SCIENCE OF FINANCE AND ALLIED SCIENCES 181 



this development is found in the universal recognition by modern 

 economists of a science that has to do with the material well-being 

 of the state as well as a science that has to do with the material well- 

 being of the individual, both of which adopt the same ultimate test 

 of a well-organized society. 



The relation which the science of finance bears to political economy, 

 the two sciences that together fill the field of economics, may be more 

 clearly suggested by passing in review the formal changes that have 

 taken place in economics since the time of John Stuart Mill, the 

 greatest as well as the latest expositor of the classical school of econ- 

 omy. Mill was too acute a thinker to ignore the existence of the 

 state in a study of industrial organization, but the philosophy in 

 which he was educated did not permit him to acknowledge the state 

 as a positive factor in industrial organization. It is true that in 

 his Principles of Political Economy he considers some of the problems 

 that are now included in the science of finance, but this considera- 

 tion is introduced in that part of the work which treats of justifiable 

 interference with the normal workings of economic laws. 



Manifestly no science of taxation was possible, to say nothing of 

 the science of finance which embraces much beside taxation, as long 

 as the influence of government in industry is regarded as a disturb- 

 ance of the normal working of natural law; for it is essential to 

 any science that it gives expression to laws that inhere in natural 

 conditions and to principles that are enduring because they are 

 vital to the existence of the subject investigated. 



For the correction of this error of the older English economists 

 we are indebted to the economists of Germany, and in Germany 

 the change came rather as a result of the study of jurisprudence and 

 of the application of the historic method of investigation to all kinds 

 of social institutions, than as a formal criticism of individualism in 

 industry. The German economist was educated to the conception 

 of the state as an institution which existed by virtue of the forces 

 that gave it a history. One result of this study of Roman institu- 

 tions was the idea that the authority of the state rests upon necessity. 

 The material with which he dealt when investigating the industrial 

 life of his own people also obliged him to distinguish between the 

 political and the industrial organization, each with its own princi- 

 ples and its own natural order. It may be true, as some have claimed, 

 that German economists, when treating of the industrial and fiscal 

 character of the state, fall into an error the same in kind as the error 

 of the English classical economists, in that they subordinate the 

 industrial to the political organization. With that, however, we are 

 not concerned. We are endeavoring to thread our way between 

 public finance and political economy as formal expressions of scien- 

 tific conclusions, and certainly some help is obtained for this task 



