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

THE

TeClld

IDEAS ON LIBERTY

JULY 1961
Modern Robber Barons . . . . . . William Henry Chamberlin 3 ,
Unsocial Insecurity . . . . . . . . New York Daily News 10
Foreign Aid Off Target . . . . . . John C. Sparks 12
Not in the Constitution. . . . . . . George W. Nilsson 16
Worse than Chain letters . . . . . . E.W. Dykes 27
Persistent Voice of Protest. . . . . . Melvin D., Barger 31
Exporting Affluence . . . . . . . H.P.B. Jenkins 37
Revolutions, Liberal and Conservative . . Thomas H. Stevenson 38
A Government Contract? No, Thanks! . . John M. Schoeph 50

Why Not Use the Pricing System
in the Broadcasting Industry? . . . . Ronald H. Coase 52

Book Reviews:
The Critics of Keynes . . . . . . . John Chamberlain 58
Other Books . . . . . . . . . . 62

THE FOUNDATION
FOR ECONOMIC EDUCATION, INC.

{rvingfon-on-Hudson, New York


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THE

Ieéman A MONTHLY JOURNAL OF IDEAS ON LIBERTY

JULY 1961 Vol. 11 No. 7

LEONARD E. READ President, Foundation for
Economic Education

PAUL L. POIROT Managing Editor

THE FREEMAN is published monthly by the
Foundation for Economic Education, Inc., a non-
political, nonprofit educational champion of private
property, the free market, the profit and loss system,
and limited government, founded in 1946, with offices
at Irvington-on-Hudson, New York. Any interested
person may receive its publications for the asking.
The costs of Foundation projects and services, in-
cluding THE FREEMAN, are met through volun-
tary donations. Total expenses average $12.00 a year
per person on the mailing list. Donations are invited
in any amount — $5.00 to $10,000 — as the means of
maintaining and extending the Foundation’s work.

Copyright, 1961, The Foundation for Economic Education, Inc. Printed

in US.A.

Additional copies, postpaid, to one address: Single copy, 50 cents;

3 for $1.00; 25 or more, 20 cents each.

Permission [s hereby granted to anyone to reprint any article in whole

or in part, providing customary credit is given, except ‘‘Unsoclal In-

security,” “Not in the Constitution,” ‘Persistent Voice of Protest,”

and “Why Not Use the Pricing System in the Broadcasting Industry?”
Fe E Any current article will be supplied in reprint form if there are enough

inquiries to justify the cost of the printing.


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WILLIAM HENRY CHAMBERLIN fs

WHAT little trade went on during plied to the pioneer builders of
the Middle Ages was considerably America’s industries and railway
harassed by a group that has systems. Unquestionably there
passed into history under the name was some wrongdoing, fraud, and
of “robber barons.” Entrenched in corruption during the big upsurge
castles strategically built in moun- of opening up and developing the
tain passes or on navigable rivers trans-Mississippi West after the
(the ruins of these castles are still end of the Civil War. Standards of
a tourist sight on the Rhine and public life were not as high as
the Danube), the feudal owners they should have been; the moral
levied more or less regular tribute letdown that usually follows big
on merchants and traders who wars made itself felt.
passed within the neighborhood. But, by and large, the good
The use of gunpowder finally which these industrial pioneers ac-
proved the undoing of the robber complished far outweighed the oc-
barons, as of the feudal system in casional spectacular and highly
general. Their castles were vul- publicized evil. The transforma-
nerable to artillery; and the in- tion of the West, from a land of
creasingly absolute centralized open prairies and mountains thinly
State acquired a monopoly of taxa- settled by bands of roving Indians,
tion rights as well as of political into new settled states made pros-
power. perous by farms, mines, and in-
The term robber barons has dustries and served by ample rail
been sweepingly and unfairly ap- communications, was one. of the
Mr. Chamberlin is a skilled observer and re- great achievements of economic
porter of economic and political conditions at history. It was done by enterpris-

home and abroad. He has written a number

of books, has lectured widely, and is a con- ing management, free capital, and
tributor to The Wall Street Journal and many
nationally known magazines. free labor. The process was cer-

3


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4 THE FREEMAN July

tainly more efficient and infinitely toward the end of January, I
more humane than the brutal com- found America’s largest city in a
pulsions employed for the same situation suggesting that a for-
purposes in the Soviet Union and eign enemy was drawing a tighter

Red China. and tighter blockade around its
. i supply lines. Some six or seven
Abuse of Power in Unions hundred members of tugboat

Now there is a new breed of crews had quit their jobs because
robber barons, those who abuse they were afraid that, a year
the vast power which increasing hence, management might intro-
interdependence of the economy duce efficiency changes that would
and mistaken one-sided legislation require fewer operators.
have placed in the hands of trade Not content with the inconven-
unions. These modern robber ience which their concerted with-
barons systematically abuse this drawal of work created for the
. vast power in order to pillage normal supply of New York City
their fellow-citizens by means of with food (this was less than
intimidation, stoppage of essen- they had counted on), they pro-
tial facilities, the actual imposi- ceeded to tie up the whole trans-
tion on communities of grave in- portation system of the eastern
conveniences of all kinds. United States. They dispatched

What made the plight of the persuasive “goon squads” to rail-
merchant in the Middle Ages still way junctions, some of these lo-
more difficult was that he had to cated hundreds of miles from
buy off not one but many oppres- New York. They turned Grand
sors. Anyone who could erect a Central into a ghost terminal. Be-
castle on a much used highway cause of the alleged grievance of
could cut in on the spoils. This a few hundred tugboat operators,
situation is often duplicated in tens of thousands of commuters
the twentieth century. It is with- in the New York area were pre-
in the power not only of big vented from reaching their jobs
trade unions, but of small seg- and thousands of railway workers
ments of the membership of these were made temporarily unem-
unions, sometimes acting in de- ployed.
fiance of the established union Sometimes in traveling in the
leadership, to bring the wheels to Soviet Union I experienced con-
a grinding stop and create a siderable difficulty in getting out
paralysis of an essential service. of a provincial town because of

Happening to visit New York delayed and chronically over-


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1961 MODERN ROBBER BARONS 5

crowded trains. I had never im- est Bostonian can remember; its
agined there might be similar annual deficit is covered by extra
difficulties in New York. But on taxation levied on the citizens of
the day when I wished to return Boston and its suburban commu-
to Boston, every train had stopped nities. What the union leaders
and a blizzard grounded all were demanding (and, needless to
planes. By good luck I was able say, they got it) was that fellow-
to find a bus with an empty seat; citizens, many earning lower
but many people, some with more wages and salaries than the union
urgent reasons for travel than members, should dig deeper in
mine, must have been stranded as their pockets to pay a wage in-
a result of a controversy in which crease that bore little if any re-
they had no part or responsibility. lation to the labor market condi-
Soon after my return to Boston tions.
the workers of the MTA (Metro- Another example of blackjack
politan Transit Authority), which tactics was the action of airline
operates the subway and bus sys- flight engineers in stopping air-
tem of Boston and the surround- line transportation because they
ing area, took it into their individ- did not like a decision of the Na-
ual and collective heads to report tional Labor Relations Board that
sick. This was to evade a state one union should represent them
law that forbids strikes in public and the airline pilots. Perhaps it
utilities. The idea was to wield the required the wisdom of Solomon
blackjack of causing immense in- to decide whether there should be
convenience to the hundreds of one union or two. But a husband
thousands of people who use the prevented from flying to the bed-
MTA to get to their places of side of a critically ill wife might
work in order to force manage- reasonably resent being made the
ment to sign on the dotted line innocent victim of this all too fre-
what the union was demanding quent type of union “jurisdic-
on a new contract. tional” dispute.
The robber baron character of

this thinly disguised strike was Above the Law

all the more apparent because the The status of the medieval rob-
pressure was not being used ber barons depended on their
against a corporation that could ability to deport themselves as
show a profit. The MTA, which is above the law; and this is equally
publicly owned, has been deeply true as regards their modern suc-
in the red for as long as the old- cessors. The rule of law, the con-


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6 THE FREEMAN July

ception that no one may do what of these organizers have “served
is legally forbidden to others, is time,” not for anything connected
part of the fabric of a free so- with labor-management disputes,
ciety. But, where trade unions as but for acts of common crimi-
organizations or their leaders and nality.

agents as individuals are con- Typical cases of union-inspired
cerned, this rule is more often violence that occurred during an
broken than observed. “organizing” campaign for the

The disgruntled tugboat work- Teamsters’ Union in the South
ers could stop all trains; the MTA were the blinding of a truck
workers could deprive a big met- driver in Nashville with tear gas
ropolitan community of essential and the burning of two truck
transportation; the flight engi- drivers in Atlanta with a ‘“Molo-
neers could ground the airlines, tov cocktail.” These events took
all with-complete impunity. Sup- place as the McClellan Committee
pose the shoe had been on the was investigating the case of a
other foot. What would have hap- Texas union organizer, one Ray-
pened if the managements of the mond Shafer, who invariably re-
railways, of the MTA, of the air- sorted to the Fifth Amendment
lines, had decided to shut down while under questioning. Mr.
service because they were dissat- Shafer’s activities, according to
isfied with the revenues they were evidence and testimony introduced
receiving? They would certainly at the Committee hearing, in-
have been permitted to do no such cluded bribing Mexicans to burn
thing and would probably have trucks, trying to arrange the mur-

found themselves in jail. der of an employer whom he dis-
} } liked, and ordering that a man
Union-Inspired Violence : who had incurred his displeasure

The Congressional Committee should be beaten unconscious and
headed by Senator McClellan, in- have the word “rat” etched into
vestigating racketeering and il- his face with acid.
legal practices in the trade-union Most trade-union leaders may be
movement, produced a mountain personally upright men, pursuing
of incontrovertible evidence that the interests of their fellow-mem-
many union organizers should be bers as they see them. But a mi-
behind bars for outrageous viola- nority, as shown by the McClellan
tions of the laws protecting per- Committee investigation, are
sons and property against violence deeply imbedded in a mire of cor-
and destruction. Indeed, not a few ruption, gangsterism, and sordid


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1961 MODERN ROBBER BARONS 7

connections with the underworld. made a nationwide effort to in-

The prolonged and bitter strike duce buyers, by threats and propa-
waged by the United Auto Work- ganda, to cease dealing in Kohler
ers against the Kohler Company, equipment. Professor Sylvester
manufacturers of plumbing equip- Petro, in his analytical little book,
ment, furnished interesting and The Kohler Strike: Union Vio-
significant illustrations of the lence and Administrative Law, re-
“above the law’ arrogance of the marks as follows on the highly
trade-union bosses. Many individ- one-sided character of much cur-
ual workers did not want this rent labor legislation:
strike and in the end it petered “Had the Kohler Company at-
out, the company carrying on pro- tempted to induce other firms to
duction with the considerable part refuse to deal with the U.A.W. or
of its work force that was satis- to hire Kohler strikers, it would
fied with conditions and with new- have been held guilty of an unfair
comers who were hired to replace labor practice with extremely seri-
the die-hard strikers. ous consequences . . . yet the

From the beginning, the U. A.W. U.A.W. was privileged to spread
resorted to the crudest methods economic harm all over the coun-
of intimidation and violence, with try, not only to Kohler, but to its
little opposition from union-backed entirely innocent distributors and
local government officials. First other neutral third parties.”
there was mass picketing, which Despite all these patently ille-
made it impossible for the con- gal activities on the part of the:
siderable number of employees trade union, the National Labor
who wished to get into the plant Relations Board in 1960, after the
to do so. When “mass picketing” strike had been effectively ended
was stopped by legal injunction, for years, ordered the Kohler
there was a campaign of individ- Company to rehire the strikers
ual intimidation, with such fea- on the ground that the company
tures as continuous ringing of had allegedly engaged in “unfair
nonstrikers’ phones to shout ob- labor practices.” Professor Petro
scenities, throwing “paint bombs” attributes this decision to a belief
into the houses of nonstrikers, that a union must never lose a
and sabotaging their cars. strike.

When this sort of thing also Should this philosophy prevail,
failed to stop production at the should all risk be taken out of
Kohler plant, the union put on an striking, there is no limit to the
intensive secondary boycott and inflationary pressures that would


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

8 THE FREEMAN July

be set loose by wage demands that current laws regulating labor-
would bear no relation to market management relations and in the
conditions. Professor Edward H. administration of these laws. It
Chamberlin, in his thoughtful has already been shown that the
booklet, The Economic Analysis NLRB showed less than impartial
of Labor Union Power, notes that wisdom in reinstating the Kohler
trade-union members today fall strikers. More recently, the Su-
within the middle income rather preme Court threw out a number
than the low income sector of our of rulings of the NLRB which
society and goes on to make this were designed to give some pro-
point: tection to nonunion workers and
“One effect of trade-union to implement the provision of the
policy, with respect both to wages Taft-Hartley Law which forbids
and to nonwage fringe benefits, the closed shop.
working rules, etc. which raise The NLRB had ruled that it
costs and thus prices, is to dimin- was unfair to nonunion workers
ish still further the real income to provide in a contract that the
of the really low-income groups, foreman of the composing room
including not only low-income and the mail room must be a
wage receivers, but also such member of the International Ty-
other elements of society as ‘self- pographers Union. For the same
employed’ and small businessmen, reason it forbade the hiring of
students, old people and other un- casual workers through a union-
employables, insurance benefici- operated hiring hall, reasoning
aries, pensioners, etc., etc. Those quite plausibly that a nonunion
who are really concerned with the member would have slight chance
lot of the underprivileged in our of employment through such a
economy will hardly be impressed hall. It also found that labor and
by the claims of the trade-union management must refund to em-
sector. Today’s underprivileged ployees all union dues collected

are to be found elsewhere.” under an agreement which had
been ruled to constitute an illegal

Biased Laws closed shop.
One big factor which makes it The Supreme Court in several

possible for union bosses to levy decisions has been very sensitive
tribute on industry, and indirectly to the rights of accused Commu-
on those who buy industry’s prod- nists and subversives and to the
ucts — which means most of the claims of certain minority groups.
population — is distinct bias in But its consideration, in these


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

1961 MODERN ROBBER BARONS 9

cases, did not extend to workers Rhine. When a few hundred tug-
who might prefer not to be union boat workers were able to stop all
members. By knocking the NLRB railway transportation in the New
decisions on the head, it made York area, throwing thousands
very difficult the implementation out of work and creating the
of the law of the land against the gravest inconvenience for tens of

closed shop. thousands more, it would have
LL been interesting to see what would
The Contributing Factors have happened if a few thousand

What has made it possible for frustrated embattled commuters
leaders of organized labor — even had banded together and engaged
small minority segments of or- in a little spirited “mass picket-
ganized labor — with increasing ing” themselves around the union
boldness and effrontery to inflict headquarters and around Grand
serious loss to the economy and Central Station. But the “innocent
inconvenience to the community bystander” victims of interrup-
in order to enforce their exac- tions of transportation and ship-
tions, in the true style of the rob- ping and other essential services
ber barons of the Middle Ages? usually display a patient submis-
Several factors enter into the siveness that is only calculated to
situation. More and more workers encourage further exactions.
have been induced or intimidated
into joining trade unions. Our The heart of the matter is to
whole industrial setup has become bring the vastly larger and more
more interdependent, so that com- powerful trade unions of the pre-
paratively small groups can para- sent time under the same rule of
lyze essential functions of pro- law that applies to other citizens.
duction and transportation. Dur- Nine-tenths of the robber baron
ing the last thirty years trade- activities would cease if the sim-
unionism has been getting a fla- ple rule were thoroughly enforced
grantly favorable bias in the en- that members of a union as in-
actment, still more, perhaps, in dividuals or a trade union as an
the enforcement or nonenforce- organization may not do things
ment, of the laws. (from throwing rocks at non-

