===== PAGE 1 =====

THE

[1Eeld

OCTOBER 1957

IDEAS ON LIBERTY

Liberalism Takes Stock . . . . . . Frank Chodorov 3
What To Read about Labor . . . . Leo Wolman 9?

Do Antitrust Laws Preserve

Competition? . . . . . . . . Sylvester Petro 12
The Great Swindle . . . . . . . Henry Hazlitt 22
Those Tricky Gadgets . . . . . . O.B. Johannsen 24
Enterintolife. . . . . . . . . Samuel B. Pettengill 25
Rich but Restless . . . . . . . Indianapolis Star 30
The Seen and the Unseen . . . . Leonard E. Read 32
Let's Face It . . . . . . . . . Harllee Branch, Jr. 34
What Is the National Debt? . . . . Medford Evans 37
What Price Security? . . . . . . VollieTripp 53
An Intellectual Scandal . . . . . John Chamberlain 56
OtherBooks . . . . . . . . . 60

ih THE FOUNDATION
FLE FOR ECONOMIC EDUCATION, INC.

Irvington-on-Hudson, ‘New York



===== PAGE 2 =====

eZ
/[ MAXIMUM RETURN

A | on your investment with SAFETY, through
E progressive, yet conservative manage-
ment —plus insurance on each account.

FEDERAL | AVAILABILITY |

Offers | | LEGAL INVESTMENT

for trust funds.

Savings
Investors

PROMPTNESS

in all transactions assured by use of

Air Mail. (We pay postage both ways). -

o
4/ RESOURCES OVER ONE
Current i. QUARTER BILLION DOLLARS

Rate

“LET'S GET ACQUAINTED"— » RES E R V ES over $24 million.
Write today for this booklet

and financial statement, to: Lo ’
COAST FEDERAL SAVINGS - 4 VA R | ETY
DEPARTMENT H of accounts, Individual, Joint, Trust and

9th and HILL

< C ration.
LOS ANGELES 14, CALIF. Ly, Corpora

Member—Federal Home Loan Bank—Federal Savings and Loan Insurance Corp.

const FEDERAL SAVINGS |

JOE CRAIL, PRESIDENT « N


===== PAGE 3 =====

Trouble at the money well

HOSE who regard Washington the money it uses—the pockets of

as a bottomless money well the taxpayers. So the next time you
shouldn’t be surprised if they find hear someone say “The government
sand in their dippers some day. The will pay for it”’, make another
sand will come from the bottom of convert for economy. Remind
their own pockets. Because the gov- that man that be is the government
ernment has only one place to get —he pays.

The Timken Roller Bearing Company
Canton 6, Ohio


===== PAGE 4 =====

An unfair burden

You may not have heard of a proposed federal law known as H. R.
8108. But, if it passes, it will be of direct financial benefit to you.
This bill was introduced by Representative Hiestand on June 13,
and referred to the Committee on Post Office and Civil Service. Its
principal provision is set forth in these words: “The Postmaster
General is authorized and directed to ascertain annually the cost of
providing service for fourth-class matter subject to the zone rates
| established for parcel post. Such cost, whether covered by appropria-
tions to the Post Office Department or to other governmental depart-
ments or agencies, shall include all expenses and costs, direct and
indirect of whatever character, ascertainable and chargeable under
sound commercial accounting practices to the performance of the
service. The expenses and costs so ascertained shall include, but not
be limited to, the reasonable value of space provided in Government-
owned buildings, and the use of other properties and facilities, in-
cluding depreciation, maintenance, and custodial costs, contributions
by the Government to support the Civil Service Retirement and
Disability Fund, and payments on account of injuries to employees
and others.” The Interstate Commerce Commission would review
the Postmaster General's findings, and prescribe parcel post rates
sufficient to meet the cost of providing the service.
| All Mr. Hiestand is proposing in this is that the people who use
parcel post and receive the benefits of it pay for what they get—
) instead of depending on everyone else to pay a part of the cost
through tax subsidies. As the Hoover Commission and other bodies
have pointed out, parcel post has been subsidized during most of its
life, and the deficit is a big one. Here's a way to lift an unnecessary
| and unfair burden from the backs of all taxpayers.

Editorial reprinted by permission. From August 6, Write today for an informative free booklet,
1957, Santa Paula, ‘California Daily Chronicle.” “The Truth About Parcel Post.”

The Public Relations Division of

RAILWAY EXPRESS AGENCY, INC.

219 East 42nd Street, New York 17, N. Y.

A PRIVATE ENTERPRISE IN THE PUBLIC SERVICE


===== PAGE 5 =====

FRANK CHODOROV

“MODERN AMERICAN LIBERALISM,” the price we are paying for it in
asserts its acknowledged spokes- moral discontent, in the pursuit of
man, “seems to have been undone spiritual cure-alls, in the obsession
by its own success. . .. So, if the with gadgets, in apathy and bore-
liberal feels impotent, he can con- dom.” By way of elucidation, the
sole himself by reflecting that it is Professor refers to this condition
in large part the impotence that as the ‘homogenization of our
results from victory.” We quote society.”
from an article by Professor Ar- With this indictment many a
thur Schlesinger, Jr., entitled nonliberal — that is, one who holds
“Where Does the Liberal Go From to conservative or libertarian ideas
Here?” that appeared recently in — might agree, although he would
The New York Times Magazine. probably phrase it differently. He
What does the victorious liberal might say that America is suffer-
feel so impotent about? It is the ing from what could be called a
national problem of “spiritual un- security-psychology, a loss of the
employment” —which the Professor spirit of adventure, a lack of ideal-
carefully explains in a profusion ism; and he might add that this is
of words as the low level of cul- a consequence of the liberalistic
tural and spiritual values in Amer- “victory.” The Professor mentions
ica. But, let him state the problem “individual spontaneity’ as some-
in his own inimitable way: thing America needs badly, but he
“Our complacency, our official does not say that this quality is in
piety, our underlying emptiness low supply because under the
and stagnation — all these have the achievement of liberalism the need
effect of a crust settling rather for it has shriveled up.
dismally over our current life. The Well, since a liberal must never
crust plainly smothers deep na- leave a problem unsolved, some-
tional instincts: this is shown by thing must be done to overcome

Mr. Chodorov, worthy opponent of society-by-compulsion, writes from his home in New Jersey.

3 .


===== PAGE 6 =====

4 THE FREEMAN October

the spiritual and moral lack in as the conservative. Now the lib-
America. The article is obviously eral must come to his senses and
directed at the liberal, giving the set his face against the growing
impression that he alone is homogenization of American soci-
equipped for the job. Liberalism ety. He must seek new social in-
is a body of thought, says the Pro- ventions that will give us the bene-
fessor, that has its roots in Jeffer- fits of a mass economy without the
sonian and Jacksonian democracy, cost of a mass culture... The lib-
in the antislavery movement, in eral, in short, must help make
the progressivism of Teddy Roose- America safe again for individual
velt, in the ages of Lincoln and spontaneity.”
Wilson; it did not begin with the
Great Depression. Since it has By Whose Definition?
proven itself so efficacious in solv- Let us accept the Professor's in-
ing the problems of the past, it has gictment of American Society at
the earmarks of a panacea, and face value. The question is, is it
therefore can be applied to the jthin the competence of liberal-
new job of improving “the status jsm to address itself to what he
and growth of the free individual a1) “the fulfillment of the indi-
in the mass society.” This should yjqual in the moral and cultural
be the present concern of the lib- relations of life”? And the answer
eral. to that question calls for a defini-
But, first, the liberal must. rid tion of liberalism, or an under-
himself (the Professor suggests) standing of what it is in reality.
of “his own occasional cockiness Perhaps an approach to the prob-
and self-righteousness, his weak- lem from such understanding
ness for moral and intellectual might put the blame for the con-
dogmatism, when riding high”; dition complained of at the door
and then he must overcome ‘the of liberalism itself.
betrayal of the liberal cause by The Professor does not take time
that tiny minority who deceived out to define liberalism in a clear-
themselves (and others) about the cut fashion; perhaps he believes
beauties of Soviet communism.” that a definition would be superflu-
Continuing in a hortatory manner, ous. Yet one wonders from his use
he asserts that the liberal “has of the word whether it means to
been among the most zealous of him what it does to people who
heresy-hunters, with his own set take their definitions from experi-
of snuffling orthodoxies and petty ence. For instance, he says in his
taboos — almost as bad, at times, article that the liberal “must re-


===== PAGE 7 =====

1957 LIBERALISM TAKES STOCK 5

cover his deeper roots in the Amer- that transcended human action, in-
ican cultural tradition — in Whit- cluding legislative action. How any
man, Emerson, Thoreau, Melville, modern liberal can claim kinship
William and Henry James.” He with Thoreau defies understand-
gives the impression that these ing; can the Professor, for in-
men were liberals. Well, they were, stance, subscribe to Thoreau’s dic-
but anyone familiar with their tum (in his Civil Disobedience)
writings would hardly class them that “that government governs
with those who now call themselves best which governs not at all”?
liberals. As a whole, these men had
no faith in mass action, were dead Roofed in Socialism
set against the idea that man can Modern liberalism, judging only
be improved by political coercion, from what its devotees advocate
and were decidedly antistatist in and do, has no connection with the
their views. liberalism of the nineteenth cen-
Those who now call themselves tury. It has its roots most decid-
liberals have shown by their pro- edly in populism and socialism.
grams and their attitudes that The appropriation of the word lib-
they are for those things that these eral by the advocates of interven-
men opposed. William James tionism and egalitarianism began
sneered at society. Emerson was a in the 1920’s — not before — and
transcendentalist, meaning that he was authenticated by the New
believed in the existence of forces Deal. The great “victory” to which

THE

y 0 OCTOBER 1957 eo Vol. 7, No. 10

1°
I ( Ol ] | dl | Additional copies, postpaid to The Great Swindle, Those Tricky
one address: Single copy, 50c; 3 Gadgets, Rich hut Restless, What
- for $1.00; 25 or more, 20c each. Is the Nationa! Debt? and What
Permission is hereby granted to price Security? Any article wil
anyone to reprint any article in e supplied in reprint form 1
A MONTHLY JOURNAL whole or in part (providing cus- there are enough inquiries to

OF IDEAS ON LIBERTY tomary credit is given), except justify the cost of printing.

’

The Freeman is published monthly by the Foundation for Economic Education, inc., lrvington-on-
Hudson, N. Y. Anyone may receive the journal regularly upon written request; an annual subscription
donation of $5.00 or more is a suggestion—not a requirement.

Accepted as controlled circutation publication at irvington, N. Y. with additional entry at New
© York, N. Y. Copyright 1957, The Foundation for Economic Education, inc. Printed in U. S. A.


===== PAGE 8 =====

6 : THE FREEMAN October

the Professor alludes with obvious living wage, a shirt on one’s back,
satisfaction is the establishment and a roof over one’s head” re-
of a polity of interventionism; the sulted from the interventions, reg-
Professor calls it a “mixed econ- ulations, and controls of industry
omy.” Liberalism hailed the ad- which the liberals, with the aid of
vent of the tax-and-spend pro- practical politicians, managed to
gram; it has always plugged for institute. It is not labor plus raw
government regulation of industry, materials plus capital that pro-
for social security “insurance,” for duces economic goods; it is ideol-
public housing, for higher income ogy plus political power.
taxes, for farm subsidies, for fed- Now is the time, the Professor
eral control of education, for laws says, for liberalism to “shift its
compelling compliance with its own focus from economics and politics
code of morals, for the centraliza- to the general style and quality of
tion of power and the immobiliza- our civilization.” But, if liberal-
tion of local government. In short, ism gives up on its political pro-
liberalism is a synonym for Big gram, what means will it use for
Government. That’s all liberalism the new job at hand? The motive
is or ever was, in the modern sense. power of all liberal programs is
Indeed, the Professor waxes al- coercion, and to abandon it would
most lyrical in describing what just about dismantle the entire
“we’’— the liberals — have done in ideology.
-the economic field, with govern-
ment coercion, of course. “We have Morals and Culture
...achieved a steadily rising na- The Professor seems to sense
tional output and something ap- the inadequacy of collective power
proaching full employment.” No in the fields of morals and culture,
doubt he expects the reader to for he says: “This is not an as-
know how “we” accomplished all signment which can be discharged
this, for he fails to go into detail. by an interdisciplinary commission
or an interfaith committee or be
Credit Political Power subsidized by a foundation. It can
If the matter were brought up, only be the product... of a large
he would most likely deny that pri- and mysterious intellectual proc-
vate enterprise had anything to do ess, carried on by many minds, but
with “rising national output” or with each communing principally
that the more intensive use of cap- with itself.” Here we have a
ital accounted for increasing em-. thought that approaches the lib-
ployment. “A job, a square meal, a eralism of the nineteenth century,


===== PAGE 9 =====

1957 LIBERALISM TAKES STOCK 7

to the effect that it is through the tected from the exigencies of life,
self-improvement of the individual even from the consequences of his
that society is improved, and that own failings? Take a dog from the
the best society can do for the in- country, where he has been accus-
dividual is to let him alone. But, tomed to improving his menu by
is the latter-day liberal willing to foraging, put him into the parlor,
let anybody alone? If he renounces feed him from the can, and what
the doctrine of compulsory envi- kind of dog will you have? Not a
ronmental conditioning, what is self-reliant one, not one given to
left of his ideology? adventure, but a nice, flabby pet.
If there has been a lowering of In like manner, a regime that
moral and cultural standards, per- promises the warmth, comfort, and
haps the cause is to be found in security of the prenatal state is
liberalism itself. By the Profes- likely to induce an infantile atti-
sor’s admission, the downgrading tude in a people.
took place while liberals were con- Before liberalism came along,
centrating on the economic prob- the young man embarking on a
lem; was this coincidental or con- career looked for a “chance to

sequential ? make good,” contemplated going
} into business for himself, and was
“Duty of Society” sure he had the future by the tail.

A cardinal tenet of liberalistic Today, thanks to liberalistic re-
faith is that it is the duty of so- forms, he evaluates his job not so
ciety to look after the individual, much on its possibilities as on its
whether he wants such coddling or promise of security. Old age does
not. Its interventionist program not concern him because that is a
centers around that tenet. Upon problem of government; even the
it rests not only the argument for prospect of unemployment is no
domestic handouts, but also the spur to ambition when one knows
idea that the “underprivileged” that a handout will keep the wolf
peoples of the world must be away. If the American spirit has
brought up to par by generous lar- suffered a decline, to what extent
gesse. Everybody can be made com- is this due to liberalism?
fortable and happy by government :
dispensation, particularly when the Individual Responsibility
job is placed in the hands of quali- The keystone of any code of
fied liberals. That’s axiomatic. morals is a sense of responsibility;

But, what is the effect on the animals have no such sense and
spirit of the person who is pro- therefore are amoral. If American


===== PAGE 10 =====

8 THE FREEMAN October

morals have slipped a cog or two, all, even by force. But, to accom-
as the Professor intimates, can we plish this end it is necessary to
not look for cause to the attitude lower the standards of education
of irresponsibility induced by lib- to the capacity of the mass-mind,
eralistic legislation? First of all, to equate education with skill in
cradle-to-grave protection eases up handicrafts, to drop courses that
on one’s sense of responsibility to only the better equipped minds can
oneself. The relinquishment of that encompass. The liberal is convinced
obligation makes the acceptance of that it is better for all to have a
handouts quite moral. As for one’s little education than that a few
responsibility to one’s fellow man, should attain heights beyond the
the charitable impulse is done reach of most. If the liberals are
away with by an easy shift to the to concern themselves with raising
broad shoulders of government. American culture, it would be nec-
- Finally, when the law becomes the essary for them to reverse them-
guide of all human behavior, there selves. They would have to create
is no call for ideals or absolutes by a market for Milton, Shakespeare,
which one must chart his course. Plato, Beethoven, Bach, and the
Perhaps this point of view is be- like, and let those whose utmost
yond the mark, for it seems that limit is jazz, the comics, and four-
when the liberal talks of morals he letter words shift for ‘themselves

does not mean behavior measured without a college degree.
by absolute standards, but be- All in all, the Professor’s adju-
havior consistent with the dicta of ration to liberals that they do some-
the mass, as recorded in statutes. thing about improving American
morals and culture is contradic-
tory, to say the least; they could
When the Professor talks about not do anything along these lines
culture — which he says has de- without renouncing liberalism.
clined — does he mean the culture Nevertheless, his concern with the
of the mass or the culture of the matter is in itself a promise; per-
individual? Liberalism has con- haps those who have been flirting
sistently idealized the mass-mind with liberalism will be prompted
and denigrated personal excellence. to do some solid thinking as a re-
Thus, it has worked indefatigably sult of his pointing up the prob-
for the extension of education to lem, and will pass up the ideology.
) ® eo ©

The Mass or the Man


===== PAGE 11 =====

Je
a .
——

Le

LEO WOLMAN — “= — R
a LA AB 0 X i

EET \ gouT
ET oA Vf

must be something lack- with it, how they manage their in-
ing in research and writing on ternal affairs, and what relations
American labor problems when the exist between members and officials
voluminous literature on this sub- of a union.

ject failed to warn intelligent and This gap is not due to lack of
literate Americans of what an in- writing and investigation. There
vestigation of the behavior of labor are so many books that to collect
unions would show. This certainly a labor library nowadays is a con-
is one conclusion that can be drawn. siderable and expensive undertak-
from the shock of surprise which ing. Much money is also available
has greeted the revelations of the for research. But the trouble seems
McClellan committee. For here is to be that authors and investiga-
a popular movement, some 18 mil- tors shy away from examining
lion strong, which for more than unions as working institutions, as
25 years has been the beneficiary the collectors and users of eco-
of invaluable concessions from the nomic and political power. Instead,
executive, legislative, and judicial they treat them as abstractions, as
branches of the federal government one of the leading instruments or
— not to speak of what rights and tools of the Welfare State. They
powers it derived at the same time are, consequently, not concerned
from state and local governments. with what unions do or how they
Yet, at the close of this critical conduct their affairs, but with the
period, there is nothing in the functions they are alleged to per-
available labor literature which de- form in replacing disorder with
scribes realistically and accurately order in the labor market and in
how unions operate, how they ac- equalizing bargaining power by
cumulate power and what they do substituting collective for indi-

Dr. Wolman, Professor of Economics at Columbia University, is an eminent authority in the
field of labor relations.

