===== PAGE 1 ===== IDEAS ON LIBERTY JULY 1959 The Philosophy of the Blur . . . . . Merryle Stanley Rukeyser 3 The First Fourth of July . . . . . . Ralph l. Woods 8 A Free Society? . . . . . . . . . lawrence Noonan and 14 Sylvester Petro Labor vs. Management . . . . . . William H. Peterson 16 The Case for Panhandling . . . . . Leonard E. Read 2] Some Fallacies of Foreign Aid . . . . William Henry Chomberlin 23 The Dollar Scarcity . . . . . . . . H.P. B. Jenkins 29 What Is Virtue? . . . . . . . . . David H. Newhall 30 Great Expectations . . . . . . . . W.Rulon Williamson 38 Agricultural Subsidies in Great Britain . . George Winder 40 Can Wage and Price Controls Cure Inflation? . . . . . . . . . . F.A Harper 46 Welfare State in Action . . . . . . Indianapolis Star 57 Prophetic Intimations . . . . . . . John Chamberlain 59 Other Books . . . . . . . . . . 63 fa THE FOUNDATION FLE FOR ECONOMIC EDUCATION, INC, Irvington-on-Hudson, New York ===== PAGE 2 ===== IDR wm Die ENR ta [=F VEY TAR Eben Fd NZ © Pee = “An economical answer Lo machining automobile body dies. In this die shop in the Chrysler Twinsburg, Ohio, plant, Special Ingersoll Milling special Ingersolls are at work machining dies for pro- Machines designed for duction of automobile bodics with “the forward look.” Chrysler Corporation Planers, once thought essential to die shop work, are Twinsburg, Ohio, plant now being replaced by faster, more economical milling The above illustration shows a machines which have been especially developed for this Vertical Spindle Ingersoll Machine particular work by dic shop master mechanics, produc- Jor medium size general purpose tion men and Ingersoll engineers. In fact, throughout die work. 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Legal Investment for Trust Funds Resources over 310,000,000.00 (As of December 31, 1958) Reserves over 28,784,000.00 (As of December 31, 1958) Variety Of ACCOUNTS to suit your needs — Individual, Joint, Trust and Corporation “LET'S GET ACQUAINTED’’'—Write today for this booklet and financial statement to: Coast Federal Savings, Department “H”’—9th at Hill, Los Angeles 14, California. “COAST FEDERAL SAVINGS JOE CRAIL, PRESIDENT " MEMBER — FEDERAL HOME LOAN BANK — FEDERAL SAVINGS AND LOAN INSURANCE CORP. ===== PAGE 4 ===== THE Teeman A MONTHLY JOURNAL OF EAS ON LIBERTY JULY 1859 Vol. 9 No. 7 LEONARD E. READ President, Foundation for Economic Education PAUL L. PoiIROT © 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. 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Any current article will be supplied in reprint form If there are enough F'E Inquiries to justify the cost of the printing. ===== PAGE 5 ===== the Philosophy |p the Blur MERRYLE STANLEY RUKEYSER THE COLD WAR with Iron Curtain clarity, is — however unwittingly countries puts traditional domes- — weakening the fabric of the na- tic issues into a fresh perspective. tion. In trying to be all things to The wastes and peccadilloes, which all men, the political confusionist are accepted with bemused toler- berefts the American system of its ance in normal times, become dan- inherent superior values, which gerously unacceptable in interludes are based on safeguarding the of crisis. free choices of the individual. Thus routine demagoguery, to Even in less tense and critical which the voting public may have times, the deviations from free- long become acclimatized, may dom and toward regimentation nowadays threaten our prospects were inharmonious with the for national survival. At a time healthy functioning of our eco- when the United States and its nomic system. It was a monumen- free world allies are girding for tal blunder to try to blend the eco- heightened international competi- nomic slave doctrine of Karl Marx tion, agelong loose practices and with the principles of a free so- moral shortcomings need to be re- ciety. Since the Bolshevists made evaluated. socialism a dirty word, advocates A free society is entitled to put of a trend toward collectivism try its best foot forward. This calls to make their program more pal- for a popular determination to atable by the semantic trick of proceed on the basis of unadul- calling the new confusion a “mixed terated knowledge and courage. economy.” There would be greater Accordingly, the “me too” politi- clarity in describing the admix- cal candidate, who exploits the ture of freedom and regimentation philosophy of the blur instead of as a “mixed up economy.” In this frame of reference, Mr. Rukeyser is a business consultant, lec- the slick candidate who blows hot t and writer of the nationally syndicated . column, “Everybody's Money.” id and cold through the devious chan- 3 ===== PAGE 6 ===== 4 THE FREEMAN July nels of me-too-ism, tends to impair is incumbent on the person in the strength and essential value of power to discharge his fiduciary a free-choice system. While free- function by full disclosure of the dom obviously entails even the facts. right to be wrong, responsible The assumption that fence-sit- statesmen try in an objective man- ting, however deplorable from the ner to permit an honest flow of standpoint of the well-being of the information to citizens, on which nation, is a sure-fire gimmick for intelligent decisions can be based. continuing political success needs Contrary to the cynicism of the to be re-examined. Perhaps the dictators, a free society need not analogy of investment finance can be an undisciplined one. On the throw light on this matter. When contrary, the very genius of a well- the unsophisticated saver patron- run Republic depends on the capac- izes a blue-sky stock swindler, he ity of the people to undertake self- does not do so with his eyes open. discipline. The hidden internal On the contrary, he is motivated enemies of self-discipline are the by a desire to achieve “economic subtle political racketeers who security’ for himself and his fam- temper truth-telling by their ap- ily. He wouldn't deal with a blue- praisal of the impact of their sky operator if he weren't under words on votes. Those who pull the delusion that the vendor was their intellectual punches and honest. Integrity is an indispen- shrink from telling unpleasant sable asset in public and private truths, such as the fact that for affairs. The racketeer temporarily every governmental benefit there gets by only through creating the is an offsetting cost, are sabotag- illusion of responsibility. ing the nation. There have been inspiring ex- amples in public life of men with The Whole Truth the courage to avoid weasel words. A public officeholder does a The late Bob Taft of Ohio exempli- disservice when he disseminates fied a type who valued integrity less than the whole truth. It is a above applause. This trait was so crime against society, though a deeply rooted that routine ma- subtle and sometimes concealed chine politicians frequently ques- one, when a public leader tells only tioned the Senator’s savvy. It took as much of the realities as he as- courage of a high order for Taft sumes will boost his current Tren- to protest after the Nuremburg dex popularity rating. Since a trials because Nazis had not been public office is a public trust, it tried in accordance with what he ===== PAGE 7 ===== 1959 THE PHILOSOPHY OF THE BLUR 5 deemed to be the principles of analysis of issues is interdicted. Anglo-Saxon justice. He criticized The gentle racketeer in politics, reliance on an ex post facto law. wanting to say only those things Again in 1950, in his last Senate which net votes, exploits public race in Ohio, Taft braved the naivete by dividing groups into organized opposition of the CIO the “good guys” and the “bad and AFL. Instead of pussyfoot- guys.” Usually, in this frame of ing, he said publicly what he be- reference, the labor bosses fall lieved privately, and he won by into the ‘good guy” category, the largest plurality he ever whereas anyone in the employ of a achieved. corporation is automatically a Likewise, the Democrat, Frank “bad guy.” Lausche, proved himself a political Obviously, corporations, labor “best seller.” After holding the unions, voluntary clubs, and other gubernatorial post for six terms in human institutions are neither Ohio, he was elected to the Senate. good nor bad per se. They are at He, too, is no trimmer. For ex- best tools with which human be- ample, when asked on a “Meet the ings work, and, irrespective of no- Press’ TV show what he thought menclature, must be judged by an of the “right to work” law, he independent audit of their per- didn’t dodge the issue. He was not formance. afraid to speak his piece even though he knew it was contrary to the party line of numerically The crisis character of these large pressure groups. He said times must bring greater aware- succinctly: “I don’t think anyone’s ness of the inherent defects in right to earn a living should be such loose thinking and feeling. contingent on membership in a For example, the Wall Street Jour- lodge, club, labor union, or any- nal, in commenting on a luminary thing else.” In the last election, now on the political scene, re- Senator Barry Goldwater, Arizona marked: “Senator ......... Republican, thrilled the electorate leans toward him on the ground by his plain talk on the same sub- that he’d be a likely winner. His ject. friends contend that he really These instances of integrity in isn’t as liberal as you think. He is public life offer hope. Such per- basically pretty conservative but sonalities challenge the easy dema- just had to act liberal to get gogic assumption that, in the elected.” scramble for votes, intelligent If vendors of commercial prod- Compromise Candidates ===== PAGE 8 ===== 6 THE FREEMAN July ucts were equally cynical, they honest dissent. The processes of would be hauled before the Fed- criticism and fair comment become eral Trade Commission for false meaningless forms if there is to labeling. These critical times are be a moral lynching of anyone who crying out for more public serv- deviates from the party line. Such ants who will echo Henry Clay’s outlawing of criticism freezes er- words: “I would rather be right rors and accumulated maladjust- than president.” ments. This became apparent in The difference between success fascist Italy after Mussolini fell. and failure vis-a-vis militant Bol- The fascist interdiction of criti- shevism may well inhere in public cism caused Italian society to rot standards which will be intolerant and approach a state of collapse. of insincere compromise with eco- On the other hand, if there had nomic illiteracy and political skull- been unrestricted discussion and duggery. criticism, many of those blunders would have been uncovered earlier Silencing the Opposition and corrected in time. Any putting forward of a false What indeed are we to think of face in order to win votes is not the intestinal fortitude of a con- only a degradation of morals but gressman who votes for a law to a slap at the two party system. If draft young men for the armed the two party system defaults on forces and who himself is so timid, developing a loyal opposition based so lacking in courage, that he on honest debate, it tends to ape fears to take an honest, forthright the spiritual aspects of totalitar- political position? It is a double ianism. ‘“Me-too-ism’” is a type of standard indeed when he orders rarefied poison which dilutes, if young men to risk their lives while it does not nullify, the strength of he is unwilling to hazard the loss the American system, which gives of a vote through common honesty. the citizen the right to select. Paul M. Butler, chairman of the Such illicit striving for popular- Democratic National Committee, ity based on suppression of honest in a speech in New York before the controversy saps collective energy. Congress of Industry, appeared to Any weak-kneed trend toward uni- be setting up the criterion that formity deprives our society of the public discussion should be limited richness of trial and error and of to remarks that win votes. It an examination of alternatives. seems to me that the responsible There should be a new public ap- candidate, in setting forth his preciation of the social utility of views, also has an obligation to ===== PAGE 9 ===== 1959 THE PHILOSOPHY OF THE BLUR 7 alert those opposed to his ideology that his name is more widely to the nature of his views. This known, and may be greeted with gives those intellectually opposed louder cheers. Other things being to him an opportunity to exercise equal, the famous man is prefer- their constitutional right to turn able, but other things are never thumbs down on him. equal. . .. “The safe candidate may not Dangers of Mediocrity draw in quite so many votes from Sometimes, it takes the perspec- the moderate men of the other tive of history to determine the side as the brilliant one would, but soundness of a man’s views. For he will not lose nearly so many example, in the Presidential cam- from his own ranks. Even those paign of 1936, former Governor who will admit his mediocrity will Alfred M. Landon of Kansas bored vote straight when the moment the electorate and won support for voting comes. He (the ordi- only in Maine and Vermont when nary American) likes his candi- he argued that the New Deal dates to be sensible, vigorous and, social and economic philosophy above all, what he calls ‘magnetic’ would cut the buying power of the and does not value, because he dollar in half. Long after the sees noneed for, originality or pro- event, there may be comfort for fundity, a fine culture or a wide the defeated candidate in the bit- knowledge... . ter fact that the subsequent record “Great men are not chosen revealed that he was indeed pro- president, first, because great men phetic. are rare in politics; secondly, be- The issue of forthrightness in cause the method of choice does public affairs is as old as self-gov- not bring them to the top; thirdly, ernment. Back in 1888, the late because, they are not, in quiet Ambassador Bryce, in his Ameri- times, absolutely heeded.” can Commonwealth, set forth the But, alas in these days of fren- thesis of why machine bosses pre- zied cold war between slavery and fer mediocrities to first-rate men. freedom, these are not, in Bryce’s The Briton wrote: “Eminent phrase, “quiet times.” men make more enemies, and give In such periods, the trimmer, enemies more assailable points the fence sitter, and the confuser than obscure men do. They are is indeed a fifth columnist. therefore less desirable candi- Patriotism calls for a higher dates. It is true that the eminent sense of responsibility in public man has also made more friends, life. oo 0 ===== PAGE 10 ===== RALPH L. Woo0DS RAISING THE LIBERTY POLE, 1776 John C. McRae, after Chapman THE DETTMANN ARCHIVE ===== PAGE 11 ===== OURTH OF IT SEEMS SAFE but it is hardly stand and share Adams’ enthusi- pleasing to say that few of the asm, it should not be supposed millions who jam the highways, that the drafting, endorsement, beaches, lakes, amusement parks, and signing of the Declaration picnic grounds, baseball diamonds, was a gay and reckless proceeding. golf links, restaurants, and Jefferson’s great document theaters this Fourth of July will owes its genesis to the revolu- give a thought to that which we tionary assembly of Virginia celebrate and those whom we when, thirteen months after Con- honor: that is, the Declaration of cord and Lexington, it instructed Independence, the courageous men its delegates to the Continental who signed it, and the brave men Congress to propose independence.’ and women of the first thirteen Richard Henry Lee of Virginia states who accepted, supported, presented the resolution on June and fought for its principles. 