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The New
Palgrave
Dictionary of
Economics
Third Edition
The New Palgrave Dictionary of
Economics
The New Palgrave
Dictionary of Economics
Third Edition

With 754 Figures and 231 Tables

ISBN 978-1-349-95188-8 ISBN 978-1-349-95189-5 (eBook)
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Library of Congress Control Number: 2017957595

# The Editor(s) (if applicable) and The Author(s) 2018

This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher,
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Publishing History

First edition of Dictionary of Political Economy, edited by Robert Harry Inglis

Palgrave, in three volumes:

Volume I, printed 1894.

Reprinted pages 1–256 with corrections, 1901, 1909.
Reprinted with corrections, 1915, 1919.

Volume II, printed 1896.

Reprinted 1900.
Reprinted with corrections, 1910, 1915.

Volume III, printed 1899.

Reprinted 1901.
Corrected with appendix, 1908.
Reprinted with corrections, 1910, 1913.
Reprinted, 1918.

New edition, retitled Palgrave’s Dictionary of Political Economy, edited by

Henry Higgs, in three volumes:

Volume I, printed 1925.

Reprinted 1926.

Volume II, printed 1923.

Reprinted 1925, 1926.

Volume III, printed February 1926.

Reprinted May 1926.

The New Palgrave: A Dictionary of Economics,

edited by John Eatwell, Murray Milgate and Peter Newman.
Published in four volumes.

v
vi Publishing History

First published 1987.

Reprinted 1988 (twice).
Reprinted with corrections 1991.
Reprinted 1994, 1996.

First published in paperback 1998.

Reprinted 1999, 2003, 2004.

The New Palgrave Dictionary of Economics, Second edition,

edited by Steven N. Durlauf and Lawrence E. Blume.
First published in 2008 in eight volumes

The New Palgrave Dictionary of Economics, Online Edition

Continuously updated between 2008 and 2016

The New Palgrave Dictionary of Economics, Third edition

First published in 2018
Preface

‘During recent years the course of economic study has extended so widely that
it was obviously impossible to restrict the work to the old and formerly well-
recognized boundaries’. That’s Inglis Palgrave in 1893 describing the first
volume of his Dictionary of Political Economy.
One hundred and twenty four years later, with this third edition of The New
Palgrave Dictionary of Economics, those boundaries have extended further
still. While Palgrave noted that his three volume dictionary – what we would
now call an encyclopedia – obviously needed to cover ‘banking, the foreign
exchanges, and the operations of the mint’, he also noted it needed to cover
‘questions of a philosophical character. . .ethics. . .reasoning. . .and the ways in
which diagrams and mathematical processes may lend assistance to economic
inquiry’. Today, the boundaries of economics include the analysis of labora-
tory experiments, brain scans and computer simulations, investigations of
cultural diversity, management methods and public health interventions, and
in the realm of theory it includes innovations in games, econometrics and asset
pricing. This third edition of The New Palgrave includes entries that review
innovations in all of these areas and many, many more.
Since the second edition of The New Palgrave was published in 2008, the
Dictionary of Economics has added hundreds of new entries in every area of
economics. Just to note a subset:

Extensive coverage of the global financial crisis, from theoretical, econometric and
historical perspectives. LIBOR, Lehman, Fannie Mae and Freddie Mac all have their
entries, and additional entries, draw multiple theoretical lessons from the crisis. The
new entry by Charles Goodhart (CBE, FBA and author of Goodhart’s Law), ‘The Run
on Northern Rock’, is not to be missed, an analytical take on an early event in the
crisis.
Coverage of the euro crisis and its aftermath, including two entries on the Greek
crisis by former Greek Minister of Economics and Finance Nicos Christodoulakis.
Entries with a focus on China, including Diego Restuccia’s entry on factor
misallocation and Gao Haihong’s entry on the growing internationalization of the
renminbi.
Entries in the areas of health economics, the economics of gender and Internet
economics all play a growing role in this third edition.

One of the great pleasures and honors of serving as an associate editor for
The New Palgrave is that one can recruit the finest minds in economics to write
so many of these entries. In total, this edition contains entries by 36 Nobel

vii
viii Preface

laureates. And since laureates Elinor Ostrom, Vernon Smith, Angus Deaton
and many others contributed well before their trips to Stockholm, it is safe to
predict that this edition, like earlier ones, includes entries by future Nobel
laureates.
Many hands and many minds have contributed to making possible this new
edition, the first in print since the 2008 edition edited by Steven Durlauf and
Lawrence Blume. Two names deserve particular mention for their valuable
work since 2008: Alison Howson and Rachel Sangster, both of whom oversaw
The New Palgrave as it continued to add entries over the past decade.
On a personal note, I recommend an entry by Francis Ysidro Edgeworth –
he of the Edgeworth Box – carried over from the 1893 edition. In ‘Mathemat-
ical Methods in Political Economy’, he begins:
The idea of applying mathematics to human affairs may appear at first sight an
absurdity worthy of Swift’s [magnetically flying island] Laputa.

It only gets better from there. Edgeworth himself descended from a line of
boundary-free thinkers. As John Creedy’s biographical entry in this edition
notes, Edgeworth’s grandfather had been an inventor, a member of the famed
Lunar Society of Birmingham, an informal club which included ‘Watt, Bolton,
Wedgwood, Priestley, Darwin and Galton’. And the family inclination to
expand one’s boundaries shows up in Francis’s aunt Maria’s novel Belinda,
where one foolish character mocks the wise heroine Belinda for wasting her
time reading the book that Adam Smith held was the better of his two: The
Theory of Moral Sentiments.
May future editions of The New Palgrave continue to expand the bound-
aries of economics and continue to lend wisdom to economic inquiry.

July 2017 Garett Jones

Associate Editor
Preface to the Second Edition of The New
Palgrave Dictionary of Economics

The second edition of The New Palgrave: A Dictionary of Economics shares

R.H. Inglis Palgrave’s original goal, ‘. . . to provide the student with such
assistance as may enable him to understand the position of economic thought
at the present time’. That goal was certainly within reach (and achieved) in
Palgrave’s time and that of his successor, Henry Higgs. Some 60 years later, it
was a much more daunting achievement for John Eatwell, Murray Milgate and
Peter Newman, the editors of The New Palgrave: A Dictionary of Economics.
A mere 21 years later, the task is nearly insuperable. When Eatwell, Milgate
and Newman began commissioning entries for their Dictionary in 1983, the
IBM PC with 16K of ram was 2 years old. Econometrics was still largely the
estimation of linear models on mainframe computers. Sequential equilibrium
had been formally introduced to the profession only the year before, and the
Bayesian revolution, indeed the modern revival of game theory, had just
begun. Economists and psychologists had already been talking for some
time, but the field of behavioral economics was still in gestation. Only a few
farsighted economists saw anything more to sociology than James
Duesenberry’s famous quip that ‘Economics is all about how people make
choices; sociology is all about how they don’t have any choices to make’.
Since the appearance of The New Palgrave: A Dictionary of Economics in
1987, the discipline of economics has grown enormously both in analytical
and technical sophistication and in the scope of the subject. The growth of
economics is reflected in the expansion of the Dictionary. This edition has
grown to eight volumes from the four of its predecessor, although many entries
from the previous edition were either removed or electronically archived.
Furthermore, the Dictionary has shed much of its historical character: from
providing a record of the development of economic thought, it has become
more a snapshot of contemporary economics. Whereas the first edition empha-
sized economic method, this edition reports equally on what those methods
have found. It places more emphasis on empirical work than have any of its
predecessors, reflecting the significant empirical advances that have occurred
in the microeconomic fields in particular. But a static snapshot could not
pretend to be contemporary for long. Our publishers have recognized not
just the magnitude of the change in the stock of knowledge between the last
edition and the present, but also the increased growth rate of economics’
intellectual capital. They have made the Dictionary dynamic. With this edition,

ix
x Preface to the Second Edition of The New Palgrave Dictionary of Economics

The New Palgrave Dictionary of Economics moves online, with the expecta-
tion of regular updates to keep the Dictionary current in ‘real time’. It is no
longer possible to produce a reference work that aspires to be comprehensive
on the small editorial scale of the lone Palgrave or the Eatwell-Milgate-
Newman trio. The present edition has benefitted from two editorial boards.
We were pleased to have access to a board of advisory editors, many of whose
members’ work has defined the methodological and subject matter transfor-
mation of the last 20 years. A board of area editors took on the responsibility of
constructing large parts of the Dictionary, choosing topics, commissioning
writers and editing the entries. This edition simply could not have been
produced without their expertise and efforts. By any measure of sweat equity,
they own much of this book. This edition of the Dictionary has come to print
only through the efforts of people too numerous to properly acknowledge, but
some names must be celebrated. In particular, we cannot thank enough Ruth
Lefevre in London and Susan Nelson in Madison, who organized every nut
and bolt of this project and kept track of manuscripts on five continents.
Economists do not write as well as our Dictionary entries suggest. Every
author benefitted from superb copy-editing by Michael James and Elizabeth
Stone. Finally, it is the job of the editors to keep the writers in line; it was the
job of Alison Jones to keep the editors in line. We deeply appreciate both the
velvet glove and the iron fist it encloses. The huge effort required to bring this
edition to print is compensated for by the opportunity to have contemporary
economics laid out before us. What joy to have the ability to commission an
explanation by any expert of anything we wanted to know. But even this is
second order to our discovery of the warmth and generosity of the community
in which we work. We are deeply appreciative of the support we have received
from our colleagues: those who wrote for the Dictionary, those who helped us
sort out editorial issues and those who just stepped forward to wish us well.
More than just a subject matter, economics is a community of scholars, of
which we are proud to be a part.

