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

gram ino
. complef

Economic Record

States worl
A Conference Board Publication

res than i
tatus of (3
out with
iture by’%
ibtful if §
flation v3
equate tay

CONTENTS
Review and Comment... .................................... 31
Government .............. 32
Some marginal utterances |
Does American Business Want Free Enterprise?.......... 33
Reactions to a question sent forth by Tae CoNFERENCE BOARD
Looking at England ......................................... 40
Notes from the travel diary of an American
A Kansas Manifesto. . ........ooeoer oe 43
Let Us Tell Them the Truth................................ 44
A speech by Virgil Jordan
Two Shapes of Thought.................................... 47
Planned vs. Free Markets.. ................................50
By Mordecai Ezekiel
In Europe’s Footsteps. ....................................... 54
A lawyer’s parallel
British Ideas of the Cartel................................. 55

From a debate in the House of Lords

, NATIONAL INDUSTRIAL CONFERENCE BOARD, INC.
247 Park Avenue « New York 17, N. Y.

July, 1944 Vol. VI, No. 2



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

Jorn

Publications of the | : I

p R

National Industrial Conference Board | Fee

: weise

: sion «

The Economic Almanac (published annually) | Ban
The Management Almanac (published annually) ; that:
: R | tions.

The Economic Record (quarterly) i to
The Conference Board Business Record (monthly) | ) 1 Bulle
The Conference Board Management Record (monthly) i polit
: & grap

The Conference Board Industry Record (four a month) ;
Conference Board Reports | 1 oy
Studies in Business Policy | 9 blo
~ Studies in Personnel Policy | ; fal
. } cd ] oul
Weekly Desk Sheet of Current Business Indications | oo 1 ol XN 2
Conference Board Previews: Weekly Summary and Announce- i them
ments of Conference Board Studies and Discussions - : | Be
Road Maps of Industry: Weekly Chart Service | 1 Mong
: gE chart
natio:

ay
line ¢
temps

wall

again
: : tional
The Economic Record is open to views and i | whore

opinions that are not necessarily those of THE 3 point
CONFERENCE BoaRrD. It does mot adopt them by | E are in

printing them; but for their integrity and good faith ; they
in every case The Board does hold itself morally 4 unde;

responsible. Contributions will be welcome. 4 they

E their

|

artic]



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

The Economic Record

Garer GARRETT, Editor

J—
Copyright, 1944, by 7

JULY, 194.4 National Industrial Conference Board, Inc. Vor. VI, No. 2

Review and Comment ~ Indicate the amount and character of na- absorb 15 billions; then the required 27

- tional output that will have to be main- billion dollar total of nonconsumption

N THE May number of the Federal tained after the war, if serious unemploy- goods will be reached.”

Reserve Bulletin, official organ of the ment -is to be avoided. No attempt is And so, if the last $27 billion get spent
Federal Reserve System, there is an article 546 to suggest how this goal is to be in that way and if the whole national
‘on “Jobs after the War,” by E. A. Golden- achieved.” product of $170 billion is therefore con-
weiser and Everett E. Hagen, of the Divi- The line of survival is a minimum gross sumed according to schedule, then the
sion of Research and Statistics. As an eco-  pational product of $170 billion, at the existing economic system together with
pomic study its excellence is what you 1943 level of prices. This is arrived at our institutions may be expected to sur-
would expect. But it is much more than 1, the calculation that: “If production vive. - oo
- that. The perfect title would have been: approximates the 170 billion dollar level Now at last the confusion of political
“What We Must Do to Save Our Institu-  ,fier the completion of reconversion, un- man with economic man is complete. Eco-
tions.” The editorial committee Probably employment will be about 2 millions, nomic man must be appeased with pros-
thought of that title and ruled it out on probably as low a figure as can be achieved perity. By whom shall he be appeased?
the ground that for the Federal Reserve ip peacetime. It consists mainly of what By political man. Yet these two are one
Bulletin it would be too strong. Neverthe- economists call frictional unemployment and the same being, in dual aspects.
less, the article begins with an ominous 4nd does not include any significant num- Therefore, what all this saying amounts
political verdict, stated in the first para- per of able and willing workers out of jobs to is that if man in his political aspect
graph, as follows: for any length of time.” Whereas, in the fails to provide man in his economic as-

“Maintenance of employment is the black area, referring now to the chart: pect with greater prosperity than he ever
principal single economic objective that “If, however, national product were to knew before, at least one-fourth more, and
will have to be achieved if the existing fall as low as 108 billion dollars (line B), do it immediately, then frustrated man in
system is to survive. . . . The choice which is the 1939 level with allowance for his economic aspect will rise against frus-
is between high production, high em- the increase in prices through 1943, we trated man in his political aspect, smash

~ ployment, and general prosperity—and ould have unemployment of between 15 his economic system and change his insti-
falling production, _serious unemploy- 514 90 million (line B*). Our economic tutions. Unless, of course, government
mont, widespread misery, and danger to destiny may lie between the two sets of shall restrain him by providing him with
our msttaiions. lines, A and A* and B and B.” more prosperity than he can provide for

Not since the age of prophecy have peo- Those are the two great ifs. But there himself. Only, in that case, what is gov-
ple been so fairly put upon notice. Let are many others. For example, if the gross ernment? And what is man in relation to
~ them heed what the finger of statistical national product levels off at $170 billion government—man in either aspect?
analysis writes. Their economic system is in the second year after V-Day; what will “It is not the purpose of this article,”
not the weatherly bark they thought it happen to it? it says, speaking again of itself, “to dis-
‘was. Another depression will sink it. ‘The It is supposed that state and local gov- cuss the measures and policies that need
fate of their institutions hangs by a fever ernment will consume $10 billion of it and to be pursued by government and by busi-
chart of prosperity. There is a line. If the that the Federal Government will consume ness to keep up the volume of national
national product falls below that line they $20 billion (which would include continu- output needed to maintain employment.
‘may begin to expect the worst. It is 2 ing lend-lease) ,—altogether, therefore, $30 It is only intended to point out here that
line definitely established, like a norm of billion for government, leaving $140 bil- a volume of output of approximately the
temperature. People may draw it on the lion for the people. size indicated is essential if disaster is to
wall for themselves. Then as they plot What will the people do with $140 bil- be averted. But there is no occasion for
against it the moving curve of gross ma- lion? If they conform to past spending discouragement, only for determination.
tonal product they may know precisely habits, which have been carefully exam- Tt is a challenge to our economy. When a
where they are. If it goes to a certain ined, the people will spend $113 billion for couple of years ago the President laid
‘Pomt they may say: “Now our institutions consumer goods, that is to say, in the sat- - out a program of war production, this pro-
are in danger.” If it goes to a lower point, isfaction of their daily wants, leaving $27 gram was considered fantastic and was
they may say: “We are sunk. Let’s get billion still to be accounted for. This $27 hailed by the enemy as the delusion of a
under the bed.” But if, praise be! it rises, billion must be spent for things not to be fatuous nation. And yet this program has
t ®Y may sigh with relief and go about immediately consumed, as for example:— not only been met—it has been exceeded.”
their errands, “If inventories increase by 38 billion dol- Nevertheless, according to the Federal

The feat was to fix the line. It was done lars; if exports exceed imports by 2 bil- Reserve Bulletin’s chart, the economic sys-
with a kind of clinical detachment. “This lions; if residential construction totals 7 tem that did that could die “between two
article,” it says of itself, “undertakes to billions, and if new plant and equipment sets of lines, A and A* and B and B.”

31



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

39 | THE ECONOMIC RECORD

dent. It is one that would entitle every need and glad to have it, and then see :
man in America to a pension. We have that this money is appropriated for the °
got to leave two taxpayers, at least, to food that the Europeans really need, in.

Marginal Utterances pay the taxes and not pension them all. stead of for these dresses.

Let us leave two of them at least. —From a debate in the House.
—In the House of Representatives.

Government

Pursuing Lend-lease Billions with
Simple Arithmetic - Fair Practice Obliged
Mg. Warrier. I believe our people Around the World Mr. Gossgrr. Mr. Chairman, I have
would like to know what the actual Mz. Roeston. A few days ago a dis- here a telegram received from the dis-
amount is that has been expended for tinguished officer in the United States . tinguished chairman of the Committee on -

lend-lease. . . . When we take the testi- Army who has been in all the theaters the Judiciary of the House, now in Dallas,
mony given before the House committee of war in Europe, Asia, and Africa, Texas, which reads as follows:
and the items placed in the Recorp later, and knows what has been going on I have just come in contact with one of the -
and compare it all with what was con- and what is going on, and who is a Demo- activities of the Qomittee on Fair Employ. :
. : : - 1 . ¢ 3 3 men ractice. e as arming ews,
tained in the report submitted to the Sen- crat, said to me: “Mr. Robsion, if the engaged in the ordinary activities of publish. |
ate last week, I challenge Senators to de- American people could see what I have ing a newspaper, printed in its paper recently
termine from the two sets of figures how seen around the world, and know the way this advertisement: “Wanted colored man to
much money has been spent, because we our country is being imposed upon, it work on night as paper handler. Essentia]
find one thing stated in one breath and would almost create a rebellion here in The paper received a letter from the regional
another thing in the next breath. Then the United States. director here with regard to this advertisement
more appropriations are requested under —From a debate in the House. from which I quote: Fair Emolovment P
lend-lease, when $85,000,000,000 has al- : . e Committee on Fair Employment Prac-
’ ea : tice, operating under Executive Order No. .
ready been authorized, $5,000,000,000 of 9346, a copy of which is attached, considers
which has been turned over to lend-lease. Bacon for 280,000 Years that such advertisement is a violation of the

. . : order.” . . .
At least $30,000,000,000 is unaccounted Only recently an unfriendly editor asked Other employers have been similarly dic

for, so far as the Congress knows, still me the question: “What bacon have you rected. Many of them have complied under