And the victims of the new rob- strikers’ cars to organizing sec-
ber barons show little spirit, like ondary boycotts) that would land
the peaceful merchants who regu- anyone else in jail. New legisla-
larly paid tribute to the masters tion is less needed than is enforce-
of the frowning castles on the ment of present laws against


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

10 } THE FREEMAN July

violence, threats, assault and bat- when a company, confronted with
tery, and the like. Consideration big new wage demands unwar-
also should be given to repeal of ranted by conditions of the mar-
all measures the effect of which ket, will stand up and fight not
gives special advantage to trade only for its own but also for
unions. In that event, it might consumer interests, as the Kohler
not be such a rare news item Company did under challenge. a»

PARKED with your reporter re- “You will get the best room and
cently in an air-conditioned saloon bed in the house. You will be given
in Manila, Philippine Republic, a first crack at whatever food the
prominent Filipino newspaperman family has to eat, and not until
discoursed approximately as fol- you have taken all you want will
lows, concerning certain folkways the others help themselves.
and conditions in the 7,000 far- “If you have a little money to
Pacific islands (4,000 of them in- help contribute to your support,
habited) currently presided over that is so much the better; but
by the Hon. Carlos P. Garcia: whether you have anything saved
“There’s a saying in our country up or are an absolute pauper, they
that all you have to do here to don’t care, and they will take care
make your dreams of ease and of you.
happiness come true is to grow “We do this thing in our coun-
old. try because, when we are young
“By that is meant that when and making any kind of a living,
you get along in years, your we share what we have with our
younger relatives — children, if you older relatives, as a matter of
have them, or nephews, nieces, or course, of duty, of privilege, and
whatnot — will take more and of charity.
more care of you. “I, for example, and if you'll
—_— forgive a personal reference, am
The above editorial is from the New York taking care of a cousin and his

Daily News, May 1, 1961, by vacationing .
chief editorial writer Rube Maury. family who at the present are


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

1961 UNSOCIAL INSECURITY 11

unfortunately not in the money. big part of the job of providing
I take no credit for this, and am for people after they get too old
glad to do it, because — well, there to work.
will come a time when I am too “It sounds fine in principle, yes.
old to work, unless I die before “But you bring in this system,
then, and it seems reasonable to and what happens? The State sim-
expect that this bread I am now ply takes away from us much of
casting on the waters will then the priceless privilege of looking
return to me in some way or other. after our own — and it makes us
“This has always been the way pay for this deprivation by pinch-
things go in these islands —at ing little pieces off the pay check
least ever since the Spaniards of everybody who has a pay check
colonized them. They have been coming in regularly.
rather maligned by some his- “You can bet these pieces will
torians — the Spaniards. Actually, grow slowly bigger as time goes
they brought missionaries with on and people demand more and
them, who taught faith, hope, and more benefits from the Social Se-
charity; and the Spanish rulers curity which they have paid for,
never made any social distinctions and as their younger relatives feel
based on the color of people’s less and less obligated to help
skins, them out because the State is sup-
“It was good when the Ameri- posedly doing such a good job of
cans came, good when they spread that.
democracy in the islands, and good “As more and more money goes
when they gave us our freedom as to people who don’t produce any-
they had long promised. But I re- thing for that money, what guar-
peat, the Spaniards weren't all antee is there that the Philippine
bad. peso, now worth about 35 of your
“Excuse me if I seem to wander American cents, won’t go down
all around what you call Robin and down in buying power until it
Hood’s barn; but what I am get- is worth nothing or next to noth-
ting around to saying is that there ing?
is one American device which has “As to what happens then, your
been adopted in the Philippines in * guess is as good as mine. But
recent years, that most Filipinos sometimes, in my more cynical
don’t like —that they regard, moments, I have a feeling that a
frankly, as an insult. better name for this so-called So-
“I am speaking of Social Se- cial Security would be Unsocial
curity — the State taking over a Insecurity...” pe


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

FOREIGN AID @FF TARGET

JOHN C. SPARKS

SHORTLY after World War II, the have not quarreled with our ob-
government of the United States jectives to ease their burdens.
imposed upon itself the task of Yet, despite good objectives,
saving the world from poverty plenty of time, and fabulous sums
and illiteracy — thus proposing to of dollars, we have completely
stop the progression of commu- missed the mark. Since there is no
nism over the globe. But sixteen end in sight to our foreign-aid
years, and expenditures of a hun- efforts — including the latest
dred billion dollars, have not ac- scheme, the Youth Peace Corps —
complished that goal. Indeed, it behooves us to re-examine our
critical appraisal reveals a de- policies.
teriorating .condition in many of In comparing our situation in
the countries most “aided,” not to the United States with that of
mention the weakening effect of other peoples, it is well to bear in
such foreign-aid efforts on our mind that the population of the
domestic economy. rest of the world outnumbers us
The general motives are not in by twenty to one. Therefore, we
question here; surely we desire can do comparatively little to as-
a world free of communism or any sist the world by simply sharing
other form of totalitarianism. our wealth. Who, among us, as the
Naturally, everyone but a scoun- head of a family, could take on the
drel opposes poverty, illiteracy, burden of raising the living stand-
and poor living conditions. The ard of a hundred additional per-
typical American, taking for sons and still support his own
granted a level of living higher wife and children? Yet, this seems
than the fondest dreams of per- to be the never-ending scheme of
sons in most other countries, bureaucrats and well-meaning
wants his happiness and good for- persons outside of government
tune to happen to others all over who urge the spending of other
the world. The countries assisted people’s money.
Mr, Sparks is a businessman in Canton, Ohio. What if the United States did

12


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

1961 FOREIGN AID OFF TARGET 13

not exist? What if there were develop what he thought was a
nothing but ocean from the west- sound idea. Each such advance, re-
ern shores of Europe to the east- peated untold thousands of times,
ern shores of China? Would In- has benefited not only the success-
dia, Pakistan, Ghana, Nigeria, ful entrepreneurs but, more im-
Laos, and the host of other na- portantly, all consumers who are
tions of the world then have no thus afforded better and more de-

hope? sirable products in exchange for

Nonsense! less and less of their own personal
~The United States has no cor- efforts.

* ner on natural resources, our geo- Here is the root of America’s

graphic area covers only a small success. This is the “magic”
part of the earth’s surface, our formula of individual liberty,
people are not endowed by the sprung from seeds of opportunity
Creator with any special allotment in a culture of severely limited
of brains or energy — frankly, a government. But this “magic”
number of other countries have formula of individual freedom is
generous amounts of these same not the restricted property of
assets. But it is not mere luck that Americans. The people of any
has brought us to our envied level country can use this same dynamic
of living. There is a definite rea- formula if they so desire.

son for our attainment. In Amer-

ica, for the first time in recorded Misunderstanding at the Top
history, government was estab- That our own political leaders
lished as an instrument of the peo- have veered sharply away from
ple to guarantee that each person individual freedom toward col-
would be protected in his God- lectivism in recent years may be a
given right to life, to be free to reason why, regardless of our aid,
make his own decisions, and to there is so much reluctance to
own property. In this great Amer- adopt or even consider the prin-
ican experiment, men who were ciples of individual freedom in the
free to try their ideas have underdeveloped foreign countries.
brought about the phenomenal If our governmental leaders do
gains of wealth and health for the not understand what made Amer-
whole of the American society. ica great, one can excuse the lack
One great enterprise after an- of understanding in the countries
other began in this manner, each we are trying to aid.

started by an individual willing Collectivist planners have propa-
to risk his property and effort to gandized the world with the won-


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

14 THE FREEMAN July

ders of compulsory Social Se- Worse than Wasted
curity, compulsory unemployment Our government leaders have
insurance, compulsory unionism, spent billions each year without
public housing, rent controls, coming close to the target — like
price supports, public power proj- an attempt to make a violinist out
ects, federal aid to education, sub- of a young man by buying him an
sidies to various groups in many expensive violin but neglecting to
forms — the list is endless. ‘It teach him how to play it. This has
would be easy for the people in been the nature of our foreign-aid
another country to conclude that policy. Now we will compound ig-
a high level of living comparable norance through the latest plan to
to that in the United States could send our youth abroad for heaven
be obtained in their country sim- knows what purpose. One example
ply. by adopting similar laws, not has been suggested: our youth
realizing that laws can create can lend their muscles to provide
nothing.! The nature of a collec- a road to get the products of the
tivist law is to ‘divide up” that backward people to market. But it
which has been produced by en- hasn’t been made clear what these
terprising citizens — like a para- inexperienced expensively-educa-
site living off the leaves of a ted young people will do to build
sturdy tree. In America we pro- roads that somehow were not pro-
duced the sturdy tree first; then vided in the past sixteen years
came the parasites. Wisdom should with the billions of foreign-aid
dictate to the discerning that dollars spent for just such proj-
parasitism taught to .our foreign ects. Furthermore, most underde-
friends will never produce a veloped countries have no shortage
sturdy tree for them. Further- of muscles; manual labor. is abun-
more, when the drain to support dant.
the parasites existing here and The advocates of the Youth
abroad becomes too demanding Peace Corps stress the teaching of
upon our economy, it will weaken English to the non-English speak-
and die. ing people — as though a second
language might help an African,
1 A: recent report from Africa indi- for example, to put a table in his
cates one country’s few college students hut with food on it or allow him
study to become politicians rather than .
engineers, doctors, and the like because tO purchase better medical care
the little wealth available in the country for his family. Assuming that he
is funneled into the hands of govern- does learn to read English, what

ment officials who live in great luxury : .
in contrast to the rest of the people. are the prospects of his reading


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

1961 FOREIGN AID OFF TARGET 15

anything to enlighten him about first place) —the one basic in-

the real way to achieve progress — gredient of self-responsibility.
namely, freedom for himself and Again the target will be missed.
his countrymen from coercive The role of government should

laws, taboos, or social caste so be to defend a nation from out-
that he can produce and own the side attack, as a soldier; and from
fruits of his production? Saving lawlessness within, as a police-
always occurs when private owner- man. The nature of government is
ship is protected from thievery, not creative. A research institu-
legal or illegal. Saving is the pre- tion would not consider for one
requisite of capital accumulation instant the placement of a project
necessary to acquire tools. The requiring creative ability and ex-
earth is stingy in its yield when perience into the hands of the
plied with manual labor only. The plant security police. Free men
earth is generous in its yield to working creatively — not the gov-
men who have saved to acquire ernment — brought about the -
tools that multiply their efforts. America of which we are so
Will the young representatives proud! The absence of govern-
in the Youth Peace Corps take mental interference in the lives of
with them the magic formula that its people was the key to success!
makes America “tick,” or will The peoples of the world we
they, too, have been fooled by the want to help will not respond to
false trappings of the Welfare any medicine except that which
State? Teach about freedom? Cer- goes to the sources of the diffi-
tainly not! The Youth Peace culty. Billions of dollars spent on
Corps, according to its sponsors, quackery will never cure the ill-
will not be permitted to attempt ness—not even when administered
to convert the people they work by nice, clean-cut, college-edu-
with to the “American way of cated American boys and girls.
life.” When the thought leaders of
This, then, is quite a dilemma! our nation come to understand our
Our educated young men and rich heritage of individual free-
women are being asked by our dom and the limited government
government leaders to sacrifice concept, and restore it at home,
their time and muscles to do we again might serve as the bea-
manual labor and teach English, con light of freedom and progress,
but to refrain from spreading attracting the oppressed and
the philosophy of freedom (if downtrodden people all over the
they understand its value in the world to follow in our footsteps. »


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

GEORGE W. NILSSON

NOT in the Constitution

Examining the history of the Constitution and the debates that sur-
rounded its adoption by the original thirteen states, Mr. Nilsson con-
cludes that there is no “general welfare power” in the Constitution. He
warns that widespread acceptance of the ‘general welfare” doctrine
threatens our liberties.

THE CONSTITUTION of Vermont the Korean War, but more espe-
reminds us: cially by twisting out of shape the

‘ interstate commerce clause of the
. . . that frequent recurrence to Constitution, (Article I, Section
fundamental principles and a firm 8 Clause 3), using taxing power
adherence to justice, moderation, for punitive purposes instead of
temperance, industry, and frugality ¢,). raising revenue as authorized,
are absolutely necessary to preserve 4 by misusing the general wel-
the blessings of liberty and keep gov- £

are clause.

ernment free. . ;
More and more power is being
In addition to the threats of seized by, or surrendered to, the
federal government under the
guise of the alleged general wel-
fare clause of Article I, Section
8, Clause 1 of the Constitution,

danger from outside of the United
States, and subversion within, the
constitutional republic of the
on. States 1s being ee which contains the following lan-
the federal government in spite guage:
of, and contrary to, the “checks The Congress shall have power to
and balances” of the Constitution. lay and collect taxes, duties, imposts
Much of such concentration has and excises, to pay the debts and

been due to two World Wars and provide for the common defense and
general welfare of the United

Mr. Nilsson, who has practiced law in Los States . . .

Angeles since 1924, is a member of the Ameri- . . .
can Bar Association’s Committee on American This clause is followed by six-
Citizenship. This article first appeared in the sp 2

ABA Journal, January, 1961. teen other clauses specifying the

16


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

1961 NOT IN THE CONSTITUTION 17

various powers of Congress — groups calls to mind an item in
Clause 2, to borrow money; Clause the joke column of Pay Dirt, a
3, to regulate foreign and inter- mining magazine published in
state commerce, etc; then Clause Phoenix, Arizona (unfortunately,
18 gives the Congress power “to it is more tragic than humorous) :
make laws necessary to carry into

execution the foregoing powers.” If a politician tries to buy votes

A with private money, he is a dirty
This last clause would have been crook; but if he tries to buy them

unnecessary if Clause 1 gave “gen- ith the people’s own money, he’s a
eral welfare power.” great liberal.

For 140 years it was generally
recognized that the quotation
from Clause 1 was not a grant of
“general welfare power.” Many
Presidents vetoed acts passed by
Congress for that reason.

For instance, President Andrew
Jackson, when he vetoed a bill for
public improvements, stated:

As an illustration of how this
alleged “welfare” clause is being
misused, here is a quotation from
a resolution passed June 15, 1959,
at the conference of mayors held
in Los Angeles, requesting addi-
tional federal funds for urban re-
newal. It begins as follows:

WHEREAS, The redevelopment of the
blighted and deteriorating sections of
American cities is vital to the welfare
and prosperity of the entire na-
tion...

