Palgrave Dictionary of Eco- way that is precluded by the scope of this
nomics (hereafter The New Palgrave), inquiry. Two books on contemporary economic
edited by John Eatwell, Murray Milgate, analysis are also included in the list that follows
because of their historical orientation; each is
and Peter Newman (London and New marked with an asterisk.
York: Macmillan and Stockton Press,
1989), has already become the most valu- Bell, John E. A History of Economic Thought
(New York: Ronald Press, 1953).
able general reference for seasoned eco-
*Blaug, Mark. Economic Theory in Retrospect
nomics scholars and students alike on Rev. ed. (Homewood, IL.: Richard D. Irwin,
topics relating to economics and its 1968.

22
 Chapter 1 Early masterworks as sources of economic thought

Bonar, James. Philosophy and Political Analysis (New York: Oxford University
Economy. 2d edn (London: George Allen and Press, 1954).
Unwin, 1909). —— Economic Doctrine and Method. Trans-
Canterbery, E. Ray. The Making of Economics. lated by R. Aris (New York: University
Rev. edn (Belmont, CA: Wadsworth, 1980). Press, 1967).
Ekelund, Robert B., Jr., and Robert E. Hebert. Seligman, Ben. Main Currents in Modern
A History of Economic Theory and Method. Economics (New York: Free Press, 1962).
3rd edn (New York: McGraw-Hill, 1990). Taylor, Overton. A History of Economic
*Fellner, William, The Emergence and Concern Thought (New York: McGraw-Hill, 1960).
of Modern Economic Analysis (New York: Whittaker, Edmund. Schools and Streams
McGraw-Hill, 1960). of Economic Thought (Chicago: Rand
Ferguson, John M. Landmarks of Economic McNally, 1960).
Thought. 2nd edn (New York: Longmans, Zweig, Ferdynand. Economic Ideas: A Study in
Green, 1950). Historical Perspective. (Englewood Cliffs,
Gide, Charles, and Rist, Charles. A History NJ: Prentice-Hall, 1950).
of Economic Doctrine. Translated by R.
Richards. 7th edn (Boston, MA: D. C. Heath, There are also several collections of readings
1948). from original sources and essays on economic
Gray, Alexander. The Development of Economic thought or about the works of specific contri-
Doctrine (New York: Longmans, Green, butors with which the reader will find it useful
1933). to be acquainted.
Gruchy, Allan G. Modern Economic Thought:
The American Contribution (New York: Abbot, Leonard D. (ed.) Masterworks of
Prentice-Hall, 1947). Economics (Garden City, NY: Doubleday
Haney, Lewis H. History of Economic Thought Publishing, 1949).
4th edn (New York: Macmillan, 1949). Ghazanfar, S. M. “Scholastic Economics and
Heibroner, Robert. The Worldly Philosophers Arab Scholars: The ‘Great Gap’ Thesis
(New York: Simon & Schuster, 1953). Reconsidered.” In Diogenes: International
Heimann, Eduard. History of Economic Doc- Review of Humane Sciences, Paris: The
trine (New York: Oxford University Press, International Council for Philosophy and
1964). Humanistic Studies, no. 154, 1991.
Homan, Paul T. Contemporary Thought (New Gheritity, James A. (ed.) Economic Thought: A
York: Harper & Row, 1928). Historical Anthology (New York: Random
Hutchison, Terrence W. A Review of Economic House, 1965).
Doctrines. 1870–1929 (Oxford: Clarendon Keynes, John Maynard. Essays in Biography.
Press, 1953). Rev. edn (London: Rupert Hart-Davis,
Landreth, Harry, and David Collander. History 1951).
of Economic Theory (Boston, MA: Lowry, S. Todd. The Archeology of Economic
Houghton Mifflin, 1989). Ideas: The Classical Greek Tradition
Lekachman, Robert. A History of Economic (Durham, NC: Duke University Press,
Ideas. (New York: Harper & Row, 1959). 1987).
Lekachman, Robert (ed). The Varieties of Eco- Monroe, Arthur E. (ed.) Early Economic
nomics, 2 vols (New York: Harcourt Brace Thought (Cambridge, MA: Harvard Uni-
Jovanovich, 1962). versity Press, 1924).
Pribram, Karl. A History of Economic Reason- Newman, Philip Arthur Gayer, and Milton
ing (Baltimore, MD: The Johns Hopkins Spencer (eds) Source Readings in Economic
University Press, 1983). [Published Thought (New York: W. W. Norton,
posthumously.] 1954).
Rogin, Leo. The Meaning and Validity of Patterson, S. Howard (ed.) Readings in the
Economic Theory (New York: Harper & Row, History of Economic Thought (New York:
1956). McGraw-Hill, 1932).
Roll, Eric. A History of Economic Thought. 3rd Rima, I. H. (ed.) Readings in the History of
edn (Englewood Cliffs, NJ: Prentice-Hall, Economic Theory (New York: Holt, Rine-
1956). hart & Winston, 1970).
Schumpeter, Joseph A. A History of Economic Robbins, Lionel. A History of Economic

23
Chapter 1 Early masterworks as sources of economic thought

Thought, edited by S. Medema and W. Sam- Bonar, James. Philosophy and Political Econ-
uels, (eds) (Princeton, NJ: Princeton Uni- omy. 2nd edn (London: George Allen and
versity Press), Lectures 1–3, pp. 5–26. Unwin, 1909).
Schumpeter, Joseph A. Ten Great Economists Lowry, S. Todd. The Archaeology of Economic
(London: Oxford University Press, 1951). Ideas. (Durham, NC: Duke University
Spengler, Joseph J., and W. Allen (eds) Essays Press, 1987).
in Economic Thought: Aristotle to Marshall Plato. The Republic. Translated by R. W.
(Chicago, IL: Rand McNally, 1960). Sterling and W. C. Scott (New York: Norton,
Spiegel, William H. (ed.) The Development of 1985).
Economic Thought (New York: John Wiley —— Theaetetus. Translated by John McDowell
& Sons, 1952). (Oxford: Clarendon Press, 1973).
Viner, Jacob. The Long View and the Short Tawney, R. H. Religion and the Rise of
(New York: Free Press, 1958). Capitalism. (New York: Penguin Books,
Wilson, George W. (ed.) Classics of Economic 1947).
Theory. (Bloomington, IN: Indiana Uni- Weber, Max. Protestant Ethic and the Spirit of
versity Press, 1964). Capitalism. Translated by Talcott Parsons
(New York: Scribner, 1948).
Weisskopf, Walter A. The Psychology of Eco-
nomics (Chicago: The University of Chicago
Selected references and suggestions for Press, 1955).
further reading Worland, Stephen. “Scholasticism and Welfare
Economics” (South Bend, IN: University of
Aquinas, Thomas. Summa Theologica. Trans- Notre Dame Press, 1967).
lated by Fathers of the Dominican Province Xenophon. Memorabilia and Oeconomicus.
(London: Washborne, 1911). Translated by E. C. Marchant (New York:
Aristotle. The Works of Aristotle. Edited by G. P. Putnam & Sons, 1923).
W. D. Ross. 12 vols (Oxford: Clarendon
Press, 1908–52).

24
Chapter 2

The origins of analytical economics

Introduction acquire stocks of gold, whether by ex-

ploratory expeditions to the New World,
The Renaissance unleashed the forces conquest, or pursuing export trade. Thus,
that were ultimately to provide the mercantile or business interests became
climate for the development of economics aligned with the sovereign to pursue pol-
as a separate discipline. Historians are icies that promised success in the acquisi-
not in complete agreement as to the exact tion of national treasure. The era of mer-
time-span during which the many and cantilism or statecraft was the product of
complex forces that were to destroy feudal their symbiosis. It gave rise to an import-
economic, political, social, and religious ant new issue: specifically, can the wealth-
life were at work. Usually, the beginning getting activities of the merchant also
of the Renaissance is placed at the time of enrich the sovereign and promote the
the fall of Constantinople (now Istanbul) economic gain of the nation? The answer
in 1453, though many of the events of the of the merchant, whose chief English
eleventh and twelfth centuries heralded spokesperson was Thomas Mun (1571–
the changes that reached fuller develop- 1641), an officer of the powerful East
ment in later centuries. India Company, was a resounding affirma-
The precise dating of the Renaissance tive. This chapter examines the post-
as a momentous time in human history is Renaissance changes that indirectly
considerably less important than recog- helped to stimulate economic inquiry.
nizing the tremendous, though gradual, Such changes as the decline of the
changes taking place in every aspect of manorial system, the emergence of a
human life. From an economic and social wage-earning class of persons, the
point of view, it was a period during Protestant Reformation, the Copernican
which European commerce revived, new revolution, and political nationalism all
forms of wealth emerged, and a town life played a critical role in paving the way
dominated by an entirely new social class for the rise of capitalism and the market
came into existence. Intellectually, it was system. Since it is the functioning of the
a time of skepticism, increasing secular- market system that economics as a dis-
ization, and a corresponding decline in cipline undertakes to explain, the many
the authority of the Church in Rome. evolutionary changes that led to its de-
Politically, it was a period of emerging velopment indirectly served to stimulate
nation-states that rivaled one another to economic inquiry.

