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

THE

[eld

AUGUST 1961

IDEAS ON LIBERTY

Forging Africa’s Chains . . . . . . Francis E. Mahaffy 3
Our “Experts’’ Almost Ruined Germany . Lawrence Fertig 10.
The Highway Dilemma. . . . . . . John C. Sparks 14
Direct Taxation . . . . . . . . . H.P.B. Jenkins . 19
NoJdobs? . . . . . . . . . . . Oscar W. Cooley 20
Everybody Knows That. . . . . . . Stanley Yankus 23
How State Help Destroys Self-Help . . . William Henry Chamberlin 25
The European Common Market . . . . John V. Van Sickle 32
What Happened to Whale Oil? . . . . E.F. Hutton 43
Conquest from Within . . . . . . . Grey leslie 44
A Sockdolager . . . . . . . . . David Crockett 49

Book Reviews:

Lessons from thelincas. . . . . . . John Chamberlain 59

Other Books . . . . . . . . . . 63

sn THE FOUNDATION
FILE FOR ECONOMIC EDUCATION, INC.

Irvington-on-Hudson, New York



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

INTERCONNECTING AND POOLING:

NEWS ON “POWER GRIDS” FROM
THE PEOPLE WHO INVENTED THEM

Great electric “power grids” are much is instantly brought in from other
in the news today. The idea goes  plants—across hundreds of miles, if
back more than 40 years to the first necessary.
Interconnecting and Pooling of power There is no need for the companies
by investor-owned electric companies. 1, build expensive duplicate facilities
Thanks to such pioneering, the in- to make sure an ample reserve of elec-
vestor-owned companies today have tricity is on hand. A city, for example,
thousands of miles of lines and bil- may need most of its electric power
lions of dollars worth of plants con- in the wintertime. A lumbering area
nected to bring America a new hundreds of miles away has its peak
dimension in low-cost, dependable demand in summer. So the investor-
electric service. owned companies exchange power as
These networks are in every section ~~ needed—keeping costs down, keeping
of the country and growing very fast. electric rates low.

They benefit millions of hemes and Interconnecting and Pooling helps
businesses by helping keep electric jndividual communities . . . vast areas
rates low, and making your electric whole states. . . the entire nation.
service ever more dependable. It is a major reason why the investor-

If an emergency shuts down one owned electric companies can supply
plant in such a power “pool,” users all the additional electricity America
may never even know it. Electricity will need.

Investor-Owned Electric Light and Power Companies

Names of companies sponsoring this message on request through this magazine



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

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

THE

ecmdn

I
Fg

A MONTHLY JOURNAL OF IDEAS ON LIBERTY

AUGUST 1961 Vol. 11 No. 8

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 U.S.A,

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

Permission is hereby granted to anyone to reprint any article in whole
or in part, providing customary credit is given, except “The European
Common Market,” and “What Happened to Whale Qil?"

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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FORGING

FRANCIS E. MAHAFFY

Africa, the sun-tanned giant is to use it for his progress at an ac-
beginning to awake, to stretch her- celerated rate.

self, and to test her strength. It The road ahead for emerging
was not too many years ago that Africa appeared to be a smooth
slave-trading vessels plied her wild one. Gradual progress with an
and forbidding coasts to bind men ever-increasing standard of living
in chains to be sold on the slave seemed almost certain. But one
markets of the world. Since that thing that Africa needed for prog-
time Africa has made vast steps ress was economic development.
forward. Her nations are emerging She lacked the capital to purchase
to take their place in the world. and utilize the tools with which
Literacy and education are increas- the progress and prosperity would
ing at a rapid pace. Many of her seem almost inevitable. Africa has
citizens have been trained in the slowly been acquiring the techno-
leading universities of the world. logical knowledge and the tools
Some outstanding leaders of strong for progress, but the pace has
character and of real ability have been far too slow to satisfy her
arisen. There is a growing Chris- restless spirit. If capital is to be
tian church in Africa and many obtained in anything like adequate
deeply spiritual men. The land it- amounts, there must be a large
self in many places is rich in nat- influx of foreign investments.
ural resources, plentiful in rain- Before this capital investment
fall, waiting for the hand of man can be forthcoming, a more basic
—_— need must be met. There must be
The Reverend Mr. Mahaffy has served since confidence and the grounds for at

194S as a missionary of the Orthodox Presby-
terian Church in Eritrea, East Africa. least a good prospect on the part

3


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

4 THE FREEMAN August

of the investors that they would aiding countries desirous of throw-
receive an adequate return for ing off colonialism. The Commu-
their investments, In order to sup- nists are infiltrating the labor
ply this a stable government is re- unions of Nigeria and elsewhere.
quired. Private property must be Communist literature from Russia
respected and protected. The basic and Red China is flooding the conti-
need is for simple honesty which nent. Thousands of students are
alone instills faith and confidence given ample scholarships to study
for investors and workers. A basi- in the universities of communist
cally honest government that rules, countries. The Communists stir up
not by the caprice of men, but ac- one group against another and
cording to well-known and estab- then at the opportune moment aid
lished rules that are in accord with the victorious side and ride to
the moral code, is essential to the power with them. The dream of
free exchange of commerce and of progress and peace has vanished as
ideas without which there can be the chains of bondage tighten. In
little hope for peace or progress. the ensuing confusion most Afri-
cans are unaware of the source of
Retrogression in Africa the enveloping chains, but a care-
However, instead of the prog- ful scrutiny will reveal the “MADE
ress that was the fond dream and IN MOSCOW” or ‘MADE IN PEKING”
hope of many, the chains of a far label.
deeper and more degrading slav- Our own country has not been
ery have been forged and are en- unaware of the developments. We
veloping the darkening continent have seen the crying need for eco-
of Africa. Several major centers nomic development for the emerg-
of communist activity have been ing continent. We have turned to
established in different African the one answer that seemed ready
states and still others are being at hand — foreign aid. Millions of
established. The Mau Mau are dollars have been poured into vari-
stirring again in Kenya, waiting ous countries there. We have dug
for the day of Kenya’s independ- wells, built roads, dams, and many
ence to strike. Ethiopia has just other projects, but the result has
survived a revolt. Uganda is under proven a bitter disappointment.
strong pressures by the Chinese The aid has not developed the ties
Communists. Egypt has turned to of friendship we anticipated nor
the Communists for aid and is seek- has it accomplished our further
ing to establish a strong military purpose in strengthening the front
- force for the avowed purpose of against communist aggression, In


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

1961 FORGING AFRICA’S CHAINS 5

despair the cry has gone up for ideology has found a ready pre-
still more aid as the solution. We pared soil in much of Africa, for
are constantly told that if only we it is the ideology of power. The
would give more, perhaps the tide Communists have been concerned
could be turned. We have given to indoctrinate in compulsory col-
more until our own economy has lectivism only an educated corps
been badly strained and our gold of the elite. They have been con-
reserves drained, but still our goal tent to bring the masses under
remains beyond our grasp. their power.

In our enthusiasm for the often So there have been two conflict-
misunderstood concept of democ- ing ideologies struggling for the
racy we have undiscerningly sup- mind and heart of Africa. The
ported almost any move toward Communists have entered the con-
complete freedom and autonomy flict fully aware of their goals and
for all of Africa. We have failed of how to achieve them. Their ef-
to realize that democracy cannot forts have had dramatic success.
function without some semblance We have entered the conflict
of general agreement at least on struggling for an ideal that we
guiding principles, and this agree- inadequately understand and only
ment has not always been present half believe. As a consequence, we
in all parts of Africa. We have are being defeated. The struggle
uncritically opposed “colonialism” is basically in the field of ideas. It
in any form, failing to see that is an ideological conflict. Two dia-
even colonialism at its worst (and metrically opposed ideals, two con-
there have been serious abuses) is flicting views of morals, two di-
far better than the abject slavery verse philosophies of life are in-
of the totalitarian, imperialistic volved. Until we grasp this impor-
colonialism of collectivism of the tant truth, we are bound to con-
Soviet or Red China brands. Not tinue in retreat.
all countries have been ready for
democracy nor is democracy nec- An Ideology of Power
essarily always the final answer. The socialist-communist ideol-

The Communists likewise have ogy is in its origin and by its
not been standing idly by as Afri- very nature an ideology of power.
ca has been emerging. They have It seeks the end of “social justice”
entered the scene with the ruthless or greater equality and security
but inconspicuous tools of power by means of the abolition of pri-
politics and have made great gains vate property and enterprise, by
toward their goal. The collectivist state ownership in the means of


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

6 THE FREEMAN August

production and by a planned econ- cept of our rights being derived
omy. The state, by making men from the state rather than from
more equal, must of necessity treat God illustrated in the very charter
the individuals in society unequal- of the United Nations.
ly, taking more from some and Essential to the socialist ethic
giving more to others. It must ex- is the idea that the end justifies
ert politico-economic power over the means. Hence, means repug-
" the members of society, which is nant to our sense of morals fall
really a most effective power over within the socialist standard of
the life and minds of men. The morality. Truth is not absolute,
individuals are no longer free to but that which serves the ends of
choose their ends, since the means the state at the particular moment.
to these ends are controlled by the Hence, the impossibility of deal-
state. The state chooses the scale ing with Communists in treaties,
of values for each individual and, contracts, or agreements as we
finally, what he is to believe and would deal with men and nations
what he is to do. The individual who hold to absolute norms of con-
becomes of necessity the slave of duct. Truth has been destroyed by
the state, a sacrifice to what is socialism.
described as “the general welfare” Socialists sometimes attain their
or “the common good.” ends of redistribution by gradual

In this socialist! ideology the and legal means, such as increas-
individual exists for the purpose ing the power of the state in the
of the whole which is determined economic sphere by welfare state
and enforced by the power of the measures. The ends, however, re-
state. His importance is gauged main the same, and the ethics of
by how well he serves the ends of the means just as contrary to
the state. He can readily be sacri- Christian ethies, although not as
ficed, as has become evident, for patently violent as those of the
the good of the state. The individ- more doctrinaire Socialists. It
ual is not free. The only “free- might be likened to the differences
doms” he has are given to him by between stabbing a man and kill-
the authority of the state, which ing him gradually by small doses
is the very opposite of true free- of poison. }
dom. We see this socialistic con-

Misunderstanding Is Our Guide

cialism and communism is immaterial to

this discussion, and the terms are here to understand the nature of social-
used interchangeably. ism is evidenced by our adopting


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1961 FORGING AFRICA’S CHAINS 7

many of the principles of socialism years there among her people have
as our own. Our foreign aid pro- come to love this great awakening
gram has been but one example of continent and her people. How-
this. On the fallacious notion that ever, not merely out of sentiment
we can buy friends, or appreciably but also from the very vital con-
improve the lot of the masses in cern for our own survival, we need
Africa by government-to-govern- to work toward the removal of
ment aid, we pour out our largess. the chains that are encompassing
Some of this aid is consumed in Africa today. This can never be
~ graft. Part of it foots the bill for effected unless we realize that the
their socialistic welfare experi- struggle is basically an ideological
ments. The result is to discourage one and unless we better under-
capital investment in the tools of stand our own ideology — the ide-
production, the only sound method ology that made our own nation
of progress. Tax-collected foreign great.
aid for the purpose of redistribut-
ing the wealth more equally [ndividualist Ethics
throughout the world is a form of The conflict in Africa (and in
socialism, the world) is basically between
Perhaps religious leaders and the ethics of socialism and the in-
prominent theologians have been dividualist ethics of the West.
especially misled in this regard. Many of us believe that this in-
Because of their sympathy for the dividualist ethics has been most
poor and oppressed and their real- consistently expressed in the
ization that we are not as charit- Christian religion finding its roots
able as we should be, they are more in the moral law given by Moses
readily inclined to make the illogi- to Israel. It is the belief that
cal jump from personal charity moral principles are absolutes and
and concern to government coer- that man is responsible to God for
cion to enforce a greater leveling his adherence to these principles.
of wealth. There is, of course, a Basic integrity is one of the foun-
vast difference between charity dation principles of all our con-
given freely from the heart of love duct. Without integrity, there can
and - concern, and the forceful be no progress in the intellectual,
equalizing of wealth by the police moral, or economic spheres.
power of the state. Many have Honesty breeds trust and the free
failed to see this vital distinction. exchange of commerce and of
There is still hope for Africa. ideas without which there can be
Some of us who have spent many no peace or progress. Honesty is


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

8 THE FREEMAN August

the basis of all commerce; the in- the West looks upon the individual
dispensable element of prosperity. as a creature of God. He does not
Contrary to a popular view, jus- exist, as the collectivist claims, to
tice relates not to the amount of serve the ends of the state but
our possessions in relation to those rather under God as an end in
of others but only to the treatment himself. He is a free soul. He
of man by man. A just state of needs free scope to utilize his
affairs can only be one in which talents and the resources available
all are treated equally by the same for his own betterment and satis-
moral standards and judged alike faction. He needs to be free to
by the same general laws. Indi- make mistakes also and to suffer
vidualist ethics demands restraint the consequences. Only thus is the
from fraud and deceit and all vio- good of the whole best served. His
lence in man’s dealings with other freedom ought to be restrained
men. Violation of these norms of when he violates the established
conduct is to be punished by the code of laws embodied in the rule
power of the state. The state is of the land, a code that ought to
"to govern, not by the whim of men conform to the moral laws given
in power, but rather by fixed gen- by God. He needs restraint also .
eral laws that apply equally to when he would interfere with the
everyone. This is one of the dis- same freedom of others. Society
tinctive marks of an individualist can make progress morally, intel-
society in contradistinction to a lectually, and economically only as
collectivist society. individuals do so. The idea of re-
Individualist ethics, since it pro- forming the individual through
hibits theft and fraud, holds in- society, which really means by the
violable the right to private prop- coercive power of the state, is a
erty. In fact this is the very heart fatal error. There can be no
and keystone to individualist and morals, no intelligence, no free-
Christian ethics. This right is a dom. unless it is the freedom, the
God-given right — a vital and in- intelligence, and the morals of in-
tegral aspect of the right to life. dividuals within the group.
Without property rights all other
rights are meaningless. If a man A Hopeful Direction
has lost the right to his honestly The hope for Africa lies in a
earned possessions, he has lost the deeper understanding of our in-
fountainhead of all rights and is dividualist ideology and in pro-
no longer free, but a slave. moting this widely in Africa to
The individualist ideology of counter the collectivist ideology of


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

1961 FORGING AFRICA’S CHAINS 9

Russia and Red China. Instead of culcation of the Christian ethic as
the vast sums that have been the norm of conduct in all our in-
poured out in foreign aid, if only dividual, family, church, and other
a fraction of that amount had been relationships. There may yet be
used to promote individualist ide- hope for Africa. The hope lies in
ology and ethics and the free en- a course different from the one on
terprise which can flourish only which we have embarked.
in such an atmosphere, we might Shall we of the United States
not be witnessing the chains continue to aid the Socialists in
tightening around Africa today. forging the chains for Africa, or
Missionaries and others work- shall we in true realism support
ing in Africa have an important the only program that can bring
part to play in this struggle. The deliverance from bondage, peace,
message of Christianity, if cor- and friendship with this great
rectly understood, is one that will emerging continent? Our own sur-
promote commerce, peace, and vival may well depend in large
prosperity because it involves in- measure upon our answer. PS

IN THE QUESTION of possessions, the ethics of reverence for life
are outspokenly individualist in the sense that wealth acquired
or inherited should be placed at the service of the community,
not through any measures taken by society, but through the
absolutely free decision of the individual. They [the ethics of
reverence for life] expect everything from a general increase in
the feeling of responsibility. Wealth they regard as the property
of society left in the sovereign control of the individual. One
man serves society by carrying on a business in which a number
of employees earn their living; another by giving away his
wealth in order to help his fellows. Between these two extreme
kinds of service, let each decide according to the responsibility
which he finds determined for him by the circumstances of his
life. Let no man judge his neighbor. The one thing that matters
is that each shall value what he possesses as means to action.
Whether this is accomplished by his keeping and increasing his
wealth, or by surrender of it, matters little. Wealth must reach
the community in the most varied ways, if it is to be of the
greatest benefit to all.