available to be used for lend-lease. How brought to Oklahoma?” Limited time per- apprehension of adverse governmental action
has that money been used, if it has been mits the mention of only a few items. In should they refuse. The confusion, accumula;
Mgr. BusermELp. I wish to join with the administration, I introduced .and had the activities of this agency has become a most
Senator from Montana in asking some- passed one bill that made a profit in gold serious matter. Pair me against continuing Ac
one to get these figures together, or get to the Treasury of $2,800,000,000. The appropriation for this activity. —Harron : Doe.
those who are responsible for the figures profit in this one law alone will pay my From a debate in the House on appro- 1 pomp
together, so that we can agree on what salary for the next 280,000 years. priating money fo continue the CFEP A pa
has been paid out, what has been obli- —The Hon. Elmer Thomas, Senator Co a
gated, and what the President still has in from Oklahoma, in a radio speech to his Co. :
his hands. If any of these figures is cor- constituents, May 16, 1944. Monetary Policy in the Pants : one
rect, approximately $30,000,000,000 is still Mgr. McMurray. On this point about ° >
left in the President’s hands which he has the debt, remember that every dollar of Po
not spent or obligated. If the figures are UNRRA Dresses public debt also represents, in the pockets - th
not correct, what are the correct figures? Mr. Crawrorp. The gentleman has of certain American people, that much § r J
I think the Senate is entitled to that in- raised a fundamental question here. Why assets . . . and if you cancel the public . ask 1
formation. Co do we, under UNRRA and lend-lease, use debt completely—do not misunderstand § Se
— From a debate in the Senate. "the seersucker type of yardage for export me on this—if you cancel that public debt | :
when certainly those people would be completely, you would not increase the °§ to rec
perfectly delighted to receive the plain wealth or decrease the wealth of the Seeme
On a Bill to Pension Surviving cloth? United States of America one cent. You J of ou
Civilians who Helped to Dig Miss Sumner. I should like to com- Would merely redistribute the wealth. : Buf
the Panama Canal ment on two things. First, I should like “Mz. Knutson. How about the people? § who |
Mgr. Russerr. These men were paid well to draw the attention of the Mem- “Mr. McMurray. Some people would eq
to go down there. These men got the ful- bers to the hem of the skirt we are gain, and some would lose. You take the § wants
filment of the contract which the govern- sending abroad as compared with the money out of one pocket and put it into § Am
ment made with them. The men who went others. It is done so carefully. It looks another pocket, but the two pockets are in § comb:
out on the frontiers in Kansas, Nebraska, as though it were handwork, hand em- different pairs of pants. . . . I said that if | enon
Oklahoma, Wyoming, Montana, and Texas  broidery. It also has lovely little buttons. this debt were repudiated—let us assume | prise
and blazed the trail and cleared the for- The ones for the American women have the debt is $300,000,000,000—if the debt : Swen
ests and pioneered the way for civilization no buttons, none made with that par- is repudiated, all the American people chaos
are sympathetically just as much entitled ticular care. The second thing I want to would gain $300,000,000,000, all of them 3 Y
to ‘be put on the pension rolls of the point out, as has been suggested, and as put together; and some of them would } ican |
United States Government as these men. has been done in the time of disaster in lose the $300,000,0000,000 which is repre- ; onlv -
The government gave them nothing to go our country repeatedly in the past, we sented by the bonds they now own. : whol
out and pioneer, but they went out there could have organized a dress line here and “Mr. Knutson. I get you. It is a book- § quite
.and did it and by so doing made a civil- brought out second-hand clothing and giv- keeping transaction.” § about

ization for America. It is a terrible prece- en it to the people who were really in —Fragment from a House debate. 3



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

oa THE ECONOMIC RECORD | 33

2! The Mind of American Business on

July, 1944
July, 1727

1, in- pp:
. °° a
i Free Competitive Enterprise
73 : f
L Some weeks ago the President of The Conference Board addressed to the Members severally an
have ; exploratory and privileged letter, beginning with the question, ‘Does business still believe in having
> ds g free competitive enterprise after the war »’—and saying that the question was prompted by the apparent
; los 4 conflict and confusion of opinions being expressed by businessmen about continuing government con-
: trols of markets and prices after the war.
of the 4 The purpose of the letter was explained in the last paragraph, as follows: “I do not know what you
nploy- if think about it, and I am sending this to ask if you will tell me by writing a letter, as short or long as
ews, 3 you like, giving me your frank opinion. I am asking all the Members of The Conference Board to do
od the same. I want to see if I can get any composite picture of the attitude of this representative group
nan to if of business leaders on the mater . . . for the guidance of the Board in its work . . . . I won’t use
sential k your name or quote you unless you say you are willing, and shall be very grateful for your help.”
sgional If The response was astonishing both for volume and quality. A member of the Staff of The Con-
sement | ference Board has made a digest of the many letters received, giving to their content of spontaneous
t Prac. 4 thought a kind of order; and this digest, together with certain free and informal reflections which
er No. 3 are permiited to stand for their provocative value, is offered as a report to the Members of The
nsiders 3 Conference Board on the mind of business on this matier. In view of what the membership of The
iE | Conference Board represents, it is, in fact, a report on the mind of business to itself.
der : Acknowledgment to those who have been so helpful in moving this experiment.
at | VirciL JORDAN, President
e seek-
on from i HE question sent forth by the Presi- Those who for themselves answer the absolute freedom, not even in the jungle.
tinuing i dent of Tee ConFErENCE BoArp— question with a positive yes are a minority Therefore freedom must be a relative
arto 8 “Does business still believe in having free of one in three; and of this minority one-. thing, and if it is a relative thing it will
. 1 competitive enterprise after the war?”— half at least are of the opinion that for not be today what it was yesterday nor
appro- ik has staggered home with a mixed and the duration of the postwar transition tomorrow what it is today, because the
environment it inhabits is continually

} 3 . . . - -
OFEP. ik heavy cargo. Diversity, indeed, is the first period, whatever that may be, govern-

most striking fact about the answers. At ment controls should be discontinued grad- changing. After that the subject belongs

to the realm of dialectics, where opposites

ats one extreme are several letters expressing ually.
about 3 impatience with the question, even to the We shall abstract these letters. But dissolve in contradiction, and where the
lar of & point of doubting its rational existence. before doing that it may be well to estab- more a thing is not what it is the more 1t
sockets One writes: “I am quite astounded at lish a kind of background. is the very same.
much the question you raise, not because you A considerable number of respondents We know that a free pople must re-
public | ask it, but because you believe there are complain that the question was innocent. strain freedom, else they cannot for long
stand grounds for it.” The words, free competitive enterprise, be free. We know that free competitive
ic debt i And another: “I was more than shocked they say, could mean many things to - enterprise must be restrained both by
se the 1 to receive your letter indicating that there many minds; and they were not defined. rules of its own making, so far as it may
of the J§ seemed to be such a question in the minds That difficulty was one that had been be permitted to make its own rules, and
t You 1 of outstanding businessmen.” foreseen and then dismissed. One knows by laws imposed upon it either by the
h. E . But they are outstanding businessmen Very well what a thing is until it begins government or by the people acting
people? i who write from the other extreme, saying, to be precisely defined. One knows, for through government. With new conditions
would E one: : example, what one means by freedom. Yet come new restraints, and these may go:
ake thie iF I really doubt whether most business We€ S€€ that if we discuss freedoms by very far without changing m the least the
+ into § wants free competitive enterprise.” number and kind we begin to lose the one idea or meaning of freedom. It is indeed
s aren 3} And another: “Yesterday I asked a very thing we know, namely, freedom. The the very process of freedom. It was the
that if 3 competent executive, who has had experi- skilled antagonist has a certain trick and American process and was continuous from
ASSUME ence in Washington, whether free enter- it is one, we believe, that has been put the beginning. It continued through the
16 debt’ Prise was possible after the war. His an- OVer on business. The trick is to ask, whole of our experience with the first
people 4 swer was, ‘Hell, no. It would mean Now exactly what is it you mean?” The = World War.
if them 3% chaos.’ ” trap there is the absolute. If you are Government control of the economy
"would 3 _ You may take it that the mind of Amer- caught in it you are obliged to admit that for purposes of that war went all the way.
s repre- if oo business is divided, and divided not there is no such thing, for example, as Prices, production, distribution, consump-
. 3 nds its forethoughts of what will be, 4 a Ar antaly tmed yw done Lucas tion and money were all rigidly. governed,
a book- 3 ether we like it or not, but almost or was desired Lo see w ether or not, those who answered it and such a thing had never happened be-
3 quite as much in its ways of thinking ment market atten the mar which prompted the fore; but through it all the character of
3 | about what ought to be. eros the kev. question involved in the future of government did not change. The govern-

te.



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

34 THE ECONOMIC RECORD July, 1944 July

JE

ment in the traditional way was still the then: “What is free competitive enter- pear.” At a later date an equally prom. c
instrumentality through which people prise, exactly?” Such a question as, “Do inent man in government circles whog the P
acted upon themselves. The great theme We want it really?” would have made no speech was quoted in all the papers said, nomic
was one of voluntary action. The gov- sense whatever. For one thing there ‘We hope vested interest will submj; the o 2
‘ernment asked people to forego Sun- Wasn't time to ask questions. There was to government controls without violent cal .
. oe . . 5 . . or
day driving in order to save gas. No too much work to do. It is true that free resistance.” And again, another distin. Oe
one could have been arrested for driving competitive enterprise was scared. It is guished gentleman in government said, 1 iy.
anyhow, since there was neither law or true also that there was in the air of the ‘When we get through with this bus. SE
edict. Nevertheless the next Sunday, cars time an idea of reforming competition to ness [insurance] we will be run by gov. to adn
vanished from the highways. Standing in make it less costly and wasteful. This ernment.” Such challenges and threats d ne
Washington Square looking north you could be done, many believed, by adapt- were largely received in silence by Amer. ve en
would have seen in Fifth Avenue not a ing to peace the lessons in cooperation ican business leaders.” sphere
single automobile, not even a taxi cab. that had been learned during war, and . pres
Another: compe
that would mean not only such coopera- “I think it i I xed . that s
As It Was Before tion within industry as had been forbid- Lt it 1 ; art PS otive ict b
Co. den by the anti-trust laws but cooperation tion and parily ear Of reprisals that 11
The inscription leaf of the final report . causes your outstanding businessmen to Deal 1
also between industry as a whole and gov- . d
of B. M. Baruch on the work of the War : sheer away . . . just as I feel free to pose
Ind ios Board b bis italic line: ernment. The result, many hoped, might . : in an unt
usisies oard bears this italic line: be a kind of competitive cooperation on write this letter to you only on the "ther
_ “The highest and best form of efficiency the part of private enterprise, the govern- understanding that my, name, which is the be
1s the spontaneous cooperation of a free ment overlooking and minding it in be- inseparable from that of the company, terpris
people.”—Woodrow Wilson. half of the public welfare. However, all shall not be connected with any quota: ble
And in the course of his report, Mr. that beautiful idea waned. It was the tion you may wish to make. line.
Baruch said: : flesh and not the spirit of private enter- Another infiltra
“No legislation was ever passed making prise that was scared. The only point that “I think business does believe in free § besides
specific provision for the establishment of remains is that even the ardent exponents enterprise, but has been so frightened private
the War Industries Board. Its power de- of the idea were able at that time to take yy jts political masters that a consider- busine
pended in’ large measure upon’ its ability something for granted about government. able cross section of businessmen have all cor
to demonstrate its effectiveness in accom- They assumed that government would started to hedge. They would rather f and th
plishing the common purpose and the wil- overlook and mind their scheme of _com- compromise than lose everything.” Never
lingness of other agencies to be assisted by petitive cooperaion without acting in it; In this letter the t litical b comme
it, together with the voluntary support they assumed, that is to say, that govern- Po er y Sa politica ry wy tion, a
of the business interests of the country. ment itself would not compete with pri- SES fo © an eco eit ag ° i
Several times during the summer of 1918, vate enterprise. el an oe ~ he d end One
bills giving the Board larger legal powers sad ina hig S SIRES S nad a . “1
were prepared and discussed by commit- What Is This Change? met 1 match, 1t was going to meet Iis je
) master. : thi
tees of Congress, ig the general conclu- Such was the shape of things twenty- F thin
sion was that the Board was accomplish- five years ago when this country faced its other letter says: | -
ing its purpose well enough without fur- postwar world. What makes the great dif- “Whether ten years of browbeating liste
ther legislative POWEIS. ference between that time and now? Why has dulled our powers of reasoning or hi
And on how it worked, he wrote: is it now that among the leaders of Amer: whether the poison of bureaucracy Is on N
Of indispensable value in facilitating jean business fewer than one in three will more deadly than we have realized, I do lines
Contact between the various sections and iy , positive manner say yes to the simple not know. Possibly both.” his :
ei ranc Re industry corresponding to question set forth by Tae CONFERENCE And another: mus
em, was the series of war service com- pgo.pp? Yo that th has B }
mittees, originally under the Council of U may say tha ere “I am astonished to find a great many | omy
A been a change in the heart and temper le in indust ho bel; ! he ¢
National Defense and later transferred to . for st beopie I mousey who believe we mus Lo
oS ° of business. That is true. But why 1s it h Is or d k in 1
the supervision of the United States 9 ave cartels or managed markets. . . .
: A true and what was the cause? You may In inion the New Deal t ;
Chamber of Commerce, each representing my opmuon the New Leal wants car Ano
. ; X say the problems are greater, and that tel dh . NRA d db
one line of business. A war service com- : ol : ; ¢ls and has since ays, and by “]
: also is true; nevertheless, magnitude is . d ted ti
mittee spoke and acted as agent and rep-  .J.tive Tn so far as the problems are eco- VIGOTOUS anc WNWArIAnied prosecilont our
resentative of an industry and not as agent : under the anti-trust laws so discouraged hav:

