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

By, ARR FR IP

IDEAS ON LIBERTY

MAY 1959

How Labor Unions ‘Cause’ Inflation . . Leonard E. Read 3
Why Not Pay Cash? . . . . . . . Oscar W. Cooley 9
What Russian Trade? . . . . . . . Henry Hazlitt 13

The Supreme Issue:
The Individual versus the State . . . William Henry Chamberlin 15

Observations from Europe. . . . . . Frederick Walker 21
The Helping Hand . . . . . . . . Vollie Tripp 23
Some Reflections on Foreign Aid. . . . Arthur B. Spooner - 29
A Child's Diary . . . . . . . . . Rose Grieco 30
The Ultimate in Unionism . . . . . . H.P.B. Jenkins 37
The Corruption of Union Leadership. . . Sylvester Petro 38
Wirk . . . . . . . . +. . . . EF Hutton 46
The Way to Economic Progress . . . . Gustavo R. Velasco 47
Where the Road Leads . . . . . . . First National Bank of Boston
Argentine Letter 53
They'll Never Hear the End of It . . . . John Chamberlain 55
OtherBooks . . . . . . . . . . 58

:! THE FOUNDATION
FOR ECONOMIC EDUCATION, INC.

Irvington-on-Hudson, New York



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: \
f

N 4
oDowvaooan
j=]

Where does “public power” send your tax money?

Tax money from you and other Amer- them $10,000,000,000 more in addi-
icans is being taken on a multi- tional taxes if the lobbyists for fed-
billion-dollar ride by the pressure eral “public power” have their way.

groups for federal “public power.” This tax spending goes on because

These billions are being spent for ~~ most people don’t know about it. So
federal government electric projects tell your friends how “public power”
—and unnecessarily. America’s hun- costs them money needlessly. As soon
dreds of independent electric light as enough people realize what’s hap-
and power companies are ready and pening, they will put a stop to it.
able to provide all the electricity the ~~ ~~
nation needs, without depending on ~~~ ~~ CTT TTTTtTUTUTTIITUttAS
your taxes to do the job. WHEN “PUBLIC POWER” WINS—

. YOU LOSE! Every time the lobbyists

The needless spending for so-called for federal “public power” push another
“public power” has already cost tax- government electricity project through
payers $5,500,000,000. It will cost Congress, you are taxed to pay the bill.

America’s Independent Electric Light and Power Companies

Company names on roquest through this magazine


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

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

THE

Teena A MONTHLY JOURNAL OF IDEAS ON LIBERTY

MAY 1859 Vol. 9 No. §

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 $12.60 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
additiona! entry at New York, N. Y, Copyright, 1959, The Foundation for
Economic Education, inc. Printed in U.S.A.

Additional coples, 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 ‘What Russlan
Trade?’’, “A Chlld’s Diary,’ “The Corruption of Union Leadership,” and
“The Way to Economic Progress.”

FYE Any current article wlll be supplied in reprint form if there are enough
E inquiries to justify the cost of the printing.


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That we find out the cause of this effect;

“ » inflation i Or, rather say, the cause of this defect,
LABOR UNIONS “cause” Inflation In For this effect defective comes by cause.

precisely the same manner as do SHAKESPEARE, Hamlet

chambers of commerce, the Na-

tional Council of Churches, thou-

sands of other organizations, and

millions of individuals who call

themselves Republicans, Demo-

crats, Socialists, and Communists. know which of these are inflation-
Labor unions, like many influen- ary. Otherwise, we may be criti-

tial groups, cause inflation by ex- izing labor unions on the wrong

ercising their power to extend count while we ourselves inno-

government beyond the point cently follow practices which bring

where sound financing is politi- on the very inflation we so stoutly

cally possible. deplore. We cannot hope to stop
Why should we seek to under- inflation until we know. its causes
stand how labor unions cause in- _ and the real causes will elude

flation? In order to see how most us as long as we chase after fic-
of the rest of us cause it! Look- titious ones.
ing into labor union behavior is Those who blame inflation on
like looking into a mirror for mil- the incessant, persistent, coercive
lions of us. We may not believe drives of labor unions for higher
what we see, but it will be an ac- and higher wages are on the
curate reflection, nonetheless. wrong track. Such coercion is not
It can be truthfully said that to be condoned, but it is not a
people cause inflation, but people direct cause of inflation. For in-
do many other things besides. stance, if your gardener issues an
Thus, if we would stop inflation, ultimatum that you pay him $100
we must know precisely which ac- a day or else he will quit and
tions of people bring on inflation forcefully keep any other person
and which ones do not. So with from taking his place (the labor
labor union practices, we need to union device in principle), you are

3


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

4 THE FREEMAN May

right to condemn his action, but tion. It's another action of unions
you are wrong to call it a cause which supplies the inflationary
of inflation. What you can say is spark.
that you may go broke if you give
in to his demand, or that he may Inflation Defined
be unemployed if you refuse. The Let’s dismiss the labor union
same results follow, except on a subject for a moment and examine
larger scale, when a million gar- inflation. What is it? Inflation is
deners act in the same way merely an increase in the money
through a labor union. Inflation supply. The process or act of
18 not one of the results of such diluting the medium of exchange
action, except in an indirect way. is inflation. Brutally, but nonethe-
less accurately, inflation is legal-
Union Aims and Accomplishments ized counterfeiting. Inflating the
Like most organizations, labor medium of exchange — everything
unions have aims they cannot at- else being equal — will result in
tain, make claims for deeds they higher prices. But the rising price
never achieved, and get blamed trend itself is not inflation; it is
for sins they never committed. only one of the possible conse-
For example, labor unions try to quences of inflation. It is of su-
claim credit for raising wages. preme importance that we know
But, regardless of their claims, the difference between cause and
unions have had no more to do effect.
with the general level of wages Assigning causation to any re-
than with the general level of the sult is difficult, at best. My ears
seven seas.! They have, it is true, are injured. The injury is an
succeeded in obtaining increases effect. What caused the injury? A
for their members at the expense deafening sound. What caused the
of nonmembers; they have de- sound? Vibrations. What caused
stroyed property and done other the vibrations? Dynamite. What
damage to their employers; and caused the dynamite to explode?
they have thrown many of their And so on. We find that cause un-
own members into unemployment. derlies cause ad infinitum.
But their coercive wage hikes are Inflation, like the ear injury, is
not the immediate cause of infla- the effect of a sequence of causes
_— that go deeper than we are capa-
For a confirmation of this fact see Why ple of exploring. However, the
Wages Riso by F. A. Harper, The Foun- 00 41,0¢ immediately underlies

dation for Economic Education, Inc, h . .
Irvington-on-Hudson, New York. the effect — inflation —is plainly


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1959 HOW LABOR UNIONS “CAUSE” INFLATION b

observable. Inasmuch as govern- their cake and eat it too.” In short,
ment has sole responsibility for they see inflation as a means of
our monetary system, we can escaping direct governmental
easily see that government causes levies without giving up the

inflation. “benefits’’ of governmentally
guaranteed welfare and pros-

An Opiate Form of Taxation perity.
But what causes government to This particular subcause of in-

inflate the money supply? Again, flation can be summarized as fol-
the answer is simple enough: Gov- lows: Whenever the federal gov-
ernment meets its costs of opera- ernment can collect no more by
tion by taxation. There is no other direct tax levies without risking
method. Now, if the costs of gov- political suicide, it will print
ernment become so high that it money to pay its bills. The fact
is no longer politically expedient that the current procedure in-
to tax by direct levies, an indirect volves monetizing the debt through
form of taxation will be utilized the central banking system doesn’t
— inflating the money supply! make it a new procedure; it only
In most countries throughout becomes more difficult to under-
history the direct tax levy has stand. This complex scheme is no
been politically expedient up to a different in principle from calling
20 to 25 per cent “take” of the in the coin of the realm and shav-
peoples’ earned income. After this ing off some of the precious metal
point, in most instances, the direct — “coin clipping” — as was done of
levy becomes repugnant to the old.
citizenry and thus politically im-
possible. The people just won't Excessive Government Spending
stand for it any more! What to Very well. We must now ex-
do? The answer: Inflate the money amine the next underlying cause.
supply, an opiate form of taxa- What causes the expenses of gov-
tion. At first, it feels good and ernment to be so high that they
secures the politicians’ popularity. cannot be paid by direct tax levies?
The fact that it assures long-range Pressure group demand for gov-
disaster is a problem for the next ernment handouts, sometimes
generation! Indeed, inflation, as called “services”! In ideal theory,
a rule and for a time, is a well- government is supposed to be the
received form of tax. To the eco- protector of life, liberty, and
nomically naive portion of the property. It shouldn’t be accessi-
population it is a way to “have ble to any group for largess or


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6 THE FREEMAN May

special privilege. But today, it’s “Through their legislative activities,
open sesame; the bars are down. unions have consistently championed
There isn’t a gold standard or any eS various g coups. nmental
other discernible standard. Indeed, zens, without regard to whether the
government in the U.S.A. not only beneficiaries are union members or
invites but insists that its treasury not.”

be raided. Spendthrifts and a Going through their publica-
dangerous number of bureaucrats tions, one finds them supporting
have become identical twins. Ex- more government aid to foreign
cept in a few isolated instances, countries, government guaranteed
one no longer hears government full employment, federal aid to
officials ask the question, “Where's education, more government hous-
the money coming from?” Nor do ing, more compulsory social secu-
they openly admit, “We'll inflate, rity, government ownership of
print money, to pay the bills.” To power and light facilities, federal
speak truthfully of such wrong- aid to so-called distressed areas,
doing would be to renounce polit- and on and on and on.

ical aspirations, and all politi- Labor unions are politically in-
cians know this. fluential. In large measure they

get increased federal activity on
Demands of Pressure Groups projects they sponsor. Their

However, government behaves coerced and uneconomic wage
in accord with the thinking of the hikes cause unemployment. Then
people who organize it. If they they use their pressure for gov-
be lax and predatory in their ernment guaranteed full employ-
ways, their government will fairly ment which adds billions to the
reflect these ways. Therefore, it costs of government. It is pre-
is the thinking of the people — cisely this successful pressure on
at least those in positions of government that is the effective
leadership — that must be ex- subcause of inflation. This is how
amined if we are to explain this labor unions cause inflation!
third underlying cause of infla- In principle, if not in degree,
tion. the social action program of the

The actions of labor unions are National Council of Churches re-
based pretty much on the thinking sembles the labor unions’ program
of their leaders. Their whole phi- — the assumption by government
losophy can be summarized by of more and more responsibility
a statement in an AFL-CIO for the welfare and prosperity of
pamphlet (Publication No. 41): the people. The National Council


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

1959 HOW LABOR UNIONS “CAUSE” INFLATION 7

of Churches is influential. The But what causes otherwise respon-
governmental activities they spon- sible persons to be so inattentive
sor cost money. This is how the to study and reflection on a matter
N.C.C. causes inflation! this serious?

And, chambers of commerce? With an enormous evidence all
Only a few in the whole nation about us that warrants a faith in
have refrained from running to free men, more and more persons
the federal pap-wagon. Federal are putting stock in a political
aid for roads, hospitals, airports, apparatus that can do nothing
and so on and on and on. Chambers more than take from them, giving
of commerce are influential. The back less than it takes. Why this
things they succeed in getting cost decline in a sense of values?
money. This is how chambers of Much of the world-wide surge
commerce cause inflation! into collectivism has rubbed off

Millions of citizens from all on our erstwhile free enterprisers.
walks of life cause inflation in the Why this softness among Ameri-
very same manner. And all of cans with their reputation for
them, along with labor unions, the hardheadedness, this caving in to
National Council of Churches, the wiles of political medicine
thousands of other organizations, men?
including chambers of commerce, Certainly, there has been an
loudly decry inflation and demand almost total failure to identify the
that the fire be put out as they add free market, private property,

fuel to it! limited government way of life

with moral and spiritual ideals.

Why People Act as They Do Why this myopia when the moral
We now come to that cause of basis for liberty is so obvious?

inflation which is fourth in depth. There are many other plausible

What causes so many people to causes. I wonder, however, if all
act so contrary to their own and of these wouldn't tend to fade
the general interest? In short, away were more of us to turn our
why do they do things in the polit- eye inward, looking to an improve-
ical collective they wouldn’t think ment of our own understanding.
of doing personally? Admittedly, this doesn’t seem as

Who can be certain? The more easy as seeking solutions through
one studies the problem the harder organizations or by the reforms of
it seems to pinpoint the exact others or by waiting for some
cause. No less than a dozen occur “leader” to appear. Isn't there a
to me. Economic naivete is one. requirement for candor, for an


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

8 THE FREEMAN May

integrity of personal conviction — sistibly, men begin to alter their
an accurate, open reflection of conduct.
what the conscience dictates as Labor unions can cease those

right — that is not now sufficiently collective actions which contribute
prevalent? Leo Tolstoy suggested to inflation, as can chambers of
what would likely follow the commerce, the National Council of
change of emphasis urged here: Churches, the Republican and
Democratic Parties, and other or-

One free man says truthfully what ganizations. However, it is their
pe thinks on a be members acting with intellectual
integrity and as self-responsible

and actions are maintaining the ex- | ©, eps
act opposite. It might be supposed individuals who can take positive

that a man who has spoken out his Steps to stop inflation. They can
thoughts sincerely would remain a refuse to serve their own pressure
solitary figure, and yet what more groups in the advancement of
often happens is that all the others, socialism, communism, the Wel-
or a large proportion of them, have fare State, and the other robbing-
for long past been thinking and feel- Peter-to-pay-Paul schemes which
ing exactly the same, only they do .,,,5¢ the government to cause in-
hou Say So freely. And what was yes- flation. In short, they can stand in

y p : defense of individuals —all indi-

becomes today the public opinion of ) : . ] .
the majority. And as soon as this viduals — in their God-given right

opinion becomes established, at once, to their lives, liberties, and prop-
gradually, imperceptibly, and irre- erties. * oo

Laxity

INFLATION, and the spirit which nourishes it and accepts it, is
merely the monetary aspect of the general decay of law and
of respect for law. It requires no special astuteness to realize
that the vanishing respect for property is very intimately re-
lated to the numbing of respect for the integrity of money and
its value. In fact, laxity about property and laxity about money
are very closely bound up together; in both cases what is firm,
durable, earned, secured, and designed for continuity gives place
to what is fragile, fugitive, fleeting, unsure, and ephemeral.
And that is not the kind of foundation on which the free society
can long remain standing,

PROFESSOR WILHELM ROEPKE, Graduate Institute of
International Studies, Geneva, Switzerland


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

OscAR W. COOLEY

: %
A. DEVARE)

OFTEN SAID — but never too often but this time the people have not
—1is that the government has had to give up their dollar. They
naught to spend but what it gets still have it. It seems they can
from the people, either directly have their cake and blow it up at
and forthrightly in taxes or serv- Cape Canaveral, too!
ice charges, or indirectly and de- But obviously they cannot. The
viously by manufacturing new real wealth represented by the
money, the value of which is taken missile is gone just as truly when
out of the money in our pockets. it is paid for with created money
When the government taxes a as when it is paid for with tax
dollar from me, I have a dollar money.
less to spend for groceries and the Some say this is not true when
government has a dollar more for there are unemployed resources,
missiles. The wealth of the nation that is, labor, land, and capital.
has not been increased a farthing. They say that then the govern-
When the government gets a ment spending of the newly
dollar by printing or otherwise created dollar sets to work other-
creating it out of nothing, the wise unproductive resources so
people’s stock of dollars is not re- that the nation’s total product is
duced but the government’s stock increased. This ignores the fact
is increased. When the govern- that the nation’s entrepreneurs
ment spends this new dollar for are continually bidding for the re-
missiles, it is plain that now, as sources, and that if certain re-
in the case when the government sources are at any moment unem-
gets a dollar by taxation, real ployed it is because their owners
wealth — steel, fuel, and the like are holding them for a higher
— is taken out of the stock of price.
civilian goods and put into the When the government enters
stock of military goods. The the resource market with its abun-
people’s wealth has been reduced, dant, newly created money, it out-
—_— bids the private entrepreneurs,
Mr. Cooley is Associate Professor of Eco- —_— .
nomics at Ohio Northern University. bidding up the prices of resources.