9


===== PAGE 12 =====

10 THE FREEMAN October

vidual action. The idea seems to be ployees who were unwilling to join
that so long as.unions undertake unions of their basic constitutional
to practice collective bargaining, rights. Anyone who has read the
which is the supreme goal of pub- Webbs would be hard put to find
lic policy, everything they do in in their writings any material
pursuing that goal is above sus- relevant to the question before the

picion, reproach, or inquiry. Court in the Hanson case. All the
Webbs were saying in their trea-
A Wrong Impression tises — Industrial Democracy and

This is, of course, a dangerous - History of Trade Unionism, pub-
condition. For it means not only lished in the 1890’s —was that
that the public is misinformed trade unionism was a good thing
about one of the most important Which deserved public support and
institutions of these times but that legislative sanction. There was cer-
professionals look to such writing tainly nothing in the Webbs that
as the authority for their conclu- had the remotest connection with
sions and decisions. Only last year, the long history of governmental
Mr. Justice Douglas, writing the policy toward railroad labor rela-
opinion of the U.S. Supreme Court tions, the rise to power of the non-
in the Hanson case, which upheld operating railway unions, the man-
the constitutionality of the compul- ner in which they have used their
sory membership provision of the power, and the story of strikes and
Railway Labor Act of 1951, ap- Violence on the railroads in the
pealed to such authorities in sup- past 15 years.

ort of the Court’s opinion. “One _
Fla have to be blind to history,” Fresh Approach Needed
he wrote, “to assert that trade Obviously, what we all need is a
unionism did not enhance and more modern literature of trade
strengthen the right to work. See unionism — one which faces, and
Webb, History of Trade Unionism; = does not evade, the issues of the
Gregory, Labor and the Law.” concentration and abuse of power.

Now, putting aside the ambigui- It is encouraging that new writing
ties attached to the phrase, “right of the past several years has begun
to work,” as used above, the Su- to address itself to long-neglected
preme Court in the Hanson case economic and political problems of
was faced with a simple question: organized labor. The Impact of the
whether an act of Congress legal- Union,’ a series of essays by eco-
izing compulsory membership on nomic theorists on the economic
the railroads deprived railroad em- . ‘New York: Harcourt, Brace and Co.


===== PAGE 13 =====

1957 WHAT TO READ ABOUT LABOR 11

effects of labor organization, deals the heart of the issue by saying:
with the problem of whether ‘Property rights are human
unions raise the material standard rights, and nothing else.” Concern-
of living, and denies the affirma- ing voluntary associations he
tive answer which had long been writes: “Voluntary associations
taken for granted. This was fol- create insoluble problems of prin-
lowed by F. A. Harper's little book, ciple only in unfree societies, or in
Why Wages Rise,” a model of sim- free societies which are on the way
plicity and clarity, which sets to becoming unfree....” Consider-
forth the story of the rise in wages ing the trade union as a form of
next to the changing strength of voluntary association he holds that
trade unionism during a long span ideally, as opposed to fact, “the
of American history, and finds no trade union enjoys a status no dif-
significant relation between the ferent from that occupied by any
two. other private association,” and
that “violent, coercive, or fraudu-
lent acts, in the theory of the free
The latest book in this proposed society, are as vicious and anti-
modern library of unionism is by social when performed by trade
Sylvester Petro, Professor of Law, unions as they are when committed
New York University School of py the Ku Klux Klan.” Moving
Law. The title of his book is The
Labor Policy of the Free Society
(New York: Ronald Press Com-
pany. 339 pp. Indexed. $5.00). He
approaches the problems of labor
law through their relation to a
system of society and in the proc-
ess deduces standards of conduct
and principles of law. Being a man =v
of perception, conviction, and cour- law to engage mn violence. .
age, he writes about questions Every believer in a free society
which most people are, or should and serious students of the Amer-
be, thinking about today. ican scene owe it to themselves to

Discussing property rights and study Professor Petro’s book so
human rights, he goes straight to that they may weigh the argu-
ments and assess the supporting

Irvington-on-Hudson, N. Y.: Foundation data which drove him to his con-
for Economic Education. $1.50. clusions. o oo 0

Labor Policy for Free Men

then to the present position of
unions in the United States, he
concludes: “The situation, then, in
regard to violent interference by
unions, is this: unions continue to
have today, despite the existence
of clear legislative prohibition, a
special privilege under national


===== PAGE 14 =====

© "Dr. ‘Petro, Professor of Law at New York |

: CO 1 HE ANTITRUST LAWS are com-
i monly thought to be the insti-
; () | tutions that distinguish the eco-
©} nomic system of the United States
Po } :i from the rest of the non-Soviet
1 + world. But for these laws, it is
fo iid) | said, we should be plagued with
Pe J V = © cartelization as in Great Britain,
| oo 1 Germany, or France. Many believe,
in short, that the antitrust laws

oo are responsible for our having a
IE . as _ I competitive society.
] : {

Preserving competition might
have been the objective about 1890
when the basic act was passed. But

 Prserve certainly for the past generation
pb the antitrust laws have not func-

i tioned to that end. Rather than

Nn preserve, they have through ques-

; i tionable interpretation and admin-
Compe i ion i istration in fact impaired compe-

! tition, by subsidizing and preserv-
Sd ing inefficient competitors.

BN RO EES i ol By competition, I refer to a sit-
ER A ~~... 1 uation that exists when the basic
“°° -7i rules of the free society are ob-

EE served — when everyone possesses
7 7.1 the basic rights of private property
i and freedom of contract. Competi-
Cl tion is not a mode of conduct that
anyone has to promote institution-

“SYLVESTER PETRO"

University School of Law, is author of num- ally. It develops naturally and nec-
-erous articles and books, the most recent = “i essarily among persons who are
- being “The Labor Policy of the Free Society” . fe :

Pad . N REE > 1 “

-(New York: Ronald Press, 1957). This article RA free to pursue their own Hicrests
is a compressed transcript from an informal | Whatever one’s personal interest
_ seminar discussion at FEE, summer, 1857." } or objective may be — businessman,

. a sculptor, or preacher — the conse-
quence of pursuing it puts him in
PS competition with all who share

12


===== PAGE 15 =====

1957 DO ANTITRUST LAWS PRESERVE COMPETITION ? 13

that objective. That being the case, seller or manufacturer of certain
preoccupation with promoting goods and a retailer, providing for
competition is at best a diversion a specific resale price, then all pur-
of effort which could have been chasers of these goods with notice
used to protect private property of the main contract are bound to
and freedom of contract. My thesis observe the price set in that main
is that we have erred in the formu- contract. These state Fair Trade
lation and application of the anti- laws all grew out of what I believe
trust laws of the United States. to be unfortunate decisions under
the Sherman Act prohibiting.a re-
‘sale price maintenance contract be-
What are these laws? The first tween a manufacturer and a re-
is the Sherman Act of 1890. This tailer.
law makes every contract or com- Though I see no violation of
bination in restraint of trade and freedom of contract if a retailer is
every conspiracy to monopolize the willing to sell at the resale price
trade or commerce of the United stipulated by the manufacturer,
States a misdemeanor. the Supreme Court thought re-
Next came the Clayton Act in straint of trade was involved and
1914, declaring unlawful specific held such resale price maintenance
types of contract, such as a tying contracts unlawful. Conditions in
agreement, or an exclusive sales the 1933 depression prompted
contract, when the result may be many states to pass Fair Trade
to lessen competition or tend to laws, and Congress suitably
create a monopoly. The Clayton amended the Sherman Act to vali-
Act was intended to clarify or date such state laws. But these
make concrete the general pro- laws now go much further than
scriptions of the Sherman Act. legitimatizing a reasonable con-
Usually included among the an- tract between a manufacturer and
titrust laws is the Federal Trade a retailer; they enable that manu-
~ Commission Act which broadly facturer and retailer to fix prices
states that unfair methods of com- for all persons who come into pos-
petition shall be subject to prose- session of the goods in question.
cution. : Such binding without consent ap-
Though Fair Trade laws are pears to violate the principle of
laws of particular states, they also freedom of contract —a case of
come under the heading of anti- having pushed the Sherman Act to
trust laws. All provide that when reach an anticompetitive result.
a contract is made between the . The Robinson-Patman Act of

A List of the Laws


===== PAGE 16 =====

14 THE FREEMAN October

1936 is the last of the antitrust from a supposed charter of eco-
laws worth noting here. This act, nomic liberty into a demagogic on-
in general, provides that the price slaught against large and success-
— including such things as adver- ful business with a kind of vote-
tising allowances or brokerage fees buying subsidy, not for small busi-
— for goods of like grade and qual- ness, but for inefficient business.
ity must be the same to all pur- Both historically and doctri-
chasers, subject to these qualifica- nally this process can be traced to
tions: (1) A price discrimination a famous case involving Messrs.
is not unlawful if it can be dem- Hill and Harriman — the Northern
onstrated that it has no tendency Securities case. Hill and Harri-
to limit competition or create a man, after what some people called
monopoly. (2) If the seller can a titanic financial war, decided
demonstrate that his costs of sell- that it would be to their advantage
ing are lower to buyer A than to if they merged a couple of rail-
buyer B, then he may charge A a roads running along the northern
proportionally lower price. (3) A tier of states out West. The rail-
seller may discriminate in favor roads were the Great Northern and
of buyer A if he can show that he the Northern Pacific. The United
had to lower his price in that in- States sued under the Sherman
stance to meet in good faith the Act, charging that this was a vio-
offer of a competing seller. Like lation of both Sections 1 and 2 of
the Clayton Act, the Robinson- that Act—a combination in re-
Patman Act was designed to be straint of trade, and an attempt to
specific concerning one of the gen- monopolize a certain portion of the
eral objectives of the Sherman trade or commerce in the area of

Act. : the United States that these rail-
LL roads covered. The decision was
The Northern Securities Case close. A majority of one held that

On the basis of this brief out- ‘the holding company violated the
line of the various antitrust laws, antitrust act. Justice Harlan,
let us proceed to examine how grandfather of the present Justice
these laws have been interpreted Harlan, reasoned for the majority
and used. I mentioned earlier that along these lines: In prohibiting
one consequence of antitrust action combinations in restraint of trade,
has been to preserve inefficient what the Sherman Act intended
competitors to the impairment of was to outlaw any impairment of
competition. In other words, the competition. Though these com-
- antitrust laws have been perverted panies did not compete for 74 per


===== PAGE 17 =====

1957 DO ANTITRUST LAWS PRESERVE COMPETITION ? 15

cent of their business, there was two railroads cannot merge be-
an overlap of 26 per cent; and cause they compete for 26 per cent
when they decided to merge, that of their business, one must say that
26 per cent was destroyed. There- two corner groceries who compete
fore, there was a restraint of trade for 26 per cent of their business
within the meaning of the Sher- cannot merge. It would be the

man Act. same for other persons. Further-
} more, by this case the Court is es-
Holmes Was Right tablishing a precedent to the effect

Justice Holmes, dissenting, rea- that if one of these persons should
soned from the fact that the Act buy out the other, he is violating
does not say that any reduction in the law. Without realizing if,
the number of competitors is a Holmes said, the Court majority
misdemeanor; it says that a com- is construing the Sherman Act as
bination in restraint of trade is a destructive of one of the leading
misdemeanor. He argued that since principles of society in this coun-
the words “in restraint of trade’ try, that is the free, inalienable
were used, the Court ought to fol- right of voluntary association.
low the meaning generally given I believe Holmes was right in
those words under common law — this case. He was right both as a
the classical theory of interpreta- technical legal analyst and in his
tion. He was right. The assump- forebodings. Establish the premise
tion is, and has to be — except in that voluntary mergers are bad,
the case of deliberate specification and you have a basis for challeng-
to the contrary on the part of Con- ing normal, common business pro-
gress — that the words of any stat- cedure in an economy based on
ute are used in the sense of exist- freedom of contract. This is the
ing law. Holmes went into an ex- daily fare of business and of capi-
haustive survey of the relevant tal. If a business feels that its af-
common law and pointed out that fairs may be more rational if it
there was nothing whatsoever in combines with another firm, it
its history to imply that such a merges or acquires assets or stocks
merger is a restraint of trade. of another corporation. And yet,

Holmes further said in effect: each time this perfectly normal
The Court must remember that thing is done, the participants are
the rule it is making in this case in danger of antitrust prosecution.
is a rule that must be applied One must recognize the real na-
equally to all persons engaged in ture of the hidden menace here.
mergers. If it be said that these The fact is that not every merger


===== PAGE 18 =====

16 " THE FREEMAN October

can be prosecuted. It is a physical What is to happen to a country
impossibility. A market economy in which success in the market
could not function if every such place is to be a signal for prosecu-
action were prosecuted. However, tion by politicians anxious to curry
from the point of view of legal sci- public favor? It is a serious ques-
ence, the resulting situation is very tion, prompted by the situation
bad. Instead of having a universal which prevails today. Danger of
rule of law applicable equally to antitrust prosecution .threatens
all members of society in free and any firm that manages to grow
open competition, what we have is and to out-produce its competitors.
selective prosecution. It would really be a comfort to
What is the basis of selection? know that each business was do-
There isn’t. any legal basis for se- ing its utmost to get as much of
lection, and if you haven't a legal the market as it possibly could,
nonarbitrary basis for selection, that each firm was striving to put
what is your basis going to be? out the greatest possible produc-
The answer is perfectly clear. It is tion at the lowest possible cost,
going to be political and ideologi- that, in short, it was being di-
cal. And these two things have rected in accordance with the pub-
tended to merge inextricably over lic good. But because of so many
the last 40 years or so. interventionist devices, the meas-
There is a great preoccupation uring sticks provided by a free
with timing of antitrust prosecu- market are no longer available.
tions; suits are brought against You can’t be sure that a move or a
mergers whenever the Democrats, failure to move on the part of a
or the Republicans, want to make business is dictated by economic
- political hay by showing how considerations in response to the
rough they are on business. Add desires of the people.
to the mix the Marxian theory that
business is bound inevitably to get Prosecutions for Price Fixing
bigger and bigger until we are all Further insight into the absurd-
at the mercy of the exploiting mo- ities and frustrations of the anti-
nopolists, and you have two pri- trust laws is afforded by review of
mary qualifications for antitrust the prosecutions under the Sher-
prosecution. First of all, it has to man Act for price fixing. The
be a big business, big enough to famous Morton Salt case dealt
scare people. And secondly, the oc- with that issue. And there have
casion has to be politically propi- been a great many others — per-
tious. haps 30 or 40 before the Supreme