February 2008 Steven Durlauf

Lawrence Blume
Preface to the First Edition of The New
Palgrave: A Dictionary of Economics

In the preface to the first volume of his Dictionary of Political Economy

(1894), R.H. Inglis Palgrave said that its ‘primary object. . . is to provide the
student with such assistance as may enable him to understand the position of
economic thought at the present time’. Although appearing almost a century
later, when economics has changed and grown beyond anything imagined in
his time, still much the same claim can be made for The New Palgrave. In order
to accommodate this growth, much that interested Inglis Palgrave has been
jettisoned. Such topics as the administration of public exchequers, foreign
coinage, land tenure systems, legal and business terms, social institutions, and
many others, are all of interest but are, as Henry Higgs said in his preface to the
second edition of the Dictionary, ‘only remotely connected with economics’.
Their place has been taken by whole disciplines unknown to the original editor
(econometrics, game theory, Keynesian economics, optimization theory, risk
and uncertainty and its application, social choice theory, urban economics), as
well as by vast expansions of subjects which were in their infancy in his time
(business cycle theory, general equilibrium theory, growth theory, industrial
organization, labour economics, welfare economics). There is so little
remaining here of the original Dictionary that it would be disingenuous to
call this its third edition. But just as the editor of The New Grove ‘tried to
ensure that something of the fine humane traditions of the earlier editions of
Grove are to be seen in our pages’, so we would like to believe that The New
Palgrave has retained some of the liberal and scholarly spirit of Palgrave’s
enterprise. At least it is like its predecessor in dealing with economics mainly
in its theoretical and applied aspects rather than in descriptive and institutional
detail. The latter becomes outdated within a very few years, depreciating too
rapidly for a publication meant for a longer shelf life than that. Although it is
not intended to contain a directory of economists, over 700 of the nearly 2000
entries in The New Palgrave are in fact biographical. We have aimed at
reasonably complete coverage of the more important economists who have
written primarily in English, especially in Britain itself, and a substantial
treatment of major economists who have written in other languages. Palgrave,
perhaps hoodwinked by his contributor C.P. Sanger, chose only Walras from
economists living at that time, on the distinctly odd ground that ‘he so closely
carried on the work of his father Prof. Antoine Walras that it was not possible to
mention the latter without also describing the works of his son’. We, however,

xi
xii Preface to the First Edition of The New Palgrave: A Dictionary of Economics

have included a substantial number of living economists, arguing that eco-

nomics has grown so much in this century that not to include many of its most
eminent living practitioners would seriously limit the usefulness and scope of
the work. To reduce obvious problems of evaluation we imposed a cut-off date:
a necessary condition for inclusion is to have reached the age of seventy before
1 January 1986. On many non-biographical subjects, large and small, we have
tried to capture diversity and vivacity of view by having multiple entries, under
similar but different titles. In this way, we hoped to obtain entries that present
the results and methods of research with fairness and accuracy, but not
necessarily from a ‘balanced’ point of view. Such a view in these cases should
be sought externally, as it were, using the system of cross-references to consult
other relevant entries. This means more work for the reader but should yield
correspondingly greater reward. There is obviously a rough and ready corre-
lation between the size of entry and the importance which the editors attach to
the person or subject concerned, but the correlation is very far from perfect.
The actual realization of the project did not always turn out in accord with our
original plans. And fortunately so, for we learned a great deal in the process of
editing and as a consequence made continual revisions of those plans. Such
adjustments have made for a better product, but not for one that displays
perfect consistency. In this regard, there can be no reader who will not wish
that the Dictionary were different in some respects, a lot more here, rather less
there, that tired or tiresome topic omitted, that important omission made good.
While it is unrealistic to expect that all such errors of omission and commission
can be avoided, our hope is that the reader will find that those which remain are
unbiased, in almost every sense of the word. There is, however, one major bias.
We wanted not only to provide a thorough account of contemporary economic
thought but also, like Palgrave himself, to have it set in historical perspective.
So we asked authors to write accordingly, discussing for any particular subject
its past and its prospects for the future, as well as its problems of the moment.
Some topics are naturally more apt for this approach than others, and some
contributors were of course more in sympathy with our aims than others. In the
main, however, they responded very well indeed to our request, in some cases
remarkably so. Palgrave was the sole editor of his Dictionary, a labour of love
for his subject over many years. Several of his authors did more than just write
for him, however, by suggesting entries and contributors and by helping the
work through the press. We have tried to preserve Palgrave’s small editorial
scale, but like him could not have done so without the generous and friendly
help (far more than could be reasonably expected) of very many contributors,
so many indeed that it would be invidious to acknowledge them all by name.
We must, however, recognize the key part played by Margot Levy, the
publishers’ managing editor, whose enthusiasm and attention to detail con-
tributed essentially to the timely completion of the work. It is also only simple
justice to acknowledge, with gratitude, how much we have depended on the
assistance of Ann Lesley in Cambridge and Donna Hall at Johns Hopkins,
always cheerfully given and expertly rendered. Editing this Dictionary has left
us with a very strong sense, quite contrary to the layman’s accepted view, of the
solidarity of economics as a profession. This has been shown in many ways,
not least by the extremely favourable response to our invitations to contribute,
Preface to the First Edition of The New Palgrave: A Dictionary of Economics xiii

which were extended to economists of widely varying ideological and meth-

odological persuasions. Over eighty per cent of those whom we asked agreed
to write, and almost all of those who declined did so with words of regret and
encouragement. Looking back, the hard work of editing subsides into the
background, overwhelmed by the sheer enjoyment of putting it all together,
by the continued pleasure of managing the flow of usually good and sometimes
superlative copy from nearly a thousand authors. We hope that the reader will
experience most of this enjoyment and less of the work.

January 1987 John Eatwell

Murray Milgate
Peter Newman
Note from the Publisher

Now in its third edition, but with a history stretching back to 1894, The New
Palgrave Dictionary of Economics has been the go-to reference work for
generations of economists.
Since the publication of the second edition 10 years ago, much has hap-
pened in the world and in economics, in particular the tumultuous years of the
financial crisis and its aftermath. As Garett Jones’s preface illustrates, the
current edition includes substantial new content covering these events along-
side entries reviewing growing areas of research which will be of interest to
readers and researchers across the spectrum of economic enquiry. In addition,
and in keeping with Palgrave tradition, classic entries of perennial importance
are maintained. Whether summarizing the economics behind the headlines or
as an entry point into an established topic, the reader can be assured that the
Dictionary provides reliable, vetted content that is authoritative and
informative.
Over 1,700 authors, including 36 Nobel Laureates, have contributed to this
third edition which includes more than 3,000 chapters and nine million words
making this the most comprehensive economic reference resource available
and one that we are proud to publish.

xv
Introduction to the First Edition of the
Dictionary of Political Economy

The primary object of the Dictionary of Political Economy is to provide the

student with such assistance as may enable him to understand the position of
economic thought at the present time, and to pursue such branches of inquiry
as may be necessary for that end. The table of the contents of the work shows
how large is the range of investigation which the student must follow at the
present time. During recent years, the course of economic study has extended
so widely that it was obviously impossible to restrict the work to the old and
formerly well-recognized boundaries. The development of the historical
school has opened out new and fertile fields, while the wants of those who
follow the mathematical method of study have also to be considered. These
two main lines of treatment are here but mentioned as examples. They are far
from exhausting the countless ramifications of inquiry now rightly thought
necessary for the complete investigation of a study bounded only by the
requirements of human life in every social relation. In making the selection
necessitated by the limits of space, the requirements of different classes of
students have throughout been borne in mind. On the one side purely business
matters, such as banking, the foreign exchanges and the operations of the mint,
come in; on the other, subjects of a philosophical character have been dealt
with, such as questions of ethics and methods of definition, analysis and
reasoning, and the ways in which diagrams and mathematical processes may
lend assistance to economic inquiry have also been discussed. Again those
interested in historical studies require an explanation of words found in early
works, and those derived from classical and medieval times, also of legal
phrases, now archaic, together with the modern correlative terms, for only thus
can it be understood how ancient usage has influenced present habit. Life in the
present day, even in the most modern settlements in the United States, in our
British colonies and in the new countries coming into existence in different
parts of the world, is influenced largely by the past. The stream of existence, if
the simile may be permitted, reaches us deeply coloured by the soil of the fields
through which it has flowed by the varied strata of the cliffs – some of them
undermined by it – that have bounded its long and devious course. Consider-
ations of space have necessarily confined the scope of the work mainly to the
developments of economic study in England, the United States and our
English-speaking colonies – and, in regard to these, an endeavour has been
made to present under all the subjects treated an account of the best and most
recent authorities, whilst the opinions held in other countries have also, as far

xvii
xviii Introduction to the First Edition of the Dictionary of Political Economy

as the required limits allowed, been considered and mentioned. The biogra-
phies introduced have been selected with the same end. They show what has
actually been written in former times, and hence will enable the reader to trace
the progress of economic thought. Much attention has been given to the less-
known writers. It is difficult for the student under ordinary circumstances to
trace out when such authors lived, the surroundings which influenced their
lives and the opinions they held. While the oversights in science are sometimes
as remarkable as the discoveries, these earlier labourers have not unfrequently
been the precursors of other and better-known men, and have sometimes
anticipated opinions that have held sway for long periods after them. The
different economic schools in the principal countries of the world are also
described. Thus, this volume contains notices of the American, Austrian,
Dutch and English schools, and the French, German, Italian and Spanish
schools will follow in due course. A work extending over so wide a range of
subjects is, necessarily, the production of many minds, of writers whose
pursuits, occupations and studies are very diverse and varied. I desire to record
my warm thanks to the contributors to the book, which is, I think, in itself an
almost unique example of economic co-operation. Where all have assisted so
heartily, it is less easy to select individual names; but I wish to be allowed to
express my special thanks to Professor Dunbar, Dr. Keynes, Professor
Marshall, Professor Montague, Professor Nicholson, Signor M. Pantaleoni,
Mr. L.R. Phelps, Mr. L.L. Price, Mr. E. Schuster, Professor H. Sidgwick and
General Walker for valuable assistance in different directions, and particularly
to Dr. Bonar, Professor Edgeworth, Mr. Henry Higgs and Mr. H.R. Tedder,
who have kindly helped in the more arduous labour of the preparation of the
work for the press. This is but an act of justice, that readers may know to whom
they are specially indebted.