9


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

10 THE FREEMAN May

The entrepreneurs, unable to future generations. Even if this
afford the higher prices, “lay off” were true, how could we in this
resources, and there is no net in- prosperous era justify shifting
crease of employment. In fact, our burden to our children? We
there may be a decrease. It is have no cause to assume that they
easy to see and count the resources will be better off than we are —
that the government puts to work, that they will be able to pay not
but those that private entrepre- only their own bills but part of
neurs lay off are not so apparent. ours.

If government creation of But it is not true. He who
money by “borrowing” from the thinks a part of the cost of gov-
banks nets the economy nothing, ernment is being postponed by
why does Congress insist on spend- deficit financing is hoodwinking
ing more money than it taxes from himself. If one-fourth of the real
the people? Taxing at least is wealth produced this year is to be
straightforward and direct and consumed by the government, then
brutal, while this other process is only three-fourths will be left for
deceptive and devious. Anyone consumers, and the pain of giving
can understand taxing, but not up that one-fourth will not be al-
one person in a thousand sees leviated one whit by paying for it
through the sleight-of-hand known with bonds rather than with cash.
as deficit financing. Even in wartime, deficit financ-
ing makes no sense. When a nation
goes to war — assuming that the

Deficit financing and the infla- war is supported by the people —
tion it engenders is essentially this involves transferring the nec-
taxation without representation, a essary part of its resources, in-
fiscal process by which the federal cluding manpower, from the pro-
government filches from its people duction of civilian goods and serv-
without their authorization, even ices to the production of war
without their knowledge. goods and the fighting of the war.

When the government spends Hence, the consumers must pull in
more than it currently collects in their belts and consume less in
taxes or voluntary payments, as order that Mars may consume
ours has done almost every year more.!
for a quarter of a century, the — —
growing federal debt gives rise For a more complete exposition of the

. economics of war, see Human Action by
to the fiction that the burden has Ludwig von Mises (New Haven: Yale
been postponed — passed on to University Press, 1049), chapter XXXIV,

Taxation Without Representation


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

1959 WHY NOT PAY CASH? 11

Iflusions of Postponed Costs been impossible to collect enough
Neither the consumers nor taxes from the people to pay cash
Mars can “borrow” goods and for World War II. One of these is
services from future generations; Professor William H. Anderson,
they must get along on what is on author of Taxation and the Amer-
hand or produced currently. We ican Economy (Prentice-Hall,
did not fight the war of 1941-45 1951). However, he admits that
with guns made in the 1950's. We the United States paid by taxation
fought the war on a currently bal- only about 41 per cent of its cost
anced budget of goods, but we of fighting the war, while Canada
emerged from the war with a and Great Britain managed to pay
money budget unbalanced to the 50 per cent of their war expense
extent of $275,000,000,000. This by this method; and he adds, on
debt, which imposed on the Ameri- page 533, “We did not approach
can people an interest charge of either our psychological or taxable
more than $7,000,000,000 a year in capacity under war conditions.”
perpetuity, did not kill a single Others hold that had wartime in-
Jap or German. The interest, come taxes been only 10 to 15 per
which in effect is paid by the cent higher than they were, there
group of Americans known as tax- would have been no postwar in-
payers to the group known as flation.?
bondholders, neither adds to nor
subtracts from the nation’s Because the People Object
wealth. But the debt, having been In the months following the
largely converted into money, has Japanese attack on Pearl Harbor,
generated inflation to rock the the American people were fired to
economy in a thousand ways. a high pitch of determination. To
If the money needed to pay for say that they were not willing to
the war had been collected from pay the cost of whipping the Axis
the people currently, this would nations — that the war had to be
have reduced their disposable in- paid for largely by deficit financ-
come and its upward pressure on ing —is to accuse the people of
price levels. Hence, neither price not wanting victory enough to pay
ceilings nor rationing would have for it, of being less patriotic than
been required. All the cost of po- the congressmen who voted the
licing the price control edicts, all appropriations.
the evils fostered by ‘black mar- The deficit financing by govern-
keting,” would have been avoided. T——— .
Some believe that it would have AAS A ‘Maren toot” American


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

12 THE FREEMAN May

ment implied that the people had seems, have the wisdom and ca-
to be cajoled into bearing the bur- pacity to manage the nation,
den of the battle, had to be assured which entails spending the nation’s
that a part of that burden was wealth. When the people demur,
being shifted to the future. Congress spends anyway and
And, indeed, a similar implica- writes it on the cuff. Government
tion may be seen in the continuing deficits are financing a burgeon-
peacetime deficits. Congress feels ing socialism.
that the Treasury must “borrow” The people's protests are feeble.
money to pay farm subsidies, vet- Whatever the meaning of the 1958
erans’ benefits, doles to house elections, they certainly were not
builders, foreign aid, and the like, a rebuff to the spenders. The pop-
because the people are not willing ular, but mistaken, notion is that
to supply cash for these purposes. a part of the cost of government
And this time, Congress may be pap is being shifted to the shoul-
right! ders of future Americans. The
modern desire to get something
for nothing — to reap without sow-
Assuming that the people are ing —is moving the people to coun-
unwilling to pay, are their repre- tenance successive government
sentatives warranted in stealing deficits during a period when, if
from them? Having found a way ever, they are able to pay cash.
to raise money by sleight-of-hand Our generation refuses to pay its
— to rob the people in their sleep, own bills. We are approaching the
so to speak — our legislators ap- nadir of irresponsibility.
parently are using this method to
finance operations they fear the William McChesney Martin,
people would not be willing to Chairman of the Board of Gov-
support openly and directly. ernors of the Federal Reserve
Through Washington's deficit System, reports that foreigners
spending, the American people are are asking: “Since Americans
losing control over their own clearly can afford these expendi-
wealth. tures (of government) why don’t
What are the motives of the they pay for them? That is, why
congressmen? Evidently, they don’t they pay in taxes... instead
think it their duty to control the of giving IOU’s or simply printing
economy. They have so indicated more paper dollars?” As Mr. Mar-
in such enactments as the Employ- tin so well put it, that is indeed
ment Act of 1946. Only they, it ‘something to think about.”e e e

Does Congress Know Best?


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

WHAT

RUSSIAN

HENRY HAZLITT

IN PAST ARTICLES I have called at-
tention to some of the fictions and
fallacies in recent hysterical com-
parisons between Soviet Russia's
alleged “rate of economic growth”
and our own. But supposedly re-
sponsible American publicists, in
and out of government, continue
not only to swallow the Soviet
boasts without adding even a grain
of salt, but to draw conclusions
that would be flagrantly fallacious
even if the boasts were reliable.
One of the latest developments
to arouse these viewers-with-alarm
has been “the Soviet challenge in
foreign trade.” In their front-page
anxiety about this they are merely
acting as megaphones for official
communist propaganda, as illus-
trated, for example, in Mikoyan'’s
statement in Moscow on January
31 in favor of “peaceful competi-
tion in cooperation with other
countries in developing the econo-
mies of the underdeveloped na-
tions,” and so forth. Before we
ask how “peaceful” this ‘“competi-
tion” has been or is likely to be,

TRADE

we may begin by putting the sub-
ject in factual perspective. Just
how important, relatively, has
Russian buying and selling been?
How does Russia rank in inter-
national trade?

It should not be too difficult to
answer that question, at least in
approximate terms. The official
figures are available. It is merely
necessary to have sufficient enter-
prise and industry (like Alice
Widener, for instance, in U. S. A.
magazine for February 13) to dig
them up and interpret them. They
are to be found among the 777
pages of the United Nations Year-
book of International Trade Sta-
tistics.

" Soviet "'Statistics’’

According to the U.S.S.R.’s own
official figures, it had total exports
of 17.5 billion rubles in 1957 and
15.8 billion of imports. If we ac-
cept these figures at face value,
the next question is how to con-
vert them into dollars for purposes
of comparison. The official rate of

13


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

14 THE FREEMAN May

the ruble is 4 to the dollar. The tries. But even if we convert the
U.N. tables solemnly convert it at U.S.S.R.’s total exports in 1957 of
that rate. Even at that rate, we 17.5 billion rubles at the tourist
find that the Soviet Union did only rate of 10 to the dollar, we get
2 per cent of world trade in 1957. only $1.8 billion. This is not only
And we find that total U.S.S.R. ex- less than one-tenth of U.S. exports
ports to the free world in 1957 of $20.6 billion; it is only one-fifth
(after deducting “trade” with the of the 1957 exports of West Ger-
Russian satellites and Red China) many ($9 billion), and it is about
amounted at that rate to only $966 equal to the exports of little
million. This is less than 5 per Switzerland ($1.6 billion) with a
cent of the total exports of $20.6 population 1/40th as large as the
billion from the United States in Soviet Union. And it is by no
that year. means certain that a conversion
But the official 4-to-1 rate for rate of 20 or 25 to 1 for rubles into
the Russian ruble is a flagrant fic- dollars would not be more realistic
tion. Foreign-currency dealers in than the tourist rate of 10 to 1.
New York will sell you rubles at Nor can these ridiculously small
25 or more to the dollar and will exports be attributed to American
buy rubles at 50 to the dollar. If “discrimination” against Russia
we are unkind enough (as Mrs. gince 1947. Soviet Russia has al-
Widener is) to convert rubles into ways been a negligible factor in
dollars at a rate of 24 to 1, we world trade. In 1938, the last full
bring Russian exports to the free year before World War II, Ameri-
world in 1957 down to a value of can exports to the Soviet Union
only $161 million. This is less than were valued at about $70 million,
the gross exports in that year of and our imports from the U.S.S.R.
a single American company, like in the same year were valued at
General Electric. If, generously, about $24 million.
however, we convert rubles at the
official tourist rate of 10 to the
dollar, we get total 1957 exports to
the free world of $386 million.
This is less than the U.S. govern-
ment spends every two days.

Finally, as the Russian satellites
and such reluctant victims as Fin-
land have discovered, “trade” is
something that Soviet Russia
forces on weaker neighbors as a
form of tribute or extortion. But

A Negligible Factor that’s another story. © oo

About 73 per cent of Soviet ex-
ports go to other communist coun-  Nowsweok, February 16, 1959


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

THE -

Supreme 3 THE INDIVIDUAL VERSUS THE STATE

& Fi Some suggestions with which to
FIUE I combat the menace of collectivism

so
/
/ J
I;
’

Vad

WILLIAM HENRY CHAMBERLIN

MORALLY, politically, and economi- ing protection against foreign ag-
cally, the supreme issue of the gression, and starts to assume the
twentieth century is whether the role of a universal provider and
State is to be the master or the regulator, it never knows when to
servant of its individual citizens. stop. One arrogation of power
Liberty is integral. One form of leads to another, and the planned
freedom begets another, just as economy quickly develops into the
tyranny in one field breeds totalitarian State.
tyranny in others. It has been and still is fashion-
It is no accident that freedom of able among the theorists of col-
speech usually goes hand in hand lectivism, whether of the com-
with freedom of trade. And those munist or fascist type, to sneer
who try to set “human rights” at liberty and represent freedom
against ‘property rights” are as a luxury which only a rich
committing a gross error. It is society can afford. But this is
where there is no security for contrary to all the teachings of
property that such human rights experience, from early historical
as freedom of speech and press times to the present day. There
and guaranties against arbitrary was nothing inherently wealthy
arrest, execution, and slave labor about the rough pioneer life of
are most notably absent. early Americans. Americans were
When the State goes beyond its not able to “afford” freedom be-
proper functions of maintaining cause they were rich. They be-
law and order at home and provid- came relatively prosperous because
Mr. Chamberlin is author of the definitive they were free, because their in-
two-volume history of the Russian Revolution stitutions — at least, until the high-

and numerous other books and articles on

world affairs. tax Welfare State became the rule

156


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

16 THE FREEMAN May

at national and state levels — gave from country to country. But the
maximum scope for the natural trend everywhere was toward more
human instinct of self-enrichment. popular participation and consent
in the management of public
A Century of Progress affairs. There were vicissitudes
A striking proof of the prag- and setbacks, and the swift de-
matic value of freedom is the velopment of the industrial system
record of the century that elapsed created new social problems, along
between the end of the Napoleonic with a vast increase in the wealth
Wars and the outbreak of World of nations. The tragic shots at
War I. This was a century when Serajevo ushered in a new war,
political and economic liberalism bigger and more terrible than
(in the old-fashioned sense of that those unleashed by the plebeian
much abused word) marched dictator who harnessed to his war
hand-in-hand. The old fetters chariot the energies released by
which absolute monarchy and the French Revolution; but by and
feudalism placed on human initia- large, the century following the
tive and enterprise were broken fall of Napoleon was the most pro-
entirely in some countries and gressive in human history.
very much loosened in others. The progress was evenly dis-
And the material results were tributed all along the line: more
impressive. There was not a coun- people’s participation in govern-
try in the Western world where ment, better assurance of basic
people were not better fed, better human rights (this century wit-
clothed, better schooled, better nessed the end of slavery in
cared for medically in 1914 than America, of serfdom in Russia), a
they had been in 1814. This rising much wider spread in education
standard of living accompanied a without deterioration in quality,
very considerable growth of popu- and a tremendous display of crea-
lation. The three freedoms of tive vitality in literature and
movement that were characteris- music.
tic of the nineteenth century —
freedom for men, goods, and capi- The Cross of War
tal to cross frontiers with mini- World War I placed a bloody
mum hindrance — did much to re- cross on the dream of perpetual
lieve population pressure and to progress which many in the United
assure the progress of undeveloped States and Europe had shared
parts of the world. during the prosperous and rela-
Political institutions varied tively peaceful century that pre-


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

1959 THE SUPREME ISSUE 17

ceded 1914. (One could list many the provision of care for the in-
wars during the nineteenth cen- digent and unfortunate. The State
tury; but the total destruction of has undertaken functions for
life and property during these was which it is inherently unsuited,
almost negligible compared with such as protecting a vast variety
the carnage and destruction that of individuals and groups against
went on from 1914 until 1918.) the consequences of their own bad
Apart from the direct toll in judgment or bad fortune.
human lives, the psychological Gone are the days when sturdy
effect of World War I was to Grover Cleveland — rejecting a
smash old political and economic proposal to provide government
patterns to such a degree as to let compensation for farmers whose
down the dykes before the fanatic, crops had been damaged by hail —
the demagogue, the adventurer. It remarked, in substance, that while
unloosed a revolt against liberty the people should support the gov-
which took two forms. There was ernment, the government should
the outright dictatorship, most not support the people. Now, it is
formidably developed in the Soviet no exaggeration to say that gov-
Union. And in Nazi Germany, a ernments in many fields do under-
dictator outlawed all political par- take to support the people, or
ties except one composed of his certain groups of the people. This
own followers, suppressed every task is very expensive, requiring
voice of dissent, made use of the taxation on a scale that formerly
impact of unlimited propaganda would have been considered fan-
and of the terror of an all-power- tastically impossible. It also neces-
ful political police, and took over sitates far-reaching controls. One
all responsibility for the well- is reminded of Alexis de Tocque-

being of his country. ville’s ‘immense and tutelary
power,” which: would rob the
The Age of the Welfare State human race of all initiative and