We are in no danger from viola-
tions of the Constitution from which
encroachments are made upon the
personal rights of the citizen... But
against the dangers of unconstitu-
tional acts which, instead of menac- This, of course, is not a state-
ing the vengeance of offended au- ment of fact but is a self-serving
thority, proffer local advantages and declaration, because the deteriora-
bring in their train the patronage of jo, of cities is due to the failure
the hs vernment, we are, 1 fear, not of the cities to enforce their build-

) ing and health regulations, and its

Early in the 1930’s some individ- correction is purely a local matter.
ual “discovered” that the clause That statement is just as illogical
granted “general welfare power,” as to say that this article is printed
and more and more this has been with white ink on black paper.
used to pass legislation based On July 8, 1960, during the
solely on this alleged grant of Democratic Convention at Los An-
general welfare power. geles, the newspapers reported that

The rush to pass “welfare” the mayors of five substantial cities
legislation for various pressure had appeared before the Demo-


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

18 THE FREEMAN July

cratic Platform Committee and re- Rules for Interpretation
quested a statement in the plat- There is a general rule of law
form recommending the establish- that where the statement of a gen-
ment in the federal government of eral proposition is followed by spe-
a “Department of Urban Affairs” cific provisions, the latter prevail.
which would have jurisdiction over This rule is stated by James Madi-
“such problems as inadequate son in Federalist Paper No. 41
housing, residential and indus- and by Alexander Hamilton in
trial slums, double shift schools, Federalist Paper No. 83. It is ap-
inefficient mass transit systems, plied by Mr. Justice Story to
congested streets, water short- Article I, Section 8 of the Consti-
ages, and sewage disposal.” tution, enumerating the powers of
Every one of these problems is Congress, in his book on the Con-
..purely local. If the local communi- stitution in Sections 909, 910, and
~ ties are unable to take care of them, 911. He shows that by Clauses 2 to
that tragic conclusion is an ac- 17, inclusive, specific powers limit
knowledgment that the people are Clause 1, referring to general wel-
unable to govern themselves, and fare. Section 910 reads in part:
that the principles stated in the
Declaration of Independence, the
Constitution, and the Bill of J}... 4 then to qualify it by a re-
Rights are incorrect, With such a i401 of particulars. But the idea of
hypothesis no American lawyer apn enumeration of particulars,
will agree. which neither explain, nor qualify
When the Constitution was com- the general meaning, and can have
pleted and ready to be signed, no other effect than to confound and
Benjamin Franklin made a speech mislead, is an absurdity which no one
in the course of which he said: ought to charge on the enlightened
authors of the Constitution. It would
be to charge them either with pre-
mediated folly or premeditated fraud.

910... Nothing is more natural or
common than first to use a general

I think a General Government nec-
essary for us, and there is no form of
government, but what may be a bless-
ing to the people if well adminis- Another yardstick to be used in
tered; and believe further, that this determining the meaning of the
is likely oi be well administe red Jor general welfare clause is discussed
oomation years, anc can ony end in below; i.e., that the powers dele-

espotism, as other forms have done .
before it, when the people shall be- gated to the United States by the
come so corrupted as to need despotic Constitution are few, defined, and

government, being incapable of any limited.
other. . Here let us read a relatively


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

1961 NOT IN THE CONSTITUTION 19

modern statement of that rule: in Volume I, Chapter 10, where
Justice Frankfurter, in the he writes about the convention
opinion in Polish Alliance v. Na- called in the State of Virginia for
tional Labor Relations Board, 322 the purpose of discussing the rati-
U.S. 643, 650 (1943), said: fication of the proposed United
The interpenetrations of modern States Constitution. At page 371
society have not wiped out state lines. ne describes the general feeling of
It is not for us to make inroads upon the people about a strong central
our federal system either by indiffer- government in these words:
ence to its maintenance or excessive
regard for the unifying forces of
modern technology. Scholastic rea-
soning may prove that no activity is
isolated within the boundaries of a
single state, but that cannot justify
absorption of legislative power by the
United States over every activity.

They [who resisted the Constitu-
tion] had on their side the fears of
the people who, as has appeared,
looked on all government with hostil-
ity, and on a great central Govern-
ment as some distant and monstrous
thing, too far away to be within their
reach, too powerful to be resisted,
too high and exalted for the good of

. . the common man, too dangerous to
In 1787, when the Constitution be tried. It was, to the masses, some-

was adopted, the colonists had thing new, vague and awful; some-
been through eight years of War thing to oppress the poor, the weak,
and four years of “a critical the debtor, the settler; something to
period.” Knowing what led up to strengthen and enrich the already
the war, and reading the charges strong and opulent, the merchant, the
in the Declaration of Independ- creditor, the financial interests.
ence, can anyone for a minute True, the people had suffered by
think that the colonists generally, the loose arrangement under which
and the members of the convention they now lived; but, after all, had not

. they and their “liberties” survived?
specifically, would have adopted a

es us . And surely they would suffer even
constitution which granted gen-

more, they felt, under this stronger
eral welfare powers to the federal power; but would they and their

government? “liberties” survive its “oppression”?
The resistance to the adoption They thought not.

of the Constitution, which will be

discussed hereafter, shows what Thomas Jefferson made the same

the people generally felt. point in a letter in 1823:

This is summarized by Albert I have been blamed for saying that
J. Beveridge in his great biog- a prevalence of the doctrine of con-
raphy, The Life of John Marshall, solidation would one day call for ref-

Climate of Opinion in 1787


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

20 THE FREEMAN July

ormation or revolution. I answer by only those high authorities and
asking if a single State of the Union powers by them delegated to Con-
would have agreed to the Constitu- gress for the purposes of the general
tion had it given all powers to the union. [Italics added.]
General Government? If the whole
opposition to it did not proceed from Articles of Confederation
the jealousy and fear of every State Article VIII of the Articles of
being subjected to the other States (gnfederation begins with the fol-
in matters merely its own? And also lowing language: “All charges of
is there any reason to believe the

war and of expences that shall be

States more disposed now than then P
to acquiesce to this general surrender incurred for the common defence
and general welfare . . .”

of all their rights and powers to a
consolidated government, one and un- James Madison pointed out in a
divided? [Italics added.] letter to Edmund Pendleton, dated
January 21, 1792, that the *“gen-
On February 16, 1783, four eral welfare clause” had been
years before the Constitutional copied from the Articles of Con-
Convention, Pelatiah Webster pub- federation, and then said:
lished a pamphlet containing his
idea of a proposed constitution for
the United States. The whole draft

. . . Where it was always under-
stood as nothing more than a general

. . . caption to specific powers, and it is
can be found in The Origin and a fact that it was preferred in the

Growth of the American Consti- new instrument for that very reason
tution, by Hannis Taylor, in an 45 less than any other to misconstruc-
appendix beginning at page 529. tion. [See Jefferson and Madison, by
In paragraph 7 of his proposed Adrienne Koch, pages 128 and 129,
Constitution, Pelatiah Webster and Irving Brant’s Madison, Volume
says: 3, Father of the Constitution, page
138.]
I propose further that the powers

of Congress, and all other depart- Constitutional Convention Debates

restricted to such matters only of p oceedings of the Constitutional
general necessity and utility to all the Convention of 1787 is found in

rir of “ny wenioular Stats, Charles Warren's book, The Mak-
J y P "ing of the Constitution.

or to which the authority of any par-
ticular State is not competent, so that From a study of the records of

each particular State shall enjoy all the Convention, it will appear that
sovereignty and supreme authority to from time to time efforts were
all intents and purposes, excepting made by some delegates to have


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

1961 NOT IN THE CONSTITUTION 21

the Constitution grant broad gen- which was to be accomplished by
eral powers to the federal govern- carrying out those enumerated and

ment. Each time such proposal was limited powers vested in Congress—
advanced, it was rejected. and mo others. [Italics added.] [See

Beginning on page 464 is a dis- also James Madison by Irving Brant,
cussion of “The Taxing Power and Volume 3, Father of the Constitution,
the General Welfare Clause.” At Chapter 10, beginning at page 132,

: which is entitled “General Power or
page 474 occurs this statement: Enumeration.”]

In Governor Livingston’s Commit-
tee Report of August 21, these words
had been used with reference to prior History tells us that in 1787
debts, and merely described them as there was great opposition to the
having been incurred during the late adoption of the proposed new Con-
war “for the common defense and stitution. As a matter of fact, it
general welfare...” squeaked through by a very few
votes in a number of states. For
instance, Massachusetts 187 to

Some words evidently had to be 168, Virginia 89 to 79, and New
added that would make clear the York 30 to 27, and then only on
power of Congress to levy taxes for condition that a Bill of Rights be
all the National purposes set forth in added.
the grants of power subsequently The Federalist Papers were
specified in this section. Evidently the written by Alexander Hamilton,
Committee selected these words, “to . .

James Madison, and John Jay in

provide for the common defence and N
general welfare,” as comprising all support of the adoption of the

the other purposes for which Con- Constitution, principally in con-
gress was to be empowered to levy nection with the debates in New
and collect taxes. They selected these York, where there was strong op-
words as embracing all the subse- position to the adoption of the
quent limited grants of power which (Constitution.
the Committee of Detail, in its Re- In Federalist Paper No. 41,
port of August 6, had specified as james Madison said (after point-
constituting that amount of common 5. ot the objections to the clause
defence and general welfare which |, .

. ... to raise money for the general
the National Government ought to ”
control and as to which ought to have welfare. .."”):
power of legislation. In other words, But what color can the objection
the phrase “to provide for the gen- have, when a specification of the ob-
eral welfare” is merely a general jects alluded to by these general
description of the amount of welfare terms immediately follows, and is not

Debates in the Various States

On page 475 Mr. Warren says:


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

22 THE FREEMAN July

even separated by a longer pause than the power of taxation will, for the
a semicolon? If the different parts of most part, be connected. The powers
the same instrument ought to be so reserved to the several States will
expounded, as to give meaning to extend to all the objects which, in
every part which will bear it, shall the ordinary course of affairs, con-
one part of the same sentence be ex- cern the lives, liberties and proper-
cluded altogether from a share in the ties of the people, and the internal
meaning; and shall the more doubtful order, improvement and prosperity
and indefinite terms be retained in of the State. [Italics added.]

their full extent, and the clear and

precise expressions be denied any sig- Alexander Hamilton, himself,
nification whatsoever? For what pur- Who argued in the Constitutional
pose could the enumeration of partic- Convention for general instead of
ular powers be inserted, if these and particular enumeration of powers,
all others were meant to be included nevertheless said in Federalist

in the preceding general power? Paper No. 83:
Nothing is more natural or common

than first to use a general phrase, The plan of the Convention de-
and then to explain and qualify it by clares that the power of Congress or,
a recital of particulars. [Italics in other words, of the “national

added.] legislature,” shall extend to certain
: enumerated cases. This -specification
Only Limited Powers of particulars evidently excluded all

In considering the question of pretension to a general legislative
whether this “general welfare” authority, because an affirmative
clause of Article I, Section 8, 97ant of special powers would be

Clause 1 is a grant of power, we absurd, as well Ggwuseless, if a gen-
t al ber that the 7 euthority was intended. [Italics
must also remember tha © added]

powers granted to the federal

government were few and defined. Since the people were persuaded
James Madison, in Federalist to adopt the Constitution on the
Paper No. 45, said: : basis that the federal government

: was being given only limited and

The powers delegated by the pro- gnecified powers, how dare anyone,
posed Constitution to the Federal in good conscience, now take the
are few a efined. position that the words “general

Those which are to remain to the Ifare” give the federal
State governments are numerous and wellare give € lederal govern-
ment unlimited power?

indefinite. The former will be ex- .
ercised principally on external ob- This principle was restated by
jects, as war, peace, negotiations and Franklin D. Roosevelt on March 2,
foreign commerce; with which last 1930, while he was Governor of


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

1961 NOT IN THE CONSTITUTION 23

New York, in a speech which was no state would have adopted the
entitled “An Address on State Constitution if the Congress had
Rights” (Collected Papers, Volume been given carte blanche to pass
I, page 569). He said in part: any law or do anything which it
The preservation of this home rule desired or which it felt was for
by the states is a fundamental neces- the “general welfare.”
sity if we are to remain a truly This demand for a Bill of
united country . . . to bring about Rights, therefore, should be suffi-
government by oligarchy masquerad- cient to prove that the Constitu-
ing as democracy it is fundamentally tion, and particularly Article I,
essential that practically all au- Qaction 8, Clause I, did not grant

thority and control be centralized general welfare power to the fed-
in our national government, the in-
eral government.

dividual sovereignty of our states . }
snty True to his promise, James

must first be destroyed . . . . g )

We are safe from the danger of Madison, in the First Congress,
any such departure from the prin- Which met in 1789, caused to be
ciples upon which this country was passed a Bill of Rights containing
founded just so long as the individ- twelve sections, ten of which were
ual home rule of the states is scrup- adopted and went into effect De-
ulously preserved and fought for cember 15, 1791.

whenever they seem in danger. Thus This Bill of Rights, and par-
it will be seen that this home rule ticularly the Ninth and Tenth
is a most important thing—a most Amendments, are further and con-
vital thing if we are to continue clusive proof that the clause that

along the course on which we have . . .
so far progressed with such un. We are discussing did not grant

precedented success. any authority to the federal gov-
ernment to pass any laws based
Bill of Rights on “general welfare powers.”

In many of the states, the Con-
stitution was adopted only when
it was accompanied by a resolution On December 5, 1791, Secretary
demanding that a Bill of Rights be of the Treasury Alexander Hamil-
added to the Constitution. If the ton presented to the Congress his
people of the various states were “Report on Manufactures.”
satisfied with the Constitution as Madison delivered an address in
written, they certainly would not Congress against the Report, in
have demanded the added protec- Which he said in part:
tion of the Bill of Rights. If Congress can apply money in-

As pointed out above, certainly definitely to the general welfare,

Statements by Contemporaries


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

24 THE FREEMAN July

and are the sole and supreme judges And in a letter to Edmund Ran-
of the general welfare, they may dolph (January 21, 1792), said:

take the care of religion into their
own hands; they may establish
teachers in every State, county and
parish, and pay them out of the pub-
lic Treasury; they may take into
their own hands the education of
children, establishing in like man-
ner schools throughout the Union; icuiar exceptions. [Italics added.]

they may undertake the regulation [Joferson and Madison, by Adrienne
of all roads, other than post roads. g,cp page 128.]