===== PAGE 19 =====

1957 DO ANTITRUST LAWS PRESERVE COMPETITION ? 17

Court. But what on earth can be itself, the basic antitrust law, has
the consequence of a judgment that been and is being used, not to pro-
a price-fixing agreement is unlaw- mote and maintain competition,
ful? What can anyone do about it but to discourage the abler firms
if 20 firms have agreed to charge from operating to the limit of
a certain price for a product? As- their abilities. Add to this the
suming that it is a homogeneous Fair Trade and the Robinson-Pat-
product, how can 20 different firms man designs to handicap the larger
be expected to sell it at 20 different more efficient merchandisers, and
prices? If A charges 98 cents, B a there is no escaping the conclusion
dollar, and Z $1.26, how is Z to that the so-called antitrust laws
gain a sale? are in fact anticompetitive and
The point is that such prosecu- antisocial. They are pushing to-
tions are nothing but ceremonial ward a rigid, inflexible, industrial
political promotions of the party structure which interferes with
line: “Watch those businessmen!” the free play of market forces.
We are great at berating the busi-
nessman for doing what is as natu- Why the Market Works
ral to him as breathing. The func- I have already mentioned some
tion of the market is to find the important requirements for the
right price, to bring competing functioning of a free society — for
goods toward the same price, and the free play of market forces. The
to screen out those producers who right to private property is one.
can’t meet the price. Freedom of contract is another.
The Cement Institute case illus- Beyond these is a need for better
trates the point. All over the coun- understanding of the market proc-
try, cement manufacturers were ess — more faith in it and less fear
submitting bids that were identi- of it.
cal to five decimal places; and the The market works because of
Supreme Court thought this was man’s desire to make a profit, to
inherently incredible without some get more out than he puts in. Cap-
evil conspiracy. But if this seems ital. formation and use rests on
incredible, try to sell cement at as this premise. People act in order
much as a fraction of a cent higher to better themselves, increase their
than competitors are charging. profits, decrease their losses. And
When cement prices begin showing the best opportunity for profit lies
variations, it will be time to look in the production of things others
for collusion and conspiracy. want — in service to others. This
So we find that the Sherman Act means that the profit motive is


===== PAGE 20 =====

18 " THE FREEMAN October

morally as well as economically greater the number of competitors,
sound. the better.

The free play of market forces A free competitive market is not
also calls for freedom to trade. a condition which requires for its
Free trade policies are the most existence large numbers of pro-
effective and successful of all pos- ducers. It only requires freedom
sible antitrust actions. Free trade on the part of all people to produce
is the best kind of curb on all if and when they wish. If the un-
forms of government intervention, likely situation should exist that
including subsidies to farmers, in a certain line of production a
monetary tricks, or any other in- single firm could most economi-
terference you could name. One of cally satisfy the whole market,
the grim features of our day is the then, of course, you would have a
great preoccupation with interna- condition which might be called
tional peace and harmony while at monopoly. But this is not the as-
the same time we have the erec- pect of monopoly that people fear.
tion of all sorts of trade barriers. What really disturbs people about

monopoly is not that a single per-
How Many Competitors? son or firm has control over a com-

On the domestic front we glory modity but that force, compulsion,
in the productive accomplishments or special privilege has been used
of the industrial revolution and to keep other people out.
freely acknowledge the advantages
of large scale mass production. But
we seem bound to try to stop the Some history is useful here. Mo-
spreading of such advantages nopoly became a problem in the
when it-comes to distribution and Anglo-American legal system ow-
retailing of these goods and serv- ing to its origin. Monopoly origi-
ices. Our politicians count noses nated in crown grants to certain
and find more small retailers than people of exclusive privileges
chain store operators. So they en- maintained by the force of gov-
act Fair Trade laws and Robinson- ernment. Queen Elizabeth granted
Patman acts deliberately designed a monopoly in salt, playing cards,
as barriers to the development of and a number of other things. She
mass distribution methods which did this only because she was dis-
could mean better living for all as satisfied with the fact that Parlia-
consumers. Perhaps this simply re- ment controlled the purse strings
flects a general fear of bigness in in England. Parliament had in-
. business — a feeling that the sisted on the exclusive power to

The Origin of Monopoly


===== PAGE 21 =====

1957 DO ANTITRUST LAWS PRESERVE COMPETITION ? 19

tax, but Queen Elizabeth had cer- a market as one can have in this
tain ends and aims of her own, imperfect market economy. Unlike
and the money needed to attain some other industries, this one is
them came from the persons or not plagued by an overweeningly
groups to whom monopoly powers jealous attitude toward patents.
were granted. Anyone can get into it. But more
It’s very plain that this situation are getting out than getting in. Is
has nothing to do with the free something drastically wrong in
market, which grants no exclusive that industry in the sense that a
franchise. But the market does not social harm is being done? It seems
preclude a monopoly. In fact, mo- to me, if you are fair about it, you
nopoly in the purely descriptive would have to say that the big
sense and the right of private three in the automotive industry
property are the same thing. Each are simply better public servants
of us is a monopolist. We are in in this line than anyone else.
exclusive control of our person and There’s quite a difference be-
all that we legitimately create. If tween monopoly in the descriptive
we legitimately create the best and sense of being the only producer,
most efficient organization, so pro- and in the exploitative sense of us-
ductive and so efficient that no one ing force or state aid to exclude
else can compete, we have a mo- competition. The latter is some-
nopoly in that descriptive sense. thing that free men should fear.
But there is no social harm done And they should know that the
as long as everyone else has an government itself is apt to be the
equal right to get into production. culprit behind genuinely antisocial
There can’t be any social harm be- monopoly.
cause the social interest lies in the
most efficient production of goods. A Useful Antitrust Action
Monopoly in this sense means only I want to make clear that one
that society has achieved that end. phase of antitrust policy is in my
One person, one firm, in a free opinion of real social utility. That
competitive market, has proved to is the phase concerned with sec-
be more efficient than any other. ondary boycotts and other preda-
Anyone else is free to produce, if tory oppressive practices which I
he thinks he can compete. consider harmful interferences
We have a pretty good example with the free market. Let us as-
of that sort of thing in the auto- sume that 30 or 40 retailers, with
mobile industry in this country. a common supplier, have an ar-
The industry operates in as free rangement to avoid competing and


===== PAGE 22 =====

20 THE FREEMAN October

to split up territories. Along comes people in significantly similar legal
an interloper, a true competitor, circumstances have to be treated
who wants to buy from the same the same way. Politics are ex-
supplier. If the other retailers cluded.
then threaten to quit buying un- A long step toward preserving
less the supplier refuses to deal or restoring competition in this
with the interloper, they are held country could be taken by abolition
to be in violation of the antitrust of the discriminatory, anticapital-
laws — and I think rightly so. istic, progressive income tax,
Though the market eventually which skims off the cream of the
would rectify Such a situation, risk capital — takes the ammuni-
substantial harm could be done to tion away from the competitors.
the interloper in the interim. Also, They can’t compete without ammu-
such collusion might lead to a gen- nition, any more than boxers can
erally cartelized economy, to every- perform with their hands tied be-
one’s detriment. So I have no ob- hind their backs. So my platform
jections to antitrust laws as a curb would include a plank for repeal
on secondary boycotts and other of the discriminatory tax laws.
oppressive action, though I'd pre- Another plank in my platform
fer that such abusive practices be to preserve competition in the
subject to prosecution under com- United States would involve re-
mon law rather than special stat- peal of the laws which have
ute law. granted so many special privileges
Actually, secondary boycotts are and exemptions to labor unions
rarely used by businessmen, the and other pressure groups. In this,
most flagrant offenders being the I take comfort from the fact that
trade unions. However, the unions the greatest of all legal scholars,
seem to be immune to prosecution Sir Henry Maine, drew the same
under that single phase of anti- conclusion — an elaborate intricate
trust policy that could be socially code of laws is a sign, not of a

useful. sophisticated society, but of a
N primitive society. English law, un-
A Positive Program til toward the end of the eight-

If T were responsible for pre- eenth century, was characterized
serving competition in the United by a practically solid network of
States, I should not turn to the laws regulating the most intimate
antitrust laws for help. The com- affairs, especially when they were
mon law affords all the legal action economic affairs. There were laws
needed, and its great merit is that fixing the amount of flour in bread.


===== PAGE 23 =====

1957 DO ANTITRUST LAWS PRESERVE COMPETITION ? 21

A wheelwright couldn’t be a wain- concerned with spreading ideas of
wright. There were laws against freedom; let the actual, detailed
forestalling, engrossing, and re- measures take care of themselves,
grating, and so on, and on and on. as they inevitably will. The ideas
Someone remarked that forward- have to come first. The most im-
looking men toward the end of the portant thing to a society is that
eighteenth century and the begin- its idea factories are really well
ning of the nineteenth century run. The scholars, writers, and
were spending most of their time philosophers of a society have to
wiping laws off the books and, as be good or there is really little
you know, the impetus toward that hope. How does one bring about a
very helpful form of human con- change in the idea factories? I
duct was supplied by laissez faire have no answer except that hard

theory. one of slow self-discipline, more
rigorous and objective pursuit of

Mankind's Eternal Task truth; all the things that take for-
All people interested in having ever. This is mankind’s eternal
a free society, I think, should be task. ® 00

| peas @ BIRERTY } The Survival of Ideas

MOST INTELLIGENT PEOPLE are now beginning to realize that democracy
is declining and peaceful society disintegrating with hopes of world
peace receding. They imagine that the solution lies in finding some
political leader who can lead us to salvation. They forget that the one
group of the community which can never save us is that which com-
prises the politicians for, in a democracy, they have to follow public
opinion or accept defeat at the polls. The survival of liberty and
democracy does not depend on the survival or the change of govern-
ments. Whether liberty and democracy will remain with us depends
entirely upon the survival of ideas. The socialists grasped this truth
and that was why, in every town and village, they set up their cells of
education to cultivate the belief in the philosophy of Karl Marx. So
successful have they been that they have almost conquered the world,
for their opponents have never had sufficient understanding of the

problem to offer any opposition.
Hauraki Plains Gazette, New Zealand, February 1, 1957


===== PAGE 24 =====

~~

| The g

i GREAT SWINDLE
{/ — A va rtm pe

p= h

HENRY HAZLITT

YEAR AGO (Newsweek, June 25, savings of the poor by the same

1956) I printed here, under percentage as the incomes and
the above title, a table showing savings of the rich. It falls with
the depreciation, in terms of do- greatest force precisely on the
mestic purchasing power, of the thrifty, on the aged, on those who
currencies of 53 countries in the cannot protect themselves by spec-
ten years from 1946 to 1955. This ulation or by demanding and get-
table had been compiled by Franz ting higher money incomes to com-
Pick. He has now carried it for- pensate for the depreciation of
ward, for the nine-year period the monetary unit.
from January 1948 to December
1956, in the 1957 edition of his Why Inflation?
Currency Yearbook. I present the Why does this swindle go on?
results below, showing the depre- It goes on because governments
ciation of 56 currencies in that wish to spend, partly for arma-
period. ments and in most cases prepon-

It is important to keep this ap- derantly for subsidies and hand-

palling world-wide picture con- outs to various pressure groups,
stantly before our minds. For it but lack the courage to tax as
reminds us that inflation is noth- much as they spend. It goes on, in
ing but a great swindle, and that other words, because governments
this swindle is practiced in vary- wish to buy the votes of some of
ing degrees, sometimes ignorantly . us while concealing from the rest
and sometimes cynically, by nearly of us that those votes are being
every government in the world. bought with our own money. It
This swindle erodes the purchas- goes on because politicians (partly
ing power of everybody’s income through the second- or third-hand
and the purchasing power of every- influence of the theories of the
body’s savings. It is a concealed late Lord Keynes) think that this
tax, and the most vicious of all is the way, and the only way, to
taxes. It taxes the incomes and maintain “full employment,” the

22


===== PAGE 25 =====

1957 THE GREAT SWINDLE 23

present-day fetish of the self- CURRENCY SHRINKAGE
styled progressives. It goes on be- Percentage Decline in Purchasing
cause the international gold stand- Power of Monetary Units
ard has been abandoned, because  juuuary 1948 — December 1956
the world’s currencies are essen-

tially paper currencies, adrift Per Cent Per Cent
without an anchor, blown about pominicon 2 Norwegian 33
by every political wind, and at the Egyptian 6 New Zealand 3
s _ Portuguese é Spanis
mercy of every bureaucratic ca Haitian 3 United Kingdom 34
price. And the very governments Swiss 10 Thailand 35
that are inflating profess solemnly Ceylonese n Turkish ; ph
IT CT : Burmese El Salvador
to be “fighting inflation. Through Dutch Antillean 12 Nicaraguan 40
cheap-money policies, or the print- Ecuadorian 13 Mexican 45
ing press, or both, they increase Pakistan 14 Colombian 46
the \v of monev and dit Belgian 15 Uruguayan 48
supply oney Credit ypited States 15 Finnish 49
and affect to deplore the inevit- Indian 15 Icelandic 51
able result. West German 18 Australian 52
. . Venezuelan 19 French 52
The following table is based on 5,5 Kong 23 Japanese 55
official cost-of-living indexes, many Guatemalan 23 Austrian 55
of which understate the real ex- Canadian 25 Peruvian 35
Italian 25 Greek 58
tent of currency debasement. Rus-  yonduran 26 Indonesian 59
sila and its satellite countries are Costa Rican 27 Israel 66
omitted because disparities be- Irish 28 Brazilian 70
c 19y . Malayan 28 Argentine 73
tween actual and “official” price pgpish 29 Taiwan 85
levels are so wide and the statis- Swedish 29 Chilean 93
tics are meaningless. The Ameri- {efterlands 30 Paraguayan 94
. . oll
can dollar, to which so many other | qnian 33 Korean 99

currencies are ostensibly tied, it-

self shows a depreciation of 15 the currencies of Chile, Paraguay,
per cent in the period. The British Bolivia, and Korea, from 93 to
pound sterling, the world’s most 99 per cent. ooo
important trade unit, lost 34 per

cent, the French franc 52 per cent, Newsweek, July 1, 1957

for ample living in 1914 would purchase only one modest meal a month
at current prices in France.
- PAUL L. POIROT, The Pension Idea


===== PAGE 26 =====

EDITOR, the Wall Street Journal: ophy of monetary manipulation as
the means to insure continual pros-
perity through an ever-increasing
expansion of credit and purchasing
media.

Your editorial, “Inflation’s ‘Tricky
Gadgets’ ”’ (June 28), brings to mind
that Andrew D. White in his classic
Fiat Money Inflation in France* re-
marked how “curious it is to note the As it manages to evade responsi-
general reluctance to assign the right bility for its own actions, it sits su-
reason’ for the depreciation of the premely confident, like Sir Galahad
purchasing media used by the French upon his charger, ready to ride forth
people in 1791. to rescue the people from the ma-

. hd chinations of capitalists, upon whom
gaduetsn ale oa the chief blame for the inflation falls.

attempts to counteract the effects of And how will it do this? It will, in
inflation, so the French blamed their a dramatic fashion, institute statutes
inflation on everything under the sun designed to “hold the price line,” all
but the real cause — issuance of bil- the while it continues to pour forth
lions of paper francs by the French more “money.” As these price con-
government. Ours is the result of the trols will result in less goods appear-
issuance of billions of dollars of do- ing in the market place, in order to
mestically irredeemable purchasing assure that all will have equal oppor-
media by our government through tunity to the available goods, it will
the centralized banking system. establish rationing. And when that
leads to black-marketing, it will issue
Draconian edicts to punish the male-
factors. Out of this will accrue to the
government that totalitarian power
which will make freedom here a
mirage of the past.