ALBERT SCHWEITZER, The Philosophy of Civilization
New York: Macmillan Company, 1960. All rights reserved.


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

LAWRENCE FERTIG ]

ALMOST
Our “Experts” || RUINED
GERMANY

. .. a vital lesson for the United
States on the relation between
inflation and growth.

IN 1951 the U.S. State Department scription which they gave for
sent a commission of American Germany’s economic health.
economists to West Germany On excellent authority, I have
to investigate and make recom- the substance, as well as a number
mendation to that government on of quotations from this 400-page
fiscal policy. Chairman of the com- report. I believe it is in the public
mission was Professor Alvin W. interest for the American public
Hansen of Harvard. Professor to know about this. It would ap-
Walter W. Heller, now chairman pear that the German government
of President Kennedy's Council of practically threw this report into
Economic Advisers, joined the the wastebasket, and pursued poli-
commission and is reported to cies which were the opposite of
have had a hand in writing the those recommended by Dr. Heller
report. The world has long waited and his associates. Today, as we
to view this report, which was know, German prosperity is the
classified as a secret document. envy of the world. What would
Many people want to know pre- have happened had they followed
cisely what measures were recom- the commission’s recommenda-
mended by Dr. Heller and the tions? The reader may answer
other economists, and to what ex- that for himself.

tent the phenomenal West German Here are some of the recom-
prosperity is related to the pre- mendations in the report: (1)
This article is from two of Mr. Fertig's columns That Germany had an “excessive
which first appeared in the New York World concern for price stability.” It

Telegram and Sun and other Scripps-Howard .
papers on May 8 and May 29, 1961. tried to egg the Germans on to

10


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

1961 OUR “EXPERTS” ALMOST RUINED GERMANY 11

more inflation and said that they (4) Finally, the American re-
(the Germans) tended to “confuse port said that ‘the nostalgic hopes
wartime inflation with the normal . . . looking toward a revival of

operations of peacetime credit.” the nineteenth century role of a
The Germans would have none of capital market are doomed to dis-
this. They kept the lid on the appointment. The capital market
money supply and refused to pur- plays no such role in any modern
sue a cheap money policy. Ger- country and there is mo prospect
many had less inflation than any that it will.” This is probably the
nation in Europe, and as a result most ridiculous statement in the
she had more prosperity. report.

(2) Our economists told them The capital market has been the
that ‘“‘a rate of interest high mainspring of German prosperity
enough to stimulate any large and it certainly has been the heart
volume of personal savings would of American progress. Plainly, Dr.
seriously curtail investment.” The Heller and his associates never
Germans scoffed at that idea and had any confidence in the heart of
they encouraged savings by a high the private capitalist system — the
rate of interest. Instead of Ger- private capital market.
man investments being curtailed,
they were expanded. German in- [8 It Good Advice for U.5.?
dustry made the most rapid This raises grave questions as
strides in Europe. to whether we ought to follow ad-

(3) The Germans allowed fast vice for this country now being
depreciation of capital investment given by some of these same peo-
and gave special inducement to ple in Washington. Is the eco-
corporations to increase their in- nomic philosophy represented by
vestment in new plant and equip- the Heller school of economics
ment. The American economists right or wrong for the United
objected to this, saying that “it States? This type of thinking now
was an expenditure of tax funds dominates the Administration, and
which would otherwise have been therefore the question is perti-
collected by the government.” Al- nent. Will it lead to a high degree
ways the Americans suggested of prosperity and maintain the
that the government should be free economic system in the
dominant in the economy. The United States?

Germans completely disregarded The important point is that the
this recommendation and went Hansen-Heller report urged Ger-
their own sweet way to prosperity. many to engage in deficit spend-


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

12 THE FREEMAN August

ing, to maintain a cheap money Imagine throwing out wage and
policy, to enlarge government eco- price controls as early as 1948!
nomic activity and shrink the pri- When the United States eliminated
vate area (the same policies which controls five years later, we were
they advocate today for the U.S.). told by so-called liberal economists
Economics Minister Erhard sum- that this action would result in
marily rejected this advice. In- a catastrophe for us.

stead, he adopted a policy of bal- Tax rates in Germany were re-
anced budgets, monetary restraint, duced —to provide greater per-
encouragement of private enter- sonal incentive — to a point where
prise and incentive for individual the top individual tax rate was no
effort. The result was what became more than 50 per cent. German de-
known as “the miracle of German preciation allowances were per-
recovery.” The progress and pros- mitted on business investment —
perity of Germany has been une- although our Fair Deal “experts”
qualed in the entire Western said at the time this was bad.
world. Shouldn’t the U.S. follow German interest rates were kept
Dr. Erhard’s course and spurn the high to encourage savings and in-
kind of economic nostrums that vestment. German government ex-

could have ruined Germany? penses were held down and a bal-

anced budget was maintained.

The Rules of “Laissez-Faire These policies were scorned by our
The first thing the Germans did experts.

was to institute currency reform What was the result? From the

and establish a hard, new Reichs- moment, in 1948, when our Occu-
mark. They vowed that they would pation Authority’s authoritarian
never engage in inflationary gov- controls on the economy were
ernment spending or inflationary abandoned, vigorous recovery be-
monetary policies which would rob gan. In ten years, production more
people of their earnings. Then, than doubled and real wages —
~ with sound money as a base, Dr. earning power figured in terms of
Erhard said, “We decided upon goods — nearly doubled, By 1958,
and re-introduced the old rules of the Bonn government offered its
a free economy, the rules of citizens the right to buy 10- and
laissez-faire. We abolished practi- 20- gram bars of gold for 57 and
cally all controls for allocation, 112 marks respectively. There was
prices, and wages and replaced no rush for gold because people
them with a price automatism con- had faith in the soundness of the
trolled predominantly by money.” mark.


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

1961 OUR “EXPERTS’’ ALMOST RUINED GERMANY 13

Britain and Germany Compared vised, as Germany was, to spend
A comparison of those years ourselves into prosperity by way
with Britain under a Labor gov- of government deficits. We are
ernment is interesting. Britain told that government must spend
pursued the opposite policy. Ac- more of the national income and
cording to a study by Economist individuals must spend less.
David McCord Wright, published Our tax rates choke business
by the American Enterprise As- and curb individual effort, but we
sociation, British prices under in- are told that high taxes are neces-
flation (1948-56) increased 45 per sary because high government
cent while German prices fell 5 spending is essential. Our depre-
per cent. While real wages in Ger- ciation schedules restrain indus-
many nearly doubled, British try investment in new plant and
workers got less than a 10 per cent equipment — which is the very
increase. Under Germany’s lower- foundation of a higher standard of
cost production, her manufactured living for everyone. Yet, Adminis-
exports rose from 7 per cent of tration economists refuse to revise
the world total to over 15 per cent. these schedules basically and in-
Her gold and dollar surplus stead come up with a piddling
soared, while the British declined. credit which is merely a gimmick.
But could this pace be main- Administration economists urge a
tained in 1960? The answer is new law to tax as income, in the
that 1960 was one of the most year property is sold, all the de-
prosperous years in German his- preciation allowances which have
tory. Her total product increased accumulated over many years.
8 per cent in real terms — a fan- This would freeze capital invest-
tastic record. There was no unem- ment, depress real estate and other
ployment — the in-between-jobs values, and spur contraction
registrants totaled less than one rather than expansion.
per cent of her work force. In Germany proved that a sound
1960, her exports increased by 15 monetary policy encourages
per cent, and she had a trade sur- growth. Our New Frontier econ-
plus of over a billion dollars. There omists do not believe this. German
is no record to equal this in the experience proves that dynamic
entire Western world. growth can be achieved by employ-
Why, then, do we in the United ing sound classical economic meas-
States give heed to advice that ures. Administration economists
might have ruined Germany had today give no sign of understand-
it been taken? We are now ad- ing and believing these principles.


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

JOHN C. SPARKS

THE HIGHWAY DICETINA

If men were free to try, they might find a way out of it.

PERHAPS for the same reason that for the growing commercial and
so many persons expect the gov- passenger traffic. Mounting main-
ernment to resolve their personal tenance costs, increasing snarls of
problems, they also imagine that traffic, rising totals of highway
a remedy which failed when ap- accidents and deaths were some of
plied in small measure is bound to the alarming symptoms of sickness
give good results if applied on a in the system of highways, roads,
massive scale. The outcome, of and streets owned by city, county,
course, depends on whether or not state, and federal governments.
the proposed remedy is suited to A major automobile manufac-
the problem. A small amount of turer conducted a contest for ideas
the wrong medicine may do no which might help resolve the prob-
more than postpone a patient’s re- lem. Clubs and civic groups offered
covery, whereas a large dose might suggestions. Government leaders
injure him seriously, if not fatally. had recommendations. But the net
By the middle 1950's, it was result of all this was the one gen-
fairly obvious that the United eral idea, the one solution, of
States had on its hands a sick pa- turning to the federal govern-
tient in the form of an acute high- ment. It could administer the
way problem. The federal govern- largest possible dose of the same
ment asked a study commission old medicine — bureaucratic plan-
for recommendations to make the ning, construction, and operation,
nation’s roads adequate and safe financed on the grand scale
Illustration: A. Devaney, Inc., New York In 1956 the Federal Highway

14


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

1961 THE HIGHWAY DILEMMA 15

Program was initiated to provide dition of the patient after a big
a network of national highways dose of the wrong medicine. Obvi-
estimated to cost $23.6 billion and ously, it is important to determine
to be completed by 1972. Today, the right medicine so that we may
five years later, the estimated mile- work ourselves out of the highway
age goal of the new highways has dilemma.
been increased slightly, but the
costs are now estimated to be $41 Looking in the Wrong Place
billion, and many believe the fig- No number or concentration of
ure may exceed $50 billion before experts on road construction or
completion. Furthermore, the pre- of wizards on finance can find the
dicted completion date has been solution to the highway problem
moved along three years to 1975. until the search is conducted in
Other difficulties include property the area in which the solution lies.
acquisition at prices well above The evidence is clear that the
recent market values; construction wrong place to look for the solu-
work below specifications; over- tion to the highway problem is in
passes too low to accommodate the area of government. That
commercial transports; houses dis- practically all highways are owned
appearing before the government by some particular form of govern-
could redeem some of the acquisi- ment — federal, state, county, or
tion costs through resale;! selec- municipal —18 the problem and
tion of costly routes when less ex- not the solution.
pensive routes were available;2 Government i8 not creative, al-
and political considerations out- though misguided and misunder-
stripping economic considerations. standing citizens and elected serv-
Sharp criticism has been leveled at ants have time and time again
the program by various senators mistaken compulsion for creation.
and others in positions to report The proper role of the govern-
the extravagant waste, bureau- ment should be to defend our na-
cratic bungling, and dishonesty. tion from outside attack, as a sol-
The only purpose in recounting dier, and defend us from lawless-
the record of the Federal Highway ness from within, as a policeman.
Program is to show the poor con- Both of these tasks are very im-
i portant, but neither is creative in
Tn ho, Billion Highway Program in nature. The company striving to
rah 7 1060. CF & World Report, gavelop a new vaccine for the
2 Karl Detzer, “Our Great Big High- €limination of cancer surely would
way Bungle.” Reader's Digest, July 1960. not assign the project to the plant


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

16 THE FREEMAN August

security police. Nor should we as- the greater dilemma which will
sign the development of highways face us still unsolved in succeed-
to political policemen. We have too ing years unless government sur-
often hooked up coercive power to renders this highway problem and
a creative field, and the results responsibility to private initiative.
have ended inevitably in failure.
When the hand of government is The Alternative: Private Ownership
inserted in a problem requiring The alternative to public or
initiative, it becomes a dead hand government ownership of high-
— and the failure can be predic- ways is private ownership. There
ted. Co are but these two possibilities. The
Government should not be in the alternative to the government
creative field of highway construc- ownership of anything is private
tion and ownership. One cognizant ownership, whether it be the auto-
of the coercive nature of govern- mobile industry, chemical indus-
ment could have predicted years try, the postal system, or the cor-
ago (and some surely must have ner grocery store. Regardless of
done so) the dilemma with which the industry or service, these are
we are faced today. Surely he the alternatives of ownership.
would have foreseen the inade- The government-ownership rec-
quacy of government roads to keep ord is not enviable. It has become
pace with the development of a so-called insurance company for
ideas for better conveyances that millions, but with a Social Secu-
would come from millions of crea- rity sales program so unconvine-
tive individuals acting freely. No ing to the discernible that it must
one could have predicted in detail force its captive “policy holders”
where the road facilities would be to pay their “premiums.” In its
proven inadequate, just as no one operation of this compulsory “in-
could have predicted in detail surance” scheme, it pays out bene-
sixty years ago just what the 1961 fits in order to win votes and
model Cadillac would look like. But increases the amount of these
if one had been aware of the crea- benefits without regard to its fi-
tive nature of a society of free nancial status. Government entry
men and the coercive nature of into the electric power field under
government, he could have pre- the guise of flood control, its entry
dicted in general terms, but no into local education and its threat
less accurately, the. dilemma of to wield even a heavier hand of
today. . authority through federal aid, its
Similarly, we can predict today slow and expensive jaunt into


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

1961 THE HIGHWAY DILEMMA 17

atomic power — these are vivid bits would have been rejected as the
of evidence of the record of gov- figment of someone’s wild imagi-
ernment ownership and control in nation.
creative fields. Now, 61 years later, let us see
For the purpose of illustrating which of these problems has been
the great accomplishments of pri- solved. Has the easiest problem
vate initiative, let us suppose you been solved? No! Have the seem-
had lived in 1900 and somehow ingly fantastic problems been
were confronted with finding a solved? Yes, and we hardly give
solution to any one of the follow- them a second thought.
ing problems (within the next 61 It is not accidental that solu-
| years) : tions have been found wherever
1. To keep roads adequate for the atmosphere of freedom and
use of conveyances, their opera- private ownership has prevailed

tors, and passengers! wherein men could try out their
2. To increase the average span ideas and succeed or fail on their
of life by 30 years! own worthiness. Nor is it acci-

3. To convey instantly the sound dental that the coercive force of
of a voice speaking at one place government — when hooked up to
to any other point or any number a creative field such as transporta-
of points around the world! tion — has been slow, plodding,

4. To convey instantly the and unimaginative in maintain-
visual replica of an action, such as ing and replacing its facilities.

a presidential inauguration, to
men and women sitting in their We Haven’t Thought About It
living rooms all over America! How could roads be built and

5. To physically transport a operated privately? I do not know.
person from Los Angeles to New This is a subject to which none of
York in less than four hours! us directs his creative attention.