In countries with an older and self-reliance, which would labor
stronger tradition of political for their happiness, but choose to
liberty, representative institutions, be the sole agent and the only
and civil rights, this revolt took arbiter of that happiness, which
a different and subtler form in would “spare them all the care of
the creation of the so-called Wel- thinking and all the trouble of
fare State. As this has developed living.”
in America and other Western In this age of the Welfare State
countries, it has gone far beyond the word liberalism has been dis-


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

18 THE FREEMAN May

torted out of any recognizable Ileftwingers in America and West-
similarity to the ideals of its ern Europe ever since it was
Founding Fathers. The British established in November 1917.
Liberal Party, which gave Eng- First, there was the view, sup-
land so many Prime Ministers be- ported by the tall tales of return-
fore World War I, has shrunk to ing conducted visitors and delega-
a tiny remnant, no longer able to tions, that Russia had achieved
hold the balance between Laborites social advances beyond those of the
and Conservatives, even after a leading Western countries. This
close election. And even this tiny despite the fact that prerevolu-
remnant cannot find a clear solid tionary Russia was an economi-
basis of agreement, some members cally retarded country and that
looking back a little wistfully to humanitarianism was not the
the days when liberalism was the characteristic of the Soviet com-
creed of economic individualism munist leaders.
and others following the new gods Gradually the gigantic crimes of
of state planning. Stalinism, the starving of millions
In the United States the good of peasants, the slave labor camps,
ship liberalism has suffered an the undiscriminating purges that
even sadder fate. It has been took the lives of many veteran
boarded and captured by a pirate communists, became better known.
crew of state interventionists and Stalin's pact with Hitler was the
near-socialists whose two favorite final psychological blow to many
remedies are more state action radicals who had sympathized
and more public spending. No one with the “Soviet experiment.” The
who sympathizes heartily with color of the beacon light has
old-fashioned liberalism could now changed, although it remains
call himself a liberal in America false.

without inviting the gravest mis- Now, especially since the Soviet
understanding as to what he really rulers tried to take the minds of
believes in. their subjects off the drab and

dreary lives which they lead on
The “Soviet Experiment’ earth by hurling huge projectiles

The Soviet Union, where the into the sky, there has been a
combination of political dictator- widespread campaign to frighten
ship and economic collectivism has us into believing that the Russians
prevailed consistently despite will catch us if we don’t watch out
minor shifts in tactics and policy, and that we must force our rate
has been a false beacon light to of industrial growth higher by


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

1959 THE SUPREME ISSUE 19

all possible means, including reck- ate. One must also place after
less inflationary spending. What is Soviet figures of output an indefi-
not realized is that Khrushchev, nite but very substantial discount
when he boasts of overtaking for defective quality. This point
America by 1970, or any other spe- was powerfully brought home to
cific date, is playing an entirely de- a personal acquaintance, a former
ceptive numbers game. journalist who returned to Moscow
after an absence of almost twenty
years and looked up his old apart-
What Khrushchev and the ment which had been built in the
gloom-and-doom American com- twenties. He discovered that it had
mentators who take him seriously simply crumbled to pieces and had
are doing is to compare the growth been abandoned as uninhabitable
rates of full-blown, highly devel- — and this in a city where the
oped United States industries with housing shortage is so desperate
those of new-fledged Soviet indus- that the condemnation of any liv-
tries, many of which are produc- ing space is not rashly undertaken.
ing at a rate which similar indus-
tries in America passed in the Monetary Manipulations
twenties or earlier. Consider pas- A survey of a few key points in
senger car production, for in- the Soviet economic system shows
stance. The last figure on Soviet that the individual is treated as
output was 117,000. Normal a ward or serf of the omnipotent
American output is five or six mil- State, without any of the guaran-
lion. Suppose the Soviet Union is ties of comfort and well-being
able to sustain its projected rate which are implicit in a free econ-
of 8 per cent yearly increase, while omy. The Soviet ruble, for in-
we go along with about 3 per cent. stance, is simply funny money out-
It does not require much higher side the Soviet frontier; it has no
mathematics to figure out that no value in international exchange,
living Russian, or American, will and will buy nothing, although
see the day when Russians (apart there is an official rate of four
from top bureaucrats) will be able rubles to the dollar, with foreign
to live on wheels as Americans do tourists, as a special concession,
today. getting ten rubles. Both rates are
Similar comparisons could be completely arbitrary and have
made for housing, plumbing fix- nothing to do with the real value
tures, and a host of other con- of the ruble.
sumer goods too vast to enumer- Not long ago the Soviet govern-

Statistical vs. Physical Output


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

20 THE FREEMAN May

ment calmly repudiated its whole bonds, incentives to save in Rus-
internal national debt on the sia are, to put it mildly, not
somewhat naive ground that in- strong.

terest payments were getting too Nor is the individual allowed to
heavy. By one stroke of the pen, buy land or to invest in real prop-
Soviet citizens were robbed of bil- erty. The Soviet design is to keep
lions of rubles which might have him working hard all his life, get-
helped them considerably in their ting what wages the State, the
years of retirement. But so com- owner of all sources of employment,
plete is the Soviet control of all may wish to pay and paying prices
means of public expression that which the State, the producer of
this act was represented as being all goods, may wish to charge.

“at the desire of the people.”

On three occasions the Soviet A Modified Form of Slavery
government has completely wiped From the cradle to the grave the
out or greatly depreciated the Soviet citizen is conditioned by
value of its currency. The Revolu- propaganda and, through a rigidly
tion did for the Russian ruble authoritarian school system, is as-
what the aftermath of World War signed or directed or channeled
I did for the German mark: re- into the work the State thinks he
duced it to worthless paper. The should take up. The horrors of
Soviet government next launched forced labor under Stalin, the
a new currency at the nominal worst kind of slavery, have abated.
value of the prewar ruble, a little This is not because his successors
less than two to the dollar. This are more humane than the de-
soon became shaky, and collapsed ceased dictator. But they realize
altogether under the inflationary that the former system of over-
impact of the First Five Year working and half-starving millions
Plan. The ruble was then assigned of people in Arctic slave labor
the new value of five to the dollar; camps is too wasteful in manpower
and the dollar itself during this for a country that is feeling the
period had been devalued by 40 effects of tremendous war losses in
per cent. After World War II, the its present low birth rate. How-
Soviet government carried out an- ever, large numbers of people, if
other currency slash, issuing a not actually kept behind barbed
brand new ruble that was forcibly wire, are forcibly detained in re-
exchanged, in many cases, for ten mote places where they are forced
old ones. In view of what has hap- to work at the tasks assigned to
pened to the currency and to the them.


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

1959 THE SUPREME ISSUE 21

It is a great pity and irony that
just when the strength of the
United States lies in being as dif-
ferent from the Soviet Union as
possible, in adhering firmly to the
principles of the free market, con-
sumer free choice, maximum op-
portunity for the individual, there
are voices in this country that use
a mistaken fear of Soviet economic
competition as an argument for
driving us further along the path
toward economic statism.

Apart from the threat of mili-

IsservATIONS

FREDERICK

THE ALL-OUT contest between the
United States and Russia for mili-
tary and diplomatic supremacy
tends to obscure the fact that the
United States holds a command-
ing lead in the satisfaction of the
daily needs of individuals. A visit
to Europe, the continent most
jeopardized by the American-
Soviet battle, reveals to even the
most superficial observer the out-
standing performance of Ameri-
can business and trade in supply-
ing goods for consumers. American

Mr. Walker is an American public relations
consultant and journalist now visiting Europe.

tary attack, which is a question in
itself, the only thing we need fear
from the Soviet economic pattern
is that we should imitate or adopt
it, even in part. Only if and as we
maintain in our own lives the his-
toric American principles of in-
dividualist opportunity in econom-
ics and other fields shall we
worthily fill our historic destiny as
champions of the principle that the
State should be the servant of its

. citizens, not the master of its sub-

jects. eo oo

FROM UROPE

WALKER

products are displayed and on sale
everywhere, with no competition
at all from Russia.

It seems that American busi-
ness, harassed as it is by growing
state intervention, is nonetheless
able to enter foreign markets with
products at an attractive price,
while completely state controlled
Russian enterprise fails to offer
the foreigner anything he wants
or needs. The universal existence
of American products, and the ab-
sence of anything comparable
from Russia, surely is a testi-
monial for the system of enter-


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

22 THE FREEMAN May

prise, merit, and price. This is no porations as though they were
foreign aid handout at the expense public enemies; these critics do
of the American taxpayer but the not see that free enterprise is
conquest of markets through prod- equally beneficial to everyone con-
ucts that meet human needs and cerned.

wants. American foreign policy has

The fact that American enter- tended to stress military might
prise can spread throughout the and foreign aid handouts while
world while the Russians export neglecting to tell the world that
espionage agents, munitions, and America stands first for freedom
scare headlines suggests that the and its results which supply the
American economy has something needs of people. Reports from
the Soviets lack — namely, free- abroad indicate that the so-called
dom. And our national policy backward countries are interested
ought to stress the why of this in political freedom and a greater
success. The testimony exists participation in the goods of life.
everywhere in foreign shop win- America has demonstrated the
dows and on shelves where Ameri- possibilities, and our exports offer
can products are for sale. Helping physical proof that we can pro-
the foreign buyer understand why duce the goods of life in abund-
he can buy American foods, drugs, ance. Russia, on the other hand,
gasoline, and tobacco, while he has offers promises and propaganda
never seen anything from the So- but neither the products people
viet Union except trouble, would want nor the freedom that makes
be a step toward sound foreign for productivity. And the great
relations which no amount of for- pity is that we play down or ig-
eign aid or State Department nore our actual triumphs and copy
propaganda could accomplish. The Russian diplomatic methods in-
visual demonstration is already stead, hoping to gain friends
there. Needed is the clear and through military and astrophysi-
comprehensive explanation of what cal projects capable of destroying
it stands for. the world.

Many Americans in recent dec- American enterprise has proven
ades have tended to reject free its ability to produce, to enter new
markets in favor of the restraints markets, to supply needs. But hav-
of an expanding state. Free enter- ing accomplished all this, we now
prise has too long been associated seem intent on throwing away our
in many minds with the selfish in- greatest strength to take a rocket
terests of wealthy men and cor- to the moon ourselves. * oo


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

por A
VOLLIE TRIPP

Why those who receive so often turn to bite... he oping wd

HUMAN NATURE often is revealed bitterness or regret: “I have al-
in jokes, such as the one about ways tried to help the underdog.
the businessman seated in his of- And the underdog has always
fice, when his excited secretary turned around and bitten me.”

burst in. Why is this so?

“There’s a man here named Bill Having been on the receiving
Simpson, and he says he’s come end of this kind of reverse grati-
to beat you up!” tude for sundry favors rendered,

“Bill Simpson,” reflected the and having lost a few valued
businessman. “That's odd. I can’t friends through well-meaning ef-
recall ever doing him a favor.” forts to help them, I set about to

Whether the businessman got resolve this interesting phenom-
beaten up by his irate visitor, the enon. Nothing, it seems, takes
narrator neglected to say. But we place without cause.
can infer that the man in the of- We should realize, first of all,
fice was quite familiar with that that every normal person has an
strange aspect of human nature instinctive need to think well of
which has both puzzled and sad- himself. He must appear in his
dened many others. own eyes as a fairly satisfactory

What of this perverse trait in human being, all things consid-
human beings that impels people ered. He has no practical way to
so often to turn against their ben- escape from that clinging, all-
efactors? A man who has labored pervading self. A contrary view of
into the twilight of his life on be- self, a disparaging view, would be
half of others, observes without intolerable, and would likely re-
—_— sult in insanity or self-destruction.
Mr. Tripp, retired from the building business, Tis well that we cannot “see our-

now devotes full time to travel, writing, and
the promotion of free enterprise. sels as others see us,” the old bard

23


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

24 THE FREEMAN May

to the contrary. In fact, psycholo- yond their power to remedy, are
gists and criminal authorities say beyond the scope of these discus-
even the most depraved refuse to sions. They must have care, ten-
think of themselves as such. In a derness, and affection, according
literal sense, they make excuses to their need. Nor need any odium
for themselves in order to live attach to this kind of charity.
with themselves. It is realized that the line grows
Now this instinctive inborn need faint at times between those who
of man to look upon himself with are in need through no fault of
favor, to minimize his faults and their own, and those who are in
magnify his virtues, implies a need as a result of too prolonged
capacity to meet certain difficulties and too easy “aid.” Perhaps no
and challenges imposed by the very completely satisfactory delinea-
act of living. In other words, he tion between these groups can ever
must believe in himself to this ex- be made.
tent. If he did not believe in him-
self to some extent, it is doubtful Admission of Inferiority
that he should ever reach matur- But help, aid, assistance of
ity, let alone success. whatever sort, can hardly be ad-
This being so, we can see that ministered without running afoul
it flatters man not at all to sug- of a fundamental part of man’s
gest that he is too weak, too stu- nature. Those who must accept
pid, too lazy, to meet life’s mini- help, or who think they must (it
mum terms. And, should we force comes to the same thing), are in
this conclusion on him, woe to us! consequence obliged to admit a
We have wounded that man in a certain inferiority to the helper,
vital spot. Small wonder, then, in those spheres to which the as-
that his resentment should be di- sistance relates. We should be
rected at him who offered the in- naive indeed not to expect reac-
sult; at him who has disturbed his tions of resentment, even bitter-
favorable view of himself. Help, ness, as the victim seeks redress in
aid, of whatever sort, must be the only way he knows.
given, if at all, with the foregoing There is a practical way to es-
well in mind. - cape the fury of those receiving
It should be made quite clear wounds to their self-esteem. Ex-
that those partially or totally un- perienced philanthropists distrib-
able to help themselves, through ute their alms anonymously. While
accident, illness, advanced age, this technique is useful to those
idiocy, or other circumstances be- who seek to do good works, it


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

1959 THE HELPING HAND 25

probably does not lessen the dam- tility, not to mention the danger,
age to the recipient. Though de- of too easy charity to those in
prived of the opportunity to strike need. There is not just the danger
directly at the author of his in- that the person so aided will slack-
jury, his displeasure is bound to en efforts in his own behalf, which
manifest in other ways. is serious enough, but that he will
It should be admitted that in- react with savage fury whenever
sult, injury, calumny do not al- he is caused to lose face in his own
ways follow assistance to those in estimation. When this happens, as
need or trouble. Sometimes the it always has, and always must —
receivers of help are intelligent when individuals or nations are
enough to analyze their deep, pri- compelled to make unfavorable
mordial feelings, welling up from comparisons between themselves
the fierce mysterious depths of the and others, through accepting help
human ego, drive them away, or — resentment and pique will fol-
banish them from consciousness. low those primitive drives for
At other times, the unfortunate vengeance.
are decent enough to hide what-
ever feelings of acrimony the ac- No Room for Gratitude
ceptance of help may breed. But Those who insist on helping
the type of people most frequently others have no right to expect
in need of help are seldom able gratitude. Isn’t it enough that the
either to analyze their own feel- helped restrain whatever umbrage
ings or to stifle those which urge may result, in consequence of it?
reprisals upon their benefactors. As a matter of fact, this require-
Those who have given of their ment of gratitude, explicit or im-
time, money, and strength in be- plied, can only aggravate a rela-
half of the underdog must have tionship which is difficult at best.
sensed this curious paradox, or Perhaps if we could eliminate all
seeming paradox, in the behavior such claims on the subject of our
of human beings. Few, perhaps, largess, we might neutralize some
have taken the trouble to try to of the irritation with us for our
understand it. Sociologists gen- doing of good. With tact and
erally would agree that the best patience we might learn to help
possible way to help anyone is to people without incurring their
help . him to help himself. The open enmity.
theory is right, but the carrying Those who would buy friends,
out poses problems. not to speak of dependable allies,
All experience bears out the fu- by such euphemisms as “foreign


