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Scholastic Economics: Survival and Lasting Influence from the Sixteenth Century to Adam Smith Author(s): Raymond De Roover

Source: The Quarterly Journal of Economics, Vol. 69, No. 2 (May, 1955), pp. 161-190 Published by: Oxford University Press Stable URL: http://www.jstor.org/stable/1882146 . Accessed: 16/11/2013 07:36
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THE

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Vol. LXIX May,1955 No. 2
SCHOLASTIC ECONOMICS: SURVIVAL AND LASTING INFLUENCE FROM THE SIXTEENTH CENTURY TO ADAM SMITH

By RAYMOND

DE ROOVER

I. Introduction: the medieval contribution,161. - II. The school of Salamanca, 167. - III. The demise ofscholastic economics,171. - IV. Scholasticism and mercantilism:a contrast, 177. - V. Conclusions, 185. I. INTRODUCTION: THE MEDIEVAL CONTRIBUTION

therehas been verylittleimprovement in recentyears,and situation, scholasticeconomicshas remaineda fieldwhichis so neglectedor so it hardly poorlycultivatedthat, in the opinionof most economists, deserves serious consideration. As a result,most of the standard - if theydo not omit textbookson the history of economicthought - devote little the subject altogether and startwiththe physiocrats some tritecomspace to what theycall "medieval" economics. After ments on Thomas Aquinas, they greetOresme (c. 1330-1382) from a distanceand thenhastenon to Thomas Mun and the theory of the but balance of trade. Usually, the treatment is not only superficial repletewith errorswhich could have been avoided by goingto the sourcesinstead of repeatingclich6s.2

before the end of the nineteenth century, Luigi Cossa Shortly on scholastic economics existed no work deplored thefactthatthere or refutation bias towardssystematic "without some underlying to amendthis extravagant apology."' DespiteCossa's ownefforts

1. Luigi Cossa, An Introduction totheStudyofPoliticalEconomy (London, 1893),p. 141. Although thisbookis notanalytical, it is stillextremely useful for its bibliographical and other accurateinformation. 2. A laudableexception is thebookofEdgar Salin,Geschichte derVolkswirtschaftslehre (4thed.; Berne,1951). Another is, ofcourse, thegreat work ofJoseph A. Schumpeter, History ofEconomic Analysis(New York,1954). As thisarticle - in fact,the manuscript was written independent of Schumpeter was sentto - no references thisJournal before his book appeared to his History have been

161

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As has already been pointed out in this Journal,the current overlookthe fact "that Aquinas was the founder textbooksentirely werefurther elaboratedand refined ofa schooland that his doctrines continued by his followers."3It shouldbe added that thesefollowers century. farbeyondthe Middle Ages untilwell into the seventeenth Moreover,some of theirimportanteconomicdoctrineswere taken of natural by the philosophers over, with only slightmodifications, law, such as Hugo Grotius (1583-1645) and Samuel Pufendorf even if theywereopposed to (1622-94), who werestillAristotelians, scholasticism. laid built on the foundations Since the later scholasticwriters it appears necessaryto say a fewwordsabout by theirpredecessors, the method used by the medieval Schoolmenand about theirecoof a technicalnature. The authorassumes that nomiccontributions in a broader sense are known,in spite of the their contributions of economic accordedthe subject in mosthistories limitedtreatment thought. did themedieval SchoolNo morethantheauthorsofantiquity, discipline,but as men considerpoliticaleconomyas an independent an appendix to ethicsand law.4 This situationstill persistedin the centurywhen Adam Smith took charge of the chair of eighteenth at GlasgowCollege. The coursesofhispredecessor, Moral Philosophy at Edinburgh, FrancisHutcheson(1694-1746), and his contemporary Adam Ferguson (1723-1816), are available in print. Accordingto these sources,the contentsof a course in Moral Philosophyin the Scotland still corresponded, centuryand in Presbyterian eighteenth of the subject mattergiven in the by and large, to the description on theEthics thirteenth century by Thomas Aquinas in his Comments of Aristotle.5Economics,in the modernsense, occupied a very subordinatepositionand was stillviewed as an ethical and legal matter involvingthe applicationof naturallaw to civil contracts. in What the Doctors in the Middle Ages were reallyinterested was to determinethe rules of justice governingsocial relations. two kindsof justice: distribuFollowingAquinas, theydistinguished
in comparing thisessaywithSchumpeter's added. The reader maybe interested of the subject, but a different treatment remarks and conclusions.He willfind on variouspoints. fundamental agreement 3. R. de Roover,"MonopolyTheorypriorto Adam Smith:a Revision," thisJournal (Nov. 1951),p. 493. 4. I avoid usingthe term"economics"here,because in the Middle Ages as in antiquityand referred to household it stillretainedthe same meaning management. I, 1. ethicorum ad Nicomachum, 5. ThomasAquinas,In X libros

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tive justice, whichregulatedthe distribution of wealth and income, accordingto the place of the individualin society,and commutative justice,whichapplied to the reciprocaldealingsbetweenindividuals, that is, to the exchangeof goods and services. In otherwords,ecoas can be readily nomicmatterspertainedto justice,not to charity, ascertained by merely runningthroughthe table of contents of Aquinas' Summa theologica. In dealing with questions of justice, the Doctors unavoidably hit upon economicmattersand were forcedto considerthem. At first theirinvestigation was limitedto the just price and usury,but it soon branchedout to involve a host of otherquestions,including the just wage, debasement (inflation),justice in taxation, public and all the condebts, monopoly,foreignexchange,partnerships, tractsthat mightinvolveany taint of usury. of The medieval mind was legalistic and, under the influence Roman law, a great deal of importance was attached to the formof contracts. The principalproblemwas always to determine whether a contractwas licit or illicit. This emphasistended to narrowthe and scope of economicsto the studyof the legal natureof contracts theirethicalimplications, itselfeven in the a tendency whichreflects titleand the arrangement of scholastictreatises. One will be sure to findeconomicmattersdiscussed- along withothertopics,of course - in any treatiseon moral theology bearingas titleDe contractibus (Concerning Contracts)or De justitia etjure (Concerning Justice and Law). Almostinvariablyeconomicsubjects are also touchedupon in guidesforconfessors, thoughthe expositionin worksof this type is likelyto be less systematic and analyticaland morecasuistic. As a matterof fact,the word "casuistry" derivesfromthe concernof the late scholasticwriters with cases of conscience. Thomas Aquinas (1226-1274) had given a place to economics in his universalscheme:it was ruledby justice and groundedon private property and exchange. In any case, the pursuitof material welfare was not to be regardedas an end in itself, but as a means to achieve the summum bonumof salvation.7 These fundamental principleswereneverquestionedby his followers, but practicalnecessities soon spurredthemto elaboratehis rathersketchyanalysis on usury and price. The first who refined it considerably was JohnBuridan ofthe Univer(1300-1358),a pupil ofWilliamofOckhamand a rector
6. Idem,Summatheologica, II, ii, quaest.61, arts.1 and 2. 7. Ibid., II, ii, qu. 55, art. 6, and Summacontra Gentiles, III, c. 30. Cf. Aristotle, Nicomachean Ethics, I, 5 and 8.

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sity of Paris. He insistedon the point that value was measuredby human wants: not by those of a single individual,but by those of the entire community(rei venalis mensuraest communes indigentia humana).8 He made it clear, also, that he consideredthe market price as the just price. Buridan's analysis even anticipates the modernconcept of a consumerscale of preferences, since he states that the person who exchangesa horse formoney would not have done so, if he had not preferred moneyto a horse. After Buridan,the nextwriter of importance was the Florentine juristand diplomat,Messer Lorenzo di AntonioRidolfi(1360-1442), who in 1403 wrotea treatiseon usury.9 It containsthe first detailed discussionof foreign exchange. Of course,he deals withthe subject fromthe scholasticpoint of view, whichis radicallydifferent from the later mercantilist or balance-of-trade approach.' The question raised by Ridolfiis whether exchangedealingsare lawfulor involve usury. Lorenzo Ridolfi was followed by the famous preacher, San Bernardinoof Siena (1380-1444), whom Professor Edgar Salin considersas one ofthe mostnotableeconomists ofall times.2 As sources of value, he lists threefactors:utility(virtuositas), scarcity(raritas), and pleasurableness(complacibilitas). He also mentionsthat goods may be more or less gratifying, accordingto the intensityof our desire to possess and to use them. Withoutstretching these statempntstoo far,it seems to me that San Bernardinohad undoubtedly a psychologicaltheory of value and even some inklingof varying degreesof utility. According to him,the just priceis determined by "the estimation made in commonby all the citizensofa community" (aTstimatio a communitatibus civilibus facta communiter). In my opinion,this is clearlythe competitive price in a freemarket. The correctness ofthisinterpretation is beyondquestion,sinceBernardino
8. EdmundSchreiber, Die volkswirtschaftlichen Anschauungen derScholastik seitThomas vonAquin (Jena,1913),pp. 178-86. 9. Tractatus de usuris etmateriae montis (1st ed.; Pavia, 1490); republished in Vol. VII ofthe Tractatus universi juris (Venice,1583),fols.15r-50r. 1. R. de Roover,Gresham on Foreign Exchange; an Essay on EarlyEnglish Mercantilism (Cambridge, Mass.: HarvardUniversity Press,1949),pp. 173-80, and L'4volution de la lettre de change, XIVe-XVIIIe sikxles (Paris: Armand Colin, 1953),pp. 51, 58-60, 127-29. 2. Op. cit.,p. 45. There are two recentmonographs on the economics of San Bernardino: Franz Josef Die wirtschafts-ethischen Predigten des Htinermann, hN.Bernardin von Siena (Miinster,1939) and AlbertoE. Trugenberger, San Bernardino da Siena, Considerazioni sullo sviluppo dell'etica economiccristiana nelprimo Rinascimento (Berne,1951). The sermons ofBernardino ofSiena dealing witheconomics are in his collection, De Evangelio Aeterno, Nos. 32 to 42.