It is a serious matter to ignore the
real cause, for the perpetrator of the
inflation — the U.S. government — is
forgotten and only occasionally
blamed. But it is the government
which initiated the inflation by tak-
ing the country off the gold standard. Those trusting souls who believe
It is the government which monetizes such is impossible need but recall
its debts... and practices the philos- that out of the French inflation of
—_— . . the 1790’s came the dictatorship of
* Available from the Foundation for Economic

Education, Irvington-on-Hudson, New York; Napoleon Bonaparte.
50 cents. 0. B. JOHANNSEN

Mr. Johannsen, employed in industry, has an avocation of teaching and leading adult discus-

sion groups. This article first appeared in the Wall Street Journal of July 9, 1957, and is
reprinted here by permission. .

24


===== PAGE 27 =====

SAMUEL B. PETTENGILL

HEN I got through Vermont we asked this grand master why
Academy, college, and law he had given so much of his life
school, I played a good deal of to chess.

chess while waiting for clients who He said: “The chessboard is a
were bold enough to let me prac- symbol of life — of all life. The
tice law on them! essence of life is struggle. Take

Chess, as some of you know, is struggle out of chess, or out of
the most difficult of all games. The life, and what is left? In chess I
combinations and permutations on have found happiness.”

the chessboard run into the octil- That was 35 years ago. I have
lions and no man ever has, or ever never forgotten his words and
will, completely master it. have often said to young parents,

Chess ‘‘masters” are relative “Don’t take struggle out of your
only to other players. Neverthe- children’s lives.”
less, they are remarkable men. The instinct of fathers and
One of several I got to know was mothers is to do just that —to
Emmanuel Lasker of Berlin, Ger- make “life easier for my boy than
many, who had been the world it was to me.” It is interesting to
champion for 24 years. He was not note that youth is sounder in this
a mental freak. He had a Ph.D. in matter than age. Youth revels in
mathematics and wrote a pro- competitive sport, whether to do
found book on philosophy. In addi- something better than his fellows,
tion, he was a kind and gentle man or to beat some previous record.
— then in his 60's. Even small children, when they
We got him to come to my home invent games of their own, always
town of South Bend to put on an put struggle into them. Struggle
exhibition match with some 30 is a blessing to be sought for, not
local players. At supper that night, an evil to be avoided.
Mr. Pettengill, noted attorney and author, was formerly a congressman from Indiana. This

article is from an address of May 26, 1957, before the Cum Laude Society of Vermont Academy
at Saxton’s River, Vermont. ]

25


===== PAGE 28 =====

26 ~ THE FREEMAN October

We have met tonight to recog- When young people apply for
nize those who have won the honor their first job, they ask, “When
of a cum laude student. But “hon- will I begin to draw a pension?
ors are silly toys,” unimportant How many coffee breaks in a day?
in themselves, important only as How many paid holidays? How
evidence of something well done. long and frequent are the paid
Those of you who did not win had vacations? And if I work more
the struggle as well as the win- than 40 hours in the 144 hours in
ners — which is the thing that six days, do I get time-and-a-
counts. half ?”

So I congratulate both the win- The young men who ask none
ners and those who tried but did of these questions are sure to get
not win. I know who is going to and hold a job. In fact, such young
get the big rewards of life. men have a golden age ahead of

In recent years, society has them, with less competition than
gone “nuts” on the pusillanimous their kind have ever had — and
cult of “security,” guaranteed by greater rewards.
government; in short, a nation of
parasites. The illusion of the age The Strenuous Life
is that people can vote themselves When I was at Vermont Acad-
rich. It is a superstition that “so- emy, Theodore Roosevelt was
cial security” depends on the President. He attracted national
promises of politicians, not on the attention when he said: “I wish
character, competence, and cour- to preach not the doctrine of ig-
age of men. It is a fable and a noble ease, but the doctrine of the
fraud that the output of society strenuous life.” He said of him-
can be greater than the input of self, “Let me wear out, not rust
individuals. out.” He told young men to hit

It is a universal complaint that the line hard. He told women not
nobody wants to work any more, to shirk their prime function to
or only enough to “get by.” Em- bear children. He said this at a
ployers are frantic for dependable time when any woman who had
employees. Labor unions have the more than two children was con-
laudable desire to improve the sidered subhuman, if not a little
position of their members, but indecent. :
they overplay their hand when Theodore Roosevelt dreamed
they say: “Stretch it out. Take it nobly of his country, and by the
easy. Do no more than enough to fire of his example, lit other fires
stay on the payroll.” in millions of homes. It was said


===== PAGE 29 =====

1957 ENTER INTO LIFE 27

that Washington founded the na- auctions in which rival politicians
tion, Lincoln saved it, and T. R. of both the old parties outbid each
revitalized it. He appealed to the other by opening the door of the
strong side of men as is now done treasury in exchange for votes.

chiefly by marine sergeants and “Come and get it” is the slogan
the coaches of athletics like my as people become the vandals of
old friend, Knute Rockne. their own country and “bread and

“Rock” had no use for “lounge circuses” the formula for political
lizards” or “tea hounds” on a col- advancement.
lege campus. Youth liked that. In the educational field, men like
They flocked to Notre Dame to John Dewey have tried to elimi-
play under Rockne; and when his nate struggle from the classroom.
players were behind at the end of No required subjects! No exami-
the first half, they proceeded to nations! They develop inferiority
pull the game out of the fire be- complexes, rather than the chal-
cause “We can’t let ‘Rock’ down.” lenge to do better. Never punish

a child. Children should be wholly

Italy Becomes a Republic free. And so forth. With the re-

A century ago, Italy was under sult that employers despair be-
foreign rule. It was then that cause “Johnny can’t read and Ma-
Mazzini — or was it his fellow pa- bel can’t spell.”
triot, Garibaldi? — appealed to the So we have cities with few citi-
strong side of men with these zens, but many who wish to share
words: “Young men of Italy, I the blessings of liberty, but shirk
offer you nothing but the water of its burdens.
the streams as your drink. I offer This is not .the spirit of 1776,
you nothing but black bread as nor of the great chess master, nor
your food, and nothing but the of Theodore Roosevelt. America
blue canopy of heaven and the needs a rebirth of “the strenuous
lights of the eternal stars as your life’” and I know I am talking to
covering at night. But if you fol- young men who will take their
low me, young men of Italy, you part in it.

and I will be free!” It was said of those who crossed
They followed — and Italy be- the Appalachians down into the
came a republic! valleys of the Ohio, the Missis-

But today, the general appeal is  sippi, and the Missouri and pushed
to the soft side of men —envy, the frontiers of freedom to the
self-pity, covetousness, class ha- Pacific shore that “the cowards
tred. Our elections have become never started and the weak never


===== PAGE 30 =====

28 THE FREEMAN October

arrived. With no capital save know we have. The great psycholo-
courage and no resource except gist, William James, said the aver-
resourcefulness they built the age person does not put forth
American empire.” more than 10 per cent of his po-
Here are the hundreds of miles tential.

of stone walls of Vermont — every

stone dug from the ground and Whence Came His Strength?

moved to where it now lies by Let me tell you a story of my
ox-power and human muscle alone. great-grandfather, Peter Petten-
We think of the pyramids of gill, who came to Vermont in 1787.
Egypt, and the tens of thousands One time his hired man was chop-
of slaves who dragged the huge ping down trees in the virgin for-
stones across the desert under the est and did not come to the house
whips of their masters. It is my at noon for lunch. My great-grand-
guess that the stone walls of Ver- father went to see what was
mont represent more toil than the wrong. He found that a tree had
pyramids. But the walls were laid fallen on the hired man and killed
by the free choice of free men. him. With nothing but the
“They scorned delights and lived strength of his own powerful body,

laborious days.” Peter lifted the tree off the dead

It is good to have a school for man and carried him to the house.
young men in sight of those stone Whence came his strength to do
walls! that? From the challenge before

Avoid struggle and life becomes him. That tree was never cut into
sterile, vapid, and meaningless. timber or firewood. It lay where
Our mental hospitals are being it fell. Other strong men in the
filled with thousands of neurotics, neighborhood came and tried to
many of whom feel inadequate to lift the tree. They could not. Why?
meet life because they were pro- Because they did not have the in-
tected from taking the bumps in centive that Peter had. Nor could

childhood. Peter himself ever lift the tree
No man was ever greater than again. The incentive was gone.
the difficulties he overcame. Great You have all seen athletes at

difficulties, great men. Small diffi- times ‘play over their heads.”

culties, small men. From struggle Why? Because of the challenge

comes strength — and physical and and its acceptance.

mental health. It is men who have counted
It is only struggle that calls struggle as a blessing who get the

forth hidden powers we do not big rewards of life. As Emerson


===== PAGE 31 =====

1957 ENTER INTO LIFE 29

said, “God keeps an honest ac- all its teachings out of our schools,

count with men.” churches, public affairs, and pri-
The hard surgical cases, where vate life. What our fathers be-

life hangs on a heart beat, do not queathed us is still “the last best

go to the dilettante surgeon. The hope of earth.” Save it for your

tough engineering problem, like boys and girls.

building a bridge across a mighty Remember robust Robert Brown-

river, does not go to the engineer ing: “I count life just a stuff to

who has always looked for the try the soul’s strength on, educe

easy jobs. And the same for law- the man.”

vers and top executives in business. Remember robust Robert Brown-
If at times you feel that you and the old Greeks “who ever with

have not had the same chance that 2a frolic welcome took the thunder

others have, ask yourself what andthesunshine”— the hard hours

chance did Abraham Lincoln have? With the same zest as the pleasant

Remember that “it is not so much ones.

the size of the dog in the fight Remember the poem of the fron-

that counts, but the size of the tier:

fight in the dog.” I dream no dream of a nurse-
maid state

That spoons me out my food.

No, the stout heart sings in its
strife with fate,

You young men face a time of
struggle with an enemy of your
country more dangerous than King

George III in 1776 — the godless For the toil and the sweat are
Caesars of atheistic communism. good.
Face up to it. Lick it. Put it and oo 0

| 10EAE ©N i5tens| Freedom To Develop One’s Own

OF ALL THE INDIVIDUAL RIGHTS which our forefathers handed down in
their legacy to us, none perhaps has been greater nor more fruitful to
our society than the traditional right of every American ...to use and
enjoy his individual freedom; and the incentive to develop to the highest
possible degree his personal creative talents.

IRVING S. ouDS, The Thousand Miles of Lao-Tse


===== PAGE 32 =====

i but Restless

°

(ue is enjoying the greatest Cuba’s President Fulgencio Ba-
prosperity in its history. The tista may or may not be correct
Cubans have an economic boom go- in declaring that the armed revolt
ing which has pushed per capita against his government is entirely
wealth to a new peak, the highest a communist movement. It is cer-
of any tropical agricultural na- tain, however, that if communists
tion in the world. The national are not at the root of the oppo-
budget is in balance for the sec- sition, they at least are feeding it
ond year, the national income is strongly. Their following in Cuba
at an all-time high, foreign capi- has not declined; it has rather ex-
tal is pouring in. And Cuba faces panded as the nation’s economy
the most serious political revolt.it prospered. They are at their
has known in more than a decade. strongest in the eastern end of
The seeming contradiction of the country — center of the present
high prosperity and bitter revolt revolt. And it seems worth noting
may seem slightly remote to Amer- that this is the richest part of
ican Midwesterners, but it has a. Cuba. The western portion, where
direct bearing on their: pocket- revolt has not taken hold, is the
books. For those pocketbooks are poorest.
drained eternally by a federal gov- Whatever the motivation for
ernment which has adopted as its the Cuban unrest, it is-a stark
official philosophy the idea that demonstration of the error of
the world’s backward nations will thinking that we can make every-
immediately settle into ways of thing right in the world by mak-
peace and contentment if only they ing everybody rich. Building steel
can achieve economic security. The mills ‘in India, dams in Iran, or
idea is the whole reason for the factories in Ethiopia will not les-
economic phase of the foreign aid sen by one iota the chances of
program. - communist subversion in those

30


===== PAGE 33 =====

1957 RICH BUT RESTLESS 31

places. Ignorant people are not a leader changing mankind into a
made less ignorant by placing a single pattern.
dollar to their pocket. Basic polit- It is all right with the commu-
ical philosophies are not changed nists if we want to spend ourselves
by running a highway through a bankrupt, fighting them on the
village. It is not the uneducated material level when their own ap-
but the too hastily educated who peal is completely ideological. They
succumb to communism. already know what we should have
The underlying fallacy of the known, and what Cuba should
American economic aid program is show us anew - that prosperity
the belief that the poor are com- cannot put a cork in communism.
munism’s chief dupes. The fact is Our only effective weapon is the
that communists themselves have one we have used the least, the
little use for the poor and the un- appeal to the yearning in every
educated, except in propaganda. person, rich or poor, for liberty as
They recruit their members from an individual.
the educated ignorant, from the With foreign aid, we try to sub-
ranks of the eternal sophomores. stitute dollars for sense. It won’t
Their appeal has two prongs, one work. oo 0
pointing to the scheming oppor-
tunist, the other to the impracti- Editorial from The Indianapolis Star,
cal idealist who visions himself as July 15, 1957.

Revolution Without Reason

THE DANGER TO WHICH THE SUCCESS OF REVOLUTIONS is most exposed,
is that of attempting them before the principles on which they proceed,
and the advantages to result from them, are sufficiently seen and
understood. Almost everything appertaining to the circumstances of
a nation, has been absorbed and confounded under the general and
mysterious word government. Though it avoids taking to its account
the errors it commits, and the mischiefs it occasions, it fails not to
arrogate to itself whatever has the appearance of prosperity. It robs
industry of its honors, by pedantically making itself the cause of its
effects; and purloins from the general character of man, the merits that

appertain to him as a social being.
THOMAS PAINE, The Rights of Man


===== PAGE 34 =====

the SEEN

and the

4 This is a government power plant.

That which can be seen resembles the pri-
vate plant, opposite; the design, construc-
tion, and generating machinery are quite
alike. There are, however, unseen aspects

of this gover t-in-b ss equation

that do not appear in the picture.
THE UNSEEN: straining and penalizing fraud,
e Compulsion used to gather capi- violence, and predation — for
tal for plant’s construction, gov- government does not collect

taxes from itself to finance it-
self.
NO PHOTOGRAPHS can show the in-
juries which compulsion inflicts
or the moral rights that are vio-
® Resulting deficits. lated or the ingenious investments
e Forcible collection of the where- and charities millions of taxpayers
withal from the income of all might have made with these funds
citizens to defray the deficits. had they not been coercively taken
from them. Yet, these unseen re-
lationships between members of
society are as real and as much a
part of the government-in-busi-
* No real ownership by the citi- p55 equation as is the reinforcing
zen of that which his money iqe] in the building.
has bought, because disposal or It’s when the unseen aspects of
sale of his share by him is im- government intervention aren't
possible. comprehended that all our photo-
eo An enterprise that makes no graphs are predestined to be of
contribution toward the proper government enterprises, as in
functions of government — re- Russia.

ernment having no other means
of financing.

e Politically induced low power
rates.

¢ Disregard of freedom of choice
in investing the fruits of one’s
own labor.

32


===== PAGE 35 =====

LEONARD E. READ

NSEEN | .-

This is a private power plant. p
That which can be seen looks like the
government plant, opposite. Visually, it's a
case of tweedledum and tweedledee. There
are, however, unseen aspects of this
private-business equation that do not ap-

pear in the picture.

THE UNSEEN: ing the material and spiritual
welfare of owners and of every-

e Countless producers freely in-
one else concerned.

vesting their saved earnings — }
as freely as they might choose © No one doing unto others that

a can of tomatoes from the which he would not have them
grocer’s shelf. do unto him — in short, the
® (Creative persons as willing part- coen Rule in workaday prac-

ners in the enterprise, possible
only when there is free exchange NO PHOTOGRAPHS can show this
of private property. voluntary cooperation. Yet, these
e Individual ownership, since ' unseen relationships between men
each investor can sell his share are as real as the mighty stacks
if he chooses to do so. that convey the annoying vapors
to the safe care of the four winds.
The unseen is as important to
understand as the seen. It’s when
the unseen of private property,
free market principles are compre-
hended that we head in the direc-
tion of a nonauthoritarian, non-
e Released creative energies and socialistic, free, and progressive
uninhibited exchanges enhane- America. LIC I

e Voluntary capitalism bringing
forth the productive effort of
other workmen while the pro-
viders of capital continue in
their own specializations.

e No authoritarianism invoked.

