Date: 1950-01-01T07:00:00+00:00
Keywords: liberty
Description: The Foundation for Economic Education The Freeman 1960

The Freeman 1960, Vol. VII

Foundation for Economic Education

ESSAYS ON LIBERTY VOLUME VII THE FOUNDATION FOR ECONOMIC EDUCATION, INC. IRVINGTON-ON-HUDSON, NEW YORK 1960 EDITOR'S N,OTE The study of freedom and presentation of the find ings in a manner helpful to anyone who is interested is the objective of the staff and the friends of the Foundation for Economic Education. The studies are distributed, as completed, in the form of separate re leases and as articles in The Freeman, a monthly study journal. This is the seventh volume .of Essays on Liberty, all of the selections in it having previously appeared in The Freeman, or in Mr. Read's Notes from FEE, between June 1959 and June 1960. The first six volumes of Essays on Liberty, covering earlier Founda tion releases, are still available. Permission is hereby granted to reprint these essays in whole or in part, except the following: The Economic Foundations of Freedom by Ludwig von Mises Our Tragic State of Confusion by William C. Mullendore Salesmen of Sloth from the Wall Street Journal The Silent Partner by Dean Russell Eternal Love by Lawrence Noonan Published October 1960 Copyright 1960 by The Foundation for Economt'c Education, Inc.

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CONTENTS Page The Day's Demand Josiah G. Holland 9 The Religious Foundation of a Free Society Edmund A. Opitz . . . . • . . . 10 Our First Thanksgiving Sartell Prentice~ Jr. 17 On Making Friends for Freedom Leonard E. Read . . . .. ..•. 31 The Economic Foundations of Freedom Ludwig von Mises . . . . . . . Two Kinds of Power Paul L. Poirot . 36 .50 .76 Unemployment and Unionism Alberto Benegas Lynch 57 Competition, Monopoly, and the Role·of Government Sylvester Petro 61 What Free Enterprise Means to Me Keith S. Wood .... Economics for the Teachable Leonard E. Read • 78 Love That Neighbor John c. Sparks Oil's Second Century Robert G. Dunlop .93 .......... 97 CONTENTS Page The Web of Intervention Paul L. Poirot . . . . . 112 On the Training of Scientists and Moral Responsibility 117 149 142 167 . 202 Daniel K. Stewart Scientific Free Enterprise Edward P. Coleson ..'........ 125 Free Will: The Foundation of the Free World Harold E. Schlichting~ Jr. . . . . . . . . 131 On Talking to Ourselves Edmu,nd A. Opitz . . . . . . . . .

Our Tragic State of Confusion: A Diagnosis William C. Mullendore . . . . . . . Salesmen of Sloth WaU Street Journal The Crusade Agains t Exc~llence Merryle Stanley Rukeyser . . . . . . . . 170 "Relax ... Enjoy Yourselves!" E. W. Dykes . . . . . . . . . . . 182 Fligh t from Integri ty Leonard E. Read 187 Government's Expanded Role First National City Bank Letter' . . . . . . 197 The High Cost of Coercion Paul L. Poirot The Welfare State Doctrine P. M. Fox 211 The Silent Partner Dean Russell . 217 CONTENTS Page · 318 .259 · 227 · 261 · 268 · 272 Free Enterprise and European Unity George Winder . . . . . Some Fallacies of Foreign Aid William Henry Chamberlin . 233 Hong Kong-A Success Story First National City Bank Letter . . . . . . 243 World GovernmentA Reactionary Disorder Darryl W. Johnson} Jr. . . . . . . . . . 250 The Magic of Believing Leonard E. Read Growth-The Dutch Example William H. Peterson The Only Way to Sound Growth Lawrence Fertig The Tricky Four Freedoms Frederick A. Manchester Social Security's Salvage Value Paul L. Poirot 291 The Phantom Called "Monopoly"

Hans F. Sennholz . . . . . . . . . . . 295 The Auction Sale Vollie Tripp The Mass Man Leonard E. Read . . . . . 325 The "Consumer Theory of Prosperity John Stuart Mill .....•..... 334 Government in the Housing Business Enlerson P. Schmidt . . . . . · 342 CONTENTS Pagt! But What Can I Do about It? J. Kesner Kahn .... Wages, Productivity, and Prices W. A llen Wallis .... Strikers Are Bound To Lose Paul L. Poirot ..... Socialism-Substance and Label Edmund A. Opitz . . . . .350 ........ 354 · 363 367 Prophetic Intimations John Chamberlain . . . . . . . . . . . 382 Socialism Through the Back Door William Henry Chamberlin 389 On the Scientific Methods and Truth Daniel K. Stewart . . . . . .'.. . . . . 398 "E ternal Love" Lawrence Noonan The Washington Monument Ralph Bradford On Behalf of the Ideal Leonard E. Read On Improving the World Leonard E. Read AUTHORS, listed alphabetically . 'INDEX .410 · 416 · 432 .. 437 . 441 . 445 THE DAY'S DEMAND t'J Jo~ialt g. JJollanJ God give us men! A time like this demands Strong minds, great hearts, true faith, and ready hands; Men whom the lust of office does not kill; Men whom the spoils of office cannot buy; Men who possess opinions and a will; Men who have honor; men who will not lie; Men who can stand before a demagogue And damn his treacherous flatteries without winking; Tall men, sun-crowned, who live above the fog In public duty and in private thinking; For while the rabble, with their thumb-worn creeds, Their large profession and their little deeds, Mingle in selfish strife, 101 Jfreedom weeps, Wrong rules the land, and waiting Justice sleeps.

Mr. Holland (1819-1881) was an American novelist, poet, and editor. 9 THE RELIGIOUS FOUNDATION OF A FREE SOCIETY t'J GJmunJA. Opifz ~ WE LIVE IN a time of great uneasiness, when the values of the free society which we cherish are being seriously challenged; challenged not only by imperial communism abroad but also by dubious ideologies here at home. Even if by some miracle the communist challenge van ished overnight and' the international scene ceased to trouble us, there is every reason to believe that we have enough domestic problems to keep us busy for the next generation. Outwardly, everything seems prosperous. Nearly every one who really wants to work can find a job. Automo biles are bigger, faster, and more numerous. Restaurants and places of entertainment are crowded. There are in creased opportunities for travel arid recreation. In the cultural fields of religion' and education, there is much activity. New church buildings are springing up every where, and· increasing numbers of people are partici pating in religious activities. In education, likewise.

Year by year, we are spending a larger proportion of our income on schooling. More young people are in The Revere~d Mr. Opitz is a member of the staff of the F<;>unda tion for Economic Education. 10 THE RELIGIOUS FOUNDATION OF A FREE SOCIETY 11 college every year, and communities all over the land are engaged in a mighty school building program. All of these things should give us a sense of satisfac tion; but they don't. There is probably more discontent now among our people than at any time in the history of this country. We view with alarm the rising incidence of crime and juvenile delinquency, the mounting prob lems of alcoholism and drug addiction. Then there is inflation, causing prices to rise while at the same time it dilutes the value of our savings accounts and insur ance policies. Government grows larger all the while, marking the stampede away from personal responsibility which occurs at all levels of life.

A recent writer has remarked that "this is the era of the goof-off, the age of the half-done job. Our land is populated with laundrymen who won't iron shirts, with waiters who won't serve, with carpenters who will come around some day maybe, with businessmen whose minds are on the golf course, with teachers who demand a single salary schedule so that achievements cannot be rewarded nor poor work punished, and with students who take cinch courses because the hard ones make them think." How did we get ourselves into such a mess, and how can we get ourselves out of it? Perhaps the most helpful way to face up to our pres ent situation is· to look at our past history. If we wish to recover faith in ourselves and in our free society, we must understand what this faith is and what it meant to earlier generations. A new nation was brought forth upon this continent. What was it like, and what was 12 EDMUND A. OPITZ the source of its strength, idealism, and earthly hopes?

During the nineteenth century, the world of the de feated and the oppressed looked to America as a land of liberty and justice for all. In large· numbers, people came here to find freedom for themselves and for their children. It goes without saying that they didn't always find what they were seeking; reality, here as everywhere, fell short of the professed ideal. But even when the ideal failed to show through the practice, it was never wholly without influence; for this ideal was in scribed in a basic national document, the Declaration of Independence, for all to see and many to memorize. Emblem of American Ideals The Declaration of Independence was once the emblem of American idealism. The America of a former day was not a mere place; it was more than a geographic area. America was a world-wide symbol of the enduring hu man quest for a country in which each person might be free. Most of us refer to the Declaration now and then and do so with reverence, but·how many of us have read the Declaration of Independence recently and read it carefully? It is worth reading and rereading and it re pays careful study.

The Declaration, in paragraph 1, refers to "the laws of nature and nature's God." In paragraph 2, the sign ers of the Declaration say that, as far as they are con cerned, they believe or accept as axiomatic, the proposi tion that the Creator endowed men with certain rights.

THE RELIGIOUS FOUNDATION OF A FREE SOCIETY 13 Other men might hold that "rights" are granted by the State, or else have a purely naturalistic basis; "we hold" that these rights have a supernatural derivation, i.e., they are God-given. The Creator is sovereign. In other words, our Declaration of Independence has a built-in religious dimension; and the importance of this fact is underscored by the absence of a similar dimension from a comparable document issued in 1789, thirteen years after our own Declaration, the French Declaration of the Rights of Man and of Citizens. The French Declaration, wishing to set forth "these natural, imprescriptible, and unalienable rights" says: "The national assembly doth recognize and declare, in the presence of the Supreme Being, and with the hope of His blessings and favor, the following sacred rights of men and citizens." It will be noted that, although the Supreme Being is mentioned, he is invoked as a mere gesture of formality; he is not acknowledged as the source of human rights. What then is this source accord ing to the French Declaration? Paragraph III tells us.

"The nation is essentially the source of all sovereignty; nor can any individual, or any body of men, be entitled to any authority which is not derived from it." The French and American Revolutions are, in short, based on contrary principles. The American dream was not of a sovereign people, which in practice comes down to mere majority rule; the American dream has at its center the individual per son, endowed by God with certain rights which no other individual nor combination of individuals may properly 14 EDMUND A. OPITZ transgress. Government itself must respect these individ ual rights, and government serves the ends of freedom and justice by punishing any trespass on these private rights. This same respect for the individual and this recog nition of his rights and immunities which we find in the Declaration is reflected also in our Constitution. The men who drafted the Constitution did not design a streamlined political structure. James Madison and the others had been once burnt by government, and they were twice shy. They created a political structure in which the federal government was to be internally self governed by three separate but balanced powers, and the several states were to retain their original sovereign ty in order to act as a counterpoise to the central au thority. This entire political equilibrium was balanced on the sovereign individual; the only excuse for gov ernment was to .secure him in his rights. The Founding Fathers knew that a free government implies an unfree people, so in the interests of personal liberty they pinned down their government to strictly limited, de fined, and delegated functions.

A Great Religious Tradition Where did the Founding Fathers get this generous estimate of man? They were students of history, and we know from their writings that they were thoroughly acquainted with the social and political institutions of ancient Greece and Rome. But we also know the FoundTHE RELIGIOUS FOUNDATION OF A FREE SOCIETY 15 ing Fathers could not have derived their vision of a free society composed of sovereign persons if they had not looked beyond the institutions of ancient Greece and Rome, for both these societies were founded on human slavery. Hilaire Belloc, the historian, describes this as pect of the Greco-Roman world: "The structure and stuff of society was based upon and rooted in slavery. . . . Slavery became a mechanical and oppressive burden weighing upon the human spirit and giving its tone to all." Then came Christianity into this world, and the power of ancient despotism was weakened. Christianity starts from man as an individual person, endowed with an immortal soul striving for its salvation. Wherever this doctrine is accepted, there is no longer a nation composed merely of oppressor and oppressed. Before the State, there is now the person, and above the State, there is God, his love and his justice common to all men.

Repair the Foundations The Founding Fathers were the inheritors of a great religious tradition and the American dream of a society of free men was largely a projection of that religion. This is how the original American equation got its built in religious dimension. But this equation no longer balances because the religious elements in it have been discarded or forgotten. In a sense, we have been merely coasting on a momentum once given to us and with which we have now lost contact. Suchan analysis helps 16 EDMUND A. OPITZ us understand, I think, the discontent and uncertainty to which I referred earlier. The American dream was built upon a religious foundation. And this was noted by a young Frenchman who came to these shores to study us backin the 1830's, Alexis de Tocqueville. "Religion," he said of us, "is the first of their political institutions." Political'liberty is the limitation of government to the securing of men in their rights, and because these rights derive from re ligious premises, political liberty needs to rest on a re ligious foundation. To employ a figure of 'speech, "po litical liberty is a check drawn against the capital stock of our religious heritage. When a check bounces, the inference is that there are no funds in the bank. Sim ilarly, we cannot go on drawing upon our religious heritage 'unless we systematically replenish it. How do we rehabilitate our religious heritage?

I wish it were possible at this point to offer you, a simple answer. I wish it were possible' to say that all we need to do is go back to church. But the answer is not so simple. Many of the most articulate church leaders of our time are part of the problem, not part of the remedy. They have sought to use the churches for their own ends, and so we are often presented with a counter feit faith. But there are churches of all faiths which "proclaim liberty throughout the land," and at least they point the direction in which we must look for our answers. The men of such churches once -created the American dream, and the men of such churches today can, if they will, recreate it.

OUR FIRST THANKSGIVING OUR American Thanksgiving Day is a unique holiday, a .day set aside by Presidential Proclamation so that we may thank our Heavenly Father for the bountiful gifts he has bestowed on us during the year. It is also a day dedicated to the Family, the basic unit of our American .society, the core and center around which all else in America revolves. This, too, is in ac cord with our basic religious faith, for the Command ment has come down to us to "honor thy father and thy mother." And so, from wherever we may be,North,South, East, or West, we Americans travel, sometimes great distances, back to the family hearth, to be present at the tradi tional Family Reunion and Feast on' Thanksgiving Day. But Thanksgiving Day has still another meaning; on this day we are'asked to remember what Edmund Burke, in one of the most eloquent phrases to be found in all literature, described as "that little speck, scarce visible in the mass of national interest, a small seminal princi ple, rather than a formed body" --the tiny vessel, more Mr. Prentice is an economist, lecturer, writer, and Counselor on Profit Sharing, now living in Dobbs Ferry, New York.

17 18 SARTELL PRENTICE., JR. accurately to be described as a "cockleshell," the May flower, and its hundred passengers, men, women, and children, who sailed on her. Twelve years earlier, in 1608, they had fled from re ligious persecution in England and established a new home in Holland. Despite the warm welcome extended by the Dutch, as contrasted with the persecutions they had endured in England, their love for their homeland impelled them to seek English soil on which to· raise their children, English soil on which they would be free to worship God in their own way. Finally, the Pilgrims landed, as we all know, on Plymouth Rock in the middle of December 1620, and on Christmas Day, in the words of Governor William Bradford,l they "begane to erecte ye first house for com mone use to receive them and their goods." So was established the first English colony in New England. Three years later, when the plentiful harvest of 1623 had been gathered in, the Pilgrims "sett aparte a day of thanksgiving."

Governor Bradford adds, "Any generall wante or famine hath not been amongst them since to this day."2 But what of the intervening years? After all, there were harvests gathered in in 1621 and 1622. 1 This and subsequent quotations are taken from Bradford's His tory ltof Plimoth Plantation" from the original manuscript. Printed under the direction of the Secretary of the Commonwealth by or der of the General Court. Boston: Wright & Potter Printing Com pany, State Printers, 1898. 2 Presumably 1647, the last· year covered in Bradford's History.

OUR FIRST THANKSGIVING Three Kernels of Corn 19 I know of one family, descended from the Pilgrims, who place beside each plate at their bounteous table on Thanksgiving Day a little paper cup containing just three kernels of corn, as a constant reminder of the all too frequent days during these first years when three kernels of corn represented the daily food ration of their Pilgrim forebears. Within three months of their landing on Plymouth Rock, "of one· hundred and odd persons, scarce fifty re mained. And of these in ye time of most distress, ther was but six or seven sound persons, who, to their great comendations be it spoken, spared no pains, night nor day, but with abundance of toyle and hazard of their own health, . . . did all ye homl y and necessarie offices which dainty and quesie stomaks cannot endure to hear named; and all this willingly and cherfully ... , shew ing herein their true love unto their freinds and breth eren. A rare example and worthy to be remembered."

One half of the crew of the Mayflower, including "many of their officers and lustyest men, as ye boatson, gunner, three quartermaisters, the cooke, and others," also perished· before the little vessel set sail on her re turn voyage to England in April 1621. In the following excerpt from his History, Governor Bradford vividly describes the lot of the Pilgrims during these early years. Writing about conditions in the spring of 1623, after their corn had been planted, he says: 20 SARTELL PRENTICE} JR. "All ther victails were spente, and they were only to rest on Gods providence; at night not many times know ing when to have a bitt of any thing ye next day. And so, as one well observed, had need to pray that God would give them their dayly brade, above all people in ye world . . .. ; which makes me remember what Peter Martire writs (in magnifying ye Spaniards) in his 5. Decade, page 208. 'They' (saith he) 'led a miserable life for 5. days togeather, with ye parched graine of maize only, and that not to saturitie'; and then con cluds, 'that shuch pains, shuch labours, and shuch hun ger, he thought none living which is not a Spaniard could have endured.' "But alass! these [the Pilgrims], when they had maize (yt is, Indean corne) they thought it as good as a feast, and wanted not only for 5. days togeather, but some time 2. or 3. months togeather, and neither had bread nor any kind of corne.

"Yet let me hear make use of his [Peter Martire's] conclusion, which in some sorte may be applied to this people: 'That with their miseries they opened a way to these new-lands; and after these stormes, with what ease other men came to inhabite in them, in respecte of ye calamities· these men suffered; so as they seeme to goe to a bride feaste wher all things are provided for them.' " So They Tried Freedom Yet, following the harvest gathered in in the fall of that same year, 1623, and for all the years that followed, OUR FIRST THANKSGIVING 21 Governor Bradford tells us, "any generall wante or famine hath not been amongst them since to this day." Three years of near starvation-and then decades of abundance. Was this a miracle? Or is there a rational explanation for this sudden change in the fortunes of our Pilgrim forefathers? Describing events that took place in the spring of 1623, Governor Bradford answers our questions, in elo quent words that should be engraved on the hearts and minds of all Americans: "All this whille no supply was heard of, neither knew they when they might expecte any. So they begane to thinke how they might raise as much corne as they could, and obtaine a beter crape then they had done, that they might not still thus languish in miserie. At length, after much debate of things, the Govr (with ye advise of ye cheefest amongest them) gave way that they should set corne every man for his owne perticuler, and in that regard trust to themselves .... And so assigned to every family a parcell of land, according. to the pro portion of their number for that end, only for present use (but made no devission for inheritance) and ranged all boys and youth under some ·familie. This had very good success; for it made all hands very industrious, so as much more corne was planted then other waise would have bene by any means ye Govr or any other could use, and saved him a great deall of trouble, and gave farr better contente. The women now wente willingly into ye feild, and tooke their little-ons with them to set corne, which before would aledg weaknes, and inabilitie; 22 SARTELL .. PRENTICE, JR.

whom to have compelled would have bene thought great tiranie and oppression. "The experience that was had in this comone course and condition, tried sundrie years, and that. amongst godly and sober men, may well evince the vanitie of that conceite of Platos and other ancients;-that ye tak ing away of propertie, and bringing into a comone wealth, would make them happy and florishing; as if they were wiser then God. For this comuni tie (so farr as it was) was found to breed much confusion and dis content, and retard much imploymet that would have been to their benefite and comforte. For ye yang-men that were most able and fitte for labour and service did repine that they should spend their time and streingth to worke for other mens wives and children, with out any recompence. The strong, or man of parts, had no more in devission of victails and cloaths, then he that was weake and not able to do a quarter ye other could; this was thought injuestice. The aged and graver men to be ranked and equalised in labours, and victails, cloaths, &c., with ye meaner and yonger sorte, thought it some indignite and disrespect unto them. And for mens wives to be commanded ·to doe servise for other men, as dresing their meate, washing their cloaths, &c., they deemd it a kind of slaverie, neither could many hushands well brokke it. Upon ye poynte all being to have alike, and all to doe alike, they thought them selves in ye like condition, and one as good as another; and so, if it did not cut of those relations that God hath set amongest men, yet it did at least much diminish and OUR FIRST THANKSGIVING 23 take of ye mutuall respects that· should be preserved amongest them. And would have bene worse if they had been men of another condition.

"Let noneobjecte this is men's corruption, and noth ing to ye corse it selfe. I answer, seeing all men have this corruption in them, God in his wisdome saw an other course fiter for them." The Importance of Property Rights This new policy of allowing each to "plant for his owne perticuler" produced such a harvest that fall that Governor Bradford was able to write: "By this time harvest was come, and in stead of fam ine, now God gave them plentie, and ye face of things was changed, to ye rejoysing of ye harts of many, for which they blessed God. And ye effect of their particuler planting was well seene, for all had, one way and other, pretty well to bring ye year aboute, and some of ye abler sorte and more industrious ,had to spare, and' sell to others, so as any generall wante or famine hath not been amongst them since to this day." Our first Thanksgiving should, therefore, be inter preted as an expression of gratitude to God, not so much for the great harvest itself, as for granting the grateful Pilgrims the perception to grasp and apply the great universal principle that produced that great har vest: Each individual is entitled to the fruits of his own labor. Property rights are, therefore, inseparable from human rights.

24 SARTELL PRENTICE, JR. If man abides by this law, he will reap abundance; if he violates this law, suffering, starvation, and death will follow, as night the day. This is the essential meaning of the two great Com mandments, "Thou shalt not covet" and "Thou shalt not steal." When it came time for the spring planting in the following year, 1624, the Pilgrims went one step fur ther. In Governor Bradford's words: "I must speak of their planting this year; they hav ing found ye benefite of their last years harvest, and setting corne for their particuler, having therby with a great deale of patience· overcome hunger and famine. That they might encrease their tillage to better advan tage, they made suite to the Govr to have some portion of land given them for continuance, and not by yearly lotte, for by that means, that which ye more industrious had brought into good culture (by much pains) one year, came to leave it ye nexte, and often another might injoye it; so as the dressing of their lands were the more sleighted over, and to lese profite. Which being well considered, their request was granted. And to every person was given only one acrre of land, to them and theirs, as nere ye towne as might be, and they had no more till ye seven years were expired."

Describing the results of the application of this policy in the year 1626, Governor Bradford tells us: "It pleased ye Lord to give ye plantation peace and health and contented minds, and so to blese their la bours, as they had corne sufficient (and some to spare OUR FIRST THANKSGIVING 25 to others) with other foode; neither ever had they any supply of foodebut what they first brought with them. After harvest this year~ they sende out a boats load of corne 40. or 50. leagues to ye eastward, up a river called Kenibeck. . . . . God preserved them, and gave them good success, for they brought home 700 ti. of beaver, besids some other furrs, having little or nothing els but this corne, which them selves had raised out of ye earth." The discovery and application of this concept of in dividual property rights, derived from the Creator, was the real "seminal principle" so eloquently phrased by the· great English statesman and orator, Edmund Burke.

As it developed from this tiny seed into a "formed body," it became the cornerstone of our Declaration of Independence and of our Constitution, and produced the extraordinary explosion of individual human en ergy that took place in nineteenth century America. Famine Persisted in England In England, meanwhile, farming "in common" con tinued to be the general practice for another hundred years. Not until the second decade of the seventeen hundreds did "setting crops for their particuler" begin slowly to be accepted in England-and decades were to pass before the new practice became sufficiently wide spread to provide an adequate food supply for the population. As .recently as 1844, an English writer thus describes the conditions which then existed: 26 SARTELL PRENTICE" .JR. "Full one third of our population [in the Uoited Kingdom] subsist entirely, or rather starve, upon. po tatoes alone, another third have, in· addition to this edible, oaten or inferior wheaten bread, with one or two meals of fat pork, or the refuse of the shambles [slaugh terhouses], per week; while a considerable majority of the remaining third seldom are able to procure an am ple daily supply of good butcher's meat or obtain the luxury of poultry from .year· to year.

"On the continent of Europe, population is still in a worse condition .... "3 No country was ever more "underdeveloped" than the wilderness of New England on which our Pilgrim forebears set foot. The majority of those who landed from the Mayflower in December 1620 perished prior to that first great harvest of 1623. For two years they fol lowed the age-old custom prevalent in England of "farm ing in common" -and they starved. Through suffering, starvation, and hardship, they learned and applied the fundamentals of freedom-and, instead of starvation, they grew crops sufficient not only for their own needs, but to spare, enabling them to ex change their surplus with the Indians for beaver and other "furrs." 8"Treatise on Artificial Incubation" by Mr. W. Bucknell, London: p. 36, quoted in Dictionary of the Farm by Mr. W. L. Rham (Charles Knight and Co., 1844), pp. 418-419. 1 am indebted to my uncle, the late Col. E. Parmalee Prentice, for the vast amount of research he carried out in gathering material such as this for his remarkable book, Hunger and History (Caldwell, Idaho: Caxton Printers, Ltd., 1951), without which this part of the article could not have been written. .

OUR FIRST THANKSGIVING ~lf Pilgrims Had Had .ttForeign Aid"? 27 But suppose some foreign country, or their mother country, had taken pity on them in their misery and sent them ample food supplies during those first terrible years; this would have been impossible, for England herself was virtually on a starvation diet, as were most of the countries on the continent of Europe. But sup pose it had been possible; suppose they had received such "foreign aid"? Would not the Pilgrims ,have continued to "farm in common"? Would they not have continued to .follow the practice that more than two centuries later was to become a basic tenet of Marxian philosophy, "From each according to his ability, to each according to his need"? Would the Pilgrims ever have learned and applied the concepts of the dignity of the individual and the sanctity· of property-the idea that each individual is entitled to the fruits of his own labor-the Law of In dividual Freedom and Individual Responsibility?

Freedom for the individual, with recognition and re spect for the right of each individual to his property, is essential to the release of· individual human energy, which alone can raise the standard of living. It is for this reason that aid sent to support socialist governments (which deny the right to private property) and aid sent to help underdeveloped peoples that have not yet learned the lessons taught to the .Pilgrims by hard experience-it is for this reason that such "aid"

28 SAR.TELL PRENTICE, JR.. may be likened to attempting to fill a bathtub without first putting the stopper in.4 Would not America be rendering a greater service to these peoples by teaching them, through precept and example, the real meaning of our first Thanksgiving and by pointing out to them the truth and applicability of the great ideals of individual freedom and individual responsibility under God? The young American nation grew and prospered be cause for more than a century and a quarter the sanc tity of property rights was recognized as being indis pensable to human rights; because her people were free to "plant for their own particuler"; because the resul tant "free market economy" invited domestic and for eign capital seeking a profit. What of Today?, Is America, today, still abiding by these principles? Not only is the answer "No!" but there is evidence on every hand that we are re-enacting the very mistakes our Pilgrim Fathers made during their first years of "farming in common," mistakes which produced nought 4The distinction between free market services to individuals and intergovernmental foreign aid may be clarified by this statement by Joseph Stalin in Marxism and the National and Colonial Ques tion (New York: Four Continent Book Corporation, 1940), pages 115 and 116:-"lt is essential that the advanced countries should render aid-real and prolonged aid-to the backward nationalities in their cultural and economic development. Otherwise it will be impossible to bring about the peaceful co-existence of the various nations and peoples within a. single economic system that is so essential for the final triumph of Socialism."

OUR FIRST THANKSGIVING 29 but disaster, re-enacting in the New World the age-old miseries of constant hunger and starvation that con tinued to plague the Old World for some two centuries. We are not as yet suffering the Pilgrims' privation, but we are reverting to arbitrary communalization· on an enormous scale, resetting the same old-world stage. Our present tax structure is a case in point. Its aim is not to finance the costs of a strictly limited govern ment, but rather to reform society, to remold our lives, and to redistribute our wealth according to the ideas of economic and social planners dedicated to the social ization, the communization, of our once free America. As a consequence, we are now supporting vast armies of government bureaucrats who swarm over the land and over much of the world-devouring our substance like a plague of locusts. Today, one in every six em ployed Americans is on a government payroll.

As a consequence, we are compelled to contribute from the fruits of our labor billions of dollars for sub sidies and handouts granted by politicians in their end less search for votes and personal power. As a consequence, we have government operating vast businesses-already representing 20 per cent of the in dustrial capacity of the U.S.A.-businesses that ride the backs of the American people as interest free, rent free, cost free,· and tax free princes of privilege, in competi tion with taxpaying enterprises. In our program of aid to socialist governments and to underdeveloped nationalities and peoples that have not yet learned to apply the great universal truths· tested 30 SARTELL PRENTICE., JR. and proved by our Pilgrim forebears, are we not seeking to fill the bathtub without first seeing to it that the stopper is in place-in a fruitless attempt to buy loyal allies with money? Referring to our sixty billion dollar Foreign Aid since World War II, on January 27, 1957, Hon. Spruille Braden said: "It is a sum equal to the assessed valuation of all real and other property in our seventeen biggest citiesl"

Each time I accept a government handout, for any reason whatsoever, I am stealing from the only Treasure House any people has-the surplus wealth created by the productive energies of millions of individual men and women, each seeking a better life for himself and for his children. Each time I produce less, in my work, than enough to earn a profit for my employer, I am stealing from someone else-and contributing toward creating unem ployment for others and a higher cost of living for all. This Thanksgiving Day, let us, each in his own way, humbly ask forgiveness for the degree to which we have all violated the great "seminal principle," either direct ly, or through tolerating its violation by others. Then, this Thanksgiving Day, let. us highly resolve to dedicate our lives, as individuals, to "planting for our own particuler," rather than living as parasites on the productive energy of others; let us dedicate our lives to a renewed application of the ideal of individual free dom and, individual responsibility, which our Pilgrim forebears learned at such sacrifice, and ,which they passed down to-us as our most precious heritage.

ON MAKING FRIENDS FOR FREEDOM t'J oCeonal'dG. Read NEARLY all devotees of the freedom philosophy can re call acquaintanceships, initially agreeable, that went sour. "What a nice person!" we say when someone im presses us favorably. Be that person a housemaid or a bank president, it is clear that neither education nor occupation nor wealth have had any bearing on these favorable associations. Graciousness, courtesy, amiabil ity, thoughtfulness, good will are among the virtues ex hibited by individuals whom we have met from all walks of life. All too often, however, the budding friendships come a cropper. For, sooner or later, ideological inquiries are made: How does the other stand on the role of govern ment, human rights and property rights, profits, wages, privileges, security, welfare, the right to a decent stand ard of living, the right to a job, or whatever? Then sparks· may fly and, unless caution and wisdom prevail, an· ugly trait, animosity, sets in.

Mr. Read is Founder and President of the Foundation for Eco nomic Education. 31 32 LEONARD E. READ Why does animosity set in? Isn't it because each party, in the face of sharp disagreement, tends to impute bad motives to the other? Selfish, power hungry, special pleader, fellow traveler, or reactionary are among the disparaging thoughts concerning the other; in short, the other is often regarded as either malevolent or a dupe. What Causes the Friction? Ascribing malevolence to another is the mother of animosity. It is the error at the root of social hatreds. And error it is! Among the persons known to me, I have never encountered anyone who appeared to be con sciously malevolent. Not even a common thief is guided by malevolence. While he may not think of his occupa tion as the highest, everything considered, he believes it to be justifiable in terms of his scale of values. Indeed, it seems most probable that every action, by anyone, is thought of as right at the moment of action. Reflection afterward may bring regret but, on balance, most actions at the time of execution are assessed as right by the actors. Conscious malevolence rarely, if ever, controls actions.

If no person is consciously malevolent, then it follows that imputing bad motives to others is a mistake. And, if this be an alienating influence, then it behooves us who would make friends for freedom to discover what really causes the friction. Animosity need not accompany ideological differences if we know why the differences and if' we correctly act on the knowledge.

ON MAKING FRIENDS FOR FREEDOM 33 The truth, sometimes, is difficult to acknowledge. If the following contention is in fact truth, it is a bitter pill to swallow: The sparks fly because two varying de grees of ignorance clash head on! Now, ignorance is evident enough in the coercionists who would deny freedom. For example, no one of them -not even a dictator nor a ruthless labor leader-would put every item of human action under his control. Some degree of freedom would be allowed. But, no two co ercionists agree as to just how much of human action should be coercively governed. If no two of them are alike, then it follows that not more than one of all their millions can possibly be right. Therefore, all except one unknown are plagued with some degree of ignorance. The intellectual obstacle that has to be overcome is conceding a degree of ignorance in oneself. Though al most an unthinkable admission, in all good conscience, it must be made. While unable to prove it, I suspect it is my good fortune to be personally acquainted with more freedom devotees than· any other person. Precise agreement among us? Indeed, not! No two see eye to eye. Not that this observed variance is to be condemned, but does it not suggest degrees of ignorance? Of course, it does.

Very well. Concede that it is the clash of two varying degrees of ignorance that causes these intense personal frictions, what then? Certainly, the most important step has been taken in making such a concession. Once this is done, the succeeding steps become more or less ob vious: 34 LEONARD E •. READ A. Never get angry at the other pers~on's ignorance. He has no monopoly on that. No doubt the other sin cerely believes his position is right. The extent to which he cannot explain his belief is one measure of his ignorance. B. Refrain from trying to force one's own ignorance on another. Self-ignorance can be measured as above the .extent to which a belief cannot be explained. It is self-evident that the only way to overcome one's own ignorance is through learning. And, it is equally evident that teaching is the only way one can help to overcome another's ignorance. But a teacher is never self-designated; the teacher is selected by the person who chooses to be taught. Therefore, learning-teachableness -is the only way to qualify for teaching.

Love Follows Understanding Let's further diagnose teachableness, for it is the fail ure to grasp this approach that is making enemies not only at the dinner table but at the "bargaining table." For instance, a child insists that two and two make five. There is no reason to be angry at this, nor will any thing be accomplished by merely asserting one's own belief that two and two make four. If, however, one can lead the child to understand that two· and two do in fact make four, the child will favorably regard his teacher for such enlightenment. If, on the other hand, one cannot explain and shields his own ignorance, even if unconsciously, by calling the child "dumb," "lazy,"

ON MAKING FRIENDS FOR FREEDOM 35 or "indolent," the child will feel only hate for the in expert attention. All experience seems to testify that when ignorance clashes with ignorance the sparks will fly and breed ill will, animosity. But when understand ing and clear exposition are administered to ignorance, affection and esteem tend to flower. There are millions in America today who are taking firm ideological positions, some on the side of govern mental and labor union control and dictation, others on the side of freedom to produce, to exchange, to live creatively as each chooses. But observe the small num ber on either side who can do more than assert their position. Only a few can explain with reason and clarity why they believe as they do. This may be consistent be havior for the coercionists, but there is no reason why those of us who believe in freedom should follow their pattern. We do not need to impugn the motives of those who have not as yet grasped the significance of freedom nor do we need vociferously to argue for points we can not explain. Quite to the contrary, we can turn con scientiously to our own homework; we can aim at be coming competent expositors.

There is an Arab proverb to the effect that he who strikes the second blow starts the fight. Ignorance stands ever ready, and all about us, to strike the first blow. However, we need not strike back by projecting our own ignorance-by insisting on points we cannot soundly ex plain. Short of, an ability to explain our beliefs in an attractive, enlightening, and truth-serving manner, there is always the friendly alternative of silence.

THE ECONOMIC FOUNDATIONS OF FREEDOM ANIMALS are driven by instinctive urges. They yield to the impulse which prevails at the moment and peremp torily asks for satisfaction. They are the puppets of their appetites. Man's eminence is to be seen in the fact that he chooses between alternatives. He regulates his behavior deliberatively. He can master his impulses and desires; he has the power to suppress wishes the satisfaction of which would force him to renounce the attainment of more important goals. In short: man acts; he purposively aims at ends chosen. This is what we have in mind in stating that man is a moral person, responsible. for his conduct. Dr. Mises is Visiting Professor of Economics at New York Uni versity and part-time advisor, consultant, and staff member of the Foundation for Economic Education. This article first appeared in the January 26, 1960 issue of Christian Economics and is here re printed with their permission.

Further analysis of the ideas explored here may be found in Dr. Mises' best known work, Human Action (Yale University Press, 1949) 889 pages, also available from the Foundation for Economic Education, Irvington-on-Hudson, N. Y., for $12.50. 36 THE ECONOMIC FOUNDATIONS OF FREEDOM 37 All the teachings and precepts of ethics, whether based upon religious creed or whether based upon a secular doctrine like that of the Stoic philosophers, presuppose this .moral autonomy of the individual and therefore appeal to· the individual's conscience. They presuppose that the individual is free to choose among various modes of conduct and require him to behave in compli ance with definite rules, the rules of morality. Do the right things, shun the bad things. Freedom as ,a Postulate of Morality It is obvious that the exhortations and admonish ments of morality make sense only when addressing in dividuals who are free agents. They are vain when di rected to slaves. It is useless to tell a bondsman what is morally good and what is morally bad. He is not free to determine his comportment; he is forced to obey the orders of his master. It is difficult to blame him if he prefers yielding to the commands of his master to the most cruel punishment threatening not only him but also the members of his family.

This is why freedom is not only a political postulate, but no less a postulate of every religious or secular morality. Yet for thousands of years a considerable part of man kind was either ·entirely or at least in many regards de prived of the faculty to choose between what is right and what is wrong. In the status society of days gone by the freedom to act according to their own choice was, 38 LUDWIG VON MISES for the lower. strata of society, the great majority of the population, seriously restricted by a rigid system of con trols. An outspoken formulation of this principle was the statute of the Holy Roman Empire that conferred upon the princes and counts of the Reich the power and the right to determine the religious allegiance of their subjects. The Orientals meekly acquiesced in this state .of af fairs. But the Christian peoples of Europe and their scions that settled in overseas territories never tired in their struggle for liberty. Step by step they abolished all status and caste privileges and disabilities until they finally succeeded in establishing the system that the har..

bingers of totalitarianism try to smear by calling it the bourgeois system. The Supremacy of the Consumers The economic foundation of this bourgeois system is the market economy in which the consumer is sovereign. The consumer, i.e., everybody, determines by his buying or abstention from buying what should be produced, in what quantity and of what quality. The businessmen are forced by the instrumentality of profit and loss to obey the orders of the consumers. Only those enterprises can flourish that supply in the best possible and cheap est way those commodities and services which the buyers are most anxious to acquire. Those who fail to satisfy the public suffer losses and are finally forced to go out of business.

THE ECONOMIC FOUNDATIONS OF FREEDOM 39 In the precapitalistic ages the rich were the owners of large landed estates. They or their ancestors had ac quired their property as gifts-feuds or fiefs-from the sovereign who-with their aid-had· conquered the coun try and subjugated its inhabitants. These aristocratic landowners were real lords as they did not depend on the patronage of buyers. But the rich of a capitalistic industrial society are subject to the supremacy of the market. They acquire their wealth by serving the con sumers better than other people do and they forfeit their wealth when other people satisfy the wishes of the con sumers better or cheaper than they do. In the free mar ket economy the owners of capital are forced to invest it in those lines in which it best serves the public. Thus ownership of capital goods is continually shifted into the hands of those who have best succeeded in serving the consumers. In the market economy private property is in this sense a public service imposing upon the owners the responsibility of employing it in the best interests of the sovereign consumers. This is what economists mean when they call the market economy a democracy in which every penny gives a right to vote.

Representative government is the political corollary of the market economy. The same spiritual movement that created modern capitalism substituted elected office holders for the authoritarian rule of absolute kings and hereditary aristocracies. It was this much-decried bour geois liberalism that brought freedom of conscience, of thought, of speech, and of the press and put an end to the intolerant persecution of dissenters.

40 LUDWIG VON MISES A free country is one in which every citizen is free to fashion his life according to his own plans. He is free to compete on the market for the most desirable jobs and on the political scene for the highest offices. He does not depend more on other peoples' favor than these others depend on his favor. If he wants to suc ceed, he has on the market to satisfy the consumers and in public affairs to satisfy the voters. This system has brought to the capitalistic countries of Western Europe, America, and Australia an unprecedented increase in population figures and the highest standard of living ever known in history. The much talked-about common man has at his disposal amenities of which the richest men in precapitalistic ages did not even dream. He is in a position to enjoy the spiritual and intellectual achieve ments of science, poetry, and art that in earlier days were accessible only to a small elite of well-to-do people.

And he is free to worship as his conscience tells him. Socialistic Misrepresentation of Market Economy All the facts about the operation of the capitalistic system are misrepresented and distorted by the politi cians and writers who arrogated to themselves the label of liberalism, of the school of thought that in the nine teenth century has crushed the arbitrary rule of mon archs and aristocrats and paved the 'way for free trade and enterprise. As these advocates of a return to despo tism see it, all the evils that plague mankind are due to sinister machinations on the part of big business. What THE ECONOMIC FOUNDATIONS OF FREEDOM 41 is needed to bring about wealth and happiness for all decent people is to put the corporations under strict government control. They admit, although only ob liquely, that this means the adoption of socialism, the system of the Union of Soviet Socialist Republics. But they protest that socialism will be something entirely different in the countries of Western civilization from what it is in Russia. And anyway, they say, there is no other method to deprive -the mammoth corporations of the enormous power they have acquired and to prevent them from further damaging the interests of the people.

Against all this fanatical propaganda there is need to emphasize again and again the truth that it is big business that brought about the unprecedented improve ment of the masses' standard of living. Luxury goods for a comparatively small number of well-to-do can be pro duced by small-size enterprises. But the fundamental principle of capitalism is to produce for the satisfaction of the wants of the many. The same people who are employed by the big corporations are the main con sumers of the goods turned out. If you look around in the household of an average American wage-earner, you will see for whom the wheels of the machines are turn ing. It is big business that makes all the achievements of modern technology .. accessible to the common man. Everybody is benefited by the high productivity of big scale production. It is silly to speak of the "power" of big business. The very mark of capitalism is that supreme . power in all economic matters is. vested in the consumers. All big 42 LUDWIG VON MISES enterprises grew from modest beginnings into bigness because the patronage of the consumers made them grow. It would be impossible for small or medium.,size firms to turn out those products which no present-day American would like to do without. The bigger a corpo ration is, the more does it depend on the consumers' readiness to buy its wares. It was the wishes-or, as some say, the folly-of the consumers that drove the automo bile industry into the production of ever bigger cars and force it today to manufacture smaller cars. Chain stores and department stores are under the necessity to adjus t their operations daily anew to the satisfaction of the changing wants of their customers. The fundamental law of the market is: the customer is always right.

Capital Accumulation Benefits Everyone A man who criticizes the conduct of business affairs and pretends to know better methods for the provision of the consumers is just an idle babbler. If he thinks that his own designs are better, why does he not try t~em himself? There are in this country always capital ists in search of a profitable investment of their funds who are ready to provide the capital required for any reasonable innovation. The public is always eager to buy what is better or cheaper or better and cheaper. What counts in the market is not fantastic reveries, but doing. It was not talking that made the "tycoons" rich, but service to the customers. I t is fashionable nowadays to pass over in silence the THE ECONOMIC FOUNDATIONS OF FREEDOM 43 fact that all economic betterment depends on saving and the accumulation of capital. None· of the marvelous achievements of science and technology could have been practically utilized if the capital required had not previ ously been made available. What prevents the econom ically backward nations from taking full advantage of all Western methods of production and thereby keeps their masses poor, is not unfamiliarity with the teach ings of technology but the insufficiency of their capital.

One badly misjudges the problems facing the under developed countries if one asserts that what they lack is technical knowledge, the "know how." Their business men and their engineers, most of them graduates of the best schools of Europe and America, are well acquainted with the state of contemporary applied science. What ties their hands is a shortage of capital. A hundred years ago America was even poorer than these backward nations. What made the United States become the most affluent country of the world was the fact that the "rugged individualism" of the years before the New Deal did not place too serious obstacles in the way of enterprising men. Businessmen became rich be cause they consumed only a small part of their profits and ploughed the much greater part back into their businesses. Thus they enriched themselves and all of the people. For it was this accumulation of capital that raised the marginal productivity of labor and thereby wage rates.

Under capitalism the acquisitiveness of the individual businessman benefits not only himself but also all other 44 LUDWIG VON MISES people. There is a reciprocal relation between his ac quiring wealth by serving the consumers and accumulat ing capital and the improvement of the standard of living of the wage-earners who form the majority of the consumers. The masses are in their capacity both as wage-earners and as consumers interested in the flower ing of business. This is what the old liberals had in mind when they declared that in the market economy there prevails a harmony of the true interests of all groups of the population. Welfare Threatened by Statism It is in the moral and mental atmosphere of this capi talistic system that the American citizen lives and works. There are still in .some parts of his country conditions left which appear highly unsatisfactory to the prosper ous inhabitants of the advanced districts which form the greater part of the country. But the rapid progress of industrialization would have long since wiped out these pockets of backwardness if the unfortunate policies of the New Deal had not slowed down the accumulation of capital, the irreplaceable tool of economic betterment.

Used to the conditions of a capitalistic environment, the average American takes it for granted that every year business makes something new and better accessible to him. Looking backward upon the years of his own life, he realizes that many implements that were totally un known in the days of his youth and many others which at that time could be enjoyed only by.a small minority THE ECONOMIC FOUNDATIONS OF FREEDOM 45 are now standard equipment of almost every household. He is fully confident that this trend will prevail also in the future. He simply calls it the "American way of life" and does not give serious thought to the question of what made this continuous improvement in the supply of material goods possible. He is not earnestly disturbed by the operation of factors that are bound not only to stop further accumulation of capital but may very· soon bring about capital decumulation. He does not oppose the forces that - by frivolously increasing public ex penditure, by cutting down capital accumulation, and even making for consumption of parts of the capital invested in business and finally by inflation-are sapping the very foundations of his material well-being. He is not concerned about the growth of statism that wherever it has been tried resulted in producing and preserving conditions which in his eyes are shockingly wretched.

Unfortunately many of our contemporaries fail to realize what a radical change in the moral conditions of man, the rise of statism, the substitution of govern ment omnipotence for the market economy, is bound to bring about. They are deluded by the idea that there prevails a clear-cut dualism in the affairs of man, that there is on the one side a sphere of economic activities and on the other side a field of activities that are con sidered as noneconomic. Between these two fields there is, they think, no close connection. The freedom that socialism abolishes is "only" the economic freedom, while freedom in all other matters remains unimpaired. However, these two spheres are not independent of 46. LUDWIG VON MISES each other as this doctrine assumes. Human beings do not float in ethereal regions. Everything that a man does must necessarily in some way or other affect the eco nomic or material sphere and requires his power to in terfere with this sphere. In order to subsist, he must toil and have the opportunity to deal with some ma terial tangible goods.

The confusion manifests itself in the popular idea that what is going on in the market refers merely to the economic side of human life and action. But in fact the prices of the market reflect not only "material concerns t , -like getting food, shelter, and other amenities-but no less those concerns which are commonly called spiritual or higher or nobler. The observance or nonobservance of religious commandments-to abstain from certain ac tivities altogether or on specific days, to assist those in need, to build and to maintain houses of worship and many others-is one of the factors that determines the supply of and the demand for various consumers' goods and thereby prices and the conduct of business. The freedom that the market economy grants to the individ ual is not merely "economic H as distinguished from some other kind of freedom. It implies the freedom to deter mine also all those issues which are considered as moral, spiritual, and intellectual.

In exclusively controlling all the factors of produc tion the socialist regime controls also every individ uars whole life. The government assigns to everybody a definite job. It determines what books and papers ought to be printed and read, who should enjoy the: THE ECONOMIC FOUNDATIONS OF FREEDOM 47 opportunity to embark on writing, who should be en titled to use public assembly halls, to broadcast and to use all other communication facilities. This means that those in charge of the supreme conduct of government affairs ultimately determine which ideas, teachings, and doctrines can be propagated and which not. Whatever a written and promulgated constitution may say about the freedom of conscience, thought, speech, and the press and about neutrality in religious matters must in a socialist country remain a dead letter if the government does not provide the material means for the exercise of these rights. He who monopolizes all media of com munication has full, power to keep a tight hand on the individuals' minds and souls.

Illusions of the Reformers What makes many people blind to the essential fea tures of any socialist or totalitarian system is the illu sion that this system will be operated precisely in the way which they themselves consider as desirable. In sup porting socialism, they take it for granted that the "state" will always do what they themselves want it to do. They call only that brand of totalitarianism "true," "real," or "good" socialism the rulers of which comply with their own ideas. All other brands they decry as counterfeit. What they first of all expect from the dic tator .is that he will suppress. all those ideas of which they themselves disapprove. In fact, all these supporters of socialism are, unbeknown to themselves, obsessed by 48 LUDWIG VON MISES the dictatorial or authoritarian complex. They want. all opinions and plans with which they disagree to be crushed by violent action on the part of the government.

The various groups that are advocating socialism, no matter whether they call themselves communists, social ists, or merely social reformers, agree in their essential economic program. They all want to substitute state control-or, as some of them prefer to call it, social con trol-of production activities for the market economy with its supremacy of the individual consumers. What separates them from one another is not issues of eco nomic management,but religious and ideological con victions. There are Christian socialists-Catholic and Protestant of different denominations-and there are atheist socialists. Each of these varieties of socialism takes it for granted that the socialist commonwealth will be guided by the precepts of their own faith or of their rejection of any religious creed. They never give a thought to the possibility that the socialist regime may be directed by men hostile to their own faith and moral principles who may consider it as their duty to use all the tremendous power of the socialist apparatus for the suppression of what in their eyes is error, superstition, and idolatry.

The Economic Power To Dissent The simple truth is that individuals can be free to choose between what they consider as right or wrong only where they are economically independent of the THE ECONOMIC FOUNDATIONS OF FREEDOM 49 government. A socialist government has the power to make dissent impossible by discriminating against un welcome religious and ideological groups and denying them all the material implements that are required for the propagation and the practice of their convictions. The one-party system, the political principle of socialist rule, implies also the one-religion and one-morality sys tem. A socialist government has at its disposal means that can be used for the attainment of rigorous conform ity in every regard, "Gleichschaltung" as the Nazis called it. Historians have pointed out what an important role in the Reformation was played by the printing press. But what chances would the reformers have had, if all the printing presses had been operated by the govern ments headed by Charles V of Germany and the Valois kings of France? And, for that matter, what chances would Marx have had under a system in which all the means of communication had been in the hands of the governments?

Whoever wants freedom of conscience must abhor so cialism. Of course, freedom enables a man not only to do the good things but also to do the wrong things. But no moral value can be ascribed to an action, however good, that has been performed under the pressure of an omnipotent government.

TWO KINDS OF POWER tg paulof. poil'ol FOR YEARS, the term "economic power" was used almost exclusively to suggest something bad about Big Business. But now, with the increasing concern over the "eco~ nomic power" of labor unions, it seems high time to ex~ amine the charge. Just what is the nature of economic power? And to what extent, if any, do labor unions have it? Or, is it some other kind of power that unionism exerts? In terms of human relationships, the word power means the ability to influence others, whereas economic has something to do with the management of one's own business. Economic power" then-unless it is a total con~ tradiction of terms-must refer to the voluntary market~ exchange arrangements in a so-called free society. It must mean purchasing power, or the ability to get what you want from others by offering to trade something of yours that they want. A workable exchange economy presupposes various conditions, including the infinite variability in human beings with their differing wants and differing capaciDr. Poirot is Managing Editor of The Freeman and a member of the staff of the Foundation for Economic Education.

50 TWO KINDS OF POWER 51 ties to fulfill such wants. Men with specialized skills, tolerant of their reasonable differences, and respectful of the lives and properties of one another, have reason to cooperate, compete, and trade, thus serving others in order to serve themselves. This is the kind of non coercive, creative power that has provided most of the tools, capital, technological development, goods, serv ices, and leisure that are available in increasing quan tities to increasing numbers of persons over the world. This, briefly, is economic power. In what respects, then, and to what extent, do labor unions possess and wield economic power? Unions, as organizations of laborers, represent a great deal of eco nomic power in the form of ever-scarce, always-valuable, creative .human effoft. Any person with the skill and strength and will to produce something of value to him self or to any potential customer possesses economic power. If others will buy his goods or services, he has purchasing power. Every man who works with head or hands and has a valuable service to offer is a potential customer or trader or buyer for the services of other laborers. The variability of natural talents, magnified in many instances through specialized training, explains why laborers can and do trade services to mutual ad vantage. All savers and property owners also are poten tial buyers of labor, particularly when their savings are in the form of business properties with facilities and tools and managerial talent of the job-providing type.

The greater such capital accumulation within a society, the greater is the demand for human labor to put it to 52 PAUL L. POIROT its most productive use, and the greater is the purchas ing power of every available laborer. Clearly, human labor possesses tremendous. economic power, with in finite opportunity for multiplication through judicious accumulation and use of savings. But such purchasing power inheres in individuals, whether ·or not they be long to labor unions. As previously· hinted, one of the prior conditions for an optimum of production, trade, and voluntary coop eration among men is a common or mutual respect for human life and for the personal means of sustaining life: namely, private property. Peace and progress with in society are threatened every time any person resorts to violence, coercion, theft, or fraud to fulfill his wants at the expense of, and without the consent of, others involved. Such power, used in an attempt to obtain something for nothing, is in sharp contrast to the eco nomic power involved in peaceful purchase or trade.

Obviously, if human labor is to achieve its maximum purchasing power, then it is essential that savings, as well as skills, be protected as private property in the hands of, and under the control of, those individuals responsible for their accumulation and development those who have proven themselves in open competition most fit to be in charge of the economic goods or serv ices involved. Throughout history, mankind has looked to government to provide such protection for life and property. Government is organized coercive power, hopefully designed to suppress any and all attempts at violence, force, or fraud that might threaten the life or TWO KINDS OF POWER 53 property of any peaceful person. The power of govern ment is political rather than economic, a power of taxa tion and seizure rather than purchasing power through voluntary ex~hange. This is why the ideal of a free so ciety requires that government be strictly limited in scope to the defense of life and property, otherwise leav ing all peaceful persons to their own devices, producing, trading, and what not.

Examples of Coercion Now, consider for a moment some forms of human ac tion-some expenditures of human labor-that might be classified as coercive rather than economic. For instance, robbery, or seizure of another person's property without his consent, would so qualify. The enslaving and forcing of other human beings to work against their will could not properly be called an exercise of economic power. It isn't economic power if force is used to curb active or potential competition-as when one producer or group threatens or employs violence to bar the efforts of others to produce; or when one or more sellers deny other sell ers access to an uncommitted market demand; or when certain laborers combine to deny other laborers· access to open job opportunities. Such individual actions or combinations in restraint of production and trade are coercive in nature-monopolistic attempts. to suppress, prohibit, repulse, control, and interfere with the·· eco nomic power of peaceful· cooperation.

It is precisely such coercive practices that the govern54 PAUL L. POIROT ment is supposed in theory to suppress, so that all in dividuals may concentrate on their respective creative specialties. And whenever the officially recognized gov ernment cooperates with, condones, or merely fails to inhibit private or unofficial resort to violence and coer cion, these forces, in effect, take control and become the government, thus perverting it from an agency of de fense to one of actual assault against life and property. Well-Intended Mistakes Nor is this abuse of coercive power always or neces sarily the product of bad intentions; more often than not the aims may seem quite laudable-to aid the poor, the weak, the young, the old, the underdeveloped, the sick, the starving. But however worthy the aims, troubles arise the moment coercive power instead of economic power is employed to achieve such goals. Coercive pow er, while the safest and most effective kind of power when politically organized and managed for protective purposes, is wholly unsuited for any creative purpose.

That's why it is so very important that government be strictly limited in scope and function to the suppression of lesser or private attempts at violence and coercion. Leave all else to the unbounded creative economic pow er of individuals competing and cooperating voluntarily in their mutual interest and to their mutual benefit. Every extension of coercive power, beyond the bare minimum required to maintain peace and order, is at the expense of economic power and diminishes its poTWO KINDS OF POWER 55 tential achievements for the improvement of man and society. Let us summarize here with a listing of some of the major distinctions between the two kinds of power: Economic Purchase Exchange Diversify Compete Advertise Promote Serve Cooperate Assist Attract Create Develop Multiply Tolerate Reward Coercive Seize Tax Conform Monopolize Suppress Prohibit Control Interfere Restrain Repulse Destroy Limit Divide Assault Penalize Union Power Reconsidered Now, let's return to our original question and con sider in what respects and to what extent labor unions in the United States today possess and wield economic power as distinguished from coercive power. We have already recognized the tremendous economic power possessed by laborers in the form of creative human ef fort. But what happens to this economic power in the process of organizing a labor union?

If membership in the union is voluntary, then ex56 PAUL L. POIROT change presumably occurs, the laborer offering his dues in return for something useful from the union such as improved communication with management, better knowledge of job opportunities, of market conditions, of competitive wage rates, and the like. Conceivably, some laborers may well gain considerably from such an expenditure or trade, greatly improving their capacities to serve themselves and others, without coercion against or injury to anyone concerned. Such a beneficial repre sentative function would clearly come under the cate gory of economic power in a labor union. But what can be said of other union powers: the flaunting of minority and individual rights; the tax-like collection of dues for uses objectionable to some mem bers; the enforced conformity to featherbedding and make-work practices, boycotts, seniority patterns, slow downs, strike orders, and the like; the monopolistic practice of excluding nonmembers from job opportu nities; the warlike picketing of private property; the shootings, bombings, wrecking, destruction, open vio lence, and intimidation? What kind. of power is this?

If it is a coercive threat to life, liberty, and property, then in theory the. government must suppress it. Other wise, such coercion will, in effect, displace the duly con stituted government and pervert it into an agency of assault against life and property. In any event, it seems highly improper to refer to this major, coercive aspect of modern labor unionism as a form of economic power. Economic power is a blessing-:-not a burden-to indi viduals and to society.

UNEMPLOYMENT AND UNIONISM. t'J Atterfo Benegad otvnch THE MAIN CRITICISM leveled against econolnic freedom is the statement that, if things in the economic field are left to the spontaneous regulation of the free market, then so-called cyclical crises will ensue, with their se quel of mass unemployment. This is an unjust and baseless accusation. Sound theory demonstrates, and practice confirms, that in every case unemployment is a consequence of the direct or in direct action of the State. Economic liberty presupposes a free market for wages, just as for all other products and services. The price or wage paid for work is generally subject to controls altering its natural level, either by the direct action of a State which sets wages arbitrarily without regard to the market, or by indirect governmental action through unrepressed trade union violence. Mr. Benegas Lynch is. a .business leader in Buenos. Aires and Presi dent of the Centro De Difusion De La Economia Libre, an associ ation for the study and teaching of the philosophy of freedom.

This is an excerpt from his lecture of September 11, 1958, before the National Academy of Economics in Montevideo, Uruguay. 57 58 ALBERTO BENEGAS LYNCH To ask a higher price for one's product than the prospective buyer is willing to pay precludes a sale and contributes to a cumulation of unsold products. The same thing happens when, instead of a product, a service is offered. If the wage demanded by a worker is higher than the person requiring this service is will ing to pay, then the wage contract is not made and the worker is unemployed. Every time wages are raised above the natural level freely established by supply and demand, unemployment will be the unavoidable result. One alternative is to lower real wages and at the same time raise nominal wages by means of monetary inflation, a trick very wide ly used in the last few years. Nominal wages are raised, and at the same time money in circulation and bank credit are expanded, whereby real wages are kept at the same level, thus avoiding the unemployment which would otherwise have taken place. That is to say, the raising of wages above their natural level inevitably brings about either unemployment or inflation.

Man is not an object of trade, but his services are like any product-when he offers them in the market and expects payment for them. The difference in the case of services is that it is becoming increasingly com mon in many places for workers, acting in organized groups, to use force to get the price they want for their services. In its tendency toward mass action and indiffer ence to the interest and choice of the individual, trade unionism gives its leaders tyrannical authority over members and nonmembers alike.

UNEMPLOYMENT AND UNIONISM 59 Modern trade unionism, by the use of force, not only distorts the wage market, causing unemployment or in flation, but also interferes with the liberty to work, to trade, and to associate. Such action frequently makes it impossible to enter a wage contract voluntarily; the right to abstain from working becomes the obligation to take part in strikes against one's will; and the right to associate becomes the obligation to join this or that union. Coercive force, instead of being reserved exclu sively to the government for the protection of the life, liberty, and property of the citizens, is employed by these organized groups to attack many of those same fundamental individual rights. Undemocratic Behavior I t is paradoxical, however, that many of those who call themselves supporters of democracy and liberty should claim that the sort of compulsory unionism we have described is a legitimate manifestation of demo cratic life. This \kind of unionism neither follows demo cratic practices nor contributes to liberty. On the con trary, trade unionism that attacks fundamental indi vidual rights is an efficient weapon with which to kill liberty. Such unionism generally serves governments of a totalitarian tendency, and in conjunction with em ployers' associations appointed by the State, works to ward a corporative structure of society.

Free elections and democratic governments are no de fense against such developments. In many cases these 60 ALBERTO BENEGAS LYNCa governments, on the one hand, interfere where they have no business, exceeding their powers; and on the other, they neglect their basic duty of enforcing respect for the life, liberty, and property of the citizens. Against the rising authoritarianism of our times, which is at flood tide where the communist empire holds sway and every trace of liberty has completely disap peared, it must be realized .that democracy, of itself, is no guarantee of liberty for the countries of the West which practice it. In the areas of the world where there is yet a remnant of liberty, it is in danger of destruc tion through the popular vote-as in other ages-if ef fective brakes are not placed on political power. Excessive government is the usurpation of power by those in control and the abdication of liberty by those who consent. The tendency toward excessive growth of government is accelerated in the West by the common but false belief that liberty cannot be lost under democracy.

The task before us is to displace this false hope with the idea of the inviolability of natural rights-to life, liberty, and property-the only guarantee for human liberty against the constant threat of enslavement by au thori tarian governments.

COMPETITION, MONOPOLY, AND THE ROLE OF GOVERNMENT The great monopoly problem mankind has to face today is not an outgrowth of the opera tion of the market economy. It is a product of purposive action on the part of govern ments. It is not one of· the evils inherent in capitalism as the demagogues trumpet. It is, on the contrary, the fruit of policies hostile to capitalism and intent upon sabotaging and destroying its operation. LUDWIG VON MISES, Human Action IN THE free society government keeps the peace, protects private property, and enforces contracts. Government must do these things effectively, and it must do nothing else; otherwise, the conditions absolutely necessary to genuine personal freedom in society are absent. Whether or not a genuinely free society· is attainable no mortal man can know; the limits of our knowledge are too narProfessor Petro of New York University School of Law reveals here some results of his special attention to labor and antitrust legisla tion and policy.