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that is, of monopolistic practices, in his condemnation is outspoken merchants drive by which agreements" and pernicious of"fraudulent up pricesin orderto increasetheirprofits. Finally,San Bernardino a good makesit scarcerand ofproducing statesthat the "difficulty" determore valuable. Does he implythat the cost of production point is that the supply? An interesting minesprice by affecting instead of supply,appears in the lecturesof Francis "difficulty," factor. Hutcheson,Adam Smith's teacher,as a price-determining reappears it but Nations, of Wealth in The The conceptis not used (chap. 20) whereit is said that ofEconomics in Ricardo's Principles whichis of production, or facility the difficulty upon depends value with more or less labor. In his Logic of apparentlysynonymous Political Economy,Thomas De Quincey (1785-1859), tryingto two sourcesof value: utilityand upon Ricardo,recognizes improve of attainment. His discussionis quoted at lengthand difficulty ofPoliticalEconwithapprovalby JohnStuartMill in his Principles lead to two conomy(Book III, chap. 2, ?1). These observations pointsto use ofthe same terminology clusions. First,the persistent a continued tradition.Second,it seemsthatthispartofvalueanalysis to John from ifany,progress thetimeofSan Bernardino made little, it mighteven be argued that the Stuart Mill. On the contrary, on thepointthat becauseit is less explicit latter'sanalysisis inferior, createsscarcity. difficulty like the other Schoolmen,regards AlthoughSan Bernardino, when he admits elsewhere himself moneyas sterile,he contradicts "capital."3 By capital, qualitybybecoming thatit acquiresa seminal he does not mean the principalof a debt, but moneyinvestedin a is found in Thomas business venture. The same contradiction that moneyis barrenand, in Aquinas,who,in one passage, affirms comparesit to seed which,if put into the soil, will sprout another, and producea crop.' debts, cambium and government also mentions San Bernardino of his of thesetopicsis foundin the writings but a betterdiscussion of Florence.6 San Antonino(1389-1459),Archbishop contemporary,

of the MiddleAges,"Researches Theories 3. ErnestNys, "The Economic History ofEconomics (London, 1899),p. 164. in the and busiusedin notarial theword"capital"is already 4. In thismeaning, in the occur examples onward. Numerous century from thetwelfth nessrecords from actsdating contains which orJohn theScribe, Scriba, cartulary ofGiovanni 1935). Turin, ed. MarioChiaudano, Scriba, di Giovanni 1154to 1164(II cartolare (qu. 78,art.1), quotII, ii, qu. 61,art.3. Elsewhere 5. Summatheological mainlyto serveas a Aquinasstatesthat moneywas invented ing Aristotle, medium ofexchange. Le Fanfani, see also Amintore and San Antonino, 6. On San Bernardino in Italia (Milan,1933),pp. 106-19. spirito capitalistico origindello

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San Antoninowrotewithease Althoughnot a very originalthinker, and theological literature. and was wellversedin theextantcanonistic then His works contain an excellentsummaryof the controversy, shares in the public of interest-bearing raging,about the lawfulness debt. With regardto value and price,he takes over the theoryof San Bernardino without modification;yet he has often received to mentionutility.7 undeservedcreditas the first of the Middle Ages economicwriters The last of the important is Thomas de Vio (1468-1524), betterknownas Cardinal Cajetan.8 His workin the fieldof economicsincludesthreebrieftreatises:one and a thirdon the MontesPietatis, on usury,anotheron cambium, whichhe bitterly opposed. The most remarkableof the threetreawellin whichhe showshimself tises is perhapsthe one on cambium, with scholasticdiainformed on bankingpractices. In conformity one of the nominateconcambium as a permutation lectics,he defines tractsfoundin Roman law, and not as a mutuum. Thus he justified be observed,that is, real exchangeprovidedthat the place difference thatthebill ofexchange be issuedin one place and payable in another. Dry exchange,a practice without analogy in modern business, is proscribed because it is a faked exchangetransactionviolatingthis rule.9 This briefand incompletesurvey omits the minorSchoolmen, some of whom are not withoutinterest. The authorsdiscussedare not all men of singularmerit,justly famousfortheirachievements, in economicsbut chiefly outsidethis field. merely A grave shortcoming of the medievalas well as the later Schoolmen is theiroveremphasis of the usuryquestion. The space devoted thatit to it in scholastictreatiseshas giventhe mistakenimpression was regardedas all important. Sir WilliamAshleyeven assertsthat "the prohibition of usurywas clearlythe centreof the canonistdoctrine."' This is untrue. As stated above, the Schoolmenconsidered and exchangeas the centralproblemin ecoequity in distribution

7. Ontheeconomic doctrines ofSan Antonino, there arethefollowing studies, noneof outstanding quality:Carl Jigner, Die volkswirtschaftlichen Anschauungen vonFlorenz Antonins (Paderborn, 1904); Bede Jarrett, San Antonino and MediaeAntonin's valEconomics (St. Louis,1914);and August Pfister, Die Wirtschaftsethik vonFlorenz (1389-1459)(Fribourg, Switzerland, 1946). 8. De Monte Pietatis (1498),De cambiis (1499),De usura(1500); republished in Scriptaphilosophica, recently opusculaoeconomico-socialia, ed. P. P. Zammit (Rome,1934). 9. R. de Roover,"Whatis Dry Exchange? A Contribution to theStudyof EnglishMercantilism," Journalof PoliticalEconomy, LII (1944), 250-66. 1. An Introduction to EnglishEconomic History and Theory, Vol. I, Part 2 (9thimpression, London,1920),p. 395. Cf. ibid.,p. 382.

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nomics. The usury question was a side issue, but concernwith it was allowed to crowdout nearlyeverything else.2 II. THE SCHOOL OF SALAMANCA By many authors,Gabriel Biel (c. 1435-1495), professor at the Universityof Tiibingen,is consideredthe last of the Schoolmen. Actually, scholasticismdid not die with him; on the contrary, it receiveda new lease on lifein the sixteenth century. This regeneration was the work of the school foundedby Francisco de Vitoria (1480-1546), who,from1526 to 1544,taughtat Salamanca - in this period,the queen of the Spanish universities. As a matterof fact, the term"the school of Salamanca" is oftenapplied to the body of his students,his disciples and their successors.3 From Spain, the influence of Francisco de Vitoria's teachingspread to Portugal (to the University of Coimbra), to Italy (through the Roman collegeof the Jesuits), and to the Low Countrieswhere Leonardus Lessius (1551-1623),FranciscusSylviusordu Bois (1581-1649),and Johannes Malderus (1563-1633) wrote commentarieson Thomas Aquinas inspiredby the Spanish doctrines. The school of Salamanca distinguished itselfin philosophyand in natural and internationallaw. The treatises of Francisco de Vitoria on the Indies and on the laws of war have even been republished by the CarnegieEndowmentforInternational Peace.4 Some of Vitoria's pupils occupied prominent positions:Domingo de Soto (1494-1560) represented Charles V at the Council of Trent and in 1548 became the Emperor'sconfessor; Diego de Covarrubiasy Leyva (1512-1577), who wrotea treatiseon money,was appointedBishop of Ciudad Rodrigo and later Presidentof the Council of Castile;5 Martin de Azpilcueta,betterknownas Navarrus (1493-1586), was rectorof the University of Coimbra beforebeing called to Rome in 1567,wherehe enjoyed the confidence of threesuccessivepopes and died a nonagenarian. Amongthoseinfluenced indirectly by Francisco

2. On usury, by farthebeststudy availablein English is thearticle ofT. P. McLaughlin, "The Teachingsof the Canonists on Usury(XII, XIII and XIV Centuries)," Mediaeval Studies, I (1939),81-147,and II (1940), 1-22. Cf. BenjaminN. Nelson,TheIdea ofUsury (Princeton: Princeton University Press, 1949). 3. Marjorie Grice-Hutchinson, TheSchool ofSalamanca, Readings in Spanish Monetary History, 1544-1605(Oxford: The Clarendon Press, 1952). Although not written by a professional economist, thisis an excellent littlebook. 4. De Indis etdejure bell: Relectiones (Washington, D. C., 1917). No. 7 of theseries:The Classicsof International Law. 5. Veterum numismatum collatio (Salamanca,1550). 6. On Azpilcueta thereis a studyby Alberto Ullastres Calvo, "Martinde Azpilcueta y su comentario resolutorio de cambios;las ideas ec6nomicas de un moralista I (1941),375-407,and II espaftol del sigloXVI," Analesde Economia, (1942),52-95.

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de Vitoria,mentionshould be made also of Luis de Molina (1535yearsthe chairoftheology 1601),who occupiedformorethantwenty at the University of Evora in Portugal. His analysis of value and Since ecoprice is especially valuable for its comprehensiveness.7 nomics was not recognizedas an independentdiscipline,it is not that the membersof the school of Salamanca achieved surprising greaterdistinction in other fields,but this is no reason why they or deniedtheirdue. should be ignoredby economists In formand content,the treatisespublished by the Spanish school continuethe scholastictraditionwith its constantappeal to to supporteven the most trivial its display of references authority, and its love of subtle distinctions and definitions.8As statements, in the past, attention remained focusedon the observanceofthe rules of various types of contracts. The of justice and on the lawfulness moralistsof the new school, however,attemptedto provide fresh to elaboratetheiranalysis,to interpretations, to refine theirconcepts, observemarketconditions, and to bringtheir somehow principles into harmonywith the requirements of expandingbusiness and finance. the scholasticmethodsof analysis,the Withoutchanging completely task was by no means an easy one. No wonderthat the casuists of scholasthe Spanish schoolwereonlyhalfsuccessful; theyrevitalized it is true,but onlyfora time,withoutsavingit from ticism, ultimate doom.9 Even more than the medieval Schoolmen, the later Doctors adheredto the theorythat utilitywas the main source of value and was deterthat the just price, in the absence of public regulation,
with an Introduction byJoseph 7. Bernard W. Dempsey, Interest and Usury, ofthree Schoolmen, all belongA. Schumpeter.This workdiscusses thetheories ingto, orinfluenced by,theschoolofSalamanca:Molina,Lessiusand Lugo. On The by W. Seavey Joyce, Molina,thereis an unpublished doctoral dissertation 1948). Economics ofLuis de Molina (HarvardUniversity, Earl J. Hamilton 8. Grice-Hutchinson, op. cit., p. 40. Nevertheless, in Spain, 1501-1650, (American Treasure and thePriceRevolution p. 295) labels Thislabelis certainly TomAs de Mercadoand others as "Spanishmercantilists." de mercaeventhetitleofMercado'streatise, Summade tratos y contratos wrong: thatthe approach is scholastic. deres (1sted.; Salamanca,1569),indicatesclearly Mercadoand other authors belonging Moreover, Spanishwriters do not consider but call themjusnaturalistas and to the schoolof Salamanca as mercantilists, is correct, which in myopinion: Larraz,La 6pocadelmercantilismo moralistas, Jos6 en Castilla, 1500-1700(2d ed.; Madrid,1943),pp. 119,122,and 131. Cf Andr6s V. Castillo,Spanish Mercantilism: de Uztariz, Economist (Columbia Ger6nimo University Press,1930),p. 45. 9. Withreference restoration initiated by theschoolof to thephilosophical History ofMediaeSalamanca,thesameviewsare expressed by MauriceDe Wulf, val Philosophy, II, 301-7.

