From Political Economy to Economics
Notes on the Passage of Time

Edward J. Dodson

[Part 1 of 2 / Compiled 2003]

384-322 B.C.

• Aristotle writes Politics and Ethics, his two main works containing his economic analyses and principles. He viewed economic issues as moral issues.

Antiquity thru the late 17th century

• From the time of Plato and Aristotle (reappearing in earnest after the Enlightenment began in Eurasia), political philsophers examined the relationship between individuals, between the individual and groups and between the individual and society.

800 on

• Eurasia, in whole or in parts, organizes into small principalities (the Manoral system and, later, Feudalism.

1250-1274

• Thomas Aquinas, canonized in 1323, writes Summa contra gentiles and Summa theologica, attempting to synthesize Christian and Aristotelian philosophy.

1450 on

• Beginning of the Age of Discovery and the extraction of gold and silver form the New World. Between 1560-1630 the influx of precious metals contributed to a four-fold incrase in the price of grian, cattle, timber, wood, etc.

1493

• The first quantities of precious metals arrive in Spain from the New World. Spanish nobility uses this treasure to buy manufactures and luxury goods, as well as to pay for Spain's religious wars against the Moors and Protestants. Then, when drought hits Spain, they begin to purchase grain and other foodstuffs. Prices throughout Europe rose in response to the expanded coinage (500 percent in spain and Portugal, less elsewhere, during the sixteenth century).

1512

• Niccolo Machiavelli's book, The Prince, is published, as a manual on how to obtain and hold power.

1558

• Thomas Gresham, founder of the Royal Exchange in London, observes that "Bad money drives out good." The becomes known as Gresham's Law.

1560s

• Thomas Gresham, an English banker and merchant, became financial adviser to Queen Elizabeth I. His observation that "bad money drives out good" becomes known as "Gresham's Law."

1600 - 1760

• Dutch, French and British merchants initiated the system of Mercantilism between domestic producers of finished goods and New World settlements.
  
  Britain's colonies, in particular, grew in population and wealth production under what historian Charles Andrews later called a century and a half of salutary neglect.

1609

• Bank of Amsterdam established in Holland. The bank was authorized to take in coinage from all over and (after charging a fee) re-mint the coinage with a standard weight of gold and silver content. The Bank then established a credit for the depositor, which could be circulated as a fully redeemable bank note.
  
  During this early period of its history, the Bank became the first international bank of deposit rather than a lending institution.

1615

• Antoine de Montchretien's book, Treatise on Political Economy, is published in France. He argues against trade with foreigners on the grounds that foreign goods and foreign ideas will corrupt the French way of life.

1630

• Thomas Mun's book, England's Treasure by Foreign Trade, is published. Mun, an official of the East India Company, argues against the government's prohibition against the export of bullion.

1662

• William Petty's book, Treatise of Taxes and Contributions, is published in England. This was one of the first attempts to use scientific investigation rather than intuition (i.e., revealed truth) to support contentions about the effects of taxes on production and commerce.

1690

• John Lock's book, Two Treatises Of Government, is published. Locke states emphatically that people are born free and come together into society in order to improve their condition. Thus, government is a creation of society and has as its primary responsibility the protection of individual liberties against acts of license (e.g., criminal behavior and monopolies).

1694

• The Bank of England is established.

169-

• England adopts silver as its coinage of choice, establishing the so-called "sterling standard" which lasts until 1816.

1705

• John Law's tract, Money and Trade Considered, with a Proposal for Supplying the Nation with Money, is published. Law advances a mercantilist view, with the substitution of paper money for specie, secured by the value of the nation's land.

1716

• John Law, a Scot of less than impeccible credentials, convinced the French to establish a new bank, the notes of which were ostensibly to be backed by conage with a fixed content of gold and silver. Law then used the deposits to fund a monopolistic trading company and engage in land speculation in North America. Enormous quantities of stock were issued, the proceeds of which went not to development but as loans to the French government. In 1720 confidence disappeared, there was a run on the bank, which closed, and Law escaped to Italy.