25
Chapter 2 The origins of analytical economics

Stimuli to economic inquiry was developed along with evolving com-

mercial relationships. The institution of
The decline of the manorial system: The written contracts (commendas), which
end of feudalism establishes the financial and managerial
responsibilities between partners, has
The power vacuum created by the fall of
been documented from the fifteenth cen-
the Roman empire was filled by feudal
tury. The commenda and other partner-
lords who provided law and order on their
ship contracts were indigenous to the
manors, as their landed estates are
Arab world, and spread to Latin Europe
known. Each manor constituted a self-
through the influence and writings of
sufficient economic, social, and political
Arab scholars, jurists and merchants.1
unit that functioned according to the
Arab coins and the spirit of entrepre-
orders of the lord who held the most
neurship were not unfamiliar in the
exalted position by virtue of his owner-
medieval Europe centered around the
ship of the land and everything on it. His
Mediterranean and Adriatic.
position was reinforced by tradition and
The heartland of continental Europe
in reciprocity for his power he was
was still slumbering in the unchanging
pledged to protect the lives of the serfs
institutions of feudalism until the popula-
and freemen of his domain who, in turn,
tion migration that accompanied the
had the obligation to serve in the lord’s
crusades brought commercial activity
army. More than any other economic
from Constantinople to the interior of the
phenomenon the disintegration of the
continent, introducing new and exotic
manorial system heralded the Renais-
commodities from the East. This encour-
sance and the dawn of modern times.
aged the regional specialization of pro-
The decline of feudalism was gradual
duction that the accident of natural
and, if we view the experience of Europe
resource distribution and the growth of
as a whole, extended over several cen-
population made possible in Northern
turies. Yet the most dramatic feature of
Europe. By the eleventh century, Flanders
the Renaissance was the decline of the
was so heavily populated that it began
manorial system, for it signaled the end
to concentrate on the production of
of feudalism. While the specific causes of
cloth, which it exported for raw materials
its decline are exceedingly complex, the
and food. Wool from England and fish
expansion of trade was a major force. Two
from Denmark and southern Sweden
great commercial movements took place
became the staples of interregional
in Europe between the eleventh and six-
trade, which was centered in Flanders.2
teenth centuries; one centered around
Great international fairs developed in
the Mediterranean and Adriatic Seas, the
places located at road or river junctions.
other on the northern shores of Europe
Champagne, a small principality near
that were accessible via the North and
Paris where roads from Flanders, Italy,
Baltic Seas. Trade was conducted from
France, and Germany converged, became
the Arab world, both before and after the
the most famous of several commercial
crusades, through Russia to Poland to the
oases to which merchants brought their
Baltic area and northward to central
wares.
Europe and even Scandinavia. The trans-
The institutions that were to become
mission of techniques and instruments of
an integral part of capitalism flourished
commerce in long use in the Arab world
together with the commercial activities of

26
 Chapter 2 The origins of analytical economics

medieval Europe. Italy—or more specific- servitude of most of the rural population,
ally, Venice—is the birthplace of the the majority of whom were not free. The
financial institutions of capitalism. legal sanction to individual freedom
Besides her several important indus- provided by the town charters was an
tries—among them the glass industry, additional factor that contributed to
which flourishes and is famous to this the destruction of feudal institutions and
day—and her extensive commercial trade, their mode of economic behavior. Feudal
Venice had financial institutions for lords were reduced to collecting revenues
dealing in bills of exchange, conducting from the townspeople in exchange for
credit transactions, and writing maritime political freedom; townspeople directed
insurance. The Florentines also excelled their attentions to nurturing their eco-
in banking; London’s Lombard Street is nomic gain through trade.3
a modern reminder of the place of the The merchant traders formed volun-
Lombards in the early history of banking. tary associations, known as guilds, and
The Medici family also specialized in often banded together in overland cara-
facilitating foreign exchange, that is, vans to better ensure the safety of both
exchanging the currencies of one locale merchandise and traders. Various
into that of another. This activity was the regional guilds joined to form national
natural outgrowth of the expansion of guilds and larger organizations of
trade and the medieval fairs. Because merchants in free German cities were
these attracted merchants with different known as Hansas. National guilds became
currencies from all over Europe, money- typical in England, whereas Hansas
changers provided facilities for conver- developed and flourished in areas like
sion at some standard rate. Bills of Germany, which lacked a strong central
exchange were used in long-distance trade government even into modern times. The
because they reduced the need to ship Hanseatic League was the most powerful
gold and silver. Thus, in their banking and famous of all. It served as a proxy for
activities, the merchant bankers of the central government from the late Middle
late medieval period pioneered the use of Ages until the political unification of
debt as a money substitute—a factor that Germany, while at the same time facilitat-
became an essential feature of modern ing trade between the various regions of
banking activity. Europe.
Another by-product of the expansion of During the latter part of the thirteenth
trade was that it established an economic century, north European trade shifted
base for city life, which was virtually from its early center at Champagne to
destroyed with the disintegration of the Bruges, Antwerp, and Amsterdam. This
Roman Empire. Originally the feudal change marked the transition from the
lords claimed jurisdiction over the towns traveling to the sedentary merchant as the
adjacent to their lands, but the com- chief participant in long-distance trade. It
mercial activities of the towns were was accompanied by important develop-
inconsistent with the restrictions inher- ments in both business and market organi-
ent in feudal relationships. As a result, it zation and in operating techniques. In
was not uncommon for a town to purchase particular, the bourse replaced the fair as
a charter granting political freedom from a selling organization. The fairs of earlier
the feudal lords. The status of the towns- eras had offered varying grades and
people was uniquely different from the types of merchandise sold by individual

27
Chapter 2 The origins of analytical economics

craftsmen. The bourses facilitated the the development of the factory system out
sale and purchase of items that lent them- of the more primitive handicraft system
selves to sufficient physical standardiza- and marks the beginning of the first per-
tion that the actual goods did not need manent wage-earning class.
to be physically present. The institution No wage class existed under the medi-
of the bourse operated under conditions eval craft system—apprentices typically
approximating those of pure competition, became journeymen, who developed their
offering homogeneous commodities along skills and became masters themselves.
with access to free markets. From the Under the putting-out system, capital
sixteenth century to the present day this became a factor completely separate from
is symbolized by the inscription “Open to labor, typically provided by rural folk
the Merchants of All Nations.” working out of their own cottages. Thus,
by the fourteenth century, the extension
of the market was the primary force
Emergence of a wage class: The putting-out
leading to the decline of the medieval
system
handicraft system just as the expansion of
Europe’s population growth and natural trade was a primary force in destroying
resource endowments, coupled with the manorial system two centuries earlier.
improved techniques of production, facili-
tated both the expansion of production
New political concepts: The State and
and the extension of markets. Growing
natural law
markets made it possible for workers to
specialize in particular products and Further stimulus to economic inquiry
acquire skills as artisans. Specialization, came from changing political develop-
and the division of labor that tends to ments and ideas. The Reformation was a
accompany it, resulted in production for major source of such political develop-
the market rather than the more primitive ments. Europe became torn by religious
form of production for self-consumption dissension as Protestants and Catholics
that was typical of the manor. The medi- fought for supremacy. The principal
eval handicraft industry is thus an inter- beneficiary of this struggle was absolute
mediate step toward industrialization. monarchy. In the interpretation offered
During the most advanced stage of the by the great sixteenth-century political
handicraft system, craft-workers con- theorist Thomas Hobbes (1588–1679), only
tracted their outputs to merchants and the monarch, that is, a strong central
thereby divorced themselves from the final authority, which he idealized as Leviathan
consumer. At a still later stage, which (1651), has the power to create a suf-
developed as the market became further ficiently powerful social order to curb the
extended, merchants contracted for out- base, natural tendencies of humans to be
put directly with workers, who now perpetually in a state of war. As monarchy
worked for wages instead of functioning replaced feudal relationships, so taxation
as independents. The merchants fre- superseded personal service as a means
quently provided tools as well as raw of supporting the state. The emergence of
materials and collected and sold the national governments, and the necessarily
finished product. This system, which is associated need to find ways to enhance
known as the putting-out, or domestic, their revenues, marks the beginning of
system, served as the intermediary step in modern political economy. This was the era

