Frank Albert Fetter (; March 8, 1863 – March 21, 1949) was an American economist of the
Austrian School
The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school ...
. Fetter's treatise, ''The Principles of Economics'', contributed to an increased American interest in the Austrian School, including the theories of
Eugen von Böhm-Bawerk
Eugen Ritter von Böhm-Bawerk (; born Eugen Böhm, 12 February 185127 August 1914) was an Austrian economist who made important contributions to the development of the Austrian School of Economics and neoclassical economics. He served intermitten ...
,
Friedrich von Wieser
Friedrich Freiherr von Wieser (; 10 July 1851 – 22 July 1926) was an early (so-called "first generation") economist of the Austrian School of economics. Born in Vienna, the son of Privy Councillor Leopold von Wieser, a high official in the war m ...
, and
Ludwig von Mises
Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...
.
Fetter notably debated
Alfred Marshall
Alfred Marshall (26 July 1842 – 13 July 1924) was an English economist, and was one of the most influential economists of his time. His book '' Principles of Economics'' (1890) was the dominant economic textbook in England for many years. I ...
, presenting a theoretical reassessment of land as capital. Fetter's arguments have been credited with prompting mainstream economists to abandon the
Georgist
Georgism, also called in modern times Geoism, and known historically as the single tax movement, is an economic ideology holding that, although people should own the value they produce themselves, the economic rent derived from land—including ...
idea "that land is a unique factor of production and hence that there is any special need for a special theory of ground rent...."
A proponent of the
subjective theory of value
The subjective theory of value is an economic theory which proposes the idea that the value of any good is not determined by the utility value of the object, nor by the cumulative value of components or labour needed to produce or manufacture it, ...
, Fetter emphasized the importance of
time preference
In economics, time preference (or time discounting, delay discounting, temporal discounting, long-term orientation) is the current relative valuation placed on receiving a good or some cash at an earlier date compared with receiving it at a later ...
and rebuffed
Irving Fisher
Irving Fisher (February 27, 1867 – April 29, 1947) was an American economist, statistician, inventor, eugenicist and progressive social campaigner. He was one of the earliest American neoclassical economists, though his later work on debt def ...
for abandoning the pure time preference theory of interest that Fisher had earlier espoused in his 1907 book, ''The Rate of Interest''.
Early life and education
Frank Fetter was born in
Peru, Indiana
Peru is a city in, and the county seat of, Miami County, Indiana, Miami County, Indiana, United States. It is north of Indianapolis. The population was 11,417 at the 2010 census, making it the most populous city in Miami County. Peru is located ...
to a
Quaker
Quakers are people who belong to a historically Protestant Christian set of Christian denomination, denominations known formally as the Religious Society of Friends. Members of these movements ("theFriends") are generally united by a belie ...
family during the height of the
American Civil War
The American Civil War (April 12, 1861 – May 26, 1865; also known by other names) was a civil war in the United States. It was fought between the Union ("the North") and the Confederacy ("the South"), the latter formed by states th ...
.
[Brown, J. Douglas]
"Fetter, Frank A."
''A Princeton Companion.'' (Alexander Leitch, ed.). Princeton University Press, 1978. Fetter proved an able student as a youth, as demonstrated by his acceptance to
Indiana University
Indiana University (IU) is a system of public universities in the U.S. state of Indiana.
Campuses
Indiana University has two core campuses, five regional campuses, and two regional centers under the administration of IUPUI.
*Indiana Universit ...
in 1879 when he was only sixteen years old. At Indiana, he joined the
Phi Kappa Psi Fraternity
Phi Kappa Psi (), commonly known as Phi Psi, is an American collegiate social fraternity that was founded by William Henry Letterman and Charles Page Thomas Moore in Widow Letterman's home on the campus of Jefferson College in Canonsburg, Penn ...