61 62 SYLVESTER PETRO row. But one thing we do know: that until at least the ad vocates of the free society are fully aware of the condi tions necessary to its existence, it can never come about. For they must ever be on guard against new movements, ideas, and principles which would endanger its realiza tion. And 'on the other hand, they must be sharply aware of existing impediments so that they may direct their energies intelligently to the removal of the causes of current imperfections. I take up with considerable trepidation the task of ar guing that government should quit trying to promote competition by means of the antitrust laws, especially since some proponents of the free society believe that vigorous enforcement of those laws is absolutely indis pensable. Yet, antitrust laws are inconsistent with the basic principles of the free society, private property, and freedom of contract; they deprive persons of private property in some cases and outlaw certain contracts which would otherwise be valid. Moreover, they expand the role of government far beyond that envisaged by the theory of the free society and thus amount to an un conscious admission that the fundamental theory itself is incoherent; for antitrust policy implicitly accepts the Marxian premise that an unregulated economy will re sult in the decay of competition and in the emergence of abusive monopoly. Finally, and this may be the most pressing reason for the present article, in their attempt to promote competition the antitrust laws may in fact be inhibiting it.

One of the basic evils in the antitrust laws is the COMPETITION) MONOPOLY) AND ROLE OF GOVERNMENT 63 vagueness and uncertainty of their application. They have produced mainly confusion. Sixty years ago the antitrust laws prevented the Great Northern Railway and the Northern Pacific from merging, although but a minor fragment of their respective lines overlapped in competition. But a few years later United States Steel was permitted to consolidate a vast preponderance of the steel production of the country under one manage ment. Now we are off on another antimerger binge,and so Bethlehem and Youngstown are enjoined from doing on a smaller scale what U.S. Steel did on a grand scale. Socony and other integrated oil companies were told that they might not buy up distress oil at prices set in competitive markets. But only a few years earlier the Appalachian Coals Association was permitted to act as exclusive marketing agent for most of the coal produc tion of an entire region. Forty years after its foresight, courage, and capital had been instrumental in develop ing the great General Motors productive complex, the du Pont Company was ordered to give up control of its G.M. stock because of a relatively picayune buyer-seller relationship between them. Only .space limitations pre clude an almost endless listing of equally contradictory and inequitable results of the unpredictable eruptions from the antitrust volcano. At present, the allegedly competitive policies of the Sherman Act are mocked by those patently anticompetitive components of the anti trust laws, the Robinson-Patman Act and the fair-trade laws.

Thus, to the careful and honest observer the antitrust 64 SYLVESTER PETRO laws appear to he a charter of confusion, rather than the "charter of economic liberty" which oratory calls them. They have been transmogrified by the political vagaries to which their vagueness makes them suscepti ble into an insult to the idea that laws should apply equally to all. Some may regard these consequences as merely unfortunate incidents of a generally praise worthy program. Yet we need continually to remind our selves that law is for the benefit of the citizenry, rather than for the sport of government and of the legal pro fession. The main function of law is to provide people with clear and sound rules of the game, so that they may pursue their affairs with a minimum of doubt and uncertainty. While aggravating the existing uncertainties of life, the antitrust laws can make no demonstrable claim to im proving competition, despite the contentions of enthusi astic trustbusters. I have heard it said that the result of breaking up large firms is to create competition among its fragments, and thus to contribute to social well being. But a moment's reflection will expose this as a bare' and unsupportable assertion. Even though addi tional firms may be created by breaking up large busi nesses, the result is not necessarily in the social interest, nor does it necessarily create or improve competition.

The social interest and competition are not automat ically served by an increase in the number of firms. It is a commonplace that competition may be more vig orous and the service to society greater when an indus try, has few firms than when it has many. The question COMPETITION) MONOPOLY) AND ROLE OF GOVERNMENT 65 from the point of view of society is not how many firms there are, but how efficiently and progressively the firms -no matter how few or how numerous-utilize scarce resources in the service of the public. Maybe production will improve cUter a single large producer is split into fragments; but it is equally possible that it will not. No one can tell in advance, and it is also impossible to do so after the fact. The only thing that can be said with cer tainty about the breaking up of businesses is that gov ernment's power has been used to deny property rights rather than to protect them. If we really believe that private property is the most valuable institution of the free society, and that in it lies the strength of the free society, then it is wrong to abrogate that institution on the basis of pure guesswork.

Monopoly Unionism The antitrust approach to improving competition loses even more of its glamor when one understands that the most abusive and socially dangerous monopoly which exists today in this country is the direct product of special governmental privileges. Labor unions are to day the most destructive monopolies in our system, and they are also the greatest beneficiaries of governmental special privileges. First and foremost, there is the virtual privilege of violence, which trade unions alone enjoy. Neither in dividuals nor other organizations are so privileged. Memory is strangely short as regards union violence, 66 SYLVESTER PETRO and yet every big union in America has used it habitu ally, in both organizing and "collective bargaining." Of the men who resist union membership, many are beaten and some are killed. They have much more to fear than do persons who reject the blandishments of sellers of other goods or services. And this is true de spite the fact that the right not to join a union is as firmly entrenched in legal theory and the theory of the free society as is the right to buy as one wishes or to re fuse to buy when one so wishes.

Last spring, the United Mine Workers engaged in one of its periodic purges of the nonunion mines which spring up continually owing to the uneconomic wage forced upon the organized mines by the UMW. I have before me an Associated Press dispatch, dated April 10, 1959, which reports that "one nonunion operator has been killed, five union members charged in the fatal shooting, and three ramps damaged by dynamite since the strike began March 9. It has made idle more than 7,000 men over the union's demands for a $34.25 a day wage, a $2.00 increase." The grimmest aspect of the dis patch lay in the news that Governor A. B. Chandler of Kentucky was threatening-after a full month of terror and pillage by the union-to order National Guardsmen into the coal fields. This is no isolated case. On the contrary, violence and physical obstruction are standard features of most strikes, except where tp.e struck employers "voluntarily"

shut down their businesses, in accordance with the Reu ther theory of enlightened managem~nt which I .have COMPETITION, MONOPOLY, AND ROLE OF GOVERNMENT 67 described in a recent book, Power Unlimited: The Cor ruption of Union Leadership (Ronald Press, 1959). A special dispatch to The New York Times, dated August 5, 1959, reports that "a siege was lifted today for 267 supervisory employees at the United States Steel Com pany's Fairless Works here ... From now on the super visory personnel will be allowed to enter and leave the plant at will for maintenance." The dispatch is silent concerning the probable consequence of any attempt by the steel companies to maintain production. But the fact that supervisors were besieged because of maintenance operations suggests that rank-and-file workers who at tempted to engage in production would be mauled. It is not out of order to infer that the siege of the super visors, otherwise a pretty silly act, was intended to get across that message.

The Pattern of Violence The careful student of industrial warfare will discern a pattern of violence which reveals an institutionalized, professional touch. Mass picketing, goon squads (or "flying squadrons" as they are known in the Auto Work ers union), home demonstrations, paint bombs,and per haps most egregious of all, the "passes" which striking unions issue to management personnel· for limited pur poses-these are the carefully tooled components of the ultimate monopoly power of unions. As a matter of fact, we have become so befuddled by, and so weary of, the terror, destruction, and waste of 68 SYLVESTER PETRO the unions' organizing wars that we view with relief and contentment one of the most prodigious contracts in re straint of trade ever executed-the celebrated "no-raid ing pact" of the AFL-CIO. No division of markets by any industrial firm has ever achieved such proportions.

The "no-raiding pact" divides the whole organizable working force in accordance with the ideas of the union leaders who swing the most weight in the AFL-CIO. It determines which unions are "entitled" to which em ployees. The theory of modern labor relations law is that employees have a right to unions of their own choosing. Reversing that principle, the "no-raiding pact" asserts that the choice belongs to the union leadership. If any business group were so openly to dictate the choices of consumers, it would be prosecuted by sundry federal agencies and hailed before the eternal Kefauver Com mittee. It would not receive congratulatory telegrams from the chief politicians of the nation. Government Intervention The more one examines American labor law the more one becomes convinced of the validity of Professor Mises' theory that no abusive monopoly is possible in a market economy without the help of government in one form or another. If employers were permitted to band together peacefully in order to resist unionization, as unions are permitted to engage in coercive concerted activities in order to compel unionization, it is probable that the purely economic (nonviolent) pressures of COMPETITION) MONOPOLY) AND ROLE OF GOVERNMENT 69 unions would not be as effective as they have been in increasing the size and power of the big unions. But the government has taken from employers all power to re sist unionization, by peaceful as well as by violent means. At the same time it has permitted unions to re..

tain the most effective methods of economic coercion. And so picketing, boycotts, and other more subtle modes of compulsory unionism are in many instances as effec tive in compelling unwilling membership-in the ab sence of countervailing economic pressures from em ployers-as sheer physical violence. Monopoly unionism owes much, too, to direct and positive help from government. Consider the vigorous prohibition of company-assisted independent unions which has prevailed for over twenty years. Although such small unions might at times best serve the interests of employees, the early National Labor Relations Board practically outlawed all independent unions, and recent decisions continue to favor the big affiliated unions. But perhaps the most significant contribution of gov ernment to monopoly unionism is the majority-rule principle which makes any union selected by a majority of votes in an "appropriate bargaining unit" the exclu sive representative of all employees in that unit, includ ing those who have not voted at all, as well as those who have expressly rejected the union as bargaining repre sentative. Majority rule is a monopolistic principle; it is always to be contrasted with individual freedom of action. But it is particularly prone to monopolistic abuse in labor. relations. Determination of the "appro70 SYLVESTER PETRO priate bargaining unit" is left to the virtually unreview able discretion of the National Labor Relations Board.

And that agency has in numerous instances felt duty bound to carve out the bargaining unit most favorable to the election of unions. Indeed, politicians might learn something about gerrymandering from studying the unit determinations of the Labor Board. Even if the gerrymandering could be eliminated, the majority-rule principle would remain a source of mon opolistic abuse, based on monopoly power granted and enforced by government. A union may be certified ex clusive representative in a 1,000-man bargaining unit on the basis of as few as 301 affirmative votes, for an election will be considered valid in such a unit when 600 employees participate. If a bare majority then votes in favor of the union, the remaining 699 are saddled with the union as their exclusive bargaining representa tive, whether or not they want it. Competitive Safeguards Society has nothing to fear from unions which with out privileged compulsion negotiate labor contracts and perform other lawful and useful jobs for workers who have voluntarily engaged their services. For they are then but another of the consensual service associations or agencies which a free society breeds so prolifically.

Moreover, the free society has demonstrated that its fundamental mechanism, free competition in open mar kets, is tough and resilient enough to defend against COMPETITION" MONOPOLY" AND ROLE OF GOVERNMENT 71 exploitation by any genuinely voluntary association. The critical problem arises when a man or an associa tion destroys society's chief defense mechanism by vio lent and coercive conduct, or when that mechanism is blacked out by special privilege from government. For then, without the checks and balances of free men vying against free men in civilized competition, society lies as prone to exploitation by the unscrupulous as a rich store would be without guards and burglar alarms. When the sources and components of union monopoly are understood,. it becomes clear that the antitrust laws cannot cure the problem. The fundamental source is to be found in failures and errors of government which the most elaborately conceived antitrust laws could not cure.

The basic job of government is to keep the peace. It has not kept the peace in labor relations. Local, state, and federal governments have all failed to prevent labor goons and massed picket lines from interfering with the freedom of action of nonunion employees and of em ployers in bargaining disputes. A similar failure in or ganizing campaigns has permitted unions which would be pygmies, if they represented only workers who want ed them, to become giants. The antitrust laws would equally clearly do nothing to remedy the monopolistic consequences of the positive aids granted by government to the big unions, such as the majority-rule principle and the virtual outlawry of small independent unions. I am convinced that the socially dangerous aspects of big unionism have been brought about by the errors and failures of government which we have been consid72 SYLVESTER PETRO ering. Government has on the one hand been tolerating the violence and economic coercion by means of which the big unions have attained their present power, and it has, on the other hand, positively intervened in their support. Moreover, for the last generation officers of the national administration have played a critical role in the key industrial disputes which have set the pattern of the so-called inflationary wage-cost push.

The latter is a much more important fact than it may seem at first view. It suggests that the checks and bal ances of free enterprise are adequate to protect the pub lic even from the artificially constructed compulsory labor monopolies which we now know. Moreover, it is not unreasonable to infer that those checks will work even more effectively if politicians not only stay out of negotiations but also enforce the laws against compul sory organization. These considerations suggest that the logical first step for those concerned about union power is to insist that government remove the present special privileges which unions enjoy and then wait pa tiently, to see if the problem will work itself out with out further government intervention. Government's Lin~ited Role I believe that the same approach should be taken in respect to businesses suspected of monopolistic abuses. Rather than following the hit-or-miss political vagaries of the antitrust approach, it would be better to make sure that all special privileges, such as tariffs, exclusive COMPETITION, MONOPOLY, AND ROLE OF GOVERNMENT 73 franchises, and other governmental devices for blocking access to markets are withdrawn. Repeal of the tax laws which unfairly prevent high earners from amassing the capital necessary to compete with existing firms would also help much more than antitrust prosecutions do in promoting competition. In short, if government would confine itself to protecting property and contract rights, and if it would desist from impairing those rights, it would be doing all that government can do to promote competition. And we should not need to be greatly con cerned about monopolies and contracts in restraint of trade. For, as Mark Twain's account of the career of the riverboat pilots' monopoly in the nineteenth century demonstrates, the free enterprise system is in itself fully capable of destroying all abusive restraints upon compe tition which are not supported and protected by gov ernment.

In the years before the Civil War, Twain writes in Life on the Mississippi, the river steamboat pilots formed an association which was to become, as Twain put it, "the rightest monopoly in the world." Having gone through many trials in building up its member ship, a sudden increase in the demand for pilots gave the association its first break. It held members to their oath against working with any nonmember, and soon nonmembers began having difficulty getting berths. This difficulty was increased by the association pilots' safety record, which grew out of an ingenious method evolved by the association for current reports on the ever-chang ing Mississippi channel. Since the information in these 74 SYLVESTER PETRO reports was confined to members of the association, and since nonmembers had no comparable navigation guide, the number of boats lost or damaged by the latter soon became obviously disproportionate. "One black day,"

Twain writes, "every captain was formally ordered (by the underwriters) to immediately discharge his outsid ers and take association pilots in their stead." The association was then in the driver's seat. It for bade all apprentices for five years and strictly controlled their number thereafter. It went into the insurance business, insuring not only the lives of members but steamboat losses as well. By United States law the signa ture of two licensed pilots was necessary before any new pilot could be made. "Now there was nobody outside of the association competent to sign," says Twain, and "consequently the making of pilots was at an end." The association proceeded to force wages up to five hundred dollars per month on the Mississippi and to seven hun dred dollars on some of its tributaries. Captains' wages naturally had to climb to at least the level of the pilots', and soon the increased costs had to be reflected in in creased rates. Then society's checks and balances went to work. This is Twain's summation: "As I have remarked, the pilots' association was now the compactest monopoly in the world, perhaps, and seemed simply indestructible. And yet the days of its glory were numbered. First, the new railroad .... began to divert the passenger travel from the steamers; next the war came and almost entirely annihilated the steam boating industry during several years ... then the treasCOMPETITION) MONOPOLY) AND ROLE OF GOVERNMENT 75 urer of the St. Louis association put his hand into the till and walked off with every dollar of the ample fund; and finally, the railroads intruding everywhere, there was little for steamers to do but carry freights; so straightway some genius from the Atlantic coast intro duced the plan of towing a dozen steamer cargoes down to New Orleans at the tail of a vulgar little tugboat; and behold, in the twinkling of an eye, as it were, the association and the noble science of piloting were things of the dead and pathetic pastI"

The moral: government's job is done when it defends the right of competitive businessmen or workers to take over functions which are being abused by monopolistic groups. The deeper moral is that monopolistic abuses rarely survive without a basis in one form or another of special privilege granted by government. The steel strike would not have lasted nearly so long if government had effectively protected the right of the steel compani\es to keep their plants operating and the right of employees to continue working during the strike.

WHA T FREE ENTERPRISE MEANS TO ME t'l J~il~ S. Wood ~ FREE ENTERPRISES are the things free people undertake to do-as individuals or in groups. Before a free enterprise can be undertaken, certain basic human rights must exist and be protected. The most fundamental of these is the human right to the fruits of one's own labor-private property. This right should exist with as few restrictions as pos sible: there should be freedom from excessive regulation, excessive taxation, and from expropriation by govern ment-and government should be so ordered that these desirable conditions can be depended upon to exist over a long period of time. From the wellsprings of private property and the free enterprises which it supports spring forth all the ingeni ous and benevolent undertakings with which our coun try is so generously blessed. Our churches are free enterprises! So are our private schools and hospitals.

Individuals in whatever kind of free enterprise they find themselves should help those in other kinds defend Mr. Wood is President of Wood Brothers Manufacturing Com pany, Oregon, Illinois. 76 WHAT FREE ENTERPRISE MEANS TO ME 77 the freedoms which make their undertakings possible. A free enterprise need not be for profit to its owners (though such an organization is one of the finest exam ples of free enterprise). The purpose can be anything its owners choose for a purpose-except the destruction of, or infringement on, the freedoms upon which the lives of all free enterprises depend. What is "free enterprise"? It is the means used by free people to provide for their wants and their needs -the only means which has demonstrated its ability to provide these things abundantly. Its endless variety is simply a measure of how uncommon a man can be!

ECONOMICS FOR THE TEACHABLE tg ofeonarJ G. Real The socialistic or governmentally planned system presupposes bureaucrats competent to control human action, whereas the market economy requires no supermen-just ordinary people freely exchanging their goods and serv ices as they choose. THE TEACHABLE-those who aspire to an ever greater understanding-are those with an awareness of how little they know. 1 Lest teachableness and lowliness or inferiority be associated, consider the case for teachable ness and wisdom as having a relationship: Said Socrates, "This man thinks he knows something when he does not, whereas I, as I do not know any thing, do not think I do, either." For such acknowledg ments of fallibility, Socrates was acclaimed a wise man. 1 The teachable shall inherit the earth appears to be a sensible interpretation of the Biblical pronouncement, "The meek shall in herit the earth." It is quite obvious that "the meek" had no refer ence to the Mr. Milquetoasts in society.

78 ECONOMICS FOR THE TEACHABLE 79 He and many others-for instance, Lecomte du Nouy and Robert Milliken, scientists of our time-discovered, as they expanded their own consciousness, that they progressively exposed themselves to more and more of the unknown. Edison's fact-packed, inquiring, ever curious mind concluded that, "We don't know a mil lionth of one per cent about anything. We are just emerging from the chimpanzee state." These teachable persons came to realize how little they knew and that, perhaps, is a measure of wisdom. For the student of economics, this poses an interest ing question: Is it possible to have a workable, produc tive economy premised on a society of teachable indi viduals, those who are aware that they know very little? We can assume that such an economy would differ markedly from the planned society of egotists or know it-aIls, those at the other end of the intellectual spec trum, the ones who see no difficulties at all in arrang ing the lives of everyone else in accord with their de signs. Further, they are quite willing to resort to the police force to implement their schemes for improving society by nationalizing it.

A group of seven economists, for example, recently voiced this view: "The federal government is our only instrument for guiding the economic destiny of the country.2 -Government, in such a role, must be staffed largely with those who are unaware of how little they know, 2 See First National City Bank Letter for August 1959. p. 90.

80 LEONARD E. READ who have no qualms about their ability to plan and regulate the national economic growth, set wages, pre scribe hours of work, write the price tags for every thing, decide how much of what shall be produced or grown, expand or contract the money supply arbitrarily, set interest rates and rents, subsidize with other peoples' earnings whatever activity strikes their fancy, lend bil lions in money not voluntarily. entrusted to them, allo cate the fruits of the labor of all to foreign governments of their choice-in short, decide what shall be taken from each Peter and how much of the "take" shall be paid to each Paul. A Presumed Wisdont Government control and ownership of the means of production is socialism, sometimes called "state inter ventionism" or "communism," depending on the degree of disparagement intended. It rests on the premise that certain persons possess the intelligence to understand and guide all human action. Socialism or state interven tionism is advocated by those who sense no lack of this prescience in themselves, by the naive followers of such claimants, by the seekers of power over others, by those who foresee an advantage to themselves in such manipu lations, and by the "do-gooders" who fail to distinguish between police grants-in-aid and the Judeo-Christian principles of charity. All in all, they are a considerable number, but still a minority of the tens of millions whose lives they would regulate.

ECONOMICS FOR THE TEACHABLE 81 The most important point to bear in mind is that so cialism presupposes that government or officialdom is the endower, dispenser, and the source of men's rights, as well as the guide, controller, and director of their energies. This is the Supremacy of Egotism: The State is God; we are the State! Let us then examine the competency of a typical ego tist. It matters not whom you choose-a professor, a professional politician, a Napoleon, a Hitler, a Stalin but the more pretentious the better. s Simply admit some supreme egotist into your mind's eye and take stock of him. Study his private life. You will usually discover that his wife, his children, his neighbors, those in his hire, fail to respond to his dictates in ways he thinks proper. 4 This is to say, the egotist is frequently a failure in the very situations nearest and best known to him. Incongruously, he then concludes that he is called to manage whole societies-or even the world! Fie on any thing small enough to occupy an ordinary man!

Let's further test the knowledge of the egotist. He wants to plan production; what does he know about it? For example, there is a company in the U.S.A. which manufactures well over 200,000 separate items. No one person in the company knows what these items are and 3 A high-brow is a low-brow plus pretentiousness," said H. G. Wells. 4 Napoleon's domestic affairs were a mess and his numerous fam ily drove him to distraction; Hitler was an indifferent paper hanger; Stalin tried first theology and then train robbery before he elected bureaucracy and dictatorship; many bureaucrats charged with great affairs have no record of personal success.

82 LEONARD E. READ there is no individual on the face of the earth who has the skills, by himself, to make anyone of them. 5 It's a safe bet that the egotist under examination has never been closer to this company than a textbook descrip tion by some fellow egotists. Yet, he would put this in tricate, voluntary mechanism under the rigid control of government and would have no hesitancy at all in ac cepting the post of Chief Administrator. He would then arbitrarily allocate and price all raw materials and man power and, after long and complicated statistics of the past, arbitrarily allocate and price the more than 200,000 items, most of which he never knew existed. Involved in the operations of this company alone-a mere fraction of the American economy-are incalculable human en ergy exchanges, many billions of them annually; but the egotist would manage these with a few "big man" gestures! Such cursory attention he would find neces sary for, bear in mind, he also would have under his control the lives, livelihoods, and activities of the 176, 750,000 individuals not directly associated with this company.

Next, what does the egotist know about exchange? In a specialized or division-of-Iabor economy like ours, ex change cannot be carried on by primitive barter. It is accomplished by countless interchanges interacting on one another with the aid of a generally accepted me dium of exchange or money. The socialistic philosophy l> See my "I, Pencil" (Essays on Liberty, Vol. VI, p. 371) for a demonstration that no one person knows how to make an item even as simple as a wooden lead pencil.

ECONOMICS FOR THE TEACHABLE 83 of the egotists presupposes that there are persons com petent to regulate and control the volume and value of money and credit. Yet, surely no one person or com mittee is any more competent to manipulate the sup ply of money and credit to attain a definite end than he or a committee is able to make an automobile or a wooden lead pencil! Is There a Better Way? An economy founded on the premise of know-it all ness is patently absurd. But, can there be a sensible, rational economy found edon the premise of know-next-to-nothingness? An economy that would run rings around socialism? In short, is there a highly productive way of life which pre supposes no human prescience, no infallibility, nothing beyond an awareness that it is not the role of man to pattern others in his own image? There is such a way! Contrary to socialism, this way of life for teachable people, who concede their fallibility, denies that gov ernment, staffed by fallible people, is the source of men's rights. It holds, instead, that men "are endowed by their Creator with certain unalienable rights, that among these are Life, Liberty, and the pursuit of Hap piness. That to secure these rights, governments are in stituted among men.... " With this as a premise, sov ereignty-the source of rights-rests with the Creator; government is but a man-made means to protect this arrangement between man and his Creator. When Crea84 LEONARD E. READ tivity is assumed to exist over and beyond the conscious mind of man, a whole new concept of man's relationship to man emerges. Man, once he conceives of himself in this setting, knows that he is not knowledgeable but, at best, is only teachable. The greatest conscious fact of his life is his awareness of the Unknown.

To illustrate, let us observe how such a person "builds" his own house. He does not think of himself as actually having built it. No man living could do that. He thinks of himself as having done only an assembly job. He is aware of numerous preconditions, two of which are: 1. The provision of his materials. Others cut trees, sawed them into boards which were kiln dried, planed, grooved, held in waiting, delivered. Some mined ore, assembled blast furnaces from which came the metals for saws, planes, pipes, tubs, nails, hardware. There were those who assembled the machinery to mine the ore and those· who assembled the machine tools to make the machinery. There were those who saved the fruits of their labor and loaned or invested it that there might be these tools. There were the growers of flax and soy beans, the extractors of their oils, chemists, paint mak ers. Others wrote books about mixing concrete, archi tecture, engineering, construction. There were publish ers, typesetters-how does one make a linotype machine?

-on and on, creative energies and energy exchanges through time and space, ad infinituml 2. A reasonable absence of destructive energies. No thieves stole his supplies. Those who supplied him had ECONOMICS FOR THE TEACHABLE 85 not defrauded him nor had they misrepresented their wares. Violence, like coercively keeping men from work ing where they chose (strikes) or like coercively keeping men from freely exchanging the products of their labor (protectionism) had not succeeded in denying these services to him. In short, interferences with creative ef forts and exchanges had not reached the point where a house was impossible. Respect for the Unknown The man who knows how little he knows is aware that creative energies, and creative energy exchanges, work miracles if unhampered. The evidence is all about him. There is his automobile, the coffee he drinks, the meat he eats, the clothes he wears, the symphony he hears, the books he reads, the painting he sees, the per fume he smells, the velvet he touches and, above all, the insights or inspiration or ideas that come to him from where he does not know.

The teachable person looks with awe upon all crea tion. 6 He agrees that "only God can make a tree." And he also understands that, in the final analysis, only God can build a house. Nature, Creation, God-use your own term-if not interfered with, will combine atoms into molecules which when configurated in one manner 6 "If I may coin a new English word to translate a much nicer old Greek word, 'wanting-to-know-it-ness' was their characteristic; wonder ... was the mother of their philosophy." The Ohallenge of the Greek by T. R. Glover. New York: The Macmillan Com pany, 1942. pp. 6-7.

86 LEONARD E. READ will form a tree, in another manner a blade of grass, in still another manner a rose-mysteries upon mysteries! And, there are demonstrations all around him that the creative energies of men, when not interfered with, do, through space and time, con figurate, in response to hu man necessity, and aspiration, to form houses, sym phonies, foods, clothes, airplanes~things in endless pro fusion. The teachable person is likely to be aware of some wonderful cosmic force at work-a drawing, attracting, magnetic power-attending to perpetual creation. He may well conceive of himself as an agent through whom this power has the potentiality of flowing and, to the extent this occurs, to that degree does he have an op portunity to share in the processes of creation. As agent, his psychological problem is to rid himself of his own inhibitory influences-fear, superstition, anger, and the like-in order that this power may freely flow. He knows that he cannnot dictate to it, direct it, or even get re suIts by commanding, "Now I shall be inspired" or "Now I shall create a symphony" or "Now I shall dis cover a cure for the common cold" or "Now I shall in vent a way of impressing upon others how little they know." He is quite certain he must not thwart this power as it pertains to his own personal being.

Society-wise, the teachable human being, the one who conceives of himself as agent through whom this mys terious, creative power has the potentiality of flowing, concedes that what applies to him must, perforce, apply to other human beings; that this same power has the ECONOMICS FOR THE TEACHABLE 87 potentiality of flowing through them; that his existence, his livelihood, his own opportunity to serve as an agency of that power, depends on how well these others fare creatively. He realizes that he can no more dictate its flow in others than in himself. He knows only that he must not thwart it in others and that it is to his interest and theirs, and to the interest of all society, that there be no thwarting of this force in others by anyone. Leave this power alone and let it work its miracles! Creative action cannot be induced by any form of au thoritarianism, be the commands directed at oneself or at others. However, any idiot can thwart these actions in himself or in others, precisely as he can thwart the forces of creation from manifesting themselves as a tree.

He can prevent a tree from being, but he can't make it be. Coercive force can only inhibit, restrain, penalize, destroy. It cannot create! The teachable individual imposes no inhibitions, re straints, or penalties on creative actions. He leaves them free to pursue their miraculous courses. The man who knows how little he knows would like to see the removal of all destructive obstacles to the flow of creative energy and energy exchanges. But, even this, he doesn't quite know how to accomplish. He would rely mostly on an improved understanding of the Golden Rule, the Ten Commandments, and other con sistent ethical and moral principles. He hopes that more and more persons eventually will see that even their own self-interest is never served by impairing the creative actions of others, or living off them as parasites.

88 LEONARD E. READ Let Government Be Limited In summary, then, the teachable person is content to leave creative energies and their exchanges untouched; and he would rely primarily on ethical precepts and practices to keep these energy circuits free of destructive invasion. The governmental apparatus would merely assist these precepts and practices by defending the life and property of all citizens equally; by protecting all willing exchange and restraining all unwilling ex change; by suppressing and penalizing all fraud, all misrepresentation, all violence, all predatory practices; by invoking a common justice under written law; and by keeping the records incidental thereto. Very well. So far, in theory, creative energies or ac tions and their exchanges are left unhampered. Destruc tive actions are self-disciplined or, if not, are restrained by the societal agency of law and defensive force. Is that all? Does not the person who is aware of how little he knows have to know a lot of economics?

The man, mentioned previously, who "built" his own house, has about as much economic understanding as is necessary. He reflects on all the countless antecedent services which he assembled into a finished home. Orig inally, all of these items came from Nature. They were there when the Indians foraged this same territory. There was no price on them in their raw state-they were for free, so to speak. Yet, he paid-let us say $10,000 for them. What was the payment for? Well, when we slice ECONOMICS FOR THE TEACHABLE 89 through all the economic terms, he paid for the human action that necessarily had to be applied to things of the good earth. He paid for actions and energies which he himself did not possess, or possessing, did not choose to exert. Were he limited to his own energies to bring about the services antecedent to his assembly of them, he could not have built such a home in a thousand life times.

These human actions for which he paid took several forms. Generalizing, his $10,000 covered salaries and wages that had been paid for judgment, foresight, skill, initiative, enterprise, research, management, invention, physical exertion, chance discovery, know-how; interest that had been paid for self-denial or waiting; dividends that had been paid for risking; rent that had been paid for locational advantage-in short, all of the $10,000 covered payments for one or another form of human action. Literally millions of individuals had a hand in the process. The major economic problem-the root of economic hassles-reduced to its simplest terms, revolves around the question of who is going to get how much of that $10,000. How is economic justice to be determined? What part shall· go to the grower of soybeans, to the investor in a saw mill, to the man who tends the ma chine that pours nails into wooden kegs, to the inventor of the machine, to the owner of a paint plant? Who shall determine the answers?

How much economics does one have to know to settle, in one's own mind, how and by whom economic justice 90 LEONARD E. READ shall be rendered? He has to know only this: Let the payment for each individual's contribution be deter mined by what others will offer in willing exchange. That's all there is to an economy for those who know they know not. It is that simple. 1 The concept underlying such an economy-never for malized until the year 1870-is known as the marginal utility theory of value. It also goes by two other names: "the subjective theory of value" and "the free market theory of value." Testimony to its simplicity was given by Eugen von Bohm-Bawerk, one of its greatest theo reticians: And so the intellectual labor that people have to perform in estimating subjective value is not so astounding as may appear ... incidentally, even if it were a considerably greater task than it actually is, one could still confidently entrust it to "John Doe and Richard Roe." ... For centuries, long before science set up the doctrine of marginal utility, the common man was accustomed to seek things and abandon things . . .

he practiced the doctrine of marginal utility before economic theory discovered it.8 The labor theory of value held scholarly sway prior to this free market theory. It contended that value was '1 There are some who will contend that one must understand money, the medium of exchange. This, also, is an impossible re quirement. For extended comments on this point of view, see my Government: An Ideal Concept. Irvington-on-Hudson, N. Y.: The Foundation for Economic Education, Inc., 1954. pp. 80-91. 8 From pages 203-4, Vol. II, Capital and Interest by Eugen von Bohm-Bawerk, The Libertarian Press, South Holland, Ill. This volume may be the best treatise on the marginal utility theory of value extant. The 3-volume set, $25.00. Available through the Foundation for Economic Education, Inc., Irvington-on-Hudson, N. Y.

ECONOMICS FOR THE TEACHABLE 91 determined by the amount of effort expended or fatigue incurred. For example, some persons make mud pies, others mince pies. The same effort, let us assume, is ex pended, in the preparation of each. Under the labor theory of value the mud pie makers should receive the same return for their efforts as the mince pie makers. The only way to accomplish this-consumers being un willing to exchange the fruits of their labor for mud pies-is for the government to subsidize the mud pie makers by taking from the mince pie makers. Karl Marx elaborated upon and helped systematize this theory governments taking from the productive and subsidiz ing the less productive. The labor theory of value, proved over and over again to be the enemy of both justice and sound economics, nonetheless, continues to gain in popular· acceptance. Emotional reactions to effort expended and fatigue in curred do not readily give way to reason. Sentimental thoughts, such as "the poor, hard-working farmers," set the political stage for agricultural subsidies. Similarly, sympathies which emanate from such outmoded and er roneous reflections as "the down-trodden laboring man"

condition most people to accept the coercive powers allowed labor unions. Practice of the labor theory of value is rationalized by spenders, inflationists, Keynesians, egotists, on the ground that it puts purchasing power in the hands of those who will spend it. As set forth earlier, this man concocted system of forcibly controlling creative human action-interventionism, socialism, communism-pres up92 LEONARD E. READ poses all-knowing bureaucrats but, to date, not a single one has been found, not even a reasonable facsimile. The free market, on the other hand, is for the teach able, who know their own limitations, who feel no com pulsions to play God, and who put their faith in volun tary, willing exchange-a manner of human relation ships that miraculously works economic wonders for all without requiring infallibility of anyone.

LOVE THA T NEIGHBOR tv Jo~n e. Spa,.t~ OUR SUBURBAN COMMUNITY near a prosperous American city consists primarily of families like ours with incomes substantially above the national average. Our three chil dren enjoy the gay summer vacation away from school. One son spends a week at camp each summer, his older brother takes golf lessons and plays baseball, and our daughter takes swimming lessons-activities which cost money, as every parent should know. Now, what would you think of me, their father, if I sent them from door to door among our neighbors seek ing contributions sufficient to cover the expense of their summer entertainment? I think I know your answer but let's further examine the question. Customs and laws have gradually diluted what used to be recognized as a parent's responsibility for his off spring. There also was a time when our nation was rela tively free of socialistic ideas, but not today, as new laws and proposals mark continuing socialistic inroads on our freedom. These two developments, I believe, are closely related.

Mr. Sparks is a businessman from Canton, Ohio. 93 94 JOHN C. SPARKS Most examinations of the collectivist philosophy are concerned with political or governmental intervention in private activities, the government taking control and making decisions for men who formerly were self-respon sible. Collectivism spawns the irresponsible "govern ment-owes-me-a-living" idea. And I agree that the great est and most immediate threat arises in this area of political and governmental intervention. But I submit that the same treacherous ideas are being sown among our youth through private activities normally considered breeding grounds for nothing but good American ideals. These ideas are fostered by well-meaning parents who thoughtlessly accept "something-for-nothing" as a sub stitute for their own parental responsibilities, the result being a new generation without a sense of individual responsibility for their own welfare-easy prey for the collectivist philosophy.

I'm thinking of the way boys' baseball is handled in our own community. An association has been organized with teams of the familiar classifications-Little League, Mity Mite, Babe Ruth, Hot Stove, and so forth. Financ ing such an enterprise is a problem, particularly if there is no reliance on parental responsibility. It is most dis couraging to witness a meeting of 50 or 60 fathers trying to figure out how to persuade others than themselves to finance these baseballteams made up of their own sons. Each father pay what it costs for his own son to play! What a shocking idea! If my son needs clothing, it is my responsibility to provide it. When my.son needs food, it is my respons,iLOVE THAT·NEIGHBOR 95 bility to provide such food for him. Only in those un usual and dire circumstances when I am unable to pro vide necessities should charity enter the picture. If my son wishes to bowl, I pay for his bowling, or he earns the money himself for this pastime. If he wishes to at tend a church camp or a YMCA camp for one or two weeks in the summer, I am required to pay the fee for such attendance. Why should summer baseball recrea tion be viewed in any different light? Why should my neighbor-or, as it usually works out, 15 or 20 of my neighbors who have no children on the team-be pres sured either directly or indirectly to provide this sum mer baseball recreation for my son by sending him from door to door attired in a baseball uniform? We.call.this system the "Booster Club Membership" ticket sale. The buyer of the ticket has received nothing in exchange ex cept whatever civic joy he may derive from. knowing he has just been pressured into giving a donation to the son of his financially capable neighbor.

It is here that we are projecting the evil of the social istic philosophy into an area which, while technically on a voluntary basis, is taking on many of the despicable characteristics of socialism. If I ask my neighbor to pro vide for my son's summer pastime, doesn't he have a corresponding right to ask me to help pay for his vaca tion trip? Isn't he justified in asking me to contribute to the expense of summer camp or singing lessons for his daughter? What does this system do to the boys themselves? These boys, particularly in the older age groups, feel 96 JOHN C. SPARKS they are somehow owed a right to play baseball on a team without expense to themselves or to their families. This often produces an attitude that is insincere and tends to cause wasteful use of the materials and uni forms supplied. Wouldn't a boy be more appreciative knowing that his parents, rather than some faceless com munity association, footed the bill for him? His attitude might be better still if he had to work and earn his own money to pay for his participation on the baseball team.

As it is now, how can we expect anything but youth ripened for socialism? I realize there are certain community projects of great merit supplying recreational activities and other assis tance to children who would not otherwise be able to participate in such activities due to financial difficulties of their parents. There even may be a scattered few in my particular area. In these instances, a modest fund could be established to which many of us would hap pily subscribe. A few may warrant charitable consid eration. It seems important that civic-minded people in volun tary community activities take a good look at their policies lest the disastrous idea that "somebody else owes me something" become the widely accepted custom. This could become a cancerous disease, the next step being passage of a law providing for a tax or levy on the whole community to pay for my son's baseball playing. If you think not, you should have been at the meeting. Some one suggested it.

OIL'S SECOND CENTURY tv Rotert q. ;])unfop JUST 100 years ago, by the slimmest of margins, Edwin L. Drake found a small, stray sand containing oil at 69~ feet in a well drilled near Titusville, Pennsylvania. Call it a miracle or an accident, no one else among the thousands who took to drilling wells in the woods of Western Pennsylvania ever produced oil from the same shallow sand. On the slender thread of this discovery hung the incentive that led men to give their time and invest their money in the search for oil. If. they found it, it was theirs-and it could make them rich. Many of those who followed Drake did find oil. Many others, of course, found none. To regard Drake's success as an accident is less fitting than to regard it as a miracle. (I suspect it is only oil men who are tempted, in the throes of the vexatious problems thrust upon them, to think irritably that it was an accident that the oil industry was ever bornl) To say that Drake's success was a miracle, however, is to deny credit to the dogged determination of that Mr. Dunlop is President of the Sun Oil Company. This article is from his remarks before the Delaware Oil Men's Association at Wilmington, September 14, 1959.

97 98 ROBERT G. DUNLOP lanky, bearded man; it would be to renounce the axiom of our heritage that the Lord helps those who help themselves. It surely may be regarded as a miracle, however, that, in God's scheme of things, millions of years ago there lived and died lower forms of marine creatures which became buried, and compressed, and transformed, that Man might one day have heat and light and an abun dance of power. It is in this sense that we speak of nat ural resources-nature's gifts.. Yet how significant it is to recognize that one hundred and one years ago the United States had no petroleum resources. We are forced to con clude that the petroleum resources we enjoy today are equally a product of the resourcefulness of men. Those who contend that oil and gas are nature's gifts and so belong to all the people are, to say the least, insufficient ly critical in their analysis. Primitive, tribal, and civil ized societies for generation upon generation trod the ground over the vast oil reserves of the Middle East.

Yet it was not until the 1930's that the major discoveries were made and the development began of Middle East oil as we know it today-the richest single oil area of the world. If oil is truly a gift, why did not all those pre ceding generations· accept it and use it? The answer, of course, is that natural resources are not wholly natural; nor are they resources until they are useful to people. Natural resources, plus man's re sourcefu Iness, equals progress. I know of no study, but I would venture that· nine tenths of the world's presently.known oil was discovered OIL'S SECOND CENTURY 99 by Americans or with American methods and equip ment. Americans, as a group, have proven themselves to be the greatest oil finders and developers in the world. I contend that this is so because the incentive to Ameri cans to be resourceful has been uniquely powerful un der our economic concepts of competition, private man agemen t, and private property.

A Record of Wortby Achievements At this juncture in their history, oil men share two feelings. One is the feeling of pride in what their resource fulness has accomplished in just 100 years . . . aided and abetted, it is true, by the resourcefulness of interdepen dent industries-the automobile and aviation industries, machine tools, chemicals, and many others-all moti vated by the same incentives. If the oil industry had done no more than light lamps and grease wheels, it would have made a great contribution to the material well-being of the American people. For it would have created resources where none existed before-it would have found the oil that hadn't been found-and it would have made useful the raw, unusable crude that came from the earth. But it has done much more. Today the glamour attaches to new petrochemicals created by petroleum science-the raw materials for syn thetics of many types. Crude oil and natural gas con stitute a vast storehouse of such wonders today and even greater marvels yet to come. But basic to all else is the 100 ROBERT G. DUNLOP major contribution petroleum has made to the plentiful availability of low-cost energy. This has given the United States unsurpassed economic leverage. We account for more than 40 per cent of the world's energy consump tion, with only 6 per cent of the world's population.

Nearly 70 per cent of our energy requirement is sup plied by oil and gas. It is no wonder that we have en joyed a standard of living unequalled anywhere at any time. As Newsweek magazine so aptly put it in an article this summer, "the whole bountiful civilization of the mid-twentieth century is petroleum and the myriad eco- . nomic and scientific reactions that it has stimulated or helped make possible." In exercising their resourcefulness, oil men have been neither spoilers nor exploiters. True, there was waste in the early boom towns of oil, resulting from greed and also from insufficient techni cal knowledge and inadequate equipment. It was from within the industry itself, however, that the initiative and statesmanship came for the establishment of sound conservation principles and methods. Despite the inflation of which we are all so conscious, petroleum products are a bargain in price. One of my associates joined the oil industry in 1914, and he likes to keep track of what has happened since then. His fig ures show that the price of. the industry's principal prod uct-gasoline-is about 50 per cent higher today than in 1914, compared with a rise of nearly 300 per cent in the so-called cost of living index. In some countries, low priced products reflect low-paid workers, but my associOIL'S SECOND CENTURY 101 ate's records show that wages in the u.s. oil industry are up 1,000 per cent since 1914, and in addition pe troleum industry employees are the recipients of fringe benefits of unequalled liberality.

By the tests which may be used to measure the social and economic performance of an industry, the petro leum industry ranks high in maintaining adequate (in fact, more often overabundant) supplies, in conserving resources, in developing new products, in improving the quality of conventional products, in competitive pricing, in treatment of employees. It has sought to re ward its stockholders commensurately with their risks, but if there is a weakness on the industry's scorecard I confess it is in this regard. Restrictions Cause Profound Concern Reviewing the facts of the petroleum industry's per formance, it is perhaps understandable that oil men regard their industry with pride. But as I mentioned a moment ago, oil men share two feelings. The second is a profound concern. In one of Edgar Allan Poe's short stories-"The Pit and the Pendulum"-a man is trapped in a room whose hot metal walls are slowly closing in on him, forcing him toward a pit containing a horror so monstrous he cannot describe it. The terror in Poe's tale lies in .the man's utter helplessness. Oil men are not so helpless, but the analogy is useful otherwise. Slowly, but inexor ably, the freedom of the managers of oil companies to 102 ROBERT G. DUNLOP conduct their business in accordance with the dictates of the market place is being restricted. The walls are closing in. And the pit, as we know from the experience of all nations which have embraced totalitarianism, is too horrible to contemplate.

Already, half of the proved hydrocarbon energy re serves of the country are under federal government con trol. The discoverer of natural gas can neither sell it in interstate commerce-nor stop selling it once he has started-without federal government approval. The price at which he sells, should the sales be approved, is con trolled by the feq.eral government. Many of the contracts producers had made in good faith with buyers have been swept aside as invalid by administrative action of the federal government. Today, the terms of tentative agreements between buyers and sellers are often changed by administrative action of the federal government dur ing the lengthy process of contract approval-a process which not uncommonly consumes two to three years. By administrative action of the federal government the buyer of natural gas is as likely as not to be required to pay less than he was willing to pay, and the seller has the choice of accepting the lower· price or nothing.

In natural gas controls, the oil man is twice injured. Not only does the price he is permitted to receive for his gas limit his financial ability to search for new re serves to replace those he has committed to sale, but the arbitrarily-established gas price is a regulator-and a depressant-of the price the oil man re<;eives for his distillate and residual fuels. Such fuels comprise more OIL'S SECOND ·CENTURY 103 than a third of the total yield. of petroleum products from crude oil. Thus oil men live daily with an ex ample of the truism that the imposition of controls on one part of a free economy breeds additional controls in the other segments. Direct controls on gas producers who sell in interstate commerce also indirectly regulate prices of gas in intrastate. commerce and the prices of a substantial percentage of our hydrocarbon energy sup ply which is in liquid form. G·overnment Regulation Liquids represent the presumably free half of our proven hydrocarbon energy supply. But oil men do not need to be reminded that managerial discretion in se lecting sources of crude oil to meet refinery require ments has been substantially supplanted by the admin istrative discretion of the federal government.

In the interests of national defense the federal gov ernment has decreed that crude oil and petroleum prod uct imports should be limited. This limitation is being accomplished through the mandatory oil imports pro gram under which a quota has been assigned to each importer. Surely equal treatment for all must have been a consideration of those who designed the quota sys tem, hut its result is unequal treatment. Worse yet, it freezes-in the unequal treatment and denies to the man agements of individual companies the opportunity to work out their own salvations, all facing an identical deterrent to importation. A realistic tariff that would 104 ROBERT G. DUNLOP apply to all importers would constitute such a deterrent. Its great advantage is that it would leave the manage ments of the separate, competitive companies free to exercise their ingenuity and to discharge their responsi bilities to their stockholders, employees, and customers according to their. individual capabilities. * Such is the traditional method of a society which believes in a com petitive economic system.

Artificial Competition Oil men also find the walls closing in on them as they attempt to meet price competition in the markets for gasoline-their major product. In this area they are suf fering uncommon harassment. This is disquieting enough. But the oil man's greatest concern is over the ultimate destination of the course we are being required to take. What the federal government appears to be say ing to the oil industry is that a sheltered position must be maintained for everyone who engages in gasoline marketing; that large marketers must not compete very vigorously with smaller marketers; and that price in flexibility is to be preferred-all in the name of pre serving competition! If a large marketer reduces prices to a large number of dealers, he risks a judgment-not by a court, but by a quasi-judicial federal government agency-of having oil: I am not here arguing for protectionism but merely saying that, if the government insists on a policy of deterring oil imports, the tariff is a more equitable device than is an import quota system.

OIL'S SECOND CENTURY 105 engaged in "predatory" pricing. If he reduces prices to a few dealers, he risks a judgment of having engaged in "discriminatory" pricing. Oil men listen in amaze ment as a regulatory agency policy-maker asserts in one breath that "hard competition" is to be fostered, and in the next breath that the defens€ of a seller who has re duced prices should be disregarded if he pte ads, when he is brought to the bar, that he made the price reduc tion in good faith to meet the lower-priced competition of other sellers! But price reductions are not alone suspect; price in creases also are a source of difficulty-this time stemming from a different federal· agency. This is a matter which may be unbecoming of me to discuss, since we will have quite a bit to say about it later on-in a Federal District Court. If I appeared before you today only to recite the ac complishments of the petroleum industry in the past and to describe the troubles oil men face today, I would be guilty of wasting your time on superficialities. I have taken time for both, however, to sharpen a contrast which must concern us if we are to get beneath the sur face to the heart of our difficulties-which, I believe, are America's difficulties as· well.

If oil men's problems were their own, unique to them, they would not be worthy of exceptional public notice and concern; all of us could regard them simply as con ditions of the business-factors to be weighed by those who contemplate engaging in petroleum. But the fact is that such problems as I have touched upon are mani~ 106 ROBERT G. DUNLOP festations of an issue that will decide our nation's future. Approximately 120 years ago Alexis de Tocqueville, reporting on his observations, wrote: "In America ... the citizen . . . never thinks of soliciting the cooperation of the government; but he publishes his plan, offers to execute it himself, courts the assistance of other indi~ viduals, and struggles manfully against all obstacles. Undoubtedly he is often less successful than the State might have been in his position, but the sum of these private undertakings far exceeds all that the government could effect."

Tocqueville's description fits the climate of American ideas and ideals as Edwin L.· Drake came on the scene. Not much more than 80 years before Drake-60 years before Tocqueville-the independence of these United States had been declared by men whose experience made them wise in the ways of governments. They were deter~ mined not just to make this new nation free from dom~ ination by any foreign government, but to keep the people free from domination by their own government. The unique political system they established enjoyed as its harmonious counterpart a unique economic system which, for the first time, put self-interest to work for the public interest. For a long time-certainly far be yond the days of Drake-those who followed were dis ciples and practitioners of the new meanings of liberty and independence. They were, if you please, skilled in dialectic Americanism. We need such believers and advocates today; articu late men fired with the conviction and the missionary OIL'S SECOND CENTURY 107 zeal to bring about a rebirth of faith in freedom, to re store pride in self-reliance, to re-establish success as a worthy goal. We need such men because we have come to another of the periods in our history when we need imperatively to know what we stand for. Do we stand for the system of political and economic freedom which the patriots of 1775 fought to secure for us? Or do we stand for a hybrid system which has borrowed some of the worst from feudal, socialist, and dictatorial systems we rejected so vigorously at an earlier time?

The answer should be clear, yet the walls have closed in to a dangerous degree. I hope that succeeding genera tions cannot say of us that we lived in the grabbag era of American History, out for what we can get today, un footed in the past, uncommitted in our philosophy, un sure of our own capabilities, unconcerned about respon sibility to the future. I hope they cannot say that we let freedom slip through our fingers because we didn't un derstand or didn't care. Let Us N at Abandon Freedom This is a serious concern, for there is abroad in the land today the idea that if there are obstacles in the path, one should not struggle manfully against them, but should ask Washington to remove them. If there are problems, let Washington solve them. If he has suc ceeded and you have failed, ask for a transfer of funds. As this idea grows, our government comes to· resemble less a republic than a perpetual plebiscite through 108 ROBERT G. DUNLOP which various groups seek to vote themselves large shares of the· good life. Many Americans are already de luded with the notion that we can simply vote full em ployment, high incomes, short hours, low prices, and complete economic security. Of course, we can no more do those things with impunity than we can vote to re quire that objects fall up rather than down. The conse quences of the attempts already made are there for all to see in a vast federal bureaucracy, a swollen national debt, and a cancerous inflation that has distorted values, penalized the prudent, rewarded the improvident and, most unfortunately, undermined morality.

Such evidence does not in the least deter· those who advocate greater governmental regulation of business, additional restraints on the functioning of free markets, and more onerous disincentives to achievement. It is proposed, for example, that Congress build new rigidi ties into the price system by requiring large companies to file advance notice of any price increase and to ap pear within thirty days thereafter to justify their intent at hearings conducted by the Federal Trade Commis sion. If we are to prohibit prices from regulating the em ployment of the factors of production, our only alterna tive is government dictation. It is proposed that Congress act to curb inflation by enacting a full set of price, wage, and rent controls to be imposed on the authority of the President under pre scribed conditions-an example, if there ever was one, of attacking the symptoms rather than the disease!

It is proposed that graduated income taxes be imOIL'S SECOND CENTURY 109 posed on corporate profits. Here the idea is apparently that the people want the goods or services of a particu lar company, and the more efficient that company is in supplying those wants, the more it should be penalized and the more stockholders should· be encouraged to in vest their funds instead in other companies which aren't doing such a good job, or which are producing goods or services that people don't want so much. DepletionAllowance I will mention just one more-out of a long list, I might say-because it relates specifically to the petroleum industry. A determined effort is being made to have Con gress reduce percentage depletion for oil and gas wells under the Internal Revenue Code. A number of sup porters of the reduction joined in sponsoring a bill for a graduated cut, the idea being that small producers would continue to be eligible for a 27~ per cent rate, medium-sized producers would be eligible for a 21 per cent rate, and large producers for 15 per cent.

Now the truth is that there is a percentage which rep resents capital-the value of the producer's oil in the ground-which he depletes every time ·he produces and sells a barrel of oil out of a field or a cubjc foot of gas out of a reservoir. That value is either 27~ per cent limited as it now is by the provision that the deduction may not exceed 50 per cent of net income from each lease-or it is some other percentage. But it isn't one per centage for one producer and another percentage for a 110 ROBERT G. DUNLOP second producer. Yet the most vocal advocates of a cut in percentage depletion for oil and gas have joined in proposing different percentages .. This simply unmasks the campaign of this particular group as inspired by.the idea that the way to make political hay is by penalizing those who have managed to succeed. I'm sure I need not labor further the point that we Americans need to decide what system we believe in.

Tomorrow [September 15, 1959], Mr. Khrushchev, who happens to believe in his particular system, will arrive for a visit on our shores. A month or so later, Mr. Eisen hower is scheduled to visit in turn in the USSR. We may hope that these visits will contribute to an honorable easing of world tension. But we cannot ignore the an nounced goals of the Soviet Union, nor the long history of our difficulties with communist regimes. Mr. Khrush chev has both asserted that he will bury us and proposed that we engage in friendly economic rivalry. He and his associates are goal-centered, tough-minded, articulate be lievers in the superiority of government planning, own ership, control, and direction of the means of produc tion. Realistically, his nation has discarded the socialist idealism of equal incomes for all-and even more the communist theory of from each according to his ability, to each according to his needs. Soviet production today is spurred by an array of incentives, both monetary and nonmonetary. Indeed, the Soviet Union appears to have added incentives to achievement as fast as we have crushed them.

After more than a quarter of a century of intimate OIL'S SECOND CENTURY III association with the oil industry as an outstanding ex ample of the achievements possible under a system of economic freedom, I have no doubts about the superior ity of competitive capitalism over communism. And this is so whether the test is building a strong nation, im proving the material welfare of all the people, contribut ing to science and the arts, or in advancing moral and spiritual values. But in the contest, we must make sure it is truly Freedom that contends with communism. That is our challenge in oil's second century.

THE WEB OF INTERVENTION t'J paulof. poirol OUTDATED is the story of the farmer who had almost taught his mule to eat sawdust in place of oats-when the critter died. But a modernized version might tell of the motorist who tried to fuel his car with government in place of gasoline. The I-cent hike in the federal gasoline tax on October 1, 1959 brought the national average of state and federal gasoline taxes to 10.2 cents a gallon. In addition to these direct state and federal levies, there are corporate income taxes, payroll taxes, real estate taxes, and numer ous other assessments by all levels of government, all along the line from production to consumption, that also are reflected in gasoline prices. All told, well over half the retail price of gasoline goes for taxes. With every gallon of gasoline purchased, the customer must take at least a "gallon of government." And motors respond no better to such a fuel mixture than does a sawdust-fed mule.

One clear consequence of the government-boosted price of gasoline is the current popularity in the United States of small, fuel-conserving, foreign-made cars. Do mestic auto manufacturers are doing their utmost to 112 THE WEB OF INTERVENTION 113 cope with the situation, by adjusting motor and chassis design and by other measures which eventually will bring pressure upon the U. S. government to impose tariffs, quotas, and other barriers against auto imports. This illustrates how governmental interference with the market at one spot, as in the taxing of gasoline, in evitably brings demand for corrective intervention at other spots. One Step Leads to the Next The web of intervention also may be traced backward to the reason behind the ever-increasing gasoline taxes: the now almost unquestioned view that road building is a function of the government. The more roads de manded of government, the more taxes needed to defray mounting costs. One departure from the free market method of providing the goods and services people want leads on to other departures-and to more substitution of coercive intervention for voluntary production and exchange.

Closely related to these matters of gasoline prices and taxes and intervention is The Question of Govern mental Oil Import Restrictions) examined by New York University associate professor of economics, William H. Peterson, in a 69-page booklet published by the Ameri can Enterprise Association (August 1959, $1.00). Dr. Peterson briefly traces the background and growth of government oil import policy since the launching of the oil industry a century ago at Titusville, Pennsyl114 PAUL L. POIROT vania. The policy was essentially one of free trade in oil up through the end of World War I, the limited gov ernment intervention for the most part being to encour age the development of foreign sources of oil. The Great Depression marked a change of policy, however, with tariffs imposed in 1932 and import quotas the following year. Since then, the policy has wavered somewhat through hot and cold wars, but culminated in a Presi dential proclamation of mandatory import control, ef fective in March 1959, primarily on grounds that na tional defense requires virtually a self-sufficient oil industry.

Behind this argument lies (1) the fact that known domestic reserves of oil have failed to keep pace with rates of extraction in recent years, (2) the fear of deple tion of domestic supplies, and (3) the presumption that government protection against foreign oil would encourage exploration and development of new domes tic reserves at a faster rate than known reserves are be ing consumed. Dr. Peterson's analysis of these facts and theories finds no justification for restricting oil imports. "Quite the contrary;" he concludes, "study of the program in prac tice indicates that it is harmful to the foreign relations of the United States, disruptive to the defense position of the armed forces, depletive to domestic oil reserves,. injurious to the vitality of the American oil industry both at home and abroad, costly to American consum ers, and finally it establishes precedents for further inTHE WEB OF INTERVENTION 115 tervention incompatible with the precepts of a free society."

So, we are faced again with these precedents for fur ther intervention incompatible with the precepts of a free society. The government is asked to build roads, the precedent for gasoline taxes, which in turn are the precedent for import restrictions against foreign-made cars. And who can say that high gasoline taxes are not also responsible for many of the government regulations and controls over domestic output and imports of pe troleum products? By the early thirties, state and federal gas taxes averaged more than 5 cents a gaUon-28 per cent of the average service-station price consumers were paying. If that 5 cents-now doubled-had gone for gaso line instead of government, whois to know or say what might have been the effect on discovery and develop ment of additional oil reserves during the past quarter century? And what was the effect of these taxes on ex haustion of known reserves and on imports of foreign oil?

Would there have been more, or less, stringent prora tioning of domestic crude oil production in the absence of gasoline taxes? Did the state and federal gas taxes have anything to do with the 27!4 per cent depletion allowance made available to oil producers? And how do each of these and numerous other governmental inter ventions interact on one another? Just how would the property of taxpayers have been used had the govern ment not intervened to deny that personal freedom of choice? No one knows or can know that answer, any 116 PAUL L. POIROT more than anyone knows or can know how to govern the creative activities of those other than himself. All we can possibly know in this regard, supported by growing mountains of evidence, is that one governmen tal intervention leads to another in an endless chain of retrogression from the best of which free men are capa ble. What peaceful persons are forced to give and re ceive, through governmental intervention, cannot help being· less satisfying than would have been the conse quences of their voluntary efforts, cooperation, and ex change. For the effort expended in forcing individuals to produce other than as they choose is that much effort subtracted from the gross productive potential.

Mules cannot live on sawdust. Motors cannot run on government. Human beings cannot realize their poten tialities for progress if restrained and coerced. Coercive actions are precedents for further intervention incom patible with the precepts of a. free society.

ON THE TRAINING OF SCIENTISTS AND MORAL RESPONSIBILITY tv ::DanielJ(' Stewart IN RECENT YEARS there has been much soul-searching among science people over the possible moral conse quences of their work. The scientist of today is genu inely concerned over the obligations that he-as a sci entist-has to his society, and the effect of his discoveries on his fellows. The term "obligations" necessarily implies a reference to some moral standard. And, up to now, moral stand ards, and their necessary implications, have not been one of the major concerns of empirical scientists. The status of moral values in the universe has been a central question in the thought of those who are in the main stream of our philosophical tradition from Plato on down. Moral values are nonphysical and thus cannot be subject to any quantitative tests, but for the typical scientists of the late nineteenth and early twen tieth centuries, whatever is not reducible to some physi calistic verification basis is unreal. Researchers who adDr. Stewart is an Instructor in the Department of Natural Science, Michigan State University, East Lansing, Michigan.

117 118 DANIEL K. STEWART here to a basically materialistic philosophy are consid ered "real" scientists; all others are regarded as making weak-kneed concessions to mysticism. Within this frame of reference, what happens to the scientist who feels some sort of obligation to his society? Any consideration of an obligation necessarily implies the existence of some moral philosophy. But any view which permits moral propositions is, of necessity, in compatible with materialism. Plato makes this distinction unmistakably clear in the dialogue, "The Sophist."l The Eleatic Stranger describes the materialists as "dragging down all things from heaven and from the unseen to earth, and they literally grasp in their hands rocks and oaks; of these they lay hold, and obstinately maintain, that the things only which can be touched or handled have being or essence, be cause they define being and body as one, and if anyone else says that what is not a body exists they altogether despise him, and will hear of nothing but body."

As opposed to this, the idealists are described as "con tending that true essence consists of certain intelligible and incorporeal ideas; the bodies of the materialists" are taken to be "not essence, but generation and motion." The dilemma is quite apparent. The young scientist either accepts the materialistic philosophy of his group; or, sensing the inadequacy of materialism to fully ex plain. nature, he tries to pick up, in a most unscientific 1 Plato, The Dialogues, tr. by B. Jowett. New York: Random House, 1937. Vol. II, pp. 253-254.