28
 Chapter 2 The origins of analytical economics

of mercantilism, during which economic the dictates of “right reason.” This

decision making was not yet liberated seventeenth-century conception of
from the state, and economics remained natural law was conceived by the Dutch
in its pre-analytic phase. The subsequent jurist Hugo Grotius.
divorce of economics from politics Grotius’s secularized version of natural
required the development of the concepts law was especially significant in regard
of the natural order and the natural law. to defining the natural rights that reason
These concepts became the vehicle for demonstrates as belonging to individuals
the political and economic liberalism of by virtue of their humanity. These are
the Physiocrats John Locke and Adam the inalienable rights that cannot be
Smith in the eighteenth century. Both abrogated by law and which John Locke
derive from the Stoic philosophy, which (1632–1704) later formulated as the “right
eventually passed into Roman legal con- to life, liberty and property.” The rising
ceptions through the writings of Marcus commercial classes were quick to embrace
Tullius Cicero (106–43 BC). According to this philosophy, for it reflected their own
Roman jurists, natural law is not only growing aspirations. As a result of their
universal and immutable, but is also the enhanced economic status during the
foundation of the state, since it existed period of mercantilism, they eventually
before the founding of any state. Thus, the challenged privileges based on birth and
state is “an assemblage of men associated social position. They believed in the
in consent to law.” This Roman concept is rights of individuals to own property and
different from the Greek view of the state the fruits of their own labor; to speak, to
as the outgrowth of “natural necessity.” write, to assemble, and to worship as they
Roman thinkers thus contributed two chose; to have the right to fair trial and
ideas that were profoundly to affect future freedom from arbitrary imprisonment
political and economic thought: first, the and cruel or unusual punishment. Thus,
idea of universal law; second, the idea of the same burgher class that supported
the state being based on mutual consent. the absolutism of the Tudors in England
These two ideas provided the foundation during the sixteenth century led the
for the conception of individual rights, Glorious Revolution, which culminated in
without which modern capitalism would establishing the supremacy of Parliament
not have evolved. While Roman thinkers in the seventeenth century. This protest
contributed little as far as the develop- against the unlimited power of the sover-
ment of economic thought is concerned, it eign marked the first victory of liberalism
is Roman law, with its emphasis on private over absolutism—a victory later echoed
property and freedom of contract, that in the American Revolution for inde-
constitutes the basis for the legal doc- pendence from Britain in 1776 and the
trines and institutions of capitalism. French Revolution of 1789.
These ideas were given new expression
during the seventeenth century. Indi-
The Protestant ethic: Individualism and
viduals challenged the uncompromising
accumulation
authority of the monarch who claimed to
rule by divine right, for such authority As the preceding discussion suggests, by
was in conflict with the whole conception the end of the fifteenth century, only the
of an autonomous individual subject last vestiges of a rural feudalistic economy
only to his or her own conscience and remained. Many islands of capitalism

29
Chapter 2 The origins of analytical economics

flourished in both northern and southern revelation (theology). As in the Arabic

Europe and were on the verge of expand- sources with which the churchmen were
ing over European economic life as a undoubtedly familiar, all branches of
whole. Only one essential prerequisite learning (logic, ethics, politics, and eco-
of capitalism was absent: an ethical nomics) were welded together into one
standard that was compatible with great whole through theology. The union
accumulation. The teachings of such between philosophy and theology was,
churchmen as Saint Augustine (AD 396– however, far from permanent, and over a
430) and Saint Aquinas (1225–74) were period of centuries, it was challenged
negative toward activities undertaken to even from within the church itself.4
pursue wealth and thus were difficult The consequence of the eventual
to reconcile with the need to accumulate. divorce between reason and faith was a
If capitalistic production was to continue secularism and a religious skepticism that
its growth, an entirely new ideology was was to characterize intellectual activity
required to give moral sanction to from the fifteenth through the seven-
acquisitive behavior. This sanction came teenth centuries. In essence, this intel-
within the framework of a wholly new lectual revolution asserted the primacy
intellectual climate. of the individual as capable of reason and
The philosophical and political transi- possessed of an individual will. These
tion which precedes the theorists of the principles became fundamental to the
sixteenth century and the evolution of spiritual revolution inherent in the
economic relationships that would later Protestant Reformation which Martin
emerge with the development of capital- Luther provoked with his sixteenth-
ism is apparent in the very different per- century attack against the misuse of
spective about the “faith versus reason” indulgences, the worship of images and
debate. These became encapsulated in the relics, and the necessity for the faithful to
“commonsense” views of anti-Catholic call upon the Mother of God and the
(low church) thinkers. The directly Saints for their salvation. To Luther,
challenging view of Thomas Hobbes is humans are autonomous individuals
perhaps the most important among the created in the image of God and therefore
non-clerical exponents of the view that inherently good, but individually respon-
knowledge is the product of observation sible for their salvation. The idea of a
not faith. This was to stimulate the “masterless man” possessing an indi-
emergence of modern philosophy, the vidual will and therefore power to think
Protestant Reformation, and also modern and discover truth gave the people of the
science. Renaissance feelings of self-worth and
Essentially, these developments have a importance in the scheme of things that
common origin, which is the thesis that would have been inconceivable in the
human reason, as distinct from divine Middle Ages.
revelation, is sufficient to discover truth. While Luther’s interpretation of
This thesis destroyed the link forged by Christian teachings was not particularly
the Scholastics of the Middle Ages sympathetic to industry and trade, the
between faith and reason, and thus reform movements of John Calvin, John
between theology and philosophy. To Knox, and the Puritans in the same cen-
Aquinas, knowledge was the product not tury were much more so. Indeed. they
only of reason (philosophy) but also of adopted such strongly favorable attitudes

30
 Chapter 2 The origins of analytical economics

toward acquisition by useful labor and the as was taught by Ptolemy (Claudius
judicious and prudent use of wealth that Ptolemaeous) the mathematician, geog-
their views have been described as the rapher, and astronomer (born c.1361) gave
Protestant ethic, which launched and way to a revolutionary new conception
encouraged the development of capitalism based on the studies of the Polish astron-
in northern Europe. This thesis was omer Nicolaus Copernicus (1473–1543).
advanced in the nineteenth century by He noted that the actual movements
Max Weber, the German sociologist and of the planets Mercury and Venus did
economist, in The Protestant Ethic and not coincide with the predictions of
the Spirit of Capitalism. Ptolemy’s system. The discrepancy
Weber’s hypothesis, of course, does not created by this inconsistency led him to
necessarily tell the whole story, for the challenge the Ptolemaic theory. He
fact that northern Europe and England hypothesized that the Earth rotates on an
were geographically well located for trade axis of its own and orbits the sun, as do
and had a climate and resources con- the other planets. This alternative to the
ducive to industry was undoubtedly also Ptolemaic system seemed to explain the
a factor in their industrial development. relative positions of Venus and Mercury.
Nevertheless, Protestantism was con- While Copernicus’s theory that the
genial to the development of personal spheres of the universe were sun centered
attributes that encouraged business was denounced by the Church as contrary
activity. In this sense, the Reformation to scripture, it nevertheless served to
contributed toward capitalist develop- drive another wedge (besides those of
ment and economic thought.5 Hobbes and Luther) between faith and
Protestantism considers acquisition a reason. Thus, the Copernican revolution
virtue rather than a sin, and instead of became important for the history of
merchants being considered un-Christian natural science and, eventually, for eco-
because of their activities for profit, they nomics. Together with the later studies of
came to be regarded as pillars of the the German Johannes Kepler (1571–1630)
church and the community. Their pur- and the Italian Galileo Galilei (1564–
suit of gain, unrelated to material needs 1642), Copernicus precipitated an intel-
and the virtue of frugality, became as lectual revolution that was to alter com-
integral a part of Protestant ethic as the pletely our conception of the universe.
autonomy of the individual. Joined with Galileo, whose experiments represented
the notion of the dignity and moral a breakthrough into the behavior of the
worth of work, Protestant emphasis on physical universe, also looked through
frugality served the capitalistic system his telescope and, upon identifying the
well, for it stimulated thrift and capital mountainous surface of the moon,
accumulation. surmised that “Heaven” was no more
“perfect” than earth. He observed the
satellites orbiting Jupiter and concluded
Modern science
that these are heavenly spheres that
The new intellectualism brought with it a orbit neither the Sun nor the Earth. His
quest for new knowledge, new techniques studies brought him into conflict with
for its acquisition, and new bases for its the Church, which threatened him with
evaluation. In the process, the conception excommunication until he retracted his
that the Earth is central to the universe, heretical beliefs.

31
Chapter 2 The origins of analytical economics

Not much later, in Germany, Kepler laws ruling the behavior of society.
noted that the planets orbited the Earth Developments in the natural sciences,
in an elliptical, rather than a circular, physics and, in particular, astronomy thus
motion. His observations, like those were influential in establishing the point
Galileo made at the tower of Pisa con- of view and methodology for studying the
cerning falling bodies, proclaimed the behavior of the economic system.
existence of laws governing the behavior
of heavenly bodies. These special cases
Statecraft as economics
were ultimately encompassed in the
mechanics of Isaac Newton (1642–1727), The growth of religious and political
whose death came only four years after freedom was paralleled by greater eco-
the birth of Adam Smith in 1723. Smith nomic freedom, which gave rise to new
was later to describe the Newtonian economic problems and phenomena
system as “the greatest discovery ever requiring explanation. Some headway was
made by man.”6 made during the period of mercantilism
Newton saw the entire universe as gov- in the development of economic con-
erned by a small number of mathematical cepts and tools of analysis. Mercantilist
laws, in particular his celebrated inverse- thinkers, particularly in the early period,
square law of gravitation. Even though were practitioners dedicated to improving
the universe is not mechanically perfect, their own fortunes and those of their
making it necessary for God to intervene nation in the struggle against other states
from time to time to take care of planetary for supremacy. The ultimate test of the
perturbations, Newton’s emphasis on strong state was its ability to wage war,
the usefulness of mathematics and make conquests, and hold colonial areas.
experimentation established the rhetoric These national objectives presented
and tone of modern science. problems different from those en-
Another aspect of the development of countered during the Middle Ages. The
science that took place during the century lord of the manor recruited soldiers and
of the Enlightenment deserves notice. materials for warfare from his own
Once it was recognized that the physical domain. But the modern state needed
universe obeys certain laws that can be money to acquire the sinews of war. It
discovered by experimentation and obser- depended on an army of mercenaries
vation, it was only a question of time employed by the sovereign. The essence
before it was asked whether the same of mercantilism, therefore. was statecraft
principles might not also be applied to (Staatsbildung); thus, economic policy
society to discover the laws that govern became a primary instrument to promote
social phenomena. Just as Newton sought the simultaneous development and
to discover the regularities governing the growth of the economy and the state.
behavior of the physical universe and give The revival of trade during the
them expression in a system of natural Renaissance and the emergence of a
laws, the Physiocrats of France, John money economy had already cemented the
Locke (1632–1704), and the Scottish moral association between money and wealth.
philosophers, among them David Hume While the accumulation of precious
(1711–76), Francis Hutcheson (1684–1746), metals was common in the ancient world
and his most eminent pupil, Adam Smith and during the Middle Ages, England and
(1723–90), sought to identify the natural the countries of Western Europe pursued