In short, everything, from the
highest object of State legislation,

d to th t minute object of . .
Folicy ° ould be — - Fe the views, He wrote to Albert Gallatin

power of Congress; for every object in 1817, about the General Welfare

I have mentioned would admit the Clause, of which he said:
application of money, and might be
called, if Congress pleased, provi- You will have to learn that an act
sions for the general welfare. for internal improvement, after pass-
ing both houses, was negatived by
The report was pigeonholed, the the President. The act was founded,
first major defeat for one of avowedly, on the principle that the
Hamilton’s most cherished poli- phrase in the Constitution which
. . authorizes the Congress “to lay
cies. (Jefferson and Madison, by .
Adrienne Koch, page 129.) taxes, to pay the debts and provide

. for the general welfare,” was an
Further on the same question, extension of the powers specifically

James Madison, on January 1, enumerated to whatever would pro-
1792, in a letter to Henry Lee, mote the general welfare; and this,
Governor of Virginia, said in part: you know, was the Federal doctrine.
Whereas our tenet ever was, and,

What think you of the commen- indeed, it is almost the only land-
tary . . . on the term “general wel- mark which now divides the Fed-
fare”? . . . The federal government eralists and the Republicans, that
has been hitherto limited to the Congress had not unlimited powers
specified powers, by the Greatest to provide for the general welfare,
Champions for Latitude in expound- but was restrained to those specif-
ing those powers . .. If not only the ically enumerated; and that, as it
means, but the objects are unlimited, was never meant that they should
the parchment had better be thrown provide for that welfare but the ex-
into the fire at once. [Italics added.] ercise of the enumerated powers, so

If Congress can do whatever in
their discretion can be done by
money, and will promote the general
welfare, the government is no longer
one possessing enumerated powers,
but an indefinite one subject to par-

Thomas Jefferson had the same


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

1961 NOT IN THE CONSTITUTION 25

it could not have meant that they after the Constitution was
should raise money for purposes adopted, he faithfully and enthusi-
which the enumeration did not place g4gtically supported it. For in-

under their action; consequently, stance, he wrote most of the Fed-
that the specification of powers is 8 ,.ulist Papers.
limitation on the purposes for which Even though Alexander Hamil-

they may raise money. [Italics .
added.] [See Undermining the Con- ton had espoused such ideas as are
now ascribed to him, such ideas

stitution, by Thomas James Norton,
page 191.] were not accepted as part of the

Constitution as finally adopted
Abraham Baldwin, a member of and, therefore, must not be used
the Constitutional Convention, to interpret the Constitution.

while a member of Congress, on Since Alexander Hamilton's
June 17, 1798, said in the Con- views were rejected by the Con-
gress: stitutional Convention of 1787

(not even being referred to a com-
fence and general welfare had never ¢j..e Alexander Hamilton was ab-
been considered as a source of legis- cot from the Convention about
lative power, as it is only a member .
introduced to limit the other parts one-half of the time, once from

June 29 to the middle of August,

of the sentence. [Undermining the h A A
Constitution, by Thomas James 1787, and since his views against

Norton, page 189.] the inclusion of a Bill of Rights
were rejected, the foregoing state-
Conclusion ment that his views are now being

(a) In a book recently pub- accepted is a clear acknowledge-
lished, analyzing some of the deci- ment that the spirit and letter of
sions of the modern Supreme the Constitution as written are
Court, the writer says: ‘“En- now being perverted.

throned at last, were Hamilton's Against this view attention is
bold nationalistic views ...” called to the Federalist Papers

To say these modern ideas of which are referred to and quoted
“general welfare power” are those herein.
of Alexander Hamilton is to It is therefore clear from his-
malign him. Alexander Hamilton tory, common sense, the records
was a great patriot and statesman. of the Constitutional Convention,
His ideas of a new government the Federalist Papers, the debates
were far different from those em- in the state ratification conven-
bodied in the Constitution, but tions, and precedents followed for


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

26 THE FREEMAN July

more than 140 years, that THERE eulogy of George Washington in
IS NO GRANT OF GENERAL WELFARE 1832, where he said in part:
POWER IN THE CONSTITUTION OF
THE UNITED STATES.

(b) While it would seem that
such general welfare power is not But who shall reconstruct the
needed, if it should be determined fabric of demolished government?
that it is necessary, then the Who shall rear again the well-pro-

; .. portioned columns of constitutional
amending clause (of the Gonstitu liberty? Who shall frame together

. : the skillful architecture which unites
pointed out by George Washington national sovereignty with State

in his Farewell Address: rights, individual security and Public
prosperity?

Other misfortunes may be borne,
or their effects overcome .. .

If, in the opinion of the people,
the distribution or modification of (c) Every lawyer when he is
the Sonstitutional ott be in i! admitted to the Bar takes an oath
particufar wrong, ‘et IL be corrected 4, ,ho)4, defend, and protect the

by an amendment in the way which ef ae . ’
the Constitution designates. But let Constitution of the United States.
Since the Constitution is being

there be no change by usurpation;
for though this in one instance may ignored, misconstrued, or by-
be the instrument for good, it is the passed by legislation, by court de-
customary weapon by which free cisions, and by executive action, it
governments are destroyed. The pre- is time that fundamental princi-
cedent must always greatly over- ples of the Constitution be re-ex-
balance, in permanent evil, any par- ymijned, and that every citizen, as
tial or transient benefit which the well as every lawyer, take his place
added] 2t any time yield. [Italics on the battle line in a new crusade
’ to re-establish the principles and

The dire results of undermin- the spirit of the Declaration of In-
ing the Constitution were pointed dependence, the Constitution, and
out by Daniel Webster in his the Bill of Rights. ->

LIBERTY LIES in the hearts of men and women; when it dies there,
no constitution, no law, no court can save it; no constitution, no

law, no court can even do much to help it.


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

So

“than chain letters]

E. W. DYKES

REMEMBER the “chain letter” volved) or even your own reward,
idea? You send a dollar to the would be a figure well in excess of
first of 12 names on a list, add the number of men, women, and
your name at the end of the list children in the United States —
of eleven remaining, mail copies and that only 13 of them would
to five other persons, and sit back have received anything in return
to await your reward! for their dollars and trouble. At
While waiting, you might check this point, it is easy to see why
the arithmetic: $5 to the first the Post Office Department has
name on your five lists, $25 to the prohibited the use of -the mails
second, $125 to the third, $625 to for this ridiculous and fraudulent
the fourth . . . $390,625 to the chain letter scheme.
eighth . . . and $244,140,625 to Now, change the picture a bit.
you, assuming an unbroken chain. Suppose you really need the
The twelve persons ahead of you, money. Perhaps your house needs
including the one to whom you extensive repairs at a staggering
sent a dollar, would have received cost. Or, you've built on land sub-
a total of $61,035,156. And you ject to occasional flooding and
would be only the thirteenth per- you’d like a protective levee. Or,
son to have received any money at you've built in a desert and now
all out of that $305,175,781 chain. want to irrigate the lawn and
It might then occur to you that garden areas. Or, you lack an off-
the cumulative amount (which is street parking area for your car.
also the number of people in- Or, you need an expensive surgi-
Mr. Dykes is an architect in Canton, Ohio. cal operation. Or, you have two

27


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

28 THE FREEMAN July

children in college at the same the means of these respective
time — or is it just one? Whatever cities. By their specious reason-
the nature of your financial diffi- ing, these writers show why the
culty, its solution probably ap- downtown problems of Philadel-
pears to be well beyond your phia, for example, constitute a
means. Surely the Post Office De- “national problem” and are thus
partment would permit a chain deserving of federal support. Such
letter for any such worthy pur- reasoning will be strained to the
pose! (Attempt it at your own utmost to justify the request of
risk.) Jonesville, Ohio, Not to be out-
The federal government is not done, these smaller cities are now
always so uncompromising, how- eyeing the grants — and why not?
ever. Under slightly different cir- When someone says, ‘“Let’s get
cumstances, not only will you be our share,” the rush begins and
able to avail yourself of the meth- the line forms to the left.
ods of the chain letter but you “Urban rot” is only one of the
will be encouraged to find projects problems that cities are reputed
to be so financed. Go to your-fel= to be unable to solve within their
low citizens in your city, county, own means. If city officials go to
or state, find an immense project the right agencies, they can get
which it would be nice to have — help for airports, expressways,
or several of them — and apply for hospitals, flood control, sanitary
federal “aid.” And justify the sewers, housing — or they can re-
whole procedure on grounds that quest money for planning in or-
you could not afford these ‘“nec- der to return later with more ef-

essary’ improvements. fective appeals for the big money.
Outside the cities there is aid
Urban Renewal for the farmer if he doesn’t plant.

One form of slopping at the Or, if he raises crops, he can bor-
public trough that is now coming row on them from the government
into vogue is urban renewal. which maintains unlimited and
Many of our larger cities have ap- indefinite storage. The govern-
plied, or are considering applying, ment offers flood control on the
for funds available from the fed- one hand, irrigation on the other.
eral government for this purpose. Minimum wage legislation and
Writers on the subject are nearly depressed area relief are other
all agreed that the magnitude of conflicting objects of government
the renewal necessary in most of intervention. And, there is gov-
our larger cities is well beyond ernment spending for highways,


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

1961 WORSE THAN CHAIN LETTERS 29

power projects, rural electrifica- unable to see through “federal
tion, aid to education, foreign aid, aid.” In my town, the people who

and so on. should have known better were
the ones who pushed through a
Everyone Pays new expressway costing over $20

Please note that the projects million, with only $1.7 million be-
listed, and others too numerous ing our “contribution” to the
to mention, in one way and an- chain! In my town, one of the
other embrace our entire popula- smartest and wealthiest men said
tion. The basis for any federal we had to have new hospitals —
“aid” has always included the rea- even if it took federal aid. The
son that the governmental unit president of a large eastern rail-
aided could not afford the particu- road wrote me that commuters
lar expenditure. The clear impli- must have help. Foremost educa-
cation is that the federal govern- tors are urging aid to education.
ment can. Were it not for the Editors of architectural maga-
overwhelming evidence to the con- zines, along with talented archi-
trary, we might let it go without tects and city planners, aided and
saying that virtually everyone abetted by prominent real estate
knows that the source of federal owners and businessmen, say “ur-
funds is from the same people ban rot” must be stopped with
who presumably are to be bene- federal dollars.

fited. Only an absolute illiterate Some of these same people talk
could be unaware of the large — about the “dollar rot” as though
and growing — federal debt. it were a scourge from outer

In the chain letter scheme, the space. When we urge federal
money flows from all the partici- money for local projects, we ap-
pants to a few who get in early. pear oblivious to the fact that we
In this giant federal “chain let- are being bribed with our own
ter” scheme the same thing is money.
true. The earliest on the various
lists will, of course, get theirs. The Web of Coercion
But if it is true that the projects The chain letter fraud, in con-
cannot be afforded locally, the trast with federal aid, has at least
money is bound to run out. The one thing to be said in its favor.
odds cannot be whipped. A person may participate or not,

Most people understand the as he chooses; not so with federal
chain letter for what it is. Yet, “aid.” The citizens of Seattle or
many of our leading citizens seem Tulsa, whether or not they can


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

30 THE FREEMAN July

afford their own urban renewal, erness of federal “aid” is dis-
must nevertheless support the closed when we face up to the
scheme in Cleveland or Boston or question, “Will some other area
wherever. use the money my neighbors and
The problems we try to solve I provided if we don’t get our
with federal ‘aid’ are nowhere share?’ The greater the tempta-
near as difficult and complex as tion, the more difficult it is to ap-
the problem we will face in trying ply one’s principles. But princi-
to untangle ourselves from the ples, you can be sure, are not
web of federal directives, red really your principles if dropped
tape, massive taxation, and de- at the point where application is
teriorating values — the ingredi- required.
ents of the strong, centralized There seems to be only one
government we worship in our thing that will stop this cruel de-
final dash away from the Ameri- ception short of its ultimate fail-
can revolutionary concept that ure. In view of the fact that “aid”
man derives his rights from his programs always require appli-
Creator. cants, the scheme will die only
when applicants fail to appear.
Where To Begin Though none of us has any con-
And how are we to change our trol over the next fellow, we do —
course? Perhaps this is the most or should — have control over our
difficult task of all, for it requires own actions. We cannot guarantee
great self-restraint on the part of that the “dollar rot” will end; we
individuals, with no assurance that can guarantee that we will not ag-
others will follow their lead. Ac- gravate that rot and that we will
tually, doing what is right should have no part in our country’s de-
never require company. The clev- mise. Pe

WE WEAKEN INDIVIDUALS by doing for them what they should do for
themselves, thus helping in their destruction. All human life has
some pleasantries and all life must suffer some disappointments
and trials. How else can one build character? The way we meet
these trials and tribulations demonstrates our character and serves
as an example and. guide to those around us as well as those who

must follow.
RALPH E. LYNE, Taylor, Michigan


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

MELVIN D. BARGER TWENTY-THREE YEARS is a long
. time to stick with certain eco-
persiste nt nomic and political convictions
— especially when the tide seems

: to be running strongly in the op-
voice posite direction. And it’s an even
f longer time to hold fast to a single
(0) basic theme for an advertising
campaign. But ever since 1938,
protest the Warner & Swasey Company
has been doing both with a

thoughtful series of advertise-
ments mainly devoted to the some-
Basic economic ideas are presented times thankless task of raising
with masterful simplicity im probing questions about the sound-
Warner & Swasey’s opinion-form- ness of our political economy and

ing campaign. our national character.
co TC : Warner & Swasey calls it an
The Warner & Swasey Com- ~~ ‘“‘opinion-forming” campaign. In
pany, Cleveland, Ohio, 18 a this day of sharp division between
leading producer of machine political factions labeled “liberal”
tools, textile machines, and and “conservative,” there is little
construction equipment. " doubt that Warner & Swasey’s

The company was founded
in 1880 by Worcester Warner
and Ambrose Swasey, a pair of
brilliant practical engineers

campaign has strong ‘conserva-
tive” overtones. But that isn’t the
end of the matter: the advertise-

who themselves fulfilled the . ments are masterpieces in sim-
classic American “success plicity; they sparkle with inge-
story” of individual enterprise, nuity in the art of stating vener-
self-reliance, and integrity. ~~ able ideas in fresh ways. They
Both Warner and Swasey had ~~ seem to protest persistently and
passed on by the time the com- vigorously against the sacrifice —

pany commenced its “opinion-
f ormuny’’ Campaign, but in American principles.
their own Uves they seem to .
have practiced the basic hard Most of the advertisements are
truths that have been so widely simple blocks of copy with single

publicized by the company they This article is reprinted by permission from
founded. the April 1961 issue of The Flying A, com-

pany magazine of the Aeroquip Corporation
at Jackson, Michigan, edited by Mr. Barger.

the draining away — of basic

31


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

32 THE FREEMAN July

ao ST Eo
Ve PE
PF pn e
Rr Gk Gran 2

vo 5%

a,

8 Deu ad, 25
en i FoF Sean ihey did 225 PP
Ns Py Ao i % ri
4 sf hhh a Tia,
oi Frcs > vo 2 i op “< oo ”, ZZ
ste wis Self Retpect/2 022 % 76577 7% ie
apa ri AA A WS Ls A ln,
2 2

Zn “55

es
rE
TF EA lu

-respect’
7 pipe]

7 3

of diem Sen chey/shol
LTH

7 7 oe Ez Zo
Z v0 S

=
7;

Zr

Clereband

hi Th PRECISION f
Z 27 Z MACHINERY S22 ?
pos “i 27% S £ 7 Sr 2
ZG 5) % ns 2 i

oe yl Ho

U.S. News & World Report 4/27/59
Newsweek 4/27/59

headlines. A small photograph at For example, the provocative
the bottom usually shows a Warner headline of one advertisement
& Swasey product in use, and went like this: “HOW MUCH
sometimes there is the added re FEDERAL AID DID THE PIL-
minder that “you can produce it GRIMS GET?”

better, faster, and for less with They were in a Depressed Area.
Warner. & Swasey equipment.” No one guaranteed them high
But the main content of the ad- prices for anything. Their only
vertisement has nothing to do with roads and schools were built by
thé commercial message. themselves. For Security, they


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

1961 LL PERSISTENT VOICE OF PROTEST 33

-

FE
pe -

SWASEY

Cletediond

PREC SION
MACHINERY

SINCE YBun

ed

‘Pages of “reports” you'll never resd. Just add © 5

oN What's anocher few billions for roads thar 4

URE, you can spend millins for » fancy ¢
ew Senate office building; s “railroxd”
;0"that Congress won't have to walk evea C-
’ across thi meee: to wrk; printieg millions of

that smaggering totat to the national debt.