TRAINING OF SCIENTISTS AND MORAL RESPONSIBILITY 119 way, what information he can concerning moral philoso phy. But, if the philosophical climate-of-opinion in sci ence is such as to embrace materialism to the exclusion of any philosophy which makes reference to spiritual realities, then what is the prognosis for those recalcitrant souls of the scientific brotherhood who dare to deviate from the unwritten code to the point of even being concerned about a· scientist's obligations to his society? Obligations, and the moral propositions which they necessarily entail, are defined as meaningless in terms of most present-day philosophies of science. It is thought that these propositions have nothing at all to do with genuine science. They belong instead to the realm of traditional philosophy, or worse yet, to religion, and are subject to all the alleged mysticisms of these pursuits. Pitfalls of Materialism Thus, it might reasonably be thought that those sci entists who accept materialism as the basis for their philosophy of nature would not concern themselves with the sociological implications of their activities. In their system man is just a curious sort of an animal. He has little sense of morality or beauty or justice or goodness.

Man, in this sense, is simply the product of his environ ment. He is but a minute part of a vast physical com plex, the forces of which interact upon each other and him, and he upon them. Holding this view of man, it would clearly be absurd to ask questions regarding good and evil, and we would 120 DANIEL K. STE~ART reasonably conclude that those scientists who accept ma terialism as the basis for their philosophy of nature could not logically be concerned with such things as obligations, morality, and free will. But some scientists of this persuasion have over~ stepped the logic of their position. Certain issues which started out to be merely simple physical accounts of purely biological phenomena, have been extended to cover social and political situations to which they were never intended to apply. One such example is the con cept of population theory as it applies to living organ isms, including man.

This theory boldly assumes. that organisms live in groups, they do not live alone. Plants and animals live together in colonies, flocks, and herds, all of which are mutually dependent upon each other and their environ ment, in such a way as to ultimately produce a relatively stable "ecosystem." Man, of course, is one of these ani mals, even though he might be, as G. G. Simpson con cedes, "among the higher animals." Now, if we consider man as a biological organism, and only that, it seems obvious that he does~ for the most part, live with other people. But this biological concept of population, as applied to humans, is notori ously vague and unscientific in that it fails to answer the questions of how many other people a person has to live with before he will not be living alone, and how much of the time this has to take place? This group theory concept is one of the basic assump tions of that point of view known as "life adjustment"

TRAINING OF SCIENTISTS AND MORAL RESPONSIBILITY 121 education. Under magic cliches uttered by the progres sive-minded teacher, the students are well indoctrinated with the slogans of "team efforts," "group projects," or "togetherness." Indeed, this may very well be the start ing point for collectivist economic and political theory. In any case, the analysis shows the ambiguity in the po sition of those. scientists who regard themselves as "tough-minded" materialists. Traditional values are os tentatiously booted out the front door while the current shibboleths are illicitly imported through a rear window. An Inadequate Philosophy This leads to a brief consideration of the second horn of our dilemma. The concern is now for those young scientists who have arrived at the conclusion that ma terialism is inadequate Jo fully explain nature. And it would not be hard to identify these people. With spe cific reference to the example above, these would be the John Does who unconsciously feel, or even truly under stand, that the concept of "living in a group," when taken in a strictly biological sense, is contradictory to the concept of the distinctiveness of the individual, his independence, his individual initiative, his moral self.

For John Doe may recognize this contradiction to be directly tied up with the freedom of any individual to choose one goal rather than another. Now this ability to make a choice between two dis tinct alternatives is generally spoken of as "free will." Free will is identified as that which provides man with 122 DANIEL K.. STEWART a feeling of freedom, of giving him a sense of author ship and responsibility, a sense of guilt and ethics, and a sense of knowing that there are norms and standards to be maintained in every human endeavor. This means that the notion of "free will" is opposed to the concept of people existing only as a part of some group. In the collective, the individual no longer counts; his mind must fit in with the group mind; his every thought and action is determined for him in terms of what the group thinks and does. If he deviates from this, he is made to feel ashamed, selfish, and a misfit. And, if this be the "choice" he has, it is clear that, in practice, it amounts to having no choice at all.

A purely materialistic philosophy is, by its very na ture, metaphysically contradictory to, and hence un able to cope with, questions regarding the morality of man, and therefore the obligations of scientists to their society. One implication from this fact is that man, the human being, must be considered in terms of his totality. This "totality" we shall call the whole man. The point is that man is more than just a mechanistic, physical-chemical machine. He is more than just a highly complex, integrated glob of protoplasm. Man also has a spiritual self. This consists of a sense of beauty, of good ness, and moral responsibility. And it is this whole man that scientists must take into consideration on those oc casions when they concern themselves with any obliga tions they might have to their society. This makes it clear why the first horn of the dilemma -stated at the beginning of this paper-ought to be our TRAINING OF SCIENTISTS AND MORAL RESPONSIBILITY 123 primary concern. The young scientist, more often than not, accepts the prevailing materialistic philosophy of his group, and therefore regards moral questions as ir relevant to "real" science. With this we would have little quarrel provided that this sort of philosophy was explicitly restricted to questions regarding biological phenomena. But, unfortunately, this has not been the case. We have shown, in one instance of several, how this philosophy has been extended to cover social and political phenomena to which it was never intended to apply, and cannot, significantly, be applied.

The implication is before us, then, that the nature of life, in all of its various forms and aspects, cannot be adequately explained solely in terms of chemistry and physics. There is, in fact, a certain vital, directive aspect to all forms of living matter-a certain organiza tional wholeness. In humans this psychical or spiritual aspect of living substance reaches its highest fruition in what is called mind and personality. Need for Moral Philosophy Our suggestion is that, before science is able to con sider such things as obligations and other moral prob lems, a theory of reality is needed that will explain both this nonmaterialistic aspect of all living matter as well as those features explicable by chemistry and physics. And it seems almost anticlimactic to point out that be fore such a synthesis of the moral and material could be made, it would be ne~essary to know something 124 DANIEL K. STEWART about moral philosophy. For it may very well be that, in the final analysis, moral philosophy and science are mutually implicative endeavors.

What this means, in terms of actual practice, is that the young scientist must conscientiously and critically study that very philosophy which he has been indoctri nated against and to which his group is metaphysically opposed. It goes without saying that these are terrific hurdles. But the fact still remains that knowledge of moral philosophy is a necessary prerequisite to any sig nificant synthesis of purely biological substance with those things that this substance is asserted as having, namely, obligations. Materialism, alone, has proven to be inadequate-be cause of its very nature-to handle such questions as morality. But yet, scientists are coming more and more to concern themselves with moral consequences of their behavior. The conclusion of our dilemma would seem to be, therefore, for scientists either to restrict their ex planations to purely physicalistic phenomena, or to openly and frankly, and even perhaps as a part of their academic training, make room for some preparation in traditional philosophy. For it is among the traditional philosophers, such as Plato, Maimonides, Aquinas, and Spinoza, that knowledge concerning morality will most likely be learned. And the only suggestion that one might make is that the prospective scientist approach the study of these men with the same intensity for the truth that he exhibits in his analysis of the facts of empirical science.

SCIENTIFIC FREE ENTERPRISE A LOT of so-called liberals have talked about "scientific socialism" so long now that the world has well-nigh fallen for the delusion that socialism is, indeed, scientific. While certainly a number of scientists, engineers, and technicians have had a distressing affinity for socialist and communist causes along with a number of other shortcomings and vices which they share with the gen eral population, it simply is not true that pure science as such has a procollectivist bias. In fact, when it seemed that everyone else was going "liberal" back in the New Deal days, it was the insights of science coupled with an elementary course in economics which helped to hold the writer steady when the issues were not clear or well understood. Some things simply could not be true by the very nature of the world even if everyone ap proved, and I found myself a lonesome minority of one.

At least this has saved me the embarrassment that many a well-meaning individual has experienced who must now make his painful way back from a bankrupt utopia, like the Prodigal Son returning from the swine pen of the Far Country. Dr. Coleson is Professor of Economics at Taylor University, Up land, Indiana. 125 126 EDWARD P. COLESON Actually, New Dealism, the bright hope of multiplied millions of Americans in the 1930's, had a strangely familiar ring to one brought up on science and mathe· matics. We used to have that trouble in engineering, too. A number of craftsmen, long on mechanical skill but short on theory, have wasted their lives trying to rig ingenious machines that would achieve perpetual mo· tion, or simply, something for nothing. Although there are doubtless as many schemes as in· dividuals, the following example may suffice to ill us· trate what is meant. Having grown weary of buying gas for the family car, we invent an electric automobile. It is all very simple. We mount a generator and a motor side by side with each running the other as in Figure 1.

We assume, of course, that there will be a considerable "unearned increnlent" of energy that can be used to Belt Figure .1. PERPETUAL MOTION ELECTRIC AUTOMOBILE. The motor runs the generator and bock wheel of the cor. The generotor produces current to keep the motor running.

SCIENTIFIC FREE ENTERPRISE 127 drive the automobile down the road. We need a push to get it started, but then the "multiplier" takes over, and we have an abundance of power-and all for noth ing-until we put on the brakes at the end of the way. It is a very good scheme, except it won't work. The motor and generator might be coaxed to very nearly run each other but, since there is friction, a little outside power would need to be added to keep them both go ing. If any work is demanded of the combination, there must be an additional input of electricity commensurate with the task to be performed. Most everyone in the sciences quit looking for some thing for nothing quite a while ago, but the politicians are still at it in full force with no indications even yet that they sense even vaguely that the whole business is impossible. Our whole Operation Bootstraps by which we tried to lift ourselves out of the Great Depression under the New Deal reeked with perpetual motionism, as did certain popular private schemes as the chain let ter craze and the Townsend Plan. They never worked and business stagnated all during the 1930's. Having learned nothing and forgotten nothing in the intervening years, we are still trying those same outworn schemes. We have a principle in science, which is used to discourage such hopeless endeavor, called the Law of Conservation of Mass and Energy. In plain English, it says you can't get something for nothing.

Now there are better and worse ways of doing things. Suppose we want to lift a 450-pound barrel to a dock 3 feet high. It will require a minimum of 3 x 450 or 1,350 128 EDWARD P. COLESON foot pounds of work to lift it up there. Given the size of the task, nothing on earth can reduce the figure be low 1,350 .£oot pounds. Since we can't lift 450 pounds directly, we may. whittle the task down to size by push ing it up a ramp. In this case we exert a lesser force over a longer distance, but nothing will reduce the mini mum figure. If we use a jack screw, an electric hoist, or a stick of dynamite, the force required is the same. If we ladle the contents up with a. teaspoon into another container and lift the empty barrel up later, we have gotten out of nothing. Indeed, we most certainly have wasted a considerable am.ount of additional effort to no purpose. The engineer of today has long since given up trying to get something for nothing: he is earnestly striving to get as close to 100 per cent efficiency as possible-the irreducible minimum of effort necessary to perform the task. Frictional losses are still high; a steam engine wastes 80 to 85 per cent of its power input, and an auto mobile as much as 75 per cent. Diesels do somewhat bet ter and, recently, reaction engines (rockets or jets) have been developed which are very nearly as efficient as our older engines were wasteful. Still we aren't getting some thing for nothing. Indeed, we are only beginning to get our money's worth.

To Discipline the Mind All of these calculations may seem irrelevant and lun interesting to the person not trained in science and SCIENTIFIC FREE ENTERPRISE 129 mathematics. However, these rigorous disciplines do something to one's mind. It simply is not possible to tell many of us that the government can give without first taking. It is sheer rubbish that there are all sorts of colossal tasks-education, roads, housing, care of the poor and aged, besides subsidizing every group you can think of-jobs that the states simply cannot do but which Uncle Sam can easily handle. Nor can you tell us that inefficiency adds up to prosperity. John Maynard Keynes might convince well-nigh the whole world that pyramid building made ancient Egypt prosperous and two were twice as good as one, but make-work schemes are frictional losses, and reduce the standard of living. A person who spends his life trying to invent and de vise more efficient ways of doing the world's work in industry, or striving to produce enough food on the farm to at least meet mankind's minimum needs, neces sarily bitterly resents deliberate efforts in the opposite direction, disguised to confuse the issue in the public mind. We are rapidly coming to the state described by Thomas Jefferson a century and a half ago: If we run into such debts, as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements ... as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses; and the six teenth being insufficient to afford us bread, we must ... be glad to obtain subsistence by hiring ourselves (to the govern ment) to rivet their chains on the necks of our fellow-sufferers.

To several million American farmers who can scarcely 130 EDWARD P. COLESON make a go of it when they work eight hours a day in a shop in town and as many or more on the land, Jeffer,. son's words will seem ominously prophetic. The old laissez-faire1 doctrine of a self-regulating economy managed by the "invisible hand" is remark ably like the science of ecology, which insists that Na ture balances the budget, gives everyone his due, and keeps the myriad forms of life in check as long as man does not upset the natural scheme of things. The dis astrous results of human interference are well known, as for example, the story of how the timid rabbit well nigh took over the continent of Australia because of a lack of "checks and balances." Professor Pavlov, the noted Russian physiologist, also found in the workings of .the body examples of how artificial inhibitions wrought havoc. These he compared with the paralysis produced by the communist system of national planning. He should have known.

Of course, it can be argued that such analogies drawn from mathematics, mechanics, and biology do not prove that the free system is appropriate in economics and that the fantastic schemes of the national planners lead only to misery and ruin. But as Winston Smith says in Or well's Ig84: "If two and two are four, the rest follows." 1 Laissez faire is here used, not in the sense of doing as one wills regardless of how that might infringe upon the rights of others, but in the classical sense of freedom to· produce, exchange. travel, and the like according to one's own interest within the bounds of due respect for the lives and property of others.

FREE WILL: THE FOUNDA TION OF THE FREE WORLD THE FREE way of life rests upon the conviction that men are freely willing creatures with the capacity to choose between alternatives. Freedom of the will is man's pri mordial liberty, the fountainhead from which every other freedom stems. The free way of life is not simply the absence of arbitrary, external controls-the absence of outside bondage reflects and implements man's inner liberty. We favor the free society because every variety of totalitarian order violates the demands of man's na ture. But if free will is an illusion, as many contempo rary philosophers assert, we cannot complain about the massive denial of free choice which is a collectivist so ciety. Totalitarianism is the end result of the denial of inner liberty, however much determinists may disavow this ultimate consequence of their position. The question of determinism or free will is a philo sophical matter, but determinists frequently base their case on what they regard as the scientific method.

A distinguished British scientist, the late Sir F. S. Dr. Schlichting is .an independent research biologist at Port Sani lac, Michigan. 131 132 HAROLD E. SCHLICHTING, JR. Taylor, states the position as follows: "Science finds no evidence of free will in matter and energy .... Matter and energy, however organized, have no free will. So, if man consists of nothing else than matter and energy, then man has no free will. The materialist, like every one else, has the experience of free will and acts as if he were free, for no one could live without doing so; but he regards this sensation of free will as an illusion."1 Thus we are not really free; we only think we are! According to Freud, "No act is uncaused and the illu sion of free will simply comes from the fact that some of our motives are unconscious."2 Dr. E. G. Boring of Harvard University goes further, saying that "freedom, when you believe it is operating, always resides in an area of ignorance. If there is a known law, you do not have freedom .... Both free dom and chance are terms that. are used when efficient causes of present events· are not known and often appear unknowable."3 This is another way of saying that our concept of free will is due to our ignorance! He adds that belief in human freedom is merely "a useful super stition" but concludes "to get rid of this concept would change the whole of our civilization."

Obviously, the despots of today, as of yesterday, are 1 Taylor, F. S. The Fourfold Vision. London: Chapman and Hall, Ltd., 1946. p. 58. 2 McClelland, D. C. "Freud and Hull: Pioneers in Scientific Psy chology," American Scientist. 45:101-1~. 1957. 8 Boring, E. G. "When Is Human Behavior Predetermined?" The Scientific Monthly. pp. 189-196. April 1957.

FREE WILL: FOUNDATION OF THE FREE WORLD 133 attempting to annihilate the concept of free will. If the basic pillars of our civilization can be shaken, their hope is that the house will crumble. In fact, denial of free will has been the basis for all totalitarian systems and their power over men! The arguments against free will may be grouped into the following !major categories: 1. All of our actions are determined by our body chemistry and interrelated past experiences; they are determined according to the laws of physics and chemistry. 2. No act is uncaused and free will is an illusion. 3. The belief in free will is due to ignorance of ante cedent causes. 4. The question of free will vs. determinism is un answerable. It would require a book to explore all of the conse quences of these propositions. However, three of these seem most apparent to me. First, for people living by the Judeo-Christian concept of life, free will is essential. The disobedience of the first man to God and its conse quences presupposes free will.

An outstanding American geneticist, Dr. T. Dobzhan sky, made the following comments: "Ants and termites are neither heroes when they defend their own nests, nor villains when they rob those of their neigh bors. They are devoid of virtues and vices because they lack the freedom to decide between possible alternative courses of action. . . . Insect behavior is, then, not reducible to a common ethical measure with 134 HAROLD· E. SCHLICHTING, JR. human actions. Praise and blame have meaning only in connection with acts in which the individual is at least to some extent a free agent .... Moral rightness or wrongness have meaning only in connection with per sons who are free agents, and who are consequently able to choose between different· ideas and between possible courses of action. Ethics presupposes freedom .... Ethics, as such, have no genetic basis and are not the product of biological evolution."4 Thus for the determinists who base their philosophy upon genetics and evolution, there actually is no ethical system for them to adopt!

Second, our entire judicial system is premised up~n the existence of free will; man is presumed responsible for his actions. There could be no moral law and order without it. The act of justice, is to give each man his due and is preceded by an act whereby something becomes his due. Therefore, one's right must precede justice! As Josef Pieper, a noted philosopher, has stated, "We can not state the basis of a Right and hence a judicial obli gation, unless we have a concept of man, of human na ture."5 If in truth there is no distinctly human nature then there can be no human rights or justice. This is the formal justification for every exercise of totalitarian power. The existence of free will is essential to this con cept of human nature upon w,hich our justice is based. Third, there could be no virtue because virtue is a state of character concerned with choice. If the latter •Dobzhansky, T. The Biological Basis of Human Freedom. New York: Columbia University Press, 1956. pp. 93-94, 132.

Ii Pieper, J. Justice. New York: Pantheon Books, 1955. pp. 1-24.

FREE WILL: FOUNDATION, OF THE FREE WORLD 135 is taken away, there is noway for goodness to assert itself. These three, Judeo-Christian belief, justice, and vir tue, are all interrelated in our Western civilization. They are the basis for our civilization, and it is obvious that our way of life, as we have known it, cannot exist if we accept the teaching of those who contend that there is no free will. This is not a one-sided argument. Contrary to many modern teachings, the concept of free will is supported by numerous philosophers. Unfortunately, most of them are dead! It is auspicious, however, that their ideas "live" on. Even though ignored or defamed, the materialists have not succeeded in destroying them. The question of freedom is one of the most difficult, most rewarding, and most pressing in metaphysics. For a thinker of the stature of Descartes it was free will alone or liberty of choice which he declared to be so great an idea that he could conceive no other to be superior.

Uncoerced Choice What do we mean by free will? We may use Web ster's definition as a starting point: "Free will: Un hampered or uncoerced choice. The doctrine that hu man beings are not controlled in their choices by physi cally or divinely imposed necessity." Free will cannot, of course, be expressed under coercion or irrationality by its very definition.

136 HAROLD E. SCHLICHTING" JR. To concede that the free will question is unanswer able, is really not to confront the problem at all. For one meets problems and must· make decisions through out his entire life; to do otherwise would be to merely vegetate! It would be extremely inconsistent if a person lives part of the time as if he were truly free and at other times as if he were not free at all. To state that no act is uncaused and that therefore free will is an illusion is to misunderstand the free will position. The proponents of free will do not claim that their actions are uncaused but that the individual causes them from within. Indeterminism is the untenable view that events are not caused. Advocates of free will are not materialistic determinists; they believe that the laws of chemistry and physics do not apply to the will and intellect-these being nonmaterial entities. Those who would have us believe that free will is due only to our ignorance are merely stating that in the final analysis it is an illusion. Some men are more ignorant than others and this ignorance in a sense makes them less free. This fact, however, does not nullify the concept of free will.

Dr. Etienne Gilson, a scholastic philosopher, proposes that man is both free and determined, i.e., man is free to choose the means to the end but is not free to choose the end itself. In "choosing the means to the end," Gil son writes, "the choice is free beyond all doubt. Man indeed does not choose his end; necessarily he wants to be happy merely on account of his nature as man; but various routes to happiness lie open, and he is free to FREE WILL: FOUNDATION OF THE FREE WORLD 137 choose what seems to him the best for the purpose."6 Human happiness is the determined end for all men be cause of their very nature; man cannot will to be un happy! All particular decisions are directed toward this end. Since choice is not concerned with the end but with the means to it, man does not choose of necessity but freely. Free will implies the power to choose a good or poor means to an end depending on the rationality of the individual and his desires for what he believes will bring happiness. He may choose any of a multitude of possibilities for obtaining his happiness.

The truth of free will can only be discovered and proven within ourselves! Why did I choose to do a cer tain act? I chose it as a means to some end which may be called the attainment of my happiness. Thus, I am self directing and I believe it because there is no conclusive evidence to the contrary. Frank Chodorov in his "Free Will and the Market place" (THE FREEMAN, January 1959) stated: "Many per sons, who would abolish free choice in themarket place, logically conclude that man is not endowed with free will, that free will is a fiction, that man is merely a product of his environment. This premise ineluctably leads them to denial of the soul, and of course, the denial of God." Every truly great man has risen above his environment! He not merely comes from it, as a part, but he adds to it. Society has its impact on man but it must also be remem bered that men have their impact on society. Actually, e Gilson, Etienne, The Spirit of Mediaeval Philosophy. New York: Charles Scribner's Sons, 1940. pp. 319-321.

138 HAROLD E. SCHLICHTING" JR. they make it what it is! This fact is forgotten in this age of socialization. Many Factors Affect Choice Body chemistry and our past experiences are certainly important in influencing our choice of action. They al low for our selection of alternatives but they do not determine them. Our past experiences and body chem istry "set the stage" for the operation of our intellect and will to make a choice from genuine alternatives of action. However, the intellect and will are "actors" which do not have to follow the script! Our behavior in carrying out some action we have decided upon as a means to achieve our end, is subject to physical-chemical laws, biological· coordination, and our reason. Because a series of choices in your past influences your present choice, one cannot say that you were determined to choose as you did due to your past experiences. It has not been proven that your past experiences are deter mined. This materialistic determinism is only an as sumption of those who do not believe in free will.

Injection of "truth serum" and physical violence can narrow the alternatives between which a choice is pos sible. But one is still free to go counter to this coercion even until irrationality or unconsciousness results. As the martyrs of history have shown, men, in fact, have re sisted these forces and have given up their lives rather than to select the alternative choice. By their very suf fering and death support is given to the concept that FREE WILL: FOUNDATION OF THE FREE WORLD 139 man has free will. Chemical, physical, and psychological forces do not rob man of his free will. When one does submit to force of any kind, it does not mean that he does not have free will but that the freedom of action is denied to him! Some would claim the martyrs could not have done otherwise, that they had to suffer and die because of their past experiences. It is easy and natural to choose nonsuffering but very difficult and indeed against our materialistic nature to choose suffering. The material ist, logically, could not be an intentional martyr. Cer tainly, there have been no martyrs for the stand against man's freedom!

For most of us man has both a material and a spirit ual nature fused into one being. Man's spiritual nature is not physically determined; man develops his moral nature based upon both the material and the spiritual aspects. The spiritual aspect can be demonstrated to exist empirically by the very behavior of men them selves. For example, the Gene Theory is important in biology because it explains, in part, the transmission of traits passed from parents to offspring. The truth of this theory is based upon its empirical verification and its predictive value. Similarily, the Judeo-Christian con cept of life is important because it explains, in part, the whole nature of man, his origin, and destiny. The truth of this concept is based upon empirical verification (i.e., behavior) and its predictive value for man in attaining happiness. Both the Gene Theory and the Judeo-Chris tian concept of life go beyond empiricism itself to an over140 HAROLD E. SCHLIGHTING" JR.

all explanation of reality. Some scientists accept the first but reject the second proposition! In his explanation of man the materialist reduces man to one aspect of his nature, and then uses this part in his attempt to explain the whole. As far as most thought ful persons are concerned materialism has not been suc cessful in explaining man. In fact, they have not as yet given a satisfactory explanation of the basic tenet of their belief, namely, matter. Human freedom does not mean that we can do any thing we wish; it means that we can do some things we wish, and it is very important to know what those things are. Free will can be limited only in the carrying out of actions, there being no thought control as yet in the free world, as set forth in Orwell's I984. Of course, there are some events which happen to us through no choice of our own. These may be due to natural catas trophies or the decisions of others. Our birth and usu ally our death are not of our own free choosing; yet their occurrence does not invalidate our concept of free will.

The following may limit our free actions: 1. Our native intelligence, which is hereditary. 2. Our total experiences in life, which are environ mental and fall into three main restrictions: a. Faulty education b. Socialism (where human relationships are co erced) c. Poverty (If the essentials necessary to sustain life are lacking, our behavior is influenced but not determined.) FREE WILL: FOUNDATION OF THE FREE WORLD 141 Nevertheless, our free will still operates even under the most adverse conditions. The act of free choice is an act of both the will and intellect. The acknowledgment of these nonmaterial entities is essential to our free way of life. According to Gilson, "wherever there is intelligence there is free will; and the more intelligence there is by so much is there more liberty." Perhaps an explanation as to why some persons do not believe in free will is im plied in the preceding quotation.

Much more has been and can be written on the con cept of free will and its importance to our way of life. It is one of those fundamental truths which must con stantly be pondered anew, lest inferior and even untrue propositions replace them. It is up to each individual in the free world to safeguard these truths upon which our freedom is based.

ON TALKING TO OURSELVES tv GJmunJA. Opitz The REVEREND MR. OPITZ of the Foundation staff replies to a FREEMAN reader's observa tion that "we are talking to ourselves when we ought to be addressing the world." Dear Mr : Perhaps you have had the experience of expressing your concern over the mounting national debt and be ing reassured, "There's nothing to worry about; we owe it to ourselves." Most people now see through this bit of semantic sleight of hand. "We" who owe the debt are one set of people. The "ourselves" to whom the debt is owed are with possibly some overlapping-a different set of people. Similarly, welfare staters try to brush off objections to collectivist political interventions by telling the crit ics, "This is majority rule at work; we are doing it to ourselves." But, obviously, the "we" who are doing it are not the "ourselves" to whom it is being done! Some Americans are doing certain things to other Americans, and our question concerns the rightness of those Hcertain things." When one of our citizens assaults another citi zen, people don't dismiss the incident by saying, "We 142 ON TALKING TO OURSELVES 143 are doing it to ourselves"; they pass judgment on the act. When "our" group does something to another group, all of us know that "we" are the first set of people and we never think of the second set as "ourselves," but as the others.

Such distinctions as these are clear to many people, but move the discussion over into the area of libertarian concern-the collectivist trend and how to roll it back and the distinctions begin to blur. Libertarians rely on the written and the spoken word as their main tools. The high quality of some of this work is widely ac knowledged, but collectivists, nevertheless, continue on their way unheeding. Why? Because, it is alleged, we libertarians are talking to ourselves when we ought to be addressing the world, no less! This seems to be your feeling. You "heartily applaud" our program, you write, and are interested in what our "capable writers have to say." This encourages me to deal with the one critical matter you raise, the point about "talking to ourselves." "I am afraid," you write, "that there is a good bit of talking to ourselves going on in this field.... " Let's face it: we are) in a sense, "talking to ourselves"!

But is this fact surprising or in any way deplorable? No! Not if it be understood that "ourselves," in this context, refers to all the persons sufficiently interested in liberty to concern themselves with its future. Obviously, we cannot force people to read THE FREEM.j'\N or any other libertarian literature, nor would we d<l> so even if we had the power. Nor can we -force anyo~e to participate 144 EDMUND A. OPITZ in one of our seminars or· be part of the various audi ences we address. Such people as do open their pores to the several efforts of this Foundation are self-selected; they come within our orbit because they feel that we have something to contribute to their determination to understand liberty better-its economic and political im plications as well as its spiritual and moral postulates. Our material goes out each month to a mailing list numbering upwards of forty thousand. True, we have a number of readers who are hostile to our point of view but who read us just to see "how the other half lives."

This is all right; we read Marxian and collectivist liter ature for the same reason. And every so often one of these persons gets a better focus· on our philosophy and moves in our direction. I don't know how many readers we can claim for each copy of THE FREEMAN, probably several; but let's keep the figure at a minimum. Let's say that "ourselves" in this context refers to only forty thousand persons; forty thousand persons trying to bet ter their own grasp of the philosophy of liberty. I am far from asserting that we are doing a good job at this thing; our inadequacy in the face of what needs doing is obvious. But the better· job, if and when it is done, will be done in the same way, by "talking to ourselves." "We" have to talk to "ourselves" for a simple reason: the "not-ourselves" are not listening! Consider this problem as it is exhibited on the church scene. Church people, by and large, exhibit standards of probity somewhat higher than the standards which obtain in the society at large. One might say, therefore, ON TALKING TO OURSELVES 145 that churchmen do not need the min'istrations of the pulpit as badly as do those who never! become part of a Sunday morning congregation. But in the nature of things a sermon can be delivered only to those who come to hear it; it is the already converted who con tinue to draw upon the inspiration and wisdom each person needs for further growth. Similarly, the people who are already within FEE's orbit are, by and large, the very persons who are already the ablest expositors and practitioners of liberty. It has to be this way.

At the same time, we'd be happy to be reaching forty million a month. We'll approach this figure only as those now in the "not-ourselves" category are attracted in to the circle of the "ourselves." But our work, by its very nature, imposes a demand on the people exposed to it. We don't peddle attractive labels which people can simply pin on themselves; we offer facts, ideas, and argu ments which are merely the raw materials out of which each person must fashion the philosophy and convic tions which become peculiarly his own. This requires time and personal effort, and all we of the Foundation claim is that we can initiate a person into this field. Perhaps we can counsel his first few steps and offer sug gestions for further reading and study; beyond this he must find his own sources of instruction. We know from our own experience, reinforced by the testimony of countless others, that while this effort may be painful at times, it is genuinely rewarding.

To your observation that we are "talking to ourselves" you add that "not enough of us are listening." There 146 EDMUND A. OPITZ you have a point! Liberty in this country has lost ground, in large measure, because so many people think they already understand all that needs to be known about itl "We sound thinkers," they say in effect, "know all the answers; all we have to do is wrap them up in a pleasing bundle and sell this package to the masses." Well, the person who thinks he has all the answers is really one who has never asked all the questions! Every one of us is, to some degree and in most subjects, part of "the ignorant masses"! This means that ours is really an educational task, not a selling job; and the educa tion should begin with the only person over whom we have control-one's self. Thus, the improvement of self has been one of FEE's major emphases. If a person has properly tended to this first order of business, he will stimulate questions in others and be come a source of learning upon which others will draw.

And as· he formulates and candidly gives off his best insights, his own understanding grows. But, if he thinks he has all the answers and tries to peddle them to peo ple who are not asking the questions, he makes a nui sance of himself, does little for the cause of liberty, and may eventually quit the cause in utter discouragement. There is a handful of us here at FEE working full time, according to our lights, on behalf of liberty. There are several other organizations motivated by a similar philosophy. We are joined by a number of clergymen and teachers and writers who understand liberty and work for it in their own baliwicks. But add us all to gether and our numbers are insignificant compared to ON TALKING TO OURSELVES 147 the team the other side can put into the field. Start with the Communist and Socialist parties, add the theorists of the monopoly unions, the lobbyists of private organ izations pressing for this or that bit of collectivization, the left-wing professors and preachers, segments of the Republican and Democratic parties, the numerous pres sure groups who want government intervention in order to help their particular enterprises, and it must be ad mitted that we face a formidable array. The odds would be much too great, except for the fact that we can count on having our team filled out by volunteers.

The philosophy of freedom aims at personal growth by removing the obstructions which stand in the way of creative release and direction of individual human en ergy. This means that the persons most accomplished in the actual daily practice of freedom are largely the busy and successful persons on whom all of us depend to get the work of the world done, in business and in the professions. These people are.· practitioners of lib erty. I have reference to the creative efforts of the free mind as it produces a better medicine, a more efficient tool, a safer tire, a sounder philosophy, a lovelier poem or song, a more useful gadget, a more apt technique of management. These are the beneficial fruits of free men at work, available to each one of us. But in the same sense in which today's technologist or merchandiser is a projection of yesterday's researcher in pure science, we must acknowledge that everyone of us who today reaps the many fruits of a free society is in debt to those who have worked and continue to work 148 EDMUND A. OPITZ at the philosophy of liberty. Each one of us, of course, has priorities on his time, and it is up to each person to allocate his own time according to his convictions. But unless the practitioners of liberty at the level of goods and services become students of the subject as well, the freedom team is in a bad way. Unless a significant num ber of people can become as skilled in the exposition of libertarian concepts as they are in the practice of free dom principles, the free society will go on steadily contracting. The only way to push back these boundaries is to continue Htalking to ourselves" -but not necessarily in the same old way_ Liberty, it has been said, depends on eloquence, and eloquence is effective communication.

Men want freedom as much as they ever did, but not many have learned to voice their aspirations effectively in a modern idiom. The literature of liberty is mostly Hpast tense"; our job is to make it contemporary so that it meets the modern mind at its growing edge. When that is accomplished,we'll still be "talking to ourselves" -but the world may pause to listen in. Sincerely, EDMUND A. OPITZ OUR TRAGIC ST A TE OF CONFUSION: A DIAGNOSIS tv William e. mullenJore FOR THE PAST three decades, as an executive of a large utility, a private citizen, and an active participant in the discussion of many of the issues and trends in American life, I have "viewed with alarm," because I have been convinced that we have been on the wrong road-a road that will lead to a disaster-and my concern has increased each year, particularly in the "era of pros perity" since 1946. During this time I have repeatedly warned stockholders of the company of which I was president, and all others who would listen, that this is a period not of prosperity and progress, but of liquida tion of our free institutions and real assets-a period of retrogression in American life.

I submit that every responsible citizen who is awake and aware should protest against these things: that American leadership should be constantly proclaiming this as a period of sound, enduring, unprecedented pros perity; that the American people should be indulging Mr. Mullendore recently retired as Board Chairman of the South ern California's Edison Company. This article first appeared in Modern Age: A Conservative Review, Winter 1959-1960; copyright by the Institute for Philosophical and Historical Studies, Inc. 149 150 WILLIAM C. MULLENDORE in a spending and speculative spree, going ever more deeply into debt and feeding the fires of a ruinous infla tion; and that we &hould be boasting of our high stand ard of living, growth, and progress, in face of the stark facts which show a worsening situation on every major front. Consider that situation: Our nation of 170 million people is called upon to bear the awful burden and re sponsibility of leadership of the forces of freedom in a war for survival of modern civilization. Our military forces are deployed throughout the world in more than forty countries and on the high seas, equipped with modern implements of war, including missiles, subma rines, and supersonic airplanes capable of handling atomic weapons. Some two million of our men are un der arms in the Navy, the Marines, the Air Force, and various branches of the Army. The war which we call a "Cold War" dominates our life, and we are today essen tially a military nation, whether we mean to be or want to be. The cost to us per annum, in man-years, in attri tion of freedom, and in tangible wealth, is greater than in any previous war except World War II. And olir un precedented and incalculable debt accumulated in World War II has not been reduced but has been in creased in our time of "greatest prosperity."

Because of advances in technology, automation, and the unprecedented abuse of credit, coupled with all· but unlimited supplies of inanimate energy, we have pro duced and are producing volumes of physical ·equip ment-tools, machinery, transportation and communicaOUR TRAGIC STATE OF CONFUSION 151 tion devices, structures and buildings for all purposes beyond the powers of comprehension or imagination. As a result, we live and are entrapped in the most arti ficial, interdependent, complicated, and complex sys tem of human society which has ever existed. With it all, we have the largest debt, the biggest burden of taxes, the most advanced and dangerous inflation, the largest crime and juvenile delinquency rate, and the highest percentage of mental patients in our history. These aspects of our "prosperity and progress" and the threats arising therefrom are some of the surface manifestations of our crisis. And we need to remember always that this crisis of ours, and of civilization, did not start with the Communists, however eagerly they have seized the opportunity to stimulate trouble, confusion, and disorder wherever it exists. The roots of the crisis lie much deeper-in revolutions and revolutionary changes, in wars and lesser evil destructive forces, which are always at work within human societies and in~ stitutions.

Abler observers than I have written countless volumes about the crisis and the events which led up to it. Two of .these have summarized its nature more powerfully and comprehensively than I could. Pitirim A. Sorokin, of Harvard, who has devoted much of his life to an intimate and informed study and interpretation of many phases of the crisis, tells us: We live amidst one of the greatest crises in human history. Not only war, famine, pestilence, and revolution, but a legion of other calamities are rampant over the whole world. All 152 WILLIAM C. MULLENDORE values are unsettled; all norms are broken. Mental, moral, aesthetic and social anarchy reigns supreme. 1 Whittaker Chambers writes similarly in his penetrat ing and moving "Foreword in the form of a Letter to My Children," in Witness: Few men are so dull that they do not know that the crisis exists and that it threatens their lives at every point. It is popular to call it a social crisis. It is in fact a total crisis religious, moral, intellectual, social, political, economic. It is popular to call it a crisis of the Western world. It is in fact a crisis of the whole world. Communism, which claims to be a solution of the crisis, is itself a symptom and an irritant of the crisis.2 It is not, however, with the objective nature of the crisis, but with our subjective reaction to it, that I am primarily concerned in this essay. In one respect I can not agree with Whittaker Chambers: I can find little evidence in the activities and attitudes of the American people that they are aware that the crisis "threatens their lives at every point." I believe that one of the greatest sources of danger is the generally prevalent unawareness of our truly appalling human situation. I also believe that this unawareness is primarily due to a lack of understanding, which in turn is due to a "failure of nerve" and refusal to face facts on the part of our people. I believe further that this "failure of nerve,"

with resultant fantasies of wishful thinking and "hop1 Sorokin, Pitirim A. Man and Society in Calamity. New York: Dutton, 1943. p. 308. 2 Chambers, Whittaker. Witness. New York: Random House, 1952.

OUR TRAGIC STATE OF CONFUSION 153 ing for the best," is fundamentally grounded in one thing: confusion. The rrDiseaseof Confusion" For the remainder of these pages, I shall examine the thesis that a major element in the present-day crisis is a "sickness of society" brought on by the "disease of con fusion." And, indeed, "confusion" is a medical term. Blakiston's New Gould Medical Dictionary defines it as: "1. State of mental bewilderment. 2. A mixing or con fusing." And in l'Vebsters New International, we find these pertinent definitions: "State of being confused, or disordered; disorder, as of ideas, persons or things .... A mental state characterized by unstable attention, poor perception of present reality, disorientation, and inabil ity to act coherently." The disease of confusion manifests itself in a human society by disorder, disunity, the disintegration of uni fying value-systems, and the abandonment of those prin ciples which are the foundation and elements of the established order.

Russell Kirk, in his article in the University of De troit Law Journal on "Our Reawakened Consciousness of Order," writes of the preeminent position of order as "the principle and the process by which the peace and harmony of society are maintained," and quotes Richard Hooker to show the reverse side of the coin: "Without order, there is no living in public society, because the want thereof is the mother of confusion." The ultimate 154 WILLIAM C. MULLENDORE in disorder is anarchy-the absence of all order-con fusion is complete. With the foregoing definitions before us and having in mind that disorder and confusion are, in the context of this discussion, very closely related, we may venture this more specific definition of the disease of confusion as it affects the individual in society: Confusion is an infection which attacks the individual human being in his consciousness, character, and conduct. It tends to destroy his anchorage in principle; to weaken his pow ers of perception, discrimination, choice, and decision; and to corrupt, retard, or halt his moral and spiritual development. An epidemic of confusion is particularly destructive of the capacity for self-government and free dom upon which the structure of a free society depends.

In the great tragedy of history now.being enacted on the world stage, the United States is the protagonist of the forces of freedom; and upon our awareness, alert ness, moral and spiritual strength and integrity, depends the survival of civilization. Our fitness for leadership is being tested. Are we meeting the test, or are we exhibit ing alarming symptoms of confusion and disorder in our reaction to the challenge of our time? During our country's greatest crisis previous to this one, Abraham Lincoln in his Gettysburg address, said: "We are now engaged in a great Civil War, testing whether that nation, or any nation so conceived and so dedicated can long endure." In this sentence Lincoln with his genius for definition of principle used the word which characterizes· the· essence of crisis-testing.

OUR TRAGIC STATE OF CONFUSION 155 A crisis is a testing period, whether it occurs in the life of a single human being, nation, or civilization. And in this testing period, as in school, questions are asked which may determine whether the questioned one is qualified to proceed. That is to say, a crisis in the life of a country or a civilization imposes questions, upon whose answers the continued existence of the country or civilization may depend. Changes Beyond Man's Comprehension As has been so often remarked, great as was the fore sight of the Founding Fathers, no one in the eighteenth century could have conceived of the United States and the world in the last half of the twentieth century. Ex pansion and growth in population, technology, and in development of the potentialities of human beings for exploration and discovery, for change of and control over their environment were predicted; but the wildest pre diction fell far short of the total achievement. No wonder we are confused! In every field of human activity there is much to be confused about.

The prophets of the eighteenth century failed to real ize particularly the enormous acceleration in the rate of change which would result once men were free of the restraints imposed by older regimes, had succeeded in harnessing unlimited quantities of energy, and had de vised the means for conquering barriers of time and space. Of even greater significance was the failure to foresee that the vast number of individual minds could 156 WILLIAM C. MULLENDORE not keep pace in awareness and understanding with the sum total of changes affecting their lives. The discov eries, inventions, and far-reaching innovations in human relationships were initiated by individual human beings; but, once launched in the world, they affected and com plicated the lives of all far beyond the intention, to say nothing of the control, of anyone man or group. Herein lies the great dilemma of freedom: Ideas orig inating in the minds of individuals are launched upon society as a whole, and their adoption and implementa tion bring about widespread and accelerating changes, both good and bad, in human relations and in the nat ural as well as the human environment. Thus perplex ing difficulties confront the individuals and groups of organized society, in their attempts to adjust to the con stantly changing order of things.

Since the political and economic forms and institu tions of a free society are based upon the assumption that the individual has the ability to respond, it follows that his failure to meet the test may jeopardize his free institutions. This is the basis for the assertion that con fusion is a disease which endangers a free society, and when, as now, it endangers the life of a civilization, it rises to the level of high tragedy. Hence the title of this essay. The word "free" is misleading, and hence a breeder of confusion, as applied to our constitutional system of limited government, the very essence and foundation principle of which is that the individual citizens must bear the burden of responsibility for the maintenance OUR TRAGIC STATE OF CONFUSION 157 of much of that order of human relations which dis tinguishes and differentiates this system. A more accurate name for such a system would be "responsible individ ualism," because it is the responsibility of the individ ual rather than his freedom, which should be empha sized as the leading characteristic of such an order of society.

There can be no organized and ordered society in the absence of intelligent restraint of the individual, either from within the individual himself or from without. Edmund Burke stated the point with his usual clarity of insight and expression: Society cannot exist unless a controlling power of will and appetite be placed somewhere; and the less of it there is within, the more there must be without. It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free. Their passions forge their fetters. Under communism, and other forms of government which enslave the individual, the responsibility for re straint and direction of human relationships is largely vested in those exercising unlimited powers of govern ment. The radical difference, therefore, for the individ ual citizen, between the free system and its opposite, lies not in freedom from restraint, but in the degree and purpose of restraint, and whether that restraint is self generated and self-imposed (voluntary in this sense), or imposed from without and enforced by the power of coercion used at the sole discretion of the ruler.

Self-government, then, essentially means self-reliance, self-restraint, self-control, self-discipline, self-denial, and 158 WILLIAM C. MULLENDORE self-direction, as contrasted with the systems of govern ment which make no such assumption and place un limited power in the government to restrain, to control and direct and hence completely to enslave and regi ment the individual. It follows that, insofar as the American people have abandoned or refused to obey the laws or rules for self-government-that is, insofar as individuals have failed and are failing or refusing to restrain themselves, to discipline themselves, and in gen eral to perform the affirmative obligations of self-reli ance upon the performance of which the health and the wholeness of their country is dependent-to that degree we are abandoning our free system. Or, to spell it out more bluntly, this also means that the trend is strongly toward a government of unlimited powers, and the con sequent disintegration of all of our free institutions which are dependent upon the maintenance of responsi ble individualism.

Much of what has been said above is clearly and suc cinctly summed up in Felix Morley's The Power in the People: When the American people have been self-reliant, mutually helpful and considerate, determined in their mistrust of politi cal authority, this nation has been Hin form"; its tradition alive; its contributions to civilization outstanding. Confusion has arisen as form has been neglected. The restoration will require, for all of us, at least as arduous an effort, and as rigor ous self-discipline, as the athlete consciously applies to himself in order to remedy physical deterioration. 3 3 Morley, Felix. The Power in the People. New York: p. Van Nostrand, 1949. p.14.

OUR TRAGIC STATE OF CONFUSION 159 Thus far we have considered some of the causes and general symptoms of confusion as manifested within our own American system of society; and we have noted a trend toward abandonment or loss of traits of character, which if lost, will greatly weaken, if not destroy, the for mer structure of our free institutions by radically chang ing our relations to one another. Confusion Regarding Communism The foregoing is only one area of our confusion in the world crisis in which we are so deeply involved. Let us now examine certain alarming symptoms of confusion in American understanding of the basic issue in the great conflict which precipitated the crisis. This con flict, as we are only too well aware, is with the aggres sive tyrants of communism who have acquired unlimited power over, and have mobilized and are training (but not educating), for their wholly evil purposes, hundreds of millions of imprisoned people.

The symptoms of confusion here under examination are those revealed by reports on the communist system made during recent months and years by American vis itors returning from Russia. These reporters include not only "run of the mine" American tourists but, more importantly, newspaper editors, prominent state and federal officials, business leaders, and members of other official and· nonofficial parties who have been admitted to Russia to observe (under surveillance and guidance of Communists) and report to their fellow-Americans 160 WILLIAM C. MULLENDORE upon the communist system, how it is working, and how the Russians themselves seem to feel about it. The basic importance of the impressions thus gained and reported to the American public lies in the fact that the questions as to what the Communists are "up to," what they intend doing to "change the world," and just how they threaten us, are questions upon which most Americans are quite uninformed and upon which they are eager to obtain information couched in language which they can understand. Generally, we un derstand that the Russians are threatening us with physical violence, especially with missiles carrying atom ic warheads, in order to keep us from interfering with their attempt to conquer the world for communism; but we have only the vaguest understanding of the real meaning of communism, and consequently of the true definition of the issue which is at the heart of the world conflict. And it is this issue which our reporting tour ists are confusing for us.

One of the most prominent and official of our report ing observers was recently quoted, on the front page of all large metropolitan daily papers, as saying that the "essence of the conflict" between the Russians and our selves is whether "our concept of progress with freedom" will prevail over their "concept of progress without freedom." The emphasis here is upon the conflict be tween the· means by which "progress" shall be achieved -not upon the real issue, which is the end aimed at, or the meaning of progress, as respectively defined in the American and communist systems of society. The word OUR TRAGIC STATE OF CONFUSION 161 Hprogress" is used· as if it had a common meaning in both systems. It does not. Essentially the same confusing idea appears in other reports,· wherein there is much talk of how much better the Russians are "succeeding" with their system in "com petition" with ours, than had been anticipated by the observer before his visit. Repeatedly appearing in the reports are such· assertions as the following: "The Rus sian people are happy with the progress they are mak ing."One reporter grows ecstatic in saying, "They are contented with and proud of their system because it stresses equality, education, science, culture, more leisure and a shorter work week, the dignity of labor, free medical and dental care, and other cradle-to-grave serv ices." This same reporter, who is the editor of a large daily newspaper, warns that we had better quit brain washing ourselves by circulating the idea that the Rus sians are not succeeding with this system, because it was obvious to him that they are making "progress" in their endeavor to improve the lot of their people, far beyond anything we had predicted.

Progress TQUlard Slavery The communist concept of progress is advancement to ward the realization of a dehumanized, depersonalized, and despiritualized society, to be attained by destroying what they call the "myths of religion and other super stitions which teach that there is a God or any Power in the Universe higher than man." The Russian goal is 162 WILLIAM C. MULLENDORE to build a world communist society by conquering and enslaving the peoples of the world. The purpose of the Russian "competition" with us will have been achieved if and when they have "buried us." The means to their goals are any and all which will serve to crush the spirit ual life of individual human beings and transform them into highly trained animals, conditioned to exist as mere replaceable units and having no significance exc.ept as tools to be used in the perfection of the communist ideal of a society of enslaved beings deprived of all individu ality. This is the "death camp" into which Communists are trying to lure and to drive the world; and this is the "essence of the conflict between the Communist Powers' concept of progress without freedom. and our concept of progress with freedom." Now really, we do not need to go to Russia nor to have Russian communist leaders come to this country to learn that!

That the communist masters of the Russian people are indeed making a real and ominous advance toward their goal of building their slave society is undoubtedly true. But for Americans to speak of this as progress, and as a gain for Russia in -a competitive race with us toward a common goal, is. shocking beyond expression. To the American, "progress" is a good word, and it con veys the idea of advance toward. a desirable and laudable goal. Now, we can be sure that responsible, intelligent, and representative Americans, such as those who made the reports above referred to, would not have made such favorC;l.ble reports as to the progress and success of the Russian system, had they comprehended the total situaOUR TRAGIC STATE OF CONFUSION 163 tion upon which they were reporting, and foreseen the implications and inferences which their fellow-Ameri cans, as well as anxious peoples ,in other countries, would derive from their statements. We must, therefore, in charity and in a spirit of forgiveness, conclude that these reports are but another symptom, albeit a most alarming one, of the mental bewilderment, disorienta tion, and disintegration of their judgment and value system, which we call confusion, and which afflicts, in its many disguises, the vast majority of our population.

T he Problem Summarized As I stated at the outset, what I have attempted here is an examination of some of the leading symptoms or manifestations of confusion in the minds of the Ameri can people. The urge and hope motivating my effort have been that we might thus derive a better under standing of the mess we are in. The symptoms which have been noted indicate that our "disease of confusion" is a well-developed and serious case. The following summary seems justified: 1. We are failing in our highest responsibility, which is to maintain, preserve, and improve our moral environ ment-the self-reliance, independence, mutual trust and confidence, and capacity for self-government required of us as American citizens. For a quarter of a century, we have been continuously, and at an increasing rate, shifting more and more functions and responsibilities, and hence ever-increasing power and authority, from 164 WILLIAM C. MULLENDORE ourselves as individuals and from our formerly free, pri vate institutions, to government and government insti tutions. We have sought to escape consciousness of our failure and neglect by concentrating on our physical en vironment-production, scientific investigation, tech nology, automation, leisure, comfort, and physical health. That is, we have devoted more and more of our efforts to the means of living, and we have neglected the ultimate ends, aims, and objectives for which we live.

2. We say we believe in freedom, but we are quite "fuzzy-minded" about the meaning of freedom. We tend to think first of freedom as meaning freedom from ob ligations and responsibilities, and as a birthright of the American to receive something free. While we readily join in any protest against infringement of personal rights of freedom of speech and religion, to many of· us such phrases as Hfreedom of spirit" mean nothing. Neither do we appear to be very sensitive about freedom of choice or association; nor do we seem really to care about oppression of the minority by the majority, par ticularly if the oppression appears to be in our favor. Definitely, the prevailing trend is toward modifying the American way of life whenever weare persuaded that the change will assist "myself and my group" to make "progress" toward the attainment of our own economic advantages and "happiness." 3. We are tending to retreat from the higher dimen sions of life, from the inner and the spiritual, and to spend our time and energy in pursuits which contribute only to the physical. Thus by. neglect, as well as by posiOUR TRAGIC STATE OF CONFUSION 165 tive action, we are contributing to the disintegration of the free system of this Republic-Responsible Individ ualism. By the same token, we are contributing to the growth of its opposite number-a government of un limited powers, dominating, controlling, directing, dic tating, and restricting the freedom of. development of those citizens who, under this trend, may soon become "subjects."

As Professor Wilhelm Roepke stated in last summer's issue of Modern Age: The nidus of the malady from which our civilization suffers lies in the individual soul and is only to be overcome within the individual soul. For more than a century, we have made the hopeless effort, more and more baldly proclaimed, to get along without God and vaingloriously to put man, his science, his art, his political contrivances, in God's place. I am con vinced that the insane futility of this effort, now evident only to a few, will one day break on most men like a tidal wave.... Our crisis is spiritual, not economic. We have suffered a failure of nerve and are wandering, lost and bewild ered, amidst a multitude of troubles and anxieties, "lacking wisdom and even common sense," because we are seeking the answer in the wrong dimension and the wrong direction. "Human existence in society has history," says Eric Voegelin in his introduction to The World of the Polis~ "because it has a dimension of spirit and freedom be yond mere animal existence, because social order is an attunement of man with the order of being ... that has its origin in world-transcendent divine Being."4 4 Voegelin, Eric. The World of the Polis. Baton Rouge: Louisi ana State University Press, 1957. p. 2.

166 WILLIAM C. MULLENDORE The pragmatists, many scientists, and intellectual liber als deride this as mysticism and demand something definite which· can be tested in the laboratory so that we may know where weare going. In reply we must ask: "Do you now know where you are going? Or why?" Those who do not now know what to hold by, nor where they want to go, have deserted our "old system" for a hybrid system which has no unifying philosophy or de sign for living. So long as we lack guiding principles and a coherent system, we will be in danger of repeating the humiliating blunder of accepting the communist chal lenge to "compete with" their system. Those who have thoughtlessly praised the superiority of the Russian system of education, merely because it has been turning out "trained" scientists and engineers in greater numbers than our system, have lost sight of the goal in their admiration of a particular m-eans. They fail to note what the Russian system does to the indi vidual; and under any system, it is what happens to the individual that is all important. I close with a favorite quotation on this vital point from the Journal of Arniel, the nineteenth-century Swiss philosopher and teacher.

Writing on June 17, 1852, Amiel said: The test of every religious, political, 'Or educational system, is the man which it forms. If a system injures the intelligence, it is bad. If it injures the character, it is vicious. If it injures the conscience, it is criminal. We know that the system we are fighting fails on every point in the test. What shall we say about our own?

SALESMEN OF SLOTH IN DISPUTE after labor dispute this year, companies have tried to get at the problem of union featherbedding. And important though this problem of pay for no work is, it seems to us to -reflect an even more serious matter. That is the apparent acceptance by many Americans of the idea that they don't need to work very hard; their apparent preference to get by with the least effort and indeed to demand progressively higher pay for progres sively less work. We realize that statement is subject to the perils of any generalization. We also realize that part of this country's high material standards is this ability of in dividuals to live comfortably on the basis of relatively few hours of work. We further realize that many men nonetheless do work extremely hard and that some, or so it is said, thereby. drive themselves to early graves. But what we are talking about is shirking on a scale more widespread than ever before in this country, and more prevalent in unions than anywhere else. Through out American industry there is a discernible employee apathy. Throughout the American ,economy there is From The Wall Street Journal, October 14, 1959.

167 168 THE WALL STREET JOURNAL featherbedding-railroad .firemen paid to tend non existent fires, musicians paid for not playing, farmers paid for not farming, pilots paid for not flying, every where men paid for watching machines that do not need watching. At this point it might appropriately be asked: If all this is so, how come the productivity of labor is said to be constantly increasing? The plain answer is that the rising productivity of labor is largely a misnomer. Capi tal investment in ever more productive machinery is the answer. It is impossible not to wonder about the attitude of people who accept pay for no work, year in and year out, or who do the least possible-a form of inactivity that might be called unofficial featherbedding. It is im possible not to wonder what has happened to their self respect. Here again there is an answer. Union leaders not only sanction and encourage all forms of featherbedding; they defend the practices with a circuitous reasoning that would stun a Sophist.. Naturally, if the great god at the head of the union approves, why should a mere union member bother about a pang of conscience? Im morality exalted, it appears, ceases to be immorality.

And the union example is followed elsewhere. Conspiring with and reinforcing this union attitude is the governmental philosophy fashionable in our time. This would remove from the individual ~any of the cares of dealing with life, and most particularly remove his sense of responsibility;, ,in a word, . spare him the SALESMEN OF SLOTH 169 bother of being a human being with inherent dignity and self-respect. It is not so surprising if many people are willing to do little when government presumes to do all. So much for causes. The effects are also evident with increasingly painful clarity. Frequently shoddy work manship. Crippling strikes for whimsical reasons. Dis dain for a contract. The enormous economic toll of featherbedding which is rapidly turning this into a high cost economy, as reflected in the inability of U. S. prod ucts to compete as once they did in world markets.Per haps most important of all, the erosion of values once held high.

We are not calling for some nebulous national moral resurgence, though the problem is a moral one. We are saying that if there is softness in America today, it is notprimarily inferior education or "inadequate" public spending but this union and statist sponsored philoso phy of indolence. There are other countries, some friendly and some otherwise, where that philosophy does not obtain. And we are saying that a little moral indignation ought to be directed at the salesmen of sloth that weaken our society.

THE CRUSADE AGAINST EXCELLENCE IF THE RECENT TV quiz scandals represented a mere trade malpractice, their significance would be circum scribed. But it seems to me that the recent episodes are surface symptoms of a deeper malady. The elaborate rigging to "control" programs on the air evidenced not only moral shortcomings, but also a lack of artistic integrity. The authentic artist seeks to portray the real nature of man, not a preconceived set of circumstances bearing no 'relationship to reality. In the market place for air time, opportunistic packagers and producers of programs were unwilling on quiz shows to run the risk of bringing selected personalities to the mi crophone, and let the chips fall where they may. They feared that truth and sincerity might yield oc casional dull spots, and an impatient audience would protest by turning the knob on the dial. Thus, they cynically downgraded the nature of man, and "hopped up" synthetic characters who appeared to know more than they did.

Mr. Rukeyser is a business consultant, lecturer, and writer of the nationally syndicated column, "Everybody's Money." 170 THE CRUSADE AGAINST EXCELLENCE 171 This desecration of decency in the clamor for "rat ings" should be fully explored. Apart from ethics, mor als, and political science, this scramble for rank does not make sense even in crass box office terms. The clamor for ratings is based on loose thinking stemming from the half-truth that "all men are created equal." This phrase-corrupted by demagogues-is utterly misleading unless qualified to mean that men are created with a right to equality of opportunity. Uncritical dedication to the phrase has been the curse of the American educational system and other phases of the national life. Because of a lazy attitude toward the nature of a free society, hundreds of thousands of children have been psychologically bruised. Fanatics in the name of democracy insist on shoving all through precisely the same educational mill. Thus the pace and the curriculum, if geared to the average, are too fast for the slow learners and inadequate for gifted children.

Wiser pedagogues are coming to recognize the need for plural standards related to the aptitudes, abilities, IQ's, and other characteristics of individuals. Enrichment of national life calls for a new respect for individual differences. Confused idealists have tended to weaken the national fabric through their passion for uniformity and conformity. On the TV issue, dismiss from consideration for the moment decent ground rules for the use of the ether, which is in the public domain. Even if we look only at strictly commercial considerations, this senseless drift toward programs that purportedly appeal to the lowest 172 MERRYLE STANLEY RUKEYSER common denominator is far from prudent. The old Roman regime of "bread and circuses" has been widened to include Westerns and tales about cops and robbers. It is putting the whole matter in the wrong frame of reference to argue that either federal bureaucrats or the networks should act to restrain the wickedness of spon sors. As a matter of fact, if sponsors are to get their money's. worth out of TV programs, they must relate their activities to their objectives. When the goal is to sell gum at five cents a package, the widest possible listening· audience is obviously desirable-and, for the sake of argument, the correct approach may be Rock 'n Roll. However, if the purpose is to "make friends and influence people" in order to improve a climate in which voluntary enterprise operates, then it is desirable to attract the opinion-making elite consisting of teach ers, ministers, professional men, and executives, and the Philharmonic Orchestra and exciting discussion forum may indeed be in order. It is obviously mixing "horses and apples" to rely on head counts by pollsters irrespec tive of the nature of the adventure upon which the business enterprise may have embarked.

And it is discrediting the free enterprise system un warrantably to cast the sponsor in the role of villain and to investigate ways and means of forcibly restrain ing his depredations. It is high time for those who finance free TV and radio as sponsors to set voluntary standards for themselves. Perhaps the issue can be lifted to its correct perspec tive by recalling that Dr. Alfred N. Whitehead, the THE CRUSADE AGAINST EXCELLENCE 173 eminent philosopher and··mathematician, in his famous speech before the Harvard Graduate School of Business Administration, observed: "A great society is a society in which its men of business think greatly of their functions." The Need for Business Statesmanship Business statesmanship is capable of canons of respon sibility based on something more than a blind worship of "ratings." To me, the crux of the matter is that the managing directors of American corporations should responsibly take over as "decision makers" in this important area of human relations. This would entail giving "come uppance" to little men on Madison Avenue, among the packagers, and in the networks, who are governed by worship of the false idol of the fast buck.

This is nothing more than enlightened self-interest. For every experienced analyst knows that, unless cur rent transactions build up permanent capital in the form of good will, they are consummated at too heavy a cost. Business leaders should instruct those at the merchan dising fringe that no sale is worth-while unless it builds a friendly attitude toward the company. Otherwise, the immediate profit is made at the unreasonable cost of dissipating long-term, intangible corporate assets in the form of public esteem and good will. Thus corporations would be better off if they re174 MERRYLE STANLEY RUKEYSER treated into anonymity rather than pay for exposure as·patrons of crooked programs that promote mediocrity in public taste. Whenever the corporate name is put before the pub lic, management should undertake to make it a symbol of public decency and service to customers. Besides consummating the immediate sale, the com pany, in its public exposure, should, in the words of a brochure which this writer put out in 1938, "sell the business (and the free-choice system) as well as the product." Unless the businessman each year puts some thing back into the system in the form of better public appreciation of liberty, he is like the antisocial farmer who mines the soil, returning nothing in fertilizers, bet ter seeds, crop rotation, and other evidences of con structive behavior. Such a negative approach of taking everything out and putting nothing back is indeed destructive.