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minedby commonestimation, of the forces that is, by the interplay ofsupplyand demandwithout any frauds, restraints, or conspiracies.' Domingo de Soto and Luis de Molina both denounceas "fallacious" the rule formulated by JohnDuns Scotus (1274-1308), accordingto whichthejust priceshouldequal the cost ofproduction plus a reasonable profit.2 Tomas de Mercado makes the pertinent remarkthat pricesare as changeableas the wind.3 Molina even introduces the conceptof competition by statingthat "concurrence"or rivalryamong buyers willenhanceprices, but that a flagging demandwillbring themdown.4 Since similarstatements are foundin otherauthors, we may conclude that the Doctors of the new school generally accepted the idea that the just price,if not fixedby public authority, corresponded to the or marketprice.5 current Conditionsof supply and demand are not the onlyfactorsthat affect prices. There is also the influence of the volumeof circulating media on the price level. The Spanish authors take the quantity theoryfor granted,since theirtreatises,almost withoutexception, mentionthat prices go up or down accordingto the abundance or scarcityof money.6 Twelve years beforeJean Bodin, or in 1556, Azpilcueta or Navarrus, attributesthe rise of Spanish prices to the
1. Luis de AlcalA,Tractado de los prestamos que passan entre mercaderes y tractantes (Toledo,1546),PartI, ? 5, fol.5v; PartII, ? 11,fol.22-23;Luis Saravia de la Calle,Instrucion de lostratos delcomprar y vender (Medinadel Campo,1544), cap. 2; TomAs de Mercado,op. cit.,lib. 2, cap. 8; Domingode Soto,De justitiaet jure (1st ed.; Salamanca, 1553), lib. VI, quest. 2, art. 3; Luis de Molina, De justitiaetjure (Cuenga,1592), tract.II, disp. 348, ? 8. Cf. Grice-Hutchinson, op. cit.,pp. 49, 72, 79, 82, 88. Soto expresses theruleas follows: Sensusergo est quodtantum valet resquantivendi potest, seclusavi,fraude etdolo. 2. Soto, op. cit.,lib. VI, qu. 2, art. 3; Molina,op. cit.,tract.II, disp. 348, ?8; and Mercado,op. cit.,lib. 2, cap. 11. Cf. Bernard W. Dempsey,"Just Price in a FunctionalEconomy,"American Economic Review, XXV (1935), 471-86. 3. Op. cit.,lib. 2, cap. 8:. . . Aunquees mas variable la experiencia (seguin enseia) que el viento. 4. Op. cit.,Tract. II (de contractibus), disp. 348, ?4: Multitudo emptorum concurrentium, plusunotempore quam alio,etmaiore aviditatefacit pretium accrescere; emptorum vero raritas facitilluddecrescere. 5. Grice-Hutchinson, op. cit.,pp. 48, 80, 86-87, 105. 6. Molina, forexample,states that pricesand wages will be higher in a country where money is abundant thanin another where itis scarce(op.cit., tract. II, disp. 348, ?4). Cf. Grice-Hutchinson, op. cit.,pp. 80, 105; Mercado,op. cit., lib. 2, cap. 11; Cardinalde Lugo quotedby J. Brodrick, The Economic Morals oftheJesuits, p. 10. Cf. BernardW. Dempsey,"The Historical Emergence of Quantity Theory," thisJournal, L (1936), 174-84,and the "Comments" thereto by E. J. Hamilton, ibid.,185-92. These comments onlyillustrate the factthat economists look in the wrongplaces forbibliographical guidanceon scholastic
economics.

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influx ofgold and silverfrom the New World.' He also observesthat, because the flowreachesSpain first, the level of pricesand of wages is highertherethan in France. The Spanish moralistsdevoted much more attentionto foreign exchangethan did the medieval Schoolmen. They noticed that in the trade with Flanders and Italy, the exchangerate was generally unfavorableto Spain, but they could not explain this phenomenon, theory.8 Instead, they since they ignoredthe balance-of-payments by arguingthat the money soughtto justifyexchangetransactions had a greaterpurchasing power abroad than in Spain and that the power rate had to be unfavorable in orderto restorethe purchasing but typicalofscholastic parity,a partialand ambiguousexplanation, dialectics.9 Among the Spanish moralists,a lively discussionwas raised concerningthe lawfulnessof exchange between two places withinthe same realm. This practice,it was charged,servedmerely as a subterfuge to circumvent the usuryprohibition.' In the debate the rigorist headed by Domingo de Soto, eventuallywon out, friars, and, through theirinfluence at Court,securedin 1552 a royaldecree internalexchangeat any rate otherthan par. It is needforbidding less to say that the merchants soon discoverednew ways of evasion. In tryingto constrainthe market, the moralistswere fighting a losingbattle. was the century One of the major developments of the sixteenth and, above rise ofthe fairsof Castile, Lyons,Frankfort-on-the-Main, all, Besangon,as international clearingcenters. From 1579 on, the Besangon fairs, while keeping their name, were actually held in
7. Comentario de cambios(Salamanca, 1556), cap. 20, no. 51. resolutorio For an Englishversionof this passage, see Grice-Hutchinson, op. cit.,p. 95. Molina,whosetextis, however, posterior to thebookofBodin,also refers to the price-raising effects oftheinflux ofgoldand silver from New Spain (op. cit., tract. II, disp. 83, ?13). Azpilcueta, or Navarrus, is not mentioned in the worksof Hamilton. 8. Mercado,op. cit.,lib. IV, cap. 4; Soto, op. cit.,lib. VI, qu. 12, art. 2. Cf. de Roover, L'4volution, p. 81; Grice-Hutchinson, op. cit.,pp. 13-14. 9. Ibid., pp. 57-58. Of course,this is not the purchasing-power-parity doctrine as understood today. 1. Those opposed to internalexchangewere Franciscode Vitoria and Domingode Soto (op. cit.,lib. VI, qu. 13,art. 1). On theother hand,Miguelde Palacios and Tomds de Mercado(op. cit., tract.4, cap. 8) considered it lawful. de tutti i contratti FranciscoGarcia (Trattato chenei negotii et commertii humani occorrere, Brescia,1596,cap. 36, ?7), withoutbeing pro or con,simply sogliono statesthat,in Spain,internal exchange is prohibited by law. The sameposition is takenbyAzpilcueta, orNavarrus(op. cit., cap. 15,nos.28-30),whois,however, very scepticalabout the practicalresultsof the prohibition.Cf. de Roover, L'6volution, pp. 108,184,195,200,202,205.

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Piacenza, on the initiativeof the Genoese bankerswho monopolized the financialbusiness of the Spanish crown. To a certain extent, these fairswere institutions called forthby the scholasticdoctrine, sinceit condemned the discounting of creditinstruments but did not frownupon dealings in foreign exchange,unless they were overtly misusedto evade the ban againstusury. Thus the exchangebusiness at the fairsbecame one of the main preoccupations of the moralists. The copiousworksoftwo Itaiians,Sigismondo Scaccia (c. 1568-1618) and Raphael de Turri (c. 1578-1666),not to speak ofminortreatises, deal exclusivelywith this topic. The principalbone of contention was thelawfulness ofthecambio a devicewhichinvolved conla ricorsa, draftsand redrafts goingback and forth betweenGenoa or another banking place and thefairs ofBesangon.2To befuddle thetheologians, thebankershad shrouded thecambio conla ricorsa in a veil oftechnical jargon and complicatedbookkeeping. Strippedof its trappings, the cambiocon la ricorsaloses all its mystery:in its naked formit is simply discount cleverly concealed under the form of fictitious exchangetransactions. Nevertheless, the theologians and the jurists, approaching theproblem from a legal pointofview,foundthemselves caughtin a web oftechnicalities and contradictions whichcontributed not a littleto the discredit of scholasticeconomics. In economics, in the scholasticdoctrine reachesits fullmaturity the monumental worksof Cardinals Juan de Lugo (1583-1660) and Giambattistade Luca (1613-1683), who shouldnot be mistakenone for the other,althoughthe similarity in name leads to confusion.' Despite an impressive display of scholarship, theirworksill conceal the fact that the Doctors had exhausted the possibilitiesof their method and that further progressno longer depended upon more elaboration and refinement, but upon a complete renewal of the analyticalapparatus. III. THE DEMISE OF SCHOLASTIc EcONOMICS The demiseofscholasticism ofcourse, is notlimitedto economics, bornin the but involvesthe entirescientific and philosophical system medieval universities and still far frommoribundon the eve of the seventeenth century. The skepticism of the Renaissance,it is true, had sapped the strength of the scholasticsystembut withoutbeing