7, but Congress postponed deci+ “The Day of Deliverance,” John sion to July 1. kK Adams called it in a letter to his As General Howe's fleet was wife, Abigail. “I am apt to be- being sighted off New York Har- lieve,” he wrote, “that it will be bor, the Second Continental Con- celebrated by succeeding genera- gress, meeting in the State House tions as the great anniversary (later Independence Hall) in festival. It ought to be commemor- Philadelphia, began its momen- ated . . . by solemn acts of devo- tous debate on Lee’s resolution and tion to God Almighty. It ought to the supporting Declaration Thom- be solemnized with pomp and pa- as Jefferson had been requested rade, with shows, games, sports, to write. guns, bells, bonfires, and illumina- Jefferson's great document was tions, from one end of this contin- cut and amended in the course of ent to the other, from this time a four-day debate by some forty- forward forevermore.” odd men of position and property Although it is easy to under- from the thirteen colonies, while — } Washington's rag, tag, and bob- hs my ance oor dod author of til and outnumbered army in 9 ===== PAGE 12 ===== 10 THE FREEMAN July New York was being further en- Providence, we mutually pledge to dangered by additional redcoats each other our Lives, our For- from the newly anchored British tunes, and our sacred Honor.” fleet. Consequently, the natural Delegate after delegate stood up tenseness of the drama being en- and declared himself. (Four dele- acted in Philadelphia was gates, obliged to abstain from vot- heightened repeatedly by the ar- ing because they lacked instruc- rival of couriers with messages tions from their home assemblies, from distressed colonial assem- later in the month signed the blies, and by unfailingly calm but document; four others refused to desperate pleas from General sign and resigned from Con- Washington for more men and gress.) supplies. When the delegates assembled When everyone had openly de- on the morning of July 3, an clared himself, each man signed anonymous note was found on the the Declaration with full aware- Speaker's table: “Take care. A ness that this step into a new plot is framed for your destruc- dawn also placed him in the tion and all of you shall be des- shadow of the gallows for treason troyed.” Several nervous delegates to the British Crown. They knew, thought the cellars of the State too, that their signatures could be House should be searched, espe- brands that burned their homes, cially since there were many loyal- warrants that confiscated their ist sympathizers in Philadelphia. farms, whips that lashed their But most of the delegates agreed wives and children into exile. But with Joseph Hewes of North Caro- sign they did; some quietly, others lina when he urged the note be boldly, a few with a jest, none ignored, adding, “I'd as soon be with a whine or whimper. White- blown to bits as proclaim to the haired Stephen Hopkins from world I was scared by a silly Rhode Island, whose hands trem- note.” bled from a sickness, said as he The sense of urgency in the scrawled his signature, “My hand Congress became so great by the may tremble but my heart does afternoon of July 4 that a final not!” vote was taken — resulting in Fifty-five members of the Con- unanimous agreement that “we tinental Congress ultimately hold these truths to be self-evi- signed the Declaration: as en- dent” and that “with a firm re- grossed on parchment on August liance on the protection of divine 2, 1776; later, seven who were ===== PAGE 13 ===== 1959 THE FIRST FOURTH OF JULY 11 absent signed, followed by the when a man was instructed to signature of six who became mem- climb the State House tower to bers of the Congress shortly after ring the bell — the Liberty Bell. July 4. Congress had resolved “to The bells of other churches in the prevent traitors and spies from town quickly joined in, and all worming themselves amongst us, continued to ring the rest of that no person shall have a seat in Con- day and night. By noon, the yard gress until he shall have signed back of the State House was the Declaration.” packed with people come to hear the news. Jefferson, Franklin, and The Declaration appeared for Hancock were among those on the the first time in a newspaper, the platform when the Sheriff of Pennsylvania Evening Post of Philadelphia became the first one Philadelphia, on Saturday, July 6, publicly to proclaim the Declara- but created little or no excitement. tion. The King’s banners and John Dunlap, printer to Congress, arms were torn from all public had been ordered to print’ as places and dumped on the Com- quickly as possible carefully- mons for a bonfire. Later in the proofed copies of the Declaration. day, the Declaration was again Couriers were held in readiness read at the same spot, followed by to gallop over the roads with cop- volleys from the militia, cheers, ies for the new independent states. speeches, toasts, fireworks, and il- Congress had resolved that the lumination. Samuel Adams, in his Declaration should be read to pub- room at Philadelphia that day, lic assemblies, citizens commit- picked up hundreds of letters tees, councils, militia, and that written to him by patriots over copies be delivered ‘“to the minis- the years — letters that would in- ters of each parish, of every de- criminate many of his friends if nomination, to be read as soon as they fell into enemy hands — and divine service is ended, on the he tore the letters into shreds first Lord’s Day after they shall and tossed the confetti into the have received it,” and that the street to add to the festivities. clergymen should then give their Meanwhile, couriers on horse- copies to the clerk of the town back were speeding copies of the council who was “required to re- Declaration to all the new states, cord the same.” some communities of which did The first public celebration of not get the news until a month the Declaration began in Philadel- later. An express rider on his way phia early on Monday, July 8, to General Washington's head- ===== PAGE 14 ===== 12 THE FREEMAN July quarters in New York, stopped at and often by thirteen toasts in New Brunswick, New Jersey, rum or wine. Town and village of- early Tuesday morning. He was ficials were expected to swear to sent on his way with a fresh horse uphold the rights of the new na- when he showed a copy of the Dec- tion, and all signs and symbols of laration. The town council decided the British crown were removed to read the document in front of and destroyed. A Connecticut inn- the White Hall Tavern that same keeper was jailed for opposing the day “to overawe any disaffected Declaration, and some of the new- Tories,” and in the evening the ly born were named Independence, document was proclaimed to the Washington, Adams, or Hancock. College of New Jersey, which was Yale University’s future presi- followed by volleys of musket fire dent, Ezra Stiles, noted in his and general celebration. Bridge- diary that “the whole continent is ton, Perth Amboy, and Dover, all alive.” Militant Boston re- New Jersey, soon followed with ceived the stirring news July 18 their own celebrations — volleys, and had elaborate ceremonies and feasting, parades, and bonfires. celebrations. Worcester had joy- ously erupted four days earlier. At 6 p.m. on Tuesday, July 9, a One week after Boston’s festivi- hollow square was formed by a ties, Williamsburg, Virginia, pro- brigade of Washington's soldiers claimed the Declaration with read- in New York. Washington sat on ings in front of the Capitol, the his horse within the square as an Court House, and the Palace in the aide read the Declaration to the presence of such notables as troops, within sight of the great George Mason, Patrick Henry, British fleet in the harbor. At its and Richard Henry Lee. Many conclusion soldiers and citizens toasts were drunk that evening in proceeded to the Bowling Green the famous Raleigh Tavern. The and demolished a gilt equestrian document was read to excited statue of George III. The four crowds at Halifax, North Caro- thousand pounds of lead in it lina. Charleston, South Carolina, would make musket balls. made the occasion both solemn Wherever and whenever the and gay, helped by people from all news arrived, there were formal parts of the state who had come to proclamations of the Declaration, town for the event. Savannah had usually followed by volleys of mus- a solemn funeral procession which ket or cannon — thirteen was the was ended with the burial of magic number — then by parades, George III in effigy, a minister ===== PAGE 15 ===== 1959 THE FIRST FOURTH OF JULY 13 “committing his existence to the Head Quarters with grate ground.” Many towns had Liberty Pompe.” Trees or Liberty Poles at which Fifty years later, on July 4, ceremonies were conducted. In 1826, only three signers of the Huntington, Long Island, they Declaration of Independence sur- made an effigy of George III, vived: Thomas Jefferson, John lined it with gunpowder, wrapped Adams, and Charles Carroll of it in the now repudiated flag, Carrollton. And at the close of hung it on the Liberty Pole, ig- that day only Carroll survived. nited it, and howled with glee Jefferson died shortly after noon when George exploded with a at his home at Monticello, Vir- bang. ginia, at the age of eighty-three. One year later, Private Elijah Adams died later that day at his Fisher, a member of George Wash- farmhouse outside Braintree, ington’s guard when the Comman- Massachusetts, at the age of der-in-Chief was with his army at ninety-one, saying at the end, New Brunswick, New Jersey, re- “Jefferson still survives.” That corded in his diary: “We Sele- morning when Adams was told it brated the Independence of Amer- was the Fourth of July, he said, ica, the howl army parraded....the “It’s a great day — a good day.” artillery Discharged thirteen Can- * oo non. we gave three Chears. At Epitor’s NoTE: For further reference to Night his excelency and the gen- the men, the events, and the spirit of 1776, see the review by Edmund Opitz tlemen and Ladys had a Bawl at 5 page 63. 1776 WE HOLD these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain un- alienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed. That whenever any Form of Govern- ment becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. ===== PAGE 16 ===== A IERIEE; The following exchange poses a question that is|— and an answer that ought to be — S @) C E T Y of increasing concern to all who love life. Seattle, Washington, November 9, 1958 Dear Professor Petro: Your book, The Labor Policy of the Free Society,’ has helped me make up my mind on the matter of compulsory unionism. This battle was recently fought in the State of Washington. Why we should have lost in the public forum on an issue of this importance is difficult to comprehend. The decline in the importance of the individual seems to be in full swing. A minority of men and women in the union movement realize that their interests are not served by compulsory membership; but the will of the majority prevails. In discussions with friends, I have tried to show that the free society does not enslave anyone — that it serves all our interests best in the long pull. But their position is that com- pulsory unionism is necessary to prevent exploitation and to assure bar- gaining power in other respects. They point out what they regard as the hopeless position of the wheat farmer if he were exposed to the free market. In the light of what happened in five of the six states which voted on voluntary unionism, do you now have misgivings in regard to your definition of the free society ? Do you now feel that you and von Mises are out of date in your economic views? Do you feel that these are per- haps beautiful principles but that the world does not want them? Very truly yours, Lawrence Noonan ‘New York: Ronald Press, $5.00. Also sce page 16 for a review of Professor Potro's new book on the McClellan Committee hearings. 14 ===== PAGE 17 ===== 1959 A FREE SOCIETY? 15 New York, N. Y., November 14, 1958 Dear Mr. Noonan: I am more than ever convinced that the free society is the only society proper to mankind and the goals of men. The collectivist trend can lead only to death and destruction, to a primitive and brutalizing end, not only of the finest and most elevated human aims, but also of humble peace and goodness. Dictation of the affairs of men by a ruling elite, no matter how selected, can bring about only such results. Realization of the best there is in men is possible only within a social structure built around the principles of full personal freedom: private property, freedom of contract, free markets, and law and order. Whether or not these insights will ever prevail, presents a doubtful question. No mortal man is in a position to answer it, or ever will be. Preoccupation with it is therefore either foolish, as a waste of time and spiritual energy, or arrogantly presumptuous. The real problem for every man is whether or not he feels that personal freedom is the only possible or acceptable basis of life in society. If he feels that it is, he then faces the further problem: what shall I do about it? The answer depends upon one’s own character, will, and inclination. One may choose any of the courses lying between total inaction and total com- mitment. One thing seems clear to me: Prevailing trends toward col- lectivism, a current defeat or even a series of defeats for the freedom principle, popular unenlightenment, or lack of interest — none of these has any bearing on whether or not one does or should favor freedom. He who loves life does not voluntarily relinquish it; he may not be able successfully to resist murder and destruction, but he should never con- fuse it with life, and will, in fact, not love life less because it looks as though he must lose it. Sincerely yours, Sylvester Petro ===== PAGE 18 ===== of Neth ~ LABOR [+] MANAGEMENT FALSE SEPARATISM WILLIAM H. PETERSON AMONG many illuminating con- kept popping into mind while cepts picked up in Professor Lewis reading Sylvester Petro’s master- H. Haney's course at New York ful synthesis and analysis of the University in 1950 on the history McClellan Committee labor-man- of economic thought was one he agement hearings: Power Unlim- called “false separatism.” Profes- ited — The Corruption of Union sor Haney referred to the easy Leadership (N.Y.: Ronald Press, and frequently arbitrary divisions 323 pp., $5.00). Professor Petro’s of economic activity economists book describes in concrete and are prone to make. Doubtless the oftentimes shocking detail how divisions ease the job of rationaliz- unwilling employees are organized ing what’s what and who's who in “from the top” by stranger picket- the economic scheme of things and ing and secondary boycotts, how hence lighten the load of the econ- psychological warfare and blatant omist. physical force are employed in But Professor Haney was not “organizing campaigns,” how vio- one to swallow the blithe division. lence and the threat of violence He criticized, for example, the take place under the name of col- cavalier manner with which econ- lective bargaining. omists of the macro-economic school divide the “gross national Why Resort to Force? product” into the “public sector” Why, why, Professor Petro’s and the “private sector,” and reader is prone to ask as he re- many other “sectors.” fleets on page after page of the “False separatism,” as an idea, violence-strewn record of Ameri- can trade unionism in the last Dr. Poterson is Associate Professor of Eco- generation. Why compulsion at all omics at New York University and a weekly . i . contributor to the Wall Stroot Journal. in the labor market place, if the 16 ===== PAGE 19 ===== 1959 LABOR VS. MANAGEMENT 17 market is but the peaceful process drawn between “labor” and “man- of buyers and sellers engaging in agement” (or ‘“capital’”’) and hos- voluntary exchange of goods and tilities begin. Is this a delayed services? The essence of the mar- realization of the Marxian inter- ket is voluntarism, the exercise of pretation of the class struggle? free will, the social maximization Or is it an implementation of of satisfactions, peacefully, prac- ‘false separatism” that we see in tically spontaneously. A couple of the strained and oftentimes vio- boys swapping kites for yoyos lent labor-management field? constitutes a market. The swap is peaceful, and each boy is happier Power Corrupts for the bargain. Contrast this Perhaps Professor Petro puts with the animosity and vitupera- his finger on the real cause of the tion that mar the organized labor problem in the very title of his market today. book, based as it is, on Lord So why the division, the separa- Acton’s sage observation that tion — or to use a stronger word, ‘power tends to corrupt and ab- the conflict — between buyers and solute power corrupts absolutely.” sellers in the organized labor mar- In his study, Professor Petro ket? What is unique about this points out that government, both market as compared to the stock advertently and inadvertently, has market, say, or the copper market, armed organized labor with spe- the clothespin market, the baby cial privileges granted to no other sitter market, or the Chinese laun- branch of society. Organized labor _ dry market? In virtually all mar- has won enforced monopolies at kets, save for that of organized the national level and tacit exemp- labor (and others where govern- tion from obedience to the laws ment intervention or price-fixing of private property and persons exists), exchanges proceed volun- at the local level. tarily and prices are freely estab- Such unlimited power has led to lished. No mass picketing, no the inevitable corruption of the shouts of “Scab!” no intimidation, leadership of organized labor, not no goon squads, no strikes, nobody all union leadership to be sure, parading up and down in front but much, far too much, of it. This of Joe's Butcher Shop saying Joe’s then — privileged unlimited power meat prices are too high or that — is the reason why the McClellan Joe pays “starvation” rates for his Committee uncovered the whole- beef and pork from the packer. sale invasion of gangsters, extor- But, for some reason, sides are tionists, racketeers, hoodlums — ===== PAGE 20 ===== 18 THE FREEMAN July and in the words of Senator Cur- is no competition among unions. tis, “all sorts of bad actors” —in One, and only one, union is certi- the trade union movement. fied to “represent” the workers at And yet, as Dr. Petro points a particular company. Thus, by out, the obvious target of corrupt law, the XYZ union is “the exclu- union leadership, so eloquently sive bargaining agent” for the criticized in the halls of Congress, workers at the ABC corporation. is not the logical place to search To be sure, the workers are sup- for “labor reform.” Attacks on posed to have ‘‘democratically” thugs, racketeers, and power-hun- elected the XYZ union at an NLRB gry union leaders miss the real election. But this in no way les- point, says Dr. Petro. The ousting sens the existence of enforced of a Dave Beck leads, inevitably, monopoly. Moreover, as is abun- to the Jimmy Hoffas, and soon ad dantly evidenced in the McClellan infinitum. hearings, much of what goes on in the name of democracy in trade “Why the Worst Get on Top unionism makes a mockery of the Temptation to corruption is the word. How democratic is it, for thing to remove. Unlimited power example, when a worker must join must be withdrawn. Responsibil- a union to get or hold a job, and ity must be restored. Rights of is permitted to join only the certi- person and property must be re- fied union with which the law per- established and protected. Create mits the employer to deal? This is situations of power and privilege what a union shop or a closed shop and in the scramble to occupy means. them the worst elements in society are bound to win — for the reasons Enforced Monopoly advanced by F. A. Hayek in the Enforced monopoly, then, is the celebrated chapter “Why the taproot of the American labor- Worst Get on Top” in his The management problem. The free Road to Serfdom. market for the American working- To be more specific, the trouble man has largely been placed out- with American labor-management of-bounds, save for some 19 states relations is the enforced monopoly which have enacted ‘right-to- granted labor under the Taft- work” laws. Compulsion has be- Hartley Act and the Wagner Act. come the rule for organized labor, Under these laws, a company must compulsion sanctioned and encour- deal with a government-certified aged by the government, compul- union and no other. In short, there sion drafted into a trade union ===== PAGE 21 ===== 1959 LABOR VS. MANAGEMENT 19 strategy which eliminates the free straight thinking about the prob- market. Writes Professor Petro in lem make