Mr. Read is President of the Foundation for Economic Education.

‘ 33


===== PAGE 36 =====

N 1955 — the last year for which

complete governmental statistics
are available — the investor-owned
electric companies paid nearly
$134 billion in federal, state, and
local taxes. These tax payments
amounted to 23.7 per cent of their
total electric operating revenues.
Generally speaking, taxes consti-
tuted — as they have for a number
of years — the largest single item
of operating expense of the in-
vestor-owned utilities. In the case
of my own company, for example, HARLLEE
tax payments represented $2.54 BRANCH, Jr.
per share of common stock, where-
as net earnings amounted to only
$1.53 per share.

By contrast, the governmentally- are fully aware of it. The point
owned and governmentally-subsi- - generally glossed over by advocates
dized power organizations paid no of government power expansion
federal income ‘taxes at all, and and generally overlooked by the
their total taxes — including what public, is that this discrimination
some of them conveniently term operates-not alone against the elec-
“payments in lieu of taxes” — tric companies and their investors
amounted to only 1.9 per cent of but directly against the 80 per
electric revenues in the case of "cent of American power consum-
TVA; and to only 2.82 per cent ers who pay the discriminatory
and 2.89 per cent, respectively, for taxes as a part of their electric
the rural electric cooperatives and bills — only to have their tax pay-
the so-called Class A and B pub- ments, in part, used to supply so-
licly-owned utilities, representing called ‘“‘cheap government power”
70 per cent of all nonfederal sys- to a minority of 20 per cent of the
tems, including municipals. people through subsidized power

This is the rankest sort of tax organizations.
favoritism, and I doubt whether Within the past few months, the
the rank and file of its beneficiaries Public Service Commission of In-

Mr. Branch is President of The Southern Company. This is an excerpt from his address of
June 5, 1957, before the Edison Electric Institute convening in Chicago.

34



===== PAGE 37 =====

1957 LET’S FACE IT 35

diana has uncovered a special fi- limited either in geography or in
nancial gimmick by which some number of beneficiaries. Like a
governmentally subsidized power cancer, they will grow and grow
groups maintain their pretense of until the whole tissue of our Amer-
“cheap public power” and enrich ican economy is infected unless a
their members at the taxpayers’ presently-apathetic citizenry can
expense. Reviewing the annual re- be made to see that they contra-
ports filed with it by the rural vene the basic concepts upon
electric cooperatives of that state, which our nation and our free en-
the Indiana Commission discov- terprise economy are grounded.

ered that through tax exemptions Two recent events will serve to
and by borrowing from the fed- illustrate what I mean:
eral government at an artificially Early in May, a leading Ameri-

low interest rate of 2 per cent, can metals manufacturer, now op-
some of these organizations have erating a major plant in the Mus-
accumulated large surpluses cle Shoals-TVA area, played host
which they are using to purchase to an impressive group of indus-
government bonds at interest rates trialists from upper New York
considerably higher than the same State who had been invited, ac-
cooperatives pay to the federal cording to The New York Times,
government as borrowers. And the to see ‘the pot of gold at the end
profit thus realized is completely of the rainbow” which could be
free from federal income taxation! achieved by North Country indus-
This is certainly one of the most trialists willing to “pull together”
ingenious financial operations of with public power. “The visitors
our time, but one that the Ameri- learned,” according to the news-
can taxpayers will hardly condone. paper, “how... profits have soared

My primary purpose in mention- since the advent of public power.”
ing these tax discriminations and Apparently no one bothered to
governmental subsidies is not point out to these visitors to TVA-
merely to point out their magni- land that the “profits” made by
tude or their inequity but to un- industrialists through the use of
derscore a further fact which I public power are the result of tax
am afraid has sometimes been discriminations and governmental
overlooked even by members of subsidies at the expense of the tax-
our own industry — namely, that payers of America generally; and
these tax discriminations and the that if governmental operation of
other forms of governmental fa- electric facilities through these de-
voritism cannot, and will not, be vices may be said to produce cheap


===== PAGE 38 =====

36 THE FREEMAN October

electricity, the same argument can ments as well as those of the Co-
be made — and in due course will op’s members at rates which no
be made in America as it has al- taxpaying utility could afford to
ready been made in other coun- match, assuming the Co-op obtains
tries — for the governmental oper- its funds from the government at
ation of metal plants and other a 2 per cent interest rate. The
manufactories as well. This tour, manufacturer in question is one
so far as I know, marks the first of my state’s most successful
time a leading industrialist has younger industrialists. He is a
openly assumed the role of a pub- large and respected customer of
lic power propagandist. The illu- one of our companies. He tells us
sory ‘‘profit” implicit in public that while the deal has not been
power subsidies is so potent and consummated, he virtually had no
insidious a lure that unless it is choice but to seek some such ar-
quickly and effectively stripped of rangement inasmuch as a number
its mask, more and more business- of his principal competitors are al-
men, struggling with today’s ris- ready receiving power from tax-
ing costs and narrowing profit exempt and governmentally-
margins, will find themselves taken financed power suppliers and that,
in by it. because of these subsidies, they
But the illusion of “profit” is are underbidding him — even in
only one of the elements on which sales to investor-owned utilities!
subsidized power feeds and grows.
Another is competition. When one Let’s face it. Unless we are able
manufacturer is able to reduce the through courage and cohesion to
price of his product because he alert America to what is happen-
purchases power from a tax- ing to its economy, the greatest
exempt and politically-favored util- pressure for socialized power in
ity at an artificially-computed cost, America in the years ahead will
we cannot be greatly surprised if come from hard-headed and prac-
his competitors seek to do likewise. tical businessmen who find it de-
A few weeks ago, a manufacturer sirable to join the procession for
in my own state was reported to the sake of “profits” and competi-
be negotiating with an electric tive position, notwithstanding
cooperative in Indiana for the con- their reluctance to accept subsidies
struction in that state of a large and their knowledge that govern-
metals plant and the joint financ- ment ownership of power facilities
ing of a huge electrical generating poses a dangerous threat to all
station to supply its power require- free enterprise. 00



===== PAGE 39 =====

EVER HAVE SO MANY understood we’re both Americans, aren’t we?
so little about so much. Even This bill is just something we owe
businessmen neglect to investigate ourselves, right? So why don’t we
something that seems so abstract simply forget the whole thing?”
and remote. Yet the national debt But you might not like it if your
could make or break them before employer, who may happen to be
they ever knew it. an American too, gave you the
If the average wife or husband same line on payday. Or ask the
charged six thousand dollars on next Social Security beneficiary
the household account, without you meet whether he will forego
consulting the other, there would his government check on the
be the devil as well as the bill to ground that “we get it from our-
pay. Yet the average United States selves,” and that therefore it
family owes at least that much on doesn’t really matter whether we
the recognized national debt. The get it or not.
vast majority do not even know The analogy is perfectly just. It
they owe it, much less how the does matter, of course, whether
debt got there, or how it will be you pay the grocer or the boss pays
paid. you, even though the money does
“So what?” is now a fashion- not move out of your community.
able comment. “We owe it to our- If matters in exactly the same way
selves.” whether Social Security benefits,
Try this argument on your gro- veteran’s benefits, or government
cer sometime. Say to him: “Look, salaries are paid, even if the
Dr. Evans has taught English, history, government, economics, public speaking, and journalism.

He was at one time editor of Facts Forum News. Since 1955 he has been a member of the
Department of Social Sciences at the Northwestern State College of Louisiana.

37


===== PAGE 40 =====

38 . THE FREEMAN October

money merely circulates around dollars, the whole economy is not
within our national boundaries. worse off, because people within
For these payments are due, not the same economy are owed five
to all of us collectively, but to par- billion dollars more, makes no
ticular individuals among us who sense unless the government con-
have performed certain services trols the whole economy without
or otherwise met certain stipu- any regard for the rights of sepa-
lated requirements. Similarly, the rate businesses or of individuals.
national debt is owed not to “our- It makes no sense unless individ-
selves” collectively, but to particu- uals are totally absorbed into the
lar individuals among us who state. To the extent that it does
have bought government bonds, make sense, to exactly that same
or to corporations in which partic- extent are we already a totali-
ular individuals among us have tarian nation.

invested savings, or to banks As would be expected, the Soviet
where particular individuals government has carried this theme
among us have made. deposits. If of “we owe it to ourselves’ to its
the government should repudiate logical conclusion. There a govern-
its debt; if the bonds representing ment bond can no longer be re-
that debt, which the banks carry garded by the individual owner
as assets, should become worthless, as an investment for his own bene-
and the banks should fail; then it fit, but merely as a contribution
is particular individuals among us by himself to the benefit of the
who would lose, in .wvarying state as a whole. Professor F. D.

amounts. Holzman points out that the So-
. viet government looks on bond

Owe It to Ourselves sales “as a regular source of rev-
There is great danger in the enue, on a par in this respect with
wide public acceptance of such a taxes . . . Individuals are com-
gliberalism as “we owe it to our- pelled to buy bonds under condi-
selves.” Because this sort of teach- tions . .. which would make such

ing has been so common in recent a purchase, if voluntary, an ir-
college textbooks in economics, we rational economic act.”

cannot take it for granted that When any government increases
even businessmen understand how its national debt more and more,
totally fallacious such reasoning with less and less regard for how
is in a “free enterprise” society. it could ever make payment, un-
The assumption that” when the der the cruelly deceptive excuse
government debt rises five billion that the size of the debt doesn’t


===== PAGE 41 =====

1957 WHAT IS THE NATIONAL DEBT? 39

matter because “we owe it to our- got the difference? The only an-
selves,” one ultimate result is that swer to that last question is “your
bond sales lose their voluntary federal government.” The process
character which distinguishes continues, with no cessation in
them from taxes. Then, and only sight, and historical experience
then, it really becomes true that clearly proves that it will continue
“we owe it to ourselves.” Then unless the government is forced
the government may, at will, de- by the people to start reducing its
clare a moratorium on all its debt rather than increasing it.
bonds, or on any particular issues Adam Smith said in 1776:
it selects for the purpose, as the “Where national debts have once
Soviet government has now done. accumulated to a certain degree,
By that time the individual bond- there is scarcely I believe, a single
holder has lost all of his rights as instance of their having been
a creditor of his government. fairly and completely paid.” The
But on the way to this fatal evidence to support the truth of
end there are many sad intermedi- this statement is many times
ate results. Every increase of a greater today than in 1776. And
national debt, beyond a govern- that our national debt has reached
ment’s knowledge of how it could that “certain degree” there can be
pay in full and a determination to no doubt. For the admitted debt
do so, is a partial repudiation. of some 275 billion dollars is only
Every partial repudiation effects a fraction of the true whole. Panic
a decrease in the value of that over the amount we owe, as on
government’s obligations, includ- the part of any debtor, would be
ing its money in circulation. And bad. But complacency is worse.
every such decrease constitutes Complacency now means panic
clear and widespread robbery later, for the debt will not go
from its individual citizens, busi- away just because we do not look
ness firms, and banks. We have at it. Let’s look.
seen our own government quite
literally steal billions of dollars’ Promises To Pay
from its own citizens by this proc- How big is the national debt?
ess over the past two decades. If To answer that we must first an-
you doubt this, ask yourself what swer another question: What isit?
that thousand dollars you put in a It consists of promises to pay,
savings account twenty years ago commitments to spend, and obliga-
will buy today, against what ‘it tions assumed.
would have bought then, and who The promises to pay begin — but


===== PAGE 42 =====

40 THE FREEMAN October

only begin — with the government = Then we come to the unex-
bonds in the formal or recognized pended portion of approved feder-
national debt. Let’s accept the al budgets. Here the amount fluc-
round figure of 275 billion dollars tuates with an annual cycle, being

for that amount. greatest at the beginning and
, , least at the end of a fiscal year.
Agency “Funds Let’s use another illustration. Sup-

“Oh,” the we-owe-it-to-ourselves pose you have promised a relative
experts at once interrupt, “but one thousand dollars per year, and
about 54 billion dollars of this that it is your custom to let him
debt the government owes to its draw against your account at in-
own agencies, which hold its tervals during the year. At the
bonds, such as those which pro- beginning your obligation is one
vide social security, veteran’s in- thousand dollars. At the end of
surance, unemployment compensa- the year you might owe him noth-
tion, and other benefits which have ing, or he might have an accumu-
been promised by Congress to de- lated balance if he has not drawn °
fined groups among us.” We ask his full allowance. Your debt
them to consider this analogy. I would fluctuate within a yearly
have put aside one thousand dol- cycle. In this case you might find
lars to finance my son through that it averaged five hundred dol-
college next year. Meanwhile, I lars, plus any leftover balance
have “borrowed” this one thou- from previous years.
sand dollars to make the down
payment on a new car. I have put Legal Spending
an “I0OU” in the box to show that This is somewhat the way it is
I borrowed it. I now owe the with Congress and the various fed-
money to myself. But the trouble eral agencies. They spend under a
is that, since my son is actually variety of legal authorizations.
going to college, I shall have to According to the federal budget
pay back that one thousand dollars for 1958, as submitted by the
just as surely as if I owed it to President, the amounts available
somebody else. And the federal for all agencies, as a total of ac-
government must pay up that 54 cumulated balances and current
billion dollars in bonds, which it authorizations, was slightly more
owes these agencies, just as surely than 143 billion dollars for each of
— and a lot sooner — than if the the fiscal years of 1956, 1957, and
bonds were held by banks in Lon- 1958. That is, legislation had been
don. enacted which, in 1956, commit-



===== PAGE 43 =====

1957 WHAT IS THE NATIONAL DEBT? 41

ted the United States to the even- ted line. Adding these 105 billion
tual expenditure of 143 billion dol- to the previous amount, we now
lars. A small part of that had to have a subtotal of 380 billion dol-
be spent by June 30, 1956, or the lars. And we still have a long way
- commitment would lapse, but the to go.
major portion could be carried
over into a new fiscal year. As a Wards of Government
matter of fact, 66.5 billion of the For we come next to that in-
total was spent by June 30, 1956; creasingly important part of the
3.6 billion ceased on that date to national debt, the cost of living
be available; and 72.9 billion was which so many now think the gov-
carried forward as still available ernment owes them. Or which
in the fiscal year of 1957. This some bureaucrat believes the gov-
wasn’t money that anybody had. ernment owes somebody. For if
This was a commitment by the the government does not owe
federal government to provide somebody a living, then the bu-
that much money for these agen- reaucrat is out of a job; and the
ciés to spend. Then the 1957 bud- more living he can find for the
get authorized 70.5 billion dollars government to owe to more people,
in new funds, putting the total the bigger his job becomes.
amount available during 1957 back Let’s go back to the analogy of
up to 143 billion. This process was financing my son’s college educa-
expected to be repeated by expen- tion. There is more trouble in this
ditures and appropriations for fis- situation than my merely having
cal 1957 and fiscal 1958. to repay the thousand dollars I
It would seem then that at pres- have borrowed from myself. For
ent, from the experience of the the thousand dollars turns out to
current three-year period, our out- be nowhere near enough, by the
standing commitments in this cat- time he gets to college, to cover
egory fluctuate between 70 billion his expenses. So if I am really
dollars and 140 billion dollars (still committed to see him through,
using very round numbers), with then realistically speaking I owe
an average commitment outstand- much more than the thousand, and
ing of 105 billion. This is not shall have to provide much more
money that has been collected in subsequent years. That. is the
from the taxpayers, though much way it is with the federal govern-
of it, of course, will be. This is ment, in connection with its “de-
debt, to which the federal govern- pendents,” except that the commit-
ment has put its name on the dot- ment is far more irrevocable. It


===== PAGE 44 =====

42 THE FREEMAN October

has obligated itself to provide for out as a means of applying an up-
Social Security. Also Veterans. Al- per-bracket tax rate to a lower-
so Agriculture. And Public bracket income. The benefits under
Health. And Education. The fed- Social Security are determined in-
eral government has very exten- dependently of the individual em-
sive financial commitments in all ployee’s contributions. Basically,
of these fields, and others. No one they are determined according to
seems to know — apparently no need, but need as categorically de-
one can” know — precisely how fined, not as felt or demonstrated
much we owe in this field, as a in individual cases.

