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

IDEAS ON LIBERTY

MARCH 1959

The Declaration of Independence

Against Itself . . . . . . . . . Edmund A. Opitz 3
A Moral Goal for Business. . . . . . Gaylord A. Freeman, Jr. 13
Ethics Is Personal . . . . . . . . William Henry Chamberlin 16
Horse and Buggy Days. . . . . . . Ralph Bradford 23
Business Taxes Concern Everyone . . . Hans F. Sennholz 32
Mutual Security . . . . . . . . . H.P.B. Jenkins 41
Inflation Spells Ruination . . . . . . Robert Moon 42
A Way To Finance Higher Education. . . Lovett C. Peters 51
Are Municipalities Exploiting

Federal Extravagance? . . . . . . ‘New Haven Register 57
Aid that Alienates . . . . . . . . John Chamberlain 59

sh THE FOUNDATION
FE FOR ECONOMIC EDUCATION, INC.

Irvington-on-Hudson, New York



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

An Economical Answer to Laying Out and Machining a Complex Pattern of Holes.

The traditional boiler shop atmosphere, including stout Ingersoll designed and buiit
muscles, dirt floor and a ‘“‘chaw’’ of tobacco, has been this special machine and the
changed to that of a modern production line plant by 180° indexing fixture for the

Cleaver-Brooks Co.,
Milwaukee, Wisconsin
Four photoelectric “eyes”,
which respond to variations in

this specially designed Ingersoll. In five years, this
photo-electrically controlled machine has trepanned and
chamfered the flue holes and processed the flues in both

ends of thousands of boilers. :

The machine and a three man crew do the work which light reflected from the res,
25 men did before. Productivity guaranteed by Ingersoll control the movements of the
is being exceeded by 25%. machine's housing, head

and spindle.

ww INGERSOLL

MILLING MACHINE COMPANY ROCKFORD, ILL.


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

MEMO ON PRIVATE ENTERPRISE

No. 5S in a series

“...private enterprise cannot hope to compete
(as to charges) with the parcel post.”

The Freight Forwarders Institute subsidized service.”
told a Senate Post office sub-com- The Senate subcommittee was
mittee in 1958 that increasing told that “common carriers oper-
the size and weight limits for ated by private enterprise cannot
parcel post would be “a step in hope to compete, in the matter
the wrong direction in that it of charges, with the parcel post
would increase the area of compe- gervice . . .
tition between the Government- “It ought to be pointed out,”
ally operated parcel post system the statement continued, “that
and the hard-pressed common cogts, as used in constructing
carrier system of the country.” parcel post rates, are not the
The Institute is the national same thing as costs that underlie
organization representing freight common carrier rates. There are
forwarders, subject to regulation many items of cost that are not
under the Interstate Commerce taken into account in fixing par-
Act, who “handle only less-than- cel post rates . . .
carload and less-than-truckload “The national transportation
shipments, sometimes referred to policy of the Interstate Commerce
as merchandise or package Act,” it was noted, “is designed
freight.” _to preserve a strong and adequate
One of the purposes of the common carrier system of trans-
Transportation Act of 1958, the portation and to discourage un-
Institute noted, ‘““is to check or fair and destructive competition.”
prevent further erosion of the Where motor carriers, local
common carriersystem by persons draymen, freight forwarders, par-
who escape regulation.” An in- cel delivery companies, bus lines,
crease in parcel post limits, the rail express and other transport
Institute said, “would permit ero- services are available, there is no
sion of common carrier service justification for government to
by Governmentally owned and compete unfairly with them.

For a free copy of the informative
booklet, “The Truth About Parcel Post,”
address the Public Relations Division,

RAILWAY EXPRESS AGENCY
219 East 42nd Street, New York 17, N.Y,
A PRIVATE ENTERPRISE IN THE PUBLIC SERVICE



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

THE

Teeman A MONTHLY JOURNAL OF IDEAS ON LIBERTY

MARCH 1959 Vol. 9 No. 3

LEONARD E. READ President, Foundation for
Economic Education

Paul L. PoIroT Managing Editor

THE FREEMAN is published monthly by the
Foundation for Economic Education, Inc., a non-
political, nonprofit educational champion of private
property, the free market, the profit and loss system,
and limited government, founded in 1946, with offices
at Irvington-on-Hudson, New York. Any interested
person may receive its publications for the asking.
The costs of Foundation projects and services, in-
cluding THE FREEMAN, are met through volun-
tary donations. Total expenses average $12.50 a year
per person on the mailing list. Donations are invited
in any amount — $5.00 to $10,000 — as the means of
maintaining and extending the Foundation’s work.

Accepted as controlled circulation publication at Irvington, N. Y., with
additional entry at New York, N. Y, Copyright, 1959, The Foundation for
Economic Education, Inc. Printed in U.S.A.

Additional copies, postpaid, to one address: Single copy, 50 cents;
3 for $1.00; 25 or more, 20 cents each.

Permission Is hereby granted to anyone to reprint any article in whole
or In part, providing customary credit is given, except ‘‘Inflation
Spells Ruination.”

Any current article will be supplied in reprint form If there are enough
Inquiries to justify the cost of the printing.


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

The Declaration

of Independence |  . vor

ITSELF

Exploring an ambiguity

DURING the nineteenth century in the basic document of
the world of the defeated and the American political thought
oppressed looked to America as a
land of liberty and justice for all.
In large numbers people came
here to find freedom for them-
selves and their children. It goes
without saying that they didn’t
always find what they were seek-
ing; reality, here as everywhere,
fell short of the professed ideal.
But even when the ideal failed to
show through the practice, it was
never wholly without influence;
for this ideal was inscribed in a
basic national document for all to
see and many to memorize. The
document contains a dangerous
ambiguity, to be discussed later,
which eventually drained away its
main strength. But until that hap-
pened the Declaration of Inde-
pendence was a beacon of liberty.

The actual writing of the Dec-
laration was Jefferson’s work, but
his purpose as drafter was not, he

EDMUND A. OPITZ

wrote, “to find out new principles,
or new arguments... but to place
before mankind the common sense
of the subject.” The document was
intended, he said, “to be an ex-
pression of the American mind.”
And indeed it was. The basic po-
litical ideas embodied in the Dec-
laration — inherent natural rights
and consent of the governed —have
a long ancestry and were the com-
mon coin of eighteenth century
political discussion. Nevertheless,
Jefferson must be credited with
the originality of phrasing and
composition which gave a creative
thrust to ideas which, till that
time, had lacked momentum.
This momentum carried over
into the next century as well.
Abraham Lincoln spoke for the
consensus when he declared, “The
— Lo principles of Jefferson are the
Te air Bree ueation. definitions and axioms of a free

3


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4 THE FREEMAN March

society.” Many American reform- and the importance of this fact is
ers and social critics expressed underscored by the absence of a
similar sentiments. They were similar dimension from a compar-
sensitive to social ills and in- able document issued in 1789 —
justices, but they traced them to the French Declaration of the
infractions of the principles laid Rights of Man and of Citizens.

down in the Declaration —inher- The French Declaration wish-
ent, individual rights, and a ing to set forth “these natural,
limited government set up solely imprescriptable, and unalienable
for their protection. Freedom was rights” says: “The National As-
the remedy they advocated, and sembly doth recognize and de-
they knew that somebody's free- clare, in the presence of the Su-
dom was being impaired the preme Being, and with the hope
moment government exceeded its of His blessings and favor, the
proper limits. The first reform, on following sacred rights of men
which all others hinged, was to and of citizens.” It will be noted
confine government within the that, although the Supreme Being
boundaries defined in the Dec- is mentioned, he is invoked as a
laration. Only so could the rights mere gesture of formality; he is

of all persons be secured. not acknowledged as the source of
human rights. What then is this
God-given Rights source, according to the French

The Declaration of Independ- Declaration? Paragraph three
ence refers, in paragraph one, to tells us. “The nation is essentially
“the laws of Nature and Nature's the source of all sovereignty; nor
God.” In paragraph two, the sign- can any individual, or any body of
ers say that, as far as they are men, be entitled to any authority
concerned, they believe, or accept which is not derived from it.” The
as axiomatic, the proposition that French and American Revolutions
the Creator endowed men with are, in short, based on contrary
certain rights. Other men might principles.
hold that “rights” are granted by
the State, or else have a purely The Early Days of the Republic
naturalistic basis. “We hold” that The philosophy back of the Con-
these rights have a supranatural stitution of the United States is
derivation, i.e.,, they are God- substantially the same natural
given. The Creator is sovereign! rights doctrine that is set forth
In other words, our Declaration in our Declaration. And social
has a built-in religious dimension; critics in the early Republic, ac-


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1959 THE DECLARATION AGAINST ITSELF 5

cepting this doctrine, traced social pay a price above the market price
evils to the door of government; which free and fair competition
because it was government which would determine. In short, a tariff
either legitimized violations of enables its beneficiaries to get
equal liberty — as in the case of something for nothing; it is a po-
slavery — or sanctioned violations litical subvention giving some peo-
by refusing to enforce the laws ple an income for which no equiv-
against predation. The remedy alent services are rendered.
they urged was to cut government A political principle may be ad-
back to the limits prescribed in duced from such practice: It is
the Declaration — defense of the one function of government to in-
lives and property of all men alike. tervene in the affairs of men so as
But if this was our ideal, it to benefit a segment of the nation
must be admitted that our prac- at the expense of the nation as a
tice was different, even from the whole, or to sacrifice a portion of
beginning. We set up a no-privi- the people so that another por-
lege government — equality before tion may prosper. This was not
the law, no politically dispensed the kind of government we
special favors for some at the ex- thought we were setting up, and
pense of others — and the first law although government intervention
of the First Congress (after the steadily proliferated during the
motion organizing itself as a nineteenth century — the necessity
body) was a tariff law! for each succeeding intervention
being sold as a means of correct-
ing the evils caused by prior in-
Now, whatever else may be said terventions — we could still think
about ‘a tariff, no one can deny of ours as “a government of lib-
that it has the effect of penalizing erty and justice for all,” i.e. a
certain consumer interests, and by government shorn of the power to
the same token advantaging cer- dispense privilege.
tain producer interests. It denies
to some people the right to buy in Finding an Excuse
the markets of their choice, i.e., As an ideal we still looked to
to make any peaceful use they the equal rights doctrine of the
choose of their resources. And to Declaration, and this doctrine fil-
others this political intervention tered down through popular ora-
grants a monopoly of certain mar- tory and literature. Granted that
kets by excluding foreign compe- we didn’t practice what we
tition, thus forcing customers to preached, at least we had a plumb-

Political Favors


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

6 THE FREEMAN March

line of sound principle by which needs a different sanctioning prin-
we could measure our deviation ciple; it will be a democratic
from the norm. But there came a tyranny.
time when we acquiesced in devia- “Consent of the governed” in-
tions from the norm and cast troduces the majoritarian princi-
about for a political principle to ple into politics. However useful
justify them. When we took this this may be as a device for choos-
tack, such a principle was easy to ing personnel, it is vicious when
find because it was enshrined in it expands into the delusion that
the Declaration itself, as a tech- the majority has competence in
nique, along with the natural the realms of faith and morals,
rights philosophy. It was the con- and has therefore a right to rule
sent of the governed idea. unrestrained except by prudential
and expedient considerations. This
delusion is crassly put by a Uni-
The “consent of the governed” versity of Chicago political scien-
idea is an implementing princi- tist: “For in a democracy right is
ple, not a primary one. Deriving what the majority makes it to be.”
the just powers of a government Consent of the governed, without
“from the consent of the gov- the restraining influence exerted
erned,” as the Declaration does, is by the belief in God-given rights,
a natural means of implementing which disappeared as religion lost
the “self-evident” truths “that all its hold on the modern mind, has
men are created equal, that they led logically, directly, and impla-
are endowed by their Creator with cably to totalitarianism and the
certain unalienable Rights, that so-called People’s Democracies.
among these are Life, Liberty, :
and the Pursuit of Happiness.” A Democratic Despotism
This is the primary principle, the Democratic despotism is the in-
axiom about rights. But when evitable consequence of the “con-
these truths are no longer self- sent of the governed” idea — un-
evident, when the belief in God- less it be accompanied by a virile
given rights dies out, leaving doctrine of rights which derives
“consent of the governed” as the them from a source beyond so-
sole political expedient, the road ciety. From the classical world to
ahead leads to tyranny. The tyr- the time of our Declaration of
anny will not conform to the pat- Independence, this source was
tern of a divine right monarchy God. But about the time the God
or an enlightened despotism which concept found a meaningful polit-

Consent of the Governed


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

1959 THE DECLARATION AGAINST ITSELF 7

ical expression in the Declara- pect of the divine interpreted as
tion, the concept itself lost its the moral order or the Natural
hold on the minds of men. The re- Law. To the extent that such be-
lationship between the explicitly liefs took hold of ancient peoples
articulated concept of equal rights they attempted to base their po-
in the Declaration and the God litical structures on the explicit
concept was that of effect and consent of those involved — “those
cause. When a cause ceases to involved” numbering less than the
operate, trace effects or an after- total population which included
image may persist for a time; and slaves and unassimilated foreign-
in the modern world the idea of ers. Conquest and subjugation do
inherent rights moved men even not supply a principle of rule; rule
after they had cut themselves is always based on some degree of
adrift from its religious moor- implicit consent. Consent, in a
ings. The eighteenth century de- republic, is deliberately courted.
natured God and deified Nature; Such was the case in the Hebrew
the nineteenth century mechan- commonwealth, in the Greek city-
ized Nature, and the twentieth states, and in the Roman republic.
century depersonalized man. If It is even more true of Christen-
the universe and man correspond dom which fell heir to these three
to such a picture, there is no place strands of tradition. Christian
in it for anything resembling the doctrine, writes Wilhelm Roepke,
traditional doctrine of rights. “starts from man as an individual
endowed with an immortal soul
striving for its salvation. Before

The poet, Coventry Patmore, the State there is now the Person,
observed that we are the inheri- whereas above the State there is
tors of God, His love and His justice com-

The fair sum of six thousand years mon to all men.”

Traditions of civility.

In the course of this long hu- The Divine Nature of Things
man experience of living together Judging by the record of his-
under relatively stable conditions tory, man seems to have a natural
there gradually evolved an aware- tendency to seek a cosmic founda-
ness that man is more than a tion for his social way of life; no
thing, that there is a dignity and culture of record has been wholly
grandeur in the human soul be- secular. Men posit a divine order
cause it is a portion of the divine of reality transcending the natu-
in man, coterminous with that as- ral world which meets the senses.

