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The Life and Work of John Rae1

Published online by Cambridge University Press:  07 November 2014

R. Warren James
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Extract

Eugen von Böhm-Bawerk was a central figure in the windy discussions of the theory of capital and interest which occupied a prominent place in economic literature in the 1890's. The two volumes of his Kapital und Kapitalzins were translated into English in 1890 and 1891, which meant that his views were generally known to English-speaking economists. An American student of economics, Charles Whitney Mixter, who was aware both of Böhm-Bawerk's writings and of his high prestige, was therefore elated to find that an earlier and obscure Scotch-Canadian writer named John Rae appeared to have foreshadowed Böhm-Bawerk's theory of capital in some important respects. Mixter somewhat hastily announced his discovery of “A Forerunner of Böhm-Bawerk” in an article with this title in the Quarterly Journal of Economics for January, 1897. Today this label would perhaps be regarded as faint praise and happily it was quite wrong. Mixter's error had arisen out of a misunderstanding of Rae's ideas and it was soon corrected, although not before it was repeated by Irving Fisher.

Mixter's find was enthusiastically acclaimed by Fisher who wrote in February, 1897:

No economist who is interested in the theory of capital in any of its aspects can afford longer to let Mr. Rae's investigations go unread. His work is a magnificent specimen of true scientific method and a rare example of orderly and convincing exposition. His style too is easy, forceful and captivating and his fund of ready illustrations commands instant admiration. Not the least remarkable feature of this many-sided work is the clear conception of sociology, or “Natural History of Men,” which it contains. It is difficult to realize that Mr. Rae wrote before that science was definitely founded. In short, the “New principles of political economy” is truly a masterpiece, a book of a generation or a century. It was written before the world was ready for such painstaking analysis. Now that its merits have been pointed out by Mr. Mixter, it is sure to be accorded a high place among the classics of economic science.

Type
Research Article
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 17 , Issue 2 , May 1951 , pp. 141 - 163
Copyright
Copyright © Canadian Political Science Association 1951

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Footnotes

1

A somewhat condensed and modified version of this paper was given before Section II of the Royal Society of Canada in June, 1950. It is planned to include a much more detailed account of Rae's life and intellectual achievements in a reissue of Rae's work on political economy and other writings which is to be published in 1951 or 1952.

References

2 The first volume, Geschichte und Kritik der Kapitalzinstheorie (Innsbruck, 1884)Google Scholar, was translated as Capital and Interest by Smart, William (London, 1890). Volume II Google Scholar, entitled Positive Theorie des Kapitales (Innsbruck, 1889)Google Scholar, was also translated by Smart as The Positive Theory of Capital (London, 1891).Google Scholar

3 Mixter, C. W., “A Forerunner of Böhm-Bawerk,” Quarterly Journal of Economics, XI, 1897, 161–90.CrossRefGoogle Scholar

4 On this question, Mixter himself wrote in a later article: “I plead guilty to the charge that to a considerable extent on a former occasion I read Böhm-Bawerk into Rae, and that I represented a greater likeness to exist between them than is actually the case.” “Böhm-Bawerk on Rae,” ibid., XVI, 1902, 385 n.

5 In an unsigned note in the Yale Review (Old Series) for 02, 1897, 457 Google Scholar, Fisher wrote: “The bulk of the work is devoted not to the free trade controversy, but to the theory of capital or ‘stock.’ In this the author has almost completely anticipated the brilliant work of Böhm-Bawerk in ‘The Positive Theory of Capital.’”

6 Rae, John, Statement of Some New Principles on the Subject of Political Economy, Exposing the Fallacies of the System of Free Trade and of Some Other Doctrines Maintained in the “Wealth of Nations” (Boston, 1834).Google Scholar Cited hereafter as New Principles.

7 Yale Review (Old Series), 02, 1897, 457.Google Scholar

8 This information about Rae's family was obtained by C. W. Mixter from Rae's great grand-niece and appears in the biographical preface of Mixter's reissue of Rae's book which he entitled The Sociological Theory of Capital (New York, 1905), xx.Google Scholar This biographical sketch will be cited in future as The Sociological Theory of Capital.