S Aad of course you can pay for vexersas
more thao five bifion dofiars every “years ;
{much of it for non-service illnesses). Just CT “i
“charge it 10 che deficit, <0

those whe use them shoold buy, end for,
“ schools in commupities whee people could

5 porter thm aod “heoefan” $4 may Kinds to oY

“more and mare Arge-voter groups. . “
To, “Jes charge ir." =
Exceps that chat «dds to deb, which wakes oe
Your. savings and pension worth less. It ddds.- .
‘16° taxes, which makes your wages buy less. i ve
1t #dds to prices, which means jaflatioo at the ’
expense of American jobs.

And tbe first of the month when se bills come

i ria cy cos deed or is conn. . <

,

Pe

U.S. News & World Report 11/21/60

did their own saving, or starved.

All they had was Character. All
they did was Work. All they
wanted was Self-Respect.

The sum of those three traits,
the advertisement goes on to say,
became America. Next comes the
obvious question: What happens
to us when we've lost these?

Another sparkling example

takes a barbed thrust at our casual
attitude toward the National
Debt: “DON’T MISTAKE A
CHARGE ACCOUNT FOR PROS-
PERITY.”

Sure, you can spend millions for
a fancy new Senate office build-
ing; a “railroad” so that Congress
won't have to walk even across the
street to work; printing millions


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

34 THE FREEMAN July

of pages of “reports” you'll never —as long as Americans acted like
read. Just add that staggering Americans, there was mo worry
total to the national debt . . . about gold, or balance of pay-

... What's another few billions ‘ments, or value of the dollar. The
for roads that those who use them dollar was impregnable because
should buy, and for schools in com- American character was behind it.
munities where people could pay But when the greedy something-
for them, and “benefits” of many for-nothing, the whining some-
kinds to more and more large- body-else-not-me selfishness has

voter groups. sapped American character, Amer-
“Just charge it.” ican strength goes out with it, as
Except that that adds to debt, it always does.

which makes your savings and Like the cloud that was once

pension worth less. It adds to the size of a man’s hand, Warner
taxes, which makes your wages & Swasey’s campaign first took
buy less. It adds to prices, which shape in 1937 and 1938 when the
means inflation at the expense of company’s sales executives were
American jobs. experimenting with economic ideas

And the first of the month when to demonstrate how new machines
the bills come in, is getting very could help companies solve their
close indeed for this country. own business problems even in a

Perhaps one of the most timely depressed business climate. The
recent Warner & Swasey adver- machine tool industry was just re-
tisements was this one, which ap- covering from the worst depres-
peared in the January 16th issue sion it had ever gone through, and
of US. News & World Report: Warner & Swasey sales had fallen
“SOMETHING MORE PRE- to aslow as 4 per cent of capacity.
CIOUS THAN GOLD IS FLOW- Hence, the initial phases of the
ING OUT OF THIS COUNTRY.” “opinion-forming” campaign were

Character, integrity, self-re- launched to sell the economics of
liance — it ts the loss of these plant modernization.

American traits that is leaving us But then the American economy
more impoverished than the out- sustained another severe shock in
flow of gold. the depression of ’37-'38, so a new

As long as Americans earned advertisement was prepared with
what they were paid, produced the headline, “The Sun Always
more for more wages, saved for - Rises,” setting the theme that
their own security, paid their bills America is too great, too power-
and demanded others do the same ful, too dynamic to sell short; that


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

1961 PERSISTENT VOICE OF PROTEST 35

4 - ‘ -

<?

~ Something more precious than gold

. is flowing out of this country .

J SL i HARACTER, iotegrity, setf-relisnce—it is the loss of
a - these American traits that is leaving us more im-
Jo co : poverished than the out-flow of gold.
‘ © As long as Americans earmed what they were paid,
7 : EE prodoced more for more wages, saved for their own |
ra - ] . w- security, paid their bills and demanded others do the
i : . . Ed same—as long a5 Americans acted like Americans, there
k i a was no worry abom gold, or balance of payments, or
y _. . value of the dolar. The dollar was impregnable because
, ) : American character was bebind it.
3. CL . But when the greedy something-for-nothing, the”
f .. , Lo * whining body-els 1fshness bas sapped
j . . ‘ RL American’ character, American strength goes out with
,-i1, as it always does.

J - S

Pl

As these messages quoted in 1942, “It is later—~and

i worse—than you think.”

Dn -
Ne -
< 7

L-
y /
i
ed
PIP
“
ia 4
i Clevdamd
= The Warner & . prEcraton T
{ ° Hapto™ all-bydrostic - MACHINERY
7 backbos digging sua SINCE 1880 by
/ a Aik . ,
i “ a - -
ee - PU 7 - = 4

U.S. News & World Report 1/16/61

the wise businessman should not to scrutinize the whole political
throw in the sponge but should economy, rather than just the por-
have complete faith that business tion of it that applied directly to
would rise again, and that he the machine tool industry. A par-
should use the interim to modern- ticularly chilling note was set in
ize his equipment and so get him- an advertisement that appeared in
self in a stronger low-cost posi- September 1940, shortly after the
tion. fall of France: “50,000,000

That was in May 1938. From FRENCHMEN CAN BE WRONG
that point on, the campaign tended ... AND WERE!”


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

36 THE FREEMAN July

They thought they could eat paign is to encourage everybody
their cake and have it, too— to understand the economic facts
thought they could be safe from of life. “We know that if we do,
invasion; and yet take life easy. the soundness of keeping a plant
Workmen wanted short hours, modern, the vital necessity of
business wanted easy taxes, youth keeping costs low, will inevitably
wanted play. lead to the purchase of our prod-

Then the Germans came . . . uct..We also know that if we can

This one advertisement pro- get the workingman to understand
duced thousands of requests for the facts of economic life he will
reprints; in fact, it was reprinted make the most and best use of the
more than 4% million times! War- modern tools we make. He’ll come
ner & Swasey officials realized that to know that a modern machine
they had struck a popular chord. tool is vital to his economic wel-
Since then, they've covered scores fare.”
of topics, usually with the single Most of the comments on the
dramatic headline which always Warner & Swasey advertisements
tells more than half the story im- have been highly congratulatory,
mediately: “THERE WEREN'T accompanied by requests for re-
MANY FRINGE BENEFITS AT prints to be used in classroom
VALLEY FORGE”; “OVERPRO- work, editorials, and even ser-
DUCTION IS A MYTH”; “THE mons. But the company has also
TIME TO BE CAREFUL IS had its share of comments which
WHEN EVERYTHING IS WON- say, in effect, “Drop dead!” By
DERFUL.” - — - -- answering each letter of this type

According to Walter K. Bailey, individually, the company has oft-
president of the company, the en won new friends as well as
basic strategy behind the cam- helped change certain viewpoints.

IDEAS ON LIBERTY. Variation

THAT SOME will be stronger, wiser, richer, or more
learned, than others, results from the dispensations
of Providence, and the varieties of the human frame;
and no human power can prevent it.

Charge to the Grand Juries of the County

Courts of the Fifth Circuit, State of
Pennsylvania, at December Sessions, 1800.

By ALEXANDER ADDISON, President of those Courts.


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

EXPORTING
AFFLUENCE

or — THE THIRD CHILDREN’S CRUSADE

It was a humid summer day
At storytelling time.
Old Kaspar nursed his last cigar
And clutched a thinning dime,
While Peterkin and Wilhelmine
Looked at the panoramic screen.

They saw a great Atlantic port

Where rows of girls and boys
Were standing by the waiting ships

Among their books and toys; .
While older folks in smiles or tears Ne
Were being hustled off the piers.

“Just look at all those boys and girls!” .
The little children cried. :
“They're Young Crusaders,” Kaspar said

In tones of honest pride.
“They're off to push the New Frontier,
To lands in every hemisphere.”

“In every land,” said Kaspar then,
“Where Young Crusaders go \
A fearful monster prowls about
And spreads a pall of woe;
For when he comes by night or day,
He springs upon his hapless prey.”

“What is he called,” cried Wilhelmine,
“And what makes him so bad?”
“The natives call him Scarcity;
And when he’s really mad,
He'll drive the loafers off the street
And make them work for what they eat.”

“Will New Crusaders track him down
And take his claws and head?”
“When they arrive,” old Kaspar smiled,

“He’ll be as good as dead.
They'll teach the natives far and near
How Scarcity was vanquished here.”

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

37


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

Revolutions —

LIBERAL and CONSERVATIVE

THOMAS H. STEVENSON

THE PAST TWO centuries may well revolts of the 1400’s and 1500’s,
be termed the “era of political rev- the French Fronde of the 1600's,
olutions.” These years have wit- the English Glorious Revolution
nessed armed uprisings all over of 1688, and a multitude of others.
the globe —in North and South The facts are that people are more
America, in France, in the Ger- aware of revolutions today, and
manies, in Russia, in China, and that modern revolutions may in-
elsewhere. Also, the word “revolu- volve a greater number of partic-
tion” is often given to nonviolent ipants. Furthermore, the Ameri-
episodes: many historians apply can Declaration of Independence
the term to the elections of 1800 asserts that revolution is a moral
and of 1832 in the United States. right, and Marxist doctrine pro-
Actually, world history is punc- claims it an inevitability.
tuated by revolutionary occur- Revolution has gained wide ac-
rences. Just scanning the time ceptance as an appropriate means
since about the year 1000, the for eradicating defective or ob-
observer may note the imposition solete political, economic, and so-
of the Magna Carta on King John, cial institutions. Numerous mod-
the institution of the French Es- ern governments are based on re-
tates-General, the German peasant cent revolutions and have a “rev-
— olutionary tradition.” Hence, many
Mr. Stevenson has been a college teacher of people both in the United States

hist and litics and is now engaged in . .
writing, editing, translating, and research. and abroad view with favor the

38


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

1961 REVOLUTIONS, LIBERAL AND CONSERVATIVE 39

actuality or potentiality of a rev- and agencies of the government,
olution today. and between the government as a

However — and this point is es- whole and the nongovernmental
pecially significant for Americans world. But revolutions of this type
— there are various kinds of rev- differ from one another, in terms
olutions. Now, the essence of a of the objects or conditions their
revolution is domestic political leaders oppose, the goals their
change. Yet one of the types of leaders seek, the instruments the
occurrence often called a “revolu- leaders use to consolidate their
tion” actually constitutes, when power, the role the leaders assign
successful, international political the people, and the possibilities
change; this is a war for national these revolutions allow for future
self-determination. In a few cases, revolutions. They fall, in fact, in-
such as the American Revolution to two general subdivisions or
and the American War between classes that for the purposes of
the States, these wars were con- investigation in this brief sketch
nected with powerful movements are called liberal and conservative.
aimed at securing domestic politi-
cal change. On the other hand, The Meaning of the Terms
most wars and struggles for na- It is essential first of all to es-
tional independence have not led tablish the meaning of the three
to, or even been aimed at, sweep- words, revolution, liberal, and
ing domestic political change; conservative. Now, what follows
when successful, they have in the is not an exercise in semantics.
main only replaced a foreign tyr- The purpose of this essay is not
anny with a domestic tyranny. Na- to reach a new definition of these
tional self-determination by itself terms; the following definitions
is not a topic in this analysis. are purely instrumental.

Another type of revolution, The chief problem that arises
which is commonplace in Latin in the definition of revolution is
America, results merely in a that of establishing a distinction
change of the personnel that ex- from evolution. Each word denotes
ercise political power; these rev- a process of change. Traditionally,
olutions likewise are not involved a revolution has been associated
in this discussion. with violence, but today even the

A third type of revolution in- Communists shrink from the no-
cludes not merely changes in gov- tion that violence is inescapable.
ernment personnel but also redis- For the purposes of this discus-
tribution of power among offices sion, therefore, revolution may be



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

40 THE FREEMAN July

either violent or nonviolent; it is and direction, liberal is employed
to be distinguished by the facts here much as a present-day “lib-
that it has identifiable and aware eral” would employ it, and con-
leadership, that it is the product servative much as a so-called
of conscious deliberation and voli- “conservative” would use it.!

tion, and that it occurs at a spe-
cific point or period in time.

One other aspect of the term
revolution is that it should be re-
garded as an effort that may or
may not be successful. That is,
certain political figures may de-
sire a change and may take steps
to effect this change, but may fail
in the attempt. The leaders of
the Russian Kadet Party during
the first half of 1917 strove to in. damentally some lack of power,
stitute certain reforms in the Rus- >°™¢ manifestation of inefficiency,
sian government, but did not suc- '* the central government — espe-
ceed. Yet their endeavors certain- cially, today, the legislative
ly comprised a revolution. The branch of the government. Some-
same holds true for the leaders of times, as in the era of Richelieu

the Confederate States of Amer- and Louis XIV, this lack of power
ica. Evolution, by contrast, is gen- in the central government becomes
erally regarded as a transforma- evident through the disorder pre-
tion that has in fact occurred. vailing among local government
The words liberal and conserv- authorities. The same type of con-
ative today have lost: almost an dition has underlain the transfor-
eae . y mation in the Indonesian govern-
objective meaning that they may 3
. ment effected by President Su-
have once possessed. The main . .
reason for using them is that karno since 1949, and is also the
ns basis for political changes in some
together they represent a familiar \ .
‘re . of the newly-independent African
contemporary political dichotomy, tates tod
and that they serve to tie together States today.
a variety of discrete occurrences ! The violent disagreement that many
. present-day “liberals” would express at
over the centuries. Certainly, these the conclusions reached here merely il-
terms are relative to one another lustrates the author’s long-standing
and to the existing situation. Yet argument that the terms “confused

. liberal,” ““intolerant liberal,” and “totali-
at least with respect to intention tarian liberal” are all pleonastic.

