ONE HUNDRED YEARS FROM TODAY: A. C. PIGOU’S WEALTH AND WELFARE
Khuu, A. and Weber, E.J.
HOW AUSTRALIAN FARMERS DEAL WITH RISK
* University of Western Australia, Business School, Economics Program. Karen Knight is the author of sections 2, 5 and 6, which she has completed as part of her PhD program. We thank Patricia McGuire, the Archivist at the King’s College Archive Centre in Cambridge, for her advice and assistance. We would also like to thank Johnson and Alcock LTD for permission to reproduce, in the appendix to this paper, the entire text from Pigou’s letter to Donald Corrie.
1 See Peter Groenewegen (1995) in relation to the life of Marshall and R.F Harrod (1951) and Robert Skidelsky (1983-2000) in relation to the life of Keynes.
2 The Baronetcy of Blackrock in the County of Dublin was created for John Lees, soldier, politician, and administrator on 30 June 1804 in the Baronetage of the United Kingdom (Lundy, 2012).
3 Both the Lees and Pigou families’ settlement in Ryde coincides with Ryde’s own increased popularity and expansion after Queen Victoria’s and Prince Albert’s commissioning of, and subsequent extended periods of residence at, Osborne House in East Cowes where Queen Victoria would eventually die in 1901.
4 Phillip Taylor (2011) has completed a paper chronicling the life of Frederick Alexander Preston Pigou (1838-1905) in which the general wealth and business history of the Pigou family in Kent is detailed.
5 English census records the country of birth and death of Arthur’s paternal grandfather, also named Arthur Pigou, as India. Pigou’s own father, Clarence’s, place of birth is also listed as Calcutta, India, in English census records.
6 The Pigou family is listed in the 1881 English census as living in Pembury, the members of the household included Clarence and Nora Pigou, Nora’s sister, Arthur Cecil Pigou, Pigou’s brother Gerard and five servants (Administrative County of Kent, 1881).
7 This is indicated by the England and Wales Census records for the year 1861 as cited in Taylor (2011).
8 Margaret, born in 1815, and Cecilia born in 1820, parents listed as Alexander Carruthers Johnston and Cecilia Ann Johnston on Baptism records.
9 At the time of his death in 1874, Henry Minchin Pigou’s fortune was listed as in the vicinity of £60,000 to £70,000 thousand pounds (Principal Probate Register, 1874). The value of Henry Minchin’s estate would approximately be equivalent to £30 million today with respect to average earnings (using the website “Measuring Worth” www.measuringworth.com/ukcompare/).
10 However, the listing of estate values which can be traced through the Probate Registers for both the families of both Frederick John Pigou and Arthur Pigou (A.C. Pigou’s paternal grandfather) indicate they were still in a comfortable financial position. The probate listing of Margaret Pigou is listed in the year 1897 “to Frederick Alexander Preston Pigou Effects £12393 13s, 11d”. The source of annuity after her husband’s death remains unestablished. The probate listing for the widow of Arthur Pigou who survived him in the year 1908 is listed “to Henry Oldham and Montagu Lewis Parkin solicitor Effects £20660 19s, 1d”. The probate listing in 1905 of Clarence Pigou is listed as “to A.C. Pigou Effects £8184 10s, 11d”.
th Oscar Browning discusses the ‘Historical Tripos’ developed at Cambridge in his biography (1910, p. 234).
11 In an undated letter from Pigou to Browning kept at the King’s College Archive Centre (Archival Reference: OB/1/1281/A), Pigou expresses his gratitude to Browning for arranging the scholarship. Saltmarsh and Wilkinson (1960, p. 4) characterised Pigou’s receipt of this undergraduate scholarship as a promotion.
12 The evidence for this comes from Pigou’s letters to Browning (see McLure forthcoming).
13 Pigou’s attempts to obtain a fellowship, and the referees’ assessments of his fellowship dissertations, are discussed in McLure (forthcoming).
14 Foxwell was, at that stage, a senior and experienced economics lecturer at Cambridge University. He felt that Pigou did not have the knowledge to teach the general course in economics (Kadish 1989, p.193) and, as such, was not supportive of the Moral Sciences Board’s decision to support to Marshall’s request for Pigou to be lecturer of the general course in economics. This issue is discussed further in McLure (forthcoming).
15 “It is prima facie desirable that arbitrators should seek somewhat to modify the general distribution of wealth awarding to poor workpeople higher wages than the trend of economic forces would naturally bring about, provided that these wages seem likely to come from the pockets of relatively wealthy persons” (Pigou 1905, p. xi).
