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The New Palgrave Dictionary of Economics

TheNewPalgraveDictionaryof Economics

TheNewPalgrave DictionaryofEconomics

ThirdEdition

With754Figuresand231Tables

ISBN978-1-349-95188-8ISBN978-1-349-95189-5(eBook)

ISBN978-1-349-95190-1(printandelectronicbundle) https://doi.org/10.1057/978-1-349-95189-5

LibraryofCongressControlNumber:2017957595

# TheEditor(s)(ifapplicable)andTheAuthor(s)2018

Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher, whetherthewholeorpartofthematerialisconcerned,specificallytherightsoftranslation, reprinting,reuseofillustrations,recitation,broadcasting,reproductiononmicrofilmsorinany otherphysicalway,andtransmissionorinformationstorageandretrieval,electronicadaptation, computersoftware,orbysimilarordissimilarmethodologynowknownorhereafterdeveloped. Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthis publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexempt fromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse. Thepublisher,theauthorsandtheeditorsaresafetoassumethattheadviceandinformationinthis bookarebelievedtobetrueandaccurateatthedateofpublication.Neitherthepublishernorthe authorsortheeditorsgiveawarranty,expressorimplied,withrespecttothematerialcontained hereinorforanyerrorsoromissionsthatmayhavebeenmade. Thepublisherremainsneutralwithregardtojurisdictionalclaimsinpublishedmapsand institutionalaffiliations.

Printedonacid-freepaper

ThisPalgraveMacmillanimprintispublishedbySpringerNature TheregisteredcompanyisMacmillanPublishersLtd. Theregisteredcompanyaddressis:TheCampus,4CrinanStreet,London,N19XW,United Kingdom

PublishingHistory

Firsteditionof DictionaryofPoliticalEconomy,editedbyRobertHarryInglis Palgrave,inthreevolumes:

VolumeI,printed1894. Reprintedpages1–256withcorrections,1901,1909. Reprintedwithcorrections,1915,1919.

VolumeII,printed1896. Reprinted1900. Reprintedwithcorrections,1910,1915.

VolumeIII,printed1899. Reprinted1901. Correctedwithappendix,1908. Reprintedwithcorrections,1910,1913. Reprinted,1918.

Newedition,retitled Palgrave’sDictionaryofPoliticalEconomy,editedby HenryHiggs,inthreevolumes:

VolumeI,printed1925. Reprinted1926.

VolumeII,printed1923. Reprinted1925,1926.

VolumeIII,printedFebruary1926. ReprintedMay1926.

TheNewPalgrave:ADictionaryofEconomics, editedbyJohnEatwell,MurrayMilgateandPeterNewman. Publishedinfourvolumes.

Firstpublished1987. Reprinted1988(twice). Reprintedwithcorrections1991. Reprinted1994,1996.

Firstpublishedinpaperback1998. Reprinted1999,2003,2004.

TheNewPalgraveDictionaryofEconomics, Secondedition, editedbyStevenN.DurlaufandLawrenceE.Blume. Firstpublishedin2008ineightvolumes

TheNewPalgraveDictionaryofEconomics,OnlineEdition Continuouslyupdatedbetween2008and2016

TheNewPalgraveDictionaryofEconomics, Thirdedition Firstpublishedin2018

Preface

‘Duringrecentyearsthecourseofeconomicstudyhasextendedsowidelythat itwasobviouslyimpossibletorestricttheworktotheoldandformerlywellrecognizedboundaries’.That’sInglisPalgravein1893describingthe first volumeofhis DictionaryofPoliticalEconomy

Onehundredandtwentyfouryearslater,withthisthirdeditionof TheNew PalgraveDictionaryofEconomics,thoseboundarieshaveextendedfurther still.WhilePalgravenotedthathisthreevolumedictionary – whatwewould nowcallanencyclopedia – obviouslyneededtocover ‘banking,theforeign exchanges,andtheoperationsofthemint’,healsonoteditneededtocover ‘questionsofaphilosophicalcharacter...ethics...reasoning...andthewaysin whichdiagramsandmathematicalprocessesmaylendassistancetoeconomic inquiry’.Today,theboundariesofeconomicsincludetheanalysisoflaboratoryexperiments,brainscansandcomputersimulations,investigationsof culturaldiversity,managementmethodsandpublichealthinterventions,and intherealmoftheoryitincludesinnovationsingames,econometricsandasset pricing.ThisthirdeditionofTheNewPalgraveincludesentriesthatreview innovationsinalloftheseareasandmany,manymore.

SincethesecondeditionofTheNewPalgravewaspublishedin2008,the DictionaryofEconomics hasaddedhundredsofnewentriesineveryareaof economics.Justtonoteasubset:

Extensivecoverageoftheglobal financialcrisis,fromtheoretical,econometricand historicalperspectives.LIBOR,Lehman,FannieMaeandFreddieMacallhavetheir entries,andadditionalentries,drawmultipletheoreticallessonsfromthecrisis.The newentrybyCharlesGoodhart(CBE,FBAandauthorofGoodhart’sLaw), ‘TheRun onNorthernRock’,isnottobemissed,ananalyticaltakeonanearlyeventinthe crisis.

Coverageoftheeurocrisisanditsaftermath,includingtwoentriesontheGreek crisisbyformerGreekMinisterofEconomicsandFinanceNicosChristodoulakis.

EntrieswithafocusonChina,includingDiegoRestuccia’sentryonfactor misallocationandGaoHaihong’sentryonthegrowinginternationalizationofthe renminbi.

Entriesintheareasofhealtheconomics,theeconomicsofgenderandInternet economics allplayagrowingroleinthisthirdedition.

Oneofthegreatpleasuresandhonorsofservingasanassociateeditorfor TheNewPalgraveisthatonecanrecruitthe finestmindsineconomicstowrite somanyoftheseentries.Intotal,thiseditioncontainsentriesby36Nobel

laureates.AndsincelaureatesElinorOstrom,VernonSmith,AngusDeaton andmanyotherscontributedwellbeforetheirtripstoStockholm,itissafeto predictthatthisedition,likeearlierones,includesentriesbyfutureNobel laureates.

Manyhandsandmanymindshavecontributedtomakingpossiblethisnew edition,the firstinprintsincethe2008editioneditedbyStevenDurlaufand LawrenceBlume.Twonamesdeserveparticularmentionfortheirvaluable worksince2008:AlisonHowsonandRachelSangster,bothofwhomoversaw TheNewPalgraveasitcontinuedtoaddentriesoverthepastdecade.

Onapersonalnote,IrecommendanentrybyFrancisYsidroEdgeworth –heoftheEdgeworthBox – carriedoverfromthe1893edition.In ‘MathematicalMethodsinPoliticalEconomy’,hebegins:

Theideaofapplyingmathematicstohumanaffairsmayappearat firstsightan absurdityworthyofSwift’s[magnetically flyingisland]Laputa.

Itonlygetsbetterfromthere.Edgeworthhimselfdescendedfromalineof boundary-freethinkers.AsJohnCreedy’sbiographicalentryinthisedition notes,Edgeworth’sgrandfatherhadbeenaninventor,amemberofthefamed LunarSocietyofBirmingham,aninformalclubwhichincluded ‘Watt,Bolton, Wedgwood,Priestley,DarwinandGalton’.Andthefamilyinclinationto expandone’sboundariesshowsupinFrancis’sauntMaria’snovel Belinda, whereonefoolishcharactermocksthewiseheroineBelindaforwastingher timereadingthebookthatAdamSmithheldwasthebetterofhistwo: The TheoryofMoralSentiments.

MayfutureeditionsofTheNewPalgravecontinuetoexpandtheboundariesofeconomicsandcontinuetolendwisdomtoeconomicinquiry.

July2017

GarettJones

AssociateEditor

PrefacetotheSecondEditionof TheNew PalgraveDictionaryofEconomics

Thesecondeditionof TheNewPalgrave:ADictionaryofEconomics shares R.H.InglisPalgrave’soriginalgoal, ‘ toprovidethestudentwithsuch assistanceasmayenablehimtounderstandthepositionofeconomicthought atthepresenttime’.Thatgoalwascertainlywithinreach(andachieved)in Palgrave’stimeandthatofhissuccessor,HenryHiggs.Some60yearslater,it wasamuchmoredauntingachievementforJohnEatwell,MurrayMilgateand PeterNewman,theeditorsof TheNewPalgrave:ADictionaryofEconomics Amere21yearslater,thetaskisnearlyinsuperable.WhenEatwell,Milgate andNewmanbegancommissioningentriesfortheirDictionaryin1983,the IBMPCwith16Koframwas2yearsold.Econometricswasstilllargelythe estimationoflinearmodelsonmainframecomputers.Sequentialequilibrium hadbeenformallyintroducedtotheprofessiononlytheyearbefore,andthe Bayesianrevolution,indeedthemodernrevivalofgametheory,hadjust begun.Economistsandpsychologistshadalreadybeentalkingforsome time,butthe fieldofbehavioraleconomicswasstillingestation.Onlyafew farsightedeconomistssawanythingmoretosociologythanJames Duesenberry’sfamousquipthat ‘Economicsisallabouthowpeoplemake choices;sociologyisallabouthowtheydon’thaveanychoicestomake’ Sincetheappearanceof TheNewPalgrave:ADictionaryofEconomics in 1987,thedisciplineofeconomicshasgrownenormouslybothinanalytical andtechnicalsophisticationandinthescopeofthesubject.Thegrowthof economicsisreflectedintheexpansionoftheDictionary.Thiseditionhas growntoeightvolumesfromthefourofitspredecessor,althoughmanyentries fromthepreviouseditionwereeitherremovedorelectronicallyarchived. Furthermore,theDictionaryhasshedmuchofitshistoricalcharacter:from providingarecordofthedevelopmentofeconomicthought,ithasbecome moreasnapshotofcontemporaryeconomics.Whereasthe firsteditionemphasizedeconomicmethod,thiseditionreportsequallyonwhatthosemethods havefound.Itplacesmoreemphasisonempiricalworkthanhaveanyofits predecessors,reflectingthesignificantempiricaladvancesthathaveoccurred inthemicroeconomic fieldsinparticular.Butastaticsnapshotcouldnot pretendtobecontemporaryforlong.Ourpublishershaverecognizednot justthemagnitudeofthechangeinthestockofknowledgebetweenthelast editionandthepresent,butalsotheincreasedgrowthrateofeconomics’ intellectualcapital.TheyhavemadetheDictionarydynamic.Withthisedition,

TheNewPalgraveDictionaryofEconomics movesonline,withtheexpectationofregularupdatestokeeptheDictionarycurrentin ‘realtime’.Itisno longerpossibletoproduceareferenceworkthataspirestobecomprehensive onthesmalleditorialscaleofthelonePalgraveortheEatwell-MilgateNewmantrio.Thepresenteditionhasbenefittedfromtwoeditorialboards. Wewerepleasedtohaveaccesstoaboardofadvisoryeditors,manyofwhose members’ workhasdefinedthemethodologicalandsubjectmattertransformationofthelast20years.Aboardofareaeditorstookontheresponsibilityof constructinglargepartsoftheDictionary,choosingtopics,commissioning writersandeditingtheentries.Thiseditionsimplycouldnothavebeen producedwithouttheirexpertiseandefforts.Byanymeasureofsweatequity, theyownmuchofthisbook.ThiseditionoftheDictionaryhascometoprint onlythroughtheeffortsofpeopletoonumeroustoproperlyacknowledge,but somenamesmustbecelebrated.Inparticular,wecannotthankenoughRuth LefevreinLondonandSusanNelsoninMadison,whoorganizedeverynut andboltofthisprojectandkepttrackofmanuscriptson fivecontinents. EconomistsdonotwriteaswellasourDictionaryentriessuggest.Every authorbenefittedfromsuperbcopy-editingbyMichaelJamesandElizabeth Stone.Finally,itisthejoboftheeditorstokeepthewritersinline;itwasthe jobofAlisonJonestokeeptheeditorsinline.Wedeeplyappreciateboththe velvetgloveandtheiron fistitencloses.Thehugeeffortrequiredtobringthis editiontoprintiscompensatedforbytheopportunitytohavecontemporary economicslaidoutbeforeus.Whatjoytohavetheabilitytocommissionan explanationbyanyexpertofanythingwewantedtoknow.Buteventhisis secondordertoourdiscoveryofthewarmthandgenerosityofthecommunity inwhichwework.Wearedeeplyappreciativeofthesupportwehavereceived fromourcolleagues:thosewhowrotefortheDictionary,thosewhohelpedus sortouteditorialissuesandthosewhojuststeppedforwardtowishuswell. Morethanjustasubjectmatter,economicsisacommunityofscholars,of whichweareproudtobeapart.