1720

• South Sea Company is organized in England, which takes over the debt ofthe English crown in return for monopoly privileges over trade with the Spanish colonies. Speculation developed in the stock, which eventually crashed, resulting in large losses for those last involved.

1729

• Benjamin Franklin's essay, A Modest Inquiry into the Nature and Necessity of Paper Currency, is published.

1730

• Richard Cantillon's essay, "The Nature of Commerce," is published in 1775 in French. Cantillon sees land as the source of wealth and labor as the active agent in the creation of wealth. Although a proponent of mercantilism, Cantillon acknowledges the need to foster entrepreneurship and risk-taking.

1748

• Charles-Louis de Secondat's book, The Spirit of the Laws, is published. Secondat, better known by his title, the Baron de Montesquieu, was one of the first political philosophers to expound the doctrine of separation of powers. His view is, however, relativistic. He writes that: "Liberty is a right of doing whatever the laws permit." He assumes that if those in power adopt laws, those laws must inherently be just.

1755

• Richard Candillon's book, Essay on the Nature of Commerce, is published in England (although written during the 1720s). Cantillon's contributions to the science of political economy ncluded his call for writers to define their terms. He was one of the first to distinguish land as "the source of material from which wealth is extracted" and not wealth itself.
  
  Cantillon also introduced the idea of the price mechanism as a market clearing device, attempting to show that supply/demand relationships were self-regulating.
  
  He is arguably the more appropriate choice as the father of political economy than is Adam Smith.

1758

• Francois Quesnay's book, Tableau economique, is published. He completes this work in an effort to explain to the King of France the circulation of goods and money in a free and competitive economy.

1758

• Francois Quesnay's book, Tableau Economique, is published in France, advocating the renewal of mercantilist restrictions over trade and the use of tax revenue (collected only form the annual net profit attributable to land ownership) for developing the nation's physical and societal infrastructure.

1763

• Victor Riquetti's book, La Philosophie rurale, is published. Riquetti, holding the title of the Marquis de Mirabeau, is one of the leading physiocrats in France. This book sets out in full detail the physiocratic doctrine.

1766

• William Pitt, Prime Minister of England, on indirect taxation: "There is a method by which you can tax the last rag from the back, and the last bite from the mouth, without causing a murmur against high taxes, and that is, to tax a great many articles of daily use and necessity so indirectly that the people will pay them and not know it. Their grumbling will then be of hard times, but they will not know that the hard times are caused by taxation."

1766

• Anne Robert Jacques Turgot's book, Reflections On The Formation And Distribution of Wealth, is published in France. Turgot examines the proces by which land comes to have an exchange value following the enclosure of the commons and issuance of private titles to land.
  
  In the 1770's, Turgot was instrumental as the French Minister of Finance of stabilizing prices (by freeing trade). After proposing radical reforms in aristocratic prvilege, tax relief to the peasants, elimination of trade guilds and the creation of local and regional assemblies, he was removed from office.

1768

• Pierre Samuel Du Pont de Nemours' essay, Physiocratie, is published in France. This essay argued that agriculture was the most important economic activity.
  
  The French school of political economists, known as Physiocrats, had a material influence on the thinking of Benjamin Franklin, Thomas Paine and Thomas Jefferson.

1768

• Pierre Samuel Dupont de Nemours book, La Physiocratie, is published. Dupont de Nemours, who was a close collaborator with Turgot and Quesnay, later fled to North America to escape execution by the Jacobin leaders in France.

1776

• John Adams (in a response to the English philosopher James Harrington), writes: "Harrington has shown that power always follows property. This I believe to be as infallible a maxim in politics, as that action and reaction are equal, in mechanics." He goes on to suggest that liberty can be preserved only by making "the acquisition of land easy to every member of society."

1776

• Adam Smith's book, The Wealth of Nations, is published. Smith writes: "Civil government, so far as it is instituted for the security of property, is in reality instituted for the defence of the rich against the poor, or of those who have some property against those who have none at all." Smith's use of the French term, laissez-faire, is interpreted by merchants, agribusiness owners and industrialists to mean that government ought not interfere with private business relations. The full French term was laissez-faire, laissez-aller (roughly translated as "a fair field with no favors").
  