long-range debt over and above

current appropriations. But every- The “Need” Grows

one who has looked into the sub- Relating the benefits to need has
ject knows that it is an awful lot. the result that the system cannot
Let’s begin our own audit with be actuarially sound, no matter

the Social Security obligation. how often Congress declares that
it must be. An actuarially sound
Social Security commitment is one to pay in the

One reason why we can’t find future a certain number of dollars,
out just what we owe for Social the commitment being based on
Security is that the whole com- experience tables. Against the fu-
mitment is so weaselly. The aver- ture payment a certain number of
age worker probably thinks that dollars can be put aside on a regu-
he is participating in a kind of lar schedule. An insurance com-
government-sponsored mutual in- pany will guarantee you an an-
surance program, and that he will nuity starting ten years from
some day get back what he has put now; it will not guarantee to pay
into the Social Security system, your rent and buy your groceries
together with the contributions of no matter what their cost may be.
his employer on his behalf, and But Social Security is, in effect, a
some interest. But in fact it seems promise to take care of the aged
that the worker’s and employer's and others. If there is serious in-
contributions are both treated by flation, benefits will have to be
the government as another tax. increased. Of course, at that time
Since this is a flat percentage of - “contributions” can be increased
the first $4,200 of wages, on top too, but the persons receiving the
of whatever other tax on earnings increased dollar benefits will not
the worker pays the federal gov- be the ones paying the increased
ernment, the arrangement works dollar costs. The justification for


===== PAGE 45 =====

1957 WHAT IS THE NATIONAL DEBT? 43

increasing the Social Security tax past. The beneficiaries-to-be are
on active workers in, let us say, not creditors, and technically there
1975, in order to protect from the is no debt.

consequences of inflation the But the fact remains that pres-
workers who are then retired, will ent workers have now been prom-
be that the retired workers will ised by the federal government,
need the increased benefits, and by statute, that when they reach
the active workers will be able to a certain age, they will receive
pay the increased “contributions.” certain benefits. Merely to state
If this program is actuarially that future Congresses can or

sound, then so is Karl Marx. might take away these statutory
. assurances, which so many voters
Unenforceable Claims now regard as actual equities, is

It is true that the Social Se- to show the absurdity of any such
curity law does not technically re- expectation. Future Congresses
gard the apparent and presump- could, also, if driven by financial
tive beneficiaries of the system as desperation, declare a moratorium
having enforceable claims. A on redemption of government
worker covered by Social Security bonds. But the clear fact is that
has no equity in the amount ac- Congress is not going to do either
cumulated by his and his employ- one, unless and until we reach a
er’s contributions. He probably state of repudiation of the na-
thinks he has, because of the tional credit that amounts to vir-
widely publicized Social Security tual bankruptcy. We are commit-
“accounts.” But where such ac- ted, in writing, by statute, to pay
counts of a worker’s earnings are Social Security benefits on at
maintained, as by the Bureau of least the level presently scheduled.
Old-Age and Survivors’ Insurance, That commitment is no more kept
it is evident that the purpose is from being a part of the national
not to show how much the worker debt by the possibility of repudia-
has paid into the system as a tion than is any unspent appropri-
total establishing a certain equity ation for the purchase of jet
claim, but to show the level of in- planes — which Congress could re-
come to which he has been accus- voke at any time. And considering
tomed, and thus to indicate his the number of beneficiaries, and
need. Congress can alter the sched- hence of voters, involved, the like-
ule of benefits at any time, with- lihood of any such revocation of
out reference to the amounts paid Social Security promises is in-
in by workers or employers in the finitely less.


===== PAGE 46 =====

44 THE FREEMAN October

Unhatched Tax Revenue going to talk about the total gov-
There is another argument also ernment assets with which to meet
advanced against considering the its liabilities presently — including
liability for Social Security bene- this power to tax. But right now
fits as a public debt. This is that we are talking about the total of
the same law which promises the the liabilities which the federal
benefits also establishes the “con- government has to meet, and its
tributions” out of which the bene- Social Security commitment is
fits are supposed to be paid. That certainly a part of that total debt.
argument is so silly that another
simple analogy should dispose of $350 Billion Liability
it with ease. Suppose I’ have So how much is this particular
bought, on the installment plan, liability? The amount can be
ten thousand dollars worth of juke guessed only within very wide
boxes and have put them all out in limits. But Dillard Stokes, who
profitable locations. I have eight probably comes as near to being a
thousand dollars in monthly in- dependable auditor in this mud-
stallments coming due on these dled affair as anybody can, cites
music machines during the next various eminent authorities on the
year. And my auditor is doing my subject, in his book,. Social Se-
books. He puts that eight thou- curity — Fact and Fancy. He con-
sand dollars down as a liability. cludes that promises which had al-
“Oh,” I say, “but that’s not a ready been made by 1955 would
debt, because I am going to have require at least two hundred bil-
the money to pay it. In fact, the lion dollars, and possibly as much
very machines for which those in- as five hundred billion dollars, to
stallments will be due will provide make them good. Splitting the dif-
me the money to pay them. So you ference between these two figures,
can’t call that a liability.” The as about the only course available,
auditor would merely laugh at me. we establish 350 billion dollars as
And that’s what we should do the liability, to which we are al-
when any government economist ready definitely and presently
says you can’t call the promised committed, under our Social Se-
Social Security benefits a part of curity legislation. And most of
the outstanding national debt, be- those payments will come due long
cause the government is going to before some of our bonds now out-
be able to collect the taxes to pay standing.
them when they come due. Maybe Adding this amount to the
it is, and maybe it isn’t. We are former subtotal of 380 billion, we


===== PAGE 47 =====

C1957 WHAT IS THE NATIONAL DEBT? 45

now have a new subtotal of 730 the parts of it show up as specific

billion dollars. amounts in appropriations, which

we have already considered, or in

Contingent Liabilities contingent liabilities, which we
To consider the full amount of should look at next.

national debt arising out of the As of dates between June 30 and

cost of the living which our federal December 31, 1954, the Treasury
government supposedly owes to so itself tabulated “contingent liabil-
many groups, we would have to ities” of the federal government,
treat the current annual payments outside of the direct federal gov-
we are now making to those ernment indebtedness subject to
groups as interest on an imaginary the statutory debt limit, amount-
fund set up for that purpose, and ing to slightly over 291 billion
project the size of the fund, and dollars. It cautioned against add-
hence of that liability, backwards ing the entire amount of these ob-
from the amount of “interest” re- ligations to the national debt, be-
quired. And this liability, equal to cause of possible overlapping and
an endowment fund which we do misleading indications. So we have
not have, would be soundly classi- to explore inside this confused
fied as debt, to the extent that we confession a bit further.

are morally, politically, and prac-

tically committed to the continua- Paper Currency

tion of these payments. But let's By far the most difficult of these
not. For one thing, there is at least contingent liabilities to discuss is,
theoretically more possibility of strange to say, the paper currency
our being able to cut out or cut outstanding. About the status of
down these supports of veterans, the “United States Notes,” the
or farmers, or education, or health “National Bank Notes,” and the
programs, than there is in the “Federal Reserve Bank Notes,”
case of Social Security. And for which remain in circulation to the
another, the figures become so extent of some 550 million dollars,
astronomical if this process is car- with a frozen gold reserve of 156
ried out logically, with reference million dollars against the first
to the style of government support classification, there can be no
to which our countrymen have now argument. There is a clear obliga-
become accustomed, that they tion here of about 400 million dol-
cease being significant. So we'll lars, which is outside of the statu-
tabulate the debt arising from tory debt limit but still a part of
these areas of welfarism only as the public debt. At the stratos-


===== PAGE 48 =====

46 THE FREEMAN October

pheric level where we are now Treasury itself does not ordinarily
cruising, however, 400 million dol- in its statements on public debt,
lars either up or down makes very list Federal Reserve notes as even
little difference. So we can simply a contingent liability.

forget about this “trifle,” and give

our attention to the real problem Responsibility To Pay

of some thirty billion dollars out- But we are not considering at
standing in Federal Reserve the minute whether, under normal
Notes. or near-normal conditions, the

Then an argument really starts federal government might be
as to whether this paper money is called on to pay these obligations.
a liability, or not. For in practice, Our question is whether it has
and under all normal or even near- that responsibility under all con-
normal conditions, the liability of ditions. And to that the answer is
the government for the value of clearly yes. The July 5, 1955, Tax
these notes is so remote as to be Review, of The Tax Foundation,
negligible. The Federal Reserve Inc., states categorically: “The
Banks which issue these “bills,” as Federal Reserve notes, as well as
we ordinarily call them, have a amounts due depositors in the
fractional gold reserve of 25 per postal savings systems in the
cent against the quantity out- United States and the Canal Zone,
standing. They have other collat- are definitely contingent liabilities
eral, including some commercial of the government.” There are
paper but consisting mostly of plenty of other authorities to sup-
government bonds, equivalent to port a tabulation based on that
well over the remaining 75 per view. What is far more important,
cent. And the commercial banks however, is that circumstances
which own the Federal Reserve which could make that remote
banks are liable, to the extent of theoretical liability a very near
four times their respective stock and practical one are not nearly so
holdings, for any shortage of the unlikely as some of the economists
Reserve banks in ever meeting take for granted. The reasons why
their obligations. All of these as- this is so are interesting and dis-
sets would have to prove inade- turbing.
quate before the U.S. Treasury’s Take one of the Federal Reserve
liability would have any meaning. notes out of your pocket—if the
Apparently for these reasons, and tax collector has left you one—and
despite the exception represented study it. The big type says: “The
by the tabulation given above, the United States of America will pay


===== PAGE 49 =====

1957 : WHAT IS THE NATIONAL DEBT? 47

to the bearer on demand Ten Dol- government's contingent liability
lars.” Only in the very small type being meaningless.

does the Federal Reserve System, This discounts too much and too
which issued this bill, get into the easily, however, another source of
act. That type says: “This note demand. Any “recognized” foreign
....is redeemable in lawful money government or foreign central
at the United States Treasury, or bank can take any of these Federal

at any Federal Reserve Bank.” Reserve notes it gets its hands on,
. and insist that our government re-
Redemption Privileges deem them in gold. (We do not

Of course both statements are, expect the Right Honorable
and since 1933 have been, false Harold McMillan, nor even the
and misleading. Nor is this an Right Dishonorable Nikita 8.
obiter dictum, dragged in because Khrushchev, to show up on the
of any pleasure in criticizing the steps of the United States Treas-
federal government. The point has ury, clutching a sheaf of these
direct bearing on the problem notes in his fist; but the mechanics
under consideration. For it doesn’t of redemption do not concern us
make sense to speak of redeeming here.) Our Federal Reserve notes
a ten dollar bill for “lawful money’ can pass into the possession of a
if all you get in exchange is another foreign government through the
ten dollar bill exactly like it. “Law- commercial transactions of its
ful money,” as used here, either citizens; through the American
means gold or it means nothing. cash spent or converted in that
And the U. S. Treasury will not country by American tourists;
pay to the bearer on demand the through an avalanche of bills
value of that ten dollars in gold being mailed by immigrants back
unless he is a foreigner; American to relatives in Europe; and in
citizens have been denied the priv- many other ways. And that is
ilege of redemption. It is un- without even considering any such
doubtedly because of this fact, bizarre idiocy as giving another
that so far as the source from government our plates and ink
which any sizable demand for re- and paper to print for themselves
demption might normally be ex- as much of our currency as they
pected, the Federal Reserve does wish, which has already happened
not have to give the demanders once and hence could happen
anything but more “money” of again. Just let the value of the
the same kind and origin, that the American dollar keep on sinking,
belief is so prevalent as to the in relation to the goods which


===== PAGE 50 =====

48 ’ THE FREEMAN October

must be traded for them, through deliberate plot afoot to make all of
the monetization of our debt and the trouble possible for the United
other inflationary pressures. Then States, is not going to show the
this particular aspect of the re- least concern as to what the ar-
sulting “flight from the dollar” rangement is between our govern-

could become serious indeed. ment and the privately owned
Federal Reserve System. Actually
Federal Reserve Notes that arrangement suggests this

Now we know that the U.S. analogy. If 1 give a man with
Treasury does not redeem Federal whom I do business a power of
Reserve notes out of its own attorney to sign my name to prom-
funds, but only as an agent of the issory notes, which I must redeem
Federal Reserve system, out of a if presented to me, the fact that
5 per cent redemption fund posted he has or is supposed to have the
with the Treasury by the Reserve resources to redeem them, and to
Banks for that purpose. We are save me from loss on any I redeem,
told that the sentence in the may make them technically only
Federal Reserve Act making these contingent liabilities of a remote
notes a Treasury liability was degree for my broad-minded book-
written into the Act when it was keeping department. But any
passed, solely to please William smart outside auditor is certainly
Jennings Bryan and his followers, going to add the total amount of
without changing any parts of the these .notes outstanding to what I
law setting forth the methods of owe, no matter how many foot-
issuing or redeeming the notes. notes he puts at the bottom of his
And that the direct promise of the audit. This decision is all the more
United States to redeem these justified if the resources which my
notes, which we quoted above, is friend, who issued these notes, has
printed on these bills solely be- with which to redeem them, con-
cause of that “superfluous” sen- sist primarily of slightly more dec-
tence. Also that, for this reason, orative promissory notes of mine,
the names of U.S. Treasury offi- called bonds, which I signed my-
cials are “improperly” placed on self. And the decision becomes im-
these notes, which should bear the perative if the most hard-boiled
signatures of the Federal Reserve creditors who are likely to pre-
Bank presidents. sent these notes can demand re-

But a foreign government, espe- demption in a medium — gold — of
cially in a time of great strin- which my friend and I together
gency, or if and when there is a have enough to meet only 25 per


===== PAGE 51 =====

1957 WHAT IS THE NATIONAL DEBT? 49

cent of the notes outstanding, and has on the whole been surprisingly
for the whole further supply of satisfactory to date. But when you
which particular medium I alone leave insurance and look at some
am responsible. eighteen billion dollars in mort-
In view of these considerations, gage loans which the Federal
of the dishonesty on the part of Housing Administration has guar-
governments with regard to their anteed, and consider what tiny
national currencies which is ram- equities many of the owners of
pant all over the world today, and these homes have in them because
of the whole foreboding interna- of the small down payments that
tional outlook, we think it would were required, you can readily
be folly not to consider these 30 imagine the wave of foreclosures
billion dollars of outstanding that the first winds of a depression
Federal Reserve currency as a would roll up against these prop-
very serious contingent liability erties. The resulting cost of the
of our federal government. And it government of making good its
should be so weighted in any esti- guaranties of the mortgages, un-
mate of the total risk to be faced, der the forced-sale conditions
in connection with the govern- which would follow, would be
ment’s total contingent liabilities sizable.
of all kinds. In between these two extremes,
as to the nature of the govern-
ment’s risk and obligation, lie such
Returning to the Treasury’sown items as “agreements to make or
tabulation of contingent liabilities, insure loans, purchase mortgages,
with which we started, we find or make other payments.” As of
that approximately 172 billion dol- November 30,1954, these amounted
lars of the amounts listed repre- to approximately eight billion dol-
sented the total insurance in force lars. And, of course, these figures,
by various government insurance and those for almost every item in
agencies, 106 billion being out- the whole 291 billion dollars of con-
standing on the part of the Fed- tingent liabilities, has increased a
eral Deposit Insurance Corpora- great deal since 1954. New com-
tion alone. And while a bad depres- mitments of the Federal Housing
sion, with banks going broke Administration, for one illustra-
around us, would make this obli- tion, were 4 billion, 648 million
gation a very real and a very dollars in 1954; 6 billion, 967 mil-
costly one, the fiscal record of the lion in 1955; and 8 billion, 300 mil-
government insurance agencies lion in 1956.