February2008

PrefacetotheFirstEditionof TheNew Palgrave:ADictionaryofEconomics

Intheprefacetothe firstvolumeofhis DictionaryofPoliticalEconomy (1894),R.H.InglisPalgravesaidthatits ‘primaryobject istoprovidethe studentwithsuchassistanceasmayenablehimtounderstandthepositionof economicthoughtatthepresenttime’.Althoughappearingalmostacentury later,wheneconomicshaschangedandgrownbeyondanythingimaginedin histime,stillmuchthesameclaimcanbemadeforTheNewPalgrave.Inorder toaccommodatethisgrowth,muchthatinterestedInglisPalgravehasbeen jettisoned.Suchtopicsastheadministrationofpublicexchequers,foreign coinage,landtenuresystems,legalandbusinessterms,socialinstitutions,and manyothers,areallofinterestbutare,asHenryHiggssaidinhisprefacetothe secondeditionoftheDictionary, ‘onlyremotelyconnectedwitheconomics’ Theirplacehasbeentakenbywholedisciplinesunknowntotheoriginaleditor (econometrics,gametheory,Keynesianeconomics,optimizationtheory,risk anduncertaintyanditsapplication,socialchoicetheory,urbaneconomics),as wellasbyvastexpansionsofsubjectswhichwereintheirinfancyinhistime (businesscycletheory,generalequilibriumtheory,growththeory,industrial organization,laboureconomics,welfareeconomics).Thereissolittle remaininghereoftheoriginalDictionarythatitwouldbedisingenuousto callthisitsthirdedition.ButjustastheeditorofTheNewGrove ‘triedto ensurethatsomethingofthe finehumanetraditionsoftheearliereditionsof Grovearetobeseeninourpages’,sowewouldliketobelievethatTheNew PalgravehasretainedsomeoftheliberalandscholarlyspiritofPalgrave’s enterprise.Atleastitislikeitspredecessorindealingwitheconomicsmainly initstheoreticalandappliedaspectsratherthanindescriptiveandinstitutional detail.Thelatterbecomesoutdatedwithinaveryfewyears,depreciatingtoo rapidlyforapublicationmeantforalongershelflifethanthat.Althoughitis notintendedtocontainadirectoryofeconomists,over700ofthenearly2000 entriesinTheNewPalgraveareinfactbiographical.Wehaveaimedat reasonablycompletecoverageofthemoreimportanteconomistswhohave writtenprimarilyinEnglish,especiallyinBritainitself,andasubstantial treatmentofmajoreconomistswhohavewritteninotherlanguages.Palgrave, perhapshoodwinkedbyhiscontributorC.P.Sanger,choseonlyWalrasfrom economistslivingatthattime,onthedistinctlyoddgroundthat ‘hesoclosely carriedontheworkofhisfatherProf.AntoineWalrasthatitwasnotpossibleto mentionthelatterwithoutalsodescribingtheworksofhisson’.We,however, xi

haveincludedasubstantialnumberoflivingeconomists,arguingthateconomicshasgrownsomuchinthiscenturythatnottoincludemanyofitsmost eminentlivingpractitionerswouldseriouslylimittheusefulnessandscopeof thework.Toreduceobviousproblemsofevaluationweimposedacut-offdate: anecessaryconditionforinclusionistohavereachedtheageofseventybefore 1January1986.Onmanynon-biographicalsubjects,largeandsmall,wehave triedtocapturediversityandvivacityofviewbyhavingmultipleentries,under similarbutdifferenttitles.Inthisway,wehopedtoobtainentriesthatpresent theresultsandmethodsofresearchwithfairnessandaccuracy,butnot necessarilyfroma ‘balanced’ pointofview.Suchaviewinthesecasesshould besoughtexternally,asitwere,usingthesystemofcross-referencestoconsult otherrelevantentries.Thismeansmoreworkforthereaderbutshouldyield correspondinglygreaterreward.Thereisobviouslyaroughandreadycorrelationbetweenthesizeofentryandtheimportancewhichtheeditorsattachto thepersonorsubjectconcerned,butthecorrelationisveryfarfromperfect. Theactualrealizationoftheprojectdidnotalwaysturnoutinaccordwithour originalplans.Andfortunatelyso,forwelearnedagreatdealintheprocessof editingandasaconsequencemadecontinualrevisionsofthoseplans.Such adjustmentshavemadeforabetterproduct,butnotforonethatdisplays perfectconsistency.Inthisregard,therecanbenoreaderwhowillnotwish thattheDictionaryweredifferentinsomerespects,alotmorehere,ratherless there,thattiredortiresometopicomitted,thatimportantomissionmadegood. Whileitisunrealistictoexpectthatallsucherrorsofomissionandcommission canbeavoided,ourhopeisthatthereaderwill findthatthosewhichremainare unbiased,inalmosteverysenseoftheword.Thereis,however,onemajorbias. Wewantednotonlytoprovideathoroughaccountofcontemporaryeconomic thoughtbutalso,likePalgravehimself,tohaveitsetinhistoricalperspective. Soweaskedauthorstowriteaccordingly,discussingforanyparticularsubject itspastanditsprospectsforthefuture,aswellasitsproblemsofthemoment. Sometopicsarenaturallymoreaptforthisapproachthanothers,andsome contributorswereofcoursemoreinsympathywithouraimsthanothers.Inthe main,however,theyrespondedverywellindeedtoourrequest,insomecases remarkablyso.PalgravewasthesoleeditorofhisDictionary,alabouroflove forhissubjectovermanyyears.Severalofhisauthorsdidmorethanjustwrite forhim,however,bysuggestingentriesandcontributorsandbyhelpingthe workthroughthepress.WehavetriedtopreservePalgrave’ssmalleditorial scale,butlikehimcouldnothavedonesowithoutthegenerousandfriendly help(farmorethancouldbereasonablyexpected)ofverymanycontributors, somanyindeedthatitwouldbeinvidioustoacknowledgethemallbyname. Wemust,however,recognizethekeypartplayedbyMargotLevy,the publishers ’ managingeditor,whoseenthusiasmandattentiontodetailcontributedessentiallytothetimelycompletionofthework.Itisalsoonlysimple justicetoacknowledge,withgratitude,howmuchwehavedependedonthe assistanceofAnnLesleyinCambridgeandDonnaHallatJohnsHopkins, alwayscheerfullygivenandexpertlyrendered.EditingthisDictionaryhasleft uswithaverystrongsense,quitecontrarytothelayman’sacceptedview,ofthe solidarityofeconomicsasaprofession.Thishasbeenshowninmanyways, notleastbytheextremelyfavourableresponsetoourinvitationstocontribute,

whichwereextendedtoeconomistsofwidelyvaryingideologicalandmethodologicalpersuasions.Overeightypercentofthosewhomweaskedagreed towrite,andalmostallofthosewhodeclineddidsowithwordsofregretand encouragement.Lookingback,thehardworkofeditingsubsidesintothe background,overwhelmedbythesheerenjoymentofputtingitalltogether, bythecontinuedpleasureofmanagingthe flowofusuallygoodandsometimes superlativecopyfromnearlyathousandauthors.Wehopethatthereaderwill experiencemostofthisenjoymentandlessofthework.

January1987

NotefromthePublisher

Nowinitsthirdedition,butwithahistorystretchingbackto1894, TheNew PalgraveDictionaryofEconomics hasbeenthego-toreferenceworkfor generationsofeconomists.

Sincethepublicationofthesecondedition10yearsago,muchhashappenedintheworldandineconomics,inparticularthetumultuousyearsofthe financialcrisisanditsaftermath.AsGarettJones’sprefaceillustrates,the currenteditionincludessubstantialnewcontentcoveringtheseeventsalongsideentriesreviewinggrowingareasofresearchwhichwillbeofinterestto readersandresearchersacrossthespectrumofeconomicenquiry.Inaddition, andinkeepingwithPalgravetradition,classicentriesofperennialimportance aremaintained.Whethersummarizingtheeconomicsbehindtheheadlinesor asanentrypointintoanestablishedtopic,thereadercanbeassuredthatthe Dictionaryprovidesreliable,vettedcontentthatisauthoritativeand informative.

Over1,700authors,including36NobelLaureates,havecontributedtothis thirdeditionwhichincludesmorethan3,000chaptersandninemillionwords makingthisthemostcomprehensiveeconomicreferenceresourceavailable andonethatweareproudtopublish.