Traditions of Civility


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

8 THE FREEMAN March

A relationship to this divine order ucts of the religious heritage of
gives added meaning and signifi- Christendom to claim natural
cance to the natural order, and rights for every human being as
the divine law furnishes the norms such, and to proclaim God’s sover-
by which the different patterns of eignty over the social and politi-
behavior in society are coordi- cal affairs of men. These religious
nated. beliefs are reflected in the Dec-

These moral norms, in other laration. But withdraw these reli-
words, are believed to be anchored gious elements from the philoso-
in the nature of things; they ex- phy of the Declaration and we are
ist independently of men’s inter- in trouble. The concept of God-
pretation of them, and neither in- given rights goes when belief in
dividual persons nor majorities God is suspended. This was hap-
can flout them with impunity. pening even as the Declaration
This was the concept of the Natu- was being written; it has hap-
ral Law, by virtue of which man pened at an accelerated tempo
was believed to possess inherent since that time. It started as far
rights, as our Declaration of In- back as Hobbes and Locke, in the
dependence explicitly states. Such middle and latter part of the
a conviction kept the “consent of seventeenth century.

the governed” idea in a secondary There was a state of nature,
spot. Locke argued, of “peace, good will,

mutual assistance, and preserva-
The Crumbling Foundation tion.” Fully endowed human be-

The Founding Fathers hung ings existed in this presocietal
their case from a theological condition, each one possessing a
premise, although their own reli- natural right to protect himself
gious philosophies were anemic and his property. After a rational
affairs and the eighteenth cen- weighing of the personal gains to
tury ideology which they partly be derived from living in civil so-
shared was not hospitable to ciety, individual men contracted
theism. The colonists, however, with other individuals to form
were a theologically minded peo- one, “by barely agreeing to unite
ple, and the Church played an im- into one political society, which
portant part in their affairs. Thus is all the compact that is, or needs
they were easily appealed to with be.”
the idea that they were super- As history, this is, of course,
naturally endowed with inherent pure moonshine; men, by virtue of
rights. It is one of the end prod- their genes, are biologically an-


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1959 THE DECLARATION AGAINST ITSELF 9

thropoids; it is only by assimila- (of the community) should move
tion of their social legacy that that way the greater force carries
they become fully human and it, which is the consent of the ma-
members of a particular society. jority.” (Italics supplied)

But social contract theories,
which linked the ideas of natural
rights and consent, were useful Jefferson himself blows hot and
fictions during the political revo- cold in these matters. No one
lutions of the seventeenth and talked more than he about “our
eighteenth centuries which were natural rights,” or was more
aimed at monarchy, and Locke aware than he of the potential
furnished much of the ammuni- tyranny in the “consent of the
tion used by our Founding governed” idea when reduced to
Fathers. All this was fine when mere majority rule. “An elective
it came to deposing the kings — despotism is not the government
the only kind of authoritarianism we fought for,” he wrote in 1781.
which seemed to frighten the men But in 1787 he wrote to Madison,
of those centuries. But if we de- “It is my principle that the will
pose the kings only to set up a of the majority should always
more far-reaching tyranny —par- prevail.” And a year later, also
liamentary absolutism or the des- to Madison, “I readily suppose
potism of a majority — where’s my opinion wrong, when opposed

Jefferson’s Uncertain Stand

the gain? by the majority.” It is this phase
of his thought which enabled
Locke Sowed the Seeds Lord Acton to speak of “Jeffer-

Actually, the seeds of majori- son’s determined aversion to
tarian democracy are in John every authority which could op-
Locke: “And thus every man, by pose or restrain the will of the
consenting with others to make sovereign people.”
one body politic under one gov- But in 1816 the tide came back
ernment, puts himself under an in with the “natural rights” idea,
obligation to every one of that and he wrote, “Our legislators
society, to submit to the deter- .... true office is to declare and
mination of the majority, and to enforce only our natural rights
be concluded by it; or else this and duties and to take none of
original compact, whereby he them from us. .. . The idea is
with others incorporates into one quite unfounded that on entering
society, would signify nothing, into society we give up any natu-
and be no compact. . . . The body ral right.” But then he veered


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

10 THE FREEMAN March

again, and in 1824 said, “All in recent years to crowd the
power is inherent in the people.” earlier rationalistic conception to
And in his last extant letter, the wall, thus aiding the triumph
written ten days before his death of the idea of human and govern-
in 1826, when the idea of inherent mental law as an expression solely
rights had all but been abandoned of will backed by force.”
by the learned, he affirmed his be-
lief that “all eyes are opened, or Mill and Spencer
opening, to the rights of man.” John Stuart Mill uttered many
He was quite mistaken in this, timeless truths about liberty on
even of his own country. Seven the basis of the utilitarian stand-
years earlier in the epoch-making ard that liberty provides condi-
Supreme Court decision in Mc- tions conducive to the greatest
Culloch vs. Maryland, John happiness. But although his rhe-
Marshall had written: “The gov- toric was gorgeous, he didn't
ernment of the Union is emphat- make his case. Who will decide
ically and truly a government of which one of several alternative
the people. In form and in sub- courses of action should be adopt-
stance it emanates from them. Its ed so as to maximize happiness?
powers are granted by them, and Majority rule again! The decision
are to be exercised directly on is based on “the judgments of
them and for their benefit.” those who are qualified by knowl-
Jefferson may have been right edge of (the consequences), or, if
in affirming that we didn’t fight they differ, that of the majority
for an “elective despotism,” but among them, must be admitted as
given the situation which existed final.” And Herbert Spencer, who
in the eighteenth and nineteenth in his early writings defended the
centuries, it is obvious to hind- rights of man against the State,
sight that that is what we were concluded somewhat sadly in his
going to get. The tyranny of the Autobiography (1904) that “the
majority is simply the unhindered unlimited right of the majority to
application of the “consent of the rule is probably as advanced a
governed” idea, with no restrain- conception of freedom as can
ing influence which might come safely be entertained at present;
from virile belief in Natural Law if indeed, even that can safely be
and inherent rights. Edwin Cor- entertained.”
win writes that ‘ ‘Natural Law’ “The unlimited right of the
in the sense of ‘the observed majority to rule” can, in practice,
order of phenomena’ has tended mean only one thing: that a de-


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

1959 THE DECLARATION AGAINST ITSELF 11

termined and articulate few will synonymous with “desires’ or
create ad hoc majorities for the “privileges.” Thus we are pre-
sole purpose of ratifying minor- sented with long lists of “human
ity demands. Such is the inevi- rights” to such things as housing,
table end result of popular sover- education, medical care, a job,
eignty, as Francis Lieber foresaw and so on. The source and dis-
a century ago: penser of these “rights” is, of
Woe to the country in which political course, the sovereign state. On
hypocrisy first calls the people al- the other hand, the air is filled
mighty, then teaches that the voice with talk about “civil rights,”
of the people is divine, then pretends which means certain patterns of
to take a mere clamor for the true conduct permitted or enforced by
voice of the people, and lastly gets up the sovereign majority. The con-
the desired clamor. duct in question may be ethically

“Consent of the governed” was desirable, provided it is volun-
an altogether inept phrase in the tary; but the majority has power,
Declaration, out of step with the and is willing to use it on minori-
main body of the American polit- ties. Members of minorities have
ical vision. The dream was that no inherent rights, so of course
if men knew the right principles they have no “civil rights” either
of social integration, no one until they join forces with the
would be governed, i.e., the crea- majority.
ture of another man’s will. The so-
ciety would be free, i.e, com- [Inviolable Man
prised of self-governing units Can we recover the idea of in-
whose social agency of arrest and herent rights? Only if we can re-
restraint served individual liberty habilitate the belief that man is
by maintaining the inherent not wholly resolvable into a social
rights of each person. But remove being, that part of him is in-
the idea of inherent rights and violable, shielded always from the
this structure collapses. prying hands of either majorities
or rulers.

Two main lines of argument

When the idea of inherent have been used to support this
rights is abandoned, people will conviction, one religious, the other
still go on using the word secular. According to the former,
“rights,” after distorting its orig- rights have a reference above and
inal meaning. On the one hand, beyond society, in a transcendent
“rights” will be used as if it were order. The individual is a crea-

Majoritarian ‘Civil Rights’


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

12 THE FREEMAN March

ture of God and therefore he is served last century, have ‘an
sovereign as a person in relation aversion to the investigation of
to his fellows. When religious be- general principles as well as to
lief waned, and the concept of a trains of systematic reasoning.”
transcendent order was abandoned, Perhaps it may be more accurate
many thinkers sought support for to say that Americans have been
the idea of “natural rights” in uncomfortable with the ambiguity
theories of an original social con- in their own political heritage.
tract. Locke, for instance, thought They have an apprehension that
he could deduce rights from the something is wrong without be-
nature of abstract, ideal men who ing aware of just what it is. With
were imagined to have existed as one part of their being they have
isolates before they got together looked to the Creator as the
and formed themselves into socie- source of their rights; with an-

ties. other part, they have lavishly
abused those rights at the behest
Regaining Our Faith of now this majority, now that.

These two approaches exhaust The split in principles is becom-
the field; abandon these and the ing more painful, and soon the
idea of inherent rights is no more choice will have to be made to ride
than a pious wish. And we have one or the other.
to abandon one of them, for so- It is possible for a people to
cial contract theories are no live without clear-cut principles
longer believable. This means for a time, sustained by the forces
that the preservation of the idea of habit, custom, and convention.
of inherent rights depends on a A man may live according to his
contemporary restatement of the father’s code, even after abandon-
ancient truth that “in the center ing the faith which gave the
of his being, in that knower who father his code. But the grandson
is never known, man is in touch will have neither faith nor code.
with God and even in his most Such is, roughly, our predicament,
wretched wandering in the wil- and there is no guarantee that
derness of this world, is always even a determined effort will get
rooted in the eternal being of us out of it. But the first step in
God.” Sovereignty must locate in solving a problem is to face a
the Creator or liberty has no bleak statement of it; for where
roots. there is no understanding, there

Americans, Lord Bryce ob- can be no intelligent response.eee


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

A MORAL G0

— the maximum|possible profit |

FOR BUSINESS

r a long period

GAYLORD A. FREEMAN, JR.

I: SEEMS UNBELIEVABLE today that of customers and employees. I have
with our large industrial corpora- listened and been disturbed.

tions, many with thousands of em- I was also impressed by reading
ployees and hundreds of millions in two recent publications of a
of dollars of capital, there could be management association the state-
any uncertainty as to the basic ments of the corporate goals of

purpose of such organizations — several of our leading businesses.

yet there is. The most frequently mentioned
What is the purpose of a busi- aims were:

ness? 1. Making the company a good
I was interested when the placg to work

builder of one of the country’s 2. Serving the customers well

greatest corporations declared that 3. Being good citizens, and, in-

the purpose of his company was cidentally,

service to its customers. I was in- 4. Making a profit

terested but not convinced. I could Although several mentioned

not imagine that practical-minded profits, it was only as a necessary
leader commencing his annual re- condition to the continuation of
port: “This has been our most suc- employment and service. Of those
cessful year; we served an addi- which considered profits as one of
tional million customers. Inciden- several goals, most referred to a
tally, we lost $20 million, but we “reasonable” or “fair” profit, or
consider this our finest year.” one “sufficient to finance our nor-
I have listened to some of my mal healthy growth,” or provide
more idealistic friends say that the “a fair return on investment,” or
purpose of a business corporation ‘‘safeguard our investment in
is, or should be, the common good order to enable the company to
Mr. Freeman is Vice-president of The First attract new capital n order to €x-
National Bank of Chicago. This article is an pand its services.” Many failed to
excerpt from his address of October 15, 1958,
before an Instalment Lending Conference spon- make any reference to profits.

d by the Illinois Bankers Association at .
Peoria, | [now Tankers Assocation Yes, I was impressed by those

13


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

14 THE FREEMAN March

statements of corporate goals —but mum possible profits. We know
still unconvinced. Do investors that!Indeed, wehavealwaysknown
(the actual owners who risk their it; but, buffeted over the past
capital in organizing or purchasing twenty or thirty years by the phi-
the stock of a hazardous business) losophy of the “new deal” and its
make such an investment in order many offshoots, we now feel that
to provide a nice place to work for to acknowledge such a goal is
some unknown employees, or to somehow immoral or at least self-
provide a good product to unknown ish. We have lost confidence in the
customers, or to earn a return only original bases of our economic sys-
sufficient to obtain additional capi- tem and feel that perhaps profits

tal from other investors? should be subordinated to some
i . other goal that would be socially
The Profit Motive more acceptable, more moral, or

I have talked to many business somehow ‘higher.” Some do this
leaders, and to them I have ex- with their tongue in their cheek;
pressed what seems to me to be the some do it confusedly but honestly.
very obvious single goal of busi- Are we so timorous that we will
ness. I have been told afterwards permit ourselves thus to be misled?
by some that I was wrong and by Do we give up our known goals
others that I was right but that merely because someone criticizes
I should have said it another way. them? The expenditure of effort

What I said is simply that the for profit has done more good for
only goal of a business corporation our society than any other effort,
is to make a profit. except that expended directly for

Expressed more fully, this education. Yet because an articu-
means: the only goal of a business late few imply that this is a selfish
corporation is to make the maxi- goal, are we to give up the compass
mum possible profit. that has led us so far and follow

And said completely: the only the will-o’-the-wisp they propose
goal of a business corporation is to to substitute?
make the maximum possible profit
over a long period. In the Long Run

Our economic and social system, If we said that short-range
whether referred to as a capitalis- profits or immediate profits were
tic system, or a system of private our goal, then the morality of such
enterprise, or a system of free en- a purpose might well be challenged.
terprise, is based upon the concept Maximum short-range profits,
of competing units seeking maxi- achieved at the expense of our em-


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

1959 A MORAL GOAL FOR BUSINESS 15

ployees or of our customers or of A Just and Equitable Society
our community, would not be a Beyond that, to achieve profits
proper goal, for it would sacrifice over a long period of time requires
the interest of others. But it would that business operate in a society
not be a wise policy either, for that is just and equitable, for if
such a course, by injuring others the majority of the people are dis-
on whom the company is dependent satisfied with the economic or polit-
for future profits, reduces the op- ical system, they will change that
portunity for profits in subsequent system. There is no divine guar-
years. antee of private ownership or the
Maximum possible profit over a permissibility of profits. If busi-
long period of time is neither ness management wants to pre-
moral nor immoral, but the effect serve a system of private property
is beneficial to the community. To and the right to make profits, it
achieve this end of maximum should see to it that the rewards,
profits over a long period (of 100 the living conditions, the status
years or more, and the life span and the dignity of our people — all
of a corporation should be meas- of our people — are such that the
ured in no shorter periods) re- great majority are happier in the
quires that we treat our employees ‘private property, profit system”
in such a way that they are happy than they believe they would be in
both at work and at home; that any other system.
their minds are relieved of fear,
that their working conditions are Thus to achieve maximum long-
pleasant, and their status and con- range profits, a corporation must
tribution are respected. Without treat its employees right, it must
these conditions present, they can- treat its customers right, and it
not be as productive as they must must make a continuing contribu-
be if a business is to achieve maxi- tion to society. It is therefore only
mum long-range profits. in this indirect sense that the goal
To achieve such a goal requires of business can be said to be social
that we treat our customers well; betterment. Its direct goal is prop-
that we provide the goods or serv- erly maximum long-range profits,
ices which they want at a price and to substitute any other for it
which they are willing to pay, and is to fail to understand the essen-
that they be delivered under satis- tial nature of business or the so-
factory conditions. ciety which it ultimately benefits.