nomic they are of the same kind, and if
it is a matter of size only one must con-
sider that our power of leverage has at

men that they began to say, “‘What’s the ernt

of the Board. The various units compos-
use? If we can’t protect ourselves, we thin

ing a particular industry would join in

appointing one of these committees to act the same time in every way increased. had better go along with government.’ ” forn
as spokesman in negotiating with the Gov- . ERE . . ther
ernment. The strongest men in the indus- Ie per find It is Government wit}
try usually served on these committees.” first 4 ’ Government has changed. That ac § A
When the war ended the War Industries For the first time we who create counts, at least in part, for the great dif- : ne
Board dissolved itself. In a few days all government are afraid of government. ference between the time before and the _
that was left of it was a notice on the . Another: time now as we face a postwar world. The mn
door: “Out of business.” : “Why should we be surprised? Do change in government is not a matter of plat
To. restore the national economy to a you remember a prominent leader in degree only, as if simply its powers had our
peacetime basis was definitely the job of Washington saying, ‘Privately run busi- been enlarged or its functions extended.’ a

free competitive enterprise. Nobody asked ness will logically be required to disap- It is a new kind of government, exercising



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

a July, 194% THE ECONOMIC RECORD | 35

: the power to act directly ‘upon the eco- phere make a reasonably efficient ex- part of our Allies, and their bewilder-

? eq omic life, even to the point of dividing ecutive into impunitive so-and-so.” ment as to how to preserve their free

ers sad 1e national income according to a politi- enterprise system in view of the atti-

: submit . cal formula, whereas before the only kind Another: tude of our Allies and their postwar

t violent of government we knew was one that was “I have been much impressed by the plans.”

T distin} -ealously supposed to act only upon the apparent conversion of businessmen in

ent said § ! economic environment, leaving the eco- Washington to the notion of govern- Another:

his busi: nomic life within that environment free ment participation in business generally “Many businessmen who have gone

by gov} to administer its own affairs. This change and particularly: to the necessity of our into war work are of the opinion that

| threats? gid not take place during the war. Be- managing the affairs of the entire world. the regimentation of markets, prices and

y Amer. | tween government, tavading the eonemie I like to think this is temporary, an out- production should be continued after
1 sphere with intent to control it, and free growth of the emergency of war and not the war. The attitude of these men can
E: a reflection of the outlook of business- be accounted for perhaps by the fact

competitive enterprise, whose power in
that sphere had been supreme, the con- men in general. We can hope for little that a large proportion of them had a

fict began with the advent of the New change while the war lasts. That doesn’t leaning toward New Dealism before be-

als ad Deal in 1933. The necessities of war im- necessarily mean to me that it is certain ing assigned to Washington, and since
1 free to} posed a kind of truce; but it has been that government participation in busi- then their views have been influenced
on the an uneasy truce, each side regarding the ness must be accepted for all time or by the atmosphere mn which they, work.
which i # other warily and with suspicion. From that intelligent opposition to it is wasted Beyond that, however, I understand
g: : effort.” that some of our large corporations are

the beginning of this change private en-

3 uot terprise was on the defensive. It was Another: | advocating that production and markets
iF unable, however, to hold an impervious » : } be allocated after the war on the basis
# line. Its defenses were penetrated by an Many businessmen who have been of a percentage of the prewar period.
iF infiltration of ideas, and self-weakened associated in Washington in one capac- If that is intended to be a long-term
ein fr ee besides in a curious way by the spirit of ity or another have become imbued with program, it would be most unfortunate.
sightened:} private enterprise itself, saying, “It is the the idea that government cooperation Not “only would it freeze the small firm,
consider-3f business of business to do business under mn business, which means, of course, but it would stop new firms dead in
sen have} all conditions.” That can be understood O° extensive control by government, their tracks. It has the ear marks of
d rather} and there is much that can be said for it. 1S necessary in the postwar period. This, ‘monopolistic privilege. . . . Should bus-
ng.” E Nevertheless, we find in these letters bitter I believe, comes about by the complex- iness insist upon government. protection
1 masters) comment on the behavior of accommoda- - o of jhe ov ashington minh and against risk, then it is digging its own
‘h of thelf tion, as if it were a kind of disaffection. £ oe © 4 al government 18 ka grave, as this inevitably paves the way
20 oseveltl j One savs: : h i - do out t PE places for totalitarianism of some form. The
alrea dy iy ys: 1 . 2 gp o i a Tontage o usiness; and mixed economy that some businessmen
Msbirnt my judgment, he in no way rep- elieve .that they have all iailed to seem to favor would combine the fea-
fH resents a cross section of businessmen’s take mto consideration the ultimate cost tures of state socialism and. free enter-
i thinking. T heard him speak recently of this aid and have overestimated its prise. Such a mongrel system cannot
& at . . . and I think it is a fair state- value. . « . Ever since NRA days, many work, for the components are mutually
wheating’ i ment to make that two-thirds of his businessmen have been running to antagonistic. The net result is that the
joning or} Listeners were totally unsympathetic to Washington with their troubles, ‘asking government’s activities are extended and
1cracy is} his views. Another group excused him the government to do something about private enterprise is forced to retreat.”
zed. I dod on the ground that he had to talk along them. This, of course, has been greatly Another:
78 lines of government control because of increased during the war period by the - or :
if - his association with the New Deal. He education of many businessmen to the We must have a certain tolerance—
ki. must have been allergic to planned econ- Washington point of view. The ex- ~~ Dot too much—for the paid managers of
eat many} ~~ omy before he went to Washington. for change, if they would only think it business whose first concern must be to
we must § he certainly contracted there the disease through, is goirig to be a very much carry on whatever conditions confront
ts... oF in its virulent form.” . one-sided affair.” them. That’s the way business always
ants car Another: © Another: has been and perhaps always will be.”
ot : “It seems to me that the trouble with “I share the feeling of alarm at the Another: , .
COUrage a: our businessmen, particularly those who cbange of psychology regarding the in- 1 don’t think we need to be sur-
That's the F have been in Washington in various gov- dividual enterprise system. exhibited by prised that businessmen who have been
elves, ie | ernment activities, is that they do their representative businessmen who have long subjected to the economic and SO-
nment.’” thinking second hand. Along with other been actively engaged in the government cial philosophies current in Washington,
activities in Washington. At first it and to the seductive influence of the

: forms of Washingtonitis, too many of i
i : | them while there have been inoculated seemed to me they were bitten by the
| bug of statism, or whatever you call

propaganda blow-up of complaisant ‘in-
dividuals are in favor of government

with the virus of pl d »
planned economy. control after the war, with the same

[hat ac the ism that makes government through

great dif- § Auother: its bureaucracy the important partner complaisant individuals doing much of
and the . “It is not surprising that businessmen in the enterprise endeavors of ‘its citi- the controlling or appearing as the mas-

orld. The o Washington become enamored of "zens. But as I have talked further with ter minds in the system.”

natter 4 p anning, particularly those who think these men, I began to think their change The letter last quoted touches with some

wers had; oh business needs protection. I have is the result of their gaining knowledge acidity a subject that may receive in the

extended Ways been amused at how a few weeks of the extent of government participa- future much more attenion. Another

PR |
=Xercising | of exposure to the Washington atmos- ‘tion in the affairs of industry on the comes at it in a more direct way, saying:



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

36 THE ECONOMIC RECORD July, 1944

July

“As an aside, I often wonder whether in the functioning of the free enterprise ‘the public interest.” To my mind, thay
by examination and analysis you could system. Back in the Twenties and ear- should always be the controlling factop, cat
discover whether there exists in busi- lier, we took these things for granted. “Legislative restraints barring the per. oul
ness, industry, agriculture or in labor We did not realize how disastrous it formance of specific acts, which becaug, the
circles what one might call a vested would be to the free enterprise system of the nature of the acts themselveg the
interest in the regimentation of which if the climate were to change. It seems are against the public interest, are me
we complain, and what are the vested to me, therefore, that all through our proper and desirable and are wholly to
interests which have to be contended history we had, to some extent, a ‘mixed compatible with my concept of a sys. am

with in addition to the political idealists economy’ and I do not think we should tem of free competitive enterprise. Pro.

- before we can restore what you referred be obsessed with the idea or be fearful hibitions of this kind leave people un. ’
to as the free enterprise system. In a of an economy that is mixed. What we hampered in undertaking any activities Th
series of articles entitled, “Principles of ought to know is what are the ingredi- which are not against the public inter. trans
Trade,” The Economist (London) makes ents put into the mix and in what order est. They embrace the whole range of of fre
some interesting observations on this and sequence is the mix concocted. production, distribution and financing of Even
point.” “Personally, I think we are still goods and services capable of satisfying utmo
: ) } . . going to” have to have the govern- human wants. impel

oo " or austen, the discussion ment provide some of the climate that “Tt seems to me that we can have if vo

nation. throagh 3 om un eueving rete will encourage free enterprise to func- free enterprise of a desirable character rou

