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PALGRAVE STUDIES IN CLASSICAL LIBERALISM
SERIES EDITORS: DAVID F. HARDWICK · LESLIE MARSH

The Evolutionary
Invisible Hand
The Problem of Rational
Decision-Making and Social
Ordering over Time
Matúš Pošvanc
 Palgrave Studies in Classical Liberalism

Series Editors
David F. Hardwick, Department of Pathology and
Laboratory Medicine, The University of British Columbia,
Vancouver, BC, Canada
Leslie Marsh, Department of Pathology and Laboratory
Medicine, The University of British Columbia, Vancouver,
BC, Canada
This series offers a forum to writers concerned that the central presuppo-
sitions of the liberal tradition have been severely corroded, neglected, or
misappropriated by overly rationalistic and constructivist approaches.
The hardest-won achievement of the liberal tradition has been the
wrestling of epistemic independence from overwhelming concentrations
of power, monopolies and capricious zealotries. The very precondition
of knowledge is the exploitation of the epistemic virtues accorded by
society’s situated and distributed manifold of spontaneous orders, the
DNA of the modern civil condition.
With the confluence of interest in situated and distributed liber-
alism emanating from the Scottish tradition, Austrian and behavioral
economics, non-Cartesian philosophy and moral psychology, the editors
are soliciting proposals that speak to this multidisciplinary constituency.
Sole or joint authorship submissions are welcome as are edited collec-
tions, broadly theoretical or topical in nature.

More information about this series at

http://www.palgrave.com/gp/series/15722
 Matúš Pošvanc

The Evolutionary
Invisible Hand
The Problem of Rational
Decision-Making and Social Ordering
over Time
Matúš Pošvanc
F. A. Hayek Foundation
Bratislava, Slovakia

ISSN 2662-6470 ISSN 2662-6489 (electronic)

Palgrave Studies in Classical Liberalism
ISBN 978-3-030-71799-5 ISBN 978-3-030-71800-8 (eBook)
https://doi.org/10.1007/978-3-030-71800-8

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature
Switzerland AG 2021
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher,
whether the whole or part of the material is concerned, specifically the rights of translation, reprinting,
reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical
way, and transmission or information storage and retrieval, electronic adaptation, computer software,
or by similar or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publication does not imply, even in the absence of a specific statement, that such names are exempt
from the relevant protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, expressed or implied, with respect to the material contained
herein or for any errors or omissions that may have been made. The publisher remains neutral with
regard to jurisdictional claims in published maps and institutional affiliations.

Cover credit: © Pattadis Walarput/Alamy Stock Photo

This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland
AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Dedicated to my family. Thank you for your support.
 Contents

1 Introduction 1
References 6
2 Why Are We Economically Successful? 7
2.1 Defining the Problem: A Comparison Over Time 10
2.1.1 Risk and Uncertainty 16
2.1.2 Estimating of the Future as the Economics
Problem 22
2.2 Intersubjectivism: The Path (Leading)
to the Solution 51
2.2.1 Some Assumptions and Claims 52
2.2.2 Evolutionary Apriorism: A Methodological
Introduction 55
2.2.3 Modified Theory of Subjective Value 64
2.2.4 How Do We Estimate the Future, and Why
We Are Economically Successful 76
2.3 Economic Coordination and Ordering: Process
Description 88

vii
viii Contents

2.3.1 Price Spread and Subjectively Perceived

Prices 92
2.3.2 Interest: An Intersubjective Tool
for Decision-Making Over Time 98
2.3.3 The Entrepreneurship Discovery Process,
Competition, and Pricing 107
2.3.4 The Meta-Standards and Standardization
as a Basis of Evolutionary as Well as Rational
Ordering 112
2.3.5 The Concept of Economic Success/Error:
Its Technical (objective), Subjective
and Intersubjective Nature 116
2.3.6 Subjective Profit/Loss Versus Intersubjective
Profit/Loss 167
2.3.7 The Problem of Cost Concept: Subjective
and Intersubjective Costs 178
2.3.8 Other Coordinating Social Standards 184
References 186
3 In Defense of the Invisible Hand Concept:
Modification of Austrian Theory of Equilibration
and Social Ordering 193
3.1 Background and Description of the Problem 195
3.2 Individual Equilibrium 203
3.2.1 Current vs. Desired vs. Possible Structure
of the Individual Portfolio 211
3.3 Market Equilibrium in the “Here and Now”
Exchange and the “Debt” Exchange 215
3.3.1 Barter/Money Exchange—Here and Now 216
3.3.2 Individual and Market Equilibrium
and Disequilibrium 223
3.3.3 The visibility of the invisible hand
of the marke—the tension from equilibrium
to disequilibrium and back to equilibrium 228
3.3.4 Debt Exchange 231
3.3.5 Lucy’s View 233
 Contents ix

3.3.6 Bob and David’s View 236

3.3.7 Charlie’s View 240
3.3.8 Alice’s View 241
3.4 The Final State of Rest (FSoR) and the Human
Evenly Rotating Economy (HERE) 241
3.4.1 Formulation of the Concept of the HERE 247
References 253
4 The Problem of Indifference and Choice: An Answer
to Nozick’s Challenge to Austrians 257
4.1 Reactions to Nozick by the Austrians 260
4.2 The Indifference Problem Solution: A Proposal 273
4.3 Implications 275
4.3.1 Implications Within the Austrian School’s
View of the Problem of Indifference 280
4.3.2 Implications Within the Mainstream View
of the Problem of Indifference 283
References 287
5 Conclusion 291
References 297

References 299
Index 301
 1
Introduction

This book presents a new theoretical approach to the description of

economic phenomena over time. A realistic and meaningful descrip-
tion over time is one of the basic preconditions for the success of any
economic theory. The presented theoretical solution or proposal has two
main characteristics. The first is a modification of the theory of subjec-
tive value in the form of the claim that one perceives the satisfaction
of one’s needs in the context of one’s overall individual portfolio of
goods. The causal relationship of the “old” theory in the form of “need
is satisfied by good” is modified in terms of “sum of needs is satisfied
by portfolio of goods (sum of goods).” This is a small modification,
which, however, brings several important elements to the description of
economic phenomena over time. The old theoretical approach did not
enable us to operate over time because of different value context of goods
which changes over time. However, the portfolio of goods is, in fact, a
formally logical homogeneous construction of the mind, which is appli-
cable over time. The portfolio is constructed by individual goods and
is always different from this point of view, however, it provides, at the

© The Author(s), under exclusive license to Springer Nature 1

Switzerland AG 2021
M. Pošvanc, The Evolutionary Invisible Hand,
Palgrave Studies in Classical Liberalism,
https://doi.org/10.1007/978-3-030-71800-8_1
2 M. Pošvanc

same time, a homogenous concept applicable; the portfolio per se. This
brings qualitatively new possibilities to describe economic phenomena
over time. The second characteristic is the anchoring of this modifica-
tion of the theory of subjective value in evolutionary (intersubjective)
apriorism. The anchoring of the concept in evolutionary apriorism
allows a description of development; not empirical, so to speak accurate
description, but the construction of the so-called conjunctural history
or logical-historical method of describing the evolution of phenomena
where exact empirical data are missing (the method has already been
used by Adam Smith, Friedrich Hegel, F. A. Hayek, and other evolu-
tionary thinkers). The vitality of this new theoretical approach is shown
in the fundamental problem that the book solves: “How do we do that
which we can correctly estimate for the future, so that we can learn
from realized mistakes and be economically successful?” To deal with the
problem, the text is divided into the three logical parts. The first part
provides basic argumentation for the main question “How do we deal
with economic problems in time?” The vitality of the presented concept
is then shown in the following two parts of the book—the application
of the presented concept onto the problem of equilibrium and in the
problem of indifference.
The first part of the book is presented in the following way: “Why Are
We Economically Successful? The Theory of Economic Error and Learning.”
It addresses two basic issues: “Why are we economically successful?” and
“How do we know that we have made an economic error?” From the
point of view of the practical life of any individual, these are trivial issues.
We know when we are economically successful and when we are not. We
know when we have made an economic error, and possibly, we know
how to correct it. These questions are much more challenging to a social
scientist, who should explain this very “trivial” knowledge. The problem
is inevitably related to our outlook for the future. It is problematic to
explain how we compare two points in time: The moment when the deci-
sion that led us to the future was implemented and a comparison of the
moment that actually came. Only this comparison allows us to answer
the question of whether we were successful or whether we have made
a mistake. The triviality of the problem is immediately lost, once we
realize that we do not know what the future will be like when we make
 1 Introduction 3

a decision. How do we estimate it? And how is it possible that we can

somehow manage to prepare good estimates? And if we make a mistake,
how do we actually learn when we are merely estimating the future in the
context of current information? Isn’t every moment of our life so unique
that there is no such thing as learning from the past? Is our decision-
making rational at all? Or is everything just a work of chance, which we
(incorrectly) call rationality? So how do we grasp the future? These are
not trivial questions. They are related to the estimation of the future,
the question of the rationality of our action, the problem of economic
profit/loss and costs, the problem of coordination of several individuals
in the community and the problem of the individual, and the market
economic equilibrium.
We will focus on a more detailed description relating to the problem
of economic estimation of the future and explore how such great minds
as Frank Knight, Ludwig von Mises, Hans Herman Hoppe, G. L. S.
Shackle Ludwig Lachmann, or F. A. Hayek approach the problem. We
will try to identify the vital parts of their systems that will allow us to
design a new solution proposal. This will be methodologically anchored
in Hayek-Pavlík’s evolutionary (intersubjective) apriorism. I will show
how we estimate the future, why we are relatively successful in estimating
the future, and why we are economically successful overall, i.e., why
we experience economic progress. I will show how the so-called “invis-
ible hand”—the most famous metaphor in economics—helps us in this
matter while defining the modus operandi behind the principles and
forces which govern it. I will demonstrate that people can also coordi-
nate with each other through the economic-normative criteria that have
evolved. I will explain the principle of coordination exclusively in the
context of the future, i.e., in the context of individuals’ expectations and
plans. We will show that concepts of error, profit, loss, and cost have a
subjective and intersubjective character as well. The division will allow us
to explain several issues related to the coordination of individuals—with
the specifying of criteria for identifying economic error and success.
The second part of the book is called “In Defense of the Invisible Hand
Concept: Modification of the Austrian Theory of Equilibration and Social
Ordering.” Tiebien (2012, p. 614) concludes that the concept of equilib-
rium has persisted on the scientific scene for such a long time because
4 M. Pošvanc

“Equilibrium is indispensable.” He argues that at the end of the day,

each replacement of the Walrasian doctrine introduced its static version
of the concept of equilibrium. Even those theories that are considered
a description of the equilibrium as a process are, after all, just end-
state theories in disguise. The reason for this conclusion is the high
degree of complexity of the described problem, which cannot be real-
ized without appropriate simplification and assumptions. From the point
of view of the Austrian School of Economics, equilibration theories are
often considered redundant or that they do not describe real phenomena.
However, there have been some attempts to describe a realistic concept of
equilibrium. This can be seen in the works of Mises, Hayek, O’Driscoll,
Rizzo, or Hülsmann. Tiebien (2012) states that the Austrian school has
provided a useful insight into theories of equilibration. This chapter
follows the program of the Austrian school in the field of equilibrium
theory, or more precisely equilibration. The ambition of this chapter is
to briefly introduce a fully dynamic theory of equilibration, which is not
a masked static version of equilibrium. However, Tiebien’s (2012) remark
that every equilibrium theory has its static side is correct. In this chapter,
it is necessary to present a potential solution to this seemingly logical
paradox—the static-dynamic character of equilibrium and to present a
theory that has both a static (thymological) and dynamic (praxeological)
component. A useful phenomenon for solving this paradox is the port-
folio of goods by which man satisfies a combination of his needs. The
portfolio as a static-dynamic phenomenon allows us to present a realistic
concept of equilibrium, both at the level of the individual in the form of
defining their individual state of equilibrium and an individual process
of equilibration, and a subsequent description of the problem of equi-
libration at the level of society. At the same time, another ambition of
this chapter is to connect several approaches to the problem of equilib-
rium which are present within the program of the Austrian school. It will
draw on and connect vital parts of Mises’s (1998) approach of the Evenly
Rotating Economy, as well as Hayek’s (post-1937) program of social
ordering. The chapter will focus on the transition from the equilibrium
to the disequilibrium state, explaining why there is a tendency to an equi-
libration (invisible hand of the market), and describing the phenomena
of competition and business discovery as consequences of individual
 1 Introduction 5

transition between equilibrium and disequilibrium. At the same time,

the presented concept is not based on the description of the circula-
tion of goods, nor is it based on price equilibrium or demand/supply
equilibrium, which, as the reader will see, are the result of equilibration
tendencies of individual interactions. It is based on a description of plans
and expectations of individuals who interact economically with each
other. The concept is not presented based as a mathematical construct,
but it implies future possibilities for its mathematization.
The last part of the book is called “The Problem of Indifference and
Choice: An Answer to Nozick’s Challenge to Austrians.” The aim of this
part of the book is to link the Austrian School’s approach to indiffer-
ence with the mainstream approach. It looks critically at an interesting
ongoing discussion about the problem of indifference and choice within
the Austrian School. The discussion was conducted in response to
Nozick’s (1977) address to representatives of the Austrian school on the
problem of indifference, implying the invalidity of the law of dimin-
ishing marginal utility in the absence of a presupposition of indifference.
It briefly introduces the discussion and its main problems. Stated reser-
vations will be replaced by suggested solutions based on the minor
modification of the theory of subjective value and on the premise that
needs are satisfied by a portfolio of goods over time. The discussion will
allow the preservation of elements of Indifference analysis as interpreted
by the neoclassical mainstream. However, it will also allow interpreta-
tion of the problem of choice based on strict preferences and creates
room for Indifference, also from the point of view of the Austrian
School of Economics. This is quite a controversial conclusion, but it is
a logical consequence of the proposed minor modification in the theory
of subjective value.
The book is anchored quite strongly into the realm of the so-called
Austrian School of Economics. It is intended to address this group of
scientists directly. However, it could be of interest also for many main-
stream economists. Why? The presented theory tries to connect the
mainstream with the Austrians. It is intended to show the importance
of the Austrian School for economic science. The book is presented as a
novel theoretical approach, however, anchored in other theoretical writ-
ings. It is possible to consider this book as some kind of “economic
6 M. Pošvanc

philosophy.” It deals with the very core problems of economics; it is

focused on the so-called essences of the phenomena. The book does
not contain empirical data. However, the text contains various kinds of
illustrative examples that describe the problem in terms of the so-called
conjunctural history method. I hope that questions, topics, and proposed
solutions will motivate readers to open the book and to dive into an
exploration of them.
Matúš Pošvanc