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

His Sb Bhomal

The lack of religious foundation for much of “the social Gospel”

WILLIAM HENRY CHAMBERLIN

THERE HAS BEEN a strong trend field of foreign policy was the re-
among some religious groups in cent action of the members of a
the modern age to invoke religious World Order Study Conference,
sanctions for advocating secular sponsored by the National Coun-
decisions of policy and theories of cil of Churches of Christ, in pass-
social change, usually in the di- ing a resolution calling for United
rection of socialism and collectiv- States diplomatic recognition of
ism. This trend, it may be noted, the communist regime in control
is in complete disregard of the of mainland China and its admis-
spirit of all the great religions sion to the United Nations. This
and ethical teachings. Common proposal was prefaced by the sen-
ground in the teachings of the tence:
Old and New Testament, of the “With reference to China,
Koran, of the Buddhist sacred Christians should urge reconsid-
writings, of moralists such as eration by our Government of its
Marcus Aurelius, Epictetus, and policy in regard to the People’s
Seneca, is that the relation of man Republic of China.”
to God and man’s own ethical re- The clear suggestion here is
sponsibilities is personal and un- that there is something un-Chris-
connected with the political, so- tian in the United States policy of
cial, and economic institutions of refusing to open diplomatic rela-
any given time. Ethics is deeply tions with a bloody atheistic des-
and unconditionally an individual potism which has never submitted
concern. its power to the verdict of a free
A striking example of an at- election, which has subjected
tempt to give a religious colora- many Protestant and Catholic mis-
tion to a secular decision in the sionaries to cruel tortures, which
Mr. Chamberlin is the author of numerous is still technically in a state of
books, a lecturer, and a contributor to the war with the United Nations,

Wall Street Journal and many nationall . . .
known mogazins. y ¥ which is responsible for the death

16


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

1959 ETHICS IS PERSONAL 17

of many thousands of Americans wrong and trade unions are al-
in Korea and the savage maltreat- ways right in labor disputes, that
ment of thousands more who were there is something inherently
unfortunate enough to be cap- wrong and immoral in the capital-
tured. ist — or individualist — economic
It is not surprising that Secre- system, that the realization of so-
tary of State John Foster Dulles, cialist aims is an obligation of the
as good a churchman as any of the professing Christian.
signatories of this resolution, was But it is interesting to note
not impressed. What makes this that no great religious or moral
episode still more puzzling is that teacher has set as his primary
the vote in favor of this resolu- aim the changing of economic and
tion, which also included much social conditions according to a
more criticism of American than doctrinaire set pattern. The first
of communist policies, was adopted aim of such teachers has always
unanimously. Yet the Congress of been the changing of men’s
the United States, a reasonably hearts, minds, and souls. There
representative cross-section of the can be no good society without
American people, has twice put it- good men. The cure for social
self on record by virtually unani- evils is to train individuals to fol-
mous votes against the recogni- low the path of righteousness.

tion of Red China or its admis- Again and again enthusiastic
sion to the United Nations. leaders of revolutions have prom-

ised their followers a new heaven
Great Expectations and a new earth as a result of

The tie-up between purportedly substituting new institutions for
religious agencies and advocates old. Again and again these great
of radical social and economic expectations have been disap-
change is also a familiar spectacle. pointed.

A man who for many years was Jean Jacques Rousseau and
the leading spirit in a church some of the less remembered
“federation for social action” was French intellectuals of the nine-
a vehement, polemical apologist teenth century, whose thinking
for the political and economic in- preceded the French Revolution
stitutions of the Soviet Union. and influenced its course, were con-

This and other groups which vinced that man is nothing but a
uphold what they call “the social product of the laws of the State
Gospel” proceed on the assump- and that there was nothing a gov-
tion that management is always ' ernment could not accomplish in


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

18 THE FREEMAN March

the forming of man; vice in soci- This conception of a virtuous
ety is not the result of corruption revolutionary elite minority bring-
in human nature, but of defective ing liberty and happiness to the

laws. people ran its bloody course and

: ended when Robespierre himself

The General Will was overthrown and executed in
Side by side with this mechani- July 1794.

cal conception of man being made But a very similar idea re-

happy by the instruction of all- turned in a somewhat different
wise preceptors and the legisla- economic setting when Lenin and
tion of omniscient legislators his band of fanatical, disciplined
went Rousseau’s mystical notion communists swept into power in
of something he called “the gen- Russia amid the chaos and disin-
eral will,” which must take pre- tegration that overwhelmed Rus-
cedence over all selfish individual sia in 1917. The communists, more
wills and interests. This was an lucky or more skillful than their
idea made to order for a band of French Jacobin predecessors,
dedicated fanatics like the Jaco- maintained continuity of power,
bins, who dominated the extreme although Stalin’s purges during
phase of the French Revolution. the thirties were even more lethal
Identifying the “general will” than what happened to the more
with their own, Robespierre and extreme Jacobins after Robes-
his associates condemned all dis- pierre was guillotined.
sent as counterrevolutionary and
experienced no qualms of con-
science about sending to the guil- Communism added to the old
lotine all who disagreed with them idea of a revolutionary elite gov-
as counterrevolutionaries who erning the people for their own
were trying to lead the people good until the millennium, when
astray. the State is supposed to “wither
Anticipating and perhaps in- away,” the newer idea that pri-
spiring Lenin with his theory of vate ownership of wealth is the
the “dictatorship of the prole- root of all evil. Nationalize fac-
tariat’” (which meant in practice tories, mines, railways, stores,
the dictatorship of the Communist abolish private profit — so ran the
Party) Robespierre declared: theme song of Lenin, Trotsky, and
“The Government of the Revolu- their associates — and the sins and
tion is the despotism of liberty frailities of human nature will
against tyranny.” automatically disappear.

Private Ownership Condemned


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

1959 ETHICS IS PERSONAL 19

But this promise has proved a Revolution have been repeated,
mirage, like the promises of the often in aggravated form, under
Jacobin agitators of the French the communist dictatorship.
Revolution. In order to make the One is reminded of the words,
wheels of their economic machine bitter yet true, with which Joseph
turn, the communist rulers of the Conrad ended a preface to his
Soviet Union were compelled to novel, Under Western Eyes, refer-
throw out of the window the early ring to the Russian Bolshevik
slogans of material equality with Revolution: “The ferocity and im-
which they had appealed to the becility of an autocratic rule re-
envy and class hatred of the po- jecting all legality and in fact
litically illiterate Russian masses. basing itself upon complete moral
Differentiation by status, differen- anarchism provokes the no less im-
tiation by the pocketbook are the becile and atrocious answer of a
rule, not the exception, in Russia purely utopian revolutionism en-

today. compassing destruction by the
first means to hand, in the strange
Perfection Comes Slowly conviction that a fundamental

As for the claim that a socialist change of hearts must follow the
or communist system would elimi- downfall of any given human insti-
nate certain traits of fallible hu- tutions. These people are unable
man nature, this has proved com- to see that all they can effect is
plete humbug. The Soviet news- merely a change of names. The
papers, the speeches of Soviet oppressors and the oppressed are
leaders, are full of denunciations all Russians together; and the
of hoodlumism, drunkenness, ju- world is brought once more face
venile delinquency. Corruption to face with the truth of the say-
scandals are at least as common ing that the tiger cannot change
in Moscow as mink (or vicuna) his stripes or the leopard his
coats have been in Washington. spots.” (Italics supplied)

To refer to these things as ‘“‘rem-

nants of the capitalist past” is Changes in the West

rather ridiculous, as everyone un- This same truth, that a funda-
der fifty in the Soviet Union to- mental change of hearts does not
day has spent his formative years follow even a profound modifica-
under Soviet rule. Indeed, char- tion of institutions, is evident, in
acteristics of oppression that had a milder way, in the United States
been moderated by the growth of and Great Britain. Fifty years ago
a liberal public opinion before the in these countries, and throughout


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

20 THE FREEMAN March

the Western world, the govern- that young criminals have never
ment laid what would now seem received so much sympathetic at-
negligibly light taxes on the in- tention from social workers, psy-
dividual — and expected the indi- chiatrists, and assorted do-good-
vidual to look out for his own ers.
well-being. Slum housing is often regarded

Now Great Britain, partly as as a cause of crime. Yet it often
the result of a crushing burden happens that modern housing
of direct and indirect taxation, projects to which slum dwellers
provides cradle-to-the-grave se- have been moved turn into dens
curity, i.e., subsistence livelihood of vice, filth, criminality, and ju-
to all. The United States has not venile delinquency. This suggests
gone quite so far in this direction that perhaps people make slums,
as Great Britain; but the trend in at least as much as slums make
the same direction is unmistak- people.
able. There has been a similar experi-

And the results should be dis- ence in England, where the old
illusioning to those who have be- law-abiding tradition has seri-
lieved that poverty is the main ously declined, although the Wel-
cause of crime and that a notable fare State has certainly removed
improvement in public behavior the old excuse that poverty is the
would follow the enactment of cause of crime. British “Teddy
legislation calculated to eliminate boys” have been as obnoxious as
or alleviate poverty. The Ameri- the gangs of young hoodlums who
can material standard of living make life and property unsafe in
has never been higher than in the large areas of American cities.
postwar years. Unemployment has Some British students of this
been sparse and very liberally problem believe that part, at least,
cushioned. Little or no crime can of the explanation is that adoles-
be attributed to such a cause as a cents, earning comparatively high
man stealing a loaf of bread or a wages, have more money than
bottle of milk to feed a starving they are able to spend wisely.
family.

Yet the figures of crime have The Individual ls the Key
soared with prosperity. Juvenile All these experiences after vio-
delinquency or criminality has lent and gradual revolutions indi-
reached heights never remotely cate that the true hope of improv-
approached in the past in spite of, ing the worth and dignity and
or perhaps because of, the fact moral and cultural level of the hu-


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

1959 ETHICS IS PERSONAL 21

man being lies in changing men, Jews were discontented with the
not in changing external condi- “colonial” status of their country
tions. That sonorous old moral under the rule of Rome. But Jesus
code, the Ten Commandments, is sounded a call not to armed revolt
put in terms of what “thou” shalt but to personal right living and
or shalt not do. There is not a preparation for life everlasting.
word in it to suggest that the in- “Render therefore unto Caesar
dividual can shuffle off his moral the things which are Caesar's”
responsibilities onto some vague was his reply to those who tried
entity called society. to tempt or provoke him into what

And this is characteristic of the would now be called a “national-
spirit of both the Old and New ist” demonstration. There is the
Testaments. The Psalms and the same emphasis in the teachings of
Hebrew Prophets always lay the great Apostle of Christianity,
stress on individual right thinking Saint Paul:

and right doing, irrespective of “lI have learned, in whatsoever
what may be the political and eco- state I am, to be content.”

nomic conditions in which the in- “Let us not be weary in well-
dividual finds himself. Says doing.”

Micah: “What doth the Lord re- “Prove all things; hold fast that
quire of thee but to do justly, and which is good.”

love mercy, and to walk humbly It is not that Jesus and Paul
with thy God?” were ignorant of or indifferent to

And there is this same concern abuses of tyranny and slavery;
with individual righteousness in but it was their conviction that
other verses of the Old Testa- the best and surest way to elimi-

ment: nate these abuses was by chang-
“The way of transgressors is ing the sinful heart of the individ-
hard.” ual man.
“Righteousness exalteth a na-
tion.” Other Religious Creeds
“He that is slow to anger is This is also the teaching of

better than the mighty; and he other religions that have won
that ruleth his spirit than he that many millions of followers. Bud-

taketh a city.” dhism, with its central creed that
the highest happiness lies in over-
Christian Doctrines coming passion and desire, is a

This is equally true in regard completely individual-centered
to the New -Testament. Many faith, with its Four Truths and


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

22 THE FREEMAN March

its Eightfold Path: rightness in life as though it were thy last.”

views, intentions, speech, action, “A man should be upright; not
livelihood, effort, mindfulness, be kept upright.”
concentration. “Blot out vain pomp; check im-

Mohammedanism also places the pulse; quench appetite; keep rea-
burden of responsibility on the son under its own control.”
individual believer. There is a like
spirit in the Meditations of Mar- Bit by bit, one may be confi-
cus Aurelius Antoninus, the great dent, the wisdom of the great re-
Stoic philosopher who became Em- ligious leaders and sages will pre-
peror of the Roman world, one of vail, and the truths will gain rec-
the very few men whom absolute ognition that without basically
power did not corrupt in the least. good men no tinkering with insti-
His ethical message is emphati- tutions will be of much avail and

cally and exclusively personal: that the only significant revolu-
“Thou wilt find rest from vain tion would be one in the spirit of
fancies if thou doest every act in men. eo oo

pote) Self-Discipline
As I GROW OLDER, it becomes increas- dren, power over our employees,
ingly distasteful to me to impose my power over our domestic animals —
will upon any being. With the pass- is not the craving for any of these a
ing of the years, I have discovered manifestation of the same spiritual
that I have quite enough to do in dis- frailty? The enlightened man seeks
ciplining myself, my thoughts and to guide others by rational persua-
emotions and impulses — in keeping sion, by example, by the contagion of
my own house in order. Self-disci- his enthusiasm; he shrinks in spir-
pline is the only kind that is of much itual stature when he must resort to
worth. So long as we are self-disci- compulsion. Although we are some-
plined we are free. When we must be times forced to use force, we should
disciplined by others, or are called for our spirit’s sake avoid such oc-
upon to discipline others, we fall into  casions to the limit of our ability.
one kind of bondage or another; in Humility is a virtue difficult to de-
the first case we are held down by fine, and the attempt to cultivate it
others, in the second case we are has led to some strange paradoxes.
pulled down by others. But if we mean by humility reluc-
The lust for power is the most per- tance to impose our will upon others,
nicious of human weaknesses, the it is one of the foremost among all of
cause of more misery than any other. the moral virtues.
Power through political position, ALEXANDER ¥. SKUTCHL,
power through social status, power “Animal Friends, Dependent and Free”
through wealth, power over our chil- Nature Magazine. March 1962



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

A nostalgic review of the...

RALPH BRADFORD

ONE WAY to damn a person who served many a ‘‘progressive’”
speaks up for solvency in these spender when he felt the need of
spendiferous years is to ask him administering oral chastisement
scathingly, “What do you want us to some benighted devotee of a
to do — go back to the horse and balanced budget and a sound cur-
buggy days?” rency.