Theprimaryobjectofthe DictionaryofPoliticalEconomy istoprovidethe studentwithsuchassistanceasmayenablehimtounderstandthepositionof economicthoughtatthepresenttime,andtopursuesuchbranchesofinquiry asmaybenecessaryforthatend.Thetableofthecontentsoftheworkshows howlargeistherangeofinvestigationwhichthestudentmustfollowatthe presenttime.Duringrecentyears,thecourseofeconomicstudyhasextended sowidelythatitwasobviouslyimpossibletorestricttheworktotheoldand formerlywell-recognizedboundaries.Thedevelopmentofthehistorical schoolhasopenedoutnewandfertile fields,whilethewantsofthosewho followthemathematicalmethodofstudyhavealsotobeconsidered.These twomainlinesoftreatmentareherebutmentionedasexamples.Theyarefar fromexhaustingthecountlessrami ficationsofinquirynowrightlythought necessaryforthecompleteinvestigationofastudyboundedonlybythe requirementsofhumanlifeineverysocialrelation.Inmakingtheselection necessitatedbythelimitsofspace,therequirementsofdifferentclassesof studentshavethroughoutbeenborneinmind.Ontheonesidepurelybusiness matters,suchasbanking,theforeignexchangesandtheoperationsofthemint, comein;ontheother,subjectsofaphilosophicalcharacterhavebeendealt with,suchasquestionsofethicsandmethodsofdefinition,analysisand reasoning,andthewaysinwhichdiagramsandmathematicalprocessesmay lendassistancetoeconomicinquiryhavealsobeendiscussed.Againthose interestedinhistoricalstudiesrequireanexplanationofwordsfoundinearly works,andthosederivedfromclassicalandmedievaltimes,alsooflegal phrases,nowarchaic,togetherwiththemoderncorrelativeterms,foronlythus canitbeunderstoodhowancientusagehasinfluencedpresenthabit.Lifeinthe presentday,eveninthemostmodernsettlementsintheUnitedStates,inour Britishcoloniesandinthenewcountriescomingintoexistenceindifferent partsoftheworld,isinfluencedlargelybythepast.Thestreamofexistence,if thesimilemaybepermitted,reachesusdeeplycolouredbythesoilofthe fields throughwhichithas flowedbythevariedstrataofthecliffs – someofthem underminedbyit – thathaveboundeditslonganddeviouscourse.Considerationsofspacehavenecessarilyconfinedthescopeoftheworkmainlytothe developmentsofeconomicstudyinEngland,theUnitedStatesandour English-speakingcolonies – and,inregardtothese,anendeavourhasbeen madetopresentunderallthesubjectstreatedanaccountofthebestandmost recentauthorities,whilsttheopinionsheldinothercountrieshavealso,asfar xvii

astherequiredlimitsallowed,beenconsideredandmentioned.Thebiographiesintroducedhavebeenselectedwiththesameend.Theyshowwhathas actuallybeenwritteninformertimes,andhencewillenablethereadertotrace theprogressofeconomicthought.Muchattentionhasbeengiventothelessknownwriters.Itisdifficultforthestudentunderordinarycircumstancesto traceoutwhensuchauthorslived,thesurroundingswhichinfluencedtheir livesandtheopinionstheyheld.Whiletheoversightsinsciencearesometimes asremarkableasthediscoveries,theseearlierlabourershavenotunfrequently beentheprecursorsofotherandbetter-knownmen,andhavesometimes anticipatedopinionsthathaveheldswayforlongperiodsafterthem.The differenteconomicschoolsintheprincipalcountriesoftheworldarealso described.Thus,thisvolumecontainsnoticesoftheAmerican,Austrian, DutchandEnglishschools,andtheFrench,German,ItalianandSpanish schoolswillfollowinduecourse.Aworkextendingoversowidearangeof subjectsis,necessarily,theproductionofmanyminds,ofwriterswhose pursuits,occupationsandstudiesareverydiverseandvaried.Idesiretorecord mywarmthankstothecontributorstothebook,whichis,Ithink,initselfan almostuniqueexampleofeconomicco-operation.Whereallhaveassistedso heartily,itislesseasytoselectindividualnames;butIwishtobeallowedto expressmyspecialthankstoProfessorDunbar,Dr.Keynes,Professor Marshall,ProfessorMontague,ProfessorNicholson,SignorM.Pantaleoni, Mr.L.R.Phelps,Mr.L.L.Price,Mr.E.Schuster,ProfessorH.Sidgwickand GeneralWalkerforvaluableassistanceindifferentdirections,andparticularly toDr.Bonar,ProfessorEdgeworth,Mr.HenryHiggsandMr.H.R.Tedder, whohavekindlyhelpedinthemorearduouslabourofthepreparationofthe workforthepress.Thisisbutanactofjustice,thatreadersmayknowtowhom theyarespeciallyindebted.

R.H.InglisPalgrave Belton,nearGreatYarmouth Christmas1893

AssociateEditors

– OnlineContent

RogerBackhouse UniversityofBirmingham,Birmingham,UK Biography,HistoryofEconomicThoughtandMethodology

IainBegg LondonSchoolofEconomics,London,UK EconomicsoftheEuropeanUnion

RogerFouquet LondonSchoolofEconomics,London,UK EnergyandEnvironmentalEconomics

YannisIoannides TuftsUniversity,Medford,USA UrbanandRuralEconomicsandEconomicGeography

GarettJones GeorgeMasonUniversity,Fairfax,USA MonetaryEconomicsandBehavioralEconomics

AdeelMalik UniversityofOxford,Oxford,UK EconomicsoftheMiddleEast

RobertPicard ReutersInstitute,UniversityofOxford,Oxford,UKandthe InformationSocietyProjectatYaleLawSchool,NewHaven,USA MediaandCulturalEconomics

GordonRausser UniversityofCaliforniaatBerkeley,Berkeley,USA AgriculturalEconomics

JonathanTemple UniversityofBristol,Bristol,UK Development

CatherineTucker MassachusettsInstituteofTechnology,Cambridge,USA EconomicsoftheInternet

BruceWeinberg OhioStateUniversity,Columbus,USA LabourEconomics

BarbaraWolfe UniversityofWisconsin,Madison,USA HealthEconomics

AssociateEditors,SecondEdition

RogerBackhouse UniversityofBirmingham,Birmingham,UK

MarkBils UniversityofRochester,Rochester,USA

MosheBuchinsky UniversityofCalifornia,LosAngeles,USA

GregoryClark UniversityofCalifornia,Davis,USA

CatherineEckel UniversityofTexas,Dallas,USA

MarcelFafchamps OxfordUniversity,Oxford,UK

DavidGenesove HebrewUniversityofJerusalem,Jerusalem,Israel

JamesHines UniversityofMichigan,AnnArbor,USA

BarryIckes PennsylvaniaStateUniversity,StateCollege,USA

YannisM.Ioannides TuftsUniversity,Medford,USA

EckhardJaneba UniversityofMannheim,Mannheim,Germany

ShellyLundberg UniversityofWashington,Seattle,USA

JohnNachbar WashingtonUniversity,StLouis,USA

LeeOhanian UniversityofCalifornia,LosAngeles,USA

JoonPark TexasA&MUniversity,CollegeStation,USA

JohnKarlScholz UniversityofWisconsin,Madison,USA

ChristopherTaber UniversityofWisconsin,Madison,USA

BruceWeinberg OhioStateUniversity,Columbus,USA

FoundingEditorialAdvisoryBoard,Second Edition

KennethArrow EmeritusProfessorofEconomics,StanfordUniversity, Stanford,USA

SirTonyAtkinson ProfessorofEconomics,NuffieldCollege,Universityof Oxford,Oxford,UK

RichardBlundell ProfessorofEconomics,UniversityCollegeLondon, London,UK

WilliamBrock VilasResearchProfessorofEconomics,UniversityofWisconsin,Madison,Madison,USA

SirParthaDasgupta ProfessorofEconomics,UniversityofCambridge, Cambridge,UK

PeterDiamond InstituteProfessor,MassachusettsInstituteofTechnology, Cambridge,USA

RogerGuesnerie DeltaPARIS-Jourdan,Paris,France

JamesJ.Heckman HenrySchultzDistinguishedServiceProfessorofEconomics,UniversityofChicago,Chicago,USA

ElhananHelpman GalenLStoneProfessorofInternationalTrade,Harvard University,Cambridge,USA

TakatoshiIto ProfessorofEconomics,UniversityofTokyo,Tokyo,Japan

AndreuMas-Colell SocietatdelaInformació/UniversitatPompeuFabra, Barcelona,Spain

PeterPhillips SterlingProfessorofEconomicsandProfessorofStatistics, YaleUniversity,NewHaven,USA

ThomasSargent SeniorFellow,HooverInstitutionandWRBerkeleyProfessor,NewYorkUniversity,NewYork,USA

PeterTemin EconomicsProfessor,MassachusettsInstituteofTechnology, Cambridge,USA

AAbbott,Edith(1876–1957)

P.Kerr

Socialreformer,economichistorianandapioneer inAmericaofthestudyoftheeconomicpositionof women,EdithAbbottwasbornon26September 1876inNebraska,andgraduatedfromtheUniversityofNebraskain1901.Sheenrolledinasummer sessionattheUniversityofChicagoin1902, attractingtheattentionofJamesLawrenceLaughlinandThorsteinVeblen,andontheirrecommendationreturnedtoChicagoin1903onafellowship inpoliticaleconomy,takingherPhDin1905witha dissertationonthewagesofunskilledlabourinthe USAbetween1850and1900(Abbott1905).Itwas duringthisperiodatChicagothatshemet SophonisbaBreckinridgewhobecamehermentor andlifelongfriend.In1906,onaCarnegieFellowship,shewenttotheLSEtocarryoutresearchon womeninindustry.InLondonshewasinfluenced bythesocialreformersoftheday,including CharlesBoothandSydneyandBeatriceWebb. ShereturnedtotheUSAin1907andtaughtpoliticaleconomyatWellesley.In1908Breckinridge, nowDirectorofResearchatthenewlyestablished ChicagoSchoolofCivicsandPhilanthropy,invited hertobecomeherassistant.

Abbott’sworkthereinvolvedherdirectlyin actionfortheprotectionandeducationof juvenilesandimmigrants,forimprovementsin

housing,andforthereformofcorrectionalinstitutions.Shealsoworkedtowardswomen’ssuffrage,the10-hlawtoprotectwomenin employment,andtheadmissionofwomeninto tradesunions.Inthe1930sshewastobecomea staunchadvocateofsocialinsurancemeasures andthewelfarestate.Althoughsympatheticto theNewDeal,shefeltittobeentirelyinadequate whenitcametowelfarepolicies.

Herpublicationsrangedoveranumberofareas insocialandpublicpolicy,andwithBreckinridge, shewasaninfluentialproponentoftheroleofthe stateasthekeyelementinanyextensiveprogrammeofsocialwelfare.Thejournaltheyjointly establishedin1927, SocialScienceReview,was immediatelyrecognizedasahighlyesteemedprofessionaljournal.Hermainwritingsoneconomics werecollectedinher WomeninIndustry (1910), wherearecurringthemewasthedistinction betweentheprogressof ‘professional’ women (andthewomen’smovementswithwhichthey wereassociated)andtherelativelyunchanged positionofworking-classwomen.

After1920,althoughsocialworkcame increasinglytodominatehertime,Abbottcontinuedherroleasanappliedeconomist.Shewasa memberoftheadvisorycommitteeoftheILOon immigration,andsucceededBreckinridgeas DeanoftheSchoolofSocialStudiesAdministrationatChicago.Sheremainedinthepostuntil 1942,andcontinuededitingthe SocialScience Review until1953.Shediedattheageof80at herfamilyhomeinGrandIsland.

# MacmillanPublishersLtd2018 MacmillanPublishersLtd(ed.), TheNewPalgraveDictionaryofEconomics, https://doi.org/10.1057/978-1-349-95189-5

SelectedWorks

1905.WagesofunskilledlabourintheUnited States,1850–1900. JournalofPoliticalEconomy 13:321–67.

1906.Industrialemploymentofwomeninthe UnitedStates. JournalofPoliticalEconomy 14:461–501.

