The American reaction precedes in point of time the National Oekonomie of Germany. and, like the latter, had its source in the political problems attendant upon the rise of a new State. The first systematic protest came from an early group of publicists, among whom may be men tioned Alexander Hamilton. Daniel Raymond, Alattliew Carey, Hezekiah Niles, and Friedrich List. Daniel Raymond is the author of the first treatise on political economy in which a distinct ively American system was advanced. His first work, Thoughts on Political Economy, appeared in 1820, and undoubtedly attracted a good deal of attention in certain circles. The fundamental idea of Raymond's system is his conception of wealth. Wealth, he held, is not an aggregation of exchange values, such as Adam Smith had conceived it, but the capacity or opportunity to acquire the necessaries and conveniences of life by labor. The English political economy. he held, was a study of exchange values, of private economy as opposed to national economy, and the laws of wealth laid down by Adam Smith were untrue of a nation conceived as a unity. Ex tending his doctrine of wealth, he maintained that the interests of one class do not always coincide with the interests of the nation as a whole. and that national wealth in its true sense will be most rapidly increased by developing all the national powers to their widest possible ex tent. He is, thus, a warm advocate of protection as opposed to the doctrine of laissez-fairc.
We come to a second period of development in American economic thought with Henry C. Carey (1793-1S79), by far the most influential of the earlier American economists. Carey's work is especially noteworthy, not only for his earnest defense of protection. hut for his economic optimism and his continued attaeks upon the Ricardian school. Drawing his lessons from American experience. he flatly denied the Alai thusian principle and the law of diminishing re turns. Carey's position upon these points was undoubtedly well taken for the America of his time, and although it is questionable whether he was justified in defending the exact converse of these propositions. he did unquestionably show
that the fundamental premises of the classical economy were not universally applicable. Carey defended a broad social conception of wealth similar to that held by Raymond, defining it as the measure of power which man has acquired over nature, while value of an object ex presses the resistance of nature which labor has to overcome to produce the object." Carey thus was led topropose the theory that the value of an object depends rather upon the cost of re production than the cost of production. Perhaps the central doctrine of his system is that. of association. The increase of wealth, the increas ing mastery of man over nature, the develop ment of a nation's powers. Carey held to be dependent upon the increasing association result ing from a compact population following diver sified pursuits with a close interrelationship be tween agriculture and manufactures. It was this optimistic belief in the possibilities of increased association that led him to advocate protection and to survey an increasing population with the greatest complacency. Since Carey's time. other American economists, like Henry George and Francis A. Walker, have exerted a world-wide influence upon economic thought. The younger generation of American economists have been largely trained in the German universities, and have in the main accepted the positive doctrines of the German Historical School. Without depre ciating the work of the great English economists it may be said that American investigation is marked by the attempt to test and supplement deductive reasoning by an appeal to statistics. law, and history. In a typical American uni versity the specialist in economic theory works harmoniously with associates whose special do main lie; in economic history. statistics, finance. or the practical problems of the day. All methods are acknowledged to be useful, and all are em ployed. The period of criticism has given way to a period of construction; but _American economic thought is still profoundly affected by the optimism and what may be called the anti cosmopolitanism of the early American reaction.