Guaranteed Mortgages


===== PAGE 52 =====

50 THE FREEMAN October

But trying to arrive at a fair be done. We are in the position of

figure as to the realistic risk- a debtor who has made so many
commitment of the government, promises, of so many kinds, to so
that is not duplicated elsewhere, many people, that no auditor can
out of the 291 billions of theoreti- possibly determine his exact finan-
cal liability, is a difficult under- cial position. All we can really do
taking. We should realize that any is to determine an “order of mag-
overextended debtor has to expect nitude.” That order of magnitude
and fear that the “worst” will is “from five hundred billion to a
happen, rather than the “best.” thousand billion dollars”; and an
And if the worst hurricane of hard intermediate figure of 800 billion
times, foreclosures, and losses dollars would seem to be a fair and
should hit this whole government conservative surmise.
insurance-guaranty-credit pro-

gram, that prudence would warn Government Assets

us to look out for, it seems likely “Again, so what?”

that the government would do very Well, for one thing, the Novem-
well indeed to keep its total losses ber 1956 Monthly Letter of the
in this category down to a hun- First National City Bank of New
dred billion dollars. So, adding that York quoted an authoritative
wildly round figure to the previous source as estimating that the value
amount, our new subtotal becomes of total government assets, includ-
830 billion dollars. ing military equipment, at the end
of 1949, was 165 billion 700 mil-
lion dollars. The Letter estimated

The net conclusion, that has be- that these total assets today would

come disturbingly more convincing reach 200 billion dollars. This in-
the further we have pursued this cludes the more than 400 million
whole subject, and especially dur- acres of public lands, and buildings
ing the analysis of this last cate- by the thousand, from the Penta-
gory of liabilities, is that nothing gon to the most remote post office.
better than a rough guess as to the It includes the gold at Fort Knox,
total national debt is even possible. the silver in the Treasury, and the
My assignment in this article was brass in the White House. It in-
to make a fairly close estimate of cludes stock in government-owned
that total. Not.only have I not corporations, butter in under-
done so, and now admit that I can’t ground caves, and equipment with
do it; my study of the subject has which to make atom ‘bombs. But
convinced me that it probably can’t with 200 billion in assets and 800

A Guess, at Best


===== PAGE 53 =====

1957 WHAT IS THE NATIONAL DEBT? 51

billion in liabilities, your federal Willingness To Pay Taxes
government would be hopelessly In connection with the current
insolvent, if it were not for one budget fight the present admini-
asset which the bank mentioned, stration is receiving a hint that
but did not capitalize — the power such willingness is not inexhaust-
to tax. ible. Perhaps President Eisen-
How much is this last asset hower should have remembered
worth? There are two limits on it: the twelfth chapter of I Kings,
(1) the ability and (2) the will- where it is told how Rehoboam,
ingness of the taxpayers. One esti- the son of Solomon, being impor-
mate, which seems to be as author- tuned by his people to make
itative as any we could find, gives lighter the taxes of Solomon,
the total financial resources of chose rather to follow the advice
United States taxpayers in 1954 of “the young men who were
as 588 billion 400 million dollars. grown up with him.” And so he
The same authority gives a grand replied to his subjects: “My father
total of the current value of all hath chastised you with whips,
property of every kind in the but I will chastise you with scor-
United States in 1948 as 797 bil- pions.” The result was that the
lion dollars. If the latter figure ten tribes of Israel “rebelled
includes property owned by the against the house of David unto
federal, state, and local govern- this day.”
ments, as well as nontaxable prop- Of course, the willingness to
erty, as it apparently does, the pay taxes depends a great deal on
figures seem to jibe fairly well. how the tax money is to be spent
And if the first. amount has in- — just as the willingness to help
creased by 3 per cent, compounded any other debtor depends on his
annually, then United States tax- determination to tighten up on his
payers have a total net worth to- expenses and to put his affairs in
day of 643 billion dollars. For the order. If our federal government,
federal government to make itself reversing its attitude of callous
barely solvent tomorrow, there- indifference to the consequences
fore, it would have to take all but of its financial folly, would dis-
43 billion dollars of everything of continue its wild spending and
every kind which every taxpayer profligate waste, and begin to act
in the United States owns. That like a responsible debtor seriously
prospect certainly raises the ques- concerned with the threat and the
tion of the second limitation, the consequences of bankruptcy, there
willingness of the taxpayer. is no doubt that the taxpayers


===== PAGE 54 =====

52 THE FREEMAN October

would have both the ability and level, by wartime conditions —
the willingness to see it through mainly the overwhelming demand
to solid ground again. There is for copper, the backbone of the
nothing so fatally wrong in our Chilean economy, at prices which
present situation, as yet, that a kept the government's budgetary
few years of common sense and deficits from getting completely
honesty in Washington couldn’t out of hand — until 1947. Then
set it right. natural economic laws began to
But what happens otherwise? work again, while the government
The answer has been given a hun- continued, expanded, and intensi-
dred times in history, and is be- fied its previous policies — exactly"
ing given most clearly in Chile the same policies our government
right now. From 1870 to 1930 that is following today. The slide of the
country lived under a gradual peso down hill started again at a
“inflation,” during which the value faster pace, and in 1950 it fell off
of the peso dropped from ninety the ledge. By 1955 the peso had
cents to twelve cents in United dropped in value to less than one-
States money. Then in 1930 there tenth of what it had been only five
began a rapid increase in govern- years before.
ment participation in, and control
of, the economy, and in social se- - What is our national debt? It is -
curity and other welfare pro- the greatest danger our country
grams. This started the public and our people have ever faced.
debt soaring and speeded up the LI
inflationary process. During that ———— 7
from twelve cents to three cents. cgited and published by Robert Welch,
It was held fairly steady at that Belmont, Massachusetts.

NOW AVAILABLE-
An up-to-date list of FEE publications —
over 200 items for the.study of freedom.
Includes 9 releases transcribed in Braille, for loan without charge to the blind.

WRITE NOW FOR YOUR FREE COPY.
THE FOUNDATION FOR ECONOMIC EDUCATION, Irvington-on-Hudson, New York



===== PAGE 55 =====

0000 6GOO00GOG 60060000000

Security prescribed by government exacts a toll, in the form of
dwindling personal initiative for which there is no sound substitute.

VOLLIE TRIPP

NE of the interesting phenom- thing for nothing. Who wouldn’t
ena of our times is our passion be willing to put a few dollars a
for security. In questionnaires week into a fund and, after a few
listing people’s desires, security years, draw a pension of $200 a
frequently heads the list of things month for life? Since the amount
dearest to the heart. of Social Security a person may
In the pursuit of security, peo- draw at age 65 depends only partly
ple have placed their faith in on his contributions to it, many
group action — forgetting for the older persons today find them-
moment that the strength of the selves in this favored position. But
group, in the long run, rests upon for every retiree who gets more
the character of the individual. than he paid into the fund, some-
For purposes of this text, secur- one will get less than he paid into
ity will mean pensions, old-age it. This is elemental, and no jug-
benefits, doles, and the like, either gling of figures — or juggled think-
paid by the State or forced upon ing — can refute it.
employers under the prodding of a - True, a part of these funds can
paternalistic government. It does be put to work at interest. But it
not include the many retiremént is doubtful if the interest can pay
systems and annuity policies, pri- the cost of collecting, administer-
vately arranged and fully financed ing, and paying them out again,
by their beneficiaries. even assuming that the employee
But the- security arranged by couldn’t (or wouldn't) put his own
the State must also be paid for, funds to work. Money just doesn’t
and it doesn’t much matter grow at any such accommodating
whether it is financed by payroll rate. As a matter of fact, it has a
deductions, direct taxes, or combi- hard time to keep pace with its
nations of both. own steadily declining value. Dur-
The appeal in this kind of securi- ing the decade from 1945 to 1955,
ty is that it seems to give some- it lost nearly half its value.
Mr. Tripp, whose article is reprinted here by permission from the June-July 1957 issue of

Partners, has retired from the building business to devote full time to travel, writing, and
promotion of free enterprise.

53


===== PAGE 56 =====

54 THE FREEMAN October

The Threat to Progress feared the ‘“guv’mint” might shut
There are several kinds of state- off his pension.
sponsored security, but all have Is it nof a poignant tragedy that

one thing in common. All inhibit a once free and proud American
and discourage the spirit of adven- could have been reduced to such
ture, independence, and freedom subserviency —to such spineless
which once distinguished the docility that he was afraid to ex-
American people from others. ercise one of his most basic
For those who desire the utmost rights? To what extent have we,
in a guarantee that the State will as a race, a people, become intimi-
look after them, there is a place in dated, browbeaten, and softened
Northern California that should through dependence on security
meet the most exacting tests. It and the fear that it may be with-
has a high stone wall all around it. held?
Folsom Prison is, aptly enough, On economic grounds, the theory
called a “maximum security’ jug, of state security is open to search-
and it’s almost as hard to get in as ing scrutiny since nothing is ac-
to get out. tually produced by this cumber-
Life at Folsom has certain some and complex machine. It
drawbacks and disadvantages. Yet takes from some and gives to
they differ only in degree — not in others. It guarantees to take care
kind — from those which a state- of the lazy, the improvident, and
sponsored security lays upon its ineffectual by taking from the
subjects everywhere. Certain free- thrifty and hard working more
doms and prerogatives must be than their share.

forfeited; things men once treas- Any pension system, whether
ured enough to fight and die for state or inanagement operated, to
must be relinquished. : be of any real use, calls for contri-

Some time back I sought an in- butions so large as seriously to in-
terview with an old fellow who was  terfere with whatever plans the
making and selling a small item citizen might have to take care of
for a little extra tobacco money. I himself. The conclusion is there-
thought he might have a salable fore inescapable that security is
story. In the midst of the inter- rapidly sapping our people, not
view he suddenly clammed up like only of the will, but even of the
an abalone. Why ? He just remem- means to take care of their own
bered something. He was getting needs, in their old age. I do not
a subsistence pension. If he made know which is the more serious.
any money by his own efforts, he Men once fought savagely for


===== PAGE 57 =====

1957 WHAT PRICE SECURITY? 55

values ‘they are now giving up mentally prescribed security pro-
without a whimper. ceeds from its compulsory nature.
Swiftly and cheerfully we are People have a right to give up a
placing our security in the hands part of their wages, or their taxes,
of others — of strangers, of people for future distribution in any way
we have never seen and never will they choose. There are those who
see. Is this a good thing? More to cannot trust themselves with their
the point, is it real security? own pay checks, or who have no
Who is the most secure person talent for investing their own
any of us knows? Is he not an in- funds. Undoubtedly the program
dividual with ability and utter con- would be widely patronized if
fidence in his ability to meet life’s made available on a purely volun-
problems whatever they may be? tary basis. But to force everyone
Isn’t that kind of security worth to participate, against their will,
infinitely more than the kind con- and against their better judgment,
jured up by a group of social is not only palpably wrong, it is
planners and poured in measured also criminally stupid. It would be
doses from a bottle into some re- just as sensible to force every citi-
mote and autocratic government zen to buy tickets on horse races
bureau? or to gamble on the Stock Ex-
Admittedly, true security —en- change!
joyed by certain individuals of ]
greater ability or greater persist- Security, a Personal Thing
ence than the average — is difficult Security, it seems to me, is a
to achieve and is steadily becom- highly personal thing. I do not be-
ing more so. Yet it is by no means lieve any State or any group can
out of reach. And the rewards and guarantee me security, any more
satisfactions are so infinitely than it can guarantee me health,
greater that it would seem to war- character, or a pleasing person-
rant a terrific and determined ef- ality. My security depends on
fort in the direction of that goal. many factors over which I and I
And if the time should come when alone have control.
no one is willing to work for his As a responsible human being,
own security and salvation, using I have no wish, nor any need to
the talents, abilities, and character shift these prerogatives to others’
God gave him, we may as well shoulders. And the less dependent
close up shop as a nation. We will I become on the security promised
be through. by others, the more really secure
The insidious effect of govern- I feel. eo 0


===== PAGE 58 =====

A REVIEWER’S NOTEBOOK JOHN CHAMBERLAIN

Right here we are in the pres-

re
A N J NTELLEC T u A L ence of a major intellectual scan-
Ji i J 7 dal: Nobody before Wittfogel has -

a NATE ANS oar . :
SS SALA ALL nie La seen what water —or its lack —

has done to shape the politics of
N its ponderous and encyclope- man. When Europe’s first social
dic form Professor Karl A. theorists were conducting their
Wittfogel’'s Oriental Despotism: A pioneer studies, they were scarcely
Comparative Study of Total Pow- aware of the Asiatic half of the
er (Yale University Press, 556 world. Knowing only the history
pp., $7.50) might have been mon- of Europe, they were inclined to
umentally dull. But so unique are view the progress of civilization in
the perspectives that open out on what Professor Wittfogel calls
almost every page that the reader, ‘‘unilinear terms.” They knew that
his eyes widening all the time, can in the ancient world economic pro-
only react with a completely duction was based on outright
amazed interest. slavery. Then came the feudal
Briefly, what Professor Witt- period when society was a matter
fogel has done is to utilize the of “multicentered” units, the ma-
world’s rainfall pattern as the key norial holdings which were worked
to societal and governmental by serfs. With the breakdown of
forms. The European traditions of the feudal order came the libera-
freedom, which were formed in tion of the land-bound villein. The
the presence of sufficient water, capitalist economists thought of
are taken for granted by most of this as the birth of freedom; the
us. The “rainfall farmer” doesn’t socialists saw it as the beginnings
need outside help. But Wittfogel of “wage slavery.”
reminds us that vast portions of Meanwhile, as the Portuguese,
the earth depend on irrigation. Dutch, and British seamen came
Since irrigation demands the or- home from the East with cargoes
ganization of vast numbers of men of spices and tea, they brought
to dig, build, and dam, it gives with them some knowledge of an
birth to something which Witt: ancient world far away from Eu-
fogel calls “hydraulic society.” In rope. This ancient world knew
his opinion the hydraulic basis of many tyrannies. Karl Marx and
life in most of Asia and in parts Frederick Engels, writing in the
of Africa makes for total tyranny. middle of the nineteenth century,

56


===== PAGE 59 =====

1957 AN INTELLECTUAL SCANDAL 57

knew far more about these tyr- the truth. If they had followed cer-
annies than John Locke had known tain leads which they themselves
in the seventeenth century, or opened up in their earliest books
Adam Smith at the end of the and pamphlets, their case against
eighteenth. In fact, both Marx and capitalism would have tended to

Engels — and Lenin after them — disappear. Wittfogel, in some in-
acknowledged a specifically “Asi- teresting paragraphs, shows how
atic mode of production.” precipitately both Marx and Lenin

But here the intellectual scandal dropped their references to the
deepens: Marx, Engels, and Lenin “Asiatic mode of production.”
conveniently “forgot” what they They were acutely embarrassed by
obviously knew. In Asia it was not something they couldn't admit:
“private property” —or the pri- that the State could enslave every-
vate ownership of the means of one. Lenin himself was put in a
production — that made for the peculiarly painful position, for
“oppression” of the working some of his rival Marxists — Ple-
classes. Nor was it any hang-over khanov was one —had deduced
of feudalism, with its tissue of from Marx’s earliest writings that
reciprocal rights and duties. It was nationalization of the Russian
simply the fact that the individual land would be a “reactionary” re-
had no rights against what Witt- version to “Asiatic barbarism.”
fogel calls the “apparatus” — The whole “progress” of the Rus-
meaning the State bureaucracy. sian Revolution would have been
In Asia the “State was stronger imperiled if the “Asiatic concept”
than society.” For generations were to be accepted as a reality.
“agromanagerial” groups had con-
trolled the water supply, letting it
flow to individual farmers (big and
small) according to the autocratic
dictates of a special bureaucratic
class. In return for water the in-
dividual could do little but acqui-
esce in tyranny. What the evidence
of Asia should have proved to
Marx, Engels, and Lenin was that
State power, not private property,
is the enemy of the working man.