The Objects or Conditions Opposed
A first contrast between a lib-
eral and a conservative revolution
concerns the objects or conditions
that the revolutionary leaders op-
pose — in other words, the existing
objects or conditions that are
called upon to justify the begin-
ning of a revolution. The leaders
“of a liberal revolution oppose fun-



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

1961 REVOLUTIONS, LIBERAL AND CONSERVATIVE 41

Another reason may be the im- King George in the Declaration of
potence of the government in the Independence, and insisted that
conduct of its foreign relations, strife had arisen between the
one of the causes for the emer- colonists and the British govern-
gence of Hitler in Germany. Yet ment because of “a long train of
another reason is the insistence of abuses and usurpations” — mean-
some central government officials ing the institution of new and “il-
that they must carry out some legitimate” practices. The early
task, which they assert nongov- leaders of the French Revolution
ernmental organizations and local aimed at overthrowing the despo-
government agencies have failed tism of the Bourbons, which itself
to perform. Such has been a com- stood on the ruins of the Estates-
mon mode of reasoning in the General. Spokesmen for the Con-
United States ever since the federate States maintained that
1880’s, which has come to full with Lincoln as President “the
fruition only since 1933. guarantees of the Constitution

A conservative revolution, on will then no longer exist; the
the contrary, is led by those who equal rights of the states will be
hold that the central government, lost.”
or the executive branch of the Thus, the revolutionaries con-
central government, is too power- tend that the central government,
ful. In other terms, a conservative or its executive head, has carried
revolution is an uprising against out unwarranted or unjustified
what its leaders contend is changes that must be reversed.
tyranny or despotism. Further- This is a main argument of those
more, the revolutionaries claim who today reject the proposals
that the tyranny or despotism has and enactments of the “New Deal”
emerged because the executive has and the “New Frontier.”
usurped new — indeed, “revolu-
tionary”’—powers in defiance of Asserted Goals
the traditional, “legitimate’ order The two classes of revolution
of things. Thus, the Magna Carta also differ in the asserted goals
comprised a royal pledge to desist their leaders profess —not only
from particular autocratic actions, in the nature of these goals, but
a promise of a return to condi- also in their realm and even in
tions as they were before the king their quantity. Indeed, the first
began expanding the royal prerog- point to be noted is that until
ative. The North American colo- comparatively recent times the
nists denounced the tyranny of leaders of liberal revolutions did


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

42 THE FREEMAN July

not have any asserted goals, save, . involve primarily the government-
perhaps, the defense of the coun- achieved economic and social bet-
try from external attack. To put terment of the lower-income
it in other terms, until recently, groups. Implementation of these
liberal - revolutionaries have not goals, the liberal revolutionaries
regarded the public, the mass of concede, brings a constantly in-
the governed, as an element in the creasing degree of government in-
political process. One noteworthy terference into economic and so-
exception to this rule was King cial affairs, that is to say, the
Henry IV of France, who was one politization — to a greater or lesser
of the great concentrators of royal extent — of national life. This
power and who has been credited amounts to a justification for a
with the “chicken in every pot” steady growth in the power of the
slogan. However, the early liberal central government at the expense
revolutionaries did have the clear of local governments and of non-
aim of establishing domestic governmental organizations.
order, even if such was not an The attainment of these as-
asserted goal. serted goals is to result in a mode
By contrast, history is strewn of life superior to, and different
with the statements of the asserted from, any heretofore existing on
goals sought by conservative revo- earth. Such have been the claims
lutionaries — the Magna Carta, the of all modern liberal revolution-
Petition of Right, the English Bill aries, whether their doctrines be
of Rights, the Declaration of In- termed socialism, communism, the
dependence, and others, even “New Deal,” the “Fair Deal,” the
though these statements might be “New Frontier,” Fabianism, Fas-
primarily negative. In other cism, or Nazism.
words, the leaders of conservative
revolutions originally regarded Meany Conservative Goals
the public, or at least a significant By contrast, conservative revo-
portion of the public, as involved lutionaries, particularly today,
in and concerned with their actual have no generally agreed-upon
goals, , body of asserted goals. With re-
Over the past two centuries, spect to the quantity of govern-
however, liberal revolutionaries ment power their philosophy is
have developed a considerable essentially negative — a stand per-
body of asserted goals, which bear fectly typified by the denials of
great resemblance to one another power in the First Amendment to
regardless of country. These goals the United States Constitution.


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

1961 REVOLUTIONS, LIBERAL AND CONSERVATIVE 43

Fundamentally, their one asserted that it is customarily unified, so
goal is the highest possible level as to afford a concentration of
of well-being for individuals and power. The curtailing of feudal
for the nation as a whole, to be disorders in France, which really
achieved through individual and began under King Charles VII
group nongovernmental enter- (1422-1461) and was not com-
prise, with the task of the gov- pleted until the time of Louis
ernment being chiefly to protect XIV, was conducted by the kings
these individuals and groups from and their ministers, and termi-
foreign and domestic predators. nated with the establishment of

Conventionally, the leaders of an all-powerful executive and the
conservative revolutions have no disappearance of the legislature —
master-plan for the future. Their the Estates-General. The same
prime insistence is that a restora- process in England, under the
tion of what they view as “funda- Tudors, led to the near-disappear-
mental liberties” that have been ance of Parliament. The transfor-
“abridged” or “eroded away’ by mation of the French Revolution
the expansion of the central gov- from a conservative into a liberal
ernment or of the central execu- uprising was signalized by the
tive authority, combined with emergence of the Committee of
present-day technology, will pro- Public Safety — an early classic of
duce a level of general prosperity collective leadership —to execu-

never before reached. tive supremacy, and the reduction

of the Convention — then serving
instruments for the Achievement as a legislative body — to political
of Goals impotence. Extreme liberal revo-

The leaders of the two classes lutionaries today, such as Hitler
of revolutions also differ as to the and Stalin, will maintain the form
instruments — that is, the of the legislature so as to give the
branches of the government — that people the illusion that they share
they use or would use for the in the government, but at the
achievement of their asserted same time they make themselves,
goals. as executives, supreme. In the

Leaders of a liberal revolution United States, important liberal
invariably rely upon the execu- revolutionaries such as union
tive branch, with subservient heads deprecate Congress and
legislative and judicial branches. strive to attain their goals
In this context the significant fea- through the presidency.
ture of the executive branch is Meanwhile the liberal revolu-



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

44 THE FREEMAN July

tionaries see to the exaltation of multiple, and comprises a diffusion
the central government over local of power among individuals,
authorities. The royal subjugation groups, regions, and interests. The,
of the feudal aristocracy achieved Parliaments and Estates-Generals
this end, for the feudal lords them- of medieval times were called in
selves were the fonts of local gov- part to acknowledge and assure the
ernment. In France the process of ancient principle that taxes could
centralization culminated in 1793 be levied only with the consent of
with the practical destruction of the taxed. In early modern times
the independence of the depart- Parliament became the instrument
mental governments; leaders of of the conservative revolutionaries
these governments had displayed who sought to undo the regime of
what the Jacobins in Paris viewed the Stuart kings and revive the
as a perilous shortage of revolu- traditional limits on the monarchy.
tionary fervor. One of Hitler's first In the United States, the early state
steps was to abolish the powers of. constitutions were noteworthy for
the various German states and sub- the strength of the legislatures
ject them to the executive author- they created, partly as a conserva-
ity of Gauleiter appointed from tive reaction against the powerful
Berlin. President Sukarno of In- colonial governors. The first na-
donesia, an outstanding present- tional government in the United
day liberal revolutionary, in 1950 States, under the Articles of Con-
saw to it that the original feder- federation, had only a legislative
ated government of Indonesia was branch; and the authors of the
replaced by a unitary structure. present Constitution devoted half
The subjection of state govern- its length to Congress, again for
ments to the national authority in the purpose of avoiding executive
the United States, which really tyranny and to insure American
started in the 1880’s, was vastly enjoyment of rights guaranteed in
accelerated by the liberal revolu- the past. French conservative
tionaries who took charge of the revolutionaries of the late 1780's
national government in the 1930’s. demanded nothing so much as a
summoning of an Estates-General,

Reliance on Legislatures to check the powers of the king
The leaders of a conservative and his ministers; and when Louis
revolution, by contrast, depend on XVI finally authorized such a step,
the legislative branch of the gov- they pored over old documents to
ernment for the attainment of their find just what had been the pro-
goals. A legislature is invariably cedures of this body — which had



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

1961 REVOLUTIONS, LIBERAL AND CONSERVATIVE 45

last met in 1614. Today, Ameri- developing ever since the time of
cans who term themselves ‘“con- Charlemagne and replacing it with
servatives” are without exception a network of popularly-elected lo-
those who most deplore the rising cal executives and legislatures.
strength of the executive and Partly in order to restore the his-
most strongly require the rebirth toric political rights of the German
of congressional initiative. people, the anti-Nazi leaders who
At the same time, conservative took power in Germany after
revolutionaries work toward les- World War II revived the federal
sening the authority of the central structure of government that Hit-
government and strengthening the ler had abolished. During the past
authority of local governments. thirty years the Americans who
The American Declaration of In- have termed themselves “conserv-
dependence clearly states the col- ative” opponents of the prevailing
onists’ opposition to the powers government philosophy have in-
exercised over them by the British variably been the ones who have
government — that is, the central called for a reduction in the pow-
government — and their demands ers of the central — national —-
that these powers be restored to government in favor of the local —
the colonial — that is, local — gov- state — governments,
ernments. In the early United
States, the national government The Relations of the People
under the Articles of Confedera- fo the Government
tion was almost completely domi- The question of the relations of
nated by the practically sovereign the people to the government dis-
state governments. Later, those closes further differences between
who supported this form of gov- Itberal revolutionaries and con-
ernment agreed to accept the new servative revolutionaries, both at
Constitution only if it were amend- the time the revolutionaries are se-
ed so as to insure the powers of curing power and at the time they
the state governments, with the are exercising power. In the main,
consequent proposal and ratifica- [liberal revolutionaries have as-
tion of the Tenth Amendment. In signed very little governing au-
France, the same group that had thority to the people. Centuries
pressed for a summoning of the ago, kings in the process of estab-
Estates-General reorganized the lishing despotismsdisregarded the
structure of French local govern- people almost entirely; in fact, by
ment, doing away with the highly weakening or abolishing the legis-
centralized system that had been lative branch of their government



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

46 THE FREEMAN July

these kings simultaneously re- voter “turn-out,” regardless of
stricted the political power of the whether there are any real issues
electorate. in the election.

However, the liberal revolution-
aries who founded a dictatorship Limiting the Franchise
under the Committee of Public By contrast, conservative revo-
Safety in France in 1793 adopted Ilutionaries have regularly con-
a contrasting policy, one that has ceded a formal share in the gov-
been followed by liberal revolu- erning process to at least a frac-
tionaries up to the present. This tion of the adult populace. After
is to assume the posture of a all, as noted above, it is the con-
“tribune of the people” by en- servative revolutionaries who
franchising all adults and by then deny the government great pow-
assigning the voters a plebisci- ers over individual activity; such
tary roie. That is, the voters com- a denial implies the individuals’
monly have been asked not to participating to a greater or les-
choose among candidates for office ser degree in the establishment of
but to indicate approval or disap- the government, in order to set
proval of some step already per- bounds on the sphere of govern-
formed by the government. The ment. It was the conservative rev-
desiderata are to have the largest olutionaries who introduced elec-
possible number of people vote and tive legislatures during the Mid--
to have the largest possible per- dle Ages, and who revived them
centage of “yes” votes cast. Napo- in the 1600's and 1700's. Often,
leon 1 and Hitler were experts at but not always, conservative revo-
this practice. Iutionaries limit the number of

In other countries where liberal adults who may possess the fran-
revolutionaries are securing pow- chise by setting some sort of qual-
er or consolidating their grasp ification, such as property-owning
on the government, as in the So- or tax-paying. They justify such
viet Union, the voters receive qualifications on the ground that
only one list of candidates from a person who cannot satisfy them
which to choose officeholders, yet is neither competent to exercise
government authorities make ex- the power of voting nor concerned
treme efforts to have a huge voter with the policies adopted by gov-
“turn-out.” In the United States ernment officials and agencies.
today it is the liberal revolution- Even today, the conservative
aries who are most concerned with revolutionaries who are striving
a wide franchise and a large to regain power in the United



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

1961 REVOLUTIONS, LIBERAL AND CONSERVATIVE 47

States do not express very great trine, which proclaims that the
interest in expanding the size of proletarian revolution is the last
the electorate or the percentage revolution. When Hitler spoke of
of voter “turn-out.” At the same the “thousand-year Reich,” he
time they are the most articulate doubtless was considering all Eur-
in their demands that voters have ope; but he clearly implied a
a “real choice” in candidates and thousand-year rule of Nazis in

issues during elections. Germany. Even in countries in
which the revolutionaries have
Possibilities of Future Revolutions been less liberal, as in the United

One other marked difference be- States since 1933, the government
tween the two classes of revolu- has acquired the concretion of an
tion comprises the possibilities of irremovable bureaucracy that has
future revolution under a govern- little by little diminished the ca-
ment established by each class of pacity of the voters to share in
revolution. These possibilities, of political decision-making and con-
course, hinge upon the natures of sequently to use the ballot for ef-
the governments based on these fecting a revolution.

revolutions, and on the degree to This is arbitrary government,
which the revolutionaries have ad hoc government, government
been liberal or conservative. under the rule of man. Hence, a

Now, the more liberal the revo- government established by a lib-
lutionaries have been, the fewer eral revolution places high bar-
political liberties the government riers in the way of future revolu-
they establish will assure the peo- tions, especially “legal” revolu-
ple. The regimes that the liberal tions. As a result, the more liberal
revolutionaries created in such the revolution upon which a gov-
states as the USSR, Nazi Ger- ernment is based, the more diffi-
many, Fascist Italy, Peronist Ar- cult it is to initiate change in that
gentina, “guided democracy’ In- government without recourse to
donesia, and Fidelist Cuba have violence.
denied the populace virtually all
political rights. At the same time, Decentralized and Diffused
such governments acquire an in- In comparison, a conservative
creasing degree of rigidity, of in- revolution expands the political
flexibility ; liberal revolutionaries liberties and powers of the peo-
once in power strive to perpetuate ple. A government based on a con-
their control. The ultimate of this servative revolution is decentral-
situation appears in Marxist doc- ized and diffused; it is limited


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

48 THE FREEMAN July

government, a government based
on the rule of law. The rulers of
such a government acknowledge
the possibility, even the desir-
ability, of future revolutions,
which they regularize by means
of periodic elections. Hence, the
American voter received from the
Constitution the opportunity to
initiate a modest revolution every
two years, and a sweeping revolu-
tion every four. The voters actu-
ally have not often availed them-
selves of such an opportunity.
Even elections that have involved
a change in the majority party,
such as those of 1848 and 1852,
have brought no significant altera-
tion in the tenor of the govern-
ment. The election of 1800 led to
a conservative revolution, for the
Federalists were certainly “liber-
als” in comparison with Jeffer-
sonian Republicans. The election
of 1832 brought on a liberal revo-
lution, not nearly so much in
terms of the. extension of the
franchise, which has been widely
exaggerated, as in terms of Jack-
son’s tribunitial concept of the
presidency. The election of 1860
resulted in a liberal revolution,
which Southern leaders feared
and which they facilitated by se-
ceding. The outcomes of the elec-
tions of 1920 and 1952 promised
conservative revolutions that never
materialized. The fact is that gov-
ernments stemming out of more

or less comservative revolutions
are particularly open to subse-
quent revolutions that may estab-
lish a regime barring future
change; the ease with which the
Nazi liberal revolutionaries sub-
verted the Weimar Republic is a
great object lesson.

The Irreversible Nature
of Liberal Revolutions

That the outcome of a conserva-
tive revolution is easily reversible,
whereas the outcome of a liberal
revolution may be almost irrever-
sible, poses the greatest difficulty
and danger for the citizens of a
government based on a conserva-
tive revolution. In a time of econ-
omic stress, it is the liberal revo-
lutionaries whose asserted goals
may appear the more attractive.
Then it requires a determined citi-
zenry to accept the fact that what
the people “temporarily” surren-
der in order to enjoy the asserted
goals of the liberal revolutionaries
they may never be able to re-
trieve. Indeed, the implementa-
tion, or the efforts to implement,
the asserted goals of liberal revo-
lutionaries almost invariably turn
out to be no more than the means
for achieving the real, though un-
asserted, goal — the establishing
or perpetuating of a tyranny.

