Ten Great Economists

Joseph A. Schumpeter

• Publisher: Routledge
• Year: 1997
• ISBN:
  9781134835485
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Originally published in 1952, this seminal work is reproduced here with a new introduction by Professor Mark Perlman, a well-known Schumpeterian scholar. The essays, written between 1910-50 were primarily commemorative pieces marking the achievement of a celebrated economist. Those covered include: * Marx* Walras* Menger* Marshall* Pareto* Bohm-Bawe

FRANK WILLIAM TAUSSIG^*1
1859–1940

I. EARLY YEARS (1859–1880)

WHATEVER we may think about the relative importance of nature and nurture or, more properly, of heredity and environment in the formation of eminent men, there cannot be any doubt that in Taussig’s case the two combined in a most happy alliance. Still more than we should in other cases, therefore, we feel that, in drawing the picture of the man, the citizen, the scholar, the teacher, and the public servant—all of which was Taussig—we must adopt the biographer’s practice and first of all describe both his parental home and the two excellent people who created it.

Frank William’s father—William Taussig—was born in Prague in 1826. Evidently not liking the surroundings on which the strife between Czechs and Germans was then beginning to cast ever-deepening shadows, the clever, energetic, and well-educated young man decided in 1846 to emigrate to the United States, where, first in New York and then in St. Louis, he found employment in the chemical trade. This was the beginning of a remarkably successful and (then) typical American career. After a few years, he abandoned the crude chemicals of the wholesaler’s shop and pursued the finer chemicals of the St. Louis medical school, took his degree, and established a practice at Carondelet—now South St. Louis—visiting his patients on horseback with his medicines and pistols in his saddle.² Steadily rising in the community, he became mayor, judge in the county court, and finally its presiding justice. The practice of medicine was reasonably successful but the Civil War brought unbearable strain in that border state. So Taussig, a strong unionist and anti-slavery man, eventually accepted the position of district collector of federal taxes (1865) under the revenue acts of 1862 and 1864, and with the perquisites—since those collectors worked on a percentage basis and either received nothing at all or, if they had enough patience and energy to go to Washington and to insist, quite a sum³—he started his fourth career, that of banking. The Traders’ National Bank of St. Louis, of which Taussig was a vice-president, was only moderately successful. However, among its customers was a bridge company organized for the purpose of building a bridge across the Mississippi. Taussig joined in the latter venture and successively became treasurer and general manager. And this was the beginning of his fifth career, the one that was to bring prominence and prosperity. The enterprise was a success from the outset and eventually developed into the Terminal Railroad Association of St. Louis, which constructed the Union Station for all the roads entering St. Louis and by its own locomotives hauled the westbound traffic from East St. Louis to the terminal. It was Taussig’s energy and resourcefulness⁴ that triumphed over all the obstacles that city magnates and railroad boards put in the way of the scheme. When everything had been done and all the fighting was over, he was in due course elected president, a quiet and dignified position from which he retired in 1896, at the mature age of seventy. Still busy with all sorts of civic activities, universally popular, admired and respected, he lived until 1913.

The mother, Adele Wuerpel, was the daughter of a Protestant teacher in a village on the Rhine, who was dismissed during the revolution of 1848 and thereupon emigrated with his family. Taussig was married to her in 1857. The marriage was a very happy one. She must have been a charming woman—able and gentle, good looking and good natured, gay and affectionate, a comfort in adversity, a delightful companion in success. She had a fine mezzo-soprano voice and shared her husband’s love for music. No problems seem ever to have arisen in the foyer warmed by her steady radiance. It is very easy to visualize the kind of home which, first in modest and then in ample circumstances, she created for her husband and her three children—the subject of this memoir, a younger brother who predeceased him, and a sister who survives him—all of whom were unreservedly attached to her. It was a home that was sufficient unto itself, sustaining a family that was very conscious of a corporate existence. No wonder that Frank William emerged from that home a confirmed family man to whom family life and family responsibility were essentials in the scheme of things.

As we should expect, he enjoyed a happy childhood. Moreover, as his sister observes, ‘there was never any doubt of his being advanced in school and in his studies; and the large physical frame that we knew was early indicated. I remember him as a big boy. I also remember that he was never without a book in his hand, either for study or diversion, and that nothing distracted him while reading unless he was directly appealed to. It was his habit to work and study in the family living room…As to schools, it was public school, I am sure, until he was about eleven years old. After that he went to a school called Smith Academy…There was always much music in our family. Such artists as Rubinstein and Winiawski we were allowed to meet, and Theodore Thomas was at our house whenever he came to St. Louis. Frank must have begun his violin lessons quite early. The foremost violinist of our day in St. Louis was an intimate friend of the family and his teacher, and Frank was well advanced as a violinist when he went to college; and there he played quite regularly in a string quartet and was a member of the Pierian as well. Music was one of the joys and recreations of his life. . . There was no travelling…except summer jaunts.’⁵

In 1871 began Frank Taussig’s lifelong friendship with Mr. Charles C.Burlingham, when they were classmates at Smith Academy. Together they entered Washington University and together they migrated, in 1876, to Harvard. The Dean, Charles F.Dunbar, proved his good sense by admitting them without examination to the exalted rank of sophomores, although they had expected to take entrance tests for the freshman class. Taussig, pitching his camp in what to Burlingham seemed to be a ‘palatial’ suite on Oxford Street, proved himself a brilliant scholar. He took every course in economics—political economy as it was then—and a lot of history, and in 1879 was graduated with ‘highest honors’ in the latter field. He gave one of the ‘commencement parts,’ the subject of the thesis being ‘The new empire in Germany,’ and was elected to Phi Beta Kappa. But he was no recluse, though records are available to show that in 1878–9 he took out of the library a prodigious number of books, mainly on history and philosophy. He played on his class baseball team, rowed on one of the six-oared crews in the scratch races, joined half a dozen students’ clubs and societies, and formed friendships in all sets. And there was, of course, his violin.