In putting their best foot forward, sponsors should associate themselves with activities that reflect quality, good taste, and standards. Business will improve its prestige if it encourages ex cellence. This requires sufficient forbearance to be will ing to reduce boob appeal in order to register the fact that they stand for truth, common honesty, and the sci entific approach to better living and improving public taste. It would be falling into a superficial booby trap to limi t the downgrading of excellence to radio and TV. Magazines of mass circulation are faced by similar THE CRUSADE AGAINST EXCELLENCE 175 temptations. Opportunistic editors are forever mindful that Hhoking" up the news· might sell more copies than dependable objective reporting. But even from strictly commercial standards, a balanced diet is to be desired. As the Saturday Evening Post has pointed out, it would not make sense for it to exclude everything except its most popular feature, "Postscripts." The late William Randolph Hearst, who is credited with originating Hyel low journalism," had sufficient balance to respect qual ity. He always wanted in his newspapers thoughtful and significant pieces to round out the "cheesecake," the comics, and the lurid sex tales.

Professional Responsibility In my own specialty of finance, investment, and busi ness counseling-to corporate clients, it would be a shock ing default not to aspire undeviatingly for a high de gree of objectivity and accuracy. Thus, it would be a degradation of professional responsibility to try to ex pand an .audience· by saying that a financial panic is lurking immediately ahead when your true opinion is that some overdue profit taking might cause a mild intermediate reaction in stock prices. Yet when radio crooners and unspecialized announcers herald the day's occurrences at· the security market places, there is a dis cernible tendency among some to improve their ratings by exaggeration and by unwarranted sensationalism. The sub-surface trend runs deep. Syndicate salesmen of newspaper features advise distinguished. contributors 176 MERRYLE STANLEY RUKEYSER to "write for the crowd." This is a mandate for over simplification and for gilding the lily. There is too little concern for stimulating others to go through what the late Graham Wallas called "the painful task of think ing." In the craze for quantity merchandising, even su perior word usage is discouraged on the theory that other than primitive language will narrow your audi ence. So what? In a good society,··there is a multiplicity of audiences-one for Irving Berlin and another for Johann Sebastian Bach.

The passing public excitement and indignation over the rigging of quiz shows ··will get precisely nowhere in the way of constructive improvement unless we relate the episodes to the larger problem. The Creative Role in Society To put the matter bluntly, if we are to survive as a free Republic in the battle for "competitive co existence" with the Soviet Union and its allies and satel lites, then we must respect an elite of creative minds. While there is a role in our society for the hewers of wood and drawers of water, the tempo of our inventors, scientists, engineers, theoreticians, and executives should not be slowed down to the pace of the lowest common denominator. In this context, there should be rising respect for quality radio and TV stations whose listen ing audience may not be the largest, and for· quality magazines of limited circulation, which keep the lamps of learning lit.

THE CRUSADE AGAINST EXCELLENCE 177 Those who are aware of the trend of the new com petition for survival should not retard their construc tive inquiries because of the slow-wittedness of the un aware. In the free market place for ideas, there must be venturesomeness and risk taking. It is stultifying to inhibit dreams until the dullest minds regard such new concep ts as self-eviden t. The blazoning forth of the banners of mediocrity is a reflection of misguided political leadership. New Dealers, Fair Dealers, Double Dealers, mixed economy advocates, modern Republicans, and others have set back the processes of civilized progress by pandering to mediocri ty. The downgrading of public taste is closely related to the drift toward a "welfare state." Despite the political blue-sky appeal behind the question-begging term "wel fare," the collectivist formula for a "welfare state" is a deviation from an individual free choice society. The "welfare state," being the antithesis of a merit system in which each is rewarded for his degree of excellence, is a device for assuring robbing Peter to pay Paul in order to unduly reward the inefficient and the unpro ductive. In its nature, the "welfare state"· rests on boob appeal and glorification of mediocrity. Its advocates in evitably find themselves crusading against excellence.

From a short-term standpoint, such negativism had its maximum appeal when fear was rampant during the maladjustments and widespread unemployment in the years following the panic of 1929. If the nostrums had appeal under such abnormal circumstances, they are 178 MERRYLE STANLEY RUKEYSER obviously ill-timed in a period of quickened economic development. Certainly the fallacious economic dogmas, concocted during the depressed early nineteen thirties, whatever their original merit or lack thereof, are today "old hat" in the context of high level employment in the dynamic nineteen sixties. Progress is made by courage in shed ding outmoded illusions and prejudices. West Germany, in its stupendous economic recovery since the end of World War II, showed the social utility of pursuing the principles of freedom and prudent eco nomics. West Germany, having earlier been through the inflation and socialist wringer, uncompromisingly turned its back on soft money theories and collectivist doctrines, and recently the Social Democratic Party in Germany, heretofore fountainhead of authoritative doc trines of socialism, threw Marx out of the window, and the British Labor Party has similarly sought to achieve popularity through soft pedaling planks for government ownership. There have been like trends in France and in Italy.

Without regard to provincialism and special pleading, let's encourage our fellow citizens in this struggle for sur vival to put their best foot forward and to foster excel lence-not hamstring it. A great sermon, a stirring edi torial, a revealing article, a fresh expression in business or in the arts of man's capacity for creativity and im provement-these are instruments of progress. Let's not choke off creativity on the ground that tired, worn out, tested appeal themes are safer.

THE CRUSADE AGAINST EXCELLENCE 179 Do We Deserve to Survive? Instead of measuring our survival prospects in a vacuum, we should examine the more fundamental ques tion: "Do we deserve to survive?" If we answer this in the affirmative, then we need have no fear that economic slavery behind the Iron Curtain will be more produc tive than a free society. In our soul-searching, we should not confuse the labels of free individual choice with the reality. We should give new and vigorous expression to the libertarian philosophy, and should make clear that it provides the fountains and springs from which creative improvement flows. In backing a free society, we should make certain that we are not kidding ourselves. We should re-examine the effect of fastening inharmonious collectivist ideas on a free society. We should take a fresh look at the effect of trade union equalitarianism on the philosophy and prac tice of an incentive system. We should study anew the human consequences of offsetting incentives with a steeply graduated income tax, which tends to dilute ma terial rewards. We should determine whether costly "featherbedding" is patriotic at a time when high pro ductivity is the sine qua non for survival of the whole free world.

Obviously, this clash between excellence and medi ocrity is not exclusively an American problem. Under Stalin, Russia attacked excellence through murdering generals-and later paid a price in military weakness when defending itself against Nazi Germany. And Hit180 MERRYLE STANLEY RUKEYSER ler, in dismissing scientists because of religious faith and political views, frustrated his own ambition to dominate the world. Some of the deported creative minds acceler ated pursuit of the splitting of the atom in this coun try, and gave us the atom bomb before the enemy achieved it. The Answers Are ('('Rigged" in Russia Back in 1948, Eugen S. Varga, described at the time as the Soviet Union's number one economist, suffered disgrace because his objective pursuit of knowledge brought him into conflict with the communist party line. Varga wrote with extreme caution, but he bucked the propaganda line. His conclusion that there was no neces sary conflict between the economic interests of Soviet "socialism" and American and British capitalism in the first postwar decade was intolerable to the Stalinists.

Varga was bringing the message that capitalism was not on the verge of collapse. He· was unfrocked for such effrontery, though subsequent events have proven the correctness of his forecas t. What Varga said and wrote are of less significance than the fact that he as the head of the Russian Insti tute of Economics was not permitted to express his true thoughts, findings, and appraisals. The point is that Russian economics was rigged just as quiz programs were. What a price the world pays for rigging. If the Russian Praesidium had listened to its expert, it might have avoided the cold war, and could have started, a decade THE CRUSADE AGAINST EXCELLENCE 181 and a half earlier, rapprochements for international co operation, such as Nikita S. Khrushchev is now mouthing. The stakes are heavy in this matter of counterfeiting the coins of communication. To the economically illiter ate, the cost of calling gray black may seem trifling, but, in the race between civilization and catastrophe, it is important to respect the scientific approach.

When government steps in to dull the rewards for ex cellence and to supplement the productivity of the in ept, it releases forces of savagery which retard progress. In a well ordered society, in which excellence is fostered, there is, of course, room for sweet charity, without en cumbering the machinery for social progress. But the processes of civilization are impaired when in sincere politicians, seeking votes at any price through boob appeal, or hucksters, looking solely at ratings, re enact Gresham's law in a new area. Gresham admon ished that "bad money drives out good" and, by the same token, uncritical worship of boob appeal stops the flow of information and inspiration to those capable of creative innovation. In the circumstances, those who contribute a mite to upgrading public taste are on the side of· the angels.

((RELAX ... ENJOY YOURSELVES!" t'J G. W. 2)gte6 OPTIMISM is a wonderful attitude but only to the point where it begins to blind us to realities for which real solutions need be found. As an example of what may be over-optimism we are told again and again that "the sixties" will usher in the most fabulous wave of pros perity we have ever enjoyed-so relax, and enjoy it. In one form or another this theme is being drummed by writers and other assorted observers. Recently, following the usual banquet fare, I heard an unusually talented speaker not only make the prophecy but support it with a number of detailed rea sons which deserve our attention. But if I understood him, three of his five principal reasons would actually work against prosperity, while the other two would have little meaning unless accompanied by the prime adjunct to prosperity-the creation of the tools of productionl Let's take a look at the reasoning which dominates the optimistic view of prosperity unlimited.

Mr. Dykes is an architect from Canton, Ohio. 182 "RELAX •••ENJOY YOURSELVES!" 183 REASON # 1: "There is an unprecedented increase in our birth rate and population." If this reason were valid, the people of China and India would be enjoying a prosperity so fabulous it would put ours to shame. Ask any family man if having another mouth to feed makes him thereby more pros perous. Clearly, quite the opposite is true. The increase in population, if present levels of living are to be maintained, means that capital investment must be sufficient not only to replace obsolete tools but also to provide all the tools needed by all the persons added to the population. Five million new job holders, for instance, would require tools costing between 50 and 75 billion dollars at today's prices-plus billions more to cover obsolescence-all this just to stay even. To in crease living standards would require still further in vestment in tools. An arbitrary increase in tools, say $1,000 more per job holder, would call for an additional 75 billion dollar investment. Since all this could come only from savings, the enormity of the task is obvious.

REASON #2: "Both political parties now are committed to the principle of (Full Employment.'" Again let's look at India and China. About nine per sons out of ten in these countries, including children, are busily engaged scratching a bare living from the soil while one of ten is left for all other forms of produc tion. This preponderant number of "farmers" is due to their primitive production methods. Full employment means little unless accompanied by full production. Full 184 E. W. DYKES production flows from the most efficient use of the best known tools. Full employment in those countries does not make the people wealthy. Actually, political parties, as such, have no control over "full production." Politicians aI-ways speak of "full employment"-not "full production." It is possible for the political party in power to "make" work to employ persons, and the taxing power even yields capital for such a purpose. However, it is capital which, in the hands of its rightful owners, might have created truly productive and lasting jobs for the unemployed.

To test this idea of "full employment," why not can cel all freight runs of the Pennsylvania Railroad and give jobs to the unemployed to carry the freight on their backs from New York to Chicago and points between? If we used all the unemployed people in the world, we might still be short of freight-carrying ability. But they would be "fully employed." Political parties, because of their mischief in the past, now have a job to do for full production: remove the roadblocks to investment which take the form of con fiscatory taxation-take away the barriers to incentive do away with the laws which give one group of citizens unfair advantages in "bargaining" with other citizens. And then let them stay out of the business world en tirely. That would be a real service. REASON # 3: uWe are in a period of controlled but con tinuous inflation/' Inflation, "controlled" or otherwise, is a deterrent to "RELAX •••ENJOY YOURSELVESl" 185 savers and therefore to investment in the capital tools which increase production. Few threats to prosperity are greater than that insidious robber which is inflation.

When persons are aware that their savings are losing value, they become spenders rather than savers. Strange ly, it is often our chief executive or high government officials who warn us about inflation-yet only the Con gress can do anything about it. And very simply, too. Just balance the budget-that's all. 1 For all practical purposes, inflation would end. REASON #4: UA utomation will increase the country's productive capacity so much that employees will have shorter hours and higher pay." This is true-if-if the immense sums of money neces sary to produce such equipment are made available. Neither political party has a record with respect to tax policies which encourage such savings and investment. If the money is not forthcoming, then automation, for the most part, will be a dream. Politicians, labor leaders, and citizens generally need to recognize this fact; most businessmen already know it.

REASON #5: u • •••Because of the tremendous capacitY7 energy~ and ingenuity of the American people." Americans, just because they are Americans, are not endowed with superman qualities. Freedom of the in dividual to invest, to invent, to keep most of the fruits 1 Balancing the federal budget, of course, would require some cooperation from the constituents of congressmen.

186 E. W. DYKES of his own labor is the factor which has made Ameri cans appear to be so energetic and ingenious. Recent political activity has done little but chop away at the basic American freedoms. It follows, of course, that only damage can result from such political activities insti gated, as always, "for the common good." In summary, then, may it be suggested that the large quantity of invested capital per unit of population pri marily accounts for our high level of living. With bare hands we could do no more, perhaps less, than savages can do. If there are more of us, it takes that much more capital. Automation, truly the wave of the future, re quires fantastic investments. Few of the spokesmen in either political party show any signs of understanding this basic economic fundamental, much less doing any thing about it. They often refer to our "free enterprise system," which is anything but free. What is needed, truly, is a return to the free market, a cessation of deficit financing, abolition of the progressive tax, and a whole new outlook oriented toward opportunity as the best path to security.

FLIGHT FROM INTEGRITY' tg oteonardG. Read SOME YEARS AGO the public relations officer of a large corporation summarized for me his guiding principle: "Find out what the people want and do more of it; find out what they don't want and do less of it." While seldom so succinctly stated, such an external, "other-directed" guide to behavior is finding ever wider acceptance in American life. Implicit in its ,acceptance is a flight from personal integrity; and here may be found an important explanation for some of the mis chief presently besetting our society. Doubtless, this is good enough as a formula for get ting rich. However, if an individual looks upon wealth as a means to such higher ends as his own intellectual and spiritual emergence or realizing those creative po tentialities inherent in his nature, then the formula has its shortcomings. And, in certain areas, it is downright destructive.

This is a serious charge. Let's explore it. In order to get this matter into perspective, contemplate the count less specialized subjects known to mankind. Take any one of them-landscape painting, for instance-and ar range the population of the U.S.A. in a pyramid accord187 188 LEONARD E. READ ing to proficiency or quality. There would be some one person at the very peak. Under him would be a few competent landscape painters; there would follow per haps one million having a discriminating appreciation of such art; after which there would be the great mass millions upon millions, unconscious, unaware, utterly ignorant of the art or the standards by which its perfec tion could be attained or judged. Rearrange the population in proficiency pyramids for all of the countless subjects which engage human inter est and each of us would find himself near the base of most of the pyramids. Few are leaders or among the highly competent-except rarely and momentarily, if at all. Each of us has a potential for growth and develop ment-especially if advantage is taken of the help avail able from those on higher levels.

With the above in mind, let us explore the implica tions of integrity to the situation we are contemplating. It involves the accurate reflection in word and deed of that which one's highest insight and conscience dictate as true and right. Now, a person's concept of what is true may not in fact be truth, but it is as close to truth as he can get. It is the individual's nearest approxima tion to truth, his most faithful projection of that ap proximation, the most accurate reflection of his best lights. With the pyramid picture and this conception of in tegrity in mind, let us now observe what happens when the skilled in any subject-the competent who are near the peak-adopt the practice of finding out what the FLIGHT FROM INTEGRITY 189 people want in order to "do more of it" and finding out what they do not want in order to "do less of it." In such circumstances, from whence comes the instruction for what each of the skilled is to do? From the best that is in each skilled person or available to him? From the highest conscience of each? Indeed not! The instruction and leadership in such circumstances is tailored to the level of the "know-nothings" of the given subject, to the values at the base of our imagined pyramid where over 90 per cent of the people are. Integrity is forsaken.

Potential leadership is diverted from higher aspiration and, instead, panders to the tastes and foibles of the ignorant. Adverse Selectivity in Art and ··Music The fields of art and music, where new "lows" are now so much in evidence, illustrate the flight from in tegrity. Consider the following confession, ascribed to the famous painter, Picasso: In art, the mass of the people no longer seek consolation and exaltation, but those who are refined, rich, unoccupied, who are distillers of quintessences, seek what is new, strange, original, extravagant, scandalous. I myself, since cubism and even before, have satisfied these masters and critics, with all the changing oddities which passed through my head, and the less they understood me, the more they admired me. By amusing myself with all these games, with all these absurdities, with all these puzzles, rebuses, and arabesques, I became fa mous, and that very quickly. And fame for a painter means sales, gains, fortune, riches. And today, as you know, I am celebrated, I am rich. But when lam alone with myself, I have 190 LEONARD E. READ not the courage to think of myself as an artist in the great and ancient sense of the term. Giotto, Titian, Rembrandt, and Goya were great painters; I am only a public entertainer who has understood his times and has exhausted as best he could the imbecility, the vanity, the cupidity of his contemporaries.

Mine is a bitter confession, more painful than it may appear, but it has the merit of being sincere. 1 I have a TV program in mind. The star is an accom plished actress with an attractive voice. Does she sing the lovely songs of which she is capable? Only now and then. For the most part, she and those in charge of her TV appearances insist on the stuff which nickels in juke boxes indicate as mass-popular. Instead of the millions at the lower part of the pyramid being lifted in their musical tastes by this singer at her creative best, we observe her descending and catering to the lowest or base tastes-an imitation of ignorance, so to speak. Thus is the music of our day degraded. However unhappily we may view the wreckage which these responses to ignorance have brought to the fields of music, art, literature, entertainment, journalism, and the like, we must concede that the individual who cares anything about himself has the choice, in these fields, of turning off the TV and not reading or viewing the rubbish that is so overwhelmingly served up to him.

He can, if he chooses, go his isolated, unmolested way. But no such freedom of choice is allowed the indi vidual when flight from integrity occurs in the realm of politics. The individual, irrespective of his scruples, 1 Broderick, Alan Houghton. Mirage of Africa. London: Hutch inson & Co., Ltd., 1953. p. 203.

FLIGHT FROM INTEGRITY 191 his morals, his ideals, his tastes, is helplessly swept with millions of others into the miserable mess which the dull weight of ignorance gradually but inevitably in· flicts on everyone. A candidate for the Presidency, supposedly brighter and better educated than average, nevertheless polled the mass of voters to find what they wanted from gov ernment. As could have been foretold, they wanted the very things that crumbled the Roman Empire-"bread and circuses." The farmers wanted subsidies, not for outstanding performance, but for not farming. The la bor unions wanted grants of coercive power that they might extort more pay for less work. Many businessmen wanted various protections against competition. Vast hordes wanted the guaranteed life: pensions, ease, re tirement; in short, to be relieved of responsibility for self. These are the things our candidate professed to stand for and promised to deliver, if elected. Instead of standing consistently for the highest principles of political economy known to him, he imitated the low est common denominator opinion of the population.

His campaign manager confided that he had to do this to get elected; that once in office he would then do what he regarded as right. This opportunity 'never came; the candidate was defeated. And, defeat was his just due. One who runs a campaign without integrity proves openly that he would, at any time, forsake integrity if it appeared expedient for him to do so. This explains why the two major political parties in the United States .today stand for the same things. Both 192 LEONARD E. READ have chosen to receive their instructions from precisely the same source, the lowest common denominator of popular opinion. The result is a one-party system under two meaningless labels. This deplorable situation can never be remedied until there is a return to integrity, with candidates whose outer selves and actions will re flect their own best thoughts, regardless of the effect this may have on their political fortunes.

Edmund Burke, addressing those who had just elected him to Parliament, put the case for integrity in un equivocal and unmistakable terms: But his [the successful candidate's] unbiased opInIon, his mature judgment, his enlightened conscience, he ought not to sacrifice to you, to any man, or to any set of men living. These he does not derive from your pleasure - no, nor from the law and the Constitution. They are a trust from Providence, for the abuse of which he is deeply answerable. Your representa tive owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion. George Washington had the same practical and lofty sentiments in mind when he reportedly said to the Con stitutional Convention: If, to please the people, we offer what we ourselves dis approve, how can we afterwards defend our work? Let us raise a standard to which the wise and honest can repair. The event is in the hand of God.

No individual, whoever he may be, can escape the immediate consequences of ignorance in politics, as he can in art, music, journalism. There is no way to avoid the pains which bad political action inflicts. For ignorFLIGHT FROM INTEGRITY 193 ant political action encompasses all-one's life and the sustenance of life which is the fruit of one's own labor; one's freedom to choose how one shall live his own life. Political collectivism-the pattern consonant with politi cal ignorance-means what it says: Everyone swept in discriminately into a human mass, the collective. 2 When an individual, in his thinking and actions, un hitches himself from integrity, he "lets himself go," so to speak. He is anchored to nothing more stable than whimsy, momentary impulses, mere whiffs of fickle opinion. He is adrift and without compass. This shows through in much current art, music, poetry, and unques tionably accounts, in a very large measure, for the rapidly growing socialism, collectivism, decadence-call it what you will. There remains, however, the task of discovering why integrity is so easily, casually, even eagerly abandoned. Why this wholesale divorce from personal conscience, this shameless acceptance of mass ignorance as· our Director of Doing?

Doubtless, there are numerous reasons, some of which may be too obscure for ready discovery and examina tion. One possible explanation has to do with a false economic assumption. We, having paid so much heed to material progress and well-being, to ever higher 2 This dim view of political collectivism is not to be mistaken as a backhanded endorsement of the "philosopher king" idea of Plato and its modern counterpart: that society should be wholly governed by committees of the creative elite. There is no political process of knowing or selecting in advance the persons who will be most creative .. The only process· that will bring the creative minority to the top, that win encourage their effectiveness, is com plete freedom.

194 LEONARD'E.READ standards of living, let our economic concepts pattern other aspects of our lives. Erring in our economic as sumptions, we compound the error in our social, politi cal, moral, and spiritual judgm.ents~ Here· is the error in economic diagnosis : We .assume that "Find out what the people want and do more of it" has been the formula for our success, for our pro lific production of goods and services. Thus, in the eco nomic area, so we think,. our guidance has come from the mass market rather than from conscience or higher realms of mind. The current cliche, "The consumer is king;" tends to support this view. Actually, instruction from the mass market has to do only with duplication. The market determines whether or not. an economic good is to be duplicated and, if so, to what extent. Duplication, sometimes called "mass production," ad mittedly controlled by the market, is· not, however, the secret of productivity. The secret lies back of that. It has its genesis in the creation, the invention. Ralph Waldo Trine helps with this explanation: Everything is first worked' out in the unseen before it is manifested in the seen, in the ideal" before it is realized in the real, in the spiritual before it shows forth in the material. The realm of the unseen is the realm of cause. The realm of the seen is the realm of effect. The nature of effect is always de termined and conditioned by the nature of its cause.3 The noted economist, Professor Ludwig von Mises, 3 From In Tune with the.Infinite. Indianapolis: The Bobbs Merrill Co., 1897.

FLIGHT FROM INTEGRITY 195 reputedly the greatest free market theorist of our time, adds his judgment to this view: Production is a spiritual, intellectual, and ideological phe nomenon. It is the method that man, directed by reason, employs for the best possible removal of uneasiness. What distinguishes our conditions from those of our ancestors who lived one thousand or twenty thousand years ago is not some thing material, but something spiritual. The material changes are the outcome of the spiritual changes. 4 Where, for example, did Thomas Alva Edison get his ideas for the electric lamp? Not from the mass market! How could a people give specifications for something about which they were totally unaware? In reality, the productive process works outward from that which is first presented uniquely to an individual mind as awareness or consciousness or insight (the re ception of ideas-ideation) and is then accurately (with integrity) worked out or reflected in the material good or service. There is a distinctively spiritual accomplish ment before the good or service is held up to view be fore the mass market.

American. economic progress has been truly phenom enal. But this progress has been founded on inspiration from the highest insights of individuals, not. on advice from the lower levels of ignorance. In this manner the masses progressively are freed from poverty and slavery, free men's material needs gratified as never before, and opportunities opened to everyone to pursue and develop 4 From Human Action. New Haven: Yale University Press, 1949. p. 141.

196 LEONARD E. READ those creative potentialities inherent in his own person ality.5 If we would succeed with our political institu tions, we have in the productive process a model to em ulate. However, we must understand how this process really works: that it finds its power in highest conscience and the accurate reflection thereof, in short, in integrity. One's highest conscience, regardless of the step it oc cupies on the Infinite Stairway of Righteousness and Wisdom, is sensitive to the way one treats it. Lie about it, distort it, reflect it inaccurately, take contrary instruc tion from inferior sources or yield to the temptation of fame or fortune or popularity or other weaknesses of the flesh at its expense and it will become flabby and flaccid and will be incapable of rising to higher levels. Now and then we .observe individuals who can be de pended upon to state accurately that which they believe to be right, persons unmoved by fickle opinions, by the lure of applause, or by the sting of censure. We may dis agree with such persons, but be it noted that we trust them. For their creed appears to be: This above all, to thine own self be true; And it must follow, as the night the day Thou canst not then be false to any man.

Such persons are possessed of integrity! II Touched upon here is the moral function of wealth. Whether or not people use wealth to free themselves for higher effort is beyond the scope of this essay. Many do not.

GOVERNMENT'S EXPANDED ROLE .An eJitorial THE EXPANDED ROLE of government has brought about significant changes in our economic system. Old-style, individual-enterprise capitalism has given way to what Professor Calvin Hoover of Duke University describes in his recent book, The Economy, Liberty and the State, (The Twentieth Century Fund, N. Y.) as "Welfare Capi talism, Progressive Capitalism, or simply the Organiza tional Economy." Picking up the last descriptive phrase, it would seem that organization headquarters are gravitating more and more toward Washington-as President Eisenhower warned at the 1957 Governors' Conference. The federal government, in ways large and small, per vades our lives. Measuring its size and scope, to get some indication of its vast and growing influence, can take many approaches. Perhaps the simplest is to cite a few statistics, single out a few programs that point rtP the wide range of government economic-financial activities and responsibilities today.

From the Monthly Letter of the First National City Bank of New York, August 1959. 197 198 FIRST NATIONAL CITY BANK For example, some 25 million Americans (veterans, federal workers, ~r~ed forces" farmers,. social security recipients )-one adult in every five-get regular checks from the government. Countless others receive occa sional payments. At the end of 1958, federal warehou~es were giving out food to more than five million "needy persons." The food got in the warehouses in the first place be cause of federal farm programs which, while regiment ing the farmer with acreage controls arid marketing quotas, have priced commodities out of markets and piled up mountainous surpluses. Some two million persons live in government-subsi dized' public housing. Taxes at all levels of government take more than one quarter of our national production and are levied most heavily on work, enterprise, and capital accumulation.

The federal government directly competes with pri vate business by operating thousands of commercial industrial facilities (a 1956 tally placed the total at nearly 20,000 with capital assets of some $12 billion). In the financial field there are over 100 federal insur ing, lending, and guaranteeing agencies covering agri culture, housing, foreign trade and investment, local government organizations, commerce, and industry. It is estimated that by June 1960 existing lending programs will reach a total outstanding of $105 billion ($23 bil lion direct loans and $82 billion guaranteed or insured loans.) In June 1945 the total was $11 billion. Federal aid to states, localities, and individuals, at GOVERNMENT'S EXPANDED ROLE 199 $147 million in 1930, climbed to $7.2 billion· by 1958. Government-ownedelectric utilities accounted for one kilowatt in 18 generated, in .this country in' 1920; last year public power facilities generated one kilowatt in every four.

One in every six employed· Americans is on a govern ment payroll. Since 1900 nongovernmental employment has increased about lOOper cent while government em ployment-federal, state, and local-has' increased about 650 per cent. The Great Reaction There is a chorus of pleas these days for an even big ger role for government-more central planning, goal setting, decision making. They are invariably put forth in the name of "progress." Last month, for example, a panel of seven economists, including Professor John K. Galbraith of Harvard, stated: "We reject the notion that government governs best which governsleast. The federal government is our only instrument for gllidiIig the economic destiny of the country." "Liberals" urge greater spheres of government to "beat the Russians" and "advance social welfare." Criticism is heaped on "reactionaries'" who are obsessed with the "fetish of a balanced budget and stable prices" and who harbor "exaggerated fears about growth of government."

"Liberalism" is a good word; "reactionary" is a bad word. Yet the real reactionaries are those who urge stat200 FIRST NATIONAL CITY BANK ism in the name of liberalism. The true liberal op poses encroachment by centralized power; he respects the individual, his cherished freedoms, his sense of re sponsibility. The "neo-liberals," on the other hand, have little faith in the capacity of free men to take care of them selves, to overcome hardships, to exercise wise judg ments. Supporters of the superstate aspire to decide for people what they shall have and to keep power by mak ing voters beholden to them for handouts. This is openly expressed in the cynical observation, widely at tributed to Harry Hopkins: "We will spend and spend, and tax and tax, and elect and elect." It was Alexis de Tocqueville, that discerning French observer, who in the 1830's warned of the ultimate fate of men who are tempted by a "benevolent" Welfare State: It provides for their security, foresees and supplies their necessities, manages their principal concerns, directs their industry, regulates the descento£ property, and subdivides their inheritances - what remains, but to spare them all the care of thinking and all the trouble of living .. '.?

The will of men is not shattered, but softened, bent, and guided. Men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence. It does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, until each nation is reduced to be nothing better than a flock of timid and industrious animals, of which the government is the shepherd. John Stuart Mill, the English philosopher and econo mist, pointed out more than a century ago: The. worth of the State, in the long run, is the worth of the GOVERNMENT'S EXPANDED ROLE 201 individuals composing it; and ... a State which dwarfs its men, in order that they may be more docile instruments in its hands even for beneficial purposes - will find that with small men no great things can be accomplished. A democracy, while preserving the outward forms, can destroy itself if the majority of the voters find them selves bound, out of selfish interests in benefit programs, to perpetuate in power a benevolent dictatorship. Soon er or later, however, people revolt when bureaucrats be come too greedy for power and money.

As far back as 1949, the Australian people turned out of office a ruling Labor Party in favor of a Liberal Country Party which reformed taxes to open opportu nity for enterprise. In Canada a Liberal Government launched a similar tax policy beginning in 1952. A year earlier, in 1951 in the United Kingdom, the Labor Government went down to defeat before a Conservative Party pledged to halt nationalization, end controls, reform taxes. As R. A. Butler, Chancellor of the Exchequer in the Conservative Government, put it in 1954: In the past three years we have burned our identity cards, torn up our ration books, halved the number of snoopers, decimated the number of forms, and said good riddance to nearly two-thirds of the remaining wartime regulations. Now we have red meat - instead of red tape. These illustrations of retreats from socialism show that, while people like to get Christmas presents, they are not so keen about the restraints, controls, and losses of opportunity that go with the fully developed socialist society.

THE HIGH COST OF COERCION tg paulof. poirol FOREIGN cars, cameras, tools, steel, and other products are growing in favor with the American consumer. An Italian-based firm recently bought control of one of the oldest typewriter companies in the United States. A parallel trend is found in rising investment of American capital abroad. Concern about rising imports of goods and the flight of gold and savings from the United S,tates prompts in quiry i~to the causes and possible correctives for this shifting pattern of trade. As producers, why are we find ing it increasingly difficult to compete for customers in the world market? Why are our exports of consumer products and services giving way more and more to ex ports of capital goods-to American investments in for eign plants and production. facilities? Are. we compara tively overcapitalized-too many tools and facilities per laborer-in the United States? Are we in America, as consumers, getting a bargain from this new pattern of international trade; or is the trend detrimental to our interests?

Current concern about· international trade brings to mind the appeals, so widespread in the depth of the 202 THE HIGH COST OF COERCION 203 "Great Depression" a generation ,ago, to shop at home patronize local merchants. The argument was that shop ping in chain stores or through mail-order houses, or otherwise spending money outside the community, would aggravate the conditions of local unemployment, slackness of business activity, and hard times generally. There is a fallacy in this "buy-locally" cure for depres sion: it is not possible to spend oneself rich. True, the local merchant would like to sell more goods at his price, the local laborer would like to sell his services at his price, the farmer would like to sell all he can produce at h is price, and so it goes as far as all sellers are con cerned. But man does not live by selling alone. The other side of every sale is a purchase. Selling one thing involves buying another--even if the thing bought is "only money." The customer is "the forgotten man" in the "buy-locally" argument. For if the consumer says that local prices are too high-whether for merchandise or the services of a laborer or whatever-the result is "No Sale!"

The upshot of all this is that nobody. in a commu nity gains, either as buyer or as seller, when there is no sale. And contrary to the implications of the buy-locally argument, the community gains, rather than .loses, if a customer can find what he wants at a price he's willing to pay, even though he has to go outside the community to find such a bargain. What did the community gain? Just what that customer gained in satisfaction from his trade-and the community lost nothing in the process. At least one person in the community made a sale and 204 PAUL L. POIROT a purchase-traded something he wanted less for some thing else he· wanted more. If he could have bought the same thing at the same price locally, no doubt he would have done so. Those who want customers to buy locally need only see to it that their asking prices are right for customers are motivated by bargains. Just as the customer is the key to community trade, so must the interests of consumers be considered in mat ters of international trade. But let's further analyze some important aspects of trade at the local level before in troducing international complications.

Jones of Jonesville In Jonesville, let us say, Mr. Jones has found he can serve his interests very nicely by inventing and operat ing a machine that turns out nails which he can trade to others in the community for anything he needs. In deed, so pleased are the others that they reward Jones handsomely in trade until he has more than enough for his immediate requirements; he has savings. As his savings accumulate, Jones risks them in part to improve his machine until it will turn out twice as many nails as before in a given time; and his savings grow. Then he begins casting about for other invest ment opportunities. He sees that others in the commu nity also have been acquiring savings and tools and skills to improve their output. But it appears that his savings are largest, so he concludes that another nail making machine might be the best investment opporTHE HIGH COST OF COERCION 205 tunity at the time __if he can hire an operator at a rea sonable wage. Upon checking, he discovers that the most likely candidate for the new job is a young man who has not yet accumulated any tools but who has the intelli gence and ability and desire to operate the new machine for Jones. They agree upon a wage rate that is higher than the youngman could earn elsewhere, yet lower than Jones would have to pay any other workman of comparable ability.

Though. nail prices decline as Jones expands his out put, he continues to profit because he knows how to cut production costs with new and better machines and hired help. He also is able to expand his sales territory as his costs-and prices-decline. In other words, the market area is enlarged, trade increases-to the advan tage of everyone concerned. This would be true, even were Jones to bring in new workmen from the fringes of the market area, workmen willing and eager to work at wages that might not attract others in the community. At first thought, it might seem that bringing in cheap outside labor would lower the level of wages in the com munity to the injury of native workmen. Actually, it does not, if the new workmen earn their wages through production. In that case, .they contribute to the commu nity at least as much as-and generally more than-they draw from it. A common argument is that a community has only a limited supply of capital or tools; and if these tools are spread thinner among more workmen, the average pro ductivity must decline. But in a free market, it may hap206 PAUL L. POIROT pen otherwise. When labor is available at reasonable wages, then capital and tools are attracted. They come forth out of idleness; they are diverted from consumer uses; they may come from outside the community as did the extra supply of labor. In other words, the supply of capital is flexible, too. And so is the supply of man agerial talent. If labor is available, some of the laborers themselves will· become employers, start new businesses, and thus move up the industrial ladder. So, an increased labor supply means increased production and lower prices for goods and services, and each wage dollar has increased purchasing power.

Competition Between Employers Futhermore, Jones cannot arbitrarily set wage rates. Other employers in the community-or potential em ployers-also want hired help and will bid against Jones to keep the going wage rate high enough to clear the market. This means that everyone who. wants to be em ployed, instead of working for himself, can find a joh. Also to be considered is that Jones, or anyone else with savings or capital, would be under strong tempta tion to invest some of the savings in new plants and new tools in any area that· offers sales opportunities and a supply of available workmen. Thus it is that capital moves from one location to another, as do workmen, within any market area, tending to spread and equalize job opportunities, wage rates, industrial development, cultural advances, and a rising level of living. Nor does THE HIGH COST OF COERCION 207 this process of competitive growth and trade improperly exploit or injure anyone-unless he had expected to get something for nothing. It assures everyone not only all he can earn but also the best possible opportunity to earn it-whether his goal be material goods, services, cultural opportunities, ·.sel£-improvement, or just plain leisure.

Now, suppose that Jones had been fully satisfied with his first nail machine and had decided to let it support him for the rest· of his life. In that case, he might have imagined that the Jonesville market was his exclusively -that he had a right to all the money that community could afford· to pay for nails. Then he might urge the Community Council to forbid any other nail manufac turing in the area· and any importation of nails. He would argue for such a nail monopoly on grounds that competition would injure him; and if he were injured, the rest of Jonesville would suffer accordingly! By that same rationalization, other producers in Jonesville could argue for protection against competi tion, and organized workmen could protest against any importation of'~cheap foreign labor." Some Consequences of Intervention At this point, ·there is no need for further specula tion as to what might happen in some hypothetical Jonesville. We need only look about us to see that these very things have happened and are happening every day.

One after another, special interest groups have turned 208 PAUL L.POIROT to government for some "fair advantage" over competi tors, both domestic and foreign. Farm prices have been propped up to the disadvan tage of domestic consumers; exports are subsidized; acreage or marketing quotas have been invoked to keep down potential competition in agricultural production. Labor unions have sought and obtained legislation that, in effect, grants them monopoly powers and ex empts them from common law prosecution for acts of violence, coercion, assault, and intimidation. Manufacturers and various producer groups, often with active support from organized labor, seek and ob tain tariffs and other protective measures against com petition from "cheap foreign .labor." Publishers, advertisers, shippers, and other groups get postal subsidies. Teachers, preachers, and various proponents of "worthy causes" expect tax exemption, federal aid, and other special privileges.

Promoters. demand subsidized credit and artificially low rates of interest. There appears to be no end to the possible. combina tions of special interests seeking something for nothing at the other fellow's .expense. All of t~ese developments, it must be noted, are departures from the method of voluntary cooperation and exchange in the open mar ket.There are no willing buyers of nothing-for~some thing, which means that· coercion or a reasonable fac simile must be invoked to· get something-for-nothing. And organized coercion tends to gravitate toward and THE HIGH COST OF COERCION 209 congeal in the hands of government. The powerful and burdensome bureaucracy that now demands a third of the productive efforts of the American citizenry is but a reflection of our departure' from voluntary competi tive enterprise and a measure of the force that is re quired to push or drag individuals into unattractive projects. Much of the government spending is in the name of national defense, which becomes a growing problem as multiple pressure groups seek protection against possible competition. This is what always hap pens when government intervenes, first to establish a monopoly power, and then to defend the monopolist.

Multiplying the Problems We in America, if we persist with the prevailing pat tern of coercive practices and departure from open com petititon in our domestic affairs, have no right to expect anything but trouble in our international relationships. It is possible to get some production by compulsory devices-if the compulsion is not absolute; slavery "works" after a fashion. But it is tremendously inefficient and wasteful· of natural resources, not the least of which is the unimaginable ingenuity and creativity of which individuals are capable if only they could be free to pur sue peacefully their own interests with their own prop erty. Burdensome taxation, culminating in runaway in flation, is the inevitable consequence of shunning com petition and turning to coercion as a way of life. And this tax burden, otherwise manifested as an interna210 PAUL L. POIROT tional flight from the U. S. dollar, is precisely why American goods and services are meeting increased cus tomer resistance in the markets of the world: coercion makes for costly production and distribution.

Let no one suppose this to be a trifling fact of merely academic concern. Serious enough is the threat to the soundness of the dollar and the credit of the U. S. gov ernment. But even that should not be our major object of concern. The terrible seriousness of the situation is hidden behind Khrushchev's boast that "we will bury you," which American business and professional and po litical leaders are interpreting to mean that we are now "at economic war with Russia." Now, the reason why this is serious is not because Khrushchev has challenged capitalism to compete in the markets of the world. Such competition is the bread and butter of capitalism, the reason for its being, its very life. No, the seriousness lies in the fact. that· supposedly stanch defenders of com petitive private enterprise are now using the term eco nomic war to describe a competitive situation. This is the new terminology of the coercive way of life, designed by and for those who do not choose to take their chances in open competition. And if this defection from capital ism means that we are going to try to beat Khrushchev and .company at their own game with their choice 'of weapons-that we, too, are bound to rely upon coercion and /government controls-then we are indeed at war, not against Russia, but with Russia, against the ideals and practices of freedom that once guided American affairs at home and abroad.

THE WELFARE ST A TE DOCTRINE tg P. m. :lox BUREAUCRACY is by no means limited to Washington; we have a full and spreading measure of it in Canada. Here are some figures. The Ottawa government had 195,390 people on the public payroll in 1958: a jump of 10,000 over 1957. The 10,000 added to the payroll in 1958 were equivalent in number to all the workers making automobiles in the vast General Motors plant at Oshawa, Ontario. In the ten years since 1948 the number of people on the Ottawa payroll has been increased by 62,000 or nearly 53 per cent. In the twenty years since 1938 the in crease has been 136,000 or 309 per cent. Our population growth since 1938 has been 55 per cent. Through the last twenty years, in peace or war, good times or bad, Ottawa thus has added to the public pay roll an average of 6,800 people every year. That yearly increase alone is 2~ times the total of our company's full-time employees in 1958, and we are not a small company.

Mr. Fox is President of the St. Lawrence Corporation, Ltd. This article is taken from his annual report to shareholders in Mon treal, April 15, 1959. 211 212 P. M. FOX But the Ottawa payroll is only part of our bureauc racy. We also have the multiplying numbers attached to provincial and municipal governments. These are difficult to ascertain but I believe it a cautious estimate to say that ordinary government payrolls throughout the country in 1958, paid out of taxes, totaled over 400,000 people. The 400,000 compares with some 60,000 workers in 125 pulp and paper mills across the country, and pulp and paper is Canada's biggest industry. In fact, the 400, 000 considerably exceeds the combined total of workers employed in Canaqa's twelve leading industries as listed in the latest Canada Year Book. And the 400,000 is by no means the full story; it rep resents only the ordinary departments of government. 1 Our multiplied and multiplying bureaucracy in Can ada is an offspring of what has become known as the Welfare State, a pseudonym for state socialism. The Welfare State also breeds overspending and inevitable inflation. The combination of welfarism, bureaucracy, and inflation is now our top danger.

If we in the Western world ever succumb to aggres sion, economic or military, it will not be due to the ag gressor; it will be from our own debilitation. When we 1 Ottawa figures do not include armed services, government agencies, or crown corporations such as CBC. (In 1958 CBC alone had 6,300 employees and took $41 million out of taxes for its capital costs and operating deficit.) Provincial and municipal esti mates are based on various authentic sources and are also for ordinary departments; they do not include school teachers or municipal police and fire forces.

THE WELFARE STATE DOCTRINE 213 surrender self-reliance to leaning on government pa ternalism we are like a man who leaves his legs idle in favor of crutches that he does not need. He will end by having no muscle. We can end by getting too flabby to work hard or to fight. To see what has happened to us, we need to look back thirty years or so. The doctrine of the Wel£are State in Canada began then as a struggle for social justice in which men like J. S. Woodsworth, right or wrong, were dedicated missionaries. Mr. Mackenzie King adopted the doctrine as a political tactic in his early seeking of support to rehabilitate his party and his dex terity was imitated by Mr. R. B. Bennett in a new deal maneuver for the 1935 election. Since then we have had a continuing performance by all political parties, federal and provincial, in trying to out-do each other by offering larger and larger doses of Sugar Daddy benevolence as a striving to stay in office or to get there. In this technique of beguiling voters with their own tax money we have never had more not able examples than in 1957 and 1958.

After thirty years of accelerating welfarism, what has been the effect? We had a public example last month in the Ottawa excursion of 1,100 western farmers seek ing a 300 million dollar handout and, worse still, in their bands-and-flags reception by some members of parliament. The fact that the excursion was a flop does not alter its. sorry contrast with what we used to think of as the strong free spirit of the West, where men were men-not mendicants.

214 P-o M. FOX But I .do not. single out the western farmer; there has been a great loss of self-reliance amongst all of us. De pendence on government now pervades our thinking. With, individual industries,2 labor bodies, cultural groups, and institutions of every kind it has become a habit to look to governments for allowances, subsidies, bonuses, benefits, grants, bounties, subventions, and all the other fancy words. that mean handout. Despite oppressive taxes and shrinking dollar value we still try to fool ourselves that the handouts are some thing-far-nothing and our newspapers unfortunately abet the delusion by their careless habit of saying that "the government will pay." It should be painfully plain that a government can pay for nothing; only the tax payers pay. Within relatively few years, welfarism has changed our ideas of how to get ahead in life. In place of hard work and the seeking of opportunity we now look for security and leisure without wanting to, earn them.

And leisure today is seldom put to use; often it means nothing better than squatting over television's endless stu pefaction. During the last war there was a slogan about choosing between guns and butter; it was like the challenge of "blood, toil, tears, and sweat." We now have to match ourselves against hard tough peoples who know nothing 2 Pulp and paper is one industry that has never asked for or taken a government handout. Even in the 1930's with half our newsprint mills operating in bankruptcy the industry made its own way against world competition, without seeking subsidy or favor or charity of any kind.

THE WELFARE STATE DOCTRINE 215 of security and leisure. But we are being led, and are acting, as though we can muster all the guns we may want and still indulge in the unlimited butter and soothing-syrup that welfarism promises to hand out. Indulgence is the essence of the Welfare State even when, as now, it means putting taxes higher in the face of pledges to make them lower. Political welfarism has no place for the ordinary household and business prac tice of cutting expenditure to stay inside income. Politicians still bet on voters being foolish enough to think that welfarism means something for-free, that higher taxes and bigger spending don't matter as long as the handouts keep coming. And the politicians still seem right about some people, for there are some who try to think that a government is coping with inflation when it taxes more even though it shows no attempt to spend less.

We do almost anything to avoid straight thinking about what's happening to us. We don't even talk plain ly about business any more. We now use the bureau crat's jargon about economic climate and segments and sectors of the economy when we're only trying to say how things· are going. Now these are disagreeable matters to talk about. You may wonder why I do, and at a meeting of company shareholders. I have four reasons I would like to men tion, and here they are. 1. The spreading of the Welfare State, with its off spring of bureaucracy and inflation, is a deadly course for this country as it is for any country. It enervates our 216 P. M. FOX character as a people and is a cruel hoax upon those it is supposed to benefit the most. As earnings and sav ings dwindle in real value, those to suffer most are bound to be the people of smallest means. 2. We cannot look to politicians or any political party to halt the spreading of indiscriminate welfarism. The aim of politicians is to win elections. They tell them selves that the people ask for welfarism; that it will continue to catch votes. Therefore, whether they think it good or bad, political party strategists will go on of fering more and more of it until the people themselves stop them. In over thirty years we have had no sign of statesmanship in Canada to let us hope for anything different.

3. Since we cannot hope for it in politicians, leader ship will have to come from the people and from a free press determined to serve the country's interest rather than the election hopes of any political party. The Ca nadian people and the press can halt welfarism by turn ing against it; by making politicians see that it will lose votes, not catch them. 4. Every person who is opposed to unrestricted wel farism thus has a public duty to say so, and there is no place where the subject does not belong: in homes, churches, social groups, business. Everyone of us has freedom and perhaps survival at stake in calling a halt to the fatal combination of welfarism-bureaucracy-infla tion. To sit back and not bother means to lose by de fault.

THE SILENT PARTNER tv ::Dean Ru:uefl WE AMERICANS are only 6.4 per cent of the world's pop ulation, living on less than 6 per cent of the world's land area. But we produce more than 60 per cent of the world's cars, trucks, buses, tractors, and other such auto motive equipment. We also lead every other nation in the production and use of steel, rubber, oil, clothing, books, housing, medicines, meat, milk, and almost any other product or service that the people want or need. The reason for our productive leadership is not natural resources; for several other nations equal or excel us in that respect. Nor are we inherently more intelligent than others; for, after all, we Americans are merely a conglomeration of peoples from every nation on the face of the globe. And certainly we don't work any harder than the people of various other countries. Thus the only major difference between us and others would ap pear to be our form of government. For a moment, let's return to that Constitutional Convention of 1787 and Dr. Russell, formerly of the Foundation staff, is Professor of Eco nomics at Rockford College. This article is from a study he has recently made on the automobile and its impact on the American economy and government.

217 218 DEAN RUSSELL try to discover just what those Founding Fathers were trying to accomplish. The primary objec;tiveQf our forefathers was to insure maximum freedom of action and equality of opportu nity to every citizen in his personal and business affairs. To insure that primary objective of the Revolution, the founders of this nation designed a cumbersome gov ernment system of checks and balances, of limited pow ers, and much division of those powers between the federal and state governments. And by arranging for frequent elections of officials, they hoped thereby to prevent anyone person or group from holding for long the few powers that the government did have. With a few minor exceptions, the founders did all in their power to bar the government from the general area of economic activities. In fact, they deliberately designed one of the most economically inefficient forms of govern ment ever known. The reason for that becomes more understandable when we remember that they had just led a successful rebellion against the planned economy of the government of King George III. They were in no mood to endorse in a new form what they had just rejected in an old form.

Except in time of war, the government wasn't ex pected to do much of anything. And it didn't. It bumbled along slowly and inefficiently, generally doing only those few things that had to be done in order to keep. it operating at all. On occasions, the duly elected and appointed officials of our government rose to great heights of statesmanship. On other occasions, they sank THE SILENT PARTNER 219 to equally great depths of sordid logrolling. All in all, the system of government· established by our forefathers was a pretty good mechanism to insure the primary ob jective for which it was established-maximum· freedom for· the individual citizen. In the area of· economic goods and services, the gov ernment generally confined itself to encouraging and aiding others (both persons and companies) to exploit, develop, and settle the nation. Throughout the early history of our nation, the main highways were generally built and operated by private turnpike companies. Wa ter transportation was controlled· by private interests.

The railroads were all privately owned. The active part played by government varied from nothing to very little in meeting the economic needs and desires of the people. Never before in the history of the world had a govern ment sat idly by while its people did almost anything they wanted to do. And as a direct result of that in activity, this nation experienced a release of human en ergy and accomplishment that astounded the world. Inevitable Mistakes Were there injustices? Of course there were. Was there suffering? Yes, there was. Did some persons exploit other persons? They did. Were the votes and influence of some senators and governors for sale? They were-and they were bought. Was there any favoritism? There was indeed. Were there many examples of greed, stupidity, and outright criminality? Yes, there were countless such 220 DEAN RUSSELL examples-by both governmental and private interests.

Point out all the mistakes and evils you wish (they are easy enough to find), and then look again at the over~all record. Never before in all history were so many people so well fed, clothed, and housed. There was more laughter and human happiness in this land than in any other. Never before had the world ever witnessed such an outpouring of the material things of life-as well as an unparalleled abundance of charity, love, and re spect for the individual person. Thousands and hun dreds-of-thousands of schools and churches sprang up across the land. Here the Biblical injunction to feed the hungry and clothe the naked became a part of our daily lives. Provision was made for the widow and the orphan, the sick and the poor, the halt and the blind. We first helped ourselves, and then we helped our less productive neighbors-both at home and abroad. For the most part, our government remained strictly passive in the market place. It seldom concerned itself with what was produced or how it was distributed. And mil lions of people, from lands where governments actively participated in both production and distribution, came pouring into the United States.

They came in search of opportunity for themselves and their children. Here a man could work for others or for himself. Here there was no state religion, no heredi tary nobility, no rigid class barriers, and, especially, no governmental controls over economic affairs. Here a man was. his own master, and both he and his children could rise as high as they were capable of rising. Many of them THE SILENT PARTNER 221 became. rich and famous, and almost all of them im proved their lot in one way or another. There were no price controls, and food and manufactured products were both plentiful and cheap. There were no wage controls, and wages were the highest in the world. There were no limits to the profits a man could make, but he had to produce something the people wanted to buy be fore he could make any profit at all. We were the "melt ing pot"-for dreams and economic ideas, as well as for persons with different backgrounds. We were a brawl ing, sprawling melange of all races, religions, nationali ties, and languages. Among us were the ambitious and the lazy, the weak and the strong, the fool and the genius, evil men and honorable men. We could (and did) tolerate strange religious ideas. We could (and also did) tolerate equally foolish ideas about carriages that would run without horses.

Unofficial Growth Meanwhile, the government continued its traditional policy of doing mostly nothing-except to act as a s·ort of referee that did a reasonably fair job of restraining murderers, robbers, and outright frauds. The govern ment didn't concern itself at all about Oliver Evans and his ideas for a road vehicle that wOlild run under its own power. True .enough, in 1792 the new government granted him a patent, but what he did with·· it was strictly up to him. When Charles Goodyear patented his method for vulcanizing rubber in 1844, the govern222 DEAN RUSSELL ment obviously knew about it since a patent was in volved. But it showed no further interest in the process. (The commissioner who issued that patent, Henry Ells worth, stated in his 1844 Annual Report that "the ad vancement of the arts from year to year taxes our credulity and seems to presage the arrival of that period when human improvement must end.") As far as· can be determined, the government knew nothing at all about the world's first oil well that was brought in by E. L. Drake at Titusville, Pennsylvania, in 1859. The government had neither encouraged nor discouraged him. The problem of what to do with the oil (if anything) was left strictly with "Colonel" Drake.

In due course, the government also issued patents on several types of internal combustion engines that had been invented or improved upon by its free citizens but that's all it did. And when John B. Dunlop, a Scottish veterinary surgeon living in Belfast, Ireland, first developed his idea for an air-filled rubber tire, neither London nor Washington knew anything about it. Dr. Dunlop was merely trying to devise some way to prevent his young son from shaking himself to pieces as he rode his iron-tired bicycle over the cobblestoned streets of that city. When his idea proved to be a prac tical success, both his .government and ours . learned about it only when he applied for a dual patent in 1889. While. bicycle companies in both countries were most in terested in his invention, neither of the two governments appeared to care about it one way or the other. When in 1893, the Duryea brothers used a by-product THE SILENT PARTNER 223 of Colonel Drake's oil to supply the power for their "horseless carriage," our government had no idea at all that America's first practical automobile was finally in operation. The officials in Washington couldn't have cared less.

Nor did the government have any interest at all in the first factories built specifically to manufacture auto mobiles in 1899-the Olds gasoline cars in Detroit, Mich igan, and the Stanley Steamers in Tarrytown, New York, and Bridgeport, Connecticut. The government treated R. E.Olds and those twin brothers (F.O. and F. E. Stanley) exactly as it was later to treat Henry Ford and the thousands of other persoIl$ who went into the auto mobile business---it just ignored them entirely. When, over the years, almost· all of those automobile com panies failed and went out of business, the government did nothing. When a few of them succeeded and made fortunes for the owners, the government continued to do nothing. Nor did the government in any way encourage Cap tain Anthony F. Lucas ashe began drilling into those strange "dome formations" he had observed all along the coasts of Louisiana and Texas. Actually, Captain Lucas was mostly interested in finding salt and sulphur.

He was about as astounded as anyone else on January 10, 1901, when his drilling rig was hurled skyward by the fantastic gusher of oil he had tapped at "Spindle top" near Beaumont, Texas. There was a good market for sulphur and salt, but about the only use for oil lay in the kerosene that could be refined from it. One cynic 224 DEAN RUSSELL looked at that 160-foot geyser of gas and oil and asked Lucas, "What are you going to do with it-feed it to the longhorns?" Captain Lucas found the answer to his problem in Detroit, not in Washington. In due course, the booming automobile industry began using so much gasoline-the "useless" by-product of oil-that millions of persons all over the world were soon depending on it for their livelihoods. Until the oil industry was a highly successful business, the government left it alone. In short, it is safe to say that the government played no part whatever in the development of the automobile and the primary industries based on it-except the cru cially vital part of doing absolutely nothing, one way or the other. And for that, we are forever indebted to the founders of our nation who deliberately planned it that way.

True enough, the government did build almost all of the roads the automobile now runs on. But it is doubt ful if anyone will claim that our highways have kept pace with the development and needs of the automobile. Even if the proposed Interstate Highway System is com pleted, the over-all road situation will still be grossly in adequate for the amount and type of traffic it must carry. A Significant Distinction A student of this problem once succinctly summed up the difference between public and private development of transportation facilities in this novel manner: Sup pose, he said, that around 1900, the government had deTHE SILENT PARTNER 225 cided to assume full responsibility for developing and building automobiles-and had left the building of roads to private enterprise. What might have happened? He predicted that~ under those circumstances, we would to day have a highway system far superior to the few, crude automobiles that would have been produced by govern ment. (And he might well have added that a privately owned "General Roads Corporation" would probably be running a national contest to solicit ideas whereby gov ernment might be encouraged to build more and bet ter cars to run on the private highway system.) Actually~ of course, we can never know what might have been.

But we do know beyond any shadow of a doubt that the government's roads have not kept pace with the development of the automobile. In no sense is this a criticism of government as such. Actually, when all is said and done, our government has done a far better job of road building than we had any reason to expect. And as time goes on, perhaps it will do an even better job. Even so, we are fortunate indeed that the developing and building of our automobiles, railroads, and airplanes was left mostly to private initia tive. We are further fortunate that the actual building of our highways is also done by private construction companies~ with the government confining itself to a su pervisory capacity. Otherwise, the present deplorable situation might well become intolerable. Be that as it may, the traditional American role of government as a "silent partner" has been steadily changing over the past 50 years or so in all economic 226 DEAN RUSSELL areas. It is changing because we citizens want our gov ernment to become more active in our daily affairs. In no sense is the change due to any "plot," either foreign or domestic. We ourselves demanded it and voted for the persons who promised to do it. And as was to be expected, we are getting what we want.

Perhaps we are wise enough (and are now experi enced enough) to keep. our active and largely unre stricted government within reasonable bounds. Perhaps we aren't. No one can say with absolute certainty. But this much is sure: The continuing trend toward more active participation by our government in our daily af fairs and problems is a complete reversal of the princi ples laid down by the Founding Fathers in 1787. Today, it is becoming increasingly popular to· scoff at their concepts of eternal principles, personal responsi bility, and severely limited governmental powers. Those ideas of our forefathers are now often called "horse and buggy" principles that· might work in a frontier com munity but not in an industrial age of rapid transpor tation and communication. The fact remains, however, that it was those "horse and buggy" principles them selves that caused the development of the automobile and the countless other products and services that have made this earth a more pleasant place to live. Converse ly, the world-wide situation. that has been threatening for so many years to plunge us back into the barbarism of complete governmental controls is due almost exclu sively to a rejection of those principles and concepts in all nations, inel uding. our own.

FREE ENTERPRISE AND EUROPEAN UNITY OWING to the economic disunity of the national states of Western Europe, that semicontinent-although prob ably in natural resources as rich as the United States has much less economic strength, and a standard of liv ing infinitely lower. Many Americans believe that the interference of their federal government with trade is detrimental to the national economy. How much more would they feel this if each of the fifty state governments controlled their people's trading activities? The unhappy position of Europe is to have all its governments interfering with trade; and, if we are to judge by results rather than by the sentiments expressed, every act of interference divides the economy of Europe still further and makes all Europeans poorer. What is to be blamed for this? What is to be blamed for Europe's failure to unite her economy in face of the threat of Russia and of communism? Why, particularly, is her economy more divided, and her trade barriers Mr. Winder is a British farmer, author, and journalist.

227 228 GEORGE WINDER more insurmountable, than they were fifty years ago? Do Europeans, then, hate each other more than they did? Have two wars taught them nothing? No. The answer cannot be found in the fact of politi cal nationalism. European people have never been more friendly with one another than they are today. The in crease of economic disunity over the last fifty years has not been deliberately and even consciously brought about. It is purely the result of internal policies which were pursued with foreign countries only incidentally in mind. The increase in the economic disunity of Europe has been caused solely by the increasing departure of Eu ropean governments from the principles of free enter prise. Free enterprise has a unifying effect on the world's economy, whereas state economic planning-which, in a democracy, must necessarily be nothing more than that evil which our fathers called "government interference"

in economic affairs-has a distinctly disintegrating effect. To unite Europe in wealth and strength, it is not the sovereignty of many states which has to be destroyed, but the fatal belief of her peoples in state economic planning. If such planning were only renounced by Eu ropean governments, so that their peoples were left free to trade with one another as they wished, then the dif ficulties which arise from the present economic disunity would be resolved. Unity is not brought about by laws to control trade but by the absence of such laws. The constitution of the FREE ENTERPRISE AND EUROPEAN UNITY 229 State of Alabama contains the following words: "The sole and only legitimate end of government is to pro· tect the citizen in the enjoyment of life, liberty, and property, and when the government assumes other func· tions, it is usurpation and oppression." If the governments of Europe would only accept this philosophy for at least as far as it affects trade, then the economic unity of Europe would be achieved, and the cloud now lowering over Europe from the East would dissolve.

The Common Market A few of Europe's more distinguished politicians now realize the dangers of her present economic division and try to remedy this, but with little success. The most notable of these attempts is, of course, the proposed common market to be set up by Belgium, Holland, Lux emburg, Italy, Germany, and France. Although this has now been agreed upon, and the slow reduction of tar iffs and quotas between those six countries has begun, the difficul ties which lie ahead are very great. Each coun try has protected interests which she is afraid will be destroyed by the flood of goods from the other five. Our fathers, with their belief in free enterprise, knew that such floods spelled wealth, but today in Europe the fear of such wealth is difficult to overcome. The tariffs between· the six nations are to be removed very slowly,. and, meantime, new barriers against the rest of Europe and the world in general are to be erected 230 GEORGE WINDER around their proposed common market. In the case of Belgium and Holland, this means that the tariff barriers will be higher than ever before. Nobody can be sure, as a result of these arrangements, whether the total trade of Europe will be increased or decreased.

Great Britain and some of the other European coun tries have tried to form what is described as a free trade area in association with the six common market coun tries, but in the end, the opposition of British farmers and French industrialists was too great. To the sectional interests of a few farmers and industrialists, the security of the whole of Europe is to be sacrificed. One Nation Could Start The ironical truth is that it would be possible, and economically profitable, for anyone European nation to abandon the planned economy, and abolish the bar riers to the trade of her people, quite irrespective of the actions taken by her neighbors. Trade is nothing but an exchange of goods, and if we admit-as most people do-that trade is beneficial, then a nation is injured by anything that prevents that trade. High mountains, tempestuous seas, and unnavigable rivers are as much barriers to trade as quotas or customs tariffs. The St. Lawrence River is sometimes frozen over and becomes a barrier to the Canadian's trade with the people of. Great Britain. What would we think of a politician who argued that, because of this, the British Parliament should pass a law barring Canadian shipFREE ENTERPRISE AND EUROPEAN UNITY 231 ping from the Thames for a similar period so as to pre vent Britons trading with Canadians?