. Fetter was on track to graduate with the class of 1883, but left college to run his family's bookstore upon news of his father's declining health. Working in the bookstore offered an opportunity for the young man to acquaint himself with some of the economic ideas that would later prove formative. Chief among the intellectual influences Fetter encountered at this time was
Henry George
Henry George (September 2, 1839 – October 29, 1897) was an American political economist and journalist. His writing was immensely popular in 19th-century America and sparked several reform movements of the Progressive Era. He inspired the eco ...
's ''Progress and Poverty'' (1879).
After eight years, Fetter returned to academia and finally completed his
B.A.
Bachelor of arts (BA or AB; from the Latin ', ', or ') is a bachelor's degree awarded for an undergraduate program in the arts, or, in some cases, other disciplines. A Bachelor of Arts degree course is generally completed in three or four years ...
in 1891. In 1892,
Jeremiah W. Jenks
Jeremiah Whipple Jenks (1856–1929) was an American economist, educator, and Professor at Cornell University, who held various posts in the US government throughout his career. He served as a member of the Dillingham Immigration Commission from 1 ...
—who had taught Fetter at Indiana University—acquired a teaching position at
Cornell University
Cornell University is a private statutory land-grant research university based in Ithaca, New York. It is a member of the Ivy League. Founded in 1865 by Ezra Cornell and Andrew Dickson White, Cornell was founded with the intention to teach an ...
at the new
President White School of History and Political Science
The Cornell University Department of History is an academic department in the College of Arts and Sciences at Cornell University that focuses on the study of history. Founded in 1868, it is one of Cornell's original departments and has been a cen ...
and subsequently secured a fellowship for Fetter at that institution. Fetter completed his
Master of Philosophy
The Master of Philosophy (MPhil; Latin ' or ') is a postgraduate degree. In the United States, an MPhil typically includes a taught portion and a significant research portion, during which a thesis project is conducted under supervision. An MPhil m ...
degree the same year. Jenks then convinced Fetter to study, as Jenks himself had, under
Johannes Conrad
Johannes Ernst Conrad (born 28 February 1839 in West Prussia) was a German political economist. Johannes Conrad was a Professor of economics in Halle (Saale), Prussian Germany. He was a co-founder (with Gustav von Schmoller) of the important ''V ...
at the
Sorbonne
Sorbonne may refer to:
* Sorbonne (building), historic building in Paris, which housed the University of Paris and is now shared among multiple universities.
*the University of Paris (c. 1150 – 1970)
*one of its components or linked institution, ...
in
Paris, France
Paris () is the Capital city, capital and List of communes in France with over 20,000 inhabitants, most populous city of France, with an estimated population of 2,165,423 residents in 2019 in an area of more than 105 km² (41 sq mi), ma ...
. Fetter earned his
Ph.D.
A Doctor of Philosophy (PhD, Ph.D., or DPhil; Latin: or ') is the most common degree at the highest academic level awarded following a course of study. PhDs are awarded for programs across the whole breadth of academic fields. Because it is a ...
in 1894 from the
University of Halle
Martin Luther University of Halle-Wittenberg (german: Martin-Luther-Universität Halle-Wittenberg), also referred to as MLU, is a public, research-oriented university in the cities of Halle and Wittenberg and the largest and oldest university i ...
in Germany, where he wrote his
doctoral dissertation
A thesis ( : theses), or dissertation (abbreviated diss.), is a document submitted in support of candidature for an academic degree or professional qualification presenting the author's research and findings.International Standard ISO 7144: ...
, a critique of
Malthusian population theory.
Professional life
![Frank fetter-young](https://upload.wikimedia.org/wikipedia/commons/d/d7/Frank_fetter-young.jpg)
After earning his doctoral degree, Fetter accepted an instructorship at Cornell, but quickly left after being offered a position as a professor at Indiana University. In 1898,
Stanford University
Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California. The campus occupies , among the largest in the United States, and enrolls over 17,000 students. Stanford is consider ...
lured him away from Indiana, but Fetter resigned from Stanford three years later over a dispute regarding
academic freedom
Academic freedom is a moral and legal concept expressing the conviction that the freedom of inquiry by faculty members is essential to the mission of the academy as well as the principles of academia, and that scholars should have freedom to teac ...