References
Hayek, A. Friedrich. 1937. Economics and Knowledge. Economica. New Series
4 (13): 33–54. Online version on WWW. DOCUMENT. https://mises.org/
library/economics-and-knowledge Accessed 22 Jan 2021.
Mises, Ludwig. 1949, 1998. Human Action. Scholar Edition. Auburn, Ala:
Ludwig Von Mises Institute. WWW DOCUMENT. https://mises.org/lib
rary/human-action-0/html/pp/663.
Nozick, Robert. 1977. On Austrian Methodology. Synthese. Vol. 36, No. 3,
Mathematical Methods of the Social Sciences, Part II (Nov. 1977), pp. 353–
392. WWW DOCUMENT. https://www.jstor.org/stable/20115233.
Tiebien, Bert. 2012. The Concept of Equilibrium in Different Economic Tradi-
tions. Edward Elgar Publishing.
 2
Why Are We Economically Successful?

The concept of success/error related to economic activity is not a special

concept for an individual. The individual knows when an error has been
made and knows when he/she is successful. In asking the question, “How
do you know that you have made a mistake?”; in most cases, the general
public would remain in silent wonder as to why anyone would ask such
a question at all. From a scientific point of view, it is not entirely easy
to explain this mundane perception that people have. This is because we
tend to compare two moments in time in connection with the mistake:

(a) the moment of implementation of the decision that led us to the

result,
(b) the moment of whether or not the result was fulfilled.

However, at the time the decision is implemented, we do not yet know

what will happen. After all, we cannot predict the future. If something
happens that we did not know would happen, how can we even say that
we made a mistake at the time our decision was made?

© The Author(s), under exclusive license to Springer Nature 7

Switzerland AG 2021
M. Pošvanc, The Evolutionary Invisible Hand,
Palgrave Studies in Classical Liberalism,
https://doi.org/10.1007/978-3-030-71800-8_2
8 M. Pošvanc

At the same time, our actions and activities are constantly focused only
on the future. We cannot change the past. We do not know the future in
terms of whether and what natural deterministic phenomenon will occur,
i.e., how nature and the surrounding reality will behave. A much bigger
problem is that we do not know the future reactions of other members
of society. We cannot look into the minds of people, nor can we analyze
their thoughts, or plans. The bigger the society, the higher the so-called
uncertainty resulting from possible combinations of actions of all people.
Given this massive degree of darkness connected with risk and uncer-
tainty, how is it even possible for us to survive? How is it even possible
that we can deal with the future and do it even relatively successfully?
Is it all just a coincidence? Is it just our illusion that we are behaving
rationally? How is it possible for an entrepreneur to successfully bring
to the market a product whose planning, production, and subsequent
successful sales are sometimes several years apart, yet they are successful?
Explaining or grasping the future is a challenge.
If we knew the future, we could be objectively certain, when we have
made a mistake. If we knew the future and acted unfavorably toward it,
we would be objectively wrong. However, if we do not know the future,
how can we ever say later that what we did was an error? As the reader
will see below, an ex post evaluation, when we say: “had I known then
what I know now, I would have behaved differently” will not help either.
How do we know we would have behaved differently from today’s point
of view? Because we do not know the alternative development of our
past, we are unable to say objectively, ex post, that by making a decision
at time t, we have made an objective error. Had we decided differently,
in a way we now consider appropriate, today we could claim once again,
that the decision was wrong because we do not know the alternative
consequences of our alternative decision.
If it is difficult to compare the plans (the plan drawn up at time t )
with the reality of what will happen (at time t + 1), how do we know
that we have even made a profit or a loss? This is still not the final
problem if we realize that profit/loss is a subjective phenomenon that
can be perceived as utterly different by everyone. It is also question-
able whether achieving profit means the entrepreneur achieved any result
expressed e.g., if money received is higher than zero or if the achieved
result is higher than the original plan that the entrepreneur had?
 2 Why Are We Economically Successful? 9

We face some interesting questions that seem to become more inter-

esting once the reader realizes that people do not have an issue dealing
with these kinds of problems. People solve these types of problems prac-
tically every day. The answer to the problem is more likely to come
from economic science, i.e., to provide a proper description of how to
respond to these questions. In this essay, we will, therefore, focus on the
problem of how we grasp the future, how we anticipate it, and how we
compare it with the past and present. We will then introduce the concept
of economic error, profit/loss, and costs. The presented solution to the
problem will allow us to define the problem of entrepreneurship and the
functions of the entrepreneur more precisely.
We will proceed as follows. We will begin by defining the problem of
grasping and anticipating the future and describe the concepts of risk and
uncertainty. We will look at some proposed solutions used today to solve
the problems in question. We will examine works from authors such
as professors Knight, Mises, Hoppe, Shackle, Lachmann, and Hayek,1
who deal with similar issues; especially how, according to them, human
subjects grasp the future. After introducing these ideas, we will intro-
duce our chosen path and methodological background in the form of
Hayek–Pavlík’s evolutionary apriorism.
As the reader will see, the chosen methodological background will
allow us to discover the answers to the questions which we set out.
Subsequently, we will describe how we are able to predict the future
and why entrepreneurs and the rest of us are relatively successful in
estimating it. However, this will not end our journey. Another very
important problem will confront us; the problem of the mutual coor-
dination of human actions, which was of particular interest to professor
F.A. Hayek. We will argue that economic coordination does not only
take place against the background of normative concepts manifested
in the socio-legal environment around which Hayek had developed his

1The authors often supplement each other. The reader should not get the impression that if this
essay cites, e.g., Mises or Hoppe, that Shackle–Lachmann’s interpretations of a phenomenon
related to the future are completely different and less relevant. I originally wanted to focus
on three lines of approach: The Knight–Mises–Hoppe–Hülsmann line, the Shackle–Lachmann
line, and the Hayek–Kirzner line. However, after a more detailed examination of the selected
authors, I had great difficulty in classifying them in this way.
10 M. Pošvanc

theory of cultural evolution. We will show that there are normative-

economic coordinates of human action, upon which people rationally
“tune” their mutual and individually determined goals to satisfy their
individual needs. We will try to identify the basic background of the
problem of economic error. We will demonstrate that the problem of
economic error has several levels—technical, individual-subjective, and
intersubjective. Based on our findings, we will then modify the approach
to the profit/loss and cost problem, which, like the concept of error, will
be individual-subjective and intersubjective in nature. As you can see, we
are facing some interesting questions.

2.1 Defining the Problem: A Comparison

Over Time
The problem we face is primarily related to human choice and the related
issue of uncertainty. The reality (world of things) in which one lives is
to some extent predictable. As we will see below, the reality (world of
things) is related to the problem of risk which one can deal with in
principle. However, as explained by Shackle (1992, pp. 122–126) the
choice is always about what “we imagine and what we want.” One does
not even have time to choose the present; it is too late for the present.
The present is already happening. Therefore, the choice is only about the
future. We imagine and think about the future; it is the future that is the
subject matter of human action. At the same time, it is the most compli-
cated phenomenon that we must explain. Shackle writes: the depth of
the problem is related (1992, pp. 122–123):

To call it future is to concede the presumption that it is already “existent” and

merely waiting to appear. If that is so, if the world is determinist, then it seems
idle to speak of choice. Choice, if it means what our instinct and workday
attitude assume, is originative, it is the start of a new train of influences. If
so, we cannot know what choices will be made at moments still to come. And
this essential and vast gap in the “relevant knowledge” required for rational
choice cannot be overcome, if world is what all our talk implicitly supposes.
 2 Why Are We Economically Successful? 11

In Shackle’s view, the future is empty. Although the present shows us that
the choices made in the past have filled it with some content that mani-
fests itself in the present. Shackle’s view is that we cannot speak of any
kind of rational action and decision-making in the context of the future,
because we live in a world that we influence through the choices we make
and that our choices have a unique and always anticipatory character.
We are simply not equipped with enough information to make a “fully
informed decision” and Shackle believes that only such a decision could be
considered a rational one.2 From Shackle’s point of view, there are simply
no objective criteria for a rational decision that would make it possible
to assess what was rational and what was not. The future is referred to
as kaleidic. This inevitably follows Shackle’s claims that everyone else
faces the same problem. This means that by not knowing what the other
person will do, I cannot even anticipate my own correct and rational
decision made in the context of the other. Selgin (1990, p. 34) perfectly
describes the problem:

Now let us pass briefly to Shackle’s strong thesis: the matter of the kaleidic
future. Here what may be claimed against praxeology is not that it fails
to recognize the categories of uncertainty, time, and expectations, but rather
that it fails to reckon with some of the more crucial implications of these.
What praxeology fails to account for … is how actors may effectively antici-
pate the future and, in particular, how they may anticipate future actions of
other people, given that the future is “unknowable.” If people cannot foretell
the future, then even the broader, praxeological idea of “rationalism” (which
assumes some-more than incidental-capacity for actors in the social world to
select means appropriate to their chosen ends) is unfounded. Economics is
obliged, in this case, not merely to account for the use and dissemination of

2 Shackle approaches the possibility of economic analysis only in terms of objectively given facts
of neoclassical equilibrist analysis which eliminates the time factor from economic analysis.
According to neoclassical economics, it is the only applicable economic analysis. In principle,
it is an honest awareness of the problem of time and change, and the application of economic
analysis only in the context of certain theoretical assumptions, e.g., Selgin (1990, p. 30) quotes
Shackle in this context: “If there is a fundamental conflict between the appeal to rationality and the
consideration of the consequences of time as it imprisons us in actuality, the theoretician is confronted
with a stark choice. He can reject rationality or time.” However, one of our tasks is to identify
the possibilities of implementing economic analysis in the context of the passage of time.
12 M. Pošvanc

existing knowledge (as Hayek would have it), but to explain the possibility of
entrepreneurial prediction.

Clearly, if Shackle were right, there would be no such thing as a rational

economic decision.3 As soon as time enters the scene, according to
Shackle, all our actions are only speculative and the result of this specula-
tion (manifested, for example, in profit) should be random.4 Of course,
the problem would also be how human action then affects the achieved
results of satisfaction, which is to appear at a later date. As Selgin (1990)
points out, the following statement by Mises (1957, 1985, p. 269, bold
added by the author of this book) could not apply either:

Man acts is tantamount to the proposition: Man is eager to substitute a state

of affairs that suits him better for a state of affairs that suits him less. In order
to achieve this, he must employ suitable means. It is the reason that enables
him to find out what is a suitable means for attaining his chosen end
and what is not.

