The founding and early history of the London School of Economics has repeatedly attracted the attention of historians, but its place in the development of British economics has hitherto been unduly neglected. As is well known, the Webbs and their co-founders were not seeking to establish a new centre of socialist propaganda, for, as Fabians, they believed that ‘it only needed patient explanation of facts to persuade others of the truths of Socialism and the desirability of socialistic reforms’.1 Nevertheless, they undoubtedly intended to encourage the ideas of schools of thought other than ‘the theoretical and individualist economics of Ricardo and Mill’,2 and to this end they chose as the first Director a young Oxford scholar, W.A.S.Hewins. Hewins’ undergraduate studies had reinforced his initial prejudices against orthodox economics, and he became an active member of an important group of young Oxford dissidents whose number included the economic historian W.J.Ashley; the clergyman-editor of the Economic Review, John Carter; the economist and journalist, J.A.Hobson; the geographer (and subsequently, second Director of the LSE), Halford J.Mackinder; and the educationist, Michael E.Sadler. Despite friendly warnings from the Oxford economic historian, J.E.Thorold Rogers, that he would jeopardize his career if he adopted too radical an approach, Hewins went ahead with his plans to reorganize the teaching of economics, and these proposals formed the basis of the scheme for the new institution which he submitted to Sidney Webb in 1894.3

In view of the precarious financial position of the LSE and the inevitable suspicions aroused by its links with the Fabian society, Hewins launched a vigorous publicity campaign designed to emphasize the novelty and the importance of this new educational venture. Naturally enough, he drew heavily upon the report of an authoritative subcommittee of the British Association for the Advancement of Science, published in 1894, which had stressed the urgent need to improve the facilities for teaching and examining economics in British universities and colleges,4 and in so doing he offended Alfred Marshall, who was not only the leading contemporary British economist, but also one of the principal defenders of the received tradition of British economic thought.