new on der in which there hall b Ww oi a tion. If we can get a limited and proper when government's participation in oe
mum of government intert ea oo interference of the right kind and at markets is confined to insuring respect to -
of the right kind, and a m erence, a the right time, then I am confident free . for contracts and to preventing fraud par ;
competitive ente SE ot th Of free enterprise can provide reasonably full or illegal restraints of trade. The de. socta
Kind. One ho htbode p oh e Tote employment and prosperity for the termination of what and how much On
says: g y written letter American people for another period that - shall be produced and sold, and at what “
: lies ahead.” price and under what conditions, should freq
“I believe that we all have a genuine Another says: be left to the voluntary decisions of the ma
desire to move as far as possible away “I don’t kn that f terprl people interested in such activities—in me
from the totalitarian type of state, and d Se +b oN a ey en A brief, should be subject to economic as str
now recognize as we never did before oes describe w at we prt nan distinguished from statutory law.” an
that some of the things we did were wish to preserve. Actua y we have | "
inconsistent with the principles of free committed ourselves to certain types of Another says: . hay
enterprise. Thus, I think the desire of regulation which we believe to be in “My personal feeling is that the rules wor
industrial management will be very def- the public Interest. We have gone much of the game have to be changed from «
initely in the direction of a free com- further in this direction than the Eng- time to time as the complexion of the onl
petitive market and towards the reinsti, LSC PAVE. - - 50 far as the cartel siti- game changes. It may be trite to use§ =
tution of the free enterprise system. ation 1s concerned, 1 am of the opinion as an analogy the game of football, but tun
“As a realist, however, I recognize from that as applied to foreign trade we shall when the Carlyle Indians made touch-§ 50
a study of our past industrial history find it necessary either to jom up or downs by tucking the football up under § to
that whenever the tides of social revo- to adopt some protective measures of the sweaters of their backs, it was ob- § bus
lution sweep on the shore and recede our own to meet cartel competition. vious that something had to be done lose
they leave behind a residue on the beach F . Trad with the rules or the game would suffer are
that is difficult to eliminate entirely. oreign trade so much that it might pass out of exist-§ = hor -
. . Thus we will have with us prac- This reference to the special circum- ence. So it is with business. We are f° thie
tices and regulations that are incon- Stances of foreign trade is characteristic. living in an ever-changing situation, and § diff
sistent with the free enterprise system The general idea is that the American ex- I for one would accept new rules of bui
and which the system will have to strug- .POrier as a private trader, unsupported the game, but I also believe that the do
gle with just as people passing middle by his government, would be unable suc- rules should be kept to a mmmum, adv
life have to struggle with ailments and cessfully to compete with trading govern- that business } should be left alone as ind
obstacles that prevent their functioning ments or with cartels created and sub- much as possible, that competition be lab
with the efficient smoothness of youth sidized by foreign governments. The allowed to be free, or that, if rules seem On
in the military forces. thought does not once occur that foreign to be necessary in regard to competi «
“Beyond this I must also add that governments may be afraid of the free tion, they be kept at an absolute mun § a
during this last generation businessmen American trader, hence their anxiety to r- wal
Tove loaned thet the free enterprise divide the trade of the world by agree- And another: uct
system and modern civilization are not ment. : “The question in your letter is very the
entirely automatic. Some of the things Another letter says: clear to me, but very difficult to answer. § uct;
that government has done in the past “It seems to me that the time has We face so many theories in political Eng
to create a climate in which free enter- long since passed, considering the com- economy these days that I believe most a]
prise can prosper, the type of monetary plexities of modern industrial develop- businessmen feel we are approaching om
system provided, the type of taxes lev- ment, for anyone reasonably to think chaos. It is natural to prefer almost tha
ied, the building of roads to provide a of free enterprise as economic conduct any definite and known condition to the reg
place for the great automotive industry entirely free of governmental restraint. prospect of utter confusion. Personally,’ exp
to run and grow, and many other such How much control, or constraint, or I have no doubt that the great majority dia
things, are activities of government that supervision there should be constitutes of American businessmen are thoroughly ky
€

in the end are great determining factors our problem. I have already mentioned convinced that free competition alon¢



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

Ys 1944] July, 1944 THE ECONOMIC RECORD 37
und, thy : en provide the incentive and initiative “As economic or social life becomes regulation and direction. Even the ac-
ng factor our economic society requires. But more complex the independence of the ceptance of self-imposed restrictions and
|g the Per these terms have become so confused simple personal and family life of the the surrender of considerable freedom of
h because that I am not surprised many business- eighteenth century is necessarily re- individual activity may be necessary if
hemselves men are discouraged in further attempts duced. Producer and consumer lived freedom of enterprise, privately owned
west, ares to reach an understanding on definitions near each other, were substantially and privately operated, is to survive.”
e wholly and meanings.” neighbors. They needed to ask from
of a sy government nothing but the preserva- Many Questions
rise. Pro] For a Gradual Return tion of order. But now more than half There is one letter that raises too many
blic inter] competitive enterprise is very rare. the necessities of life come from strang- To me free enterprise 1s a high-
range of Even many who hold that a return to the ers in distant places, through a vast oy ding d abstraction that Fei
1ancing of freedom of private initiative is and complicated system of production thing and everything irom the driving
. <§  ytmost 1iree p ER . » ps force of individual initiative expressin
satisfying erative are for doing it gradually, as and distribution, with which the indi- he enlich 16 > : g
3 3 oo do it suddenly, as was done before, vidual has little direct relation. If the = tened se nterest o hv
can have ould be too heroic and perhaps socially catastrophe or combination impairs or people to the grossest exploitation o
character danger ous. And this is a view that seems destroys the working of that machinery, nature and man. In recent years var-
a ha SRE TE ous traders in semantic currency have
»ation uf derive partly from natural anxieties and the consumer is individually helpless. ht Ke it stand in th 4 1
1g respec artly from the consideration that the He has to call upon his own government ind f “ the ni ht © chino armor
ing fraud P cial climate has changed. for something more than the preserva- und for the knight in shining armor
The de so tion of peace. To an increasing degree who will one day deliver the spotless
ow much, - Ope says: he has to regulate and protect the ma- virgin Business from the New Deal
d at what “Certainly we want to get back to chinery of production and distribution dragon. . :
ns, should free enterprise just as rapidly as hu- and safeguard it from injurious inter- For wo hundred years it has not
ons of the) ‘manly possible. The thing that bothers ference so that it shall continue to work. been a question in any wodery state
ivities—in, me is how long that will take. The old That does not justify the interference of of freedom Versus regulation, ut of
onomic asf structure has been patched up to such government wherever it may, but only how much regul ation. Emphasis upon
aw.” an extent that if the patches were taken wherever it must and where what it free enterprise has n ot only eon ged
3 off overnight it is possible we would does is necessary and effective to ac- the bof but bas conitved oo give a
the rul have a chaotic condition in which it complish the justifiable social purpose.” ne 0 LY 0 A ond
H would be difficult to readjust ourselves. practices wich are no longer condone
ged on “There is no question but that the Exit the Simple Life either n ow or morals. The rebuttal
g only hope for the individual is a ret . a8 been acvastalng.
ite to ust} to id built this country—the oppor. Another on this same theme says: “Economic controversy cannot be re-
ytball, but tunity of each individual to prosper All of us must accept the fact that solved in generalities. Business man-
de touch: | according to his ability and willingness war upsets many normal economic agement is deeply and sincerely perplexed
up under to work. Yet I am not convinced that forces and requires a reorientation of over its obligations and responsibilities,
t was ob; business can absorb all the men that business arrangements. All necessary a perplexity which is intensified by the
+ be donk ose their jobs when the war contracts changes cannot be voluntary. In many cross purposes indicated in government
ould suff gre completed and the soldiers come cases the dislocation of normsl pro. policy. Immediate postwar problems
t of exist; home, except over a period of time. For cedure would result in unfair advan- require more than copy-book rules for
We arg this reason it may be necessary for the tages or disadvantages. Therefore, in their solution; wiz., Is maximum and
ation, all different states to find some way to such times as these, certain govern- and stable employment possible under
r rules of build new roads or repair old ones, and mental and other regulations are re- the unrestricted competition demanded
that the do public work of other kinds which. is quired. The necessity is recognized and by the Justice Department? Can a
minimum; advantageous to the community until accepted by the- business executive as management be sued by stockholders for
alone 2% industry is in position to absorb the one of the inevitable consequences of putting its concept of the public welfare
etition be labor surplus.” waging a major conflict in which noth- ahead of their interests? It is small
cules seell, On foreien trad . . oo Ing 1s important except that it con- wonder that management in some indus-
competi} . gn tra ¢ again another says: tribute to victory. tries is not averse to being told what
lute mini Free enterprise to me does not mean “As long as we had a predominantly to do.
3 a situation where, for example, tariff agricultural state we could carry on “Only eleven years ago a respectable
3 walls are Jemoved and American pred very largely, each man for himself. No segment of businessmen asked for the
NE Eve emselves in a position w ere one depended much on any one else. The NRA (with its suspension of the Sher-
er is veil ~~ “iey must compete price-wise with prod- inability of that relationship to survive man Act) to help them relieve a de-
to answer, ucts manufactured in Belgium, France, in the mass industrial era mto which pression which some of them apprehend
1 polit : ey or any other country having we have entered is the unmet challenge will be repeated when the war boom is
lieve 100: : ower standard of living than our of our time. over. There may be another demand for
‘proachint hes + 1 cannot avoid the conclusion “The complicated relationships of a limited cartelization of heavy indus-
er atm regu] some  goverhment assistance and various elements in our national econ- - try, at least, if the going gets bad. I
lon to Ii ation will be required to finance omy require intense cooperation in personally believe all such expedients
dersona Yj Pll business during the years 1mme- working out the problems of all indus- weaken the economic structure of the
t majo ed following the cessation of hos- tries, and we believe these problems country in the long run, but I might not
horough'i:g ilies in Europe. can best be solved by permissives and feel so if I were confronted by a condi-

don alo he simple life is gone, says another: with perhaps a modicum of intelligent tion and not just a theory.