9 Ibid., xxii.

10 According to the Statuta Solennia of the University of Edinburgh in force when Rae was a medical student, the requirements for a medical degree included courses in anatomy and surgery, chemistry, botany, materia medica and pharmacy, the theory and practice of medicine, and clinical lectures in the Royal Infirmary. The course prescribed was three years and there is some doubt that Rae fulfilled the residence and course requirements for his degree. The assistance of James C. Corson, Deputy Librarian of the University of Edinburgh, in ascertaining the facts concerning Rae's attendance at the University is gratefully acknowledged.

11 This is based on information supplied by Charles W. Mercer, Secretary of the Royal Medical Society of Edinburgh, who has been kind enough to examine the minutes of the Society for the period when Rae participated in its affairs.

12 According to information obtained, by Mixter from Rae's relatives, John Rae, Sr. lost his money after the death of his wife which took place between 1815 and 1820. The Sociological Theory of Capital, xx n.

13 This is very conjectural and is based on the fact that Rae invented devices for measuring ocean currents and for feathering paddle wheels. This suggests that he may have been intimately concerned with shipbuilding or shipping.

14 Rae refers to improvements in Norwegian agriculture which occurred following the Swedish annexation of Norway and says in a footnote: “These facts I learned in a tour through that country in 1818.” New Principles, 317 n.Google Scholar

15 One of Mixter's correspondents wrote that Rae left Scotland “under a sort of bad luck, having married in haste.” Another referred to Rae's wife as the daughter of a Scotch shepherd whose education was far inferior to Rae's. The Sociological Theory of Capital, xxii.

16 Mixter says that Rae landed in Quebec in the spring of 1821 and that “there is some evidence tending to show that he found employment for a time ‘in the lumber trade.’” Ibid., xxii. It has not been possible to confirm this. Two statements by Rae concerning the length of time he had lived in Canada provide conclusive proof that he did not arrive until 1822.

17 Montreal Herald, May 4, 1822.

18 Macdonell, J. A., Sketches, Illustrating the Early Settlement and History of Glengarry in Canada (Montreal, 1893), 335.Google Scholar

19 The only evidence on this point is the following remark in a letter from Rae to H. B. Willson dated December, 1856, quoted by Mixter: “If you would really help a man you must know how to help him. You must know in what his well-being and happiness consist, what therefore are his objects and aims. My earlier friends in Canada could not conceive or at least understand what were mine. They thought me foolish in burying the attainments and ability they were pleased to give me credit for in the subordinate position of a village surgeon, or still worse in that of a country schoolmaster.” The Sociological Theory of Capital, x.

20 Upper Canada, Journals of the Legislative Assembly, 2nd session, 11th Parliament, 2 Wm. IV, p. 100.Google Scholar The Lieutenant-Governor's note of transmittal refers in three places to Doctor Rae, although in the body of the petition Rae's name is given as “John Rae, A.M., Fellow of the Royal Medical Society, Edinburgh.”

21 New Principles, v.

22 On this point Rae wrote: “In general then, all these changes which man makes, in the form or arrangement of material objects, for the purpose of supplying his future wants, and which derive their power of doing this from his knowledge of the course of events, and the changes which his labor, guided by his reason, is hence enabled to make in the issue of these wants, may be termed instruments.” New Principles, 87.

23 Ibid., 92.

24 Ibid., 91.

25 Ibid., 110.

26 Ibid., 111-12.

27 Ibid., 113.

28 Ibid., 113-14.

29 This conclusion is challenged in Akerman's, Gustaf Realkapital und Kapitalzins (Stockholm, 1923).Google Scholar Akerman, borrowing explicitly from Rae, conceives of the labour costs of manufacturing durable capital as consisting of a series, the first term being the amount required to make the capital last one year, the next term being the amount required to extend the life of the capital for another year, and so on. Akerman states a rule that the average of the terms of the series must be decreasing before it is profitable to extend the life of capital. Akerman's claim that Rae is wrong (pp. 22, 118) seems to reflect some confusion between the average and marginal behaviour of the terms of the series. Rae's contention that the terms of the series must form a decreasing geometric progression is quite correct and at the same time a more stringent condition than Akerman's. See also Wicksell, Knut, Lectures on Political Economy (New York, 1934), I, 259–61.Google Scholar

30 New Principles, 124.

31 The Report of the Earl of Durham, Her Majesty's High Commissioner and Governor-General of British North America (London, 1902), 63.Google Scholar

32 Even in the nineteenth century, Rae's work would have provided the intellectual justification for the economic policies adopted in Canada, but there is nothing to show that he had the slightest influence on Canadian economic ideas.