This not only conjures up the Do you happen to believe that
image of an outmoded means of a nation, like an individual, should
transportation, but denotes also pay its debts honestly and honor-
that the person addressed has a ably and not defraud its creditors
primitive and unprogressive out- by forcing them to accept payment
look. To say of a man that he pos- in depreciated money? Then
sesses a horse and buggy mind is surely you are a hang-over from
to bury him very deep indeed in the horse and buggy period.
blackest obloquy. Do you think it is unfair to your

A President of the United States grandchildren to pile up moun-
gave great currency to the phrase tainous debt and leave it for them
in the middle thirties. The Su- to pay as best they can? Ah then,
preme Court had invalidated one quite clearly you belong to the
of his pet interventionist meas- horse and buggy type of men-
ures by declaring it unconstitu- tality.
tional. To the joy and satisfaction Are you concerned lest con-
of his worshipful followers, he put tinued governmental spending,
the court in its place by asserting year after year, of more than it
that its decision would take the takes in will lead to insolvency
country back to the horse and and ruin? Why then — what's the
buggy days. matter, man, do you want us to go

Since then the phrase has back to the horse and buggy days?
—_— It is a verbal dagger that has
Mr. Bradford is a well-known writer and busi- . .
ness organization consultant. caused many a stout heart to quail

23


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

24 THE FREEMAN March

and grow faint — and I often won- drawn either by a single horse
der why. Actually, the horse and between shafts, or by a team
buggy days constituted one of the hitched to an equalizer called a
most enlightened and progressive double-tree, and harnessed on

periods in human history. either side of a guiding pole,
usually called the “tongue.” There
The Buggy Came Later were several varieties of buggy in

The horse, of course, served this country, with or without tops.
mankind from very early times. When there was a top, it could be
We see him in prehistoric picture let down in fair weather and put
tablets, bearing burdens and draw- up in foul. Side curtains could be
ing loads. Sometimes he is de- snapped on when it rained, and a
picted drawing sledges; at others storm curtain was also supplied,
he is hitched to carts or wagons. with an isinglass window and
Here and there we find him gal- protected slots for the reins, or
loping fiercely ahead of Assyrian “lines” as most people called them.
or Roman chariots of war. Later This curtain came from the top
he furnished the power for cum- down over the dashboard in front,
bersome but on the whole rather thus enabling driver and passen-

stately coaches. ger to proceed snugly through
But the light, delicate, strong, the rain.
and easily handled vehicle with A feature of most buggies was

the unfortunate name of “buggy” the so-called fifth wheel. This was
— this was a late-comer in the a horizontal metal ring, made up
large family of horse-drawn con- of two parts that rotated on each
traptions and did not reach very other around the king-bolt or cen-
general use until around 1800. Its ter pin of the swinging front axle.
“age” was roughly the nineteenth This fifth wheel, far from being
century. the useless appendage that its
In itself it was a distinct ad- name came later to imply, was a
vancement over many of its prede- valuable addition to travel com-
cessors. In England it was gen- fort in that it prevented careen-
erally a two-wheeled conveyance ing, and also enabled the buggy to
drawn by one horse hitched be- be turned around in a very short
tween side members known as compass.
shafts. It developed also in India, So much for the buggy as a
where it usually had a hood, or means of transport—a light,
top. springed, cushioned, sometimes
The American buggy could be rubber-tired, generally comforta-


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

1959 HORSE AND BUGGY DAYS 26

ble, and often gaily painted little water craft; and of Ericsson, who
conveyance. It was a “modern” ve- did away with the paddles in fa-
hicle in which people went happily vor of a submerged screw.

and not at all uncomfortably about The horse and buggy days?
the business of getting from one They saw Corliss perfect the re-
place to another — or of going no- ciprocating engine; they saw De
where in particular. People often Laval invent the steam turbine.
“took a spin” for pleasure in their And when it seemed that steam
buggies, just as they later did in had about reached the zenith of

their automobiles. its development, they saw the age
} of electricity begin and develop.
A Period of Remarkable Progress It was the age of Volta, Farraday,

But what of the horse and buggy Kelvin, Maxwell, Ampere, Ohm —
days? What of that dark and dis- bold thinkers and patient experi-
mal era to which you are quickly menters who advanced the theo-
consigned if you are so brash as to ries and surmises of Galvani,
ask, regarding any piece of public Franklin, and the other pioneers
work, “What does it cost?” What, to the point of practical use and
in short, of that period in history application.
which is the present-day symbol And then, right in the middle
of backwardness and stagnation? of the horse and buggy period —

The horse and buggy days? it was 1837 — the name of a por-
Well, to start out with, they were trait painter named Morse flashed
the days of Watt and Evans and upon the electric horizon, and the
Bull and M’Naughton — days in telegraph was born. A few years
which the imaginations of men later the Brett Brothers, followed
dreamed up ways to harness the by Crampton, pioneered the ocean
expansive power of steam to make cable by laying the first wires un-
it push a piston and finally turn a der the English Channel. And in
wheel. They were the days of 1858, while the horse and buggy
George and Robert Stephenson, of were still a going concern, the
Peter Cooper and their successors, New World and the Old were
who believed that the steam en- joined by Field's transatlantic
gine could be made to drive a cable.
thing they called a locomotive — In 1879, driven to his work no
and who made it work. They were doubt by horse and buggy trans-
the days of Symington and Bell port, Thomas Edison invented the
and Fitch and Fulton, who set incandescent bulb, and the era of
steam to turning the paddles of electric illumination broke splen-


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

26 THE FREEMAN March

didly upon the world. And just tive skills and entreprenurial tal-
ahead of that, young Alexander ents thought first of mass trans-
Bell spoke his summoning words port rather than of individual con-
to Watson over the first telephone. veyance. When mass transport had

While the horse-drawn cabs and been well served by the develop-
carts of Paris went cloppety-clop ment of ship and train, those
over the paving stones, a young skills and talents were directed to
couple named Curie toiled in their the needs and desires of the indi-
dreary workshop to startle the vidual and the family; the inter-
world with the magic of radium; nal combustion engine was soon
and while there were as yet only brought to practical perfection,
a few automobiles in the whole and the automobile followed.
world, a young Italian named Mar- But while the automobile was
coni had dispatched the first wire- still an infant and the horse and
less message. In the same period buggy age was still in lusty stride,
the human voice, acoustically re- another bit of magic was wrought
corded on wax and zinc, was re- by men of genius and persistence.
produced mechanically, and the The Wright Brothers flew above
now-commonplace but then-mi- the sands of Kitty Hawk. The air
raculous moving picture was age, too, began in the horse and
created. buggy days!

While all this was going on, sail
gave place to steam on the high Medical Developments
seas, and men went from con- These paragraphs have traced
tinent to continent amid all the only the more dramatic and ob-
comforts and thrills of great lux- vious achievements. Medical sci-
ury liners — but they went to the ence also advanced in the same
dock in a conveyance of the horse period with seven-league strides.
and buggy days. The crude en- It was the century of Laennec,
gines of Stephenson and Cooper who invented the stethoscope, of
evolved into mighty moguls with Serturner, who isolated morphine
compound drive, and the Ameri- from the opium gum, of Long and
can continent was spanned and Morton, who developed ether. In
crisscrossed with a railway sys- this “dark” age Auenbrugger and
tem of fabulous speed, comfort, Corvisart discovered percussive
and dependability — even while the diagnosis; Bright “solved the
passengers drove to the depots in meaning of urinary albumen,
horse-drawn cabs and buggies. Blundell devised blood transfu-

That was because men of inven- sion, and Semmelweiss discovered


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

1959 HORSE AND BUGGY DAYS 27

the cause and prevention of the favor of representative govern-
deadly puerperal fever. Virchow ment. The liberty and importance
laid the foundation for cellular of the individual were stressed,
pathology, Pasteur demonstrated and statesmen were careful to
the germ theory of disease, Lister build up safeguards for man’s
began the use of antiseptics, Mc- freedom of conscience and of
Dowell introduced abdominal sur- choice.
gery, and Roentgen invented, or At the core of the new attitude
rather discovered, the X-ray. was a wholesome fear of govern-
Malaria and yellow fever were ment. Comprehending fully that
conquered. Typhoid, once a dread government was necessary for
scourge, was practically elimi- their protection, men who under-
nated. Tuberculosis, the great stood its nature, who knew its
killer, lost much of its terror. fatal tendency to grow and spread
Smallpox was reduced to manage- and feed upon the substance of its
able proportions. Surgery was own people, men who in their own
vastly improved and extended. lifetimes had experienced its ty-
And perhaps most significant of rannies over mind and body — such
all, the importance of mind in the men held with Jefferson that the
cure and prevention of disease best governed were the least gov-

was recognized. erned; and in forming a wholly
} new nation they set up checks and
Social and Political Growth balances among the several arms

It was a century of the greatest of their government, all designed
invention and material progress to preserve the greatest degree of
and general prosperity that the freedom to people as individuals.

world had ever known or dreamed As the nineteenth century
of —and it was all done in the moved farther into the horse and
horse and buggy days. buggy age, society developed still

It was a time, too, of social and further its social conscience and
political progress. Here in the consciousness. At a prodigious
Western world a new nation had cost of life and treasure, human
just been founded, based on fresh slavery was abolished. Child labor
new principles of self-government. was first outmoded by industrial
The theory of the divine right of progress, and then outlawed. With-
kings had run its course. The an- in the states, education was broad-
cient ideas of monarchial and ened and extended. Beneficent
other highly centralized authori- laws were enacted to protect the
ties were gradually abandoned in honest and unwary from exploita-


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

28 THE FREEMAN March

tion at the hands of the unscrupu- So did the trolley car, at first
lous. And quite apart from the horse-drawn, later pulled by
compulsions of law, enlightened cables, and at last electrically
policies evolved in business and driven. So did the elevator or lift,
‘industry respecting the relations which made multiple-story build-
of management with labor and ings possible. The sleeping car,

with the general public. the automatic coupling, the air
Co } brake and the refrigerator car —
Revolution in Agriculture four primary essentials to rail-

It was also a time of growth road progress —all were invented
and development in many fields in the horse and buggy days.
other than those we have men- It was an amazing time of de-
tioned. Agriculture was being velopment — roughly a century of
studied, and men were going in man-wrought miracles. More
for what they called scientific strides were made toward speed,
farming, with the laudable object production, comfort, health, ease,
of increasing production. They and general diffusion of material
never dreamed that a time would benefits than had taken place in
come when they would be paid by all the previous ages of human ex-
their government not to produce. perience lumped together!

Chemistry was then the top ma-
gician, as electronics was later to A Time of Solvency
be. Invention was the obsession And along with other virtues, it
of many; and out of the great was generally a time of solvency.
seethe of questing minds, the Following the Revolutionary War
world was enriched. The mold- the colonies were heavily in debt.
board and landside plows, the Not yet a united country, not yet
mowing machine, the semi-auto- truly a self-governing nation, but
matic hay rake, the multiple-fur- rather an alliance of separate and
row drill that placed seed and fer- often antagonistic provinces, the
tilizer in the ground at the same war-created Continental Congress
time, the mechanical broadcasting of the nation-about-to-be had at-
machine for sowing grasses and tempted the impossible by creating
small graing, the checkrow planter a kind of fiat paper money. It was
for corn and cotton, the reaper, called Continental Currency to
the binder, the steam-powered distinguish it from the money is-
“combine” — all these came along sued by the several colonies on
in those benighted horse and their own authority, and its indi-
buggy days. vidual notes were referred to as


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

1959 HORSE AND BUGGY DAYS 29

“continentals.” This money soon fundamentals of monetary and
became so worthless that the credit policy. Then as now, the
phrase “not worth a Continental” exploiters and victims of boom
was invented to describe anything and bust blamed one another, and
that was completely without value. little suspected that government
There was a terrific inflation — tampering with money had helped
which is another way of saying cause bad conditions — which fur-
that the Congress had spent on ther tampering was expected to
the war far more than it could cure! :
realize from taxes, and had issued Nevertheless, the people of the
bales of excess and unsupported horse and buggy century did gen-
paper money. The cost of living erally hold a conservatively
went sky high — which simply healthy respect for solvency. Of
meant that, with no confidence in course, they knew about debt and
the plentiful “continentals,” peo- its proper uses. They did not at
ple preferred things to money and all hesitate to borrow when it was
bid up their prices accordingly. good business to do so. They could
But then came the new constitu- have understood, and did under-
tional Republic, buttressed by the stand, an occasional deficit year on
improved monetary policies of the part of their government,
Hamilton; and in a short time the when some unusual circumstance
young country again had a cur- controlled.
rency that meant something. But to operate on a permanent
It would, of course, be naive to deficit basis, to keep piling debt
assert that absolute monetary and on top of debt endlessly, cheap-
financial stability characterized ening their money and threaten-
the century of the horse and ing their standards of living in
buggy. These lines are not writ- the process — this is a procedure
ten to overglamorize that period, that would have been revolting to
nor to gloss over its shortcomings. their reason and offensive to their
There was pronounced inflation practical good sense. Is this an-
during the Civil War period; and other reason to be slightly nostal-
there were other cycles of finan- gic about the horse and buggy
cial and industrial boom and sub- days?
sequent “panic.” Now it is about time for some-
Certainly it is not contended body to rise up and say, “What do
that voters and their agents in you want to do — go back to those
Congress during the nineteenth horse and buggy days?” And that,
century understood thoroughly the needless to say, is nonsense. I


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

30 THE FREEMAN March

couldn't go back if I would, and windows were heavily draped. The
I wouldn’t if I could. Those days walls were hung with family por-
had many discomforts and some traits. An upright piano stood in
hardships — though I must say the corner. A wood stove furnished
they were not then so regarded. heat. Even a “God Bless Our
But nobody in his senses wants to Home” motto was hanging above
go backward. The way of life and the door. The picture was sup-
of progress is forward, to new posed to be funny to a present-
comforts, inventions, achieve- day viewer. But it failed to amuse

ments, adventures. me.
I was conscious that the scene
Unchanging Truths typified an era. Maybe we shall

But there are certain things have other eras as good, but we
- that do not change, whatever the have not for many years enjoyed
age. Living in the space age does a period of time so filled with
not alter the fact that honesty is peace and comfort and lack of
the best policy. The miracle of fretful worry, so rich with real
atomic fission does not negate that security, and withal so full of
two and two make four. A thermo- freedom, as that one was.
nuclear bomb may destroy a city Maybe the man of the picture
and raise a cloud a hundred miles had a small income by today’s
high, but it does not destroy the standards; but he had a comfort-
truth that neither a man nor a able home, and he lived well and
nation can forever spend more saved money. And when he had
than it takes in and escape bank- saved that money, he was not
ruptcy. Supersonic speed can haunted by the fear of ruinous
never take us away from the truth inflation or the awareness that his
that human freedom and welfare savings were losing their value
are conditioned by limitations up- steadily and inexorably.
on governmental power. Maybe he ran a small business.
Such truths, which seem so If so, it was his business, not a
easily forgotten or ignored today, kind of adjunct to the State. No-
were not merely in existence but body at Washington shed croco-
were recognized and generally un- dile tears over his plight as a
derstood and acted upon during “small” businessman; and by the
the horse and buggy days. same token nobody at Washington
Some time ago I saw a drawing or elsewhere told him how to run
that depicted the parlor of an that business. If he wanted to ex-
American home around 1900. The pand it, he did so within the


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

1959 HORSE AND BUGGY DAYS 31

limits of his resources and credit, Are we secure economically? Then
without securing the consent or why the almost frenzied analysis
approval of any bureau or com- and counteranalysis of the recent
mission, whether of the state or business slow-up? And what of
federal government. our so-called social security ? What

Or possibly he was a farmer. does it mean to the average bene-
If so, he was free to plant as ficiary, when the dollars that he
many acres as he liked to what- and his employer have paid in
ever crops he pleased and sell his have already been spent for other
produce at the price it would bring governmental operations, while
in a relatively free market. If he the promised benefits have shrunk
could devise some way to raise to less than half their value, and
more or better wheat or hogs or are still shrinking?

beef or wool or cotton, he was Go back to the horse and buggy
free to do so without being sub- days? Certainly not. The way of
ject to fine and prosecution. life is forward, even though it

He had his problems, that turn- may lead to disaster before it
of-the-century householder, what- leads to fulfillment. But we might
ever his occupation. He probably very well and with great profit go
knew some hardships. But actually back to some of the moral values
he enjoyed a far greater sense of and some of the economic horse-

security than he would today. sense of that much maligned pe-
riod.
Security Sought and Lost At least we can stop referring.