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

| TH
E ECONOMIC RECORD

no one ¢
of free © one can afford the I
who h competition except th uxury to fight a .
as nothing to 1 e fellow m war efficiently, de .
that alwa; ose. And hasn’ ust be given » despotic powers | ty! I uly, 1
ys tended sn't to the Anoth . ’
the beginning of to be the case, since and our mode of life ro executive er on mixed economy: : Se
ime: 3 . H tion , our ire d “1 $ il .
Th . 5 and even €aom of a.c- all to se .
; e spirit of acco dati . be temporary: our personal libert c compulsor e how we can introd price i
ectly e _accommodation is porarily surrend y must y government lee ;
is th expressed in the next let per- trol of bureaucrat. endered to the con- a part of our pp al planning j int, consun
e last in this phase t letter which voluntarily th Ss. . . . But to contin ally destroying th y without event stricter
“I Beli o be quoted: destro y the .unusual powe oe ness enterpr e freedom of all b v stroys
. elieve that som y our balanced rs which rprise. And when pri si. ts
imply in the e of our associat ment beyond th form of gover petitive business is d private cop, its sot
‘terprise, Le use of the term, ‘free . least the period postwar period, or o intellectual and ” lestroyed, politics) resulte
revi ey wish A a of emer (RL uickl iritual free it we
some previous period 1 to return to ssume may be only a gency, which I lia dom wif tion, ¢
conception of m ong before the after the cessatio matter of months Another: y
accepted social any of our commonl be a ecalamit n of hostilities, would ZN ’ I and s¢
Workmen’ ial legislative y Co v beyond a S, woul he experienc this 1s
OorKmen’s Compensati acts, such as untry has suffered in it nything this of other countri e of our own and th centive
pw I cannot go along ry ‘How- Another: its history.” lieve that es taught us to be it can
of Ypeate the repeal of the So those who “Management f its regimentation a oy government Start m etho
that e past twenty-five years o reforms ment, or a mixed markets by govern it is bound to exp managed economy
many have corr , or think onl econom " we il and and
ect . y to ch y, can will hav eventu
The could justify. ed abuses which American bacincee the ortenton of dustrial life in op etely socialized 1 The .
many ° tem ‘private enterprise’ is i 55: porary benefits th en and any tem T
or ways a better phr se” 18 In The I . to even out the may come aboy here
erprise,” for i ase than ‘fre nspirati diat rough road in uf fair cuta
esse r 1t seems to © Anoth won diate postwar period wi the imme.
es nce of the system we express the 3 er says: in comparison t iod will be small gains © are const
rve-—private individ wish to pre- . Free enterprise : that we will o the long-time lossy of Ameri
have often thought ual investment. 1 tion which ha : has been the inspira An sustain by such a p i" One w
« t at: * S ) TO - TOgTra) 8
div: pune to save is ot what we are standard of living. en t us our high o her = | the facts
1 idual to start a busi right of an egimented for the d are necessarily definitely feel that —1s sont
and to reap th siness of his own but when the duration of the the end of th promptly aft sired, to
provided h e rewards of his eff competiti peace comes, a Sysk war, freed fr e war business shoul y ti
velo e operates it effici efforts, > petition and free ystem of free th om the governm d be ion, for
ps new techni ciently, de- only one under whi enterprise 1s the - at now exist. That is, ental controls the facts
reduces c ques and prod with th which we can free mark hat is, we should h do th
I such osts and widens di products, ca he rest of the world compete the d arkets. Production, pri ave ey -
hl < a system requires istribution. me time, if we desire ~and at .the oe ay-by-day operation. prices, and Well,
as p to make it run, throu  Sovormment our standard of living continue to raise 1 atters of collective b of busines; sion. Nc
s patent protection, ta Eo such things Another: oe y bor, and the responsibil gaining with forthrigh
special income tax relief assistance, “T am 1 : andling of these import ity for proper system 2
oat restrictions to re c., Or govern- free ente ot so much concerned ab the. close of the war an items, after} laissez fa
hot let us face the facts vent abuses, ese as T am aboub Ee out businessmen and No d be put on several 1
such Delp open. The — welcome beings only iF again become free human L know without question, a grim old
orthright poli antage of a if, among oth an experien ased on m case exp)
mot policy migh pproach t er thin ce, that a d
BE greater efficiency 2 bp e to pro- place. nthe freedom of the ket job will be accomplished much, beter | Ns ely :
and ool. of thes Goveramental admin- for purposes . al business firms fo Toent controls continue to: i gov B, limit ¢
been ances, in which field al checks protective t ol selfish gains seek sw no t 0 are now. Legitimatel o apply a ut the
woefully weak.” we have a national ariffs, they cannot w To en rols were only set up f ely these con- ground
7 | of = cartel as they did in come riod and they would 4 or the war pe Case of
he Positive Voi ciples of , thou accepting hr ays continue beyond that period. no right t% er publi
hose wh . ce “thin ntrol. There prin- - ‘A very im 10 country.
and know no believe what they belie hd = a mixed economy. be no such matter for uportant item in this whole competit
we have said ay of compromise ve fel PDAES quite as much i resham’s of employment ration is—what sort a profit
But they Ny fewer than one i are, as «= d of economics and ch in the broader I think that i _ we provide?—and when th
o ake up for it. n three. in the monetary field | society as it does ernmental ont gi freed from gov- was loss.
pe says: Another: tion much on il pnswel the ques other wa
will tis the only scheme of thi “It seems to m workers—boys reburnin ony to theg 5 sist
work for a lo . things that ample dem 2C that we hav —than industr g from the front een 1t w
we can ng period and onstration e had t . v burdened wi g expe
A get back to a basi unless of the failur in many directi inuation of the ( with a cor cted
m gov basis of moderati e of gove ons present wasn’
: ernment, we must moderation to accomplish ronment restrictio controls.” nt.
into the wat mus take the pl fac permanent r LoS |) 74 A s
civilizati ers of misfort € plunge ace of the operati esults in the hat Is I } ec
vilization either st ortune. . . A and, therefo ation of economic I t We Want? without
goes under, and a Jd In high form or tions in our re, to rely on such regu s; And lastly a definition: ) : a crucial
trend to regul ntinuation of th would postward busine ras “Unde § that ther
. gulatory gov e not onl ss plannin r a free eco isis |
ourse toward degrad ernment is a read the vide mean that we could oo buys what he want nm the consume! Cnsis in
. . There is no ceracation and ruin. years, but hat oe of the past twel wants, at the pric sn the quantity he cannot ;
Another: ative. nomic histor, we disregarded our v The producer m e he is willing to poy case, of «
years of oy of one hundred and ceo of public acc ust meet this acid tes] the war
 ficht ree enter ris sixty me eptance. Hen § about i
fighting this war if prise. Why are we ndous industrial effici ce our tre E tin
1
other hand, carried economy, on oe ontrols
ed to its logical cor of supply
until the

“Tt is und
e that in ord
er opportunity.”
clusion, the
s government re
gulates the]



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

THE ECONOMIC RECORD 39

oo and the quantity and what the it is that will happen. The argument is our foreign markets. In view of the cost
price may buy. This results in r=- both plausible and rational. It is unfair of preparing the second World War no-

er . . . So
ed markets, increased costs, de- to expect private enterprise alone and un- body will now maintain that Europe could
S

as ny s incentive, strangles industry at assisted to undo what the government not have paid her debts both to the United
of all % AA and in history has always has done; therefore, let the government States Treasury and to the private Ameri-
A; its omic collapse. What is undo its own work. But that was not the can investors. But whether she could ac-

resulted m econ: : . .
? Production and consump- state of mind of business twenty-five years tually pay them or not was never at any

tion, employment, exchange of goods ago. The habit of turning to government time the question really. The question
and services. Under a free economy In time of crisis did not begin in the transi- was one of good faith. This country was
this is attained by opportunity and in- tion period that followed the first World the creditor. It did not want to be paid
Under a regimented economy War; it began in the great depression. The off, any more than a bank wants to be paid

rivate col
3 it we want

tive. . or. . . ep .
pa only be attained by disagreeable British mind is on this same road. The off by its debtors, for if its debtors did
methods and then never maintained.” Committee on Postwar Trade Policy of pay it off, the bank would be out of busi-

the Federation of British Industries says ness. What the bank requires of a good

nent st

ed econong it will be needful for the government to debtor is that he shall pay each separate
eventul} The Repor ter’s Comment maintain its controls over raw materials, piece of paper as it comes due. and the

rcialized Tf prices, finance and consumer buying for interest upon it in a regular manner, and

There is the report. It is, we believe, 2 some time after the war, “to avoid a cha- if he does that he may go on increasing
fair cutaway view of the thoughts that otic scramble for the available resources year after year his total indebtedness to
are consciously taking place in the mind and to safeguard the balance of pay- the bank. In the same way, if Europe
of American business. ments;” to which it adds a statement of had been a good debtor, if she had been

One who reports the facts—in this case faith, saying that in the long run private willing to pay only the instalments and
ihe facts of sentiment, feeling and opinion enterprise must take over again in order the interest, she might have gone on bor-
—is sometimes permitted, or even de- that individual incentive shall be restored. rowing more and more in this country
sired, to make a postscript of interpreta- But if free competitive enterprise is no and we might have gone on increasing our
tion, for what it may be worth. What do longer able to make its own way through foreign investments, almost without limit.
the facts mean? What total impression crises, will it not come to be regarded as One obstruction was Europe’s fear of the

mptly af
3 should h

al EE do they make? a fair weather barge? And will not the growing power and prestige of free and
shou d ha Well, first there is one notable omis- idea of what constitutes a crisis tend to competitive American enterprise. —G. G.
prices, sion. No one comes forward to make a become so diluted that presently the gov-

forthright defense of the profit and loss ~ ernment will be expected to take charge

uning wig i der the doctrine of at ry of d ? . :

} aff system as it was under the do every cry oi dangers

Jor prorg laissez faire. On the contrary, there are ° Thirdly, and last, one gets the feeling Confusion of Tools
1tems, alg  coveral rather harsh references to that that in the great depression the mind of General Motors is operating in the

| be put @ grim old doctrine; and although it is in n0 American business suffered a psychic in- United States 99 of its own plants which
pee | case explicitly said, the idea seems to be jury from which it has mever recovered, have a total of approximately 77,000,000
ase py A vaguely present that it may be necessary hence its impulse to confess its sins and square feet of floor space, and in addition
wach if ely to limit private profit in the social interest. its defensive attitude generally, instead 16 government-owned plants totaling ap-
han 1 he But the limitation of profit by law or on of saying, as it would have said at any proximately 12,000,000 square feet of floor
2 rp V4 ground of social policy, except in the time before, “So what of it? Nothing space. These plants contain a total of
fp g) case of regulated monopoly, operating un- else has ever worked better; nothing else approximately 130,000 machine tools in

il der public franchise, is a new thing in this has ever worked so well.” One could be- use on war work and other authorized
no rg “4 country. The great effects of the free [lieve it had been hexed by the New Deal’s products, of which 69,000 belong to Gen-
) this whi competitive enterprise system—which is interpretation of that economic disaster, eral. Motors. In addition, 17,000 machine
ghey E a profit and loss system—were achieved which was an interpretation that laid tools for which no wartime use was found
A when the only thing that limited profit upon business the guilt and the responsi- are in storage. Some 3,100 peacetime ma-
: Fi i was loss. Will the system work in any bility. Certainly that was not the only chines have been sold. These figures in-
or the o.3 other way? We do not know. Certainly interpretation possible, nor was it the dicate in some measure the physical prob-
er the qUZE that is the only way in which we have ever one consistent with either our economic lem involved in reorganization when the

. 2 "
rly Lod seen it work. At any rate you might have history or the history of great popular time comes to resume the manufacture of
ry © a expected the point to be argued and it delusions. It was a world-wide depression. civilian products. se In addition, govern-
trols.” 4 wasn't. A world-wide idea had collapsed. The ment-owned machine tools present a prob-

S. A second impression is that almost idea was that the cost of the first World lem, particularly where they are inter-
without argument business now concedes War could be absorbed in a prodigious mingled with machine tools owned by

ant? a crucial point—the point being simply increase of wealth. Whether that was General Motors. Disposition must be
that there is or may be a kind of economic possible or not is a matter that can never made of these thousands of machine tools

. crisis in which free competitive enterprise be either proved or disproved. Great before plants can be cleared for the post-

le consul cannot right itself. The crisis in this hazards lay against it. If it had been in war reestablishment of normal manufac-

1#v 78
ee bn of course, is the transition back from fact impossible it would in the end have turing operations. Many of the 3,100
So ad en War to peace. The common thought -defeated itself. However, the world-wide peacetime machine tools which were sold
ua pout it is that the government must con- and unnecessary repudiation of debts ow- to other producers were key machines.
and prof ue to act, and that it must relax its ing to this country, principally by Europe, They must be replaced or recovered be-
4 if °ontrols gradually until the normal laws was a mortal blow. Not only did bil- fore the production of peacetime goods

my, O0 :af of supply and demand can be restored or lions of paper turn suddenly worthless in can get started —From the General Mo-

: 1 olf .
es {i ha they restore themselves, or whatever our hands, but we lost at the same time Zors annual report.