33 The following quotation from the New Principles (p. 310) makes this clear: “In regard to articles supplying real wants, the more easy and unconstrained the communication, the more extended the production, the freer the competition, the farther, as we have seen, are the stocks of instruments of the societies exchanging carried towards the more quickly returning orders. Every step in advance in the course is equivalent, subject only to the risk of the communication being interrupted, to a real improvement.”

34 Athenaeum, no. 374, Dec. 27, 1834, 933-4.

35 Foreign Quarterly Review, XV, no. 30, 1835, 241–66.Google Scholar The review was probably written by the editor John George Cochrane. In his original article on Rae in the Quarterly Journal of Economics in January, 1897, Mixter refers to this review as follows: “A reviewer in the Foreign Quarterly Review soon wearied in following Rae's close, abstract reasoning on capital, and broke off with a long quotation concerning an illustration from Indian life which, he said, formed a 'charming relief to the subject.' The quotation begins, ‘The North American Indian in his canoe comes to an island in some lake or river,’—and so on. As the ingenuous reviewer presently adds: ‘we love to accompany the writer in his analysis of the Indian mind. …’” Mixter's comment is both inaccurate and unfair and refers to a very minor remark in a detailed twenty-five page review.

36 North American Review, XL, 1835, 123.Google Scholar Many years later, in a letter to John Stuart Mill, Rae wrote: “Unfortunately I was induced to put forth [my Political Economy] in Boston, under the assurance from Mr. A. Everett that it would be appreciated there. He was, however, I believe scared at it. Could not make up his mind, nor could any one there, if I was right or wrong, and so passed it by with praise of its style, etc. This damned it.” The Sociological Theory of Capital, xxxi.

37 The review was reprinted in the Montreal Gazette, Aug. 26, 1834.

38 Ibid., Sept. 13, 1834.

39 The position, which had become vacant as a result of the death of the Rev. Philip Mills Rolls, was advertised in the Montreal Gazette on Oct. 28, 1834, and probably in other papers.

40 This information is contained in a letter dated Oct. 25, 1827, from William Ellis, James Racey, and William Jarvis, three of the Gore District School trustees to John Strachan. Public Archives of Canada, Education Papers, Upper Canada, no. 117.

41 Ibid., nos. 463, 490.

42 Hodgins, J. George, Documentary History of Education in Upper Canada from the Passing of the Constitutional Act of 1791 to the Close of Rev. Dr. Ryerson's Administration of the Education Department in 1876 (Toronto, 1894), III, 256.Google Scholar Dr. William Tassie later became famous as a schoolteacher in Gait.

43 Hamilton Gazette, May 27, 1839.

44 Smith, J. H., The Central School Jubilee Re-Union, August, 1903: An Historical Sketch (Hamilton, 1905), 14.Google Scholar

45 Hodgins, , Documentary History, III, 48.Google Scholar

46 Hamilton Gazette, Jan. 4, 1837.

47 The Sociological Theory of Capital, xxiv. There are some indications that the militia used water solely as a means of transportation.

48 Ibid., xxviii-xxix.

49 American Journal of Arts and Sciences, XXXIII, 01, 1838, 196–8.Google Scholar

50 Miss Freda Waldon, Chief Librarian of the Hamilton Public Library, was kind enough to provide excerpts from the minutes of the Mechanics' Institute dealing with Rae's lectures.

51 Hamilton Spectator and Journal of Commerce, Nov. 10, 1847.

52 P.A.C, Education Papers, Upper Canada, no. 686.

53 4 Vic., c. 18.

54 Minutes, Hamilton Board of Police, May 31, 1843, 325.

55 The Sociological Theory of Capital, xxxiii.

56 Hamilton Gazette, July 27, 1840. The projected book was advertised almost continuously in the Montreal Gazette in the fall of 1840.