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

26 THE FREEMAN May

aid,” are uninformed both in in-aid to states, or social security,
psychology and in the lessons of where the recipients are made to
history. By our outpouring of feel they ‘have it coming” to
wealth into such nations as India, them. But whatever the true mo-
we have accomplished nothing ex- tive, no course could be more effec-
cept to point up the vast difference tive if it were intended to produce
between our economic status and a race of spineless serfs.
their own. This is like flashing By appealing to man’s weak-
jewels in the face of a starving ness, in a word, making him feel
beggar. These unfortunate peoples sorry for himself, he is all too
have reacted true to form. They easily persuaded that the State,
despise and hate us. It should sur- or someone, “owes him a living”;
prise no one. and like an overgrown suckling
Our popularity as a nation and past weaning time, he will yell to
a people is in reverse ratio to the Heaven in defense of his “rights.”
amount of ‘“help” we have ad- But the State, the government,
vanced foreign nations. In Canada, not content merely to seduce the
where an offer of “aid” would re- citizen by all manner of unearned
ceive the rebuff it deserves, we are bounties, seems determined to
treated well, and (I think) gen- force the thrifty and self-respect-
erally respected. ing into a condition of supine beg-
gardom through its tax on thrift
and initiative. The punitive taxes
Getting back to the personal on industry and solvency present
level, to the problems of millions increasing difficulties to those who
of persons whose egos have been most despise the idea of depend-
deeply hurt by state and federal ence and all it implies.
aid, it must be admitted that many True charity must never be con-
thousands have lost all power to fused with subsidized pauperism.
help themselves. The State, having Charity and force are as different
rendered them impotent, will now as fire and water. Real charity, as
have to take care of them. But we the Reverend Russell J. Clinchy
need not continue this blind waste so well defines it, is “an act of
of human resources. loving all men as brothers because
Perhaps it is going too far to they are sons of God.” But neither
say it is the deliberate, calculated true charity nor the spurious
design to soften up the moral fiber brand put out by the Welfare
of the people by such enervating State can ever be a satisfactory
devices as aid to farmers, grants- way of making a living.

Wards of the State


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

1959 THE HELPING HAND 27

Provisions for Termination against man than many other re-
An important requirement of grettable limitations.
giving help is that it be termi- And since we are going to have

nated the moment the “case” is to keep right on helping people—
able to do without it. This may some people, anyway — this knowl-
require, at times, a little gentle edge of human nature ought to be
suasion. Indiana has shown us one useful to us. For one thing, we
way this can be done. Publishing may learn how to assist another
the names of those drawing relief with a minimum of “flashback.”
checks has helped several thousand We may also learn how to parry
Hoosiers get along without any it when or if it comes.
aid. It is safe to say that many If we could restore a concept of
of them, pride restored, faith re- “aid” in vogue fifty years ago,
built, have found gainful and much good would result. This was
dignified employment once more. the idea, generally accepted, that
The problem of the poor, the help was extended with the sole
ineffectual, the ‘underdog,’ will purpose of getting the helped back
remain with us always, I fear. on his feet and producing as
There has never been anything quickly as possible. There existed
even remotely resembling a solu- a tacit understanding between
tion. George Bernard Shaw once helper and helped on this score.
proposed to solve it by shooting And the helped, fully expecting to
everyone who didn’t make at least regain quickly his former status,
5,000 pounds sterling a year. helping others in his turn, suf-
Others would shoot everyone who fered no galling traumatic injury
did. Though interesting, these wit- as he does today.
ticisms bear but remotely on the
matter under discussion: the The Woodpile :
wrath, active or passive, which One of the homely “institu-

usually follows attempts to help tions” of a bygone time was the -
those in need. woodpile, with quantities of un-

Once we understand the under- cut wood, a chopping block, and
lying causes, we will save our- an ax. Applicants for “aid,”
selves much moaning and wailing sometimes bums, often men
in self-pity, when having extri- honestly seeking work, were habit-
cated the underdog, he shows his ually referred to the woodpile for
appreciation by rending our flesh. a square meal.

After all, it is but a droll human It was a point of pride at our
trait, no more to be assessed house that no man was ever turned


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

28 THE FREEMAN May

away hungry, whether or not he immense complications of the
elected to pay for his dinner by human soul — when we better ap-
cutting a few armloads of wood. preciate the extreme tenderness
Indeed, most of them did so gladly. of the human psyche — we shall no
This early version of “trade, not longer offer a man insults in this
aid” helped the down-and-outer clumsy fashion. Nor will we be
in two ways. It gave him a better puzzled and chagrined when he
appetite, and it left the fellow strikes back at his would-be bene-
with ego intact, knowing that he factors.
could help himself if he chose. I If it were ever true that we
do not recall that we ever made grow strong by bearing burdens,
an enemy by offering a man a it’s true today. It follows, and is
chance to work in exchange for a equally true, that we grow weak
good nourishing farm meal, and flaccid when our burdens are
though many were the kicks in taken away.
the face from people given out-
right help. The Downward Path

Certainly the logical plea of Satisfying one’s compassion for
debtor nations for “trade, not others with the fruits of one’s own
aid,” if heeded, would result in labor is no easy way to win
vastly better international rela- friends. But a certain way to make
tions than can ever be bought with enemies is to indulge in political
“foreign aid.” And we all should “charity” where the motive is
benefit by the natural exchange of political power instead of compas-
goods. sion and where the donations are

The most helpful man in any forcibly taken from stockpiles
community is not the man who other than our own.
dispenses the most charity. On To millions, these police-grants-
the contrary, he is the one who in-aid offer weakness rather than
makes any kind of charity or aid strength, dependence rather than
unnecessary. He is, if I may say independence, faith, security, and
so, the man who gives the most freedom. In the doing, we are
people self-respecting gainful em- hurting man in a tender and vital
ployment. The least helpful are spot. We insult his pride when we
those who seek to harass, penalize, invite him to degrade himself in
and ruin men willing to risk their his own eyes. This cannot con-
time and capital in venturesome tinue without the gravest conse-
pursuits. quences to him as well as to those

When we understand better the who render the “aid.” ooo


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

weenon FOREIGN AID

ARTHUR B. SPOONER

THIS AFTERNOON, by the warm fire, with the
kettle boiling merrily, it is hard to believe we are here. Yet the sound
of the witchwoman’s drums brings reality to a head. Here in Korea we,
as a nation, are not doing the right thing by our friends, the Korean
people. Part of the fomenting that is bubbling through the Office of
Public Information’s placid effulgences comes from the deep awareness
among the people that something is wrong. We are giving them too
much. That is, we have not given too wisely. Some of our giving reflects
a Pollyanna compulsion to “do good.” Some of our giving springs out
of a fear of being friendless in a jealous world. Some of our giving has
its source in a genuine desire to share what we have with others who
have so much less, like the GI and the Hershey bar he gives to the
shoeshine boy at the gate.

But there is unfolding at our very doors the bitterness of a people who
are weary of being always on the receiving end, and yet are not aware
of the reason for their own bitterness, sometimes. They are “riding the
tiger.” They fear to hang on, and they are afraid to drop off. The Tiger
is Relief, unrelieved relief . .. endless bales and bundles and machines
and money, and endless queues of long-nosed people to administer it all.

The Reverend Mr. Spooner, with The Korea the floor of the General Assembly by our
Mission of The Orthodox Presbyterian Church Korean brothers, but we have no vote; they
at Pusan, Korea, explains, ‘We are three mis- do it all...we only help in the pinch. Our
sionary families connected with a Korean mission, as a whole, is seriously considering
church that has over 500 churches, 6 Bible in- not handling relief in quantity. We are op-

stitutes, a full-fledged seminary, a 40-bed hos- posed to the use of government surplus grains
pital, a medical clinic, a Christian high school, and the like as a proselytizing force in mis-
several night schools, 20 orphanages, 20 leper sions. Normal gifts from sister churches are
colony churches, and the beginnings of a pub- excepted. These are not only good sisterly
lishing company and a liberal arts college. In actions, but Scriptural actions, as well, But
all of this we are trustees in only two institu- much of our giving has become . . . productive

tions, and we are given the right to speak on only of resentment and lack of self-reliance.”

29


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

! Some reflections on the problem
of becoming an individual, as revealed in...

~a Child's
~~ Diary

ROSE GRIECO

MONDAY: dinner, then he'd eat in New York
Mommy looks awfully tired to- before he came home. Then
night. She really had a time, put- Mommy started to tell him about
ting on a play for the Brownies. the Brownies, and Daddy yelled
She worked on it for weeks, and out, “Your Brownies be damned!”
today they finally gave it. Every- And Mommy gasped because
body said it was nice, and that Daddy doesn’t use that kind of
Mommy was doing a wonderful language. And then they were
job with the Brownies. I'm glad quiet for the rest of the night.
because she spends so much time I hate it when they're quiet.
with them... and talking on the I was hoping I could start read-
telephone with their mothers, and ing Little Women tonight . . . but
always trying to find out interest- with Mommy and Daddy so quiet,
ing things for them to do. I can’t think about anything else.
On account of the play, we had TI’ll close now because I want to go
scrambled eggs again tonight, to bed. Maybe when I fall asleep,
and Daddy said something about I'll forget how quiet it is.
it...and how he thought a man
who worked all day certainly TUESDAY:
ought to get something better than I wish I could go to the library
scrambled eggs when he came today with my best friend, Nancy.
home...and he was getting aw- But we can’t because today is
fully tired of it . . . and if she Girls’ Day after school. Last week,
couldn’t cook her family a decent when I tried not going to Girls’
Tre i” Day, Miss Markey, my teacher,
teaches PTA sponsored dansing’ ond creative called up Mommy and told her I

dramatics classes and works with the Recrea- .
tion Department of Montclair, New Jorsey. needed more exercise and I should

30


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

1959 A CHILD'S DIARY 31

play more with the other children. to say to Daddy, but I wasn't sure
So Mommy made me promise I'd just what it was ... so instead, I
go to Girls’ Day and play games held his hand on my cheek ... and
because Miss Markey was so nice the quiet changed. It wasn’t black
to take a special interest in me. anymore.

We'll have to wait till some Tues- Then Mommy called me into the
day when it rains and then Nancy kitchen to dry the dishes because
and I can go to the library. It's a she had to go to a Board Meeting.
wonderful place, our library .. . When she said she was going to
just hundreds and thousands of the Board Meeting, she looked at
books and each book is a different Daddy as if waiting for him to

world . . . and we can take out as say something . . . but he didn’t.
many books as we like . . . all at When she kissed me good night,
the same time. Imagine carrying she looked so pretty in her new
home five different worlds under spring hat... then she went out
your arm. without saying anything to

It was bacon-and-eggs tonight Daddy. I wish she had at least
and Daddy didn’t say anything at said good night to him. I guess
all. Mommy explained about the Daddy doesn’t understand how
meeting she had for the card hard Mommy works at school.
party so the PTA could buy new That's why she can’t cook us a
draperies for the activities room good dinner at night. Why, if she
to make it more cheerful for the ever dropped out of the PTA, I
Brownies and Scouts when they think the whole thing would col-

meet. But Daddy didn’t say a lapse . . . because she’s over at

word. He finished eating and went school almost every day, for one

to his paper. And it got quiet thing or another . . . and what

again. would happen to the school with-
After a while I couldn't stand out the PTA?

the quiet, so I went over and sat One time Daddy said that when

on the stool beside Daddy’s chair he was a boy, his mother didn’t
and put my head on his knee. He belong to any PTA and he didn’t
stopped reading the paper and put notice anybody going to the dogs
his hand on my cheek. When he because of it... and Mommy ex-
did that, it felt like the whole plained to him that times have
world was warm and pink. I put changed and life isn’t that simple
my hand over his, and I didn’t anymore. And Daddy said it would
mind the quiet anymore. There be a helluva lot simpler if all those
was something inside me I wanted women would go on home and just


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

32 THE FREEMAN May

look after their own little family. in the chair next to my bed like
I never saw Mommy look so much he does when I'm sick. It was nice
like she didn’t know what to say to see his face the last thing be-
. . . after Daddy said that. And be- fore I closed my eyes.

cause she didn’t know what to say,

she cried. So I guess tonight when WEDNESDAY:

Mommy said she was going to the I love Wednesdays because
Board Meeting, maybe Daddy Wednesday is piano lessons. When
thought she would cry again... I go to Miss Danke’s all by myself
and so he didn’t say anything, with nobody around me to bother

When I finished drying the me with questions and silly talk
dishes, I thought maybe I'd start about boys, I feel just like skip-
reading Little Women. But Daddy ping. Because when I walk alone
asked me if I wanted to play chess 1 get a chance to talk to myself.
with him, and it has been so long There are always so many things
since we played a game together, to do with Scouts and Girls’ Day
that I just ran to get it. I love and Dancing School that I hardly

playing with Daddy . .. he talks ever get a chance to talk to my-
to me softer than anybody in the self. I don’t think grownups know
world . . . and he never tells me much about us eleven-year-olds,
what's good for me . .. he just because if they did, they'd leave
makes me happy. I'm so sick of wus alone a little more.

doing things with children my own Sometimes I feel sad when I see
age . . . they're all alike, mostly. how hard they work for us . ..

But there's nobody in the whole especially Mommy. I'd like it so
wide world like Daddy, and even much better if Daddy got a good
though he isn’t in my “age-group” dinner instead, but I don’t think
whenever I'm with him, I feel as I could make Mommy understand.
though I'm half way to Heaven. And it 7s nice when my teacher
We played for an hour and a or the principal says to me, “Your
half. Daddy smoked his pipe, and mother is a wonderful woman. I
the smell that filled the room was don’t know what we'd do without
just wonderful. I wonder why her.” Only I'd rather hear Daddy
Mommy doesn’t like it. Then I say it.
had my bath and when I yelled Anyway, I like Miss Danke be-
out good night to Daddy, he came cause she never asks me which
upstairs and we said our prayers music I want to learn, like Mary
together. When we finished, he Lou's teacher does. Miss Danke
didn’t go back downstairs but sat tells me. And the music she


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

1959 A CHILD'S DIARY 33

tells me I have to practice touches the school, it would be a shame
something inside me that nothing indeed if we didn’t cooperate and
else in the world does. That’s why listen to her guest . .. who was
I like her . . . because I wouldn't coming out from New York espe-
know which music could tell me cially to talk to us. So because
things and which couldn’t. But she Mrs. Thorpe is a nice woman and

knows . . . and even though she tries to do things for us to keep
makes me practice scales, I don’t us “occupied,” we'll go.
mind. Because after the scales, Later: Mommy helped supervise

she lets me play the piece of the children during the talk on
Beethoven . . . that sounds like the music appreciation because to tell
quiet of Mommy and Daddy after the truth, most of the children
we have scrambled eggs for dinner didn’t seem to really care if music
and neither one knows what to is appreciated.

say. Maybe next time we have that = We got home in time for
kind of quiet, I'll play this sad Mommy to cook a steak and heat
music of Beethoven . . . and the some French fries and frozen peas.
quiet won’t be only sad, but beau- She bought a cheese cake on our
tiful . . . because maybe it's the way home because she knows both
sad quiet that everybody has and Daddy and I love it. Daddy en-
Beethoven found out about it. joyed the steak and said so.