2. Ibid.,pp. 80-81,for an example ofcambio conla ricorsa.Further informationis found in therecent bookofGiulioMandich, Le pacte de Ricorsa etle march italiendes changes au XVIIe siecle (Collection"Affaires et Gens d'affaires," No. 7, Paris: Armand Colin,1953). 3. The work of Cardinal de Lugo, Disputationes scholasticae et morales (Lyons,1642),was republished in 1869. VolumeVII (in quo de contractibus in

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able to destroythe still vigorousorganism. Althoughderided and ridiculed by its opponents,scholasticismcontinued to exert farwithan increasingly however, influence. It was confronted, reaching of whichprovideda favorableclimateforthe reception hostilespirit, Cartesian philosophy. The real crisisdid not come until the sevenfailedto teenthcentury. In the face of the attack, the Aristotelians realize that, in orderto survive,they had to renewtheirmethods. refusedto accept the new discoveriesin Instead, they stubbornly science,withthe inevitableresultthat theirphilosophy experimental and medicine, physics, sharedthe fateoftheirantiquatedastronomy, and along withthem,fellinto completediscredit.4 of Europe, and to a lesser extentin England, On the continent which the dyingAristotelian systemkeptits hold on the universities, thus became asylumsforold fogiesand citadelsof bigotedpedantry. and founda haven in the Learningdesertedthis mustyenvironment century. academies and in the salons of the eighteenth ofeconomics mistaketo viewtheevolution It wouldbe a grievous as divorcedfromthat of the othersciences. The main reason why scholasticeconomicsdecayed was that its adherentswere unable or unwillingto revamp theirsystemand to discard the dead wood in order to preservewhat was worthpreserving. Nothing illustrates thisfailure betterthantheworkofthelate casuistsoftheseventeenth such as the treatiseofRaphael de Turri. In it, the scholastic century, but the subtle doctrineon the cambiumcontractreached maturity, between licit and illicit exchange fail to cover up the distinctions whichunderliethe whole argument. fallaciesand the inconsistencies Why should one formof exchangebe lawfuland not another? One who in Malachy Postlethwayt, can only agree with the mercantilist nice"their useless with and divines the lawyers that 1751 declared of clearinstead divisionsand subdivisions," ties" and "theirfanciful it."' Already and confounded had "onlyperplexed ingup thematter, Domingo de Soto, had in the sixteenth century, the Dominican friar, although soundedthe alarm by statingthat "the matterofexchange,
witheconomics. the part dealingprincipally genere et in specieagitur)contains II dottor (Rome, work in thevernacular, a popular Cardinalde Luca wrote volgare was designed to explainthe doctrine as the titleindicates, 1673,9 vols.),which, Theatrum ofa Latin treatise, oftheDoctorsto thepublic. He is also theauthor onlyforscholars. 21 vols.) written veritatis etjustitiae(Rome,1669-1681, II, 309 ff. The late author, a pupilofCardinal op. cit., 4. MauriceDe Wulf, of Louvain and at Harvard at the CatholicUniversity Mercier, was professor University. Dictionary of Trade and Commerce 5. "Bill of Exchange,"The Universal (2d ed.; London,1757),p. 277.

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6. Op. cit.,lib. 6, qu. 8, art. 1. This textwas copied by other Doctors, see de Roover,L'6volution, p. 72. 7. Emil Kauder, "Genesisof the MarginalUtility Theory:FromAristotle totheEnd oftheEighteenth Century," Economic Journal.LXIII (1953),638-50; ofthe Marginal Utility Theory," thisJournal, idem,"The RetardedAcceptance LXVII (1953),564-75. 8. The triplecontract, as the name indicates, involvesa combination of threecontracts in one: (1) a partnership contract the lenderand the between borrower sharing in profit and loss of the borrower's business, (2) an insurance contract by whichthe borrower guarantees restitution of the capital,and (3) another insurance contract by which theborrower guarantees thelenderagainst any loss, if the latterforegoes in exchangefora his sharein eventualprofits, fixed but reducedreturn on his investment.Although the triplecontract had been condemned, in 1586,by SixtusV (1585-1590),the casuistscontinued to debateitslawfulness throughout theseventeenth century."Usure,"Dictionnaire de Thdologie Catholique, XV (1948),cols.2373-74.

sufficiently is beingmoreand moreobscuredby the abstrusein itself, of the merchants and the contradictory clever subterfuges opinions of the Doctors."6 But he himself was a prisonerof his methodand could not escape fromthe impasse. There was nothing basicallywrongwiththe scholastictheory on and Adam Smith value and price. It restedon utilityand scarcity, did not improveupon it.7 The greatweaknessof scholasticeconomicswas the usurydoctrine. Canon law, dating as it does back to the early Middle Ages whenmostloans weremade forconsumption purposes,defined usury as any increment demanded beyond the principalof a loan. Since this definition was a part of Catholic dogma, the Schoolmenwere unable to changeit. As timewentby, it became a sourceof increasingembarrassment.Tied to theirdefinition, the Doctors weresucked deeperand deeperinto a quagmireof contradictions. It is not that the Churchever seriously hamperedbusinessinvestments, but practical necessityplaced beforethe moraliststhe well-nigh impossible task of legitimizing whilesafeguarding the means fortakinginterest was principlethat loans were gratuitouscontracts. This difficulty solved in two ways: (1) by the doctrine of extrinsic titles,and (2) by the ratherartificial distinction betweenlicit and illicitcontracts. In the sixteenthcentury,the more lenientamong the casuists underminedtheir ownposition stillfurther by permitting thetriplecontract, accordingto which the borrowerguaranteedto the lender a fixed return of,let us say, 5 per cent a year.8 In the end,the lawfulness of interest became a questionof formality, that is, of drafting contracts in the properform. Is it thensurprising that casuistry acquiredsuch a bad connotationand is today synonymous with sophistryand mentalreservation?

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Fromthe start, the usurydoctrine becamean easy target for ofscholasticism. the opponents In a certain way,theDoctorshad to blame:bytheir onlythemselves had exposed inconsistencies, they to criticism and evenridicule. themselves was openedin the sixteenth The firing century withthe fierce attackofCharles whoadvocated du Moulin(1500-1566), thetolerationofa moderate rateofinterest.He pointed out thattheusury prohibition, meant to protect thedebtor, had theopposite effect by increasing thecostoflending.Not content withmarshaling serious he pokedfun at the"jargon"oftheDoctors arguments, and at their of cambium classification into real, dry,and fictitious exchange, and "counter-change."9 bookwas premature rechange Du Moulin's and exposed itsauthor to persecution for heresy. In theseventeenth theblastcamefrom century, another quarter; thistime thecasuists werecriticized, notfortheir rigor butfor their leniency, by the Jansenist, Blaise Pascal (1623-1662),illustrious philosopher, mathematician, and physicist, who,by the excellency ofhisstyle, in French wona namefor himself His Lettres literature. Provinciales werescurrilous that createdan enormous pamphlets, sensation.In theeighth he attempts to confute thecasuists letter, fortheir opinion on usury and contracts.Of course, Pascal was an amateur in economics, as wellas in theology.Nevertheless, there is no denying thathiscastigation was notentirely and that undeserved his victimshad made concessions inconsistent with theirbasic Duringtheeighteenth theattackcontinues century, unabated. refer the Philosophes Whenever to the Doctors,they call them with an undertone ofscorn and contempt.Theyrefer "casuists" to to criticize; them borrow from andwhen do not only they them, they givethem anycredit.Thisattitude is typical oftheAgeofEnlightenof Gothiccathedrals or of ment,whichshowedno appreciation in general. things medieval, More than ever,the usurydoctrine is the centerof attack. to Turgot According interest had (1727-1781), theprejudice against beenintroduced ofignorance" "in centuries whodid by theologians
9. Charlesdu Moulin,Sommaire du livreanalytique des contracts, usures rentes constitutes, interests et monnoyes, in Omniaquae extant opera(Paris,1681), Vol. II, No. 73: "Je laisse aussi leursjargonset distinctions de changer6al,fict et sec,rechange et contre-change." Cf. de Roover,L'6volution, p. 195. 1. To be specific, I refer to thecomments ofPascal on theMohatracontract, one of the subterfuges used in Spain. Pascal's main victimwas the casuist, Antonio Escobary Mendoza,whosemajor workis Universae theologiae morals receptores (1st ed.; Lyons,1652,7 vols.).

principles.'

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not "understandthe meaningof the Scriptures any betterthan the principlesof natural law."2 Richard Cantillon (d. 1734) remarked sarcasticallythat lucrumcessans would entitlea man making "five hundredper cent" in his business to demand the same fromhis comes out withthe assertion borrowers.3Abbe de Condillac frankly that the loan at interestis just and should be permitted. He goes and "casuists" are confused on to state that legislators on the subject and asks thempointedly whytheydisapproveof interest and not of exchange.4 Is there really so much difference between distance in de temps)and distanceof place (distancede lieu)? In time (distance the law still proscribedthe France, duringthe eighteenth century, takingofinterest, althoughthispracticewas generally toleratedwith ofthe courts. The physiocrats the connivance waged an unsuccessful campaignfor the enactmentof a statute whichwould legalize conthe paymentof interest. Such a law was tractualclauses stipulating not passed until October 12, 1789, afterthe outbreakof the French Revolution. was even more insidiIn Italy, the attack on the usurydoctrine ous than in France, since it was carriedon underthe cover of orthodoxy. In 1744,thereappeareda book in whichtheauthor,Marquess on the surface, to defendthe ScipioneMaffei(1675-1755), pretended, traditionaldoctrines,but, in the last chapters,ruined the entire edificeby advocating a new extrinsic title, never admittedby the that is, the law or customof the land.' theologians:the lex principis, As a matterof fact,the purposeof the book was to justifythe issue by the city of Verona of a municipalloan yieldinginterestat 4 per createdsucha stirthatin orderto appease cent. Maffei's publication the tempest,Pope Benedict XIV (1740-1758) was impelledto promulgatethe encyclicalVix Pervenit forthe (1745), whichreasserted last timethe old dogmawithrespectto usury.6 Withina fewmonths (1746), thereappeared the second editionof Maffei'sbook without
et la distribution 2. "R6flexions surla formation des richesses," Oeuvres de Turgot, ed. Gustave Schelle,II (Paris, 1914), 577-78, ?LXXIII:" Erreurs des and "M6moiresur les pretsd'argent"(1770); ibid.,III scolastiques r6fut6es"; (Paris, 1919), 163. Cf. Jean FrangoisMelon, Essai politique sur le commerce (Paris,1761),pp. 259 and 272. du commerce 3. Essai sur la nature en general, ed. Henry Higgs (London, 4. Le commerce et le government considdrds relativement l'un a' Vautre, in ed. EugbneDaire (Paris,1847),I, 311-12. Melanges d'6conomie politique, 5. Dell'impiego del danaro,libritre(1st. ed.; Rome, 1744; 2d ed.; Rome, 1746). 6. de Roover (L'6volution, in Frenchof pp. 123-24 n.) givesa summary in Vix Pervenit. thefivepointsdiscussed
1931), pp. 208-10.