6. To build a horseless carriage We never think creatively on any
of the qualities and capabilities activity pre-empted by govern-
described in the 1961 advertising ment. It is not until an activity
folder of any automobile manu- has been freed from monopoly
facturer! that creative thought comes into

Without much doubt you would play.
have selected the first problem as But go back to 1900. Could any
the one easiest of solution. In fact, of us then have told how to solve
the other problems would have the five problems to which solu-
seemed fantastic and quite likely tions have been found? Suppose,



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

18 THE FREEMAN August

for instance, that someone could alty or reward according to their
then have described the looks and abilities? I cannot predict the
performance of a 1961 automobile. exact development in highways
Could any of us have told him how which would be comparable to the
to make it? No, no more than we development of four-wheel brakes
can describe how to privately build to an automobile, or to the de-
and operate highways today. But velopment of the coaxial cable or
we can be sure that the exciting microwaves to the communica-
and miraculous equivalent of other tions industry. I cannot predict
private-ownership developments the exact nature of the ingenious
will occur with respect to high- thought of some man unknown to
ways when they are freed from me, perhaps yet unborn. But I
governmental monopoly. can safely and accurately predict
A privately-owned highway he will exist somewhere just as
company would continually seek to soon as government relinquishes
satisfy its customers by providing its monopolistic and compulsory
safe facilities for them and their hold on highways, and he will
vehicles, most likely far beyond bring forth and try out an idea
our imagination. It would contin- which will be but one of many ad-
ually seek to improve its facilities vances that will come through a
in order to increase its own sales private highway system.
and attract customers from its
competitors. The tie-in of achieve- This is the direction toward
ment and financial reward would which we must head if we hope to
be direct — and the results would be successful in finding our way
be as astounding as penicillin, tele- out of the highway dilemma. It
vision, or power-steering. Could will cost: nothing but courage to
we not logically expect a develop- try freedom. Private ownership,
ment in highway facilities as private initiative, the hope of re-
amazing as the contrast between ward, and the expectation of
a jet-engine airliner and the first achievement have always been pri-
invention of the Wright brothers? marily responsible for the ad-
Who can say what thoughts will vancement of mankind — account-
come to light when men are free ing for an almost infinite number
to own, build, and operate high- of “fantastic” accomplishments.
ways and try out their own ideas, Privately-owned highways could
assuming their own risks of pen- be another. >


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

DIRECT |
TAXATION

or — THE ULTIMATE IN FARM SUBSIDIES

It was a windy afternoon
With thunder in the air.
Old Kaspar closed the windows tight
And settled in his chair,
While Peterkin and Wilhelmine
Looked at the futurama screen.

They saw brigades of dusty men
In boots and denim pants

Go surging through the city streets
Like swarming soldier ants; p

While city folks amid the rout

Were left with pockets hanging out.

“Now tell us what it’s all about!”
The little children cried.
“It is the Farmers’ Subsidy,”
Old Kaspar then replied.
“It keeps the farmers’ income high,
Without a surplus food supply.”

“There was a time,” Old Kaspar sighed
“When fiscal arts were crude,
And farmers earned their subsidy
By growing surplus food,
Which Uncle Sam would take and store
While farmers worked at growing more.”

“But now we've set the farmers free
From such a sorry plight.

Whenever they are short of cash
They have the legal right

To raid a bunch of city folks

And take enough to fill their pokes.”

“What happens if they take too much?”
Asked little Peterkin.

“They stop when they have all they need,”
Said Kaspar with a grin.

“They want their rightful Subsidy,

But not a mite of Charity.”

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

19


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

OSCAR W. COOLEY EMPLOYMENT OFFICE

NO JOBS?

“I can’t find a job.” very poor, like Chinese coolies.
Many a wage earner in recent How many would vote to return to

months has lost heart and said or such a primitive way of life?
thought these discouraging words. Specialization can create a
But, are they warranted? highly productive economy, but it
Is there really nothing one can also creates a highly interdepend-
do for which somebody, some- ent one. Everyone finds himself
where, would pay a wage? This" dependent on everyone else. It’s
would be true only if the work of like a production line in a plant;
the world were all done and we if interrupted at some point the
were all living on Easy Street. whole line is thrown out of whack.
This is just not the case. We, with our highly specialized
True, modern workers are spe- economy, offer the consumer a myr-
cialists, and the more highly spe- iad of choices; and he, being hu-
cialized an. economy, the more man and- fickle, keeps choosing
likely that some workers, some- first one thing and then another.
where, will at times find them- Because the demand for each good
selves temporarily out of work. If and service fluctuates, the number
there were no specialization — if employed to produce each good or
everyone produced everything for service also fluctuates. Hence,
his own consumption — there some unemployment is inevitable
would be no unemployment. We in a specialized, free-choice econ-
would all be very busy, and also omy — that is, if each worker in-
sists on sticking to his own spe-

Mr. Cooley is Associate Professor of Eco- H 3
nomics at Ohio Northern University. Nohis cialty and at an. arbitrary wage
article first appeared in e Lima (0O.,) News

of March 19, 1961. pattern.

Illustration: A. Devaney, Inc.,, New York. The flexibility of consumers in

20


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

1961 NO JOBS? 21

choosing their purchases ought to omy. And why should a worker ex-
be matched by flexibility of pect such a guarantee? Such guar-
workers in adapting themselves to antees are worthless, as workers
jobs. And it can be, if the worker under the omnipotent state know
doesn’t give up in despair and say, full well. In a free society the mer-

“I can’t find a job.” chant has no guarantee that he

will succeed, nor does the doctor
Flexibility in Skills, or lawyer or banker or farmer.
Wage Rates, and Mobility And remember, a house that has a

There are at least three kinds floor also has a ceiling. Putting a
of flexibility which the worker can floor under wages sets a precedent
exercise. for putting a ceiling over wages.

First, he can be flexible in the Totalitarian nations do both.
kind of work done. There's no law The third kind of flexibility °
which says that a man can have open to a worker is geographical.
but one skill. If his specialty is not He should be ready to move — to
in demand, let him turn his hand go where the work is, for it rarely
to a related skill. Thus, a milk will come to him. After all, a work-
salesman may become a bread ven- er and his family are much more
dor. Or, he may retrain himself mobile than is a factory, to say
for an entirely different kind of nothing of a mine, a forest, or a
work. U. S. Department of Com- fishery.
merce figures show that 8,500,- Fortunately, advanced speciali-
000 workers change employers zation makes moving much easier
every year and that over half of for today’s worker than it was for
these change to different job clas- his grandfather. Having an auto-
sifications. These figures testify mobile, he can work anywhere
to the versatility of American within a wide radius without mov-
workers, ing his family. When he has to

The second choice open to the move his place of residence, if he
worker is flexibility in his wage has a house trailer he can take his
rates. He will seek the maximum, home right with him. If not, there
naturally, and he should. On the are houses and apartments of all
other hand, no employer, under kinds to rent or buy on easy terms
any system in any economy, can in every community. And wher-
guarantee a- worker that his wages ever he goes he finds many retail
will never be reduced. Certainly, stores and service establishments
no such guarantee can be given in to supply the needs of his family.
a highly variable, dynamic econ- Some 33,000,000 Americans


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

22 THE FREEMAN August

move their place of residence every be. Though there has been a re-
year. Every five years, on the grettable trend of recent years
average, we all move! away from freedom and self-re-
No other worker in the world sponsibility, this trend need not
has ever been so mobile as is the be irreversible. The greatest op-
modern American. It is one of the portunity in the world awaits the
chief reasons why the American’s worker of initiative and ambition,
level of living is so high. who deplores the modern trend
and who recognizes temporary un-

This country has been a land employment as a chance to find a
of opportunity, and it still can new and better job. ~>

I YIELD TO NO MAN in the world ....in a hearty goodwill towards
the great body of the working classes; but my sympathy is not
of that morbid kind which would lead me to despond over their
future prospects. Nor do I partake of that spurious humanity,
which would indulge in an unreasoning kind of philanthropy at
the expense of the independence of the great bulk of the com-
munity. Mine is that masculine species of charity which would
lead me to inculcate in the minds of the laboring classes the love
of independence, the privilege of self-respect, the disdain of be-
ing patronized or petted, the desire to accumulate, and the am-
bition to rise. I know it has been found easier to please the
people by holding out flattering and delusive prospects of cheap
benefits to be derived from Parliament, rather than by urging
them to a course of self-reliance, but while I will not be a syco-
phant of the great, I cannot become the parasite of the poor....

RICHARD COBDEN, as expressed in 1836 in a letter
to W. C. Hunt on hours of labor.


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

STANLEY YANKUS

DURING MY YEARS as a chicken ing more fundamental in civilized
farmer in Michigan I used to read society than the right to own
various poultry magazines to gain property — nothing more destruc-
a better knowledge of the busi- tive of civilization than stealing.
ness. While thus engaged one But, how many of us know why
evening, I suddenly realized that stealing is wrong?
I didn’t know how many toes a Imagine yourself before a jury
chicken has on each foot. Though of Socialists whose ideas on steal-
there were thousands of hens ing match their creed: “From
roosting in our chicken coop at the each according to ability, to each
moment, and though chickens had according to need.” Charged with
provided our living for a number spreading the belief that stealing
of years, the shocking fact was is wrong, you stand bound before
that I didn’t know about their a firing squad. The squad leader
toes. “Yankus,” I thought, “you’re affords you a last chance: “Why is
stupid!” So I referred the prob- stealing wrong? Give me a rea-
lem to my wife in the kitchen; she son.”
didn’t know, either. The next day Why is stealing wrong? Every-
I asked a neighboring chicken far- body knows that! Stealing is
mer, who admitted his ignorance. wrong because you are taking
A truck driver, primarily engaged something that belongs to someone
in hauling chickens, couldn’t give else. But that is only a definition
the answer. — not a reason. Stealing is wrong
The point is that so often we because someone might catch you?
fail to observe and think about No, that argument is futile
the very things most basic in our against Socialists, because they
lives. For instance, there is noth- have voted to legalize stealing, by

Mr. Yankus, in protest to governmental inter- way of taxation and inflation.

ference with his farming operations, recently Perhaps your brain is numbed
removed his family from Michigan to Aus- . . .
tralia. by such coercive action. So, im-

23


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

24 THE FREEMAN August

agine you've now escaped to a fill its purpose — in your pursuit of
land of capitalism. A group of happiness — you must be able to
businessmen have offered a mil- own, possess, use the things you
lion dollars for an answer to the earn. The thief who steals your
question, “Why is stealing earnings, your property, is in-
wrong?” So you work on a million- fringing -on your God-given right
dollar explanation. to life. This is why honesty is the
Your thoughts run back to those best policy —- why it is wrong to
from whom you had learned of steal.
truth. Your mother told you that Some believe that stealing is a
stealing is wrong, but she didn’t law of nature because, they say,
prove it. Your teacher said that it is natural for animals to steal.
stealing is wrong, but didn’t ex- But there is a penalty built into
plain. Your preacher simply asked this law of the jungle: even in the
you to believe that stealing is animal kingdom, stealing leads to
wrong. The law says that stealing violent fights. Ownership of prop-
is wrong — but man’s laws are sub- erty is not a well-developed insti-
ject to man’s repeal. The Bible tution among animals because they
and the Ten Commandments say lack the ability or understanding
that stealing is wrong; but seek to earn or create wealth; they can
there as reverently as you will, only garner the fruits of nature
the explanation eludes you. by instinct. When men adopt steal-
Even little children know that ing as a code, under the guise of
stealing is wrong. Perhaps you’ll welfarism, they reduce themselves
want to ask your children for a to the animal level. In a socialistic
reason against stealing. If you get society, the theory and practice of
the same answers I did, you'll private ownership tend to vanish,
agree that it’s time to exercise as does one’s right to his own life.

that form of parental responsi- A man once said to me, “I con-
bility that starts with improving demn all stealing except when a
one’s own understanding. person steals bread to sustain his

Why is stealing wrong? Here is life.” But suppose your sole pos-
the best explanation I can offer at session were a loaf of bread, and
the moment: someone stole it from you? Whose

Each of us is born with a God- life has priority?
given right to his own life. If you Stealing is wrong. Everybody
think otherwise, name the person knows that!
who has a right to your life. In Incidentally, there are four toes
order to retain your life and ful- on a chicken’s foot. PS


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

HOW HELP

DESTROYS Sol -HELP

WILLIAM HENRY CHAMBERLIN

IT WOULD NOT MAKE either good vide for the well-being of himself
sense or good morals to leave a and his family.
long stretch of sidewalk danger- For it is a most pernicious al-
ously slippery with glazed ice though widespread illusion that
while spending the money that the State can create any wealth of
might have been used for snow its own. When a government an-
removal on ambulances and hos- nounces some new expensive social
pital beds for passersby who welfare program, the point is usu-
might break their arms or legs on ally carefully obscured that this
the slippery ice. program must be paid for through
Yet, in essence, this is what the some form of increased taxation
Welfare State in America and (it is immaterial whether this
elsewhere does. While making a takes the form of heightened “so-
parade of humanitarian purposes, cial security” payments or of di-
the ever-expanding practice of of- rect federal or state taxes) or
fering state handouts for every through the most cruel and harm-
emergency, from getting a house ful tax of all, inflation.
or apartment to paying for medi- It may seem humane and benev-
cal aid, is destroying an extremely olent to provide free medical care
valuable American tradition that for the aged by taxing the general
it is up to the individual to pro- population. But a much more prac-
Mr. Chamberlin is a skilled observer and re- tical and realistic form of benevo-
porter of economic and political conditions at lence would be to leave people in
home and abroad. He has written a number of . .
books, has lectured widely, and is a contributor their productive years enough of

to The Wall Street Jo I and tion- . .
ally-known magazines. on) BHO their earnings so that they could