Mommy smiled and they began
THURSDAY: to talk . . . nothing very impor-

Nancy and I thought we might tant... just nice talk, like some
go to the library today, but we of Chopin’s happy music.
can’t because Mrs. Thorpe, who As I got into bed, the sound of
has a housekeeper to do all her their voices warmed up the house.
housework, needed something to I didn’t read Little Women
fill in her time, I guess, so she again because I got so tired listen-
organized what she calls a Cul- ing to the lady tell us all the
tural Workshop at school . . . and things we should listen for in
today she's bringing some woman music . .. when really, I wanted
who's going to talk on music ap- to be at the library... that I went
preciation and we all have to go. right to bed after drying the
We don’t really have to go ... 1 dishes.
mean nobody will put us in jail
if we don’t, only our teacher told FRIDAY:
us that after all the time and Today was Dancing School
effort Mrs. Thorpe is giving to party. I hate Dancing School


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

34 THE FREEMAN May

because I can’t stand it for boys ‘emotionally disturbed.” Anyway,
to put their arms around me. I went to Dancing School so Mom-
Daddy is the only man I want to my wouldn’t have Miss Markey
hold me...and his brother, my using all those odd words about
Uncle Jim. Because when they me...and today was the last day
hold me, I know that nothing in of the term . . . so Mrs. Burns,
the world can harm me. But with who hasn’t “done anything for the
the sixth grade boys, it's different. children” yet, decided to have us
I didn’t want to go to Dancing all over to her house for a party
School. I wanted to stay with the after class.

class in Creative Dancing because There were quite a few mothers
there we did dances to match the on Mrs. Burns’ committee to see
music that talked to us. But every- that we all had a good time. And
body else goes to Miss Purdy’s since the party went right on till
Dancing School, except Joe Blake after six o'clock, I wondered how
...and when I said I didn’t want many of their husbands were
to go, Mommy had a “conference” getting scrambled eggs for dinner.
with my teacher about it, and I When I saw all of Mrs. Burns’
heard Miss Markey use funny beautiful furniture in soft pretty
words like “antisocial behavior” colors, I think I knew why she
and it frightened me. And because hadn't “done anything for the
I wanted her to stop using those children.”

ugly words, I said all right, I'd Tom Smithers, who always likes
go. And Mommy looked so relieved to make people laugh, somehow
that it was worth it. And Miss managed to drop his chocolate ice
Markey patted my head and said cream on Mrs. Burns’ beautiful
to Mommy that maybe if they cut white circular couch. All the boys
my braids, it might help me grow laughed and the girls squealed at
out of my “child’s world.” I said the top of their lungs. Mrs. Burns
nobody was going to cut my hair came into the room just as Tom
until I said so... (I've loved my Smithers was yelling, “Hey . . .
long hair ever since Daddy told look at my black-and-white soda.”
me the story of Rapunzel and com- And the boys laughed some more.
pared me with the lovely maiden) I looked at Mrs. Burns. .. and her
and that if they cut my hair before lips were quivering. I don’t know
I said so, I'd go up to the Pond about anybody else, but I could
and drown myself. Miss Markey sce just as plain as daylight the
looked at Mommy for a long time, tears that were behind Mrs.
then she said two more ugly words, Burns’ eyes. She didn’t dare let


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

1959 A CHILD'S DIARY 35

them fall . . . because the other must be nice to go home to a house
mothers were there, I guess. On full of sisters and brothers.
our way out, I watched Tom Miss Markey sent Joe to see the

Smithers tell Mrs. Burns what a school psychologist, on account of
good time he had and how sorry the way he likes to play hookey.
he was about her couch. And Joe said he likes to go see the
though he said it seriously, I could school psychologist because he gets
tell he was laughing. a kick out of the way Dr. Hey-

I tried to start Little Women ward looks at him. He said he'll
tonight, but I couldn’t because I probably have to go see him again
kept seeing Mrs. Burns’ trembling next Wednesday if he plays hookey
lips and the tears that didn’t on Tuesday. One day Miss Markey

come out. told the class we should be kind to
Joe because he’s “maladjusted.”
SATURDAY: Anyway, Joe still gets the best

Today we packed a lunch and marks in the class, maladjusted
Mommy is taking our Scout Troop and all, so I guess it can’t be as
down into the Glen for a picnic. I bad as Miss Markey makes it
love the Glen. It's so wild and sound.
mysterious . . . and Joe Blake told About the picnic today, Mommy
me the violets are growing like said it was very strange that I
crazy down there. He knows ... wanted to go into the Glen last
because he played hookey from Sunday afternoon by myself, but
school yesterday. When 1 asked thatI didn’t have a good time with
him what he did, he said he walked the Scout Troop today. I couldn’t
the railroad tracks for a while and help wandering off among the
then he went into the Glen . . . all trees, away from the noise and
by himself. He told me about the talk of fifteen Girl Scouts, and
violets because he knows I love Mommy kept telling me to stay
them. He said he didn’t think of it with the crowd. I don’t think she
yesterday, but next Tuesday, when understands that when you're
he plays hookey again, he’ll pick alone in the Glen and the only
some for me. Joe is the “problem sounds you hear are the birds and
boy” in the sixth grade. But I like the brook and you take off your
him better than anybody in the shoes and run through the violets,
class, except Nancy. He's the only it’s like the beginning of the
one who refused to go to Dancing world. I think maybe next Tues-
School and got away with it. There day I'll play hookey with Joe
are six children in his family. It Blake.


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

36 THE FREEMAN May

The only trouble is if I play rest of the night. It was like the
hookey, then I'll be a problem nights when we have scrambled
child, too. I don’t mind at all be- eggs for dinner.
ing a problem child if it means
being like Joe Blake. Only it would Tomorrow is Sunday and maybe
hurt Mommy so . . . because she’s in the afternoon when Daddy is
president of the PTA. Joe doesn’t having his nap and Mommy is
have to worry because his mother talking on the telephone to one of
doesn’t even belong to the PTA. her committees, I can sneak down
She told Mommy over the tele- into the Glen and pick violets.
phone that the only organization There's nothing in this whole
she belongs to is her family. world I'd rather do in the spring
Mommy couldn’t make it out . .. than go down into the Glen and
but when she told Daddy about it, listen to the sounds while I pick
he said somebody ought to pin a violets.
gold medal on Mrs. Blake . . . and Only it’s so hard to do . . . the
Mommy didn’t talk to him for the way things are. ¢ oo

a

Selfishness

SELFISHNESS is not living as one wishes to live; it is asking
others to live as one wishes to live. And unselfishness is letting
other people alone, not interfering with them. Selfishness always
aims at creating around it an absolute uniformity of type. Un-
selfishness recognizes infinite variety of type as a delightful
thing, accepts it, acquiesces in it, and enjoys it.

OSCAR WILDE

Education
THE WELL-MEANING PEOPLE who talk of education as if it were a
substance distributable by coupon in large. or small quantities
never exhibit any understanding of the truth that you cannot
teach anybody anything that he does not want to learn. If a pupil
wants to learn, he is already half-way to learning before he is
taught. If he does not want to learn, he cannot be taught, how-

ever many years you add to his school life.
GEORGE BAMPSON


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

Id
/

the Ultimate
in Unionism

It was a sunny afternoon
At story-telling time.
Old Kaspar chose a fresh cigar NT
And sipped his rum-and-lime, / \ ~
While Peterkin and Wilhelmine
Looked at the futurama screen.

They saw a large commercial bank
Beside a busy street;

And men who marched and counter marched,
Like soldiers on a beat,

Or stood in solid, rigid lines

Presenting sandwich boards and signs. 7

“Now tell us what it’s all about,”
The little children cried.
“It is the Robbers’ Brotherhood,”

Old Kaspar then replied;
“These men parade with stamp and swank —
While other members rob the bank.”

\

- av

“Why don’t the Cops arrest them all?”
Asked little Peterkin.
“The Cops belong to unions, too,”
Said Kaspar with a grin;
“They'd rather boil in oil or brine
Than cross a union picket line.”

“Then must we let the Robbers go,
To rob another day?” . -
“The Cops would catch them,” Kaspar said, a,
“If they could find a way; 2
But union ethics make it clear - /
A picket line is sacred, dear.” [7

, ,
SEEN L J

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

37


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

The Corruption of Union Leadership

SYLVESTER PETRO

COERCION marks the beginning are not only permissible but
and corruption the conclusion of praiseworthy.
the march of union power observ- Law-enforcement officials some-
able in the McClellan Record. The times stand in the way, however,
process begins with the use of and it therefore becomes necessary
compulsion to secure members. to take care of them, too. Pure
Thereafter new and different coer- bribery is not always the appro-
cive devices are used to bind the
unwilling employees to the union.
After a union has learned the use-
fulness of coercion in increasing The greatest tyranny has the smallest
membership, it falls into the habit beginnings. From precedents overlooked,
of using even more in disputes
with employers.

Some trade union leaders hold
that any employer who resists

from remonstrances despised, from griev-
ances treated with ridicule, from power-
less men oppressed with impunity and

their demands is an “enemy of the overbearing men tolerated with compla-
labor movement” who must be cence, springs the tyrannical usage which
taught a lesson, and, if he con- generations of wise and good men may
tinues to resist, must be exter- hereafter perceive and lament and resist
minated. If employees themselves in vain.

refuse to acquiesce in strikes, if, THE LONDON TIMES (1845)

instead, they exercise their right

to continue working during

strikes, they are considered trai-

tors, against whom brutal reprisals priate method here, and often a
generous campaign contribution

Dr. Potro is Professor of Law at New York Will do as well. If the laws of the

University School of Law. This article consists
of excerpts from his new book, Power Un- land pose an obstacle to the use of

limited: The Corruption of Union Leadership : i i
(New York: The Ronald Press Company, union power against traitorous
1959. $5.00. 323 pp.). The book accurately employers and employees, then
summarizes the McClellan Committee hearings

and carries recommendations for the elimina- the laws must be changed, and

tion of the special privileges which give trade cat :
unions the powers thoy inevitably abuso. full-scale political action, largely

38


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

1959 THE CORRUPTION OF UNION LEADERSHIP 39

financed by membership dues con- use of coercion and violence by
tributed in a substantial degree traditional unions induces their
by workers of differing political leaders to include on their staffs
views, is the appropriate vehicle — alongside college-trained econ-
of change. Candidates who sup- omists — men with criminal rec-
port the unions’ claims of special ords and backgrounds of brutality;
privileges to coerce and compel if dirty work is to be done, it is
get extensive, expensive, and en- just as well to have a person
thusiastic political support; those around who has had some experi-
who insist that the laws of the ence with it. And the practical
land should apply to trade unions privilege to coerce, to extort, to
are marked for extinction. Too shake down, to compel (such as
often the unions have their way, has accrued to the unions) is pre-
cisely what the denizens of the
underworld, the professionals of
organized crime, have been search-
ing for most avidly, ever since the
rich pickings under Prohibition
dried up.

If a single picket will harm a
business badly enough to make the
owner sign up with the union,
maybe it will also serve to shake
loose some immediate money. In
either case the picket line is coer-
cive, and if it is a specially privi-
leged form of coercion in the one
case, why not in the other? Thus
the professional extortionist dis-
covers a new tool for his trade,
and thus too are born “racket-
although a startling exception picketing” and its associated
here and there indicates that the shakedown techniques.
black night has not yet fallen. Convicted criminals are in the

Meanwhile, alongside the struc- unions then with both feet — as
ture of traditional unionism, there adjuncts to traditional unions, and
begins to grow in its shadow a on their own, cynically using the
murky pseudo-unionism. A two- form of unionism as a cover for
stage process is at work. Frequent their age-old methods of getting

KOHLER CO.


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

40 THE FREEMAN May

ahead in the world. The one thing future of society. But it is still
they have never learned is how to less than that produced by .the
work for a living. As union agents power of the traditional unions.
and leaders they live very well off They daily coerce and brutally at-
the product of those who have tack workers who decline to join
learned how to make a living or refuse to participate in strikes.
through socially useful work — the They throw out of work hundreds
businessmen and workingmen of of thousands of men because of
the country. their artificially inflated wage

Although society at large may costs. They create irresistible in-
know very little about all this, it flationary pressures and compound
pays the bill—an overwhelming, the evil by encouraging costly and
extortionate, and destructive bill. destructive deficit-spending by
"A shakedown induced by ‘“stran- governments. Through the use of
ger-picketing” has to be made up legal and political special privi-
by the businessman somehow. leges, they tie up entire industries

The situation is not made any into tight monopolies and cartels
" better by the shrill accusations of which abuse the public and
the union leaders against business- threaten the destruction of the
men about the high cost of living free and competitive economy

and unemployment. The plain fact which has always been the Ameri-
is that no businessman ever likes can ideal.
to cut back production. He does so This is the panorama of union
only when he has to. More often power. Traditional unions have
than not the union leader has been secured for themselves special
responsible for pricing union privileges which vest in them un-
members out of the market. For limited power. This power, like
that he ought to be fired, or law any other unlimited power, can
and law enforcement ought to be only be abused, and it is abused.
rigorous enough to keep him from Violence and economic coercion by
abusing workers, union members, themselves create socially harm-
“businessmen, and the public. ful conditions, the consequences of
which are infinite and unpredicta-
Special Privilege — Unlimited Power ble. Besides, they exert a magnetic
The point cannot be emphasized force, drawing to the trade unions
enough. The harm done by crimi- some of the worst types of crimi-
nals masquerading as union offi- nals, who find there an environ-
cials is enormous and filled with ment which suits them.
the most ominous signs for the The combination is a destruc-


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

1959 THE CORRUPTION OF UNION LEADERSHIP 41

tive force which no society can poorly, so that they have neither
long survive: on the one hand, the numbers nor the quality of
abuse of the citizenry and impair- men necessary to do what is, after
ment of peaceful, progressive, pro- all, the basic job of civilization:
ductive activity; on the other keeping the peace.

hand, dissolution of the moral While recognizing, then, that
and political structure. In the spe- Senator Ives had hold of a piece
cial privileges of coercion and of the truth in observing that the
compulsion which unions have crime disclosed in the McClellan
gained, there breeds a rotten Record is a part of the larger
growth which corrupts the whole problem of law enforcement cre-
moral and political structure of ated by the welfare-state distor-

society. tion of the role of government,
} his view is not on the whole ac-
The Welfare State Philosophy curate. At least it is not the whole

The same thinking which is pro- truth if he means to say that there
ducing the Welfare State has also are no independent causes for the
been largely responsible for the prevalence of crime and corrup-
special privileges accorded trade tion in trade unions. It is not the
unions. Furthermore, the welfare- whole truth because it fails to ex-
state ideology has given the State plain why, among all the other
so many diverse jobs to perform private associations of society —
that it can no longer properly per- the business firms, the bar asso-
form the basic job for which it ciations, the medical associations,
was designed. That job was to in- and the thousands of other private
sure domestic tranquility by pro- associations in this country — vio-
tecting honest citizens against lence, crime, and corruption do
thugs and criminals. Proper per- not prevail as they do among trade
formance of that basic function unions.
requires, obviously, a primary and Violence, crime, and corruption
predominant preoccupation by prevail among trade unions to a
government with the police force degree unmatched in any other.
and the administration of justice. private association because trade