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any substantial modification of the author's stand on the usury question. Yet this second editionpublishedin full the text of the of the ecclesiasticalauthorities, Encyclical,bore the imprimatur and containeda dedicatoryletterto Benedict XIV, a personalfriendof the author. On scholasticism, the book of Maffeihad a deleterious since it implicitlyredefined effect, usury as any increment -not beyond the principal- but beyond themoderate rateallowedby law or custom.7 The new definition a radical departurefromthe represented basic normsof scholasticeconomics.8 Books challenging the thesis the scholastictradition of Maffeiand restating were stillbeingwritten in the beginningof the nineteenth century,but their authors were not men of any talent and they repeated the old, worn-out arguments withoutcontributing anythingnew.9 Scholasticismhad ceased to attractthebestminds:its discredit, exceptin ultra-conservative circles, was too profound. Afterthe Code Napoleon,adopted all over westernEurope, had allowed the takingof interest, the Church,too, decided to abandon the old usury doctrine. It was quietly buried in 1830, when the Sacred Penitentiary to confessors issued instructions not to disturb penitentswho lent moneyat the legal rate of interestwithoutany title other than the sanction of Civil Law.' With this decision,
in Nicolas Broedersen, by the Jansenist, 7. The same thesiswas defended Galianiin etillicitis licitis (1st ed.; 1743). Abb6Ferdinando his book,De usuris in which he pays devotesto usuryan equivocalchapter, his book,Della moneta, Eli Monroe,Early doctrine. See Arthur at least lip serviceto the traditional pp. to AdamSmith, Literature prior from Economic Thought, Selections Economic civile, 300-7. AntonioGenovesi(1713-1769)in his book, Lezionidi economia and Broedersen. adoptsthesamepointofviewas Maffei interest wereantito theold canonlaw,any statutes allowing 8. According themto be in declares canonical. The CouncilofVienne(1311-1312)explicitly ofthose in operation: ofdivine andhuman therepeal law and orders contravention lib. 5, title5, can. 1, ?1. c. Ex gravi, in Clement., Decretales, e l'usura La giustizia 9. CountMonaldoLeopardi(1776-1847), uei contratti e critica dei libritresu le usure Analisi ragionata (Modena, 1834); Anonymous, MarcoMastrofini data in luceda un amicodellaveritd (Naples, 1835). dell'abbate ofthe famous poet,GiacomoLeopardi:his reacCountLeopardiwas thefather to theusuryquestion. ideas werenotlimited tionary de Thgologie Catholique, XV, cols. 2379 f. The 1. "Usure," Dictionnaire by BenedictXV in 1917, art. 1543, admitsthe new canon law, promulgated nisi constet ofthelegaltitle(nonestperse illicitum de lucro legalipacisci, validity that a loan is although it stillupholdsthe principle ipsumesseimmoderatum), of the Roman detailsabout the decisions contract. Further perse a gratuitous in Henry C. Lea, "The Ecclesiastical in 1830andlatermaybe found congregations II (1893-94),379-85 (republished in Minor of Usury,"Yale Review, Treatment and OtherEssays, Philadelphia,1942, pp. 129-51). The HistoricalWritings but his unfavorable to the Church, of thisauthorare generally interpretations Catholique. de Thgologie agreeswiththe Dictionnaire factualinformation

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received usury so much, which had emphasized scholastic economics, its deathblow.
IV. SCHOLASTICISM AND MERCANTILISM:A CONTRAST

and scholasticeconomics betweenmercantilism The differences are striking and profound. Yet, I do not know that a comparison ofthe contrasts althougha clearperception has ever been attempted, of ecoof the development foran understanding has its importance

to find the whoprofess nomicthought.Thereare evenhistorians of the the contributions ignoring pamphleteers, thus completely
Doctors.2

of economicsamong the vagaries of the mercantilistic "prehistory"

scholasticeconomicsenjoyed the unquesUnlike mercantilism, of beingan integral philosophipart of a coherent tionedsuperiority cal system. Althougheconomicswas not yet acknowledgedas an independent discipline, it formed a consistentbody of doctrine

juris). Most of them were clerics,though there are some notable exceptions among the jurists, especially among the civilians, for instance,Messer Lorenzo di Antonio Ridolfi,who was a layman, a at the Florentine athenaeum.4 The mercandiplomatand a lecturer merwere with few exceptionsself-trained tilists,on the contrary, degrees. chants,with some literarytalents,but withoutuniversity who, forbetteror forworse,were Essentially,theywere empiricists not encumberedby scholastic traditions. In this way they made theirmajor contribution theory, by developingthe balance-of-trade loose fromtheir whereasthe Doctors were unable to cut themselves exchangeproblem. traditional approach to the foreign a As rule,the mercantilist were brieftractson specific writings and controversial issues, which contrastmarkedlywith the weighty and oftenpedantic treatisesof the Doctors. Whereas the mercanEdwardHeimann, pp. 22-47. 2. Forinstance, History ofEconomic Doctrines, ofthe Royal 3. A. V. Judges, "The Idea ofa Mercantile State," Transactions 4thSeries, XXI (1939),50. Historical Society, see Vespasianoda Bisticci,Vitedi uomini del illustri 4. For his biography, secolo XV (Florence, 1938),pp. 401-5.

tobe ruled bythelawsof ought economic relations according towhich was and commutative mercantilism justice. In contrast, distributive ofunco-ordinated by prescriptions never morethana conglomerate ofthemercantilistic ecotracts to influence which sought theauthors interests.3 in a sensefavorable to their nomic private usually policy, as thisnameindicates, wereall university graduThe Doctors, or in canonand civillaw (doctor utriusque ates,trained in theology

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to sourcesor providemarginalnotes,the tilistpamphletsrarelyrefer in support of scholastic treatises literally bristle with references nearlyevery statement,even the most commonplace. This sometimes annoyingdisplay of erudition,firstintroducedby the postwho fromthe humanists, encouragement receivedfurther glossators, developed the habit of invokingthe authorityof the Ancientsfor everything. theirmain preBy theveryfactthat the Doctors weremoralists, but naturally occupationwas withsocial justice and generalwelfare, withthese ideals as theywere conceivedin the Middle Ages and the too, prosixteenthand seventeenthcenturies. The mercantilists, the cause ofthe commonweal;however,theirdeclafessedto further facevalue. rationsin this respectshould not always be takenat their All too often theyserveas a screenforprivateinterests. Most ofthe tractshad an ax to grind. This is especially authorsof mercantilist true of the early mercantilists. G6rardde Malynes (fl. 1586-1641) who advocated exchangecontrolin the was a perennialoffice-seeker would be appointed the controller. Misselden hope that he himself (fl. 1608-1654) and John Wheeler (fl. 1601-1608) were spokesmen and Thomas Mun (1571-1641) wrote forthe MerchantAdventurers; his tracts in defenseof the East India Company. As forGresham (1519-1579), he was a shrewdand none too scrupulousmanipulator althoughadvantaof the money market,whose recommendations, on geous to the Queen, were apt to have unfavorablerepercussions Englishtradeand on the volumeofemployment. The latermercantilistswereless prejudiced,but theirviewswerestillwarpedby their narrow nationalism. Most of them rallied to the defense of the colonial systemand sponsoredaggressivemeasuresto combat or to an attitudewhichis alien to the spirit competition, exclude foreign trade by of scholasticism. Did not St. Thomas justifyinternational pointingout the fact that no nationis self-sufficient?' centurywere As we have seen, the casuists of the seventeenth or unable to rejuvenatetheirmethods. They coneitherunwilling to incorporatenew distinued in the old ruts and made no effort theory,into theirtraditional coveries,such as the balance-of-trade doctrines. The conservatismof the late scholastic writersthus that and it is fortunate progress, became an impediment to further the mercantilists displayedmore initiativeand did not hesitate to blaze new trails. True, theirmethodswere not always sound, nor
(3d ed.; dottrine economiche: Fanfani, Storiadelle il volontarismo 5. Amintore Book 2, chap.3. principum, is to De regimine Milan,1942),p. 112. The reference

