THE TERM Economics, as originally used by the Greeks, meant the art of household management, or the principles which govern the wise management of the household. Xenophon’s treatise on this subject is a description of the management of a simple agricultural household where problems of revenue and expenditure, of business and home life, are not very sharply separated. In modern times, particularly in urban life, the business, or the source of income, is so sharply separated from the home, where the income is utilized, that we now have two distinct branches of the subject instead of one. To one branch we now give the name business economics, business management, or business administration. The other is known by such names as home economics, household economics, household management, domestic science, etc. That these two branches are now so sharply separated as to seem unrelated is a commentary on how far we have departed from the simple conditions of the self-sufficing rural household, and how thoroughly we have divorced business from life.

Xenophon also wrote a treatise on the Revenues of Athens. While this cannot be regarded as a general treatise on public finance, it serves at least to show that he had some interest in that field, which may not inaptly be called public housekeeping. Every government, considered as a corporate body, has needs of its own apart from those of the people whom it governs. Whether it be a city, a state, or a smaller governing unit, it must solve the problems of revenue and expenditure just as a private household. Later writers applied the term economics mainly to this group of problems to which we now apply the name public finance, rather than to that group which in the diagram above are included under Private Economics. In a monarchy the providing of revenues for the king’s household, and the expenditure of those revenues in the support of the household, may approximate very closely to the character of private economics, as when the chief source of revenue is the royal demesne, or to public economics when the chief source of revenue is taxation, and the king is regarded merely as a public official to be supported as other public officials are.

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