Thus, if Shackle’s interpretation were to apply, nothing like the rational

choice of appropriate means to achieve one’s goals over time could exist,
and any success/failure is a matter of chance. As Selgin (1990) further

3 From this point of view, it is completely understandable, that when examining economics why
e.g., Shackle resorts to describing static equilibrium. For him, it is the only scientifically honest
(!) method of studying economic phenomena. At the same time, Shackle is well aware that the
elimination of several variables is a simplification, but in the context of the description of real
reality, this is the only option for him.
From the classical Austrian analysis of the problem of economic phenomena, where it is
argued that the neoclassical way of examining the problem of equilibrium is unrealistic, it is
questionable to what extent the analysis based on the examination of human action is equally
realistic. If we can even talk about any realism of the Austrian way of studying economics,
it is only at the level of general and abstract knowledge, which is the modus operandi of
human action. An equally interesting and related question arises as to how much this kind of
abstraction of the description of human action differs from the neoclassical description based
on the elimination of some variables.
4 Shackle–Lachmann solves this problem by describing speculative markets, where one part of
the speculative market belongs to the so-called bulls (speculators on price growth) and the
second part of the market is called bears (speculators on falling prices). At one point in time,
one or the other simply hits the bull’s eye and actually guesses the “result” correctly. However,
it does not explain how our predecessors made decisions, they did not know these types of
bull-bear markets and, if we go even further into history, did not even calculate in monetary
units.
 2 Why Are We Economically Successful? 13

states, Shackle’s system and the interesting questions that arise from it do
not remain the only challenge to explain the problems associated with the
rational grasp of the future. Other proposed solutions bring challenges
and questions when Selgin points to Alfred Schutz and Ludwig Lach-
mann. Schutz (1959), in the Husserl’s tradition, explains that we have
some knowledge about the future and that we use it successfully. Schutz
does not accept that the future is completely empty as is implied if we
paraphrase Shackle. We can think about the future and anticipate it in
the context of abstract assumptions. Schutz (1959, p. 81) writes:

First, our anticipations and expectations refer not to the future occurrences
in their uniqueness and their unique settings within the unique context, but
occurrences of such and such a type typically placed in a typical constellation.
The structurization of our stock of knowledge at hand in terms of types is
at the foundation of the aforementioned idealization. Yet because of their
very typicality, our anticipations are necessarily more or less empty, and this
emptiness will be filled in by exactly those features of the event, once it is
actualized, that make it a unique individual occurrence. Secondly, … not
only the range but also the structurization of our stock of knowledge at hand
changes continually. … It is this system of relevance, however, that determines
the structurization of the stock of knowledge at hand and divides it into
zones of various degrees of clarity and distinctness. Any shift in the system of
relevance dislocates these layers and redistributes knowledge.

Schutz also says that we use this knowledge as “common sense” while
having the character of social knowledge. Schutz’s solution is somewhat
similar to Mises’s solution to the problem through Verstehen, but at the
same time, it has the features of Hayek’s system of dispersed knowledge
and its coordination. However, Schutz is also aware that the fundamental
problem one faces is in human action in the context of others. And he,
too, remains somewhat skeptical, but much less so than Shackle. Schutz
(1959, pp. 86, 87) writes:

As long as we succeed, within this unified and delimited realm of the specious
present, in keeping our projects consistent and compatible both with one
another and with the stock of knowledge at hand, there exists a reasonable
chance that our future action will conform, at least in type, to our projects as
14 M. Pošvanc

anticipated modo future exacti. Such a chance will, however, be a subjective

one, that is, it will exist merely for me, the actor, in the form of reason-
able likelihood, and there is no warranty whatever that this subjective chance
– a chance for me – will coincide with objective probability, calculable in
mathematical terms.

Schutz realizes that the use of knowledge is only possible in its abstract
and general form; only in this way is knowledge applicable over time. It
is in this sense that he uses his dictum of common sense and the system
of mutual knowledge sharing solve the problem of the future relatively
“successfully.” However, he does not answer one important and related
question: How is this possible? How is it possible that our knowledge,
not only about the reality (world of things) but also about the world of
action (praxeology), can be used successfully and rationally? What are our
“objectified” criteria5 for success/failure in anticipating the future, and
how are they objectified (Hayek 1937), that we all understand them in
the same way? And we have to note that they have this kind of character
in order to be operational in time and from the subjective perspective of
any individual. The second problem is Schutz’s weak pessimism, which
speaks only of a “reasonable chance” which implies that his solution is
only practical; this means that it is good that it works. However, this does
not address the question of why this is so; isn’t the result just random
in nature? In the context of Schutz’s first quote, this should not be a
coincidence or just a meaningful chance.
Selgin (1990) further presents the problem through the work of
Ludwig Lachmann who uses Schutz’s solution to grasp the future but
combines it with Hayek’s (albeit modified) solution of knowledge coor-
dination. Here Lachmann introduces and applies to the problem of
so-called “divergent expectations.” In Shackle’s tradition, Lachmann is
well aware that we live in an ever-changing world. It does not only
change in the context of the situation, i.e., the surrounding reality,
but mainly in the context of human value changes. Lachmann (2005,
pp. 225–226) writes:

5 As the reader will see later, these are not objective criteria, but intersubjective criteria. These
people perceive them as tacit knowledge, they do not question it in any way, and in this
respect, they are objectified criteria for them, based on which they make decisions.
 2 Why Are We Economically Successful? 15

The world of the market economy is thus a kaleidic world, a world of flux
in which the ceaseless flow of news daily impinges on human choice and the
making of decisions.

Lachmann was attempting to solve the problem of this constant change

through a concept of “divergent expectations,” which is our tool for
attempting to grasp the unknowns associated with the future. In prin-
ciple, the more diverse these expectations are (in the form of dispersed
knowledge), the more likely it is that someone’s expectations will be
met. This is fully reflected in the speculative markets where the so-called
bulls vs. bears act. According to Selgin (1990), the problem that can
be implied from Lachmann’s concept of divergent expectations is funda-
mental, in the form of the absence of any criteria that could inform
entrepreneurs ex ante about the plans and expectations of consumers.
From these few mentioned and selected works and quotations, it
should be clear that the greatest challenge to explain the problem of
grasping the future is paradoxically caused by the problem of choice. Para-
doxically, because it is precisely the choice that allows us to influence the
future and change it potentially in our favor. It is also a choice that causes
an identical problem when comparing today with the past. This is due
to the differing values of economic context (caused by other choices) at
the time the choice in question was made. In other words, the question
arises as to how we value two states in a time continuum, provided that
we accept that people’s preferences and evaluations can change. At the
same time, how is it possible that we are economically successful despite
the fact that people’s preferences and evaluations can change? Does this
mean that value changes do not happen that often? Or that there is some
component of stability of evaluation, or potentially some kind of natural
determinism, contained within the choice with which we are allowed to
anticipate the future? So how do we grasp the future? How do we know
if we have made a mistake? And how is it even possible to learn from
the mistakes and learn from the past if we are faced with an absolutely
veiled (kaleidic) future that is inherently unique? Capturing and antici-
pating the future is related to understanding how the world around us
and other people behave. This division is related to the problem of risk
and the problem of uncertainty.
16 M. Pošvanc

2.1.1 Risk and Uncertainty

The division of the above-mentioned problem into issues of risk and

uncertainty is connected in economic theory, usually by the works
of Frank Knight. Knight (1964) shows that risk and uncertainty are
different concepts. While the concept of risk is related to the possibility
of predicting some phenomena (for example, Knight states, the prob-
ability of how many bottles needed to produce champagne will break
during its production per e.g., 1000 bottles produced), the concept of
uncertainty relates to choice, subjective evaluation and people’s subjective
preferences. Hoppe (1997, 2007) explains that what Knight perceives as
risky and uncertain, Mises (1998) describes in the context of the so-
called class and case probability. While a class probability is related to
the frequency of some phenomena, i.e., the probability that in a class of
phenomena known to us, a phenomenon related to a given member of
this class will occur; in a case probability, we are only aware of some of the
reasons why something happened, whereas other determining factors are
unknown to us. In principle, class probability can be linked to how the
world around us is “managed” and how it relates to statistical risk assess-
ment, i.e., with what probability a given natural phenomenon occurs.
Whereas case probability connects precisely with human (unpredictable,
dependent on free will) action,6 it is related to an estimate related to
uncertainty, i.e., we estimate how other members of the community will
behave.
According to Hoppe, whether Knight or Mises divide the problem
into risk and uncertainty in connection with the question, “why does a
competitive business not eliminate the existence of profit,” or the problem is
related to the question of why there is a profit at all, both authors answer
the question in the sense that it is precisely because of the existence

6 Shackle is also aware of this problem; within this context, Lachmann (2005, p. 228) compares
Shackle to Mises: Both authors emphatically reject the calculus of probability as a tool for dealing
with human conduct in a world of uncertainty. Shackle devotes his chapter 34 (‘Languages for
Expectation’) to this matter. He sums up his view in the heading of section 34.40: ‘Probability
concerns groups of events, not single critical choices’ (1972, p. 400). Mises makes the same point by
distinguishing between class and case probability.
 2 Why Are We Economically Successful? 17

of uncertainty (not risk). The uncertainty we have with the connec-

tion of another’s behavior does not allow us to determine the likelihood
of whether a phenomenon derived from human action will occur. The
conduct of others is too unique in the context of the future for us to
apply statistical methods to it. The distinctiveness associated with human
action and choice has a unique and unrepeatable context. Although a
phenomenon may belong to a group of phenomena (which is a condi-
tion for the use of the concept of probability), it lacks the character of
randomness. According to these authors, it is not possible to use tools
related to statistical methods of probability, which are based on a statis-
tical determination for this type of phenomenon. On the contrary, the
reality (nature) is about the extent to which we can use our knowledge to
determine what will happen and what will not. The probability literally
shows us the degree of our ignorance. The probability is therefore related
to whether or not a phenomenon, a defined group of phenomena related
to reality (the world of things) will (or will not) occur with a certain
probability.
Profit, on the other hand, is the entrepreneur’s reward for the
correct detection of unique economic phenomena (case probability),
e.g., what the other person wants. Of course, the entrepreneur also
handles the elements of reality that is needed to make the best use in
the context of case probability. The case probability is a major problem
for entrepreneurs. To satisfy the consumer’s wishes, they must first detect
subjective preferences (domain of case probability) and only then use
the elements of reality. Dealing with reality as such is a domain of risk
and phenomena related to class probability, but we still use them in our
(human) context of case probability—meaning we use parts of reality to
meet someone’s needs.
As Hoppe (1997, 2007) shows, in the case of knowledge of the
surrounding reality, we focus on the description of its causal functioning,
where we look for time-invariant regularities, i.e., homogenized elements
of phenomena that are related to the described reality. Based on this, we
acquire certain knowledge about a given class of phenomena which we
apply in time, and, if the knowledge is correct, it provides us with a
certain degree of certainty about the behavior of the reality in the future.
Of course, entrepreneurs try to increase the level of certainty, but it can
18 M. Pošvanc

never be complete due to the unlikelihood of fully understanding the

functioning of nature per se. Given that a person is interested in influ-
encing reality, they can also formulate hypotheses about the phenomena
in question regarding the relative occurrence of a phenomenon within a
class of phenomena. The hypothesis about the probability of the occur-
rence of a given phenomenon can also be the subject of business in
the field of insurance (insurance payment), i.e., special entrepreneurs
preparing for the eventuality of the possible circumstances by increas-
ingly accumulating savings. The insurance companies or entrepreneurs
themselves accumulate a higher rate of savings, which economically miti-
gates the risk of the occurrence of that given event, whereas the given
event will occur with a statistical probability.7
Hoppe further argues that the above-mentioned tools cannot be
applied to the estimation of the future associated with human action.
Hoppe (2007) also points out that Mises (1998) has not given a very
satisfactory answer on how to deal with the problem of uncertainty.
Furthermore, Hoppe (2007) argues that Mises left a sufficient line of
arguments to formulate an answer. Hoppe shows that while in the case of
reality we deal with time-invariant i.e., homogeneous phenomena, this is
not so in the case of human actions. Time-invariant, i.e., the only homo-
geneous element here, is the action itself, which we know is based on
the preference of the higher to lower satisfaction of perceived needs. We
know that it is always focused on the future and we know that it always
takes into account the new value context of the individual. According to

7 Using Knight’s example with bottles of champagne, an entrepreneur buys 1001 bottles for every
1000 bottles used because he anticipates that 1 out of 1000 bottles will be broken. This way,
the entrepreneur increases the degree of certainty related to the phenomena in question in order
to achieve their intentions towards customers. However, this does not mean that purchasing
1001 bottles increase their level of knowledge about the surrounding reality. Nor does it mean
that they are not interested in increasing their knowledge of the surrounding reality, which
subsequently enables them to reduce the need for insurance; e.g., by investing in inventing
a better method of bottle production, which will reduce the volume of breakage. Naturally,
investing in a higher degree of knowledge of how reality works must be economically feasible.
Using the bottles example means that the degree of certainty associated with lower average
bottle breakage and the level of investment into a possible solution must bring economically
meaningful results, otherwise, it is more advantageous to use either insurance or accumulating
savings and not investing. In other words, it sometimes makes more sense to accept one bottle
out of a thousand bottles being broken, than to invest in a solution that will reduce the bottle
breakage.
 2 Why Are We Economically Successful? 19

Hoppe, who followed Mises’s theory, when grasping the future, we use
the so-called Verstehen (understanding) through various forms of commu-
nication. Based on Verstehen and communication, we have access to the
thoughts and insights of others as opposed to accessing the objects of
reality. In other words, we understand, and based on communication,
we know what other people do and want. Although another person may
have better knowledge related to the surrounding reality and the related
problem of risk, we can also gain and share knowledge about reality
through communication.
However, it is also true that the specific anticipation of the future
related to a particular person and a particular value context remains
unknown to the anticipator (me or anybody); it is given only to the
person who can best estimate his/her future in the context of what he/she
perceives for themselves. The field of human action, therefore, creates a
special category and method of insight based on individualization, which
is, to some extent, synchronous and diachronic. By the synchronous
character, Hoppe advocates a modus operandi which is an action; its
characteristics do not change over time. We can say that in this way,
we grasp the human abstract, essence, or essence of the other’s view of
reality as well as other members of the community. By the diachronic
character, Hoppe recognizes the specific context and disposition of man,
which implies a strictly individualized, very specific, diverse, and over
time, changing character of one particular person, the mutatis mutandis
of each person.
The point of view of this essay is that it is primarily problematic to
estimate the future in the context of human action, i.e., uncertainties,
which Mises calls case probability (Klein 2009 explains the term as “case
judgments without probabilities”).8 Here, we face a real unknown. How
do we estimate the future associated with other people’s actions from
an individual point of view, if we know that others principally behave