57 The Sociological Theory of Capital, xxxi.

58 British American Journal of Medical and Physical Science, 07, 1845, 91 Google Scholar, and Aug., 1845, 119.

59 Queen's College Journal, Dec. 3, 1889, 22.

60 Hodgins, , Documentary History, III, 289.Google Scholar

61 Minutes of the Synod of the Presbyterian Church in Canada in connection with the Church of Scotland, 1838 and 1839.

62 John Rae to the Rev. John Machar, Jan. 12, 1848.

63 Montreal Gazette, June 2, 1840. Report of the meeting of the Board of Trustees of Queen's College, July 20-2, 1840.

64 John Rae to the Rev. James Williamson, Oct. 27, 1845. This letter is in the possession of Queen's University.

65 P.A.C, Provincial Secretary's Office, Canada West, no. 18698, William Craigie to Dominick Daly, Dec. 30, 1847.

66 The Sociological Theory of Capital, xxiv-xxv.

67 Ibid., xxiv.

68 2 Vic., c. 10.

69 Hodgins, , Documentary History, IV, 64–6.Google Scholar

70 Ibid., 158. The minority protest bears the marks of Rae's style but it is not certain that he wrote it.

71 Ibid., V, 282.

72 Ibid., 236.

73 P.A.C., Provincial Secretary's Office, Canada West, no. 18698, William Craigie to Dominick Daly, Dec. 30, 1847.

74 Ibid., Dominick Daly to William Craigie, Feb. 21, 1848. The grounds for the removal of teachers were laid down in the Grammar School Act of 1807, 47 Geo. III, c. 6, s. 5.

75 Ibid., no. 19547, William Craigie to Dominick Daly, March 10, 1848.

76 Ibid., no. 19325, Memorial, John Rae to the Governor-General, Feb. 16, 1848.

77 Hodgins, , Documentary History, VIII, 66.Google Scholar

78 The Sociological Theory of Capital, xxv.

79 Bowley, Marian, Nassau Senior and Classical Economics (London, 1937), 161 n.Google Scholar

80 Reminiscences and Opinions of Sir Francis Hastings Doyle (New York, 1886), 133.Google Scholar Professor Jacob Viner was kind enough to call this reference to my attention.

81 Mill, J. S., Principles of Political Economy with Some of Their Applications to Social Philosophy (London, 1926), 165.Google Scholar It is worth noticing that Mill refers to “Dr. Rae,” although there is nothing in the New Principles to show that Rae was a doctor.

82 “John Rae and John Stuart Mill: A Correspondence,” Economica, New Series, 08, 1943, 253.Google Scholar

83 The first series of the Biblioteca dell'Economista was published in Turin in thirteen volumes between 1850 and 1856.

84 Ferrara wrote of the New Principles: “This work is almost unknown in Europe. I have not seen it referred to by anyone except Stuart Mill who praised ideas in it which certainly have some merit but in my opinion are inferior to those which are revealed by the clear and forthright manner in which the author develops the theory of value. This, as the reader will see, occupies several pages in which I would find difficulty in contradicting a single word.” Biblioteca dell'Economista, XI, xxv.Google Scholar

85 Rae wrote several letters to his friend Roderick W. Cameron describing his adventures in California and these were published by Cameron, in the Hamilton Gazette on Dec. 19, 1850 Google Scholar, under the title “With Dr. Rae in California.” No copy of this article now appears to exist.

86 Alexander, W. D., A Brief History of the Hawaiian People (New York, 1891), 273.Google Scholar

87 Polynesian, Feb. 2, 1861.

88 Archives of Hawaii, Board of Health Documents, no. 88, Dec. 16, 1850.

89 The Sociological Theory of Capital, xxvii.

90 “John Rae and John Stuart Mill: A Correspondence,” Economica, New Series, 08, 1943, 253.Google Scholar On several occasions, Rae referred to “Stillman's Journal” by which he meant the American Journal of Science and Arts edited by Benjamin Silliman.

91 Archives of Hawaii, Board of Health flies, 1860, John Rae to Dr. Robert M'Kibbin Jr., March 4, I860.

92 Ibid., John Rae to Robert M'Kibbin, Oct. 5, 1860.

93 Archives of Hawaii, Interior Department land files, 1857, John Rae to William Webster, July 5 and Sept. 3, 1857.

94 Ibid., 1862, P. Nahaolelua to His Highness, L. Kamehameha, July 16, 1862.

95 Ibid., John Rae to S. Spencer, Oct. 15, 1862.

96 The Sociological Theory of Capital, xxvii.

97 Archives of Hawaii, Board of Health files, 1862, John Rae to Robert M'Kibbin, Sept. 21, 1862.

98 Polynesian, Oct. 11, 1862.

99 Archives of Hawaii, Interior Department land files, 1862, John Rae to S. Spencer, Dec. 9, 1862.

100 Polynesian, Feb. 2, 9; March 16, 30; April 20, 1861.

101 Dana's views were expressed in a letter published in the New York Tribune in 1860 and reprinted in Hopkins, Manley, Hawaii: The Past, Present and Future of the Island-Kingdom: An Historical Account of the Sandwich Islands (Polynesian) (London, 1862).Google Scholar