1908.Studyofearlyhistoryofchildlabourin America. AmericanJournalofSociology 14: 15–37.

1910. Womeninindustry:AstudyinAmerican economichistory.London:Appleton&Co; lastreprintedin1970.

1915.Aforgottenminimumwagebill. Lifeand Labour 5:13–16.

Abramovitz,Moses(1912–2000)

RichardA.Easterlin

Keywords

Abramovitz,M.;Aggregatedemandtheory; Businesscycles;Economicgrowthinthevery longrun;Inventories;Kuznetscycles

JELClassifications

B31

BorninBrooklyn,NewYork,Abramovitzwas educatedatHarvard(AB,1932)andColumbia (Ph.D.,1939).Heheldfacultyappointmentsat Columbia(l940–2,1946–8)andStanfordUniversity(1948–77)andwasamemberoftheresearch staffoftheNationalBureauofEconomic Researchfrom1938to1969.From1942to1946 heworkedasaneconomistforseveralorganizationswithintheUnitedStatesgovernment.He waselectedpresidentoftheAmericanEconomic Associationin1979–80.

Abramovitz’swork,whichwasparticularly influencedbyWesleyC.MitchellandSimon Kuznets,centresonthestudyoflong-term

economicgrowthand fluctuationsinindustrialized marketeconomies.His firstmajorcontributionwas anempiricalstudyofbusinessinventoriesthat demonstratedtheimportanceofinventorychange intheshorterswingsofthebusinesscycle,and showedhowtheclassificationofinventoriesby stageofprocessingaidedintheexplanationof theirbehaviour(Abramovitz1950).Fromthis, Abramovitzwentontothestudyoflonger-term fluctuations,Kuznetscyclesof15to20yearsduration,andformulatedthemostwidelyaccepted interpretationofthesecycles.UsingKeynesian aggregatedemandtheory,Abramovitzdeveloped amodellinkingKuznetscyclestolongswingsin buildingcyclesanddemographicvariables,andto shorter-termbusinesscycles(Abramovitz1959a, 1961,1964,1968).

Contemporaneouslywithhisworkon fluctuations,Abramovitzmadeimportantcontributions tolong-termeconomicgrowth.Hewasoneofthe firsttodemonstratethatonlyasmallshareoflongtermoutputgrowthintheUnitedStateswas explainedbyfactorinputs(Abramovitz1956). Hedocumentedandanalysedtheincreasingrole ofgovernmentduringlong-termeconomicgrowth (Abramovitz1957,1981)anddirectedandcoordinatedacomparativestudyofthepost-wareconomicgrowthofanumberofindustrialized marketnations(Abramovitz1979b,1986).Finally, hechallengedincharacteristicallyperceptivefashionthefacilelinkagemadebymanyeconomists betweeneconomicgrowthandimprovinghuman welfare(Abramovitz1959b,1979a,1982).

SelectedWorks

1950. Inventoriesandbusinesscycles. NewYork:NBER.

1956.ResourceandoutputtrendsintheUnited Statessince1870. AmericanEconomicReview, PapersandProceedings 46(2):5–23.

1957.(WithV.Eliasberg.) Thegrowthofpublic employmentinGreatBritain. Princeton: PrincetonUniversityPress.

1959a.LongswingsinU.S.economicgrowth. Statementpresentedtojointeconomiccommitteeofthecongress.Hearingsbeforejoint

economiccommitteeofthecongressofthe U.S.on Employment,GrowthandPrice Levels, Part2,11–66,10April.

1959b.Thewelfareinterpretationofseculartrends innationalincomeandproduction.In Theallocationofeconomicresources: Essaysinhonor ofBernardF.Haley,ed.M.Abramovitzetal. Stanford:StanfordUniversityPress.

1961.ThenatureandsignificanceofKuznets cycles. EconomicDevelopmentandCultural Change 9:225–248.

1964. Evidenceoflongswingsinaggregateconstructionsincethecivilwar. Occasionalpaper no.90.NewYork:NBER.

1968.ThepassingoftheKuznetscycle. Economica 349–367.

1979a.Economicgrowthanditsdiscontents.In Economicsandhumanwelfare: Essaysin honorofTiborScitovsky, ed.M.Boskin. NewYork:AcademicPress.

1979b.Rapidgrowthpotentialanditsrealization: Theexperienceofcapitalisteconomiesinthe postwarperiod.In Economicgrowthand resources.Proceedingsofthe fifthworldcongressoftheinternationaleconomicassociation, vol.1.London/NewYork:Macmillan.

1981.Welfarequandariesandproductivityconcerns.PresidentialaddresstotheAmerican economicassociation. AmericanEconomic Review 71:1–17.

1982.Theretreatfromeconomicadvance.In Progressanditsdiscontents, ed.G.A.Almond, M.Chodorow,andR.H.Pearce.Berkeley: UniversityofCaliforniaPress.

1986.Catchingup,forgingaheadandfalling behind. JournalofEconomicHistory 46: 385–406.

estate,or(2)fromhiscountry;ormoregenerally (3)anyunproductiveconsumerwholivesoutof thecountryfromwhichhederiveshisincome.

Examplesofthesespeciesare(1)aseigneur underthe ancienrégime livinginParisatadistancefromhisestates;(2)anIrishlandlord residentabroad;(3)anAnglo-Indianex-official residentinEnglandanddrawingapensionfrom India.Inwritingbrieflyontheevilsofabsenteeismitisdifficulttousegeneraltermsappropriate toallthedefinitions;butconsiderationsprimarily relatingtosomeonedefinitionmayeasilybe adaptedtoanotherbythereader.

Itisusefultoconsiderseparatelytheeffectsof theabsenteeproprietor ’sconsumptionuponthe wealthofhiscountrymen;andthemoral,aswell aseconomicaleffectsofothercircumstances.

Absentee

F.Y.Edgeworth

Anabsenteemaybevariouslydefined(1)asa landedproprietorwhoresidesawayfromhis

I.Themoreabstractquestionturnsuponthefact thattheincomeofanabsenteeismostlyremittedbymeansofexports. ‘Thetribute,subsidy, orremittanceisalwaysingoods unlessthe countrypossessesminesofthepreciousmetals’ (Mill).Sofarastheproprietor,ifresidentat home,wouldconsumeforeignproduce,his absence,notincreasingexports,doesnotaffect localindustry.Sofarastheproprietor ’sabsence causesmanufacturestobeexported,hiscountrymenarenotprejudiced.Fortheymayhave asprofitableemploymentinmanufacturing thoseexportsas,iftheproprietorhadresided athome,theywouldhavehadinsupplying manufacturedcommoditiesorservicesforhis use.Butiftheproprietorbyhisabsencecauses rawmaterialstobeexported,whileifpresent hewouldhaveusednativemanufacturesand services,hisabsencetendstodeprivehiscountrymenofemployment,todiminishtheir prosperity,andperhapstheirnumbers.This reasoningisbasedonSenior ’s Lecturesonthe RateofWages (LectureII),and PoliticalEconomy (pp.155–61).Senior ’spositionisinajust meanbetweentwoextremes – thepopularfallacyandtheparadoxofMcCulloch.Ontheone handitisassertedthatbetweenthepaymentof adebttoanabsenteeandaresidentthereisthe samedifferenceasbetweenthepaymentand non-paymentofatributetoaforeigncountry.

Ontheotherhanditisdeniedthatthereisany differenceatall.Thegrosserformofthevulgar error,theconceptionthattheincomeofthe absenteeisdrawnfromthetributarycountry inspecie,isexemplifiedinThomasPrior ’s ListofAbsentees (1727).McCulloch’sargumentsarestatedintheessayon ‘Absenteeism’ inhis TreatisesandEssaysonMoney,etc.,and intheevidencegivenbyhimbeforesomeofthe parliamentarycommissionswhicharereferred tobelow.Asked ‘Doyouseeanydifference betweenrawproduceandmanufactured goods’,McCullochreplies, ‘Idonotthinkit makesanydifference ’ (compare Treatisesand Essays,p.232).Heappealstoobservation,and findsthatthetenantsofabsenteelandlordsare ‘subjectedtoless fleecingandextortionthan thoseofresidents ’ .

J.S.Millattributestoabsenteeismatendency tolowerthelevelofpricesinthecountryfrom whichtheabsenteedrawsanincome;withthe consequencethattheinhabitantsofthatcountry obtaintheirimportsatanincreasedcostofeffort andsacrifice(UnsettledQuestions,Essayi,p.43). Mill’smeaningmaybemadeclearerbyastudyof therestoftheessaywhichhasbeencited,andof theparallelpassageinhis PoliticalEconomy (Bookv,ch.iv,§6),wherehearguesthatan inequalitybetweenexportsandimportsresultsin an ‘effluxofmoney’ fromonecountrytoanother. UponlessdistinctgroundsQuesnayconnects absenteeismwithadevelopmentoftradeand industryinanunhealthydirection(Oeuvres,ed. Oncken,p.189).Amongreconditeconsiderations whichmaybearonthesubjectshouldbementionedCantillon’stheoryconcerningtheeffectof theconsumptionoftherichonthegrowthofpopulation(Essai,pt.i,ch.xv).

II.Othereconomicaladvantageslostbyabsenteeismarethosewhichspringfromtheinterest whicharesidentisapttotakeinthethingsand personsabouthim.Thushemaybeprompted toinvestcapitalinlocalimprovements,orto actasanemployerofworkmen. ‘Itisnotthe simpleamountoftherentalbeingremittedto anothercountry’,saysArthurYoung, ‘butthe

damponallsortsofimprovements’ D’Argensoninhis Considérationssurle gouvernementancienetprésentdelaFrance (1765,p.183),attributesgreatimportanceto themaster ’seye.

Thegoodfeelingwhichisapttogrowup betweenaresidentlandlordandhistenantryhas materialaswellasmoralresults,whicharegenerallybeneficial.Theabsenteeislesslikelytotake accountofcircumstances(e.g.,tenant’simprovements),whichrenderrack-rentingunjust.Heis lesslikelytomakeallowanceforcalamitieswhich renderpunctualpaymentdifficult. ‘Miseriesof whichhecanseenothing,andprobablyhearas littleof,canmakenoimpression’ (A.Young).He isgladtogetridofresponsibilitybydealingwitha ‘middleman’,orintermediatetenant – anadditionalwheelinthemachineryofexaction,calculatedtogrindrelentlesslythoseplacedunderneath it.Withoutthesofteninginfluenceofpersonal communicationbetweentheownerandthecultivatorofthesoil,the ‘cashnexus’ isliabletobe strainedbeyondthelimitofhumanpatience,and toburstviolently.Therecanbelittledoubtbutthat absenteeismhasbeenonepotentcauseofthe miseryanddisturbancesinIreland.Thesame causehasproducedlikeeffectsincaseswidely differentinotherrespects.ThecruellestoppressorsoftheFrenchpeasantrybeforetheRevolution werethe fermiers,whopurchasedforanannual sumtherighttocollecttheduesofabsenteeseigneurs.TheviolenceoftheGrangerRailwaylegislationinthewesternstatesofAmericais attributedtothefactthattheshareholdersdamnifiedwereabsenteeproprietors(Seligman, Journal ofPoliticalScience,1888).