R.H. Inglis Palgrave

Belton, near Great Yarmouth
Christmas 1893
Associate Editors – Online Content

Roger Backhouse University of Birmingham, Birmingham, UK

Biography, History of Economic Thought and Methodology
Iain Begg London School of Economics, London, UK
Economics of the European Union
Roger Fouquet London School of Economics, London, UK
Energy and Environmental Economics
Yannis Ioannides Tufts University, Medford, USA
Urban and Rural Economics and Economic Geography
Garett Jones George Mason University, Fairfax, USA
Monetary Economics and Behavioral Economics
Adeel Malik University of Oxford, Oxford, UK
Economics of the Middle East
Robert Picard Reuters Institute, University of Oxford, Oxford, UK and the
Information Society Project at Yale Law School, New Haven, USA
Media and Cultural Economics
Gordon Rausser University of California at Berkeley, Berkeley, USA
Agricultural Economics
Jonathan Temple University of Bristol, Bristol, UK
Development
Catherine Tucker Massachusetts Institute of Technology, Cambridge, USA
Economics of the Internet
Bruce Weinberg Ohio State University, Columbus, USA
Labour Economics
Barbara Wolfe University of Wisconsin, Madison, USA
Health Economics

xix
Associate Editors, Second Edition

Roger Backhouse University of Birmingham, Birmingham, UK

Mark Bils University of Rochester, Rochester, USA
Moshe Buchinsky University of California, Los Angeles, USA
Gregory Clark University of California, Davis, USA
Catherine Eckel University of Texas, Dallas, USA
Marcel Fafchamps Oxford University, Oxford, UK
David Genesove Hebrew University of Jerusalem, Jerusalem, Israel
James Hines University of Michigan, Ann Arbor, USA
Barry Ickes Pennsylvania State University, State College, USA
Yannis M. Ioannides Tufts University, Medford, USA
Eckhard Janeba University of Mannheim, Mannheim, Germany
Shelly Lundberg University of Washington, Seattle, USA
John Nachbar Washington University, StLouis, USA
Lee Ohanian University of California, Los Angeles, USA
Joon Park Texas A&M University, College Station, USA
John Karl Scholz University of Wisconsin, Madison, USA
Christopher Taber University of Wisconsin, Madison, USA
Bruce Weinberg Ohio State University, Columbus, USA

xxi
Founding Editorial Advisory Board, Second
Edition

Kenneth Arrow Emeritus Professor of Economics, Stanford University,

Stanford, USA
Sir Tony Atkinson Professor of Economics, Nuffield College, University of
Oxford, Oxford, UK
Richard Blundell Professor of Economics, University College London,
London, UK
William Brock Vilas Research Professor of Economics, University of Wis-
consin, Madison, Madison, USA
Sir Partha Dasgupta Professor of Economics, University of Cambridge,
Cambridge, UK
Peter Diamond Institute Professor, Massachusetts Institute of Technology,
Cambridge, USA
Roger Guesnerie Delta PARIS-Jourdan, Paris, France
James J. Heckman Henry Schultz Distinguished Service Professor of Eco-
nomics, University of Chicago, Chicago, USA
Elhanan Helpman Galen L Stone Professor of International Trade, Harvard
University, Cambridge, USA
Takatoshi Ito Professor of Economics, University of Tokyo, Tokyo, Japan
Andreu Mas-Colell Societat de la Informació/Universitat Pompeu Fabra,
Barcelona, Spain
Peter Phillips Sterling Professor of Economics and Professor of Statistics,
Yale University, New Haven, USA
Thomas Sargent Senior Fellow, Hoover Institution and WR Berkeley Pro-
fessor, New York University, New York, USA
Peter Temin Economics Professor, Massachusetts Institute of Technology,
Cambridge, USA