While we expend our substance unions have acquired from society
in granting special privileges and and the law special privileges al-
subsidies to the strong pressure lowed to no other private associa-
groups, encouraging idleness and tion. There is every reason to be-
unproductiveness, we underman lieve that any other private asso-
our police forces and pay them ciation accorded the same privi-


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

42 THE FREEMAN May

leges would manifest the same conduct of the federal government
characteristics which the McClel- over the past thirty years, begin-
lan Record discloses in trade ning in 1930 and continuing to
unions. this date. The responsibility is
If, for example, businessmen nonpartisan, with Republicans and
were allowed to compel the pur- Democrats sharing it, although
chases of their customers, to as- not in equal proportions. It is dis-
sault them when they showed any tributed in another way. Rather
intention of removing their pa- than being confined to one or an-
tronage, and to block access to other of the three branches of the
competitors — there is very little federal government, it is shared,
reason to believe that such conduct instead, by all three: the legisla-
would not become common busi- tive branch, the executive branch,
ness practice, leading to more and and the judicial branch.
more of the same as the selective Unwise laws have been made
process wore on in business in worse by the administration and
the way that it has in trade interpretation they have had,
unions: with the productive and while socially beneficial laws have
the ingenious giving ground be- been reduced to impotency by re-
fore the thugs, the bullies, and luctant administration, on the one
the master strategists of large- hand, and dubious interpretation,
scale organized violence. on the other. Without exonerating
Businesses compete in a civilized Congress from its share of the re-
way partly because the law com- sponsibility, one still must ac-
pels them to do so and partly be- knowledge in the interests of ac-
cause the law’s compulsion has curacy that its record is not as
created a selection process which defective as that of the other par-
grinds out the thugs and the law- ties: the National Labor Relations
less and advances the able and Board, representing the executive
the industrious. Among trade branch; and the United States Su-
unions, precisely the contrary proc- preme Court, representing the
ess of selection has been going judicial branch.

on, with, as might be expected, Accuracy calls for further quali-
precisely the contrary results. fication. There have at all times

been on the Supreme Court some
Errors in Government justices who resisted valiantly and

The sources of the special privi- with great legal ability the errors
leges which trade unions enjoy are and excesses of that Court. Again,
to be found in the policies and some of the justices who earlier


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

1959 THE CORRUPTION OF UNION LEADERSHIP 43

participated in the most dubious tried to give trade unions and
decisions of the Court have shown their officials more privileges than
since then that theirs were good- the laws of Congress intended, nor
faith errors; and, as all good and have they negated, except by di-
learned men will do upon finding rect mandate of the Supreme
themselves in error, they have Court, the laws of Congress which
taken steps toward correction. were intended to limit abusive and
It should also be noted that at monopolistic trade-union conduct.
frequent intervals between 1935 Little need be added at this
and 1953 there were some mem- point on the kind of corruption at
bers of the NLRB who recognized all levels which we have witnessed
and dissented from improper de- in the preceding chapters. ... But
cisions of the Board. Moreover, we must bear in mind that moral
the majority of the Board since and political corruption of the
1953 has been guilty of nothing varieties recounted there rot in-
comparable to the outrageous mis- tegrity at all levels and thus
interpretations of the Taft-Hart- weaken the fiber of society, mak-
ley Act handed down by the ma- ing it prone to further corruption
jority which prevailed from 1949 of a million kinds in a million
to 1953, although the more recent ways, every day. Nonunion men
majority has been very slow to treated brutally as outlaws and
correct some and has failed com- union members as serfs, the in-
pletely to reverse the most serious filtration of unions by professional
of its predecessor’s misinterpre- gangsters, extortion from busi-
tations. nessmen, bribery and corruption
Whereas the NLRB and the Su- of public officials, the theory that
preme Court have preponderantly trade unions are entitled to special
contributed decisions heightening privileges from government — no
the abusive powers of trade unions society can survive much of that
and negating the efforts of Con- for very long.
gress to reduce such powers, the
record of the Federal Circuit Destructive Monopoly Powers
Courts of Appeals has been one, All these put together, however,
preponderantly, of the kind of ex- probably do not equal and cer-
cellence in legal scholarship, fair- tainly do not exceed the danger in-
mindedness, and fidelity to law and herent in the necessary course of
precedent which is to be expected monopolistic unionism. As much
of all judges. The Circuit Judges, as trade unions may protest their
with some exceptions, have neither virtue and distort the truth, it is


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

44 THE FREEMAN May

the opinion of the most competent social sciences, in my opinion,
economists in this country, and of Professor Ludwig von Mises.?
the greatest economists in the
world, that monopolistic trade Steps in the Process
unionism will destroy any free en- All these men agree, not only
terprise system if it is allowed as to the fact, but as to the process
to proceed unchecked. Many of by means of which trade unions
America’s ranking economists will, if unchecked, bring about the
have come to more or less this destruction of the free society.
same conclusion — Fritz Machlup, First, compulsory membership
Milton Friedman, David McCord leading to dictatorial control of
Wright, Edward H. Chamberlin, all workers; second, through the
Philip Bradley, Henry C. Simons, ensuing monopolistic regimenta-
and many others of equal ability tion of all industry, the securing
and disinterested devotion to of wage structures higher than
truth.! Their conclusions are the market will bear; third, in in-
shared by economists of unsur- evitable consequence, drastic and
passed international reputation, severe unemployment of great
including Friedrich A. Hayek and numbers of workers; fourth,
Wilhelm Roepke, as well as the clamorous insistence that govern-
man who has in our time achieved ment, through deficit spending,
the greatest stature of all in the create jobs and other subsidies
SE — for the men thrown into unemploy-
1. For some of the books in which these ment by the union monopolies:
men have expressed their conclusions .
and explained their reasoning, see: fifth, loose money policies by the
Henry C. Simons, Economic Policy for monetary arm of a government
sity of GE oo. 121 politically committed to “full em-
ff.; Fritz Machlup, The Political Econ- ployment” policies; sixth, a crack-

omy of Monopoly (Baltimore: The up inflation: seventh, consequent
Johns Hopkins Press, 19562), pp. 333 p ’ ! q

ff.; David McCord Wright, editor), 2.0ne of the chapters of Professor

The Impact of the Union (New York: Friedrich A, Hayek's forthcoming
Harcourt, Brace & Co., Inc. 1951) book, The Constitution of Liberty, is
(containing a paper by Professor a masterful analysis and summation
Friedman); Labor Unions and Public of the opinion of economists as to the
Policy (Washington, D.C.: American consequences of unlimited union power.
Enterprise Association, 1858) (which Professor Mises’ great work is Human
carries the articles by Professors Action (New Haven: Yale University
Chamberlin and Bradley cited else- Press, 1949), although he deals with
where in this book). See also Charles the destructive tendencies of monopo-
Lindblom, Unions and Capitalism listic trade-unionism also in Socialism
(New Haven: Yale University Press, (New Haven: Yale University Press,

1949). 1951), pp. 467-84.


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

1959 THE CORRUPTION OF UNION LEADERSHIP 45

mangling of the lives of all those still run a decent government in
who have attempted to save; the general welfare. Then it is the
eighth, increasing chaos and dis- job of the public to understand
location; ninth, the rise of vicious that government, like all other
demagogues playing upon the con- human institutions, has very nar-
fusion, chaos, and dissatisfaction row limits. It may be able to do a
of the populace to secure for them- fair job of providing for the na-
selves dictatorial powers which tional defense, of keeping the
permit them to apply totalitarian peace, of enforcing the laws, and
remedies which the Constitution of administering justice in the
of the United States inhibits; courts —if it devotes all its time
tenth, dissolution into the jungle.? and energy to those difficult tasks.
The McClellan Record demon- But it cannot do those things at
strates the fundamental culpabil- all, as the McClellan Record so
ity of the federal government for vividly demonstrates, if its ener-
the intolerable conditions which gies are expended on every pet
exist in labor relations. Attacks project upon which every pressure
on thugs, racketeers, and power- group from the National Educa-
hungry union leaders miss the tion Association to the National
real point. The real problem, the Committee for the Protection of
real fault, lies in a theory of gov- Tropical Fish comes running to
ernment which insures an awful Washington for help.
paradox: a virtual anarchy within I do not know of any short way
a plethora of laws. We have thou- to bring about limited and there-
sands upon thousands of rules and fore effective government in this
statutes, millions upon millions of country; that will come only when
government employees. Yet we large numbers of people appre-

have no law. ciate its value and insist upon it.
Yet I am convinced that the jun-
Government's Limited Role gle, retrogression, and decay are

The ultimate responsibility falls the necessary result of unlimited
to the public. But this fact does government, just as they are the
not absolve the members of the necessary result of unlimited
government from all responsibil- power in trade unions. No civili-
ity. It is their job to inform the zation can long survive unlimited
public that they cannot deal with power in any hands. The greatest
all the things which the special contribution of the McClellan
privilege groups are seeking and Committee lies in its overwhelm-
3See Mises, Socialism, pp. 457-500. ing documentation of that truth.


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

E. F. HUTTON

JOHN HARTFORD, of the Great Atlantic & Pacific Tea Com-
pany, hung a sign on the wall of his office. It read: “Ache
and Pain Dept. Wirk.”

He said, “I spell ‘work’ with an ‘i’ because I'm the only
one around here who wirks.”

Of course, he was “sorta” joking, because the A. & P.
gives jobs tq 100,000 folks, and it just couldn’t become the
greatest food store in the world unless they wirked.

It couldn’t have lasted and grown for 100 years without
a lot of aches and pains. But they all get cured by wirk.

If Mr. Hartford had lived in Ben Franklin's time, the
old philosopher would have put him in Poor Richard's
Almanac. He'd have told young folks: “If you'd get ahead
in the world, put ‘i’ in your wirk.”

A young man, applying for his first job, who doesn’t
ask when his pension will begin, or how many paid holi-
days he’ll have, and so on, is sure to get and hold a good job.

A golden age is opening up for such young men and
women. For they will have less competition than ever
before!

The idea today is that you can have wealth without
wirk. Just vote yourself rich!

That's what the politicians tell us.

But unless Ben Franklin and John Hartford were com-
pletely wrong, we'll find that the output of society can’t
be greater than the input of wirkers. * oo

Mr. Hutton is the well-known industrialist, investment banker, and author of
the column, “Think It Through.”

46


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

For poor and rich nations alike—

THE WAY TO

GUSTAVO R. VELASCO

PEASE, MONKMEYER

AT PRESENT in economics, there is different from those followed by a
no subject so popular as the plight man who is already well-off but
of the underdeveloped countries, wants to become richer. If there is
if one is to judge by the number any difference in these rules, it
of studies and books about it. is only that the poor man will have
I am not at all sure, however, to work harder, to be more careful
that this interest is a healthy one in his conduct, and to be thriftier.
— that it will turn out to be bene- Similarly, I find that underde-
ficial to the underdeveloped coun- veloped countries are not subject
tries. This doubt stems from my to a set of economic principles dif-
belief that, from an economic point ferent from those to which the ad-
of view, underdeveloped countries vanced countries are subject. The
are fundamentally similar to de- problems of the former are funda-
veloped ones. According to my def- mentally similar to those of the
inition, an underdeveloped coun- latter. Certainly, these problems
try is a poor country considered to are very much like those affecting
have a possibility of becoming less Great Britain, the United States,
poor. and France a century and a half
Now, a poor man wishing to or two centuries ago, before the
make his way up in the economic Industrial Revolution took place.

scale does not have to follow rules

—_— Beyond a Tourist's View
Dean of the Free Law School of Mexico, Dr. . . .
Velasco is a former president of the Mexican It is by no means my intention

Bankers Association, and founder of the Mexi- .
can Institute for Social and Economic Re- t0 play down the differences of all

search. . . oye
This article, based on remarks at the an- kinds — economic, political, and 50-

nual meeting of the Mont Pelerin Society at ja] — which exist between Mexico
Princeton University in September 1958, was i

first published in the November 21, 1958 is- and the United States, for instance.
sue of U.S.A. magazine, P. O. Box 134, Lenox n » .

Hill Station, New York 21, New York. But I believe the scientist should

47


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

48 THE FREEMAN May

look far deeper than the tourist tendency in our underdeveloped
into the real situation, discerning countries to think that our prob-
the similarities as well as the true lems will be solved if we grow
differences. physically, i.e., if we just build
To cite a simple illustration: enough new factories or engage in
Two years ago, my good friend, new activities, regardless of
Professor Louis Baudin of Paris, whether they will be profitable or
France, visited us in Mexico City. whether they. are being created
As he and I were driving from the artificially through protective du-
airport to a hotel, he saw lines of ties or subsidies, and thereby in
people waiting to go into movie reality decreasing instead of in-
houses and asked whether we had creasing the income and well-be-
price control over admission tick- ing of the people.
ets. Indeed, the municipal authori- I therefore prefer to use the
ties have imposed a maximum term “economic progress.” And if
price of $4.00 (32¢ in United critics assert that this term is
States money). Of course, this neither special nor new, I would
control has increased the demand reply that this is an advantage
for seats. Incidentally, it also and not a disadvantage.
forces us Mexicans to travel to
the United States to see our movie The Fanciful Theories
star Cantinflas in Around the On concrete grounds, I would
World in 80 Days, because this say that the similarity between
picture cannot be shown in our the underdeveloped and advanced
country at the official price. nations is made greater by the ten-
There may indeed be a special dency to follow social and economic
problem for underdeveloped coun- theories fashionable at a given
tries in international politics. But moment. Perhaps because the ca-
on the economic plane, I believe pacity of underdeveloped countries
their problem is a general one and to develop original thinkers is still
that it applies to all nations, poor limited, we imitate the more pros-
and rich alike. perous nations, not only in their
I am loathe to speak in the cur- many good features but also in
rently fashionable way of ‘“eco- their dubious and even frankly
nomic growth” or “economic devel- bad ones.
opment” because, as Professor S. To me, this is conclusive proof
Herbert Frankel of Oxford Uni- that it is not facts, not realities,
versity rightly said in a recent which determine the actions of
lecture in Mexico City, there is a men, but rather the ideas which


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

1959 THE WAY T0 ECONOMIC PROGRESS 49

they form of things, the theories In our country, we have labor
which they fancifully elaborate in unions with special privileges and
order to guide their conduct and exemptions from ordinary legisla-

to be supposedly “better off.” tion. We have corrupt labor
leaders, participation of unions in
Mexican Welfare State politics, minimum wages, and con-

Mexico is beset by each and tinuous pressure by unions and
every one of these fanciful the- government to raise nominal
ories. We have the Welfare State. wage rates, supposedly “to im-
It is growing daily and creating prove workers’ living conditions”
all sorts of difficulties. For in- and make “a more just” distribu-
stance, there is resistance to a bus tion of national income.
fare increase of five centavos Finally, we have had land re-
(two-fifths of a cent in United form with the disappearance of
States money) in Mexico City. The the old ‘“haciendas,” and the re-
people have become accustomed to vival of the semicommunal sys-
not paying for economic goods and tem of land ownership that ex-
services, or to paying less than isted during colonial times. Of
their cost, so that the inevitable course, this tremendous change —
rise in fares becomes a political I would almost say ‘upheaval’ —
instead of an economic question. resulted in a sharp drop in agri-
This leads to a very serious politi- cultural production from which
cal situation because the govern- we have been emerging only in the
ment, victim of the same mental- last twelve years, but which has
ity, neither speaks out clearly nor left us with a heritage of very
acts forcibly. difficult problems.