8 Itis very interesting how Klein (2009, Footnote 6) approaches the problem. He notes that
the very notion of “case probability” is misleading. According to him, Mises should have
called the phenomenon “case non-probability,” or maybe “case judgments without probabilities.”
According to Klein, it is not possible to apply deterministic principles of homogenized and time-
invariant phenomena of reality to the phenomenon of human action. We will return to this
remark later in the text because it is important to us.
20 M. Pošvanc

exactly the same (i.e., they also act)? And if everyone anticipates the
future in the context of their specific goals while also trying to antic-
ipate what others are doing, given that we live in a society, how is it
possible that we do not face absolute chaos? Does this mean that our
concreteness is the same for every human? The problem can be charac-
terized by the question: If the phenomena related to case judgments without
probabilities are absolutely unique and specific, how is it possible that an
entrepreneur or anyone else can still predict the future connected with the
action of others? How is it possible that we are economically successful?
Is it just a coincidence? Or is it some form of supernatural quality that is
related to the entrepreneur’s good judgment? Or is Lachmann’s remark
that the more diverse an entrepreneurial activity, the more likely it is that
an entrepreneur will be correct? So, is it an accident? How is it possible
to make progress and improve the state of affairs at all, if we are contem-
plating an absolutely veiled future in its concrete form and we move only
on the level of general understanding (Verstehen) of the action of other
human beings? And it’s not just the problem of the judgment of some
kinds of professional entrepreneurs per se; it is quite the opposite. We
use the term (entrepreneur) in the sense of the so-called ideal type, so
the problem is connected with any judgment of any man.9
It should also be recalled that the problem of uncertainty associated
with human behavior is linked to the problem of risk (class probability).
It is still the tangible items that we transform, and they are the subject
of our interest because they serve us in the context of case judgments
without probabilities. This means that when dealing with the estimation
of the future (case probability), an entrepreneur also uses the possibilities
of reducing the risk associated with the world in order to improve their
estimation of how the elements of reality will behave in the future. This
is based on the use of better technologies or better knowledge related
to insurance. Knight (1964, p. 213) e.g., describes the example used
by Mangoldt, that the risk is compounded by overheads (an example

9 Itshould be noted that we use the term “entrepreneur” in economic theory in the form of
an ideal type. In reality, each of us is to some extent an entrepreneur, worker, or owner of
capital goods, land, or are consumers (Mises 1949; 1998, pp. 252–256). In other words, each
of us somehow makes an entrepreneurial estimate of the future. And as we see around us, if
politicians don’t stop us using political force, we’re relatively successful.
 2 Why Are We Economically Successful? 21

of the probability of champagne bottle breakages during production),

i.e., improvements in this area (e.g., a combination of production factors
that cause a lower bottle breakdown rate) are important for the business
in the context of estimating consumer behavior in terms of reducing
its costs. Naturally, it must be an economically meaningful improve-
ment. Given that human action (related to case probability) is purposeful
in the sense of estimating the future, the use of class probability must
also be purposeful in this sense. In this respect Huerta de Soto (2012,
pp. 46–52) is instructive, describing that any knowledge related to case
probability is equally implicit and unexpressed, referring to Michael
Polanyi who argues that tacit types of knowledge (Huerta de Soto ranks
them among Mises’s case probability) are in fact the dominant principle
of all knowledge.
However, even the area of knowledge about risk (class probability) is
not without controversy. In this area, it is possible to talk about two
basic problems and whether class probability has an objective or subjec-
tive character, i.e., whether the phenomenon of probability is a feature of
reality per se, which we observe and derive empirically10 ; or, whether it
has a “propensity” character, that is to say, probability describes a certain
interpretation of reality,11 while the causal and strictly deterministic part
of reality is obscured. It also provokes controversy as to whether there is a
so-called a priori concept of probability.12 However, we will not develop
our essay in this direction; we will address this question at another time
and in a different context. The theme of this essay will deal exclusively
with the problem of case probability which is related to human action
and with estimating the future in the context of another individual.

10 Position held e.g., by Richard von Mises; defended e.g., by Hoppe (2007); the given concept
is also promoted by authors such as Venn or Reichenbach.
11The term “certain interpretation of reality” is manifested in the fact that there is contro-
versy, whether it is a classical (Laplace), subjective (de Finetti, Savage), epistemic and inductive
interpretation (Ramsey, Cox), logical interpretation (Keynes, Carnap), or the newly proposed
intersubjective interpretation (Gillies) of probability. See in more detail in Gillies (2006).
12 For closer look see e.g., van den Hauwe (2011).
22 M. Pošvanc

2.1.2 Estimating of the Future as the Economics

Problem

Shackle’s warning about the non-existence of the future, i.e., that the
future is empty, is relative. As Schutz points out, the future is full of
plans, thoughts, and people’s insights. From a human point of view, it is
not a specific situation. Nevertheless, we are heading into the future state
of affairs where some ideas are based on some degree of knowledge, and
some form of mutual coordination of these plans. Let us illustrate some
existing solutions to the problem of grasping the future related to unpre-
dictable human action, which are described by Frank Knight, Ludwig
von Mises and Hans Hermann Hoppe, but also by G.L.S Shackle and
Ludwig Lachmann himself, as well as by Friedrich Hayek.

2.1.2.1 Knight (Grouping, Specialization,

and Cooperation)

Knight (1964) devoted several individual chapters of his famous book to

this problem. He writes that when dealing with uncertainty, we cannot
group phenomena into any group due to their uniqueness, and we
cannot apply the rules of statistical probability to the world of reality.
Knight also approaches the problem of the future from the decision-
makers’ happiness point of view. He claims that even if the decision made
is based on some faith or inspiration, it must be accepted as rational
(Knight 1964, p. 236). If we were to set Knight against Shackle, who in
principle argues that a rational decision cannot exist, then Knight would
certainly oppose Shackle. He would argue that even if one decides based
on some faith, it is a rational decision. Knight does not need objective
criteria for rationality. In his view, rationality springs from the subjective
point of view of a person. Knight further writes that decision-making
can be influenced not only by estimating the future in terms of uncer-
tainty (case probability/uncertainty, which is immeasurable) but also in
 2 Why Are We Economically Successful? 23

combination with objective probability13 related to the world of things

(class probability/risk, measurable and removable through various types
of insurance and savings). He argues that decision-making is linked to
a choice that takes place between what brings us a lower return with
higher certainty (probability) and what brings us a higher return and a
lower degree of certainty. The action is, of course, focused on the future,
which means that the entrepreneur must deal with both the physical state
of affairs, i.e., the goods produced (facing a problem in connection with
class probability), as well as an estimate of demand and future results
of its activity (case probability). Knight further defines six types of ways
of dealing with uncertainty. First, he argues that there is less uncertainty
(certainty is not removed completely) in some groups as opposed to indi-
vidual cases (pp. 238–239). He states that the entrepreneur does not
produce for a specific consumer, but they produce for a market. Knight
argues that even absolute uncertainty tends to have some kind of regu-
larity when grouped, based on some similarity or common element.14
Knight’s statement about regularity is interesting; however, it is logically
inconsistent with the claim about the uniqueness associated with human
action. The second method is about the diversity of people and how they
deal with uncertainty. This argument is related to the fact that different
people specialize in different ways and they consolidate the group activi-
ties they perform in different ways as well. Specialization directly implies
some form of grouping.15 Knight speaks of this as a method of special-
izing in some specific problems, while speculation is seen as the most
important phenomenon of specialization. Knight argues that it is obvious

13 On this basis, we could classify Knight among those who claim that class probability has an
objective character. Knight is also a proponent of the a priori nature of the probability problem
in the context of the mathematical expression of probability.
14 Knight goes further within this context. He claims that the creation of these groups results
in the creation of different sizes of entrepreneurial units. The size of the company makes it
more likely that correct estimates will prevail over incorrect ones. Knight clearly suggests that
one way of dealing with an uncertain future is through different types of organizational units,
business entities, based on some form of cooperation between individuals.
15 “Specialization itself is primarily an application of the insurance principle; but, like large-scale
enterprise, it grows up to meet uncertainty situations where, on account of the impossibility of
objective definition and external control of the individual ventures or uncertainties, a “moral hazard”
prevents insurance by an external agency or a loose association of venturers for this single purpose ”
(Knight 1964, p. 256).
24 M. Pošvanc

that a specialist in a certain field can make a better judgment for the
future than someone unfamiliar with the field (p. 258). Knight comple-
ments these two methods of dealing with uncertainty in two other ways.
Thirdly, by controlling the future in terms of building capital structures
and, in a fourth sense, by increasing the prediction of the functioning of
reality, which are interrelated strategies relating to the progress of human
civilization. Knight does not stop there and names the other two poten-
tial strategies, which he calls “diffusion” and “monitoring the minimum
degree of uncertainty.” Diffusion, for Knight, means that it is better, for
example, for 100 people to lose $100 each rather than for one person
to lose $10,000, i.e., it is better that a technology injures more workers
rather than kills several. “Monitoring the minimum level of uncertainty”
is associated with some business activities that achieve much more certain
results over time than other business projects. It is clear that given the fact
that it is not possible to compare the loss of $100 to a loss of $10,000
subjectively, the diffusion strategy should be rejected from the typical
Austrian school’s point of view, as it is impossible from a subjective
point of view to compare what is better/worse for this or that individual.
Knight’s view of the consumer who relies on the producer to predict the
future is interesting. He writes:

The main reason is that he does not know what he will want, and how much,
and how badly; consequently, he leaves it to producers to create goods and hold
them ready for his decision when the time comes. The clue to the apparent
paradox is, of course, in the “law of large numbers,” the consolidation of risks
(or uncertainties). The consumer is, to himself, only one; to the producer, he is
a mere multitude in which individuality is lost. It turns out that an outsider
can foresee the wants of a multitude with more ease and accuracy than an
individual can attain with respect to his own. This phenomenon gives us the
most fundamental feature of the economic system, production for a market.
(p. 241)

From an individual perspective, Knight then identifies at least five more

ways in which individuals deal with the future. The first is our different
perception, grasp, and anticipation of future events. The second is the
different ways in which resources are used to achieve future goals.
The third is the different ways of implementing plans and our ability
 2 Why Are We Economically Successful? 25

to adapt to change.16 The fourth is the collective trust between the

individuals making decisions. And finally, the fifth is the degree of
certainty with which the decision is made, when some individuals, who
demand certainty, prefer not to engage in any threatening activities
and, vice versa, some individuals follow their hypotheses rigidly. Knight
summarizes the problem of grasping the future as follows:

The problem of meeting uncertainty thus passes inevitably into the general
problem of management, of economic control. The fundamental uncertainties
of economic life are the errors in predicting the future and in making present
adjustments to fit future conditions. …. „ We are thus brought naturally
around to a discussion of the most thoroughgoing methods of dealing with
uncertainty, i.e., by securing better knowledge of and control over the future.
(pp. 259, 260)

Knight does not explicitly address the issue of error. He takes the error
as a given quantity with which he works. To him, the error is an objec-
tified quantity, otherwise, he could not claim that the error is merely a
bad prediction of the future set against the organizing of resources that
are currently adjusted, and which should correspond with the future.
Shackle should never agree with Knight because he does not believe in
the notion of a “general problem of management of economic control ,”
which implies the Misesian rationality of an entrepreneur’s behavior. It
is also clear that, in principle, Knight approaches the solution of uncer-
tainty and risk based on grouping, which has a different character in the
risk area (probability of occurrence of a phenomenon within the defined
group) and a different character in the area of uncertainty (production
for the market—a wider group of people). Knight does not think very
deeply about how people are solving the problem of the future through
the tools described. However, Knight’s description of tools is instructive
for the purposes of this essay.