25


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

26 THE FREEMAN August

save for 'medical care and other capable of purchasing or renting
emergencies in their years of re- his own housing. Take the case of
tirement. From the standpoint of a young man, newly married, who
personal satisfaction, self-help is supposed to be taken care of, if -
beats state help every time. he wants a middle-income house,
It is indeed shocking and dis- by a 40-year, no-down-payment
tressing that.in. a country like the mortgage plan. But, if his income
United States, where wage and were less heavily taxed, he might
salary levels are comparatively well be able to save enough for
high, where no serious depression a conventional down payment and
has been known for more than a have enough of his paycheck left
generation, so many “senior citi- to pay off his mortgage on a 20-
zens” have such low ‘personal in- year basis.
comes. The reason iis pretty ob-
vious: the tremendous increase in ‘Some Fundamentals
the burden of taxdtion at all levels, ‘The fundamental truths that the
Many of the indigent aged could State, by its very nature, can cre-
take a pencil ‘and ‘paper and -cal- ate no real wealth, that whatever
culate accurately how :many ‘more :itigives to one group it must take
opportunities for comfortable liv- away from another (or perhaps
ing, including ability to meet their “from the same group), should be
medical bills, they would have en- hammered in with the remorseless
joyed if so much of what they Iliteration of which only commer-
earned had not been siphoned off cial advertising seems capable. For
by federal, state, municipal, and history is full of examples “of
other taxgatherers, to say nothing healthy national communities that
of the steadily increasing bite of gradually shriveled up, lost vital-
the payments required to maintain ity, and perished as the people
some semblance of solvency for the were bribed by the will-o’-the-wisp
social security system. of state handouts and fell more
There are many fields in which and more into the meshes of an
the ever-expanding process of all-encompassing bureaucracy.
state help is destroying individual It is one of the best established
capacity for self-help. Take hous- laws of history that, as govern-
ing, for instance. Whenever a fed- ment activity expands, individual
eral housing project is launched, activity and enterprise contract,
with rents below the cost of pro- until what was once a vigorous,
duction, the taxpayer who must self-reliant society becomes a hol-
foot the deficit is rendered less low, bureaucratized shell, easily


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

1961 HOW STATE HELP DESTROYS SELF-HELP 27

cracked by external attack or in- lace demanded, steadily increased.
ternal decay. This whole drama of Roman financial policy became
rise, growth, decay, and ultimate one of creeping and not-so-creep-
fall has been played on many ing inflation. The most common
stages in world history, the most Roman coin, the sestertius, lost
dramatic being that of ancient about 98 per cent of its value be-
Rome, tween the time of Augustus, at
Gibbon has immortalized the the beginning of the Christian
fate of Rome in what is probably, Era, and the reign of Diocletian,
if only for its literary style and some three centuries later. Diocle-
philosophical quality, the greatest tian, who brought some temporary
of all histories, The Decline and order and stability into the declin-
Fall of the Roman Empire. A ing empire, might well be honored
Canadian professor of classics, as the patron saint of all planning
W. G. Hardy, in a lecture entitled and regulating agencies. He issued
“Why Rome Fell,” published in a an edict fixing a maximum price
paperback work on Greece and for all goods on the market and
Rome, sums up in briefer form for wages in all trades. The
many of the causes of decline and penalty for violation was death.
fall which Gibbon analyzed at But economic laws proved stronger
more length. than the imperial decree and this
supreme experiment in economic

Why Rome Fell regimentation ended in a fiasco.
The Roman Republic, which had The clammy dead hand of bu-
triumphed over Hannibal and reaucracy more and more stran-
many lesser enemies mainly be- gled individual initiative. The em-
cause of the self-sacrificing pa- pire became a bound society. The
triotism and devotion of its proud more well-to-do citizens in every
citizens, had become an absolute community were made collectively
empire in which the State, work- responsible for bringing in the
ing through a huge imperial bu- taxes. The natural result was that
reaucracy, tried to do everything they ceased to be well-to-do.
for everybody, relieving everybody Farmers were tied to the soil;
of his surplus cash in the process. their sons had to be farmers.
The financial burden of keeping Similarly the sons of artisans had
up an increasingly mercenary to follow their fathers’ trade. As
army and of providing the panem Professor Hardy sums it up:
et circenses, the “bread and cir- ‘There was no escape from this
cuses” which the idle Roman popu- relentless regimentation. For regi-


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

28 THE FREEMAN August

mentation was the end-result of others; but it has never been de-
the abdication of political freedom cisively arrested, much less re-
and of the pursuit of materialism. versed.
The Welfare State had become a By far the best kind of social
despotism.” security is provided by individual
Ever higher .taxes, an ever-in- saving. But the healthy impulse of
creasing bureaucracy, the growth the normal individual to put aside
of an omnipotent State, the for “a rainy day” has been given
paralysis of local initiative, a no positive encouragement and
growing reliance on a faraway much discouragement. The prin-
central authority that started with cipal discouraging factors have
some features of the Welfare State been inflation, the steady erosion
and ended with full-fledged totali- in the purchasing power of the
tarianism — here are some very ob- dollar, and taxes at federal, state,
vious forces making for the de- and local levels so heavy that little
cline and fall of Rome. Does it re- margin is left for saving.
quire much exercise of the imagi- There are several feasible ways
nation to see in our own country in which the government could
and our own time some germs, at encourage individual saving and
least, of these ultimately fatal thereby rid itself of the almost

diseases? : unlimited obligation which it as-
sumes when it is taken for granted
A Trend Away from Freedom that the State has some obligation

Surely, the saying that all one to bail out the individual from any
learns from history is that men misfortune he may suffer. Both
learn nothing from history is borne deposits in savings banks and in-
out by the lack of awareness of terest on savings bonds, within a
the symptoms that have foretold reasonable limit, say $25,000, could
the decline and fall of great socie- be freed from taxation. In view of
ties in the past. For more than the steady decline in the purchas-
a generation the trend has been ing power of the dollar, this would
steadily in the direction of in- only be elementary fiscal justice.
creasing the power of the central But neither these nor any other
government and diminishing the measures calculated to stimulate
self-reliance and independence of individual saving have received
the individual, and his ability to effective support in Washington.
provide for his own future. This One of the most familiar forms of
trend has been faster under some saving in America, in contrast to
Administrations, slower under Europe, where corporation stocks


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

1961 HOW STATE HELP DESTROYS SELF-HELP 29

are usually held by a rather nar- credit for income from dividends
row circle, is investment in com- was introduced. Now it has been
mon stocks. There are now some proposed to do away with these
thirteen million owners of com- small concessions and restore the
mon stocks in the United States, full undiluted injustice of double
most of them people of quite taxation of the same income. An
modest means. extremely cumbersome and diffi-
There has been much vague talk cult system of withholding taxa-
about “economic democracy’; but tion for dividends and interest
this increasingly diffused owner- seems designed as another discour-
ship of America’s industrial en- agement to savers.
terprises is the most effective
means of distributing profits Seok the Poor
widely that has ever been devised. Even when it is recognized that
Many companies have employee the State can create no wealth of
stock ownership plans on favored its own, it can only take from some
conditions — an excellent means of if it is to give to others, it could
creating a sense of personal in- still be argued that state spending
terest in the performance of the programs are financed on the
company. Robin Hood principle of taking
One factor that has discouraged from the rich to give to the poor.
stock ownership is the double tax- But this contention loses force at
ation of money paid out in divi- a time when the maximum rate of
dends. A corporation is first taxed the steeply graduated federal in-
52 per cent on its profits. Then a come tax is 91 per cent. Taxes de-
second tax is levied on whatever signed to ‘soak the rich” have
is paid out in dividends, depending reached the point of small and
on the tax status of the dividend diminishing returns. Most of the
recipient. In other words, the same money for additional government
money is taxed twice — a gross and spending projects will be extracted
obvious inequity. In logic there from taxpayers in the medium and
should be either a corporation tax low brackets, whose ability to pro-
or a tax on individual income from vide for their own social security
dividends, not a combination of will be correspondingly reduced.
the two. It has been the general experi-
A slight alleviation of this in- ence in Great Britain and other
justice went into effect some years countries where the Welfare State
ago when the practice of allowing has been pushed even farther than
a $50 deduction and a 4 per cent it has been in the United States


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

30 THE FREEMAN August

that the end of the process is for derbrush of detail and face up
the government to take out of one to the basic question in this issue
pocket what it puts into another, of state help versus self-help.
with the inevitable high overhead What kind of society do we want?
costs of bureaucracy as an extra One of independent self-reliant
loading charge. Perhaps some day, citizens, prepared to take care of
when the futility of this process themselves and their families, ask-
becomes more apparent, there will ing from the State only to leave
be more recognition of the simple them alone and get off their
truth that the best service gov- backs? Or a society of government
ernment could render to the peace pensioners, willing to sign away
of mind and the true social se- their political and economic liberty
curity of its citizens would be to in exchange for ever bigger hand-
cut down both spending and taxa- outs? Which is the more desirable
tion to a point where the individ- type of citizen — the chronic re-
ual could fairly be expected to look cipient of relief or the sturdy
out for his own “social security.” hardworking Amish farmer who
: had his horses confiscated and sold
What Kind of Society? ; by .order of some local bureaucrat
The State in America has be- because he wanted to contract out
come an omnicompetent provider, of both the benefits and the pay-
a purveyor of housing and of vari- ments involved in: the social se-
ous social services, a regulator curity system?
and, if the “liberals” have their
way, a large-scale financier of a Minimum Government
public school system that was The good society is surely one
formerly left to local administra- in which people are allowed to
tion and local resources. For this keep enough of what they earn
new role of the central government so .that they can pay for their
there is no warrant in the letter homes, medical aid, and other
and spirit of the American Con- needs without government ‘assist-
stitution, which is mainly con- ance. And it is foolish to say that
cerned not with offering a grab such a society is visionary; fifty
bag of promised material benefits years ago it existed in these
to all and sundry, but with telling United States. But it is receding
the government what it may not farther and farther into the dis-
do in abridging the. liberties of tance and itis part of the corrupt-
the individual citizen. : ing effect of the Welfare State that
It is time to cut through the un- resistance to it tends to weaken


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

1961 HOW STATE HELP DESTROYS SELF-HELP 31

as the individual is able to keep principal concerns, directs their
less and less of what he earns industry, regulates the descent of

because of its exactions, property, and subdivides their in-
heritances — what remains, but to
Tocqueville’s Warning spare them all the care of thinking

Long before communism, social- and all the trouble of living? . ..
ism, and collectivism were more The will of man is not shattered,
than abstract theories, a great but softened, bent, and guided;
political thinker conceived a vi- men are seldom forced by it to
sion, or a nightmare, of what act, but they are constantly re-
might well be the logical final strained from acting; such a
form of the Welfare State. As power does not destroy, but it
Alexis de Tocqueville writes in prevents existence; it does not
one of the more striking passages tyrannize, but it compresses, ener-
of his Democracy in America: vates, extinguishes, and stupefies

“Above this race of men stands a people, till each nation is reduced
an immense and tutelary power, to be nothing better than a flock
which takes upon itself alone to of timid and industrious animals,
secure their gratifications, and to of which the government is the
watch over their fate. . .. For their shepherd.” (Italics supplied.)
happiness such a government will- If the American Republic takes
ingly labors, but it chooses to be the final irrevocable turn down the
the sole agent and the only arbiter road of statism and collectivism, it
of that happiness; it provides for will not be for lack of warnings
their security, foresees and sup- in the pages of history and in the
plies their necessities, facilitates ever-living ideas of prophetic
their pleasures, manages their thinkers. Pe

Give me the right to fail —
To butt my brains against the high wall of ambition;
I care not how rough the gale,
If I can choose the course my ship will sail.
J. R. BURGESS, JR.


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

THE

EUROPEAN
‘COMMON
MARKET

A commentary based on the experience of the United States.

JOHN V. VAN SICKLE

THERE ARE MANY reasons for the Success cannot be taken for
substantial difference in material granted. As the traditional in-
levels of living in the United ternal barriers are torn down,
States of America and in the coun- popular demands will arise in
tries of Western Europe. The Western Europe, as they have in
existence of free trade within the the United States, for the erec-
extensive territories making up tion of substitute barriers which
the United States and its absence can be even more harmful to
in Western Europe is certainly a growth and to friendly relations
reason, perhaps the most impor- than moderate and stable tariffs.
tant single reason. Naturally, And these demands will be hard to
therefore, the decision of the resist because they will be sup-
European Six to go all the way to: ported by humanitarian arguments
complete free trade has created of exceptional persuasiveness —
great expectations. Will these ex- and respectability.

pectations be fulfilled or disap- I shall illustrate my thesis by
pointed? American experience three important pieces of Ameri-
with which we shall be concerned can federal legislation of the
in this paper provides grounds for 1930’s. It will be argued that each
hope and for caution. one tended and still tends, in and
_— . of itself, to protect industries in
re oy Dr aig roogensed from an.2d- the wealthier parts of the country
Wabash College, Crawfordsville, Indiana, be- from the competition of industries

fore the Association of Luxembourg Econo-

mists, Luxembourg, September 2, 1959, and in the poorer and less developed
first published in I! Politico vol. XXV, N.1,
University of Pavia, Italy. parts of the country. All of these

32


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

1961 THE EUROPEAN COMMON MARKET 33

measures are protectionist in effect exclude goods or capital or people
and rest on an economically falla- from their territories. They had
cious concept of what constitutes no control of their monetary sys-

a fair wage. tems. They could not devalue their
} } currencies. They were denied ac-
U. S. Economic Integration cess to the printing press. Hence-

We in the United States formed forth, trade among them was on a
a Common Market 170 years ago. completely free-trade basis and
From the beginning the American under rules equivalent to those
experiment involved a political as embodied in the unqualified and
well as an economic integration. unconditional most-favored-nation
The people transferred a few but treatment clause in international
very important elements of sov- treaties and under a discipline as
ereignty to a new central govern- exacting as that of an interna-
ment which replaced the existing tional gold standard.
loose and ineffective Confedera- This redistribution of sover-
tion, or League of Friendship. eignty virtually ruled out welfare

This League —with France's planning as we know it today. The
help — had been strong enough to American people, perhaps by inad-
win a war, but not strong enough vertency, were committed to work-
to preserve peace among the vic- ing out their social and economic
tors. Further surrenders of sover- problems within the framework of
eignty were needed. Among the private competitive capitalism.
powers transferred to the new Technically, any one of the 50
Federation, the following are im- states of the American Union can
portant for our purposes: the pow- adopt socialism, or can convert
er to regulate commerce and pop- itself into a modern welfare state,
ulation movements between the provided it does so in such fashion
states and with foreign countries; as to leave itself in a thoroughly
the power to tax the people di- competitive position within the
rectly — but with safeguards which vast domestic market. It cannot
forced the new government to rely price itself out of that market and
on regressive taxes (as distin- then invoke tariffs or quotas or ex-
guished from graduated income change controls or monetary de-
taxes) for almost 150 years; the valuation on the ground that it is
power to coin money and to regu- confronted with a “fundamental
late its value. : disequilibrium.” Nor can any single

What Washington gained, the state finance an ambitious welfare
states lost. They could no longer program or growth program via


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

34 THE FREEMAN August

the printing press. State expendi- the original 13 states and imposed
tures must be paid for out of cur- in the case of the 37 states subse-
rent taxes or by loans floated in the quently admitted to the Union en-
private capital market. couraged domestic saving and at-
If the United States goes so- tracted substantial foreign savings
cialist or carries the welfare con-. as well. A liberal immigration
cept as far as it has been carried policy, religious tolerance, and po-
in many parts of the world, the litical liberty under law, attracted
job will in fact have to be done many skilled workers to this richly
from Washington. With the pas- endowed and underpopulated coun-
sage in 1913 of the 16th Amend- try. The moderateness of taxation
ment authorizing the federal Con- and its regressiveness in the face
gress to impose a direct and pro- of almost unlimited opportunities
gressive tax on personal incomes, encouraged saving and investing.
the central government now pos- From the very beginning this
sesses the necessary powers. For growth occurred behind a tariff
the past quarter of a century it wall. Moderate at first, it reached
. has used these powers extensively inordinate heights in the Tariff of
to this end, and now it is the Abominations of 1828. The threat
United States as a whole that is of secession by the Southern cot-
confronted with the problem of ton states led to a reversal of policy
reconciling welfarism with the ne- during the 1830's. If the slavery
cessity of keeping the American issue could have been settled
economy competitive in world peacefully, it is possible that the

markets. . tariff wall would have been kept at
a moderate level indefinitely. Un-
Years of Growth and Progress fortunately, the Republican Party

In many respects, and for many formed to preserve the Union was
years, however, the American ex- as hostile to free trade as it was
periment more than fulfilled the to servile labor. And save for 16
hopes of the Founding Fathers. years the Republican Party con-
The breadth and diversity of the trolled the White House through-
domestic market encouraged ter- out the period 1861-1932. During
ritorial specialization and inter- that 70-year period tariffs were re-
state trade, and, with the later de- peatedly raised until-with the pas-
velopment of cheap overland trans- sage of the Hawley-Smoot Tariff
portation, mass ‘production. The Act of 1930, the United States be-
legal protection of property rights came one of the most highly pro-
provided in the constitutions of tectionist countries in the world.