Therearealsothemoraladvantagesduetothe influenceandexampleofacultivatedupperclass. Theextentofthisbenefitwillvaryaccordingto thecharacteroftheproprietorsandthepeople.In somecasesitmaybe,asAdamSmithsays,that ‘theinhabitantsofalargevillage,afterhaving madeconsiderableprogressinmanufactures, havebecomeidleinconsequenceofagreat lordhavingtakenuphisresidenceintheir neighbourhood’.Theoppositeview,presented byMissEdgeworthinher Absentee,maybetrue

inotherstatesofcivilization.Perhapsthesafest generalizationisthatmadebySeniorthat ‘in generalthepresenceofmenoflargefortuneis morallydetrimental,andthatofmenofmoderate fortunemorallybeneficial,totheirimmediate neighbourhood’ .

Reprintedfrom Palgrave’sDictionaryofPoliticalEconomy.

References

Brodrick,G.C.1881. EnglishlandandEnglishlandlords. London.

Carey,H.1835. Essayontherateofwages.Philadelphia: Carey,Lea&Blanchard. deLavergne,L.1860. EconomieruraledelaFrance depuis1789.Paris:Guillamin. Levasseur,E.1885.Asummaryoftheresultsoftherecent ItalianCommission. JournaldesEconomistes Levasseur,E.1889. LapopulationFrançaise. Paris. Montchrétien.1615. L’économiepolitiquepatronale. Traictédel’oekonomiepolitique,ed.Th.FunckBretano.Paris,1889. Smith,A.1776. Aninquiryintothenatureandcausesof thewealthofnations.London:W.Strahan&T.Cadell. Taine,H.1876. L’ancienrégime. Paris. Tocqueville,A.deClerel.1856. L’ancienrégimeetla révolution,3rdedn.Paris,1857. Wakefield,E.1812. AnaccountofIreland,statisticaland political.London. Young,A.1780. AtourinIreland.London:T.Cannell& J.Dodsley.

AbsoluteandExchangeableValue

JohnEatwell

Abstract

Thenotionofabsolute(asdistinctfrom exchangeableorrelative)valuearisesinclassicaleconomicsfromtheimageofagiven magnitudeofoutputbeingdistributedbetween thesocialclasses.Ricardopositedthatthe valueofthesocialsurpluscouldbeexpressed intermsoflabourregardlessofhowthesurplus wasdistributed.Butsincechangesindistributionaffectexchangeablevalue,thevalueofthe

surpluswilltypicallyvaryasdistribution varies,eventhoughitsphysicalmagnitude remainsunchanged.In1823Ricardoconcludedthat ‘thereisnosuchthinginnatureas aperfectmeasureofvalue’ .

Keywords

Absoluteandexchangeablevalue;Cairnes, F.E.;Cairnes,J.E.;Class;Classicaleconomics;Invariablestandardofvalue;Labourtheoryofvalue;Marx,K.H.;Rateofprofit; Ricardo,D.;Sraffa,P.;Surplus

JELClassifications

Noonecandoubtthatitwouldbeagreatdesideratuminpoliticaleconomytohavesuchameasureofabsolutevalueinordertoenableusto know,whencommoditiesalteredinrelative value,inwhichthealterationinvaluehadtaken place(DavidRicardo 1823,p.399n).

Theideathatchangesintherelativeor exchangeablevalueofapairofcommodities mightusefullybeattributedtoalterationsinthe ‘absolutevalue’ ofoneortheotherofthemwill appearratheroddtoanyoneaccustomedtothinkingofthebasicproblemofpricetheoryasbeing thedeterminationofsetsofrelativeprices,with anyconsiderationof ‘absolute’ valuebeingconfinedtoproblemsinmonetarytheoryandthe determinationoftheoverallpricelevel.Sincein neoclassicaltheoryitisthe relative scarcityof commodities,orofthefactorserviceswhichare usedtoproducethem,whichisthekeytorelative priceformation,noconceptionof ‘absolute’ value,thatis,apriceassociatedwiththeconditionsofproductionofasinglecommodity,is eitherrelevantornecessary.

Yetthenotionofabsolutevaluearosenaturally withinRicardo’sanalysisofvalueanddistribution.Thecentralproblemofclassicaltheoryisto relatethephysicalmagnitudeofsurplus(defined asthesocialoutput minus thereplacementof materialsusedinitsproductionandthewage goodspaidtothelabourersemployed)tothe generalrateofprofitandtherentsintermsof

whichthesurplusisdistributed.Thekeyimageis thedistributionofagivenmagnitudeofoutput betweentheclassesofthesociety. ‘Afterall’,as Ricardoputit, ‘thegreatquestionsofRent,Wages andProfitsmustbeexplainedbytheproportions inwhichthewholeproduceisdividedbetween landlords,capitalists,andlabourers,andwhich arenotessentiallyconnectedwiththedoctrineof value’ (1820,p.194).Ricardowasabletosustain this ‘material’ viewofdistributiononlyinthe EssayonProfits, andonlytherebytheimplicit deviceofasectorinwhichallinputsandalloutput consistofthesamecommodity,corn,whichis alsousedtopaywagesintheothersectorsofthe economy.Inthecornsectorthedivisionofthe productmaybeexpressedinphysicalterms,and therateofprofitexpressedasaratioofphysical magnitudes.

Thisclearanddirectanalysisisnolongerpossibleoncethestrongassumptionofaselfreproducingsectorisdropped.

Theneedtoexpressheterogeneoussurplus(net ofrent)andheterogeneouscapitalashomogeneousmagnitudesinordertodeterminetherate ofprofitcreatedtheneedforatheoryofvalue. Ricardo’smaterialistapproachledhimtothe labourtheoryofvalue.Thequantityoflabour embodieddirectlyandindirectlyintheproduction ofacommodityisdeterminedbytheconditionsof productionofthatcommodity,orasRicardoputit, bythedifficultyorfacilityofproduction,andwill changeonlywhenthetechniquechanges.Hence theaggregatesofsocialsurplusandcapital advancedmaybeexpressedasquantitiesof labour,thesequantitiesbeinginvarianttochanges inthedistributionofsocialproduct.Sotherateof profitisdeterminedastheratioofsurplus(onthe landlastbroughtintouse)tothemeansofproduction,includingwages.

Once,however,theimpactofchangesindistributiononexchangeablevalueistakeninto accountthepictureisfarlessclear.Thevalueof socialoutput,andofthesurplus,measuredinany givenstandard,willtypicallynowvaryasdistributionvaries,eventhoughthephysicalmagnitude ofsocialoutputremainsunchanged.Thedirect deductiverelationshipbetweenwages,surplus, andhence,therateofprofit,isnolonger

self-evident,orindeed,evidentatall.Itwas Ricardo’sdesiretorestoreclaritytohisanalysis whichledtohissearchforaninvariablestandard ofvalue(astandardintermsofwhichthesizeof theaggregatewouldnotvaryasdistributionwas changed)andforwhatSraffadescribesas ‘for Ricardoitsnecessarycomplement’,absolute value(Sraffa 1951,p.xlvi).

Theterm ‘absolutevalue’ wasusedbyRicardo butonceinthe firsteditionofthe Principles and occasionallyinletters.Itwasclari fiedinthe paperson ‘AbsoluteValueandExchangeable Value’,writtenin1823inthelastfewyearsof hislife.Thesewerediscoveredinalockedboxat thehomeofF.E.Cairnes,thesonoftheeconomist JohnElliotCairnes,in1943,andpublishedforthe firsttimeinSraffa’seditionofRicardo’sWorks andCorrespondence.

Therearetwoversionsoftheessay.One,a roughdraft,iswrittenonoddpiecesofpaper, someofthemthecoversoflettersaddressedto Ricardo.Theotherisascarcelycorrecteddraft, writtenonuniformsheetsofpaper.Thisclean draftbreaksoff,unfinished.

Theimportanceoftheessayderivesfromthe reinforcementitprovidestothatinterpretationof Ricardo’stheoryofvalueanddistributionwhich suggeststhattheproblemofthedeterminationof therelativevaluesofcommoditiesstemmedfrom Ricardo’sdesiretorelatehisimageofthedivision ofsocialproductasaphysicalmagnitudetothe wages,rents,andrateofprofitofamarketeconomy.Ricardowasnotinterestedforitsown sakeintheproblemofwhytwocommodities producedbythesamequantitiesoflabourare notofthesameexchangeablevalue.Hewas, rather,concernedbythefactthatasdistribution ofsocialoutput changes exchangeablevalue changes, disruptingandobscuringanotherwise clearvision.Itwasthisemphasisonthefact that changes indistributionleadtochangesin exchangeablevalue,eventhoughthequantityof socialoutputandthemethodbywhichitisproducedareunchanged,whichledRicardointothe intellectualcul-de-sacofthesearchforaninvariablestandardofvalue.

Theabsolutevalueofacommodityisthevalue ofthatcommoditymeasuredintermsofan

invariablestandard.Aninvariablestandardof valuemaybefound

...ifpreciselythesamelengthoftimeandneither morenorlesswerenecessarytotheproductionof allcommodities.Commoditieswouldthenhavean absolutevaluedirectlyinproportiontothequantity oflabourembodiedinthem.(Ricardo 1823,p.382.

Changesintheabsolutevaluesofcommodities couldthenderiveonlyfromchangesinthe amountoflabourembodiedinthem,andthe valueofsocialoutputwouldbeinvariatetoits distribution.

Yetpreciselybecauseallcommoditiesarenot producedunderthesamecircumstances, ‘difficultyorfacilityofproductionisnotabsolutely theonlycauseofvariationinvalue,thereisone other,theriseorfallofwages’ sincecommodities cannot ‘beproducedandbroughttomarketin preciselythesametime’ (1823,p.368).Hence Ricardomustconclude,rathersadly,that ‘thereis nosuchthinginnatureasaperfectmeasureof value’ (1823,p.404) – thereisnosuchthingasan invariablestandardofvalue.

Marx(1883),whocouldnot,ofcourse,have seenthepapersonAbsoluteandExchangeable Value,wascriticalofRicardo’sabsorptionwith thesearchforaninvariablestandard.Thefocuson changesinrelativevalueobscuredthefactthat commoditiesdonotexchangeatratesproportionaltotheirlabourvalues(labourembodied). YetMarx’sattempttorestoreclaritytotheanalysisofdistributionby firstdeterminingtherate ofprofitastheratioofquantitiesoflabour,and then ‘transforming’ labourvaluesintopricesof production,encountersdifficultieswhichderive fromexactlythesamesourceasthosewhich bedevilledRicardo – thedifferenceinproduction conditionsor ‘organiccompositionofcapital’ of commodities.

Thedataofclassicaltheorycanbeusedto determinetherateofprofit,asSraffa(1960) hasshown.Butthedeterminationcannotbe ‘sequential’– firstspecifyingatheoryofvalue andthenevaluatingtheratioofsurplustocapital advancedbymeansofthatpredeterminedtheory ofvalue.Rathertherateofprofitandtheratesat whichcommoditiesexchangemustbedetermined simultaneously.