16 As we can see, the first three strategies are similar to Lachmann’s divergent expectations.
26 M. Pošvanc

2.1.2.2 Mises, Hoppe (Verstehen)

Mises (1998) divides knowledge in terms of class probability and case

probability. Mises describes class probability as the kind of knowledge we
apply to the surrounding reality, pointing out the degree of our igno-
rance associated with the exact causal nature of the surrounding reality.
The degree of ignorance is manifested in the degree of probability of
occurrence of this or that phenomenon. We do not know that something
will happen one hundred percent because we do not know all the causal
phenomena of reality. Mises’s successor, Hoppe (1997), adds additional
remarks to Mises in the context of assumptions about the surrounding
reality. In the context of the future, according to Hoppe, we are prac-
tically more certain about some reality-related phenomena compared to
other phenomena. We know that for e.g., a house will remain standing
tomorrow unless something happens to its foundations, or we know that
a machine will work if the conditions under which it was constructed are
maintained. We can also be certain of the results of our activities in terms
of the production of certain goods. We know how to produce them, and
if the production conditions do not change, the result of that activity is,
practically speaking, certain. Of course, this area is also subject to change
and we cannot be 100% sure. We can potentially face the surprise factor.
That’s why Hoppe talks about practical certainty. And if we face some
kind of surprise, which is of a relative nature, we use different types of
insurance or we increase the rate of savings. We are also expanding our
knowledge of the surrounding reality that allows us to reduce the insur-
ance rate and the need for higher savings. This means that if we have an
economically meaningful opportunity to build a better house and secure
it against collapse or if we build a machine from better materials and
increase its durability, we will do so, and in doing so, we increase the
certainty associated with our environment.
However, when interpreting case probability, we have a much bigger
problem. On the one hand, Mises still calls it probability, which is strange
given the nature of his interpretation of this phenomenon. As we have
already mentioned above, in the context of Mises’ work, it might be
more appropriate to talk about the improbability or, as Klein (2009)
points out, case judgments without probabilities. In my opinion, however,
 2 Why Are We Economically Successful? 27

as we will demonstrate below, Mises had his reasons. Mises clings to the
concept of Verstehen while explaining how we grasp these phenomena.17
The term Verstehen means one person’s view of another in the sense that
we understand each other and our actions i.e., we understand the reasons
behind our actions. It is not about empathy (Einfühlung ) and specula-
tion about the motives of someone’s actions. It is the very understanding
and identification of the action of the other person. On this basis, we
can explain the concept of voluntary exchange, we are able to grasp that
all of us prefer one thing over another, or we can define the concept of
marginal utility, etc. However, Mises is not as explicit in case probability
as he is in the case of class probability. When mentioning the reasons for
the existence of the Verstehen concept, he refers to identical structures of
the human mind (see e.g., Mises 1962, p. 16; or Mentzel 2018).
If we were to characterize Mises’ solution to the problem of case prob-
ability, then it is possible to say that Mises claims that people know
something about the future. Contrary to Shackle’s belief, the future is
not completely empty. When referring to Verstehen, Mises identifies time-
invariant principles, i.e., the abstracts of human behavior. Therefore, they
can be applied over time and to each individual. But how do we apply
our understanding of Verstehen to grasp the future? How do we antici-
pate the actions of the other person? We will not find a relevant answer
in Mises’s works. Hoppe (1997) can, therefore, be instructive for Mises’
interpretation. He argues that Mises left us a relevant analytical apparatus
to be able to answer this question.
When explaining case probability, Hoppe clearly deviates from the
possibility of applying statistical methods. One of the reasons is learning
and the diversity of knowledge we have. According to him, the differ-
ence between knowledge and our individual predictions of the future
precludes any possibility of defining all potential states of human action.
This prevents the existence of knowledge about the relative frequency
of their occurrence, which we can identify in knowledge related to class
probability. However, Hoppe rejects Shackle–Lachmann’s interpretation
that we know nothing about future action. Hoppe explains that we can

17 Here,Mises follows Weber and the historical school. He also differentiates himself against
some of the historical school’s conclusions, but that is a different discussion.
28 M. Pošvanc

make several statements about the future. We know that it is possible to

change behavior through learning; recognize error and success (however,
Hoppe does not present the concept of error), know when an indi-
vidual’s hypotheses about reality are confirmed or falsified. In other
words, according to Hoppe, we know the modus operandi of human
action; Hoppe calls this uniform and constant logic of human action and
learning. Hoppe basically describes the abstract, time-invariant knowl-
edge of human action. It does not matter what specific expression it has.
However, it will always be subject to a given abstraction, i.e., we cannot
exactly predict our future goals, which we’ve set ourselves while in the
mode of concreteness. Nonetheless, we can say that goals exist, that we
must use subjectively assessed means to achieve them, face costs, and
make decisions in some future context. We have this certainty associated
with human action. In other words, we are not able to predict only those
aspects of human action that are subject to learning, i.e., what we call a
specific action influenced not only by my particular content of action
but also by the particular content of other peoples’ actions.
Although these specific aspects of human action are fundamentally
unpredictable, we still have to deal with the future in some way. We must
somehow estimate our future as well as anticipate the actions of others.
We have to understand them. How we do it? Hoppe (1997, p. 71) writes:

In contrast, in the field of past and future human history, we are capable
of distinguishing between every singular event (each event can be treated as
heterogeneous); and to improve our grasp of the past, and our anticipations of
the future actions of our fellows, we know and are capable of learning some-
thing about the individual causes-the personal knowledge-uniquely affecting
the outcome of each and every singular human event (with each event
deserving of its own special attention).

Following Mises, Hoppe further explains that we do this based on an

understanding of human character. The character of a person is formed
based on past actions and past behavior. However, at the same time,
one must also make a prediction regarding the stability or instability
of parts of one’s individual system, i.e., a person must anticipate the
circumstances based on which their conduct remains unchanged or their
 2 Why Are We Economically Successful? 29

behavior changes. The following passage where Hoppe (1997) quotes

Mises (1962) is interesting:

As Mises explains, we must “assume that, by and large, the future conduct
of people will, other things being equal, not deviate without special reason
from their past conduct, because we assume that what determined their past
conduct will also determine their future conduct. However different we may
know ourselves to be from other people, we try to guess how they will react
to changes in their environment. Out of what we know about a man’s past
behavior, we construct a scheme about what we call his character. We assume
that this character will not change if no special reasons interfere, and, going
a step farther, we even try to foretell how definite changes in conditions will
affect his reactions”. (Hoppe 1997, p. 72; Mises 1962, pp. 49–50)

It follows that if we want to talk about the future behavior of some

people, we must place them into groups according to their character, i.e.,
we determine some kind of ideal type, meaning a group of individuals or
institutions (made up of several people based on their character). Based
on these ideal types (characteristics) we know or anticipate how they will
behave, what will cause changes in their behavior, or what causes will
contribute to their behavior remaining the same. From this point of view,
the term “case probability” makes perfect sense.
While Knight (1964) omitted the explanation of the phrase “produced
for the market ” with the exact definition of what it means “for the market ”
and how it is possible to combine the prediction of the future with
production “for the market,” following Mises, Hoppe offers an interesting
explanation. Any estimates related to the problem of case probability are
realized, based upon the definition of ideal types. Basically, this is, in
Knight’s terminology, “for the market.” Based on our understanding of
the past, a definition of the ideal type of group (of people) or a man-
made institution, we can make a hypothetical or, in Hoppe’s words, a
provisional , prediction that helps us anticipate the pattern of behavior
for the individual or for a group of people. We are able to define in this
way what it means “for the market.” Hoppe says, that unlike the natural
30 M. Pošvanc

sciences, it is not entirely possible to identify the success or failure of our

prediction in this case.18 Hoppe (1997, p. 73):

Maybe our prediction was wrong because some people, as can happen some-
times, acted out of character. In this case, we would want to use our hypothesis
again even though it had been apparently falsified. Or maybe our prediction
was successful, but the individual in question has meanwhile undergone a
change in his character. In this case, we would not want to use our hypothesis
again even though it had just been seemingly confirmed. Or maybe the actor
in question knew our prediction and deliberately acted so as to confirm or
falsify our hypothesis, in which case we might or might not want to change our
future prediction. Every success and every failure, then, bears only inconclusive
results and necessitates another tentative judgment, a new and updated under-
standing of the actors concerned and a renewed assessment of their characters
in light of their most recent actions, and so on.

In the context of Mises, Hoppe believes that an understanding of the

other person is always an understanding of their personality, based on
their past actions. This creates the character of the individual, which is
applied in his future activities. As Hoppe emphasizes, this is not a ques-
tion of determining the future based on past proceedings, but rather in
the sense that the past values and know-how of an individual (which deter-
mined his past actions) shape and constrain his future values and know-how
(which determine his future actions).
For Mises, the past associated with the existence of personality is
important. Because it is clearly the past from which we can identify
the individual patterns of behavior and anticipate these patterns with
respect to the future. Therefore, there is no kaleidic flow or flow with no
discontinuity, according to Mises/Hoppe. People’s lives have a pattern of
behavior that is intertwined with social change (patterned social change ).

18 “Moreover, whether we evaluate our predictions as successful or not, the meaning of success and
failure is necessarily ambiguous” (Hoppe 1997, p. 73). However, Hoppe contradicts himself here
in the sense that either we can learn from errors and success, and then the meaning of success
and failure is not ambiguous or the concept of error and success is only a chimera without any
objectified criteria.
 2 Why Are We Economically Successful? 31

There is no human personality without the past. And then it is the indi-
vidual personality per se that predicts a person’s behavior toward the
future.
To support his argument, Hoppe contends that the existence of capital
goods—as an empirical fact capital goods is involved in the economic
process across several production periods of time—have a continuous
temporal character. Hoppe also refers to the existence of plans which
imply that a person makes decisions and acts in a time continuum,
i.e., the person realizes what they intend to do throughout the time.
Hoppe also points out that if the Shackle–Lachmann absolute kaleidic
approach to explaining how we grasp the future were to apply without
any connection between the past and the future, we would be faced with
the problem of explaining why some of us are more successful than others
in predicting the future. If knowing and understanding others and the
ability to predict their behavior did not matter and vice versa, if the past
and the future were not connected in any way, our predictions about
the future should statistically be distributed identically among people.
In other words, if anything is a question of luck then statistically people
would alternate in being successful in predicting the future.
Although Hoppe refers to a commonsense interpretation of Mises’s
analysis of grasping the future, it should be noted that the interpreta-
tion is not without problems. In building his system, Mises points out
that, inevitably our actions are focused on the future. The past is lost.
The past is the sum of circumstances that man has no way of changing.
The character of a person who is dependent on what they have experi-
enced in the past can change at any time, depending on the nature of the
action. The action is what ultimately determines the direction. Regardless
of the past and only depending on what and how a person wants. Mises
finds himself in a strange middle ground. On the one hand, he is fully
in line with the Shackle–Lachmann system, which is also based on the
dominance of the will and its necessary direction to the future. To para-
phrase Shackle,19 it’s too late for the past and present. On the other hand,
the past is meant for Mises to be the decisive factor for understanding

19 As Lewis (2017) shows, Shackle has another kind of mistake in his system when he claims
that free will is called “uncaused cause.” See also Footnote 24 below.
Exploring the Variety of Random
Documents with Different Content
M Y obligations are much increased by your Grace’s putting the
last draught of the Georgia College so speedily into the hands
of the Lord President. As by this, (I presume) it hath been honoured
by your Grace’s, so I make no manner of doubt, but it will also meet
with his Lordship’s approbation. In obedience to your Grace’s desire,
I herewith send your Grace an account of “what present
endowment, and to what value, I propose for the intended College.”
Upon a moderate computation, may it please your Grace, I believe
its present annual income, is between four and five hundred pounds
sterling. The house is surrounded with eighteen hundred acres of
land; a plan of which, and likewise of the house itself, I herein
inclose, and humbly present for your Grace’s inspection. The number
of negroes young and old, employed on various parts of these lands,
in sawing timber, raising rice for exportation, and corn with all other
kinds of provision for the family, is about thirty. Besides these, the
College will be immediately possessed of two thousand acres of land
near Altamaha, which were granted me by the Governor and
Council, when I was last at Georgia; and a thousand acres more,
left, as I am informed, by the late reverend and worthy Mr.
Zubberbuler. So that, by laying out only a thousand pounds in
purchasing an additional number of negroes, and allowing another
thousand for repairing the house, and building the two intended
wings, the present annual income may very easily and speedily be
augmented to a thousand pounds per annum. Out of this standing
fund, may be paid the salaries of the Master, professors, tutors, &c.
and also small exhibitions be allowed for some orphan or other poor
students, who may have their tutorage and room-rent gratis, and act
as servitors to those who enter commoners. What these salaries and
exhibitions ought to be, may at a proper season be submitted to
your Grace’s future consideration. At present, I would only further
propose, that the negroe children belonging to the College, shall be
instructed, in their intervals of labour, by one of the poorer students,
as is done now by one of the scholars in the present Orphan-house.
And I do not see why an additional provision may not likewise be
made for educating and maintaining a number of Indian children,
which, I imagine, may easily be procured from the Creeks,
Choctaws, Cherokees, and the other neighbouring nations. Hence
the whole will be a free-gift to the colony of Georgia: a complex
extensive charity be established; and at the same time, not a single
person obliged, by any public act of assembly, to pay an involuntary
forced tax towards the support of a seminary, from which many of
the more distant and poorer Colonist’s children cannot possibly
receive any immediate advantage; and yet the whole Colony, by the
christian and liberal education of a great number of its individuals,
be universally benefited. Thus have I most readily, and I humbly
hope, gratefully complied with your Grace’s desire, which to me is as
a command. I am constrained to trespass on your Grace’s patience,
whilst I congratulate your Grace on the goodness of God, who,
amongst many other signal marks of his peculiar providence, hath
honoured your Grace, in making you an happy instrument of
establishing two Northern-American Colleges; the one at New-York,
and the other at Philadelphia: and if (as I pray may be the case)
your Grace should yet be made further instrumental in establishing a
third College in the yet more southern, but now flourishing colony of
Georgia, I trust it will be an additional gem in the crown, which I
earnestly pray that God, the righteous judge, may give your Grace in
that day. In his great name, I beg leave to subscribe myself, may it
please your Grace,

Your Grace’s most dutiful, obliged son and servant,

G. W.

Mr. Whitefield to the Archbishop.