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

1961 THE EUROPEAN COMMON MARKET 35

And what was ominous for the strengthened. Security became an
health of the world economy, this end in itself and not, as it must
happened when the United States be in a dynamic and free society,
had also become the world’s great- a by-product of continuous and

est creditor nation. appropriate adjustments to ever-
changing conditions. In all this
Protectionist Policies turmoil the protectionist element

It is impossible, of course, to in American thinking was vastly
say what would have happened if strengthened.
the United States had remained a This assertion may sound para-
low-tariff country. The fact is that doxical in view of the sharp re-
it did not, and yet the American versal of American foreign trade
economy grew very rapidly in the policy inaugurated by the Recip-
two generations following the rocal Trade Agreement Program,
Civil War. To the man on the our active participation in GATT,
street American prosperity was our aid in rebuilding the econ-
enough to prove the correctness omies of other countries, the
of the protectionist thesis. There drastic lowering of many of the
was little or no popular under- Hawley-Smoot tariff rates, and
standing of the fact that the com- our willingness to accept discrim-
plete free trade within the vast ination against our exports.
and diversified domestic market But the assertion becomes less
could as readily be cited as proof paradoxical if United States policy
of the correctness of the free- is looked at as a whole, domestic
trade thesis. Up to 1929 the as well as foreign.
American people managed to ac- All that was said above regard-
cept, with no apparent mental dis- ing the liberalization of United
comfort, protectionist arguments States foreign policy, while true,
with respect to international trade is misleading. Most of the reduc-
and free-trade arguments with re- tions in tariff rates, while substan-
spect to trade between the states tial, are highly selective, nominal
making up the American union. in their effects, and terminable on

The Great Depression came as a short notice if they cause serious
profound shock to many who had damage to any industry. Equally
failed to see the folly of govern- serious is the protectionism con-
ment intervention. Belief in pri- cealed in the valuation and clear-
vate competitive capitalism was ing of goods through customs.
seriously weakened; faith in state All in all, the American market
interventionism correspondingly may be about as difficult to pene-


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

36 THE FREEMAN August

trate as at any time in the past. underpopulated West and to the

In fairness to the United States industrial North kept the enor-
it should be pointed out that the mous level-of-living gap between
record of most other countries the South and the rest of the coun-
over the same period has been try within tolerable limits,

even worse. The United States has Beginning about 1900 a slow
at least avoided most of the quan- and glacierlike change set in. By
titative restrictions on trade. 1929 there was some evidence that

But the real evidence for the industry was breaking out of the
growth of protectionism is to be Industrial Quadrilateral and that
found in the domestic aspects of the South, the Mountain States,

United States policy. and the Far West were the chief
gainers. The South continued to
Industrialization in the South export people, but it was now be-

The Industrial Revolution ginning to attract extraregional
really started in the United States capital in the form of firms that
after the Civil War. Between 1865 could make sufficiently effective
and 1890 the Old South, a region use of its abundant supply of un-
larger than Western Europe, lan- skilled and semiskilled labor and
guished, impoverished and em- of its substantial mineral, forest,
bittered, while the victorious and water resources to pay pre-
North surged ahead. By 1890 a mium prices for the capital and
geographical pattern of specializa- the skilled and supervisory labor
tion had been set which is only which had to be brought in from
now slowly breaking up. Some 85 the outside. Yet the gain was
per cent of all industrial wage jobs slight, and it was not at the ex-
were concentrated in a narrow pense of the other regions.
Quadrilateral encompassing south- With the onset of the Great De-
ern New England, most of New pression the situation changed
York state, Pennsylvania, Mary- radically. Industrialization con-
land, and the northern halves of tinued in the Old South while
the Lake States of Ohio, Indiana, there was an absolute contraction
and Illinois. The Old South with its in the North. Large numbers of
very high birth rate was poorer ab- recent migrants from the South
solutely, and much poorer relative- returned to their homelands, de-
ly, than it had been 30 years be- pressing wage rates there still fur-
fore. It was the underdeveloped ther. Meantime, state and later
part of the country. Only a large federal aid and a relatively strong
and continuing migration to the trade union organization sustained


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

1961 THE EUROPEAN COMMON MARKET 37

money wage rates in the North. merce Clause should be invoked to
Thus the wage gap, which had al- stop the sale in interstate markets
ways been large, widened and the of goods produced at substandard
migration of industry quickened. wages, while the federal power to
The South’s growth now appeared spend and to promote the general
to be at the expense of other parts welfare should be used to establish
of the country. The view spread minimum standards for workers
that its growth was due to labor engaged on federally financed
“exploitation,” that this repre- projects.!

sented a type of unfair interstate Secondly, there was the “his-
competition that should be toric locations” argument. It was
stopped. first set forth in Migration and

Acting individually there was Economic Opportunity,® and fur-
nothing the Northern industrial ther developed and documented by
states could do about it. The fed- the National Resources Planning
eral government, on the other Board in Problems of a Changing
hand, could — provided a majority Population (1938). The amazingly
in the Congress could be persuaded persistent geographical concentra-

of the propriety of intervening. tion of industry, to which refer-
ence has already been made, was
Political Excuses advanced as proof that the Indus-

Political realities were the real trial Quadrilateral possessed a nat-
persuaders. But when politicians ural comparative advantage. The
propose to act contrary to long- existing migration of capital out
established practices, it helps to of the Quadrilateral was held to be
have handy respectable rational- abnormal and uneconomical. With
izations. Three generalizations ap- recovery the disadvantages of lo-
pear to have been particularly cation in the agricultural hinter-
effective. land would force many of these

First of all, there was the “just activities back into the Quadri-
wage” argument. Workers of com- Am oective statement of the fai
parable skills in the same indus- wage thesis is %o be found in the ILO
try, it was argued, should get the charter as it appears in Part XIII of

deed, virtually the whole of the New

happening. Firms in the South Deal program of social reform is con-
were paying substandard wages, tained in the first two “whereases” of the
and in the process they were pull- Preamble Goodrich | y
. : y Carter Goodrich et al,, and pub-
ing down wages and incomes lished by the University of Pennsyl-
throughout the country. The Com- vania Press, 1936.

—


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

38 THE FREEMAN August

lateral to the accompaniment of bidding on federal contracts to
costly temporary misallocations of agree in advance to pay fair
capital. wages; (3) by encouraging the
The sensible thing to do, there- extension of collective bargaining
fore, was, first of all, to set mini- into the region; (4) by supporting
mum wage standards directly by the prices of the South’s principal
federal law or indirectly by col- agricultural products; (5) by pub-
lective bargaining so as to stop, or lic works, like the T.V.A.; and (6)
at least slow down, this wasteful by financing the whole expensive
diffusion of capital; and, in the program (a) by borrowing from
second place, to facilitate the mi- the Federal Reserve Banks at
gration of people into the Quadri- nominal rates of interest and (b)
lateral as rapidly as job opportuni- by highly progressive taxes on the
ties opened up there. Within the wealthy whose low propensities to
United States, labor should be spend and reluctance to invest
more mobile than capital. Interna- were contributing to the continua-
tionally, of course, the official posi- tion of the Depression.
tion was that capital should be This is the background against
more mobile than labor. Neither which it is proposed to examine
the Democratic nor the Republican the three important New Deal
Party proposed to encourage mi- measures referred to earlier: the
gration into the United States as National Labor Relations Act of
a contribution to recovery or as a 1935; the Public Contracts Act of
requirement of social justice. 1936; and the Fair Labor Stand-
The third, or ‘purchasing ards Act of 1938. They are popu-
power” argument invoked the larly regarded as models of social
name of Lord Keynes, though he welfare legislation.
would almost certainly have dis- I shall argue that the second and
approved of the way in which his third of these measures, in and of
theory of effective demand was themselves, tend to retard the de-
used, or more accurately, misused velopment of the poorer parts of
in this connection. The trouble the country; that the first, i.e., the
with the South was declared to be National Labor Relations Act, was
lack of purchasing power. The intended to have this effect; and
thing to do, therefore, was to in- finally that they are all incon-
ject purchasing power into the re- sistent with the operating require-
gion. This could be done (1) by ments of private capitalism and
establishing a minimum wage; with the international interests of
(2) by requiring Southern firms the United States.


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

1961 THE EUROPEAN COMMON MARKET 39

Legislation Granting Powers and with respect to hours and mini-
Privileges to Organized Labor mum age of employment. The Act
The National Labor Relations provided a workable definition of
Act was designed to increase the a fair wage — that prevailing in
bargaining power of labor. It the locality in which the good or
lifted collective bargaining from service involved was actually pro-
the status of a liberty to that of duced. But by what to a layman
a right. In connection with the not versed in the subtleties of law
Norris-LaGuardia Act of 1932, was an amazing tour de force, the
which virtually ruled out the use test of fairness was declared to
of the injunction in labor disputes, apply not to a particular firm but
it so greatly increased the power to that nebulous concept, “an in-
of organized labor as to lead the dustry,” and was to be determined
late Professor Sumner H. Slichter by a complicated finding which in
of Harvard University to describe fact pretty effectively excluded
the American economy as “labor- from government contracts
istic” rather than ‘“capitalistic.”3 smaller firms in smaller communi-
The growth of trade unionism ties everywhere, and particularly
was phenomenal yet uneven. It Southern firms.
penetrated only slightly into the Federal spending power could
more rural parts of the country, now reach into every hamlet in
‘This was particularly true in the the land to influence the formation
case of the Old South. As a result of wages. But federal spending
the Act actually tended to widen throughout the 1930's was insuffi-
the North/South wage-gap and cient to affect appreciably North/
ithus increased the ability of the South wage differentials. A more
Old South to attract extraregional far-reaching intervention was
capital. needed. A legal minimum wage ap-
The next approach, therefore, peared to be the answer.
was through the federal spending Despite its traditional opposi-
power. The Public Contracts Act tion to government wage-fixing,
of 1936 barred firms from bidding organized labor was slowly won
on federal contracts in excess of over to the view that a federally
$10,000 if they paid less than a imposed minimum wage could ac-
fair wage to be stipulated by the complish in short order what it
Secretary of Labor, and if they would take years to accomplish
failed to observe other provisions through collective bargaining. The
3 The American Economy: Its Prob- Fair Labor Standards Act of 1938
lems and Prospects, 1949, p. 7. is the product of this conversion.


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

40 THE FREEMAN August

‘The American minimum wage in intrastate commerce.”¢ Political
law is unlike any other minimum forces tend to establish the rate
wage law in the world. It is the close to that required by competi-
same throughout the country, but tive forces in the wealthier parts
it applies only to firms whose of the country and well above that
goods and services enter into in- prevailing in the poorer states.
terstate commerce. This is tanta-
mount to saying that it applies The International Labor Organization
only to the exporters of the several As the barriers to trade within
states, and by and large, these are Western Europe are torn down,
the highest wage-paying firms in there will be a demand for legisla-
the localities in which they are tion similar to that adopted in the
located. United States — and similar, in-

This partial coverage is due to cidentally, to that now being
the fact that the power to fix sought through ILO sponsored In-
wages rests with the state govern- ternational Conventions. And ar-
ments, not with the federal gov- guments very like those described
ernment. The latter says in effect, above will be advanced. How valid
“You, employer, are free to pay are these arguments?
any wage you want, but, if you Take first the “historical loca-
sell, or if there is reason to believe tion” argument. It is of very
that your product may eventually doubtful validity. The geographi-
sell outside the confines of your cal pattern set during the early
state, you must pay so and so stages of the Industrial Revolu-
many cents per hour for the privi- tion in the United States was not
lege, with time and one-half for inevitable. It was to a consider-
hours worked over 40 per week, able extent the outcome of a his-
and you may not employ boys and torical accident — the prostration
girls under 16 years of age. Fur- and demoralization of the Old
thermore, you must pay this mini- South. From 1900 on, regional dif-
mum regardless of whether you ferences in factor prices were
are large or small, regardless of slowly but surely bringing about a
whether you are located in a tiny diffusion of manufacturing out of
village in the most poverty- :
stricken part of the country or in 4 The minimum was set originally at
New York City, and regardless of 40 cents per hour — to be arrived at by
how much lower the unskilled stages and by industries over a seven-

. year period. After several increases it
labor rate may be in your com- pow stands at $1.00 an hour ($1.15 in

munity for firms engaged entirely 1961, to rise to $1.25 in 1963).



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

1961 THE EUROPEAN COMMON MARKET 41

the Industrial Quadrilateral, and ing in interstate markets. This
in the process regional differences seems to me to have represented
in levels of living were being nar- bad economics, bad ethics, and (to
rowed. In my judgment federal in- the extent that it fostered exces-
terventions designed to hasten re- sive urbanization) bad sociology.
covery should have worked with This is our second objection to the
and not against the forces making arguments under consideration.
for dispersion.

