180 PUBLIC FINANCE 



tion to allied sciences is usually approached, but it is certainly more 

 concrete and has the merit of being easily understood. I shall at 

 least ask your indulgence while developing along this line the subject 

 assigned by the committee. And first let us consider the relation 

 of the science of finance to political economy. 



Relation to Political Economy 



The most important fact of political organization for one who 

 seeks to define and limit the science of finance is found in its essen- 

 tially benevolent character. The state as an organization has no 

 personality of interest. A consideration that centers in itself, or a 

 policy that holds in view the power or prosperity of the state apart 

 from the well-being of the individuals who compose it, is bereft of 

 any sound basis of judgment or safe test of propriety; without such 

 judgment and test it is, of course, impossible for a science to exist. 

 The state feels no pleasure in riches nor ambition for wealth except 

 so far as an ample income ministers to the well-being of the people. 

 It is this fact, namely, the benevolent character of the political 

 organization, that gives to the science of finance its peculiar point 

 of view, and what is of more importance for the purpose of this 

 analysis, it is this fact that draws a clear and enduring line between 

 the science of finance and the science of political economy. 



It may be well to dwell for a moment upon this distinction, for 

 it carries with it many formal and theoretical conclusions as well as 

 practical results. 



The essential weakness of what is known as English political econ- 

 omy consisted in the assumption that material well-being can be 

 attained only through the agency of a single form of association, 

 that is to say, through voluntary association resting on contract. 

 This assumption is nowhere formally expressed by the writers of 

 the classical school for the reason that its expression would have 

 been superfluous. The establishment of this thesis, and the enact- 

 ment of laws to secure for the individual the exclusive right of oper- 

 ating within the industrial domain, was the sole purpose of all their 

 analysis and argument. This is not the time to pass in review 

 the line of reasoning which identifies private gain and public welfare, 

 and which seeks to clothe with an ethical philosophy an industrial 

 organization directed by the hope of personal gain. It is sufficient 

 to note that while such a philosophy of industrial relations held 

 sway there was no place for the science of finance as a distinct and 

 independent branch of human knowledge. The course of events 

 has proven the limitations of this philosophy. Its modification 

 covers most of what is important in the development of economics 

 since 1850, and perhaps the most significant of the formal results of 