xxiii
A
Abbott, Edith (1876–1957)
P. Kerr
Social reformer, economic historian and a pioneer
in America of the study of the economic position of
women, Edith Abbott was born on 26 September
1876 in Nebraska, and graduated from the Univer-
sity of Nebraska in 1901. She enrolled in a summer
session at the University of Chicago in 1902,
attracting the attention of James Lawrence Laugh-
lin and Thorstein Veblen, and on their recommen-
dation returned to Chicago in 1903 on a fellowship
in political economy, taking her PhD in 1905 with a
dissertation on the wages of unskilled labour in the
USA between 1850 and 1900 (Abbott 1905). It was
during this period at Chicago that she met
Sophonisba Breckinridge who became her mentor
and lifelong friend. In 1906, on a Carnegie Fellow-
ship, she went to the LSE to carry out research on
women in industry. In London she was influenced
by the social reformers of the day, including
Charles Booth and Sydney and Beatrice Webb.
She returned to the USA in 1907 and taught polit-
ical economy at Wellesley. In 1908 Breckinridge,
now Director of Research at the newly established
Chicago School of Civics and Philanthropy, invited
her to become her assistant.
Abbott’s work there involved her directly in
action for the protection and education of
juveniles and immigrants, for improvements in
# Macmillan Publishers Ltd 2018
Macmillan Publishers Ltd (ed.), The New Palgrave Dictionary of Economics,
https://doi.org/10.1057/978-1-349-95189-5
housing, and for the reform of correctional insti-
tutions. She also worked towards women’s suf-
frage, the 10-h law to protect women in
employment, and the admission of women into
trades unions. In the 1930s she was to become a
staunch advocate of social insurance measures
and the welfare state. Although sympathetic to
the New Deal, she felt it to be entirely inadequate
when it came to welfare policies.
Her publications ranged over a number of areas
in social and public policy, and with Breckinridge,
she was an influential proponent of the role of the
state as the key element in any extensive pro-
gramme of social welfare. The journal they jointly
established in 1927, Social Science Review, was
immediately recognized as a highly esteemed pro-
fessional journal. Her main writings on economics
were collected in her Women in Industry (1910),
where a recurring theme was the distinction
between the progress of ‘professional’ women
(and the women’s movements with which they
were associated) and the relatively unchanged
position of working-class women.
After 1920, although social work came
increasingly to dominate her time, Abbott contin-
ued her role as an applied economist. She was a
member of the advisory committee of the ILO on
immigration, and succeeded Breckinridge as
Dean of the School of Social Studies Administra-
tion at Chicago. She remained in the post until
1942, and continued editing the Social Science
Review until 1953. She died at the age of 80 at
her family home in Grand Island.
2 Abramovitz, Moses (1912–2000)
Selected Works
1905. Wages of unskilled labour in the United
States, 1850–1900. Journal of Political Econ-
omy 13: 321–67.
1906. Industrial employment of women in the
United States. Journal of Political Economy
14: 461–501.
1908. Study of early history of child labour in
America. American Journal of Sociology 14:
15–37.
1910. Women in industry: A study in American
economic history. London: Appleton & Co;
last reprinted in 1970.
1915. A forgotten minimum wage bill. Life and
Labour 5: 13–16.
Abramovitz, Moses (1912–2000)
Richard A. Easterlin
Keywords
Abramovitz, M.; Aggregate demand theory;
Business cycles; Economic growth in the very
long run; Inventories; Kuznets cycles
JEL Classifications
B31
Born in Brooklyn, New York, Abramovitz was
educated at Harvard (AB, 1932) and Columbia
(Ph.D., 1939). He held faculty appointments at
Columbia (l940–2, 1946–8) and Stanford Univer-
sity (1948–77) and was a member of the research
staff of the National Bureau of Economic
Research from 1938 to 1969. From 1942 to 1946
he worked as an economist for several organiza-
tions within the United States government. He
was elected president of the American Economic
Association in 1979–80.
Abramovitz’s work, which was particularly
influenced by Wesley C. Mitchell and Simon
Kuznets, centres on the study of long-term
economic growth and fluctuations in industrialized
market economies. His first major contribution was
an empirical study of business inventories that
demonstrated the importance of inventory change
in the shorter swings of the business cycle, and
showed how the classification of inventories by
stage of processing aided in the explanation of
their behaviour (Abramovitz 1950). From this,
Abramovitz went on to the study of longer-term
fluctuations, Kuznets cycles of 15 to 20 years dura-
tion, and formulated the most widely accepted
interpretation of these cycles. Using Keynesian
aggregate demand theory, Abramovitz developed
a model linking Kuznets cycles to long swings in
building cycles and demographic variables, and to
shorter-term business cycles (Abramovitz 1959a,
1961, 1964, 1968).
Contemporaneously with his work on fluctua-
tions, Abramovitz made important contributions
to long-term economic growth. He was one of the
first to demonstrate that only a small share of long-
term output growth in the United States was
explained by factor inputs (Abramovitz 1956).
He documented and analysed the increasing role
of government during long-term economic growth
(Abramovitz 1957, 1981) and directed and coordi-
nated a comparative study of the post-war eco-
nomic growth of a number of industrialized
market nations (Abramovitz 1979b, 1986). Finally,
he challenged in characteristically perceptive fash-
ion the facile linkage made by many economists
between economic growth and improving human
welfare (Abramovitz 1959b, 1979a, 1982).
Selected Works
1950. Inventories and business cycles.
New York: NBER.
1956. Resource and output trends in the United
States since 1870. American Economic Review,
Papers and Proceedings 46(2): 5–23.
1957. (With V. Eliasberg.) The growth of public
employment in Great Britain. Princeton:
Princeton University Press.
1959a. Long swings in U.S. economic growth.
Statement presented to joint economic com-
mittee of the congress. Hearings before joint
Absentee
economic committee of the congress of the
U.S. on Employment, Growth and Price
Levels, Part 2, 11–66, 10 April.
1959b. The welfare interpretation of secular trends
in national income and production. In The allo-
cation of economic resources: Essays in honor
of Bernard F. Haley, ed. M. Abramovitz et al.
Stanford: Stanford University Press.
1961. The nature and significance of Kuznets
cycles. Economic Development and Cultural
Change 9: 225–248.
1964. Evidence of long swings in aggregate con-
struction since the civil war. Occasional paper
no. 90. New York: NBER.
1968. The passing of the Kuznets cycle.
Economica 349–367.
1979a. Economic growth and its discontents. In
Economics and human welfare: Essays in
honor of Tibor Scitovsky, ed. M. Boskin.
New York: Academic Press.
1979b. Rapid growth potential and its realization:
The experience of capitalist economies in the
postwar period. In Economic growth and
resources. Proceedings of the fifth world con-
gress of the international economic associa-
tion, vol. 1. London/New York: Macmillan.
1981. Welfare quandaries and productivity con-
cerns. Presidential address to the American
economic association. American Economic
Review 71: 1–17.
1982. The retreat from economic advance. In Pro-
gress and its discontents, ed. G.A. Almond,
M. Chodorow, and R.H. Pearce. Berkeley:
University of California Press.
1986. Catching up, forging ahead and falling
behind. Journal of Economic History 46:
385–406.
Absentee
F. Y. Edgeworth
An absentee may be variously defined (1) as a
landed proprietor who resides away from his
3
estate, or (2) from his country; or more generally
(3) any unproductive consumer who lives out of
the country from which he derives his income. A
Examples of these species are (1) a seigneur
under the ancien régime living in Paris at a dis-
tance from his estates; (2) an Irish landlord
resident abroad; (3) an Anglo-Indian ex-official
resident in England and drawing a pension from
India. In writing briefly on the evils of absentee-
ism it is difficult to use general terms appropriate
to all the definitions; but considerations primarily
relating to some one definition may easily be
adapted to another by the reader.
It is useful to consider separately the effects of
the absentee proprietor’s consumption upon the
wealth of his countrymen; and the moral, as well
as economical effects of other circumstances.
I. The more abstract question turns upon the fact
that the income of an absentee is mostly remit-
ted by means of exports. ‘The tribute, subsidy,
or remittance is always in goods . . . unless the
country possesses mines of the precious metals’
(Mill). So far as the proprietor, if resident at
home, would consume foreign produce, his
absence, not increasing exports, does not affect
local industry. So far as the proprietor’s absence
causes manufactures to be exported, his coun-
trymen are not prejudiced. For they may have
as profitable employment in manufacturing
those exports as, if the proprietor had resided
at home, they would have had in supplying
manufactured commodities or services for his
use. But if the proprietor by his absence causes
raw materials to be exported, while if present
he would have used native manufactures and
services, his absence tends to deprive his coun-
trymen of employment, to diminish their
prosperity, and perhaps their numbers. This
reasoning is based on Senior’s Lectures on the
Rate of Wages (Lecture II), and Political Econ-
omy (pp. 155–61). Senior’s position is in a just
mean between two extremes – the popular fal-
lacy and the paradox of McCulloch. On the one
hand it is asserted that between the payment of
a debt to an absentee and a resident there is the
same difference as between the payment and
non-payment of a tribute to a foreign country.
4 Absentee
On the other hand it is denied that there is any
difference at all. The grosser form of the vulgar
error, the conception that the income of the
absentee is drawn from the tributary country
in specie, is exemplified in Thomas Prior’s
List of Absentees (1727). McCulloch’s argu-
ments are stated in the essay on ‘Absenteeism’
in his Treatises and Essays on Money, etc., and
in the evidence given by him before some of the
parliamentary commissions which are referred
to below. Asked ‘Do you see any difference
between raw produce and manufactured
goods’, McCulloch replies, ‘I do not think it
makes any difference’ (compare Treatises and
Essays, p. 232). He appeals to observation, and
finds that the tenants of absentee landlords are
‘subjected to less fleecing and extortion than
those of residents’.
J.S. Mill attributes to absenteeism a tendency
to lower the level of prices in the country from
which the absentee draws an income; with the
consequence that the inhabitants of that country
obtain their imports at an increased cost of effort
and sacrifice (Unsettled Questions, Essay i, p. 43).
Mill’s meaning may be made clearer by a study of
the rest of the essay which has been cited, and of
the parallel passage in his Political Economy
(Book v, ch. iv, § 6), where he argues that an
inequality between exports and imports results in
an ‘efflux of money’ from one country to another.
Upon less distinct grounds Quesnay connects
absenteeism with a development of trade and
industry in an unhealthy direction (Oeuvres, ed.
Oncken, p. 189). Among recondite considerations
which may bear on the subject should be men-
tioned Cantillon’s theory concerning the effect of
the consumption of the rich on the growth of pop-
ulation (Essai, pt. i, ch. xv).
II. Other economical advantages lost by absen-
teeism are those which spring from the interest
which a resident is apt to take in the things and
persons about him. Thus he may be prompted
to invest capital in local improvements, or to
act as an employer of workmen. ‘It is not the
simple amount of the rental being remitted to
another country’, says Arthur Young, ‘but the
damp on all sorts of improvements’.
D’Argenson in his Considérations sur le
gouvernement ancien et présent de la France
(1765, p. 183), attributes great importance to
the master’s eye.
The good feeling which is apt to grow up
between a resident landlord and his tenantry has
material as well as moral results, which are gen-
erally beneficial. The absentee is less likely to take
account of circumstances (e.g., tenant’s improve-
ments), which render rack-renting unjust. He is
less likely to make allowance for calamities which
render punctual payment difficult. ‘Miseries of
which he can see nothing, and probably hear as
little of, can make no impression’ (A. Young). He
is glad to get rid of responsibility by dealing with a
‘middleman’, or intermediate tenant – an addi-
tional wheel in the machinery of exaction, calcu-
lated to grind relentlessly those placed underneath
it. Without the softening influence of personal
communication between the owner and the culti-
vator of the soil, the ‘cash nexus’ is liable to be
strained beyond the limit of human patience, and
to burst violently. There can be little doubt but that
absenteeism has been one potent cause of the
misery and disturbances in Ireland. The same
cause has produced like effects in cases widely
different in other respects. The cruellest oppres-
sors of the French peasantry before the Revolution
were the fermiers, who purchased for an annual