. After leaving Stanford in 1901, Fetter went back to Cornell, where he remained for ten years.
In 1911, he again found himself in professional transition, accepting the position of chairman in an interdisciplinary department at
Princeton University
Princeton University is a private university, private research university in Princeton, New Jersey. Founded in 1746 in Elizabeth, New Jersey, Elizabeth as the College of New Jersey, Princeton is the List of Colonial Colleges, fourth-oldest ins ...
which incorporated
history
History (derived ) is the systematic study and the documentation of the human activity. The time period of event before the History of writing#Inventions of writing, invention of writing systems is considered prehistory. "History" is an umbr ...
,
politics
Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status. The branch of social science that studies ...
, and economics.
Fetter was the first chairman of Princeton University's Department of Economics and Social institutions.
Despite his ideological proximity and personal rapport with eminent Austrian School economists such as
Eugen von Böhm-Bawerk
Eugen Ritter von Böhm-Bawerk (; born Eugen Böhm, 12 February 185127 August 1914) was an Austrian economist who made important contributions to the development of the Austrian School of Economics and neoclassical economics. He served intermitten ...
and
Friedrich von Wieser
Friedrich Freiherr von Wieser (; 10 July 1851 – 22 July 1926) was an early (so-called "first generation") economist of the Austrian School of economics. Born in Vienna, the son of Privy Councillor Leopold von Wieser, a high official in the war m ...
, as well as his favorable reviews of works by
Ludwig von Mises
Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...
and
F.A. Hayek
Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Hayek ...
, Fetter referred to himself,
Thorstein Veblen
Thorstein Bunde Veblen (July 30, 1857 – August 3, 1929) was a Norwegian-American economist and sociologist who, during his lifetime, emerged as a well-known critic of capitalism.
In his best-known book, ''The Theory of the Leisure Class'' ...
, and
Herbert J. Davenport
Herbert Joseph Davenport (August 10, 1861 – June 15, 1931) was an American economist and critic of the Austrian School, educator and author.
Biography
Born in Vermont, Davenport studied at the University of Chicago for a year or so under Thor ...
more specifically as being members of the "American Psychological School."
["Frank A. Fetter, 1863–1949."](_blank)
The New School
The New School is a private research university in New York City. It was founded in 1919 as The New School for Social Research with an original mission dedicated to academic freedom and intellectual inquiry and a home for progressive thinkers. ...
. The appellation "Psychological School" is now generally considered to be synonymous with "
Austrian School
The Austrian School is a heterodox school of economic thought that advocates strict adherence to methodological individualism, the concept that social phenomena result exclusively from the motivations and actions of individuals. Austrian school ...
."
Fetter was a staunch opponent of
Franklin D. Roosevelt
Franklin Delano Roosevelt (; ; January 30, 1882April 12, 1945), often referred to by his initials FDR, was an American politician and attorney who served as the 32nd president of the United States from 1933 until his death in 1945. As the ...
's plan to end the
gold standard
A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from the la ...
and worked with other economists in lobbying against the move to a
fiat currency
Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was sometime ...
. As some indication of Fetter's role in these efforts,
In January 1933, a letter was sent to the president-elect, urging him not only to lower tariff barriers to revive international trade, but to maintain the gold standard "unflinchingly." The letter was signed by a number of prominent "traditional" economists, headed by the American "Austrian," Frank A. Fetter, of Princeton.
Theoretical contributions in economics
Land as capital
Fetter participated in a notable debate with
English
English usually refers to:
* English language
* English people
English may also refer to:
Peoples, culture, and language
* ''English'', an adjective for something of, from, or related to England
** English national ide ...
economist
Alfred Marshall
Alfred Marshall (26 July 1842 – 13 July 1924) was an English economist, and was one of the most influential economists of his time. His book '' Principles of Economics'' (1890) was the dominant economic textbook in England for many years. I ...
