Grand Pursuit: A Story of Economic Genius

The overflowing crowd of union supporters that squeezed into the Barnwell Workingmen’s Hall on Cambridge’s scruffy north side on Tuesday, May 11, 1874, was thus somewhat bemused to find an unlikely set of allies standing on the stage clad in caps and gowns. One of the leaders, the fiery George Mitchell, confessed, amid much laughter, that “when he saw all those gentlemen with their wide-awake hats and tippets he thought he was going to have some put on him.”

Sedley Taylor, a former Trinity College fellow and prominent reformer, spoke first, proposing a resolution condemning the farmers’ efforts to break the union as “prejudicial to the general interests of the country,” delivering a broadside at his fellow collegian CSM in the process.

Then it was Marshall’s turn. Seconding a motion put forward by a dissident farmer supporting the locked-out laborers, he called for donations: “Let us sympathize with our hearts and with our purses.”

Addressing the farmworkers, Marshall denied that political economy could “direct decisions of moral principle,” which it must instead “leave to her sister, the Science of Ethics.” Writing in the Bee Hive, he argued that “political economy is abused when any one claims for it that it is itself a guide in life. The more we study it the more we find cases in which man’s own direct material interest does not lie in the same direction as the general well being. In such cases we must fall back on duty.”

The following Saturday, the Cambridge Chronicle dismissed Marshall’s speech as “ingenious sophistry.” In fact, he had successfully demonstrated why labor markets do not always produce fair wages, and why unions can lead to greater efficiency as well as equity. He’d “been asked to speak of the laws of supply and demand,” Marshall began. He poured scorn on the union’s opponents who held wages were at their “natural level” because, if they weren’t, other employers would have offered the workers more, and if a worker’s “wages be raised artificially they will come down again.” This was Ricardo’s iron law of wages, accepted even by many who sympathized with the plight of the workers. The argument was “excellent,” Marshall admitted, but the assumptions false. No farmer would offer a neighbor’s hired hands more to come and work for him. What’s more, higher wages would make the workers more productive by allowing them to be better fed. Admitting that “unions have their faults,” Marshall said that “a union gives men interests and sympathies beyond the boundaries of their parish; it will cause them to feel their need of knowledge, and to vow that their sons shall be educated . . . Wages will rise . . . poor rates will dwindle . . . England will prosper.”

Despite the support of the university and much of the media, the strike ultimately failed. The farmers held out by acquiring more machinery and employing more boys and girls. When the strike fund ran out in early June, the union called on the workers to return to the fields. Marshall took from the episode that new ideas would prevail over old doctrines only after a carefully plotted, patient campaign to win the hearts and minds of practical men.

Five weeks out of New York City and bound for San Francisco, Marshall stared down on the Horseshoe Falls with a frown. From the Goat Island suspension bridge where he stood, the cataract looked nowhere near as mighty as his Baedeker guide had promised. As a mathematician, he knew that perspective was to blame and engaged in some mental calculations to reassure himself that the falls were truly as colossal as advertised. But the numerical exercise did little to dispel his feeling of having been badly let down. “Niagara is a great humbug,” he wrote to his mother on July 10, 1875. “It takes longer for a man to discover how much greater Niagara is than it seems than it does to discover that an Alpine Valley which appears to be only a mile broad is really six miles broad.”

Marshall had come to America to study its social and economic landscape. He had left Manhattan on a paddle steamer headed for Albany. In a letter, he recalled how “disgusted and savage” Alexis de Tocqueville had been forty years earlier when he discovered that the finest of the “villas built in Greek style of marble, shining from the banks of the Hudson” were actually made of wood. He, by contrast, “did not find anything like as much sham as I expected.”

Indeed, everywhere Marshall looked, he seemed to discover more, not less, than met the eye: American architects displayed “daring & strength,” their buildings being of “uniform thoroughness & solidity.”

An “American drink called ‘mint-julep’ ” was “luxurious.” American preachers gave sermons that were “way out of sight ahead of us,” having achieved “startling improvements” on Anglican liturgy.

American workers were full of “go.”

As he reported to the Moral Sciences Club on his return to Cambridge in the fall, “I met no man or woman in America whose appearance indicated an utterly dull or insipid life.”