We have inflation —not yet a As you can see, underdeveloped
hyperinflation such as we had in countries may be poorer and
1916 when our money system was weaker from an economic point of
completely wrecked — but sufficient view than the developed ones, but
to have multiplied the money sup- the painful symptoms from which
ply by 17 times and to create al- they suffer are the same, and the
most an eight-fold rise in prices disease is the same, no matter
during the last 22 years. This in- whether it is called “intervention-
flation (perhaps because we, like ism,” “statism,” or “collectivism.”
the Germans, were once badly
burnt) has led to widespread dis- Middle-of-the-Road Inflation
satisfaction and to lack of con- In the problem of inflation, I
fidence in the Mexican peso. would say that we occupy a middle


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

50 THE FREEMAN May

position; we are not among the beyond its means. More specifi-
worst offenders. We do not belong cally, I find that the underlying
within the better group of nations. causes of our inflation are:

In spite of this, we have had con- 1. The Welfare State

tinuous inflation since 1936, with 2. The desire for economic bet-
prices steadily going up although terment

lagging behind the increase in the 3. The desire for economic de-
supply of money according to the velopment.

official price indices. Permit me to comment briefly

Our inflation has sometimes pro- on the foregoing causes of infla-
ceeded at a more rapid pace, as it tion:
did between 1937 and 1946; some- e Our budget, i.e, our tradi-
times more slowly, as it did be- tional budget, has been balanced
tween 1946 and 19562 (I cite the over the last six years. But outside
years coinciding with the changes this budget, we now have dozens
of our government administra- of independent establishments and
tion); or still more slowly, as it economic agencies providing eco-
has since 1952. Nevertheless, the nomic goods or services free or at
fact is that we have been unable less than cost. Some of these agen-
either to stop inflation or even to cies have deficits because of ineffi-
approach a rate of “merely 3 per cient management; others must be
cent a year” which is looked on subsidized to make ends meet;
by some economists as not too most of these agencies or estab-
harmful. lishments go in for extensive de-

Worse still, the effects of this velopment and investment plans.
long inflation have been cumula- In many cases, the Bank of Mexico
tive, especially the psychological has had to grant loans or absorb
ones. Although I believe the job their issues of securities either
can be done, few people think that directly or through a development
the trend will be reversed, that bank called Nacional Financiera.
prices will cease to rise, and that Naturally, it also helps to sustain
the government will succeed in them by pegging their prices and
preventing another devaluation of buying them when offered for sale.

the peso. ¢ In relation to the desire for
economic betterment, the labor
Underlying Causes unions exert constant pressure —

Generally and basically, I be- and so does the government—
lieve that Mexico has had and still toward the raising of money wage
has inflation because it has lived rates. In Mexico, collective labor


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

1959 THE WAY TO ECONOMIC PROGRESS 51

agreements have to be revised in Mexico they appeared simul-
every two years. In general, unions taneously, or more exactly, syn-
succeed in securing approximately chronously.
a 15 per cent rise every time. Of We began to try out socialistic
course, I do not believe that this measures in 1935 under President
is a direct cause of inflation. It Cardenas. The next year, the
is still necessary for the monetary budget had a large deficit and the
authorities to add to the money only way to cover it was through
supply. But this union pressure an overdraft in the amount that
has created the climate in which the Bank of Mexico was author-
the money authorities have made ized to lend to the government.
the increase and have relaxed their Over the years, budget deficits
measures against credit expan- were the most important cause of
sion. our inflation. And though during
* The desire for economic de- the present Administration, the
velopment does not, I believe, per traditional budget has been bal-
se produce inflation, and it does anced, it is a fact that the so-called
not have to be accompanied by in- social and government banks and
flation, as has sometimes been economic agencies are still being
said in our underdeveloped coun- helped by the Bank of Mexico.
tries. (Incidentally, I must here Often, discussion of the Welfare
remark that we in the underde- State centers around the subjects
veloped countries accept all the of social insurance and medical
bad theories propounded in the services. However, the concept of
advanced countries and even add the Welfare State, at least as 1°
some of our own!) Inflation arises understand it, embraces much
from economic development as the wider subjects. I think we have
result of a tendency to overinvest, this admirable scheme (admirable,
both on the part of the govern- of course, if the government could
ment and of private enterprise. As be a sort of third-dimensional
I pointed out, the building of new Santa Claus) whenever the gov-
plants — whether profitable or not ernment provides some goods or
— is confused with real economic services free — in whole or in part
progress. — or when it forces some members
of the community, such as prop-
erty owners of housing, to provide
There is a plain connection be- services and goods free to others,
tween the Welfare State and infla- such as tenants.
tion. It is interesting to note that If this concept is correct, then

Socialism Creates Inflation


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

52 THE FREEMAN May

in Mexico we have not only gen- Law.” The official conclusion — set
eral social insurance and medical forth in a report — was that there
services for those persons em- is no conflict, no incompatibility,
braced by the Welfare State (up between the two ideas.

to now, artisans, domestics, and Among the distinguished gath-
agricultural workers are not ering of leading professors of con-
covered by the insurance system), stitutional and administrative law
but also a multitude of other atthe UNESCO conference, I was
prestations sociales, as the French the only one to speak out publicly
say rather elegantly, or of “hand- against the report, though several

outs’ as in American slang. of the persons present told me
privately that they were in agree-
Welfare’ and the Rule of Law ment with my view. Perhaps I

There is a particular point spoke up because, even though I
about the Welfare State that I, as am not an economist, I am proud
a lawyer, am greatly interested in to be counted among “the ignorant
bringing out. I believe that the and vociferous minority” — as the
Welfare State is incompatible with delegate from Poland called some
the Rule of Law, or, to use the economists who, he said, are the
European expression as it is only ones to oppose the Welfare
written in French, with “L’Etat State.
de Droit et le Principe de Le-
galité.” Economic Life or Death

Unfortunately, in our century, It has been said very rightly
the legal profession and teachers that free enterprise can take an
of law have failed miserably —as awful lot of punishment. I be-
Professor F. A. Hayek has stressed lieve it was Benedetto Croce who
—in their duty to defend this wrote that the spirit of freedom
prized feature of Western Civili- is always reviving and assuming
zation. new forms despite all obstacles.

I can bear witness to this. Last Permit me to point out that a
year, I attended a meeting of the healthy strong man can indulge
International Association for in a great deal of alcoholism or
Juridical Science, held under the lead a most dissolute life before
auspices of UNESCO at the Uni- the ill effects finally get the better
versity of Chicago, which dealt of him; but a frailer man, or an
with the Rule of Law. One of the adolescent beginning development,
subjects discussed there was “The can take no such liberties without
Welfare State and the Rule of suffering immediate bad results.


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

1959 THE WAY TO ECONOMIC PROGRESS 53

Such is the case with the un- serve and perfect our civilization.
derdeveloped countries. Measures But I also believe that if the
causing only some inconvenience greater nations of the West wish
or harm to giants like the United to regain their leadership, they
States or Great Britain may well must first of all be our spiritual
prove fatal for us. The advanced, and intellectual guides. They must
well-developed countries have more again believe sincerely and prac-
social and political stability, and tice wholeheartedly the principles
even stronger traditions, than we, of freedom under which they led
although even in Great Britain, the world until a generation ago.
which is the motherland of con- The way to achieve economic
stitutional government and of the progress, for poor and rich nations
Rule of Law, we have seen the alike, is to follow the principles
weakening effects of socialism and of economic freedom. ooo
of the Welfare State.

Need for Good Examples

As a final point in considering . WHERE THE BROAD
the economic progress of our un-
derdeveloped countries, permit me
to say that it is up to the developed

countries to set good examples for

us. Parents should not lead dis- The inevitable consequences of Wel-

orderly lives and then blame their fare State policies Dr. Velasco de-

children for imitating them. Ee rr comiie 29,
We have already one bad enough 1958 issue of The Situation in Argen-

example wherein the State was . fina, monthly bulletin from the Buenos

going to wither away and the res ranch of the First National

people would rise to unheard-of

stages of prosperity and happi-

ness. Surely if India has a social-

istic development plan and if To sHoOwW the downward drift in

Egypt expropriates the Suez the economy he [Argentine Presi-

Canal, it is not solely because of dent Frondizi] pointed out: that

this single bad example. money in circulation had risen in
I am aware that the task before ten years from 7,600 million pesos

us is a common one, and that it to 70,000 million pesos, while per

devolves on us all — great or small, capita production had remained al-

developed or undeveloped — to pre- most stationary; that during the


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

54 THE FREEMAN May

past fifteen years Argentina has pesos, with many of the compo-
spent far more than it earned; that nents presently lacking the means
it has omitted to facilitate basic to meet payments.
capital investment and allowed in- Bureaucracy has expanded to
debtedness abroad to rise sharply. such an extent that state, munici-
At the end of World War II, net pal, and provincial employees now
gold and exchange reserves stood number 1,800,000 and with de-
at 1,300 million dollars while by pendents total 7,000,000 — out of a
the end of April foreign debts ex- total population of 20,250,000.
ceeded gold and exchange reserves Over 80 per cent of the national
by 1,100 million dollars. revenue is used to pay salaries,
He did not vacillate in stating leaving no funds for building
that the country was close to being houses, roads, schools, and even
unable to fulfill its foreign obliga- for providing adequate mainten-
tions and that the Central Bank ance, while the cities are dark for
has outstanding commitments lack of power. State expenditure
covering authorized imports which amounts to 100,000 million pesos
duplicate prevailing reserves annually, of which barely half is
equivalent to 104 million dollars. covered by revenue.
To these must be added 200 mil- The cost of living in ten years
lion dollars due during the coming has risen over 600 per cent without
year in interest and amortization any growth in productive capacity,
of foreign credits. Since January creating a steady process of im-
1, 1955, to date, the country has poverishment. As was the case
accumulated a foreign trade deficit thirty years ago, the President
of 1,000 million dollars. stated, the country is still depend-
Referring to the government- ent on its grain and pastoral in-
owned enterprises, the President dustries which, however, are yield-
confirmed that they are losing un- ing ever smaller exportable sur-
told millions yearly, with the rail- plus. Meanwhile, little was done
ways alone showing a deficit of toward developing petroleum and
14,000 million pesos on total ex- coal resources, building new
penditures of 20,000 million pesos, sources of electric power produc-
this without providing for amorti- tion, mineral wealth, and the ex-
zations or replacement of ma- pansion of steel and other heavy
terials. The National Treasury industries. The material and fi-
since 1946 has withdrawn money nancial resources which could have
from the National Pension Fund been used to fulfill these objectives
to the extent of 55,000 million were wasted. eo 0


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

A REVIEWER'S NOTEBOOK
meri Reuven HEAR |

THE Sond OF IT

JOHN CHAMBERLAIN

For ALMOST a full quarter of a
century John Maynard Keynes’s
famous General Theory of Em- >.
ployment, Interest and Money has ~~ HAZLITT: His job had to be done.
hung heavy over our heads. The
“Bible” of people who have cer- giving them any precision. He let
tainly never plowed their way most of them do duty for a variety
through some of its more oppres- of things, some of them highly
sive chapters, it has bemused the contradictory. But when he came
subject of economics with a whole to putting his words into the al-
new vocabulary: ‘failure of de- gebraic formulae that have become
mand,” “marginal efficiency of so fashionable in economics since
capital,” “propensity to consume,” the time of Stanley Jevons, he as-
“liquidity preference,” “the multi- sumed they could be translated
plier,” “aggregate demand,” “eu- into precise entities. Like the “ex-
thanasia of the rentier.” These pert” who figured in the late Ben-
terms rocket through our economic jamin Stolberg’s comic story,
literature, throwing off dense Keynes had a habit of never paus-
clouds of inky blackness. ing on his way as he swept for-
It is not that the terms cannot ward with inexorable logic from
be defined; the trouble is, as the initial error to the grand fal-
Henry Hazlitt demonstrates with lacy of the conclusion.
great clarity in his The Failure To review in small space Mr.
of the “New Economics”: An An- Hazlitt’'s demolition of the whole
alysis of the Keynesian Fallacies Keynesian structure is a physical
(Van Nostrand, 457 pp., $7.50. To impossibility. Mr. Hazlitt takes
be published May 10), that the up the General Theory line by line
great Lord Keynes fought shy of and paragraph by paragraph, dis-

b5


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

56 THE FREEMAN May

covering scores of errors on al- conclusions despite the evidence
most every page. Not only does he of his own senses. In parts of the
kill Keynes; he cuts the corpse General Theory, Keynes accepts
up into little pieces and stamps the classical truth that savings
each little piece into the earth. and investment are two faces of
The performance is awe-inspiring, the same coin. But, to arrive at
masterly, irrefutable — and a little his “failure of demand” postulate,
grisly. At times one almost feels Keynes had in other parts of the
sorry for the victim. But, since General Theory to assume that
Keynesian doctrines have created savings did not flow into invest-
so much misery in the world, any ment when “liquidity preference”
sympathy is misplaced. Hazlitt’s was rampant. The limited amount
job had to be done. of truth in the Keynesian formu-
As Hazlitt indicates, Keynes lations is that the time lags that
considered that Say’s Law of are attendant upon the swings of
Markets — the law or theory that the business cycle create momen-
production creates its own pur- tary imbalances. But, when the
chasing power — did not hold true, economic system is free, the im-
especially in a complex modern so- balances give way to new swings
ciety. But, again as Hazlitt says, toward equilibrium. With his bias
the Law is in itself merely a toward authoritarianism, Keynes
truism. If goods exchange for did not like to watch people work-
goods, it is obvious on the face of ing their way out of temporary
things that the creation of a good difficulties by use of their own
puts something into circulation wills, brains, and emotional drives.
that can be traded for something An aristocrat at heart, he wanted
else. The creation of the good does to assign the common people —
not necessarily guarantee its Veblen’s “underlying population”
creator a profit. But, unless the — their duties and tasks as well as
good is burned or dumped into the their pleasures.
sea or seized by the government
or stored away in a cave to rot, The Autocratic Nature of Keynes
tt is and must be purchasing Again and again Hazlitt pauses
power. amid his purely technical refuta-
So what was Keynes talking tions of Keynes to observe the
about when he made “failure of hand of the autocrat in the Gen-
demand’’ the keystone of the ‘new eral Theory. Keynes proposed to
economics”? As Hazlitt makes correct the “failure of demand” by
plain, Keynes had to assume his artificial stimulation of the “pro-


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

1959 THEY'LL NEVER HEAR THE END OF IT b7

pensity to consume.” Capital must bor costs, he never dared mention
be put to work by edict, even when the possibility that a downward
it had no “marginal efficiency.” revision of wages in certain indus-
Demand and consumption must be tries might result in an increase
“multiplied” by “government in- in the real purchasing power of
vestment”’ (a high-toned phrase labor and in a forward movement
for inflation or for tax-and-spend toward the full employment of all
give-aways), until “aggregate de- available labor. Any such admis-
mand” had created ‘full employ- sion would have left Keynes with-
ment.” It would not matter if pri- out political influence on the Left.
vate ownership were snuffed out And it was such influence, rather
by the continuation of such poli- than a reputation for scientific ac-
cies — the “rentier” could be left curacy, that Keynes most prized.
quietly to die as his capital and
its concomitant income disap- Aggregates” vs. Individuals
peared. A basic trouble with Keynes,
Keynes, says Hazlitt, is the Karl says Hazlitt, is that he had re-
Marx of the twentieth century. verted to “block” or “lump” think-
His economics is demagogic —it ing. Despite his assumed modern-
gets its vast influence, its “dyna- ity, his habit of considering him-
mism,” from its sly incitement self part of le dernier cri among
to the mob to snuff out all credi- the fashionable Bohemians of
tors. In Keynes the money lender Bloomsbury, he was a man of the
has replaced the capitalist as the seventeenth century, a mercan-
villain. tilist, in all of his preconceptions.
The Keynesian appeal to dema- When he wrote of wages, he for-
gogic passions chimes in with the got that wage payments are in-
contentions of certain labor lead- dividual before they are parts of
ers, that high wages are necessary an average or a “level.” He could
to sustain “purchasing power” re- not conceive of a situation in
gardless of their relation to man- which the wages in one industry
machine productivity. The Keyne- might be too high at the same
sian system makes no allowance time that wages in another indus-
for wage cuts in industries which try, or sector of the economy,
have seen their markets shrink might be too low or too mixed. Be-
because of the cost-price squeeze cause of his accent on “aggre-
on the customer. Although Keynes gates,” he thought of national
knew very well that almost all purchasing power as a lump.
costs, in the last analysis, are la- Taking off from the Keynesian