Yet this would be no more foolish than the argument that, because the government of one country puts up a tariff barrier to prevent our merchants trading with hers, we should retaliate with a barrier preventing her merchants trading with ours. Great Britain should know this better than any other country because, at one· time, she was the only free trade country of any size in the world, while, at the same time, she was the greatest and wealthiest power in existence. If but one European nation would adopt the system of free enterprise and grant her people the right to trade freely both at home and abroad, her economy would be so stimulated that she would become an exam ple for other nations to follow. In this way only will the economic unity of Europe be. achieved. T he Socialist Dilemma The prevalence of socialist theory among all classes throughout Europe, however, makes this one road to unity very difficult to traverse. Socialists are determined to plan the economy in which they live, and, as national planners have jurisdiction only in their own country, this has a tendency to divide Europe into small, tight, hidebound economies more resistant to trade than ever.

Socialists profess a belief in peace and unity; but when they try to plan internationally, their national planning 232 GEORGE WINDER makes cooperation virtually impossible. To plan the economy of Europe by a central authority, it would first be necessary to destroy all national plans as well as the sovereignty of every country involved. Socialists may be willing to go to any length to unite Europe by government action, but they will do nothing to achieve unity in the only way it can be achieved-by government inaction. The economic unity of Europe will not be brought about by any assembly of politicians or by international conferences, or by trade agreements entered into by gov ernments, or by loans and gifts from America. It will be brought about only when the people of Europe accept the immutable truth that man is endowed by Providence with certain inalienable rights, and that among these is the right to produce and trade freely with whomsoever he wishes.

Once this truth is accepted-once governments repeal their laws against trade-Western Europe will become as prosperous and as strong and united as America, and the cloud of communism gathering over her Eastern border and threatening the existence of her civilization will be dissolved forever. Europe will be united in freedom, or not at all. We have forgotten the power and the magic which lives in freedom.

SOME FALLACIES OF FOREIGN AID tll WilliamJJen'1l Chamterlin SPRING is open season on the hardpressed American tax payer for that annual raid that goes by the name of for eign aid. (The preferred official characterization is "mu tual security.") The pattern of this raid is familiar. The Administration sets a figure (in this year a little short of $4 billion) and protests that the most disastrous con sequences will follow if a penny less is appropriated. On behalf of its program, it mobilizes the big guns of the State Department, the Pentagon, and. other gov ernment departments and agencies. Congress-well aware of the widespread unpopularity of this program among constituents-listens a little skeptically, prunes a little here, clips this or that item, but ends by voting most of what has been requested. What has not been chal lenged as vigorously and effectively as it should be (al though the Citizens Foreign Aid Committee has made a promising begin'ning in this direction) is a set of dog matic assumptions which are supposed to justify lavish Mr. Chamberlin is the well-known author, lecturer, and con tributor to the Wall Street Journal and many nationally known magazines. His most recent book: The Evolution of a Conservative (Chicago: Henry Regnery Co.).

233 234 WILLIAM HENRY CHAMBERLIN handouts to foreign governments. Among these assump tions are: • That foreign aid saves foreign nations from "going communist." • That it increases American security, prestige, and popularity. • That it promotes international trade and prosperity and world peace. These assumptions overlook certain grave disadvan tages, both to givers and recipients, which seriously un dermine the effectiveness of government-to-government subsidies. They also do not stand up to the-test of prac tical experience. The dispensing of foreign aid in the shape of money and materials given freely to foreign governments has become a major bureaucratic enterprise. It employed 450 people in 1948. Ten years and $41 billion later this staff had grown to 12,000 directing 2,000 projects. In addition, some 9,000 persons are engaged in supervis ing the military assistance program, which has amounted to .$23 billion.

Poor Plans Poorly Executed_ There is an obvious yawning gap between the quali ties necessary for successful administration of aid proj ects-often in countries which, in history, language, and customs, are extremely un£amiliar to most Americans and the available personn.el. An advisory group, headed by William H. Draper, Jr., former Undersecretary of the SOME FALLACIES OF FOREIGN AID 235 Army, which came out with a strong endorsement of foreign aid, and which was probably selected because most of its members are known to favor the idea, made this significant admission: "We have not developed the well-trained corps of per sonnel required to carry out such a far-flung program with absolute efficiency. Some projects have been im perfectly conceived, inadequately planned, and poorly executed." This seems to err considerably on the side of under statement. The defects pilloried in the novel, The Ugly American" were drawn from the life of American for eign missions, not made up in the authors' imagination.

Among these defects are insensitiveness and ignorance in regard to local manners and customs, aloofness. from the life of the people among whom the work is being carried out, and a tendency to live in self-created American ghettos as closely modeled on Peoria, Du buque, and other American towns as possible. There are just not enough qualified people to go around for the ef ficient operation of a giveaway program in the neigh borhood of $4 billion a year. What can happen to your tax money and mine when administration is loose and slipshod is evident from this excerpt from the report of the House Committee on Government Operations about aid to Iran: "Dnited States aid and technical assistance programs in Iran which, between 1951 and 1956, totaled a quar ter billion dollars, were administered in a loose, slip shod, and unbusinesslike manner ... It is now impossi236 WILLIAM HENRY CHAMBERLIN ble-with any accuracy-to tell what became of these funds."

Another example of "down the drain with the tax payers' money" was the financing of an ultimately un successful French colonial war in Indo-China to the tune of $745 million. After the military disaster at Dien Bien Phu, the French threw up the sponge and Indo China was partitioned between a communist-ruled North and an anticommunist South. Only some $95 million of the $745 million was ever recovered. The scandal about corrupt misuse of overlavish aid to the primitive state of Laos, adjoining Indo-China, is notorious, although the International. Cooperation Ad ministration was not very cooperative in furnishing con gressional investigators with detailed information on the subject. Even when no direct wrongdoing or culpable negli gence is involved, there are serious psychological road blocks in the way of effective American remolding of the economies, social customs, and daily lives of Oriental peoples. rThe missionary spirit, when it is a matter of unselfish individual dedication to a religious, educa tional, or philanthropic cause, is a fine element in the American heritage. But the missionary spirit, bureauc ratized and supported by large appropriations of pub lic funds, is something else again. Here is an excerpt from a recent report of Vermont C. Royster, editor of the Wall Street Journal, on a recent visit to Thailand, perhaps still better known as Siam: "Consider that here is a country which, for all that SOME FALLACIES OF FOREIGN AID 237 it may be backward by American standards, has man aged to get along for a thousand years without United States dollar aid or United States aid. advisers. Its peo ple are proud of their independence, their tradition, their own way of life, and are probably as successful in the pursuit of happiness as any people can be.

"Yet here come the Americans with a program which, when you look at it, would remake the country from one end to the other, from top to bottom. There is no area of Siamese life-schools, farms, business, language, homes, government, customs-left untouched in some fashion by the United States aid program. uN0 one, be he a visitor here among the ancient tem ples and palaces or a stay-at-home reading about it, need be surprised that a program so conceived rubs many Siamese the wrong way. Certainly, the evidence of it is not hard to find. . . . "One friendly Siamese, with a twinkle in his eye, put it to his American visitor this way: 'I suppose we ought to be glad that you are helping us, but we do wish you wouldn't help us so hard.' " Backfire in Bolivia The reaction to American largess is sometimes much more negative than this tepid, good-natured criticism. Consider the case of Bolivia. This land-locked South American country, located on the high Andean plateau, has a long history of economic poverty (much of the population is composed of primitive Indians) and politi238 WILLIAM HENRY CHAMBERLIN cal disturbance. In 1952, Bolivia experienced a left-wing revolution and has been in economic hot water ever since, despite United States handouts to the radical re gime in power to the amount of $129 million- $43 to every Bolivian.

Two measures of the revolutionary government were nationalization of the tin mines, principal source of Bo livia's wealth, and splitting up the large estates to pro vide small holdings for the Indians. Neither has worked well in terms of productivity. There have been con tinual, sometimes violent, strikes in the tin mines. And the Indian small proprietors, whose wants are few and simple, show a tendency to knock off work as soon as these are satisfied. The climax was reached in Bolivia when-because an American weekly magazine published an unfavorable picture of the economic situation and quoted an un identified American diplomat as jokingly suggesting that Bolivia and its problems should be divided among its neighbors-mobs went on the warpath in La Paz, the capital, and other Bolivian towns. The United States Embassy was stoned. Diplomatic cars were burned. American citizens were evacuated to the suburbs for bet ter protection. And the Bolivian government, whose members should have known that the United States gov ernment is not responsible for comment in American publications, filed formal protests with the State De partment.

This is not the first case when violent anti-American demonstrations have followed large American subsidies.

SOME .FALLACIES· OF FOREIGN AID 239 Part of the fault, one suspects, may rest with the new fangled timid pussyfooting reaction to such outrages. There was a time when stiff diplomatic action would have followed the desecration of the American flag, at tacks by lawless mobs on American official representa tives and American official buildings. Now, all too often, the reaction is a nervous self-questioning as to whether our foreign aid program to the offending country was big enough, whether we should not think out some new handouts. That is not the road to friendship and respect. A pointed comment on the dismal failure of our Bo livian policy is to be found in a letter published in Time by Roger A. Freeman, who was fiscal adviser to the Bo livian government on a special United States mission in 1956-57: "I returned with the conviction that a continuation of United States aid policies would lead to further eco nomic and social deterioration and disaster .... The real power is in the hands of the armed and communist ..

led mine workers unions who will not permit the steps necessary to economic recovery. United States aid policy has, for the past six years, been strengthening their hand." Whatever may be the answer to Bolivia's economic and social problems, lavish American aid has accom plished rather less than nothing. It has not improved American prestige or popularity, rather the reverse. And it has not brought political or economic stabilization to Bolivia. If the United States did not exist or was not com240 WILLIAM HENRY CHAMBERLIN mitted by its government to expensive, far-reaching, and indefinite programs of subsidizing the economies of for eign lands, there is no reason to assume that under developed countries would vanish from the map, cease to exist, or "go communist." They might very well be in a stronger and healthier position if they were obliged to face their problems realistically, without the constant hope that America would bail them out of all their difficulties.

International Blackmail A distinctly negative by-product of the too easy as sumption that a plentiful transfusion of dollars is an easy way to check the spread of communism is the temp tation to try to exert blackmail. This occurs when· the representative of Backwardarea lets it be known-with more or less subtlety..,...that, unless his government re ceives a generous handout from the United States Treasury, said government will turn to Moscow. A na tion whose rulers are cynically prepared to sell out to the highest bidder is not worth buying, if only because there can be no assurance that it will stay bought. An incident that occurred in the spring of 1958 shows the dangers and pitfalls of undiscriminating handouts. A representative of the small country of Lebanon, which had already received $38 million in economic help, along with some military aid, announced that this was not good enough. The United States must provide $170 million in the next six years-or else. In the event that SOME FALLACIES OF FOREIGN AID 241 Uncle Sam did not sign on the dotted line, Lebanon would deliver a truly crushing blow. It would refuse American aid altogether!

Some Explaining Is N ceded Something must have gone astray with our diplomacy when a foreign government can get the idea that it is conferring a favor by accepting the largess of the Ameri can taxpayer. One wishes we had more diplomats like the representative of a private business firm who, when questioned by reporters in a Near Eastern country as to why the United States was not giving some additional requested aid, gave in substance the following friendly but frank reply: "Do you really understand who is paying for this foreign aid? It isn't the American government, which you think of as being so incredibly rich that a few hun dred million dollars makes no difference. It is average American citizens like my son and my son-in-law, whose families can't have meat every day, who must scrimp and save in many ways in order to meet the taxes which are the source of the aid." The businessman reports that his remarks produced a sobering impression. And the Austrian government, which, like other European countries, has long been in a position to stand on its own feet, acknowledged in the dedication of a report on the Marshall Plan aid its in debtedness to the American taxpayer. Too often, how ever, it is assumed that money grows on trees in the 242 WILLIAM HENRY CHAMBERLIN United States; and this attitude in foreign countries is encouraged by the more reckless advocates of unlim ited foreign aid among our politicians and publicists.

It is a good thing that the advocates of foreign aid no longer have the field to themselves, that organizations like the Citizens Foreign Aid Committee are bringing to attention the argument against this substantial item in the national budget. The principal concrete sugges tions of this organization are as follows: • That our traditional generous private charity and governmental grants to relieve disaster be continued. • That in countries which we are morally obligated to defend and which are directly threatened by Red ag gression military assistance-for the time being-should be continued, but on a realistic basis. • That until foreign aid is terminated, the Congress take steps properly to exercise close supervision and control over the manner in which all foreign aid funds are being spent. • That the $3.9 billion requested by the President for the fiscal year 1960 be reduced $2 billion, and that each year thereafter foreign aid be substantially re duced until terminated within three years.

Foreign aid is no adequate substitute for self-help. A nation, like an individual, stands straightest when it stands on its own feet.

HONG KONG-A SUCCESS STORY ..An GJiforial IN A FREE economy, man's ingenuity knows no bounds. The industrial expansion and high living standards of the United States are testimony to what individual en terprise can accomplish. Abroad, too, we find striking examples of what men can achieve when left to solve their own problems. In Europe, during the years just after World War II, many governments experimented with state planning and economic controls. Over the past decade these have been progressively abandoned or modified. The unleash ing of private initiative has enabled the Old World to forge ahead with renewed vigor. On the other side of the globe is Japan whose re markable postwar comeback has been due to the hard work and resourcefulness of its people and an economic climate which encourages these energies. Less well known is the case of Hong Kong, Britain's island colony off the South China coast.

Hong Kong's recent economic growth is one of the outstanding success stories in the Far East today. This ! From the MontJ:zly Letter of the First National City Bank of New York, Decembe~ 1959. 243 244 FIRST NATIONAL CITY BANK achievement has been one of private enterprise operat ing within a free market economy. There has been rela tively little government intervention in the Colony's affairs. This is the more significant in view of the chal lenge to its existence posed by postwar events. A great seaport and commercial center, Hong Kong grew to prosperity on the entrepot trade with China, its location convenient for transshipment of goods to and from the West. But when the mainland fell to the com munists, and the Korean War brought a United Nations embargo on trade with Red China, all this was sud denly changed. Hong Kong found itself no longer the gateway to China, but instead on the, edge of the Bam boo Curtain.

As exports to China dropped from nearly 40 per cent of the total in 1950-51 to a trifling 4 per cent a few years later, and a million refugees nearly doubled its popu lation, Hong Kong searched out other means of liveli hood. Instead of massive programs of government spend ing or requests for foreign assistance, reliance was placed on private initiative. It was natural for Hong Kong to look to its busi nessmen in time of crisis. The island was a barren, al most uninhabited rock when it was acquired by the British in 1841 as a trading settlement. Lacking in re sources, tillable land, or even adequate water supply, its principal asset is a sheltered deepwater harbor. That it grew and attracted the commerce of all nations was because it offered businessmen-Chinese and Western HONG KONG-A SUCCESS STORY 245 alike-a stable government, the rule of law, low taxes, and a minimum of official interference.

Private Enterprise in Action When necessity forced Hong Kong to find new sources of income to replace the lost China trade, its resource ful businessmen wasted no time. New opportunities were vigorously sought in Southeast Asia. To the recently independent countries of that region Hong Kong offered not just trade but the benefit of its mercantile experi ence. With inventories of imported goods warehoused locally Hong Kong merchants were able to make rapid deliveries to neighboring countries. Hong Kong's free money market eased the payments problem for many buyers. And its wide range of commercial facilities and duty-free port encouraged foreign companies to main tain regional sales offices there. Attracted by Asian markets for consumer goods, Hong Kong businessmen were soon drawn to manufacturing as well as trading. Although shipbuilding and some small amount of light industry were already established in the Colony, expansion faced difficulties: lack of fuel, scarcity of industrial sites, and competition from well established foreign producers, not to mention the ever present possibility that the Chinese communists might some day choose to swallow up the little island colony.

But there were assets too. Skilled labor and investable funds were augmented by an influx of refugee labor and capital from the mainland. Most important of all, 246 FIRST NATIONAL CITY BANK the economic climate was favorable to enterprise. The colonial government consistently kept its accounts in balance with a standard tax rate of only 12~ per cent on personal and corporate income. Here was opportu nity for businessmen to create, to produce, and to en joy the fruits of their labor. Industry was expanded and, at the same time, ener getic efforts were made to develop larger export mar kets. New products were introduced and old ones adapt ed to consumer needs in different countries. The phe nomenal four-fold growth of Hong Kong's textile indus try, for example, has been due in large measure to skilled marketing-sarongs for the South Seas trade, woolens gloves for European buyers, cheap print cloth for Africa, drip-dry shirts for the United States, cotton knitwear for Southeast Asia, and even made-to-measure suits by mail order.

In the past decade factory employment has tripled. Despite fluctuations in over-all trade, exports of Hong Kong manufacturers have climbed steadily, from a bare 10 per cent of total export sales in 1947 to nearly 70 per cent this year. In value terms this represents a rise from about $40 million to almost $400 million, with more than half comprised of textiles and apparel. Other in expensive consumer goods make up the balance-kitchen utensils, rubber footwear, flashlights, thermos jugs, and plastic articles. Production for the local market has grown apace with exports. Food processing and the manufacture of house wares and building materials have increased rapidly.

HONG KONG-A SUCCESS STORY 247 Handicrafts and art objects for the growing tourist trade are another source of income. Hotel and office construc tion account for a good part of the building boom. Hong Kong's achievement is all the more impressive since its largest industry-textiles-is the one that meets the stiffest competition in world markets. Hong Kong can compete effectively because its production costs are low. In the absence of exchange controls, its businessmen can buy raw materials in the cheapest market. Since they do not rely on government for expensive services, they pay low taxes. Local labor is industrious and quick to learn. Very little time has been lost through industrial disputes. Although competition has kept wage rates low, the same forces have kept down living costs. Hong Kong's success in building up its export indus tries has created new problems. Striking sales gains over seas have brought protests from established suppliers elsewhere. Several nations have placed import quotas on Hong Kong goods. And Red China reportedly has been undercu tting Hong Kong sales in some markets by dumping. Despite these difficulties, Hong Kong business men are certain they can compete if given a chance.

They seek no subsidies or special favors. But they know their future is tied to the healthy growth of world trade. For Hong Kong, freedom to trade is life itself. A Lesson for Undeveloped Countries In many parts of the world today governments are seeking to raise living standards through industrializa248 FIRST NATIONAL CITY BANK tion. To attain this goal, underdeveloped nations have indulged heavily in state planning and other forms of government intervention in economic life. Indeed, it is really quite unfashionable these days not to have a de velopmen t .plan. In seeking to industrialize, governments have bur dened their fledgling economies with controls. They have allocated limited resources to ill-conceived projects with resulting inefficiency and waste. Impatient to get ahead in the world, they have fed inflation with printing press money. Exchange allocations, import licensing, and arbi trary taxation have been used to subsidize uneconomic enterprise, eliminate competition, and conceal planning blunders.

For such progress as this, the consumer pays a heavy price. Goods are more costly, selections limited. Foreign investment and private initiative are discouraged. The range of opportunity for local funds is narrowed. The final irony is often the flight of sorely needed domestic capital to more hospitable areas. Hong Kong's postwar industrialization, for example, has benefited not only from refugee money fleeing Red China, but also from the influx of capital from noncommunist neighboring countries that could ill afford to lose it. Hong Kong's success in attracting foreign investment and achieving rapid development despite inherent dis advantages is striking testimony to the truth of liberal economic principles. Of the physical factors usually con sidered essential to industrial growth, nearly all are missing in Hong Kong. But Hong Kong has offered HONG KONG-A SUCCESS STORY 249 businessmen greater freedom from official interference than any other area in Asia. It has also provided a stable government and strong support for the free enterprise system. This policy has paid off handsomely by unleash ing human potentials that in other countries have re mained paralyzed by bureaucratic controls.

Some of the nations now bent on economic advance might well ponder the lesson of this bootstrap operation. Hong Kong's success has also demonstrated that external aid is not the most vital ingredient of a development plan. As the Hong Kong government itself states in its latest annual report: "The predominant theme in international discussions about Asia in recent years has been the urgent need for outside assistance ... to promote ... economic development and to raise the standard of living . "Hong Kong, however, has [been] the exception .... This small Colony, almost entirely lacking in natural resources other than the indomitable will arid enterprise of its people, has not only belied all prophe cies of economic disaster, but also established itself as a vigorous industrial power .... This development has been achieved without major recourse to outside eco nomic assistance . . . and despite formidable obstacles arising from political circumstances beyond local control."

WORLD GOVERNMENT: A REACTIONARY DISORDER THE ENTHUSIASM (and frequent hysteria) for world gov ernment embodies, and is the culmination of, the entire philosophy of collectivism. As such, it is a paragon of false idealism, irrationality, and misconception. It is based primarily on five major erroneous philosophical, logical, and historical assumptions. The first of these is that world government would stop wars and and bring peace. It is essential that we adopt the usual meanings of the words "war" and "peace," for if this is not done, we may say that there is perfect peace in Russia. Peaceful slavery, however, is not the kind of peace any of us desire, as illustrated by none other than Franklin Roosevelt when he said, "It is better to die standing up than to live on your knees." In like manner, a "'police action" or a "resistance to aggression" or such similar phrases do not make a war not a war. Otherwise, we may eliminate war and create peace by simple semantic expedient. There are types of Mr. Johnson, a teacher of mathematics, included the remarks here published as part of a visiting lecture in economics (in which he is also certified) at Hialeah Senior High School in Florida.

250 WORLD GOVERNMENT: A REACTIONARY DISORDER 251 "peace" in the world today as destructive to the human personality as the atom bomb. Without laboring the point further, it should be obvIous that peace is much more than the absence of armed conflict. Bearing this in mind, history shows, from the failure of the Delian League of ancient Hellas, through the Holy Alliance of 1815, up to the present-day United Na tions, that the collective approach to peace is a dismal failure. Since the League of Nations and the U.N., wars have been both more frequent and more devastating. World government at best would only transform wars between governments into wars between the govern ment's police force and segments of the empire. And, again with an eye on the world's history, can anyone really believe that a government powerful enough to thus "enforce the peace" would not soon become one of the most corrupt instruments of total power and oppres sion in the history of man?

The United States constitutes but 1/15 of the earth's surface and 7 per cent of the world's population, yet we are having enough difficulty preserving liberty on this small segment, let alone the whole world. The fact that others would be helping us is of negative value when these others have little or no conception of liberty as we know it in America. We experience great difficulty electing representatives adequate to deal with local problems. Are we to imagine this situation improving with the permanent introduc tion of world problems? How are governments handling world problems these days anyway? Are they doing a fine 252 DARRYL W. JOHNSON} JR. job-or do we not see that governments unable to tend successfully to their own affairs could not possibly at tend to the world's affairs? How odd, when it is so ob vious that most of the world's problems are caused by government that we should look to government as a solution.

Working from Different Premises The second erroneous belief is that world government would be similar to our own here in the United States, and would not reduce individual freedom. The very philosophy of force which underlies world government and the thinking of its advocates belies this concept. Are not advocates of world government the same people, with extremely few exceptions, who have advocated diminution of States' Rights, stretching of the Constitu tion, abandonment of the Connally Amendment, and interventionist policies generally? Have not such policies already resulted in the restriction of individual freedom? Advocates of world government are fond of making a distinction between "human rights" and "property rights." Now, not only are property rights human rights, but no human rights are secure without property rights, as our Founding Fathers so well understood when they revolted in defense of "life, liberty, and property." This is a small sample of the ideological disparity between the philosophers of world government and the architects of the Cons titu tion.

Government, to be controlled, must be kept near WORLD GOVERNMENT: A REACfIONARY DISORDER 253 home. As the area of government increases, the area of the individual just as surely decreases. A brief perusal of the United Nations charter will show that it is as similar to the concept and content of our Constitution as a triangle is to Wednesday. How could we expect otherwise? Most of the world's peoples have never known the free society, its comforts, its se curities, its spiritual and ideological background. How could we possibly expect such peoples to create anything faintly resembling the government of the United States? Would the founding of such a government be a popular movement in the sense of the American Revolution, or a movement sponsored and consumlnated by existing governments, most of which are outright dictatorships? America can serve the world best by continuing to be a shining example of the fruits of freedom and limited government. Other nations may copy us if they so de sire, but for the United States to dilute its philosophy with the rubbish of the world would be to raze the pin nacle of civilization-it would be the greatest of moral crimes-economic, political, and ideological suicide.

Nothing could possibly be more reactionary. The third fallacy is that world government would bring all men together-the "brotherhood of man." World government would not unite people . .. it would merely unite the governments at the expense of the peo ple. Unified trouble would hardly mean less trouble. And why should we all unite, politically or any other way, as long as we follow the golden rule and keep our noses out of places where they are not wanted? As Cob254 DARRYL W. JOHNSON, JR. den said, the key to peace lies in "as much intercourse as possible between the peoples of the world ... as little as possible between the governments of the world." Brotherhood based on compulsion is not brotherhood any more than government subsidy is charity. If com pulsion is not necessary for it, then we will have brother hood without world government. A brief consultation with the dictionary will show that every definition of brotherhood implies the concept of voluntarism, near ness, and a relationship between one individual and an other. It may be argued, rightly or wrongly, that the Christian concept modifies the principle of nearness and expands the relationship to exist between one individual and all men, but it is still a problem for the individual; it is still voluntary, and most important, men are to be brothers under God, not under world government.

So Much To Lose The fourth error lies in the belief that whatever we would have to give up for world government would be well worth it. Let us see what we have, that we may know what might have to be given up. We have a country with the oldest written constitu tion in the world, a country whose freedom has been so universal that our greatest danger is that people will take it for granted; a country which produces nearly 50 per cent of the world's goods, and provides therefore, the only possible bases for security, charity, literature, the arts, sciences-all the finer things of life. All this we WORLD GOVERNMENT: A REACTIONARY DISORDER 255 have, and more than volumes could tell, yet we are asked to give up part or parcel of our hard won and well-deserved heritage to avoid being called "chauvinis tic." The desire to retain the proven success of America in preference to that which experience shows to be a failure is simple common sense. Such desire is hardly based on a "misunderstanding of the purposes and func tions of world government," as so many social studies texts state. Such texts, incidentally, discretely refrain from clearing up these "misunderstandings" by a thor ough discussion of just how and why a world govern ment would work.

At best, we are asked to forego a tangible success for something, as Shakespeare said, "full of sound and fury ... signifying nothing." The last, and most remarkable doctrine in the world government repertoire, is that world government is es sential for social progress to overcome our "cultural lag" and catch up with the tremendous advances in science and technology. This is like saying that it is essential to jump into the water that we may keep' dry. It is an argument which illustrates the peculiar blindness to both logic and fact which seems to be the exclusive province of the contemporary collectivist. It is a classic non sequitur. If one were requested to compile a list of the· great achievements of civilization, such a list would be associ ated with great individuals, from Solomon to Jesus, Plato to Santayana, Galileo to Einstein, Haydn to Wag ner. No one seems to. believe that the "Mona Lisa"

256 DARRYL W. JOHNSON., JR. could have been painted by a committee. Certain phases of human endeavor, especially science and tech nology, seem to have been blessed by society's realization that achievement in these fields must be individual in character. The entire history of scientific and techno logical progress is the history of individuals, from Eu clid to Ford. Progress has been accelerated by the divi sion of labor-the individualization of effort and respon sibility. There have been great advances in all areas where responsibility has been kept closest to the in dividual. To miss this point is to miss the story of lib erty and one of history's most important lessons. A Mark of Maturity As John Chamberlain so aptly perceives in a state ment backed up by Sir Henry Maine's Ancient Law: "Individualism belongs to the maturity of the race, not to its beginnings."I If social scientists are really anxious to secure govern mental harmony, they will abandon their irrational fear of liberty and extend the principle of individuation to all phases of human relations. The American Constitu tion was the first utilization of this principle-placing the responsibility for government upon the individual first, the community second, the state third, and the cen1 Chamberlain, John. The Roots of Capitalism-. Princeton: D.

Van Nostrand Co., 1959. p. 60. Also consult the first six chapters of Sylvester Petro's The Labor Policy of the Free Society (New York: Ronald Press, 1957), which contain as brilliant a discussion of government and freedom as may be found anywhere.

WORLD GOVERNMENT: A REACTIONARY DISORDER 257 tral government last. While it is important to know that the Constitution limited government, it is equally important to realize that this limitation applied almost exclusively to the central government. Such limitation is the only possible way to secure self-government, for a man cannot be expected to assume responsibilities with which he is not charged. For World Prosperity Arguments to the effect that "the world is smaller now" miss the point if they are used to justify govern-' mental remedies. Professor Burgess, over 37 years ago, refuted this idea and the claim that we should therefore abandon our historic policy of nonintervention. He stated, "This claim rests upon the very serious error that world intercourse and world interchange of the ele ments of civilization require political interference and intermeddling. This is not only false, but it is so false as to be highly mischievous and harmful. Outside of this lies the whole free realm of trade, commerce, science, literature, art, and social relations, things which bring all parts of the world together in friendly and helpful interchange, while political intermeddling almost always provokes hatred, enmity and war. . . .

"The freedom of individual thought and expression, of individual initiative and invention, and the free inter change of the results of these great spiritual forces, are the powers which make for civilization both local, na tional, and universal, while governmental interference 258 DARRYL W. JOHNSON, JR. through its orders, commands, directions, limitations, punishments, and wars has done much to restrain rather than always to advance the world's true prosperity."2 The miraculous success of the American experiment in individuation and self-government, plus the tragic history of collectivist palliatives should be enough to convince· anyone that the road to. world government is the road to reaction. Each step along this road turns the clock back hundreds of years. It is true that man does not always govern himself perfectly, but he can hardly be expected to learn and to progress by being deprived of the opportunity to do so.

If the fruits of decentralized government cannot dispel forever the foggy vision of world-wide, central control, then one can only wonder if man is doomed to repeat a large segment of painful history for not having learned from it the first time. Unity and peace will come only as man changes from within-not as governments seek to force man to change from without. Our greatest task is to see that man has the opportunity for such change. 2 Burgess, John W. Recent Changes in American Constitutional Theory. Columbia University Press, 1923. pp. 12-13.

THE MAGIC OF BELIEVING tg ofeonarJC. R",aJ A FEELING OF HOPELESSNESS is the straw that could break the back of the freedom movement-for freedom will never be achieved without faith. In any event, this feel ing of futility more seriously threatens the continuance of the work of the Foundation for Economic Education than does any other discernible influence. People do not continue to work at a problem after its solution appears hopeless to them. Too many opponents of socialism-once convinced that there is no simple remedy at hand, and aware that the problem at issue is nothing less than altering the mores of a vast society-tend to give up the ghost. Unnerved by the dimensions of the job, they say, "Oh, what's the use!" The tale of two frogs, dumped into a can of milk, comes to mind. One frog, quick to concede the hopeless ness of his situation, gave up and promptly drowned. The other frog was of sterner stuff: So he kicked and splashed and he slammed and thrashed, And he kept on top through all; And he churned that milk in first-class shape In a great big butter ball.'"

... Day, Holman F. Story of a Kicker. 259 260 LEONARD E. READ Experience leads one to. believe that the forces which have to do with shaping human destiny are of no help to those of little faith. Indeed, they appear to have no truck with people who lack confidence in what deter mined effort can accomplish. On the other hand, these forces-call them by your own name-tend to cooperate with those who believe they can accomplish the seemingly impossible and never call it quits until the game is over. There are men, be it observed, who do, in fact, move mountains. But they are not the men who doubt that mountains can be moved. Take note, for instance,. of golfers on putting. greens. There are those who doubt they can sink any but the simplest putts. And there are those who have confidence that they can sink every putt-they actually believe this! The former are miserable performers. Among the latter are to be found the skilled and all the miracle putters.

Miracles are all about us-a common loaf of bread is packed with wonders. Those who have no sense of the miraculous, who have no faith in achieving anything beyond what the unaided individual can accomplish, will be of little help in ridding our society of socialism. The problem seems too hopelessly impossible to them and they quit. But the undaunted, those who know the magic of believing, will make progress, for the forces which are available to those who believe will lend a hand to multiply their efforts. Too bad there aren't more such efforts for them to multiply!

GROWTHTHE DUTCH EXAMPLE GROWTH. Economic development. The planned expan sion of the world's poorer economies outside the com munist orbit. These are the watch'words of today's seven major international lending agencies with offices in Washington, D. C., in which the United States Govern ment is either the largest or the only shareholder. (Old est is the Export-Import Bank, founded in 1934, which neither exports nor imports; nor is it, in the usual sense of the word, a bank. Newest, still in the planning stage, is the International Development Association, which will make loans to poor nations that cannot qualify for credit at the World Bank nor the other agencies under existing relatively easy regulations.) Such fervor to dispense money abroad, to fight com munism through upbuilding "underdeveloped" nations, raises questions: Are government-to-government loans often gifts in disguise-with their usual accompaniments of exchange control, inflationary schemes, tariff protec tion, full employment practices, tax gimmicks, CastroDr. Peterson is Associate Professor of Economics at New York Uni versity and a weekly contributor to the Wall Street Journal.

261 WILLIAM H. PETERSON like "agrarian reform," and so on, the best road to na tional economic growth? If so, how then did the United States and Britain flower in the nineteenth century as the two richest nations in all the world? What of Japan which leaped from feudalism to industrialism in the late nineteenth and early twentieth centuries? And what of the Netherlands in the sixteenth and seventeenth cen turies? For is there not a tested second road to national eco nomic growth, namely, laissez faire? Before considering the Dutch example, it might be well to note that growth) in underdeveloped and devel oped economies, has assumed· a sloganeering function. As Lawrence Fertig, Scripps-Howard financial and eco nomic columnist, observed recently: "The inflationists' new device is to wave the banner of 'growth.' Of course, they say, we are against inflation. Of course, they assert, we are not in favor of zooming prices. But after all, they quickly ask, isn't growth the really important thing-shouldn't we achieve growth (with government in the driver's seat as planner and spender) even at the expense of some inflation?"1 Fertig's contention that growth-and-inflation is a false correlation is borne out in a recent study by economists of the New York Federal Reserve Bank covering eco nomic development in 16 countries from 1950 to 1957.

These economists found that in countries in which prices advanced only moderately or not at all, annual 1 See the next article in this volume.

GROWTHTHE DUTCH EXAMPLE 263 rates of growth were generally close to 6 per cent. In countries where there were heavy inflationary pressures during this period-and where, by and large, U. S. for eign aid was much greater-rates of growth varied widely, ranging from less than. one to more than 7 and averag ing around 4 per cent. So, the thesis that growth depends on inflation de mands critical examination. It is an old thesis, and though exploded time and again in the past (see, e.g., Andrew Dickson White's classic-Fiat Money Inflation in France 2 ) it crops up ever anew. The antiquity of the thesis can be seen from the following quotation by John Law, who became Controller General of France and in itiated the Mississippi Bubble inflation from 1716 to 1720: Domestick Trade depends on the Money. A Greater Quan tity employes more People than a lesser Quantity. A limited Sum can only set a number of· People to Work proportion'd to it, and 'tis with little success Laws are made, for Employing the Poor or Idle in Countries where money is scarce.3 So, when John Law got economic command in France, he implemented his inflationary scheme, inadvertently courting and finally embracing economic ruin for both France and himself.

The Dutch example was in full display for Law and his employer, Louis XV. But, like so many lessons of 2 A new edition with an introduction by Henry Hazlitt is avail able through the Foundation for Economic Education, Irvington on-Hudson, N. Y. 3 Law, John. Money and Trade Considered. Edinburgh, 1705.

264 WILLIAM H. PETERSON history, the example was ignored. No rich uncles show ered the Dutch of the sixteenth and seventeenth cen turies with aid. No Point Four teams of technical ex perts surveyed their lowlands for likely sites for fac tories, warehouses, harbors, and other projects. No Eco nomic and Social Council issued reports decrying the Havenations for failure to share their economic gains with their less fortunate neighbors. How did the Dutch miracle happen? And to many it was a miracle. The Dutch were not blessed with nat ural resources. If anything, nature had cheated them with seas which had periodically flooded the lowlands, thus requiring expensive dikes. A contemporary ob server, Daniel Defoe, noted that the seventeenth cen tury Dutch had "neither Corn, Hemp, Tar, Timber, Lead, Iron, Arms, Ammunition, woolen Manufacture, or Fish of their own Growth." For these commodities, the Dutch took to the sea-and hence became known, initially, as the Sea-Beggars.

To Max Weber and others, religion was the answer to the Dutch miracle. The Protestant Reformation, sup posedly, opened the floodgates of business prosperity. The Calvinists even had their own regime in Amster dam for eleven years (1611-22). The keynote of Calvin ism, particularly as it was developed by the Dutch Puri tans, was complete dedication to one's calling.What ever a man's pursuit, it was his Christian duty to give it his fullest effort. The tradesman in his own shop "could most confidently expect the presence and bless ing of God." Thus pursuit of profit, in free and honorGROWTH-THE DUTCH EXAMPLE 265 able trade, was no longer tainted; quite the contrary, it was Christian virtue. Sloth was the sin. But perhaps the best answer to the Dutch miracle was trade-trade, and its corollaries of freedom, prop erty, and economic gain (and without the progressive income tax!). In the sixteenth century, Antwerp-then in the Netherlands-was the queen city of all Christendom; in the seventeenth,· it was Amsterdam. Each week some two thousand freight wagons and ten thousand peasant carts passed through Antwerp's gates with the manufac tures and foodstuffs of the Continent. As many as four hundred ships came in on the same tide, spreading on Antwerp's docks silks and spices from the East, wool from England, pitch from Sweden, tallow from Nor way, furs from Russia, and fish from the Seven Seas. In surance became big business in sixteenth century Ant werp-ship and cargo insurance and even life insurance.

The Antwerp Bourse, founded in 1531, was the world's first stock exchange. Little wonder, then, Defoe said of the Netherlands population: The Dutch must be understood to be as they really are, the Carryers of the World, the Middle Persons in Trade, the Factors and Brokers of Europe: That, as is said above, they buy to sell again, take in to send out; and the greatest Part of their vast Comme~ce consists in being Supply'd from all Parts of the World, that they may supply all the World again. But trade is only part of the story, apparently. The Dutch, as may be gathered from the presence of the Antwerp and Amsterdam Exchanges, were investors as 266 WILLIAM, H. PETERSON well as traders. Frugality and steady trade furnished the savings. Savings, in turn, furnished the capital for their mercantile searchings and trade centers and outposts the world over. Above all, the soundness of the Dutch currency unit, the florin, won world renown and respect as is seen in the volume of Dutch banking and insur ance business. The florin of that era knew virtually no depreciation-no "planned" inflation. And this was a big reason it attracted· so much business.

Aspects of the Dutch business behavior can be seen in the observations of Sir William Temple, English am bassor to The Hague in 1668: The [Dutch] merchants and tradesmen are of mighty in dustry. Never has any country traded so much and consumed so little. They buy infinitely, but 'tis to sell again. They are the great masters of Indian spices and Persian silks, but wear plain woolen and feed upon their own fish and roots. They sell the finest of their cloth to France and buy coarse out of Eng land for their own wear. They send abroad the best of their own butter and buy the cheapest out of Ireland for their own use. They furnish infinite luxury which they never practice and traffic in pleasures which they never taste. Sir William shrewdly pinned down the Dutch secret. "Their common riches," he. wrote, "lie in every man's spending less than he has coming in." Self-indulgence was out, for "the general intention every man has is upon his business .... All appetites and passions seem to run lower and cooler here than in other countries, avarice excepted. Their tempers are not airy enough for joy, nor warm enough for love."

This observation· was shared by the philosopher DesGROWTH-THE DUTCH EXAMPLE 267 cartes who lived in Holland from 1629 to 1640: "Every man thinks only of himself and his business interests and whoever has nothing to do with business and trade ... is completely disregarded." Such comments, while having some measure of truth, are to a degree obviated by the burst of great Dutch art. Art requires patrons, an economic surplus. And a measure of Dutch prosperity can be seen in the parade of the Dutch masters: Brueghel, Vermeer, Hals, Steen, Rubens, Rembrandt. If such paintings were for the rich, the middle class home had its appointments. A. con temporary historian noted that "the plainest and most modest burgher had a house full of pictures, and there was nothing unusual about finding from one to two hundred paintings in a modest home." To be sure, Dutch business success in the sixteenth and seventeenth centuries was not always. onward and upward. The Tulip Craze of the early seventeenth cen tury (in 1609, one prize bulb was sold for 13,000 florins) broke in 1638, bringing financial hardship to thou sands. And in the end, beginning with the Anglo-Dutch wars of 1652-1674, business somehow became inextrica bly entwined with empire. The Netherlands had be come, if temporarily, a "world power." And the era of the bourgeois man of the lowlands, who had reached Java in the East and the Hudson River in the West, was largely no more.

At any rate, the secret of the Dutch example of eco nomic development is plain-it was· trade., not inflation; growth was natural, not manipulated.

THE ONLY WAY TO SOUND GROWTH t'J ofawrence :J.erfig WARNING! Inflationists (and those who fall under their influence) are now operating under an effective disguise. Since they know that the word inflation is unpopular, they do not dare to openly endorse it. Instead, they try to achieve their objective by hiding behind a more popular word. The inflationis ts' new device is to wave the banner of "growth." Of course, they say, we are against infla tion. Of course, they assert, we are not in· favor of zoom ing prices. But after all, they quickly ask, isn't growth the really important thing-shouldn't we achieve growth (with government in the driver's seat as planner and spender) even at the expense of some inflation? By phrasing the issue this way they imply that infla tion promotes growth. They imply that anti-inflationary measures and a stable or declining price level actually prevent growth. These assertions are made despite a long history which proves that the opposite is true. Inflation actually endangers sound growth. Much factual evidence Mr. Fertig is a columnist on economic affairs, New York World Telegram and Sun and other Scripps-Howard newspapers, in which this column first appeared August 24, 1959.

268 THE ONLY WAY TO SOUND GROWTH 269 on this growth-inflation subject is available, but within this brief column we have room for only a few instances. Take the course of the Federal Republic of Germany and of Great Britain from 1948 to 1955. Germany turned her face against inflation while Britain inflated at the rate of about 4 per cent per annum. German in dustrial production increased 134 per cent as opposed to the British 24 per cent. German real wages increased 90 per cent, whereas in the United Kingdom they went up only 7 per cent. All of this is related to the fact that German prices actually fell 5 per cent while British prices increased about 45 per cent. Currently, says Eco nomics Minister Dr. Ludwig Erhard, Germany has "reached a new stage in its steady growth over the past ten years." This he attributes greatly to stable prices and a German currency freely convertible into gold.

Another historic instance of growth is the period in the United States from 1873 down to the turn of this century. During this time an anti-inflation policy caused prices to decline about 40 percent while production more than doubled. These are just two instances of growth and anti-infla tion going hand in hand. Other recent cases are the Philippines, Burma, and Ecuador.· The opposite-where inflation throttles growth-can be seen in Brazil, Chile, Argentina, and many other countries. Recently, statements by several important figures re veal how widespread is this growth-inflation policy. Dag Hammarskjold, Secretary-General of the United Na tions, recently stated that modern industrial nations 270 LAWRENCE FERTIG have· been inclined to favor policies aimed at price sta bility instead of encouraging growth. (Note how he poses a false conflict.) Price stability has not been well won, he said, if its cost is economic stagnation-even though the stagnation is on a high level. Mr. Hammar skjold's statement turns out to be a slightly disguised brief in favor of inflation, which has nearly ruined so many European nations. In this country, on the TV program "Meet the Press," Governor Nelson Rockefel ler was asked whether he agreed with President Eisen hower that inflation is "the great issue of our national life." Governor Rockefeller hesitated and· said, "I'm not sure. I think this is certainly an integral part of the total issue. I think the economic growth of our country and the adequacy of job opportunities ... are the root, really."

Now it certainly would be unfair to call the Governor an inflationist, although his liking for expanded, costly government activities is well known. But it is evident from his statement that he has come to the same fal lacious assumptions that the inflationists make. His thinking is no different from that of Professor Sumner Slichter of Harvard, who must be given due credit for openly and honestly advocating "creeping" inflation. Similar logic is employed by the Democratic Advisory Committee and by Mr. Leon Keyserling. They persis tently urge cheap money, giant-sized government ex penditures, and budgets unbalanced temporarily (they hope) to create growth. There is only one way to achieve growth-that is, by THE ONLY WAY TO SOUND GROWTH 271 increased savings and by increased investment in the tools of production. In this way there is a greater flow of goods resulting from every hour of human labor.

Anti-inflationary policies encourage growth because peo ple are inclined to save more when they have a convic tion that the dollar they put aside today for future use will not be eaten up by the price increases of tomorrow. People save less when they are convinced that the dollar saved today may be worth only50¢ or only a dime after many years. Those who think that it is up to the government to create growth overlook the fact that increased produc tivity depends upon the intelligence, work, and thrift of individuals and corporations. People-not government create growth. All the government can do is to encour age people to save and invest. This is accomplished by curtailing government spending and encouraging sound fiscal and monetary policies. The evidence is plain that sound growth is achieved by fighting inflation, not by encouraging it.

THE TRICKY FOUR FREEDOMS LOGIC, it has been said, not without point, is horse sense made asinine. Certain it is that many a man who n~ver heard of it has done handsomely without it. Neverthe less it sometimes has its uses, and since any success achieved in the discussion to follow must depend above all on sound reasoning, I suggest that we pay a brief visit to a man who was both a writer on logic and on other grounds an outstanding thinker. It happens that John Stuart Mill, the authority to whom I refer, has considered the· subject of liberty at length,_ as everyone knows, and· has arrived at very definite conclusions regarding its nature. Weshall learn from him what these conclusions, in their essence, are. In his society, moreover, we can flex our intellectual muscles, and at the same time obtain from him criteria that will prove of value in our special undertaking. In examining his ideas it is well to bear in mind that they are (he tells us) "anything but new," and that they were formulated a century ago, in a quieter time than ours-or so it seems-generations before the present Dr. Manchester is an educator, formerly of the Department of English, University of Wisconsin.

272 THE TRICKY FOUR FREEDOMS 273 whirlwinds of glib opinion had come to trouble and confuse us. The "appropriate region of human liberty," says Mill, comprises, first, "liberty of thought," including· "the cog nate liberty of speaking and of writing"; second, "lib erty of tastes and pursuits"; third, "liberty ... of com bination among individuals" - freedom, that is, "to unite, for any purpose not· involving harm to others, the per sons combining being supposed to be of full age, and not forced or deceived." "No society," he continues, "in which these liberties are not, on the whole, respected, is free, whatever may be the form of government; and none is completely free in which they do not exist ab solute and unqualified. The only freedom which de serves the name is that of pursuing our own good in our own way, so long as we do not attempt to deprive others of theirs, or impede their efforts to obtain it."!

To one eminent philosopher, then, the three freedoms differentiated, neither more nor fewer, are the great, the indispensable, human freedoms, and as such, one is safe in adding, constitute basic political objectives which he thinks proper to all mankind. What are the characteris tics, one is curious to inquire, that distinguish them? Each of the three freedoms-and this· is their first and most fundamental charactertistic-represents the absence of restraint in relation to a particular activity. It is a freedom to do something. In one case it is a freedom to think as one chooses; in another to like or dislike, and IOn Liberty, introductory chapter.

274 FREDERICK A. MANCHESTER to select one's course in life, as one chooses; in another to unite with one's fellows as one chooses. Always, in one direction or another, it is an exhilarating state of un shackledness, of freedom to go about, unhampered, the fulfillment of one's desires. Each, again, is essentially an immaterial benefit, in volving, as it does, the human dignity and moral inde pendence of the individual, together with his inner peace and satisfaction. The first of them frees the work ings of his mind, the second his tastes and pursuits, the third his choice of affiliations. Each, again, is a benefit that the individual is incapa ble of achieving by his own exertions, that is his only through an act, implied or actual, of the society in which he lives-an act, moreover, which it is easily within the power of any society, at any time, to give. It is society only which can inhibit his freedom of thought (includ ing worship), his freedom of tastes and pursuits, includ ing, necessarily, the ownership and control of property, and his freedom of entering into groups with others; consequently it is society only which in all these re spects can leave him free.

And each, finally, is a benefit which, when granted, costs the individual's fellow citizens nothing. It requires only that in the respects in question they keep their hands off, let him alone, leave him to his own devices. Mill's essential human freedoms, then, are three-of thought, of taste, and of affiliation; and, let us fix firmly in mind, they have in common four characteristics: they are liberty to do something, they are of profound imTHE TRICKY FOUR FREEDOMS 275 portance to the well-being of the inner man, they are benefits which an individual cannot by any act of his own confer upon himself, and they are benefits which, when conferred by society, cost it nothing whatsoever. A Famous Message to Congress Opinions differ, even as to essential human free doms. On January 6, 1941, an American President, in the course of an address to Congress, began a memorable passage thus: In the future days, which we seek to make secure, we look forward to a world founded upon four essential human free doms.

The exordium probably caused no general thrill of expectation, either in the auditorium proper or in the galleries. After all, freedoms are with us Americans an old, old story. The President went on: The first is freedom of speech and expression - everywhere in the world. Nothing here either to set the blood spinning, though perhaps on left or right a pre-Progressive pedagogue turned Congressman may have muttered to himself, " 'Speech and expression': is speech, then, no longer ex pression?" Or perhaps some not-yet-subdued isolationist may have gasped at the reckless terminal flourish. "'Everywhere in the world,' did he say? A big order! A big order indeed!" The voice from the rostrum continued: The second is freedom of every person to worship God in his own way - everywhere in the world.

276 FREDERICK A. MANCHESTER If any auditor had previously taken to the edge of his chair in the hope of novelty, he was ready by now to slide back to somnolence. Freedom of speech, freedom of worship: both were etched deep in the mind of half a continent. Both had been included a century ago in Mill's first freedom. Both were assured us all by the very first amendment to our once-reverenced Constitu tion. Freedom "to worship God in his own way" had been the cry that made many a colonist brave the dangers of the sea, the unknown perils of the New Eng land forest, and the specter of possible starvation. Both freedoms were freedoms close to men's hearts; the second, at least, many a man had been ready to suffer for, to fight for, and,. if need were, to die for. But listen: The third is freedom from want . .. Then it was, on the instant, while ~he speaker read. on unheard, that extraordinary things began to happen.

Men stared at each other astonished, incredulous. What was this? What was this? Could they have heard cor rectly? How could freedom from want get admittance to this sacrosanct fellowship? One man, a former diplomat, shouted in bad French, "What the devil's that doing in this galley?" A murmur of shocked disagreement arose in a remote corner of the chamber, spread rapidly in all directions, and grew momently louder and more resent ful. Finally, a dozen of the more agitated got straight up on their feet and exclaimed "No, nol" ... And now I too must exclaim "No, nol" No: things did not happen as I have described them-or, if they did, THE TRICKY FOUR FREEDOMS 277 the news never reached me. Yet I cannot but wish that something of the sort had happened, contrary as it would have been to our traditional manners (1 have gathered that abroad audiences are sometimes more pub licly demonstrative: if that is the case, may it not be, in part at least, because they take ideas more seriously?) and if it had happened I could now offer for the un precedented reaction two very definite reasons.

A Jump in Logic The first is that when the speaker proceeded to add his third essential freedom to his first and second he made a logical jump so enormous as probably to be unprecedented in the annals of responsible statesman ship, and to constitute, however void of injurious in tent, an affront to the intelligence of everyone within hearing-a logical jump which, by analogy, would make a nonstop leap from the pinnacle of the Empire State Building to the pinnacle of the Eiffel Tower seem the merest bagatelle. One's sense for logic is pained by its extravagance, instinctively, before analysis has had time to begin. But let analysis once have its turn, and Presi dent Franklin D. Roosevelt's third freedom is seen clear ly for what it is.2 It does not possess a single one of the four character2 The shift in phrasing from "of" to "from" is in itself a kind of warning-though it must be admitted that so flexible and re sourceful is our marvelous language that even a legitimate freedom might, however awkwardly, employ the same introductory word, as, for example, in the case of Mill's first freedom, "freedom from control of thought."

278 FREDERICK· A. MANCHESTER istics which Mill's three freedoms have in common. It is not a freedom to do anything: on the contrary, as it might in practice often work out, it is rather a freedom not to do anything. Again, it is not of profound impor tance to the well-being of the inner man: its enjoyment guarantees no such well-being, and such well-being is quite possible in its absence-as the history of saints un· questionably proves. St. Francis of Assisi, probably one of the most inwardly happy men who ever lived, made Lady Poverty, not Lady Bountiful, his bride. Again, in stead of being a good which man cannot secure by his own exertions, it is normally by his own exertions that he secures it; while at the same time it is a good which society mayor may not be able to confer upon him, since the sources in nature of man's necessities are not inexhaustible, and such as they are they are only par tially under his control. And, finally, instead of being a good which costs society nothing whatsoever, its pos session, if it is to be constantly and universally obtained, must often in greater or less degree be at society's ex pense. Clearly there is nothing important in common between the strange intruder "freedom from want" and the three essential freedoms of John Stuart Mill-and Mill's freedoms, it is time to assert, are by no means personal or peculiar to their formulator, but on the con trary are substantially identical with the freedoms that freedom-loving men everywhere have always struggled to attain. Indeed, what others are there?

"Freedom from want," then, is not properly a political freedom at all. That is one fact that would forever justiTHE TRICKY FOUR FREEDOMS 279 fy its sharp exclusion from the august company into which it was so illogically and so arbitrarily thrust. But there is a second reason why such exclusion is of the greatest practical importance. Which is that this miscalled freedom, once accepted as of the same order as the immemorial freedoms, con tains within itself the potentiality of incalculable evil. It is as rights that we think of the other, genuine free doms; freedom of speech, freedom of worship, are guar anteed in our Constitution as a part of what we call our bill of-rights. They are things we regard as our inalien able possessions. Whatever they may have cost our an cestors to obtain, they cost us nothing. They are already ours. Suppose now that in a nation where universal suf frage prevails a distinct majority should become firmly convinced that the good news is indeed true, that free dom from want-a concept subject to easy abuse-is a freedom like freedom of speech and freedom of worship, and, independently of any great effort on their part, a vested right: what then? Would not their first step be to demand that their enjoyment of that right be realized in fact?3 And to whom or what would they address that demand but to their government, and how is that gov ernment to obtain the means to satisfy it, in so far as it can satisfy it at all, save by taxing, and ever more tax ing, all those who might be able, for a time at least, to pay whatever sum was levied? Down such a vista, ob viously, lies confiscation almost without limit.

a Cf. Felix Morley, Freedom and Federalism (Chicago, Henry Regnery Company, 1959), pp. 135f.

280 FREDERICK A. MANCHESTER Surely such a possible development was latent in "freedom from want." Apropos of it there is much more to be said-but that must wait, for already we have too long left President Roosevelt suspended in the midst of his speech. Let us now hear the whole of the inter rupted sentence, and along with it the proclamation of the fourth freedom: The third is freedom from want - which} translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants everywhere in the world. The fourth is freedom from fear - which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor - anywhere in the world. It will be noticed that the previously unquoted part of the first of the above sentences in no way alters the meaning of the expression "freedom from want." Was the corresponding part of the second sentence-"which, translated . . ."-intended to define and restrict the meaning of "freedom from fear"? For a good while I as sumed that it was so intended, and considered that to interpret the phrase without reference to its context was to do injustice to Roosevelt's good sense. I am now in doubt-or rather, I am sufficiently convinced that "free dom from fear," probably never subjected by its author to careful scrutiny or analysis, is just as much to be taken by itself as is "freedom from want." Undoubtedly THE TRICKY FOUR FREEDOMS 281 it has been so taken, and indeed that is probably how it has been generally understood-"everywhere in the world."4 But, so taken, so understood, what rational meaning can be attached to it? Freedom. from fear? How is such a thing conceivable, in a world where the everyday greeting "How are you?" betrays a long-established con viction of uncertainty and peril; where the objects of fear, physical and mental, are infinite in number and infinite in kind, darkening all the long trail from yawn ing earthquakes and fierce lady-hurricanes (what mis ogynist ever thought up that one!), through flood, acci dent, disease-through frightful deeds of wicked men, and nameless horrors of disordered dreams-to the ulti mate terrors of old age and death? And the fear of God, once inculcated as a thing preeminently to be fostered are we to be freed from that, too?

I t would be as tedious as unnecessary to show in de tail that anything so hopelessly vague and uncircum scribed as freedom from fear, and so largely unrelated to the problems of government, cannot properly be con sidered a political freedom. As a matter of fact, apart perhaps from some association with freedom from want -with the meaning of freedom from fear of destitution it has had, so far as I have learned, no significant history. 4 Even if the intention was to restrict freedom from fear to mean freedom from the fear of international aggression~ the restriction would scarcely reach the popular mind and imagination. Only the concise, compact formula would be likely to go far, and, in that, fear is flatly coordinated with want.

282 FREDERICK A. MANCHESTER But not so, it seems, with freedom from want-to which I now return. For this, 'according to the useful study by Felix Morley already cited, has been, either alone or with the aid of freedom from fear, a potent influence. An ('('Economic Bill of Rights" An "Economic Bill of Rights" announced by Presi dent Roosevelt in his Message to Congress of January 11, 1944, was "squarely based" upon it. It was the "start .. ing point" for highly significant elements in the Charter of the United Nations, ratified by the United States Senate on July 18, 1945. Its philosophy continued to operate in the United States, independently of the party in power after President Roosevelt's death. 5 The "Economic Bill of Rights" referred to deserves examination. "We have accepted, so to speak, a second Bill of Rights," declared the President, "under which a new basis of security and prosperity can be established for all-regardless of station, race or creed."6 Among these, he said, are the following: Ii Morley, Ope cit., pp. 133-138. Strictly speaking, Morley attributes the influence specified, directly or indirectly, to the Four Free doms, but my interpretation of his meaning, ignoring the two traditional freedoms and stressing freedom from want, is doubtless correct. Articles 55 and 56 of the Chflrter of the United Nations, partly quoted below, are quoted in full by Morley.

e The text .. of the preceding sentence, and of the "rights" that follow shortly, is that of The Roosevelt Reader, edited and with an introduction by Basil Rauch (New York, Rinehart 8e Co., Inc., 1957).

THE TRICKY FOUR FREEDOMS 283 The right to a useful and remunerative job in the industries , or shops or farms or mines of the nation; The right to earn enough to provide adequate food and clothing and recreation; The right of every farmer to raise and sell his products at a return which will give him and his family a decent living; The right of every business manl large and smalll to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad; The right of every family to a decent home; The right to adequate medical care and the opportunity to achieve and enjoy good health; The right to adequate protection from the economic fears of old age, sickness, accident and unemployment; T he right to a good education. Several comments suggest themselves. First, the list is characterized by the President as "so to speak, a· second Bill of Rights" -as egregious a violation of sense and logic as was his formulation of the Four Freedoms.

What, pray, have rights to do with the pleasant and gratuitous assurances with which it abounds? Second, it is annoyingly diffuse and repetitious, by no means the product of keen, clear, organizing thought. Third-and it is. this which is definitely relevant to our immediate topic-they can obviously be summed up, with two ex cepti()ns, as the small change of the President's third freedom, assuming that "want" is understood in a gen erally charitable fashion. The two exceptions are the provision for "a good education" and the provision for recreation. I confess I should find it difficult to think of 284 FREDERICK A. MANCHESTER the absence of a good education (whatever that may be) as the presence, in any reasonable sense, of "want," and still more difficult to think of the absence of recreation or shall we say freedom from boredom (it being surely no less a "freedom" than a "right")-in a similar manner.

The "Economic Bill of Rights" was designed, primar ily at least, for America. It was "definitely the responsi bility of the Congress," said President Roosevelt, "to explore the means" for its implementation. Article 55 of the United Nations charter proposed objectives for all the world in part highly similar to those of the "Eco nomic Bill of Rights." The United Nations "shall pro mote: (a) higher standards of living, full employment, and conditions of economic and social progress and de velopment; (b) solutions of international economic, so cial, health, and related problems; and international cultural and educational cooperation; and (c) uni versal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language or religion." Article 56 pledges the members of the United Nations "to take joint and sepa rate action in cooperation with the Organization for the achievement of the purposes set forth in Article 55."

And now, in America, after President Roosevelt's death? "In farming," says Mr. Morley, "housing, health, education, road construction, old-age pensions and un employment insurance, to mention only the more im portant services, centralized 'aid' . . . is now an estab lished principle."1 1 Morley, Ope cit., p. 136.

THE TRICKY FOUR FREEDOMS The Formula Publicized 285 For some time after their announcement the Four Freedoms received considerable attention. Among en tries in the Readers' Guide to Periodical Literature for the period July 1941 to April 1945 are the following (they will repay close scrutiny), some of which, judged by their titles, are obviously friendly and cooperative, none of them obviously the reverse-needless to say, I have not read them: "Cultivating the Four Freedoms," F. Kingdon,· Parents' il1.agazine ("Children must learn their meaning and value at home"); "Four Freedoms for Which We Fight," with paintings by N. Rockwell, Saturday 'Evening Post; "Free World; Requirements for the Four Freedoms," S. Welles, Vital Speeches; "Toward the Four Freedoms," H. Kallen, Saturday Review of Lit erature; "United States Peace Aims: Summary of the Four Freedoms," Catholic World; "Contributions of English to the Four Freedoms," C. F. Stecher, Educa tion; "Democracy and the Four Freedoms" ("panels painted by B. R. Woodworth for the children's room, Ohio University Library"); "Four Freedoms Are an Ideal," Saturday Evening Post; "What Does Freedom Mean? American Conception," N. M. Butler, Vital Speeches; "Education and the Two New Freedoms; Freedom from Want and Freedom from Fear," W. C.

Bagley, Education~ The Four Freedoms, as evidenced above, have been the subject of at least two series of paintings. They were celebrated in a special United States postage stamp286 FREDERICK A. MANCHESTER and in this way promulgated, one may suppose, through out the civilized world. In the publicity accorded the Roosevelt formula was there no discordant note, no protest lodged against the travesty it represented upon the immemorial freedoms? Not so far· as I happen to know; and Felix Morley (quoted above), who has called the Four Freedoms "an inharmonious quartette" and a "monstrosity," and in so doing become the first person I have known to charac terize them (as I think) properly, appears to have en countered little or nothing of the kind. Few if any "po litical scientists," he says, "have ever closely examined the monstrosity"; and one naturally infers that he has not found it closely examined by others. 8 Indeed, his remark appears to me to imply that logical analysis of the formula by other than professionals, say by mere average citizens, was something it had not occurred to him to expect.