it plain that it is con- this regard: sumers who really hire workers “| Unions] must in the first and pay their wages. Companies place compel all employees to join are merely the intermediaries, the the union; they must in the sec- hirelings of society, or what Haney ond place compel all the employees called the “social paymasters.” If to participate in their strikes, a company ceases to produce the picketing, and boycotts; and they goods people want at prices they must in the third place, after their can afford to pay, it goes out of monopolistic conduct has created business. Consumers in effect hire unemployment by pushing wages (and fire) entrepreneurs and set above the free-market level, use wages, which originate solely violence and coercion to keep the from production. unemployed from bidding for jobs Yet, who are the consumers? at lower rates than the unions Everybody. And, in numbers, con- have fixed.” sumers are overwhelmingly workers. Therefore, ironically, The Market Is Misunderstood strikes, violence, attacks on labor- Still, the question arises as to saving equipment, and all other why the government has legalized, phases of compulsion are labor’s overtly or covertly, this apparatus assaults on the income and well- of compulsion, why it has in effect being of labor — a nice case of so- encouraged the sharp division, the cial masochism. wide separation, of partners in production into hostile groups. - - - and Distrusted The answer is, mainly, that there In labor-management relations, is a widespread misunderstanding the free market is, to put it mild- of the efficacy of the free market. ly, distrusted, though not nearly In the popular mind, unoygan- so much on management’s side. ized employees are weak, em- The free market is even accused ployers strong, and so the lopsided of depressing wages, which is bargaining scale must be bal- anything but the truth. The truth anced. On the surface, the prem- is that unions, for all their vast ise appears true, although his- power, are powerless to increase tory, logic, and contemporary evi- over-all wages. The truth is that dence do not support it. Who are over-all wages can rise only with the real employers: companies or the increase of capital investment, consumers? A few minutes of and then only if the increase of ===== PAGE 22 ===== 20 . THE FREEMAN July capital investment is greater than proletariat vs. bourgeoisie. Such the growth of the labor force. induced hostility is misguided, Yet, such truths are unappre- misconstrued, and completely un- ciated in the halls of government warranted. and in many other centers of in- fluence —in most churches and As Sylvester Petro concludes in schools, for example. Hence, the true libertarian spirit, only a re- march of ‘false separatism” — turn to the free market, to free wages vs. profits, labor vs. man- and responsible trade unionism, agement, or, in Marxian terms, can improve the situation. ¢ eo A Corresponding Duty THERE IS A BEAUTIFUL NOTION afloat in our literature and in the minds of our people that men are born to certain “natural rights.” If that were true, there would be something on earth which was got for noth- ing, and this world would not be the place it is at all. The fact is, that there is no right whatever inherited by man which has not an equivalent and correspond- ing duty by the side of it, as the price of it. The rights, advantages, capital, knowledge, and all other goods which we inherit from past generations have been won by the struggles and sufferings of past genera- tions; and the fact that the race lives, though men die, and that the race can by heredity accumulate within some cycle its victories aver Nature, is one of the facts which make civilization possible. The struggles of the race as a whole produce the posses- sions of the race as a whole. Something for nothing is not to be found on earth. WILLIAM GRAHAM SUMNER, What Social Classes Qwe to Each Other ===== PAGE 23 ===== Hit Liat AR Pri LEONARD E. READ OFTEN ENOUGH it is an alcoholic indeed, in papers all over the na- who sidles up to one on a sidewalk tion — asking alms: and pleads, “Buddy, can you spare a dime for a cup of coffee?” Oc- Our sewerage system ts in dis- casionally, the panhandler shows repair! Widows and orphans, rich real initiative, like the one who re- and poor — from Hilo to Nome, cently accosted me near New York from Bellingham to Key West, City’s Penn Station, “Buddy, from Chula Vista to Bangor — give could you gimme the fare to South “8, we pray, the fruits of your la- Carolina?” bor. We are not prepared to dis- Panhandling is a pretty low- pose of our own sewage. We mo grade, demeaning trade into which onger wish JLo stan py Jur ind people sometimes sink, a vocation ,,02 Have mercy, for how else of last resort. Yet, this type of (qn weaklings like us survive? begging has its relative merit: Those importuned are allowed Now, what is wrong with this freedom of choice — to be lenient procedure? Not much, except with or not to be lenient. Person-to-per- the people who make such degrad- son begging has far less to con- ing acknowledgments and confes- demn it than does the legalized, sions of weakness. At least, every ‘“federal-aid” type currently en- citizen in the nation would be free dorsed and widely employed by our * to choose how he would respond. country’s social, intellectual, polit- Would the citizens of Los An- ical, and commercial elite, as well geles or any other community, as the not so elite! Let us test this farmers or any other group — un- startling assertion. happy with their economic plight Los Angeles, or any other city, — resort to the panhandling prin- would, under the sidewalk variety ciple in its pristine form? No, in- of panhandling, place an advertise- deed! That would be too revolting. ment in a Paducah newspaper — But, behold! We have found a 21 ===== PAGE 24 ===== 22 THE FREEMAN July way to ‘“ennoble” the panhandling Sidewalk panhandling allows principle and to remove all feel- freedom of choice and causes no ings of revulsion: Legalize the inflation. Nor do panhandlers in- principle. Allow freedom of choice jure the economy any more than to no one. Bring the police power do others who have retired from of government into play and coerce productive life. Legalized panhan- all citizens throughout the nation dling, on the other hand, allows no into financing the local sewerage freedom of choice and is one of system — whether they wish to do the principal causes of inflation so or not. and, thus, is destructive of the Has legalization made the action economy. Sidewalk panhandling is any less degrading? Or restored not nearly as bad as the legalized manhood to the weaklings? There variety, this being the best case appears to be not a trace of miti- that can be made for panhandling gating evidence. on sidewalks. o oo Reprints of this article are available at 1 cent each. SATURDAY REVIEW “Thank you, sir. Please move along.” A Used by permiasion, ===== PAGE 25 ===== Some Fallacies of Foreign Aid WILLIAM HENRY CHAMBERLIN SPRING is open season on the hard- vigorously and effectively as it pressed American taxpayer for should be (although the Citizens that annual raid that goes by the Foreign Aid Committee has made name of foreign aid. (The pre- a promising beginning in this di- ferred official characterization is rection) is a set of dogmatic as- “mutual security.”) The pattern sumptions which are supposed to of this raid is familiar. The Ad- justify lavish hand-outs to foreign ministration sets a figure (in this governments. Among these as- year a little short of $4 billion) sumptions are: and protests that the most disas- e That foreign aid saves foreign trous consequences will follow if a nations from “going communist.” penny less is appropriated. e That it increases American se- On behalf of its program, it curity, prestige, and popularity. mobilizes the big guns of the State e That it promotes international Department, the Pentagon, and trade and prosperity and world other government departments peace. and agencies, Congress — well These assumptions overlook cer- aware of the widespread unpopu- tain grave disadvantages, both to larity of this program among con- givers and recipients, which seri- stituents — listens a little skepti- ously undermine the effectiveness cally, prunes a little here, clips this of government-to-government sub- or that item, but ends by voting sidies. They also do not stand up most of what has been requested. to the test of practical experience. What has not been challenged as The dispensing of foreign aid in Mr. Chamberlin is the well-known author, lec- the shape of money and materials turer, and contributor to the Wall Street Jour- given freely to foreign govern- nal and many nationally known rnagazines. His most recent book, The Evolution of a ments has become a major bureau- Conservative, (Chicago: Henry Regnery Co.) . . wos ceviewed in THE FREEMAN, June 1950. cratic enterprise. It employed 450 23 ===== PAGE 26 ===== 24 THE FREEMAN July people in 1948. Ten years and $41 defects are insensitiveness and ig- billion later this staff had grown norance in regard to local manners to 12,000 directing 2,000 projects. and customs, aloofness from the In addition, some 9,000 persons are life of the people among whom the engaged in supervising the mili- work is being carried out, and a tary assistance program, which has tendency to live in self-created amounted to $23 billion. American ghettos as closely mod- eled on Peoria, Dubuque, and Poor Plans Poorly Executed other American towns as possible. There is an obvious yawning There are just not enough quali- gap between the qualities neces- fied people to go around for the sary for successful administration efficient operation of a giveaway of aid projects — often in countries program in the neighborhood of which, in history, language, and $4 billion a year. customs, are extremely unfamiliar What can happen to your tax to most Americans —and the avail- money and mine when administra- able personnel. An advisory group, tion is loose and slipshod is evi- headed by William H. Draper, Jr.,, dent from this excerpt from the former Undersecretary of the report of the House Committee on Army, which came out with a Government Operations about aid strong endorsement of foreign aid, to Iran: and which was probably selected “United States aid and technical because most of its members are assistance programs in Iran which, known to favor the idea, made this between 1951 and 1956, totaled a significant admission: quarter billion dollars, were ad- “We have not developed the well- ministered in a loose, slipshod, and trained corps of personnel required unbusinesslike manner...It is now to carry out such a far-flung pro- impossible — with any accuracy — gram with absolute efficiency. to tell what became of these Some projects have been imper- funds.” fectly conceived, inadequately Another example of ‘down the planned, and poorly executed.” drain with the taxpayers’ money” This seems to err considerably was the financing of an ultimately on the side of understatement. unsuccessful French colonial war The defects pilloried in the novel, in Indo-China to the tune of $745 The Ugly American, were drawn million. After the military disaster from the life of American foreign at Dien Bien Phu, the French missions, not made up in the au- threw up the sponge and Indo- thors’ imagination. Among these China was partitioned between a ===== PAGE 27 ===== 1959 SOME FALLACIES OF FOREIGN AID 25 communist-ruled North and an dollar aid or United States aid ad- anticommunist South. Only some visers. Its people are proud of their $95 million of the $745 million was independence, their tradition, their ever recovered. own way of life, and are probably The scandal about corrupt mis- as successful in the pursuit of use of overlavish aid to the primi- happiness as any people can be. tive state of Laos, adjoining Indo- “Yet here come the Americans China, is notorious, although the with a program which, when you International Cooperation Admin- look at it, would remake the coun- istration was not very cooperative try from one end to the other, in furnishing congressional inves- from top to bottom. There is no tigators with detailed information area of Siamese life — schools, on the subject. farms, business, language, homes, Even when no direct wrongdoing government, customs — left un- or culpable negligence is involved, touched in some fashion by the there are serious psychological United States aid program. roadblocks in the way of effective “No one, be he a visitor here American remolding of the econo- among the ancient temples and mies, social customs, and daily palaces or a stay-at-home reading lives of Oriental peoples. The mis- about it, need be surprised that a sionary spirit, when it is a matter program so conceived rubs many of unselfish individual dedication Siamese the wrong way. Certainly, to a religious, educational, or phil- the evidence of it is not hard to anthropic cause, is a fine element find.... in the American heritage. But the “One friendly Siamese, with a missionary spirit, bureaucratized twinkle in his eye, put it to his and supported by large appropria- American visitor this way: ‘I sup- tions of public funds, is something pose we ought to be glad that you else again. Here is an excerpt from are helping us, but we do wish you a recent report of Vermont C. wouldn’t help us so hard.” Royster, editor of the Wall Street Journal, on a recent visit to Thai- land, perhaps still better known as The reaction to American lar- Siam: gess is sometimes much more neg- “Consider that here is a country ative than this tepid, good-natured which, for all that it may be back- criticism. Consider the case of Bo- ward by American standards, has livia. This land-locked South managed to get along for a thou- American country, located on the sand years without United States high Andean plateau, has a long Backfire in Bolivia ===== PAGE 28 ===== 26 THE FREEMAN July history of economic poverty evacuated to the suburbs for bet- (much of the population is com- ter protection. And the Bolivian posed of primitive Indians) and government, whose members * political disturbance. In 1952, Bo- should have known that the United livia experienced a left-wing revo- States government is not responsi- lution and has been in economic ble for comment in American pub- hot water ever since, despite lications, filed formal protests United States handouts to the radi- with the State Department. cal regime in power to the amount of $129 million — $43 to every Questionable Diplomacy Bolivian. This is not the first case when Two measures of the revolu- violent anti-American demonstra- tionary government were nationa- tions have followed large Ameri- lization of the tin mines, principal can subsidies, Part of the fault, source of Bolivia’s wealth, and one suspects, may rest with the splitting up the large estates to new-fangled timid pussyfooting provide small holdings for the In- reaction to such outrages. There dians. Neither has worked well in was a time when stiff diplomatic terms of productivity. There have action would have followed the been continual, sometimes violent, desecration of the American flag, strikes in the tin mines. And the attacks by lawless mobs on Ameri- Indian small proprietors, whose can official representatives and wants are few and simple, show a American official buildings. Now, tendency to knock off work as soon all too often, the reaction is a ner- as these are satisfied. vous self-questioning as to wheth- The climax was reached in Bo- er our foreign aid program to the livia when — because an American offending country was big enough, weekly magazine published an un- whether we should not think out favorable picture of the economic some new handouts. That is not situation and quoted an unidenti- the road to friendship and respect. fied American diplomat as jokingly A pointed comment on the dis- suggesting that Bolivia and its mal failure of our Bolivian policy problems should be divided among is to be found in a letter published its neighbors — mobs went on the in Time by Roger A. Freeman, warpath in La Paz, the capital, who was fiscal adviser to the Bo- and other Bolivian towns. The livian government on a special United States Embassy was United States mission in 1956-57: stoned. Diplomatic cars were “I returned with the conviction burned. American citizens were that a continuation of United ===== PAGE 29 ===== 1959 SOME FALLACIES OF FOREIGN AID 27 States aid policies would lead to plentiful transfusion of dollars is further economic and social dete- an easy way to check the spread of rioration and disaster....The real communism is the temptation to power is in the hands of the armed try to exert blackmail. This occurs and communist-led mine workers when the representative of Back- unions who will not permit the wardarea lets it be known — with steps necessary to economic re- more or less subtlety — that, unless covery. United States aid policy his government receives a gener- has, for the past six years, been ous handout from the United strengthening their hand.” States Treasury, said government will turn to Moscow. A nation whose rulers are cynically pre- Whatever may be the answer to pared to sell out to the highest Bolivia's economic and social prob- bidder is not worth buying, if only lems, lavish American aid has ac- because there can be no assurance complished rather less than noth- that it will stay bought. ing. It has not improved American ' prestige or popularity, rather the Gives a Wrong Impression Bribing the Beggar reverse. And it has not brought An incident that occurred in the political or economic stabilization spring of 1958 shows the dangers to Bolivia. and pitfalls of undiscriminating If the United States did not ex- handouts. A representative of the ist or was not committed by its small country of Lebanon, which government to expensive, far- had already received $38 million in reaching, and indefinite programs economic help, along with some of subsidizing the economies of military aid, announced that this foreign lands, there is no reason to was not good enough. The United assume that underdeveloped coun- States must provide $170 million tries would vanish from