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always successful,but they opened up new avenues for further research. The controversy of the earlymercantilists about exchange control led to a premature proposalforthe creationof a stabilization fundand eventuallyculminated in the formulation by Thomas Mun of the balance-of-trade theory. The mercantilists also made the first clumsyattemptsto use statisticaldata, and Sir William Petty (1623-1687) evenmade statistics thebasis ofhis PoliticalArithmetick. Othersponderedover bankingschemes; and the studies of Charles Davenant (1656-1714) and Gregory King (1648-1712) on the behavior of grainpricesput themon the trackof the elasticity of demand.7 The seventeenth century was the age of projectors. Nearly always, the aim was to influence public policy,whereasthe scholasticwriters were content to set up ethical standards,but left their practical realizationto the ofteninefficient government authorities. The scholasticwritersregardedtrade as an occupation which, althoughnot evil in itself,endangeredthe salvation of the soul, as the merchantsalmost unavoidably succumbed to the temptations of usury, cheating,and unlawfulgain: et de hoc rarissimeevadunt as St. Bonaventure (1221-1275), the Seraphic Doctor, mercatores, testifies.8In this opinion,the otherDoctors concur:withoutexcepto trade. The mercantilist tion,theymuchprefer agriculture writers, of course, take exactly the opposite point of view.9 In their eyes tradeis thenoblestofall professions.' Both agriculture and industry depend on trade to providea marketfortheirproductsand to give to the "poor."2 The merchant, farfrom employment beingregarded
6. de Roover,Gresham on Foreign Exchange, pp. 226-31,250-65. 7. I take advantageof thisopportunity to call the attention of the economiststo an articleby Luigi Einaudi, "La paternity della leggedetta di King," Rivistadi storiaeconomica, VIII (1943), 33-38. The authorattributes to both Davenantand King thediscovery ofthelaw stating thatgrainprices varymore thanproportionately to thedeviations oftheharvest from thenormal. 8. Decretum Gratiani: canonQuoniam noncognovi, Dist. LXXXVIII, canon 12; and canonQualitaslucri, Dist. V, "de paenitentia," canon2; quia difficile est interementis non intervenire vendentisque commercium peccatum.Cf. Schreiber, op. cit.,p. 129. 9. Jelle C. Riemersma, "Usury Restrictions in a Mercantile Economy," CanadianJournal ofEconomics and Political Science, XVIII (1952),22. 1. See the encomium of trade by Thomas Mun, England'sTreasure by ForraignTrade (London,1664), chap. 21. Cf. Eli F. Heckscher, Mercantilism II, 281. 2. WilliamD. Grampp,"The LiberalElements in EnglishMercantilism," thisJournal, LXVI (1952),469. Theseideas musthave been current amongthe merchants on the continent as well as in England,sincewe findthemalso in LodovicoGuicciardini's famous description of Antwerp, first published in 1567: Description de tousles Pays-Bas,trans.Frangois de Belleforest (Antwerp, 1582), eds. R. H. Tawneyand Eileen p. 182; republished in Tudor Economic Documents, Power,III, 161.

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withdistrust, is extolledas the benefactor ofhumanity and the principal pillaroftheState. This is whatone mightexpect,sincemercantilismwas the economicsystem developedby,and for, themerchants. In contrastto scholasticeconomics,mercantilism was amoral. The later mercantilists were interestedin a large population and full employment only because they thoughtsuch conditionswould stimulate tradeand increasethe economicpowerofthe state.3 Usury was no longer considereda voracious monster: Sir Josiah Child (1630-1699), Sir Thomas Culpeperthe Elder, and otherscomplained onlythat the interest rate,beinghigher in England than in Holland, favoredthe competition of the Dutch.4 Trade has no soul and the individualdid not count: why should the mercantilists be disturbed by moralissues? One of the most striking characteristics of scholasticeconomics was universalism:regardlessof originand nationality, the Doctors are in fundamental agreement on methodand principles. Although theremay be, sometimes, sharp differences on points of detail or of practicalapplication,all theirtreatisesfollowmore or less the same pattern easily recognizableby anyone acquainted with scholastic literature. In themercantilist camp,on thecontrary, suchuniformity in doctrine or methoddoes not exist:neither betweennationalschools nor betweenindividualwriters. Among the mercantilists, "everyone is his own economist," according to thephraseso aptlycoinedby Professor E. A. J. Johnson. No one considers himself boundby precedent, and each authorfollows his own inspiration in selectingthe appropriatemethodfordealing with his chosentopic. the great prestigeof Eli F. Heckscher,I disNotwithstanding agree with his statementthat mercantilism strove toward unity.5 As a matterof fact,non-scholastic and economicsin the seventeenth eighteenth centuries varied greatly to country. In my fromcountry opinion,the name "mercantilism" is appropriate onlyforBritisheconomicsduringthat period. In Germany,one should speak of cameralism. One ofits leadingexponents, Becher (1635Joachim Johann
3. E. A. J. Johnson, Predecessors of Adam Smith, pp. 247-52; Heckscher, II, 159; PhilipW. Buck, The PoliticsofMercantilism, Mercantilism, pp. 44-48, 65-66,89-90. 4. Heckscher, Mercantilism, II, 286-89. 5. Heckscher, in response to criticism of his book,was forced to himself, concede thatmercantilism failed as a unifying system: "Mercantilism," Economic History Review, VII (1936),48. Cf. Herbert Heaton,"Heckscher on Mercantilism,"Journal ofPolitical Economy, XLV (1937),374; J.F. Rees,"Mercantilism," History, New Series, XXIV (1939-1940),130.

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1682), "was still strongly influenced by the venerable Aristotelian tradition," albeit that he considerably modified the scholasticviews.6 In France,the expression "Colbertism,"ratherthan "mercantilism," should be used to designatethe economicpolicy of Colbert. Moreover,thispolicyarousedmuchcriticism from writers such as Vauban (1633-1707)and his cousinBoisguilbert (1646-1714),whosecomments on theiniquitiesoftheFrenchtax system anticipatedthe physiocrats instead of owingsomething to mercantilist ideas.7 Although the UnitedProvinceswerethe leadingeconomicpower in the seventeenth century, thereexistsas yet no adequate studyon Dutch economic thoughtduringthis period.8 At any rate, Hugo Grotiusor de Groot deservesa nichein the galleryof famouseconomists. One can hardlyclassify him as a mercantilist; he was rather an Aristotelian who used scholasticmethodsto defeatscholasticism.9 Even Pieter de la Court (1618-1685), althoughnot an Aristotelian, is far too liberalto pass fora mercantilist.' In Spain, after 1600, economicwriters, withoutbreakingwith scholasticism, were mainly concernedwith the country'sailments: vellon inflation,vagrancy, depopulation, and economic decline. Whetherthis concernwith pressingsocial and economicproblems labels themas mercantilists remainsa debatablepoint.2 As in Spain,
6. de Roover,"MonopolyTheorypriorto Adam Smith,"op. cit.,p. 519. Thereis a newbook on Becherby H. Hassinger, Johann Joachim Becher (16351682): ein Beitrag zurGeschichte des Mercantilismus (Vienna,1951). The author apparently regards Becheras a mercantilist.Heckscher, however, statesthat the German cameralists "wereimbuedwitha spirit oftheir own" (Mercantilism, II, 263). 7. Ibid., II, 264. Cf. Hazel van Dyke Roberts, Boisguilbert, Economist of the Reign ofLouis XIV, p. 255: "Boisguilbert had completely shaken off mercantilist thought." 8. The best studyis stillthatof EtienneLaspeyres, but it is almosta centuryold: Geschichte derwirtschaftlichen Anschauungen and ihrer derNiederlander Litteratur zur Zeit der Republik (Preisschriften gekr6nt und herausgegeben von derFtirstlich Jablonowski'schen Gesellschaft, Vol. XI, Leipzig,1863). 9. de Roover, "Monopoly Theory prior to AdamSmith," op.cit., pp. 521-22. 1. Heckscher(Mercantilism, I, 351) admits that the Dutch were "less affected by mercantilist tendencies than mostothercountries." His treatment ofDutchwriters is based entirely on thestudy ofLaspeyres (op. cit., II, 263) and, moreover, is verysuperficial. See the pertinent remarks ofHeaton (op. cit.,pp. 371 f.) about Heckscher's neglect of Dutch economic thought and policyin the seventeenth century. 2. Theyare mercantilists according to Earl J. Hamilton, "SpanishMercantilismbefore1700," Facts and Factorsin Economic History: Articles byformer Students ofEdwinFrancisGay,pp. 214-39. This is an introductory survey which listsa fewtractsand makessomegeneral comments on the contents of the economic literature in Spainfrom about1600to 1700. The Latintreatises, including the important workof Luis de Molina, are not discussed. After statingthat

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and wereparticularly strong, so also in Italy the scholastictraditions century along withothercurrents persistedwell into the eighteenth manuals of the Middle Ages.3 in the merchant originating of thought a scheme Dr. AntonioSerra,in fighting In 1613,a Neapolitanwriter, the balanceindependently exchange,formulated to regulateforeign by theEnglishmercandevelopedcontemporaneously of-trade theory and his book was ignoredfor were dismissed, tilists.4 His proposals praised it as an a Galiani abb6 Ferdinando more than century until that his surprise performance.The wittyabb6 expresses outstanding a book like Serra's was conceived"in an age of ignoranceabout economicmatters,"but he complainsthat the workis "tedious" reading and its "divisions because of its obscurestyle,its poor organization, of scholastic literature.' In other and subdivisions" reminiscent point words,the abbe is a typicalexampleof the eighteenth-century the work fact is that Galiani considers of view. Anotherinteresting whereasmost modernauthorshave classed of Serra to be scholastic, pamphlet.6 it as a mercantilist does not stand for The troubleis that the word "mercantilism" a clear concept,but lends itselfto confusion. The great specialist is simply a Heckscher,himself,has to admit that "mercantilism a phase of economic policy and convenientterm for summarizing
knowlwithno intimate writers wereecclesiastics mostof the Spanisheconomic Hamilton callsthem"mercanor finance (pp. 229-30),Professor edgeofbusiness was tilists." Sancho de Moncada, one of the so-calledSpanishmercantilists, himself pointsout ofToledo,as Hamilton in the University professor oftheology VillegasCastillo, including Andrds Treasure, p. 294). Otherauthors, (American and Jos6 Ram6n Carande,BernardW. Dempsey,MarjorieGrice-Hutchinson, de Uzt~iriz OnlyGer6nimo classification. Larraz,do not agreewithHamilton's underthe and statesman, seemsto have comestrongly a late writer (1670-1732), thought. Cf.Ram6nCarande,CarlosV y sts Banquteros, influence ofmercantilist 1516-1556(Madrid, la vida economic de Espafa en una fase de si hegemonia, 1943),p. 89. admits that he is unacII, 263) implicitly 3. Heckscher(Mercantilism, DavantractofBernardo withItalianeconomic literature.The famous quainted in 1581,was certainly based on merNotiziadei cambi, written zati (1529-1606), of in the State Archives two manuscripts chantmanuals,as appearsclearfrom of to the kindness Nos. 17 and 69. I owe thisinformation Pisa: Pondo Alleati, of Pisa. Melisof theUniversity Professor Federigo d'oroe argento ti regni dellecausechepossono far abbondare trattatc 4. Breve delcinque conapplicazione di Napoli in Economisti dove nonsonominiere al Regno from Serra's e seicento, ed. AugustoGraziani (Bari, 1913), 141-233. Selections in Monroe, in English are found op. cit.,pp. 143-67. translation, treatise, 5. Ferdinando (Bari, 1915),p. 344. Galiani,Della moneta it volontaStoria, p. 178; Fanfani, op. cit., p. 144; Cossa,op. cit., 6. Monroe, (3d ed.), pp. 112-13; ofEconomic Thought rismo, p. 171; LewisH. Haney,History Thought, pp. 36-37. JohnM. Ferguson, Landmarks ofEconomic