Tottenham-Court, September 1, 1767.

May it please your Grace,

A S I am going out of town for a few weeks, I beg leave humbly to

enquire, whether my L―― P――t hath considered the draught
of the charter sent him by your Grace some weeks ago. The
Governor, Council, Assembly, and other inhabitants of Georgia, wait
with impatience to have this affair brought to a desired issue; and
therefore I humbly hope your Grace will excuse the freedom of the
request now made by, may it please your Grace,

Your Grace’s most dutiful, obliged son and servant,

G. W.

The Archbishop to Mr. Whitefield,

Lambeth, September 18, 1767.

To the Reverend Mr. Whitefield.

T HE Archbishop of Canterbury sends Mr. Whitefield the enclosed

letter from the Lord President, which he received this day, and
which he desires may be returned to him.

Mr. Whitefield to the Archbishop.

Tottenham-Court, October 13, 1767.

May it please your Grace,

B Y a series of unaccountable incidents and mistakes, your Grace’s

letter, with that of the L―― P――t, did not reach me till this
afternoon. I have made bold to copy the letter; and in obedience to
your Grace’s command, herewith return the original. Its contents
shall be immediately and duly considered, and an answer very
speedily remitted to your Grace. In the mean time, with most
humble thanks for the zeal and punctuality shewn by your Grace in
the prosecution of this important affair, and earnestly begging an
interest in your Grace’s prayers, that I may be kept from erring on
the right hand, or the left, in this final discharge of my public trust, I
beg leave to subscribe myself, may it please your Grace,

Your Grace’s most obedient and dutiful son and servant,

 G. W.

Mr. Whitefield to the Archbishop.

Tottenham-Court, October 16, 1767.

May it please your Grace,

A FTER earnest application to the Father of mercies for direction, I

have endeavoured as in his presence, duly to consider and
weigh the contents of the L―― P――t’s letter, which your Grace was
so condescending as to transmit for my perusal. His L――p therein,
is pleased to inform your Grace, “That he observes, that the second
draught of Mr. Whitefield’s charter, differs from that of New-York; in
not requiring the head of the College to be a member of the church
of England, which his Lordship thinks so material a qualification, that
for one, he should not be for dispensing with it. And his L――p is
also of opinion, that the public prayers should not be extempore
ones, but the liturgy of the church, or some part thereof, or some
other settled and established form.” Thus far his L――p. And, as I
profess myself to be a presbyter of the same communion with his
L――p, I cannot but applaud his L――p’s zeal for, and watchfulness
over, the honour of the established church. But if his L――p would
be so good as to take a particular view of the point of light in which
I stand, I cannot help flattering myself, but that his L――p will be so
far from thinking, that being a member of the church of England is a
qualification not to be dispensed with in the head of the intended
College; that on the contrary, it ought not so much as to be
mentioned, or insisted upon in the charter at all. For not to trouble
your Grace with a repetition of the reasons urged against such a
restraining clause, in my letter of June 17; I would beg leave further
to observe to your Grace, that by far the greatest part of the
Orphan-house collections and contributions came from Dissenters,
not only in New-England, New-York, Pensylvania, South-Carolina,
and Scotland, but in all probability here in England also. Most of
these places I have visited since the several audits of the Orphan-
house accompts, and acquainted with the design of turning it into a
College; and likewise the address of the Council and Assembly of the
province of Georgia, with his Excellency Governor Wright’s answer,
highly approving and recommending the design, have been
published. Being frequently asked, “Upon what bottom the intended
College was to be founded;” I not only most readily and repeatedly
answered, “Undoubtedly upon a broad bottom;” but likewise, in
most of the above-mentioned places, have solemnly declared from
the pulpit, that it should be upon a broad bottom, and no other.
This, I judged, I was sufficiently warranted to do, from the known,
long established, mild, and uncoercive genius of the English
government; also from your Grace’s moderation towards protestant
Dissenters; from the unconquerable attachment of the Americans to
toleration principles, as well as from the avowed habitual feelings
and sentiments of my own heart. This being the case, may it please
your Grace, I would humbly appeal to his L――p, whether I can
answer it to my God, my conscience, my king, my country, my
constituents, and Orphan-house benefactors and contributors, both
at home and abroad, to betray my trust, forfeit my word, act
contrary to my own convictions, and greatly retard and prejudice the
growth and progress of the intended institution, by narrowing its
foundation, and thereby letting it fall upon such a bottom, as I am
persuaded will give a general disgust, and most justly open the
mouths of persons of all denominations against me. This, as I
acquainted your Grace, in the same letter referred to above, is what
I dare not do. And therefore, as your Grace by your silence seems to
be like-minded with the L――d P――t; and as your Grace’s and his
L――p’s influence will undoubtedly extend itself to others of his
Majesty’s most Honourable Privy-Council, I would beg leave, after
returning all due acknowledgments, to inform your Grace, that I
intend troubling your Grace and his Lordship no more about this so
long depending concern. As it hath pleased the great Head of the
church in some degree to renew my bodily strength, I purpose now
to renew my feeble efforts, and turn the charity into a more
generous, and consequently into a more extensively useful channel.
If I know any thing of my own heart, I have no ambition to be
looked upon at present, or remembered for the future, as a founder
of a college; but I would fain, may it please your Grace, act the part
of an honest man, a disinterested minister of Jesus Christ, and a truly
catholic, moderate presbyter of the church of England. In this way,
and in this only, can I hope for a continued heart-felt enjoyment of
that peace of God, which passeth all understanding, whilst here on
earth, and be thereby prepared to stand with humble boldness
before the awful, impartial tribunal of the great Shepherd and Bishop
of souls at the great day. That your Grace may shine as a star of the
first magnitude in that day, is the sincere prayer of, may it please
your Grace,

Your Grace’s most dutiful obliged son and servant,

G. W.

Mr. Whitefield to the Archbishop.

Tottenham-Court, November 11, 1767.

May it please your Grace,

T HE bearer is my humble friend; one who hath been with me

several years, and been my companion in travel through the
continent of America. If your Grace would be so good as to send by
him the plans and papers relating to the Orphan-house, it would
much oblige, may it please your Grace,

Your Grace’s most dutiful humble servant,

G. W.

P. S. I know not whether your Grace or the Lord President hath

the copy of the New-Jersey College charter. I gave it to Mr. Secretary
Sharp, in order that your Grace and his Lordship might see it. Mr.
Sharp being dead, obliges me to trouble your Grace with this
particular: I should not otherwise have taken the freedom.
 Mr. Whitefield to the Archbishop.

Tottenham-Court, February 12, 1768.

May it please your Grace,

A S not only the Governor, Council and Assembly of Georgia, have

been for a long season, and are now waiting for an account of
what hath been done in respect to the affair of the intended
Bethesda college, I find myself under a necessity of giving them and
the contributors, on this, as well as the other side of the water, a
plain narration of the steps I have been taking; and at the same
time I intend to lay before the public a draught of the future plan,
which, God willing, I am now determined to prosecute. And as the
letters which I have had the honour of writing to your Grace, contain
most of what I have to say on this subject, I suppose your Grace can
have no objection against my publishing those letters, together with
the answers returned, and the issue of the correspondence. To
prevent your Grace’s having further trouble, as I hear your Grace is
at present much indisposed, I shall look upon silence as an
approbation, at least as a tacit allowance of what is designed by,
may it please your Grace,

Your Grace’s most dutiful son and servant, in the King of

kings and Lord of lords,

G. W.

Thus, may it please your excellency, concluded my

correspondence with his Grace, and I humbly hope, the province of
Georgia, in the end, will be no loser by this negociation. For, God
willing, I now purpose to add a public academy, to the Orphan-
house, as the college ¹ of Philadelphia was constituted a public
academy, as well as charitable school, for some time before its
present college charter was granted by the honourable proprietors of
Pensylvania in the year 1755.
 ¹ This college was originally built, above twenty-eight years
ago, for a charity school and preaching place for me, and
ministers of various denominations, on the bottom of the
doctrinal articles of the church of England. The trustees,
as a public and standing acknowledgment of this, have
inserted a clause in their Grant, for leave for a part of the
building still to be allowed for that purpose. Accordingly I
preached a sermon in it, for the benefit of their charity
children, when I was last at Philadelphia, before a very
large auditory, and Dr. Smith, the present Provost, read
prayers.

In pursuing a like plan, the present Georgia Orphan-house

estate, which for near these three years hath been in a state of
suspense, may be vigorously and properly improved, and thereby an
ample and lasting provision made for the future maintenance and
education of many poor, indigent, and orphan, as well as more
opulent students. Proper masters likewise may now be sent over to
instruct, and prepare for academical honours the many youths, who
are at this time both in Georgia and the adjacent provinces, waiting
for admission. In the mean time, a proper trust may be formed to
act after my decease, or even before, with this proviso, that no
opportunity shall be omitted of making fresh application for a college
charter, upon a broad bottom, whenever those in power shall think it
for the glory of God, and the interest of their king and country to
grant the same. And thus, may it please your Excellency, my beloved
Bethesda will not only be continued as a house of mercy for poor
orphans, but be confirmed as a seat and nursery of sound learning,
and religious education, I trust, to the latest posterity. That this may
be the happy case, as I am persuaded is the desire of your
Excellency, his Majesty’s Honourable Council, and house of
representatives, in the province of Georgia, so it shall still be, to my
latest breath, as it hath been for many years, the earnest endeavour
and incessant prayer of,

May it please your Excellency, Your Excellency’s, &c.

 G. W.

Commons House of Assembly, Monday,

January 29, 1770.

M R. Speaker reported, that he with the house having waited on

the Reverend Mr. Whitefield, in consequence of his invitation,
at the Orphan-house academy, heard him preach a very suitable and
pious sermon on the occasion; and with great pleasure observed the
promising appearance of improvement towards the good purposes
intended, and the decency and propriety of behaviour of the several
residents there; and were sensibly affected, when they saw the
happy success which has attended Mr. Whitefield’s indefatigable zeal
for promoting the welfare of the province in general, and the
Orphan-house in particular.

Ordered, That this report be printed in the Gazette.

John Simpson, Clerk.

Extract from the Georgia Gazette.

Savannah, January 31, 1770.

L AST Sunday his Excellency the Governor, Council and Assembly,

having been invited by the Reverend Mr. George Whitefield,
attended at divine service in the chapel of the Orphan-house
academy, where prayers were read by the reverend Mr. Ellington,
and a very suitable sermon was preached by the reverend Mr.
Whitefield from Zechariah ivth chapter 9th. and part of the 10th
verses; “The hands of Zerubbabel have laid the foundation of this
house, his hands shall also finish it; and thou shalt know, that the
Lord of hosts hath sent me unto you; for who hath despised the day
of small things?” to the general satisfaction of the auditory; in which
he took occasion to mention the many discouragements he met
with, well known to many there, in carrying on this institution for
upwards of thirty years past, and the present promising prospect of
its future and more extensive usefulness. After divine service, the
company were very politely entertained with a handsome and
plentiful dinner; and were greatly pleased to see the useful
improvements made in the house, the two additional wings for
apartments for students, one-hundred and fifty feet each in length,
and other lesser buildings, in so much forwardness, and the whole
executed with taste and in a masterly manner; and being sensible of
the truly generous and disinterested benefactions derived to the
province through his means, they expressed their gratitude in the
most respectful terms.

Orphan-House, in Georgia, Dʳ. Orphan-House, in Georgia, Cʳ.

Sterling, Sterling,
l. s. d. l. s. d.
To cash received from By cash paid sundries
the 15th December, by particular
1738, to the 1st Jan. accompts examined,
1745‒6, by public from the 15th
Collections, private 4982 12 8 December, 1738, to
Benefactions, and the 1st Jan. 1745‒6,
annual for buildings, 5511 17 9¼
subscriptions, per cultivation of lands,
accompt infirmary, provisions,
To ballance super- wearing apparel, and
expended, Jan. 1, 529 05 1¼ other incident
1745‒6. expences
£. 5511 17 9¼

SAVANNAH in GEORGIA.

S. L.
T
HIS day personally appeared before us Henry Parker and
William Spencer, bailiffs of Savannah aforesaid, the
Reverend Mr. George Whitefield, and James Habersham,
Merchant of Savannah aforesaid, who, being duly sworn, say, That
the accompts relating to the Orphan-house, now exhibited before us,
of which the above is an abstract, amounting on the debit side
(namely, for collections and subscriptions received) to the sum of
four thousand nine hundred eighty-two pounds twelve shillings and
eight pence, sterling, and on the credit side, (namely, for
disbursements paid) to the sum of five thousand five hundred eleven
pounds seventeen shillings and ninepence farthing, sterling, do, to
the best of their knowledge, contain a just and true account of all
the monies collected by, or given to them, or any other, for the use
and benefit of the said house; and that the disbursements,
amounting to the sum aforesaid, have been faithfully applied to and
for the use of the same. And the Reverend Mr. Whitefield further
declareth, that he hath not converted or applied any part thereof to
his own private use and property, neither hath charged the said
house with any of his travelling, or any other private expences
whatsoever.

George Whitefield,
James Habersham.