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

40 THE ECONOMIC RECORD | July, 1944 | Ju

healt.
PY cial
Looking at England new
may
Notes from the travel diary of an unofficial American men
fabri
EORGE BERNARD SHAW was re- without a written Constitution and a moved so far toward socialism that in the wort]
sponsible, I believe, for the obser- Supreme Court to interpret it. There are neutral zone between the two parties’ ex- pot
vation that “England and the United no limits to the legislative powers of Par- tremes it would be difficult to find any CONSE
States are two nations divided by the liament, and Parliament is its highest distinction in the philosophy of those who § the 1
same language.” In common with all tribunal, too. It selects, usually from its call themselves Progressive Tories and ing t
socialists, he sees people as numbers. In own members in Lords and Commons, the more conservative wing of the Labor whol
truth, a great gulf separates the two ministers for the nation’s administration. Party typified by Ernest Bevin and Sir party
people, their mores and their outlook. In contrast, we have forty-eight sovereign Walter Citrine. Th
Britain is, after all, a tight little island states and until recently have been pro- The benefit of this National (Govern- pear
whereon everything by comparison with tected by a Supreme Court to interpret ment is the unity which it inspires in the the I
our continent is in miniature. What they a written Constitution which prohibits country. As petty politics have been ad- the 1
call rivers we would call streams or creeks. unlimited legislation. journed for the duration, the National are
Their trains are tiny, as are most of their Whether it is due to different political Government’s efforts are combined to fur- expel
automobiles, their roads and their lanes. organization or to the fact that we have ther one purpose—the winning of the war. wher
It is a homogeneous little place. Its been at least fifty years behind Britain But the two parties, working in apparent - Cong
people have more or less a common root. in the industrialization of our economy, harmony, have absorbed much of each cente
The climate is much the same from Scot- the New Deal is a shock to us which the other’s philosophy. They frequently de- econ
land to Cornwall, as are the crops and English find it difficult to understand. fend each other against public criticism. -
manner of living. : England has been undergoing a similar They have agreed upon foreign policy and
One center controls their economic, fi- process of creeping collectivism ever since upon an extensive postwar program which § Hc
nancial and political life—London. I Disraeli. From that point onward, each is now being whipped into shape for legis- unde:
aroused many protests when I remarked successive administration—Conservative, lation. in mi
to a group of Englishmen that London Liberal and Labor—has passed one piece But England has now what is essentially attan
reminded me of a small town because ev- of so-called social legislation after another, a one-party government, with attending - nesse
eryone who is anyone seems to know each creating or giving more power to evils. The people are deprived of an op- Man,
everyone else who is anyone. But this is one bureaucracy after another, so that position and an opportunity to register form
true. Sitting in the Dorchester or Clar- England even at the beginning of this war their protests. Occasionally one notices signe
idge’s, in the course of a few evenings one Was well along the road toward a social in the press a complaint against this one- § disap
sees in turn almost all members of the welfare state. And the war has acceler- party government. And this state of af- a len
Cabinet, air and field marshals of the ated the process. fairs has provided the occasion for the - who
army, admirals of the navy, every mem- More and more the state has been given rise of a new party—the Commonwealth or bi
ber of the Lords and Commons, and, control, even ownership, of enterprise. The Party—which is taking advantage of the can (
sooner or later, the head of every indus- state owns the telephone and telegraph lack of opportunity to express protests. whet
trial enterprise in the Kingdom. London companies and all the radio and television : one
is the heart and brain of Britain. stations. The state has invested in oil 1 Ne Commonwealth Party drink
fields. It has loaned money to the steam- The Commonwealth Party has a clev- Fa
ir ship companies. It has subsidized housing erly chosen title which has both political §

In the Other Tradition . on a large scale. It has purchased coal and economic connotations. It Bas put don,
By contrast, we have forty below In mine royalties. It owns outright all over- up candidates in several by-elections in ene
North Dakota and surf bathing in Florida. seas air lines. : opposition to the government candidate most
Our crops vary from tropical to subarctic. Because of differing conditions, com- and won seats in the House of Commons. - L
Great mountain ranges separate the eco- parisons between English and American The chief distinction between the Com- “M
nomic life of the east, west and middle administration of the war are difficult. monwealth Party’s program and that of § he
west, each of which in turn has several At its outbreak a truce was declared be- the orthodox socialists is that the Com- J

metropolitan centers. We have forty- tween Conservative, Labor and Liberal monwealth Party would do away with al

: og . . ors . A A Los 3 peare
eight political capitals in addition to parties. Britain’s National Government private property, and whereas the social- blan]
Washington. New York does not dominate was formed and the principal members of ists propose to compensate owners for land -

our finances. We have at least twelve each party constituted themselves into a or other property that might be national ett
recognized financial centers with their own ~~ War Cabinet. ized, Commonwealthers would expropri- iA >
Federal Reserve banks, and we have some From my point of view, good and bad ate it and pay in compensation no more § ardiz
ten thousand banks. In contrast, five have resulted. It is not generally under- than £1,000 a year as an annuity. I be- has |
great banks, headquartering in London, stood in America that the British Labor lieve it is the threat of the Commonwealth there
dominate England. These disparities are Party is a socialist party. In no sense Party, together with evidence gleaned turer
productive of a different attitude and out- do they regard the term “socialist” as one from polls which the government regu- a su
look. of derision. They call themselves social- larly makes among the armed forces, which Or

In political organization, too, we are, ists and are referred to as socialists with- was responsible for Churchill’s recent oper:
or at least we have been, different from out any ulterior connotation. But the speech wherein he promised a reconstruc Ame

Britain. Britain is one sovereign state British Conservative Party has itself tion program embracing comprehensive



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

THE ECONOMIC RECORD Al

MR July, 1944
1 he Jlth insurance, a Beveridge Plan of so- ish Broadcasting Corporation. Only one "subject to anti-trust laws, on the whole
3 cial security, a new education bill, and a London radio station broadcasts. - With tolerates and believes in the cartel con-
3 ew housing bill. If you listened, you one exception, it is the only program te cept. Lord McGowan has recently pro-
3 ay recall: him saying that thé govern- which one can listen. . Another station posed a scheme, ‘which found wide accept-
3 ment intends to construct, immediately broadcasts short wave from Droitwich to ance among businessmen, for the postwar
i materials are available, one million pre- all the armed forces overseas. It also can organization of all British business into
3 fabricated houses “with built-in fixtures be heard on long wave. News programs tight cartels under the sgls of a benevolent
the ZF worth £80.” In my opinion, Churchill was are broadcast at 8:00 a.m. and 1:00, 6:00 state. His scheme projects self-govern-
ex- 3 not speaking for himself, a right-wing and, 9:00 pam. only; those to the forces Ing industry cartels which would be em-
my 3 conservative, but as Prime Minister of are at 6:30 am, 900 a.m. and 12 noon. powered to grant or withhold manufactur-
vho 2 ihe National Government. He was voic- News broadcasts are uninteresting. Dg licenses, compel the pooling of manu-
nd ok ing the views of socialists, which on the There is no interpretive comment such as facture and, sales, dictate prices, and allo-
bor = whole have been accepted by his own we are accustomed to. It is factual, ap- cate markets. The duty of these cartels
Sir 4 party- oo _ parently unbiased, and dull. There are would be first to their own communities,
4 The anomaly of the situation would ap- many so-called morale-building programs then to labor, and finally to the Owners.
arn 1 ear to be that, although the thinking of furnished by the Ministry of Information. It is, in essence, the old principle of
the “4 the British and their Parliament is far to The propaganda is evident but it is not NRA but with sharp teeth. It follows
ad- ik the left of American thinking, those who as sweet and sticky as ours. Unexplained In principle the war regimentation of some
smal 4 are administering their economy are periods of silence—intervals of a minute or British industries.
fur. 3 experienced, conservative - businessmen, so—oceur frequently between programs, To one who thought McGowan’s a good
wor. 2 whereas here, where the people and their and one accustomed to the rapid-fire scheme I remarked that it reminded me
rent 2 Congress seem to be well to the right of tempo of American radio is at first apt Very much of the guild organizations of
ey 4 center, the administration of their war to think that the station or his radio has the Middle Ages. He answered, “Yes,
de- § economy is in the hands of leftists. gone beserk. It is significant that the there are many good things we can learn
ism. 3 , ] ] most popular programs are those of Bob from the Middle Ages.” }
and | War’s Regimentation Hope and Jack Benny rebroadcast from Of course, cartels grant security to those
hich 3 However, under these men Britain has. America. who are members of them. Labor is given
E! | undergone a ruthless regimentation, and Everyone is required to have a license security of wages and working conditions,

3 in many cases the socialists’ goal has been for his radio which costs ten shillings a capital is given security from competl-
tion. I have heard it said that McGowan’s

in

ally 3 attained. For instance, many small busi- year. But I surmise it to be much like wan s
«ding 1 1 nesses have just been told to close up. dog-license requirements and that many scheme was the answer to the socialists
1 op- 3 Many so-called product pools have been people risk confiscation of their sets as Prayer, because as soon as industry got
sister 3 ] formed and so-called utility products de- the price of not having a license. itself well organized it would be simple
tices § signed and standardized. All brands have The British Labor Party adopted some for the state to take over the perfected or-
one- disappeared from soft drinks. One drinks time ago a platform advocating pational- ganization—which reminded me that Trot-
f af- if a lemon squash or soda without knowing ization of all means of transportation, sky had observed that “the elimination of
. thei} who produced it. The quality may be good banks, land, coal mines, and other basic .competition marks the transformation of
ealth & or bad. There is a drink called “Ameri- industries. But the private attitude of stockholders into social parasites.” I
f the df can Cola,” and one has no way of telling most of the leaders of the Labor Party ~ think the old Bolshevik ‘said something.
is. 3k whether he gets Coca-Cola, Pepsi-Cola, or is different from that they express in pub- Other schemes similar to McGowan’s

b | one of the British substitutes for these lic. get widespread serious consideration and
rity | drinks. This has resulted in numerous nancial and moral support om aig

E complaints by the American Army, and + 7 . . usinessmen. That they could meet wit
ol Coca Cola ll one of its officials to Lon- Social Security for Business as much approval, in business and other
s put don to try to get the situation straight- I heard one of them say, half in earnest, circles, reveals great essential differences
ns ind ened out. However, when I saw him the that he feared a postwar victory by the in the American and British concepts. I
Fo, | most he hoped for was that the American Conservative Party because he" thought believe that I reflect the typical American
pot army might be allowed to bottle its own it would nationalize things too quickly business attitude; 1 was shocked by them.
p. Cokes.” and make a mess of it.” But Englishmen have become thoroughly
at oil Margarine sales have been pooled, also, Tt is significant that Labor Party men accustomed to the cartel idea, as well as
Com- as have those of oil, gasoline, and many who have gone conservative are those who to state ownership of or state participation
ith KE canned foods, trade names having disap- have had a taste of power under Ramsay many enterprises which we still regard
social- TF peared. One may NOW buy only utility MacDonald and those who are now shar- 2S the sole province of individuals.
land blankets in one color—white, utility cig- Ing the responsibilities of government. It Goi I bv Righ
tion a] ~ arette lighters, utility furniture and util- appears that as long as these men control Gong eft by Right
sropri- 3 ity paint in one color—brown. For all of the Labor Party it would make very little But England’s trend toward. collectiv-
more | these products the socialists’ aim of stand- difference to England who won the post- ism, or the totalitarian form of govern-
I bet ardization and removal of competition war election. The danger seems to ie In ment or the welfare state or whatever one
wealth} has been achieved. If a product is faulty the Labor Party’s more radical elements, wants to term it, is evidenced not only
Toane 4 there is no way of blaming the manufac- such as the Laski group, getting control by the acceptance of the cartel idea and
’ regu- 3} turer, or, conversely, of rewarding one for and putting their theories into effect. No state ownership of enterprise but by the
hich i a superior product. one to whom I talked, however, thought widespread social program sponsored by
’ recent 1 One instance of state ownership and that this was more than a remote possi- the National Government. Legislation to
astruc-i8 Spores which must impress every bility. implement these programs is being de-

. merican is the government-owned Brit- British business, which has never been bated by Parliament, not with the de-