In an Earlier Time However that may be, there was a time, if we are to believe lames M. Beck, when such a logical "monstros ity" would have been likely to prove, by general con demnation-I adapt some terse phrasing of lames Mad ison's-short in its life and violent in its death. In his book on the Constitution, published in 1924, Beck ob serves that a candidate for President-this was before 8 Ibid., p. 130.

THE TRICKY FOUR FREEDOMS 287 1900-"defeated himself by the chance expression that 'the tariff was a local issue,' which covered him with ridicule and blasted his political hopes." "A generation ago," says the former Solicitor General of the United States, "men spoke rarely and only after the most care ful deliberation, and their words were examined with microscopic nicety." But by Beck's day things had changed. "In recent years this meticulous attention to declarations of policies has largely passed away. Leaders of public thought have given utterance to beliefs and policies which would have damned any public man a generation ago."9 Thus matters stood, according to Beck, in 1924. In the seventeen-year interval between then and Roose velt's announcement of his Four Freedoms, had the com posite American mind become sharper, more alert, more impatient of intellectual monstrosities? It would seem not. Is it so today?

If it is not, if the Golden Age of American politics, when for a statesman to sayan absurd thing would be to end his career, lies generations away, in an ever-re ceding past, two problems present themselves that are great in interest and greater still in importance: What has happened to the American Mind? and What can be done to restore it to its original state? But all that is another story. In order here is a final word regarding the Four Free•The Constitution of the United States, revised and with addi tional material by James Truslow Adams (Garden City, New York, Doubleday, Doran &: Company, Inc., 1941), p. 243.

288 FREDERICK A. MANCHESTER doms, or rather regarding the third freedom-freedom from want. Lincoln vs. Roosevelt I will begin by reporting a striking compliment to its inventor. In a fairly recent book called Freedom: A New· A nalysis, the author, Maurice Cranston, after quoting Abraham Lincoln, continues thus: "Another, no less thoughtful President, Franklin D. Roosevelt ... " Let us stop there. Franklin D. Roosevelt as thoughtful a President as Abraham Lincoln? Extraordinary judg mentl Suppose now we apply the test of political wis dom ready to hand. What Roosevelt thought of his offspring "freedom from want" we need not ask. What would Lincoln think? There would be no use thumbing through his collected works, or their indexes, in search of specific statements on the subject, since in his more primitive time the idea that freedom from want, how ever much to be desired, was either a "freedom" or a "right," had not yet been dreamed of. As a substitute I offer a letter which Lincoln wrote in December 1848 to his stepbrother John D. Johnston. Its substance, our main· concern, I am happy to leave, unremarked on, to the reader: let him make his own inferences on the point in question, undisturbed. But perhaps I may be per mitted to call his attention to what is scarcely separable from the substance of the letter-namely, its excellent style: simple, easy, direct, exact, orderly, and completely lucid. Salt of the earth, one reflects, that has not lost its THE TRICKY FOUR FREEDOMS 289 savor. With almost no. benefit of public schools, a,nd none of federal scholarships, Lincoln had somehow man aged (the Bible, Shakespeare, and Euclid 'by his side) to train his intellect-an achievement which does not re quire display in, a great speech to make its presence felt. And now the letter-it is somewhat long, but I can not bring myself to omit anything from it: 10 Dear Johnston: Your request for eighty dollars I do not think it best to comply with now. At the various times when I have helped you a little, you have said to me, "We can get along very well, now," but in a very short time I find you in the same difficulty again. Now this can only happen by some defect in your conduct. What that defect is, I think 1 know.

You are not lazy,' and still you are an idler. I doubt whether since I saw you" you have done a good whole day's work, in anyone day. You do not very much dislike to work; and still you do not work much, merely because it does not seem to you that you could get much for it. This habit of needlessly wast ing time, is the whole difficulty; and it is vastly important to you, and still more so to your children, that you should break this habit. It is more important to them, because they have longer to live, and can keep out of an idle habit before they are in it, easier than they can get out after they are in. You are now in need of some money; and what I propose is, that you shall go to work, "tooth and nails," for somebody who will give you money for it. Let father and your boys take charge of things at home - prepare for a crop, and make the crop; and you go to work for the best money wages, or in dis charge of any debt you owe, that you can get. And to secure you a fair reward for your labor, I now promise you that for every dollar you will, between this and the first of next May, get for your own labor, either in money, or on your own in10 The text is that of the original manuscript, with some correc tions in details of form. The changes made do not touch the es sence of the style.

290 FREDERICK A. MANCHESTER debtedness, I will then give you one other dollar. By this, if you hire yourself at ten dollars a month, from me you will get ten more, making twenty dollars a month for your work .. In this, I do not mean you shall go off to St. Louis, or the lead mines, or the gold mines in California, but I [mean for you to go at it for the best wages you] can get close to home in Coles County. Now if you will do this, you will be soon out of debt, and what is better, you will have a habit that will keep you from getting in debt again. But if I should now clear you out, next year you would be just as deep in as ever. You say you would. almost give your place in Heaven for $70 or $80. Then you value your place in Heaven very cheaply, for I am sure you can with the offer I make you get the seventy or eighty dollars for four or five months ·work. You say if I furnish you the money you will deed me the land, and, if you don't pay the money back, you will deliver possession. Nonsenset If you can't now live with the land, how will you. then live without it?

You have always been [kind] to m~, and I do not now mean to be unkind to you. On the contrary, if you will but follow my advice, you will find it worth more than eight times eighty dollars to you. Affectionately your brother, A. Lincoln SOCIAL SECURITY'S SALVAGE VALUE t'l paulof. poirol THE 20 PER CENT jump in Social Security taxes, effective January 1, 1960, brought the total to 6 per cent on' the first $4,800 of an employee's annual earnings. That's $288 a year. Technically, half is paid by the employee; half by the employer. But actually, the full amount is part of the employer's cost of hiring help-and the full amount is missing from the employee's take-home pay.. In other words, it's $288 a year, all paid in effect by the employee. Incidentally, he's liable for the regular in come tax on his half of that $288-at not over 20 per cent ($28.80) if he's lucky. However, that's double tax ation, which is another story.

The next point of the present story is that the current Social Security tax of 6 per cent, or $288, is 'scheduled for three more jumps between now and 1969, when it will be 9 per cent on the first $4,800, or $432 per employee. Any reliable insurance agent can tell you that would buy a sizable chunk of old-age insurance from his com pany-particularly if you happen to be a young person. 1 1 For a premium of $432 a year from age 20, a man can secure from private companies a life annuity averaging about $216 a month after he reaches 65. This is in contrast to the monthly bene fit of $127 promised through Social Security. 291 292 PAUL L. POIROT Short-Cha11,ging the Youngsters But that's the third point of the story. If you're buy ing Social Security, it's not a good deal to be a young person. In fact, it's an exceedingly raw deal, as indi cated in Actuarial Study No. 48 of the Social Security Adminis tration: The sum of the present value of the contributions to be paid under the present schedule [1956] by present members and the existing fund is $269 billion less than the present value of the benefits to be· paid to them and their dependents and survivors . . . On the other hand, there is a "surplus"

of $228 billion for new entrants. In layman's language, what that says is that the good old days of something-for-nothing from Social Security are drawing to a close, and that a "new entrant" (a young fellow at his first "covered" job) is going to help pay at least $288 billion more than he can ever expect to get back from his Social Security taxes. In other words, un der the 1956 amendments (aggravated in 1958, and likely to get worse with each subsequent amendment), the .new entrant can expect to pay a tax averaging about 8.3 per cent of payroll un til he retires, as against bene fits valued at 4.93 per cent of that same payroll. That is, the new entrant is scheduled to pay $1.69 for every $1.00 promised in benefits. At least, that's how the actu aries of the Social Security Administration figure it and it's not their business to paint the picture· any worse than it is. The lead editorial in Barron's of January 4, 1960 car ried this brief review of the program: SOCIAL SECURITY'S SALVAGE VALUE 293 Since Social Security was launched in 1935, benefit payments have increased sharply. Group after group has been added to the rolls, age limits have been lowered, and eligibility broad ened. In 1956, Congress extended coverage to a whole new class of recipients, the disabled. Today, 13.4 million Americans are receiving monthly checks, which for the year just ended, totaled $10 billion. Nor will the process stop here, since. the number of beneficiaries is mounting steadily. What's more, Congress is toying with dozens of ways to broaden the pro gram. Some legislators would reduce the age of eligibility from 65 for men and. 62 for women to 60 (or less) for everyone.

Others would lower or eliminate the minimum age of 50 for payments for disability. Still others would· boost all benefits by 10 per cent. Finally, Rep. Aime Forand (D., R.I.) proposes to add "free" medical, hospital, and nursing-home care. This modest proposal, by government estimate, would cost over a billion dollars in the .first year, and far more thereafter. The bitter truth, which any conscientious parent should want his children-as well as his congressman-to understand here and now, is that Social Security has been tried and found wanting. The facts developed in these first 25 years under the program make abundantly clear what could have been known from the beginning: the only way the government can provide a windfall for the oldsters is to fleece the youngsters. With perhaps a few rare exceptions, the point already has been passed for entering the program with the chance of getting back as much as one puts into it. Nor is there the slightest political possibility of a soundly funded government insurance program that could give any other result.

As long as it afforded a chance of something-for nothing, Social Security had its inducements for "prac tical" persons with no guide other than that of crass 294 PAUL L. POIROT materialism. But, with that powerful inducement now wiped out by the soaring schedule of taxes, it should be easier for everyone to understand why the program was doomed from the beginning by its compulsory and immoral features. The immorality arises, not in freely giving of one's own to assist the needy or the aged, but in the coercion employed to make others contribute. The lesson Social Security offers is that a morally defec tive procedure eventually must prove to be both eco nomically and politically unsound. If the youth of America will learn that lesson, it could be a vital salvage -their most important benefit-from the Social Security burden thrust upon them.

THE PHANTOM CALLED ((MONOPOL Y" t, JJand :J.. Senn~olz IN THEIR denunciation of capitalism the socialists use some frightful phantoms. The oldest and perhaps the most effective one is the notion that monopolistic con centration of business inheres permanently and insepa rably in capitalism. They depict in vivid colors the hor rors of monopolistic capitalism and then conclude that a free enterprise economy obviously requires govern mental restraint lest it deteriorate to a chaotic system of business monopolies and public oppression. Recalling the era of "trusts" and "tycoonf' around the turn of this century, these socialists valiantly defend the Sherman Antitrust Act of 1890, the Federal Trade Commission Act, and the Clayton Antitrust Act of 1914 which aim at the suppression of business monopoly. And they will be shocked if anyone casts doubt on the wis dom of the antitrust .legislation.

Unfortunately, even free enterprisers are divided on this point. Some defend our antitrust legislation and the governmental supervision of big business which it Dr. Sennholz is Professar of Economics at Grove City College, Pennsylvania. 295 296 HANS F. SENNHOLZ entails, while others summarily reject the prevailing notions on monopoly and the antitrust activity of the government. An unbiased investigation of the monopoly problem might well begin with the question: Are monopolies in herently bad? Are they identical with destruction of competition, with enormous monopolistic gains, and with gouging of workers and consumers? Under what conditions, if any, are monopolies really the evil .or ganizations which they are assumed to be? In an unhampered market economy a monopoly af fords no cause for alarm. A company that has exclusive control of a commodity or service in a particular mar ket is prevented from exploiting the situation by the following competitive factors: potential competition, competition of substitutes, and the elasticity of demand.

Potential Competition In the United States thousands of different commodi ties are each produced by a single producer,ie., by a monopolist, and no one seems to care about it. The 5 and 10 cent stores are full of items produced by monopolists. And yet, all these items are sold at competitive prices. Why? Because of potential competition. A.s long as there is potential competition, a monopolist cannot charge monopolistic prices. Potential competition exists in all fields of production and commerce which anyone is free to enter. In other words, wherever government does not prevent free entry THE PHANTOM CALLED MONOPOLY 297 through licenses, franchises, and other controls, potential competition exists. Most corporations are searching con tinuously for new lines and items of production. They are eager to invade any field in which business earnings are unusually high. The invasion of another field by a corporation may in volve no more than a simple retooling or reorganization that is achieved in a few weeks or months. Or, brand new facilities may be employed for an invasion. Thus one producer, whether he is a monopolist, duopolist, or a competitor among many, always faces the potential com petition of all other producers.

Even if a corporation the size of General Motors were a monopolist with regard to certain commodities, it would have to act as if it were a single producer among many. For it continuously faces potential competition from the Fords, Chryslers, General Electrics, and others. These potential competitors undoubtedly have the re sources, technical know-how, and marketing organiza tions to compete with General Motors. But even if competitors of similar size and structure should be absent, the monopolist must be mindful of the potential competition that can arise overnight. Nu merous financiers, promoters, and speculators continu ously search for opportunities to establish new enter prises. They have formed new giant companies in the past. And they are willing to risk their capital again if they see an opportunity for profits. Dreading the promoter who may invade his field, the monopolist therefore must act as if he were surrounded 298 HANS F. SENNHOLZ by numerous competitors. He must be alert and always "competitive." He must continuously improve his prod uct and reduce its price. For if he should relax, another company will soon invade his field. The newcomer is likely to be a formidable competitor for he has new machinery and equipment. He has new ideas and ap plies new methods of production. And he enjoys the good will of all customers. Indeed, a monopolist who relaxes invites disaster ..

If an enterprise nevertheless enjoys a monopolistic po sition, it must by necessity be the most efficient producer in the field. In other words, in an industry endowed with freedom of entrance, a monopoly is an efficiency monopoly. For the government to impose restrictions on it or even dissolve it by force would be to destroy the most efficient producer and invite the less efficient to enter the field. In this case, the economy suffers a net loss in output and efficiency. In my hometown a small manufacturer succeeded in gaining a monopolistic position in the production of creep testers" which are machines that test the behavior of materials at elevated temperatures. When I inquired into the reasons for his astonishing position, he ex plained with a smile: "1 completely routed my two com petitors, both billion-dollar corporations, by continu ously improving the quality of my product and reducing its price. They finally abandoned the field." Obviously, he would immediately invite· his formidable competi tors to re-enter the field if he failed to improve his prod uct in the future, or charged monopolistic prices.

THE PHANTOM CALLED MONOPOLY 299 That government has not investigated or prosecuted this monopolist probably is due to the smallness of his operations. Experience, however, suggests that such large corporations as General Motors, du Pont, or U.S. Steel would face governmental investigation and prosecution if they were the monopolist. If this is true-and unfortu nately there is no reason to doubt it-governmental prosecution aims at big business rather than at monopolies. Competition of Substitutes But even if American enterprises failed to compete with each other and potential competition failed to ex ert a restraining influence on monopolists-which is a most unrealistic assumption-the people would escape monopolistic pricing through recourse to substitutes. In many fields the competition of substitutes is more im portant than that of competing producers. People's wants may be satisfied by a variety of prod ucts and materials. In the ~anufacture of clothing, for instance, a dozen different materials vie with each other for the consumer's dollar. The monopolist of anyone material is powerless because monopolistic pricing would induce consumers to switch immediately to other materials. The producers of suspenders Cf;>mpete not only with each other and with potential competitors, but also with the producers of belts. In the transporta tion industry the railroads compete with trucks, cars, airplanes, pipelines, and ships. In the building industry 300 HANS F. SENNHOLZ lumber competes with aluminum, steel, bricks, and stones. And Bayer's aspirin competes with Anacin and Bufferin.

In some cases, the adoption of substitutes requires large capital outlays which producers are not willing to make immediately. Complete substitution then will take time, although it will ultimately be as effective as im mediate substitution. A railroad that wants to substitute oil for coal needs large capital for the purchase of diesel engines. Therefore, it may switch from coal to oil only when it needs to replace worn-out coal locomotives. A house owner may switch from coal to oil or natural gas when his old coal furnace must be replaced. Thus, with~ in a period of several years, substitution will have its restraining effect on a monopolist. Elasticity 0/ Demand The existence of substitutes makes for demand elas ticity which, in turn, makes monopolistic pricing un profitable; for higher product prices would greatly cur tail product demand, and thus sales and income, of the monopolist. Therefore, he again must act as if he were a competitor among many.

The same is true in all cases of demand elasticity, whether or. not there are substitutes. For instance, elec tricity for heating must compete with such substitutes as oil, gas, and coal. However, as a source of light and of energy for power tools, it probably faces no substi tutes. An electricity monopolist, nevertheless, would be THE PHANTOM CALLED MONOPOLY 301 greatly restrained by potential competition and demand elasticity. If electricity prices would rise considerably, the most important consumers, such as industrial plants and other business organizations, would soon produce·. their own electricity. With the proper equipment anyone can pro duce his own. Of course, the monopolist may counteract this danger by charging different rates to his different classes of customers: low rates to all industrial users who are apt to produce their own electricity, and higher rates to all others. Assuming that residential users do not readily resort to independent power production, are they not liable to fall in the grip of a monopolist? No!

Demand elasticity would prevent this. Many people un doubtedly could reduce their consumption of electricity without suffering mentionable discomfort. A house own er who may enjoy the light of a hundred bulbs on a winter evening might easily curtail his consumption if electricity charges should increase greatly. But this cur tailment of demand would reduce the sales and income of the monopolist. All producers in fact compete with all other pro ducers for the consumer's dollars. The manufacturer of television sets competes with the manufacturer of freez ers and refrigerators. If the monopolist of one com modity-say, television sets-should raise his price, the consumer may forego the purchase of a new set and buy instead a new refrigerator. We consumers do not allo cate our income to the satisfaction of categories of wants but to that of specific wants yielding the greatest net 302 HANS F. SENNHOLZ addition to our well-being. This addition, in turn, is determined by the urgency of our wants and by the cost of acquisition. Rising costs obviously affect us adversely, which may induce us to purchase an entirely different product that now contributes most to our well-being.

Consumer resistance to monopolistic pricing finds ex pression in yet another form. People who suspect mon opolistic practice by a producer tend to favor any new comer who would compete with him. Any enterprise striving to invade the field is assured the patronage and good will of all dissatisfied consumers. In our example of the electricity monopolist, the industrial user produc ing electricity for his own consumption may decide to supply power also to his workers and neighbors who, at lower rates, would gladly transfer their patronage. Thus, in a free economy, even the electricity monopolist is greatly limited in his pricing policies. The same limitations apply in all other industries, in cluding the public utilities. A mail monopoly would face not only the people's demand elasticity for mailing serv ices but also the potential competition by the numerous intercompany mailing systems. At the present time hun dreds of companies have intercompany mail delivery systems that could expand their services to include their workers, customers, and other people in their communi ties if the law allowed. The case is the same with other "public utilities" supplying goods and services such as water, telephone, and telegraph.

In a system of unhampered economic freedom, a mo nopolistic market position could be attained only through THE PHANTOM CALLED MONOPOLY 303 efficiency. Without government intervention, an efficient enterprise tends to grow until it reaches its optimum size at which the unit costs of production are lowest. This optimum. depends on the· nature of the industry, the state of the product and capital markets, the rate of taxation, and the caliber of management. Obviously, a steel company requires a much larger capital outlay and work force than does a dentist's office or a barbershop. Also, the enterprise managed by a hrilliant businessman has a higher point of optimum than one managed by his mediocre successors. A monopolistic position can be attained only if the optimum size suffices to supply completely a given market. The territorial expanse of the market which a mo nopoly is capable of supplying depends on two factors: the difference between the unit costs of production of the monopolist and those of his potential competitors, which determines the margin of .superiority of the mo nopolist, and the unit costs of transportation, which are determined by the nature of the product and by the dis tances involved. A bulky commodity such as cement, for instance, is burdened with high costs of transportation.

Consequently, the market of the cement monopolist will be relatively small, for an increase in distance from plant to consumer rapidly increases his unit costs. On the other hand, commodities with· relatively low trans portation costs such as watches or diamonds can be dis tributed over vast market areas. This analysis of the territorial range of markets also reveals that bulky item monopolies are in a relatively 304 HANS F. SENNHOLZ favorable position to conduct monopolistic policies. While an American producer of watches must cope with foreign competitors all over the globe, a cement pro ducer may be little concerned about the competition of another producer some 100 miles away. He may indeed be tempted to restrict output and raise prices in order to maximize his income. But, of course, such action would invite other producers to invade the territory of the monopolist. Another corporation soon would build a modern plant in that territory. With a new plant and the good will of all consumers, it undoubtedly would rout the monopolist.

Competition Assures Efficiency It is apparent that a change in transportation costs, production technology, management, or any other cost factor can upset a monopolistic position. Also, a con centration beyond the optimum point is an invitation to failure, for the unit costs of production tend to in crease again. The monopolist who disregards this fact invites potential competitors to invade his field and re duce him to his optimum size. There· is no need for government to break up a giant enterprise; if it were too large, the competitors would reduce it. This is not to deny that even in a capitalist economy a monopoly may temporarily reduce output and charge monopolistic prices. Having reached a monopolistic po sition through efficiency, a businessman may attempt henceforth to follow monopolistic policies. But the foreTHE PHANTOM CALLED MONOPOLY 305 going analysis clearly indicates that his attempts are bound to be short-lived. Soon, he will face a crucial struggle with powerful invaders producing with new equipment and enjoying the good will of the public. Of course, it is most unnatural and unlikely for a business man to rise to eminence through product improvements and lower prices, and then suddenly to turn toward output curtailment and price increases. But if he should act in such a manner, which is conceivable, he practices self-destruction.

How Government Curbs Competition It cannot be denied that in our interventionist world many monopolies actually have the power to restrict output and charge monopolistic prices. But the reason for this unfortunate state of affairs is to be found in the multiplicity of government restrictions of competition. If the government prevents competitors from entering the field, the people lose their protection by potential competition. The public utility that enjoys an exclusive franchise is a local monopoly. In this case, the peoples only line of resistance is their demand elasticity and per haps, also, their recourse to independent production. Meanwhile, the planners resort to political controls. Through franchises, licenses, patents, tariffs, and other restrictions, modern government has in fact created thousands of monopolies. Having thus crippled and hampered competition, it then proceeds to control the monopolies. Political bodies now decide vital economic 306 HANS F. SENNHOLZ questions in many important industries. They regulate our railroads, airlines, and other means of transporta tion. They grant exclusive franchises in radio, televi sion, telephone, and telegraph. They monopolize the production and marketing of electricity, water, and gas.

They issue patents that assure their recipients monopo listic positions. And, finally, they own and operate the whole postal industry and prevent competition through fines and imprisonments. In all these cases, the govern ment effectively restricts competition and thus creates local or national monopolies. Labor legislation has granted monopolistic powers to labor unions, which control whole industries employing hundreds of thousands of workers. They close down vital industries and cripple the entire economy. Through the union shop arrangement, or directly through brute force, they dictate employment condi tions in thousands of enterprises. All this is done in per fectly legal sanctity without interference by the govern ment. On the contrary, the legal framework for this union power is provided by the very government that professes to oppose monopolistic practices and positions in the economy.

This frightful union power, in turn, forces enterprises to unite. A small businessman cannot possibly meet the challenge of a powerful industry union. He there fore is tempted to sell out to a giant corporation with greater power of resistance. Of course, even the giant corporation will be closed by unions. But it cannot be destroyed as easily as can a smaller company.

THE PHANTOM CALLED MONOPOLY 307 Effects of Tax Policy The confiscatory taxation imposed by the interven tionist state causes the same industrial concentration. The middle-aged founder and owner of a million-dollar enterprise is forced to sell out to a large corporation for fear of confiscatory estate taxation. In case of his sud den demise his widow and heirs, who may not be quali fied to carryon his business, will face. confiscatory in heritance taxes. They would have to liquidate the busi ness in a very short time to meet the tax liabilities. As the sale of a specialized business requires great skill and good timing, the sale by the widow probably would en tail large losses. Therefore, a responsible businessman will arrange the liquidation of his own enterprise in good time. He himself will sell out to his corporate competitors and invest the proceeds in marketable se curities. Government bonds, for instance, can be readily sold for estate tax purposes. Thus, hundreds ,of small companies disappear every year.

Especially the most efficient small enterprises tend to be liquidated on account of tax considerations. A going concern that generates profits is taxed at a rate of 52 per cent after which the corporate owner may be taxed at rates up to 91 per cent. If the owner should decide to liquidate his enterprise during the year, his profits are subject to a capital gains tax amounting to 25 per cent. It is obvious that a businessman is tempted to generate a maximum amount of profits in a given year and then quickly sell or liquidate his enterprise. Thus, 308 HANS F. SENNHOLZ hundreds of efficient "collapsible" companies disappear every year. Governments Create Cartels Since the rise of political intervention in economic af fairs, governments have frequently organized or fostered the organization of cartels. These are combinations of enterprises for the purpose of controlling the output or marketing of a commodity or trade through regulation of production, allocation of markets, price fixing, or other means. This regulation always aims at assuring the cartel members a "fair" income, which means a higher income than they otherwise would have.

The German government led the way toward cartel ization of key industries. From about 1880 to 1930 it organized more than 2,100 cartels. It was prompted to this disastrous policy by yet another intervention: its labor legislation. Since the 1880's, the German govern ment had imposed tremendous "social" costs on its in dustry through social security legislation and other meas ures that increased labor costs and reduced labor effi ciency. Without further government intervention, this social legislation would have put German producers at a competitive disadvantage against foreign producers. Under the new burden of social costs, they would have lost not only many foreign markets but probably some domestic markets as well. Then there would have been depression and unemployment until German wages de clined sufficiently to offset the social security costs.

THE PHANTOM CALLED MONOPOLY 309 Instead of facing depression and unemployment, the German government decided to form cartels. It imposed high tariffs on foreign goods, which protected the Ger man industries laboring under the heavy burden of la bor legislation. Businessmen were thus enabled to raise prices, which meant that workers were obliged to pay for their social benefits through higher product prices instead of lower wages. In order to prevent unemploy ment in the export industries, the government encour aged them to sell their products at world market prices. Such sales involved losses, due to the burden of social costs, so the cartels adopted profit-sharing schemes by which the producers supplying the domestic market at higher prices were forced to subsidize exporters. Thus, the cartels commenced dumping, which tended to de stroy the world market and the world division of labor.

Trusts in the United States In the United States the formation of trusts proceeded along similar lines. However, the motivating force was different. There was no social legislation depressing the American economy. Yet, the McKinley administra tion, by imposing high import restrictions, quite un· intentionally achieved the same sort of trustification as was done intentionally by the Bismarck administration in Germany. The Dingley Tariff of 1897, which became known as "the mother of trusts," granted tariff protection to basic industries. With industrial imports from Europe greatly 310 HANS F. SENNHOLZ reduced, the American producers enjoyed monopolistic positions. Consolidations took place on a large scale. During the "Golden Age of Trusts" between 1897 and 1904, 425 trusts were organized with a total capital of more than $20 billion. This trustification of American industry was pro moted by yet another factor for which the government was solely responsible. This was the rapid credit expan sion that culminated in the panic of 1907 and the en suing depression. "Easy money" permitted the organiza tion of new corporations. It made the promotion of combinations most profitable, as new securities could be sold at premium prices. Consequently, Wall Street financiers eagerly promoted mergers and reorganizations on a vast scale. When, in 1903, investors began to ques tion the overcapitalization of the industrial combines, a trust-share panic developed which signaled the tempo rary end of trustification.

Two decades later, when the Federal Reserve System was flooding the capital market with huge quantities of new credit, gigantic trusts again made ·their appearance. Easy financing permitted the organization of powerful holding companies that controlled production through several layers of subsidiaries. They reigned supreme in all industries that were sheltered from healthy competi tion through government franchises, charters, tariffs, and other restrictions. In the field of public utilities, nine holding company systems-among which the Insull group was outstanding-controlled about three-quarters of the power resources in the United States. Holding THE PHANTOM CALLED MONOPOLY 311 companies dominated one-fifth of the railroad mileage. As was to be expected, this period of industrial combin· ation came to an end with the stock market crash in 1929. A few years later, the Roosevelt administration re sorted to extensive industry combinations in order to control the American economy. Under the National Industrial Recovery Act, the industries were organized along the lines of a cartel with codes that regulated most phases of production. The objective was shorter -work hours, reduced production, higher prices. Under the Agricultural Adjustment Act, American agriculture was organized to reduce production by plowing under crops and thus raise agricultural prices artifically. It is a rec ord of history that all these measures failed dismally.

Instead of reviving the economy, they kept it in the grip of deep and lengthy depression. But it was the Ameri~ can government that enacted and enforced these policies which the enemies of capitalism ascribe to private corpora tions. Antitrust Legislation The failure to distinguish between the monopolistic tendencies of government and the propensity of private corporations to grow to optimum size probably under lies the American antitrust movement. Our Founding Fathers were fully aware of this difference. They were so hostile to monopoly power granted by government that Thomas Jefferson wanted to include an antimo312 HANS F. SENNHOLZ nopoly provision in the articles of the Constitution. But their hostility was aimed at monopolistic policies as they were conducted by the colonial powers of Europe before the age of capitalism. They condemned "mercantilism" which was an economic system similar to modern social ism. As Adam Smith had pointed out, monopoly was "the chief engine of mercantilism."

It was entirely natural that the nineteenth century disciples of capitalism should continue to oppose mo nopolistic endeavors. The common law as it developed in the United States reflected their attitude. But during the 1880's, the prevailing ideology began to change. Un der the influence of new schools of thought that were hostile to various aspects of capitalism, the American public began to view with alarm the growth of indus trial enterprise. Advancing technology, especially in the manufacturing and transportation fields, and the rapid accumulation of capital, made private en terprises grow by leaps and bounds. But such growth in most cases merely moved toward optimum size. Of course, in some cases a very successful entrepreneur may have overexpanded his organization, which sooner or later resulted in losses and failure. In other cases, gov ernment franchises, patents, tariffs, and other trade re strictions actually promoted the growth of monopolies.

But public opinion, which was molded by numerous "anti-monopoly parties," by the Populist and Grange movements, laid the blame solely on private enterprise. Thus, while the Founding Fathers· had clearly recog nized the role of government in every monopoly, their THE PHANTOM CALLED MONOPOLY 313 descendants from the 1880's on saw only the "monop olizing businessman." Kansas was the first state to enact an antitrust law in 1889. It was quickly followed by other states. In 1890, in performance of campaign commitments and in re sponse to widespread public demand, the federal gov ernment passed the Sherman Antitrust Act. The act set forth as a national policy the proposition that restraint of trade and monopolistic market positions of private corporations are contrary to the public interest. Later legislation included the Clayton Antitrust Act and the Federal Trade Commission Act, the Robinson-Patman Act, certain provisions of the Wilson Tariff Act, the Webb-Pomerene Act, and the miscellaneous provisions of o'ther acts.

Responsibility for the enforcement of the antitrust laws was placed with the Antitrust Division of the De partment of Justice. From a modest beginning, this di vision has grown today into a large bureaucracy with swarms of lawyers and investigators. During President Harrison's administration only seven cases were insti tuted against large corporations. President T. R. Roose velt initiated 44 cases. Taft began 80, and Wilson 90. Coolidge's administration instituted 83 prosecutions, Roosevelt's 332, and Truman's 169. It is significant that the Roosevelt administration filed its 332 formal charges although its National Industrial Recovery Administra tion had suspended the Sherman Act and was occupied with organizing the American economy along the lines of a cartel. Under President Eisenhower's administra314 HANS F. SENNHOLZ tion, the number of prosecutions per year promises to be even higher than under any preceding administration.

These figures suggest that the antitrust prosecution of American corporations shows a marked tendency to.. ward acceleration. Two reasons may account for this ominous development. First, the growing antitrust bu reaucracy feels compelled to bring proof for the justi fication of its existence and growth. An antitrust lawyer knows of no better evidence of his worth than the number of his prosecutions. Consequently, he will file more and more charges against businessmen. Then, these charges, being made in the limelight of nationwide pub licity, poison the political atmosphere and create further business hostility that demands more charges. In fact, the antitrust charges of the U.S. Justice Department have created a badly distorted picture of our enterprise economy, which has contributed to the rise of a political ideology that is opposed to capitalism. Today, the Anti trust Division is an efficient arm of government omnip otence. It has prosecuted virtually every large corpo ration in the country and continues to embarrass and harass thousands of businessmen, especially the most eminent.

The New Ideology Of course, the government lawyers and eager poli ticians offer a different explanation for the acceleration of their antitrust activity. According to them, the ma ture capitalist economy, such as the American, tends to THE PHANTOM CALLED MONOPOLY 315 deteriorate into a monopolistic economy that deprives small enterprises of fair and equal chances; increased monopolization requires increasing antitrust prosecu tion; the restraint of trade by big business is the cause, and the government actions are its effect, not vice versa. No matter how plausible, this is a vicious line of thought taken from the armory of Marxism. According to Karl Marx, the proclaimed father of modern social ism and communism, the exploitation of the workers by the capitalists leads to industrial concentration and monopolization. A declining number of industrialists grow richer and richer while· the masses of the people form an ever-growing army of paupers and unemployed.

Finally, this process of concentration will come to a head when the people expropriate the expropriators. Thus, socialism is born. A Conflict of Interests Our statist politicians and antitrust bureaucrats em brace the first half of this Marxian explanation. They subscribe to the theory that our capitalist system breeds monopolies. But then they part with Marx by proclaim ing their desire to save this monopoly-breeding system from its own destruction. They propose to destroy the monopolies through government action. We need not here refute this argumentation. Our foregoing discussion of potential competition, competi tion of substitutes, and the optimum size of capitalist enterprises contains a cogent refutation. But we wonder 316 HANS F. SENNHOLZ about the sincerity of the government intention to pre serve our capitalist system. How can it seriously oppose monopolies if the government itself continuously is cre ating them?

A modern offshoot of the Marxian concentration theory is the "monopolistic competition theory" which is propagated at hundreds of our colleges and universi ties. It was first stated by Edward H. Chamberlain of Harvard University and Mrs. Joan Robinson of Cam bridge University. Both believe that the old idea of alternative-either monopoly or competition-is falla cious, and that both situations are combined in our economic system. The monopoly of each producer in his own brand is the starting point that gives producers the power to "administer prices," gouge consumers, and exploit workers. Pure or perfect competition, they be lieve, can only exist if the number of competing pro ducers is large and if they deal in perfectly standardized products. The foregoing discussion of potential competition clearly denies the requirement of numerous competitors. Competition is at work, even if there be only one pro ducer. For, in an industry without government fran chises or other entrance restrictions, the monopolist must act as if he were surrounded by hundreds of com petitors. If he were to attempt to restrict output in order to raise prices, he would invite immediate invasion by other producers.

The requirement of a perfectly standardized product is based on the assumption that consumers can be pulled THE PHANTOM CALLED MONOPOLY 317 into a monopolistic grip by trade names, minor product variations, by advertisement, and other producer devices. Once you drive a Ford car, you will always be sold on Ford products. This consumer habit will give Ford a monopolistic position which entails the power to charge monopolistic prices. We reject this assumption of a dull and gullible pub lic. We believe that people continuously shop around, comparing the quality of products with different trade names and labels. Many consumers switch brands and suppliers, always seeking the better product for their money. Consequently, the Ford manufacturers compete not only with General Motors cars, Chrysler cars, Ameri can Motors cars, all foreign cars, but also with the manu facturers of houses, freezers, washers, dryers, and so on.

For the high price of one product may induce us to buy an entirely different product. The monopolistic competition theory offers as frail a foundation for government antitrust activity as the Marxian concentration theory itself. Both fail to de scribe and explain capitalism. But they are succeeding in destroying American big business which is the main stay of our high standard of living. In fact, they are de stroying competition and individual enterprise.

THE AUCTION SALE tg VO/All 5,ipp I HAVE just had a thrilling experience-watching an old fashioned auction. What is there so exciting about fol lowing a loquacious auctioneer about 4 hot dusty Kan sas farmyard, while stolid farmers bid for cultivators, plows, laying hens, and feather mattresses? Well, for one thing, it's always interesting to watch an expert; and Walter Hand, son of a famous auctioneer, knows his business. But even more important, the auc tion, as developed and carried on in Midwest farm areas, has become a symbol of the free market, free enterprise system. It expresses the robust dynamic spirit, the good natured give and take of the American busi ness tradition. And tlle auction is far from a dying institution. In a day when many of the customs and tokens of the free market are under bitter attack, it is good to know this one neutral meeting place for buyer and seller remains inviolate.

Shall we review briefly the mechanics of the Midwest auction? An older couple, no longer able to farm, are Mr. Tripp, retired from the building business, now devotes full time to travel, writing, and the promotion of free enterprise. 318 THE AUCTION SALE 319 selling out, moving to Wichita. In the course of nearly 40 years, they have accumulated, besides the varied and complicated items required in farming, a large two-story house full of furniture, oddments, and unrelated items thousands of them. Some are valuable, and will fetch a fair price. Others are of little account. But, whether they bring much or little they're going under the hammer this sultry Saturday afternoon in late August. Several factors are necessary for a successful auction. A good crowd is essential. Both the auctioneer and the owners will try to insure a good turnout, by advertising in the two local papers, by radio spot announcements, by handbills distributed in feed stores and other places where farmers may see them. Others are notified by telephone, while the farm "grapevine" further spreads the news.

The weather is important, and Kansas weather is un predictable. A bad storm not only. will discourage people from coming, but may ruin furniture, beds, rugs, and other items piled in the yard. But Kansans are used to risks,· and cheerfully take one more. The auctioneer, the man who kids and cajoles the crowds, keeps them chuckling and in a buying mood, is the heart and soul of the auction sale. For auctioneering is a true art. Not many have the ready wit, the leather lungs, the varied and practical knowledge of merchan dise to do it successfully. The work is physically and mentally exhausting, calling for tremendous concentra tion, an intuitive knowledge of when to conclude a sale. And, the auctioneer must be fair to all. The man who 320 VOLLIE TRIPP has things to sell, as well as those who come to buy, must have complete confidence in his integrity. The crowd begins to assemble long before the hour set for the sale. Farmers want to inspect the machinery, the livestock, the furniture, before they make their bids.

The men come in their work clothing. At least a few of them are worth from $50,000 to $200,000. But wealthy or not, all have come to the sale to improve their for tunes in some way. They come in late Buicks, Pontiacs, some pulling trailers. This is good, for we know they mean to buy, if possible. They come in battered pick ups, in trucks. But you can't tell a thing about a Kansas farmer's finances by the car he drives, or by the clothes he wears. The ladies of the Riverside Home Demonstration Unit arrive with cases of pop and sacks of crushed ice. They set up their bar in the garage, serving hot coffee, frankfurters and buns, and homemade pies by the slice. The crowd will clean them out, and provide a neat profit for their Unit. Now, the auctioneer and his two clerks have arrived, and the sale will begin-a demonstration of the free market, in its most basic, most elemental form. Auctioneer Hand mounts a farm wagon piled with unclassifiable farm items. He makes a brief and friendly talk, seizes an ancient mattock,as if it were some rare and interesting object.

"Well, whatdya know? Just the thing for those weeds too big and tough for a hoe! What am I bid? Who'll give a dollar? Who'll give a half?" The sale is on.

THE AUCTION SALE 321 In a few moments the tool sells, and in rapid succes sion other items, a big sledge hammer, a felling saw, a wire stretcher, rolls of wire, boxes of assorted nails, screws. The price, whatever it is, is exactly right. It is right because this sale represents the perfect functioning of the free market, without interference from meddle some government agents bent on "protecting" either those who want' to sell, or those who hope to buy, to the annoyance of both. The seller recognizes .the risks inherent in all trade, and assumes those risks. It is conceivable that a nearly new tractor might go to someone for a dollar bill. But the seller knows from past experience that such a dis astrous sale is quite improbable, so long as the profit motive exists, and men are free to compete for such bargains. Some items may not bring as much as the seller hopes, but others will bring even more. He pre-accepts the price offered, that is, the best price, and has faith that it will be the right price, in relation to the conditions.

The conditions are those of today, on a hot dusty Kan sas farm in late August. Yesterday, or tomorrow, or next month some item, polished and packaged brightly and offered to the right person in N ew York or California or Chicago, might bring much more. But such selling costs money, and our seller is in no position to search out that right person as his buyer. The quick, final action of an auction sale compensates in part for the lower prices he may have to take for his things.

322 VOLLIE TRIPP As for the buyer, he. knows better than any other person-certainly better than any agent of government how much he can afford to pay for a tractor, or disc, a dozen sheep or chickens. ,He makes his bid, based on what the merchandise is worth to him, now, and· to him alone. There is no pressure to buy other than his own self-interest as it operates in this free and open market place. There is a lot of merchandise to sell. Neighbors ask permission to bring things to be auctioned off. One man sends two loads of furniture. Another a small garden tractor, another a horse. And one neighbor has a big old tractor to sell, a truck or two. "Now, we'll sell this bed, springs, mattress, and all. Boys, if you once sleep in a bed, you'll never sleep on the floor again," sings out Hand. Everyone chuckles. Soon he gets a bid, nota very large bid. But, big or small, it is the proper one, all things considered. In unbelievably short time, the furniture and odds and ends are sold and the auctioneer moves out to the barn yard, where rows of farm ·machinery are neatly dis played.

He gives a tractor a resounding whack with his cane. "Ernie, tell us about your tractor."· At such affairs, the owner of machinery, livestock, and the like' is expected to tell the truth-and does. To claim falsely that the tractor has had a new clutch, a new transmission, bat tery, or whatever would subject him toa prompt, vigor ous, and wrathful accounting. Hand soon gets spirited bidding for the tractor and THE AUCfION SALE tries hard to sell it for $500. After five minutes he sees this is too much, lets it go for $465-a fair and proper price. His job is to sell things at the best figure the free and uncoerced market will permit. He works on a com~ mission basis. Naturally, he doesn't knock his wares. But neither does he make extravagant and unsupported claims. Among the diverse items of property are ten bushels of new corn. "Someone give me a buck a bushel. If we had it in the bottle, it'd be worth twice as much." Hand lets the corn go at 95 cents.

Now a saddle horse is brought out of the barn. "Bet ter take the saddle off, Charlie, so we can see him all over." Charlie does, as he cites statistics about his horse, age, disposition, and so on. And we know Charlie is tell ing the truth, for the eyes of his friends and neighbors are upon him. At this sale, there was not an instance of knocking of merchandise. Much of it was junk, and brought a junk price. But auction etiquette seems to forbid and discourage any belittling tactics. If a battered chair has no appeal to a bidder, he expresses his views by simple silence. Chances are the chair was worth something to someone. Every transaction was handled with the same quiet, professional dignity. Never had we seen a better mannered crowd. They were "capitalists" bent on gain, each man for himself in a sense, but faithful to the rules of the game. The sale was over. Walter Hand, exhausted, went for a cool pop at the ladies' bar. Happy people were gathering 324 VOLLIE TRIPP up their bargain treasures, exchanging bits of farm news, guying and kidding each other for their bizarre pur chases. If there was any chagrin, any disappointment, it was not revealed. The owners were satisfied, feeling that their property had received a fair "trial" in the court of public values. Here buyer and seller met freely and of their own accord, matched wits in good-natured banter, compromised, and finally reached a price acceptable to both.

It may be of interest that selling costs, which must be borne by both customer and supplier in all transactions, are amazingly low in these auction sales. Auctioneer Hand received 2 per cent of gross sales. His two clerks received another 2 per cent of the gross. The cost of advertising, including radio spots and handbills, proba bly did not exceed 1Y2 per cent of the total-roughly 5~ per cent in all. By no other method can such im mensely diverse and "perverse" merchandise be sold so quickly and cheaply. Yes, I saw an auction sale, and a very good one-a striking and stirring manifestation of the free market, free enterprise system operating vigorously in an econ omy that wobbles precariously on the brink of socialism. So long as this peculiarly American institution-the auction sale-remains with us, freedom's cause is far from lost.

THE MASS MAN tg of~ona,.J G. R~aJ OVER AND OVER again the argument is dinned into our ears, "Let's stop talking to each other and reach out in stead for the unconverted. Sell the masses on freedom; they have the votes." This advice is superficially cogent, with the result that hundreds of millions of dollars and untold man-hours have been expended in an effort to "bring light" to the masses. But an impartial survey of these efforts fails to turn up even one which lived up to its promises; all have proved dismal failures. Nonetheless, the search for na tional salvation through "selling the masses" is as per sistent today as it ever was.! If there is such a thing as "the masses," there must be such a thing as a mass man. But who in heaven's name is he, and where's his hangout? Perhaps he is among 1 Success in mass production and sale of commodities-autos, watches, soap, corn flakes, cosmetics-has influenced many to er roneously conclude that ideas can be mass sold. There is, however, an important distinction between marketing products-things that satisfy desires of the flesh-and spreading ideas, the latter being accomplishments of the intellect. Commodities, once produced, are ready for consumption, whereas "selling" an idea requires that each "buyer" reproduce it in his own mind.

325 326 LEONARD E. READ those who urge mass reform, for they are so numerous that the remaining population can hardly qualify as U the masses"1 Those who would "sell the masses" don't give us much of a clue as to the characteristics of the mass man ex cept that he is low grade intellectually. He is always pointed to as one who needs vast improvement, so ob viously he is something of an ignoramus. T he Search for rrSomeone Else" Within these popular terms of reference, "the masses" who "don't undertsand" would seem to include the fin ger-pointers themselves. For, pray tell, who among us has a monopoly of understanding? Can it be those who insist that someone else be brought to a state of wis dom, especially when nearly everyone is pointing to someone else? Or, could it be that those who point their fingers are unwittingly pointing at their own reflections? Thinking they see someone else, they spend their money and time on the reformation of reflections and shadows, forgetting, as Thackeray put it, that "the world is a looking glass and gives back to every man the reflection of his own face." Small wonder that programs for edu cating the masses have so consistently met with dismal failure!

There is, though, a real mass man-millions of himl And he is not necessarily an ignorant fellow. By all the standards we use to measure intelligence, the best intel lects among us may be of the mass. The real mass man is THE MASS MAN 327 likely to be found in a position of leadership-in the church, in business, in the· classroom, on the farm, and even more conspicuously in government and all com mittee-type organizations. This real mass man, I submit, has been escaping our attention because our natural inclination in the face of social problems is to seek the culprit among those whose behavior differs from our own. Using our own behaviors as the norm of righteous ness-Hour" being the most of us-we find it difficult to discover the mass man in ourselves. It is almost unbe lievable that we could be the masses. How are we to recognize the real mass man-in others, or in ourselves? The mass man is anyone who lives by a double standard of morality, who acts in the mass-the collective, the committee, the organization-in a manner inferior to the way he acts on his own responsibility.

Take Joe Doakes for example: he wouldn't kill a fly, let alone take the life of a human being. Yet, Mr. Doakes will join a mob, hang another by the neck till he's dead, and feel no remorse whatsoever. To his mind, the· mob, not he, is responsible. Joe is definitely and definitively a mass man. For, Joe's moral standard when acting in mass is inferior to 'his moral standard when acting individually. Most persons would agree that Joe Doakes fits the definition-but they themselves have never behaved like that! No, there aren't many lynching parties in this day and age. But, if the definition is accepted, the shoe will come nearer to fitting-and pinching-as we move on· to more common examples of mass action.

328 LEONARD E. READ For instance, suppose the federal government were to decree that all farmers are entitled to $30.00' for every acre of land taken out of production and that each farmer, with the help of an armed officer assigned to him for the purpose, is to call personally on people, rich and poor alike, and forcibly collect the booty. Disre garding the inefficiency of this cumbersome method, how many farmers would take advantage of such a law? Few indeed, for this personal, face-to-face procedure would be as revolting to the farmers as it would be to the pay ers of the pelf. Farmers in the Mass However, let us give the immoral conduct sanctioned by this law the appearance of being depersonalized, re writing it in conformity with the way it now stands on our statute books. Let the mass agency-government do the forcible collection for the farmers. Nearly all feeling of guilt disappears. Indeed, in most instances, what would have been a feeling of moral revulsion gives way to an opposite sensation: a right to the property of others. This actually has happened to most of the mil lion and more farmers now receiving such collections for not growing something. The action of farmers in the mass is inferior to the way each of them would act personall y.

Of course, it is not right to single out farmers as typi cal mass men. They qualify no more than do those of other occupations such as the producer of steel prodTHE MASS MAN 329 ucts who wouldn't personally raise his hand to stop an exchange between two of his neighbors but who will solicit the help of the mass agency-government-to hin der and penalize certain exchanges in order to improve his own chance of getting that business. He has a moral standard for mass action inferior to his moral standard for personal action. Who in the church or the chamber of commerce would personally take the property of others by force to satisfy his charitable or welfare instincts? Except in rare headlines, such persons simply do not exist. Their personal standards of morality are above such action. Yet, the mere pretense of depersonalizing the act-doing it in mass, in the collective, in the organization-reduces their souls to the level of robbery. From the pulpit and in countless resolutions from every type of organization we hear and read solicitations to the federal pap-wagon, pleas for police grants-in-aids. These individuals.,-every one who acts in this manner-are mass men, "the masses," whether their solicitations be for hospitals or airports or TVAs or subsidies for nonproduction or for anything else in the socialistic bag of tricks.

Depersonalizing the Act Apparently, it is the appearance of depersonalization that accounts for this destructive, inferior standard of morality. Joe Doakes thinks of the mob as doing the lynching, and so does each of the others. Everyone con siders himself absolved of any evil, as if an abstraction 330 LEONARD E. READ -a mere term, "the mob"-could hang a man! But does action by a collective absolve the individuals who com pose it of the responsibility for the collective action? An affirmative answer is absurd. The following story illus trates the point: A person reputed for his libertarian views was a visit ing guest at a chamber of commerce meeting. Favorable action was taken on three committee reports, all of which were pleas for the federal government to use its compulsion to obtain the property of others that the local community might be "benefited." At the conclu sion of the meeting the visitor was invited to "say a word." This is all he said: Remus Papwagon passed away and his spirit floated to the Pearly Gates. The spirit knocked. Saint. Peter responded and inquired as to the purpose of the visit.

"I crave admittance," said the spirit. Saint Peter looked over his list and sadly announced, "Sorry, Mr. Papwagon, I don't have your name." "Don't have my name? How come?" "You took money from others, from widows and orphans as well as the rich, in order to satisfy your personal notions of doing good." "Saint Peter, you are in error. I had the reputation of an honest man." "You may have had. that reputation among. those who acted in a manner similar to yourself, but it was an undeserved reputation. Specifically, you were a financial supporter and a member of the board of directors of the Opportunity Chamber of Commerce, and that organization sponsored· a government golf course, to mention but one of the many irresponsible actions; that required the coercive extortion .0£ the earnings of widows and orphans to benefit would-be golfers." "Ah, but that was the Opportunity Chamber of Commerce THE MASS MAN 331 that took those actions, not your humble servant, Remus Papwagon."

Saint Peter looked over his list again and then said, "Mr. Papwagon, we don't have any chambers of commerce or labor unions or councils of churches on this list. There is nothing but individual souls." Saint Peter closed the Pearly Gates. Whereupon, the meeting adjourned, but some in at tendance that day are still speculating on the where abouts of the soul of Remus Papwagon and on the pros pects for others who similarly deny self-responsibility. Each of Us Is Guilty A painful fact to keep in mind is that every· living person in the U.S.A. to some extent qualifies as a mass man. Let each take note that any finger of shame points in part at his own reflection. Absolute purity in conduct in response to the dictates of individual conscience is not attainable; it is only approachable. If one would continue life-an aim this author com mends-there is no way to divorce oneself completely from the way of life imposed by men who act in mass, by men who act in some manner inferior to their high est personal standard of morality. Few, if any of us, know how to live except in the market and in society as it is. The very bread we eat is from subsidized. wheat.

The mail that takes this issue of THE FREEMAN to the reader is rank with special privilege, as socialistic as anything in the U.S.S.R. Much of the power and light we use is on the rob-Peter-to-pay-Paul basis. Our eco332 LEONARD E. READ nomic blood stream-the money we use to exchange our millions of specializations-is shot through with the adulterations which. result from the Papwagon way of life. The only alternative to life in this smoggy atmos phere is death itself. Absolute purity is unattainable. But we can paddle in the direction of purity. So far as the mass agency government-is concerned, we can refrain from ever standing sponsor for any socialistic activity, and we are free to employ all the persuasion we can muster to ex plain the fallacies of state ownership and control of any productive and creative activity. So far as voluntary mass agencies-committees and organizations-are concerned, we can, if we are a part of them, act always in accurate response to our highest individual standard of morality, realizing that there is never any escape from a personal responsibility for any collective action in which the individual participates.

And, one more thing: We can refuse to' be a member or financial supporter of any voluntary organization that takes action for which we are unwilling to stand personally responsible. Organizations Often Misrepresent Here is an example of how voluntary collectives all too often misrepresent us: A spokesman for a business organization appeared before a committee of Congress. By reason of what a small committee had resolved, he claimed to speak for several million businessmen. His THE MASS MAN 333 report made concessions to rent control, concessions that many of the members would disapprove. In short, a lie was told. Many businessmen of libertarian views were represented as advocates of rent control, a socialistic item. Identity with such organizations is no way for a man to reflect accurately that which he believes to be right. Nonetheless and more or less, we are all of the masses. And what we see as imperfections in others is little else but a reflection of how far we are from our own poten tial perfections. So, there may be something to "selling the masses" after all-that is, if each of us correctly identifies the individual seen in the looking glass as part of the .mass and thus an imperfect man. Here is a fact so dimly appreciated it can be classified as secret: Further enlightenment of the man reflected in one's own mirror is the sole means he has of bringing more light to others.

THE CONSUMER THEORY OF PROSPERITY t'l Jo~n Stuart mitt AMONG THE MISTAKES [of the pre-classical writers] which were most pernicious in their direct consequences ... was the immense importance attached to consumption. The great end of legislation in matters of national wealth ... was to create consumers .... This object, un der the varying names of an extensive demand, a brisk circulation, a great expenditure of money, and some times totidem verbis a large consumption, was conceived to be the great condition of prosperity. It is not necessary, in the present state of the science, to contest this doctrine in the most flagrantly absurd of its forms or of its applications. The utility of a large government expenditure for the purpose of encouraging industry is no longer maintained .... In opposition to these palpable absurdities, it was triumphantly established by political economists that consumption never needs encouragement .... The per son who saves his income is no less a consumer than he These excerpts, selected by Henry Hazlitt for quotation in The Failure of the uNew Economics" (Princeton: D. Van Nostrand, 1959) are from Mill's Essays on Some Unsettled Questions of Po litical Economy written in 1830.

334 THE CONSUMER THEORY OF PROSPERITY 335 who spends it: he consumes it in a different way; it sup plies food and clothing to be consumed, tools and rna.. terials to be used, by productive laborers. Consumption, therefore, already takes place to the greatest extent which the amount of production admits of; but, of the two kinds of consumption, reproductive and unproduc tive, the former alone adds to the national wealth, the latter impairs it. What is consumed for mere enjoyment is gone; what is consumed for reproduction leaves com modi ties of equal value, commonly with the addition of a profit. The usual effect of the attempts of govern ment to encourage consumption is merely to prevent saving; that is, to promote unproductive consumption at the expense of reproductive, and diminish the na tional wealth by the very means which were intended to increase it. What a country wants to make it richer is never con sumption, but production. Where there is the latter, we may be sure that there is no want of the former. To pro duce, implies that the producer desires to consume; why else should he give himself useless labor? He may not wish to consume what he himself produces, but his mo tive for producing and selling is the desire to buy.

Therefore, if the producers generally produce and sell more and more, they certainly also buy more and more. From what has been already said, it is obvious that periods of "brisk demand" are also the periods of great est production: the national·capital is never called into full employment but at those periods. This, however, is no reason for desiring such times; it is not desirable 336 JOHN STUART MILL that the whole capital of the country should be in full employment. For, the calculations of producers and trad ers being of necessity imperfect, there are always some commodities which are more or less in excess, as there are ahvays some which are in deficiency. If, therefore, the whole truth were known, there would always be some classes of producers contracting, not extending, their operations. If all are endeavoring to extend them, it is a certain proof that some general delusion is afloat.

The commonest cause of such delusion is some gen eral, or very extensive, rise of prices (whether caused by speculation or by the currency) which persuades all dealers that they are growing rich. And hence, an in crease of production really takes place during the prog ress of depreciation, as long as the existence of deprecia tion is not suspected. . . . But when the delusion van ishes and the truth is disclosed, those whose commodi ties are relatively in excess must diminish their produc tion or be ruined: and if during the high prices they have built mills and erected machinery, they will be likely to repent at leisure. Waves of Hope ,and Fear Unreasonable hopes and unreasonable fears alter nately rule with tyrannical sway over the minds of a ma jority of the mercantile public; general eagerness to buy and general reluctance to buy, succeed one another in a manner more or less marked, at brief intervals. Except during short periods of transition, there is almost alTHE CONSUMER THEORY OF PROSPERITY 337 ways either great briskness of business or great stagna tion; either the principal producers of almost all the leading articles of industry have as many orders as they can possibly execute, or the dealers in almost all com modities have their warehouses full of unsold goods.

In this last case, it is commonly said that there is a general superabundance; and as those economists who have contested the possibility of general superabun dance would none of them deny the possibility or even the frequent occurrence of the phenomenon which we have just noticed, it would seem incumbent on them to show that the expression to which they object is not applicable to a state of things in which all or most commodities remain unsold, in the same sense in which there is said to· be a superabundance. of anyone com modity when it remains in the warehouses of dealers for want of a market. Whoever offers a commodity for sale desires to obtain a commodity in exchange for it, and is therefore a buyer by the mere fact of his being a seller. The sellers and the buyers, for all commodities taken together, must, by the metaphysical necessity of the case, be an exact equipoise to each other; and if there be more sellers than buyers of one thing, there must be more buyers than sellers for another.

This argument is evidently founded on the supposi tion of a state of barter; and, on that supposition, it is perfectly incontestable. When two persons perform an act of barter, each of them is at once a seller and a buyer. He cannot sell without buying. Unless he chooses 338 JOHN STUART MILL to buy some other person's commodity, he does not sell his own. Monetary Complications If, however, we suppose that money is used, these propositions cease to be exactly true. . . . Interchange by means of money is therefore, as has been often ob served, ultimately nothing but barter. But there is this difference-that in the case of barter, the selling and the buying are simultaneously confounded in one operation; you sell what you have, and buy what you want, by one indivisible act, and you cannot do the one without doing the other. Now the effect of the employment of money, and even the utility of it, is that it enables this one act of inter change to be divided into two separate acts or opera tions; one of which may be performed now, and the other a year hence, or whenever it shall be most con venient. Although he who sells, really sells only to buy, he need not buy at the same moment when he sells; and he does not therefore necessarily add to the immedi ate demand for one commodity when he adds to the supply of another. The buying and selling being now separated, it may very well occur that there may be, at some given time, a very general inclination to sell with as little delay as possible, accompanied with an equally general inclination to defer all purchases as long as possible.

This is always actually the case, in those periods THE CONSUMER THEORY OF PROSPERITY 339 which are described as periods of general excess. And no one, after sufficient explanation, will contest the possi bility of general excess, in this sense of the word. The state of things which we have just described, and which is of no uncommon occurrence, amounts to it. For when there is a general anxiety to sell, and a general disinclination to buy, commodities of all kinds remain for a long time unsold, and those which find an immediate market do so at a very low price. . . . There is stagnation to those who are not obliged to sell, and distress to those who are.... In order to render the argument for the impossibility of an excess of all commodities applicable to the case in which a circulating medium is employed, money must itself be considered as a commodity. It must, undoubt edly, be admitted that there cannot be an excess of all other commodities, and an excess of money at the same time.

But those who have, at periods such as we have de scribed, affirmed that there was an excess of all com modities, never pretended that money was one of these commodities; they held that there was not an excess, but a deficiency of the circulating medium. What they called a general superabundance, was not :a superabun dance of commodities relatively to commodities, but a superabundance of all commodities relatively to money. What it amounted to was, that persons in general, at that particular time, from a general expectation of be ing called upon to meet sudden demands, liked better to possess money than any other commodity. Money, 340 JOHN STUART MILL \ consequently, was in. request, and all other commodities were in comparative disrepute. In extreme cases, money is collected in masses, and hoarded; in the milder cases, people merely defer parting with· their money, or com ing under any new engagements to part with it. But the result is, that all commodities fall in price, or become unsalable ....

It is, however, of the utmost importance to observe that excess of all commodities, in the only sense in which it is possible, means only a temporary fall in their value relatively to money. To suppose that the markets for all commodities could, in any other sense than this, be overstocked, involves the absurdity that commodities may fall in value relatively to themselves. The Myth of Oversaving The argument against the possibility of general over production is quite conclusive, so far as it applies to the doctrine that a country may accumulate capital too fast; that produce in general may, by increasing faster than the demand for it, reduce all· producers to distress. This proposition, strange to say, was almost a received doctrine as lately as thirty years ago; and the merit of those who have exploded it is much greater than might be inferred from the extreme obviousness of its absurdity when it is stated in its native simplicity.

It is true that if all the wants of all the inhabitants of a country were fully satisfied, no further capital could find useful employment; but, in that case, none would THE CONSUMER THEORY OF PROSPERITY 341 be accumulated. So long as there remain any persons not possessed, we do not say of subsistence, but of the most refined luxuries, and who would work to possess them, there is employment for capital. ... Nothing can be more chimerical than the fear that the accumulation of capital should produce poverty and not wealth, or that it will ever take place too fast for its own end. Nothing is more true than that it is produce which con stitutes the market for produce, and that every increase of production, if distributed without miscalculation among all kinds of produce in the proportion which private interest would dictate, creates, or rather con stitutes its own demand. This is the truth which the deniers of general over prod uction have seized and enforced. . . .

The essentials of the doctrine are preserved when it is allowed that there cannot be permanent excess of production, or of accumulation; though it be at the same time admitted, that as there may be a temporary excess of anyone article considered separately, so may there of commodities generally, not in consequence of over production, but of a want of commercial confidence.

GOVERNMENT IN THE HOUSING BUSINESS tv Gmer:Jon p. Sc~miJI My NAME is Emerson P. Schmidt, Director of Eco nomic Research of the Chamber of Commerce of the United States. I am here on request to discuss the ques tions submitted to me by the Subcommittee. "What are the prospects for an adequate supply of resi dential construction labor during the period Ig6I-70? To what extent will the per unit labor costs increase or decrease the per unit cost of housing during the period of Ig6I-70? How should federal programs be supple mented or modified to improve prospects for an ade quate supply?" An unraised question occurred to me: Why has our national government become so deeply and heavily in volved in the people's housing? This Subcommittee, the Senate Committee on Banking and Currency, the entire Congress as well as hundreds, perhaps thousands, of wit nesses and industry people over the last 25 years have spent an enormous amount of time and energy and money considering and discussing housing, housing legThis article is condensed from Dr. Schmidt's testimony of May 19, 1959 before the Subcommittee on Housing of the Senate Banking and Currency Committee.