SAVANNAH in GEORGIA.

T HIS day personally appeared before us, Henry Parker, and

William Spencer, bailiffs of Savannah aforesaid, William
Woodrooffe, William Ewen, and William Russel of Savannah
aforesaid, who being duly sworn say, That they have carefully and
strictly examined all and singular the accompts relating to the
Orphan-house in Georgia, contained in forty-one pages, in a book
entitled, Receipts and disbursements for the Orphan-house in
Georgia, with the original bills, receipts, and other vouchers, from
the fifteenth day of December, in the year of our Lord one thousand
seven hundred and thirty eight, to the first day of January, in the
year of our Lord one thousand seven hundred and forty-five; and
that the monies received on account of the said Orphan-house,
amounted to the sum of four thousand nine hundred eighty-two
pounds twelve shillings and eight-pence, sterling, as above; and that
it doth not appear, that the Reverend Mr. Whitefield hath converted
any part thereof to his own private use and property, or charged the
said house with any of his travelling, or other private expences; but,
on the contrary, hath contributed to the said house many valuable
benefactions; and that the monies disbursed on account of the said
house, amounted to the sum of five thousand five hundred eleven
pounds seventeen shillings and ninepence farthing, sterling, as
above, which we, in justice to the Reverend Mr. Whitefield, and the
managers of the said house, do hereby declare, appear to us to be
faithfully and justly applied to and for the use and benefit of the said
house only.

William Woodrooffe,
William Ewen,
William Russel.

Sworn this 16th day of April, 1746, before us, bailiffs of

Savannah; in justification whereof we have hereunto fixed our
hands, and the common seal.

Henry Parker,
William Spencer.

General Accompt of Monies expended and received for the

Use of the Orphan-house in Georgia, from January 7th,
1738‒9, to February 9th, 1765.
 Dʳ. Cʳ.
l. s. d. l. s. d.
1746, April 16.
To sundries
1746, April 16. By sundry
expended as 5511 17 9¼ 4982 12 8
receipts per audit
per audit this
day
1752, Feb. 25.
2026 13 7½ 1752, Feb. 25. By ditto 1386 8 7½
To ditto
1755, Feb. 19.
1966 18 2 1755, Feb. 19. By ditto 1289 2 3
To ditto
1765, Feb. 9.
3349 15 10 1765, Feb. 9. By ditto 3132 16 0¼
To ditto
10,790 19 6¾
By the Rev. Mr. Whitefield’s
benefactions, being the
sums expended more
than received, as
appears from the several
former audits, now
carefully examined,
viz. Folio 65 — 1169
10 1¼
Ditto 81 — 400
2064 5 10
5 4¾
Ditto 98 — 494
10 4
12,855 5 4¾ 12,855 5 4¾

Georgia ss.
BEFORE me, the Honourable Noble Jones, Esq. senior,
one of the assistant justices for the province
aforesaid, personally appeared the Reverend Mr. George
Whitefield and Thomas Dixon of the province aforesaid, who being
duly sworn, declare that the accompts relating to the Orphan-house,
from folio 82, to folio 98, in this book, amounting on the debit side
to three thousand three hundred and forty-nine pounds fifteen
shillings and ten pence, sterling, and on the credit side to three
thousand one hundred and thirty-two pounds sixteen shillings and
one farthing, sterling, contain, to the best of their knowledge, a just
and true account of all the monies collected by, or given to them, or
any other, for the use or benefit of the said house; and that the
disbursements amounting to the sum aforesaid, have been faithfully
applied to and for the use of the same.

Signed, George Whitefield,

Thos. Dixon.

February 9, 1765.

Sworn this 9th day of February, 1765, before me; in justification

whereof I have caused the seal of the general court to be affixed.

Signed N. Jones. Sealed.

Georgia ss.
B EFORE me, the Honourable Noble Jones, Esq. senior,
personally appeared James Edward Powell and Grey
Elliot, Esqrs. members of his Majesty’s honourable council
for the province aforesaid, who being duly sworn, declare that they
have carefully examined the accompts containing the receipts and
disbursements, for the use of the Orphan-house in the said province,
and that comparing them with the several vouchers, they find the
same not only just and true in every respect, but kept in such a clear
and regular manner, as does honour to the managers of that house;
and that on a careful examination of the several former audits, it
appears that the sum of two thousand and sixty-four pounds, five
shillings and ten pence, has at several times been given by the
Reverend Mr. George Whitefield for the use of the said house; and
that in the whole the sum of twelve thousand eight hundred fifty-five
pounds five shillings and four pence three farthings, has been laid
out for the same house since 7th January, 1738‒9, to this day:—Also
that it doth not appear that any charge has ever been made by the
said Reverend Mr. Whitefield, either for travelling charges or any
other expences whatever, and that no charge of salary has been
made for any person whatever, employed or concerned in the
management of the said house. February 9th, 1765.

Signed, James Edward Powell,

Grey Elliot.

Sworn this 9th day of February, 1765, before me; in justification

whereof, I have caused the seal of the general court to be affixed.

Signed N. Jones. Sealed.

 Dʳ. Cʳ.
General Accompt of monies
expended for the Orphan-
house, taken from the authentic Monies received for the use of the
book, from Dec. 1738, to same, taken from the authentic book,
February 1770. from Dec. 1738, to February 1770.
l. s. d. l. s. d.
1746 April 16. To
By Benefactions and
Sundries, per 5511 17 9¼ 4471 0 6¼
Collections, in England
audit, this day,
1752 Feb. 25 Dᵒ
2026 13 7½ Dᵒ ―― Scotland 978 2 5½
――
1755 Feb. 19 Dᵒ
1966 18 2 Dᵒ ―― Georgia 275 5 7¼
――
1765 Feb. 9 Dᵒ
3349 15 10 Dᵒ ―― Charles-Town 567 1 9¾
――
1770 Feb. 2 Dᵒ
2548 17 0½ Dᵒ ―― Beaufort 16 10 7
――
Dᵒ ―― Boston, New-
1809 6 10½
York, Philad. &c.
Dᵒ ―― Lisbon 3 12 0
8120 19 10½
By cash, received for
payment of boarders
3983 19 3
cocoons, rice, lumber,
♦indigo, provisions, &c.
By the Reverend Mr.
Whitefield’s
benefactions, being
the sums expended,
3299 3 3¾
more than received, as
appears by the several
audits, carefully
examined,
15404 2 5¼ 15404 2 5¼

♦ “indico” replaced with “indigo”

Georgia
B EFORE the Honourable Noble Jones, Esq. senior assistant
Justice for the province aforesaid, personally appeared,
the Rev. Mr. George Whitefield and Thomas Dixon, of the province
aforesaid, who being duly sworn, declare that the accompts relating
to the Orphan-house, from folio 101 to folio 109 in this book,
amounting, on the debit side, to two thousand five hundred forty-
eight pounds seventeen shillings and one half-penny, sterling, and
on the credit side, to one thousand three hundred thirteen pounds
nineteen shillings and sixpence three farthings, sterling, contain, to
the best of their knowledge, a just and true account of all the
monies collected by, or given to them, or any others, for the use or
benefit of the said house; and that the disbursements, amounting to
the sum aforesaid, have been faithfully applied to and for the use of
the same.

George Whitefield,
Thomas Dixon.

February 2, 1770.

Sworn this 2d day of February, 1770, before

me; in justification whereof I have caused
the seal of the general court to be affixed.

N. Jones. Seal.

5th and last audit, 1770.

Georgia.
B
EFORE the Honourable Noble Jones, Esq. senior assistant
Justice, &c. personally appeared, James Edward Powell
and Grey Elliot, Esquires, members of his Majesty’s council
for the province aforesaid, who being duly sworn, declare that they
have carefully inspected and examined the accompts, containing the
receipts and disbursements, for the use of the Orphan-house in the
said province. And find the sums expended for the use of the same,
from the 9th February 1765, to this day, amount to two thousand
five hundred forty-eight pounds seventeen shillings and one half-
penny, sterling; and the sums received, to one thousand three
hundred thirteen pounds nineteen shillings and sixpence three
farthings, sterling; and that the whole of the sums expended on
account of the institution, amount to fifteen thousand four hundred
and four pounds two shillings and five-pence farthing, sterling, and
the whole receipts, to the sum of twelve thousand one hundred four
pounds nineteen shillings and one penny half-penny, sterling; and
the benefactions of the Rev. Mr. George Whitefield thereunto, have,
at different times, amounted to the sum of three thousand two
hundred ninety-nine pounds three shillings and three-pence three
farthings, sterling, as clearly appears by a general account thereof
stated by us. And that in this our last, as well as each preceding
audit, no charge whatever has been made by the Rev. Mr.
Whitefield, either for travelling charges or otherwise, nor any other
charge for the salary of any person whatever, employed or
concerned in the management of the said Orphan-house; and that
clear and distinct vouchers for the whole amount of the sums
expended, have been laid before us, except for four articles,
amounting together to forty pounds one shilling and one penny,
being monies expended and paid by the said Mr. Whitefield on
several occasions, the particulars of which were laid before us, but
no receipt had been by him taken for the same.

James Edward Powell,

Grey Elliot.

February 2, 1770.

Sworn this 2d day of February, 1770, before

me; in justification whereof, I have caused
the seal of the general court to be affixed.

N. Jones. Seal.
Schedule of all the Lands possessed by, and belonging to the late
Reverend George Whitefield, in Georgia.

Lands granted by his Majesty to the late Reverend George

Whitefield, in trust for the Orphan-house, or for the endowment of
a College in Georgia.

A TRACT of 500 acres, called Bethesda, on which the Orphan-house

and additional buildings are erected.

Another of 419 acres, called Nazareth.

Another of 400 acres, called Ephrata, on which are the principal

planting improvements.

1319 acres.

These lands are granted in trust to the deceased, for the use of
the Orphan-house, and adjoin each other: the grants are dated 13th
of April, 1761.
Another of 500 acres, called Huntingdon, and adjoins on one
corner to Ephrata.—This grant is dated 13th of
April, 1761.

These 3 tracts, amounting to 2000 acres are

Another of 1000 contiguous, and are granted to the deceased in
Another of 500 trust for the endowment of a college. The grants
Another of 500 are dated 6th of August, 1765.
2000

Another of 1000 acres, left by the Reverend Bartholomew

Zouberbuhler, deceased, late minister of
Savannah, by Will, for the endowment of a
college, but conditionally.

The habendum of the three grants, amounting to 1319 acres of

land, for the use of the Orphan-house, run in the following words:
“To have and to hold the said tract of four hundred acres of land,
and all and singular other the premises hereby granted, with the
appurtenances, unto the said George Whitefield, his heirs and
assigns for ever, in free and common soccage:—In trust nevertheless
for the use and benefit of the Orphan-House,—he the said George
Whitefield, his heirs or assigns, yielding and paying, &c.”

And the three grants, together amounting to 2000 acres of land,

for the endowment of a college, are thus expressed: “To have and to
hold the said tract of one thousand acres of land, and all and
singular other the premises hereby granted, with the appurtenances,
unto the said George Whitefield, his heirs and assigns for ever, in
free and common soccage: In trust for the endowment of a college
in our said province,—he the said George Whitefield, his heirs and
assigns, yielding and paying, &c.”

So that it plainly appears, these lands cannot be aliened or

appropriated to any other use, than the purposes for which they
were granted.

Extract from an account of the state of the family at the

Orphan-house in April 1770.

Whites.
Managers and
9
carpenters
Boys 15
Girl 1
Negroes.
Of which 16 are young, and fit for any labor; 7 are old,
Men 24 but capable of some service, and 1 so old as to be
useless.
8 of these are capable of the usual labor, 2 are old and
Women 11 assist in the business of the house, and 1 almost
incapable of any service.
Of whom, those that are capable are employed about
Children 15 something useful, as far as their strength and abilities
will permit.
75

By an authentic account of the state of the family at the Orphan-

house, from the year 1739 to 1770,

have been clothed, educated, maintained and suitably

140 Boys provided for.
43 Girls
183 Total.

N. B. The Spanish war; the fluctuating state of the colony for

years; the long suspense in which Mr. Whitefield was kept by
government at home, as to his intended plan of improvement at the
Orphan-house; and other particulars which are noticed, and may be
observed in his letters, prevented the accession of a greater number
of orphans; but to the honour and usefulness of the institution, it
ought to be remarked, that many poor children, besides what are
numbered in this list, were occasionally received, educated, and
maintained at the Orphan-house.

Copy of a paper, endorsed College Rules, taken from the original in

Mr. Whitefield’s hand-writing, 1770.

M ORNING prayer to begin constantly, every day in the year, at

half after five. The first bell to ring exactly at 5 o’clock. The
form as follows: A psalm or hymn; the general confession,
introduced with “Let us pray.” If any scholar of the house, or any
other person not in priest’s orders, doth officiate, then that collect,
“O God, whose nature and property, &c.” or that out of the
commination-office, “O Lord, we beseech thee mercifully hear our
prayers, &c.” Then must follow the Lord’s prayer, Gloria Patri, “O
come let us sing unto the Lord, &c.” or the Te Deum, or Song of the
Three Children, or Benedictus; then the second lesson for the day,
with a few short practical remarks; then a suitable prayer, with
singing a short doxology; and thus to conclude, “The grace of our
Lord Jesus Christ, and the love of God, and fellowship of the Holy
Ghost be with us, the Founder of this institution, the Master,
Wardens, and all its benefactors, and all mankind, now, henceforth,
and for evermore.” If no one is capable of using free prayer, then
shall follow the apostles creed, the collect for the week, the third
collect for grace; the three prayers for the king, royal family, and
clergy, turned into one; “O God, the creator;” the general
thanksgiving, the prayer of St. Chrysostom, and “Grace of our Lord
Jesus Christ,” as before.