the map, in the next six years — or else. In cease to exist, or “go communist.” the event that Uncle Sam did not They might very well be in a sign on the dotted line, Lebanon stronger and healthier position if would deliver a truly crushing they were obliged to face their blow. It would refuse American problems realistically, without the aid altogether! constant hope that America would Something must have gone bail them out of all their diffi- astray with our diplomacy when a culties. foreign government can get the A distinctly negative by-product idea that it is conferring a favor + of the too easy assumption that a by accepting. the largess of the ===== PAGE 30 ===== 28 THE FREEMAN July American taxpayer. One wishes we Constructive Suggestions had more diplomats like the repre- It is a good thing that the advo- sentative of a private business cates of foreign aid no longer have firm who, when questioned by re- the field to themselves, that organi- porters in a Near Eastern country zations like the Citizens Foreign as to why the United States was Aid Committee are bringing to at- not giving some additional re- tention the argument against this quested aid, gave in substance the substantial item in the national following friendly but frank reply: budget. The principal concrete “Do you really understand who suggestions of this organization is paying for this foreign aid? are as follows: It isn’t the American government, e That our traditional generous which you think of as being so in- private charity and governmental credibly rich that a few hundred grants to relieve disaster be con- million dollars makes no differ- tinued. ence. It is average American citi- * That in countries which we zens like my son and my son-in- are morally obligated to defend law, whose families can’t have and which are directly threatened meat every day, who must scrimp by Red aggression military assist- and save in many ways in order to ance — for the time being — should meet the taxes which are the be continued, but on a realistic source of the aid.” basis. The businessman reports that e That until foreign aid is his remarks produced a sobering terminated, the Congress take impression. And the Austrian gov- steps properly to exercise close ernment, which, like other Euro- supervision and control over the pean countries, has long been in manner in which all foreign aid a position to stand on its own feet, funds are being spent. acknowledged in the dedication of e That the $3.9 billion requested a report on the Marshall Plan aid by the President for the fiscal year its indebtedness to the American 1960 be reduced $2 billion, and taxpayer. Too often, however, it is that each year thereafter foreign assumed that money grows on aid be substantially reduced until trees in the United States; and terminated within three years. this attitude in foreign countries Foreign aid is no adequate sub- is encouraged by the more reck- stitute for self-help. A nation, like less advocates of unlimited foreign an individual, stands straightest aid among our politicians and pub- when it stands on its own feet. licists. * oo . ===== PAGE 31 ===== 0r—THE UNIVERSAL POULTICE It was a summer evening At story-telling time. Old Kaspar settled in his chair And sipped his rum-and-lime, While Peterkin and Wilhelmine Turned on the television screen. They saw a dark and stormy coast Where fog banks whirled and spun; And multitudes, with faces turned Toward the setting sun, Stood holding out their pallid hands Or fell in rows upon the sands. The children turned the vision off And ran to Kaspar’s side. “Now tell us what ‘twas all about,” They both together cried; “Now tell us what they did, and where, And why those people fainted there!” “It was the Dollar Scarcity,” Said Kaspar with a sigh; “For lack of dollars in their hands Those people faint and die; In palace ground or peasant shack It strikes them down like Yellow Jack.” “Why don’t we give them dollars, then?” Cried little Wilhelmine. “We give them many billions, dear, Of dollars long and green; But still they wait on every shore In hope that we will give them more.” “How will it end?” cried Peterkin. CL : “Will all of them be dead?” oS Old Kaspar took a sip of rum Co h And shook his snowy head; “We only hope the dollars last Until the dreadful plague is past.” H. P. B. JENKINS Economist at Fayetteville, Arkansas 29 ===== PAGE 32 ===== A philosopher interested in the . . 0 area of business and ethics asks... 1) ‘ DAviD H. NEWHALL AS MAN-MADE SATELLITES move question of central importance, around the Earth and head off and perhaps we are justified at toward the Moon, and as our na- present in making a stab at it. tion proceeds with its efforts to We can hardly be intelligent and produce more and better scien- effective in our efforts to produce tists, we may do well to remind good people if we do not under- ourselves once again that the need stand the nature of our objective. for good men as well as good This essay makes six assertions scientists continues, and that this, about virtue and proposes that too, is a basic objective of our awareness of these aspects of vir- educational system and our na- tue is of considerable importance tional life. If we are to produce to us as we attempt to diagnose good men, we should be as clear the nature and extent of our con- as possible about what constitutes temporary sickness. this goodness. What is good char- acter? Socrates, living in a situa- 1. Virtue involves asking the tion not entirely unlike our own, right question. The right question used to wander around Athens is, “What ought I to do?” This asking this question. He phrased question is not asked to lead to a it, “What is virtue?’ It was not a discussion of moral theory; it is very popular question then — Soc- asked with a view to determining rates was executed for his persis- action. It is to be answered by the tence, and it is not a very popular selection of an act, not by the for- question now — we would prefer to mulation of a standard. This ques- leave it to someone else. Never- tion represents the adoption of the theless, Socrates may have been moral point of view, without right in thinking that it was a which a person may be rich or Professor Newhall teaches philosophy at Port- popular or influential or respect- land State College in Oregon. This article first gable — but not virtuous. Virtue peared in MANAS azine, March 4, . . . 1959, =" mas thus requires from the beginning 30 ===== PAGE 33 ===== 1959 WHAT IS VIRTUE? 31 a moral orientation that will ex- way out of this mess?” or “What hibit itself in the response a per- is the way to have the most fun?” son makes to each situation that or “What is the way to secure confronts him. If this orientation power?” or “What is the way to is built into human nature, so make the most money out of this much the better; if it is not, then state of affairs?” Each of these we must commit ourselves to it. questions defines a point of view, And this may not be entirely easy. and there are occasions when they People are persecuted as much for are appropriate leads to follow; the questions they ask as for the but pursuing any one of them answers they offer. We have makes no contribution to virtue learned that one does not get the unless the person who asks it has right sort of answer unless he already asked whether or not he asks the right sort of question; ought to discover the easiest, the but it is probably wrong questions gayest, the Machiavellian, or the rather than wrong answers which financially shrewd way through lead us astray. and out of a situation. The virtu- We need not quibble over words. ous man is morally oriented. This The question might be phrased, means that his interest in these “What is the best thing for me to other questions is subordinate to do?” or “Where is the good in his concern to discover what he this situation?” rather than in the ought to do. His moral orientation Kantian language of obligation does not arbitrarily exclude them; which is used here. The important rather, it places them in perspec- point is that the question insti- tive. We might say that his moral tutes a search for the valuable, the orientation provides him with the worth-while, the better, in a spe- perspective for pursuing these cific situation. It represents a other questions when they ought normative orientation on the part to be pursued. They may be rele- of the person who asks it. Without vant, but they are not ultimate. this orientation, virtue is already This seems to make it clear forfeit because the individual has that the moral question is not the failed, either willfully or other- only question. There are other wise, to take the stance of a moral questions a person must ask. It agent. He is not aimed in the di- would be silly to go through life rection of virtue. with a single question. But it is There are other questions that not silly to select a single question come to dominate our lives. For in order to define the point of example, “What will be the easiest view from which the others shall ===== PAGE 34 ===== 32 THE FREEMAN July be approached. One is reminded of old opinion that constitutes moral Aristotle’s doctrine that the man insight in our sense. of moral virtue must act and feel As Kant has pointed out (Cri- in the right way, at the right time, {tique of Practical Reason), the vir- with the right motive, toward the tuous man does not have to be able right people, and to the right ex- to justify his insight in terms of tent. (Nichomachean Ethics.) a well-developed ethical theory — Thus, says Aristotle, “It is no easy that is the task of philosophers — task to be good . . . wherefore but he must possess the insight goodness is both rare and laudable nonetheless and he must be able to and noble.” make a responsible choice of act Clearly, it is not enough merely in a given situation. We will per- to ask the right question. haps be gentle in imposing blame upon a person who is incapable of 2. Virtue involves reaching a moral insight, but a person does responsive answer. The great So- not have to be blameworthy in cratic affirmation was that virtue order to fail in virtue. A blunderer is knowledge, and we agree with is a blunderer, and, though he may this to the extent of insisting upon be dealt with kindly until you are the presence of a cognitive factor convinced that he should have in virtue. The virtuous man must achieved some knowledge of his know what he is doing. But we are own limitations, he lacks an essen- not saying, as Socrates was, that tial ingredient of virtue — you do knowledge is sufficient for virtue; not trust him. we are saying that it is essential Our present concern does not but not by itself sufficient. And require us to analyze this failure we are proceeding with modern of moral insight. It may be due to epistemological caution in using failure to observe facts, failure to the term “responsible answer” draw correct inferences, or some rather than the trouble-strewn uniquely moral failure. This does term “knowledge.” Nevertheless, not matter. Our point is that some the responsible answer we seek is people persistently fail to come up far from arbitrary. It will not be with a responsible answer to the infallible or absolute, but it will question, “What ought I to do?” represent moral insight into the They are unable to discern what moral requirements of a given is relevant. situation. It is not any old knowl- At this point it is important to edge that constitutes virtue in the distinguish clearly between the Socratic sense; neither is it any virtuous man and the ethical theo- ===== PAGE 35 ===== 1959 WHAT IS VIRTUE? 33 rist, lest we appear to be trans- into action. He lacks what is or- forming the former into the lat- dinarily called will or determina- ter. In a sense, their point of de- tion. Sooner or later, as the case parture is the same: both respond may be, virtue requires action. to the normative orientation. The Virtue is incompatible with pure virtuous man, however, proceeds spectatorship no matter how subtle to answer the question in practical and discerning this spectatorship terms: “This is what I ought to may be. Even the blunderer com- do!” The ethical theorist proceeds mands a kind of admiration at to render explicit the meaning of this point. His lack of insight is the terms of the question and to deplorable, and what he does may articulate and criticize various be disastrous, but his will to act standards which might be used as is awe-inspiring. We are likely to practical guides in the discovery interfere with his action, but our of what one ought to do. Moral basic task is to sharpen his in- insight does not have to wait for sight, not weaken his will. A com- ethical theory. Ethical theory de- mon word for this aspect of vir-- velops by reflection upon moral tue is guts. Virtue involves guts, insight; and if it can subsequently the courage to see through in ac- deepen and stabilize the insight, tion the dictates of moral insight. so much the better. Our present Positively, this is the will to act; topic, which is a scrap of ethical negatively, this is the ability to theory, leads us to stress the resist temptation. movement of thought which leads The struggle to resist tempta- the questioning moral agent to the tion is very likely in part a selection of an act to be per- struggle for deeper insight, yet formed, not that which leads to Paul's description of the situation the search for a moral standard. (Romans 7: 15-20) seems to have wide application in human experi- 3. Virtue involves the will or ence. He holds that we frequently determination to act in accordance know perfectly well what we with what one believes to be right. should do and yet we do some- We are familiar with the person thing else. The problem here is not - who asks the right question and one of knowing what ought to be consistently comes up with a done. It is a problem of doing it. wrong answer. We are also famil- Our wills are weak or evil or di- iar with the person who seems to vided. Against this background have a sound answer to a moral the struggle to resist temptation problem but fails to translate it emerges clearly. This struggle pre- ===== PAGE 36 ===== 34 THE FREEMAN July supposes a conviction concerning We might ask, “Was his heart in what ought to be done. Without it?” It is at this point that Jean- this there would be nothing to Paul Sartre makes a significant struggle with, and the only contribution. He finds the whole struggle would be a struggle for of virtue in this one aspect of it. knowledge — call it a struggle with His writings deny that there is ignorance if you wish. any basis for a responsible answer Of course, to the extent that a to the question, “What ought I to person is virtuous, he will possess do?” — with this we need not the kind of character that enables agree — but we can nevertheless him to resist temptation without learn something about commit- a major skirmish with each Cha- ment from him. The virtuous man rybdis, and he may even have is dedicated to his action. He may ceased to feel certain temptations. find it objectively, but he does not But this moral security represents do it in the same mode. He does the triumph of virtue over tempta- it subjectively; it is his action. He tion; it does not entitle us to elim- is not playing a part assigned to inate will as an essential ingredi- him by someone or something else, ent of virtue. The will is there, al- as Stoic literature suggests. His though its presence is no longer conduct is his contribution, his conspicuous. very own; it flows from him and We see, so far, that virtue re- he is its autonomous source. In a quires a person to ask the right sense, his conduct is an extension question, to reach a responsible of himself; he transcends himself answer, and to manifest determin- in and through his conduct, so ation to do what he has found to that no clear line of demarcation be right. These assertions cover between himself and what he does most of what we ordinarily look remains. for in a virtuous person, but there Commitment also involves is something extremely important acknowledgment. The virtuous man to be added. acknowledges his conduct, not merely by admitting that he is its 4. Virtue involves commitment. immediate causal source, but in a Commitment is not a matter of much stronger way. It is as if he knowing what to do, nor entirely were to say: “There is my act. I a matter of doing it. Commitment, have chosen it, willed it, done it. or the lack of it, is revealed in the You may look at it and associate kind of relationship that exists be- it with me. I am responsible for tween a person and what he does. it.” ===== PAGE 37 ===== 1959 WHAT IS VIRTUE? 