SeeAlso

▶ Ricardo,David(1772–1823)

Bibliography

Marx,K.1883. Capital.Vol.3.London:Lawrenceand Wishart.1976.

Ricardo,D.1820.LettertoJ.R.McCulloch,13June1820. In WorksandcorrespondenceofDavidRicardo. Vol.8, ed.P.Sraffa.Cambridge:CambridgeUniversityPress, 1953.

Ricardo,D.1823.Paperon ‘Absoluteandexchangeable value’ (roughdraft,andunfinishedcleanversion).In WorksandcorrespondenceofDavidRicardo. Vol.4, ed.P.Sraffa.Cambridge:CambridgeUniversityPress, 1951.

Sraffa,P.1951. Introductiontoworksandcorrespondence ofDavidRicardo.Vol.1.Cambridge:CambridgeUniversityPress.

Sraffa,P.1960. Productionofcommoditiesbymeansof commodities.Cambridge:CambridgeUniversityPress.

AbsoluteRent

EdnaldoAraquemdaSilva

Marx’sworkonrentwasbasedonhisstudiesof thestatisticalreportspublishedaftertheRussian AgrarianReformof1861.Theimportanceofthe RussiancaseonMarx’sthinkingishighlightedin Engels’‘Preface’ tothethirdvolumeofMarx’s Capital,whichdrawsaparallelbetweentheinfluenceofRussia’sdiverselandtenuresystemon Marx’sanalysisofrentandtheroleofEngland onhisanalysisofindustrialwage-labour. Althoughtheeconomicsurplusnormallytakes theformofprofitsinthecapitalistsystem,Marx gaveconsiderableattentiontorent.Inchapter XLVofthethirdvolumeof Capital (1894),and inhiscriticalcommentsonRicardo’stheoryof rent,publishedin TheoriesofSurplus-Value (1905),Marxintroducedtheconceptofabsolute rentastherentpaidbycapitalisttenantfarmersto landowners,regardlessofthefertilityofthe rentedland.

Marx(1894,pp.760,771;1905,pp.244,392) definedabsoluterentasthedifferencebetween thevalueoftheagriculturalproductoftheleast productivelandandthe general production price, P(g).Absoluterentcanabsorbtheentire [value–P(g)]differenceoraproportionofthis difference.Incontrast,differentialrentisdefined asthedifferencebetweenthegeneralproduction priceandthe individual productionprice, P(i). TheseconceptsaredepictedinFig. 1.Bydefinition,absoluterentispositiveevenontheworst cultivatedland,A,whereasdifferentialrentiszero onA,butthenbecomespositiveandincreases withimprovedlandfertility,B,C,andD.

Marx’sconceptofabsoluterentisbasedontwo assumptions:(1)theagriculturalorganiccompositionofcapitalislowerthantheaverageofagricultureandindustry;and(2)landiscultivatedby capitalisttenantfarmers.Assumption(1)implies thatthevalueofanagriculturalcommoditywillbe above itsproductionprice;underassumption(2), landownerswillleaselandonlytothosecapitalist tenantswhocanpayabsoluterentevenontheworst qualityandmostinconvenientlylocatedland.

Incontrasttoothercommoditieswhose organiccompositionofcapitalislowerthanthe averageofagricultureandindustry,andthushave theirvaluesabovetheirproductionprices,competitionamongcapitalistproducersdoesnot

reducethevaluesoftheagriculturalproductsto theirproductionprices.Theseparationoflandownersfromtenantoperatorspreventstheequalizationofprofitratesinagriculturewiththesingle rateprevailinginindustry.Landownersarethereforeabletoseizeexcessoraboveaverageagriculturalprofitsandpreventthemfromenteringthe processbywhichtheaverageprofitrateisformed (seeMarx1905,p.37;Murray1977).

UnderMarx’sassumptions,themarketpriceof anagriculturalproductwillincludetheabsolute rentabovethegeneralproductionprice.

Iftheworstsoilcannotbecultivated – althoughits cultivationwouldyieldthepriceofproduction – until itproducessomethinginexcessofthepriceof production,[absolute]rent,thenlandedproperty isthecreativecauseof this riseinprice(Marx 1894 ,p.755).

Therehasbeensomeconfusionastowhether theupperlimitofthemarketpriceofanagricultural productwouldbesetbyitsindividualvalueonthe worstcultivatedland.Marx(1905,p.332)himself asked: ‘Iflandedpropertygivesthepowertosell theproductaboveits[productionprice], at its value,whydoesitnotequallywellgivethe powertoselltheproduct above itsvalue,atan arbitrarymonopolyprice?’ EchoingMarx, Bortkiewicz(1911)and,muchlater,Emmanuel (1972)havealsoquestionedwhylandlordslimit

Increasinglandfertility
AbsoluteRent,
Fig.1 Marx’sconceptof

absoluterenttotheexcessofvalueovertheproductionpriceontheworstcultivatedland.They suggestthatsincelandownershavethepowerto withdrawlandfromcultivationuntilthemarket pricecoversboththeabsoluterentandtheproductionpriceofthehighest-costproducer,theycould alsochargearentinexcessofthecorresponding value.Incapitalistagriculture,absoluterenthasa negativeimpactbecauseitpreventsagricultural pricesfromfalling,andbecauseitremovesabove averageprofits,amajorsourceofcapitalisttechnicalinnovation(seeLenin 1901,pp.119–29).

DespitesomeambiguityinMarx’sformulation ofabsoluterent,hisargumentispersuasive:

Althoughlandedpropertymaydrivethepriceof agriculturalproduceaboveitspriceofproduction,it doesnotdependonthis,butratheronthegeneral stateofthemarket,towhatdegreemarket-price exceedsthepriceofproductionandapproaches thevalue(Marx, 1894,p.764,seealsop.762; Murray1977;Flichman 1977).

AccordingtoMarx(1894,pp.760,765;1905, pp.244,393),thelowercompositionofagriculturalcapitalcomparedtothatofindustry ‘is a historical differenceandcanthereforedisappear ’,andsoabsoluterentwouldalsotendto disappearastheproductivityofagricultural labourapproachesthatofindustry.Inthiscase, theproductionpriceofanagriculturalproduct wouldapproachitsvalueandanyrentpaidby thecapitalisttenantswouldconstituteamonopoly rent.Themonopolyrentispaidabovethevalueof theagriculturalproduct,anditwouldthusbe limitednotbyvalue,asinthecaseofabsolute rent,butbyforeignagriculturaltrade,competition amonglandowners,andtheconsumersbudget (seeMarx 1894,pp.758,805,810;1905,p.332).

Marx’stheoryofabsoluterenthasbeen by-passedbythecontroversyoverthetransformationofvaluesintoproductionprices,andhasbeen littleusedasaconceptualdevicetoanalysethe effectoflandownershiponcapitalistinvestment inagricultureortheeffectoflandownershipon agriculturalprices.Unfortunately,absoluterent hasbeenneglectedbyMarxisteconomists,while itseemstobeafavourite bêtenoire amongsympatheticcriticsofMarx,suchasBortkiewicz (1911)andEmmanuel(1972).Asaresult,

absoluterenthasanuncertainfutureasauseful theoreticaldevice,despitethefactthatinmany countriescapitalistagriculturestilllargelyconformstothetwobasicassumptionsmadeby Marxmorethanahundredyearsago.

SeeAlso

▶ LandRent

▶ Marx,KarlHeinrich(1818–1883)

▶ Rent

▶ UnequalExchange

Bibliography

Bortkiewicz,L.1911.Lateoriadellarenditafondiariadi RodbertuseladottrinadiMarxsullarenditafondiaria assoluta.In LaTeoriaEconomicadiMarxealtrisaggi suBöhm-Bawerk,WalrasePareto. Turin:Einaudi, 1971.

Emmanuel,A.1972. Unequalexchange.NewYork: MonthlyReviewPress. Flichman,G.1977. LaRentadelSueloyelDesarrollo AgrarioArgentino.BuenosAires:SigloVeintiuno Editores.

Lenin,V.I.1901.Theagrarianquestionandthe ‘criticsof Marx’.In Collectedworks,Vol.V,ed.V.I.Lenin.Moscow:ProgressPublishers,1973.

Marx,K.1894. Capital,Vol.III.Moscow:ProgressPublishers,1971.

.1905. Theoriesofsurplusvalue,PartII.Moscow: ProgressPublishers,1968.Murray,R.1977.Valueand thetheoryofrent:I. Capital&Class 1(3):100–122.

AbsorptionApproachtotheBalance ofPayments

DavidVines JELClassifications E0

Theabsorptionapproachtothebalanceofpaymentsstatesthatacountry’sbalanceoftradewill onlyimproveifthecountry’soutputofgoodsand

servicesincreasesbymorethanitsabsorption, wheretheterm ‘absorption’ meansexpenditure bydomesticresidentsongoodsandservices. Thisapproachwas firstputforwardbyAlexander (1952, 1959).

Thenoveltyofthisapproachmaybeappreciatedbyconsideringtheparticularquestion ‘willa devaluationimproveacountry’sbalanceof trade?’ Theelasticitiesapproach,popularwhen Alexanderwaswriting,answersthisquestionby focusingonthepriceelasticitiesofsupplyand demandforexportsandimports.Itholdsthatthe devaluationwillbesuccessfulifthepriceelasticitiesofdemandforexportsandimportsarelarge enoughsothattheincreaseinexportssoldto foreignersandthereductioninimportsbought bydomesticresidentstogethermorethanoffset thetermsoftradelosscausedbythedevaluation (Aspecialcaseofthisresultisformalizedinthe Marshall–Lernerconditions).Theabsorption approachargues,bycontrast,thatthedevaluation willonlybesuccessfulifitcausesthegapbetween domesticoutputanddomesticabsorptionto widen.IneffectAlexandercriticizestheelasticitiesapproachforfocusingonthemovementalong givensupplyanddemandcurvesintheparticular marketsforexportsandimports(amicroeconomicapproach),insteadoflookingattheproductionandspendingofthenationasawhole whichshiftthesecurves(amacroeconomic approach).

Alexander ’scriticismoftheelasticities approachisvalid.Butwithoutfurtherelaboration theabsorptionapproachisunhelpfulinrectifying theinadequacy.Thisisbecause,takenatface value,theabsorptionapproachmerelystatesan identity.Letthesymbols, Y, C, I, G, X and M stand foroutput,consumption,investment,government expenditure,exportsandimportsrespectively. ThentheKeynesianincome-expenditure identity statesthat

This identity statespreciselythatthetradebalance willimproveifoutput, Y,increasesbymorethan absorption(C + I + G).

Whatisneeded,andwhatAlexanderhelpedto provide,isananalysisofexactlyhowoutputand absorptionchange,inresponsetoadevaluation, andindeedinresponsetootherdevelopmentsin theeconomy.Suchagapwasalsobeing filledat thetimebyKeynesianwriters(Robinson 1937; Harrod 1939;Machlup 1943;Meade 1951; Harberger 1950;LaursenandMetzler 1950;see alsoSwan 1956).