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economic ideas."7 It should be added that the term covers only those heterogeneousideas that are non-scholasticin inspiration. of scholasticinfluence There are remnants in many mercantilist those traces have not been recognized, writings, but surprisingly to spot. The mercantilists, of course, thoughtheyare not so difficult the impactofseveralcenturies wereunable to escape from ofculture. Whether or not they knew it, they absorbed some of the ideas bequeathed by former generations.8 in whose worksthe traditional Gerard de Malynes is the writer views are the most perceptible. Whether he shouldbe considered as a mercantilist oras a scholastic writer, is to myminda mootquestion.9 In any case, therecan be no doubt thathe forms the linkbetweenthe two schools of thought. His insistenceon the par as the only fair rate of exchangeis simplya variant of the just price theorytaken over fromDr. Thomas Wilson, himselfa Doctor still imbued with scholastictraditions. Accordingto Professor Jacob Viner,Malynes was poor in marketanalysis,'but therecan be no questionabout his being well read and well acquainted with ancientand scholasticliterature.2 In his Saint George forEngland,a tract against usury,he describesthe dragon called Foenus politicum as having two wings, usura palliata and usura explicate, and a tail, "inconstant Cambium."s This allegoryis obviously sheer and unadulteratedscholasticism. Malynes has also receivedcreditfordistinguishing betweenchanges in the price level due to monetary factorsand changesin the price of particularcommodities due to the operationof the law of supply and demand. I strongly suspectthat thisidea did not originate with him but that he took it froma continental treatise, forhe was by no means an originalthinker and was addicted to plagiarism.4
7. "Mercantilism," Economic History Review, VII (1936-37),54. 8. Heckscher (Mercantilism, II, 277) states:"Here onemayperceive a tendencytowards economic liberty thatwas neverentirely broken offand therefore and laizzez-faire connected medieval ideals." 9. de Roover,Gresham on Foreign Exchange, pp. 285 f. 1. Studiesin theTheory of International Trade (New York, 1937), p. 76. 2. Helen E. Sandison,"An ElizabethanEconomist'sMethodof Literary Composition," Huntington Library Quarterly, VI (1942-43),205-11. Professor Sandisonshowsthat Malynes certainly "borrowed" fromSir Thomas More's Utopia. I may add thathe also was acquaintedwiththe works of JeanBodin, Lodovico Guicciardini, Dr. Thomas Wilson, Aristotle, and most probably, Leonardus Lessius. 3. SaintGeorge for described England allegorically (London, 1601); "Foreword to the Reader." On p. 61, Malynes mentions the extrinsic titles,damnum emergens and lucrum cessans. 4. In the sixteenth century, most of the scholastic writers acceptedthe quantitytheory of moneyand stated that prices"generally" go up or down

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In a recentarticle,the mercantilists have been praised forthe "liberalism" of theirconcepts.5 Contraryto the conclusionsof the author,it appears, however,that those so-called "liberal elements" are rooted in the doctrinesof the medieval Schoolmen.6 For one of thing,the Doctors were uncompromising in their condemnation monopolyforthe reason that the monopolist exploitsthe public and makes an illicit gain by raisingthe price of his articles above the on level. For example,Cardinal Cajetan, commenting competitive offends freedom the SummaofThomas Aquinas statesthat monopoly by compellingthe public to pay a price higherthan the one that would prevail in the market,if there were no such monopoly (si huiusmodimonopolium non esset).7 The traditionalfeelingagainst monopolywas so strongthat no mercantilist writerdared openly themonopodefypublic opinion, evenwhenhispurposewas to justify listicpracticesof this or that tradingcompany.8 In the parlance of the mercantilists, "freetrade," as I have pointedout in thisJournal, meant freedom fromrestraints of any sort in internalas well as in foreign trade. Consequently, it corresponded to the Frenchexpresdu commerce sion liberty and not to libre6change.9In the seventeenth century, protection in themodern sensewas notyetborn;the struggle trade.' was still a medieval struggleforthe controlof the carrying In dealingwiththe historyof economicthought, it is not enoughto know the writings of the economists;one must also know something
withthe abundanceor scarcity of money. Such a statement had even become commonplace. 5. Grampp, op. cit., pp. 465-501. have neverstated 6. Ibid., pp. 500 f. So far as I know,the Schoolmen "thatfree individual behavior ofsociety." Heckscher was inimical to thewelfare states: "that even the (Mercantilism, II, 277) assertsthe contrary and rightly medievaltradition was sympathetic to a certain sortoffreedom.The medieval under was thusnotwithout ofeconomic liberty influence importance to thenotion As late as the seventeenth the Anglican and Puritan mercantilism." century, divines continuedto propoundscholasticdoctrineon just price, monopoly, and price discrimination. passages of Richard Baxter See the characteristic Aspects (1615-1691),a popularpreacher, which are quotedby H. M. Robertson, of Max Weber and his School oftheRise ofEconomic Individualism: A Criticism (Cambridge, 1935),p. 17. capitalistico, p. 123. Cf. 7. Text quoted by Fanfani,Originidellospirito and sechzehnten JosephHOfner,Wirtschaftsethik und Monopoleim finfzehnten (Jena,1941),p. 107. Jahrhundert the 8. de Roover, Gresham onForeign Exchange, p. 284. Suchwas certainly purposeof JohnWheeler, Edward Misselden, Thomas Mun, Sir JosiahChild, and CharlesDavenant. 9. When Frenchauthorsof the periodmean librechange, they use the du commerce expression: entre les nations. liberty pp. 282 f. 1. de Roover,Gresham on Foreign Exchange,

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of the and the social environment framework about the institutional period. the English "mercantilists did not believein an econCertainly, omywhollyor mainlydirectedby the State,"2but they wanted the and they state to pursue a policyfavorableto the tradinginterests of chartered companiesand tendedto defendthe exclusiveprivileges of scholasticideals, influence corporations.3Owingto the persistent themercantilists paid lip serviceto thegoddessof"freetrade,"though the sincerity of theirdevotionis very much open to question,inaswith their other aims. But then, much as theirpretensesconflict mercantilism was not a logical system. It may even plausibly be systhe much vaunted mercantile argued that,unlikescholasticism, tem was not a systemat all. V. CONCLUSIONS - and no effort has of The shortcomings scholasticeconomics been made to conceal them- should not blind us to the greatness of the achievement. The Doctors correctly diagnosedthe economic was a branch problemas one of scarcity. In theiropinion,economics the rules of justice that oughtto preside of ethicswhichdetermined and the exchangeof scarce goods. It is obvious overthe distribution that therewould be no need for distribution or exchange,if goods in unlimited quantities. could be obtainedwithouteffort ecobetweenscholasticand contemporary The great difference nomics is one of scope and methodology:the Doctors approached economicsfroma legal point of view. They attached an excessive so that the study of economics nearly importanceto formalism, into the formand nature of conreduced itselfto an investigation withethics,the Doctors were tracts. Because of theirpreoccupation in what oughtto be than in what actually was. also moreinterested In the matterof usury,theymade the fatal mistakeof allowingthis all otherproblems. Besides, the subordinate questionto overshadow ofthelater casuists involvedthemmore and morein a sophistication which, ever since the eighteenthcentury, maze of contradictions, have prejudicedeconomistsagainst scholasticdoctrines. The more theirown concessionsthe casuists made, the more theyundermined to face the fact that theirdistinction position. They wereunwilling
2. Grampp, op. cit.,p. 495. 3. In order to enlist thesupport mercantilist writers and ofthegovernment, projectors neverfailedto stressthe benefits whichwould accrueto the Royal Treasury, if theirschemes werecarried out (Heaton,"Heckscher on Mercantilism,"op. cit.,p. 376).

