182 PUBLIC FINANCE 



when we come to understand why German students were able to 

 accomplish what English writers thought it not worth their while 

 to undertake, namely, the development of an independent and self- 

 consistent science of finance and its presentation as one of the many 

 branches of knowledge that have to do with social institutions. 

 The German writer started with a scientific conception of the state; 

 the English writer, on the other hand, notwithstanding the marked 

 success of his people with practical problems of government, had no 

 such conception, nor, indeed, was it possible for him to gain such 

 a conception without confessing the inadequacy of his philosophy of 

 social relations. This he has not yet done in any formal and com- 

 prehensive manner, and this is doubtless the explanation of the fact 

 that the English language yet waits for a satisfactory treatise upon 

 the science of finance. 



One generalization from the above may not be out of place. 

 Society exists by virtue of two principles of organization which 

 between them divide the field of social relations. These are the 

 principles of voluntary and of coercive association. The former 

 is motived by the proximate interest of the individual and finds 

 expression in contract and agreement; the latter is motived by the 

 welfare of the state and finds expression in fundamental law and 

 legislative enactment. The science of political economy and the 

 science of finance are dealing with the same material, but the former 

 confines itself to the domain of voluntary association and the latter 

 to the domain of coercive organization. It is doubtless this dis- 

 tinction that led Dr. Adolph Wagner of the University of Berlin 

 he to whom this paper was first assigned by your committee, and 

 whose absence no one regrets more than myself to begin his 

 encyclopedic work upon finance with the observation that " the 

 state is the sole depository of coercive power." This fact is the cor- 

 nerstone of his work, and properly so, for upon it are based the rules 

 by which we are to determine whether a proposition, an argument, 

 or a problem belongs to public finance or to private economics. 



Other marks there are that differentiate the field of public finance 

 from the field occupied by political economy, but their mention at the 

 present time is precluded by the necessity of considering the rela- 

 tion of the science of finance to other fields of investigation that 

 touch the interests of society. The responsibility of condensing into 

 a single paper so broad a topic, I am glad to say, rests with the com- 

 mittee in charge of this programme and not with myself. Among the 

 sciences that demand consideration are political science, the science 

 of jurisprudence, and the science of sociology. Each will receive 

 brief consideration. 



