Taussig, Frank W.
Taussig, Frank W.
Frank William Taussig (1859-1940), one of the foremost American economists of his age, was born in St. Louis, Missouri. His father had emigrated from Prague to the United States in 1846 and had an unusual career even for nineteenth-century America. He started in wholesale trade, then became successively a medical practitioner, mayor of his community, judge, federal tax collector, banker, and eventually president of a successful railroad. Taussig’s mother was the daughter of a Protestant teacher from the Rhineland who had come to the United States in 1848. Taussig entered Harvard as a sophomore in 1876, graduating in 1879 with “highest honors.” After a year in Europe, where he traveled extensively and studied Roman law and political economy for a semester in Berlin, he enrolled in the Harvard Law School, soon switched to economics, became secretary to President Eliot of Harvard, and took his PH.D. in economics in 1883 and his LL.B. in 1886. He advanced quickly from instructor in 1885 to full professor of economics in 1892, a position which he held until his retirement in 1935. From 1876 until his death Taussig lived in the academic community of Cambridge, Massachusetts, except for two years in Europe, from 1901 to 1903, for reasons of health, and two years’ service in Washington, from 1917 to 1919. There he was the first chairman of the new U.S. Tariff Commission, a close adviser of President Woodrow Wilson, especially on commercial policy measures, and a member of the Price Fixing Committee. Under his leadership the Tariff Commission acquired an excellent staff and published several reports (especially Reciprocity and Commercial Treaties 1919) of lasting value and influence, which helped to shape the liberal turn in American tariff policies in later years. In 1919 he spent several months at the peace conference in Paris as economic adviser and intimate counselor to President Wilson.
Taussig belonged to the same group of American “neoclassical” economists as John Bates Clark, Irving Fisher, and Frank A. Fetter, but he was more deeply rooted in the classical tradition than the others. Schumpeter reported that Taussig once told him that he regarded Ricardo as the greatest economist of all time and considered Bohm-Bawerk the only possible rival (Schumpeter et al.  1951, p. 199). As a refined and elegant theorist and the inventor and user of mathematical methods, Fisher was unsurpassed among his American contemporaries. But Taussig was foremost in the field of applied economic theory. His work was remarkable for its historical perspective and his intuitive sense both for orders of magnitude of economic variables and for the political feasibility of proposed economic measures.
Through his numerous students and disciples and through his Principles of Economics (1911), the leading economic text for a long time, Taussig had a stronger influence than any other American economist of his time on several generations of academic economists as well as on many leading economic civil servants—an influence which can still be clearly felt in many quarters. For 40 years, from 1896 to 1936, Taussig was the editor of the Quarterly Journal of Economics. Through his editorial policy, which was discriminating and firm as well as liberal and tolerant, he made a significant contribution to American economics.
His principal field of interest was the theory, history, and practice of international trade and trade policy. In Viner’s words, Taussig’s work in the field of theory of international trade can be characterized as “a restatement and an elaboration of the analysis of the English classical school.” His specific contributions were:
(1) his synthesis of the scattered and unorganized classical materials into a unified and coordinated general theory of international trade; (2) his revision of the classical doctrine of comparative costs dealing especially with problems arising from the existence of different types of labor (”non-competing groups”) and of interest costs, which always were a stumbling block for the labor theory of value; (3) his analysis of the mechanism of international trade under nonmetallic monetary standards; and (4) his use of the theory of international trade in the interpretation of the industrial development of the United States. (Viner 1936, P. 5)
The theory is treated in the relevant chapters of Taussig’s Principles of Economics and in greater detail in his later book, International Trade (1927), with elaborate attempts at historical and statistical “verifications” so characteristic of all his work.
Taussig’s discussion of the balance-of-payments mechanism is contained in numerous articles (see especially 1917) and in Parts n and in of his International Trade. In this work he used extensively the results of the studies of particular countries, which had been made at his suggestion and partly under his guidance by his students, notably, James W. Angell and Frank Dunstone Graham (who studied the United States), Norman J. Sil-berling (Great Britain), Jacob Viner (Canada), John H. Williams (Argentina).
Taussig devoted a great many articles and two important monographs, The Tariff History of the United States (1888) and Some Aspects of the Tariff Question (1915a), to tariff history and commercial policy. The latter volume has separate chapters on important American industries, such as sugar, iron and steel, silk, cotton, and wool manufacturing, and is an important contribution to general American economic history. Taussig was a moderate free trader, believing that such benefits as accrue from a system of free trade are secured only if that system is maintained for a long time and that, conversely, the greatest evil is a changing tariff system. In principle he accepted the validity of the infant industry argument for protection, although he was skeptical of its actual application. In his empirical-historical researches he paid special attention to discovering the extent to which tariffs had contributed to the rise of particular industries; he did not find that protection had made a large contribution to American economic development.