But the fathers of ‘scientific : .-
socialism” couldn’t afford to see Bettmann Archive



===== PAGE 60 =====

58 THE FREEMAN October

Professor Wittfogel has devoted the need for or the incentive to
some five hundred packed pages to ‘“‘corvée labor” is lacking. The fact
his analysis of “hydraulic soci- that rain falls on the Polish plain
eties” all over the world. Wher- and on the mountains of Yugo-
ever the State has taken it upon slavia may be the key to the fu-
itself to build monumental works ture redemption of Eastern Eu-
— canals, dams, pyramids, palaces, rope: peasants who depend on the
great walls — it has tended to to- skies —i.e.,, on the God of Nature
tal tyranny. Great numbers of — for the fruitfulness of their soil
workers are needed all at once to will not willingly endure the con-
construct big ditches and to con- ditions that have been historically
trol floods; hence the growth, in appropriate to “hydiaulic society”
“hydraulic society,” of the forced and the “Asiatic concept.”

“labor of the corvée. The “hydraulic Following the trail marked out
states” pioneered in record keep- by Professor Wittfogel, what we
ing, in the taking of the census, are now witnessing is the spread
for when one needs thousands of of an infection: the “Asiatic con-
workers to dig waterways one cept” is proving contagious in
needs also to know who they are parts of the earth where an abun-
and how many of them are avail- dance of rainfall makes it totally
able. The keeping of records led to unnecessary. There are other
the creation of a scholar class of .things besides the construction of
bureaucrats. In league with kings great waterworks, however,
and priests, the scholarly bureau- through which a centralized State
crats of “hydraulic society” saw to ‘“apparatus’ might presume to
it that property owners should be take control over an entire econ-
held in continued subjection by omy. If industry should ever be-
the State “apparatus.” On Profes- come dependent on atomic energy,
sor Wittfogel’s evidence, no Ori- for instance, the same forces that
ental league of barons ever man- created “hydraulic despotism” in
aged to wangle a Magna Charta Egypt, Mesopotamia, and China
from an Oriental King John. The might tend to eventuate in an
State, as the possessor of the key “atomic despotism” in the West.
to life-giving water, never let any Then, instead of kowtowing to
“multicentered” power units grow those who keep the gates of the
to a point where they could chal- canals, we would bow to the State
lenge the central authority. authorities in charge of process-

Give praise, then, to rain. Where ing uranium, thorium, and hydro-

“rainfall farming” is the norm, gen.


===== PAGE 61 =====

1957 AN INTELLECTUAL SCANDAL 59

The truly heartening thing reaucratized complexes that mu-
about Professor Wittfogel’s book, tually — and laterally — check each
however, is that the author is not other: most importantly, Big Gov-
a fatalist. He believes in what he ernment, Big Business, Big Agri-
calls the “open historical situa- culture, and Big Labor.” Profes-
tion.” In Russia, for a brief space sor Wittfogel trusts that “Western
between the fall of the Czar’s writers, teachers, and practising
“semi-Oriental bureaucracy” and politicians” will grasp the nature
the Bolshevik seizure of total pow- of our “open situation” and pre-
er, there was an “open situation” vent the swallowing of any “large
which might have been seized up- bureaucratized complex” by any
on and exploited by true liberals. other.

There is enough rainfall in Euro- This analysis of the rather lim-
pean Russia to support a whole ited nature of our “open situation”
complex of peasant freeholds and may leave much to be desired. It
all the other “multicentered” phe- does not accord with the prospect
nomena of a free society. It was that new small businesses might
simply the malign will of Lenin flourish if inflation and the depre-
and his small band of conspirators dations of the tax collector could
which forced the “hydraulic pat- be halted. Nor does it reckon with
tern” of Asia on the Russia of the fact that the family-sized farm
1917. can still be prosperous, or with the

Today, despite the threat which possibility that Big Labor might
a war-oriented economy entails as be trimmed down by the repeal of
bureaucrats keep a jealous hold laws that tend to foster the whole
on atomic installations, we still paraphernalia of industry-wide
have an “open situation.” Profes- bargaining and industry-wide
sor Wittfogel is impressed with agreements. Professor Wittfogel
the reasoning of James Burnham, may, indeed, be entirely too pessi-
who has scented great danger in mistic about the possibilities for
the rise of a “managerial bureauc- a proliferation of smaller power
racy.” But despite the fact that units in our multicentered society.
“public opinion . . . is ambivalent Even though Wittfogel is quali-
about the form and function of fied in his optimism, however, we
managerial bureaucracy,” the Sec- may be grateful for his eye-open-
ond Industrial Revolution (to ing book. It is a truly original
quote Wittfogel) “... is perpetu- work. With luck it may prove to
ating the principle of a multi- be the final blow to the thinking
centered society through large bu- of Karl Marx. LL


===== PAGE 62 =====

60 THE FREEMAN October

«= Battle for the Mind hovah and Christianity with its
By William Sargant. New York: God of Love appear as aeonic an-
Doubleday and Company. 260 pp. tagonists. He is compassionate and
$4.50. sad. Know the truth as psycho-
analysis has revealed it, he seems
By Theodor Reik. New York: George bt URio nc tf
Braziller, Inc. 432 pp. $5.75. off the dangerously elational drug
These two books are in manifold called Hope.
and fruitful opposition. Dr. Sar- Dr. Sargant’s confidence in re-
gant is an eminent British psychi- conditioned reflexes and nerve
atrist. He is religious in back- drugs does seem a little prema-
ground, physiologically slanted ture. He tells us that the deep
through his enthusiastic belief in mind can only be altered by three
Pavlovian control by conditioning forces — fear, hatred, and ecstasy.
the reflexes and his reliance on He shows, convincingly, the pro-
laboratory experimentation with found alterations now routinely
drugs and nerve stimuli. He is produced by fear and hatred. But
hopeful of the outcome in this he says nothing about the effects
Battle for the Mind between the of ecstasy — although’ he makes
varied ideologies if only we realize some interesting comments on re-
we are in the Psychological Revo- ligious conversion and the revival-
lution and will use. these newly ist techniques of John Wesley and
sharpened weapons of the mind later evangelists. Wesley did “re-
and the newly cut keys to the bound” his converts into happi-
spirit. ness, but it was by first bouncing
Dr. Reik is a patriarch of the them off the red hot floor of eter-
Freudian faith, deeply learned in nal Hell. This technique is still
Western history (as orthodoxists used but it works less well each
should be) and holding fast to the year, and with fewer people. The
revelation given by the Founder. others await a truly contemporary
Charmingly, he blends a theory of set of “spiritual exercises.”
tragedy (as a dramatic rendering Dr. Sargant proposes that, if we
of the precultural murder of the are not prepared to “Pavlovize”
sire of the pack by his sons), an all our people, we had better culti-
hypothesis about Original Sin (our vate a sense of humor. Humor, he
ancestral guilt springs from the thinks, holds up better against
same source), and a proposal as present police or popular fourth
to why Judaism with its stern Je- and fifth degree methods of mind-

+> Myth and Guilt



===== PAGE 63 =====

1957 OTHER BOOKS 61

changing than does rational con- 5» The Coming Caesars

viction or conscientious loyalty. By Amaury de Riencourt. New York:
Dr. Reik’s pessimism, on the Coward-McCann. 384 pp. $6.00.
other hand, happily seems no bet-
ter founded. He appeals to history. The Coming Caesars may be de-
But, with the too common provin- scribed as an extended essay on
cialism of Western man, he con- historical patterns which makes
fines his survey to the Semitic some bold predictions about the
Mediterranean outcrop from the future of the West. The author's
main stratiform layers of man’s thesis is that America is now well
story. China and India he leaves on the road to Caesarian govern-
aside. Had he considered the en- ment, and that, since American
tirety of these deposits in the light power will inevitably dominate the
of psychological history, he would world, the age of Caesars is here.
have detected, as historians today The argument derives such force
are coming to recognize, that the as it has from a grand historical
guilt in our social tradition arose analogy. In a long and detailed
as a natural reaction following the survey, Mr. de Riencourt main-
Heroic Age. After “Heroic Man” tains that Europe stands in the
(the proto-individual) had (circa same relation to America in which
1500 B.c.) with violent hubris Greece stood to Rome, and that
smashed the ancient “hypnocratic” just as Rome was fated to over-
cultural pattern, this epoch of come Greece and master the world,
violence is of necessity succeeded so America is fated to take over
by the next stage (circa the eighth Europe and dominate the world of
century B.C.), the Epoch of Guilt tomorrow. This is supported by a
with its expiatory method, Asceti- concurring analogy, in which Eu-
cism. ropean culture is likened to Greek
And further, if we survey the culture and American civilization
entire process now available to the to Roman civilization. In his anal-
historian, (as I have attempted in ysis, culture and civilization are
The Human Venture) instead of distinct stages; a civilization al-
a damnosa hereditas, we can detect ways follows upon a culture and,
a vast period of successive ordeals in a manner of speaking, lives upon
and initiations whereby Man is, the capital the culture has created.
through these labors and rebirths, As Rome absorbed and to some ex-
gradually becoming aware of tent maintained the culture of
where he is, what he is, and who Greece, so America is absorbing
he is. GERALD HEARD and to some extent maintaining


===== PAGE 64 =====

62 THE FREEMAN October

the European cultural heritage. On the people,” which fact has put an
analogy with Rome, its civilization end to the original balance of pow-
must end in “a universal state un- er among the branches of the gov-
der the sway of a Caesarian ruler.” ernment. Even Lincoln, with his

In developing this case, the au- native democratic instincts, as-
thor draws many specific parallels sumed virtually unlimited power
between Rome and America. But during the Civil War and so es-
the decisive parallel for his argu- tablished precedents which any
ment was the adoption by both of future “strong man” could use for
the course of expansion and power. his own purposes. But it was in
He recalls the time when the Franklin D. Roosevelt that the
Americans stood at a crossroads: Americans found their first real
would they follow the decentraliz- ‘tribune of the people,” and it was
ing lead of Jefferson, or would out of the Tribunitian office that
they “embark upon the road to Augustus created the imperial dig-
consolidation, centralization, and nity. “Franklin Roosevelt was de-
fusion, with all that is implied — termined to establish a semidicta-
territorial expansion, increasing torial rule, a personal rule such as
national power, and eventual im- none of his strong predecessors
perialism leading to a profound would have dared to contemplate
transformation of the political in their wildest dreams.” And such
structure” ? was his success that when the New

The crucial turn came with the: Deal was in full operation, ‘“noth-
end of ‘the conservative Virginia ing could have been further re-
Dynasty and the beginning of rad- moved from the, parliamentary
ical democracy under Jackson, with type of government.” With the
its augmentation. of the power of changes of structure effected by
the President. Mr. de Riencourt Roosevelt, it now seems almost
does not fail to remind us that im- hopeless to think of diminishing
perialism and democracy have too the powers of the President. Many
often been linked in history for will feel that Mr. de Riencourt
their conjunction to be accidental: hardly exaggerates when he
“the implacable expansion of vig- writes: “Today he wears ten hats
orous democracy has often been — as Head of State, Chief Execu-
blurred by ideological misconcep- tive, Minister of Foreign Affairs,
tions; but it is a stark reality.” Chief Legislator, Head of Party,

The story from this point on Tribune of the People, Ultimate
deals with the inevitable elevation Arbitrator of Social Justice,
of the President into a “tribune of Guardian of Economic Prosperity,



===== PAGE 65 =====

1957 OTHER BOOKS 63 -

and World Leader of Western Civ- hearts and minds,” “biological
ilization. Slowly and unobtrusively laws,” “inescapable destiny,” etc.
these hats are becoming crowns The reader may be pardoned if he
and this pyramid of hats is slowly throws up his hands in discourage-
metamorphosing itself into a tiara, ment and says that although Mr.
the tiara of one man’s world im- de Riencourt has described much,
perium.” he has proved little or nothing that
But skillful as it is in its deline- could be of use to those who hope
ations, the work suffers gravely to save freedom.
from obscurity of purpose. In some RICHARD M. WEAVER
places the tone suggests that the
author wishes to put the Ameri-
proaching Caesarism. In other mail. You pay only the bookstore price. We
places, he seems to hold people | Poy the postage anywhere in the world
culpable for not appreciating the | rye gookmaILer, Box 101, New York 16
necessity of Caesarism. In yet
other places, he seems to regard

Caesarism as one of those inexor- P | 60 80
able forces which it would be eop e to

assist.

To have real value, a book of RESERVE LIFE INSURANCE
this kind should isolate with some If you are under 80, you can
degree of clarity the cause of Cae- still apply for a $1,000 life in-
sarism, as Garet Garrett did so surance policy to help take care
brilliantly in The People’s Pottage. . of final expenses without bur-
Then we would have an inkling of dening your family.
where to take hold if we desire to You handle the entire trans-
arrest the process. But Mr. de action by mail with OLD
Riencourt’s causal analysis is al- AMERICAN of KANSAS
most hopelessly confused and cha- CITY. No obligation. No one
otic. He jumps wildly from the  j]] call on you!
literal to the metaphorical, and
from things that could be con- today with your name, address
trolled to things that are by defini- and age to Old American In-
tion uncontrollable. In one place surance Co., 1 West 9th, Dept.

the cause 1S given as historical L1055N, Kansas City, Missouri.
evolution,” in other places as “our

Tear out this ad and mail it



===== PAGE 66 =====

CAS
-~ at oo,

eo ty. at
Fa aed v=
= CF “. -
~~ - - - “. Tm. TL .

- ’ » - Lo. . Aem— -
I 4 2
& EL

“AOI Xt oo Le

Pp BRIS Me. 3 >

An [ay a .Y . -

or TO amid od cw Te ~
. x wr

- or tet

This power dam was built
near the Pennsylvania-Mary-
land border by an independent
electric light and power com-
pany at no cost to taxpayers.

3
(od Pad em? Se

This TVA power dam was
built near Paducah, Ky., by
the federal government with
millions of tax dollars that
you and other citizens paid.

x34

rT mr, Feri om row ’,
I EP i CN
a EP ORIRIRB AA 3h asia 3 on 3 s

have to help pay electric bills for customers of this one?

Your taxes help build federal gov- ~~ only about 4¢ per dollar if their
ernment power plants like the one in ~~ power comes from the federal gov-
the lower picture. And these plants  ernment’s TVA power system, for
keep on costing you money year example. So to make up for the lost
after year. Here’s how: tax revenues which federal power

About 23¢ of every dollar you pay projects don’t pay, you have to be
for electricity from your independent taxed more.

electric light and power company Is it fair for you to have to pay
goes for taxes. But because of pres- extra taxes like this for customers of
ent tax laws, customers of federal federal government power systems?

power systems escape paying most of ~~ Shouldn’t something be done about
the taxes in their electric bills that it? America’s Independent Electric

you pay in yours. They pay taxes of Light and Power Companies*.

*Company names on request through this magazine


===== PAGE 67 =====

This is one of the bronze statues which is
awarded to J&L operating divisions in
recognition of safety achievement under
the Corporation's Safety Award Plan.

F]

gets top priority at J&L Steel

Safety doesn’t just happen at Jones & Laughlin. It’s a day-in, day-out, planned
program with the objective of preventing injuries to the men and women who
make up this Corporation.

Beginning with his first day on the job, the J&L employe becomes a part of
the company-wide safety program. Safety instruction, individually and in groups,
is continuous. Healthful working conditions are subjects of never-ending study.

Prompt investigation of all accidents and near accidents; continuous first-
aid training; complete safety records and statistics; safety contests—all these

are a part of J&L’s accident-prevention program for the pro-
tection of the Corporation’s most valuable asset—its employes.

Jones & Laughlin

STEEL ...a great name in steel



===== PAGE 68 =====

FROM A LIBERTARIAN’S LIBRARY

Ox, LIBERTY!” Madame Roland is said to have exclaimed as she
passed a statue to that goddess on her way to the guillotine, “what
crimes are committed in thy name!” Looking at the world today,
we are tempted to stress the intellectual crimes committed in the
name of liberty as much as the moral crimes. Never were men
more ardent in defense of “liberty” than they are today; but
never were there more diverse concepts of what constitutes true
liberty. Many of today’s writers who are most eloquent in their
arguments for liberty in fact preach philosophies that would
destroy it. It seems to be typical of the books of our intelligentsia
to praise one kind of ‘liberty incessantly while disparaging or
ridiculing another kind. The liberty that they so rightly praise
is the liberty of thought and expression. But the liberty that they
so foolishly denounce is economic liberty.

A selection from The Free Man's Library, a descriptive and critical bibli-
ography by Henry Hazlitt, D. Van Nostrand Company, Princeton. 176pp. $3.50.