32
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these four days they also calculated that ships might arrive from St.
Louis to save them. Soon after this intimation was made, two
soldiers were discovered behind the cask of wine, through which
they had bored a hole for the purpose of drinking it. It having been
determined that the punishment of death should be inflicted on any
one who should be guilty of such a crime, they were immediately
tossed into the sea.

At length the raft was discovered by a small brig, which was

sent out in search of
her.—P. 137.
Their number was thus reduced to twenty-eight; and, as nearly one
half of them were so worn out and emaciated, that it was in vain to
expect their surviving till assistance could arrive, (but, as long as
they did live, they consumed part of the scanty stock of provisions,)
a council was held, and after deliberation, it was decided to throw
overboard the weak and the sickly. This shocking resolution was
immediately carried into effect.
At length the raft was discovered by a small brig, which had been
sent out in search of it. Of the 150 who embarked, fifteen only were
received on board the brig; and of these, six died shortly after their
arrival at St. Louis.
Oh dreadful, Uncle Thomas! It is indeed the most awful tale you
have yet told us. Did the parties in the boats reach land safely?
Yes, Harry, they all reached the shore in safety, though several of
them afterwards fell victims to the combined effects of hunger,
thirst, and the oppression of a burning sun. Shortly after their
arrival, the governor, recollecting that the Medusa, at the time of her
wreck, had on board a large sum of money, despatched a vessel to
try to recover it. From various causes, the ship was twice put back;
and when she reached the wreck, fifty-two days after it was
abandoned, she found three miserable wretches still on board, and
so reduced as to be just on the point of expiring!
Where did they come from, Uncle Thomas?
Why, John, they had never quitted the ship. You will recollect that,
when the boats left it, such was the scene of confusion, that the
fewest provisions were put on board the raft, where there were the
most passengers. Well, these men, along with fourteen others, had
either concealed themselves, or refused to leave the ship. They
managed to secure a quantity of provisions; and so long as these
lasted, there appearing no danger of the wreck going to pieces, they
remained quietly awaiting the arrival of assistance; but finding their
provisions begin to run short, twelve of the most determined
constructed a raft; but, setting off without either sail or oars, they
were all drowned. Another, who had refused to embark with them on
the raft, resolved, a day or two after, to try to reach the shore, and,
lowering a hen-coop from the deck, placed himself on it; but, before
he had sailed half a cable's length, he sank, to rise no more. The
other four determined to stick by the wreck; and one of them died
before assistance reached them.
Did the other three arrive in safety, Uncle Thomas?
I believe they did, Frank; one of them was, however, shortly
afterwards found murdered in his bed. But I dare say you have had
enough of horrors for the evening; so, I believe I must stop.
Oh yes, Uncle Thomas, quite enough for one evening. We will
therefore bid you good night.
Good night, boys: I will be glad to see you again to-morrow.
 CHAPTER VII.
UNCLE THOMAS TELLS ABOUT THE LOSS OF
THE WINTERTON EAST INDIAMAN.

Good evening, boys. I am glad to see you so early. I have "a long
yarn to spin" to-night, as the sailors say; though fortunately it
contains fewer horrors than that of last evening. The strife of the
elements is in deed as strong, but the angry passions of man—more
dreadful than the fiercest storm—form no part of the tale.
I am glad of it, Uncle Thomas. The shocking conduct of the
mutineers on board the raft, after leaving the Medusa, of which you
told us last night, makes me shudder when I think of it.
Intoxicating drinks, my boys, often make men mad. The tale which I
am going to tell you this evening, is that of the loss of the
Winterton, an East Indiaman, which was wrecked on the Island of
Madagascar, on her passage to India. The Winterton sailed from
England in the spring of 1792, and arrived at the Cape of Good Hope
in safety. On leaving the Cape, it was Captain Dundas's intention to
have taken what is called the outer passage to India, but,
encountering light, variable winds, he was obliged to abandon his
original design, and bore away for the Mozambique Channel.
In order to avoid a shoal, which he knew to be somewhat incorrectly
laid down in the charts, Captain Dundas steered east. Thinking he
had sufficiently accomplished this, he altered his course; but had
scarcely sailed in this new direction for three hours, when the ship,
which they supposed to be sixty miles distant from land, struck.
The boats were instantly got out, and on sounding they found deep
water within fifty yards of the stern of the vessel.
Every exertion was made to get her off, but without avail. Day-light
soon disclosed to them the dangers of their situation. The ship had
struck on a reef of rocks, about six miles from land.
As the tide ebbed, the ship beat violently, and began to leak, and by-
and-by the rudder was broken off, and the copper sheathing of the
vessel came up alongside her; but as she lay comparatively quiet,
hopes were entertained that they might succeed in getting her off
next tide. With this view they proceeded to lighten her by every
means, throwing the guns overboard—carrying them to such a
distance as to prevent their injuring the ship as she again rose with
the tide. When, however, they had succeeded in removing about half
the number, the sea-breeze set in fresh, and prevented the boats
from approaching the ship's side. They continued, notwithstanding,
to relieve her as much as possible, by throwing overboard such
heavy articles as the tide would carry away. At high water they
renewed their exertions to heave the ship off; but were again
unsuccessful. The leak had by this time gained on the pumps, in
spite of their utmost exertions.
It being evident that the ship was irrecoverably lost, the great object
now was to secure the safety of the passengers and crew. The
masts were cut away, in order to relieve the vessel, and such spars
as the surf prevented being borne away by the tide, were secured
for the purpose of making rafts to assist in conveying the passengers
on shore. In order to prevent such scenes of drunkenness as have
sometimes disgraced shipwrecks, every cask of spirits which could
be reached was staved.
Towards evening, a party was sent on shore in the yawl, to prepare
a convenient place for landing; and the captain addressed the crew,
directing them as to the proper course of procedure on reaching the
shore, and stating his determination to abide by the ship till the
safety of every person on board was secured. This manly address
reanimated the drooping courage of the crew.
During the night the wind increased, and several of the boats were
dashed in pieces by the violence of the surf. Thus deprived of the
means of transporting themselves on shore, and the ship, in the
meantime, beating with such frightful violence against the rocks, as
threatened every instant to break her in pieces, they passed a night
of the greatest consternation and anxiety.
As soon as daylight set in, they began to construct rafts, of such
materials as they could procure. Three or four of these constructions
left the ship, carrying about eighty persons, all of whom succeeded
in reaching the shore. In the meantime the breeze continued to
freshen, till at length it became so violent, that the hawser which
held the ship's stern to the wind parted, and she drove with her
broadside on the rocks, the sea making a complete breach over her.
She soon began to break up, when every one crowded to the-
quarter-deck and poop, as the only place which afforded any chance
of safety: in a short time this retreat also failed, the vessel going
completely in pieces. Some of these were driven on shore in various
places, bearing with them such of the crew as had managed to
secure a footing upon them; but the gallant captain fell a victim to
the waves.
For several days, portions of the wreck continued to drift on shore,
generally bringing with them some part of the crew. On gathering
the survivers together, it was found that the captain, the first mate,
three young ladies, and forty-eight seamen, had perished. But the
trials of the survivers were not at an end. The natives, attracted by
the wreck, flocked to the shore, and, seizing on everything of value
that had either been saved or was cast on shore, threatened every
one who opposed them with instant death.
At length they reached Tulliar, the residence of the king of Baba, by
whom they were kindly received. The yawl, which you will recollect
had been sent on shore on the evening previous to the breaking up
of the vessel, was then equipped and despatched to Mozambique, to
endeavor to procure a ship to come to their rescue. After sailing for
some days, they reached the coast of Africa; but being unable to
make head against the northerly winds, they were forced to steer for
Sofala, a Portuguese settlement, where they arrived in safety.
Unfortunately, but a single vessel touched at the settlement in the
course of the year; and it had sailed about a month before. Finding
that there was here no hope of obtaining relief for their companions,
they again set sail, intending to proceed to Delagoa bay, in the
expectation of falling in with some of the South Sea ships, which
touch there annually in considerable numbers. Contrary winds,
however, and the leaky state of their boat, soon forced them to
return to Sofala. The governor received them, this time, in a very
different manner from that which he had shown to them on their
former visit, and with little ceremony insisted on the whole party
proceeding with his messengers to Senna, an inland settlement.
For five weeks they travelled through a miserable country, very thinly
inhabited, and exposed to the intense heat of the sun, and many
dangers from the wild beasts with which the country abounds. The
fatigue which they underwent on this journey was too much for
several of the party, who died shortly after their arrival.
At length, five months after leaving Madagascar, two of the forty
reached Mozambique. Here they freighted a vessel, and proceeded
to the rescue of their unfortunate comrades in misfortune. They
found them in a most melancholy plight. Disease and despair had
been at work among them; nearly one half of those who were saved
from the wreck had perished. The others, emaciated and worn out,
were embarked, and, with the exception of seven, who expired on
the passage, reached Mozambique, where, in spite of every
attention which was lavished on them by the governor and the
inhabitants, about thirty of them died within two months of their
arrival.
When the others were so far recovered as to be able to proceed,
they again hired a vessel to carry them to Madras; but, before they
reached it, the ship was captured by a French privateer. Part of the
crew the privateer took on board their own ship, and put a number
of their men into the captured vessel, with orders to proceed to the
Mauritius with all possible speed. The privateer then continued her
cruise, and in a few days falling in with a Dutch East Indiaman,
engaged with her; but the Dutchmen proving victors, the remains of
the crew of the unfortunate Winterton were once more set at liberty.
They at length reached Madras; whence they sailed for England in
the Scorpion sloop-of-war.
Poor fellows! they seem to have been very unlucky, Uncle Thomas.
The rest of the crew, who were carried to the Mauritius, did they get
home in safety also, Uncle Thomas?
Oh, I had almost forgotten to tell you about them, Frank. They never
reached England; nor could the least intelligence be heard of them,
though the East India Company caused the most diligent inquiries to
be made after them.
Do you think they were again shipwrecked, Uncle Thomas?
That I won't say: but I rather fear there was foul play somewhere.
Without some certain grounds to go upon, however, it is useless to
conjecture. So I must bid you good night.
Good night, Uncle Thomas!
 CHAPTER VIII.
UNCLE THOMAS TELLS ABOUT THE LOSS OF
THE ROYAL GEORGE.