342 GOVERNMENT IN THE HOUSING BUSINESS 343 islation, financing, and related problems. Had all this legislative activity not taken place, would our citizens be less well housed today, or would they be better housed? Would unit housing costs be higher or lower? The answers to these basic questions are not obvious. Yet, to a nonexpert, they would seem to be important. For example, let us take a look at the accompanying table which may help us to consider one of these basic questions. The table contrasts nonfarm housing starts in two prosperous years in the mid-1920's and two prosperous years in the mid-1950's. The figures show that 35 years ago, without government intervention, we had over 5 new nonfarm housing starts per $1,000,000 of GNP (in constant 1954 prices), as against only about 3 housing starts in the mid-1950's. Housing starts in the mid-1920's HOUSING STARTS IN THE UNITED STATES With Govern ..

Without Aid ment Aid 1925 1926 1955 1956 Nonfarm Housing Starts (thousands) 937 849 1,329 1,118 Gross National Product· (billion dollars) 161.8 170.8 392.7 402.2 Population (millions) 115.8 117.4 165.3 168.2 Housing Starts per Million Dollars GNp· 5.79 4.97 3.38 2.78 Housing Starts per Thousand Population 8.09 7.23 8.04 6.65 .. Gross National Product adjusted to reflect the same value of the dollar as in 1954.

344 EMERSON P. SCHMIDT per thousand population were moderately higher than in the mid-1950's. Offhand, this unfavorable showing for the government interventionist period causes one to wonder whether all this congressional concern for housing was justified in the past 20 or 25 years, and whether its continuation in the future is wise. Whether other comparisons and more refined and more comprehensive analysis would put the government interventionist period in a less unfavorable light would be worth further study. The figures in the table are not submitted to prove any conclusion; but they do suggest, at least superficially, that the Subcommittee members should ask themselves whether the proper next steps should be in the direction of more and more gov ernment intervention, or, rather, a move in the oppo site direction. If the figures are relevant and reasonably representative, they suggest that this Subcommittee and the Congress have been needlessly worried and con cerned with the American people's housing problems.

The fact that housing is a basic human need does not necessarily mean that it is a public, rather than private, economic problem. There are other needs just as "basic." A Change of Attitude The late, great Professor Joseph P. Schumpeter of Harvard University often observed that America is in danger of being one of the first great modern nations GOVERNMENT IN THE HOUSING BUSINESS 345 to be socialized because something has happened to our spirit. Alexis de Tocqueville, in 1836, said: "In America ... the citizen ... never thinks of solicit ing the cooperation of the. government; but he pub lishes his plan, offers to execute it himself, courts the assistance of other individuals, and struggles manfully against all obstacles. Undoubtedly he is often less suc cessful than the State might have been in his position; but in the end, the sum of these private undertakings far exceeds all that the government could effect."

Many of our citizens, it seems, have lost the profound insights of our forebearers and men like Tocqueville with respect to the great individual and social gains which can come through this individual effort and self reliance. We seem to have become victims of what has been called "the socialization of the soul:Perhaps here we have the key to the absence of su perior performance in recent decades, even with all our government intervention, as against the performance in our earlier history, for example, in the 1920's men tioned above. Again, I do not want to draw any dogmatic conclusions, but this Subcommittee might think seri ously about the kind of society we have and the kind of society we want to build. Where does individual respon sibilityend? And where should government interven tion start? What are the state and local responsibilities, as against the central government's responsibility?

The essentially private character of housing as a com modity and the historical record suggest that the ques tions which the Subcommittee put to me are easily re346 EMERSON P. SCHMIDT· solved, even though·. incapable of concrete, quantitative answers. Even in the first one, "What are the prospects for an adequate supply of residential construction labor during the period 1961-70?" it would seem obvious that if neither labor unions nor government create any road blocks, labor mobility and individual personal incen tives will assure an "adequate" supply of construction labor to meet the bulging requirements of the 1960's. The word "adequate" has little meaning, of course, ex cept in terms of voluntary participation by workers in construction trades and the demand for the services of workers in general in alternative employments. No Shortages in Free Market We might put the matter another way, in the form of a different question: Has any effective demand (desire, coupled with ability and willingness to pay) for any commodity or service ever remained unfulfilled for any extended period because of the scarcity. of common or skilled labor? Except for very short periods, such as a few days or weeks, it would be difficult to identify any sig nifiant consumer demand in peacetime which has ever been left unsatiated because of a scarcity of labor.

Thus, it seems to me that this question enters need lessly into an arena where market forces can be relied upon to furnish the correct answer, provided, of course, no artificial restraints or stimulants are put in the way of these forces. It is the function of the free market, the GOVERNMENT IN THE HOUSING BUSINESS 347 free price (wage) system, and the self-interest motive to allocate human and other resources in response to free consumer demand. On the other hand, if artificial forces tend to over stimulate housing starts, when the remainder of the economy is in a buoyant state, an apparent shortage of both labor and materials might occur. After all, when permitted to do so, the price system does work. In 1934, average hourly earnings in manu facturing were $.53 and in building construction $.79, or 50 per cent higher. By 1959, average hourly earnings in manufacturing had reached $2.21, or 417 per cent of the 1934 figure, while average hourly earnings in build ing construction had reached $3.18, or 403 per cent of the 1934 figure.

No labor leader, no businessman, no labor arbitrator, and no government bureau is wise enough to say what wage rates ought to be. But if permitted to do so, the market will provide the answer. Why have wages in manufacturing gone up slightly faster since 1934 than in building construction (particularly so, since fringe benefits in manufacturing are also larger than in the building trades)? Supply and demand forces unquestion ably were at work. Some might argue that even as long ago as 1934, construction labor was too expensive, rela tively speaking; although I would have no information to support such a view. But, probably, the rise in construc tion wages has been retarded, relatively to those in manufacturing, because of substitution effects.

348 EMERSON P. SCHMIDT Institutional Restraints If construction labor is in fact overpriced ordeliber ate shortages are created by closed unions, unduly high initiation fees, or unnecessarily long apprenticeship training periods, this will raise the price of. construction labor in the organized trades. But, if these occupations are relatively more remunerative, additional people will be attracted to the industry in those areas of the econ omy where this is permitted-that is to say, where the union does not have complete control of job oppor tunities. Furthermore, such overpricing will put a high premi um on prefabrication and the related trends. It seems altogether probable that the on-site labor requirements for residential construction will diminish year by year in the decade ahead. The use of component construc tion, subassemblies, and modular design will increase greatly. If it should happen that a scarcity of construc tion labor develops in the decade ahead, these powerful forces will be accelerated, quite probably, to the point where any serious labor scarcity will be fairly promptly overcome. But local bottlenecks for particular skills will continue from time to time, as they have in the past.

Even if the labor leaders were so unwise as to put re strictions on the use of labor-saving methods and com ponents, then building materials firms, contractors, and consumers-that is, the house buyers-are not necessarily under permanent restraint; they have ways of getting around this.

GOVERNMENT IN THE HOUSING BUSINESS 349 By the supply of labor, we, of course, don't merely mean so many bodies. The economic concept of labor supply involves not only the number of human beings, but also their ability, their skill, their work habits, and the number of hours they are willing to work per week. Reductions in the length of the work week or feather bedding or restrictions on the use of labor-saving de vices are ways of effectively reducing the supply of labor. Without government support, unions cannot hold back the tide of progress for long. Thus, it is likely in some localities and at some times that construction trades may overprice their services and restrict output. There are powerful price and techno logical forces working in the other direction; so that it would appear to be improbable that we would have any secular deficiency of construction labor supply in the period ahead or that unit housing costs, for identical products, will rise relatively.

Labor costs~ of course, are not merely a question of hourly wage rates, but also of fringe benefits and of labor input, of productivity. And productivity, of course, is a result of improved tools, management, technology, com ponents, materials, and the like, as well as labor. If wage rates should rise unduly, or restrictive practices-includ ing unduly short work weeks-occur, this will put a very high premium on a massive reduction in on-site labor, and a great increase in the use of components which are factory-made, and will give additional impetus to pre fabrication and all the movements in that direction.

BUT WHAT CAN I DO ABOUT IT? t'l J. J~dne,. J(a~n MOST PEOPLE are aware that our Way, the American Way of Life, is being seriously challenged-that if some thing isn't done, things will get worse instead of better. There may not be agreement on which issue or issues are the most crucial, but among those most frequently mentioned are apathy, conformity, lack of a sense of re sponsibility, racial conflict, inflation, internationalism, socialism-communism, juvenile delinquency, automobile accidents, government spending, monopoly unionism, foreign competition, and the like. Yet, we find even those persons most seriously con cerned asking this question: "But what can I do about it?" I'd like to have a nickel for every time I have heard this expression from those who earn more than I do. I say it this way to emphasize the fact that so many peo ple, whose capabilities in business fields far exceed mine, plead full ignorance in the all-important business of ful filling their duty as American citizens.

Salesmen who make hundreds of contacts before they make a sale, advertisers who are happy with a few orMr. Kahn, a businessman from Chicago, is perhaps best known for his letters to editors. 350 BUT WHAT CAN I DO ABOUT IT? 351 clers per thousand broadsides mailed, fishermen who will go to any lengths in the mere hope of landing the big one, become very different people when it comes to per forming their civic duties. Here, they seem to expect immediate and overwhelming results with a minimum of effort. They underestimate the competition. The grafter, the subversive, and the special interest groups have much to gain by imposing their wills upon legislators and upon the public; and what they gain is immediate. You and I, who want the blessings of liberty secure for ourselves and our posterity, perhaps are less aware of what we gain by defending and advancing Americanism. Whatever the reason, the fact remains: people seem to like to believe that they can't do anything-so they do nothing. Yet, what each person is capable of doing, and has the ability to do, is most substantial.

First, you must have an opinion, as soundly based and firmly established as possible. Second, you must see that this opinion is expressed in public, for an unknown opinion has no more value than any other form of un known wealth. Most of us aren't going to hire a hall, put on our own TV show, or even write a book. But we can, at least in conversations, say we are not convinced (when we aren't), and let those who have made a good point know that we think they have done well. Even those who would remain least involved can do this much. Psycholo gists have demonstrated that six or seven people, in agreement or disagreement, determine the degree of cer tainty with which a person holds a conviction. Never 352 J. KESNER KAHN underestimate the power of an expressed indication of approval or disapproval. You are busy, but you do read widely to keep in formed. Good! As you read, mark articles, underline cogent phrases, check summarizing paragraphs. Then, send these on to others. If you have time, include a note such as, "This also confirms what you said," or "You may be right, but there does appear to be another side."

Formal letters of transmittal are seldom necessary. Just mail these materials where you think they would do the most good. You may doubt the effectiveness of this technique un til you see an editor, to whom you have sent a mailing or two, permanently alter his policies; or a legislator change his vote on an issue. Or, a friend who has been in disagreement with you will come around one day and say: "You know that last item you sent really has some thing to it. I never thought of it that way." And still people ask: "What can I do about it?" If most of us did just this much, the principles and institutions of Americanism wouldn't be as contorted and corroded as they are now. Of course, you could go much further. You could refrain from letting purely commercial considerations "force" you to contribute and support movements and actions that you know are wrong. You could initiate correspondence with govern mental officials, trade association executives, and editors.

No matter how "big" or "small" you may consider yourself, realize that you may be the sole initiator-spon sor of an idea-and that if you stop, everything stops.

BUT WHAT CAN I DO ABOUT IT? 353 On the other hand, unless others join you eventually, you probably won't get far. And this works both ways; for others need support, too. This you can do. You can support those who are supporting what you believe is right. We can think of ourselves as voluntary members of a voluntary army, each of us deciding how much we can afford to give in time and wealth-how much we can afford not to give. Just because it is a voluntary affair, we must each be responsible for doing our duty, help ing others who are also working and fighting in our be half, doing our share of the work and the fighting. Again, because it is all voluntary, we must support our selves, and we should be willing to give help to those who give so much in time and effort that they need our support. The big question is not, "What can I do about it?" but rather, "How can I possibly afford not to do some thing?" That you refrain from doing anything does not mean that your opposite number, on the other side of the issue, will also refrain. You surely can be as effective in shaping public opinion as can your opposite number; and since he is active, you cannot afford to be otherwise.

You can go far, if you just keep putting one foot ahead of the other. In this business of being a Citizen, START! KEEP MOVING! and you'll find you have really begun to "do something about it."

WAGES, PRODUCTIVITY, AND PRICES t'l W .Allen Watli~ THE LONG and rapid rise in productivity in the United States has occurred not because people work harder-in fact, our grandfathers almost all worked longer hours at heavier tasks than we do-but because people work more effectively. The increase in the effectiveness with which people work results in considerable part from in creases in education, in skills, in health, and in general well-being. The rising quality of the labor force, in short, is an important source of productivity increases. A related source of productivity increases is new knowledge, some produced by research in industrial, university, and government laboratories but much de veloped in an informal way on all kinds of jobs where ingenious people make innumerable small or large im provements in their methods of doing things. Dr. Wallis is Special Assistant to the President of the United States and Executive Vice-chairman of the Cabinet Committee on Price Stability for Economic Growth, on leave as Dean of the Graduate School of Business, University of Chicago. This article is from his remarks of November 19, 1959, before the National Industrial Conference Board at Chicago.

354 WAGES" PRODUCfIVITY" AND PR.ICES 855 Productivity increases also as more and better capital equipment is used. One man with a steam shovel can move more earth than many men using only hand tools. Even without improvement in the quality of equipment, an increase in the amount used can bring a rise in out put per man-hour. In general, however, as we accumu late capital, we incorporate in it the findings of research, so that we have not only more but better capital equip ment. But capital includes more than just tools and machinery. For example, the improvement of roads, har bors, communication networks, water supplies, and sani tary facilities can all contribute to rising productivity. Just as the tools with which people work are impor tant to their productivity, so too are the natural re sources at their disposal. Ask a farmer about the impor tance of good land or a miner about the importance of the richness of the seam he works. The discovery and development of more and richer natural resources re sults in increased productivity.

Improve Management Increased productivity also results from more effective organization of human and material resources, so that each input is used where it can produce the most value. The organizing job is performed mostly by man agement,and improved methods of management in crease the rate of growth in productivity. An important contribution of managers is in seeking and developing new products and new methods, and especially in risk356 W. ALLEN WALLIS ing the funds necessary to try innovations that often prove costly failures. The responses people make on their own initiative to differences in wages and prices also result in labor, capital, and natural resources mov ing toward their most effective uses. As manpower shifts from, or. avoids,low-productivity jobs where pay must be low, and moves to high-produc tivity jobs where pay is higher, productivity increases for the economy as a whole, even though produc~ivity in each industry separately may .remain unchanged.

Similarly, the efforts of owners of capital and natural resources to get a high return lead them to employ their property where the demand for it is greatest. Competi tion .for the buyer's dollar and the incentives offered in a free economy by wages, prices, and profits play a vital role in directing our efforts and stimulating efficiency, as well as in. rewarding them. Increases in productivity arise, then, from the efforts of people in all walks of .life. They are not attributable to any single group. Even a group whose measured pro ductivity happens to be rising cannot necessarily claim special credit, for its rises may be due primarily to in creases in the quantity and quality of the people, capi tal, natural resources, management, and· technology with which it works. Labor, capital, natural resources, man agement, and technology jointly produce our output, and an increase in the quantity or quality of anyone of them will increase the output per unit of input of the others.

The various measures of productivity all give us some WAGES, PRODUCfIVITY, AND PRICES 357 insight into the process by which our. standard of living rises, and they therefore have some bearing on the average gains that workers can expect to obtain through increases in average earnings or decreases in average consumer prices. In evaluating specific wages and sal aries, however, there is no similar rule or formula of broad applicability. Productivity Varies Amon,g Industries One important barrier to any general rule is that pro ductivity and its growth, however measured, vary tre mendously from industry to industry. There are many reasons why productivity increases more rapidly in some industries than in others. New in dustries typically present many opportunities for im provement, since as they grow, economies are realized from mass-production or simply from new ideas. New technology and new resources affect some industries more than others. Arrangements by governments, labor, or management stimulate productivity gains in some in dustries but retard them in other industries. Many di rect-service industries are by nature difficult to change; for example, productivity cannot be expected to rise as rapidly in barbershops as in automobile factories.

If wages were tied to output per man-hour, industry by industry, the result would be both unfair and im practical. Wages would go up rapidly in some indus tries, stay about the same in others, and even decline in a few.

358 w. ALLEN WALLIS Since many occupations and types of jobs are found in virtually all industries, people doing the same work would receive different pay. In fact, many plants pro duce. in several industries, so wages might differ for the same work in the same plant. Industries with constant or only slowly rising wages would have more and more trouble persuading people to work for them, while peo ple would he on waiting lists to work in the high-wage industries. Also, tying wages to output per man-hour in each in dustry would reduce the incentive to industry to intro duce the innovations which raise productivity in the first place, and would discourage expansion in the suc cessful industries by preventing exceptional productivity from being fully reflected in reduced costs and prices. Thus, if wages are not tied to the productivity of in dividual industries, the outcome is likely to be more equitable and more practical. The ordinary processes of wage determination and of choosing among jobs once rates of pay are established, tend to bring about roughly equal pay for equal work.

Not only would it be impractical to tie wages in each industry to productivity in that particular industry, but it would also be impractical to tie wages in each indus try to average productivity in the whole economy. This would ignore differences in the need for labor and in its availability. In an expanding area, industry, or oc cupation, employers frequently raise wages more than the national average increase in output per man-hour. These large wage increases serve the useful purpose of WAGES" PRODUcrIVITY" AND PRICES 359 inducing labor to enter the area, industry, or occupa tion in question, and they help pay moving or retraining costs. In a declining area, industry, or occupation, a chronic labor surplus may· develop, and attempts to in crease wages in line with the national average increase in output per man-hour would reduce employment op portunities and make it less likely that new industries would move into the areas of labor surplus.

These considerations and many others like them make it clear that it is difficult or impossible to prescribe gen eral criteria for proper rates of wages and salaries. Those on the spot with knowledge of all the special circum stances must find the best solution for each case. For the Economy as a Whole Even though the special circumstances surrounding each particular wage or salary may make it impossible to judge anyone rate, certain judgments can be made about the general or average result of all the separate rates. There is here an analogy with judging baseball players: the shortstop, for example, is not necessarily causing a game to be lost if he scores fewer runs than the opposing shortstop; but the team as a whole certainly loses if it scores fewer runs than the opposing team as a whole. In wage negotiations as in baseball, even though we have no clear-cut criterion for evaluating anyone con tributor to the total result, we can apply certain clear cut criteria to the total result.

For the economy as a whole, .productivity is related to 360 W. ALLEN WALLIS wages in the following broad terms: If the average level of prices is to be reasonably stable, wages can rise only as much as productivity, appropriately measured, rises. (Increases in the total share of national output going to wage and salary earners do· modify this assertion; but such changes are so slow and the possibilities for further increases from the present 80 per. cent are so limited that they can be overlooked in discussing short run practical questions.) Productivity, and changes in productivity, throw little light on what wages should be, or what changes in wages should occur, in any particular job, firm, industry, oc cupation, or region. Above-average increases in produc tivity in anyone industry, for example, may to some extent raise wages in the industry, to some extent increase employment in the industry, . to some extent decrease employment in the industry, to some extent increase output in the industry, . to some extent lower prices in the industry, to some extent raise wages in other industries which compete for similar workers, . . . to some extent lower wages in other industries, to some extent raise prices in other industries, to some extent lower prices in other industries.

The extent to which each of these adjustments is ap propriate in any instance depends on literally thousands of details and special circumstances, and can best be worked out by individuals who have freedom and op portunities to choose among jobs and among the goods WAGES) PRODUCTIVITY) AND PRICES 361 and services they buy. Since the public interest may be little concerned with each separate adjustment in each instance, and since the maintenance of free institutions and free collective bargaining are paramount goals of public policy, attainment of the appropriate over-all result for the whole economy must be sought by con trolling. the environment in which wage and salary negotiations occur. Maintaining a Prope.rEnvironment The key to a proper environment is to maintain a legal and institutional framework such that the self interest of each party is either consistent with the public interest, or else is balanced and checked by opposing interests of other parties. If excessive wage and price increases would cause severe losses of employment, sales, and public good will, for example, one side or the other will resist them. Where excessive concentrations of power in the hands of labor or business produce too many results or an average result contrary to the public interest, remedies should be sought through eliminating the power to injure the public interest, rather than through direct control of unions, businesses, or collec tive bargaining.

Another important key to an environment which will hold wages and salary settlements in line with the public interest is sound management of money, budgets, and debt by governments. When mismanagement creates pervasive inflationary pressures, little success can be 362 W. ALLEN WALLIS achieved by those who attempt to hold down particular wages or prices, for neither party to transactions gains any advantage from preventing increases-and to the extent that they do succeed they may do as much harm as good, since "grey markets" appear under these conditions. Productivity is the basis of prosperity. Increases in productivity, on which depend the rapid improvements that characterize the American standard of living, spring from many different sources: more effective workers, more and better capital equipment, better natural re sources, better management, new knowledge and tech nology, and a social organization which affords broad opportunities, encourages competition, and provides in centives and rewards to individuals for efficiency, thrift, and industry.

STRIKERS ARE BOUND TO LOSE tv paulof. poirot A MAJOR STRIKE, such as the recent one by steelworkers, focuses attention on the corruption of union leadership, the unwarranted violence attending strike action, and the impropriety of compulsory union membership. In deed, such a strike might even spark legislative action to withdraw or qualify to some degree the monopolistic powers granted labor unions through earlier legislation. On the other hand, the steelworkers will have had a sounding board for their resentment of the high salaries paid to management officials of the various steel com panies and the profits earned by the most successfully managed operations. But the charges and countercharges and emotional and physical disturbances of a strike throw no light whatsoever on a fundamental issue raised by General Francis Amasa Walker long before there was either a U.S. Steel or a steelworkers union.

Walker's irrefutable observation is that profits are taken ·out of costs-not added to prices. The more steel profitably produced, the greater will be the downward competitive pressure on steel prices, tending to squeeze out of business the least efficient managers, the high363 364 PAUL L. POIROT cost marginal producers. These "no-profiC' producers can least afford to pay high wages, and therefore tend to hire the least efficient workmen, yet their marginal production at high cost determines not only the price of steel for the entire industry but also the level of wages that will be paid to all steelworkers. If this point were understood by steelworkers, it would revolutionize the entire concept and modus op erandi of unionism. Industry-wide bargaining, with in sistence that every steel company sign an identical con tract, should be the last thing any self-respecting steel worker would want. For he would see that under such an arrangement his own wage, regardless of his skill and productivity, couldn't possibly rise above the wages paid to the least efficient workmen by the "no-profit" man agers.

A New Type of Labor Leader The enlightened steelworker would start seeking a new type of union leader. Indeed, he would turn for leadership to the very man the union bosses have been most vigorously denouncing: the highest paid executive of the most profitable steel company in the business. This manager's record shows that he is most capable of cutting costs. This means that he could afford to offer the highest wages in the industry for the most highly skilled workmen, and that he would actually do that very thing-if the union would let him-in order to maximize the profitability of his business.

STRIKERS ARE BOUND·· TO LOSE 365 If steelworkers want to be more highly paid,. the surest way is to produce more steel, at greater profit to the company (which means at lower costs). The more this can be done, the more will the "no-profit" managers and companies be chased out of their unworthy under takings. Then, and only then, can the market prices of steel decline in response to keener competition. And not until that happens will there be any great requirement upon or incentive for successful management to pay higher wages in order to obtain and hold the best workmen. According to Walker's view, the trend has .been en tirely in the wrong direction-and organized labor has spearheaded that drive, to the grave detriment of society generally and to the injury· of all but the least worthy of its own membership. The effect of industry-wide bar gaining has been to perpetuate in business the "no profit" steel operators, whose high costs hold steel prices up and steelworkers' wages down.

Other Barriers to Progress The same results are obtained through featherbedding and slowdowns and absenteeism and all the other union devices that tend to equalize the output of a 'good work man and a poor one-of profitable management and "no profit" management. The result is less steel at higher prices and at lower wages than would otherwise be ef fected through active competition. Other equalizing devices that work in the same gen~ 366 PAULL. POIROT eral direction are minimum wage legislation; unemploy ment compensations that have been forced toward pre vailing wage rates; excess profits taxes that deprive the successful of the rewards for cost reduction and of the means and incentive for expansion; the arbitrary award ing of government contracts to companies that "need help" -indeed, the whole "caboodle" of welfare state practices, which generally have had ample support from organized labor.

These are a few of the things upon which the recent steel strike shed little light, if any. But the light struck in the nineteenth century by men such as Walker still flickers-ready to show the way to labor union members, the American public, anyone who has had enough of coercive political management of his life and who seeks a better alternative.

SOCIALISM SUBSTANCE AND LABEL tv GJmunJ.A.Opitz AMERICANS appear to like most everything about social ism except the name. Let a politician lift a plank out of the old time Socialist Party platform, paint it red, white, and blue to disguise its origin, and the voters will go on a stampede until they find some office for him. Socialism, thus domesticated, is safe and sane enough for a Fourth of July oration. But if an opinion poll is taken of these same voters it reveals that they are as hostile to the socialist label as they are friendly to its substance. "For the great majority of Americans," laments a pair of certi fied thinkers who jointly edit a socialist monthly, "'so cialism' is little more than a dirty word." Thus it was necessary for Mr. W. Averell Harriman, when he directed the mutual security program, to ex plain away foreign "socialism" for the inquiring mem bers of a Senate committee. "Now this word (sic!) 'So cialist Party' is much misunderstood here, because it is a general term. In many countries the Socialist Party is what we would call here the New Deal Party or a Fair Deal Party and not the theoretical socialist of the his toric kind."

367 368 EDMUND A. OPITZ This confusion about socialism as between substance and label bespeaks the need of a definition. As a first step, turn to Webster's dictionary. There we read this: "Socialism: A political and economic theory of social organization based on collective or governmental owner ship· and democratic management of the essential means for the production and distribution of goods." This definition may be sharpened to read as follows: "A con viction or belief that organized police force-govern ment-should dictate the creative activities of citizens within a society by the ownership and/or control of the means of production and exchange." Such definitions as these are all right as far as they go, but they omit an important fact about socialism: that it is a substitute religion for many people, arousing all the emotional· response and ethical fervor of genuine re ligion. It is a dream of the kingdom of God on earth but, as von Huegel observed, "without a king and with out a .God."

It was such a religion to H. G. Wells, for example. Wells stands about halfway between Karl Marx and the present. He was active among the early Fabians in Great Britain and wrote his. book, New Worlds for Old, about fifty years ago. In it he said, "Socialism is to me a very great thing indeed, the form and substance of my ideal life and all the religion I possess. I am, by a sort of predestination, a socialist .. I perceive I cannot help talking and writing about so cialism, and shaping and forwarding socialism. I am one of a succession-one of a growing multitude of witnesses, SOCIALISM-SUBSTANCE AND LABEL 369 who will continue. It does not-in the larger sense matter how many generations of us must toil and testify. It does not matter, except as our individual concern, how individually we succeed or fail, what blunders we make, what thwartings we encounter, what follies and inadequacies darken our private hopes and level our personal imaginations to the dust. We have the light.

We know what we are for, and that the light that now glimmers so dimly through· us must in the end prevail." This apocalyptic mood was shared by Americans in the early decades of this century. One of these was the prominent socialist, George D. Herron. He wrote, "There is approaching-and it is not so far off as it seems-a world arranged by the wisdom hid in the hu man heart; a world that is the organization pf a strong and universal kindness; a wor ld redeemedl from the fear of institutions and of poverty. Even now, derided and discouraged as it is, socially untrained arid inexperi enced as it is, if the instinctual and repressed kindness of mankind were suddenly let loose upon the earth, sooner than we think would we be members one of an other, sitting around one family hearthstone, and sing ing the song of the new humanity." In Aristotle's View These harbingers of a terrestrial paradise by legisla tive fiat are not without antecedents. Aristotle encoun tered them. Proposals for legislative interference have "a specious air of benevolence," he says, causing an audi370 EDMUND A. OPITZ ence to accept them with delight, supposing, "especially when abuses under the existing system are denounced as due to private property, that under communism everyone will miraculously become everyone else's friend." But, Aristotle comments, "the real cause of these evils is not private property but the wickedness of human nature."

The men for whom socialism is a kind of religion, see it as the fulfillment of mankind's age-old dream of jus tice and good will on earth. Lenin brought to fruition the seeds planted as far back as the Old Testament prophets! Harry Laidler, of the League for Industrial Democracy, opens his History of Socialist Thought (1927) with a chapter in praise of Amos, Hosea, Isaiah, Jesus, and St. Augustine. This tactic of marshaling the great figures of our religious tradition under the ban ner of socialism is designed to make the critic of modern socialism appear in opposition to the spiritual giants of our race. But the dream of justice and good will among men is by no means the exclusive possession of socialists; it is a dream shared by all men of generous instincts. It is possible to demonstrate, moreover, that the good things, both material and spiritual, that we desire for all men are undermined by methods socialists use to attain them.

The socialist dream is shattered by the operational im peratives of socialist performance. This is not only true of Russian practice; it is implicit in socialist theory. Socialists propose to realize their dreams by putting the productive powers of men under the direction and SOCIALISM-SUBSTANCE AND LABEL 371 control of the State. Socialists prefer to speak of the so cial ownership of property. But society-which means all of us-cannot act as a whole to own and control prop erty; it must act through its enforcement agency, which is government. The men who comprise the governing agency in any society are a small minority within that society. The Methods Are Unsuited In practice, therefore, a socialist society is one in which the vast majority of men are controlled by the tiny minority which has power to direct their economic activities. We might put the matter differently by say ing that the socialist dream is based on the delusion that men's other freedoms will be enhanced if they are de prived of economic liberty. By eliminating economic liberty and replacing it with a planned economy social ists hope to usher in a brave new world.

It hasn't worked out that way in practice because the theory is all wrong. "Economic control is not merely control of a sector of human life which can be sepa rated from the rest," writes F. A. Hayek, Hit is control of the means for all our ends." Eliminate economic lib erty in a society and you begin to institute a master-slave relationship. The guiding ideals which ushered in the modern period aimed at the liberation of the individual; from ecclesiastical corruption, from political tyranny, and from economic bondage. These movements of liber ation converge and the individual is more firmly fettered 372 EDMUND A. OPITZ than ever before. What a strange denouement I How did it happen? Chronic Discontent Socialism, as mood, theory, and practice, is a result of the material abundance made possible by the industrial revolution. Millions of people had toiled close to the soil for millennia, only to be rewarded by a bare sub sistence, at best; at worst by plague and famine. U nti!

the modern era, poverty was hardly more attributed to human arrangements than to cosmic setting; one seemed about as fixed as the other .. Generations toiled, fed, bred, and died and, because of the general conviction that such was man's fate, entertained little hope of bettering their circumstances. The expectation of unimaginable progress was released by the revol u tionary changes which mark the modern period, a period characterized until recently by expanding political liberty, invention and technology, capitalist production, and relative ma terial abundance. Men ceased to yearn for compensatory delights in the world to come and began to dream of getting their New Jerusalem now in "England's green and pleasant land." Secular hopes grew wildly, and material progress seemed to justify them. Conditions of existence were ameliorated. Life expectancy increased; many diseases were eliminated. Populations have increased at an ac celerated rate since 1800; but in spite of this, the addi tional mouths were better fed and the additional bodies were better housed and clothed. But this was not SOCIALISM-SUBSTANCE AND LABEL 373 enough. For those whose expectations can only be summed up by one word, "More!" no additional incre ment is ever enough.

Given this mood, discontent becomes chronic in the modern world. Material progress must forever trail be hind expectation because, in the nature of things, eco nomic goods are always in short supply. This does not reflect a human failure; it is a built-in feature of the universe. A thing is not an economic good unless it is scarce relative to human demand for it. Human de mands, being limitless, invariably outrun supplies, which are naturally limited. This simple fact is widely over looked, with the result that a sense of grievance has be come endemic among large numbers of people. It is simply a reflex of the contrast between a utopian vision and actual living conditions. Being poor is endurable, and besides, poverty is a relative matter. But the feeling that one is being kept poor raises an issue of an altogether different sort; jus tice is involved. Embracing the practical possibility of a heaven on earth is the first false step; belief in a con spiracy· which prevents it from arriving is .the second. A mind vvhich entertains the first foolishness is ripe to be infected with the second.

A sense of grievance is, of all human emotions, the easiest to exploit; and e4ploited it was, by grievance collectors and demagogues. Political power had been wrested from the kings and distributed according to the democratic formula.· But after the glow of exaltation over popular sovereignty had worn off, it was noticed 374 EDMUND A. OPITZ that the anticipated new dawn had not broken. The im mediate inference was that someone must be holding it back. The bottleneck could not be political-the demo cratic revolution assured that; therefore, it must be eco nomic. A conspiracy of capitalists prevented the arrival of utopia! Obviously, we needed an economic revolution. ffDas Kapital" The word "capitalist" was a Marxian term, imported into the language for polemical purposes and as a term of abuse. The "capitalist" was the owner of the factories, machines, and tools. He employed people to run his equipment and then, in his depravity, stole everything they produced except for the pittance they needed to stay alive.

This "surplus value" theory would never have been broached-or, if broached, would never have caught on except that the mentality of the period consisted of a utopian expectation, a sense of grievance, and a belief that the masses were victims of a conspiracy. Out of this soil sprang modern collectivist movements, Marxian and otherwise. But collectivism has been fed by another tributary as well, a non-theoretical one. Classic liberalism dis trusted the state, per see On principle it threw up safe guards to protect society from undue extensions of political power. But the democratic principle does not address itself to· the problem of limiting political auth ority; it is concerned only to get the state operating unSOCIALISM-SUBSTANCE AND LABEL 375 der popular auspices, or majority rule. If a majority wants the state to undertake some function, there is nothing in the democratic principle to forbid it, how ever unjust it might be, or however violative of the principles of liberalism, which make for limited government.

The nature of political action is constant, regardless of the auspices under which it operates. It is of the na ture of power to want to perpetuate itself and, following this mandate, every government seeks to create the means of its own support. The Court of Versailles, un der the old regime, was largely a group of wastrels de pending on government handouts for their mode of life. Their consumption was nothing if not conspicuous. Po litical subventions, under a democracy, are more subtle, but the feeling spreads that everyone is entitled to all he can get. Government comes to be regarded as a benign omnip otence possessing the magical properties of an Alad din's lamp. If properly approached-by means of a lobby or pressure group which knows which buttons to push, which levers to pull-it delivers the goods as obediently as a vending machine. Government is a tool capable of accomplishing anything a majority can be mustered to demand. "Majority" is a technical term among political pros, referring to a numerical figment used by a literal minority to justify a handout from the public treasury.

Democracy and majority rule become a screen behind which insiders operate under the formula: Votes and taxes for all, subsidies for us.

376 EDMUND A. OPITZ Given popular acceptance of the Service State-a po litical authority presumed to be responsive to majority demand, and it is inevitable that democratic govern mentswould get into. the business of dispensing economic benefits-advantage for some at the expense of others. Pyf'a1nidingSpecial Pleaders There is only one way for mankind to live and im prove its economic circumstances, and that is by apply ing its energies to nature and nature's products. Goods are produced in this way and in no other. But once pro duced, the goods of some men may be acquired by other men through political manipulation. Let government perform this service and the trek to Washington is on. Once on, it will grow in geometric progression as group after group organizes to apply political pressure to get something· for nothing: organized labor, the farm bloc, veterans, regional groups, educationists, the aged, and others.

Business and industry, strictly speaking, have to do only with the deploying of economic factors and re sources-somebody making something, transporting it, exchanging it. A businessman or industrialist, pursuing his aims as an entrepreneur, seeks to turn a profit. The appearance of a profit indicates that his talents are be ing employed in a manner approved by a significant number of people. Absence of a profit, on the other hand, ought to be his clue that people are instructing him to go··into some other line. So long as a man proSOCIALISM-SUBSTANCE AND LABEL 377 duces and sells things people· want at a price they are willing to pay, he operates according to the rules of economics. The vast majority of our millions of busi ness enterprises are conducted in this fashion. All that is necessary to keep this operation going is for the law to inhibit and penalize cases of theft, fraud, and violence.

The processes of production and exchange are self starting and self-fueled and need nothing from govern ment but protection from predation. It is in the inter ests of business-as-a-whole to maintain this climate of freedom. But the immediate interests of a particular businessman do not always coincide with the interests of business-as-a-whole. That is to say, businessman X might find it profitable for himself if his responsive, democratic government will intervene to give him a preferential position in the market by penalizing his competitors. Such political intervention is contrary to the princi ples of classic liberalism and has the effect of giving some men an economic advantage at the expense of other men. Government intervention frustrates the workings of economic laws by forcing economic deci sions contrary to the decisions of the unhampered mar ket. The intervention annuls consumer choice, and the net result is economic advantage for political favorites.

Economic success under capitalism-the free market system-is measured by consumer s'atisfactions. If con sumers are pleased with the goods and services provided by a producer, as demonstrated by their willingness to 378 EDMUND A•.OPITZ pay for them, the producer makes a profit. But in a political setup where the politicians stand by to confer economic advantage in return for lobbying and pressure group activity, material rewards may accrue to a man, even if consumers have returned a negative vote by not buying his goods or services. When there is general acceptance of the idea that it is the function of the State to dispense economic priv ilege to its partisans, there will be competition among "businessmen" for political largesse. This is a departure from capitalism into the practice of an under-the-coun ter socialism. The practice has been all too prevalent during the past century, and is one of the main influ ences feeding into the socialist trend. No businessman wants over-all socialism, but many a businessman wants a little piece of socialism where it is to his immediate advantage. Add up all· these little pieces and the society is no longer liberal. It may be called liberal· by some merely because the word has a favorable connotation, but it is not liberal in the limited government sense of the word.

The Costs of Freedom Classic liberalism meant freedom: freedom to write and speak, to worship and teach, and, most neglected freedom of all, freedom of economic enterprise, i.e., consumer sovereignty in the market place. A believer in free speech accepts this principle even though he is fully aware that its exercise will result in campaign SOCIALISM-SUBSTANCE AND LABEL 379 oratory, socialist tracts, uplift drivel, pornography, pub lic relations prose, modern poetry, and the "literature" of a beat generation. The defender of free speechrecog nizes these things as corruptions of the divine gift of communication, but they are part of the price he is will ing to pay for freedom. Freedom costs, and thus it can not endure among a people who do not understand this or, if they do, are unwilling to incur these costs. Accept the principle of religious liberty and things will happen which the civilized man will view with dis gust. There will be holy roller revivals, store-front churches, unlettered Bible thumpers, bingo, and baked bean suppers. But the man possessed of a sensitive re ligious conscience is aware that it is not up to him to tell God the kind of instruments He can use to work His mysterious ways; and he wishes to make it plain that the opponent of religious liberty, if he is logical, must invoke a kind of inquisition to curb those expres sions of religion he finds distasteful.

Acceptance of the principle of economic liberty means that the consumer has a right to demand, and the pro ducer a right to supply, any item which does not injure another-as injury is defined in laws against theft and fraud. This means that poor taste and doubtful morals will find expression here just as they do in the kindred fields of speech and religion. A rock-and-roll performer will ride around in a pink Cadillac while a symphony orchestra has to beg for funds. A race track will be built where common sense would dictate a playground. Peo ple refuse to .buy mere transportation; they want a 380 EDMUND A•.OPITZ chariot with lots of chrome and three hundred horses under the hood. Worse yet, when political subventions are available, some businessmen will seek· to get "one up" on their competitors with government help. Freedom costs, and the costs of freedom in the areas of speech, press, worship, and assemblage are generally acknowledged by a significant number of articulate peo ple. These freedoms are not under assault-not in this country, at any rate. In the case of economic freedom the situation is different. Few people mistake the abuses of free speech for the principle itself; but the abuses of economic liberty loom so large in the modern eye that it cannot detect the market principle of which they are violations.

Properly Limited Government Freedom, in sound theory, is all of a piece. It hinges on properly limiting government. A society may be called free when its government does not dictate mat ters of religion and private conscience, does not censor reading material, curb speech, nor bar lawful assem blage. But mere paper guarantees of these important freedoms are worthless if there is governmental control and bureaucratic planning of economic life. The guar antee of religious freedom is worth little if the devotees are denied the economic means to build their temples, print their literature, and pay their spiritual guides. How meaningful is freedom of the press if there are no private means to buy paper and presses? And there is no SOCIALISM-SUBSTANCE AND LABEL 381 full right to assemble if buildings, street corners, and vacant lots are government owned. "Whoso controls our subsistence controls us."

If government is properly limited, men are free. In a free society a certain pattern of economic activity will be precipitated. This pattern will change constantly. It will respond as men have less or more political liberty. It will be modified as technology advances, taste is re fined, and morals improve. Properly speaking, the eco nomic pattern of a free society is capitalism, or the mar ket economy. Under capitalism the people are eco nomically free, exercising control over their own sub sistence, and thus they become self-controlling in other freedoms as well.

PROPHETIC INTIMA TIONS IT IS THE TEST of an enduring classic that it has the ability to maintain an underground life during periods when its spirit or its morality or its lesson is not in fashion. Andrew Dickson White's Fiat Money Inflation in France, which has just been republished again by the Foundation for Economic Education with an introduc tion by Henry Hazlitt (128 pp. $1.25 paper; $2.00 cloth), is such a classic. Both its spirit and its morality are old fashioned, and its lesson (though inexorable) has been honored more in the breach than in the observance. But it has always come back, a source of indisputable fact and wisdom for the discerning. This time the repUblication of Fiat Money Inflation in France, with its many prophetic intimations, prom ises to have a major impact. The battle for and against inflation rages in Washington, with the tide seemingly running strongly against the stalwart few who object to the notion that governments are instituted among Mr. Chamberlain, critic, journalist, and editor, has written a num ber of books and innumerable reviews as well as articles for news papers and magazines. This is one of his regular monthly reviews for THE FREEMAN.

382 PROPHETIC INTIMATIONS 383 men to serve as grabbags. In the country at large, how ever, the whole rigmarole of "social democratic" eco nomics (interventionism, Keynesian spending, the sacri fice of all other values to the fetish of full employment) commands less intellectual prestige than it did a few years back. And in Europe, where the social democratic ideas have raged through country after country like a plague, a real libertarian revival seems to be taking place in government itself. As is generally known, the ideas of Mont Pelerin Society libertarian professors have been dominant in West Germany for almost a decade. More recently these ideas have crossed the Rhine: Charles de Gaulle has been taking his economic cues from Mont-Pelerinian Jacques Rueff, whose program calls for a stabilized and convertible currency, a bal anced budget, fewer subsidies, and a relaxation of trade controls-in short, an end to inflation itself.

The "movement of ideas," then, should guarantee a more willing acceptance of certain deductions drawn by Henry l-Iazlitt from White's pungent historical essay. The usual argument for inflation is that it favors the debtor classes, who are usually thought of as the poor. But Mr. Hazlitt, drawing upon White's facts and rein terpreting them to fit the contemporary United States, notes that it is the rich who are ordinarily the chief debtors in any advanced economic society. Says Mr. Haz litt: "In the United States today the chief debtors are the stockholders of the corporations .... The creditors include the holders of life insurance policies, and of 384 JOHN CHAMBERLAIN government bonds, large and small. ..." Whom, then, does inflation help? And whom does it hurt? As Mr. Hazlitt says, "A poor man never gets to be a big. debtor." The only way. the poor man can protect himself against inflation in our modern society is to belong to a union which has a monopolistic position.

In French Revolutionary .times there were no such unions, which meant that the fiat money inflation bore down most heavily on the very people whom the revo lutionists professed to serve. But even today most work ers aren't in a position to get the "cost of living" in creases that are becoming standard items in the "pack ages" demanded by the few big unions. Inflation, in the modern United States, helps an aristocracy of labor; it bears down cruelly on a vast host of workers who either do their own individual bargaining or operate on a con tract basis for themselves. Andrew Dickson White Andrew Dickson White was a professor of history, an educator, and a diplomat; he helped to establish Cor nell University in New York State, and he led a famous campaign for the "equality of studies" in the post-Civil War era. His educational ideas, carried to excess, have done some harm, for they have led to the absurdity of giving college degrees for taking courses in flycasting, beekeeping, and home economics. When White was fighting against the primacy of Latin and Greek, how ever, it was the basic theoretical underpinning of sciPROPHETIC INTIMATIONS 385 ence itself that was being left out of account. To White, it seemed senseless to regard a Latin scholar as the social superior of the chemist, the civil engineer, or the econ omist. Something had to be done to bring the post-Civil War university abreast of the modern world; hence, White, a realist, accepted the challenge.

As a historian, he looked for uniformities of experi ence that might be formulated as natural law. When he was president of Cornell, the whole American West was seething with inflationary ideas. There was Greenback ism; there were the Free Silverites. William Graham Sum ner's History of the American Currency was replete with grisly instances of the workings of Gresham's Law when ever the effort was made in the United States to build prosperity on irredeemable paper. Because of the safety valve of the American frontier, however, the full force of inflation had never been felt on these shores. There was always a new horizon for the indigent, the tempo rarily ruined, or the immigrant without a stake. To uncover the workings of ~he natural law of infla tion, White, in a paper read before the Union League Club of New York in 1876, went back to the French Revo lutionary experience with the assignats and the mandats, paper money based on the properties which had been seized by the "peoples'" State from the Church or for feited by emigres. The leaders of the French National Assembly thought they were being inordinately clever in making their first issue of paper money a mortgage on "a landed domain vastly greater than the entire is sue." And, since land acquired for paper money could 386 JOHN CHAMBERLAIN be held for an indefinite period pending the return of financial probity, or sold on the market for solid cash, the dodge might have worked if the national authori ties had had the good sense to refrain from repeating it.

Within five months of the first issue,· however, the new Revolutionary regime succumbed to temptation and is sued a second batch of. paper livres. In the following year-1791-the inflationary debauch was on. Good men~the economist Du Pont de Nemours and the brilliant cook, Brillat-Savarin, were among them warned against any issue of paper money. Other good men-Mirabeau, Talleyrand-thought a little inflation, just a very little, might be a good thing. But when Tal leyrand argued that the effect of a second issue of as signats might be different from that of a first, he was overruled by an Assembly that had tasted blood. White, in the course of a wonderfully animated narrative, notes a "law of acceleration" that seemed to be at work as one inflationary issue of assignats followed another. When prices went out of whack with the inevitable de preciation of the circulating medium, the extremists in the Assembly took over. Naturally, they turned to force.

Price-fixing-the notorious Law· of the Maximum-was invoked in 1793. Then rationing was added. To make sure the merchants obeyed the Law of the Maximum, a spy system was organized. The death penalty was pre scribed for anyone who refused to accept payment in assignats, or for anyone who violated the Maximum laws. With the guillotine poised above the throats of virPROPHETIC INTIMATIONS 387 tually all shopkeepers, farmers, and manufacturers, it is scant cause for wonder that the people· of France ceased more and more to do any business whatsoever. It was much safer to go on relief-even though the bread dis tributed by the authorities was sometimes indigestible. Speculators, however, knew how to protect themselves. With a great show of virtue they willingly did business, buying up land and goods for vast amounts of worth less paper. Meanwhile, they bribed the legislators and dressed their wives in vulgar finery as the tone of "so ciety" became more and more raffish. The speculators "unloaded" their paper on the people before prostra tion set in.

Inflation, as Mr. Hazlitt points out, is always followed -in the end-by a "stabilization crisis." In the France of 1799, the "stabilization crisis" produced Napoleon, a dictator. When the dictator refused to have any more traffic with assignats or mandats, France began a long and painful convalescence. Along with the dictator the French people got fifteen years of debilitating warfare, a vast blood-letting carried out in the name of la gloire. And all because, in 1790, a few men had decided that a little nip of inflation might be a good thing. Many Contributing Factors There were many other elements, of course, that fed the flames of the French Revolution. First of all, there was the theory that all the people of a nation must be bound in all matters by the "general will" (meaning a 51 per 388 JOHN CHAMBERLAIN cent vote) . Secondly, there were the linked "scientistic" ideas that man is perfectible and that the State can be the instrument of making his perfection a reality. Third ly, there was what Frank Chodorov has called the opera tion of the Law of Parsimony-meaning that a steadily increasing number of people will cease to work for a living in any State that is philosophically committed to supporting its citizens. Inasmuch as the French Revolu tionary theorists believed what they believed, the infla tion was probably an inevitable by-product of a general state of mind. But this does not invalidate White's essay in the least. White does not say that inflation "caused"

the excesses of the Revolution. He does indicate that it helped to intensify and prolong the excesses. And that is quite enough.

SOCIALISM THROUGH THE BACK DOOR l'l WilliamJJfJnl''1 Clamtel'/in SOCIALISM through the front door, the passing by Con gress of a law transferring to public ownership some or all of our basic industries, would not stand the slightest chance of adoption in the United States today. Indeed, this old-fashioned socialist dogma of nationalization of means of production is visibly losing its appeal in Europe, where Marxism has been more widely accepted than in the United States. Both the Labor Party in England and the Social Democratic Party in Germany have lost three elections running to the Conservative Party in Great Britain and to Chancellor Konrad Adenauer's Christian Democratic Union in Germany. As a consequence, the German So cial Democrats have drawn up a new program in which nationalization of industry does not figure. The reten tion of the clause in the party program which calls for public ownership of all means of production, distribu tion, and exchange has become a subject of sharp in ternal debate in the British Labor Party.

There are die-hards who see betrayal in changing one comma of this dogma. But the leader of the party, Hugh 389 390 WILLIAM HENRY CHAMBERLIN Gaitskell, and some of his associates believe that all-out commitment to wholesale nationalization is an albatross around the party's neck, come election time. It has now been possible in Britain to judge national ization by the practical test of how it works. The Labor Government that was elected in 1945 nationalized the railways and the coal mines. Neither coal production nor railway service has improved as a result; and the miners and railway workers are just as ready to resort to strikes and slowdowns against state boards which are now oper ating these industries as they formerly were against pri vate owners. One· of the humorous features of the Labor Party con ference at the seaside resort of Blackpool, where the principle of nationalization was hotly discussed, was that the delegates and journalists who attended the con ference received appallingly bad service on the return trip to London on the (nationalized) British Railways.

It was even humorously suggested that Mr. Gaitskell had bribed the management to give the worst possible treat ment, so as to convince some of the Laborite left-wingers that nationalization was not all they cracked it up to be. Another amusing aside is that the editor of the left wing New Statesman, in theory a hot advocate of more extensive nationalization, plaintively pointed out in his editorial columns that it took British Railways longer to get copies of the magazine to Manchester than it took Pan-American Airways to bring the publication to New York. His ideological blinkers, of course, excluded the posSOCIALISM 'THROUGH THE' BACK' DOOR 391 sible explanation that such' a comparative showing was par for the course when a state monopoly was competing with a private organization. Nationalization, as a result of experience of its work ings, is not an inspiring banner under which to march.

It is in retreat in Europe; in Germany there has been a move in some industries which have come under state ownership to dispose of shares to the public. Outright nationalization has no prospect of getting to first base in the United States. But there are indirect as well as direct ways of destroy ing the system of responsible private ownership within the framework ofa competitive free market which, when given a chance, has produced infinitely the best eco nomic results from the standpoint of workers and con sumers alike. The most insidious and dangerous of these means is excessive and' growing expenditure by agencies of government at all levels, federal, state, and municipal. For, 'although America has the biggest educational plant in the world, has by far the largest per capita number of university and college graduates, and the highest per capita expenditure on education from pri mary school to university, Americans are not good at arithmetic when it is a question of government spend ing. The average individual knows that he cannot buy everything he may want, that he must establish some system of priority in his personal spending, if he is not to go broke.

But a different stale of values is applied to federal and state budgets. It is loosely assumed that government, 392 WILLIAM HENRY CHAMBERLIN which produces nothing, has some miraculous means of creating money painlessly-that the economy which most people know they must practice in their private lives has no proper place when it is a matter of voting higher social security payments, bigger and better pensions, larger subsidies to farmers for producing nothing or less, tariff handouts to fat and sleek industries, lavish hand outs to veterans for disabilities that have nothing to do with their service in the armed forces. Indeed there is a widespread campaign under way in the United States to convince the American people that the sovereign remedy for all political, economic, moral, and social ills is to have Uncle Sam write larger checks for support for every conceivable project, from propping up obsolete mines to reclaiming delinquent youths. The manual of this campaign is the book, The Affluent So ciety, published two years ago, by the Harvard professor, John K. Galbraith.

The central thesis of this book, which has exerted a good deal of influence even on those who have not read it, is that private spending is intrinsically bad and pub lic spending intrinsically good; that popular taste and the free market are base and unreliable guides; that public spending should be vastly stepped up and private spending sharply curtailed. Arguments along this line, in some cases clearly derived from this book, are now the stock-in-trade of left-of-center politicians and com mentators. One point that should be made clear before consider ing the question whether the government or the indiSOCIALISM THROUGH THE BACK DOOR 393 vidual should properly have a prior claim on the in dividual's income is that government spending is not and cannot be painless. Such expenditure can be financed in two ways: by higher taxes or by inflationary borrowing. And inflation, the systematic destruction of the purchasing power of the currency, is the most cruel tax of all.

So, when individuals and organizations come up with spending schemes for defense, welfare, education, foreign aid, and a score of other purposes, totaling tens of bil lions of dollars, they are, if they are honest with them selves, advocating that the present burden of taxation on the American citizen be made very much heavier. But are Americans undertaxed at the present time? The Painful Tax Burden There has been no reduction in federal taxation since the first years of the Eisenhower Administration. The trend of state and local taxes is steadily upward. By and large, about one-third of what Americans earn is taken away from them by taxation. How much farther can this process go, especially in the graduated direct taxes which play such a big role in the American finan cial system, without completely blunting and dulling initiative and the desire to earn and produce more? One oratorical debating device of the spenders is to represent the American people as rolling in wealth and invariably using that wealth for low and debased ends.

How often are tail fins on automobiles scornfully men394 WILLIAM .HENRY CHAMBERLIN tioned, or the fact that outlays on liquor, tobacco, and chewing gum exceed spending on .symphony concerts, first-rate books, and college endowments? But this type of sermonizing, however effective it may be at commencement addresses, does not appeal to a typical middle-class American who is struggling to cope with the cost of putting two or three children through college, or meeting a high medical bill for someone in his family, or considering how" after he has met his various tax obligations, he can save something for his years of retirement. Taxation rates today are fantastically high by com parison with those of the years before World War II. The annual intake of federal revenue now is closer to the unprecedented outlay of the war years than to what would have been considered normal in the twenties or the thirties. And the trend of federal spending, even un der an Administration more averse to profligate use of public funds than most of its opponents, has been up ward, from $67.8 billion in fiscal 1954 to $79.8 billion proposed for fiscal 1961. During the period from fiscal 1954 until fiscal 1960, the public debt has risen from $271.3 to $284.5 billion.

High rates of interest on government bonds and the outflow of gold indicate that the state of government credit leaves something to be desired. As Senator Harry F. Byrd of Virginia, one of the outstanding financial ex perts in Congress, remarked: the government has ex hausted its capacity to tax and its capacity to borrow. It· is under such inauspicious circumstances that it has SOCIALISM THROUGH. THE BACK DOOR 395 become fashionable to bemoan the supposed absence of sufficient government spending, to insist in strident tones that America will become a .second-class power if much larger sums are not siphoned off from the use of those who earned them into the insatiable maw of govern ment spending agencies. If one-third of America's national income is already earmarked for taxes, this proportion would have to rise to one-half, or even more, if the varied plans of the spenders were put into operation. And this would mean such a basic change in the nature of American society and of the American economy, that it should be treated as a great issue and debated up and down the land be fore a decision is taken.

It is difficult to say at what point the national debt becomes irredeemable and a hopeless mortgage on fu ture generations. It is hard to say what rate of taxation will prove the last straw that breaks the back of that patient camel, the American taxpayer. But limits, on both these points, there certainly are. Excessive government sp~nding and its accompani ment, overtaxation, represent the back door to socialism. For the individualist, self-reliant citizen who has been the backbone of the American system of free enterprise and personal responsibility cannot survive in the role of a cow mercilessly milked by several systems of taxa tion, federal, state, local. He will lose heart and accept socialism, in the sense of an ever-widening area of sub stituting state help for self-help, as something inevita ble, if not desirable.

396 WILLIAM HENRY CHAMBERLIN I am old enough to remember a time when most Americans considered it a disgrace to receive any kind of public aid. Only recently I learned of a man with a dis tinguished record in teaching and academic work who finds, in his period of retirement, that social security payments stand between him and downright penury. Had he belonged to an earlier generation when the quaint idea prevailed that what a man earned was his own, he could easily have saved enough to provide for his own retirement. Should present rates of taxation and present costs of medical aid continue to soar, the pressure for some kind of "socialized medicine" may become irresistible. A man who could face a stiff medical bill when what he earned was his own is often in no position to do so today. And, as people are taxed more and more to pay for public housing, they become increasingly unable to provide their own housing on a commercial basis.

Moreover, if the advocates of uninhibited state spend ing have their way, if the burden of individual taxation is increased 50 per cent or more above present levels, the private capital that is the lifeblood of industrial growth will dry up. Savings will drastically diminish. This would very probably lead to the substitution of state for private capital, which would certainly be social ism by the back door. In other ways, too, life would become increasingly socialized. Sums available for the support of the private schools and colleges, which make a contribution to American education out of proportion to the number SOCIALISM THROUGH THE BACK. DOOR 397 of students enrolled, would fall off drastically. Since the individual would have fewer resources of his own, the clamor for socialized education, along with socialized medicine, would grow stronger. The logical end would be an educational system supported by and controlled by the federal government from top to bottom. All the beneficial and stimulating diversity, the competition in differing approaches to education, and varied emphasis in subjects which are derived from our present system of a multitude of unstandardized private colleges would be ironed out.

State help or self-help? Is the individual entitled to keep the fruits of his labor or is he to be adjudged an incompetent moron who must have a board of state guardians to spend the money which he is not able to spend himself? These questions, I believe, point up one of the big and significant issues confronting America in the twen tieth century. It would be of immense educational bene fit if all the implications of these questions could be threshed out in a nationwide series of debates of the Lincoln-Douglas type. The men in public office, in Congress and in the Ex ecutive Branch, who fight for holding the line against further federal spending are fighting for something even more important than financial stability, although this is certainly a most worthy and necessary cause. They are fighting to preserve some of the most important tradi tional American values against an insidious and danger ous attempt to smuggle in socialism by the back door.

ON THE SCIENTIFIC METHODS AND TRUTH t';} ::baniet J(. Stewart ONE of the great idealists of the last century, Bernard Bosanquet, once said that "it is not cleverness or learn ing that makes the philosopher; it is a certain spirit; openness of mind, thoroughness of work, and hatred of superficiality.! His point, of course, was not intended to apply mere ly to philosophers but to any and all persons who might be interested in truth for its own sake. Thus, his remark would apply equally well to persons engaged in scien tific work, in politics, in economics, in religion, or any other activity where the avowed intention is the expan sion and acquisition of knowledge that is reflective of reality-be it seen or unseen. But surely, to speak and act with a view to obtaining the truth in all matters is simultaneously to speak and act from a world view having different norms and values than what prevail in our time.

Indeed, we are told that to be interested in such pur suits is to be most impractical, and that no one is really 1 Bosanquet, Bernard. The Essentials of Logic. London: Macmil lan and Company, reprinted 1948. p. 167. 398 ON THE SCIENTIFIC METHODS AND TRUTH 399 interested in the truth. We are told to wake up and stop dreaming, that the bald-faced fact is that we are living in an irrational world. We are told that throughout his tory, different systems of what constitutes truth have ex isted. 'Which system, if any, is the valid one for eternity? Is empirical knowledge truth? Is knowledge gained through revelation truth? And by these questions, the implication is that "truth" is relative, depending on how each of us defines the meaning of that word. To think otherwise is to be old-fashioned, somewhat unsophisti cated, and at best, just a wee bit naive. But, for all of this, for my part, if we are to be good judges we must say what we think. And our thought is that to those who are under the false impression that agnosticism, cynicism, or intellectual nihilism is mod ern, I would suggest that they dust off some of those books they have been indoctrinated against and start reading Plato's Protagorusand Theaetetus.

In these two dialogues in particular, we meet Prota gorus, the original progressive educator. Here, in the fifth century B.C., we meet up with the doctrine that everything has a relative truth only; there are no abso lutes, in that "man is the measure of all things."2 Thus, even while this· doctrine stems from antiquity, we find it passionately embraced as a first article of faith by those very people who would accuse conservatives of trying to turn back the clock, as being "reactionary" in political affairs, and as being comparable to "fundamen2 Plato. The Dialogue$, tr. by B. Jowett. New York: Random House, 1937. Vol. II, p. 153.

400 DANIEL K. STEWART talists" in religious matters. (A "fundamentalist" for these people is anyone who fails to grasp the "logic" of construing the spiritual brotherhood of theology in terms of biological brotherhood.) It would be of little moment, of course, if these views and epithets came from people with limited education. But, on the contrary, these views and epithets come from members of the "intelligentsia," from people who hold Ph. D.'s. They come from university administrators whose primary responsibility, ironically, is to fulfill the trust placed in their hands to carryon the best traditions of our society, to endow their students with moral princi ples, to instruct them in the ways of becoming more human. Accordingly, we are awe-stricken when some uni versity presidents find it repugnant for their students to take an oath of loyalty to their country while others boldly disseminate, as progress reports, the moral rela tivism, "Man is the measure of all things."

The Spirit and Methods of Truth Thus, Bosanquet's remark of the nineteenth century sounds exceedingly modern when compared with the type of philosophy enunciated by many within our present-day academies of higher education. The "certain spirit" that Bosanquet is talking about is, of course, the spirit of truth. And the "thoroughness of work" he mentions refers to the methodological tech nique employed while seeking this truth. These are but ON THE SCIENTIFIC METHODS AND TRUTH 401 some of the things which go to make the philosopher. But, also, these are the very things which go to make the scientist, those scientists, at .least, who make their mark in history. (We are not talking about those trades men whose chief occupation is literally to collect, count, and classify, and whose unders tanding of reality is re stricted to those things which can be kicked and stimu lated in some manner.) For my part, good scientists are also good philosophers, and vice versa; even as philos ophy begins with wonder, so does science.