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was based on merelegal contracts betweenusuriousand nonusurious technicalities.4Afterall, was it logical to allow a chargeforthe use it in another?5 of moneyin one case and to prohibit ofthe schoolofSalamanca, The Doctors,especiallythe members ofvalue, in developing a theory made one of theirmain contributions based on utilityand scarcity,which is more in line with modern and thinking than that of Adam Smith. Because of his influence on this topic by throwing of confusion he createda century prestige, out utilityand by becomingentangledin the antithesisof value in use and value in exchange. The Doctors were also rightin stressing ofmutual advantage in any bargain the principle fromthe beginning exchange.' or voluntary In the absence of fraudor collusion,the marketprice was supofpublic posed to be just, but the Doctors neverquestionedthe right because offamineor othercircumwhenever, to interfere, authorities stances, eitherbuyers or sellerswould be seriouslyharmed by the free operationof the law of supply and demand. Perhaps in the economistsmighthave regardedthe scholastic century, nineteenth but today we operate,in fact,on a just-price positionas erroneous, does not hesitate to regulateprices in basis, since the government times of national emergency. While the Doctors may have been correct in theiranalysis,theyhad the faultofmanyidealistsof overto theyassumedthat it sufficed practicaldifficulties: lookingentirely set a priceby decreein orderto make it effective. was In accordancewiththe teachingsof the Doctors, monopoly the Incidentally, offense. criminal a considered almost everywhere for them to reprove only the guildsand then Doctors rarelymention treatises in their evidence theirmonopolistic practices.7 I do not find whichis so oftenpicturedas an that theyfavoredthe guild system, as a panforChristiansocietyor is recommended ideal organization industrialism.8 acea against the evils of modern
(thatall usuries Calvin'sposition p. 118: "In practice, op. cit., 4. Robertson, had been reachedby Catholicteachers. to be condemned) werenot necessarily the Catholicsmore was mainlyone of expression. Amongst The difference ofcontracts." upontheformalities depended in a review ofJohnP. Kelly,"Aquinasand 5. See R. H. Harrod'sremarks LVI (1946),314. Journal, Taking,"Economic ofInterest ModernPractices the mercantilists withthe formulation 6. Grampp(op. cit.,p. 466) credits statedby ThomasAquinas,in his Summa it is clearly although ofthisprinciple, Buridan p. 54. John op. cit., II, ii, qu. 77, art. 1, corpus. Cf. Monroe, theologica, op. cit.,p. 183). thanAquinas (Schreiber, analysis givesan evenbetter 7. H6ffner, Wirtschaftsethik undMonopole, pp. 82, 92-94. oftheadvocatesofguildsocialism, example, 8. Thisis thepointofview,for J. Penty,Old Worlds of thisschool. Cf.Arthur adherents the earlier especially

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Amongothercontributions of the Doctors, one should not forget to mentiontheir acceptance, by the sixteenthcentury,of the quantity theoryof money and theirspeculationson the lawfulness of bankingand dealingsin foreign exchange. The latterdiscussion, as farback as the thirteenth starting century, paved the way to the in balance-of-trade theory,developed by the English mercantilists the Tudor and Stuartperiod. Unfortunately, the late casuistsnever paid any attentionto this discoveryand even allowed it to be used against themby theiropponents. One should not mistakenlyassume that scholastic economics exertedno influence on business morality. The Church sought to enforce its code of social ethicsin two ways: in foroexterno, that is, throughthe courts,ecclesiasticaland secular, and in foro interno, that is, throughthe confessional. In the Middle Ages, all over westernEurope, usurerswere constantlybroughtto court. It is of the confessional, truethat the historian stops at the threshold but of usurysugthe numerousmedieval wills providingforrestitution means of gest that confessionwas far frombeing an ineffective enforcement.9 ofthe Max Weber This is not the place to enterinto a discussion theory about the r6le of religion in the rise of capitalism. I question it,because thewritings oftheDoctors seemto showthatthemedieval of capitalism. Churchneither favorednor hinderedthe development Like technological and scientific progress, capitalismgrewoutsidethe had Church. It does not follow,however,that scholasticdoctrines no influenceon the course of economic development. Quite the contrary. Recent researchin economichistoryhas establishedthe the development fact that the usuryprohibition profoundly affected of banking. Since the taking of interestwas forbidden, the discountingof commercialpaper was also ruled out, but the bankers cleverlyshifted to exchangedealingsas the basis of theiroperations. This shiftchangedthe entirestructure of the continental European bankingsystemup to the timeof the FrenchRevolution.' is simply To considerscholasticeconomicsas medieval doctrine an error, and economists of thoughtwhich have bypassed a current
for New, a Studyof thePost-Industrial State,pp. 44-49; Ralph Adams Cram, TheEncyclopaedia WalledTowns pp. 46,80-82; G. D. H. Cole,"GuildSocialism," ofthe Social Sciences, VII, 202-4. 9. BenjaminN. Nelson, "The Usurerand the MerchantPrince: Italian Law ofRestitution, 1100-1550," Supplement Businessmen and theEcclesiastical VII (1947), 104-22. to TheJournal ofEconomic History, pp. 144-45. 1. de Roover,L'evolution,

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runs parallel with mercantilism and reachedout into the eighteenth century,connectingthe 6conomistes and even Adam Smith with Thomas Aquinas and the medievalSchoolmen.2 Traces of scholastic influencestill permeate eighteenth centuryeconomic thinkingand sometimes appear in unexpectedplaces, such as the Encyclopedie of Diderot and d'Alembert. The Encyclopddie's definition ofpricediffers in no way from that givenin scholastictreatises, and the same applies to the treatment of monopolyand dryexchange.' In the case of Adam Smith,the ascendance whichlinks him to scholasticism passes through his teacher,Francis Hutcheson,Samuel and Hugo Grotius.4 Smith's librarycontainedcopies of Pufendorf, bothGrotiusand Pufendorf.5 Moreover, thereis evidencethatAdam Smith read Grotiusat the age of fifteen when he was a studentat Glasgow College. At that time,his teacherwas usingas textbooka translationof Pufendorf's De officio Hominis et Givis by Gershom Carmichael(d. 1729), Hutcheson'spredecessor in the chair of Moral Philosophy.6 In his lectureson politicaleconomy, as alreadystated, Hutchesondealt withthe subject in scholasticfashionas a branchof natural jurisprudence, particularly as "a discussionof contracts."7 WhenAdam Smith,himself, succeededto the chairof Moral Philosophy,he modified this outlineby transferring economicsto the fourth part of "his courseof lectures"devoted to mattersnot pertaining to to decision constituted a justice, but expediency.8 This definitely break with the scholastic tradition. The outline of the course in Moral Philosophy,as taught by Francis Hutcheson and later by Adam Smithhimself, of Glasgow clearlyshows that the curriculum College,in the eighteenth century, neverpaid any attentionto mer2. Professor Mabel Magee,myformer colleagueat Wells College,tellsme that Seligman was an exception. According to herdetailednoteson his course at ColumbiaUniversity on the history of economic thought, he dealt withmost in thisarticle ofthewriters mentioned and did notconsider scholastic economics as a medievaleconomic doctrine. I avail myself of this opportunity to thank Dr. Magee and another former colleague, Professor JeanS. Davis, forreading a draft ofthisarticle and making helpful suggestions. 3. According to the Encyclopedie, the priceof commodities is set either by ordinance orby common estimation: thefirst is calledthelegalprice(prixlegitime) and the second,the current price (prixcourant). The scholastic origin of this distinction is beyondquestion. 4. Grice-Hutchinson, TheSchoolofSalamanca,pp. 64-69,76. Cf. William RobertScott,AdamSmith as Student andProfessor (Glasgow, 1937). 5. JamesBonar,A Catalogue ofthe Library ofAdamSmith(2d ed.), pp. 78, 151. 6. Scott,op. cit.,pp. 34, 112. 7. JohnRae, LifeofAdamSmith, p. 14. 8. Ibid.,pp. 54 f.

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9. Galiani,op. cit., Book I, chap.2, pp. 25-45; and Condillac, Vol. I, op. cit., the editor,Eugene Daire, blames chaps. 1 and 2, pp. 248-57. In a footnote, ofQuesnayand AdamSmithand not Condillac fornotfollowing in thefootsteps adopting their distinction between valuein useand valuein exchange! 1. Op. cit.,pp. 63-64,76. 2. Op. cit.,Book 5, chaps. 1 and 4, pp. 289-96,303-7. Galiani'sdefinition accruing from a mutuum, is stillpurely ofusury, as any gainabove theprincipal scholastic. 3. Op. cit.,Book I, chap. 2, p. 26. The most recentand muchthe best Luigi Einaudi,"Galiani biographical studyon abbe Galianiis that of President intorno alle dottrine economiche e storici economists," (Rome, Saggi bibliografici published in German under thetitle"Galiani 1953),269-305. This study was first als Nationalkkonom," Zeitschrift furVolkswirtschaft undStatistik, Schweizerische of the first part of Einaudi's study LXXXI (1945), No. 1. An Englishversion is availablein HenryWilliam Spiegel(ed.), TheDevelopment ofEconomic Thought (New York,1952),pp. 62-82.

cantilist thought, but always providedforsome teachingof economic principlesbased on ethics and law, inheritedfrom the medieval university. In the Wealth ofNations,Adam Smith,it is true,devotes several chaptersto mercantilism but only to denounceit as a pernicious and "sophistical"system. Two eighteenthcenturyeconomists,abb6 Ferdinando Galiani (1728-87) and abb6 Etienne Bonnot de Condillac (1715-80), have been hailed by some historians to anticipatethe modern as the first marginalutilitytheoryof value by statingthat value rests on the combinationof two elements:utilityand scarcity.9 The question withthe two abb6s or whether ariseswhether this idea originates the Doctors,possiblyby way what is morelikely- theytook it from of the late casuists and the school of Salamanca, as Marjorie GriceHutchinsonseems to think.' In my opinion, she is undoubtedly right, since it is highlyimprobablethat culturedmen in holy orders on moraltheolwould be unacquaintedwiththe extensiveliterature is noticeable scholasticinfluence ogy. As faras Galiani is concerned, in many passages of his essay on money,especiallyin his treatment of usuryand cambio.2 Furthermore, the chapteron value containsa quotationfrom Diego Covarrubiasy Leyva, one of the leadingrepreGaliani cersentativesof the school of Salamanca.3 Consequently, tainlyknewhis work,and hence therewas no breach of continuity. As this study shows, modern economics owes the Schoolmen acknowledged. and theirsuccessorsa greaterdebt than is commonly It also illustrates the meritsand the defectsof the legal approachto of scholasticeconomics economics. What reallycaused the downfall was the refusalof the late casuists to revise and to modernize their methods. Perhaps theirwhole systemwas in need of a complete overhauling. Nevertheless, it containedmuch that was worthpre-

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in actual fact. Valuable ideas may serving and whichwas preserved lie buried for a time but they eventuallyspring up. Like other sciences,economicsgrowsslowlyby accretion. Despite many curcontinuity is perhaps the most impressive rentsand cross currents, of economicdoctrines. in the history phenomenon
RAYMOND DE ROOVER.
THE GRADUATE SCHOOL BOSTON COLLEGE

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