AlloftheseauthorsgraftedtheKeynesian multiplierontotheelasticitiesapproach.The resultinghybridconstructcanbeusedtoanalyse theeffectsofadevaluationasfollows.Suppose thatthepriceelasticityeffectsdoimprovethe balanceoftrade, X–M,by ‘switching’ expenditurestowardsdomesticgoods.Thenthese ‘expenditure-switching’ effectsprovideapositive stimulustotheKeynesianmultiplierprocess,and driveupoutput Y andabsorption C + I + G.Let x betheexpenditure-switchingeffectsonthetrade balanceofadevaluationofthecurrencybyone unit,andlettheoveralleffectsofthisdevaluation onthetradebalancebe y.Letthepropensityto consumebe c,thetaxratebe t andthepropensity toimport m,sothattheKeynesianmultiplieris k = 1/[1 c(1 t)+ m].Theincreaseinoutput resultingfromthedevaluationis kx andthe increaseinabsorptionis c(1 t)kx.Andso

Ifthepropensitytoconsume c islessthanunity andthetaxrate t ispositivethenabsorption increasesbylessthanoutput,and,asEq.(3) showsthetradebalanceisimprovedbythedevaluation.TheabovesketchshowshowthecombinationoftheelasticitiesapproachandKeynesian theoryisabletoprovidetheneededanalysisof howoutputandabsorptionchangefollowing adevaluation.Andinsteadofdescribingthe outcomesintermsofoutputandabsorption,as Alexanderdid,itispossibletogiveamore conventionalKeynesiandescription,which wouldproceedasfollows.Sincethemultiplier

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The Project Gutenberg eBook of Nick Carter Stories No. 122, January 9, 1915: The suicide; or, Nick Carter and the lost head

This ebook is for the use of anyone anywhere in the United States and most other parts of the world at no cost and with almost no restrictions whatsoever. You may copy it, give it away or re-use it under the terms of the Project Gutenberg License included with this ebook or online at www.gutenberg.org. If you are not located in the United States, you will have to check the laws of the country where you are located before using this eBook.

Title: Nick Carter Stories No. 122, January 9, 1915: The suicide; or, Nick Carter and the lost head

Author: Nicholas Carter

Burke Jenkins

E. K. Nostwell

Release date: July 7, 2022 [eBook #68467]

Language: English

Original publication: United States: Street & Smaith, 1914

Credits: David Edwards, Chuck Greif and the Online Distributed Proofreading Team at https://www.pgdp.net (Northern Illinois University Digital Library) *** START OF THE PROJECT GUTENBERG EBOOK NICK CARTER STORIES NO. 122, JANUARY 9, 1915: THE SUICIDE; OR, NICK CARTER AND THE LOST HEAD ***

Issued Weekly. Entered as Second-class Matter at the New York Post Office, by S S, 79-89 Seventh Ave., New York.

Copyright, 1915, by S S. O. G. Smith and G. C. Smith, Proprietors.

Terms to NICK CARTER STORIES Mail Subscribers.

(Postage Free.)

Single Copies or Back Numbers, 5c. Each.

3 months 65c.

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Receipts—Receipt of your remittance is acknowledged by proper change of number on your label. If not correct you have not been properly credited, and should let us know at once. No. 122. NEW YORK, January 9, 1915. Price Five Cents.

THE SUICIDE;

Or, NICK CARTER AND THE LOST HEAD.

CHAPTER I.

HOW THE END CAME.

“Slow down, Danny, and look out for that wire,” said Nick Carter to his chauffeur. “It may be a live one.”

“I’m onto it, chief.”

“Onto it, eh? Don’t you run onto it while I’m in the car, not if it’s a live one. You may fancy absorbing the output of an electric-lighting plant, but not for mine, Danny, not for mine! I know what it would do to me. I’ve seen men electrocuted.”

Danny Maloney laughed, for it was obvious that the famous detective was jesting.

“Onto it with my lamps, chief, is what I meant,” he replied.

“Say what you mean, then,” said Nick, with a smile. “Precision is one of the valuable assets of a detective. Luckily, however, you are addressing one who can read between the lines—barring those of the ambiguous letter that brought us out here.”

“Can’t you fathom it? It must be mighty blind, chief, if it fools you.”

“On the contrary, Danny, it is perfectly plain—what there is of it,” said Nick dryly. “A woman, one Mrs. Myra Darling, states that she is in great trouble, that a very devoted friend of mine has advised her to appeal to me, and will I favor her with a call at my earliest convenience.”

“That all?” questioned Danny tersely.

“The whole business,” said Nick. “Of course, the appeal coming from a woman, I cannot turn it down. Noblesse oblige.”

“You don’t know her?”

“Not from a side of leather. I am acquainted with no Darling woman— suppress that smile, Danny. I know what you are thinking. But all women are not darlings—far from it.”

“This one might be,” said Danny, his smile spreading to a grin.

“That’s neither here nor there,” said Nick, with a laugh. “Not being in the market, Danny, all women look alike to me. Now, the said Mrs. Darling’s trouble may be—ah, but we are near an answer to the momentous question.

Yonder is the place, unless I am much mistaken. Stop at the driveway gate. I’ll walk into the grounds. Keep your eye peeled, by the way, while I’m engaged with her ladyship.”

The place referred to was out beyond Washington Heights and overlooking the Hudson. It was an attractive estate, without being at all pretentious, as were others in the immediate locality.

The grounds flanked a broad street in which electric lighting was being introduced, and from which the house stood back some thirty yards, with a well-kept lawn and a few shade trees. In the rear were a stable and garage, beyond which the land sloped down sharply toward the river.

Nick did not wait for an answer from his chauffeur. He sprang from the car while speaking, then walked briskly up the driveway and approached the house, quite a large wooden dwelling of the colonial type. Nick mounted the broad front veranda and rang the bell.

It was answered almost immediately by a tall, graceful woman, clad in black, and about thirty years of age. She was of medium complexion, with brown hair and eyes and a finely poised head. Her features were regular, but her face was a strong one, rather than handsome, evincing will power, intellectuality, and a lofty character. She bowed and smiled a bit gravely, saying immediately:

“You are Mr. Carter, I think.”

“Yes,” said Nick politely.

“I am Mrs. Darling. Walk in, please, and come into the library. I am very glad you could comply so soon with my request. It is very good of you.”

“I happened to be at liberty this afternoon,” Nick replied, following her into the hall. “I received your letter this morning.”

Mrs. Darling conducted him into a prettily furnished library and invited him to be seated. Taking an opposite chair, she then said gravely:

“I will take as little as possible of your valuable time. I will tell you with few and simple words, Mr. Carter, why I have sent for you.”

“Cover all of the ground, Mrs. Darling,” Nick suggested. “My time just now is at your disposal.”

“Thank you,” she replied, bowing. “I will in that case begin at the beginning. I was married eight years ago to Mr. Cyrus Darling, a New York tobacco dealer, a man whom I have always supposed had considerable

means, though he has never informed me definitely. He owned this place, however, and we have always lived well, and he has provided for me generously.”

“Mr. Darling is not living?”

“No. I will explain presently.”

“Continue.”

“I was nearly twenty years younger than he, Mr. Carter, but our married life was a uniformly happy one, though not as gay and festive as he perhaps would have preferred. I am inclined to be domestic, while he was of a volatile nature, having neither a strong or stable character. I frankly admit, Mr. Carter, that he was subservient to my will and wishes.”

“I understand you,” said Nick.

“I have no children, and I keep only two servants, aside from a chauffeur, whom I occasionally employ,” Mrs. Darling continued. “My husband’s habits were good, as the world goes, and I noticed nothing unusual in his conduct until about three months ago.”

“And then?”

“I then thought he appeared strangely reticent, at times very self-absorbed and less frank and affectionate than before. I asked him whether there was anything wrong, but he assured me to the contrary, though he seemed a bit irritated because I questioned him.”

“I follow you.”

“Later, Mr. Carter, he appeared quite despondent, and I feared that his business troubled him. He said that my fears were groundless, and that his business was never better. He went from bad to worse. He said very little at home, and remained in town evenings much more frequently than in years past, which I attributed to his seeming depression and his desire to find relief in the excitement and diversions of the city.”

“Did you occasionally accompany him?” Nick inquired.

“Very seldom. He did not seem inclined to have me do so.”

“Was he addicted to drink?”

“Only moderately. I never saw him intoxicated, nor anything like it.”

“Proceed.”

“About two weeks ago, Mr. Carter, he decided to sell his business, saying that he was sick of it and would try something else. I remonstrated with him,

telling him that he was making a mistake, and that it is not easy for a man over fifty to make such changes profitably.”

“That is very true, Mrs. Darling.”

“It had no effect upon him, however, and he let the business go,” she replied, sadly shaking her head. “During the following week he was at home part of each day, but he spent most of the afternoons and evenings in town. On Tuesday, one week ago yesterday, he appeared unusually nervous and depressed. I missed him soon after lunch, and supposed he had gone into town. I had an appointment with my dentist and was absent from two o’clock until nearly six. When I returned home—well, Mr. Carter, the end had come.”

“You mean?” questioned Nick gravely.

“My husband had committed suicide—or was the victim of foul play.”

“H’m, I see!” Nick drew up in his chair. “Were you in any uncertainty at that time, Mrs. Darling, as to the cause of his death?”

“No, not at that time, Mr. Carter,” she quickly informed him. “I know what you have in mind—that I should have called in the police immediately. I did not then, however, nor at any time until yesterday, have even a thought of anything but suicide. The circumstances suggested nothing else.”

“What were the circumstances, Mrs. Darling?” Nick inquired. “State them briefly.”

“There is very little to tell,” she rejoined. “My husband was last seen alive by one of my servants. She saw him going out of the back door of the house and around the stable, and she supposed he was going down to our boathouse, which was on the river bank and out of view from here, owing to the sharp slope of the land.”

“I see,” said Nick, glancing from the window.

“Soon after, Mr. Carter, the boathouse was seen to be on fire. It contained a motor boat and considerable gasoline, which caused it to burn very rapidly. It was completely destroyed. In the ruins were found the remains of my husband, little more than a charred skeleton, from which the flesh was almost entirely burned.”

Mrs. Darling paused to dry her eyes, maintaining with an effort her outward composure. Appreciating her feelings, Nick waited a few moments and then inquired:

“Are you sure, Mrs. Darling, that his death was not due to an accident?”

“Positively,” she replied. “To begin with, Mr. Carter, he left this letter on the chiffonier in my bedroom. You may read it.”

She took it from the library table while speaking and tendered it to the detective.

Nick read it, the following few lines written with pen and ink.

“M D M: Forgive me for the step I am going to take. I am driven to it by feelings I cannot describe. I am sick and tired of the whole business —of life itself. I am going to end it. Forgive and forget me.

“C.”

Nick replaced the letter on the table, saying considerately:

“There seems, indeed, to be no reasonable doubt of Mr. Darling’s intentions. You recognize the writing, I infer.”

“Yes, surely,” she replied. “Furthermore, Mr. Carter, there were found in the ruins numerous articles that positively identify my husband’s remains. They included the buttons on his garments, which were entirely consumed; also his pocketknife, his false teeth, and a plain gold ring. His revolver also was found near by, and it is supposed that he shot himself after setting fire to the boathouse, presumably to make sure that his terrible design could not miscarry.”