sum the right to collect the dues of absentee sei-
gneurs. The violence of the Granger Railway leg-
islation in the western states of America is
attributed to the fact that the shareholders damni-
fied were absentee proprietors (Seligman, Journal
of Political Science, 1888).
There are also the moral advantages due to the
influence and example of a cultivated upper class.
The extent of this benefit will vary according to
the character of the proprietors and the people. In
some cases it may be, as Adam Smith says, that
‘the inhabitants of a large village, after having
made considerable progress in manufactures,
have become idle in consequence of a great
lord having taken up his residence in their
neighbourhood’. The opposite view, presented
by Miss Edgeworth in her Absentee, may be true
Absolute and Exchangeable Value
in other states of civilization. Perhaps the safest
generalization is that made by Senior that ‘in
general the presence of men of large fortune is
morally detrimental, and that of men of moderate
fortune morally beneficial, to their immediate
neighbourhood’.
Reprinted from Palgrave’s Dictionary of Polit-
ical Economy.
References
Brodrick, G.C. 1881. English land and English landlords.
London.
Carey, H. 1835. Essay on the rate of wages. Philadelphia:
Carey, Lea & Blanchard.
de Lavergne, L. 1860. Economie rurale de la France
depuis 1789. Paris: Guillamin.
Levasseur, E. 1885. A summary of the results of the recent
Italian Commission. Journal des Economistes.
Levasseur, E. 1889. La population Française. Paris.
Montchrétien. 1615. L’économie politique patronale.
Traicté de l’oekonomie politique, ed. Th. Funck-
Bretano. Paris, 1889.
Smith, A. 1776. An inquiry into the nature and causes of
the wealth of nations. London: W. Strahan & T. Cadell.
Taine, H. 1876. L’ancien régime. Paris.
Tocqueville, A. de Clerel. 1856. L’ancien régime et la
révolution, 3rd edn. Paris, 1857.
Wakefield, E. 1812. An account of Ireland, statistical and
political. London.
Young, A. 1780. A tour in Ireland. London: T. Cannell &
J. Dodsley.
Absolute and Exchangeable Value
John Eatwell
Abstract
The notion of absolute (as distinct from
exchangeable or relative) value arises in clas-
sical economics from the image of a given
magnitude of output being distributed between
the social classes. Ricardo posited that the
value of the social surplus could be expressed
in terms of labour regardless of how the surplus
was distributed. But since changes in distribu-
tion affect exchangeable value, the value of the
5
surplus will typically vary as distribution
varies, even though its physical magnitude
remains unchanged. In 1823 Ricardo con- A
cluded that ‘there is no such thing in nature as
a perfect measure of value’.
Keywords
Absolute and exchangeable value; Cairnes,
F. E.; Cairnes, J. E.; Class; Classical econom-
ics; Invariable standard of value; Labour the-
ory of value; Marx, K.H.; Rate of profit;
Ricardo, D.; Sraffa, P.; Surplus
JEL Classifications
D0
No one can doubt that it would be a great desid-
eratum in political economy to have such a mea-
sure of absolute value in order to enable us to
know, when commodities altered in relative
value, in which the alteration in value had taken
place (David Ricardo 1823, p. 399n).
The idea that changes in the relative or
exchangeable value of a pair of commodities
might usefully be attributed to alterations in the
‘absolute value’ of one or the other of them will
appear rather odd to anyone accustomed to think-
ing of the basic problem of price theory as being
the determination of sets of relative prices, with
any consideration of ‘absolute’ value being con-
fined to problems in monetary theory and the
determination of the overall price level. Since in
neoclassical theory it is the relative scarcity of
commodities, or of the factor services which are
used to produce them, which is the key to relative
price formation, no conception of ‘absolute’
value, that is, a price associated with the condi-
tions of production of a single commodity, is
either relevant or necessary.
Yet the notion of absolute value arose naturally
within Ricardo’s analysis of value and distribu-
tion. The central problem of classical theory is to
relate the physical magnitude of surplus (defined
as the social output minus the replacement of
materials used in its production and the wage
goods paid to the labourers employed) to the
general rate of profit and the rents in terms of
6 Absolute and Exchangeable Value
which the surplus is distributed. The key image is
the distribution of a given magnitude of output
between the classes of the society. ‘After all’, as
Ricardo put it, ‘the great questions of Rent, Wages
and Profits must be explained by the proportions
in which the whole produce is divided between
landlords, capitalists, and labourers, and which
are not essentially connected with the doctrine of
value’ (1820, p. 194). Ricardo was able to sustain
this ‘material’ view of distribution only in the
Essay on Profits, and only there by the implicit
device of a sector in which all inputs and all output
consist of the same commodity, corn, which is
also used to pay wages in the other sectors of the
economy. In the corn sector the division of the
product may be expressed in physical terms, and
the rate of profit expressed as a ratio of physical
magnitudes.
This clear and direct analysis is no longer pos-
sible once the strong assumption of a self-
reproducing sector is dropped.
The need to express heterogeneous surplus (net
of rent) and heterogeneous capital as homoge-
neous magnitudes in order to determine the rate
of profit created the need for a theory of value.
Ricardo’s materialist approach led him to the
labour theory of value. The quantity of labour
embodied directly and indirectly in the production
of a commodity is determined by the conditions of
production of that commodity, or as Ricardo put it,
by the difficulty or facility of production, and will
change only when the technique changes. Hence
the aggregates of social surplus and capital
advanced may be expressed as quantities of
labour, these quantities being invariant to changes
in the distribution of social product. So the rate of
profit is determined as the ratio of surplus (on the
land last brought into use) to the means of pro-
duction, including wages.
Once, however, the impact of changes in dis-
tribution on exchangeable value is taken into
account the picture is far less clear. The value of
social output, and of the surplus, measured in any
given standard, will typically now vary as distri-
bution varies, even though the physical magnitude
of social output remains unchanged. The direct
deductive relationship between wages, surplus,
and hence, the rate of profit, is no longer
self-evident, or indeed, evident at all. It was
Ricardo’s desire to restore clarity to his analysis
which led to his search for an invariable standard
of value (a standard in terms of which the size of
the aggregate would not vary as distribution was
changed) and for what Sraffa describes as ‘for
Ricardo its necessary complement’, absolute
value (Sraffa 1951, p. xlvi).
The term ‘absolute value’ was used by Ricardo
but once in the first edition of the Principles and
occasionally in letters. It was clarified in the
papers on ‘Absolute Value and Exchangeable
Value’, written in 1823 in the last few years of
his life. These were discovered in a locked box at
the home of F.E. Cairnes, the son of the economist
John Elliot Cairnes, in 1943, and published for the
first time in Sraffa’s edition of Ricardo’s Works
and Correspondence.
There are two versions of the essay. One, a
rough draft, is written on odd pieces of paper,
some of them the covers of letters addressed to
Ricardo. The other is a scarcely corrected draft,
written on uniform sheets of paper. This clean
draft breaks off, unfinished.
The importance of the essay derives from the
reinforcement it provides to that interpretation of
Ricardo’s theory of value and distribution which
suggests that the problem of the determination of
the relative values of commodities stemmed from
Ricardo’s desire to relate his image of the division
of social product as a physical magnitude to the
wages, rents, and rate of profit of a market econ-
omy. Ricardo was not interested for its own
sake in the problem of why two commodities
produced by the same quantities of labour are
not of the same exchangeable value. He was,
rather, concerned by the fact that as distribution
of social output changes exchangeable value
changes, disrupting and obscuring an otherwise
clear vision. It was this emphasis on the fact
that changes in distribution lead to changes in
exchangeable value, even though the quantity of
social output and the method by which it is pro-
duced are unchanged, which led Ricardo into the
intellectual cul-de-sac of the search for an invari-
able standard of value.
The absolute value of a commodity is the value
of that commodity measured in terms of an
Absolute Rent
invariable standard. An invariable standard of
value may be found
... if precisely the same length of time and neither
more nor less were necessary to the production of
all commodities. Commodities would then have an
absolute value directly in proportion to the quantity
of labour embodied in them. (Ricardo 1823, p. 382.
Changes in the absolute values of commodities
could then derive only from changes in the
amount of labour embodied in them, and the
value of social output would be invariate to its
distribution.
Yet precisely because all commodities are not
produced under the same circumstances, ‘diffi-
culty or facility of production is not absolutely
the only cause of variation in value, there is one
other, the rise or fall of wages’ since commodities
cannot ‘be produced and brought to market in
precisely the same time’ (1823, p. 368). Hence
Ricardo must conclude, rather sadly, that ‘there is
no such thing in nature as a perfect measure of
value’ (1823, p. 404) – there is no such thing as an
invariable standard of value.
Marx (1883), who could not, of course, have
seen the papers on Absolute and Exchangeable
Value, was critical of Ricardo’s absorption with
the search for an invariable standard. The focus on
changes in relative value obscured the fact that
commodities do not exchange at rates propor-
tional to their labour values (labour embodied).
Yet Marx’s attempt to restore clarity to the analy-
sis of distribution by first determining the rate
of profit as the ratio of quantities of labour, and
then ‘transforming’ labour values into prices of
production, encounters difficulties which derive
from exactly the same source as those which
bedevilled Ricardo – the difference in production
conditions or ‘organic composition of capital’ of
commodities.
The data of classical theory can be used to
determine the rate of profit, as Sraffa (1960)
has shown. But the determination cannot be
‘sequential’ – first specifying a theory of value
and then evaluating the ratio of surplus to capital
advanced by means of that predetermined theory
of value. Rather the rate of profit and the rates at
which commodities exchange must be determined
simultaneously.
7
See Also
▶ Ricardo, David (1772–1823) A
Bibliography
Marx, K. 1883. Capital. Vol. 3. London: Lawrence and
Wishart. 1976.
Ricardo, D. 1820. Letter to J.R. McCulloch, 13 June 1820.
In Works and correspondence of David Ricardo. Vol. 8,
ed. P. Sraffa. Cambridge: Cambridge University Press,
1953.
Ricardo, D. 1823. Paper on ‘Absolute and exchangeable
value’ (rough draft, and unfinished clean version). In
Works and correspondence of David Ricardo. Vol. 4,
ed. P. Sraffa. Cambridge: Cambridge University Press,
1951.
Sraffa, P. 1951. Introduction to works and correspondence
of David Ricardo. Vol. 1. Cambridge: Cambridge Uni-
versity Press.
Sraffa, P. 1960. Production of commodities by means of
commodities. Cambridge: Cambridge University Press.
Absolute Rent
Ednaldo Araquem da Silva
Marx’s work on rent was based on his studies of
the statistical reports published after the Russian
Agrarian Reform of 1861. The importance of the
Russian case on Marx’s thinking is highlighted in
Engels’ ‘Preface’ to the third volume of Marx’s
Capital, which draws a parallel between the influ-
ence of Russia’s diverse land tenure system on
Marx’s analysis of rent and the role of England
on his analysis of industrial wage-labour.
Although the economic surplus normally takes
the form of profits in the capitalist system, Marx
gave considerable attention to rent. In chapter
XLV of the third volume of Capital (1894), and
in his critical comments on Ricardo’s theory of
rent, published in Theories of Surplus-Value
(1905), Marx introduced the concept of absolute
rent as the rent paid by capitalist tenant farmers to
landowners, regardless of the fertility of the
rented land.
8 Absolute Rent
Absolute Rent,
Fig. 1 Marx’s concept of
absolute rent
Unit price
A B
Marx (1894, pp. 760, 771; 1905, pp. 244, 392)
defined absolute rent as the difference between
the value of the agricultural product of the least
productive land and the general production
price, P(g). Absolute rent can absorb the entire
[value–P(g)] difference or a proportion of this
difference. In contrast, differential rent is defined
as the difference between the general production
price and the individual production price, P(i).
These concepts are depicted in Fig. 1. By defini-
tion, absolute rent is positive even on the worst
cultivated land, A, whereas differential rent is zero
on A, but then becomes positive and increases
with improved land fertility, B, C, and D.
Marx’s concept of absolute rent is based on two