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

b8 THE FREEMAN May

concept of ‘‘aggregative’ econom- probably they would have choked
ics, the political disciples of the off much of the experimentation
Great Man have fallen into the that has resulted in the modern
error of supposing that anything automobile and the modern high-
which stimulates ‘aggregate de- way system.

mand” must add something of val- Hazlitt's book is a joyful para-
ue to the Gross National Product. dox in that it successfully com-
Accordingly, the manipulators of bines a number of ways of looking
the GNP and the ‘national in- at Keynes and Keynesianism. It
come” propose to subsidize all exposes Keynes's fallacies in broad
sorts of moribund or marginal in- stroke, as though Hazlitt were
dustries and regions on the theory looking at a mountain range
that this constitutes economic through a telescope. But it also
progress. If the construction in- exposes the fallacies microscopi-
dustry is in the doldrums, why, cally. As a by-product of his in-
the way to a sumptuous “national quest, Hazlitt provides us with a
income” is to pour government beautiful series of essays on the
money into cheap housing. If the uses, the abuses, and the limita-
farms of Appalachia or the Ozarks tions of mathematical economics.
are struggling along at the same The book is ponderous in its scope,
time that rich farmers in Ne- but it is witty in its detail. Be-
braska aren’t making quite what cause of its technical nature it
they would like to make, why, the will probably never sell in the hun-
way to a maximized GNP is to dreds of thousands. But the Key-
pour “lump” money into agricul- nesians will never hear the end
ture. of it. eo

It does not matter to Keynesian

“block” thinkers that this is pri-

marily a way of subsidizing back- © We the People: The Eco-
wardness and, at the same time, nomic Origins of the Consti-

of choking off the possible emer- tution.

gence of new “ladder” industries, By Forrest McDonald. Chicago:

such as the automobile industry University of Chicago Press.
436 pp. $7.00.

once was. If there had been Key-
nesians around in Henry Ford's THIS BOOK could be described sim-
day, they would have poured ply as a scholarly evaluation of
“lump” money into the carriage Charles Beard’s famous thesis of
business and they would have sub- the economic origin of the Con-
sidized the blacksmiths. Quite stitution. But viewed in its broad


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

1959 WE THE PEOPLE 69

implications, it may be regarded as to identical interests in the coun-
a refutation, deserving to be cited try at large.” The impulse behind
often, of the general concept of its adoption was the fact that “im-
economic determinism. portant groups of economic in-
The publication in 1913 of terests were adversely affected
Beard’s An Economic Interpreta- by the system of government un-
tion of the Constitution of the der the Articles of Confederation,
United States touched off a cause namely those of public securities,
célébre in American education. The shipping and manufacturing,
author, an associate professor of money at interest, in short, capital
politics in Columbia University, as opposed to land.” -
filled with zeal for the new doc- Accordingly, the entire cam-
trine that men’s attitudes are sim- paign for the Constitution was be-
ple reflections of their economic in- gun and pushed forward by “a
terests, tried to account in those small and active group of men im-
terms for the framing of our Con- mediately interested through their
stitution. The resulting shock was personal possessions in the out-
so great that it led eventually to come of their labors... . The prop-
his departure from the faculty of ertyless masses were.. .excluded
Columbia and his adopting the role at the outset from participation
of free-lance historian for the re- (through representatives) in the
mainder of his life. Beard lived work of framing the Constitution.
to reverse his views on the matter The members of the Philadelphia
in his Basic History of the United Convention which drafted the Con-
States (1944), and now Professor stitution were, with a few excep-
McDonald provides unassailable tions, immediately, directly, and
proof that Beard’s original posi- personally interested in, and de-
tion is untenable. rived economic advantage from,
Beard’s argument was, in brief the establishment of the new sys-
outline, that the movement for the tem.”
Constitution and the ensuing
battles over its ratification were The amount of labor which Pro-
an economic class struggle. As it fessor McDonald performed in
came to be written, then, the Con- order to determine whether these
stitution was “an economic docu- assertions have any basis in fact
ment drawn with superb skill by was evidently enormous. First, he
men whose property interests were analyzed the delegates elected to
immediately at stake; and as such the Philadelphia Convention with
it appealed directly and unerringly reference to the areas from which


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

60 THE FREEMAN May

they came and the political fac- which his research uncovered. Let
tions with which they were identi- us bear in mind that Beard had
fied in their home states. Next, he represented the Constitution as a
investigated the economic circum- kind of capitalist “plot” against
stances of every one of the fifty- farmers and debtors. “Five of the
five delegates who actually at- men who either refused to sign the
tended to determine whether, and finished Constitution or who
in what sense, they were men of walked out of the Convention
property. Next, he analyzed their (Gerry, Randolph, Mercer, Lan-
conduct in the Convention to see sing, and Luther Martin) were
whether there was any correlation among the largest holders of se-
between their economic interests curities in the Convention. Had
and their attitude toward the new they sold their securities in Phila-
system of government which was delphia as the Convention opened,
being drawn up. Finally, he the proceeds would have been suf-
studied the battle over ratification ficient to buy all the securities
in every one of the thirteen states owned by forty-five of the remain-
to determine whether any infer- ing fifty delegates.”
ences can be drawn regarding the Delaware was the first state to
economic status of those elements ratify, the vote being 30-0. Its con-
opposing and those favoring ratifi- vention was largely made up of
cation. small farmers, of whom sixteen
His conclusion is what every had annual incomes between $40
man of sense would have antici- and $267. Only five of the thirty
pated. There is hardly a shred of held public securities.
evidence for Beard’s thesis to rest New Jersey was the next to
upon; it was all spun out of a the- ratify, and it also voted unani-
oretical prejudice in favor of eco- mously. “The convention was a
nomic determinism. But let Pro- fairly representative cross section
fessor McDonald announce the of the economy of the state.” About
finding in his own words: “Beard’s twenty-five of its thirty-eight
thesis — that the line of cleavage members were farmers and land-
as regards the Constitution was owners.
between substantial personalty in- Pennsylvania was one of the
terests on the one hand and small states in which there was sharp
farmer and debtor interests on the conflict over ratification. The in-
other —is entirely incompatible vestigation showed that the dele-
with the facts.” gates on both sides of the issue
Here is a sampling of the facts held about the same amounts of


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

1959 WE THE PEOPLE 61

the same kinds of property. The equal numbers of large and small
slight difference was that the anti- landholders and speculators in var-
Federalists were a little better en- ious forms of property.” Beard
dowed with personalty, especially had argued that in New York the
public securities, than proponents struggle was a clear one between
of the Constitution. That is, of security holders (Federalists) and
course, the exact opposite of what advocates of paper money (anti-
Beard would have had us believe. Federalists). But Professor Mec-
The conflict in the critical state Donald’s research shows that in
of Virginia was a fierce one. But this state ‘security holders” and
here, too, the author’s data tell ‘paper money advocates” are but
the same tale. For in this state two names for the same group of
“the property holdings of ratifica- people.
tionists and antiratificationists
were virtually identical, except There remains the general ques-
that more small farmers from the tion of whether the American peo-
interior supported ratificationthan ple at this time can be grouped
opposed it.” To this he adds the into any significant categories with
telling item that “if there was a reference to their enthusiasm for
debtors’ faction in Virginia, it was or against the Constitution.
largely identical in personnel with In attempting to answer this,
the proratificationist group.” Professor McDonald divides the
The great state of New York states themselves into three
came as near as anything to re- groups: those favorable to the
jecting the Constitution, the final Constitution (Delaware, New Jer-
vote being 30-27. There, the strug- sey, Georgia, Connecticut, and
gle over ratification was a compli- Maryland), those divided over the
cated and bitter affair between two Constitution (Pennsylvania, Mas-
distinet parties, one led by Gov- sachusetts, South Carolina, and
ernor George Clinton and the other New Hampshire), and those more
by Hamilton and John Jay. But
their respective positions cannot
be explained in terms of the Beard Any book reviewed in this Book Section (or
thesis of economic cleavage. “In | any other current book) supplied by return
the showdown over ratification mail. You pay only the bookstore price. We
neither party to the conflict had a pay the postage anywhere in the world.
monopoly of economic interest of Catalogue on req
any kind. . . . The ranks of both | yhe pookMAILER, Box 101, New York 16
parties included approximately



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

62 THE FREEMAN May

or less opposed to the Constitution and vote merely according to their
(New York, Virginia, North Caro- anticipations of economic gain.
lina, and Rhode Island). The sensible part of mankind has
The only thing that can be de- never embraced anything so nar-
duced from this comparison is that row and unrealistic. Historians
those states which wanted the Con- can thus provide important help to
stitution were states which were philosophers and others in re-edu-
not able to cope with their own cating people to know that ‘“eco-
problems, those which were di- nomic man” really doesn’t exist.
vided on the issue were states Man acts sometimes selfishly,
which felt somewhat more able to sometimes unselfishly, but more
do so, and those which opposed it often out of varying combinations
were states which felt that they of these motives. This means that
were getting along well enough as man is a free agent in a sense no
sovereign entities. economic determinist would allow,
But these feelings themselves and in that fact lie our challenge
depended on a great variety of fac- and our hope. RICHARD M. WEAVER
tors. Delaware felt that she was
simply too small to go it alone.
Georgia felt unable to cope with WHY LIBERTY?

the Indian menace on her frontier. )
New York might have gone it A MAN who can ask the right

alone had not the City of New questions, observes Plato some-

York threatened to secede. North Where, has thereby obtained nine-
Carolina, economically and ecul- tenths of his answer already. Such

turally the most isolated of the is certainly the case in this matter
thirteen, seems to have proceeded Of liberty. For centuries men per-
out of a general indifference. sisted in asking the wrong ques-
So it comes down to this: the tions. “Who,” they queried, “will
states were eager to ratify accord- set us free?” Or, “Who will give
ing to whether or not they felt a us freedom?” Invariably they got
need for national union. The role the wrong answers. Freedom, it
of economic interests remains in- is implied by these questions, is
definite, indecisive, and unpredict- a prerogative to be pried away
able. from some earthly sovereign; or,
It is to be hoped that this pains- alternatively, freedom is to be es-
taking piece of scholarship will tablished merely be replacing the
contribute much toward exploding old authorities with new ones.
the theory that human beings act It was only with the gradual


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

1959 WHY LIBERTY? 63

dawning of the belief that men had the right answer once and for
participate in the divine ration- all, men ceased to ask the proper
ality and are endowed with free questions — with the result that
will that they began to ask the the old answers lost almost every-
right questions about liberty. thing but their labels. Look what
When men believe they have inner has happened to “liberalism”!
freedom, they will demand that it Thus it is imperative that we
be matched by outer liberty as a start again to ask the right ques-
natural condition essential to the tions; about human nature, about
working out of their salvation. “If man’s place in the universe as well
God will not override man’s free as in society, about government
will, how can it be lawful for any and the nature of human liberty.
mere man or collective to do so?” This Pierre Goodrich does in his
The public authority, they con- usual trenchant and penetrating
cluded, has no other function than way in his Mont Pelerin paper,
to defend the life and liberty of Why Liberty? A copy of this
all men alike. timely message, a 15-page reprint,
But even a good answer to the may be had for the asking. Write
right sort of question may become to the Foundation for Economic
an embalmed impediment to fur- Education, Irvington-on-Hudson,
ther questioning. Thinking they N.Y. EDMUND A. OPITZ

We invite your subscription to

MODERN AGE

A CONSERVATIVE REVIEW

Published Quarterly FoR 2) Edited by RusseLL Kirk
VoL. 3, No. 2 (Spring 1959)
“HUMANE LETTERS”

=

Including contributions by Eric VoeceLIN, FREDERICK D. WILHELMSEN,
PETER StANLIS, ROBERT J. NEEDLES, M.D., and “M.T.V.”

$4.00 the year 81.25 the copy
Address: 64 East Jackson Boulevard, Chicago 4, Illinois



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

MEMO ON PRIVATE ENTERPRISE

No. 7 in a series ——
An Editorial Comment Reprinted from
the Portland, Ind., Graphic, February 26, 1959

———

asssnenann.. sw——

THURSDAY MORNING QUARTERBACK

A good friend of ours, an executive in a merchandising firm,
is continually reminding us about the dangers of government in
business. “This country is headed for disaster unless the people
wake up to the fact that you cannot turn to government for a
solution to social and economic problems,” he asserts. “And it’s
up to you editors to straighten them out, by plugging free enter-
prise.”

Recently we called on him in his office. We found him in an
ugly mood. Seems he had discovered the shipping department
using Railway Express for shipment of merchandise.

“Those dumbheads never think about costs,” he growled.
“With inflation and high taxes, we've got to cut every corner we
can. They know it’s cheaper to ship Parcel Post.”

“But look,” we said, ‘don’t you know why Parcel Post is
cheaper? It is a subsidized service, operated at a loss by the
Post Office department, or so the boys in Washington tell us.
Seems to me this puts you in an untenable position — patronizing
a government service at the expense of a fellow free enterprise
operation, the Railway Express.”

He glared at us. “Oh go to hell,” he replied. “You news-
paper guys are all alike. You don’t understand the problems of
industry.”

For a free copy of the informative

booklet, “The Truth About P i

arcel Post, A
address the Public Relations Division. Pasig PH
EXPRESS ©

RAILWAY EXPRESS AGENCY LD)

219 East 42nd Street, New York 17, N.Y. p.. SNR
A PRIVATE ENTERPRISE IN THE PUBLIC SERVICE CED
RR 1 a



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

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

FROM A LIBERTARIAN’S LIBRARY

W nen THE LAW, by means of its necessary agent, force, imposes
upon men a regulation of labor, a method or a subject of edu-
cation, a religious faith or creed — then the law is no longer
negative; it acts positively upon people. It substitutes the will of
the legislator for their own wills; the initiative of the legislator
for their own initiatives. When this happens, the people no
longer need to discuss, to compare, to plan ahead; the law does
all this for them. Intelligence becomes a useless prop for the
people; they cease to be men; they lose their personality, their
liberty, their property.

Try to imagine a regulation of labor imposed by force that is
not a violation of liberty; a transfer of wealth imposed by force
that is not a violation of property. If you cannot reconcile these
contradictions, then you must conclude that the law cannot
organize labor and industry without organizing injustice.

A selection from The Law by Frederic Bastiat, 1850. Translated

by Dean Russell. Irvington-on-Hudson, N. Y.: Foundation for
Economic Education. 76 pp. 65¢ paper-bound, $1.25 clothbound.

THE FREEMAN may be forwarded any-

where in the U. S. A. No wrapper required. PLACE
4%-CENT
From: POSTAGE

| HERE

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