35 This does not mean that a man Orestes does not follow this ad- is expected always to like what he vice. Not only does he act, but, is doing, nor is he expected to speaking to his sister, Electra, he value each act as an end in itself. clearly defines his relation to his Our heart may be in unpleasant act: activity because we believe in it, I have done my deed, Electra, and not because we like it; and life has 4}. deed was good. I shall bear it on a way of dividing into means and ny shoulders as a carrier at a ferry ends, so that our commitment to carries the traveler to the farther an act may be commitment to that bank. And when I have brought it to act, not as an end, but as a means the farther bank, I shall take stock to an end to which we are com- of it. The heavier it is to carry, the mitted. better pleased I shall be; for that burden is my freedom. Only yester- day I walked the earth haphazard; Flies. First ivid pictur thousands of roads I tramped that les. rst we see a vivid picture brought me nowhere, for they were of the breakdown of this aspect of other men’s roads. Yes, I tried them virtue. Orestes’ tutor, an intellec- all; the haulers’ tracks along the tual and an uncommitted man, riverside, the mule-paths in the speaks: mountains, and the broad, flagged And what of your culture, Lord highways of the charioteers. But Orestes? What of that? All that wise none of these was mine. Today I have lore I culled for you with loving care, one path only, and heaven knows like a bouquet, matching the fruits of where it leads. But it is my path. my knowledge with the finest flowers . It would be rash to say that this of my experience? Did I not, from . the very first, set you a-reading all 1S the whole of virtue, but surely the books there are, so as to make this is part of what we mean when clear to you the infinite diversity of Wwe ascribe virtue to a person. In- men’s opinions? And did I not re- tegrity requires this sort of rela- mind you, time and again, how vari- tionship between a person and his able are human creeds and customs? gots. So, along with youth, good looks, and There is a difference between wealth, you have the wisdom of far the person who meets the four riper years; your mind is free from requirements of virtue which have prejudice and superstition; you have ji no family ties, no religion, no calling, been discussed, but manages to do so only by keeping his teeth you are free to turn your hand to anything. But you know better than clenched, his lips tight, and his to commit yourself — and there lies Visage grim — and the person who your strength. manifests virtue with a joyfulness These points are powerfully il- lustrated in Sartre's play, The ===== PAGE 38 ===== 36 THE FREEMAN July that is both contagious and inspir- easier moments of his life. These ing. The former is not to be dis- illustrations should be sufficient paraged. He may have ulcers but to show that there is a difference he has accomplished a great deal. between joy and fun. To say that You can count on him. He will be joy enhances virtue is not to iden- virtuous if it kills him (and his tify virtue with happiness in the attitude frequently suggests that popular sense nor to revert to the he expects this to happen at any view which makes fun central. moment). The famous lines of These people, and others like William Ernest Henley’s “Invic- them, are the saints of our world. tus” exhibit this grim virtue. And This designation stretches the a little imagination may enable us term considerably beyond its ca- to suppose that the elder brother nonical usage, but joyfulness in in the parable of the prodigal son virtue seems important enough was such a person. But the latter and rare enough to warrant this is the better man. He is not blind extended meaning. At the same to the hazards, but he has learned time, we might rescue another to find joy as he goes about his term from limited usage and label duty. He may even have ceased to as puritans those steadfast souls think in terms of duty as opposed who respect duty but find no joy to desire, so that he is one man in in it. a sense in which most of us are Finally, to remind us that vir- not. Thus — tue is not cultivated and does not exist in a psychophysical vacuum, 5. Virtue is enhanced by joy. we assert that — A person may come to love his duty and find satisfaction and de- 6. Virtue involves getting light in doing it. This joyfulness enough sleep. Obviously, sleep is shines through the lives of some not virtue, nor do we mean to in- people even when the going is sist literally that sleep is an es- rough. We see it in Socrates in the sential ingredient. The assertion midst of the serious business of is made as a reminder that with- his trial and subsequent days in out sleep the several ingredients prison. We see it in St. Francis, of virtue are hard to develop and quite compatible with his life of difficult to maintain. Many poten- voluntary poverty. We see it in tially good men have failed for the later years of Gandhi, even lack of sleep, that is, for lack of during the painful moments of his concern for their physical and fasting, to say nothing of the psychological well-being, without ===== PAGE 39 ===== 1959 WHAT IS VIRTUE? 37 which one may lack the alertness rive at answers satisfactory even to ask the right question, the to themselves. The toughest of sharpness to see the answer, the these keep on searching; others, determination to act, or the stay- unable to endure the anxieties of ing power that may be required. accelerated social change, live aim- It would be unwise to claim too lessly and meaninglessly. The will much for the preceding discussion. to act is not in short supply — It is a point of departure for a everywhere people are going theory of virtue rather than a places and doing things — but completed analysis, and much, in- when we come to commitment, we deed, nearly everything, remains find that a powerful diagnosis of to be said about the relations be- our contemporary sickness focuses tween the six aspects that have at this point. been mentioned. But this approach We are charged with alienation. does have the advantage of ena- Erich Fromm writes: bling us to focus attention upon different aspects of good character Man does not experience himself and thereby locate specific areas 25 the active bearer of his own of breakdown and specific tech- powers and richness, but as an im- . poverished “thing” dependent on niques for recovery and develop- : . ¢ powers outside of himself, unto ment. whom he has projected his living Many people are not morally substance. (The Sane Society) oriented. Their lives are organ- ized in some other way. It is easy An alienated person is incapable to confirm, for example, the wide- of commitment. Fromm charges spread occurrence of Erich that alienation pervades every as- Fromm’s “marketing orientation” pect of our lives, our work, our (Man for Himself), whose defin- play, our social and economic re- ing question we may phrase as lations, and our relations to our- “What must I do in order to be selves. Thus he explains how we in demand?” or “How can I be as can scramble for fun but live with- you desire me?” These people are out joy, how we can be depressed interested in being marketable and bored in the midst of pleasure. packages rather than moral The diagnosis need not con- agents. There are also many tinue. If Socrates was correct in people who are morally oriented, thinking that the cultivation of that is, they ask the right ques- virtue is the proper business of tion; but they are honestly con- man, our task is clear — and we fused and painfully unable to ar- have much to do. * oo ===== PAGE 40 ===== W. RULON WILLIAMSON THE RECENT average increase of 1/8600th of the 22nd year’s outgo. about 7 per cent in monthly bene- By 1950, the outgo had reached fit payments to more than 12 mil- 1,000 times the outgo of 1937, lion persons under the federal pro- while 60 per cent of tax collected gram officially designated as Old was added to the Trust Fund. Age and Survivors Insurance is an- In 1958, the Social Security tax other step taken by the camel into receipts were six times those of the “social security” tent. Over the 1950, but 1958 was the second year years the camel has been deliberate in succession when the Social Se- in following his head into the tent, curity taxes plus the interest on but he is relentlessly moving in. the reserve together were less than The tax burden has increased and the outgo for benefits and adminis- the program broadened and liber- trative costs. alized tremendously. In the early years of the pro- In 1937, the first year of opera- gram the Social Security tax col- tion of the system now known as lections above the outgo require- OASI, the income from the tax ments were mighty reassuring and was $500 million, and the outgo averaged a billion dollars a year only $1 million. for the first 22 years. This Trust In 1958, the Social Security tax Fund of $22 billion at the end of and interest payments amounted to 1958 included cash of $1 billion $8.1 billion, and the outgo $8.6 and funded interest-bearing fed- billion. eral debt of $21 billion, or approxi- The first year’s income was mately 7 per cent of the total 1/16th of the 22nd year’s income, federal debt. and the first year’s outgo was The 12 million beneficiaries of Mr. Williomson is a former Actuarial Consul- the 1958 year end were receiving tant to the Social Security Board. This article $700 million a month, and they i inted with issi from Christian oe ‘Economics, May 12, 1950, could anticipate aggregate future 38 ===== PAGE 41 ===== 1959 SOME FACTS ABOUT SOCIAL SECURITY 39 receipts of $70 billion, all accrued times the 1935 prospectus for by completed service. Comparing 1955; we do know that Congress the Trust Fund of $22 billion with has expanded the system 5 times the potential aggregate payments in the 9 year period of 1950-1958; to existing claimants, the Trust we do know that the 86th Congress Fund is less than one-third of such gives advance evidence of even payments. less financial prudence than recent Furthermore, there are 100 mil- former Congresses; we do know lion nonretired covered individuals that the already determined up- who look. forward to later benefit trend in benefits is so high as to status for themselves, dependents, call for an advance in tax rates and survivors, It is a calculated from 4% per cent in 1958 to 81% guess-estimate that their past per cent in 1969; and we do know service accrual could be over $600 that the taxable wage base has ad- billion. So, against this total past vanced 60 per cent from 1937 to service accrual of $670 billion, the 1959. Trust Fund bulks some 3 per cent. It will become steadily clearer Big as $22 billion is, against de- that OASI taxpayers contribute mands of this magnitude it is just the funds for the current benefi- peanuts. ciary classes rather than for them- We cannot know to what gigan- selves and their dependents, and tic sum these payments will here- thus the benefits become more doles after expand. But we do know to the recipients than anything that in 1955 the outgo was some 6 else. * oo Politically Dependent UNLIKE PRIVATE insurance, the protection afforded by the social security program rests upon the willingness and ability of gov- ernment officials to authorize future appropriations from future tax revenue. The so-called social security fund has not been invested in productive property. In place of the money which was collected to go into the fund, there are receipts saying in effect that the government used that money to meet current operating expenses of one kind or another. The government bonds which are said to constitute a social security fund can only be redeemed in valuable goods or services as any other govern- ment bonds are redeemed — by future levies against the private property and productive efforts of individuals. Who can say now what the real value of a government bond will be to the next generation of taxpayers who may be asked to redeem it in goods 1 2 and services! PAUL L. POIROT, Social Security ===== PAGE 42 ===== [I ~ a y ! ~ A por { A ey DBRIBULTURAL SUBSIDIES 07] GREAT oaAN A study in miniature of the situation in the United States and other “planned” economies "EWING GALLOWAY, N. Y. GEORGE WINDER MANY sectional interests in Great sum more than enough to pay the Britain believe it to their advan- whole of the agricultural wages tage that agriculture receive large bill. Had this money been used in- subsidies from the government. stead to reduce the government’s The present system of state guar- annual budget deficit, there need anteed prices for nearly all agri- not have been the inflation of the cultural products is constantly ex- British currency which has de- tolled from platform and press. prived provident classes of the But the British taxpayer, who un- community of nearly 50 per cent doubtedly pays the cost of the of the value of their savings since system, has no paid band of pub- World War II. As there are only licity experts to express his views. some 500,000 farms in Great Brit- The purpose of this article is to ain, the subsidy averages $1,310 break that silence and express a per farm. developing public opposition to Of the total subsidy, $199 mil- agricultural subsidies. lion has been paid in direct grants In the accounting year 1956-57, to farmers for such work as plow- it cost the British taxpayer $655,- ing and drainage and application 200,000 to subsidize agriculture, a of fertilizer, while the balance has EE been paid to make up the defi- Mr. Winder is a British farmer, author, and . . . journalist. ciency between the price received 40 ===== PAGE 43 ===== 1959 AGRICULTURAL SUBSIDIES IN GREAT BRITAIN 41 by the farmer for his products on both imported and home-produced the market and the price guaran- wheat was $2.80 per hundred- teed by the government. weight. When the deficiency pay- Every year, representatives of ment was added, the guaranteed the Farmers Union and of the price received by the farmer was Ministry of Agriculture meet to $3.98. There can be no pretense decide upon guaranteed prices for here that the subsidy reduced the farm products for the ensuing price of wheat to the millers, for twelve months. The difference be- that was governed almost com- tween the market price and the pletely by the price of the im- guaranteed price is distributed ported commodity. through dealers who handle the Home-produced meat, because farmer’s products. This distribu- of its reputation for excellence, al- tion is simplified by the fact that ways realizes a premium over im- the majority of Britain’s farm ported meat, but here again the products are now sold through large quantity imported from the state-created Marketing Boards, Dominions and the Argentine is which act as monopoly dealers in the deciding factor in the price at the product they control. which meat is sold to the public. It is sometimes claimed that In 1956-57, the deficiency pay- agricultural subsidies are not in ment for meat was $209 million. reality a gift to the farmer but to the consumer, who, as a result, ob- The Milk-Marketing Board tains food at a reduced price. In a Fresh milk is the one important country which has a closed econ- farm product in Great Britain omy this argument might be dif- which does not face competition ficult to refute, as no rival com- from abroad. All milk must pass modity would exist to act as a through the Milk Marketing standard for comparison. But in Board, which has the power to fix Great Britain, where nearly half all retail prices. In 1956-57, in ad- the food is imported, the price of dition to a subsidy for milk sold the imported article is the decid- at reduced prices for welfare pur- ing factor in all food prices, and poses, the government paid $62 the subsidies paid to the farmer million to the Board to enable it to have rarely, if ever, caused his increase the farmers’ returns. products to be marketed at less According to quality, farmers than imported prices. all receive through the Milk Board For example, the price of wheat approximately the same price for paid by millers this winter for their milk in whatever part of the ===== PAGE 44 ===== 42 THE FREEMAN July country they live and no matter sold at top prices, find themselves for what purpose their milk is subsidizing those farmers who used. The effect has been to stimu- live in Wales, or in remote parts late milk production in those parts of the West of England, whose of the country which formerly had milk can only be sold at a loss for no dairy herds, with the result manufacturing purposes. The final that Great Britain has now an ex- outcome of this process of encour- cessive supply of milk. aging ever-growing supplies The only profitable outlet for which must be sold at a loss is dif- milk in Great Britain is its use ficult to foresee. for consumption in liquid form; the balance has to be sold, at less Production Controls than the cost of production, for In the case of two farm com- manufacture into dried milk, modities, the government has cheese, butter, and the like. solved the problem of increased Fourteen per cent of the milk subsidies simply by restricting used for liquid consumption is production. For example, only sold at a loss for welfare purposes some 1,100 farmers are allowed to under “National Health” and grow hops in Great Britain, and “Milk in School” schemes, but the each has an acreage quota which government compensates the Milk he must not exceed. The result is Board for this at a cost of some that the supply of hops is kept $126 million per year, an amount down and their price up, so that not included in the total farm sub- no guarantee or subsidy is needed. sidy mentioned at the beginning It is virtually impossible for new of this article. growers to obtain a quota. The money received by the In the case of potatoes, growers Board for milk sold at a profit are given an acreage quota based for consumption in liquid form is on their average area under pota- now pooled with that received for toes in the years 1951-53. The Po- milk sold at a loss for manufactur- tato Board has the power to in- ing purposes, and an average or crease or decrease this quota, and pool price — which includes the so control the quantity grown. government subsidy —is paid to This enables it to ensure what it all farmers. considers a satisfactory price and One result of this is that those saves the government the cost of a farmers who live in the eastern subsidy. It also causes the con- part of Great Britain, near the sumer to be saddled with exces- great towns where their milk is sive prices. ===== PAGE 45 ===== 1959 AGRICULTURAL SUBSIDIES IN GREAT BRITAIN 43 Eggs afford us another example For many years Great Britain of the difficulties which arise has been an importer of eggs, under a system of guaranteed but the growing subsidized pro- prices. A farmer is permitted to duction is, of course, destroying sell eggs at the farm gate, or, this trade with countries such as under special license, to retailers, Australia and Denmark. The ef- but to enjoy the subsidy the eggs fect is that they have reduced sup- must pass through licensed pack- plies of British currency and must ing stations. There can be no reduce their importation of manu- doubt that the subsidized price factured goods from Great received over the last few years Britain. The egg subsidy, which has greatly stimulated egg produc- reached $92 million in 1956-57, is tion, and surplus supplies now oc- undoubtedly damaging that over- cur. Everyone with a little land seas trade which is the very basis seems to be going in for a deep- of Great Britain's prosperity. litter poultry shed. This is one of the consequences of In the early spring of last year, subsidies which legislators invari- eggs for