Perilous as is the life of a sailor, boys, during the raging of the storm,
or when far at sea in the middle of the trackless ocean, he is still
exposed to danger even when his ship rides at anchor in the fancied
security of some friendly port. I dare say you have all heard of the
loss of the Royal George, one of the first-rate ships in the British
navy, which sank off Spithead, fifty-six years ago. The sudden and
unexpected event, and the vast number of persons who fell victims,
caused the greatest excitement at the time.
I have often heard of the loss of the Royal George, Uncle Thomas,
but I never could get any information about it. Will you have the
goodness to tell us about it?
With pleasure, boys. The vessel had just returned from a cruise, in
which it was found that she leaked more than usual, and as the
leakage continued even after she came into harbor, an order was
issued by the Admiralty that she should go into dock to repair. After
a strict survey, however, by the carpenter and others, it was found
that the leak was not more than two feet below the watermark, and
supposing it to be occasioned by the rubbing off of the copper
sheathing, it was resolved, in order to save time, to lay her down at
Spithead, by what is called a parliament heel; that is, by means of
ropes attached to the masts, to pull her over so much to one side as
to expose the other above water. In the meantime it was discovered
that the pipe, which occasionally admitted the water to cleanse and
sweeten the ship, was out of order, and that it was necessary to
replace it with a new one. As the vessel required to be heeled very
much for this purpose, the greater part of the guns were removed
from one side to the other; but as she was not expected to heel so
much as she did, they neglected to stop the scuppers of the lower
decks, so that the water coming in on deck, gradually gained upon
them, and the vessel thus for some time stole down imperceptibly.
During this time the greater part of the crew were at dinner; but the
carpenters and caulkers continued at their work, and had almost
finished it, when a sudden squall took the ship on the raised side,
and the lower deck ports to leeward being open, the water rushed
in. As soon as the dangerous situation of the vessel was discovered,
they beat to arms to right the ship, but in vain: in less than eight
minutes she fell flat on one side, filled with water, and the guns,
shot, &c., falling from the other side, accelerated her descent. She
sunk to the bottom so rapidly that no signal of distress could be
made; nor indeed could any assistance have availed if there had, for
after her lower ports were fairly in the water, no power on earth
could have prevented her from going to the bottom.
At this fatal moment there were nearly twelve hundred persons on
board, including about two hundred and fifty women and several
children, chiefly belonging to the seamen, who had been permitted
to remain on board until the order for sailing arrived. The people
who formed the watch upon deck, including their friends, amounting
in all to about two hundred and thirty, were mostly saved by the
boats, which the ships lying near the Royal George manned and sent
to their assistance, with the utmost expedition, when they observed
the vessel was sinking. Their assistance was, however, for some time
necessarily delayed, as the swell occasioned by the sinking of such a
large body produced a temporary whirlpool, which rendered
approach impossible; a victualling sloop indeed, which lay alongside
the Royal George, was drawn into the vortex, and seven of her crew
were drowned. The boats also picked up about seventy more, who
rose to the surface after the ship had disappeared, among whom
were four lieutenants, eleven women, and the remainder seamen.
Among the officers thus snatched from the brink of eternity, was
Lieutenant Durham, who, being officer of the watch, was upon deck
at the time when he observed the vessel going down. He had just
time to throw off his coat and scramble on the beam, from which he
was washed as the ship sunk, and left floating about among men
and hammocks. A drowning marine caught him by the waistcoat,
and held him so fast, that several times he was drawn under water.
It was in vain to reason with a man struggling for life; and conscious
of the certainty of neither being saved, if he did not disentangle
himself from his burden, he clung with his legs round a hammock,
and with one hand unbuttoning his waistcoat and sloping his
shoulder, committed it, with the unfortunate marine, to the
remorseless deep. He then got to some of the top rigging, where a
boat soon afterwards came to him, but he nobly declined the
assistance offered, and pointing out to them where Captain
Waghorne was in great danger, he desired them to go to his relief:
the gallant youth was at length taken up and conveyed in safety to
the shore.
The preservation of another young man, named Henry Bishop, was
effected in a very extraordinary manner. He was on the lower deck
at the time of the fatal accident, and as the vessel filled, the force of
the water hurried him, almost insensibly, up the hatchway, when, at
the instant, he was met by one of the guns which fell from the
middle deck, which striking him on his left hand, broke three of his
fingers; in a few seconds, however, he found himself floating on the
surface of the water, and was providentially picked up by one of the
boats.
Every effort was made by the boats of the fleet to save the crew;
but they were able to pick up only Captain Waghorne, a few officers,
and about three hundred people. By this dreadful and unlooked-for
accident, nearly nine hundred persons lost their lives; among whom
was Admiral Kempenfelt, whose flag was then flying on board the
Royal George, and whose loss was universally lamented. Besides the
Admiral, who was in his cabin writing when the sudden disaster
happened, every one who was between the decks perished with her.
Captain Waghorne, the Admiral's first captain, was, fortunately, on
deck; but his son, who was a lieutenant on board, was drowned.
The water must have been very deep, Uncle Thomas, to cover such
a large vessel. But I suppose she lay on her side.
No, Harry, she did not: a great number of persons were saved by
climbing on the topsail yards, which remained above water after the
vessel reached the bottom. She very soon righted herself, and the
tops of her masts were visible so late as 1799; part of her hull even
might then be seen at low water.
Could not the Royal George be got up again, Uncle Thomas? I
should have thought that, being quite sound and in still water, she
might have been weighed.
Several attempts were made to weigh her, Frank; but they were all
unsuccessful. Her anchor and some of her guns were, however,
recovered by means of diving bells. Her anchor was the heaviest
ever made—it weighed ninety-eight hundred weight.
In the churchyard at Portsea, an elegant monument was erected to
the memory of the brave Admiral Kempenfelt and his fellow-
sufferers. On it is engraved this impressive admonition:—
"Reader! with solemn thought survey this grave, and reflect on the
untimely death of thy fellow-mortals; and whilst, as a man, a Briton,
and a patriot, thou readest the melancholy narrative, drop a tear for
thy country's loss. On the twenty-ninth day of August, 1782, his
Majesty's ship, the Royal George, being on the heel at Spithead,
overset and sunk: by which fatal accident about nine hundred
persons were instantly launched into eternity; among whom was
that brave and experienced officer, Rear Admiral Kempenfelt. Nine
days after, many of the bodies of the unfortunate floated; thirty-five
of whom were interred in one grave, near this monument, which is
erected by the parish of Portsea, as a grateful tribute to the memory
of that great commander and his fellow-sufferers."
Good night, Uncle Thomas.
 CHAPTER IX.
UNCLE THOMAS TELLS ABOUT THE WRECK OF
THE STEAMERS KILLARNEY AND
FORFARSHIRE.