, both through his 1904 ''Principles of Economics'' and a number of journal articles in the
American Economic Association
The American Economic Association (AEA) is a learned society in the field of economics. It publishes several peer-reviewed journals acknowledged in business and academia. There are some 23,000 members.
History and Constitution
The AEA was esta ...
's journals and in the ''
Quarterly Journal of Economics
''The Quarterly Journal of Economics'' is a peer-reviewed academic journal published by the Oxford University Press for the Harvard University Department of Economics. Its current editors-in-chief are Robert J. Barro, Lawrence F. Katz, Nathan N ...
''. He contested Marshall's position that land is theoretically distinct from capital. Fetter argued that such a distinction was impractical, stating that,
The notion that it is a simple matter to distinguish between the yield of natural agents and that of improvements is fanciful and confusing.... The objective classification of land and capital as natural and artificial agents is a task that always must transcend the human power of discrimination.
![Henry George](https://upload.wikimedia.org/wikipedia/commons/2/26/Henry_George.jpg)
Fetter's stand on this issue further led him to oppose
Georgist
Georgism, also called in modern times Geoism, and known historically as the single tax movement, is an economic ideology holding that, although people should own the value they produce themselves, the economic rent derived from land—including ...
ideas like the
land value tax
A land value tax (LVT) is a levy on the value of land (economics), land without regard to buildings, personal property and other land improvement, improvements. It is also known as a location value tax, a point valuation tax, a site valuation ta ...
.
Mark Blaug
Mark Blaug FBA (; 3 April 1927 – 18 November 2011) was a Dutch-born British economist (naturalised in 1982), who covered a broad range of topics during his long career.
He was married to Ruth Towse.
Life and work
Blaug was born on 3 April ...
, a specialist in the history of economic thought, credits Fetter and
John Bates Clark
John Bates Clark (January 26, 1847 – March 21, 1938) was an American neoclassical economist. He was one of the pioneers of the marginalist revolution and opponent to the Institutionalist school of economics, and spent most of his career as ...
with influencing mainstream economists to abandon the idea "that land is a unique factor of production and hence that there is any special need for a special theory of ground rent.... This is in fact the basis of all the attacks on Henry George by contemporary economists and certainly the fundamental reason why professional economists increasingly ignored him."
[Blaug, Mark. Interview in Andelson, Robert V]
''Critics of Henry George: An Appraisal of Their Strictures on Progress and Poverty''
Blackwell Publishing. 1979. p. 686.
Applications of subjective value theory
Fetter believed in the
subjective theory of value
The subjective theory of value is an economic theory which proposes the idea that the value of any good is not determined by the utility value of the object, nor by the cumulative value of components or labour needed to produce or manufacture it, ...
, and thus supported a pure
time preference
In economics, time preference (or time discounting, delay discounting, temporal discounting, long-term orientation) is the current relative valuation placed on receiving a good or some cash at an earlier date compared with receiving it at a later ...
theory of
interest
In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...
.
Richard Ebeling
__NOTOC__
Richard M. Ebeling (; born January 30, 1950) is an American libertarian author who was the president of the Foundation for Economic Education (FEE) from 2003 to 2008. Ebeling is currently the BB&T Distinguished Professor of Ethics and F ...
wrote that Fetter "constructed a consistent theory of value, price, cost, and production in the context of emphasizing the time-valuational element in all consumption and production choices." According to
Jeffrey Herbener, Fetter asserted that "just as the price of each consumer good is determined solely by subjective value, the rate of interest is determined solely by time preference."
Likewise, Herbener explains, this led Fetter to also conclude that "
e rental price of each producer good is
imputed to it by entrepreneurial demand and is equal to its discounted
marginal value A marginal value is
#a value that holds true given particular constraints,
#the ''change'' in a value associated with a specific change in some independent variable, whether it be of that variable or of a dependent variable, or
# hen underlying valu ...
product. The capital value of each durable good is equal to the discounted value of its future rents." Fetter's contribution to the Austrian subjectivist tradition, then, is that he "showed how this uniform, subjective theory of value implies the demise of
socialist
Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the e ...
theories of
labor exploitation
Forced labour, or unfree labour, is any work relation, especially in modern or early modern history, in which people are employed against their will with the threat of destitution, detention, violence including death, or other forms of e ...