By the time Marshall reached Cleveland in mid-July, he was convinced that “nine Englishmen out of ten would be themselves more happy & contented in Canada than in the U.S.; though I myself if I had to emigrate should go to the U.S.”

Marshall’s magnum opus, Principles of Economics, would not appear for another fifteen years, but he had already worked out the chief tenets of his “new economics”—an alternative to both the old laissez-faire doctrines of Smith, Ricardo, and Mill and the newly ascendant Socialist gospels of Marx. He had spent a decade “laying the foundations of his subject but publishing nothing.”

His travels in America gave him confidence that he was on the right track.

Marshall’s relations had scoffed at his plan to use a £250 legacy from the same uncle who had financed his university education to tour the United States. He justified himself by saying that he was gathering material for a treatise on foreign trade. While this was perfectly true, the economic historian John Whitaker observes that his actual purpose was broader, part of a growing, “almost obsessive attempt to apprehend in all its aspects an ever-changing economic reality.”

Like other European observers, including Tocqueville, Marshall thought of the United States as a great social laboratory. Dickens, William Makepeace Thackeray, and Trollope had been occupied by old questions, now settled, of democracy, slavery, and the survival of the union. Marshall wanted to know where the rise of industry, the growth of global commerce, and the decline of traditional morality were leading. These were advancing more rapidly in America than anywhere else. “I wanted to see the history of the future in America,” he told an audience when he returned to Cambridge.

Marshall sailed to America during the biggest transatlantic tourism boom in history. Sales of the most popular North American guide were climbing toward the half-million mark. The North Atlantic was now a virtual highway of the sea. No fewer than ten steamship companies offered weekly departures from Liverpool to New York, and English travelers were advised to book berths as much as a year in advance.

Marshall’s trip aboard the SS Spain, one of the fastest and most luxurious of the big liners, took a mere ten days, in contrast to the miserable three-week crossing Dickens had endured in 1842. Travel in America was expensive, owing to the immense distances. Marshall had to budget £60 a month versus £15 a month when he spent summers climbing in the Alps. But afterward, according to Mary, he felt that “he had never spent money so well. It was not so much what he learnt there as that he got to know what things he wanted to learn.”

His experiences convinced him that “economic influences play a larger part in determining the higher life of men and women than was once considered.” In particular, he believed, “there are no thoughts or actions, or feelings, which occupy a man and which thus have the opportunity of forming the man . . . as those thoughts and actions and feelings which make up his daily occupation.”

He spent some of his time in churches and drawing rooms, especially in Boston, where he met leading American intellectuals, including the poet Ralph Waldo Emerson and the art historian Charles Eliot Norton. He lingered for several days at communes run by Shakers and disciples of Robert Owen in New England. But mostly he toured factories, filling notebooks with interviews with businessmen and workers and drawings of machinery. At Chickering and Sons piano factory near Boston, he observed that “care & judgment were required from many of the workers in a very high degree” and that the workers there had “able, almost powerful & artistic faces.” On a visit to an organ factory, he wondered whether “the work of each individual being confined to a very small portion of the whole operation” did not “prevent the growth of intelligence?”

He found that it did not.

The business traveler of that time was always something of a tourist. Marshall was no exception. He could not resist the lure of the recently completed transcontinental railroad. In his hotel in Niagara, he plotted his westward route on an advertising map provided by the Union Pacific, marking it with pinpricks so that his mother back home in London could follow his progress toward San Francisco by holding the map up to a light.

Chicago was the best place to catch a train for the Pacific coast. The new railway system was like a giant hand whose palm lay atop the Great Lakes and whose fingers stretched all the way to Seattle, Portland, San Francisco, and, in the case of the two southernmost routes, Los Angeles. Most travelers took the North Western from Chicago due west across Illinois and Iowa to Council Bluffs. Marshall took the Great Northern line to St. Paul and then sailed back down on a Mississippi riverboat, the kind “more famous for their propensity to blow up than for the magnificence of their fittings.”

He met up with the North Western at the Iowa border and was in Council Bluffs a day later. From there he crossed the river to Omaha and transferred to the Union Pacific train. From Omaha it was a straight shot west to Cheyenne and Granger, in Wyoming, where the line dipped down toward Ogden, Utah; Reno; and Sacramento before making the final 125-mile jog south to San Francisco. In Cheyenne, Marshall boarded a stagecoach for a twenty-four-hour side trip to Denver. In Ogden, he stopped to explore the Mormon capital, Salt Lake City. On the return trip, he got off in Reno for a look at “the wild population of Virginia City.” He was conscious throughout of witnessing something extraordinary and unprecedented. From his railway car he was seeing what another young Briton had earlier described as “the unrolling of a new map, a revelation of a new empire, the creation of a new civilization.”