which the farmer was re- ably overlook in their anxiety to ceiving the guaranteed price of 60 help some sectional pressure cents a dozen from his packing group. station were being sold in the shops at 85 cents —the govern- Distorted Farming Operations ment “deficiency” payment mak- The system of agricultural sub- ing up the difference. sidies not only causes dairy farms These excessive supplies actual- to be established in unsuitable ly caused Great Britain to become, parts of the country but is also dis- for the first time, an exporter of torting the whole development of eggs. They were dumped in Italy British farming. Great Britain's and Germany at 28 cents a dozen. great natural resource is an ample Denmark complained that this supply of excellent grass which dumping was destroying her long- enables her to produce some of the established export trade. This finest cattle and sheep in the year, as a result, the export of sub- world. She is entirely unsuited to sidized eggs has been forbidden by modern methods of grain produc- law. One argument that helped to tion. Before the war, her animal pass the law was that the British husbandry was expanding rapidly. people were being taxed to subsi- Her grain production was declin- dize the eggs consumed by the ing, except in a few particularly Germans. suitable parts of the country, such ===== PAGE 46 ===== 44 THE FREEMAN July as East Anglia. These were un- of fertilizer, whereas fields that doubtedly the most profitable lines had been plowed even a few years along which British agriculture before had lost a great part of could develop. their fertility. The present system, however, The importation of grain also re- has reversed this development, so quires the use of a large number that much land which was former- of ships. One of the results of the ly in grass has been plowed for present emphasis on grain produc- grain. This emphasis on arable tion will be that, if war does break farming has helped the larger out, and the atom bomb does not farmers rather than the small man settle the dispute at once, Great who is generally represented as Britain will have fewer fertile the man the taxpayer needs to fields and fewer ships than she had help. The large farmer who enjoys in 1939. The danger of future so great a percentage of the gov- wars is not a justification of sub- ernment aid has a higher standard sidies, but an additional reason of living than most of those who why the present system should be are compelled to pay the subsidies abandoned. he receives. Great Britain has long ceased to be an independent economic unit. The “National Defense’’ Argument Throughout the nineteenth cen- One argument often used in tury, and for a considerable part Great Britain in favor of agricul- of this, she has been developing tural subsidies is that, in the what may be called an oceanic event of war, the country has to economy. Her Dominions and the depend very largely on home- New World produce a great part grown food. It is claimed that, as of her food. Great Britain requires so much Great Britain, with her small grain during times of war, it is farms, is almost completely un- necessary to keep her arable farm- suited to arable production, but ing going by means of subsidies her rich grassland fits admirably during times of peace. The truth, into the system of interlocking however, is that grain is the great Dominion and home farming. The robber of fertility. During the present subsidies, by compelling last war, when the supply of fer- her to put so much of her land tilizer was greatly reduced, it was under grain, is a complete perver- found that grassland that had not sion of her natural development. been plowed for years gave fair It has put the clock back one hun- harvests of grain without the aid dred years to that system of ===== PAGE 47 ===== 1959 AGRICULTURAL SUBSIDIES IN GREAT BRITAIN 45 mixed farming which existed be- greater economic cooperation with fore the famous Repeal of the Europe. Corn Laws in 1846. Thus the British taxpayer is The effect of this system of paying some $650 million a year agricultural protection by means to subsidize agriculture, and of subsidies is already being felt reaps, in return, only a harvest of in the British Dominions. It con- tares. When politicians, either on stitutes another step in the break- behalf of pressure groups or ing up of that economic unity of through sheer inability to consider the British Empire which, before all the facts, interfere with the 1914, was the very foundation of free working of a country’s econ- her greatness. At the same time it omy, they set in motion forces has become an insuperable barrier which may be as disastrous as preventing her from entering into they are immeasurable. ° oo [ oeas ON] R0OGa0Y | U.S. Agricultural Subsidies THE AMERICAN PUBLIC will find fed- American people approximates 10 eral expenditures on agriculture at billion dollars a year, equal to about the annual rate of 6.8 billion dollars, three-fourths of national farm in- which is 54 per cent greater than in come. 19565 and five times as much as in They will find the farm population 1939. This does not include some has declined to just over 20 million half-billion dollars of gifts of agri- from 82 million in the mid-thirties. cultural surpluses abroad and so- It is estimated that two-thirds of called “barters” of them for stock- these, or 8 per cent of total popula- pile materials (paying deliberately tion, are dependent on farm income. too much for these materials in order The bulk of the 6.8 billion dollars to subsidize agricultural exports). of federal expenditures on agricul- They will find also that the price- ture is spent in connection with the support and regular export subsidy price-support and export subsidy programs for agriculture are caus- programs for six crops: wheat, corn, ing American consumers to pay in cotton, rice, tobacco, and peanuts, the neighborhood of 3% billion dol- particularly the first three. Less than lars more for the agricultural pro- a quarter of the nation’s farms grow duce which they use than it would these crops. cost at world prices, so that the com- LAMAR FLEMING, JR., in an address before bined cost of the programs to the the American Cotton Congress, May 4, 1959 ===== PAGE 48 ===== A CAN WAGE AND PRICE CONTROLS | CURE INFLATION? F. A. HARPER CONTINUING INFLATION inevitably attention on its small, integral, poses the question: Are wage and and essential working parts, so price controls effective medicine that we may clearly observe how for the illness? Does the bottle they relate to one another. contain a potent remedy, or is it So let's start with Jones, a pio- filled with the false potions of neer in the primeval forest. He quackery? hunts and fishes and grows some A doctor diagnoses illness from crops in his little clearing. He his knowledge of a healthy body tames a few animals and uses them and how it functions. The eco- for toil or to provide food. nomic doctors must do likewise. Then along comes Smith to be So our first step is to study the Jones’ neighbor. He, too, hunts anatomy of a healthy trading econ- and fishes and farms. But Jones is omy. the better hunter, and Smith is Ours is a nation of 177 million the better farmer. As they follow persons. Like any other giant and their respective abilities, Jones complicated machine, its operation comes to acquire an abundance of can best be seen by focusing our furs, but is short of corn for his meal; Smith has a goodly supply Dr. Harper, formerly Professor of Marketing of corn, but is short of furs. So one at Cornell University and for years a member of the staff of tho Foundation for Economic cold day in winter, Jones — warm Education, continues his research and writing . . from Atherton, California. in his furs, but hungry — wanders 46 ===== PAGE 49 ===== 1959 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 47 over to see Smith, who is well-fed the sole judge, empowered to force but shivering in his cave. Jones upon Smith whatever terms of proposes to trade some furs for trade he shall dictate? Hardly, for some corn. to do so is to deny Smith all rights The two men may higgle and of ownership of the corn he has haggle over the terms of the trade. labored to produce. It would allow The margin for bargaining may Jones to confiscate Smith's prop- appear to be wide in this instance, erty. in contrast to real life in our com- Would it be fair to make Smith plex economy. No alternative mar- the sole judge? No -— and for the ket exists for the product each has same reason. in surplus, except to keep it him- self. But on closer scrutiny, we The Historical Concept find that each has an effective bar- Historically, the concept of “a gaining tool against the other: just price dictated by a disinter- Each knows that the other realizes ested third party’ has usually been the advantage of making a trade, offered as the solution of this as compared with keeping his sur- seeming dilemma. This concept has plus product. Each knows that persisted in the affairs of man there is little sense in driving so since earliest times — since ancient hard a bargain that it kills off a man first congregated into groups trade. Each realizes the absurdity of three or more, thus making it of continuing to suffer for want of possible for one person to interject what the other has for trade. So himself into the economic affairs we may assume that trade will of two other persons. Let us say somehow be arranged between that the third party in this in- them. stance is Joe Doakes, a new and Now, what terms of the trade distant neighbor. Joe seems to be between Jones and Smith might be qualified to render justice since called fair and just? he is “distinterested, impartial, un- The question of a just price pre- prejudiced, and objective.” He sumes certain antecedent ques- might be called the “public repre- tions: Says who? In whose judg- sentative.” Shall it be left to Joe ment? By what right to speak? to decide what is a fair price? Justice always presumes a judge Joe's presumed qualifications for with some principle by which to judging what price is fair — being judge. Who is to be the judge, and disinterested, and all that — are what is the principle involved? precisely the reasons why he is Would it be fair to make Jones not really qualified at all. He has ===== PAGE 50 ===== 48 THE FREEMAN July not one iota of right to speak as A judgment is rendered based on an owner because he has done noth- the evidence: Was there a con- ing to produce either the furs or tract? Was it valid? What were the corn. He has no relevant infor- its terms? Were the terms violated mation except what he might ob- by the actions of the person? tain from Jones and Smith. They Yet none of these conditions alone can know their own wants, exist in the instance of Jones’ and and whether, at each specified Smith’s trade. There is no impasse price, they should keep what they which must be resolved against one have produced or exchange it. At party or the other; each may keep best, Joe knows less about it than his property and maintain his sta- does either Jones or Smith. tus the same as it was before they Bluntly and in simple terms, Joe met. In that sense, neither must is unqualified for the job of de- lose. If they trade voluntarily, both termining a fair price; and fur- will be better off than before. And thermore, it is none of his busi- the ownership of what is his own ness. To empower him to throw gives to each the right of veto — the bargain this way or that is to the right to decree that there shall grant him the equivalent of owner- be no trade between them. As was ship of both products; and by the said above, to violate this right by test of who has produced them and allowing Joe to force a trade at who owns them under private prop- terms he dictates is to violate the erty, he deserves no such right. At right of ownership. best, he is an interloper; at worst, he is an outright racketeer, hold- Dval Judgeship ing a power by which he can de- How, then, is the problem to be mand a bribe from either or both resolved? Jones has been disquali- parties. fied as the sole judge. And so has What is wrong with this theory Smith. And so has Joe. Since that of an impartial judge determining excludes all who comprise this so- what price is fair? Why is this any ciety, the problem may appear to different from a judge in a court be insolvable. But it seems that of law who presides, let us say, way only if one persists in looking in a civil suit concerning an alleged for a single judge — some one per- violation of contract? son qualified to make the decision. Such a civil suit involves an im- There is the appeal of simplicity, passe of conflict, in which one or among other things, in having au- the other side must lose by a judg- thority reside with one person — ment of “guilty” or “not guilty.” some Joe — empowered to establish ===== PAGE 51 ===== 1959 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 49 a just price. Throughout all his- one, stand to benefit. Each has a tory, this practice has been in evi- voice in the decision. Since both dence. In Medieval times, for in- reserve the right of veto, their stance, kings or lords fixed prices voices are equal in a decision that for goods, and thereby supported must be unanimous or else there the traditional thought of the is no “case in court” and no ver- time, which presumed a just price dict. according to the powerful church The exchange process involves influence and the ecclesiastical two persons, not just one. There “logic” of the time. More recently, is no free exchange unless and various arrangements of govern- until two persons, serving as ment have done likewise. But al- judges, agree on what the price ways there has been some Joe oc- shall be. The only persons who cupying the seat of authority, like qualify as judges are the owners our own heads of OPA and OPS. of the goods to be exchanged. There has always been the urge, in other words, to find some one The 177 Million Traders person who should be empowered, In our 1959 economy, there are as the all-wise, to decide the price some 177 million Joneses and that would be just. And therein Smiths. The ebb and flow of their lies the error of the search. trade and exchange is too complex Under the beginning concept for any human mind to grasp that Jones owns his furs and fully. What is a just price for Smith owns his corn, it is clear shoes or wheat or a day's work in that no rights are violated if no this economy? trade occurs and each keeps what There is no one just price for he has. There is no conflict in that all shoes sold today. Justice, as al- sense. The only sense in which a ready analyzed, rests on freedom conflict can arise is if either Jones of exchange for each pair of shoes, or Smith—or some third Joe—pre- between the store which offers it sumes ownership of what is not for sale and the consumer who his, and acquires a power to dic- considers buying it. So the only tate the terms of a trade beyond way to have justice in the price his own rights as owner. But so for shoes today is to have free long as the basic right of owner- trade and free terms of exchange ship is preserved, a contemplated for each and every separate deal. trade is never a conflict; it is an Justice in prices, then, precludes attempted act of cooperation un- any legal or authoritative decree der which both parties, not merely of price for any trade of anything. ===== PAGE 52 ===== 50 THE FREEMAN July Justice on a large scale cannot “hourly wage,’ the hound is off be composed of subsidiary in- the trail. In a free economy where justices. Justice in the aggregate personal rights are preserved, comes only from justice in each of there is no national price of any- its parts — free and voluntary thing; there are innumerable terms of exchange for each buyer prices, trade by trade. and seller. That demands the preservation of private property Miraculous Balance rights, above all else. Justice re- When prices are freely arranged sides in the right to keep what is between each buyer and seller, an one’s own, if all buying offers are over-all condition develops which unsatisfactory; in the right of is one of almost miraculous bal- every offerer and bidder to resist ance. Both surpluses and short- coercion—even by the government, ages disappear. Peace appears the presumed agency of legal jus- where otherwise there would be tice. Once the search for justice chaos and conflict. “Who shall have ceases to focus on individual what?” is resolved in the only way buyers and sellers and scans the possible if a person’s time is to re- national ‘‘price of wheat’ or main his own; if what he has pro- duced is to remain his; if he may give his property to whom he EFFECTS OF PRICE FREEDOM ~~ YVishes or trade it on whatever terms are satisfactory to both him If the price these quantities wlii be Is fixed at wanted offered traded and the buyer. . . . 2 4 . 4 wv The manner in which this bal- ance occurs is revealed by the 50¢ | 10000 i accompanying chart. It combines 2 = A . SURPLUS two simple economic facts: 1. Consumers will buy less of a 40c | 0000 if thing at a high price than at a soars low price. 30¢ 1 | I | I i i 2. Producers will produce more of a thing in anticipation of a high price than of a low price. 20¢ Hil U0... : : Another economic fact, not shown sons in the chart, is important in in- terpreting it: For a society as a 10¢ JH 0... i whole, the consumers are the pro- SnoatAdl ducers, and the producers are the ===== PAGE 53 ===== 1959 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 51 consumers. This fact, coupled with must be sure that circumstances the simple truth that we cannot permit it.”? consume what is not produced, The same view was expressed necessitates a balance between con- in the following release from the sumption and production. As the Chamber of Commerce of the chart shows, a balance in this in- United States: “In case of a seri- stance is found at the free price ous new national emergency, a (at 30¢), where neither surplus price and wage freeze would be nor shortage exists. The free price the most effective way of dealing also generates a maximum amount with the situation, as we learned of trading; and the terms of trade in both the World War II and Post- will have been accepted by every Korean periods.”’