Good evening, boys! The sudden and unexpected disappearance of

the Royal George, though, from the size of the vessel, and the
number of lives which were lost on the occasion, an event
sufficiently appalling, is yet frequently outdone, in intensity of
suffering, by cases of shipwreck which happen on our coasts. To-
night, I am going to tell you about the loss of two steam vessels,
both of which afford remarkable instances of extreme suffering.
The first is that of the Killarney, a small steamer of about two
hundred tons burthen, which sailed between Cork and Bristol. She
left the quay at Cork, on the morning of Friday, January 19, 1838,
having on board twenty-one passengers, and twenty-two persons
belonging to the vessel. Her cargo consisted of about one hundred
tons of goods, and six hundred and fifty pigs, part of which were in
the fore hold, and the rest on deck.
Soon after she had left the harbor she encountered a gale, and the
number of pigs causing her to dip considerably, she shipped several
seas, which alarmed the passengers so much, that they prevailed on
the captain to put back.
In the evening, the wind having somewhat moderated, the captain,
contrary to the wishes of the passengers, resumed his voyage. The
vessel had, however, scarcely left the harbor, when the wind again
rose, and kept increasing till it blew a gale. This continued until
midnight, the vessel rolling dreadfully, and every wave that struck
her causing her to dip so deeply, that she shipped several seas. A
great quantity of water poured down into the fore hold, the hatches
having been left open in order to admit the air to the pigs which
were confined in it.
As matters began to wear a threatening aspect, the captain
requested that every person on board would assist in throwing
overboard the pigs which were on deck, which crowded to the lee-
side of the vessel so as almost to render her unmanageable. They
found this, however, a matter of great difficulty, and were able thus
to dispose of a very small number only.
The sea, in the meantime, continued to wash over the deck, and to
pour into the hold. Up to four o'clock, on Saturday morning, they
managed, by means of pumps which were worked by the engine, to
get rid of this water; but about that hour some small coal got into
the pumps and choked them. The water then rose rapidly, until it
reached the level of the engine-fire, when it rushed in, and at once
extinguished it. The engine no longer moved, and all was given up
for lost.
After a few minutes of abandonment to despair, the sailors, and part
of the passengers, seizing buckets, began to endeavor to lighten the
vessel of some of the water in the hold, and after several hours of
hard labor, they so far gained upon it as to enable them once more
to light the fire, and to get the steam partly up again. They were at
this time utterly ignorant of where they were, or whither they were
going, for the fog was so dense that no object was visible. They
endeavored to keep the vessel's head to the wind, but, after some
time, they found they were going to leeward. The jibsail was then
set, in order to keep her steady, but no sooner was it run out than it
was blown into ribbons. About three o'clock the fog cleared away,
and they saw land behind them, but no one could tell with certainty
what part of the coast it was. It was then blowing a complete
hurricane; the shore was covered with rocks, and they saw that, if
they drifted towards it, destruction was inevitable. By the captain's
orders, the mainsail was set, and the engine-men were directed to
do their utmost to get up the steam, in order to keep her off. The
steam, unfortunately, was so weak as to be of no assistance—it
scarcely moved the crank; and the sail had to be hauled down, lest it
should throw the vessel on her beam ends. The staysail was then
tried, in the hope that it would enable them to round the point; but
the storm was so violent that they could not haul it out.
The vessel was in the meantime drifting nearer to the rock on which
she ultimately struck. After great exertions they succeeded in turning
her round, to endeavor to make for a bay which promised a place of
safety. Just as they had succeeded in getting her before the wind,
she was, however, pooped by a tremendous sea, which carried away
the taffrail, the wheel, and the two men who worked it, the
companion, the binnacle, and the breakwater. The men fortunately
caught part of the rigging, and were saved; but the sea carried away
the bulwarks, with some of the steerage passengers who were
standing near the funnel, and at once cleared the deck of all the
pigs.
When the vessel was nearing the rock, and before she put about,
the steward went down to call the cabin passengers on deck. They
were on their way up when the sea passed over the vessel. A second
wave succeeded almost immediately, and scarcely had two of them
stepped on the quarter-deck when they were hurried overboard.
These two seas had the effect of bringing the head of the vessel
somewhat to windward again, when a third wave rapidly succeeded,
and drove her on the rock. It was then between four and five
o'clock. The first stroke she gave, the carpenter jumped on the rock;
he was followed by one of the passengers, but the landing-place was
so narrow that there was not room for both, and the latter fell into
the water and was drowned. After striking, the vessel receded; she
soon struck again, and continued receding and striking for some
time, during which some of the sailors, the first mate, and the
captain landed. When the latter got on the rock, a rope was thrown
to him and the mate, that they might endeavor to keep the vessel to
the rock. Most of the sailors and some of the passengers were saved
in this way, one only landing at a time.
Before leaving the vessel, the steward scrambled along the deck to
look for Mrs. Lawe, one of the passengers, who had distinguished
herself by her calmness, and the firm reliance she placed on a
protecting Providence. He found her near the funnel, calm and
collected; with some difficulty he brought her to the quarter-gallery,
and loosing the rope, he handed it to her, directing her to take hold
of it, and, when the vessel next struck, to leap into the sea, and they
would drag her to the rock. She did so, and was drawn up part of
the way, but having quitted her hold of the rope, she was carried
away by the receding wave, and never seen again. The steward
leaped almost at the same moment, and was saved. The last
persons who left the vessel were a sailor and a woman—the latter
supposed to be the stewardess. She appeared to be insensible; and
the sailor, who seemed to have brought her from the cabin, had her
in his arms. He leaped from the vessel, and reached the rock, the
woman under one arm; but the footing was narrow, and the rock
was shelving. He had room for little more than his toes, and was
obliged to endeavor to hold on with the fingers of one hand, but the
weight of the woman inclining him backwards, they fell into the sea,
and both were drowned.
The manner in which some of the lives were lost was peculiarly
affecting. A medical gentleman, one of the passengers, had his little
son in his arms, soothing and supporting him, and when the vessel
struck, he flung him with all his strength towards the rock. The child
reached it in safety, though the violence of the effort nearly carried
the father overboard. When the latter gained the rock, he again took
him in his arms, and, by clasping him closely, endeavored to keep
him warm. "Kiss me, papa," said the little fellow, "we shall soon
meet no more." The child was right. In a few minutes he got on his
feet, ventured a short distance from his father's side, and slipping
from the rock, was at once swallowed up by the raging deep.
As soon as the steward loosed the rope to give it to Mrs. Lawe, the
vessel having nothing to confine her, swung round, and the next sea
that struck her drove her against the rock; her deck opened, she
divided into two, fore and aft, and every one who remained on
board perished. In an hour after, with the exception of the engine
and the paddle-wheel, not a vestige of the vessel or of her
machinery was visible.
There were now about twenty-five persons on the rock. The sailors
had contrived to clamber to a sheltered side, but the situation of the
passengers was pitiable in the extreme. One who had on but a shirt
and waistcoat, was seated astride on a projection of the rock, his
face towards the sea. Under him was another, his back to the sea,
his toes resting on a narrow ledge, and his fingers clinging in a
crevice; while close beside them were others equally exposed and
equally helpless.
The persons on the side next the land observing some country
people—about eighteen or twenty—on the shore, shouted to them,
hoping to attract their attention, but there was no answer. The
probability is, that the sound never reached the land, as they saw
the people subsequently descend and carry off some of the pigs that
had been washed ashore. Night came on. About eleven o'clock the
wind rose and blew terrifically, but, even amid the raging of the
storm, a startling shriek was now and then heard, as one after
another, unable longer to maintain their hold, fell into the sea.
When morning broke, the survivers clambered to the sheltered side
of the rock. As they had now been discovered by the people on
shore, great exertions were made to relieve them; but, as the storm
continued unabated, it was found impossible to reach the rock.