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

42 THE ECONOMIC RECORD July, 1944

feat of the program as a goal, but criti- of eight million; today it has only half will be impoverished. The self-governing f
cally, with a view toward its perfection. that number. This dismal picture may be Dominions took another 30%; the war has
The Beveridge Plan, providing social overdrawn. I hope it is. made them largely self-sufficient. India

security from womb to tomb—prenatal But if one talks to the informed English- took another 7% but India’s attitude is to 2
‘aid to burial benefit~—will, I am con- man about postwar problems, he will find trade with anyone but Britain. India, for Pp
vinced, become law with only minor modi- him preoccupied with one thought—“Brit- instance, now gives the United States re- >
fications. An education bill providing for ain must export.” “We must export in or- verse lend-lease supplies but will not ex- F
compulsory schooling up to sixteen, part- der to eat.” He is anxious for American tend this principle to Britain.. In addi- se
time compulsory schooling to eighteen “cooperation” in the postwar world. But tion, during the war India has built up a is
years of age, draws little criticism and when his various effusions are distilled billion pound sterling credit which is grow- ne
will become law in something like its off, the essence of his concept of “cooper- ing at the rate of thirty million pounds
present form. A health bill providing for ation” is the opening of the American 2a month. This contrasts with her prewar ra
free medical services for all people in all market to British exports. That is how debit position of 650 million pounds ster- th
circumstances. also will become law in he wants us to “cooperate.” ling. If this credit cannot be funded in Tes
' something like its present form. England is in a pretty tough way. She some way, it will have to be liquidated gi
has few natural resources: coal, iron, some through British exports without compen- - eq
worn-out tin mines. She must import a sating imports. Russia, of course, is a °
For Delegated Government large part of her food, all of her oil, her hopeful but unreliable possibility and it
Herbert Morrison, the Home Secretary, rubber, and all of her nonferrous metals may be many years before she has a sur-
from the left wing of the Labor Party, is and industrial raw materials. plus of food and raw materials to trade. . in
very insistent that Parliament adopt a She is no longer a great creditor nation. South America has great unsatisfied needs co
policy of delegated legislation, maintain- So far in the war her creditor position has for industrial products and has the raw va
ing that the demands for postwar legis- fallen from fourteen billion pounds pre- materials and foods that England wants, is
lation will be so great that Parliament’s war to about four billion pounds at pres- but South America took only 8% of Brit- pr
present procedure will not be able to cope ent. Even this remainder is shrinking. ish prewar exports. hk
with the quantity. He ploposes. as does Due to lend-lease and our Army ex- : fer
our champion of this philosophy, Pro- penditures, Britain’s dollar balance is 1 ZL) | cel
fessor Hansen, that Parliament delegate improving. From a debit balance she has We Must Exp orl” : fe:
most of its legislative powers to the ad- built up a credit of $1,200 million, and United States, which took only 5% of lea
ministrative branch of the government this is growing. American soldiers alone British exports prewar, is the one great viz
and confine itself to legislation of broad spend thirty million dollars a month in market which could absorb all Britain's Ar
character. England and the Red Cross is spending industrial production and at the same ica
In this case, England would be governed twenty-five million a year. The $390 mil- time be the source of most of the ° lie
by executive order. Conservative members lion which Britain borrowed from the raw materials and other things which § op
of Parliament to whom I talked agreed RFC on the American securities held Britain needs. Ours is the market Eng- - fia
that there was considerable sentiment in by British nationals has been reduced by land watches with covetous eyes. It is § pu
Parliament for delegated legislation and $87 million, 22.4%. Nevertheless, com- the reason why, when an American passes, « no
that undoubtedly Parliament would move pared to prewar, there will be a sharp re- Englishmen mumble to themselves, “We - lic:
in Morrison’s direction. duction in the returns from Britain’s over- must export!” x kie
Now if one asks an informed English seas investment. Fortune recently summarized Britain's : firy
businessman if England is going to the Another of Britain's great invisible ex- postwar position this way: “A highly ~~ nol
right or left after the war, he will probably ports was the return from her shipping. conservative estimate for British imports not
reply, “Oh, no, England is not going to She carried two-fifths of the world’s ocean- on the long pull is £750 million—a sharp - 1
the left.” But he will add, “Of course we borne commerce. Her merchant ship ton- reduction from 1938’s £938 million. But - An
will have something like Beveridge, state nage is now down and air transport will expansionists believe that at full employ- eve
housing, the national health and educa- impinge on -her passenger revenues. It ment Britain will meed imports of at ° ans
tion schemes, and full employment.” will be some time before she can re-estab- least £950 million (at 1938 prices). How ° : An
I call this “going to the left.” It is lsh her position, if, indeed, it is ever re- would any such level of imports be paid | . cd
statism. Certainly it is the New Deal. established. Admiral Land states America’s for? In 1988 Britain had some £200 mil- Lo
Certainly it grants the state a degree of security demands a merchant fleet of fif- lion coming in from overseas investments, be
control over the lives of the individuals teen to twenty million tons. He main- ~ plus another £122 million from shipping § mn
that must make the Liberals of the early tains it is vital to our defense. In 1943 and other services. But the first item will § opr
Victorian era turn over in their graves. we built twenty million; we are building certainly be halved in the postwar world, § be
No one has answered. to anyone's satis- in 1944 eighteen million tons. Britain while shipping revenues will probably also § cut
faction how the schemes are going to be had but twenty-one million tons before be lower. To cover imports of £950 mil- - tow
paid for. My own belief is that payment the war! If we follow Land’s advice we lion, exports would therefore have to in- reg:
will be made in a lower standard of living, will impinge on this old major source of crease to about £750 million—a 80% gain . Am
and, if the rest of the world does not fol- Britain’s revenue. over 1938 and nearly a 50% gain over mg |
low suit, by the emigration of the most ~~ Britain must pay for her imports not 1936.” k bot.
enterprising and adventurous Englishmen only with returns from overseas invest- One point which I think Fortune over- ngs |
of current and future generations. A ments and shipping profits but with ex- looks is the effect of a social welfare ° thei
thousand years ago Iraq was. a flourishing ports. World markets do not present a state on British internal consumption of . v
community of forty-five million people. pretty picture. Formerly the Continent products which must be imported. If liv- Roc
Today it has less than one-tenth as many. of Europe took 309 of British exports. ing standards are raised, people will eat fo
ar

A century ago Ireland had a population Russia will swallow some of it; the rest and consume more products that must be -



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

uly, 1944 | THE ECONOMIC RECORD | 43

-governiy, 3 imported. , Churchill's Bouses wil take .

1e war hy  - d lumber, copper, bauxite an A K M f

nt. Tai imports seems to me that if the social ANsSas anil esto

itude is ts} program is put into effect, Britain's ex- Declaration of the Town Hall Committee of Wichita

India, fof ports would have to be increased by a |

States re larger percentage than is estimated by HEREAS a state of extreme crisis ern us if we are to retain the blessings of
ill not ex Fortune. But even the problem it pre- is recognized to exist in the affairs liberty to ourselves and our posterity.

In add sents is formidable enough; and until 18 of this Nation; and If we would be true to our God and
built up 7} js solved Britain won't eat, Beveridge or Whereas this Nation was founded upon country, our methods—both in peace and
*h 4s grow: no Beveridge. } the principles of liberty, equality, and in war—must be those of free people.
n pounds} ~~ There is only one alternative to this justice among all men; and We shall need to practice freedom while
1eT preway: rather gloomy picture for England and Whereas, through the experience of we fight for it, so that in the end, when
unds ster} that is the continuation of the principle of more than a century and a half, we have peace comes, we shall not have forgotten.
funded iy:§ Jend-lease whereby we will contmue t0 found these principles to be good, to wit: Therefore, in the exercise of those natu-
liquidate{} ~~ give England food and raw materials We are now engaged in fighting a war ral rights of freemen, retained by the
t compen: equal to the deficit in her trade balance. for the survival of freemen on this earth, people of the United States as set forth
urse, is 3 . the importance of which cannot be too in our Constitution, we, the undersigned
ty and itl} As They See America greatly emphasized by any man. Our ef- citizens of Wichita, State. of Kansas, and
has a sur: - There is great interest among all classes forts and the lives of those given in our of the United States, alarmed by the con-
i to trade? in our coming election. If the English behalf would, indeed, have been futilely tinuous increase through recent years of
sfied needs’ could participate they would cast their spent if we were to win the military vie- powers exercised by the Federal Govern-
s the ray} vote, almost to a man, for Roosevelt. He tory, yet lose the purpose of our fight. ment over and upon the citizens of the
nd wants js facetiously referred to as “the best Liberty (or freedom) is all things to all United States, these same to such an ex-
% of Brit: president England ever had”; and they men who would neither deny it to nor re- _ tent as to make evident a design on the

like his Secretary of State, whom they re- strain it from others. Its source is God, part of this government to effect such
fer to as “Cordial” Hull. Their one con- not governments or other men—a thing of control over the habits, the activities, and
cern is the possibility of a Roosevelt de- the spirit, the mind, and the heart. All the lives of the people as to eventually
EE feat. He is given the credit for lend- history has proven that its possession is render them incapable of retaining and

oly 5% of lease, without which the British are con- retained only by those who would have exercising their God-given rights and lib-

£199
Fa J .

one greit: vinced they could not have carried on. the courage and faith to use and defend erties, do hereby make devotion to these
1 Britain's} And no one else “could have guided Amer- it at all times against all enemies. principles and truths, and for the universal
the same ica so skillfully into the war.” They be- The real strength of this Nation from recognition and perpetuation of which, do
it of the} lieve that without American postwar co- the days of its birth and through all its pledge to ourselves and to each other, the
gs which’ operation England would have a most dif- history has had its source in one simple use of our humble talents and efforts to

irket Eng? ficult time. They believe that if the Re- thing—the liberty of its people. Knowing bring the facts of this condition to the

yes. It is publicans attained power there would be that our great strength is the liberty of conscious and active attention of our fel-
can passes} no chance for such cooperation. ‘Repub- our people, we cannot now afford its loss, low men, with the hope and prayer that
alves, “Wet licans are regarded as isolationists. Will- lest both we and liberty perish. prudence will determine and guide the
kie’s resounding defeat in Wisconsin con- The only true and imperishable unity actions of all to the end that the people
1 Britai firmed their views. Willkie, however, did of our people lies in their common devo- of these States shall return to themselves
“A highly not seem to be well regarded. They did tion to individual freedom. Today, as and their local governments those powers
sh imports - not understand his “antics.” never before, this unity is needed, that we and rights which have been usurped from
n—a sharp’ I was asked often what I thought as a people shall live again in safety and them by the Federal Government at
illion.. But] America’s foreign policy would be in the happiness. Washington, D. C., in violation of the
ul employs, event of a Republican victory. My stock The proof of what freemen can accom- spirit and letter of our Constitution.
rts of ai, answer was that I ‘did not think that plish in competition with all others in all Siemed by:
es) . Hov: American foreign policy would be de- fields of human endeavor needs no re- 1gned by:

ts be paid} . cided by the election but by the policies of counting. Our Nation, but ours alone, E. C. Moriarty, John A. Bowdish, John

+ £200 mil London and Moscow. I believe this to is the shining example through the ages. W. Harwood, Cecil A. Jordan, L. B.
vestments: be a fact. No foreign policy will endure For the past several years the people Brown, Jesse Vowel, C. E. Scrafford,
a shipping] in America without the support of public and their various governmental agents Rell C. Krozck, ghar C. Stewart,
st item wil opinion, and American public opinion will have been experimenting with our Gov- Brads, Bill Hol : Geo XN Potter a
be determined by British policy in prose- ernment in attempts to alter both its H i Gillesor > Geo. E Reeves,

sbably cution of the Japanese war, her policy form and substance, thereby creating and Earl X. Duke. A M. Denny, R E.
[ £950 mil toward Libya and Ethiopia, her policy spreading confusion, unrest, and disunity Mannis, Jr., Louis E. Potucek, Geo.
ave to inf Tegarding the aviation bases built with throughout the land. This procedure R. Temple, Charles S. Ritchie, Phil
1 80% gail American funds, Moscow’s policy regard- should now be ended. We should now re- H. Manning, Fred Cochran, Jr,
gain overf Ing conquered Europe, and the restraint turn to the basic laws and precepts of our E. W. Pyle, Dr. Geo. G. Anderson,
3 both nations show not only in their deal- . Constitution. So many of us, so many H. C. Yarpell, F. Paul Jernigan,

rtune overs ngs with other European nations but in times during recent years, have avowed C. J. Chandler, C. H. Cunningham,
ial welfare, their demands upon us. +. our devotion to democracy, forgetting that Emerson oe: wowin N, Car ey
imption of} When asked why Congress had cut our Nation is a republic—forgetting that Perc ‘G Gilson Elmer C Moore,
ed. If ivi] Roosevelt's request for UNRRA appropri- no majority (nor minority) rules us, but R. 4 Campbell "W. Luke Chapin,
le will est ations, T replied it reflected the people’s rather that law governs us—that this law 0. A. Bell, Carl Moore, John H.

at must be, + fear of global boondoggling. ~ —the Constitution—must continue to gov- Morrison, T. A. Morgan.