? seller and every buyer as benefit- Such persons believe that the ing himself — as evidenced by their free market with free exchange is having traded willingly. The only a pleasant luxury—a lovely thing just price is the free price. to be enjoyed only in those happy } , times when the economy is sailing Economic lliness over untroubled waters. At all Against this background of the other times, the government should anatomy of a sound economic body, prohibit the citizens from such we may now proceed with its path- wasteful indulgence, and should ology. What is the economic illness dictate prices and wages under the for which the stand-by controls control of administrative law. are intended? What are the symp- Freedom of exchange, by this rea- toms that will signal a rush to the soning, should be considered a economic medicine cabinet for the pleasant pastime—a privilege presumed remedy? granted to us and bestowed upon “It will be when wages and us by the government only when prices soar due to war or inflation officials of government consider or some other serious disruption; that the circumstances warrant it. when some emergency causes acute shortages of certain things.’ Weakness in Emergencies These, in the minds of those who As clearly implied in the Defense favor stand-by controls, are the Mobilizer's statement, those who symptoms of the illness. Appearing before Congress, a Hearings before the Committee on Banking ili 1d + ¢ and Currency, United States Senate, Eighty- former Defense Mobilizer said: “I Second Congress, Second Session on S.25694 am always delighted to see a re- and 8.2645. March 4, 1952, p.27. 2Fconomic Intelligence, Number 55, February turn to the free market, but I 1953, U. S. Chamber of Commerce. ===== PAGE 54 ===== 52 THE FREEMAN July favor stand-by controls for emer- wages and prices amounts to hav- gencies look upon controlled prices ing a medicine cabinet stocked as strength and upon free prices with injustice to be used in times as weakness. Why, otherwise, of emergency; to creating sur- would they prescribe the medicine pluses and shortages, rather than of controls in emergencies? balanced distribution, when emer- Any price either above or below gencies arise; to giving a poison the point of a free price, forced by as an antidote for itself. If justice some “Joe” armed with political is strength and injustice is weak- authority rather than with rights ness, it amounts to prescribing as owner, is injustice. As prices weakness at precisely those times depart from that point, more and when strength is most needed. more trading is killed off, to the Goodness and justice, it would detriment of both buyers and sell- seem, are luxuries to be tolerated ers. Then further controls over the during an indulgent binge; but affairs of workers and producers when the going gets rough and are likely to be added in order to sobering realities must be faced, obfuscate the new difficulties it seems that the emergency bottle brought about by the first injus- should contain injustice. tice. Error is piled on error in an inverted pyramid of interferences, until eventually the monument of For those who find the proof of mistakes must be dismantled or the pudding only in the eating, collapse under its own unstable history affords continuous and am- weight. Whenever a false premise ple evidence, since the first known is adopted for medication, the price control laws were enacted in “cure” is likely to aggravate the Babylonia 3,800 years ago. They condition; then there is the temp- failed of their purpose, as has tation to apply more and more of every similar attempt in recorded it under the assumption that the history since that time. dosage was inadequate or that the It is ever the same. When a gov- area of application was too narrow. ernment inflates the money or some Nothing — not even the famous other cause pushes prices upward, guinea pig — is as prolific as con- attempts are made to conceal the trols in the hands of political au- symptoms, rather than to attack thorities, during so-called emer- inflation at its source or otherwise gencies. get at the root-cause. The attempt In the light of the previous anal- is made to adjust the scale on the ysis, enacting stand-by controls of thermometer by edict, rather than Historical Failure of Control ===== PAGE 55 ===== C4 1959 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 53 to cure the fever that causes the the world has perceived the truth.” mercury to rise — so to speak. The In the early forties, when we treatment applied to the fever vic- were at war with national so- tim is to throw him into a deep- cialist Germany, the United States freeze. Department of State published a revealing treatise on these ideo- National Socialism Via Control logies of our then enemy. It is re- The evidence against controls, vealing because it shows that we even during emergencies, is so over- embraced, and are still embracing, whelming — by logic, and as re- the ideologies of our enemy in na- vealed in the historical record — tional socialism.’ that one wonders how their enact- This source warned us that as ment has gained so much credence the plan of national socialism pro- in this “land of the free.” Could it gresses, an authority is to be made be that we have been so busy man- supreme; his decisions are to be ning the machines of physical de- final and always right; his follow- fense that an intellectual mass at- ers are to owe him the duty of un- tack upon our bastions has gone questioning obedience. This is the unnoticed ? Sometimes our perspec- same concept that was advocated tive on such matters is helped if by the ardent nationalistic philos- we back away from the illusory be- opher, Johann Gottlieb Fichte. lief we have embraced and look at the evidence from a distance. A Prophecy Lassalle, the German Socialist, But under the influence of Na- in a letter to Bismarck on June 8, poleon’s repulsive example, Fichte 1863, wrote: “The working class later opposed absolutism in the instinctively feels attracted to dic- state, foretelling the character of tatorship, if they can first be con- a future fithrer and describing vinced that it will be practiced in how he might come to attain his their interests.” Spengler accu- power: The future fiihrer would rately forecast an age of govern- educate his people in cool and de- mental demagogy when he wrote: liberate piracy; he would encour- “What is truth? For the multi- age extortion; robbery would be tude it is that which they constant- made the honorable token of a fine ly read and hear . .. what it (the 3Raymond E. Murphy and others, National 1 - Socialism: Basic Principles, Their Applica- press] wants, 18 true. Its com tion by the Nazi Party's Foreign Organiza- ] trans- tion, and the Use of Germans Abroad for manding officers engender, S Nazi Aims, Department of State Publication form, and exchange truths. Three No. 1864 (Washington, D. C.: U. S. Gov- ’ ernment Printing Office, 1943), pp. 11, 12, weeks’ work by the press, and all 5 22. ===== PAGE 56 ===== % 54 THE FREEMAN July reason; the State should virtually tried that too and it failed. You eliminate private enterprise, set- are no better planners than we. I ting up a rigidly planned corporate should think your economists economy — including, of course, would read what happened here. price controls and other controls “Germany has been beaten, of various sorts; there would be eliminated, but it will be interest- strict governmental control of la- ing to watch the development of bor and production, concealed in- the remaining great powers, the flation and blocked currency, inter- stupidities they practice within national barter agreements, and their home lands, their internal intensive armament as a prelude strife, and their battles of wits to territorial expansion. abroad. Those are the concepts embodied “Will it be as it always has been in controls, whereby legalized loot- that countries will not learn from ing of some persons by others is the mistakes of others and will authorized under guise of fighting continue to make the mistakes of inflation. It is the blueprint of na- others all over again and again?” tional socialism as told by our own This same view — believe it or State Department. We should read not — was confirmed by the then it again and again — and judge our Vice-president of the Council of own acts by its measure. People’s Commissars and People’s . } Commissioner of Foreign Trade, Goering's Advice in an interview printed in all So- This quotation from Henry J. viet newspapers on May 18, 1945.* Taylor, of what Goering said in an In explaining the serious food sit- interview long after Goering, Rib- uation in Germany, he blamed the bentrop, and others had been jailed Hitler regime for having forbid- following the surrender of Ger- den free trade of all articles of many, is revealing: daily consumption. He stated that “Your America is doing many the trouble was due to the closing things in the economic field which of all markets and the forced de- we found out caused us so much livery of all farm products to the trouble. You are trying to control government, thus killing the incen- people’s wages and prices — peo- tive to produce. ple’s work. If you do that, you It is not, perhaps, entirely a co- must control people’s lives. And no incidence that the man who was country can do that part way. I tried it and failed. Nor can any 1Supplied through the courtesy of Professor . . Jocques Ruefl, of the Institut d'Etudes Poli- country do it all the way either. I {jques, Paris, France. ===== PAGE 57 ===== 1959 CAN WAGE AND PRICE CONTROLS CURE INFLATION? 55 the administrative head of German for a successful communist-social- Price Administration until 1923, ist revolution. Among them are when their inflation exploded, several which specify controls by came to the United States, wrote the State of prices in their various the book entitled Price Control in forms, and also the confiscation of the War Economy in 1943, and be-. private property. came chief consultant in the Office In 1950, Earl Browder, former of Price Administration. leader of the Communist Party in America, discussed the American trend toward communism. He Now, rather than being at war listed 22 specific attainments which with a national socialist Germany, he said had furthered the com- we are involved in a “cold” war munist program in this country with communist Russia. Let’s take even beyond that attained in Brit- a look at the advice from that ain under their much-maligned La- quarter. Not that there is much bor government. Among those difference between the communism listed were controls over prices, of Russia and the socialism of Ger- credit, money, laborers, and busi- many prior to World War II. Com- nesses; also bribes, in the form of munism is merely socialism in a special privileges to various hurry. Even Marx spoke of what groups. The program is so far ad- we now label “communist” as be- vanced already that the govern- ing socialist, and the Soviet state ment owns nearly one-fourth of all was named the Union of Soviet So- wealth other than land, and has cialist Republics. Moreover, the licensing and other controls over Communist Party in the United practically every type of business. States, in its advice about recruit- ing new members, says that it Stand-by Controls for What? should be easy to recruit a social- The most kindly charge that can ist by showing him that the Com- be made against one who favors munist Party is the only real fight- stand-by controls for emergencies, er for socialism in America; that it seems to me, is that he does not the most effective way to help at- understand the workings of a free tain his ideals is to join the Com- market and that he lacks confidence munist Party.’ in the performance of free men In 1848, Karl Marx, the “father” working with private property in of communism, listed ten measures ga voluntary exchange economy. And if that be his belief, why does 5Gaining Recruits for an Idea, single sheet, Foundation for Economic Education. he not propose government con- A Matter of Degree ===== PAGE 58 ===== 56 THE FREEMAN July trols of everything, all the time? principle that control of the vital Why not use the “strength” of mainstreams of commerce and con- controls all the time, not just in fiscation of the rights of private emergencies? property are sound and just prac- Stand-by controls? For what? tices. A nation of freedom cannot Not, to be sure, for the purpose of enact even stand-by controls and either productive efficiency or jus- remain basically free. tice! Not to maximize trade, nor “, . . it hath been found by to balance distribution so that Experience that Limitations shortages and surpluses will dis- upon the Prices of Commodi- appear! Not to further the free- ties are not only ineffectual dom of man in this land which we for the Purposes proposed, but claim will be the last bastion of likewise productive of very freedom in the world struggle in evil Consequences to the great which we are now engaged! Detriment of the public Serv- To enact stand-by controls would ice and greivous Oppression mean putting into the law of the of Individuals.”¢ * oo land a permanent endorsement of ——m—— . . qe SJune 4, 1778. Journals of the Continental a basic tenet of socialism — the Congress (1908 ed.), p. 569, Vol. X1 Eprror’s Note: This article is a slight condensation of a pam- phlet published in 19563 under the title, Stand-By Controls. Copies of the pamphlet may be obtained from The Foundation for Eco- nomic Education, Irvington-on-Hudson, N. Y. at 10 for $1.00; 100 for $6.00. Coed . Cor Ly One Set of Ills for Another THE RESULTS have been astonishingly uniform. ... The history of government limitation of price seems to teach one clear lesson: that in attempting to ease the burdens of the people in a time of high prices by artificially setting a limit to them, the people are not relieved but only exchange one set of ills for another which is greater. ... The man, or class of men, who controls the supply of essential foods is in possession of supreme power.... They had to exercise this control in order to hold supreme power, be- cause all the people need food and it is the only commodity of which this is true. MARY 6. LACY, Food Control During Forty-six Centuries ===== PAGE 59 ===== WELFARE STATE 1 IN ACTION A PICTURE of Indians of the Six Nations picketing the White House probably attracted no more than a curious glance. But the next time you are traveling in a part of the country where there is a major Indian reservation, give it more than a curious glance. Give a thoughtful look. There, but for the grace of God, sit you, or we. But for the grace of God — and the independence of a lot of an- cestors who figured they would work things out for themselves rather than look to the government to take care of them. The Indians were not given as much choice about it. For more than 170 years — though consider- ably less in the case of some tribes which were less tractable than others— the all-providing guardian of the reservation Indians has been the United States government. In any case, since well beyond the memory of any living elder, the reservation Indian has been the beneficiary of a cradle-to-the-grave Welfare State administered in Washington. 3 Eo What is the result? In Mississippi, the Jackson Clarion-Ledger and Daily News recently looked to the Choctaw In- dians, whose reservation is there, for an answer. A missionary called the Choctaws the most poverty- stricken group in the nation. The only serious challenge we can think of to that statement might come from those who would claim that the distinction belongs to some other reservation tribe. This con- dition has been developed under generation after generation of management of economic affairs by federal “experts.” It is to such management as this that the wel- fare enthusiasts want to turn over the entire American economy. The missionary critic said the adult Choctaws average a second grade education. An Indian Agency official said this wasn’t so, that the Choctaws have a fourth grade average. The federal government, from the beginning, has been responsible for providing education for the reservation In- dians. This is the same govern- 57 ===== PAGE 60 ===== 58 THE FREEMAN July ment which the federal aiders say These are, to be sure, examples must plunge into all American pub- from the worst of the Indians’ ex- lic education at once, to save it perience. Many Indians, either in from “disaster.” groups or individually, now live The last school census showed just as well as anyone else. But some 91,000 Indians of school age. they haven’t done it under the A third of these were in public care and feeding of the federal schools, off the reservations. government! These are the ones Nearly 8,000 were in mission who have succeeded in taking over schools. About half of the rest were the management of their own af- in federally provided schools. On fairs or who have left the reserva- the Navajo reservation alone, in tions or who have been so fortun- the Southwest, there were 15,000 ate as to have oil turn up under school age children not in school. their tribal lands. School facilities were not available Take a long and thoughtful look for them. It is to the federal gov- at the tribal groups which have ernment, which has had the re- continued to depend on the wisdom sponsibility for reservation schools and benevolence of federal pater- from the beginning, that the fed- nalism. You will see what all eral aid enthusiasts now want the America would be like a few gen- whole country to look for money erations from now if the welfare and example in providing adequate state planners should succeed in schools. What an example! taking over. The tuberculosis death rate Let’s not let it happen. Let’s among the Choctaws is put at five chuck the Welfare State, with its times the national average. The “security” and its “benefits,” into infant death rate is termed three the ash can where it belongs. Let's times the national average. The go back to the principles and prac- federal government is and has been tices of individual initiative. They responsible for hospitals and