Ducks with ropes fastened to them were sent out; only one arrived,
and that they were unable to catch. Wire was attached to bullets,
and rope to the wire, and sundry shots were fired; but this means
also was unsuccessful.
The whole of Sunday was spent in a variety of experiments to
convey a rope to the rock, without success. The feelings of the
sufferers it would be impossible to describe, and their agony, when
they saw the attempt to rescue them abandoned—when darkness
settled down upon the deep, and they could no longer distinguish
the figures of the persons on the cliff above them, it would not be
easy to imagine. Their sole sustenance, during the two tedious days
and nights which they had passed since the wreck, was a little salt
water and the few scraps of seaweed that they could gather from
one of the bleakest and most barren rocks on the coast. The night,
however, was not so tempestuous as the preceding, and at daylight
the shore was once more crowded by persons, all anxious to lend
their assistance.
On Monday morning, Captain Manby's life-preserving apparatus was
brought to their assistance, but the same difficulty was experienced
in reaching the rock with the rope. Shots were again fired from guns
and small cannon brought for the purpose, but without success. At
length, a plan, which had been unsuccessful on the preceding day,
succeeded, and about eleven o'clock two loaves of bread, and a little
wine and spirits, were lowered to them—the first they had partaken
of since Friday. After refreshing themselves, they were hauled up,
one by one. Of the forty-three persons who embarked on Friday
morning, thirteen only escaped, and of these one died soon after
their rescue.
Dreadful, Uncle Thomas! I wonder they were not all starved to
death, exposed as they were to the cold of two January nights.
It was indeed surprising, Harry, that any of them escaped. Some of
them were nearly destitute of clothing. I told you of one of the
passengers who was all but naked, and the woman who escaped
passed the time on the rock with only her night-dress and a small
handkerchief to cover her.
The other wreck, of which I promised to tell you this evening, is that
of the Forfarshire, also a steamer, which sailed between Hull and
Dundee. She left Hull on the evening of Wednesday, September 5th,
1838, having on board a valuable cargo, and upwards of forty
passengers. Her crew consisted of twenty-one persons; the captain's
wife accompanied him on the voyage.
The Forfarshire had not proceeded far when a leak was discovered in
the boiler. This rendered it necessary to extinguish two of the fires,
which were, however, relighted when the boiler had been partially
repaired. The vessel continued her course until the following
evening, by which time she had proceeded as far as Berwick Bay,
when the leak again appeared. It had now become so great, that the
greatest difficulty was experienced in keeping the boilers filled, the
water escaping through the leak as fast as it was pumped in. The
wind was blowing strong and the sea running high, and the leak
increased so much from the motion of the vessel, that the fires were
extinguished, and the engines, of course, became entirely useless. It
was now about ten o'clock at night, and they were off St. Abbs'
Head, a bold promontory on the Scottish coast. There being great
danger of drifting ashore, the sails were hoisted fore and aft, and
the vessel put about in order to get her before the wind, and keep
her off the land. She soon became unmanageable, and the tide
setting strong to the south, she proceeded in that direction. It rained
heavily during the whole time, and the fog was so dense that it
became impossible to tell the situation of the vessel. At length
breakers were discovered close to leeward, and the Ferne Lights,
which about the same period became visible, put an end to all doubt
as to the imminent peril of the unfortunate vessel. An attempt was
made to run her between the Ferne Islands, but she refused to obey
the helm, and at three o'clock on Friday morning, she struck with
tremendous force against the outer or Longstone Island.
At the moment the vessel struck, most of the passengers were
below, and many of them asleep in their berths. One, alarmed by
the shock, started up, and seizing his trousers only, rushed upon
deck. When he reached it, he found everything in confusion, and
seeing part of the crew hoisting out a boat, he sprang into it. The
raging of the sea instantly separated it from the vessel, and though
several of the other passengers attempted to reach it, they were
unsuccessful, and perished in the attempt. The boat itself escaped
by something little short of a miracle. There was but one outlet by
which it could avoid being dashed in pieces on the breakers by
which it was surrounded. This outlet it providentially took without its
crew being aware of it; and after being exposed to the storm all
night, it was picked up by a sloop and carried into Shields.
In less than five minutes after the vessel struck, a second shock
separated her into two parts—the stern, quarter-deck, and cabin
being instantly borne away, through a passage called the Piper Gut,
by a tremendous current, which runs with considerable violence
even in temperate weather—with a rapidity of about six miles an
hour—but which, when the weather is tempestuous, flows with a
force truly terrific.
The fore part of the vessel, in the meantime, remained fast on the
rock, and to it still clung the few passengers who remained, every
instant expecting to share the fate of their unfortunate companions,
whom they had seen swept away by the raging element. In this
dreadful situation their cries attracted the notice of Grace Darling,
the daughter of the keeper of the Outer Ferne Lighthouse. With a
noble heroism, she immediately determined to attempt their rescue,
in spite of the raging of the storm, and the all but certain destruction
which threatened to attend it.
Having hastily awakened her father, he launched his boat at day-
break, and, with a generous sympathy worthy of the father of Grace
Darling, prepared to proceed to their rescue. The gale, in the
meantime, continued unabated, and the boiling of the waves
threatened a speedy destruction to their frail boat. It was therefore
with a heart full of the most fearful forebodings, that he undertook
the perilous enterprise. After watching the wreck for some time, they
discovered that living beings were still clinging to it, and the gallant
young woman, with matchless intrepidity, seized an oar and entered
the boat. This was enough—her father followed; and, with the
assistance of his daughter, conducted the frail skiff over the foaming
billows to the spot where the wreck appeared. By a dangerous and
desperate effort he was landed on the rock, and to preserve the frail
boat from being dashed to pieces, it was rapidly rowed back among
the awful abyss of waters, and kept afloat by the skilfulness and
dexterity of this noble-minded young woman. At length the whole of
the survivers, consisting of five of the crew and four of the
passengers, were taken from the wreck, and conveyed to the light-
house, where she ministered to their wants, and anxiously, for three
days and three nights, waited on the sufferers, and soothed their
afflictions. This perilous achievement, unexampled in the feats of
female fortitude, was witnessed by the survivers in silent wonder.
The weather continued so tempestuous that the mainland could not
be reached till Sunday, when the nine persons, saved by the gallant
heroism of the Darlings, were landed in safety; thus making the
entire number of persons saved from the wreck eighteen. All the
others perished.
Those who found refuge on the rock on which the vessel struck,
suffered severely during the night from the cold and the heavy seas
which, at intervals, washed over them. The female passenger, who
escaped, sat with her two children, a boy and a girl, the one eight
and the other eleven years of age, firmly grasped in each hand, long
after the buffetings of the waves had deprived them of existence.
The captain and his wife were washed from the wreck, clasped in
each other's arms, and both drowned.
It was indeed a noble act, Uncle Thomas! I wonder she was not
afraid that her boat would share the fate of the steam-vessel, and be
dashed in pieces on the rock.
It was an act of heroism, boys, to which you will find few parallels;
nor has it been without its reward. Besides the satisfaction of saving
nine fellow-creatures from certain destruction, the fame of the heroic
act has spread far and wide, and its praise been on every tongue.
Painters, of no mean power, have portrayed the scene, and its
memory will be thus preserved. Presents have besides poured in
upon her and her father, and everything been done to mark the
public sympathy and approbation of the daring and disinterested
deed.
A coroner's inquest was held on the bodies of four of the sufferers,
which were washed ashore. The jury returned a verdict "Wrecked on
board the Forfarshire steam-packet, by the imperfection of her
boilers, and the culpable negligence of the captain in not putting
back to port."
Was the vessel completely destroyed, Uncle Thomas?
The only part of the vessel which remained, Harry, consisted of the
forecastle, part of the engine, the paddle-wheels, and part of the
rigging. One of the boilers was thrown upon the rock, the other
disappeared in the sea. Of the valuable cargo, a few boxes of soap
only were recovered.
 CHAPTER X.
UNCLE THOMAS TELLS ABOUT THE WRECK OF
THE ALBION NEW YORK PACKET.