Security! What an irony the to it with sneering condescension
word contains! What are we se- as though it were a kind of mod-
cure from today, with the threat ern dark age. It was in fact a
of thermonuclear devastation great and glowing century, ex-
hanging over our lives? Are we celling all others before it, and all
secure in our position as a nation? of them combined, in the richness
If so, then why are we afraid? and variety of its unfoldment.e ee

| peas ON] 0000RIY | Progress Through Thought

SOCIAL REFORM is not to be secured by noise and shouting, by
complaints and denunciations, by the formation of parties, or
the making of revolutions; but by the awakening of thought and
the progress of ideas.... When there is correct thought, right

action will follow.
HENRY GEORGE, Social Problems


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

EXECUTIVES

TAX CALENDAR Burinen Toxer

(First Quarter, 1959)
JANUARY — The burden of taxes may be shifted thra

15-F Final Declaration of Estimated In-
come Tax by individuals for calendar
year 1958 due, accompanied by final

or full payment. WHY SHOULD I be concerned about
31.S New York State Unemployment In- : : -
surance Tax for fourth Quarter 1958. the multitude of business taxes \
levied by the federal, state, and
FEBRUARY — : local governments? Why should a
2-F Federal Unemployment Insurance Tax wage earner be interested in a
or year . . )
2-F Deposit Withholding Tax accumulation businessman's property, commod-
(if over $100 through December 1958). ity, excise, service, income, excess
2-F Federal Withholding Tax and Social i 2
Security Tax for fourth quarter 1958 profits, and license taxes? ]
on Form 941, All socialists and pseudoliber-
2-F File Directors copies of Form W-2 als have a ready answer: “Taxes
and reconciliation of quarterly With- . : . .
holding Tax reports on Form W-3; and on business redistribute the gains
* also compile individual statements to . ye
employees on Form W-2 (in duplicate) derived from exploiting the work-
covering total payment and withhold- 3 :
ing of employees during 1958. ing man and gouging the con-
15-§ Fina Quarterly payment due, Normal sumer. They return purchasing
ncome ax an apita! Gains fax ror
Individuals. power to the people whom the
16-8 Deposit | Withholding Tax Bemus. cruel capitalist system has de-
tion and Social Security Tax (if over : : : .
$100 through January). prived of their rightful shares as
15-S Information returns due on garnings workers and consumers. Confisca-
of Resident Employees of the State i 1me-
OE New York. tory business taxes are an im
portant element of justice In an
MARCH — otherwise unfair economic order.
1-8 Report and payment of Tax withheld This tax justice reconciles the
on Non-residents of the State of New .
York. workers with the system and thus
2-F All other Federal Income Tax Infor. prevents them from overthrow-
mation returns due, except returns . . . .
of fiduciaries and partnerships. Forms ing it. In final analysis, business

1096 and 1099 due here.

16-F Deposit Withholding Tax accumula-
tion and Social Security Tax (if over
$100 through February).

16-F Income Tax for calendar year 1958 of
Corporations.

F — Federal Taxes
20-C Sales and Compensating Use Tax cov
ering the three months of December S — State of New York Taxes
1958, January and February 1959, C — New York City Taxes

taxes and other business-control-

4 A typical tax calendar for a business in New York
City.


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

Conconn, Everyone

gh readjustment of the whole economy HANS F. SENNHOLZ

ling measures safeguard the old As long as the factors of produc-
capitalist order from its own de- tion — capital and labor — stay in
struction. They sustain our demo- private ownership or retain their
cratic way of life.” mobility, they tend to adjust to all
The free enterpriser summarily changes in market conditions as
rejects these socialist notions and well as government intervention.
may reason as follows: “Business
taxes concern everyone because
they burden everyone’s produc- Let us trace the shifting of the
tion. They cause capital consump- federal income tax on corporate
tion, lower economic productivity, profits. The tax is, in effect, an ad-
lower salaries and wages, and lead ditional cost of production, like
to government expansion and ar- that of raw material, fuel, or
bitrariness. Above all, business labor. When it is first imposed, no
taxes concern everyone because single producer can raise his
they are frequently ‘shifted’ to prices to compensate for the tax.
everyone through readjustment of He must pay it out of his earn-
the whole economy.” ings. Under the impact of the tax,
The term “shifting” unfortun- the marginal enterprises, which
ately implies an expedient which had previously earned just enough
moves the tax burden from one to remunerate all employed fac-
person to another often by trick, tors of production including a.re-
dodge, or fraud. It implies evasive turn on capital and payment for
methods and tax loopholes which risk, will now lack the necessary
the government should endeavor to income.
close. A producer who suffers losses
In reality, the “shifting” is will endeavor to minimize the
simply a poor expression for price losses by reducing his output.
adjustment in a market economy. And one who is not compensated
_— for his risk and capital acts simi-
Bonoumen Cre Cony ote D) a larly. He may shift his capital to

Shifting of Profit Taxes

33


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

34 THE FREEMAN March

more profitable employment or such as labor union refusal to
merely withdraw it from produc- lower wages, unemployment must
tion. Thus, economic output is re- set in. Lower wages and unem-
duced. How quickly it will be re- ployment reduce the workers’ de-
duced depends on the nature of mand for consumer goods which
the capital and, especially, on its in turn leads to further produc-
mobility. tion restrictions.

Declining production tends to Thus, we find not only “forward
exert an upward pressure on the shifting” in the form of reduced
sales price of the product. The profits and higher prices, but also
market price is bid up to a point “backward shifting” in the form
where the demand for and supply of lower prices for materials and
of the product are in equilibrium lower wages.
again. This means that production The restrictive effect of the tax
will be cut back and prices will is counteracted somewhat by a
rise until the earnings suffice to larger government demand.
compensate the remaining pro- Wherever the federal govern-
ducers for their capital and risk. ment spends its revenue, it tends
At the higher prices and lower to strengthen prices. Its subsidies
production, however, some capital to agriculture, for instance, make
investments will remain unprofit- farming more profitable than it
able until eventually written off otherwise would be. Farming will
as malinvestments or withdrawn attract more capital and labor,
for other employments.The higher and farmers will have more money
prices also impose a burden on for consumption. Other industries
consumers and lower their stand- consequently will readjust to cater
ards of living. Some consumers to agriculture.

even have to do without the prod- The employment of 24 million
uct. civil servants on federal payrolls

also tends to absorb some labor
Two-Way Tax Shifting set free by industry. But their in-

This is merely the beginning come, as well as all other govern-
of the necessary shifting. The cut- ment spending, involves more
back of production causes a re- than a mere transfer payment
duction of demand for materials, taken from industry and spent by
labor, and capital goods. Their civil servants, farmers, and con-
prices tend to decline. In case tractors working for the govern-
price adjustment is difficult be- ment; it is income derived from
cause of institutional rigidity, the market awards of a single fac-


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

1959 BUSINESS TAXES CONCERN EVERYONE 35

tor of production: capital. In the prices, and lower wages. But these
hands of the businessmen, capital very same things happen as the
is both the motivating power and result of confiscatory inheritance
the material requirement of all in- taxation which aims at large busi-
dustrial production. To deprive ness fortunes.

capital of its proper rewards, such It is true, the tax does not con-
as interest on the businessman’s sume directly the business assets,
own capital and remuneration for such as railroad equipment and oil
risk, inflicts havoc on the whole refineries. But it forces the heirs
economy. Production is curtailed to liquidate the assets in order to
not only by the amount of tax pay the tax assessment. The gov-
levy but also by the much greater ernment then absorbs the liqui-
amount of capital lost or with- dated capital, with the same ef-
drawn for want of remuneration. fects as if it were absorbing busi-
Though this capital deficiency is ness profits. Indeed, although the
caused by government taxation, it inheritance tax may be less fre-
cannot be remedied by govern- quently imposed, it nevertheless is

ment spending. equally devastating for the whole
economy. It consumes business
Two Alleged Exceptions capital, reduces production, in-

According to the prevailing tax creases product prices, and lowers
doctrine, there are at least two material prices’ and wages. And
taxes that cannot be shifted after like the corporate income tax
having been imposed on a tax- which inflicts heavy losses on some
payer. It is said that such a per- marginal producers, the inherit-
sonal tax as the inheritance tax ance tax confiscates the large for-
cannot be shifted by way of busi- tunes of some deceased producers.

ness operations. Consequently, it The second alleged exception to
cannot affect the prices charged tax shifting is the case of “eco-
for goods and services. nomic surplus.” According to the

Although this reasoning ap- interventionist tax doctrine,
pears plausible, it is nevertheless which has led to the present con-
dubious. In our preceding ex- fiscatory levels of business taxa-
ample, the first tax assessment on tion, “surplus” taxes do not de-
corporate income clearly reduced termine prices and costs, but are
corporate profits. But then the eco- determined by them; they cannot
nomic adjustment set in, leading work themselves either forward
to reduced production, higher or backward into prices or costs.
product prices, lower material “Economic surplus” is usually


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

36 THE FREEMAN March

defined as “that part of a pay- pansion unprofitable and thus per-
ment or accretion of purchasing petuates the maladjustment that
power which is not necessary creates the profits.
either to maintain the service of In other words, the surplus tax-
a factor of production, or to its ation deprives the market econ-
necessary or desirable increase.” omy of its ability to adjust to
In other words, true profits above changed conditions. Progress
an allowance for interest and risk through technological improve-
are not needed to maintain factor ments is either halted entirely or
services and, consequently, may slowed down to a “desirable” rate
be absorbed through taxes. of growth. Thus, product prices
In reality, this concept of ‘“eco- are kept higher and wages lower
nomic surplus” is ambiguous and than they otherwise would be. So
utterly useless for the understand- we see that confiscatory inherit-
ing of economic profits. What is ance taxes and the taxes against
an executive’s “surplus” salary “surpluses” are quite as readily
which can be taken from him “shifted” as are regular corporate
without reducing his initiative income taxes.
and efficiency? What is a corpora-
tion’s “surplus” profit that can be Present Tax Rates Encourage Waste
taxed away without hampering The present taxes not only con-
its operation and ‘necessary or de- sume business capital, and conse-
sirable” growth? What is “neces- quently retard economic progress,
sary or desirable” growth? Every but also lead to wasteful business
conceivable answer obviously must practices. High taxes discourage
be arbitrary. thrift and economy because most
The “surplus” theory disre- of the fruits of such economy
gards the very function of profits would accrue to the various gov-
as the indispensable regulator of ernments in the form of taxes.
business activity. High profits Why should a corporation or a
which result from increased con- businessman in confiscatory tax
sumer demand or technological brackets scrutinize business costs
improvements immediately pro- and endeavor to hold them down
vide and attract additional capital. if there is little chance to gain
The ensuing expansion of output thereby?
then reduces the profits and ulti- Instead of controlling costs
mately eliminates them entirely. carefully, a businessman subject
An absorption of profits through to confiscatory taxation may be
taxes, however, renders the ex- tempted to increase them. He may


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

1959 BUSINESS TAXES CONCERN EVERYONE 37

increase his outlays for advertise- that the business which employs
ment, thus reducing his tax lia- them earns high profits. Other
bilities while at the same time workers, in marginal enterprises
promoting his future business. He without profits available for bene-
may close his eyes to labor in- fits, will earn less for similar
efficiency in order that he may be- labor services. But such a differ-
come more popular with his work- ence causes dissatisfaction on the
ers. He may grant costly “fringe” part of the “underpaid” workers
benefits just to reduce his tax and leads to labor unrest and
liabilities. Or he may increase his strife. This ominous result, to-
costs of business travel and enter- gether with the fact that the
tainment. higher costs consume business
His decision depends on which capital, should give concern to all
yields the greater satisfaction: workers, including those who
his added spending, or his net share in the profits.
profit after taxes. For instance,
being in the 80 per cent income Economic and Social Rigidity
bracket he must decide whether Production for future consump-
one dollar additional spending on tion involves various degrees of
advertisement, labor benefits, risk. Demand, supply, and prices
traveling, or entertainment is may change. Even the whole out-
more desirable than 20¢ net profit. come of a business venture may
In many cases, his decision will be be uncertain, as in the case of sci-
in favor of additional spending. entific research or the search for
At first glance, the greater oil. A businessman, therefore,
benefits to labor may appear de- compares his chances of success
sirable and beneficial. But it must and eventual profit with the pos-
be recognized that they are not sibilities of failure and loss. En-
earned through higher produc- ticed by the possibility of great
tivity. On the contrary, in this profits, he may be willing to risk
case they are accompanied by some capital. On the other hand,
lower labor efficiency. The greater if profits are to be denied him re-
benefits are obtained gratuitously gardless of his success, he will be
through distribution of the busi- reluctant to risk his capital. This
nessman’s profits. They create a is why confiscatory business taxes
privileged class of workers earn- discourage risk-taking. The costs
ing higher wages for less work. of failure are exclusively borne
The workers’ only claim to these by the businessman, and the fruits
benefits rests on the coincidence of eventual success are mainly


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

38 THE FREEMAN March

reaped by the hungry government. pete with the giant corporations
Without “risk capital” an econ- while his profits are continuously
omy becomes rigid and stagnant. confiscated? The large corpora-
It loses the capacity to adjust tions may relax and become bu-
quickly to changing demand situa- reaucratic and inefficient; they
tions or to technological innova- will not be challenged by new-
tions. Maladjustments go uncor- comers. On the contrary, the small
rected, and progress becomes pain- businessman facing this futile
fully slow. struggle against taxes and other
This rigidity and stagnation is interventionist obstacles may en-
of special significance for the deavor to sell out to his larger
young and the poor. A young man competitors. Thus, present tax
eager for success in business de- rates encourage the growth of
pends on his courage and inge- business combinations and dis-
nuity. Lack of capital obliges him courage the small independent
to operate on a ‘‘shoestring.” He producers.
takes great chances in order to It is indeed an irony that our
earn large profits. Only through government protects the large
profits plowed back can his busi- corporation from the competition
ness grow to challenge the estab- of the small while it professes to
lished enterprises. Profits are the protect the small. It deprives the
only road by which a man in busi- poor of opportunity to succeed
ness can rise from rags to riches. while it professes to promote their
The present business taxation welfare. And it creates social
tends to prevent a newcomer from classes while it ardently aims at
growing to challenge the large equality.
corporations. It is true, the same
taxation prevents a large enter- A New Profession
prise from growing even larger. The present business taxes have
But it also keeps the new business created a new profession: the tax
small. In other words, the pres- expert. They have withdrawn
ent income taxes help to shield the hundreds of thousands of men and
established wealthy businessman women from productive employ-
against competition from the new- ment and put them to work on tax
comer. matters. They have crowded not
Today, a young man’s oppor- only the government bureaus with
tunity to become the founder of a thousands of tax agents assisted
large enterprise is ‘very slim. by large clerical staffs but also the
What chance does he have to com- accounting department of our pro-


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

1959 BUSINESS TAXES CONCERN EVERYONE 39

ductive enterprises with an even ness costs and low profits in order
larger number of tax accountants, to reduce his tax liabilities, the
tax counselors and advisers, tax government likes to arrive at
lawyers, and the like. lower costs and higher profits in
We often neglect this aspect of order to enjoy larger revenues. In
taxation when we calculate the the absence of an objective yard-
costs of government. We are stick of evaluation, the govern-
prone to forget that tax account- ment proceeds to define “legiti-
ing and all other bookkeeping re- mate” business costs, depreciation
quired by government impose tre- allowances, obsolescence, inven-
mendous costs on business. And tory value, and the like.
we take it for granted that busi- Without fail, its definitions aim
nessmen must calculate and with- at increasing government reve-
hold the taxes of their employees nues. Without regard for eco-
and send them to the federal gov- nomic effects, the “legitimate”
ernment without being remuner- costs are reduced to levels that
ated for the costs of such collec- fail to cover actual business ex-
tion. All those expenses inevitably penses. An example of such an
lead to higher product prices, arbitrary tax regulation is the
lower productivity and wages, government refusal to allow for
consumption of business capital, proper depreciation.
and ultimate economic stagnation. According to present tax regu-
lations, depreciation can be based
only on original cost. But in pe-
riods of inflation, such as ours,
However, there is yet another the cost of replacing plant and
more ominous result of our pres- equipment is much larger than its
ent taxation: It has opened a gate- original cost. Consequently, ac-
way for bureaucratic power and counting that does not allow for
arbitrariness. Business taxes in the replacement costs causes an
general are based on valuations. overstatement of earnings for
In order to arrive at his taxable American corporations amounting
income, a businessman must to billions of dollars annually. It
evaluate his inventory, the depre- has been estimated that during
ciation and obsolescence of his 1947 and 1948, when prices rose
fixed assets and equipment, his ac- rapidly, all nonfinancial corpora-
counts receivable, and other busi- tions were forced to overstate
ness assets. While it is in his in- their profits by a total of $28.4
terest to demonstrate high busi- billion and their tax liabilities by

Towards Government Arbitrariness
and Economic Regulation


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

40 THE FREEMAN March

45.8 per cent. In this fashion, the the Administration, the Internal
Internal Revenue Service levies Revenue Service is likely to be
an oppressive supertax on the called into action. Usually in such
high business taxes imposed by cases, tax agents will establish
Congress. new tax liabilities or even charge
In order to enforce such arbi- the victim with tax evasion. In
trary tax devices, a host of tax fact, the Internal Revenue Service
agents incessantly swarm about a frequently has acted as the puni-
man’s business and pry into his tive arm of the government.
books. Searching for “unauthor- Our present business taxes are
ized” expenditures and ‘‘im- the concern of everyone because
proper” tax procedures, they delve they are ushering in government
into all details of business life. omnipotence and all-round eco-
Their decisions may spell doom to nomic regulation. They hamper
a businessman, for noncompliance production and cause economic
with tax regulations may mean stagnation. They encourage waste
economic disaster, conviction, and and inefficiency, depress wages,
social disgrace. and cause labor unrest and strife.
The frightful power of our tax They make for economic rigidity
administration can also be seen in and create social classes. In short,
politics. Whenever a businessman present business taxes are des-
incurs the wrath of Congress or troying our way of life. eo o eo

William Graham Sumner

THE STATE is the greatest monopoly of all; it can brook no rival
or colleague in its domain; it is necessarily sole and supreme.
If the State is purely a civil organization, this monopoly char-
acter of it is beneficial; if, however, the State enters as an agent
into the industrial or social relations of its own subjects, it be-
comes the greatest and worst of all monopolies, the one best
worth having under one’s control, the best prize of base strug-.
gles, and the most powerful engine by which some men may
exploit others.