After the B.A. came the European tour. With another lifelong friend, Mr. E.C.Felton,⁶ he sailed in September 1879. ‘After spending a few weeks together in London, we separated,’ wrote Taussig shortly afterwards. ‘I went to Germany, and spent a winter, from October until March, at the University of Berlin, studying Roman Law and Political Economy.⁷ In March, I left Germany, and rejoined Felton in Italy. We spent two months together in Italy and then went to Paris by the way of Geneva. In Paris, in May, we again separated, Felton going to England, on his way home, while I traveled in different parts of Europe chiefly in Austria and Switzerland.’⁸ Some articles in the New York Nation published during the travels in Europe, testify, if testimony be needed, to the seriousness of the young man.

When he returned to Harvard, in September 1880, he did so in order to enter the Law School. He had not definitely committed himself to economics as a profession. The law still meant as much or more to him. But he was offered and he accepted the position of secretary to President Eliot—a laborious, though not a full-time job, which introduced him to the arcana of university administration and university politics⁹—and thus entered upon the service that was to be central to his life for the sixty years that followed.

II. ASCENT (1881–1900)

His secretarial duties interfered for a time with Taussig’s plan to study law, but they left him enough surplus energy to work for the Ph.D. in economics. The special subject he selected was the history of American tariff legislation, a choice that was as indicative of the importance, in his mental pattern, of the historical component as it was of the paramount importance, in the hierarchy of his scientific interests, of the great questions of economic policy. It is necessary here—and it will be necessary later on—to stress both points. No doubt Taussig was an eminent theorist and a very great teacher of theory. The institutionalist opposition that later on arose against the type of theory he taught, seems however to have overlooked that a great part of his work was on institutional lines and that, in important respects, it would have been more correct to claim him as leader than it was to consider him an opponent. To him, economics always remained political economy. His early training and his general equipment were not only as much historical as they were theoretical; they were primarily historical. The practical problem in its historical, legal, political, in short, in its institutional aspects attracted him much more than any theoretical refinements ever did. And nobody who knew him can have failed to admire his ability to see problems in their sociological settings and in their historical perspectives.¹⁰

It was, then, in a thoroughly historical spirit that he approached his chosen subject: international trade. The prize essay of 1882 on ‘Protection to young industries as applied in the United States,’ which served as Ph.D. thesis and in 1883 was published as a book—and a successful book it was, for a second edition was required in 1884—contained very little theory, but excelled in factual analysis. Incidentally, there is another aspect to this performance that is too characteristic to be passed by, an aspect which foreshadowed his future eminence in the field of tariff policy. It is that balance and maturity of judgment which constitutes so important an element in his greatness as an economist and which in that book, written when Taussig was only twenty-three, shows to an extent that is quite astonishing. As much on grounds of political morality as on grounds of economic expediency, Taussig never was in sympathy with the tariff legislation of this country. He was far indeed from being a protectionist in the ordinary sense of the term. But he was not a free trader either. He frankly recognized whatever seemed to him to be tenable in the protectionist arguments—particularly, but not exclusively, the infant industry argument—and never tried to minimize it as economists who sympathize with free trade are in the habit of doing. This was not his way. He approached that problem, as he did any other, in a spirit that was both practical and judicial.

For another decade or more, his creative work followed the line thus auspiciously opened. The book on Protection to Young Industries was followed by the History of the Present Tariff, 1860–1883 (1885), and both developed into that classic, The Tariff History of the United States (1888, with various subsequent editions extending to the eighth in 1931), which established his reputation as the first American authority in that field and which, as a politico-economic analysis, has in fact no superior in any field. Most of the articles which he wrote at that time also deal with tariff problems, but the other public issues of those years did not fail to attract the attention of his active mind, and regarding two of them Taussig made significant contributions. The economic and political aspects of the silver question seem to have stirred him deeply. Mastering the subject with his usual thoroughness, he started in 1890 numerous publications in that area, and in 1891 produced his book The Silver Situation in the United States, which became the standard work of the anti-silver school and exerted strong influence all over the civilized world. Also in 1891 he published in The Quarterly Journal of Economics a ‘Contribution to the Theory of Railroad Rates.’ This paper, alone of all that he did until 1893, indicates leanings toward purely theoretical reasoning, and even that was concerned with an ‘applied’ problem. His writings do display, to be sure, full command of the analytic apparatus of economics such as it was at the time. But though he readily used it, he does not seem to have ...