Marshall was bowled over by the constant motion he witnessed. “Many things have changed since [Tocqueville’s] time . . . many things which were nearly stationary then are not stationary now,” he wrote in a letter home.

The first thing to catch his eye after he checked in at the Fifth Avenue Hotel was “a steam lift which without ever stopping from 7 a.m. until midnight goes up & down [emphasis his].” He was captivated by the lobby’s unmanned telegraph machine spewing paper ribbons of stock quotations. Business travelers staying uptown “are as well posted as if they were on the Exchange itself,” he wrote.

Mobility was the preeminent fact of American life, Marshall decided. It wasn’t just the railway and telegraph, the successive waves of new immigrants, or the movement of the population from the manufacturing centers of the Northeast to the “mushroom towns” of the West, sprouting so fast that one “can only suppose that, the soil being so fruitful, buildings grow spontaneously.”

The most interesting freedom of motion was economic, social, and psychological. Marshall was astonished by ordinary Americans’ readiness to leave family and friends for new towns, to switch occupations and businesses, to adopt new beliefs and ways of doing things. He reported, “If a man starts in the boot trade and does not make money so fast as he thinks he ought to do, he tries, perhaps, grocery for a few years and then he tries books or watches or dry goods.” He was delighted by the independence of young people: “American lads . . . abhor apprenticeships . . . The mere fact of his being bound down to a particular occupation is sufficient in general to create in the mind of an American youth that he will do something else as soon as he has the power.”

Americans’ welcoming attitude toward growing urbanization also struck him powerfully: “The Englishman Mill bursts into unwonted enthusiasm when speaking . . . of the pleasures of wandering alone in beautiful scenery,” he noted dryly, adding that “many American writers give fervid descriptions of the growing richness of human life as the backwoodsman finds neighbors settling around him, as the backwoods settlement develops into a village, the village into a town, and the town into a vast city.”

Like his favorite novelists, Marshall was less interested in the material and technological advances, impressive as these were, than in their consequences for how people thought and behaved. What guarantee was there that individual choices added up to social good? Would all the up and down movement of individuals and the attendant loosening of traditional ties lead, as pessimists such as Marx and Carlyle predicted, to social chaos? Or did mobility imply a “movement towards that state of things to which modern Utopians generally look forward.” That was the question.

Marshall’s visceral reactions put him squarely on the other, optimistic side. In Norwich, Connecticut, he went on an evening drive with a Miss Nunn, who told him she was prepared to take the reins and wound up steering. Marshall found the experience “very delicious.” He observed that young American women are “mistresses of themselves . . . [with] thorough freedom in the management of their own concerns.” Such freedom, he admitted, “would be regarded as dangerous license by the average Englishman,” but he found it “right and wholesome.”

The absence of rigid class distinctions delighted him. When a clerk in a hat shop removed the bowler Marshall was wearing and tried it on his own head in order to gauge the correct size, Marshall noted approvingly, “My friend was such a perfect democrat that it did not occur to him that there was any reason why he should not wear my hat: his manner was absolutely free from insolence. May the habit become general!”

When he reached California, he was pleased to report that the farther west he traveled, the more American society resembled its egalitarian ideal. “I returned on the whole more sanguine with regard to the future of the world than when I set out,” he noted.

Striking a prophetic note, he envisioned a new type of society:

In America, mobility was creating an equality of condition . . . Where nearly all receive the same school education, where the incomparably more important education which is derived from the business of life, however various in form it be, yet is for every one nearly equally thorough, nearly equally effective in developing the faculties of men, there cannot but be true democracy. There will of course be great inequalities of wealth; at least there will be some very wealthy men. But there will be no clearly marked gradation of classes. There will be nothing like what Mill calls so strongly marked line of demarcation between the different grades of laborers as to be almost equivalent to the hereditary distinction of caste.