At this point a value judgment The National Interest
is involved. To the writer it seems Our final objection grows out of
more humane to encourage capital our conception of the national in-
to move to areas of surplus popu- terest. As a major military and
lation rather than to encourage economic power and as a substan-
surplus populations to move to tial creditor nation our interests
areas of existing capital concentra- and our moral obligations toward
tion. Competitive market forces, the rest of the Free World clearly
left to themselves, divide the bur- require that we open up our do-
den of adjustment by encouraging mestic market on stable, durable,
a voluntary migration of people and reasonable terms. This is all
out of areas where labor rewards the more important since we are
are low and a voluntary movement not going to encourage mass mi-
of capital into such areas in the grations of peoples into the United
form of industries that can make States, American business and
effective use of unskilled labor. American labor must be prepared

This is what had been happen- to compete with foreign firms
ing in the United States during which enjoy wage differentials far
the first three decades of the pres- more substantial than those pre-
ent century. Firms coming South vailing within the United States.
had been establishing themselves While we have been going
in small towns. They paid wages through the motions of opening
that were low by Northern stand- up the American market for more
ards but high by comparison with than a quarter of a century now,
what those workers could earn in we have simultaneously introduced
any available local alternative em- into our vast domestic market in-
ployment, Yet it was precisely direct barriers to regional ex-
these firms that the unions sought changes that represent a basic re-
to organize, that the federal gov- jection of free trade. More than
ernment tried to bar from bidding that, these measures, in combina-
on federal contracts and from sell- tion with a federal commitment to


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

42 THE FREEMAN August

full employment, have introduced seems so unimportant compared to
a built-in inflationary bias into our vast domestic trade — unless,
the American economy.® As long indeed, the rest of the Free World
as American inflation lagged be- can convince us that we cannot
hind that in Europe, our tariff re- afford the luxury of isolationism.
ductions were relatively meaning-
less. Now, however, as other parts Prospects and Pitfalls
of the Free World bring inflation And this brings me back to the
under control, the American mar- European Common Market and to
ket is at long last under serious my final remarks. I believe that as
pressure. you move toward your ultimate
At this point it seems clear that goal of complete free trade, you
something will have to give. If the will enjoy a substantial increase in
United States is to continue to dis- productivity and in material well-
charge its foreign responsibilities being. But I also believe that large
constructively and at the same geographical differentials in wages
time meet successfully this new will lead to a demand for the “har-
and unaccustomed international monization” of welfare legislation,
challenge, we shall have to learn of state minimum wage laws, and
to live with competition. If Ameri- for the extension of collective
can public opinion continues to feel wage agreements to firms through-
that it is unfair for a firm in out the Common Market. Such
Michigan (one of our wealthiest measures put the cart before the
states) to compete with one in horse. They seek to impose rela-
Mississippi (our poorest state) on tionships which competitive mar-
the basis of a 20-cent-an-hour ket forces would eventually bring
wage differential, will this same to pass. Imposed prematurely, they
public opinion be willing to allow prevent these adjustments and
foreign goods to enter the Ameri- hence perpetuate the very inequali-
can market in increasing quanti- ties they are designed to correct.
ties, when it is known the wage If you pursue this course, the
differential is a multiple of the benefits of the Great Experiment
Michigan /Mississippi differential? will largely escape you. If you
It seems highly unlikely, particu- avoid it, you may very well over
larly since international trade the next few years demonstrate
_ the vitality and beneficence of pri-
> See my “Regional Aspects of the yate capitalism and help re-estab-
Problem of Full Employment at Fair lish it in popular esteem through-

Wages,” in The Southern Economic
Journal, vol. XIII, No. 1, July 1946. out the Free World. -


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

E. F. HurToN

IT IS GENERALLY A MISTAKE for politicians to try to bolster up depressed
areas or industries. History proves this over and over.

If an area or industry is depressed because of previously mistaken
legislation, the law should be repealed. But if they become depressed
for economic reasons, the politicians should keep hands off.

Take whale oil. That industry was a great and necessary one down to
about 1850. Whaling ships searched every sea. There was “no climate
that was not witness to their toil; no sea not vexed with their ships.”

Then came coal oil, or kerosene, and New Bedford and Nantucket
became depressed areas. Government, however, kept hands off and
whaling men and their sons found other jobs.

With the coming of natural gas, kerosene for lighting started a long
decline despite more millions of homes. The smelly lamp gave way to
the gas jet, which was soon obsoleted by electric light,

Suppose all these new industries had been taxed to keep the dying
ones alive! Government kept hands off, and the free competition of
better and cheaper products caused the most rapid technological prog-
ress in history.

Congress is now urged to legislate increased coal consumption by 100
million tons a year to relieve unemployment in the coal industry which
has pushed wage scales to the highest levels in America. Congress can
do that only at the cost of other industries and their employees.

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

Illustration: The Bettmann Archive

43


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

onquest from Wirkin

GREY LESLIE

EVERY AMERICAN CITIZEN can be tributions” were made with the
justly proud when he considers high purpose of ‘‘containing” or
the fact that the United States has frustrating the aims and ambi-
never known a military defeat in tions of the despots of commu-
its history. But his jubilation nism, public resistance has been
might be somewhat tempered if muted; and active public support
he took the time and made the has been encouraged by telling us
effort to examine the structure that these expenditures were made

and fantastic growth of our mod- ‘in our own enlightened self-in-
ern government, which contains terest.”
within it a subtle antagonist more We have seen the sad results of

cunning and ruthless than any our crusade of economic and finan-
avowed enemy of our free enter- cial evangelism in the recent past
prise system. and in the immediate present.
The typical American taxpayer But the conquest of the United
is too occupied in earning enough States may be accomplished by an
money to meet the incessant and enemy belatedly recognized as
ever-increasing demands of the ‘bureaucracy,” which has been un-
tax collector at all levels of gov- wittingly nourished for some three
ernment to realize that he and his decades and is now propagating at
fellow citizens have contributed a fantastic rate.
more of their hard-earned money One has only to glance through
to foreign powers than all of the a formidable volume entitled
vanquished people in history have United States Government Organ-
paid to their conquerors. ization Manual of any recent issue,
Because these enormous “con- to get an idea of the proliferation
— of this menace to our welfare.

Mr. Leslie is a free-lance reviewer and journal- .
ist from Washington, D. C. Every phase of human vocation

44


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

1961 CONQUEST FROM WITHIN 45

has been and is being invaded and leged infraction by the application
affected by this constantly grow- of an “Administrative Sanction’ —
ing octopus, which has fastened a form of executive punishment
itself upon us without any pretense quite unknown and completely

of constitutional authority. alien to our concept of free gov-
The several branches of our gov- ernment.

ernment as envisioned and formu- With further shock, we learn

lated by our Constitution — Legis- that the judgments of certain of

lative, Judicial, and Executive — these agencies are “final and not

are no longer “branches” of gov- subject to review by any Courts.”
ernment, but have created ‘“em- (Estap vs. U.S. 327 U.S. et alii.)
pires” by means of so-called ‘“Inde- Our revered maxim of “equal
pendent Agencies” which are now justice for all” seems to have been
totally “independent” of the very wantonly ignored and abrogated
Legislative, Judicial, or Executive without any clearly recognized
offices that brought them into be- authority.
ing. It would be a melancholy task
to undertake even a casual reading
of the 797 closely printed pages of
Look at the number of “Laws” the Government Organization
passed by Congress since 1933 Manual. A reasonably comprehen-
which are currently in force (11 sive study of the structure of our
weighty volumes), and compare modern American government
this collection with the Rules and would require a volume of encyclo-
Regulations of the Administrative pedic dimension. However, with-
Agencies (59 equally weighty vol- out prejudice to any Department,
umes), which have the full effect we might take a cursory look at
of law. Indeed, many of these laws the organization, duties, functions,
by rules and regulations have objectives, and aspirations of the
more than the compelling effect of Department of the Interior as a
law as we interpret law in Amer- typical example of government in-
ica. With a painful recognition of vasion as an active and uncon-
a system of absolutism and totali- trolled competitor of private en-
tarianism, we find that the rules, terprise in a wide field of human
regulations, jurisdictions, and acts endeavor.
of certain of these Administrative “The jurisdiction [?] of the De-
Agencies permit an Agency to partment [Interior] extends over
summon citizens before it to be the continental United States, to
tried and penalized for some al- islands in the Caribbean and the

Volumes of Evidence


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

46 THE FREEMAN August

South Pacific, and to lands in the There follow 20 closely printed
Arctic Circle. It includes the cus- pages describing the activities of
tody of 751 million acres of land, the several subdivisions of the De-
the conservation and development partment.
of mineral resources and the pro- Here is but one agency of gov-
motion of mine safety, the conser- ernment which claims jurisdiction
vation development and utilization (2?) over almost one-third of the
of fish and wildlife resources, the total land and water area of the
administration of the Nation’s United States and all its posses-
great scenic and historic areas, sions and territories.
the reclamation of the arid lands Add to this the other vast areas
of the West through irrigation, and operations taken over by fed-
and the management of hydroelec- eral agencies, and we are confront-
tric power systems.” (p. 229, 1959- ed with a nontaxpaying but taz-
60; emphasis added.) supported political and land empire
The foregoing is only a partial which threatens to expand, to the
statement of the omnibus opera- detriment of privately-owned, pri-
tions of that one Department. Un- vately-operated, taxpaying busi-
der a heading, “Organization,” we nesses.
find that:

_ Tax-Supported Losses
The Department of the Interior

is composed of the office of the The claim has often been made
Secretary, other Departmental that government-owned and gov-
Offices (38), and the following: ernment-operated activities were
Bureau of Indian Affairs necessarily created and expanded
Bureau of Land Management to provide services, economic de-
Bureau of Mines velopment, and defense production
Bureau of Reclamation which private enterprise had
Geological Survey failed, or was incapable, or was

National Park Service [which unwilling to provide; also that
owns and operates resort hotels, the federal corporate entities pay
motels, amusement and recrea- i}oiv own way.

tional es on public These fictions have been exposed
U.S. Fish and Wildlife Service so often and so devastatingly that
Bonneville Power Administration it Would be tedious to repeat the
Southeastern Power Administra- rebuttal here. One simple fact
tion stands out. The governmental op-
Southwestern Power Administra- erations in competition with pri-

tion (Ibid. p. 229) vately-owned businesses pay no


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

1961 CONQUEST FROM WITHIN 47

taxes, and their accounting prac- governmental employees engaged
tices would never be tolerated in in these federally operated enter-
private business; indeed, a busi- prises. They estimate that more
nessman indulging in them would than a million of their fellow
likely be subject to legal prose- workers will be unemployed if the
cution, Yet these governmental proposed Amendment and trans-
operations seek and get tax dollars fer of operations are brought to
to pay for losses, to underwrite fruition.
payrolls, and to finance hidden The obvious answer would seem
costs. to be that if their work and ability
Their very bulk and irresponsi- are really useful, they can be more
bility make efficient and economi- gainfully employed by private en-

cal operations impossible. terprise, and thereby get off the
Lo backs of taxpayers.
Trimming the Bureaucracy The pattern of government es-

One need not possess a Doctor- tablished by the Founding Fathers
ate in Economics to see the logic is as valid today as it was in their
of drastically curtailing or elim- own time. The Ninth and Tenth
inating many of these government- Amendments in the Constitution
al invasions on private enterprise, are clear and concise, even if they
if for no other reason than to are not self-enforcing. They re-
lighten the disastrous and ever- quire a continuous and vigorous
increasing tax burden on individ- support by a well-informed, alert,
uals and industry that may well and articulate public opinion for
be the most potent weapon in the effective application.
conquest of the United States from We need to recognize that,
within. through a long series of legislative

An awareness of this threat is acts and executive orders, the gov-
evidenced in the introduction of ernment has delegated powers and
a proposed Constitutional Amend- authority to governmental agen-
ment which would require the prop- cies, clearly and patently outside
erties and facilities of most of the scope and intent of the Con-
the federal corporations and ad- stitution.
ministrative agencies, now in com- Such delegations have made it
petition with private business, to possible for the government to in-
be sold back to the American peo- ject itself into fields that rightly
ple. and sensibly belong to private in-

We have already heard the wail- dustry which must operate effi-
ings of an entrenched group of ciently to survive. Private enter-


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

48 THE FREEMAN August

prise can survive and thrive when be subject to many ills; but an
the dead hand of the tax collector equally wise sage has said that
is removed, thus relieving individ- its citizens possess in their own
uals and industry of the intoler- hands the saving prescription for
able burden of tax-supported medi- their remedy.
ocrity and inefficiencies in agen- The chief ingredient of that
cies and administrations which prescription is a constant aware-
have no rightful place in our sys- ness and alertness of the possi-
tem of government. bility of a conquest from within
and a determination, based on in-
It has been said that a Republic telligent and informed opinion, to
like the United States is bound to combat it. >

To Strengthen or Destroy

DISCONTENT LEADS TO PROGRESS, yet we attempt to eliminate it
through dubious social welfare programs. Instead, we should
strive to develop a sense of responsibility in each person to
stimulate his interests, challenging him to do his best and to
continually strive to do better.

Self-improvement was recognized and encouraged even back in
the days of Confucius, and we have had hundreds of years to
witness the truth of this adage: “The world improves only when
people improve.”

Kill a man’s sense of responsibility, his self-respect, and his
self-reliant spirit and you have destroyed his initiative leaving
a spineless creature dependent on others, a slave.

This country grew strong under a pioneer philosophy of thrift,
self-reliance, and ambition. All countries have grown weak when

the people lose that spirit.

RALPH E. LYNE, Taylor, Michigan


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

From time to time, Congress has ap-
propriated money for so-called char-
itable purposes. An unidentified nar-
rator relates Davy Crockett’s experi-
ence with the problem when he was
a member of Congress. The following
18 slightly condensed from The Life
of Colonel David Crockett compiled
by Edward S. Ellis (Philadelphia:
Porter & Coates, 1884). Member of Congress 1827-31, 1832-35

DAvID CROCKETT

CROCKEIT was then the lion of portunity for display than from
Washington. I was a great ad- the necessity of convincing any-
mirer of his character, and, hav- body, for it seemed to me that
ing several friends who were inti- everybody favored it. The Speaker
mate with him, I found no diffi- was just about to put the question
culty in making his acquaintance. when Crockett arose. Everybody
I was fascinated with him, and expected, of course, that he was
he seemed to take a fancy to me. going to make one of his char-
I was one day in the lobby of acteristic speeches in support of
the House of Representatives the bill. He commenced:
when a bill was taken up appro- “Mr. Speaker — 1 have as much
priating money for the benefit of respect for the memory of the
a widow of a distinguished naval deceased, and as much sympathy
officer. Several beautiful speeches for the sufferings of the living, if
had been made in its support, suffering there be, as any man in
rather, as I thought, because it this House, but we must not per-
afforded the speakers a fine op- mit our respect for the dead or
llustration: Culver Pictures, Inc. our sympathy for a part of the

49


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

50 THE FREEMAN August

living to lead us into an act of
injustice to the balance of the liv-
ing. I will not go into an argu-
ment to prove that Congress has
no power to appropriate this
money as an act of charity. Every
member upon this floor knows it.
We have the right, as individuals,
to give away as much of our own
money as we please in charity;
but as members of Congress we
have no right so to appropriate
a dollar of the public money.
Some eloquent appeals have been
made to us upon the ground that
it is a debt due the deceased. Mr.