In many countries, notably the
USSR and Communist China, the
people have been the butts of the


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

1961 REVOLUTIONS, LIBERAL AND CONSERVATIVE 49

most hideous practical joke of all: did saddle the American people
the liberal revolutionaries have with an apparently immortal bu-
attained virtually none of their reaucratic autocracy. The govern-
asserted goals, but have easily ac- ment based on a liberal revolution
complished their true goal of may be the regime of the “com-
founding a despotism. Only to a mon man”; but the government
somewhat lesser degree, the poli- based on a conservative revolution
cies of the “New Deal” in the demands a nation of “uncommon
1930’s contributed practically men,” such as the United States
nothing to the enduring prosper- was in 1775 and as it can be to-
ity of the United States, but they day. ~

AMERICANS are a prudent people. Look at the evidence: In a
recent poll, 63 per cent of those questioned said the President
and Congress should do something about holding down prices
and preventing inflation.

Americans are a good-hearted people. Look at the evidence: In
the same poll, 52 per cent of those who answered said they
thought the powers that be ought to get busy and provide more
medical care for the aged.

Americans are a generous people who like to see the other
fellow get a break. Look at the evidence: In the poll, 48 per cent
said Congress and the Chief Executive should boost the mini-
mum wage to $1.25 per hour.

Americans are people who also like to see themselves get a
break. Look at the evidence: The poll turned up 46 per cent who
thought the government ought to “reduce taxes for people like
myself.”

A higher minimum wage — but no price rise and no inflation.
More medical care for the aged, more federal aid to education
(said 40 per cent), more housing and slum clearance (38 per
cent), more spending on national defense (31 per cent) and to
cut unemployment (28 per cent) — but still “balance the budget
by cutting government spending” (37 per cent) and, above all,
“reduce taxes for people like myself.”

Yep, Americans are prudent, good-hearted, and generous. But
Americans, judging by that poll, also are a people who need a
fast lesson or two in arithmetic and the relationship between
cause and effect.

From the Warrensburg, Missouri, Star-Journal


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

Mr. John M. Schoeph, Manager of the Fair-
field, Iowa, Chamber of Commerce, recently

was solicited as follows by one of the numerous
expediting agencies for government contracts:

Dear Mr. Schoeph:

Is your community getting back its fair share of
federal tax moneys in the form of defense contracts?
Some Midwestern states get only a few cents in .
contracts for every tax dollar paid, while
California, for instance, gets back nearly $3.00 for
every tax dollar its people pay out! Part of the
answer for your community is to get more firms to bid
for the many kinds of prime contracts available....

If you think there are plants in your community
which would profitably enter into government work,
please let us hear from you or from the firms

themselves...

50


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

/3 Mr. Schoeph’s reply is worthy of note by any-

one interested in the theory and practice of
competitive private enterprise:

March 22, 1961

Dear Mr. :

Our community is not concerned with "getting
back its fair share of federal tax monies in the form
of defense contracts" or any other form of federal
dole-outs. We are concerned with getting less
federal government for less dollars. We do not
regard the recirculation of federal tax dollars as
justification for seeking a greater portion of their
return nor do we consider the process economically
productive.

Our community is more interested in eliminating
the crutch of defense contracts and other government
spending so that individual people can exercise
greater impact on markets by their personal buying
choices and purchasing power.

Call us foolish if you will, but it is clear to us
that our nation's economy has succeeded on concepts of
private enterprise rather than government
contracts. We believe in expressing this
conviction forthrightly and by not rationalizing
wrong into right.

Cordially,
John M. Schoeph, Manager
Fairfield Chamber of Commerce

51


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

WHY NOT USE y/ 2 Ficing Splen

RONALD H. COASE

I APPEAR before you with a strong might quote a passage with which
conviction and a bold proposal. My you are all familiar, Mr. Justice
conviction is that the principles Frankfurter said in the NBC Case
under which the American eco- in 1943: “The facilities of radio
nomic system generally operates are not large enough to accommo-
are fundamentally sound. My pro- - date all who wish to use them.
posal is that the American broad- Methods must be devised for
casting industry adopt those prin- choosing among the many who ap-
ciples. ply. And since Congress itself
In presenting my case, I suffer could not do this, it committed the
from the disadvantage that, at the task to the Commission.” In short,
outset, I must attack a position the argument is that the selection
which, although I am convinced it of broadcast station operators by
is erroneous, is nonetheless firmly the Commission is needed because
held by many of those most knowl- radio frequencies are limited in
edgeable about the broadcasting number, and people want to use
industry. Most authorities argue more of them than are available.
that the administrative assign-
ment of radio and television fre-
quencies by the Commission is
called for by the technology of the
industry. The number of frequen-
cies, we are told, is limited. If I

This article is. slightly condensed from testi-
mony given to the Federal Communications
Commission on December 11, 1959. The author
is Professor of Economics, University of Vir-
ginia, Charlottesville.

52



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

1961 WHY NOT USE THE PRICING SYSTEM ? 53

But the situation described by lation of a technical character.
Mr. Justice Frankfurter is in no But such regulation would not pre-
sense peculiar to the broadcasting clude the existence of private
industry. All resources used in the rights in frequencies, just as zon-
economic system are limited in ing and other regulations do not
amount and are scarce in that peo- preclude the existence of private
ple want to use more of them than property in houses.
exists. This is so whether we
think of labor, land, or capital. Advantages of Market Pricing
However, we do not ordinarily con- Such a use of the pricing mech-
sider that this situation calls for anism would bring the same ad-
government regulation. It is true vantages to the radio and televi-
that some mechanism has to be sion industry as its use confers on
employed to decide who, out of the the rest of the American economy.
many claimants, should be allowed It would avoid the need for much
to use the scarce resources. But of the costly and time-consuming
the usual way of handling this procedures involved in the assign-
problem in the American economic ment of frequencies by the Com-
system is to employ the pricing mission. It would rule out ineffi-
mechanism, and this allocates re- cient use of frequencies by bring-
sources to users without the need ing any proposal for the use of
for government regulation. such frequencies up against the

This is the system under which test of the market, with its precise
broadcasting concerns obtain the monetary measure of cost and
labor, land, and capital equipment benefit. It would avoid the threat
they require. There is no reason to freedom of the press in its wid-
why the same system could not be est sense which is inherent in
adopted for radio and television present procedures, weak though
frequencies. If these were disposed the threat may be at the moment.
of by selling or leasing them to And it would avoid that arbitrary
the highest bidder, there would be enrichment of private operators of
no need to use such criteria as radio and television stations which
proposed or past programming as inevitably follows from the pres-
a basis for the selection of broad- ent system. A station operator
cast station operators, Such a sys- who is granted a license to use a
tem would require a delimitation particular frequency in a particu-
of the property rights acquired, lar place may be granted a very
and there would almost certainly valuable right, one for which he
also have to be some general regu- would be willing to pay millions


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

54 THE FREEMAN July

of dollars and which he would be face squarely the issue of freedom
forced to pay if others could bid of the press so far as broadcast-
for the frequency. We sometimes ing is concerned. It may be
hear denunciations of giveaways doubted whether regulation de-
and their corrupting influence. signed to influence programming,
You, gentlemen, who are adminis- and which was instituted for that
tering what must be one of the purpose alone, would be constitu-
biggest giveaways of all, must tional, but on this a lawyer’s opin-
surely have been very uneasy at ion would be more valuable than
this aspect of your work. I have mine,

not made any detailed calculations, But in any case it may be
but it would be surprising to me doubted whether an indirect at-
if the extent of this enrichment tempt to influence programming
of private individuals did not through the selection of broadcast
amount to hundreds of millions of station operators could ever be
dollars; and this could be too low very effective. For over 30 years
a figure. All this is unnecessary. the Federal Communications Com-
It could be avoided by charging mission and your predecessor, the

for the use of frequencies. Federal Radio Commission, have
been selecting broadcast station
Freedom of the Press operators on the basis, among

~ It has been my experience that other things, of their good char-
such a suggestion as I have made acter and their devotion to the
horrifies my listeners. I am told public interest. By now one would
that it is necessary to choose those expect the broadcasting industry
who should operate radio and tele- to be a beacon of virtue, shining
vision stations to make sure that out in a wicked world. Such, I am
the public interest is served and afraid, is not the case.

that programs of the right kind I do not- wish to claim that the
are transmitted. But, put this way, ethical standards of the broad-
the case for governmental selec- casting industry are lower than in
tion of broadcast station operators the rest of American business. It
represents a significant shift of is enough for my purpose that, in
position from that which justifies spite of the selective process, it is
it on technological grounds. It is, not obvious that the standards are
of course, a tenable position. But significantly higher. This is not
if the object of the selection is, in really surprising. Most people
part, directly or indirectly, to in- have presumably invested in the
fluence programming, we have to broadcasting industry because


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

1961 WHY NOT USE THE PRICING SYSTEM ? 55

they thought it would be more ness has been to find that there
profitable than any alternative in- are many people who cannot see
vestment open to them; and the anything wrong with an act if
list of occupations of broadcast there is no law against it. This
station owners published by the attitude, which recognizes no
Commission shows them to repre- moral restraints, by its very na-
sent a cross-section of American ture cannot be touched by any
business. change in the law.

Of course, it might be argued Furthermore, without moral
that the Commission should show standards the law itself is largely
more zeal in the future, but I ineffective. It matters little what
would not urge this upon you. I the law says if those who admin-
think it is the cautious approach ister it can be bribed. Nor is it
of the present, and past, Commis- possible to enforce a law unless
sions which has made the existing most people feel it to be morally
system tolerable. Imagine what justified. The major problem posed
would happen if the Commission by recent events is not one for the
really determined to inquire into Commission but for parents, edu-
an applicant's morals, beliefs, as- cational institutions, and religious
sociations, fair-mindedness, devo- bodies. It may be that there are
tion to truth and to the public in- some loopholes in the law relating
terest. The situation that would to fraud, but this is a very minor
arise would be intolerable, and you aspect of the whole question. If
may be sure that it would not long we rule out, as I think we must,

continue, governmental regulation of pro-
gramming on both constitutional
Morality and the Law and practical grounds, and also be-

In saying this, I do not mean to cause it cannot touch the basic is-
imply that it is not of supreme sue of morality, we can but hope
importance to maintain high moral that the changes now being put
standards. It obviously is. But I into effect by the broadcasting in-
am doubtful whether it is possible dustry are not simply an attempt
to do much to raise moral stand- to offset public criticism but rep-
ards by governmental regulation. resent a new awareness of what
The recent disclosures of wide- right conduct is.
spread deceit, and possibly fraud, As an economist I cannot but
in the broadcasting industry are be aware that the nature of the
shocking. But perhaps the most problem has just forced me into
shocking aspect of the whole busi- a discussion of questions on which


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

56 THE FREEMAN July

I have little professional compe-
tence. But part of the dissatisfac-
tion with the performance of the
broadcasting industry stems from
something which falls squarely
within the domain of an econo-
mist. The American broadcasting
system is financed by revenue
from advertisements, a system
commonly called commercial
broadcasting.

Commercial Broadcasting

The essence of a commercial
broadcasting system is that the
operator of a radio or television
station is paid for making broad-
casts or allowing them to be made.
But he is not paid by those who
listen to or view the programs.
He is paid by those who wish lis-
teners to receive a particular mes-
sage — the advertisement, or com-
mercial. However, simply to broad-
cast the commercial will not
usually lead people to listen or
view. A program, therefore, has
to be broadcast to induce people
to listen or view. In a commercial
broadcasting system, the object of
the program is to attract an audi-
ence for the commercials.

With such a system what pro-
grams will be broadcast? They are
the programs which maximize the
difference between the profits
yielded by broadcast advertising
and the costs of the program. If
programs were supplied in the

way which is normal in the Amer-
ican economic system, the pro-
grams which would be broadcast
would be those which maximize
the difference between the amount
people would pay to hear or see
the programs and the cost of the
programs. It is easy to see that
these are completely different
ways of determining what pro-
grams to transmit —and that a
broadcasting system organized as
other industries are (with reve-
nue accruing directly from the
consumers) would lead to a very
different structure of programs.
But how different and in what
ways? This is a difficult problem,
and it is difficult precisely because
the systems are so very different.

Minorities Neglected

The best I can do now is to in-
dicate some of the ways in which
these two systems will lead to dif-
ferent results. It is clear that some
programs which people would be
willing to pay for will have costs
which are higher than the profits
that would accrue from any com-
mercials that might be associated
with them and that therefore they
would not be made available with
the commercial system. Again,
with commercial broadcasting, a
program which attracts a larger
audience may be chosen even
though viewers or listeners in to-
tal would pay more for one which

i


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

1961 WHY NOT USE THE PRICING SYSTEM? 87

would attract a smaller audience. Much is made of the fact that
The result of all this is that com- with commercial television the
mercial broadcasting leaves some service is free. The argument is
sectors of the public with the feel- essentially the same as that for
ing that they are not being catered socialism and the Welfare State.
for. And this is true. This result What is being attacked is the price
is particularly bad because it is mechanism. The factors of pro-
often the educated classes who duction used in television are not
feel that their wants are not be- made available for nothing. They
ing satisfied —and because they will be paid for by someone: the
are apt to conclude that this is the government out of the proceeds
inevitable result of the working of of taxation, the advertiser, or the
a private enterprise market econ- consumer. What is important is
omy. that factors of production should

This, of course, is not the case. be used where their output is most
I need not here go into the ration- valuable, and this is most likely to
ale of the competitive system, happen if the use of factors of
which treats all money demands production is determined by what
equally and operates in such a way consumers are willing to pay. The
as to maximize the value of out- objection to a “free” system is
put. But it will hardly come as a that it is not really “free” and it
surprise to you that, holding these is less efficient. It has been pointed
views, I urge you to do all you can out that, with subscription tele-
to bring about the introduction of vision, programs will only be seen
subscription television (and sub- by those who have the money to
scription radio, too, if possible). pay for them. But if reliance on
There may be practical difficulties ability to pay is so unfortunate
standing in the way of subscrip- when applied to television pro-
tion television. But I am convinced grams, how much worse it must
that there are no substantial ob- be when applied to food or cloth-
jections to subscription television ing or housing — or even to televi-
in principle. sion sets and phonograph records.

James Russell Lowell

YEARS AGO, when James Russell Lowell was the American min-
ister in Great Britain, he was asked: “How long will the Ameri-
can Republic endure?’ His answer was crisp and to the point.
“As long,” he said, “as the ideas of the men who made it con-
tinue to be dominant.”