Explaining how individual choices might add up to social good—the very thing that Carlyle denied was possible—Marshall defined two types of moral education. One was characteristic of England, where, he claimed, “the peaceful molding of character into harmony with the conditions by which it is surrounded, so that a man . . . will without conscious moral effort be impelled on that course which is in union with the actions, the sympathies and the interests of the society amid which he spends his life.” In America, by contrast, mobility had opened up a second route to moral evolution, namely, “the education of a firm will by the overcoming of difficulties, a will which submits every particular action to the judgment of reason.”

Most Victorian social commentators, including Karl Marx, feared that the industrial system was not merely destroying traditional social relations and livelihoods but deforming human nature through “ignorance, brutalization, and moral degradation.”

In America, Marshall saw another possibility: “It appears to me that on the average an American has the habit of using his own individual judgment more consciously and deliberately, more freely and intrepidly, with regards to questions of Ethics than an Englishman uses his.”

Marshall seemed to be talking about mankind in general, but he was also talking about himself. He had developed a firm will by overcoming all sorts of difficulties—a tyrant of a father, genteel poverty, and the oppressive strictures of class. He had broken with authority—by losing his religious belief and defying his father’s wishes that he enter the ministry. Now he felt that his own independence would lead not to his downfall but to great things. What he witnessed in America filled him with hope. “Such a society may degenerate into licentiousness and thence into depravity. But in its higher forms it will develop a mighty system of law, and it will obey law . . . Such a society will be an empire of energy.”

“I have been rather spoilt” when it comes to “go” and a “strong character” in women,” Marshall had written in a letter from America. In another, he described his “riveting evening” with Miss Nunn, confessing that he found her naïveté “mingled with enterprise” charming. But he added that “for steady support I would have the strength that has been formed by daring and success.”

Apparently he was thinking of Mary Paley, who had triumphed over the Tripos in his absence.

When they got engaged on his return to Cambridge, Marshall was thirty-four and Mary twenty-six. He was a rising star of the “New Economics.” She was a college lecturer. Marshall’s view of marriage was inspired by intellectual partnerships such as those of George Eliot and George Lewes and Thomas and Jane Carlyle. “The ideal of married life is often said to be that husband and wife should live for each other. If this means that they should live for each other’s gratification it seems to me intensely immoral,” Marshall wrote in an essay. “Man and wife should live, not for each other but with each other for some end.”

For Mary, who had entered her first engagement “out of boredom,” this was a thrilling vision. Like the other unusual, idiosyncratic Victorian marriages Phyllis Rose describes in Parallel Lives: Five Victorian Marriages, the secret of Alfred Marshall and Mary Paley’s alliance lay in their “telling the same story.”

The couple immediately decided to make Mary’s textbook a joint project and spent most of their engagement working on it.

They were married at the Parish Church in Ufford, next to the “rambling old house, its front covered with red and white roses,” where Mary had grown up. Mary wore no veil, only jasmine in her hair. In a gesture that proclaimed their untraditional views and high expectations, bride and groom contracted themselves out of the “obey clause.”

By marrying, Marshall forfeited his fellowship at St. John’s. He and Mary flirted briefly with the notion of teaching at a boarding school, but when the principalship of a newly founded redbrick college in Bristol—the first experiment in coeducation in Britain—suddenly became vacant, they leapt at the opportunity. When they moved to Bristol in 1877, Mary had a tennis court installed and most of the rooms papered with Morris while Marshall chose the secondhand furniture and piano. But she was soon back in the classroom, lecturing on economics and tutoring women students.

Underwritten by Bristol’s business community, University College was to provide “middle and working class men and women with a liberal education.”

Though strapped for funds, the college managed, during the Marshall’s tenure, to offer day and evening classes to some five hundred students, sponsor public lectures in working-class neighborhoods, provide technical instruction to textile workers, and run a work-study program jointly with local businesses for engineering students. Marshall’s administrative duties were heavy and so was his teaching load. His regular classes, attended by a mix of small businessmen, trade unionists, and women, were “less academic than those at Cambridge . . . a mixture of hard reasoning and practical problems illuminated by interesting sidelights on all sorts of subjects,” a student recalled.

Marshall “spoke without notes and his face caught the light from the window while all else was in shadow. The lecture seemed to me the most wonderful I had ever heard. He told of his faith that economic science had a great future in furthering the progress of social improvement and his enthusiasm was infectious.”