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

MUTUAL SECURITY......

0r—THE NEW MERCANTILISM

It was an April afternoon

At story-telling time.
Old Kaspar lit a fresh cigar

And poured a rum-and-lime;
While Peterkin and Wilhelmine
Turned on the television screen.

They saw a gang of sweating men
Go through an open door
And dump a pile of swords and guns
Upon the Senate floor,
Where Senators, with weights and scales,
Were sorting dollars into bales.

“Now tell us what it’s all about!”
The little children cried.
“It’s Mutual Security,”
Old Kaspar soon replied.
“The folks who live across the seas
Want many swords and guns like these.”

“How will they pay for all those guns?”
Asked little Peterkin.

“They’ll pay for them with dollars, Pete,”
Said Kaspar with a grin.

“Before they get a sword or gun

They'll pay us dollars by the ton.”

“But how can folks across the sea
Get dollars by the ton?” )
“Why, that’s no problem,” Kaspar said,
“Or just a little one;
When buyers live in foreign lands,
We put the dollars in their hands.”

H. P. B. JENKINS
Economist at Fayetteville, Arkansas

41


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

Silciine

Except for the actual figures, this account of inflation
in Canada accurately describes what also is happening in
the United States, and in most other countries as well.

ROBERT MOON

HISTORY IS FILLED with examples manding and supporting policies
of unchecked inflation and its which fan the inflationary fires.
disastrous results — destruction of Canadians are among them.
the people's savings, disruption of Collectively, we have indulged in
their lives, and the wrecking of unsound, wishful thinking. Most
national economic systems. Em- of us have wanted something for
pires have fallen because of it. nothing from our governments.
Lenin advised his communist We farmers have wanted hand-
followers that inflation was one of outs, we businessmen have wanted
their chief weapons for the world easy money, low interest rates.
revolution they hoped to bring We manufacturers have wanted
about. Lenin said the best way to tariff protection from foreign
destroy capitalistic countries was competitors. We workmen have
to demolish the purchasing power wanted constant employment with
of their currencies. higher pay, shorter hours, and ex-
Today, Lenin would not have pensive security provisions. We
had to conduct his secret infla- ‘have expected our governments to
tionary war from behind the Iron accomplish the impossible. We
Curtain. He has many millions of have supported them while they
unconscious allies in the Western tried. We have been mystified by
world to aid and abet him by de- the discovery that our good Cana-
— dian dollar is progressively losing
Mr. Moon is Ottawa staff correspondent for jtg purchasing value.

the Regina Leader-Post and the Saskatoon

Star Phoenix. This is a condensation, printed Now the shocking truth has
by permission, from a series of ten articles .
published in those papers in the Fall of 1958. caught up with us. We find that

42


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

1959 INFLATION SPELLS RUINATION 43

we have paid for these unearned those who live on fixed incomes
handouts by progressive destruc- suffer because prices go up and
tion of the value and the purchas- their dollar won’t buy as much as
ing power of our hard-earned formerly.
money saved for our retirement Pensioners suffer because their
in pension funds, saved for the pensions were established when
protection of our wives and chil- the dollar was worth more and
dren in insurance benefits, saved bought more. When its purchas-
for future use or for a rainy day ing power declined, they could
in bank accounts, in bonds, in- buy less. They suffer.
cluding war savings bonds. Such Those who receive life insur-
cherished assets now buy only 70 ance benefits suffer. They paid in
per cent or 50 per cent of what their money when it was worth
they cost and will soon buy less, perhaps twice as much as it is to-
unless we succeed in stopping in- day. They thought they were pro-
flation and preserving the value of viding for their future or their
our dollar. dependents’ future. They weren't.
All of this has resulted from Prices went up in the meantime
policies and practices which we and the purchasing power of the
have forced on our governments dollar dropped. They suffer.
if they were to enjoy our support. Savers who deposited their
The tragedy is that Canadians money in the bank heeded a child-
now seem to accept inflation as hood injunction that the bank was
certain. Many try to safeguard a good place to leave their money
themselves, or ‘hedge,’ against and that savings were a good
inflation by buying stocks and thing to have. They were. But
houses and tangible ‘“things.’”” prices rose and the dollar dropped
Even such safeguards will not in value. The savers no longer can
prevent eventual monetary and fi- buy as much with the dollar they
nancial chaos. If this trend con- saved as they could when they put
tinues, the value of the dollar in- it in the bank. They suffer.

evitably will collapse. Investors who purchased gov-
ernment bonds thought their in-
Those Who Suffer vestment was about the safest

But inflation and the dollar's they could make. It was. Inflation
continued shrinkage needn’t be changed all that. The investors
certain. They can and should be who bought government bonds
stopped, and the buying power of suffer.
the dollar maintained. Until it is, Those who are on salaries and


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

44 THE FREEMAN March

wages also suffer. These salaries in the hands of the people in-
and wages may be rising, but they creased by a startling 14 per cent.
are not rising equally from firm There now are $114 in the pockets
to firm and from occupation to oc- of the people or in bank deposits
cupation. Those workers may be for every $100 thirteen months
better off in inflationary times ago. The increase in the money
than those who are on fixed in- supply in the last thirteen months
comes, but there will be certain in- has totaled $1,5600,000,000. It is

equalities caused by inflation. much greater than in any similar
In the end, everyone suffers. postwar period.
And if the government cannot Meanwhile, the minor recession

sell its bonds to the people be- has caused some persons to save
cause the people have grown wary their money. From the end of
of placing their money where it April to September 17, dollar de-
will not maintain its value, a very posits in chartered banks in-
serious situation develops in creased by $808,000,000. The in-

carrying on the nation’s affairs. crease in deposits for the year up
to September 17 was $1,418,000,-
The National Debt 000. This temporarily alleviated

Nevertheless, it is within the pressures which the artificially
power of government, through its created money might have on the
handling of the national debt and existing goods and services, pres-
the supply of money, to speed up sures which might shrink the pur-
or slow down the insidious disease chasing power of the dollar still
of inflation. further.

Ever since the war, more and
more dollars have been purchas- The Money Supply
ing relatively fewer goods. In the The question is: What will hap-
decade after 1946, the volume of pen if a boom comes quickly, per-
production of goods and services haps next summer — as many be-
climbed by only about 3 per cent lieve —to spark a new spending
per year, whereas the money sup- spree? Will the $1,500,000,000
ply rose by about 51% per cent an- still be around to compete for the
nually. existing goods and services, which

In the last thirteen months normally only increase in volume
(through September 1958) the by an average of 3 per cent an-
volume of output of goods and nually?
services remained virtually un- Will the government in the
changed. But the supply of money meantime drain off some of the


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

1959 INFLATION SPELLS RUINATION 45

potentially competitive dollars by deficits incurred in an attempt to
way of imposing and collecting please everyone.
higher taxes or through increased Sometimes governments “print”
borrowing from the public, or by money because they wish to avoid
having its Bank of Canada sell the politically unpopular action of
some of its vast holdings of gov- raising taxes to cover the deficit.
ernment bonds to the public and The terrible fact is that in seek-
the chartered banks for cash and ing to avoid a politically unpopu-
bank credits which thus would be lar action, an extremely harmful
taken out of circulation? economic force is set in motion,
This is the great question in which makes everybody's income
Canada’s present inflation crisis. and savings buy less by lowering
If the government does not do the value of the dollar.
this, then prices will rise still That is why the money supply
further. The dollar will shrink is crucially important. That is
more in purchasing power. Infla- why governments should use cour-
tion will have exacted a still high- age of the highest order in han-
er toll of suffering. dling money and why every Cana-
dian should understand before he
can support corrective changes in
If a government ‘printing government policy.
press” ran off $1,500,000,000 in This is how the ‘“‘printed”
dollar bills, it could no more surely money process operates when a
increase Canada’s money supply government resorts to it because
than our Canadian government it can’t raise sufficient money by
has during the past thirteen taxes or by borrowing from the
months. It has indeed called for public to pay for its spending:
the “printing” of some of the cur-
rency included in this total. It The Central Bank
does not need to print it all be- The government issues a bond
cause of a money and banking or note of specified amount to the
technique which will be described. Bank of Canada or a chartered
Nonetheless, the whole process is bank and has the bank credit the
called the “printing press” method government’s account with the
of creating money and credits. value of the bond. The govern-
The technique sometimes is ment has thus created a credit or
used by our governments when new deposits in the Bank of
borrowings from the people’s sav- Canada or in the chartered bank.
ings are not sufficient to cover The government can draw

The “Printing Press’


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

46 THE FREEMAN March

checks on the Bank of Canada or Bank of Canada for “printing
the chartered bank. The govern- press’ money.
ment then pays its own expenses
by issuing checks to individuals or Reserve Banking
firms to the total extent of the An important fact of this
bond or note deposited originally “printed” money process is that
in the Bank of Canada or the the effect of such artificial crea-
chartered bank. Recipients of the tion of money is enlarged by a
government checks may, of course, standard banking practice which
cash them for currency. results in the multiplication of
Nowadays, most large-scale bank loans and credits. The char-
business is conducted by check, so tered banks are required by law
that very little actual dollar bill to back up their loans and invest-
currency may be required. ments by placing 8 per cent of
The chartered bank can procure their deposits in the Bank of
the actual dollars required by pre- Canada.
senting the government’s check to That is, if a check or cash is
the Bank of Canada for currency. deposited by a citizen in a char-
The money would then have to be tered bank, this will raise the vol-
printed by the Bank of Canada to ume of the bank’s deposits and
meet the obligation for cash. the bank must in turn deposit 8
But the check paid out by the per cent of this check or cash
government has the same effect as amount with the Bank of Canada.
money, even if it is not presented Once the chartered bank has done
for actual currency. And the gov- this, it may loan out the remain-
ernment has another way of put- ing 92 per cent. It is the fact that
ting “printing press” money into it can loan out this amount which
circulation. It can have its gov- magnifies the effect of the govern-
ernment-owned Bank of Canada ment’s artificial creation of
simply go into the open bond mar- money. Further, if another char-
ket and buy government bonds tered bank then receives this re-
from private holders and pay for maining 92 per cent, it too must
them by Bank of Canada ‘“print- deposit 8 per cent of this amount
ing press” notes and credits. The with the Bank of Canada and it
result of this open market opera- can loan out the remainder. This
tion is the same as if the govern- process can go on a number of
ment in the first place had not times, each time creating new
sold the bonds to the public at all spendable credits, and therefore
but had merely sold them to its increasing the pressure on the


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

1959 INFLATION SPELLS RUINATION 47

purchasing power of the dollar spending far more than it is tak-
each time. ing in by way of revenues from
When the government sells a all sources, including taxation and
bond to the Bank of Canada and bond sales to purchasers (other
deposits the proceeds in a char- than banks) who pay for the
tered bank, it is therefore con- bonds out of savings. Bond sales
ceivably increasing the potential to the public represent a natural
money supply by more than twelve increase in the national debt, but
times the amount of the original at least the government is obtain-
government note. ing legitimate savings to use in
The Bank of Canada can in- meeting its expenditures. The
crease or decrease the money sup- bond sales to the general public
ply at its own discretion. In the have not filled up the revenue bag
last analysis, however, it is the to the point at which revenues
government itself which plays the and expenditures are in balance.
decisive role in deciding how To the extent of $1,500,000,000
much money should be in circula- during the past year our govern-
tion. ment has added to its debt obliga-
Our government’s actions in in- tions by creating new ‘printing
creasing or decreasing money in - press’ money, that is, by selling
circulation, in drawing on public bonds to the banks which pay for
savings by selling government se- them by creating new deposits for
curities to the public in loans, in the government to spend. It now
controlling interest rates, are de- seems that our government’s
pendent finally on public opinion present spending policies will re-
politically approving or disap- sult in more money being created,
proving these government prac- or “printed” and spent, to add
tices. further to the inflationary spiral.
This is not a new process, not
$1,500,000,000 Added a recent postwar invention. It has
The handling of money is di- been known and practiced for
rectly related to the national debt. many years. During World War
And from the standpoint of the II, Canada’s national debt multi-
purchasing power of the dollar, plied by four times. Yet Canada
there is now a new emergency in financed that war on a 3 per cent
Canada. That emergency arises interest rate, tripled the money
out of the present rapidly increas- supply, and prevented prices from
ing national debt. This is why: rising beyond 20 per cent.
Our federal government is now After the war, the controls and


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

48 THE FREEMAN March

the rationing ended. Gone, too, Nationalization Spells Loss
was the patriotic impulse to save, The fact of this year’s deficit is
But the inflationary pressure was already widely known. Its full
somewhat mitigated by the gov- scope, however, is not. The bud-
ernment taxing more money than get itself involved a deficit of
it currently spent. It used the §805,000,000, including a $165,-
surplus to buy in and retire gov- 000,000 NATO account for which
ernment bonds, thus reducing the funds must be raised. Moreover,
debt in a way in which the pres- the government still has to find
ent government might intend re- money for its old-age pension fund
tiring the present debt at some because the revenues from these
future date. collections do not equal the outgo.
Nonetheless, in the postwar Further, the Canadian National
years, the tripled money supply Railway does not operate at a
remained. There was, moreover, a profit and the government must
strong impulse to cash in on the provide the railway with funds to
Victory Bonds in order to make cover its extensive 1958-59 loss.
purchases which had been post- The government also is making
poned during the war years. As new loans to the Central Mort-
if this were not enough, there gage and Housing Corporation, to
was also a great new era of capi- the St. Lawrence Seaway Author-
tal expansion and construction. ity, and to other federal organiza-
In Canada, as in Britain and tions. Finance Minister Fleming
the United States and elsewhere, himself estimated that over all,
prices kept rising so that now the without making any allowance for
Canadian dollar will buy only half old debts falling due, he would
as much as it would buy in 1939. need to raise about $1,400,000,000
Prices have risen by 100 per cent. in additional money this year.
Such was the effect of increasing At the same time, our govern-
the public debt and the money ment has not succeeded in bor-
supply by deficit finance during rowing sufficient existing savings
World War II. by selling the savers new govern-
The Canadian dollar had proven ment bonds. The “borrowing,”
as much a war casualty as any therefore, has mainly been done
wounded soldier in the field. More- by “selling” the bonds to the char-
over, the injury to the Canadian tered banks and in part to the
dollar grew worse after the war. Bank of Canada. These banks pay
In terms of purchasing power, it the government for its bonds by
has never recovered. creating a new “printing press”