The same order in the evening, only to repeat the Magnificat, &c.
before the reading of the second lesson.

On Wednesday and Friday morning, the hymn, the litany, the

general thanksgiving, prayer of St. Chrysostom, and concluding
prayer.
 On Sunday morning, a short prayer with a psalm or hymn early in
the morning. Full prayers and sermon at ten: the same at three in
the afternoon. A short prayer, and a hymn, at half after six in the
evening. The first lesson to be read at dinner; the same at supper: a
short hymn at each meal. One of the orphans to read and give out
the hymn, or any other substituted by the master; and also to read
the second lesson in chapel.

Great care to be taken, that all read, write, speak, and behave
properly.

All the statutes to be in English, and read to every scholar or

student at admission, and thrice a year, at Easter, Whitsuntide, and
Christmas, publicly.

No cards, dice, or gaming of any kind to be allowed, on pain of

expulsion, or dismission, by masters, tutors, professors, students or
any officer or member of the college whatsoever. No music but
divine psalmody; such as Butt’s Harmonia sacra, Knibb’s and
Madan’s collection of tunes.

All are to be taught Bland’s Manual Exercise, by some deputed

officer, but not bound to attend on musters or other exercises,
unless on account of an alarm.

Nobody shall be suffered to run in arrears above half a year:

some caution money to be paid down.

All students to furnish their own rooms, but to lie on mattresses,

and the successors to pay thirds.

No one suffered to go to town without express leave from the

master, or persons deputed by him.

Breakfast at seven o’clock, dinner at twelve, supper at six,

through all the year; the utmost neatness to be observed and
maintained in every room.
 All orphans and students shall be obliged to learn and repeat,
and, if capable, to translate into Latin all the thirty-nine articles, or
those specified in the act of toleration. The homilies to be read
publicly, distinctly, frequently and carefully, every year, by the
students, deputed in rotation. All to be first thoroughly instructed in
the history of Georgia, and constitution of England, before they are
taught the history of Greece and Rome. Kimber’s history of England
is a good one for beginners, then may follow Rapin’s. The young
negro boys to be baptized and taught to read. The young negro girls
to be taught to work with the needle. The following divinity books to
be read, Henry’s Comment,—Doddridge and Guise,— ♦ Burkitt,—
Clark’s Bible,—Wilson’s Dictionary,—Professor Franck’s Manuductio,
especially the preface de Impedimentis Studii Theologici,—
Doddridge’s Rise and Progress,—Boston’s fourfold State,—ditto, on
the Covenant,—Jenks, on the righteousness of Christ, and his
Meditations,—Hervey’s Meditations, and Theron and Aspasio,—
Bishop Hall’s Contemplations, and other works,—Edwards’s Preacher,
—Trapp on the old and new Testament,—Poole’s Annotations,—
Warner’s Tracts,—Bishop Leighton’s Comment on St. Peter’s 1st
Epistle,—Bishop Pearson on the Creed,—Edwards’s Veritas redux,—
Owen and Bunyan’s works.

♦ “Burkit” replaced with “Burkitt” for consistency

Copy of a paper, intitled, “Subjects for Annual Prizes at the Orphan-

house, Bethesda College,” in the hand-writing of Mr. Whitefield,
inclosed with and referred to in his Will ¹.
 ¹ “Whatever profits may arise from the sale of my books, or
any manuscripts, that I may leave behind, I give and
bequeath ―― towards paying off my arrears that may be
due on the account of the Orphan-house academy, or for
Annual Prizes, as a reward for the best three Orations that
shall be made in English, on the subjects mentioned in a
paper annexed to this Will.”

Subjects for Annual Prizes at the Orphan-house, Bethesda

College.

O N every 27th of December, the Founder’s birth-day,—an Oration

on the Mercy of God, in preparing Habitations and Places of
Education for poor Orphans, “In thee the fatherless find mercy,” by
an Orphan.

Another on our Lord’s Nativity,—by an Orphan.

On the Anniversary, March 25,—Orations on the benefit of

erecting, founding, and contributing towards Seminaries of sound
Learning, and religious Education.—On the Benefit of an Union
between Great Britain and her Colonies.—The Rise and Progress of
the Colony of Georgia.—The Rise and Progress of Commerce and
Religion in the other American Colonies,—by Orphans or Students.

On the 5th of November,—an Oration on the glorious Revolution,

and the infinite Mercy of God, in delivering Great Britain from Popish
Tyranny and arbitrary Power, by Orphan or Student.

On Easter Monday,—an Oration on the Resurrection,—by Orphan

or Student.

On Whitsunday,—an Oration on the Descent of the Holy Spirit

upon the Apostles,—by Orphan or Student.

All the Exercises to be closed with an Application, Exhortation,

and Prayer, by the Master of the College.
The following Speech was also found in Mr. Whitefield’s own Writing,
delivered by an Orphan after Mr. Whitefield’s Sermon preached
before the Governor, &c. &c. January 28, 1770 ¹.

¹ For the Sermon, the Reader is referred to the last volume

of this work.

W HEN I consider where I stand, and before whom I am about to

speak, no wonder that previous to my rising, a trembling
seized my limbs; and now, when risen, a throbbing seizes my heart,
and as a consequence of both, shame and confusion cover my face.
For what am I? (a poor unlettered orphan, unlearned almost in the
very rudiments of my mother tongue, and totally unskilled in the
persuasive arts of speaking) that I should be called to speak before
such a venerable, august assembly, as is this day convened under
Bethesda’s roof. But when I reflect, that I stand up at your
command, Reverend Sir, to whom, under God, I owe my little all, and
when I further reflect on the well-known candour of those that
compose this venerable, august assembly, my trembling begins to
abate, my throbbing ceases, and a gleam of hope breaks in, that the
tongue of the stammerer will in some degree be able to speak plain.
But where shall I begin, and how shall I express the various
emotions, that within the space of the last hour have alternately
agitated and affected my soul? If the eye, as I have been taught to
think, is the looking-glass of the soul; and if the outward gestures,
and earnest attention, are indications and expressive of the inward
commotions and dispositions of the human heart, then a heart-felt
complacency and joy hath possessed the souls of many in this
assembly, whilst the reverend Founder hath been giving from the
pulpit such a clear, succinct, and yet withal affecting account of the
rise and progress of this Orphan-house academy, and of the low
estate of this now flourishing colony, when the first brick of this
edifice was laid. All hail that happy day! which we now
commemorate, when about thirty-two years ago, in faith and fervent
prayer, the first brick of this edifice was laid. Many destitute orphans
were soon taken in, and without any visible fund, in the dearest part
of his Majesty’s dominions, more than fifty labourers were employed,
and honourably paid, and a large orphan-family, for these many
years, hath been supported, cloathed, and brought up in the nurture
and admonition of the Lord. O could these walls speak! could every
chamber, every corner of this fabric speak! what agonizing
supplications, what inwrought energetic prayers would they tell us
they had been witness to, and also of the blessed fruits, of which we
are now partakers. Behold! a once infant, deserted, despised colony,
not only lifting up its drooping head, and in some degree over-
topping, at least for trade, and increase and extent of commerce,
vying with some of its neighbouring provinces. Behold the once
despised institution! (the very existence of which was for many years
denied) through the indefatigable industry, unparalleled
disinterestedness, and unwearied perseverance of its reverend
Founder, expanding and stretching its wings, not only to receive a
larger number of helpless orphans like myself, but to nurse and
cherish many of the present rising generation, training them up to
be ornaments both in church and state. For ever adored be that
Providence, that power and goodness, which hath brought matters
to such a desirable and long expected issue! Thanks, thanks be
rendered to your Excellency, for the countenance you have always
given to this beneficial plan, for laying the first brick of yonder wings
this time twelvemonth, and for the favour of your company on this
our anniversary. Thanks to you, Mr. President ¹, who have long been
a fellow-helper in this important work, and have now the pleasure of
seeing the fruit of all your labours. Thanks to the Gentlemen of his
Majesty’s Honourable Council, and to the Members of the General
Assembly, who so warmly recommended the utility of this institution.
Thanks to you, Sir, who first opened it by preaching. Thanks to you,
who left your native country, and without fee and reward have for
many years laboured and watched over us in the Lord. Thanks to all
who have this day honoured us with your presence. And above all,
thanks, more than an orphan tongue can utter, or orphan hearts
conceive, be, under God, rendered unto you, most honoured Sir, who
have been so happily instrumental, in the hands of a never-failing
God, in spreading his ever-lasting gospel.

¹ The Honourable James Habersham, President of his

Majesty’s council, and Mr. Whitefield’s Executor in Georgia.

Savannah, March 27, 1771.

M ONDAY last being the anniversary of laying the foundation of

the Orphan-house, the new and very decent chapel lately
erected there was opened. On this solemnity his Excellency the
Governor, many of the Gentlemen of the Council, and a very great
number of the principal inhabitants of the province, were present.
The company being seated in the chapel, and the orphan children
having sung a short hymn, the following address, with great
propriety, and to the universal satisfaction of the audience, was
delivered by Peter Edwards, one of the orphans:

“May it please your Excellency,

Reverend Gentlemen,
Gentlemen and Ladies,

In obedience to the commands of my superiors, and relying also

on the candour and benevolence of your Excellency and this polite
and respectable company, I beg leave, with all humility, to make this
public address. It may not be improper to mention, that on this day,
thirty-two years ago, the foundation of this house was laid by the
reverend Founder, whose death we orphans in particular cannot
sufficiently lament; that also on this day, two years past, your
Excellency honoured this place with your presence, and
condescended to lay the foundation of the two wings, superadded to
the Orphan-house, for the accommodation of young gentlemen
intended to be educated in academical learning, to enable them to
move in a superior sphere of life; and we are now met to open and
solemnly dedicate this new and convenient chapel to the service of
our God and Saviour Jesus Christ. The many and great advantages
accruing from the establishment of public schools in every
government, is obvious, and in a young province, as this is, it must
be of the highest importance to its future prosperity and welfare,
which is the professed design of this charitable institution; an
institution evidently calculated to promote the happiness of society,
by providing for, and instructing such poor children, as would
otherwise, in all appearance, be brought up in ignorance, and
become of little use and value to mankind. They are here early
taught their duty to God, and their country, and the respect they owe
to those in authority over them. God has various, and to us
unthought-of ways, which we poor short-sighted beings cannot
fathom, to effect his purposes; but I hope I may be allowed to say,
that, in all human probability, great might have been the blessing to
this noble undertaking, had it pleased divine Providence to have
prolonged the valuable life of the deceased Founder: but he is now
no more. We have, however, no doubt of the great Father of the
fatherless supplying his loss; and that your Excellency, and all well-
disposed persons, especially the good people of this province, will
espouse our cause, and promote our welfare. Agreeable to the plan
of our deceased Benefactor, an Academy is now begun to be
superadded to the Orphan-house, and gentlemen of this province
will have an opportunity of educating their sons under their
immediate inspection, and will not be under the necessity of sending
them at a great distance for that purpose, or be constantly labouring
under the painful anxiety of knowing of their health and welfare,
besides being probably at a greater and more uncertain expence.

The utility of this, it is humbly presumed, wants no

recommendation: it is natural to love the place where we received
our education, and passed our first years. If parents would therefore
have the pleasure of seeing the daily progress their children make in
knowledge; if they desire they should love and revere them, and
have a peculiar regard for the place of their nativity; if they would
preserve them from the improper liberties they may take, when
removed from their authority; it surely must be most eligible to let
them spend their early years under the shadow of their wings, and
within the reach of their parental admonitions.

May it please your Excellency,

I have now in charge to return your Excellency, with all deference

and humility, our most grateful acknowledgments for your kind
patronage and countenance; and to assure your Excellency, that we
do and will constantly pray for your happiness, wherever Providence
may please to place you, unfeignedly wishing, that your Excellency
may continually experience that heart-felt satisfaction which can only
dwell in the breast of the humane and benevolent; and we are
persuaded, when you return to your native country, our cause will
not be forgotten by your Excellency.

Honourable Sir, ¹

We should be highly wanting in gratitude, if, on this occasion, we

omitted to acknowledge your unwearied and unabating attention to
serve this institution from its first foundation; and we are happy that
God has been pleased to preserve your life to succeed our kind
Founder, and carry into execution his truly generous intentions. Your
disinterested regard to promote our real welfare is well known, and
therefore I shall forbear to add, only that for your happiness, and
long continuance amongst us, we daily pray.

¹ The Honourable James Habersham.

Reverend Gentlemen,
Gentlemen and Ladies,

Permit me to return you our best thanks for the very kind regard
you have shewn us, and to assure you, that we will endeavour to
deserve the continuance of your friendship and favour.
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