“Who examined the articles and investigated the case?” asked Nick.

“Doctor Lyons, my physician, who is also the coroner.”

“A capable man,” Nick nodded. “I am acquainted with him. What is his opinion?”

“He thinks it a case of suicide. He could find no evidence of anything else, and is very positive in his opinion.”

“Had your husband any money, jewelry, or——”

“He left those in the bedroom, his watch, diamonds, and pocketbook, also his ring of keys,” Mrs. Darling interposed. “Only one key was missing from the ring.”

“Which one?”

“The key to the boathouse.”

Nick did not reply for a few moments. He sat gazing thoughtfully at a figure in the heavy carpet. Superficially viewed, the circumstances stated

seemed to admit of only one reasonable theory—that Mr. Cyrus Darling had, indeed, deliberately ended his own life.

“The funeral and burial were last Thursday,” Mrs. Darling added, during the brief silence on Nick’s part. “Doctor Lyons did not think the case called for any investigations beyond those he personally made, nor did I at that time. He——”

“One moment,” said Nick, looking up. “What have you since learned, Mrs. Darling, that occasions your misgivings? Why do you now suspect foul play? That, I think, is the term you used.”

“I have two reasons for apprehending something of the kind,” she replied. “One relates to my husband’s estate. I have learned from his lawyer, who has been assisting me, and in whom I have absolute confidence, that Mr. Darling left no will, that he has recently withdrawn considerable money from the bank, and that his safety-deposit drawer contains only a few securities, worth less than three thousand dollars. From dividends which I know that he has been in the habit of receiving, as well as from our living expenses for several years, I know that he was worth at least a hundred thousand dollars.”

“Is your lawyer investigating the matter?”

“I have requested him to do so.”

“What is his name?” Nick inquired, taking out his notebook.

“Henry Clayton. He has an office in town.”

“I am acquainted with him, also,” said Nick, noting the name. “You mentioned a second reason for your misgivings. What is that?”

“One of my servants.”

“You mean?”

“I referred in my letter, Mr. Carter, to a very devoted friend of yours, who advised me to appeal to you.”

“Yes, I remember,” said Nick, wondering. “A devoted friend of mine— one of your servants?”

“I refer to my table girl, who also serves me as a maid. You have, I am very sure, no more grateful and devoted an admirer. I will call her.”

Nick bowed and waited, still more deeply puzzled as to the girl’s identity.

Mrs. Darling touched a bell on the library table.

Nick glanced again from one of the windows—and discovered another perplexing fact.

His touring car was standing where he had left it, but his chauffeur was missing. Danny Maloney had disappeared.

The quick, light steps of the approaching maid sounded in the hall. Turning in that direction just as she appeared at the open door, Nick beheld

Nancy Nordeck.

CHAPTER II.

THE GIRL WHO WAS DOWN.

Suspicions were mingled with Nick Carter’s surprise at seeing Nancy Nordeck. They were perfectly natural, too, under the circumstances, and in view of the disclosures to which he had just listened. The presence of a girl with a criminal record in the home of a man whose death was shrouded in mystery, much more of a mystery than Mrs. Darling even imagined, though already keenly appreciated by the detective, might indeed be significant.

Months had passed since Nick last saw Nancy Nordeck. She had so improved in looks that he hardly recognized her. She bore little likeness to the frail girl with pinched and haggard face, who was so deeply affected by the violent death of her crook father that she had resolved to reform, a moral awakening that Nick had by no means felt sure would be lasting.

His first thought, therefore, was that she might be up to her old tricks and in league with rascals to have killed Cyrus Darling to get possession of his fortune. It was not in Nick’s nature to expose the girl, nevertheless, if her reformation was genuine, for he never put a block in the way of any one who was down and striving to rise.

He felt for a moment that his position might be a delicate one, but though no signs of them appeared in his face, his impressions evidently were suspected by the girl. For she approached him quickly, saying respectfully, yet with characteristic assurance:

“I know what you’re thinking, Mr. Carter, and no one could blame you. But there’s nothing in it, sir. I’ve been as straight as a string from the time you set me right and shook hands with me, wishing me all kinds of good luck, and you couldn’t think if you tried how much I now care for you and your good opinion. I have hid nothing here, sir. Mrs. Darling knows all about me and what I was, and she’s been as good to me as you, sir. I’d bite a finger off before I’d go crooked again in any way.”

“I think you can safely depend upon that, Mr. Carter,” said Mrs. Darling, smiling faintly. “Nancy has confided her entire past to me, and in overlooking it and lending her a helping hand, I now know positively that I made no mistake. She is a good girl and a capable one.”

There was a suspicious moisture in Nancy’s brown eyes, then fixed upon the strong, kindly face of her mistress. She colored deeply, too, when Nick extended his hand and said heartily:

“Come here, Nancy. Let’s shake again. I’m more than glad to hear this and to know you are on the right track. Stick to it, my girl, as I now feel sure you will.”

“You may be sure that I will, Mr. Carter,” said Nancy, eagerly shaking his hand.

“Now let’s proceed with this matter,” Nick said, more seriously. “Mrs. Darling tells me that you advised her to appeal to me?”

“So I did, Mr. Carter,” Nancy replied.

“She will answer any questions you care to ask her,” Mrs. Darling put in.

“To begin with, then, what do you know about the case?” said Nick. “Was it you who last saw Mr. Darling alive?”

“Yes, sir. I saw him leaving the house and going down back of the stable.”

“Did you notice anything unusual? Did he appear excited, or——”

“No, sir; not in the least,” put in Nancy. “I didn’t reckon anything wrong was coming off. I didn’t get wise at all until the mistress told me that most of the master’s money is missing.”

“Wise to what, Nancy?”

“That he was killed and robbed, mebbe, instead of putting out his own light.”

“Why did you suspect that?”

“Only because of two guys he has been friendly with lately. They have been here to see him, one of them quite a number of times.”

“Two men?”

“Yes, sir.”

“Do you know them?” Nick inquired, turning to Mrs. Darling.

“Hardly more than by name,” she replied. “My husband introduced me to one of them, named Philip Floyd, who has called several times to see him. I have met the other only once.”

“What is his name?” asked Nick, proceeding to write them in his notebook.

“Ralph Sheldon. He called here a few days ago with Mr. Floyd, who introduced me to him. My husband was absent at the time and they remained only a few minutes. That is the only time I ever saw Mr. Sheldon, though my husband had frequently mentioned him.”

“Are they old friends of his?”

“Quite the contrary. I never heard of them until about a month ago.”

“Had they any business relations with your husband?”

“I cannot say.”

“Do you know anything about them?”

“No more than I have told you,” said Mrs. Darling. “My husband referred to them only as friends, and he appeared to think well of them.”

“Do you know where they live?”

“I do not.”

“Both were here, you say, a few days before he died.”

“The day before, Mr. Carter, and both attended his funeral.”

“Did they say why they wanted to see him on the day preceding his death?”

“They did not. I inferred from their remarks, however, that it was only a friendly call.”

“Are they men of his own age?”

“I would say that Mr. Sheldon is nearly as old. He appears to be in the forties. Mr. Floyd, however, is not over thirty.”

“Are they prepossessing men?”

“Yes, in a way, though I did not quite fancy them,” said Mrs. Darling. “As for Nancy—well, she may speak for herself. It was partly her impression of them that led me to take her advice and appeal to you.”

“On the dead, Mr. Carter, I would not trust either of them as far as I could throw a bull by the tail,” Nancy bluntly declared, in characteristic terms. “You know me, sir. I am not easily fooled. I can read a man dead right nine times out of ten, Mr. Carter, the minute I set my eyes on him.”

“You did not fancy them, then?”

“Not so you’d notice it,” said Nancy. “I wouldn’t say too much against the Sheldon man, Mr. Carter, for I’ve seen him only twice. I saw him at the

funeral, and I let him in with Mr. Floyd a few days before. He’s all right, mebbe, though I’d hate to bank much on it.”

“What about Mr. Floyd? Why do you distrust him so seriously?”

“I have more than one reason for that hunch,” said Nancy inelegantly. “For a starter, Mr. Carter, I’ve seen that guy before.”

“Floyd?”

“Yes, sir.”

“When and where, Nancy?”

“Give it up. On the dead, sir, I can’t tell.”

“But you feel sure of it?”

“Surest thing you know,” said Nancy confidently. “I’d stake my bundle on it, Mr. Carter, and you know what that means, knowing what I was. Any man I knew in the past was most likely a crook.”

Nick did not contradict her.

“Besides, he knew me, sir, the first time. I let him in here,” Nancy went on. “I was wise to that, all right, but it wasn’t for me to meddle with the master’s affairs. So I kept my trap closed.”

“Why did you think Floyd recognized you?”

“I saw his lamps light up the instant they lit on me,” Nancy explained, in characteristic terms. “He looked at me like he saw a ghost.”

“Did he say anything to you?”

“No, not a word, Mr. Carter. But no man with eyes like his is on the level. I know what I’m saying. It’s like breaking sticks for me to pick out a crook from a bunch of men. Floyd is one, Mr. Carter, if ever there was one, and that’s why I got the mistress to send for you. I don’t forget what you did in that Maybrick case—and what you did for me, sir, never!”

“I’m quite sure of it, Nancy,” Nick replied. “You can tell me no more about the two men, I infer.”

“No, sir.”

“That is all, then. I will look deeper into this matter, Mrs. Darling, if you wish me to do so, under one condition.”

“Any conditions you see fit to impose, Mr. Carter,” she replied gratefully.

“You must leave the case entirely to me, aside from the instructions you already have given your lawyer and Doctor Lyons. I will see and inform both

of them of our arrangements.”

“Very well. I leave it all to you.”

“And say nothing about it to others,” Nick added. “There must be no publicity at present.”

“I am more than anxious to avoid it,” Mrs. Darling assured him.

Nick arose and took his hat from the table.

“I am going to have a look at the ruins of the boathouse,” he said. “If you will show me the way——”

“I will send Nancy with you.”

“I prefer to go alone,” Nick objected. “I will return in a very few minutes.”

He left the house by the rear door, passing around the stable and down the river bank. All that remained at the boathouse and its contents was a heap of charred, black ruins. The ground near by was covered with footprints of many persons who had visited the tragic scene, but none of them were of material significance.

Nick wanted only to view the surroundings, however, and he saw with a glance that the spot was so shut in by the hill in the rear and the trees on either side, that knaves selecting it for the murder of Darling, if such was his fate, would have incurred only chance observation by persons on the river, against which effective precautions could easily have been taken.

Scarce ten minutes had passed when Nick returned and rejoined Mrs. Darling in the library. He then obtained from her a description of Floyd and Sheldon, the only two persons then seeming to invite suspicion, and he also asked to see a photograph of her husband.

“I know of only one in existence, Mr. Carter,” she replied. “That was taken the year after our marriage. It is still a very good likeness of him. It is in our album. I will get it for you.”

She brought the volume and opened it on the library table—only to search it vainly.

The photograph of Mr. Cyrus Darling had disappeared.

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