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

1959 INFLATION SPELLS RUINATION 49

deposit. Hence, the increase in less than $8,100,000,000 in such
the money supply, about 14 per bonds, including Savings Bonds.
cent in thirteen months. Hence The sharpness of the decline in
the dangers to the value of the this investment is self-evident.

dollar. Here are the figures which
show the continuing recent de-
Citizens Lose Faith cline in public investment in gov-

The average Canadian citizen, ernment bonds, not including Sav-
who more and more has been ings Bonds:
sensing the prolonged and un- August 28, 1957—$6,159,000,000
abated nature of the declining June 25, 1958 —$6,013,000,000
value of his dollar, has become Sept. 24, 1958 —$5,597,000,000

less and less inclined to trust the The trend is unmistakable. It is
federal government with his down, down, down.
money. During the same period, the

He has, in actual practice, been gross public debt has been going
doing what is technically de- yp, up, up:
scribed as ‘“dis-investing” in gov- August 28, 1957—$14,765,000,000
ernment bonds. He has, in lay- June 25, 1958 —§15,5607,000,000
man’s language, been taking his Sept. 24, 1958 —$15,815,000,000
money out of government bonds As of October 20, it was
and using it otherwise. He has —over $16,000,000,000
been saving it or spending it or
investing it in some other way Savings Bonds Unattractive
such as common stocks, land, and Neither should there be any
buildings at increasingly high confusion about the effect of Sav-
prices. He has, on average, been ings Bond sales. While a new Sav-
selling more government bonds to ings Bond issue was being offered
the banks than he has been buy- last month, with certain resultant
ing. He has been doing this to the sales, the total amount the public
extent of hundreds of millions of invests with the government in
dollars since the end of World this way rises very little from year
War II. He has been doing it con- to year, notwithstanding huge
stantly over the years since that annual sales volumes. These are
time. He is still doing it. the figures of Savings Bonds out-
At the end of 1945, the public, standing:
excluding the banks, held more August 28, 1957—$2,238,000,000
than $11,000,000,000 in govern- June 25, 1958  —$2,474,000,000
ment bonds. Now the public holds Sept. 24,1958  —$2,391,000,000


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

50 THE FREEMAN March

The public may buy new Sav- aid to farmers. We did not realize
ings Bonds quickly and in large that it involved the artificial crea-
amounts. The public cashes in on tion of money which would be left
its old ones almost as fast. There in circulation and be sure to re-
is, in short, little net gain in Sav- duce the purchasing power of the
ings Bond totals. Our government dollar. We rarely, if ever, look at
is not financing much more of its both sides of the same coin. We
operations from this form of funds may benefit, temporarily at least,
from year to year. In fact, with but we seldom realize it was the
the dollar relentlessly losing value very government policies and
and expenditure totals rising, it practices which we supported
has been financing proportionately which have helped bring about
less and less of its operations from the present inflation crisis.
the proceeds of Savings Bonds. Consider how this comes about.
And it is losing the proceeds of We may wish to have our govern-
the nonsavings type of govern- ment help maintain a high level
ment bonds to the tune of hun- of employment. Our government,
dreds of millions of dollars. therefore, may embark on a heavy
spending program or cut taxes, or
do both. Either way, more money

P. T. Barnum, the circus im- is put into circulation. In thus
presario, whose cynical comments seeking to have our government
on the gullible have become re- spur the economy we may have
nowned, indeed would have en- set in motion a far worse danger
joyed our readiness to support than that which we sought to alle-
policies which are destroying our viate.
own savings. We have learned that there is

When we embarked on an infla- no pie-in-the-sky. We have learned
tionary spending program, we did the hard way that the real price
not realize that the result cer- of demanding something for noth-
tainly would be that our dollars’ ing is the progressive destruction
purchasing value would be seri- of the value of all our Canadian
ously reduced thereby. We wanted dollars — our . shopping dollars —
only to alleviate unemployment, our pension dollars — our insur-
to help a depressed industry, to ance dollars —our invested dollars.
inspire development, to provide This is the price a nation can-
higher wages for civil servants, not endure without grave peril to
higher pensions for the aged, and the whole economic system, o o o

Good Intentions, Bad Results


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

A suggestion that ought to béS helpful «to. students, parents,
alumni, mer school, a and! othirs's Seeking .

nA

A WAY TO FINANCE # GHER EDUCATION

CL Lover C. PETERS

IN PRIVATE INSTITUTIONS, college tinually re-examining their bases
and graduate school education has for charges in order to find a bet-
been heavily subsidized by income ter method.
from endowment. Each student's Offered here is a new method of
tuition .represents only a fraction charging for tuition. It is sug-
of the cost of the service rendered, gested not so much in the hope
and, in addition, tuition for needy that it will prove to be the ulti-
students may be reduced or elimi- mate solution but in the hope that
nated through scholarship aid. this approach may stimulate
With the prospects of continued others to devise better methods,
long-term inflation and very high some one of which might provide
personal income taxes, private col- a practical solution for the col-
leges face a difficult time even in leges.
maintaining their present finan- It has been demonstrated that
cial position, i.e., having endow- college education has substantial
ment income cover their present value to the recipient both in terms
percentage of total costs. Private of higher lifetime earnings and
colleges have thus far met this other benefits. With this in mind,
problem by increasing tuition and why not relate the charge for the
other charges. Of course, higher education either to its cost or to
tuition charges create other prob- an individual's lifetime earnings?
lems, such as reducing the num- A college might offer students
ber of potential applicants and in- three alternatives:
creasing the demand for scholar- 1. Tuition based on the gross
ship funds for needy students. As cost to the college of supplying
a result, private colleges are con- the education. (This would be
Mr. Peters is Financial Vice-president of the computed without giving any
Continental Oil Company, Houston, Texas. He credit for endowment income,

is the son of a college professor, and many aye
members of his family are in educational work. Thus, annual tuition of, say,

51


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

52 THE FREEMAN March

$1,000 a year might be increased economic interest in the success
to, say, $2,600 a year.) If an in- of the graduates. This might well
dividual followed this method of tend to encourage the colleges to
payment, he would have no fur- provide stronger and better train-
ther obligation to his college. ing because their future income

2. An individual might elect to would depend in considerable
pay the currently stated tuition measure on the ultimate economic
of, say, $1,000 a year and contract success of their graduates.

to pay his college, say, 1 per cent There is no reason why the per-
of his earnings from the time he centages in options 2 and 3 need
became productive until age 65. be the same for all colleges. If

3. For individuals financially any college wanted to charge a
unable to elect No. 1 or No. 2, tui- higher or lower percentage, it
tion would be free, provided the might do so.
individual contracted to pay, say,

2 per cent of his earnings up to 4A Good Time To Start
the age 65. With the tremendous competi-

Note that options 2 and 3 would tion among able students for
be in the form of legal, binding places in good private universi-
obligations. As a suggestion, some ties, such a system probably could
agency such as the College En- be undertaken now with a mini-
trance Examination Board might mum of dislocation. Admittedly,
act as collection agency for all pri- its introduction would discourage
vate colleges and graduate schools. some students who are now candi-
Thus, a man who went to college dates for admission at many of
“A” and graduate school “B’” the better known private colleges
would, each year, provide the and universities. But this should
“College Payment Board” with a be no problem now, when there
certified copy of his federal in- are several reasonably well-quali-
come tax return and a check for fied candidates for every available
what he owed these two colleges place.
by May 1 of the following year. The percentage contractual ar-
The “College Payment Board” rangement would tend to protect
would be instructed to collect all the private college against the ef-
monies owed it. fects of long-term inflation be-

Since most individuals would cause each college would have the
probably elect alternative 2 or 3 incoming revenue from its gradu-
above, the private colleges would ates payable in terms of a per-
immediately have a substantial centage of each year’s earnings


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

1959 A WAY TO FINANCE HIGHER EDUCATION 53

which, in turn, presumably would voluntary basis at present, re-
be directly related to the cost of quires large amounts of effort,
living. To the extent that any stu- without compensation, by a num-
dents elected to pay the full gross ber of dedicated graduates, most
cost (alternative 1), the college of whom could profitably devote
would have available funds in the their time to the furtherance of
amount of, say, $1,500 a year (ac- their businesses or to other civic
tually the amount would be one or community activities.

student’s proportionate share of Obviously, some way would have
the college's endowment income to be found to make the contrac-
for one year). This sum the col- tual obligations to the colleges de-
lege could use to add to its en- ductible for an individual's in-
dowment or to improve or enlarge come tax return. Doubtless, legis-
its physical facilities. By adding lation in this regard would be de-
to its endowment or improving its sirable and, with the interest on
plant, the college would strengthen high quality education today, per-

its basic long-term situation. haps it could be obtained. A pos-
sibility in the meantime might be
Alumni Fund Raising to have a student sign a note for

When this arrangement had his tuition. This note would have
been in effect long enough (about a large face amount. Interest on
50 years) so that all graduates the note would be payable only as
had paid for their education in and if earned and only to the ex-
this manner, each private college tent of the specified percentage
should then be able to dispense of any individual's earnings agreed
with its customary alumni fund to in his contract. If the princi-
activity, since most alumni would pal amount of the note had not
be contractually obligated to make been liquidated by age 65, the ob-
annual payments for their educa- ligation would then cease to be
tions under alternatives 2 or 3. collectible.

At present, alumni giving to pri-

vate institutions comes from [Incentives to Professors

roughly one-fourth to one-half of The proposals here outlined
the graduates, with most of the should enable any college or uni-
donations coming from the com- versity to offer attractive incen-
paratively few who sense keenly tives to professors if the profes-
their implied moral obligation. sors could, in turn, attract stu-
Similarly, the alumni fund-giving dents. Just to be extreme, college
activity, which is purely on a “C” might elect to specialize in,


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

bd THE FREEMAN March

say, oil geology and hire some of phasis on the earning power of its
the country’s leading oil geolo- graduates. Our best colleges and
gists at pay scales approaching universities have long prided
their existing levels of compensa- themselves, and properly so, on
tion. With this outstanding fac- turning out more than their share
ulty, this college would doubtlessly of teachers, philosophers, min-
attract most of the able students isters, writers, musicians, and
who wanted to become outstand- others, who have not been particu-
ing oil geologists — probably for larly successful in a monetary
undergraduate work, certainly at sense but who have contributed
the graduate level. In order to fi- enormously to the culture of the
nance the development of this pre- country. Therefore, the charge
eminent but expensive depart- will be made against this ap-
ment, college “C” might well have proach that it will encourage col-
to charge an undergraduate fee leges to admit and train “only
of, say, 3 per cent of earnings and business executives, and the like.”
a graduate fee of, say, 4 per cent
of earnings. However, training of There is no question that the
this character should be highly at- proposed system of tuition would
tractive to potential students even encourage all colleges to offer
at these tuition fees. Competent courses in areas likely to produce
graduates of this institution could good incomes. Greek and philos-
certainly command premium sal- ophy, for example, might thus suf-
aries. Similarly, any college could fer at the expense, say, of nuclear
elect to specialize in any chosen physics. However, this situation
area and charge an amount cal- also exists today, though it may
culated to pay out its investment be somewhat disguised. Con-
in professorial talent. sciously or unconsciously, all uni-
versities want to turn out enough
graduates of high earning poten-
It is recognized that some ob- tial, so that the alumni fund giv-
jections may be raised against ing and bequests from these high
this plan — that it may have dis- earners will enable the university
advantages which ought to be con- to provide its full share of cul-
sidered: tural subjects to the next genera-
1. Many experienced scholars tion. Without such gifts and be-
and educators will react unfavor- quests, Greek and philosophy ulti-
ably to any fee system such as mately could suffer at the expense
this, which places so direct an em- of the more practical courses.

Objections Considered


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

1959 A WAY TO FINANCE HIGHER EDUCATION 55

2. Any method which directly opportunity to obtain a college
or indirectly raises the fees charged education.” This thinking has led
by private colleges will encourage to highly subsidized education for
some students to choose a tax sup- all students who use state institu-
ported institution instead of a pri- tions. Any trend which ultimately
vate ome. This might encourage led to less state subsidy for higher
some of the most able students to education should work toward

desert private colleges. having more students select pri-
Clearly, it would be incumbent vate colleges.
upon the private institutions to 3. Alumni might not honor their

use this new fee schedule in a way contractual obligations.

to improve the quality of their Indeed, this is a possibility.
educational products. It would However, people are increasingly
seem that if the quality of the accustomed to purchasing a wide
product were demonstrably better range of articles on time pay-
than that of the tax supported in- ments. Why not treat education on
stitutions, the private colleges a similar basis? In essence, this
could maintain their facilities at suggestion represents a combina-
capacity. In this area of govern- tion of ability to pay (widely used
ment versus private education, it in setting medical fees) with
could be argued that once the col- ‘time payments.”

lege education became readily 4. This arrangement might cause
available on a “nothing down—pay inequities in faculty salaries.
as you earn’ basis, the taxpayers The situation, of course, exists

might take cognizance of the fact today. Pressure of competition
that less than half of the children from other sources has caused col-
of college age attend any college. leges to pay higher salaries for

If this were to happen, the certain teaching skills much in de-
voters might feel justified in fa- mand in other areas, notably medi-
voring a reduction of the subsidy cine and law. In addition, many
to state supported schools. As a colleges have encouraged or al-
matter of fact, they might even en- lowed faculty members to do con-
courage the state universities to sulting work as a source of addi-
convert their tuition chargestothe tional remuneration, particularly
general plan proposed here. The for those whose skills lie in tech-
reason customarily given for the nical or scientific fields. Much as
low fees of public educational in- some faculty members may de-
stitutions is that “no resident of plore a disparity in salary levels
this state must be deprived of an for certain teaching skills, this is


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

b6 THE FREEMAN March

a result of the operation of the nies. Such institutions are in the
law of supply and demand. Per- business of taking actuarial risks
haps the day may come when a and of loaning money. If this
professor of philosophy or of could be worked out, the life in-
Greek may command a higher sal- surance companies could then
ary than a professor of surgery, make immediate cash payment to
but that clearly is not the case the colleges for at least a large
today. Other industries have dealt part of the receivables. Admit-
with differentials in compensation tedly, some of the regulations gov-
for different skills and, presum- erning life insurance company in-
ably, the colleges can successfully vestments might have to be modi-
meet this problem also. fied slightly. However, on a proper
5. Colleges need cash now. They actuarial basis, the life insurance
cannot wait years for the income. companies should be able to create
It would, of course, take years a suitable investment medium out
for the full financial effects of any of such “educational contracts.”
pay-later tuition scheme to pro-
vide the colleges with a reason- This same method of charging
able flow of cash. The colleges for educational services might be
have an immediate financial prob- adaptable to private secondary
lem; they need money NOW. Per- schools. However, in this area, the
haps this problem could be solved percentage of earnings more prop-
by having the colleges sell their erly could apply to the parent of
student receivables to life insur- the child rather than to the child.
ance companies or other financial Also, a minor would not have the
institutions, or borrow against legal ability to contract for a per-
them from life insurance compa- centage of his earnings. eo eo eo

Education

BECAUSE I am opposed to compulsory government education, there
are those who accuse me of being opposed to education itself.
This is the deduction of a confused mind. It is as though they
accused me of being opposed to religion because I am opposed
to a compulsory religion or a state religion. It is as though they
accused me of being opposed to the eating of food because I am

opposed to government crop controls.

