The immediate future of economic history is here. As I look over the program of our sessions, it seems plain that all of us are bound to be thinking about the nature of that future. Our president will speak on this subject with an authority that the rest of us cannot command. But it is up to each of us, however humble, to make such a contribution as the means at our disposal permit. Creative discussion always helps men to edge a little closer toward the truth. Let us hope there will be much of it during the next two days. Professor Innis has asked me to open the formal part of this session by some brief remarks on the relation of economic history to American civilization. I thank him for his confidence, but wish that he had placed the task in more competent hands. The subject I have selected is a vast and complicated one, and all I can hope to offer are a few rough and general suggestions. What I have to say is intended to provoke discussion.

It is a great honor, deeply appreciated, to be chosen first president of the Economic History Association. I cannot pretend to act as spokesman for this newly organized scientific group. I assume that I owe my present honor and responsibility partly to the number of years I have imperfectly taught economic history—and, I hope, stimulated some interest in it—and partly to your recognition of the principle of historical continuity. For I was a student under Schmoller at Berlin; he in turn was a pupil of Roscher (whose last lectures at Leipsic I heard); and Roscher, almost a century ago, was one of the first historical economists and the original formulator of a program for the new “school” of economics. I wish to recall to your attention these beginnings of our discipline in order to emphasize how the subsequent shift in its development has made us economic historians instead of historical economists.

In this paper I intend to confine myself to one aspect of the manysided changes which came over English political economy between the publication of John Stuart Mill's Principles of Political Economy (1848) and of Alfred Marshall's Principles of Economics (1890). During this period great theoretical advances were made by W. S. Jevons and Alfred Marshall, advances which were paralleled in Lausanne and Vienna, and pushed further on the American continent by Professors J. B. Clark and Irving Fisher. I shall not attempt to summarize these contributions to pure theory, nor to estimate how wide was the gulf between the theory of Mill and the theory of Marshall (but in parenthesis I cannot refrain from suggesting that the real change in the theory of value was relatively small, while the change in the theory of distribution which derived from it was revolutionary). It is more appropriate at this first annual meeting of the Economic History Association to discuss the change in the status of economic theory in the corpus of economics as a result, mainly, of the influence of the historical school. Emphasis will be placed on the terms of peace rather than on the war of the methods, for it is my purpose to emphasize the possibilities of cooperation rather than to revive old antagonisms. I want to discuss the influence of some economic historians on economics. I shall make frequent reference to William Ashley, first professor of political economy in the University of Toronto and first professor of economic history in Harvard University and, I think, on the American continent. If I give him undue prominence this can surely be forgiven a Toronto man on this occasion.

Archeologists assure us that organized social life has existed on this earth for about two hundred and fifty thousand years. How millions of people have sought to satisfy their wants over this tremendous span of time is the acknowledged province of economic history. Yet, for lack of records, the gild of economic historians must, for the most part, confine their attention to the last one per cent of this time span; indeed the great bulk of research in economic history is devoted the last one-tenth of one per cent of the archeologists' two hundred and fifty thousand years of social history. Even then the economic historian is utterly overwhelmed with facts. He who essays to write the economic history of the United States, for example, must depict as best can the economic activities of people for more than a hundred and fifty years, farmers, merchants, manufacturers, wage-earners, rentiers; men, women and children in all walks of life, in all variety of occupations. The task is utterly staggering. An army of economic historians would be required to write a complete economic history of the United States; a regiment at least to write a faithful factual account of a single industry.

The power of the church in the medieval town was ever-present and all-pervasive. It operated through the ritual of the sacraments, the jurisdiction of the ecclesiastical courts, the charitable foundations of the orders, through the pictorial teaching on church walls and windows, open-air sermons, public inflictions of penance, the celebration of saints' festivals, and in many other ways. There can be no reasonable doubt that the social teachings of the church, along with its other doctrines, were by one means or another impressed upon every townsman, in so far as he was capable of understanding them.

Prior to the Civil War in the United States much of the economic development of the country was financed by means of European credit, extended for both short and long terms. The flow of capital was chiefly from England and considerable Continental capital moved through England to the United States. A few firms in England were the chief instruments in this process of financing American trade and marketing American securities. These Anglo-American merchant bankers are the subject of this paper.

The study of business incorporations was undertaken with several purposes in mind. Incorporations—while they may reflect other things in a more or less significant manner—can give a very good picture of one stage of enterpreneurial activity. The large entrepreneur is, of course, better represented in the data on corporations than is the small businessman; and the entrepreneur of recent years is better represented than the entrepreneur of an earlier date, since at that time the corporation was less widely used. Nevertheless, one who studies data on newly chartered companies can see the development of the economy from an unused standpoint. Moreover, since entrepreneurs' ideas about business projects ought to be reflected in the number and character of business incorporations, a study of charters should add to our knowledge of the operation of business cycles. It should also lead to a better understanding of the corporation itself, since new light would be thrown on the history of state competition for the business of creating the corporations of this country. State rivalry for the chartering business has been a powerful factor in moulding the corporation to the changing needs of our economy. This adaptation might—or might not—have been brought about as efficiently by some other device, but that is a problem in itself.

During the past decade the rapid spread of governmental activities into new fields and their extension within the fields that had previously been entered have increased the attention always given to the question of the legitimate sphere of activity for the Federal Government. There has been a widespread assumption that throughout the nineteenth century with only insignificant exceptions this country followed a policy of laissez-faire. From this assumption many people have proceeded to argue that in the past decade the American people have suddenly turned from the tradition which made this the greatest industrial nation of the world and have adopted a course which leads away from the “American way of life.”

The frontier interpretation of American history with which Professor Frederick Jackson Turner captivated and intrigued the observers of American development more than forty years ago still retains its fascination. Professor Turner saw the American frontier as an area in which American society was constantly being rebuilt, each time shaped by special problems: “American social development,” he wrote, “has been continually beginning over again on the frontier.” It was on this theme that Professor Turner based his most striking contention that “The existence of an area of free land, its continuous recession, and the advance of American settlement westward, explain American development.”

Economics, as it is frequently taught nowadays, consists largely of supply and demand curves. Within their graceful lines are contained the wisdom of the ages—the key to the past and the barometer of the future. If superimposed on one another, these curves have all the esthetic quality of dynamistic drawings. So completely have they dominated economic thinking that when a group of economists considered the possibility of founding an Economic History Association, their first impulse was to establish a demand curve. This was done, as Professor Heaton has intimated, by Miss Anne Bezanson, who canvassed the field. She discovered that four hundred people could be counted upon immediately to support a Journal of Economic History.