Thus, the search for truth and one's methodological techniques are mutually implicative propositions. And it is for this very reason that the critical study of what has come to be known as "the scientific methods" is most important in one's intellectual upbringing. These meth ods are not restricted to science, of course, even though some individuals might feel that things not convention ally identified with science are necessarily apart. from it. For these individuals, philosophy could never be construed as having to do with "real" science. And, in final analysis this is more a semantic problem than any thing else, hinging on what is meant by the term "science." Even so, it is an interesting paradox that those people who do the most critical thinking about the scientific methods are not scientists at all, but, in fact, are philoso phers-or at least they receive their income under this label. Under less presumptuous occasions they call them selves positivists or logical empiricists. Positivists are to philosophy as the tradesmen mentioned above are to 402 DANIEL K. STEWART science. Both are skilled technicians. Both excel at op erational thinking.

Scientific methodology, therefore, has to do with those techniques which the modern philosopher critically ex amines and the modern scientist professes to use. They refer to those tools which anyone employs on those occasions that he is searching for truth. They have to do, first of all, with a critical understanding of logic. They include some understanding of what is meant by "systems-of-thought" and "systems-of-explanation" inso far as these are embodiments of theories, laws, and deTHE SCIENTIFIC METHODS Cause and effect ..analysis Theory ~f Probability,the I / free will problem, and + moral responsibility Qualitativeand / Quantitativeanalysis Necessaryand .....1: --- sufficientconditions ....u a::---- Theories """-~ , ~~Laws \ ,c." " ~ "' Hypotheses \~ \ . Logic (validity,deduction, induction,ambiguity, vagueness,etc.) Mill's Canons Controlledexperiments '\ Fundamental ~ measurement----.....

.., o X ---O~ f'* c1'tIf' Definitions"""" ~'~;I C1assifications//~/C'it I t / ASSIS't Descriptive Istatements Analogies Facts (observation,percepts, conceptformation,etc.) ON THE SCIENTIFIC METHODS AND TRUTH 403 scriptions. A critical knowledge of the nature of facts, hypotheses, measurement, probability, and so on, also is included among the scientific methods. Thus, if we define a "system-of-thought" as a coherent, orderly arrangement of ideas or beliefs regarding some given subject, and a "system-of-explanation" as the physical explication of this system-of-thought, then the point of epistemological significance involved here can be graphically presented in the following manner. From the diagram on page 402, it is necessarily im plied that the scientific methods can be thought of as epistemological tools which have as their primary object the production of true systems-of-explanation. These are the entities we can lay hold of, talk about, and hone down to an extremely critical, highly discriminatory edge. After all, this is what the mind is for-to reason.

Not sloppily, and not with dull tools, but with the best and sharpest tools one possesses. It is my position that knowledge may be viewed as a series of "systems-of-explanation," and that these sys tems are the product not only of science but of anything that man thinks and talks about. The real issue in any thing is, What is the truth? To approach this we, as human beings, most of the time employ signs of some sort, normally words. Therefore, in any discourse which is being pres ented to us as truth, the primary task is to look for a consistent system-of-explanation, and, sec ondly, the empirical facts-directly or indirectly ob tained-and which would make the propositions in that system true. Thus, ideas and facts go together in that 404 DANIEL K. STEWART "Gedanken ohne Inhalt sind leer, Anschauungen ohne Begriffe sind blind."3 And this is as true for science as it is for those systems dealing with religion, aesthetics, politics, philosophy, or anything else.

Our Contemptuous Sophistication Now we are cognizant, of course, that we live in an age and a climate-of-opinion which rebels at this sort of procedure. Any attempt to reach the minds of the young cynics of our time is met only with a kind of contemptuous sophistication. In terms of intellectual growth, they are like the young boy who quit learning because he thought he knew all there was to know. And as the boy grew older, the more sophisticated he be came, until finally no one could tell him anything. He knew so little, he knew it all. Even in science, which boasts of having an open mind, many biologists will at one time say, "We can never know what life is," and, at another time say-with wide eyed innocence, "There is no life after death." In one case they admit they do not know what "life" is, yet are quite willing to assume they do in the next case. That these biologists are materialists is obvious.

But it is also true that, through the history of mankind, materialism has always been the enemy of truth. 3 Kant, Immanuel. Kritik der reinen Vernunft. Berlin: Mayer and Muller, 1889. p. 100. "Thoughts without content are empty, intuitions without concepts are blind," where intuition means per ception, sensibility, or senses. Thus, Kant subsequently states, "the understanding cannot see, the senses cannot think."

ON THE SCIENTIFIC METHODS AND TRUTH 405 Yet, it is often said that we live in a materialistic age. And certainly no one would question the truth of this. For no other explanation can better account for the success in this country of such materialistic philosophies as positivism, pragmatism, and their political manifes tation-totalitarian liberalism. (Liberalism, as Chodorov so succinctly puts it, is simply socialism without Marx.) That this type of philosophy has infected our educa tional and political institutions is also self-evident. One merely. has to read various campus newspapers, text books, "progress" reports, and look at various showcases to observe the political and philosophical slant which is presented. In many states today genuine political liberty does not, in fact, exist. Calling the same political philos ophy by two different party labels does not alter the identity of that philosophy. "Bi-partisanship" is the or der of the day.

In short, any alternative philosophy which insists that traditional norms and standards be maintained is de scribed by the materialists as being "old-fashioned," "re actionary," "extreme right wing," or just plain "anti liberal." In fact, to be concerned more about the welfare of one's own country-as opposed to some other country -is to leave ourselves open to smear and intimidation by the political liberals. Indeed, materialistic philosophy has been so successful that, as a consequence, patriotism actually has to be taught to young people going into the armed services. This fact, among several possible facts, certifies the ex tent that we have intellectually alienated ourselves from 406 DANIEL K. STEWART the teachings of traditional philosophy. It marks the extent that we have divorced ourselves from norms and values-and truth. So it is for these reasons, and many others, that we have emphasized here the point of getting the truth. As human beings, as communicating individuals, we nor mally proceed in our search for truth only by the pro duction of some system-of-explanation and the necessary facts to back up this system. For my part, if we are not given both of these, the chances are excellent that we are being propagandized for a given purpose.

Emphasis on the Individual Thus, it is now clear why we have chosen to empha size this methodological aspect of science. Our interest has been in terms of its broader implications. Critical thinking applies itself to all areas of human endeavor. We are concerned especially with the task of making human beings more human. This necessarily implies that we are concerned with people not as a group which is a sheer fiction-but as individuals unique in every way_ Our primary concern has been to explicate a methodo logical basis of truthful knowledge. Because it is appar ently only through this basis that human beings come to acquire some knowledge of norms and values, some knowledge of our duties and responsibilities, and, most important, some knowledge of morality. For my part, it is as Sigwart says-that the principles ON THE SCIENTIFIC METHODS AND TRUTH 407 of methodology ultimately point to the idea of a moral God; and that this God can only be more definitely ap prehended by means of these principles which forever stand before our thought as the purpose for which they exist. 4 The form of truth does not vary from discipline to discipline; it is only the subject matter that varies. In final analysis, truth is one, not many. There are not "truths"; there is only truth.

In conclusion, we now recognize that the popular phrase known as "the scientific methods" is really a mis nomer, and that it might be more significantly called "general methodology for approaching the truth." And we recognize, also, that this methodology does not be long to science alone. Rather, it belongs to any, and all, disciplines where truth is the goal. The Ideal Is Practical At this point, someone may ask somewhat wearily, "Why all this talk about truth? Of course we are inter ested in the truth, but we have to live, too; we must earn a living and get along with other people (together ness)," and so on. But these remarks merely reflect that point of view I spoke about earlier, namely, that the pursuit of truth is most impractical-the general idea being that we ought to stop dreaming, wake up to the facts of life, and "live modeI'n," as it were. 4 Sigwart, Christoph. Logic~ tr. by H. Dendy. London: Swan Sonnenschein and Company, 1895. Vol. II, p. 548.

408 DANIEL K. STEWART Again, that this cynicism is the fashionable philosophy of our age we do not deny. But also, that it has failed miserably is an empirical fact. So what may appear prac tical to some people may not be practical at all. And what may appear most impractical may, in final analysis, be the most practical thing there is. Even so, we might reply with Hegel when he was speaking of the earlier cynics that they are, "generally speaking, nothing more than swinish beggars, who found their satisfaction in the insolence 'which they showed to others."5 But more than this, it is these very exhortations which mark the stampede away from personal responsibility and a philosophy of life which has some semblance of morality about it. They mark the prevalence of agnos ticism, cynicism, and, in general, intellectual nihilism. The problem, as always, is fundamentally a philo sophical one, ergo, our interest in truth and our empha sis upon methodology. For that system by means of which one directs his behavior-that is, one's very own philosophy of life-ought to be truth-oriented. And the truth-value of any given philosophy of life is measured only in terms of the criticalness of one's methodology.

For my part, the early period of our life-our youth is the most important. It is here where we receive our basic notions of what constitutes good and bad moral and ethical judgments. And the point is that no one would want these basic notions of anything less than 5 Hegel, Georg w. F. Lectures on the History of Philosophy, tr. by E. S. Haldane. London: Routledge and Kegan Paul, Ltd., 1955. Vol. I, pp. 486-487.

ON THE SCIENTIFIC METHODS AND TRUTH 409 the purest form. Indeed, they should be of the strong est and most durable fiber obtainable-the most perfect, the ideal. It is in this sense, therefore, that Plato suggests we should teach our youth to love but one form only-the pure form; and soon they will see that the beauty of one form is analogous to the beauty of another. And then, if beauty of form in general is their pursuit, how foolish they would be not to recognize that the beauty in every form is one and the same-the beauty of truth. 6 IS Plato, op. cit. Vol. I, p. 3tH.

((ETERNAL LOVE" tg el!awrence noonan THE COURTROOM was hushed as the judge entered the chamber. It was crowded and many people could find standing room only. The trial, of course, had attracted nationwide interest and you could almost reach out and feel the expectancy. The defendant, Charles Akins, was a rather small and timid looking man. Perhaps the timidity was a matter of fear-surely the somber courtroom and the overpow ering majesty of the law were enough to inspire fear in a defendant. Mr. Akins certainly did not look like a criminal. As a matter of fact, he really looked quite re spectable. But he did look frightened. And yet, there was determination there. And just a gleam of courage shining through, too. Perhaps we should tell you now that the year was 1975. Not that there was anything so special about '75. Children went to school, grew up, worked, got married, and reared their own children. People went to church, voted, talked politics, argued, and endeavored to under stand the subtleties of economics. But, all of it was just a little bit different. Especially in the way that people looked at things.

Mr. Noonan is a business'man in Seattle. 410 "ETERNAL LOVE" 411 The Judge, the Honorable Warren Faber, having completed the preliminary ceremonies, was looking rather curiously, we thought, at the defendant. "Mr. Akins," he said, "it is my understanding that you have retained no counsel and that you wish to defend yourself. Considering the gravity of the charge against you, I feel that you might like to reconsider." "N0, your honor," Akins replied, "I am going to de fend myself." "Mr. Akins, you are charged with a federal offense and are being tried in a federal court. You are charged with usurping the function of the government, of under mining and attempting to replace the monetary system of this country. With serious charges of this nature why will you not avail yourself of counsel?" Mr. Akins seemed to be shivering slightly. "Your honor, the facts have already been more or less determined. This is a matter of right or wrong. There isn't any legal thing involved here. I'm not guilty of anything. I simply want to tell what happened. I want to tell my story. I don't need any lawyer to do that."

The Prosecuting Attorney, Arnold Spear, leaped to his feet. "Your honor, I object. The defendant is attempting to tell the court what is right and wrong. Further, I ob ject to the statement that all of the facts are known." "Objection overruled. This court will make its find ings when the time comes. The defendant does have the right to represent himself. Mr. Akins, you have been sworn in. Now tell us what you consider to be your story."

412 LAWRENCE NOONAN "Well, this is the way it was. Back in 1957 my com pany, Trans-World Mining, became interested in in creasing the market for our principal product-plat inum. We had expanded our mining considerably and we needed more in the way of sales. We believed that platinum could be used far more extensively in jewelry and we bought a well-known jewelry manufacturing firm. We experimented with combining platinum with another metal, and we came up with something very beautiful and practical." Judge Faber interrupted. "Mr. Akins, let me interrupt a minute. Up to this point you have simply told us that you were a mining company and had turned to the manufacture of jewelry from platinum?" "Yes sir, that is correct. We had considerable success with the manufacture of jewelry, but as the years went by we began to notice a very unusual thing." The Judge leaned forward intently. There was abso lute quiet in the courtroom.

"We had manufactured small disk-like pieces of jewelry with some fine detail work on each side. Each piece had a small hole near one edge and we had in tended them as pieces suitable for pendants. They sold for fifty, a hundred, and two hundred dollars apiece. Frankly, we had not expected to sell too many of them. But as time passed, we began to experience something unusual. As I said, in the beginning, we didn't know how much to expect in the way of sales from a simple little piece like this. But as the years went by, the sales on this one small piece of adornment jewelry exceeded "ETERNAL LOVE" 413 the sale of everything else the company was making! We couldn't understand it. These small pieces-originally priced at $50 to $200, and later at higher figures as the dollar price of platinum rose along with prices of every thing else-were going like hot cakes. This went on and on. Finally, I had a market research outfit do a survey to find out why we were selling so many of these."

Charles Akins paused and licked his lips. The audi ence in the room was quiet but tense. Al though they didn't have a doubt about the outcome of the trial, it was fascinating to hear· this story from the man himself. After all, you didn't defy the government these days and get away with it! Akins went on. "We discovered that people were buy ing these as an investment. People had become terribly afraid of the government's solvency. The government had issued barrels full of paper money. It wasn't even backed by gold any more. You couldn't even get gold." Arnold Spear had jumped to his feet again. There was contempt in his eyes as he looked toward the de fendant. "Your honor, the defendant is beating about the bush. These things about paper money and gold are ridicu lous! He's completely dodging the main issue-what was written on those coins?" Little Mr. Akins was growing bolder. "Your honor, it is my turn now to object. This was not a coin. We did not make these as coins. We did put an inscription on this piece of jewelry which conveyed in a foreign tongue-Eternal Love. We had expected 414 LAWRENCE NOONAN that this piece ·would be used for gift purposes. How ever, many people also interpreted this quotation to mean Eternal Value. Later on, this piece of jewelry be gan to be used by people in trade. They recognized and trusted the purity of its alloy. It had real value to them not only as an ornament but also as a medium of ex change. And as it came more and more into use in trade, this new use gave it still added value. People began saving them, hoarding them. We increased our produc tion many times. We almost eliminated the manufacture of all other platinum items. The people wanted these.

They were demanding them." Akins paused again. He seemed to be either waiting to be challenged by the Prosecuting Attorney or for a request for clarification from the Judge. Nothing hap pened. Both the Judge and Arnold Spear had become absorbed in the story. Akins proceeded now with growing confidence. He was on familiar ground. Regardless of the outcome, he had only one course and he followed it. "Naturally, we were in business to make a profit. How ever, we, too, had become very apprehensive about the monetary situation and the government's policy. We finally decided that in addition to selling the platinum pieces, we would also make them the basis of our ac counting and billing system-our private monetary unit. Thus, we began to use them as a medium of exchange. Of course, we were soon threatened by the Treasury Department. But they couldn't really do anything about it. Anyway, they didn't try. But later the value of the UETERNAL LOVE" 415 paper money in the country became almost worthless and they tried to blame Trans-World Mining for it.

There was wild inflation. But the platinum pieces kept their value. People kept these whereas they would have kept gold if they could have gotten it. The government's paper money became almost worthless." There was now both triumph and despair in Akins' voice. "Well, it was almost incredible what had happened. The chaos became almost indescribable. People became franLc to get more of these platinum pieces. Where the value of paper money was going down and down, the value of the platinum piece was going up. It became the only sound means of exchange· in the country." Sadly he continued. "People came to realize that sound money was just as important as liberty itself. They found that there wasn't any honest freedom without honest money." Another pause. "But now the government needs a scapegoat and they've got me. They want to put their own blame on someone else." We won't bore you with the cross examination by Arnold Spear, the Prosecuting Attorney. He was eager for a conviction and the· rhetoric thundered in the court. He likened Akins to one guilty of treason, of plot ting the·downfall of his own country. Akins was morally a leech and legally far worse. The thunder rolled on and on.

We don't know yet what the verdict is. The jury is still out.

THE WASHINGTON MONUMENT tv Jealp~ BraJ/orJ FROM A MOUND on the Mall at Washington a stately obelisk points skyward-the Nation's monument to its first President, whose birthday we celebrate this month. But it is more. That splendid shaft of old-fashi()ned, marble-faced masonry is a symbol-an emblem of our country itself, and of the spirit of persistence and freedom which made possible that country and its in stitutions of government. Like the country and its government, and like most of us as individuals, the Monument has had its vicis situdes. The story of its construction is one of delay, dis appointment, criticism, suspicion, accusation, ridicule, bigotry, political chicanery, and general frustration. But it is also a story of courage, high purpose, determina tion, tenacity, sacrifice, devotion, persistence, and finally of achievement. A monument to honor George Washington was first given consideration by the Congress of the Confedera tion as early as 1783, the year in which, as a victorious general, he surrendered his commission to the Congress at Annapolis and retired, as he thought, to private life.

Mr. Bradford is a well-known writer, speaker, and business organ ization consultant. 416 THE WASHINGTON MONUMENT 417 But it was too soon. He was still alive, and so were his critics and detractors. He was a man, already elderly at 51, hollow-cheeked, heavily pockmarked, famous as a war hero, but not yet become a legend. Parson .Weems had not yet invented the cherry tree story, nor had Gil bert Stuart painted that majestic portrait. So nothing was done. On the twenty-fourth of December that year, accom panied by his aides, Colonels Walker, Cobb, and Hum phreys, the General rode home from Annapolis to Mount Vernon. He arrived late, but in time for Christ ma:s, as ,he had promised Martha he would do in a letter he had sent her from Philadelphia two weeks before. And while in Philadelphia, amid all the preoccupa tions of closing out his affairs as Commander-in-Chief, he had not forgotten the approaching Yuletide. For Martha, or Patsy, ashe called her, he had purchased a locket, a hat, and a silver coffeepot. For Jackie Custis' widow, Eleanor, he had provided, a fine silk handkerchief. For Eleanor's three little girls, Eliza, Martha, and Eleanor, a pocketbook, a thimble, and a colored sash apiece. He had also bought, several children's books to be distrib uted among them; and for little George Washington Parke Custis, aged two, there were a toy fiddle and a whirligig. There were other things, too, less sentimental and more utilitarian: fifty yards of carpet, a reading glass to aid his failing eyes, a handle for his letter seal, a shaving outfit, a tea waiter, an umbrella, and several pairs of hose.

This was the man pictured by some "modern" writ418 RALPH 'BRADFORD ers as cold, austere, unsentimental, and burnt out inside by the war! It had been enough to' burn him out, heaven knows. He could remember bitterly his own mistakes and the nagging failures of the Congress. His pride was still galled by the remembrance of the cabal against him in that body, when he escaped dismissal by only one vote. He could still flinch at thought of the disgraceful rout of his troops at Kip's Bay, or the fiasco of the Brandy wine, or the failure at Germantown. But he could also remember, and with satisfaction, the redeeming success at Harlem Heights, the victory at Monmouth, the near miracle of Trenton, and the final triumph at Yorktown. But that was all past now. Once he had written: "When we assumed the soldier, we did not lay aside the citizen." Now he would lay aside the soldier and resume the citizen. And there would be much to do. He must develop his farms, which had gone sadly to pot during the war under the slipshod management of Cousin Lund. He must improve his stock. He wanted also to experiment with various seeds, and with crop rotation.

There were commercial projects in his mind, too-a grist mill on his place not far from the Mansion House; an other mill and a foundry at the Great Falls of the Po tomac; his lands in western Pennsylvania to develop or sell; a canal around the Potomac shoals for commerce with the western territory. Yes-much to do. But he reckoned without the fame that had come to him. It would never again be possible for him to be a private citizen. He had been touched by destiny.

THE WASHINGTON MONUMENT 419 The war had left the colonies bankrupt. Some twelve million dollars were owed abroad on borrowings made from foreign governments during the war. At home the continental debt in principal and unpaid interest was around 40 millions. The several colonies or states were also indebt in amounts variously estimated at from 50 to 70 millions. In addition, there was a huge volume of paper money, called "Continentals," which had been lavishly issued during the war, and which had shrunk in value to almost nothing. All this was partly the result of a fundamental weak ness in the political organization of the new country. It was called the United States, but actually it was still only a loosely-knit federation of thirteen independent countries. When a man from Williamsburg referred to "my country," he did not mean the United States; he meant Virginia. These thirteen "countries" were inef fectually tied together by the Articles of Confederation.

The Congress, which consisted of a single legislative body in which each state had one vote, could make no laws respecting individuals. It could only act for, and upon, the several states; and even so, a state could do pretty much as it pleased, in spite of Congress. More over, the states distrusted each other, and many disputes arose among and between them. New York enacted a tariff against New Jersey; Pennsylvania and Connecticut were on the verge of going to war with each other over their respective claims to the Wyoming Valley., The National, or Confederation, government was powerless to prevent such threats to the general peace 420 RALPH BRADFORD and welfare because it didn't have money enough to support even a police-force army. It could levy no taxes, but had to depend upon requisitions which it might make on the several states-but which the latter could payor ignore, as suited their pleasure. Perhaps it was only the enormous asset of holding title to all the vast public domain west of the Alleghenies that enabled the Congress to continue its precarious existence as a gov ernment.

Certainly this was an impossible situation if the United States was ever to become a nation. George Washington, private citizen, sawall this quite clearly. In 1783, he wrote Hamilton that unless Congress were given the powers it needed, then "the blood we have spilt will avail us nothing." And later, in writing about the necessity of pointing out the defects of the Articles of Confederation, he added, "All my private letters have teemed with these sentiments ... and I have endeavored to diffuse and enforce them." His private letters! When you keep in mind that such letters in those days were handwritten by their author, the volume of correspondence he turned out is almost unbelievable. The Library of Congress has about 40,000 Washington papers, of which about 18,000 were either written by or to or for, or signed by, Washington; and Dr. John C. Fitzpatrick, who edited the 37-volumeedi tion of The Writings of Washington) estimated that the General wrote with his own hand between eight and ten thousand letters 1 Of course, Washington was guilty of one grave offense THE WASHINGTON MONUMENT 421 in the eyes of certain leftish modern historians-namely, he was rich! So were some others of the Convention, such as Robert Morris, George Mason, John Rutledge, and the Pinckneys. One writer of some note, very popu lar a few years ago as a debunking biographer of the great, described the Convention as "fifty-five sleek, well to-do gentlemen, sitting carelessly in a closed room."

And with a touch of venom he added that Washington, as presiding officer, was "grave, serious and bored." Bored? Maybe he was. Ninety-nine days of presiding over sharp argument and listening to long-winded speeches might bore almost anybody. But he was there! He was there, guiding, counseling, and lending his great prestige to the Convention. As for those well-to-do, "sleek" delegates, iconoclastic writers have belittled near ly all of them, just as they have the signers of 'the Declara tion of Independence. One historian some years ago was at great pains to trace each one's economic status and commercial and financial connections; and he came up with what he seemed to think was the scandalous infor mation that a good many of them were holders of the worthless paper that had been issued under the Confed eration. The inference was that the whole idea of the new Constitution was therefore simply a scheme to vali date their paper and redeem their losses!

The answer to such nonsense is: Suppose it were true -so what? It would have been very strange indeed if many of those delegates had not possessed some of the near-worthless "Continentals," or other paper obliga tions of the states or of the Confederation. Nearly every422 RALPH BRADFORD body did, down to the village shoemaker; and these men were leaders-businessmen, lawyers, bankers, educators, landowners. Naturally, most of them were men of sub stance. And, of course~ they wanted that near-worthless paper to have value. So did everybody else who had any of it. Was that bad? Was it an evil thing to get the new government out· of bankruptcy and into solvency? True, there was shameless speculation in the depreciated paper; but that can hardly be laid at the door of the delegates. Many of those delegates had abundantly proved their ability to rise above merely personal interest. The as sembly included lawyers, merchants, farmers, educators, financiers. More than half of them were graduates of institutions of higher learning. About two-thirds of them had served either in the Continental Congress or in the Congress of the Confederation. Eight had helped write their own state constitutions.' Some had seen actual service under fire in the Revolutionary War. Some of them had put their necks in a noose a few years before when they signed the Declaration of Independence.

They were an able, representative group of men, hard headed, practical, business-minded. They knew the im portance of trade and commerce and of a stable cur rency. They wanted to bring order out of chaos. They wanted-shame on them!-to restore the value of the country's money. They wanted to re-establish the credit of the new nation. They wanted to create a govern ment that would be strong and that would last. There were extremists among them. There were long and some times bitter arguments. There were also compromises THE WASHINGTON ,MONUMENT 423 and accommodations. At times. the Convention threat ened to blow up, but the wise counsel of 81-year-old Benjamin Franklin and the leadership of George Wash ington kept them at their difficult task. And so at last they finished the job. At last they hammered out a Con stitution and made a nation. And then by unanimous choice George Washington was elected to be the first President of that nation. It was a hard task. There were great problems. There were no precedents. Everything he did was being done for the first time. He had to feel his way. He made mis takes. He worried too much about relatively small mat ters of protocol. He lacked imagination. He was, not a theorist. He could not .turn a 'graceful phrase. He was awkward when he tried to speak in public. He was criti cized and vilified.

But he was a great rock of patient strength and tow" ering integrity. He was "the Cincinnatus of the West." He was truly the Father of his Country. On December 14, 1799, he died at Mount Vernon, a world figure, honored and revered~ He had scarcely been laid in the old family tomb when Congress took action authorizing the erection of a suitable memorial. But as many an ambitious seeker of government funds has since learned, there is a notable difference between an an thorization and 'an .appropriation. A monument was authorized, but no funds were made available for its constrnction. This is hardly surprising, in view of the financial con dition oft:he government in the years following the 424 RALPH BRADFORD Revolutionary War. The matter was later brought up in Congress in 1816 and again in 1819 with negative re· suits because the costs of the War of 1812 were to be met. It is an interesting point that even though venera tion for Washington was by that time well-nigh uni· versal, members of Congress nevertheless stopped to con sider the condition of the treasury. What a shockingly unprogressive attitude that must be for some of our present-day spenders to contemplate!

But the members of Congress evidently felt the same way. in 1824 when President Monroe again laid the mat ter before them, and in 1825 when the subject ,was re opened by John Quincy Adams. Finally in 1833, a group of leading citizens was called together by the then Chief Justice of the Supreme Court, John Marshall. As are· suIt of that meeting, the Washington National Monu ment Society was formed, for the purpose .of privately erecting t4e long-delayed memorial. The Society went earnestly about the business of rais ing funds by subscription. It was slow work; and it was not until fifteen years later that enough money had been raised to begin construction. Meantime, a great competition had been held to determine the design of the proposed monument. Many entries were received, some of them approaching the fantastic in their pro portions and ornamentation. The winning submittal was by Robert Mills, a well-known architect of that time. It called for a decorated obelisk 600 feet tall aris ing out of a sort of colonnaded Roman temple arrange ment, circular in form, about 100 feet high and 250 THE WASHINGTON MONUMENT 425 feet in diameter. This was finally modified to the classic obelisk design now familiar to-all -the world.

Finally, in 1848 all was ready to make a beginning on the actual construction. Congress -again "authorized" the monument; a site was selected; the foundation was put in; and on July Fourth the cornerstone was laid by President Zachary Taylor, who used the same silver trowel Washington had used 55 years before when he laid the cornerstone of the Capitol building. For the next six years the work progressed slowly but satisfactorily, in spite of obstacles and opposition. Some people ridiculed the design. Others -said the monument would fall of its own weight. There were not wanting those who charged that the Monument Society was -cor rupt, and that funds had been misused. A few grumbled because the shaft was not located where L'Enfant had said it ought to be when he laid out the city-the grumblers being oblivious to the fact that this would have put the Monument in the middle of what was then an extensive swamp. Such things are the petty annoy ances that plague those who undertake most any such great public work. It remained for the most insidious influence of all-religious intolerance-to bring the great enterprise to a halt.

As a means of stirring up widespread interest in the project-what we would now call the public relations angle-the Monument Society had encouraged the con tribution of memorial stones to be placed in visible positions on the inner walls of the Monument. The stones came from many sources-from cities, states, ter426 RALPH BRADFORD ritories; from fraternal and patriotic organizations; and from foreign governments that wanted· to pay tribute to Washington and cultivate American good will. Among many such stones, a block of Italian marble from a Roman temple had been sent by the Pope. It created no particular stir; it was just another memorial stone among many. And then one day-or perhaps one night-in 1854, it was stolen-and a very large chunk of fat was in the fire! To this day it has never been recov ered, and nobody knows who stole it. The theft was generally attributed to the so-called Know-Nothing po litical party, which at that time had a very large follow ing and which, among other things, was strongly anti foreign and anti-Catholic. The Society and the Monu ment were immediately and helplessly thrown into the middle of a prolonged and bitter religious controversy.

The flow of contributions shrank to a trickle and soon stopped altogether-and so did the work. Perhaps the storm would have blown over in a few years; but by 1854 the clouds of sectional acrimony were growing very dark indeed; and before the Society could weather the "Know-Nothing" flurry, a real storm had broken upon the country, and the Civil War. was be ginning its work of desolation. Of course, quite apart from the Know-Nothing issue, work on the Monument. would in' all probability have closed down anyway during the· war. Even such a dis tinctly national piece of construction as the new dome over the Capitol building was continued only because Lincoln insisted that it proceed as an evidence and an THE WASHINGTON MONUMENT 427 emblem of national strength and unity. At any rate, the Monument was stopped cold. Wartime pictures of the Washington scene show the unfinished, truncated shaft, 154 feet high above the foundation, and to all outward appearance completely abandoned. And there it stood for 25 years until the project was finally resurrected, this time by the government itself under an act of Con gress signed by President Grant on August 2, 1876.

And then a strange thing occurred. The first 150-odd feet of the shaft had been built, or at any rate faced, with dressed white Maryland marble in 2-foot courses, backed with rubble masonry. When work was resumed after the quarter century hiatus, a few courses were pulled off to get down below possible weather damage. These were replaced and a few more courses added with white marble from Massachusetts. But then the builders went back to the same quarries, near Baltimore, from which the original marble had been obtained. But the old quarry had been flooded, and was under some 90 feet of water. However, the same marble (so they thought) was obtainable about a mile away. It was of a little finer grain, but was the same color, and possessed even greater strength when tested. It was not until it had been incorporated into the Monument's face and had been exposed to the weather for some time that it was seen to be of a slightly different color. But by that time it was too ·late to do anything about it. As a result, even an untrained eye can detect the difference today, after the passage of 80 years.

A second interesting problem was the foundation.

428 RALPH BRADFORD Originally, it was 80 feet square at the base and about 23 feet deep, rising in stepped-pyramid form to where the shaft proper began. It was built of blue Potomac rock, laid up in ordinary lime and sand mortar, with some cement added. When the Army engineers, who now took over, refigured the weights and stresses, they decided that such a foundation was not adequate to take the enormous pressure of the finished monument. It must be enlarged, they figured, from a bottom area of 6,400 square feet to an area of 16,000 square feet. But the structure, including the existing foundation, was already nearly 180 feet tall, and weighed about 137,750 tons! The trick was to insert, so to speak, a new founda tion, without weakening or disturbing the towering seg ment of the Monument that was completed. The job involved digging out about 70 per cent of the earth under the old foundation to a depth of 13 feet 6 inches beneath it, and replacing the excavated earth with concrete. This concrete must reach back about 18 feet inside the outer edges of the old foundation, and extend about 23 feet outside. Also, in order to distribute the weight over the new foundation, it was necessary to pull out the old rubble-stone foundation from under the walls of the shaft, and replace it with concrete. This meant that a little more than 50 per cent of the old foundation was removed, and that about 48 per cent of the shaft's area was undermined and replaced with con crete. I t was an engineering problem of serious propor tions; and it was solved without causing the smallest crack in the 'masonry above it.

THE WASHINGTON MONUMENT 429 So much by way of history. But what of the symbolism mentioned at the beginning? In what ways is the Monu ment emblematic of our country? Like that country and like all its institutions of gov~ ernment, it was born of a great idea, but came into be ing through toil and trouble, accompanied by delays, dis appointments, vilifications, internal dissensions, and financial disaster. And just as its original foundations were insufficient and insecure and had to be strength ened with new undergirding while the structure was still a-building, so the original foundations of our govern ment, the Articles of Confederation, were weak and in adequate, and our fathers had to replace them, even while the nation was still a-building, with the new foundation of the Constitution. And what of the demarcation in the color of the mar ble, the line that divides the Monument into two sec tions? That is the scar tissue, so to speak, of the Civil War-and it is significant that while the scar is there, it represents no weakness in the structure. I am told that there is no stronger spot in all the masonry than along that old line where the work was stopped so long.

Of course, it is easy to pursue such analogy too far; and yet certain considerations do emerge, and should be of particular meaning to those who are prone to dwell upon our country's shortcomings rather than to enlarge upon its virtues. For instance, there is the relatively insignificant size of the individual marble blocks that face the shaft. One would think that the designers would have had greater 430 RALPH BRADFORD regard for architectural relevancy; but as you stand close and look up at the towering face of the Monument, you are struck unpleasantly by the apparently trivial size of the blocks, compared with the height and breadth of the space they cover. Also, some of the blocks are chipped a little, and sur face-cracked here and there from pressure; and, of course, there is absolutely no adornment of any kind. Even all kinds of planting are absent from its base. The place is bare and stark and vault-like as you stand near it. The doorway is low and squat and uninteresting.

But now turn your back on the offending portal, on the too-small courses of. marble, on the whole Monu ment. Walk rapidly away-not just a few hundred feet, but several blocks. Leave the Mall and start walking up 14th Street. Soon you will think you have lost yourself in the crowded city. But suddenly over your shoulder, or over the shoulder, it may be, of some building, you catch a breathtaking glimpse of the great white shaft, lifted against the clouds. Or walk down the Mall toward the Lincoln Memorial. Go past the reflecting basin. Then tum suddenly and look back-and be prepared for a veritable shock of pleasure that borders upon awe. At such moments you are not conscious of any archi tectural incongruity. Etched sharply in the sunlight of noonday; bathed at night in the soft light of the moon; or when the night is black, picked out and dramatized by the floodlights that surround it-there it stands, a thing of massive and yet somehow fragile beauty, perTHE WASHINGTON MONUMENT 431 fect in its dimensions and in its symbolic conception.

And one wonders: how long would it stand if a group of people, without engineering knowledge 'or acquain tance with the laws of weight and stress, moved in some day and began pulling out sections of the carefully built foundation? And what would happen if such people, ignoring the foundation and its limitations upon the superstructure, chose to festoon the shaft with great stone balconies or other adventitious monstrosities that not only marred its classic beauty but threw it out of balance? Washington's Monument! The phrase summons up the image of that stately and beautiful marble shaft. It evokes, too, an image of the towering figure the shaft memorializes-grown remote and almost legendary now with the passing decades, but real, human, dedicated, and of such transcendent historic importance that his real monument is a thing that rises higher than the great obelisk, and casts its shadow infinitely farther.

His real Monument is a nation which, like the obelisk, was placed upon a safe and secure foundation. Shall we keep it so? Or shall we overload it with debt and inflation and the concentrated power that Jefferson feared, until it totters off balance and on the brink of collapse? Shall we keep it bravely and beautifully erect against the skies? Or shall we hack away at its foundations un til a breaking point is reached, and the noble structure is brought down in ruins, to become a rubble monu ment to our greed, stupidity, and folly?

ON BEHALF OF THE IDEAL tg ofeonard G. Read THERE IS A LINE of reasoning, gaInIng ground among businessmen and others, that tends to narrow an under standing of freedom rather than broaden it. It relates in part to our work at the Foundation for Economic Education, and I want to examine the reasoning. from this standpoint. Over the past fourteen years-from countries as remote as India as well as here at home-have come inquiries to this effect: "In what ideological pigeonhole can FEE be put? You folks don't quite fit Bentham or the Physio crats or the Georgists or Smith or Mill or Simons, or any system. Where shall we put you?" Honor be to these discriminating inquirers, for what FEE attempts to purvey is neither a system nor is it "pigeonholeable." On the contrary, we seek to learn of freedom in its consistent, undiluted, ideal form~ and to report candidly and in full what that search reveals.

This effort on behalf of the ideal has met with enough approval to put FEE on its educational and financial feet. While always challenged and even criticized by many. "practical" people-among. whom are some of the world's greatest producers-there has been an adequate 432 ON BEHALF OF THE IDEAL 433 corps of what we shall call idealists to keep FEE going as a small-scale enterprise. Now, however, "practicality" appears to be winning converts from among those who were thought to be the idealists. Limiting these comments to the "practical" as distinguished from the idealistic busi nessmen and putting it bluntly, defections are observed at a time when leadership on behalf of the ideal might well turn the tide for freedom. These "practical" people-many of them-will readily acknowledge that our society is shot through and through with socialism. But, having said this, they will add, "While I agree with your idea of the ideal society in theory) it is utterly naive to insist upon its rightness in today's world. The existing political interventions are fait accompli) water over the dam. To condemn them and to suggest the ideal in their stead, as you so un deviatingly do at FEE, is to operate in a dreamland.

Forget about upholding the ideal and do your educa tional work for freedom premised on the what is) not on an idealistic what-ought-to-be. Let us be practical! Such counsel, increasingly offered, could more accur ately be phrased, "Tell us how to make socialism work," as though we at FEE could perform that miracle if only we'd try! For instance, the "practical" argue that TVA is here to stay, as are subsidies to farmers, compulsory social security, federal delivery of the mails, exchange con trols, the minimum wage at which one is allowed to work, the maximum one is permitted to earn, coercive powers in the hands of labor unions called "gains for 434 LEONARD E. READ the laboring man," indeed any item of socialism once it is put on the statute books. Everything, no matter how absurd, appears sacrosanct to them the moment it becomes law. Thus, they regard as foolhardy any ques tioning of what they deem "unalterable." The president of one of America's largest corporations summarized their conclusions, "We wouldn't think of supporting the work of FEE. Why those folks even argue that the gov ernment's social security program is not right."

Conceding, as they do, the hopelessness of removing any of the interventions, and recognizing clearly enough the miserable distortions these interventions inflict on a free and competitive market, the "practical" minded look with favor on additional anti-market devices such as governmental protections against their competitors. They privately regard as "economic nonsense" the wage earner's claim to the job he has vacated and, at the same time, claim ,a right to an exchange made by other par ties. They denounce compulsory actions of unions as they ask for compulsory protection for themselves. Their inconsistency, which certainly is apparent to them, is charged off to "being practical." It isn't that these people quarrel with the way FEE presents the ideal; it is that they reject the presentation of the ideal as sound educational procedure. This brings us to the nub of the question, to the point when analysis of their position is possible.

One thing for certain: Our "practical" friends, accord ing to their own admissions, are dead set against any more socialism than we now have. Except for some soON BEHALF OF THE IDEAL 435 cialism in the form of protection against competition or a pet project, they stoutly advocate "dropping an chor." Yet, their unwillingness to criticize the status quo, coupled with their refusal to uphold the ideal of a free society for all to see and hear, makes them more effective obstacles to freedom's progress than are the socialists themselves. This, indeed, is a serious charge. Valid? Let's see. Socialism has only a few articulate antagonists and only a few articulate protagonists. Between these two small groups are unnumbered millions who are more or less indifferent, who at best are only followers of one camp or the other. Every issue has always been thus. Socialism's protagonists will argue for, not against, their credo. Count on thatl Now, socialism's antagonists, were they to follow the counsel of the "practical" people, would remain neutral -standing neither against socialism nor for the ideal. In short, not one person in the population would be signal ing either right or wrong. What is not shown to be wrong is perforce right, or so the unnumbered millions "who have the votes" would be warranted in concluding.

If TVA is not wrong, then why not nine TVA's? Or, the nationalization of the power and light industry? If the graduated income tax is not to be condemned, what fault can be found with the communists' ideal, "From each according to ability, to each according to need"? If government education is right-and who is' to call it wrong?-why should we not favor compulsory attend ance at church, sermons ghostwritten by the State, the 436 LEONARD E. READ forcible collection of money to pay for religious guid ance? If protection against the competition of the pro ducer's goods is approved, how can we consistently dis approve protection against the competition of the worker's services? Those who, in this moral crisis, remain noncommittal while purporting to be private enterprisers are, in effect, however innocently, abettors of collectivism. They, not the socialists, have the educational obligation for stating the private enterprise case, ideally.

Regardless of how thoroughly we may adjust our selves to our ·sickness-or even enjoy it~the numerous social diseases must be repeatedly and consistently iden tified as maladies lest we mistake our sickness for a state of health. Indeed, such diagnostic action is a necessary preface to corrective action, to the presentation and ulti rnate realization of freedom in its ideal form. There aren't any of us at FEE naive enough to believe that identifying socialistic projects as maladies, and up holding the ideal, will bring about the ideal. Any such expectation is absurd among human beings who, by na ture, are fallible. However, we do insist that this course is the essence of genuine practicality, for only in this manner can our country's direction be reversed. Man can do no better than travel toward the ideal, and this he can do only if the ideal is sought for and to some extent discovered. We must always face in the right di rection! There will never be any undoing of socialism unless the ideal of freedom is identified and upheld with enthusiasm and with undaunted faith.

ON IMPROVING THE WORLD tg ofeona,.JL Real A FRIEND OF oURs-call him John-born at the turn of the century, was associated with big affairs as far back as college days. A natural leader, he became president of one of the country's most successful corporations dur ing the early thirties. Devoted to private enterprise, he saw sooner than most men the fallacies in NIRA and a host of other political interventions. And he actively participated in program after program to alter the country's lunge into political, social, and financial· disaster. He contributed generously to plans designed to educate "the masses who had the votes." Yet, nothing seemed to come of all this. John served as a director of-and helped finance-all sorts of business organizations which passed resolutions strongly condemning interventionist policy. But no one, least of all those in political power, appeared to be moved by these criticisms.

Time passed. Interventionism continued to grow. The national debt, coupled with the accrued liability of the federal government on various unfunded promises, slipped almost unnoticed beyond the trillion dollar mark. The dollar, as a result, progressively lost value 437 438 LEONARD E. READ in terms of what it would purchase. Labor· union power kept growil1g into an awesome form of dictatorial gpv ernment. To add insult to injury, the ranks of the stanch opposition steadily thinned. Meanwhile, plans aimed at setting things straight were offered in endless profusion. For instance, projects were set in motion, with John's support, to educate the youth of the land after a poll of high school students showed that they knew no more about private enterprise and capitalism than could reasonably have been expected of Russian students. But such corrective efforts had no dis cernible effect. Recently, came this unusually appealing proposal: Put the "right people" in public office; and, to accom plish this, organize "right down to the precinct level."

John's company paid a lot of lip service to this one, going so far as to encourage their young execu tives to "get into politics." Yet, nothing seemed to come of it. The "right people," as it turned out, had a few of the correct economic and political predilections, but little else in the way of qualifications. With several notable exceptions, they were not firmly anchored in private en terprise principles and thus were little better than the politicians they hoped to replace. Next to managing the corporation, the problem up permost in John's mind all of his adult life had been how best to achieve private enterprise in its ideal form. He had given thousands of hours of thought and many hundreds of thousands of dollars to what he affection ately termed "the cause." Lately, however, he has virON IMPROVING THE WORLD 439 tually conceded defeat-given up the ghost. In spite of his efforts over the years, the opposite point of view grew stronger day by day. He had explored every avenue known to him, with no more to show for his pains than socialism-under its various labels-still on the march.

But the other day, in a reflective mood, John realized for the first time that every effort of his, all of his en ergies, all of these schemes, had been aimed at the ut terly fruitless task of reforming others-a method that only put in motion the latent errors so widely enter tained. It was like fanning dust-the more you fan, the more you fill the air with it. No wonder "the cause" was losing its enthusiasts. The method was woefully at fault. Right method? As simple as a-b-c, just as anything is simple, once it is known. It is one thing to organize an army or police force to inhibit others or compel con formity to dictatorial decrees. But the practice of free dom cannot depend on coercion. When it comes to in fluencing another to think and act creatively, to help advance another's understanding, one is limited to the power of attraction. Let anyone acquire mastery of any subject, and others will hunger for his counsel. This is a common fact, in evidence on every hand.

Once he had grasped the profound importance of right method, John gave up every thought of reforming or making over others. Though vastly ahead of most people-even business leaders-in his understanding of private enterprise and his ability to explain its princi ples, he realized how incompetent he was, not by com440 LEONARD E. READ parison with others but compared to his own poten tialities. He turned his sights inward toward his own fulfillment instead of focusing his efforts upon others. It was as if he had escaped from a dungeon on a tiny ray of light into an openness as expansive as the Cosmos itself. No longer was every effort futile. Instead, every effort had its reward in personal upgrading, opportuni ties without end. He wrote a friend: What a wonderful new life I have been introduced to. Never before have I realized the great power of the mind . . . it actually has changed my whole concept of living.

Before, John had "buttonholed" others. Now, others came to him. Previously, others ran away from his preachments. Lately, they were drawn toward his wis dom. Where he had sought, uselessly, to reform others, they now managed to reform themselves. An axiom learned in high school came to mind: "The whole is equal to the sum of its parts." John forgot the whole and concentrated on the improvement of a part. As a result, John's part of the world was changed, and thus the whole world improved.

AUTHORS Page Benegas Lynch, Alberto Unemployment and Unionism Bradford, Ralph The Washington Monument Chamberlain, John Prophetic Intimations Chamberlin, William Henry Some Fallacies of Foreign Aid Socialism Through the Back Door Coleson, Edward P. Scientific Free Enterprise Dunlop, Robert G. Oil's Second Century Dykes, E. W. "Relax ... Enjoy Yourselves!" Fertig, Lawrence The Only Way to Sound Growth First National City Bank Letter Government's Expanded Role Hong Kong-A Success Story Fox, P. M. The Welfare State Doctrine Holland, Josiah G. The Day's Demand . . 57 . . 416 . 382 233 ... 389 125 97 182 268 197 .. 243 211 9 Author identification appears on the title page of each author's first article in this volume. 441 442 AUTHORS Page Johnson, Darryl W., Jr. World GovernmentA Reactionary Disorder . 250 Kahn, J. Kesner But What Can I Do About It? . . . . . . 350 Manchester, Frederick A. The Tricky Four Freedoms Mill, John Stuart The Consumer Theory of Prosperity M ises, Ludwig von The Economic Foundations of Freedom · 272 334 · 36 · 410 261 .. 50 . . . 112 ....... 202 . . . . . . 291 · 363 Mullendore, William C'.

Our Tragic State of Confusion: A Diagnosis . 149 Noonan, Lawrence 'IEternal Love" Opitz, Edmund A. The Religious Foundation of a Free Society 10 On Talking to Ourselves . 142 Socialism-Substance and Label . . . . . . 367 Peterson, William H. Growth-The Dutch Example Petro, Sylvester Competition, Monopoly, and Role of Government 61 Poirot, Paul· L. Two Kinds of Power The Web of Intervention The High Cost of Coercion Social Security's Salvage Value Strikers Are Bound To Lose AUTHORS 443 Page · 93 Prentice~ Sartell~ Jr. Our First Thanksgiving . . . . . .. . . 17 Read~ Leonard E. On Making Friends for Freedom . . . . . 31 Economics for the Teachable . . . . . . . 78 Flight from Integrity 187 The Magic of Believing . . . . . . 259 The Mass Man ..... . . 325 On Behalf of the Ideal . 432 On Improving the World . . . 437 Rukeyser~ Merryle Stanley The Crusade Against Excellence ..... 170 Russell~ Dean The Silent Partner 217 Schlichting~ Harold E.~ Jr.

Free Will: The Foundation of the Free World 131 Schmidt~ Emerson P. Government in the· Housing Business . 342 Sennholz~ Hans F. The Phantom Called "Monopoly" . 295 Sparks, John C. Love That Neighbor · 318 . . 117 · 398 Stewart, Daniel K. On the Training of Scientists and Moral Responsibility On the Scientific Methods and Truth Tripp, Vollie The Auction Sale . . . .. . . . . .

444 Wail Street Journal Salesmen of Sloth AUTHORS Page 167 Wallis, W. Allen Wages, Productivity, and Prices 354 Winder, George Free Enterprise and European Unity . 227 Wood, Keith S. What Free Enterprise Means to Me . . . . 76 INDEX A Arniel, Journal of, 166 Aristotle's view of socialism, 369 Auction sale, 318 Automation, 185 Automobiles, 223 B Beck, James M., 286 Belloc, Hilaire, 15 Benegas Lynch, Alberto unemployment and unionism, 57 Bohm·Bawerk, Eugen, 90 Bolivia, American aid to, 237, 239 Boring, E. G., 132 Bosanquet, Bernard, 398, 400 Bradford, Ralph Washington Monument, 416 Bradford, William, 18, 21 Bucknell, W., 26 Bureaucracy Canadian, 211 see also, Government Burgess, John W., 257 Burke, Edmund, 17, 25, 157, 192 Business relationships, 43, 173 C Canada, Welfare State in, 211 Capital invested, 186, 202 Capitalism, 38, 210; see also, Free Market Cartels, 308 Chamberlain, John individualism, 256 inflation, 382 Chamberlin, William Henry foreign aid, 233 socialism through back door, 389 Chambers, Whittaker, 152 China, 183, 243 Chodorov, Frank. 137 Christianity. See Religion Citizens Foreign Aid Committee, 242 Civilization, crisis in, 151 Coercion. See Government Coleson, Edward P.

scientific free enterprise, 125 Common market, 229 Communication, 142, 170, 181 Communism principle, 28, 159, 180, 210, 374 see also, Socialism Competition challenged, 210 monopoly and role of govern ment, 61 prices, 296, 318 Confusion, tragic state of, 149 Constitution, U. S., 14, 25, 252 Consumption. See Production and consumption Cranston, Maurice, 288 Creativity, 87, 176, 412 D Declaration of Independence American, 12, 25 French, 13 Defoe, Daniel, 265 Demand elasticity, 300 Dingley Tariff, 309 Dobzhansky, T., 133 Drake, E. L., 97, 222 Draper, William H., Jr., 235 Dunlop, Robert G. oil's second century, 97, 222 Duryea brothers, 222 Dutch economic growth, 261 Dykes, E. W. prosperity, 182 E Economics Dutch example, 261 European disunity, 227 education, 78 freedom, 36, 52, 379 growth, 262, 268 power of, 50, 79 rights, 282 Russian, 180, 210, 374 Education, economic, 78 Egotist, 81 England, See Great Britain Erhard, Ludwig, 269 Ethics, 134, 171 European unity and free market, 227 Evans, Oliver, 221 Excellence, crusade against, 170 Exchange. See Trade F Featherbedding, 167 Fertig, Lawrence economic growth, 262, 268 Fiat Money Inflation in France, 382 First National City Bank Letter government's role, 79, 197 Hong Kong's success story, 243 Foreign aid, 27, 233, 237, 239 Foundation for Economic Education freedom promoted by, 142, 259 understanding freedom, 31, 432 Founding Fathers, 14, 217 Fox, P. M.

Welfare State doctrine, 211 France Declaration of Independence, 13 inflation, 382 445 446 INDEX Free market development, 217 European unity and, 227 free will and, 131 Honk Kong, 243 housing, 345 improvement, 437 labor, 354 meaning of, 76 monopoly and, 295 prices, 318 scientific, 125 supremacy of, 38 wages, 57 Free will, 131 Freedom belief in, 142, 259 challenge of, 97 confusion in, 149 costs of, 378 court case about, 410 economic, 36, 52, 379 four, 272 free will and, 131 human, 273 law and, 410 personal growth and, 31, 142 Pilgrims' experience, 18, 21, 26 religious foundation of, 10 understanding, 31, 259, 432 world government and, 250 Freeman, Roger A., 239 Freud, Sigmund, 132 G Gaitskell, Hugh, 390 Galbraith, John K., 199 Germany, 269, 308, 389 Gilson, Etienne, 136, 141 Government Canadian, 211 coercion, 33, 52, 202 collectivism, 94, 193 communistic, 28, 159, 180, 210, 374 Dutch, 261 English, 25, 269, 389 foreign aid, 26, 233, 237, 239 French, 13, 382 German, 269, 308, 389 growth, 433, 438 Hong Kong, 243 housing, 342 inflation, 184, 262, 268, 382 intervention, 112, 433, 438 mass agency of, 325 monetary system usurped, 382, 411 monopoly, 61, 295 nationalism in, 389 New Deal, 125 purpose, 229 religious foundations of, 10 restraint, 156 Government (continued) rights destroyed by, 59 role of, 61, 79, 106, 197 Russian, 180, 210, 374 silent partner, 217 Social Security, 291 socialistic. See Socialism subsidy, 93, 211, 233 tax. See Taxation Welfare State, 177, 200, 211 world, 250 Great Britain inflation, 269 nationalism in, 389 starvation, 25 H Hammarskjold, Dag, 269 Hazlitt, Henry, 383 Hegel, Georg W. F., 408 Herron, George D., 369 Holland, economic growth, 261 Holland, Josiah G.

day's demand, 9 Hong Kong, 243 Hooker, Richard, 153 Hoover, Calvin, 197 Housing, 342, 345 Human relations, 173 I India, prosperity, 183 Individualism American, observed by Tocqueville, 106, 345 colonial, 17 scientific progress by, 256 see also, Free market; Freedom Inflation controlled, 184 economic growth, 268 English, 269 French experience, 382 trade versus, 262 Integrity, flight from, 187 Investments, 186, 202, 204 JJ efferson, Thomas, 129 Johnson, Darryl W., Jr. world government, 250 Judeo-Christian belief, 135 Justice, 9, 135 K Kahn, J. Kesner shaping public opinion, 350 Kant, Immanuel, 404 Kirk, Russell, 153 L Labor Canadian payroll, 212 costs in housing, 342 employment, 57, 183 exchange, SO Lincoln's views, 289 INDEX 447 Labor (continued) market, 354 strikes, 363 supply and demand, 202 unions. See Unions, labor value theory, 91 wages, 57, 205, 354 Laissez faire, 130, 262 Law, John, 263 Law antitrust, 61, 295, 311 freedom under, 410 Leadership, 149 Liberty. See Freedom Lincoln, Abraham, 154, 288 Logic, 272 Lucas, Anthony F., 223 M Majority rule, 69 Manchester, Frederick A.

fQur freedoms, 272 Marxism, 28, 374 Mass man, 325 Materialism, 117, 136, 404 Methodology, 398, 402 Mill, John Stuart c033~mer theory of prosperity, freedom, 272 government destruction, 200 Mises, Ludwig economic foundations of free dom, 36 monopoly, 61 production, 195 Monetary system, 382, 411 Monopoly competition and role of government, 61 labor, 65 phantom, 295 tariff and, 309 Morality. See Religion Morley, Felix, 158, 279, 282, 286 Mullendore, William C. tragic state of confusion, 149 N Nationalization, 389 New Deal, 125 Noonan, Lawrence court case on money, 410 o Oil industry, 97, 113, 222 OIds, R. E., 223 Opitz, Edmund A. religious foundation of free so ciety, 10 socialtsm, 367 talking to ourselves, 142 Order, principle of, 153 Ownership, 23, 389 p Peace, 250 Peterson, William H. Dutch economic growth, 261 oil industry, 113 Petro, Sylvester competition, monopoly, and government, 61, 256 Petroleum industry, 97, 113, 222 Pieper, Josef, 135 Pilgrims, 18, 21, 26 Plato, 118, 399 Poirot, Paul L.

coercion, cost of, 202 interventionism, 112 power, two kinds of, 50 Social Security, 291 strikes, 363 Politics, integrity in, 190 Population, 183, 265 Positivists, 401 Power economic and coercive, 50, 79 see also, Government Prentice, E. Parmalee, 26 Prentice, Sartell, Jr. first Thanksgiving, 17 Prices competitive, 296, 318 determined, 203, 354 oil, 100 stability, 270 wages, production and, 354 Production and consumption challenged, 202 competition, 296 mass, 325 prosperity and, 183, 334 secret of, 194 supremacy of, 38 wages, prices and, 354 Progress, 149, 194, 256 Property, 23, 389 Prosperity, 149, 182, 334 Public opinion, 350 R Read, Leonard E. economics for the teachable, 78 freedom, understanding, 259, 432 improving the world, 437 integrity, flight from, 187 mass man, 325 Recreation, 93 Religion foundation of free society, 10 Judeo-Christian belief in, 135 materialism and, 117, 136, 404 morality and, 37, 165, 170, 400 Responsibility leadership, 149 moral, 117 parental, 94 removed, 167 448 INDEX Rights destroyed, 59 economic, 282 guaranteed, 12 human, 76 justice and, 9, 135 property, 23, 389 source of, 83 Rockefeller, Nelson, 270 Roepke, Wilhelm, 165 Roosevelt, Franklin D., 277, 288 Rukeyser, Merryle Stanley crusade against excellence, 170 Russell, Dean government as silent partner, 217 Russia, economics of, 37, 159, 180, 210, 374 S Savings, 186, 202, 204 Schlichting, Harold E., Jr.

free will, 131 Schmidt, Emerson P. government in housing business, 342 Schumpeter, Joseph P., 344 Science, 117, 125, 398 Self-reliance, 158 Sennholz, Hans F. monopoly, phantom of, 295 Sigwart, Christoph, 406 Slavery, 15, 161 Social Security, 291 Socialism argument for, 40, 434 Aristotle's view of, 369 back door to, 389 defined, 80 planning, 231 recreation and, 93 retreat from, 201 scientific, 125 sum and substance of, 367 Sorokin, Pitirim A., 151 Sparks, John C. recreational assistance, 93 Spending, 392; see also Taxation Stalin, Joseph, 28 Standard of living, 41, 356 Stanley, F. O. and F. E., 223 Stewart, Daniel K. scientific methods, 117, 398 Strikes, 363 Subjective theory of value, 90 Subsidy, 93, 211, 233 Supply and demand, 202 Surplus value theory, 374 T Tariff, 229, 309 Taxation effects, 307, 393 futile, 235 gasoline, 112 Jefferson's views, 129 Social Security, 291 Taylor, F. S., 131 Television quiz shows,· 170 Temple, William, 266 Thanksgiving, American, 17 Tocqueville, Alexis de, 106, 200, 345 Trade Dutch, 263 inflation versus, 262 government, 227 jewelry, 412 world, 202 Transportation, 223 Trine, Ralph Waldo, 194 Tripp, Vollie auction sale,318 Truth, 398 U Underdeveloped countries, 26, 247.

262 Unemployment unionism and, 57 see also, Labor Unions, labor economic power, 50 featherbedding,· 167 monopoly, 65 strikes, 363 unemployment and, 57 V Varga, Eugen S., 180 Virtue, 9, 135 Voegelin, Eric, 165 W Wages, 57, 205, 354 Wall Street Journal salesmen of sloth, 167 Wallis, W. Allen wages, productivity, and prices, 354 War, 250 Washington, George, 192 Washington Monument, 416 Welfare State, 177, 200, 211 Wells, H. G., 81, 368 White, Andrew Dickson, 263, 382, 384 Winder, George free enterprise and European unity, 227 Wood, Keith S. free enterprise, meaning of, 76 World government, 250

About this edition

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Title: The Freeman 1960, Vol. VII

Author: Foundation for Economic Education

First published: 1950

Series: The Freeman

Source file: The Freeman 1960, Vol VII.pdf

Source page: https://freecapitalists.org/books/the-freeman-1960-vol-vii/

Converted: 2026-08-09 by The Liberty Archive (freecapitalists.org), converter v6

Table of Contents

- Title Page
- Contents
- The Day's Demand; J.G. Holland

- The Religous Foundation of a Free Society; E. Opitz

- Our First Thanksgiving; S. Prentice, Jr.

- On Making Friends for Freedom; L.E. Read

- The Economic Foundations of Freedom; L. von Mises

- Two Kinds of Power; P. L. Poirot

- Unemployment and Unionism; A. Lynch

- Competition, Monopoly, and the Role of Government; S. Petro

- What Free Enterprise Means to Me; K.S. Wood
- Economics for the Teachable; L.E. Read
- Love That Neighbor; J.Sparks
- Oil's Second Century; R. G. Dunlop
- The Web of Intervention; P.L. Poirot
- On the Training of Scientists; D. Steward
- Scientic Free Enterprise; E. P. Coleson

- Free Will; The Foundation of the Free World; H. E. Schlichting, Jr.

- On Talking to Ourselves; E. A. Opitz

- Our Tragic State of Confusion; W. Mullendore

- Salesmen of Sloth

- The Crusade Against Excellence; M. S. Rukeyser

- "Relax...Enjoy Yourselves!" E.W. Dykes
- Flight from Integrity; L.E. Read
- Government's Expanded Role
- The High Cost of Coercion; P.L. Poirot
- The Welfare State Doctrine; P.M. Fox
- The Silent Partner; D. Russell

- Free Enterprise And European Unity; G. Winder

- Some Fallacies of Foreign Aid; W. H. Chamberlin

- Hong Kong - A Success Story

- World Government: A Reactionary Disorder; D. W. Johnson, Jr.

- The Magic of Believing; L.E. Read
- Growth - The Dutch Example; W. J. Peterson
- The Only Way to Sound Growth; L. Fertig
- The Tricky Four Freedoms; F. A. Manchester

- Social Security's Salvage Value; P.L. Poirot

- A Phantom Called "Monopoly;" H. Sennholz
- The Auction Sale; V. Tripp
- The Mass Man; L.E. Read

- The Consumer Theory of Prosperity; J.S. Mill

- Government in the Housing Business; E. P. Schmidt

- But What Can I Do About It? J.K. Kahn

- Wages, Productivity, and Prices; W. A. Wallis

- Strikers Are Bound To Lose; P.L. Poirot
- Socialism-Substance and Label; E. Opitz
- Prophetic Intimations; J. Chamberlain

- Socialism Through the Back Door; W. H. Chamberlain

- On the Scientific Methods and Truth; D. K. Stewart

- "Eternal Love;" L. Noonan
- The Washington Monument; R. Bradford
- On Behalf of the Ideal; L.E. Read
- On Improving the World; L.E. Read
- Authors
- Index
- About this edition