16 The letter is reprinted in Coats (1992, pp. 315-314)
17 G. C. G. Moore (2003) provides a ‘centennial’ review of Ashley (1903).
18 Amery had also taken direct aim at Pigou in the Times during the height of the debate, suggesting that Pigou’s works on protection (The Riddle of the Tariff) simply highlighted his ignorance of economics (Takami, 2012, p. 10).
19 In his referee’s report on Pigou’s King’s College fellowship dissertation, which was a revised version of his winning Cobden Prize essay, Marshall supported his very strong recommendation in favour of Pigou by quoting extensively from a letter that he had received from Lloyd that enthused about the ‘remarkable capacity for economic argument’ that Pigou demonstrated in his Cobden essay (see McLure forthcoming).
20 The relevance of ‘Some Remarks on Utility’ (Pigou 1903b) and ‘Producers’ and ‘Consumers’ Surplus’ (Pigou 1910) to Pigouvian welfare economics, and the consequence differences between Pigou’s and Pareto’s approaches to economic and social welfare, are considered by McLure (2010).
21 For further discussion on Pigou’s appointment see Coase (1972), Coats (1967) and Jones (1978).
22 The active electors for Marshall’s successor to the position of Professor of Political Economy were Lord Courtney, F. Y. Edgeworth, J. N. Keynes, J. S. Nicholson, R. H. Inglis Palgrave, V. H. Stanton and W. R. Sorley (Coase 1972, p. 478).
23 Coats (1972, p. 488) suggests that ‘moderates’ among the electors, like Nicholson and J. N. Keynes, were displeased by Marshall’s lobbying in favour of Pigou. Coase (1972, p.483-484) suggests that they probably voted against Pigou and in favour of Foxwell.
24 Peter Groenewegen (2012) considers Charles Ryle Fay (1884-1961) and Walter Layton (1884-1966) as minor Marshallians. Fay, an economic historian, remained an academic during the course of his working life teaching and writing economic history but he also completed a treatise on the cooperative movement in Great Britain and abroad. Layton wrote on labour economics and the price level. He left academia to become a financial journalist and newspaper editor, later becoming the proprietor of the weekly Economist. (See Groenewegen’s book for an in-depth consideration of both men as Marshallian economists).
25 Pigou also provided considerable support to Richard Kahn particularly in the consideration and endorsement of Kahn’s fellowship dissertation, providing advice to Kahn to publish the work without delay; advice Kahn did in the end act upon (see Aslanbeigui & Oakes, 2010).
26 The ongoing debates concerning this theoretical issue would later culminate in the “increasing returns-symposium” in which appeared in The Economic Journal in 1930.
27 Aslanbeigui (1996; 1997) provides an historical account of how the cost controversy affected Pigou’s analysis noting that his responses led to his separation of external and internal economies of an equilibrium firm, constructing the average and marginal cost curves, and outlining the conditions for equilibrium.
28 Although Coase’s work appeared after Pigou’s death, Aslanbeigui (2010, pp. lv-lvii) constructs a possible critique that may Pigou may have presented.
th Pigou is remembered for having been particularly fond of children for whom he would develop amusing stories. Collard (1996, p.32), when exploring Pigou’s relationship with his publisher Macmillan, reports Pigou’s suggestion of publishing stories which he had over the years “tried out successfully on several children”.
29 Further details of Pigou’s climbing achievements can be found in his obituary written by H.C.A. Guant (1959) appearing in the Alpine Journal.
30 This event is remembered in detail in Philip Noel-Baker’s (1959) obituary on Pigou appearing in Nature.
31 In his biography of the famous British rock climber, John Menlove Edwards, Jim Perrin (1993) recounts the relationship that developed between Noyce and Menlove during 1936, with the relationship ending on Noyce’s enrolment at King’s. The relationship between Noyce and Pigou, who was much older than Noyce (Pigou would have been approaching 60 years of age, 40 years Noyce’s senior), became lifelong and close. However, there is little to suggest that this friendship extended anywhere beyond a young man and a sponsor. Pigou remained friends with Noyce after his marriage in 1950 and the subsequent birth of his two sons and Pigou generously remembered Noyce in his final will and testimony.
32 Pigou would later confer upon visitors at Buttermere, for achievements in hill-walking and rock-climbing, the various medals and ribbons he had been bestowed for the activities of his ambulance driving during World War I (Champernowne, 1959).
33 Aslanbeigui (1992) refers to J. N. Keynes’ Dairies, June 1 and 4, 1908.
34Naldi (2005) reproduces the second paragraph of this letter. Where difficulties were encountered in deciphering A.C. Pigou’s difficult to decipher handwriting, we have relied on Naldi’s transcription .