Taussig’s main contribution to the field of general economic theory is his book Wages and Capital (1896) and the relevant chapters of the Principles. His treatment of the theory of distribution of income was systematic, but as Schumpeter put it, he “allowed his exposition to grow out of contemporary American discussion—as shaped primarily by Walker—on a particular point—the wages fund doctrine” (Schumpeter 1936, p. 219). Taussig’s own theory can perhaps be described as a blend of Ricardo and Bohm-Bawerk. Like Marshall, whom he knew well and with whom he had extensive correspondence, he did not accept the then prevalent view that there was a sharp break or contrast between the old classical theory of Ricardo, Nassau Senior, and J. S. Mill on the one hand and the modern marginal analysis on the other. On the contrary, he saw a continuous process of improvement, elaboration, and refinement of essentially one body of economic theory, spanning the classical and what we now call the neoclassical epoch. In this belief he was perhaps more modern, by present standards, than most of his contemporaries, although he himself did not use, was not able to use, and even had a certain disdain for refined mathematical methods of economic analysis.
[For the historical context of Taussig’s work, see the biographies of Bohm-BAWERK; Ricardo; Walker; for discussion of the subsequent development of his ideas, see International Trade; International Trade Controls, article on TARIFFS AND PROTECTIONISM.]
(1883) 1886 Protection to Young Industries as Applied in the United States: A Study in Economic History. 2d ed. New York: Putnam.
(1888) 1931 The Tariff History of the United States. 8th ed., rev. New York: Putnam.
(1892-1919) 1920 Free Trade, the Tariff and Reciprocity. New York: Macmillan. → Collected essays.
(1896) 1932 Wages and Capital: An Examination of the Wages Fund Doctrine. London School of Economics and Political Science.
1905 The Present Position of the Doctrine of Free Trade. (Presidential Address.) American Economic Association, Publications Third Series 6:29-65.
1906 Wages and Prices in Relation to International Trade. Quarterly Journal of Economics 20:497-522.
1908 Capital, Interest, and Diminishing Returns. Quarterly Journal of Economics 22:333-363.
(1911) 1939 Principles of Economics. 2 vols., 4th ed. New York: Macmillan.
(1915a) 1931 Some Aspects of the Tariff Question: An Examination of the Development of American Industries Under Protection. 3d ed., enl. Harvard Economic Studies, Vol. 12. Cambridge, Mass.: Harvard Univ. Press.
(1915b) 1930 Inventors and Money-makers: Lectures on Some Relations Between Economics and Psychology Delivered at Brown University in Connection with the Celebration of the 150th Anniversary of the Foundation of the University. New York: Macmillan.
1917 International Trade Under Depreciated Paper: A Contribution to Theory. Quarterly Journal of Economics 31:380-403.
1919 Price-fixing as Seen by a Price-fixer. Quarterly Journal of Economics 33:205-241.
1921 Is Market Price Determinate? Quarterly Journal of Economics 35:394-411.
1927 International Trade. New York: Macmillan.
1932 Taussig, Frank W.; and Joslyn, Cari. S. American Business Leaders: A Study in Social Origins and Social Stratification. New York: Macmillan.
Explorations in Economics: Notes and Essays Contributed in Honor of F. W. Taussig. 1936 New York: McGraw-Hill. → Contains a bibliography of Taussig’s writings.
Opie, Redvers 1941 Frank William Taussig (1859-1940). Economic Journal 51:347-368.
Schumpeter, Joseph A. 1936 Professor Taussig on Wages and Capital. Pages 213-222 in Explorations in Economics: Notes and Essays Contributed in Honor of F. W. Taussig. New York: McGraw-Hill.
Schumpeter, Joseph A.; COLE, A. H.; and Mason, E. S. (1941) 1951 Frank William Taussig. Pages 191-221 in Joseph A. Schumpeter, Ten Great Economists From Marx to Keynes. New York: Oxford Univ. Press. → First published in Volume 55 of the Quarterly Journal of Economics.
U.S. Tariff Commission 1919 Reciprocity and Commercial Treaties. Washington: Government Printing Office.
Viner, Jacob 1936 Introduction: Professor Taussig’s Contribution to the Theory of International Trade. Pages 3—12 in Explorations in Economics: Notes and Essays Contributed in Honor of F. W. Taussig. New York: McGraw-Hill.