,
Ricardian theories of rent, and productivity theories of interest."
Criticism of Fisher's theory of interest
In "Interest Theories, Old and New" (1914), Fetter criticized
Irving Fisher
Irving Fisher (February 27, 1867 – April 29, 1947) was an American economist, statistician, inventor, eugenicist and progressive social campaigner. He was one of the earliest American neoclassical economists, though his later work on debt def ...
for abandoning the pure time preference theory of interest that Fisher had earlier espoused in his 1907 book, ''The Rate of Interest'', a tome which had heavily influenced Fetter. As
Murray Rothbard
Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School, economic historian, political theorist, and activist. Rothbard was a central figure in the 20th-century American libertarian m ...
recounts, upon further review of Fisher's earlier work,
...Fetter discovered that the seeds of error were in Fisher's publication of 1907. Fisher had stated that valuations of present and future goods imply a preexisting money rate of interest, thereby suggesting that a pure time-preference explanation of interest involves circular reasoning. By way of contrast, and in the course of explaining his own pure time-preference, or "capitalization," theory of interest, Fetter showed that time valuation is prerequisite to the determination of the market rate of interest.[Rothbard, Murray N]
"Fetter the Radical." Introduction to ''Capital, Interest, and Rent''
Institute for Humane Studies. Kansas City: Sheed Andrews and McMeel, Inc., 1977.
Reception in academia
In 1909, at the age of forty-six, Fetter was awarded an honorary
LL.D.
Legum Doctor (Latin: “teacher of the laws”) (LL.D.) or, in English, Doctor of Laws, is a doctorate-level academic degree in law or an honorary degree, depending on the jurisdiction. The double “L” in the abbreviation refers to the early ...
from
Colgate University
Colgate University is a private liberal arts college in Hamilton, New York. The college was founded in 1819 as the Baptist Education Society of the State of New York and operated under that name until 1823, when it was renamed Hamilton Theologi ...
,
and he was made president of the American Economic Association in 1913. Additional honorary doctoral degrees were conferred on Fetter by
Occidental College
Occidental College (informally Oxy) is a private liberal arts college in Los Angeles, California. Founded in 1887 as a coeducational college by clergy and members of the Presbyterian Church, it became non-sectarian in 1910. It is one of the oldes ...
in 1930 and
Indiana University
Indiana University (IU) is a system of public universities in the U.S. state of Indiana.
Campuses
Indiana University has two core campuses, five regional campuses, and two regional centers under the administration of IUPUI.
*Indiana Universit ...
in 1934. He was a fellow of the
American Academy of Arts and Sciences
The American Academy of Arts and Sciences (abbreviation: AAA&S) is one of the oldest learned societies in the United States. It was founded in 1780 during the American Revolution by John Adams, John Hancock, James Bowdoin, Andrew Oliver, and ...
and a member of the
American Philosophical Society
The American Philosophical Society (APS), founded in 1743 in Philadelphia, is a scholarly organization that promotes knowledge in the sciences and humanities through research, professional meetings, publications, library resources, and communit ...
. In 1927, he was awarded the
Karl Menger
Karl Menger (January 13, 1902 – October 5, 1985) was an Austrian-American mathematician, the son of the economist Carl Menger. In mathematics, Menger studied the theory of algebras and the dimension theory of low- regularity ("rough") curves a ...
Medal by the
Austrian Economic Society.
Fetter's treatise, ''Principles of Economics'' (1904), has been described by Herbener as "unsurpassed until
Ludwig von Mises
Ludwig Heinrich Edler von Mises (; 29 September 1881 – 10 October 1973) was an Austrian School economist, historian, logician, and Sociology, sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberali ...