DEAN RUSSELL, a8 paraphrased from
Frederic Bastiat's The Law,


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

A question for those who deplore
the inordinate growth of federal power:

EXPLOITING

Ane M wnicipofitien FEDERAL

EXTRAVAGANCY

O

THE LATEST ISSUE of the United strength rests— doing to meet
States Municipal News — which is their problems?

published by the U.S. Conference Check this digest of resolutions
of Mayors, came to hand during as reported by the Conference of
the week. Mayors:

It reprinted a summary of reso-
lutions adopted by the 1958 An- TURBAN REDEVELOPMENT: “That

nual Conference of Mayors which the President be urged....That
provides —to our mind —a sad the Banking and Currency com-
commentary upon the state of lo- mittees of the Senate and House
cal government. be requested...”

This municipal organization ArporTS: “That the 86th Con-
seems to be functioning entirely gress be urgently requested...”

as a shakedown group, which is
unconcerned about its own sur-
render of local rights and local re-
sponsibilities so long as it can
grab off a few, or sometimes a
great many dollars in federal

PuBLIC TRANSIT: “That Congress
be urged...”

TAXES: “That Congress be
urged ...” (Nothing about re-
ducing them.)

funds. DEPRESSED AREAS: “That Congress
Here is an agency which quotes be urged...”

as a credo Alexis de Tocqueville’s: INTERGOVERNMENTAL RELATIONS:

“Municipal institutions constitute “That the Committee on

the strength of free nations.” Government Operations of the
But what does it say in its reso- House of Representatives be

lutions? What are the municipal urged. ..That the Administra-

institutions — upon which our tion be requested...”

ror Tre ew Haven Resistor. October 12 JUVENILE DELINQUENCY: ‘That
Pres, [ho New Haven Register, October 12, the Congress be urged...”

57


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

58 THE FREEMAN March

HOSPITALS AND MEDICAL FACILI- run their own cities in their own
TIES: “That Congress be urged democratic local way.

to amend...” At a time when serious students
CIVIL DEFENSE: “That the Con- of American government are
gress be requested...” deeply concerned about the over-

STREETS, HIGHWAYS, AND TRAFFIC: centralization of power in Wash-
“That State Highway Depart- ington, it is distressing to see this
ments be urged ...That the Fed- sort of political exploitation — at
eral Government establish...” the municipal level — of *big gov-

ernment’s extravagance and of

Looking at this compendium of big government's willingness to

buck-passing, issue-dodging rec- shoulder any burden no matter

ommendations, it is quite easy to how unrealistic its programs may
believe that our American cities — be.

if this sort of sponsorship con- The mayors obviously find it

tinues in the U.S. Conference of easy to pass resolutions which

Mayors — may eventually be cap- throw upon Congress or the Ad-

tured by an interlocking bureauc- ministration the difficulties of city

racy of municipal and federal government—but they serve
fund jugglers who will completely neither their cities nor their citi-
outflank and override whatever zens when they take this easy way

citizens and voters still want to out. oo

We invite your subscription to

MODERN AGE

A CONSERVATIVE REVIEW

> Edited by RusseLL Kirk
VoL. 3, No. 1 (Winter 1958-1959)
HUMANE POLITICS
Including contributions by Ricuarp M. Weaver, RayMonD EncLisn,
WirLLmoore KENDALL and AusTiIN WARREN
$4.00 the year $1.25 the copy
Address: 64 East Jackson Boulevard, Chicago 4, Illinois



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

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

INTELLECTUALS are supposed to be thority only serves to reinforce
able to think. But it becomes in- the general rule to which they are
creasingly apparent these days notable exceptions.
that our intellectuals aren’t The main point made by most
thinkers and that our thinkers of the contributors to this sym-
lack the status and influence of posium, which was held in 1957
intellectuals. Thus our society is on the campus of Emory Univer-
bereft of the use of brains. sity in Atlanta, Georgia, under
This paradoxical state of affairs the auspices of the local Depart-
is brought into sharp outline in ment of Sociology and Anthro-
a symposium on ‘culture contact pology, is that an economic sys-
in undeveloped countries” which tem exists within the context of a
has been edited by James W. Wig- culture and that you can’t change
gins and Helmut Schoeck and pub- one without changing the other.
lished under the title of Foreign Our dominant intellectuals, how-
Aid Reexamined: A Critical Ap- ever, persist in thinking that
praisal (Public Affairs Press, 260 economic and technological
pp., $5.00). The intellectuals rep- changes stand quite apart from
resented in this volume are, of cultural and ideological factors.
course, thinkers. But they consti- They are sublimely unaware that
tute a very small minority of their progress, as the West has known
. breed, and the fact that they are it, depends on multicentered so-
almost without influence or au- cial systems in which voluntary

59


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

60 THE FREEMAN March

action is the rule, not the excep- people and a tortured economic
tion. This idea, which is the only system from collapse. We become
thing worth exporting, is left hid- more like India. But India doesn’t
den at the back of the closet. become more like us.

As the contributors to Foreign
Aid Reexamined make plain, most The Church and the State
of our intellectuals who pass for In a paper called “Historical
being thinkers are engaged in Perspective,” which leads the sym-
promoting a two-way hara-kiri. posium, Professor J. Fred Rippy
They are trying to export a high of the University of Chicago notes
technology and a system of eco- that the separation of Church and
nomic plenty to countries like State disappears as compulsory
India which show no signs of re- benevolence, supported by church
alizing that freedom from the dic- councils, is substituted for private
tation of government must come charity. In backing our foreign
before, not after, freedom from aid programs, our clergy departs
want. And, in their zeal for ‘“do- from one of the fundamental pre-
ing good” without regard to the cepts of Christianity which once
circumstances in which “good” is insisted that the giver be the
to operate, they are hacking away keeper of his own moral con-
vigorously at the very roots of science. There is no love, no en-
the system which created Western noblement of the giver, when the
technology and economic plenty in money is extorted from him by
the first place. The Indians take vote of a majority. Moreover, the
our largess and feed it into bu- responsibility that goes with in-
reaucratic hands which effectively dividual judgment disappears.
prevent a free productive system Elgin Groseclose, questioning
from emerging. As for what hap- the vitality of a “diplomacy of
pens at home in America, our altruism,” notes that government-
charities become engines of com- to-government giving tends to
pulsion. Bureaucracies are cre- “identify the State with the to-
ated to process and forward the tality of social life,” which is a
compulsory “take,” and it is not fascist and communist concept.
long before these bureaucracies The “altruism” (if you can list
have proliferated according to compulsory giving or lending as
Parkinson’s well-known law. guch) defeats its purposes for
Meanwhile, our money system is reasons that were well known to
progressively debauched as infla- Shakespeare, who remarked that
tion is invoked to keep a taxed loan oft loses both itself and


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

1959 AID THAT ALIENATES 61

friend. Mr. Groseclose, a Middle example, absorbed his view of
East expert, says our aid to Tur- politics from Englishmen of the
key, which went into the subsidi- Shaw-Wells generation who be-
zation of tractor farming, created lieved in taking industry away
too much development, too fast. from the industrialists. And as
The tractors were bought and the Professor Schoeck puts it, the in-
wooden plows were destroyed. tellectuals who have presided over
But, to keep the tractors going, the birth of the Indonesian and
the farmers had suddenly to pro- Ghana nations also “received their
duce a. surplus in orderto buy gas- education in Western schools dur-
oline and pay for tractor repair. ing the time between two World
This, in turn, meant a revamping Wars when academic socialism had
of the road system so that the not yet faced certain experiences
crops could move to the ports. of the years 1945-1958.” This
Competition for foreign markets ‘cultural lag” has enabled *“so-
ran head-on into the fact that cialism to have a revival in coun-
the United States, which had sup- tries which can least afford it.”
plied the money for the tractors,
had its own surplus of crops which The People Resent It
it couldn’t sell at a profit. The net In his famous Point Four, Pres-
result? “After ten years of for- ident Harry Truman outlined a
eign aid,” says Mr. Groseclose, “bold new program” for exporting
“Turkey is no nearer a self-suf- technical know-how to undevel-
ficient economy than ever.” oped nations. But do we need to
use government funds, govern-
ment personnel, and government
Several contributors to the sym- power to export Point Four to
posium — Helmut Schoeck and Latin America, for example? Wil-
Professor Rippy are among them liam S. Stokes, in a remarkable
— note that foreign aid is mostly paper called “The Drag of the
used by the recipients to “finance Pensadores,” argues that Latin
the political careers of a marginal American leaders have all along
intellectual minority.” Motivated been able to have our technological
primarily by envy, this minority know-how for the asking. All they
is committed against capitalism. have to do is to visit the U.S. or
Thus nations are saddled with to make use of our libraries or to
“planners” whose educational send their graduate students to
background is largely socialistic North American universities.
and Fabian. Nehru of India, for In cold fact, however, the Latin.

The Aid Goes to Planners


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

62 THE FREEMAN March

American intellectuals — the “pen- ing the climate of opinion
sadores” — don’t want ‘“Yanqui”’ throughout Latin America, nobody
or “gringo” culture even if it is going to get excited about the
comes on a silver platter. As Mr. technology of steel mills or oil
Stokes phrases it, they prefer gra- drilling. Better to let the gringo
cious living in their own Hispanic build the mill or sink the oil well
style. They look down on our tech- and then take 50 or 60 per cent of
nology, regarding a preoccupation the profits. If the gringo objects
with the machine as barbarian. to sharing too much profit, the
They share the general Spanish government can always expropri-
and Portuguese idea that “leisure ate the works and hire foreign
ennobles and labor, especially tech- technicians to operate them.

nical labor, - degrades.” If they

have to work, they prefer employ- Our Burdensome Debt

ment as lawyers, doctors, authors, Elgin Groseclose reports that
or university professors, not as the U.S. has put 70 billion dollars,
entrepreneurs or technical ex- which amounts to 25 per cent of
perts. If they have money to in- the national debt, into foreign aid
vest, they tend to put it into land within the span of a decade. Else-
or apartment houses (the collec- where in this volume (see Mr.
tion of rents is considered a gen- Stokes) the figure is put at $99
tlemanly occupation). And when billion for the period “from July
it comes to spending, they like to 1, 1940, to June 30, 1956.” No
indulge in an “ostentatious use of matter how one measures it, the
leisure (travel, patronage of the foreign aid figure has saddled

arts, conspicuous consumption),” Americans with the largest per
all of which has “maximum social capita debt of any large country
status.” in the world.

With such “pensadores” creat- The inflationary impact of this

debt must be beyond computation.
Many a budget could have been
balanced over the past decade if
Any book reviewed in this Book Soction (or foreign aid ‘had been limited to
any other current book) supplied by return military assistance to such tough
mail. You pay only the bookstore prico, We and willing allies as the Turks
poy tho postage anywhoro in the world. and South Koreans. With budgets
Catalogue on request. in balance, there would have been
considerably less debt to be ‘“mon-
etized.” Taxes would have been

THE BOOKMAILER, Box 101, Now York 16



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

1959 AID THAT ALIENATES 63

lower, “disposable” income great- nated within the foreseeable fu-
er. And the American price level ture, the U.S. might have the re-
would not have strained for the silience to stand the drain. But

roof. the contributors to this sympo-
i sium do not see how the U.S. is to
Wasting Our Substance get out from under. Too many

Would this have weakened the jobs, too many vested interests,
U.S. vis-a-vis the Soviet Union? are involved. Says James W. Wig-
In a paper which invokes the gins, in summing up: “No unusu-
shade of William Graham Sum- al insight is required to decide
ner, who contemptuously dismissed that the donor will be blamed for
the Spanish-American War as the withdrawal of his benevo-
proof of ‘the conquest of the lence.” With our softheaded
United States by Spain” (mean- hunger to be universally loved,
ing that we had gone over to the can we, as a nation, ever cut
ideas which had brought Spain clean? One wonders. eo
low), Professor George Peter
Murdock of Yale says our foreign
aid has actually sapped the vital- Keynes refuted!

ity of the so-called free world. THE FAILURE OF THE

Professor Murdock speaks of “the “ "
Byzantine Conquest of the United NEW ECONOMICS? An Analysis

States.” He recalls that Byzan- of the Keynesian Fallacies,
tium tried to buy allies with BY HENRY HAZLITT, writer of

. Business Tides column, Newsweek Magazine
money. Meanwhile, she neglected A brilliant chapter-by-chapter crit-

her own military power. In the cism of Keynes’ celebrated work,

time of her extremity, the “allies” The General Theory of Employ-
. Pp ” ment, Interest, an oney”.

of Byzantium turned “neutral. 348 pp. about $5.75

And Byzantium herself, a hollow Now—a dialectic for capitalists

shell because of the long sauan- | rue pOOTS OF CAPITALISM.

dering of her resources, lacked BY JOHN CAANBIG ALN
the military and economic strength This provocative survey examines

to go it alone. the men and ideas and the techno-

“Somehow,” says Professor logical achievements that have
Murdock, “as a model for contem- raped the American capitalist
porary national policy, Byzantium 224 pp. about $5.50

seems scarcely preferable to
Spain.”
If foreign aid could be termi-

At all
Thre) Van Nostrand
120 Alexander St. Princeton, N. J.

=


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

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

WHEN “PUBLIC POWER’ WINS ~~ YOU LOSE!

The promoters of federal government  program—to be collected from you
“public power” are trying to get their ~~ and other Americans, of course.
hands on more of your tax money And it’s all so unnecessary! Amer-

re . ica’s many independent electric com-
Five and a half billion dollars is an panies are ables ready—to supply
important sum of money. Especially ye electricity the nation needs—
when you know some of it is yours. ~~, .. 0. your tax money.
It’s the amount of tax money al- What can you do about it? Plenty!
ready spent on federal “public power.” This waste of taxes goes on only be-
And that’s just the beginning. The cause most people aren’t aware of it.
lobbyists and pressure groups who Spread the word. Talk with your
promote “public power” are pushing friends. As soon as enough people
the idea that Congress should spend know they are paying needlessly for
10 billion dollars more on this costly ~~ “public power,” they will stop it.

America’s Independent Electric Light and Power Companies

Company names on request through this magazine


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

IDEAS ON LIBERYY

B When men rightly apprehend their relationship with the nature of
things and with each other, there is harmony and growth. But mis-
understanding portends trouble, leading possibly to the collapse of a
civilization if the wrong ideas are widely shared.

@ The Foundation for Economic Education works within the framework of
the spiritual and ethical understanding embodied in the heritage of
Western Civilization. Its conviction is that this heritage, in its social
aspects, spells out into the philosophy of limited government and free
market economics. Political liberty and economic freedom, in turn, are
important in man’s quest for material sufficiency and spiritual growth,

0 The Foundation’s monthly publication, THE FREEMAN, prints articles
dealing mainly with current efforts to restrain economic and political
liberty, with the misunderstandings and fallacies which cause well-
meaning people to invoke these restraints. On the positive side, it
attempts to explore ways in which men in freedom resolve their
economic and political problems.

THE FREEMAN may be forwarded any-

where in the U. S. A. No wrapper required. PLACE
4%-CENT
From: POSTAGE
HERE
To:
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city Z0R0 state