Many of the tales of shipwrecks which have happened on our shores,

are extremely distressing; none more so, perhaps, than that of the
Albion packet, which was wrecked on the Irish coast, in 1822.
The Albion was one of the first-class packet ships between New York
and Liverpool, and sailed from the former place on the first of April,
having on board twenty-three cabin and six steerage passengers,
her crew consisting of twenty-five persons; making the entire
number who embarked fifty-four. For the first twenty days the
voyage was prosperous and pleasant. About two o'clock on Sunday
the 21st, they made Cape Clear, and the weather, which had, during
the earlier part of the voyage, been moderate and favorable, now
became thick and foggy, the wind blowing fresh, with heavy squalls
from the southward. The ship had been carrying all her canvass, but
as the gale increased they were obliged to shorten sail. At four
o'clock, they were under double-reefed topsails, foresail, and
mainsail, when a sudden squall carried away the fore-yard and split
the fore-topsail. They therefore got the broken yard down, and
prepared to replace it by another.
As night came on, the decks were cleared for working the ship; the
wind, however, lulled, and it was supposed that the storm of the day
was over. As they were near the coast, all hands flattered
themselves they should, in a short time, reach their destined harbor,
and be once more secure from the dangers of the deep. About nine
o'clock, the ship was struck by a tremendous sea, which threw her
on her beam-ends, and carried away the mainmast by the board, the
heads of the mizenmast and fore-topmast, sweeping the deck clear
of everything, including boats, caboose-house, and bulwarks, and
staving in all the hatches, and state-rooms, and nearly filling the
cabin with water. It also carried away six of the crew and one of the
cabin passengers, and, in short, so destructive was its influence, that
it left the Albion in the state of a wreck.
As the ship now became unmanageable, and the sea continued to
make a complete breach over her, both crew and passengers were
obliged to lash themselves to the pumps, in order to keep
themselves from being washed away while working them. All who
were unnecessary or unable to afford assistance on deck retired
below, but the water was knee-deep in the cabin, and the furniture
floating about rendered their situation dangerous and dreadful. On
deck they were in total darkness, and having no correct compasses,
they could not tell how the ship's head lay.
About one o'clock in the morning of the 22d, they made the light of
the Old Head of Kinsale, a light-house on the Irish coast, but could
not ascertain its bearing, and at two o'clock they found the ship
embayed. All night long the wind had blown directly on shore,
towards which the vessel was drifting at the rate of about three
miles an hour. The complete hopelessness of their situation was
known to few on board; but to Captain Williams the coast was
familiar, and he must have seen, in despair and horror, throughout
the night, the certainty of their fate. At length the noise of the ocean
roaring and dashing upon the rocky and precipitous shore, spoke too
plainly of the fate that awaited them. The captain, seeing that the
crisis was now close at hand, and that the wreck of the vessel was
inevitable, summoned all the passengers on deck, and briefly told
them that each must prepare to save himself, as the ship must soon
strike—it was impossible to preserve her. The scene was one of the
most touching description; many of them had received considerable
injury when the sea first struck the ship, and were scarcely able to
come on deck; others were completely exhausted from having been
incessantly assisting at the pumps; and one gentleman, who had
been extremely ill during the voyage, Mr. William Everhart, of
Chester, Pennsylvania, was too feeble to crawl to the deck without
assistance, though, strange to say, he was the only cabin passenger
who was saved.
The situation of the passengers on board the Albion was, at this
moment, one of peculiar agony, as they watched, without the power
of resistance, the deadly and relentless blast impelling them to
destruction—the ship a wreck—and the raging of the billows against
the precipice on which they were driving, sending back from the
rocky caverns the hoarse and melancholy warnings of death. In such
a situation, the stoutest heart must have quailed with utter despair.
As the morning dawned, the Albion struck on a reef, her upper-
works beat in over the rocks, and in about half an hour she parted
midships, her quarter-deck drifting on the top of the inside ledge,
immediately under the cliffs. The perpendicular precipice of rocks,
under which the unfortunate vessel struck, is nearly two hundred
feet in height, in the base of which, the sea beating for ages, has
worn large caverns, into which the waves rush violently, sending
back a deep and hollow sound; after striking against the rock, they
are thrown back in various directions, forming whirlpools of great
violence. For some distance from the precipice, rocks rise out of the
water, broad at bottom, and sharp at top: on one of these the Albion
first struck; the next wave threw her farther on the rock, the third
farther still, until, nearly balanced, she swung round, and her stern
was driven against another, closer in shore.
In this perilous situation, every wave making a complete breach over
her, many of the passengers and crew were drowned on deck.
Captain Williams, worn out with the extraordinary exertions which,
up to the last moment, he continued to make for the preservation of
the lives of the unfortunate passengers and crew, was, with several
others, swept away soon after the vessel struck.
A short time before she parted, the mate and six of the crew
managed to gain a rock, but so exhausted were they by their
previous exertions, and by the dashing of the waves, which every
instant washed over them, that the mate was washed off;
fortunately, however, he regained his position before the return of
the sea. So exhausted was he, that before he could attempt to climb
the rock, which was nearly perpendicular, he was obliged to lie down
to recover strength from the severe bruises and contusions which he
had received. One of the passengers also reached the rock alive,
but, together with one of the stewards, he was washed off and
drowned.
Perceiving that the stern was higher out of water than the fore part
of the wreck, and the sea had less power in its sweep over it, Mr.
Everhart went aft. He now saw that the bottom had been broken out
of the ship. The heavy articles must have sunk, and the cotton and
lighter articles were floating around, dashed by every wave against
the rocks. Presently the ship broke in two, and all who remained
near the bow were lost. Several had got on the side of the precipice
from the stern of the ship, and were hanging by the crags. Although
weakened by previous sickness and present suffering, Mr. Everhart
made an effort and got upon the rock, and stood upon one foot,
which was the only hold he could obtain. He saw several of his
fellow-sufferers around him, and, among the rest, Colonel Prevost,
who, on seeing him take his station, remarked, "Here is another
poor fellow," But the waves rolling heavily against them, and often
dashing the spray fifty feet above their heads, gradually swept them
away, one after another. One of the sailors, losing his hold,
attempted to grasp Mr. Everhart's leg, and nearly pulled him from his
place. Weak and ill as he was, however, he contrived to retain his
position, and stood for several hours on one foot on a little crag, the
billows dashing over him, and quite benumbed with cold.
By day-light, the wreck having been discovered, as soon as the
ebbing of the tide rendered it practicable, the country people
descended the rocks as far as they could, and dropped Mr. Everhart
a rope, which he fastened round his body, and was drawn up to a
place of safety. Of twenty-three cabin passengers he alone escaped.
Many of the passengers who were lost in this melancholy shipwreck,
held distinguished stations in society. The most eminent sufferer was
Gen. Lefebvre Desnouettes, who, during a long series of years, had
braved death in the field of battle, and escaped to perish at last in
this catastrophe, when his mind was, perhaps, less than at any other
period of his life, reconciled to the stroke of fate. His situation was
every way peculiar. It is well known that he had been one of the
favorite and most distinguished of Napoleon's military generals, and
that he took part in the combination against Louis XVIII. On the
landing of his old commander from Elba, with headlong enthusiasm
he joined him in his last campaign, and being proscribed by the royal
government, took refuge in the United States. Here his misfortunes,
reputation, intelligence, and manly, unexceptionable deportment,
rendered him an object of universal esteem. To escape, as he used
to remark, pity and curiosity, and to gratify the natural activity of his
mind, he retired to the territory granted to the French exiles in the
State of Alabama, where he labored in the fields, under the burning
sun, with a reckless exertion, which proved very injurious to his
health. His wife, an amiable and accomplished woman, remained
behind in France to look after his interests there. Having begun his
agricultural toil, he never quitted it until his final departure from the
country, except to visit Washington on business. At length, he
addressed a petition to the French government, praying to be
allowed to return home. He received directions to proceed to
Holland, and there wait the final pleasure of the king; and, on his
way to Liverpool, met with a watery grave on the Irish coast.
It is a very affecting tale indeed, Uncle Thomas! How shocking to
think that, after crossing the Atlantic ocean in safety, they should
perish when almost within sight of home!
 CHAPTER XI.
UNCLE THOMAS TELLS OF THE LOSS OF THE
DODDINGTON EAST INDIAMAN.

This evening, boys, I am going to tell you of the loss of the

Doddington, which was wrecked on a barren, uninhabited rock,
when nearly two hundred persons lost their lives.
The Doddington sailed from the Downs, April 23d, 1755, in company
with four others of the East India Company's ships. On the 20th of
May, they made Bonavista, one of the Cape de Verd Islands, and on
the 21st got into Port Prior Bay, for the purpose of taking in a supply
of fresh water. On the 27th, she proceeded on her voyage, in
company with three of the vessels with which she had at first set
out, leaving the other, which had not yet completed her refitment, in
the roads. They continued together until the following day, when the
Captain, thinking that their course was too easterly, ordered the
Doddington to be kept south; and after a fine run of seven weeks,
she made the land of the Cape of Good Hope.
On the 5th of July, they took their departure from Cape Needles, and
the vessel having steered eastward about twenty-four hours, the
Captain ordered her to be kept E. N. E. In this course she continued
till about a quarter before one on the morning of Thursday the 17th
of July, when she struck.
The officer whose journal furnishes materials for the following
narrative, was, at the time of the accident, asleep in his cabin; but
being suddenly awakened by the shock, he started up in the utmost
consternation, and hurried upon deck. He found the sea rolling over
the ship with the utmost violence, and sweeping the men overboard,
while the beating of the surge upon the vessel threatened, every
instant, to dash her in pieces. On reaching the larboard side of the
deck, which lay highest out of the water, he encountered the
Captain, who told him in a very little time they must all perish; in a
few minutes a sea parted them, and he saw him no more. He
managed, by dint of great exertion, to get back to the quarter-deck,
though he was much bruised and had the small bone of his left arm
broken; the other portion of the ship was, in the meantime,
overwhelmed by the waves and completely shattered in pieces.
In this dreadful situation, when every minute he expected would be
the last of all who still clung to the wreck, he heard the welcome cry
of "Land!" and looked eagerly about him; but though he saw
something which he supposed had been taken for land, he believed
that it was only the bursting of the surge on the other side of the
breakers. At this instant, the sea broke over him with such fury, that
it not only forced him from his hold, but such was the violence of the
blow, that he was stunned, and lay insensible till after daylight. On
recovering, he found himself fixed to a plank by a nail that had been
forced into his shoulder. Besides the pain of his wound, and the
many bruises which he had sustained, he was so benumbed with
cold that he could scarcely move. He now observed that several of
the crew had got on the rocks which were near, and called out to
them as loud as he could; but they were not able to give him any
assistance, so that a considerable time elapsed before he was able
to disengage himself from the wreck and get on shore.
On reaching the rock, he found twenty-three of his companions,
which were all that had been able to save themselves out of two
hundred and twenty individuals that were on board when the ship
struck. Their first care was to search among the things that had
been thrown on the rocks from the wreck, for something to cover
them from the weather, and in this they succeeded almost beyond
their expectations; but the attainment of fire was not so easily
accomplished. Some of them made an unsuccessful attempt to
kindle two pieces of wood by rubbing them together, while others
diligently searched the rocks in anxious endeavors to find a
substitute for flint and steel. After some time they found a box
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