- Speaker, the deceased lived long
after the close of the war; he was

in office to the day of his death,
and I have never heard that the
government was in arrears to
him. This government can owe no
debts but for services rendered,
and at a stipulated price. If it is
a debt, how much is it? Has it
been audited, and the amount due
ascertained? If it is a debt, this
is not the place to present it for
payment, or to have its merits ex-
amined. If it is a debt, we owe
more than we can ever hope to
pay, for we owe the widow of
every soldier who fought in the

War of 1812 precisely the same-

amount. There is a woman in my
neighborhood, the widow of as
gallant a man as ever shouldered
a musket. He fell in battle. She is
as good in every respect as this

lady, and is as poor. She is earn-
ing her daily bread by her daily
labor; and if I were to introduce
a bill to appropriate five or ten
thousand dollars for her benefit,
I should be laughed at, and my
bill would not get five votes in this
House. There are thousands of
widows in the country just such
as the one I have spoken of, but
we never hear of any of these
large debts to them. Sir, this is
no debt. The government did not
owe it to the deceased when he
was alive; it could not contract it
after he died. I do not wish to
be rude, but I must be plain.
Every man in this House knows
it is not a debt. We cannot, with-
out the grossest corruption, ap-
propriate this money as the pay-
ment of a debt. We have not the
semblance of authority to-appro-
priate it as a charity. Mr. Speak-
er, I have said we have the right
to give as much money of our own
as we please. I am the poorest
man on this floor. I cannot vote
for this bill, but I will give one
week’s pay to the object, and if
every member of Congress will do
the same, it will amount to more
than the bill asks.”

He took his seat. Nobody re-
plied. The bill was put upon its
passage, and, instead of passing
unanimously, as was generally
supposed, and as, no doubt, it
would, but for that speech, it re-


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

1961 A SOCKDOLAGER 51

ceived but few votes, and, of I listened, and this is the tale
course, was lost. which I heard:

Like many other young men,
and old ones too, for that matter, “Several years ago I was one

who had not thought upon the evening standing on the steps of
subject, I desired the passage of the Capitol with some other mem-
the bill, and felt outraged at its bers of Congress, when our atten-
defeat, I determined that I would tion was attracted by a great light
persuade my friend Crockett to over in Georgetown. It was evi-
move a reconsideration the next dently a large fire. We jumped
day. into a hack and drove over as fast

Previous engagements prevent- as we could. When we got there, I
ing me from seeing Crockett that went to work, and I never worked
night, I went early to his room as hard in my life as I did there
the next morning and found him for several hours. But, in spite
engaged in addressing and frank- of all that could be done, many
ing letters, a large pile of which houses were burned and many
lay upon his table. families made houseless, and, be-

I broke in upon him rather sides, some of them had lost all
abruptly, by asking him what but the clothes they had on. The
devil had possessed him to make weather was very cold, and when
that speech and defeat that bill I saw so many women and chil-
yesterday. Without turning his dren suffering, I felt that some-
head or looking up from his work, thing ought to be done for them,

he replied: and everybody else seemed to feel
“You see that I am very busy the same way.
now; take a seat and cool your- “The next morning a bill was

self. I will be through in a few introduced appropriating $20,000
minutes, and then I will tell you for their relief. We put aside all
all about it.” other business and rushed it

He continued his employment through as soon as it could be
for about ten minutes, and when done. I said everybody felt as I
he had finished he turned to me did. That was not quite so; for,
and said: though they perhaps sympathized

“Now, sir, I will answer your as deeply with the sufferers as I
question. But thereby hangs a did, there were a few of the mem-
tale, and one of considerable bers who did not think we had the
length, to which you will have to right to indulge our sympathy or
listen.” excite our charity at the expense:


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

52 THE FREEMAN August

of anybody but ourselves. They coldly, and was about turning his
opposed the bill, and upon its pas- horse for another furrow when I
sage demanded the yeas and nays. said to him: ‘Don’t be in such a
There were not enough of them to hurry, my friend; I want to have
sustain the call, but many of us a little talk with you, and get
wanted our names to appear in better acquainted.” He replied:
favor of what we considered a “I am very busy, and have but
praiseworthy measure, and we little time to talk, but if it does
voted with them to sustain it. So not take too long, I will listen to
the yeas and nays were recorded, what. you have to say.’

and my name appeared on the “Il began: ‘Well, friend, I am

journals in favor of the bill. one of those unfortunate beings
“The next summer, when it be- called candidates, and — — —’

gan to be time to think about the “‘Yes, I know you; you are

election, I concluded I would take Colonel Crockett. I have seen you
a scout around among the boys of once before, and voted for you the
my district. I had no opposition last time you were elected. I sup-
“there, but, as the election was pose you are out electioneering
some time off, I did not know now, but you had better not waste
what might turn up, and I thought your time or mine. I shall not vote
it was best to let the boys know for you again.’
that I had not forgot them, and “This was a sockdolager. . . . I
that going to Congress had not begged him to tell me what was
made me too proud to go to see the matter.
them. “ ‘Well, Colonel, it is hardly
“So I put a couple of shirts and worth-while to waste time or
a few twists of tobacco into my words upon it. I do not see how
saddlebags, and put out. I had it can be mended, but you gave
been out about a week and had a vote last winter which shows
found things going very smoothly, that either you have not capacity
when, riding one day in a part of to understand the Constitution, or
my district in which I was more that you are wanting in the hon-
of a stranger than any other, I esty and firmness to be guided by
saw a man in a field plowing and it. In either case you are not the
coming toward ‘the road. I gauged man to represent me. But I beg
my gait so that we should meet as your pardon for expressing it in
he came to the fence. As he came that way. I did not intend to avail
up I spoke to the man. He replied myself of the privilege of the con-
politely, but, as I thought, rather stituent to speak plainly to a ¢an-


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

1961 A SOCKDOLAGER 53

didate for the purpose of insult- find in the Constitution any
ing or wounding you. I intend by authority to give away the public
it only to say that your under- money in charity?

standing of the Constitution is “Here was another sockdolager;
very different from mine; and I for, when I began to think about
will say to you what, but for my it, I could not remember a thing
rudeness, I should not have said, in the Constitution that author-

that I believe you to be honest. ... ized it. I found I must take an-
But an understanding of the Con- other tack, so I said:
stitution different from mine I “Well, my friend; I may as

cannot overlook, because the Con- well own up. You have got me
stitution, to be worth anything, there. But certainly nobody will
must be held sacred, and rigidly complain that a great and rich
observed in all its provisions. The country like ours should give the
man who wields power and misin- insignificant sum of $20,000 to re-
terprets it is the more dangerous lieve its suffering women and
the more honest he is.’ children, particularly with a full

“1 admit the truth of all you and overflowing Treasury, and I
say, but there must be some mis- am sure, if you had been there,
take about it, for I do not remem- you would have done just as I did.’

ber that I gave any vote last win- “ ‘It is not the amount, Colonel,
ter upon any constitutional ques- that I complain of; it is the prin-
tion.’ ciple. In the first place, the gov-

“ ‘No, Colonel, there's no mis- ernment ought to have in the
take. Though I live here in the Treasury no more than enough
backwoods and seldom go from for its legitimate purposes. But
home, I take the papers from that has nothing to do with the
Washington and read very care- question. The power of collecting
fully all the proceedings of Con- and disbursing money at pleasure
gress, My papers say that last is the most dangerous power that
winter you voted for a bill to ap- can be intrusted to man, particu-
propriate $20,000 to some suffer- larly under our system of collect-
ers by a fire in Georgetown. Is ing revenue by a tariff, which
that true?’ reaches every man in the country,

“ ‘Certainly it is, and I thought no matter how poor he may be,
that was the last vote which any- and the poorer he is the more he
body in the world would have pays in proportion to his means.
found fault with.’ What is worse, it presses upon

“ ‘Well, Colonel, where do you him without his knowledge where


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

54 THE FREEMAN August

the weight centers, for there is and forty members of Congress.
not a man in the United States If they had shown their sympathy
who can ever guess how much he for the sufferers by contributing
pays to the government. So you each one week’s pay, it would
see, that while you are contribu- have made over $13,000. There
ting to relieve one, you are draw- are plenty of wealthy men in and
ing it from thousands who are around Washington who could
even worse off than he. If you had have given $20,000 without de-
the right to give anything, the priving themselves of even a lux-
amount was simply a matter of ury of life. The congressmen
discretion with you, and you had chose to keep their own money,
as much right to give $20,000,000 which, if reports be true, some of
as $20,000. If you have the right them spend not very creditably;
to give to one, you have the right and the people about Washington,
to give to all; and, as the Consti- no doubt, applauded you for re-
tution neither defines charity nor lieving them from the necessity of
stipulates the amount, you are at giving by giving what was not
liberty to give to any and every- yours to give. The people have
thing which you may believe, or delegated to Congress, by the Con-
profess to believe, is a charity, stitution, the power to do certain
and to any amount you may think things. To do these, it is author-
proper. You will very easily per- ized to collect and pay moneys,
ceive what a wide door this would and for nothing else. Everything
open for fraud and corruption and beyond this is usurpation, and a
favoritism, on the one hand, and violation of the Constitution.’”
for robbing the people on the

other. No, Colonel, Congress has “] have given you,” continued
no right to give charity. Individ- Crockett, “an imperfect account
ual members may give as much of what he said. Long before he
of their own money as they was through, I was convinced
please, but they have no right to that I had done wrong. He wound
touch a dollar of the public money up by saying:

for that purpose. If twice as many “‘So you see, Colonel, you have
houses had been burned in this violated the Constitution in what
county as in Georgetown, neither I consider a vital point. It is a
you nor any other member of precedent fraught with danger to
Congress would have thought of the country, for when Congress
appropriating a dollar for our re- once begins to stretch its power
lief. There are about two hundred beyond the limits of the Consti-



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

1961 A SOCKDOLAGER 55

tution, there is no limit to it, and again upon one condition. You say
no security for the people. I have that you are convinced that your
no doubt you acted honestly, but vote was wrong. Your acknowl-
that does not make it any better, edgment of it will do more good
except as far as you are person- than beating you for it. If, as you
ally concerned, and you see that I go round the district, you will tell
cannot vote for you.’ ~ people about this vote, and that
“I tell you I felt streaked. I you are satisfied it was wrong, I
saw if I should have opposition, will not only vote for you, but will
and this man should go to talking, do what I can to keep down op-
he would set others to talking,and position, and, perhaps, I may ex-
in that district I was a gone ert some little influence in that
fawn-skin. I could not answer way.’
him, and the fact is, I was so “‘If I don’t,’ said I, ‘I wish I
fully convinced that he was right, may be shot; and to convince you
I did not want to. But I must sat- that I am in earnest in what I say
isfy him, and I said to him: I will come back this way in a
“ ‘Well, my friend, you hit the week or ten days, and if you will
nail upon the head when you said get up a gathering of the people,
I had not sense enough to under- I will make a speech to them. Get
stand the Constitution. I intended up a barbecue, and I will pay for
to be guided by it, and thought I it.
had studied it fully. I have heard “ ‘No, Colonel, we are not rich
many speeches in Congress about people in this section, but we have
the powers of Congress, but what plenty of provisions to contribute
you have said here at your plow for a barbecue, and some to spare
has got more hard, sound sense for those who have none. The push
in it than all the fine speeches I of crops will be over in a few
ever heard. If I had ever taken days, and we can then afford a day
the view of it that you have, I for a barbecue. This is Thursday;
would have put my head into the I will see to getting it up on Sat-
fire before I would have given urday week, Come to my house on
that vote; and if you will forgive Friday, and we will go together,
me and vote for me again, if I and I promise you a very respect-
ever vote for another unconstitu- able crowd to see and hear you.’
tional law I wish I may be shot.’ “‘Well, I will be here. But one
“He laughingly replied: ‘Yes, thing more before I say good-by.
Colonel, you have sworn to that I must know your name.’
once before, but I will trust you “‘My name is Bunce.


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

56 THE FREEMAN August

“ ‘Not Horatio Bunce?’ ~ confidence in me stronger than I
“Yes. had ever seen manifested before.
“ ‘Well, Mr. Bunce, I never saw “Though ‘I was considerably

you before, though you say you fatigued when I reached his house,
have seen me, but I know you and, under ordinary circum-
very well. I am glad I have met stances, should have gone early to
you, and very proud that I may bed, I kept him up until midnight,
hope to have you for my friend. talking about the principles and
You must let me shake your hand affairs of government, and got

before I go.’ more real, true knowledge of them
“We shook hands and parted. than I had got all my life before.
“It was one of the luckiest hits “I have told you Mr. Bunce con-

of my life that I met him. He verted me politically. He came
mingled but little with the public, nearer converting me religiously
but was widely known for his re- than I had ever been before. He
markable intelligence and incor- did not make a very good Chris-
ruptible integrity, and for a heart tian of me, as you know; but he
brimful and running over with has wrought upon my mind a con-
kindness and benevolence, which viction of the truth of Christian-
showed themselves not only in ity, and upon my feelings a rever-
words but in acts. He was the ence for its purifying and ele-
oracle of the whole countryaround vating power such as I had never
him, and his fame had extended felt before. -
far beyond the circle of his im- “I have known and seen much
mediate acquaintance. Though I of him since, for I respect him —
had never met him before, I had no, that is not the word — I
heard much of him, and but for reverence and love him more than
this meeting it is very likely I any living man, and I go to see
should have had opposition, and him two or three times every
had been beaten. One thing is year; and I will tell you, sir, if
very certain, no man could now every one who professes to be a
stand up in that district under Christian lived and acted and en-
such a vote, joyed it as he does, the religion
“At the appointed time I was at of Christ would take the world by
his house, having told our con- storm.
versation to every crowd I had .
met, and to every man I stayed “But to return to my story. The
all night with, and I found that it next morning we went to the bar-
gave the people an interest and a becue, and, to my surprise, found



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

1961 A SOCKDOLAGER 57

about a thousand men there. I met terest was simply a repetition of
a good many whom I had not the arguments by which your
known before, and they and my neighbor, Mr. Bunce, convinced me
friend introduced me around until of my error.
I had got pretty well acquainted — “‘It is the best speech I ever
at least, they all knew me. made in my life, but he is entitled
“In due time notice was given to the credit of it. And now I hope
that I would speak to them. They he is satisfied with his convert
gathered up around a stand that and that he will get up here and
had been erected. I opened my tell you so.’