From Life Lines


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

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

The Critics of Keynes

RICARDO, said John Maynard year, has actually succeeded in
Keynes, ‘conquered England as making it intellectually respecta-
completely as the Holy Inquisition ble to oppose the Keynesian analy-
conquered Spain.” But what of sis. In the course of writing The
the great Lord Keynes himself? Failure of the “New Economics”
His “inquisition” — if the strange Mr. Hazlitt was impressed by the
comparison be allowed — did not number of brilliant short discus-
stop at national boundaries; in- sions of the General Theory that
deed, its conquests have virtually he came upon. These were scat-
encircled the entire globe. tered through learned journals

True enough, the Keynesian in- dating back to the nineteen thir-
quisition has not made use of tor- ties, or they consisted of single
ture and the stake to force people chapters or a few passages in
into conformity. But the pres- books that are sometimes not gen-
sures, as any anti-Keynesian who erally available. It occurred to Mr.
has lived through the past three Hazlitt that it would be a useful
decades knows, have been subtle idea to assemble them all in one
and far-reaching — and quite un- place —and .the result is a fat
relenting. The strange thing is anthology, The Critics of Keynes-
that so many good men saw tan Economics (Van Nostrand, $7).
through the Keynesian theories Since Keynes's theory is rooted
from the start — and said so at the in a rejection of the famous “law
time of their first encounters with of markets’ which was first form-
the famous General Theory of Em- ulated 150 years ago by the French
ployment, Interest and Money. economist Jean Baptiste Say, Mr.

Henry Hazlitt, one of the origi- Hazlitt begins his anthology with
nal anti-Keynesians, has lived to an excerpt from Say and with a
see the inquisition relax its grip “restatement” of Say’s Law by
on at least some nations of the John Stuart Mill. It was the con-
world. His The Failure of the tention of both Say and Mill that
“New Economics,” published last production creates its own buying

58


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

1961 THE CRITICS OF KEYNES 59

power. Since, in the last analysis, it ficial maintenance of high wages).
takes a good to “buy” another good The subsidy naturally entailed an
(even though the exchange may inflated money supply, or a high
be facilitated by the use of rate of taxation, or a combination
money), Say’s Law amounts to of the two.
a truism. The “Law” does not, of At the time of the first publica-
course, insist that markets will be tion of the General Theory Jacob
“cleared” automatically merely be- Viner objected that Keynes as-
cause the purchasing power re- sumed his various “propensities”
leased by production (in wages, —the propensity of “liquidity”
interest, dividends, and outlay for preference, the “propensity to con-
services and materials) is there to sume,” the “propensity to hoard,”
soak up the production. Men make and so on— without statistical
mistakes in judging what con- warrant. “We have almost no re-
sumers want, and there can be a liable information,” said Profes-
lag in the operation of Say’s Law sor Viner in 1937, “about the
until a mistake in judgment has strength of liquidity preferences
been corrected by a new equilib- under varying circumstances...”
rium of economic forces. But the But even allowing for sensible
truism remains: it takes a good conjecture, Viner thought that
to buy a good. “Keynes has grossly exaggerated
What Keynes did, in effect, was the extent to which liquidity pref-
to deny that mistakes in judgment erences have operated in the past
on the part of producers would and are likely to operate in the
be self-correcting in time. Once a future as a barrier to ‘full’ em-
depression had started, he saw a ployment.”
“liquidity preference” constantly
impeding the translation of sav- An Array of Experts
ings into new investment that Hazlitt grants Viner the posi-
would produce new and different tion of honor next to Say and
goods capable of “clearing the Mill in his anthology. Other anti-
market” as the older (and un- Keynesians follow in brilliant pro-
wanted) goods were sacrificed at fusion. There is Frank H. Knight,
cut rates. To get the economy off who considered that Keynes's
dead center under “liquidity pref- “revolution” in economic thought
erence” conditions, Keynes pro- amounted to little more than a
posed subsidizing consumers “contribution to the theory of
(either through government business oscillations” —a “wild
“made work” or through the arti- overstatement” whose value was


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

60 THE FREEMAN July

that it might “serve to emphasize tribution which, in Mr. Hazlitt’s
some factors which have been rela- words, “is one of the most hard-
tively neglected.” There is Etienne hitting as well as one of the least
Mantoux, a talented Frenchman technical criticisms of Keynesian
who, before his death in battle in economics and policy.”

1945, conjectured that Keynesian Lawrence is both a satirist of
policies would be “likely to beget no mean dimension and a brilliant
inflation pure and simple.” There utilizer of statistics in a common-
is F. A. Hayek, who lamented the sense. way. His list of “new order
“apres nous le deluge” aspects of aphorisms,” derived from Keynes-
Keynes’s concentration on ‘“‘short- ian literature, is a sardonic re-
run effects.” There is Franco minder that, if Keynes is right,
Modigliani, whose completely un- the way to economic health is to
relenting mathematical economics dig holes in the ground and fill
so repels the eye that it will prob- them up again. Doubting that
ably be skipped by most of Mr. Keynes had any idea of what he
Hazlitt’s readers. And there are was talking about when he con-
essays and articles by Benjamin jectured that savings and invest-
Anderson, Philip Cortney, R. ment must always and everywhere
Gordon Wasson, Garet Garrett, tend to get out of whack under
Jacques Rueff, John H. Williams, modern economic conditions,
L. Albert Hahn, Ludwig von Lawrence reminds us that the in-
Mises, Joseph Stagg Lawrence, vestments of life insurance com-
Wilhelm Roepke, David McCord panies are in the hands of com-
Wright, and several others, all of petent professionals; that social
whom at least tacitly endorse Mr. security contributions are prompt-
Hazlitt’s own contention that what ly spent by the government; that
is true in Keynes is not new, and corporate savings are reinvested

what is new is untrue. by the very managements that
} make them in the first place; that
Dig Holes, and Fill Them banks live by feeding out credit

It would be a physical impos- as they take in money; that the
sibility, of course, to be fair to great bulk of savings made by
twenty or more searching com- those in the upper fifth of income
mentaries within the space of a brackets “is usually invested di-
single short review. At the risk of rectly” — and so forth and so on.
perpetrating a wild injustice, let In short, the “hoarder,” the patho-
us concentrate on the contribution logical addict of “liquidity pref-
of Joseph Stagg Lawrence — a con- erence,” is not usually a problem.


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

1961 OTHER BOOKS 61

In Lawrence's opinion, Keynes's
General Theory adds up to a “dig-
nified rationalization of the con-
duct of the drunken sailor and the
fabled grasshopper.” Applied by
governments seeking “full employ-
ment and cyclical stabilization,”
this “rationalization” of what von
Mises has called the “Santa Claus
fable” makes shovel-leaning the
sine qua non of effective modern
statecraft. It does not require
pages of differential equations to
tell us that pyramid building is
of dubious economic value — or
that modern governmental substi-
tutes for pyramids are what the
late Isabel Paterson called “dead-
end appliances.” Pyramids toil
not, neither do they spin. In the
nature of things they are not
“goods” that can be used in “buy-
ing” other goods. To give “pur-
chasing power” to the man who
works on a pyramid must ulti-
mately involve filching from some-
body, somewhere. Admittedly
Say’s Law does not make connec-
tion with the inflationary “mone-
tary policy” that is normally
needed to hide the theft from the
populace. Nor did Keynes ever
stop to think that pyramids are in
themselves hoardings of a sort.
The only difference between a mi-
ser’s hoard and a pyramid-builder’s
hoard is that one is expressed in
gold, the other in stone. Both exist
outside the stream of commerce.

p THE FEDERALIST: A CLASSIC
ON FEDERALISM AND FREE
GOVERNMENT by Gottfried
Dietze. Baltimore, Maryland: The
Johns Hopkins Press. 378 pp. $6.50.

Reviewed by K. S. Templeton

THIRTY YEARS AGO the Spanish
philosopher and journalist, Jose
Ortega y Gasset, warned of the
resurgence of state intervention,
by which he meant “the absorption
of all spontaneous social effort by
the State.” In the meantime, the
spectacular increase in the level
and scope of state power has pro-
duced the result foreseen by Or-
tega — the militarization of society
—as a world-wide condition. Or-
tega’s analysis suggested a certain
historical inevitability: “Is the
paradoxical, tragic process of
Statism now realized ? Society, that
it may live better, creates the
State as ‘an instrument. Then the
State gets the upper hand and
society has to begin to live for
the State.”

Never in history has a more
conscious attempt been made to
prevent this “tragic process” than
in the founding of the United
States. The full dimensions of that
attempt are what Professor Gott-
fried Dietze of Johns Hopkins
University reviews in his treatise
on the Federalist Papers. The
story that emerges is itself para-
doxical: in proposing adoption of


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

62 THE FREEMAN July

the Constitution, the Founding as a vehicle for ‘social engineer-
Fathers called for more and ing.”
stronger government — the United But this phenomenon hardly
States in place of the Confedera- substantiates doctrinaire Marxist
tion — not for the purpose of en- analysis, and, as Professor Dietze
hancing state power at the ex- points out, The Federalist argu-
pense of spontaneous social effort, ments in favor of the Constitution
but rather for just the opposite — marked a tremendous advance to-
“as a means for securing the in- ward freedom by attempting to
dividual’s freedom from govern- subvert traditional notions and
mental control.” practices of state intervention. In
In this effort, the Founders were other words, the: Founders were
truly radical revolutionaries, trying to establish a government
much more so than they and others that would properly reflect all of
had been twenty years earlier in the most libertarian ideas of the
leading the struggle for independ- Enlightenment — for the first time
ence from Great Britain. For it in history, a Negative State that
should be remembered that mer- would release, rather than con-
cantilistic thought —the “New sume, the individual energies of
Frontiersmanship” of an earlier its citizens.
day — still had a pervasive influ-
ence on politicians, statesmen, and A Stronger Federalism
entrepreneurs at the end of the But why establish a stronger,
eighteenth century. The idea of federal government in place of the
government as the instrument of weak Confederation for these pur-
national and social progress ap- poses? How could more govern-
pealed even to the so-called “farm- ment possibly secure the individ-
ers and mechanicks” of the time, ual’s inalienable rights of life,
thereby giving a group of later liberty, and property? To begin
historians an opportunity to “ex- with, the authors of The Federalist
plain” the War for Independence saw in the new federal govern-
as a social democratic, class- ment a means to curb governmen-
struggle revolution! Naturally tal interventionism which had
there is bound to be a struggle for been running rampant on the state
political power among and within and local levels during the 1780's.
economic groups, creating rival Tariffs, paper currencies, stay
“factions” as James Madison laws, and the like, were infring-
termed them, just as long as the ing on the obligation of contracts
State is regarded, or can be used and hence undermining property


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

1961 OTHER BOOKS 63

rights, the cornerstone of all in- Furthermore, the Constitutional
dividual rights. The freedom of organization of the federal gov-
the individual, both within each ernment itself provides for a sys-
state and outside of it, was there- tem of power balances and func-
fore being jeopardized. Insofar as tional restrictions which, as they
these state interventions created are explained in The Federalist,
interstate animosity, the inalien- lead Dietze to conclude that “the
able rights of the individual were liberal protection principle has
further threatened. And this fric- primacy before the democratic
tion among the states, coupled participation principle.”
with a generally weak framework
of national government under the Totalitarian Democracy
Confederation, also undermined As the first book-length ex-
individual freedom in the face of amination of The Federalist, Pro-
threats from foreign nations. fessor Dietze's work is extremely
Thus, The Federalist as Professor timely, for it serves to reopen the
Dietze sees it argued for a strong- neglected subject of the legiti-
er federalism and union in order mate ends of government at a
to secure freedom by protecting time when the Great Depression
the individual from domestic gov- and the Nazi and communist
ernment, interstate tensions, and movements have successively been
foreign powers. used as excuses for the tremen-
The function of the new federal- dous expansion of governmental
ism of the Constitution was to pro- powers under the presumed sanc-
vide safety for the individual from tion of the “general welfare” and
infringements of government at all ‘necessary and proper” clauses of
levels. Dietze shows that The Fed- the Constitution. In his final chap-
eralist, while accepting popular ter, Dietze attempts to assess how
participation in government as The Federalist concept of free
essential to this end, stresses pro- government has fared during 170
tective devices of all sorts against years of American history under
“democratic despotism” and un- the Constitution. He is forced to
limited government. Thus, the conclude, as did historian Arthur
powers of the federal government A. Ekirch, Jr. a few years ago in
which provide checks on the state his Decline of American Liberal-
governments are designed for the ism, that the classical liberal prin-
protection of the individual, not ciples of the Founders have all
simply for the indiscriminate en- but disappeared. Dietze accounts
hancement of governmental power. for this decline in terms of the


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

64 THE FREEMAN July

perversion of judicial review and name of which they argued for
federalism and in the elevation of the adoption of the Constitution.
the participation principle above In these days of semantic con-
the protection principle, of non- fusion and historical blackouts, it
economic above economic (prop- is good to have this record of our
erty) rights. He suggests that the Constitutional foundations re-ex-
Founders’ greatest fear — totali- amined. Only as we understand
tarian democracy — has at last be- the ideals with which the Found-
come the order of the day, as our ers started can we appreciate how
judiciary no longer concerns itself far we have strayed and what
with “legitimacy,” but only with errors should be avoided if an op-
“legality.” Vox populi vox det is portunity to try to realize those
the hallmark of the “new Caesars” ideas presents itself once again.
of the twentieth century. The Perhaps the beginning of wisdom
total politicizing of modern life will be our recognition of the
has reduced freedom to a skeleton magnificent failure of the Consti-
— at least freedom as it was un- tution ~ the reliance on a higher
derstood by men like Madison, form of temporal government —
Hamilton, and Jay, and in the to secure a society of free men.

Signs of Underdevelopment

IF FOREIGN AID were fully successful, and we subsidized the rest
of the world until everyone was as well off as we are, all of the
big problems would still remain. Debts, increasing crime rates,
dope, the threat of communism, immorality, taxes, rising costs of
living, insecurity, and all the rest of the problems we have would
remain.

Surely what we lack in order to solve our own problems, we
could never extend to others even as foreign aid. We should be
paying more attention to our own underdevelopments before
we go around calling other people “underdeveloped.”

J. KESNER KAHN


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

WY HEN a devotee of private property, free market, limited govern-
ment principles states his position, he inevitably meets a barrage of —

Cliches of Socialism

Available now are suggested answers to the following:

1. “The more complex the society, the more government control we need.”
2. “If we had no social security, many people would go hungry.”

3. “The government should do for the people what the people are unable to do
for themselves.”

4 “The right to strike is conceded, but. . .”
5. “Too much government? Just what would you cut out?”

6. The size of the national debt doesn’t matter because we owe it to our-
selves.

7. “Why, you'd take us back to the horse and buggy.”
8. “The free market ignores the poor.”
9. “Man is born for cooperation, not for competition.”

10. “Americans squander their incomes on themselves while public needs are
neglected.”

11. “Labor unions are too powerful today, but were useful in the past.”
12. “We have learned to counteract and thus avoid any serious depression.”
13. “Human rights are more important than property rights.”

14. “Employees often lack reserves and are subject to ‘exploitation’ by capitalist
employers.”

15. “Competition is fine, but not at the expense of human beings.”
16. “We're paying for it, so we might as well get our share.”

17. “I'm a middle-of-the-roader.”

18. “Customers ought to be protected by price controls.”

19. “The welfare state is the best security against communism.”

20. “Don’t you want to do anything?”

21. “If we need big business, why don’t we need big government?”
22. “We believe in presenting both sides.”

23. “If free enterprise really works, why the Great Depression?”

Each one is on a separate sheet, 8%” x 11”. Single copies for the ask-
ing. Quantities at 1¢ a sheet. For sample copies (no charge) write to:

Tue FounbaTioN For Economic Epucarion, Inc.
IrviNcTON-ON-HUDSON, N. Y.


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