assumptions: (1) the agricultural organic compo-
sition of capital is lower than the average of agri-
culture and industry; and (2) land is cultivated by
capitalist tenant farmers. Assumption (1) implies
that the value of an agricultural commodity will be
above its production price; under assumption (2),
landowners will lease land only to those capitalist
tenants who can pay absolute rent even on the worst
quality and most inconveniently located land.
In contrast to other commodities whose
organic composition of capital is lower than the
average of agriculture and industry, and thus have
their values above their production prices, com-
petition among capitalist producers does not
value
AR
P (g)
DR
P (i)
C D
Increasing land fertility
reduce the values of the agricultural products to
their production prices. The separation of land-
owners from tenant operators prevents the equal-
ization of profit rates in agriculture with the single
rate prevailing in industry. Landowners are there-
fore able to seize excess or above average agricul-
tural profits and prevent them from entering the
process by which the average profit rate is formed
(see Marx 1905, p. 37; Murray 1977).
Under Marx’s assumptions, the market price of
an agricultural product will include the absolute
rent above the general production price.
If the worst soil cannot be cultivated – although its
cultivation would yield the price of production – until
it produces something in excess of the price of
production, [absolute] rent, then landed property
is the creative cause of this rise in price (Marx
1894, p. 755).
There has been some confusion as to whether
the upper limit of the market price of an agricultural
product would be set by its individual value on the
worst cultivated land. Marx (1905, p. 332) himself
asked: ‘If landed property gives the power to sell
the product above its [production price], at its
value, why does it not equally well give the
power to sell the product above its value, at an
arbitrary monopoly price?’ Echoing Marx,
Bortkiewicz (1911) and, much later, Emmanuel
(1972) have also questioned why landlords limit
Absorption Approach to the Balance of Payments
absolute rent to the excess of value over the pro-
duction price on the worst cultivated land. They
suggest that since landowners have the power to
withdraw land from cultivation until the market
price covers both the absolute rent and the produc-
tion price of the highest-cost producer, they could
also charge a rent in excess of the corresponding
value. In capitalist agriculture, absolute rent has a
negative impact because it prevents agricultural
prices from falling, and because it removes above
average profits, a major source of capitalist techni-
cal innovation (see Lenin 1901, pp. 119–29).
Despite some ambiguity in Marx’s formulation
of absolute rent, his argument is persuasive:
Although landed property may drive the price of
agricultural produce above its price of production, it
does not depend on this, but rather on the general
state of the market, to what degree market-price
exceeds the price of production and approaches
the value (Marx, 1894, p. 764, see also p. 762;
Murray 1977; Flichman 1977).
According to Marx (1894, pp. 760, 765; 1905,
pp. 244, 393), the lower composition of agricul-
tural capital compared to that of industry ‘is
a historical difference and can therefore disap-
pear’, and so absolute rent would also tend to
disappear as the productivity of agricultural
labour approaches that of industry. In this case,
the production price of an agricultural product
would approach its value and any rent paid by
the capitalist tenants would constitute a monopoly
rent. The monopoly rent is paid above the value of
the agricultural product, and it would thus be
limited not by value, as in the case of absolute
rent, but by foreign agricultural trade, competition
among landowners, and the consumers budget
(see Marx 1894, pp. 758, 805, 810; 1905, p. 332).
Marx’s theory of absolute rent has been
by-passed by the controversy over the transforma-
tion of values into production prices, and has been
little used as a conceptual device to analyse the
effect of landownership on capitalist investment
in agriculture or the effect of landownership on
agricultural prices. Unfortunately, absolute rent
has been neglected by Marxist economists, while
it seems to be a favourite bête noire among sym-
pathetic critics of Marx, such as Bortkiewicz
(1911) and Emmanuel (1972). As a result,
9
absolute rent has an uncertain future as a useful
theoretical device, despite the fact that in many
countries capitalist agriculture still largely con- A
forms to the two basic assumptions made by
Marx more than a hundred years ago.
See Also
▶ Land Rent
▶ Marx, Karl Heinrich (1818–1883)
▶ Rent
▶ Unequal Exchange
Bibliography
Bortkiewicz, L. 1911. La teoria della rendita fondiaria di
Rodbertus e la dottrina di Marx sulla rendita fondiaria
assoluta. In La Teoria Economica di Marx e altri saggi
su Böhm-Bawerk, Walras e Pareto. Turin: Einaudi,
1971.
Emmanuel, A. 1972. Unequal exchange. New York:
Monthly Review Press.
Flichman, G. 1977. La Renta del Suelo y el Desarrollo
Agrario Argentino. Buenos Aires: Siglo Veintiuno
Editores.
Lenin, V.I. 1901. The agrarian question and the ‘critics of
Marx’. In Collected works, Vol. V, ed. V.I. Lenin. Mos-
cow: Progress Publishers, 1973.
Marx, K. 1894. Capital, Vol. III. Moscow: Progress Pub-
lishers, 1971.
———. 1905. Theories of surplus value, Part II. Moscow:
Progress Publishers, 1968. Murray, R. 1977. Value and
the theory of rent: I. Capital & Class 1(3): 100–122.
Absorption Approach to the Balance
of Payments
David Vines
JEL Classifications
E0
The absorption approach to the balance of pay-
ments states that a country’s balance of trade will
only improve if the country’s output of goods and
10
services increases by more than its absorption,
where the term ‘absorption’ means expenditure
by domestic residents on goods and services.
This approach was first put forward by Alexander
(1952, 1959).
The novelty of this approach may be appreci-
ated by considering the particular question ‘will a
devaluation improve a country’s balance of
trade?’ The elasticities approach, popular when
Alexander was writing, answers this question by
focusing on the price elasticities of supply and
demand for exports and imports. It holds that the
devaluation will be successful if the price elastic-
ities of demand for exports and imports are large
enough so that the increase in exports sold to
foreigners and the reduction in imports bought
by domestic residents together more than offset
the terms of trade loss caused by the devaluation
(A special case of this result is formalized in the
Marshall–Lerner conditions). The absorption
approach argues, by contrast, that the devaluation
will only be successful if it causes the gap between
domestic output and domestic absorption to
widen. In effect Alexander criticizes the elastici-
ties approach for focusing on the movement along
given supply and demand curves in the particular
markets for exports and imports (a microeco-
nomic approach), instead of looking at the pro-
duction and spending of the nation as a whole
which shift these curves (a macroeconomic
approach).
Alexander’s criticism of the elasticities
approach is valid. But without further elaboration
the absorption approach is unhelpful in rectifying
the inadequacy. This is because, taken at face
value, the absorption approach merely states an
identity. Let the symbols, Y, C, I, G, X and M stand
for output, consumption, investment, government
expenditure, exports and imports respectively.
Then the Keynesian income-expenditure identity
states that
Y ¼CþIþGþXM (1)
which may be rewritten
X  M ¼ Y  ðC þ I þ GÞ: (2)
Absorption Approach to the Balance of Payments
This identity states precisely that the trade balance
will improve if output, Y, increases by more than
absorption (C + I + G).
What is needed, and what Alexander helped to
provide, is an analysis of exactly how output and
absorption change, in response to a devaluation,
and indeed in response to other developments in
the economy. Such a gap was also being filled at
the time by Keynesian writers (Robinson 1937;
Harrod 1939; Machlup 1943; Meade 1951;
Harberger 1950; Laursen and Metzler 1950; see
also Swan 1956).
All of these authors grafted the Keynesian
multiplier onto the elasticities approach. The
resulting hybrid construct can be used to analyse
the effects of a devaluation as follows. Suppose
that the price elasticity effects do improve the
balance of trade, X–M, by ‘switching’ expen-
ditures towards domestic goods. Then these
‘expenditure-switching’ effects provide a positive
stimulus to the Keynesian multiplier process, and
drive up output Y and absorption C + I + G. Let
x be the expenditure-switching effects on the trade
balance of a devaluation of the currency by one
unit, and let the overall effects of this devaluation
on the trade balance be y. Let the propensity to
consume be c, the tax rate be t and the propensity
to import m, so that the Keynesian multiplier is
k = 1/[1  c(1  t) + m]. The increase in output
resulting from the devaluation is kx and the
increase in absorption is c(1  t)kx. And so
y ¼ k½1  cð1  tÞx: (3)
If the propensity to consume c is less than unity
and the tax rate t is positive then absorption
increases by less than output, and, as Eq. (3)
shows the trade balance is improved by the deval-
uation. The above sketch shows how the combi-
nation of the elasticities approach and Keynesian
theory is able to provide the needed analysis of
how output and absorption change following
a devaluation. And instead of describing the
outcomes in terms of output and absorption, as
Alexander did, it is possible to give a more
conventional Keynesian description, which
would proceed as follows. Since the multiplier
Another random document with
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under. The pole appears to end in a fork, and to be attached to the
axle bed.
On the decline of the Roman power, many of the arts of civilisation
which they had been instrumental in forwarding fell into disuse. The
skilled artisans died and left no successors, there being no demand
for them. This will account for no mention being made of carriages or
chariots for some centuries. Of course there were various primitive
contrivances in use to which the name of cart was given, but the
great and wealthy moved about the cities or travelled on horseback,
or if they were incapable of this, they used litters carried by men or
horses. The great bar to the general adoption of wheeled carriages
was undoubtedly the very bad state of the roads.
An evident improvement in construction was made by the Saxons.
In the Cotton Library there is a valuable illuminated manuscript,
supposed to be the work of Elfricus, Abbot of Malmesbury. The
subject is a commentary on the Books of Genesis and Exodus, with
accompanying illustrations. In one of these is represented the first
approach to a slung carriage; and it may be interesting to the lovers
of historical coincidence that it is given in an illustration of the
meeting of Joseph and Jacob, and in that part of the Bible which first
makes mention of vehicular conveyance. The chariot in which
Joseph is seated is a kind of hammock (most probably made of
leather, which was much used by the Anglo-Saxons), suspended by
iron hooks from a framework of wood. It moves upon four wheels,
the construction of which is not clear, owing to the decorative license
taken with them by the artist. The father of Joseph is placed in a cart,
which we doubt not, from its extreme simplicity, is a faithful type of
those of the time. This proves the illuminator to have been true to his
subject and the custom of the period in which he lived, as the chariot
was monopolised by the great men, while the people rode in carts.
With the Normans came the horse litter, a native originally of
Bithynia, and from thence introduced into Rome, where it is still used
by the Pope on state occasions, and also among the mountain
passes of Sicily, as well as in Spain and Portugal. Malmesbury
records that the dead body of Rufus was placed upon a rheda
caballaria, a kind of horse litter. King John, in his last illness, was
conveyed from the Abbey of Swinstead in lectica equestre. These
were for several succeeding reigns the only carriages in use for
persons of distinction. Froissart writes of Isabel, the second wife of
Richard II., as “La june Royne d’Angleterre en une litieré moult riche
qui etoit ordonèe pour elle.” These litters were seldom used except
on state occasions. When Margaret, daughter of Henry II., went into
Scotland, she is described as journeying on a “faire palfrey,” but after
her was conveyed by two footmen “one very riche litere, borne by
two faire coursers vary nobly drest; in which litere the sayd queene
was borne in the intryng of the good towns or otherwise to her good
playsher.”
Carriages proper were first introduced on the continent. Italy,
France, Spain, and Germany contend with each other for the honour
of the first introduction. The earliest record we have is on the
authority of Beckmann, who says that, when at the close of the
thirteenth century Charles of Anjou entered Naples, his queen rode
in a caretta, the outside and inside of which were covered with sky-
blue velvet interspersed with golden lilies.
The English were not long before they adopted this new
innovation. In an early English poem called the “Squyr of Low
Degree,” supposed to be before the time of Chaucer, the father of
the Princess of Hungary thus makes promise:—