's treatise of 1940, ''Nationaloekonomie''."
In Rothbard's preface to the 1977 edition of Fetter's ''Capital, Interest, and Rent'', he notes that he was first introduced to Fetter's work via a citation in Mises' ''
Human Action
''Human Action: A Treatise on Economics'' is a work by the Austrian economist and philosopher Ludwig von Mises. Widely considered Mises' ''magnum opus'', it presents the case for laissez-faire capitalism based on praxeology, his method to under ...
'' and describes Fetter's views on interest and rent as being "Austrian" and influential on his own views.
...while reading Fetter's oeuvre in the course of writing my ''Man, Economy, and State
''Man, Economy, and State: A treatise on economic principles'' is a 1962 book of Austrian School economics by Murray Rothbard
Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School ...
''... I was struck by the brilliance and consistency of his integrated theory of distribution and by the neglect of Fetter in current histories of economic thought, even by those that are Austrian oriented. For Fetter's systematic theory, while challenging and original (particularly his theories of interest and rent), was emphatically in the Austrian school tradition.
Upon Fetter's death in 1949, J. Douglas Brown, who would later be named Provost of Princeton University, wrote a "Memorial" to Fetter for the ''
American Economic Review
The ''American Economic Review'' is a monthly peer-reviewed academic journal published by the American Economic Association. First published in 1911, it is considered one of the most prestigious and highly distinguished journals in the field of ec ...
''. He opened the tribute with the announcement that "with the death of Frank Albert Fetter the great company of American economists has suffered an irreparable loss."
[Brown, J. Douglas]
"Memorial: Frank Albert Fetter
1863–1949." ''American Economic Review''. Vol. 39, No. 5 (September 1949), p. 979.
Books
* ''Versuch einer Bevölkerungslehre ausgehend von einer Kritik des Malthus'schen Bevölkerungsprinzips'' (Translation: "An Essay on Population Doctrine based on a Critique of the Population Principles of Malthus"). Jena: Gustav Fischer, 1894.
*
The Principles of Economics'
The Principles of Economics, With Applications to Practical ProblemsNew York: The Century Co., 1905
*
Source Book in Economics'. New York: The Century Co., 1912.
*
Economics, Volume 1: Economic Principles'
Economic PrinciplesNew York: The Century Co., 1915.
* ''Manual of References and Exercises in Economics for Use with, Vol. 1: Economic Principles''. New York: The Century Co., 1916.
*
Economics, Vol. 2: Modern Economic Problems'
Modern Economic ProblemsNew York: The Century Co., 1916. Revised 2nd edition, 1922.
* ''Manual of References and Exercises in Economics for Use with, Vol. 2: Modern Economics''. New York: The Century Co., 1917.
* ''Masquerade of Monopoly''. New York: Harcourt, Brace & Co., 1931.
*
'.
ttps://mises.org/books/capital-fetter.pdf Capital, Interest, and Rent: Essays in the Theory of DistributionInstitute for Humane Studies
The Institute for Humane Studies (IHS) is a non-profit organization that promotes the teaching and research of classical liberalism in higher education in the United States. IHS offers funding opportunities, programs, and events for faculty and g ...
. Kansas City: Sheed Andrews and McMeel, Inc., 1977.
Articles
*
Recent Discussion of the Capital Concept by Frank A. Fetter, ''Quarterly Journal of Economics'', (1900)
References
External links
*
*
*
Works by Frank Fetterat the
Ludwig von Mises Institute
Ludwig von Mises Institute for Austrian Economics, or Mises Institute, is a libertarian nonprofit think tank headquartered in Auburn, Alabama, United States. It is named after the Austrian School economist Ludwig von Mises (1881–1973).
It wa ...
.
Information on Fetter's papers housed at Indiana University.
*
{{DEFAULTSORT:Fetter, Frank A.
1863 births
1949 deaths
Austrian School economists
Economists from Indiana
Cornell University faculty
Presidents of the American Economic Association
Cornell University alumni
People from Peru, Indiana