medi- built a nation out of a wilderness. cal care for the reservation In- They can keep the nation going dians. The welfare staters want to forward to ever greater heights turn over the health of the entire of freedom and progress. oe eo eo nation to the mercies of a bureauc- racy with a record like this. From The Indianapolis Star, March 21, 1959. ===== PAGE 61 ===== A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN PROPHETIC INTIMATIONS A modern lesson from the French Revolution IT 1s THE TEST of an enduring men to serve as grab-bags. In the classic that it has the ability to country at large, however, the maintain an underground life dur- whole rigmarole of “social demo- ing periods when its spirit or its cratic” economics (intervention- morality or its lesson is not in ism, Keynesian spending, the sac- fashion. Andrew Dickson White's rifice of all other values to the Fiat Money Inflation in France, fetish of full employment) com- which has just been republished mands less intellectual prestige again by the Foundation for Eco- than it did a few years back. And nomic Education with an introduc- in Europe, where the social demo- tion by Henry Hazlitt (128 pp. cratic ideas have raged through $1.25 paper; $2.00 cloth), is such country after country like a a classic. Both its spirit and its plague, a real libertarian revival morality are old-fashioned, and its seems to be taking place in govern- lesson (though inexorable) has ment itself. As is generally known, been honored more in the breach the ideas of Mont Pelerin Society than in the observance. But it has libertarian professors have been always come back, a source of in- dominant in West Germany for al- disputable fact and wisdom for the most a decade. More recently discerning. these ideas have crossed the This time the republication of Rhine: Charles de Gaulle has been Fiat Money Inflation in France, taking his economic cues from with its many prophetic intima- Mont-Pelerinian Jacques Rueff, tions, promises to have a major whose program calls for a stabi- impact. The battle for and against lized and convertible currency, a inflation rages in Washington, balanced budget, fewer subsidies, with the tide seemingly running and a relaxation of trade controls strongly against the stalwart few — in short, an end to inflation it- who object to the notion that gov- self. ernments are instituted among The “movement of ideas,” then, 59 ===== PAGE 62 ===== 60 THE FREEMAN July should guarantee a more willing big unions. Inflation, in the mod- acceptance of certain deductions ern United States, helps an aris- drawn by Henry Hazlitt from tocracy of labor; it bears down White's pungent historical essay. cruelly on a vast host of workers The usual argument for inflation who either do their own individual is that it favors the debtor classes, bargaining or operate on a con- who are usually thought of as the tract basis for themselves. poor. But Mr. Hazlitt, drawing upon White’s facts and reinter- Andrew D. White (1832-1918) preting them to fit the contempo- Andrew Dickson White was a rary United States, notes that it is professor of history, an educator, the rich who are ordinarily the and a diplomat; he helped to es- chief debtors in any advanced eco- tablish Cornell University in New nomic society. Says Mr. Hazlitt: York State, and he led a famous “In the United States today the campaign for the ‘‘equality of chief debtors are the stockholders studies” in the post-Civil War era. of the corporations. ... The credi- His educational ideas, carried to tors include the holders of life in- excess, have done some harm, for surance policies, and of govern- they have led to the absurdity of ment bonds, large and small....” giving college degrees for taking Whom, then, does inflation help? courses in flycasting, beekeeping, And whom does it hurt? and home economics. When White As Mr. Hazlitt says, “A poor was fighting against the primacy man never gets to be a big debtor.” of Latin and Greek, however, it The only way the poor man can was the basic theoretical underpin- protect himself against inflation ning of science itself that was be- in our modern society is to belong ing left out of account. To White, to a union which has a monopolis- it seemed senseless to regard a tic position. In French Revolu- Latin scholar as the social supe- tionary times there were no such rior of the chemist, the civil engi- unions, which meant that the fiat neer, or the economist. Something money inflation bore down most had to be done to bring the post- heavily on the very people whom Civil War university abreast of the revolutionists professed to the modern world; hence, White, serve. But even today most work- a realist, accepted the challenge. ers aren’t in a position to get the As a historian, he looked for uni- “cost of living” increases that are formities of experience that might becoming standard items in the be formulated as natural law. “packages” demanded by the few When he was president of Cornell, ===== PAGE 63 ===== 1959 PROPHETIC INTIMATIONS 61 the whole American West was riod pending the return of finan- seething with inflationary ideas. cial probity, or sold on the market There was Greenbackism; there for solid cash, the dodge might were the Free Silverites. William have worked if the national au- Graham Sumner’s History of the thorities had had the good sense American Currency was replete to refrain from repeating it. With- with grisly instances of the work- in five months of the first issue, ings of Gresham’s Law whenever however, the new Revolutionary the effort was made in the United regime succumbed to temptation States to build prosperity on irre- and issued a second batch of paper deemable paper. Because of the livres. In the following year — 1791 safety valve of the American fron- — the inflationary debauch was on. tier, however, the full force of in- Good men — the economist Du flation had never been felt on these Pont de Nemours and the brilliant shores. There was always a new cook, Brillat-Savarin, were among horizon for the indigent, the tem- them — warned against any issue porarily ruined, or the immigrant of paper money. Other good men — without a stake. Mirabeau, Talleyrand - thought a little inflation, just a very little, Monetizing Church Lands might be a good thing. But when To uncover the workings of the Talleyrand argued that the effect natural law of inflation, White, in of a second issue of assignats a paper read before the Union might be different from that of a League Club of New York in 1876, first, he was overruled by an As- went back to the French Revolu- sembly that had tasted blood. tionary experience with the as- White, in the course of a wonder- signats and the mandats, paper fully animated narrative, notes a money based on the properties ‘law of acceleration” that seemed which had been seized by the ‘“peo- to be at work as one inflationary ples’ ” State from the Church or issue of assignats followed another. forfeited by emigrés. The leaders When prices went out of whack of the French National Assembly with the inevitable depreciation of thought they were being inordi- the circulating medium, the ex- nately clever in making their first tremists in the Assembly took issue of paper money a mortgage over. Naturally, they turned to on “a landed domain vastly greater force. Price-fixing — the notorious than the entire issue.” And, since Law of the Maximum — was in- land acquired for paper money voked in 1793. Then rationing was could be held for an indefinite pe- added. To make sure the merchants ===== PAGE 64 ===== 62 THE FREEMAN July obeyed the Law of the Maximum, debilitating warfare, a vast blood- a spy system was organized. The letting carried out in the name of death penalty was prescribed for la gloire. And all because, in 1790, anyone who refused to accept pay- a few men had decided that a little ment in assignats, or for anyone nip of inflation might be a good who violated the Maximum laws. thing. With the guillotine poised above the throats of virtually all shop- Other Causes of the Revolution keepers, farmers, and manufac- There were many other ele- turers, it is scant cause for won- ments, of course, that fed the der that the people of France flames of the French Revolution. ceased more and more to do any First of all, there was the theory business whatsoever. It was much that all the people of a nation must safer to go on relief — even though be bound in all matters by the the bread distributed by the au- “general will” (meaning a 51 per thorities was sometimes indigest- cent vote). Secondly, there were ible. Speculators, however, knew the linked “scientistic” ideas that how to protect themselves, With a man is perfectible and that the great show of virtue they willing- State can be the instrument of mak- ly did business, buying up land and ing his perfection a reality. Third- goods for vast amounts of worth- ly, there was what Frank Chodorov less paper. Meanwhile, they bribed has called the operation of the the legislators and dressed their Law of Parsimony — meaning that wives in vulgar finery as the tone a steadily increasing number of of “society” became more and people will cease to work for a liv- more raffish. The speculators ‘“un- ing in any State that is philosoph- loaded” their paper on the people ically committed to supporting its before prostration set in. citizens. Inasmuch as the French Inflation, as Mr. Hazlitt points Revolutionary theorists believed out, is always followed — in the what they believed, the inflation end —by a “stabilization crisis.” was probably an inevitable by- In the France of 1799, the “stabili- product of a general state of mind. zation crisis” produced Napoleon, But this does not invalidate a dictator. When the dictator re- White's essay in the least. White fused to have any more traffic with does not say that inflation “caused” assignats or mandats, France be- the excesses of the Revolution, He gan a long and painful convales- does indicate that it helped to in- cence. Along with the dictator the tensify and prolong the excesses. French people got fifteen years of And that is quite enough. eo © ===== PAGE 65 ===== 1959 OTHER BOOKS 63 > Four Days in July. alists. Their day by day record of By Cornel Lengyel. New York: the great events in which they par- Doubleday & Company. 360 pp. ticipated is voluminous and still $4.95. available. Thus, one may tell the THE FULL STORY of the Declaration story of the Declaration of Inde- of Independence is the whole his- pendence in the words of the men tory of human liberty. The story who framed it. We can almost sit of the Continental Congress which in on the debates which preceded adopted that Declaration is a chap- its adoption. ter in that history, one of the most The events in Philadelphia are important chapters. The Declara- brought to life in Cornel Lengyel’s tion sets forth the conviction that book. It reads like a novel, but the political liberty is part of the cov- author cites his sources chapter by enant between a man and his chapter and assures us that the Maker. The general assumption speeches and conversations, except hitherto was that such liberties as for minor interpolations, are ver- a man was permitted to exercise batim. The purist who insists that he had on loan from the sovereign- history must be footnoted and dull ty — variously conceived as the may have a point or two to support king, the society, or the majority. his preference; there is some sub- The Declaration stepped off, not so ject matter better treated in small much in a new direction as into a screen black and white rather than new dimension, by resting sover- in Cinerama. But three dimen- eignty in the Creator who endows sional color has a real place, and men with the full stature of their there is a place for books like Four humanity. Days in July, especially when they It may be accepted that the phil- are as well done as this one. osophical side of the Declaration Some of the men who figure is the most significant part of the prominently in Lengyel’s book air story, but the importance of the their religious opinions in a recent human elements must not be over- compilation entitled In God We looked. History is mostly biog- raphy, and the prime movers in the Continental Congress are men Any book reviewed in this Book Section (or of such large caliber that its story any other current book) supplied by return is to some extent their story. And | mel: You pey only the bookstere Brice a. their story can be well and fully Catalogue on request. told, for these men were letter THE BOOKMAILER, Box 101, New York 16 writers, diarists, and conversation- ===== PAGE 66 ===== 64 THE FREEMAN July Trust — insofar as these opinions ligion by osmosis, not by conta- can be revealed by excerpts from gion. Faith was a private matter. letters and other writings (Nor- “I never told my own religion,” man Cousins, editor. New York: wrote Jefferson, “nor scrutinized Harper & Bros. 464 pp. $5.95). The that of another.” The fruits of re- book is hardly a contribution to ligion were visible in their lives, the literature of religion, because and for this we honor them. the real religion of the Founding In God We Trust is a useful Fathers is something which can piece of Americana. We under- only be inferred from the premises stand our own history better when on which they habitually acted. we know the religious opinions of There is an old Latin motto the men who helped launch the which is rendered freely as “Our American experiment. They un- studies vanish into attitudes.” The derstood what some churchmen Founding Fathers were legatees of have never realized, that compul- a great religious tradition which sory religion is a contradiction in had shaped in them the high stand- terms. By God’s grace, the Found- ards of courage, probity, and mor- ing Fathers were not theologians, als by which they lived. They be- else the country would have been lieved in a Supreme Being, to stillborn! They were gentlemen, whom they were polite, and they and their abhorrence of religious hoped for immortality, but with- conflict gave us the great principle out enthusiasm. They had their re- of religious liberty. E. A. OPITZ We invite your subscription to MODERN AGE A CONSERVATIVE REVIEW Published Quarterly a RR TN n Edited by Russenn Kirk VoL. 3, No. 3 (Summer 1959) Special number on “HUMANE POLITICAL ECONOMY?” introducing... Tue “Eomunp Burke NEWSLETTER” as a continuing feature $4.00 the year 81.25 the copy Address: 64 East Jackson Boulevard, Chicago 4, Ninois ===== PAGE 67 ===== MEMO ON PRIVATE ENTERPRISE No. 8 in a series “Tax money is saved by the present limitations. . . on parcel post packages” Consistent with its long-standing costs are hidden in the budgets of position, the Chamber of Commerce other agencies and are not charged of the United States once again has against the Post Office Department. spoken frankly in its defense of Moreover, postal facilities are not private transportation enterprise adequate now to provide all the serv- and its opposition to the efforts of ice assigned to the Department. Any parcel post shippers to extend their increaseinthesizeand weightofpack- already large taxpayer subsidies. ages permitted in the mails would in- In the April 24, 1959, issue of crease the need for more governmen- Washington Report, the Chamber tal spending for enlarged facilities.” points out to the taxpayer that * * 0% “some of your tax money is saved “Protection is provided by P. L. by the present limitation on the size 199 to communities and individuals and weight of parcel post packages.” not adequately served by private In an April 20 statement to the carriers in that it applies only be- Senate Post Office Subcommittee, tween first class post offices. where the Chamber urged Congress to pre- private carriers are equipped to serve Public Law 199, enacted in handle all transportation needs. 1951 by the 82nd Congress. which “P. L. 199 was brought about, as imposed the present parcel post a restatement of policy by Congress, limits between first class post offices. because the original purpose of Following are some pertinent quotes establishing parcel post had been from that statement: distorted over the years by admin- “Since enactment of the law, sub- istrative action until the Post Office stantial amounts of large package found itself in the freight business.” business have been returned to com- Representing 3,450 business or- mercial carriers. This has benefited ganizations with an underlying the nation’s economy. The business membership of some 2.500.000 busi- should not now be turned back to nessmen, the U. S. Chamber justly the government. opposes the special interest viewpoint “Parcel post is still a subsidized of the relatively few large commer- government service, since part of its cial users of below-cost parcel post. For a free copy of the informative booklet, “The Truth About Parcel Post,” address the Public Relations Division, RAILWAY EXPRESS AGENCY 219 East 42nd Street, New York 17, N.Y. A PRIVATE ENTERPRISE IN THE PUBLIC SERVICE ===== PAGE 68 ===== IDEAS ON LIBERTY 0 When men rightly apprehend their relationship with the nature of things and with each other, there is harmony and growth. But mis- understanding portends trouble, leading possibly to the collapse of a civilization if the wrong ideas are widely shared. 0 The Foundation for Economic Education works within the framework of the spiritual and ethical understanding embodied in the heritage of Western Civilization. Its conviction is that this heritage, in its social aspects, spells out into the philosophy of limited government and free market economics. Political liberty and economic freedom, in turn, are important in man’s quest for material sufficiency and spiritual growth. 0 The Foundation’s monthly publication, THE FREEMAN, prints articles dealing mainly with current efforts to restrain economic and political liberty, with the misunderstandings and fallacies which cause well- meaning people to invoke these restraints. On the positive side, it attempts to explore ways in which men in freedom resolve their economic and political problems. THE FREEMAN may be forwarded any- where in the U. S. A. No wrapper required. PLACE 4%4-CENT From: POSTAGE HERE To: streot city z0n0 stote