“To-morrow ye shall on hunting fare,

And ride my daughter in a chare.
It shall be covered with velvet red,
And cloths of fine gold all about your head,
With damask white and azure blue,
Well diapered with lilies new:
Your pomelles shall be ended with gold,
Your chains enamelled many a fold.”

The pomelles were doubtless the handles to the rods affixed

towards the roof of the “chariette,” and were for the purpose of
holding by when deep ruts or obstacles in the roads caused an
unusual jerk in the vehicle.
 On the continent, there seems to have been a great deal of
opposition to the use of carriages. In 1294, Philip, King of France,
issued an ordinance prohibiting the citizens’ wives the use of cars or
chars; and later on, Pope Pius IV. exhorted his cardinals and bishops
not to ride in coaches, according to the fashion of the time, but to
leave such things to women; and it really was thought infra dig. for a
man to travel other than on horseback. Even his Holiness the Pope
rode upon a grey horse; though to indemnify him for the exertion, his
horse was led, and his stirrup held by kings and emperors.
These exhortations had about the same effect as James I.’s
“Counterblast to Tobacco;” they created an increased demand, and
the people showed their sense in preferring the ease that does no
injury to the self-denial that does no good, in spite of the opposition
of their superiors.
The first coach made in England was for the Earl of Rutland, in
1555, and Walter Rippon was the builder. He afterwards made one
for Queen Mary. Stow’s “Summerie of the English Chronicle” is the
authority upon which this statement is made.
In a postscript to the life of Thomas Parr, written by Taylor, the
Water Poet (and a mortal enemy to land carriages), we find the
following note: “He (Parr) was eighty-one years old before there was
any coach in England (Parr was born in Edward IV.’s reign in 1483);
for the first ever seen here was brought out of the Netherlands by
one William Boonen, a Dutchman, who gave a coach to Queen
Elizabeth, for she had been seven years a queen before she had
any coach; since when they have increased with a mischief, and
ruined all the best housekeeping, to the undoing of the watermen, by
the multitudes of Hackney coaches. But they never swarmed so
much to pester the streets as they do now till the year 1605; and
then was the gunpowder treason hatched, and at that time did the
coaches breed and multiply.” Taylor is to be thanked, not only for his
information, but for his capital though unconscious burlesque upon
those fancied philosophers who talk of cause and effect, where
events, because they happen in sequence, are made to depend one
on the other, when the fact of their being two things apart makes
them independent existences.
 We have not space to dwell upon these old specimens at length.
Queen Elizabeth’s coach is called by an old author “a moving
temple.” It had doors all round, so that when the people desired, and
the virgin queen was agreeable, they might feast their eyes on the
beauty of its trimming or linings.
The following entry in Sir William Dugdale’s diary may be
interesting: “1681. Payd to Mr. Meares, a coachmaker in St. Martin’s
Lane, for a little chariot wch I then sent into the country, £23 13s. 0d.,
and for a cover of canvas £01 00s. 00d.: also for harness for two
horses £04 00s. 00d.”
The opposition on the part of the watermen to the introduction of
coaches assumed rather serious proportions, more especially as the
populace sided with them; to such a height did the antagonism run
that a movement was made to introduce a Bill into Parliament to
prevent the increase of coaches; the apology for its introduction
being, that in war time it would be a matter of great difficulty to mount
the troops if so many horses were monopolised for these coaches.
Luckily, however, it came to nothing, and the antipathy gradually died
out.
Coaches and vehicles of all descriptions now became general,
and in 1635 a patent was granted to Sir Saunders Duncombe for the
introduction of sedans; their purpose being “to interfere with the too
frequent use of coaches, to the hindrance of the carts and carriages
employed in the necessary provision of the city and suburbs.” A
rivalry now sprung up between coach and sedan, and gave rise to a
humorous tract, in which they hold a colloquy as to which should
take precedence, a brewer’s cart being appointed umpire.
The coaches at this period were fearfully and wonderfully made.
There are several examples of them scattered about in the various
museums. The people who used them at this time had no great
ideas of them, for so formidable an affair was the undertaking of a
journey reckoned, that even from Birmingham to London a departure
was the signal for making a will, followed by a solemn farewell of
wife, children, and household!
 Towards the end of the seventeenth century improvements began
to take place. In Wood’s diary mention is made of a machine called
the “Flying Coach,” which performed the journey between Oxford
and London in thirteen hours! This was express rate for that age,
especially as there was some talk of making a law to limit the ground
covered by a coach to thirty miles a day in summer, and twenty-five
miles a day in winter. Oh, those good old times! The outcry lessened,
and the imperfect vehicles and bad roads were left to passengers
unmolested. What the latter were may be imagined from the fact
that, when Charles III. of Spain visited England, and Prince George
of Denmark went out to meet him, both princes were so impeded by
the badness of the roads that their carriages were obliged to be
borne on the shoulders of the peasantry, and they were six hours in
performing the last nine miles of their journey.
In the eighteenth century improvements were made in the
construction of coaches, but they were still heavy lumbering
contrivances, so that little or no progress was made in the rate at
which they travelled. Even so late as 1760 a journey from Edinburgh
to London occupied eighteen days, a part of the roads being only
accessible by pack horses. There is a very good specimen of the
vehicle of the early part of the eighteenth century in the South
Kensington Museum, belonging to the Earl of Darnley’s family, and is
well worthy of study as being one of the lightest examples known of
this period.
In the Museum of South Kensington is also an excellent example
of the fully developed coach of 1790. It is a very massive-looking
affair, and belonged to the Lord Chancellor of Ireland; it looks very
much like a faded edition of the City state coach now, though when
new it doubtless had a very good appearance. It consists of a very
large body, suspended from upright or whip springs by means of
leather braces; the standing pillars slope outwards, making the sides
longer at the roof than at the elbow line. The wheels are of good
height, and the carriage part is very massively constructed, the
upper part being finished off with scroll ironwork, and on this in the
front the coachman’s hammercloth is raised. The panels are painted
with landscapes, &c., by Hamilton, R.A., and no doubt altogether it
cost a deal of money.
Vehicles now began to assume that variety of shape and form of
which we have in our own time so many specimens. There were
Landaus, introduced from a town of that name in Germany; these
were, like the coaches, only made to open in the centre of the roof
just as they do now, but instead of the covering falling into a
horizontal line it only fell back to an angle of 45 degrees, and this
pattern was maintained for a number of years. Landaulets were
chariots made to open. Generally speaking, the difference between a
coach and a chariot was that the former had two seats for the
accommodation of passengers, and the latter but one, and in
appearance was like a coach cut in half. Then came phaetons,
barouches, sociables, curricles, gigs, and whiskies, which, in their
general form and attributes, were similar to the vehicles of the
present day which bear these names. In those days fast driving was
all the “go,” and young men vied with each other in driving the loftiest
and most dangerous gigs and phaetons. Contemporary literature
teemed with romantic tales of spills and hairbreadth ’scapes from
these vehicles, and yet dilated on the fearful pleasure there was in
driving them.
The larger wheeled vehicles were hung upon framed carriages,
with whip springs behind and elbow springs in front, like the
gentlemen’s cabriolets of the present day. When drawn by two
horses they were called curricles, or by one horse, chaises. There
was a little variation in the shape of the body, viz. the full curricle
pattern and the half curricle, with or without a boot, similar to a
Tilbury or a gig body. The wheels were 4 feet 3 inches to 5 feet in
height. Lancewood was then used for shafts.
It is at the beginning of the nineteenth century that real progress is
to be found in coaches and other carriages. In 1804, Mr. Obadiah
Elliott, a coachmaker of Lambeth, patented a plan for hanging
vehicles upon elliptic springs, thus doing away with the heavy perch,
as the longitudinal timber or iron connecting the hind-carriage with
the fore carriage is called. Perches are still used, but are chiefly
confined to coaches proper, or those hung upon C springs. Elliott
also considerably lightened the carriage part of the vehicles he
turned out. This was the first step to a grand revolution in the
manufacture of carriages, which was to affect every variety of
vehicle, great or small. Elliott’s enterprise was rewarded by the gold
medal of the Society of Arts, and by his business becoming a very
prosperous one, for the public were not slow in discovering the
advantages arising from great lightness in vehicles.
A print, published in 1816, shows a landaulet hung on elliptic
springs, four in number, with a square boot framed to the body, and
the driving seat supported on ironwork high above the boot. Behind
there is a footboard supported on the pump-handles. The distance
between the axletrees is very short, only 6 feet 6 inches from centre
to centre. The body is rather small, and the wheels are 3 feet 8
inches and 4 feet 8 inches high respectively, and the bottom of the
body is 3 feet 6 inches above the ground. The span or opening of the
springs is 10 inches.
In 1814 there were 23,400 four-wheeled vehicles paying duty to
Government, 27,300 two-wheeled, and 18,500 tax-carts in Great
Britain, showing a total of 69,200 vehicles. The later returns will
show how much a reduction in the duties and the use of elliptic
springs have promoted the increase of vehicles of all kinds.
A vehicle much in fashion at this period was the curricle, which
had been in use for some time in Italy, where it was suspended from
leather braces. Springs were added by the French, and, on its being
introduced here, the English altered the shape, giving the back a
graceful ogee curve, improved the hood, and added a spring bar
across the horses’ backs. It was a vehicle of easy draught, and could
be driven at great speed. Unfortunately it was rather dangerous if the
horse shied or stumbled, and this tended to reduce the demand for
it, and it was gradually superseded by the cabriolet, though Charles
Dickens used one as soon as he could afford it, and Count D’Orsay
had one made as late as 1836.
The vehicle called the briska, or britchka, was introduced about
1818 from Austria. It was hung both upon C springs and elliptic
springs, and was made in various sizes for different requirements. It
was nearly straight along the bottom. The hind panel was ogee
shaped, and the front terminated in a square boot. There was a
rumble behind, and the back seat was fitted with a hood which could
be raised or lowered at pleasure, and the knees were covered by a
folding knee flap. This was an inconvenient vehicle for our climate,
as only half the number could be sheltered in wet weather that could
be accommodated in dry. It was very fashionable for a time, but died
out about 1840.

Fig. 5.—Stanhope.

The “Stanhope” takes its name from being first built to the order
and under the superintendence of the Hon. Fitzroy Stanhope, by
Tilbury, the builder of the vehicle bearing that name. It was shaped
like the old ribbed gig, but was hung upon four springs, two of which
were bolted between the shaft and axle, and the other two
crossways, parallel to the axle at either end of the body, and
shackled to the side springs. Stanhopes are an easy kind of vehicle,
and do not rock so much as other gigs behind a rough-trotting horse.
At the same time they are rather heavy, owing to the large amount of
iron plating used to strengthen the shafts, &c.
 Fig. 6.—Tilbury.
The “Tilbury” was very much like the Stanhope, but had no boot,
and like it was heavily plated with iron. It was hung by two elbow
springs in front, with leather braces to the shafts or front cross bar,
and behind by two elbow springs passing from beneath the seat to a
cross spring raised to the level of the back rail of the body by three
straight irons from the hind part of the cross bar. Later, two more
springs were added between the axletree and the shafts, by scroll
irons. The Tilbury was a very good-looking and durable vehicle, but
its weight took away the public favour, and it went out of fashion
about 1850. It was, however, adopted with great success by Italy and
other continental countries, where the roads are bad, and solidity of
construction is the first consideration.
Dog-carts and Tandem-carts are too well known to need
description. The former were so called from their being used for the
conveyance of sporting dogs, such as greyhounds or pointers, and
the slats or louvre arrangement of the sides was for the purpose of
admitting air to the animals; though scarcely ever used for this
purpose now, the original plan has been pretty closely adhered to,
except that the boot is considerably reduced and made to harmonise
more with the other parts.
Some of the greatest improvements in the shape and style of
various vehicles were effected by a celebrated maker named
Samuel Hobson, who remodelled and improved pretty nearly every
vehicle which came under his hands. He particularly directed his
attention to the true proportion of parts, and artistic form of carriages.
He lowered the bodies, and lengthened the under or “carriage” part.
The curves and sweeps also received due attention. In fact, he
carefully studied those “trifles” (as Michael Angelo’s friend would
have termed them) on which depended the success of the
production as a work of art. Imitation being the sincerest form of
flattery, the other coachmakers soon showed their sense by copying
his best ideas, though, to give these other coachmakers their due,
they greatly assisted Mr. Hobson with suggestions for improvements,
and as a reward availed themselves of his superior talent for working
on these ideas.
As our interior trade and manufactures increased, the custom
arose of sending commercial travellers throughout England to call
attention to the various goods, and it was found very convenient to
send these travellers in light vehicles which could convey samples of
the various articles. This led to a very great increase in the number
of gigs; and about 1830 one coach factory of London supplied
several hundreds of these vehicles to travellers at annual rentals.
And though on the introduction of the railway system long journeys
by road were unnecessary, these gigs were found of great use in
town and suburban journeys, and in London they may be seen by
hundreds daily, and they are scarcely used by any one else but
commercial travellers. They are too familiar to need detailed
description.
In 1810 a duty was levied by Government upon vehicles for sale. It
was repealed in 1825, but the returns give the number of vehicles
built for private use in 1814 as 3,636, and in 1824 as 5,143, whilst
the number of carriages in use in 1824 had grown to 25,000 four-
wheeled, and 36,000 two-wheeled, besides 15,000 tax-carts; an
increase since 1814 of 20,000 vehicles.
In 1824 there was built for George IV. a low phaeton, called a pony
phaeton, which has since become very common, and has undergone
but very little change from the original. It was a cab shape, half-
caned, with a skeleton bottom side hung upon four elliptical springs,
with crane ironwork back and front. It was drawn by two ponies; the
wheels were only 21 and 33 inches high.
A carriage had been introduced from Germany, called a droitska or
droskey—an open carriage with a hood, on a perch, and suspended
from C springs. The peculiarity was, that the body was hung very
near the perch, so that the seat was only 12 inches above the hind
axletree, and the place for the legs was on either side of the perch.
The chief merits of this vehicle consisted in its lightness as
compared with barouches and briskas, and its shortness.
The cab phaeton was invented by Mr. Davies, of Albany Street,
about 1835; it consisted of a cab body with a hood, hung upon four
elliptic springs, and a low driving seat and dasher, for one horse. It
met with great success and was soon in general use. It was
introduced on the continent, where it became known under the name
of “Milord,” and became the common hack carriage, after which it
went out of fashion with the upper circles. It has, however, been
recently revived under the name of “Victoria.” The Prince of Wales
and Baron Rothschild set the fashion by using Victorias about 1869,
and it really is a very elegant and useful vehicle.
In 1839 the first Brougham was built by Mr. Robinson, of Mount
Street, for Lord Brougham, since when this has become the most
common and the most fashionable vehicle in use. The size of the
first brougham was in its chief dimensions similar to those now
manufactured; it was hung on elliptic springs in front, and five
springs behind. Coachmakers seemed to have lavished the greatest
care and attention on these vehicles, in order to turn out the lightest,
and at the same time the most artistic contrivance, and great
success has attended their efforts.
The foregoing is a brief history of vehicular conveyances from the
earliest times to the present. During the last ten or fifteen years
many further improvements have been added, tending to produce
more perfect vehicles in every respect; but these improvements have
been more in matters of detail than those at the commencement of
the century, and hence are more likely to escape ordinary
observation; but the critical eye will soon discover these changes,
and marvel at the short space of time in which the real work has
been done.
A glance at public carriages may not be out of place. Hackney
coaches were first used in England in 1605. These were similar to
the coaches used by fashionable people, but they did not ply for hire
in the streets, but remained at the hiring yards until they were
wanted. Their number soon increased, owing to there being a
greater number of persons who wished to hire than could afford to
keep a conveyance of their own. In 1635 the number was limited to
fifty, but in spite of the opposition of the King they continued to
increase in number, and in 1640 there were 300 in London. In Paris
they were introduced by Nicholas Sauvage, who lived in a street at
the sign of St. Fiacre, and from this circumstance hackney carriages
are called “fiacres” in France. In 1772 the hire of a fiacre in Paris was
one shilling for the first hour and tenpence for the second. There
were 400 hackney coaches in London in 1662, and the Government
then levied a yearly duty of £5 each upon them. In spite of this their
number had in 1694 increased to 700, a substantial proof of their
usefulness.
In 1703 a stage coach performed the journey from London to
Portsmouth, when the roads were good, in fourteen hours. From this
time there was a gradual increase in the number and destinations of
stage coaches.
In 1755 stage coaches are described as being covered with dull
black leather, studded with broad-headed nails by way of ornament,
and oval windows in the quarters, with the frames painted red. On
the panels the destination of the coach was displayed in bold
characters. The roof rose in a high curve with a rail round it. The
coachman and guard sat in front upon a high narrow boot,
sometimes garnished with a hammercloth ornamented with a deep
fringe. Behind was an immense basket supported by iron bars, in
which passengers were carried at a cheaper rate than in other parts
of the vehicle. The wheels were painted red. The coach was usually
drawn by three horses, on the first of which a postillion rode, dressed
in green and gold, and with a cocked hat. This machine groaned and
creaked as it went along, with every tug the horses gave, though the
ordinary speed was somewhere about four miles an hour.
One hundred years ago news and letters travelled very slowly, the
post-boys to whom the letter bags were intrusted progressing at the
rate of three and a half miles an hour! In 1784 a proposal was laid
before Government by Mr. John Palmer, the originator of mail
coaches, to run quicker vehicles, though at much dearer rates of
postage. This scheme was at first opposed by Parliament, but after a
struggle of some two years, Palmer’s coaches were adopted for the
conveyance of the mails, though the rate at which these travelled
was only six miles an hour for a long time after their introduction.
A great impetus was given to the production of better forms of
stage coaches by gentlemen taking to drive them as an amusement,
and two clubs were soon formed of noblemen and gentlemen who
took an interest in four-in-hand driving and in vehicles in general.
Several clubs of this kind are now flourishing to encourage manly
sport, and with the capacity to promote improvements in the form of
the “drag,” as it is now called.
It is to an architect that we owe the invention of the Hansom cab.
The safety consisted in the arrangement of the framework at the
nearest part to the ground, so as to prevent an upset if the cab tilted
up or down. The inventor was Mr. Hansom, the architect of the
Birmingham Town Hall. Numberless improvements have been made
on this idea, but the leading principles are the same.
In 1829 the first omnibus was started in London by Mr. Shillibeer,
who some time previously had been a coachmaker in Paris. It was
drawn by three horses, and carried twenty-two passengers, all
inside. The fare was a shilling from the “Yorkshire Stingo,” in
Marylebone Road, to the Bank. This vehicle was found too large for
the streets of London, so a smaller one was started, drawn by two
horses and carrying twelve passengers inside. In 1849 an outside
seat was added along the centre of the roof, and by 1857 the
omnibus had become pretty nearly the same form as we now know
it. Our present omnibus is probably the lightest vehicle of its kind for
carrying such a large number of passengers. Its average weight is
about 25 cwt. The London General Omnibus Company have, on an
average, 626 omnibuses running on week-days, and 6,935 horses to
work them. They build their own vehicles, and each runs about sixty
miles a day, at a speed of about six miles an hour, and nearly all are
supplied with brake retarders, worked by the foot, which effect a
great saving in the strain put upon the horses in stopping.
 CHAPTER II.