  Smith is considered the father of modern political economy.

1776

• Jeremy Bentham's book, A Fragment on Government, is published.

1776-1792

• The Spanish milled dollar was the stated money for which paper currency issued by the Continental Congress could be redeemed. Overissuance and British counterfeiting drove the exchange rate (i.e., the discount) to as high as 1,000 Continentals to the Spanish dollar.

1778

• Thomas Jefferson introduces a bill in the Virginia legislature to eliminate the remnants of aristocratic privilege in land ownership -- ential and primogeniture.

1779

Benjamin Franklin writes of the paper currency with great sarcasm: "This currency, as we manage it, is a wonderful machine. It performs its Office when we issue it; it pays and clothes Troops, and provides Victuals and Ammunition; and when we are obliged to issue a Quantity excessive, it pays itself off by Depreciation."

1780

• Edmund Burke's book, Plan for Economic Reform, is published.

1782

• William Ogilvie's essay, "On the Right of Property in Land" is published. He advocates reform of the land tenure system then existing in Britain.

1783

• William Pitt, the younger, becomes Prime Minister of Britain and begins to dismantle mercantilism, incorporating the ideas of Adam Smith and lifting restrictions on trade and investment.
  
  War with France left Britain with a national debt of 40 million pounds. Holders of Britain's paper currency lined up at the Bank of England to turn in their paper for gold. Combined with new taxes, the effect was to drive up prices and cause food shortages.

1786

• Thomas Paine's pamphlet, "Dissertation on Government; the Affairs of the Bank; and Paper Money," is published. At the end of the year, Paine leaves North America for France, where he hoped to find investors for his new iron bridge design.

1789

• Jeremy Bentham's book, An Introduction to the Principles of Morals and Legislation, is published. Bentham seeks to utilize utilitarian analysis to develop public and private policies that result in the "the greatest good for the greatest number."

1789

• Thomas Malthus's Essay On The Principle of Population is published in England. Mathus linked the control of population growth to increasing poverty and called for a new commitment to moral responsibility to curtail population growth.

1789

• Jeremy Bentham's book, Principles of Morals and Legislation,, is published in England. Influenced by David Hume, Bentham becomes the philosopher of Utilitarianism, (i.e., human beings act consistently to maximize pleasure and minimize pain). He also argued that forms of government ought to be judged on performance and obedience to government was required only if government was useful.

1790

• Thomas Jefferson develops a "Plan for Establishing Uniformity in the Coinage, Weights, and Measures of the United States."

1791

• Thomas Paine's book, The Rights Of Man, is published in England. Paine urged reformers in the Old World to look to the American experiment for guidance in achieving "government founded on a moral theory."

1791

• Thomas Jefferson warns George Washington that the level of taxation required merely to maintain the interest payments on the national debt threatened to cause "a drain of coin" estimated at some "three millions of dollars annually."

1791

• Alexander Hamilton is instrumental in getting the U.S. Congress to charter the first Bank of the United States, with the power to issue notes redeemable in coined money or bullion.

1792

• The U.S. dollar is established as 371.25 grains of pure silver (which was the average silver content of coins circulating in the U.S. at the time. The new coins also had a 15:1 ratio of silver to gold (the approximate market rate of exchange between silver and gold).

1794

• Marie Jean Antoine Nicolas de Caritat (the Marquis de Condorcet) writes his philosophical work, Esquisse d'un tableau historique des progres de l'esprit humain. He believes the natural evolution of humanity will bring about an absolute equality of rights.

1796

• Thomas Paine's pamphlet, Agrarian Justice, is published. He argues that every owner of land must pay a "ground rent" for the privilege of controlling land.

1798

• Thomas Robert Malthus' book, Essay on the Principle of Population as It Affects the Future Improvement of Society, is published anonymously.