speech by saying: “He came upon the stand and
‘“‘Fellow-citizens — I present said:
myself before you today feeling “‘Fellow-citizens — It affords

like a new man. My eyes have me great pleasure to comply with
lately been opened to truths which the request of Colonel Crockett. I
ignorance or prejudice, or both, have always considered him a
had heretofore hidden from my thoroughly honest man, and I am
view. I feel that I can today offer satisfied that he will faithfully
you the ability to render you more perform all that he has promised
valuable service than I have ever you today.’
been able to render before. I am “He went down, and there went
here today more for the purpose up from that crowd such a shout
of acknowledging my error than for Davy Crockett as his name
to seek your votes. That I should never called forth before.
make this acknowledgment is due “I am not much given to tears,
to myself as well as to you. but I was taken with a choking
Whether you will vote for me is then and felt some big drops roll-
a matter for your consideration ing down my cheeks. And I tell
only.’ you now that the remembrance of
“I went on to tell them about those few words spoken by such a
the fire and my vote for the appro- man, and the honest, hearty shout
priation as I have told it to you, they produced, is worth more to
and then told them why I was me than all the honors I have re-
satisfied it was wrong. I closed by ceived and all the reputation I
saying: have ever made, or ever shall
“And now, fellow-citizens, it make, as a member of Congress.”
remains only for me to tell you
that the most of the speech you “Now, sir,” concluded Crockett,
have listened to with so much in- “you know why I made that speech


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

58 THE FREEMAN August

yesterday. I have had several which the country owed the de-
thousand copies of it printed, and ceased — a debt which could not
was directing them to my constit- be paid by money — and the insig-
uents when you came in. nificance and worthlessness of

“There is one thing now to money, particularly so insignifi-
which I will call your attention. cant a sum as $10,000, when
You remember that I proposed to weighed against the honor of the
give a week’s pay. There are in nation. Yet not one of them re-
that House many very wealthy sponded to my proposition. Money
men — men who think nothing of with them is nothing but trash
spending a week's pay, or a dozen when it is to come out of the peo-
of them, for a dinner or a wine ple. But it is the one great thing
party when they have something for which most of them are striv-
to accomplish by it. Some of those ing, and many of them sacrifice
same men made beautiful speeches honor, integrity, and justice to
upon the great debt of gratitude obtain it.” ~

State Intervention

THIS IS THE GRAVEST DANGER that today threatens civilization:
state intervention; the absorption of all spontaneous social
effort by the State, that is to say, of spontaneous historical ac-
tion, which in the long run sustains, nourishes, and impels
human destinies. When the mass suffers any ill-fortune or
simply feels some strong appetite, its great temptation is that
permanent, sure possibility of obtaining everything — without
effort, struggle, doubt, or risk — merely by touching a button
and setting the mighty machine in motion. The mass says to

itself, “L ’Etat, c’est moi,” which is a complete mistake.

JOSE ORTEGA Y GASSET, The Revolt of the Masses


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

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

i pare NOON pn Sa = ad

i LEYSONS FROM

IT IS INCONTESTABLE that human sible, In a hundred localities, from
beings can live under a vast vari- India to Cuba, and from Soviet
ety of economic and social dispen- Russia to the Congo, a second im-
sations. But the question is how portation from the West — that of
well do they live? theoretical socialism of both the
We know how they have lived Fabian and Marxian types — has
for some three hundred years un- spread its alluring gospel. Western
der the relatively free economies intellectuals who ought to know
of Western Europe and the North better have preached to the East-
American continent. Inventions ern and tropical worlds that capi-
have increased apace, the individ- talism has had its day, and that
ual standard of living has risen, socialism — or the commandeering
limited forms of government have and administration of productive
thrived, and populations have property for collectively ordained
mounted without leading to the uses — will prove quite compatible
dire effects predicted by Malthus. with a steady expansion of goods,
It is solely on the basis of the services, and leisure for every-
Western progress of the past three body.
centuries that Eastern and tropi- Since the future hasn't hap-
cal cultures have dared to put their pened as yet, and since socialists
trust in the so-called “revolution of all types judge capitalism by
of rising expectations.” comparing it to a purely imagi-
Perversely enough, the Eastern nary future collectivist utopia, it
and tropical cultures want the is difficult to prove to the Cuban
benefits of Western freedom while or the Laotian people, for example,
at the same time they resist tak- that the end-product of economic
ing over the going principles that plenty depends on what Ludwig
have made Western benefits pos- von Mises calls the “essentially hu-

59


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

60 THE FREEMAN August

man quality, the power to choose or mines to exploit, or (as in the
and to act.” History, however, can case of the churchmen) souls to
be suggestive, for collectivist em- save. Neither the records set down
pires have existed on this earth in by the original conquistadores nor
the past. What do such empires the imaginings of the “noble sav-
show for themselves? How have age” school of literature which
human beings fared under them? reigned throughout the eighteenth
Answers to such questions are century are to be trusted as evi-
available to the curious, provided dence of the workings of the Inca
they can find their way to certain culture.
books that do not ordinarily ap- But with incredible patience
pear on the recommended lists of Professor Baudin has winnowed
the orthodox Fabian and Keynes- his sources and compared his find-
ian professors. One such book is ings with what goes on today
Louis Baudin’s classic, A Socialist among the modern descendants of
Empire: the Incas of Peru, which the old Quechua Indians of the
after many years of slumber in South American cordilleran high-
the original French has just been lands. Archeology and contempo-
made available in an English rary anthropology have yielded
translation (editor, Arthur God- him much. By dint of piecing
dard; translator, Katherine Woods; many things together, Baudin
publisher, D. Van Nostrand, 442 comes up with some answers that
pages, $8). should prove highly embarrassing
This work by Baudin, whom von to those who expect great things
Mises describes in a foreword as from a collectivist way of life.
“the most eminent representative
of contemporary French economic A Class Society
science,” is hardly a polemical es- The Andean Indians of Peru
say; indeed, it is hedged about by who were ruled by the Inca elite
all sorts of cautionary caveats. of the sixteenth century lived in a
Baudin knows that he is dealing naturally hostile environment.
with fragmentary knowledge, and They were short and stocky men,
with the reporting of ignorant and olive-brown in color, with broad
sometimes highly prejudiced men. chests and well-set shoulders. Ca-
The Spaniards who burst in upon pable of great endurance and great
the Inca world in the sixteenth indolence, they scraped their live-
century were not social historians; lihoods from highland plateaus
they were passionate people who that were hemmed in by forbid-
were looking for provinces to loot, ding mountain peaks. Beyond the


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

1961 LESSONS FROM THE INCAS 61

peaks in one direction were the was no absolute guarantee of con-
deserts of the Pacific coast lit- tinued membership in the ruling
toral; beyond them in another was caste. As for the “storehouse of
the Amazon rain forest. Origi- women” available to the elite, this
nally, the Quechuans had lived the included the more personable
immemorial life of the primitive young females of the underlying
agrarian commune, with every masses. They were recruited into
member of a clan sharing in the community houses for “chosen
produce of lands that were par- women,” where they received in-
celled out to families in periodic struction in sewing, cooking, and
redistributions. religious training. Eventually, the
When the Inca elite moved in on prettiest maidens became the chief
the Quechuan underlying popula- Ineca’s concubines, or were given in
tion, the agrarian commune was marriage to lesser elite digni-
not fundamentally disturbed. The taries.
Incas themselves — the rulers who A nice life, that of the Inca
originally took over by conquest — elite. But it was a life bounded by
merely added what Baudin de- duty, and nobody in Inca Peru was
scribes as a State Socialist super- permitted to loaf. The elite tried
structure. Everything which the to set a good example. As for the
masses received was planned by masses, they accepted their mas-
the Inca rulers or the local ca- ters without complaint.
ciques who served as their lieu- As described by Baudin, Inca
tenants in outlying districts. Ev- “socialism” provided for a good
erybody had security — but nobody deal of organized leisure; there
had a right to go against a most were public celebrations, banquets,
authoritarian form of planning. songs, dances, family events. No-
The Inca elite itself had privi- body, however, was permitted to
leges and even some private prop- get off by himself to indulge in in-
erty. Known as the orejones (from dividual idleness. Between the ages
their pierced ears), this elite was of eighteen and twenty-five, young
a genuine ruling class, It educated people helped their families. Able-
its own offspring to rule, but it bodied men between the ages of
was also far-sighted enough to al- twenty-five and fifty performed
low for some measure of recruit- obligatory agricultural labor and
ment from the masses. Tests of military service. Children from
endurance winnowed the ranks of ten to eighteen led the llamas; be-
those who were in training for tween the ages of five and ten
elite jobs, which meant that birth they chased birds from the fields.


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

62 THE FREEMAN August

The most repulsive jobs were ro- invasion of the Spaniards, the
tated. Families of hereditarycrafts- passive Indian populations suc-
men — jewelry workers, painters, cumbed to indolence, timidity,
potters, weavers — were set apart drunkenness, uncleanliness. True,
to produce for the Inca rulers. they have shown a gentleness in
Other families, however, conducted “submissiveness, servility . . . and
unspecialized household economies, a certain utilitarian turn of mind.”
doing their own weaving, shoe- They still have a great “resistance
making, weapons making, and so to fatigue.” But their virtues and
on. Says Baudin, “there was no their vices are all of a pattern,
tailor or shoemaker or armorer in constituting what Baudin calls

the empire.” “the distinctive features of an en-
Since the Incas provided for slaved and besotted race.”
storehouses, and practiced conser- Baudin doesn’t argue that the

vation, there was generally a sur- Peruvian Indian was necessarily
plus on hand to insure against made by heredity and environment
hard times. No wonder, then, that to be anything else but what he
European authors frequently has been. The Andean world was
thought of Inca life when they and is a harsh world. The Peru-
were busy projecting their own vian Indian lacked the wheel — and
utopias. But were people happy in even with wheeled vehicles travel
the realm of the Incas? To this and trade would have been diffi-
question Baudin addresses himself cult in a region of jumbled high-
in a notable chapter called “A land valleys that were isolated by
Menagerie of Happy Men.” deserts and fever-ridden jungles
Judging by the yearnings of the from access to the sea. There were
modern Andean Indian for the historic reasons for the develop-.
“old ways,” the Incas were happy ment of Inca socialism.
in a “negative” way. But it was
the happiness of constituting a A Model To Be Avoided
“cell” in a superior organism. The But if the Inca Empire was
chief Inca, says Baudin, plunged fated to be as it was, it does not
his subjects into a sleep that was follow from this that its princi-
akin to death. Happiness was ples should be imitated elsewhere.
achieved by annihilation of the hu- What oppresses Baudin is not that
man personality. Stagnation was the Quechuan Indian submitted to
everywhere; inventions simply did his environment. His real objec-
not happen. And when the ruling tion is to authors like Edward
Inca caste disappeared after the Bellamy, whose Looking Backward


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

1961 LESSONS FROM THE INCAS 63

was an attempt to prescribe an )p SCIENTISM AND VALUES, edi-
Inca-like social organization for ted by Helmut Schoeck and James
everybody. Since Bellamy’s day W. Wiggins. D. Van Nostrand. 270
the idea of a blueprinted society pp. $6.50.
has become very popular. As Bau-
din puts it, the history that is Reviewed by W. H. Peterson
evoked in A Socialist Empire: the ELECTION NIGHT belonged to the
Incas of Peru, which seems “so computers! On the basis of early
far removed from us, is in fact, returns one electronic brain fore-
our very own .. . the conflict with saw a Nixon victory; on the basis
which it is concerned has become of later returns another predicted
one of the most burning issues of a Kennedy landslide, with Cali-
the present day. The two civiliza- fornia a better than 300-1 shot for
tions, the two social systems whose the then Senator. Came the dawn!
impending clash fills us with anxi- The extension of this kind of
ety today are the very same that “scientific human programming,”
confronted each other at the dawn frequently computerized, gets
of the sixteenth century; and un- short shrift from 12 scholars in
der the impact of their violent Scientism and Values (Ludwig von
collision, one of them, the empire Bertalanffy, William T. Couch,
of the Incas, collapsed.” Pieter Geyl, Henry S. Kariel,
If history repeats, the modern Ralph W. Lewis, Murray Roth-
Inca-world, that of Soviet Russia, bard, Helmut Schoeck, Robert
will not prevail against the West. Strausz-Hupé, Eliseo Vivas, Rich-
But will history necessarily re- ard M. Weaver, W. H. Werkmeis-
peat? After all, how many of us ter, and James W. Wiggins).
have the will-to-prevail that ani- These social scientists believe
mated the cavalier-soldiers of Pi- that the methods of the physical
zarro and the Christian friars of sciences — mathematical models,
old Castile? Though they abused controlled experiments, laboratory
it, the conquistadores had a sense techniques, and so on — are fine for
of mission. But the modern West the physical sciences. But when
has half-way gone over to the idea these methods are uncritically ap-
that the method of the Incas —a plied to the social field where hu-
centrally planned, centrally en- man values and choices are domi-
forced life — is right. How much nant, computers become something
of a vital “confrontation” of “two less than perfect forecasters and
social systems” is guaranteed by such social disciplines as eco-
that? ~ nomics, anthropology, psychology,


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

64 THE FREEMAN August

sociology, political science, history, social engineering in particular is
education, and ethnology become its denial of individual conscious-
something less than accurate de- ness and free will. He derides
scriptions of man in a social en- those who think advanced com-
vironment. puters “think’’—in a reflective way
To be sure, other commentators — and who view man as but some
on the passing scene — Richard La kind of “servomechanism.” Mathe-
Piere in The Freudian Ethic, Jac- matician-philosopher Lord Ber-
ques Barzun in The House of In- trand Russell is singled out as par-
tellect and, earlier, F'. A. Hayek taking of this mentality. So are
in The Counter-Revolution of Sci- economists of the mathematical
ence — have been saying pretty school who, overlooking or dis-
much the same thing. New theo- counting the wide-open variable
ries of human behavior adduced of free will, fall for a strict quan-
from esoteric “evidence” and “ex- tity theory of money or a Keynes-
perience,” garbed in the trappings ian ‘“‘consumption function” or a
of science — mathematical formu- mathematical model predicting or
las, laboratory and field studies, advocating this or that.
reams of statistics, and the like, James W. Wiggins, Emory Uni-
complete to the black-bound report versity sociologist, takes many of
— do not necessarily add up to sci- his fellow social scientists to task
ence. They may well add up to for abandoning articles of faith
“scientism’” — a reproachful term once shared with all scientists.
used to tag an elaborate but quite Among these are the use of rele-
unsupported social theory. vant concepts, a commitment to
In particular, the authors of the objectivity, an avoidance of value
book reviewed here condemn social judgments, a search for all the
engineering as a scientistic meth- evidence, and a public methodology
od leading, however inadvertently, which allows fellow scientists to
slowly but surely, on an ultimately test conclusions through replica-
all or nothing basis, to a situation tion.
where individual achievement and This book is not light reading.
creativity are all but smothered. It demands reflection while it
Consulting economist Murray knocks insistently on the doors of
Rothbard makes the point that the entrenched dogmas and approaches
key to scientism in general and to the problems of our times. ao


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

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

Clichés 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, 812” x 11”. Single copies for the ask-
ing. Quantities at 1¢ a sheet. For sample copies (no charge) write to:

THE FounpaTtioN For Economic EpucaTioN, INC.
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===== PAGE 68 =====

-n