Liberty Matters

Remembering Sumner the Political Economist. Part 1: The Poison of Paper Money


Before Sumner became a “sociologist” he was a biblical scholar and linguist, and then an economist. Unfortunately, the full history of Sumner’s work as an economist, economic historian, and free trade activist has yet to be written. The importance political economy played in Sumner’s thought was understood by the early 20th century editor of his works, Albert Galloway Keller, who realised that Sumner had a “dominant interest in political economy (which was) revealed in his teaching and writing, (his) doughty advocacy of “free trade and hard money,” and … the relentless exposure of protectionism and of schemes of currency-debasement.”[63] In this and the next post I will attempt to give a brief account of these two economic interests.
After graduating from Yale in 1863, Sumner studied languages, theology, and biblical history at the Universities of Geneva, Göttingen, and Oxford. He then returned to Yale in September 1867 to teach Greek before taking a position as Rector of the Church of the Redeemer in Morristown, NJ. where he worked from September 1870 to September 1872. He returned to Yale again but this time to teach in an entirely different field, that of “Political and Social Sciences” of which he was a professor for the next 37 years (between 1872 and his retirement in 1909). What is interesting is that he thought political economy played a very important role in what he called “political science in its widest sense” and that given “the degraded state of American politics and public life” into which the country had fallen since the Civil War, economic topics “now more especially demands our attention.”[64] And this is what would occupy much of his time for the next 20 years. He summarized what would be almost his life’s work in countering the “moral and social deterioration” of the nation which was caused by the “economical mistakes” of protective tariffs and paper money, mistakes which were only made worse by policies adopted during the Civil War. Sumner believed it was the task of the economist, in whose ranks he believed he stood, to point out these mistakes and the enormous economic waste they caused for ordinary people:[65]
I affirm that the questions on which our national future to-day depends are questions of political economy, questions of labor and capital, of finance and taxation. The fruits of the Civil War did not cease when the armies disbanded. It left us with financial and industrial legacies whose fruits, as every student of political economy and social science knows, are slow in ripening; and they contain seeds of future and still more disastrous crops. No man can estimate these long following results. No man can tell what social, moral, and political transformations they may produce. There is no field of activity which now calls so urgently for the activity of honest and conscientious men as the enlightenment of the American public on the nature and inevitable results of the financial and industrial errors to which they are committed. …The patriotism with which the American people submitted to the burdens of taxation and paper money, believing them to be necessary parts of the evil of the War, is deserving of the most enthusiastic admiration. It serves only to deepen the sadness with which the economist must declare the conviction that the paper money never was a necessity, never could in the nature of things be a necessity any more than it could be necessary for a physician to poison a patient in order to cure him of fever or for a man to become bankrupt to escape insolvency; and also this other conviction, not a matter of science but of history, that the necessity for taxation has been abused by the creation of a protective tariff which increases the burden which it pretends to carry. These two subjects, money and tariff, will be the subjects of my lectures during the present term.
Sumner began his new academic career with a spurt of activity on the topic of paper money, writing a 109 page “History of Paper Money” in 1873 (unpublished), a 400 page “History of American Currency” (published in 1874),[66] along with several shorter pieces on money and currency issues in 1875–76. Many of the pieces he wrote during this period are detailed historical and technical discussions of particular government financial policies which were not written for popular audiences so a pithy statement of his views are hard to find. He does however quote a passage by Webster very approvingly in A History of American Currency which I believes sums up his own opinion of the harm caused by paper money:
A disordered currency is one of the greatest political evils. It undermines the virtues necessary for the support of the social system, and encourages propensities destructive to its happiness. It wars against industry, frugality, and economy, and it fosters the evil spirits of extravagance and speculation. Of all the contrivances for cheating the laboring classes of mankind, none has been more effectual than that which deludes them with paper money. This is the most effectual of inventions to fertilize the rich man’s field by the sweat of the poor man’s brow. Ordinary tyranny, oppression, excessive taxation, these bear lightly on the happiness of the mass of the community, compared with fraudulent currencies and the robberies committed by depreciated paper. Our own history has recorded for our instruction enough, and more than enough, of the demoralizing tendency, the injustice, and the intolerable oppression on the virtuous and well disposed, of a degraded paper currency, authorized by law, or any way countenanced by government.[67]
Something similar can be found in the slightly later essay on “The Forgotten Man” (1883) where Sumner argues that it is essential to protect his “earnings and savings” from the ravages of inflation and the depreciation of the currency:
Hence, if you care for the Forgotten Man, you will be sure to be charged with not caring for the poor. Whatever you do for any of the petted classes wastes capital. If you do anything for the Forgotten Man, you must secure him his earnings and savings, that is, you legislate for the security of capital and for its free employment; you must oppose paper money, wildcat banking and usury laws and you must maintain the inviolability of contracts. Hence you must be prepared to be told that you favor the capitalist class, the enemy of the poor man.[68]
The years from 1872 to 1876 was the first period of Sumner’s career as a political economist during which he focussed mainly on money and currency issues. In the spring of 1876 he would begin a second period which lasted 10 years during which he would turn his attention to the matter of tariff protection and free trade on which he would write many more accessible articles, books, and essays. This will be the topic of my next post.
[63.] Preface to William Graham Sumner, The Forgotten Man and Other Essays, ed. Albert Galloway Keller (New Haven: Yale University Press, 1918). </titles/2396#Sumner_1225_5>.
[64.] See his program for his courses in the “Introductory Lecture to Courses in Political and Social Science” (1873) in William Graham Sumner, The Challenge of Facts and other Essays, ed. Albert Galloway Keller (New Haven: Yale University Press, 1914). . Keller notes in the Bibliographical Note to The Forgotten Man and Other Essays </titles/2396#lf1225_head_128> that he found in Sumner’s papers at Yale 300–400 pages of “lecture notes for classroom use” which he used in his course on Political Economy.
[65.] “Introductory Lecture to Courses in Political and Social Science” >and </titles/1656#Sumner_0962_482>.
[66.] William Graham Sumner, A History of American Currency, with Chapters on the English Bank Restriction and Austrian Paper Money, to which is appended “The Bullion Report” (New York: Henry Holt and Company, 1884). </titles/1653>.
[67.] Sumner, A History of American Currency </titles/1653#Sumner_1231_167>.
[68.] Sumner, “The Forgotten Man” </titles/2396#Sumner_1225_726>.