PREPARATION OF THE DESIGN AND

SETTING OUT THE FULL-SIZED DRAUGHT.
In coach-building, as in building construction, the first thing to be
done is to prepare a design of the vehicle proposed to be built
according to the requirements of the customer. A scale of one inch to
a foot is a very good one for the purpose, though the scale drawings
are more often made to a scale of one and a half or two inches to a
foot. These drawings (or draughts as they are technically termed),
are prepared by specially trained draughtsmen, and it requires no
mean skill to produce, on a small scale, a pictorial representation of
the future vehicle, truly proportioned in all its parts, and a delicacy of
touch in order that the parts may not look coarse. These drawings, if
well made (and they generally are), give a very accurate picture of
the carriage, and a purchaser is generally able from this to say what
peculiar feature he requires, or where he thinks it should be altered;
if he can do this it saves a great deal of trouble in the future, whilst
the coach is being built.
For this work the draughtsman requires a drawing-board and T
square, and two set squares; as he never has to prepare very large
drawings, a board of imperial size will be amply sufficient, and the T
square to have a corresponding length of blade. T squares are made
of a variety of woods, but the most serviceable is one made of
mahogany, with an ebony edge; the most important consideration
being that the edge should be truly “shot” from end to end. The set
squares should either be vulcanite or skeleton mahogany with ebony
edges; the latter are preferable, as they work more cleanly than the
vulcanite, which, unless kept very clean, are apt to make black
smears across the drawing. In order to fasten the paper down to the
drawing board, drawing pins will be required; they are simple pins of
iron or steel, with a large flat brass head; four is the number required
for each sheet of paper, one at each corner. A very much better way
to fix the paper down is to “strain” it to the board. It is done in the
following way:—The sheet of paper to be fastened down is
thoroughly well wetted, by means of a sponge or large flat brush, on
one side (which, it does not matter, but see that your board is
perfectly clean before starting); it should then be left for five or ten
minutes for the water to well soak into the pores of the paper; when
this is done, the paper will be quite limp. Now take a perfectly clean
straight edge, or the back edge of the T square, and turn up one of
the edges of the paper ¼ or ½ an inch against it; along this edge run
a brush charged with glue from the glue pot, or a piece of ordinary
glue dipped into boiling water and rubbed along the edge will do just
as well, and when you think there is enough sticky matter to promote
adhesion between the paper and the board, turn the edge of the
paper back on the board (without removing the straight edge or T
square), and quickly rub it with the tips of the fingers until it goes
down flat all along without any air bubbles: do this to all four edges of
the paper, and place in a perfectly flat position to dry; and if the
operation has been carefully conducted the paper will be beautifully
flat to draw upon, and there can be no fear of its shifting. When the
drawing is finished, all that has to be done is to cut round the edges
of the paper just inside the glued edge, and take it off. A little hot
water will take off the glued strip, and take care to wash all the glue
off at the same time, otherwise a smaller piece of paper might stick
in some important part, and the drawing spoilt in order to detach it.
 Fig. 7.—Coach.
The draughtsman will do well to have a few French curves, for
drawing the “sweeps” or curved lines of the carriage bodies, and
scales of various sizes, which are slips of boxwood or ivory, on which
are marked at the edges various scales, from ¹⁄₁₆th of an inch to a
foot up to 3 inches to a foot; and last, though not by any means
least, a good box of compasses or mathematical instruments. We
shall not discuss the merits of the various kinds of instruments here,
but any one wishing to go into the matter may do so by reading
“Mathematical Instruments” in Weale’s Series. But we should
strongly advise the draughtsman to go to some good maker, as bad
drawing instruments only lead to bad drawing.
The drawing paper used should be of a kind having a slight gloss
on the surface, like “hot-pressed” paper, but without its granular
texture. This kind of paper is usually called a “board,” as Bristol
board, and kept in various sizes, and sold by all colour dealers.
Various names are given to it, but it is all pretty nearly alike.
The paper being fastened, the drawing is commenced by drawing
the ground line a (Fig. 7); from that set off the height that the body is
to be from the ground, indicated by the dotted line b, and draw the
line c, which is the depth of the rocker. This latter is the real bottom
of the vehicle, and from it is measured the height of the seat, about
12 inches, shown by the dotted lines on the body. Then from the seat
measure 42 inches, the length of the roof d. Lay off 23 inches for the
width of the door, and draw e and f. From f measure 28 inches, the
depth of the back quarter g, and from e measure 25 inches, which
will give the front quarter h. Now the curves or sweeps of the body
can be put in by means of French curves. From the hinge pillar
measure 26 inches, shown by dotted line i, and this is the centre of
the hind wheel, which is 4 feet 3 inches high. The spring is 1¼
inches thick, and consists of 5 plates 42 inches long. The opening
between the springs is 12½ inches, the lower one being clipped
beneath the axle. Measure 12½ inches from the underside of the
axle, which will give the underside of the top spring. 1¼ inches must
also be allowed for the back bar j, and the pump-handle k will be ½
an inch thick. Then draw the boot l in such a position that the front
wheels will lock or turn under it freely. This may be found by drawing
a plan of the wheel as shown, and with the centre of the lock bolt
produced to n, strike the lines m, and it will be seen that the wheels
will just clear the body, which is all that is necessary. From this it will
be noticed that the centre on which the fore carriage turns is not in
the same plane as the axle. This is more particularly discussed in the
chapter on wheel-plates. The front wheel is 42 inches high, the
springs the same size as the back springs. The draught may be now
completed from Fig. 7, after having settled on the various heights
and sizes, and can be inked in with Indian ink. The dotted lines,
being merely constructional, are rubbed out when the drawing is
inked in. To complete the drawing, the spokes of the wheels must be
shown. These should be neither too many nor too few, but there is
no rule which regulates their number, except that there should be
two to each felloe. Having inked the parts in and cleaned the pencil
lines off, the drawing is ready to be coloured. The colours applied to
the drawing are the same as will be used for painting the carriage, so
we shall not detail them here.
From this drawing is constructed the full-size draught, which is
prepared before a tool is touched. On the walls of the body-making
shop are large black-boards, 10
or 12 feet square, and on these
the draughts are prepared just
in the same way as described
for the scale drawing, except
that all the heights are marked
up a vertical line which runs
through the centre of the
doorway, and from this the
various widths are also set off.
This and the ground line are the
first two lines drawn, and it is
imperative that they should
make a perfect right angle with
each other, otherwise the
draught will not be true, and the
material worked from it will be
wasted. This full-sized draught
requires the greatest care in
preparation, as all the patterns
to which the materials are cut or Fig. 8.—Brougham with Cant-Board. s,
shaped are taken from it, even Standing pillar (developed). b, Bottom
to the smallest parts. bar. r, Rocker. l, Seat.
The full-size draught also
differs from the scale draught, inasmuch as all the details of the
construction of the vehicle are shown as in the accompanying cut
(Fig. 8), which shows the construction of a small doctor’s brougham,
and Fig. 9, which shows the construction of a landau. This latter is a
representation of the working draught for the vehicle, and, in fact, is
a reduced copy of what would be drawn upon the black-board in the
shop, except that some of the minor details are omitted to avoid
confusion.
Fig. 9.—Landau.