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so as not only to provide for the greater share of her own rapidly increasing demand for ships, but also to fill orders for other countries. In a word, the progress of Germany has taken place along all lines, in manufacturing, trade, shipping and shipbuilding. However important other factors may have been in bringing about this general advance, there can be no doubt that Germany furnishes an excellent example of the salutary influence which the State may exert in fostering those phases of commercial activity upon which the domestic prosperity and international prestige of a nation is principally dependent.
THE PRESENT PROBLEMS IN THE ECONOMIC INTERPRETATION OF HISTORY1
To the man of theory and often to the man of practice the study of history seems a useless occupation. Both have an interest in the present and demand solution for present problems. Has history anything to offer these men and can its methods be applied to the investigation of present conditions? At first sight the theorist gains little from its perusal. He finds the attention of historians limited to events of little present importance; wars occupy more space than the avocations of peace and personal affairs are discussed to the neglect of social tendencies and principles.
If a reader overlooks the prolix statements of non-essentials to which some historians are prone and seeks principles to guide present action what does he find but the familiar assertion, "History repeats itself?" Driven back from history, the searcher for present guidance once more resorts to theory in the hope that some light may be struck that shows the road he is blindly seeking. But all in vain.
Is there no link between these two disconnected methods of research? Must the past be interpreted by a method that yields no valuable results and the present by a method that discards all reference to the past?
This opposition and these defects continued for a long time before any remedy was suggested. Historians sneered at the theorist and the economist had an openly expressed contempt for those who did not use his methods. It is only of late that a new method of research has arisen, giving to history a wider meaning and offering to the economist a test for his theories.
Progress in this direction has, however, been slow. The historical appetite for facts is in a measure satisfied by the study of the economic conditions of earlier times. It acted as a limitation on theorizing to know that the conditions economists emphasized as parts of a perpetual economy were of recent origin and have application to but a small section of humanity. The doctrines of
1An Address delivered at the International Congress of Arts and Science, St. Louis, September 1904.
free competition, personal liberty, free trade, individual bargaining and like tenets of the current economic philosophy thus lost their position of supremacy and sunk into the company of the minor doctrines that are plainly limited by time and space.
The resulting changes in mental attitude are in a large measure due to the efforts of the historical economists who taught the limitations to which all economic doctrines are subjected. Yet in spite of a breadth of view and great command of facts they did not destroy the old school but merely compelled its adherents to make more modest statements. This failure was due to the lack of a method of historical interpretation in harmony with the facts they were using and the conditions they were investigating.
Economic history and the economic interpretation of history are different concepts and have been forced upon public attention by two different groups of thinkers. Economic history is a question of facts-of the discovery and utilization of those facts of yesterday of which the economist of to-day avails himself. The economic interpretation of history is a study of these data and of the method of utilizing them. It enables us to reason about past events in the same way we reason about present events and to find common principles that will apply to both. Economic dogmatism concentrates attention on the dominant features of a given age or nation. Economic interpretation eliminates dogmatism by comparing the dominant features of many ages and clearly presents their points of difference and similarity. In this way a new theory arises with a broader basis and more closely in touch not only with history but also with the sciences from which the economic premises come.
There are, however, two diverging lines of thought, each of which is called an economic interpretation of history. One group of men ask what light can history throw on present events? Their interest is in the present and they use history as a method of interpreting it. The other group ask: What light can our knowledge of present events and conditions throw on those of past ages? The first group assumes a knowledge of the past superior to that of the present and hopes to use this knowledge to clear away the difficulties of interpreting contemporary events. The second group contends that our knowledge of present economic conditions is greater than that of past ages and hence that it can help us to supplement our meager knowledge of the past.
If we wish to be accurate in the use of terms this first viewpoint should not be called an economic interpretation of history, but an historical interpretation of the present. That which is interpreted is not history but current events, while the method used is not economic but historical. It is only the second viewpoint that attempts to interpret history and does it by an economic method.
It will add to the clearness of the contrast if the term "history" be eliminated. History in both cases is used in a popular way and as a result its interpreters fall into a needless conflict with those historians who want the facts of the past rather than their present significance.
It would be clearer to speak of the social interpretation of current events instead of the historical interpretation. Those who employ this method are interested in social affairs and use social methods of investigation and social principles oftener than historical methods and principles. It is still more clear to speak of the traditional interpretation of current events. The facts presented and the ideals emphasized are those which, wrought over into popular tradition, have become motives prompting intuitive response. The popular historian seizes the telling events of the world's history and by recounting them vividly tends to make people act to-day as their forefathers acted in the epoch-making struggles through which the race has gone. "Act to-day as your fathers acted in their day." This advice may seem the hand of history, but it is the voice of tradition. The economic interpretation of history starts with an analysis of present conditions and opens the way to a theory of social causation. In contrast with this method the historical interpretation of present events accepts the traditional view of the past and uses social prediction as a means of exerting social influence. The prophet strives to be a social leader. Economic interpretation as a method thus stands in contrast with social prediction. There is no real opposition between economics and history or between economics and sociology. It is only in the field of prediction that opposition appears. The scientific historian avoids the conflict by refusing to predict, but as the historian becomes modest, the social enthusiast becomes bolder, and, using the same methods as the predicting historian, he falls into similar errors.
Should social investigation begin with a study of the past and predict events from it as a base, or should a study of the present be
first made and its results be used to interpret the past? Of the past we have social tradition; of the present we have economic knowledge: Which is the more reliable as the basis of deduction?
Were not the knowledge of the past defective its study might give a starting point equally valuable with economic interpretation that starts from the firm foundation of present fact. The first canon of social prediction is, "History repeats itself." A series of repeated effects occurring under similar social institutions gives ground for the judgment that these institutions will always produce like effects.
In contrast with this, economic interpretation starts with the assumption that like economic causes produce like social results. Prediction can be made from one race or civilization to others only as the economic conditions back of them are the same. It is not like race, like institutions, like tradition or like consciousness of kind but like economic conditions that give a sound basis for prediction. Social prediction is of necessity based on data drawn from different races, institutions and civilizations. This evidence has little value unless a similarity of economic conditions exists as the antecedent of race, institution or civilization. An economic interpretation of past events must therefore precede valid prediction.
There are two channels in which thought runs and two bases on which it rests. The physical environment of a man is made up of objects upon which welfare depends. The force that perpetuates and increases this contact is desire. No object is a part of the conscious environment of men until they desire it or the means of avoiding it. Thought based on desire or arising out of its influence is plainly economic. But thought has another element not derived from the immediate objects of interest: This is tradition. Past conditions and events do not persist. The events and conditions of to-day cease with to-day, but new ones appear to-morrow. Economic conditions are thus short-lived, but the habits and thoughts that yesterday's conditions evoked live on and modify the present.
The newer biology makes the distinction between natural and acquired characters and affirms that the latter are not inherited. All acquired knowledge must pass from generation to generation by the repeated impressment of habits and thought upon the individuals of succeeding generations. This knowledge depending on constant repetition for its continuance, is tradition and imitation is its great