102 Archives of Hawaii, Foreign Office Letter Book no. 28E, vol. II, Miscellaneous Internal Correspondence, p. 260, R. C. Wyllie to John Rae, Feb. 4, 1861.

103 Polynesian, Sept. 27; Oct. 4, 11, 1862. In Fornander's book, An Account of the Polynesian Race: Its Origin and Migrations and the Ancient History of the Hawaiian People to the Times of Kamehameha I (London, 1878–1985)Google Scholar, he refers to “the late Dr. John Rae of Hana, Maui, who in a series of articles published in the ‘Polynesian’ (Honululu, 1862), first called attention to the extreme antiquity of the Polynesian language” (I, xii).

104 Müller, Max, Lectures on the Science of Language, Second Series (London, 1864), 10.Google Scholar

105 SirPaget, Richard, Human Speech (New York, 1930), 157.Google Scholar Paget said that Rae's essay was “so remarkable” that he had decided to reprint it verbatim as an appendix to his book.

106 “Laieikawai: A Legend of the Hawaiian Islands,” Journal of American Folklore, XIII, 1900, 241–60.Google Scholar

107 Archives of Hawaii, Foreign Office files, 1859, Miscellaneous Local Correspondence, John Rae to R. C. Wyllie, n. d., received Aug. 12, 1859.

108 Ibid., R. C. Wyllie to John Rae, Sept. 19, 1859.

109 Archives of Hawaii, Foreign Office Letter Book, no. 37E, vol. Ill, Miscellaneous Internal Correspondence, R. C. Wyllie to John Rae, Nov. 20, 1861. Wyllie expressed the same opinion to Walter Murray Gibson of Polawai, Lanai, in a letter dated December 24, 1861. Ibid.

110 Ibid., R. c. Wyllie to John Rae, April 8, 1862.

111 Archives of Hawaii, Interior Department land files, 1862, John Rae to S. Spencer, Dec. 9, 1862.

112 The Sociological Theory of Capital, xxxv.

113 Archives of Hawaii, Board of Health files, 1868-9, Minutes of the Board of Health, Nov. 12, 1869.

114 Cameron established a steamship line between the United States and Australia and New Zealand and was a successful and wealthy merchant. He was knighted in 1883 on the recommendation of the Canadian Government. His obituary notice in the New York Daily Tribune (Oct. 20, 1900), states that “he was educated under the care of Dr. John Rae, the political economist and at the district school in Kingston.”

115 Brief obituary notices appeared in the New York Evening Post, July 18, 1872 and the New York Herald, July 19, 1872. There does not appear to be a cemetery by this name and Rae's actual place of burial has not been determined definitely.

116 (Innsbruck, 1900), 375-428.

117 In his review of Mixter's edition, Böhm-Bawerk wrote: “Das Original war ja durch seine grosse Seltenheit—es scheinen nur einige wenige, in festen Händen befindliche Exemplare desselben zu existieren—unserer Generation unzugänglich geworden.” Zeitschrift für Volksivirtschaft, Sozialpolitik und Verwaltung, Band 15, 1906, 274.Google Scholar Among the reviewers, Adolphe Landry was the only one to question the wisdom of Mixter's drastic editorial revisions. Revue d'économie politique, 05, 1907, 381.Google Scholar

118 Fisher, Irving, The Theory of Interest (New York, 1930), ix.Google Scholar

119 Lectures on Political Economy, I, 259–61.Google Scholar

120 Lehmann's book was a doctoral dissertation submitted to the University of Leipzig and printed in Dresden in 1937.

121 John Rae (1813-93) was a Hudson's Bay Company surgeon and one of the discoverers of the remains of the Sir John Franklin expedition. He lived in Hamilton for several years after his namesake had left, a fact which has contributed to the confusion.

122 New Principles, 214.