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

44 THE ECONOMIC RECORD July, 1944 7
— 1

: ha
Us Tell Them the Truth | :
Let Us le em the rut | =
wi
Virgil Jordan’s Speech at the General Session of the 28th Annual Meeting of the pe
National Industrial Conference Board, May 18, 1944 he
m
N a broad sense, it would be true to these things, and make political capital of during the dismal and humiliating decade ar
| say that in all the 260 meetings of them to maintain power. War today is a just ended, I have sometimes sought to ar
Tam Conrerence Boarp during the public-works program turned upside down. amuse you and sometimes to move you, w
twenty-eight years since it began its work, That is why someone has said that war but now I shall tell you as simply as I can th
before the preceding World War, we have has become the main instrument of do- what is in my mind about them, for this tr
been discussing one aspect or another mestic policy, and by a strange paradox crucial moment is an occasion more for ne
of the opportunities and problems of em- men pursue social or economic security by candor than for eloquence or entertain- di
ployment before, during, after and be- dropping high explosives on each other. ment.
tween wars. We talked about the same These ten millions stand tonight on the
things a year ago, in this same place, In Room of War edge of an inferno of infinite force, facing
under the imposing title of postwar recon- - . A or suffering torture of flesh and spirit
struction, and in the monthly meetings William James, the American philoso- which we can only dimly imagine and
since we have examined one by one the pher, racked his brains back in the '90’s to which will pursue many of them down {
more important elements in the enigma of Suggest what he called “a moral equiva- the nights and down the days to the end 1c
postwar employment—inflation, capital in- lent of war” —some peacetime mass activ- of their lives. They have asked no ques-- o
vestment, management-labor relations, ity that would be as Inspirmg, stimulating tions. They know only that in one way fl
markets, education and the rest—as today or merely as amusing as the martial life— or another their lives have been torn up o
in our round-table sessions we have con- and he came out only with a sort of mid- hy the roots from the American soil to 5
sidered some of the special problems of Victorian version of the WPA. Today we gyye themselves and the rest of us from z
re-employment, local and technical. are less worried about the emotional than the danger of being driven to work and 5
If, after all this discussion, you were to about the economic equivalent of war, but [ive for masters we do not choose to serve. I
ask what we know about the opportunities 5° far we do not seem to have been able Beyond that they do not ask why they are 0
and problems of postwar employment that to get much farther with our ideas than here, removed from the busy scene, out- rn
we did not know twenty-five years ago, or William did, despite the enormous and de the stream of life which flows on a
a year ago, it would be hard to say. One entertaining new industries that have de- much as before, with others taking their i
feels rather that in the interval we have veloped since: his time. . The distracted places on the stage. They do not perceive o
learned a lot of things that are not true, statesmen of every nation in the past the tragic paradox that in truth, despite d
and forgotten or lost something that we quarter-century have visited the Soviet everything, it is these martial masters who t
once knew. Everyone senses that there is Sphinx abroad and consulted the academic command their life and labor today—that, J c
something new, different, more formidable, oracles at home. One after another, the in the end, it was Hitler and Hirohito who )
menacing and strange in the question to- mummies of every ancient economic for- put them to work, because no less in f
day. Never before have we been so self- mula for full employment have been €X- America than in England, Russia, taly, s
conscious about postwar employment, or humed and exhibited to the masses il Germany and Japan, there was no other f° +
put so much emphasis on the problem. modern semantic wrappings, but the work to do, and no other way to live. . C
Our anxiety about it might almost ‘pe Statesmen, and businessmen, too, still eir- Cy
classed as a new form of home-front ‘war cle swiss in thelr statistical pinta] . The Paradox f
neurosis or civilian shell shock specially in search of the right answer to the riddle, } )
characteristic of this war. hoping to discover the Secret of the Pyra- We are framing for them the questions § )
mids—at least the political secret of per- of the future which are rooted in this § )
. . manent prosperity and complete employ- paradox, and the answers, too, to comfort :
Framing the Questions ment apart from war and its peacetime or encourage them in their trial and our-

selves in our fear, against the time when

Why this is so is an important question counterpart of fake work with fake money.
they will return to the stage to take up the 1

in itself, which I shall not pursue tonight, One begins to wonder whether, in this
beyond repeating what I have said in past ceaseless but so far unsuccessful search for parts where they left off. But we are not

meetings, which is that this total war em- the right answer, we may not have been telling them the truth, which we owe them

ploys so much more of the population than asking the wrong questions. and which would be the greatest gift our )
ever before, and consumes so much more I do not assume to say so. I only sub- gratitude could give them, because we do :
of its output, that to find its peacetime mit, in these few comments by way of not know it ourselves or will not face it.
economic equivalent as an employer and background for our discussion tonight, Somewhere along the road that led to this

consumer is a much larger problem than that we had better begin by making quite disaster during the decade of delusion, :
ever before, though not necessarily a dif- clear to ourselves what the questions are, confusion and demoralization just ended
ferent one. The magnitude of the problem and making quite sure that they are what we have lost or surrendered that unique
merely makes war much easier and politi- we in America and the ten millions of and almost instinctive faith which here-
cally more attractive than peace so long sons and brothers of ours for whom we tofore, in every crisis or difficulty, had
as governments put a premium on em- are offering our answers want to know. framed the questions and the answers for
ployment or income or consumption for In the hundred or more times I have dis- us infallibly. And having lost it we for-
their own sake, assume responsibility for cussed these matters in these meetings, got what till that time every American



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

DI uy, 104d THE ECONOMIC RECORD 45

#  pad always known, unconsciously and the lowest common denominator of the But I am not attempting tonight to
E | surely, from the beginning, which is that passing opinion of a random sample of psychoanalyze the confusion, frustration
2 government at home or elsewhere in the indifferent people on devious questions and futility of either business or labor as
4 world is ultimately the only enemy of they know nothing about. they face the problems of postwar em-
3 peace OT plenty he has to fear, because it pigment It seems to me that before
L as always been the greatest common . : either or both can frame the questions
3 ] he ole of the limitless greed for power Promises and Plans and the answers of the future with truth
5 among men and groups. This war should One after another it hopefully follows and frankness for the men in the inferno
lecade 2 have reminded us of that, both in business the ceaseless procession of spouting stooges of the far-flung battle line there are some
sht to 3 and labor, but so far it has not, and so of Statism who have promised some solu- fundamental facts we must face or false-
> you, i} we face the future and frame our ques- tion of these problems by easy compro- hoods we must fight in ourselves if we
i I can 3 tions and answers for it confused and frus- mise or expert plan. Its supreme concep- are to keep faith with them. We may
or this | trated as we never were before, believing tion of policy has been one of appease- delude ourselves in these matters for a
re for no longer in ourselves, but in the provi- ment toward organized labor and organ- time, as we have been doing, but let us
ertain- dence, omnipotence and omniscience of the ized bureaucracy—“peace in our time”’— no longer lie to the men in hell about
i unlimited State. and today it is seeking escape from its po- them. I shall mention a few of these
© the litical pessimism and economic despair in fatal falsehoods briefly and bluntly before
facing 7 . a sort of apocalyptic belief in the millen- I introduce our speakers, and leave them
spirit} The Wounded Sp rit nium based on the childish dream that with you till we meet again.
“1 and | The greatest difficulty that faces us is America is a kind of patent cornucopia of
own that business itself, along with labor, has automatic plenty or a bottomless well of
he end i lost, or no longer has, any coherent con- unlimited wealth; that the war won't Let It Be the Truth
ques-- f - ception, conviction or philosophy of its really cost anybody anything, and we can Let us not tell these sons and brothers
© way. 3 function. During the past decade it has start where we left off after it is over as of ours that we, or labor, or government,
orn up 3 suffered a deep wound to its integrity of though it never happened. It imagines are going to guarantee them economic se-
soil to E spirit, a profound sense of inferiority or that exhibitions of public self-flagellation curity and leave them their civil Liberty
s from 3 guilt, from which it has not been able to and conspicuous displays of synthetic hair and personal freedom, if they still want it.
tk and E recover despite its spectacular accomplish- shirts are a sufficient substitute for a It is not true. The governments they are
' serve. 2 ment in this war, and the great problem rational and self-respecting business or fighting have demonstrated in the past
ley are E of the future for it is to rebuilt its seli- labor philosophy. It still seems to believe decade, and the whole record of human
e, out- ‘of respect and purpose which were dissipated that salvation is to be found in spectacu- experience proves, that it is a lie.
Ws on 1 and demoralized by the humiliations of lar performances of soprano hog-calling by Let us tell them rather that nobody
g their AF the Great Depression and the persecutions professional propagandists and organiza- can pledge them full employment as work-
ercerve 3 of the past decade. American business is tion promoters, or by offering itself as the ers or permanent purchasing power as con-
despite A drifting toward, the difficult problems of sacrificial scapegoat for past economic sins sumers without depriving them, one by
rs who B the postwar future without any clear and or errors which were obviously universal. one, of every iudividual freedom they
—that, 4 . consistent philosophy of thought or action Even the business press has nothing to have. Let us tell them frankly that no
to who 1 based upon any candid recognition of the suggest as a slogan for the future except one can fix a national income figure for a
less in -3f facts about the economic or, political con- “more government and more gadgets,” or people or enforce a statistical standard for
, Italy, i sequences of the war, or upon any perspec- for a business philosophy a warmed-over employment or payrolls or consumption
> other 3 tive of past experience, or even any prin- hash of Hansen’s and Keynes's stale and and still leave everything, or anything,
live. 1 ciple other than that of momentary ex- sterile ideas about public spending, and about the life, labor or thought of every-
2 © pediency. The current confusion and con- doses of “whether you like it or not” fa- body or anybody as it was before.
} 1 flict of attitudes toward the crucial issues talism about permanent public control, Let us tell them instead that nobody,
| of postwar continuance of wartime gov- collective bargaining and the like, as business or government, can plan tomor-
lostions fi ernment market controls is disturbing evi- though tyranny were more inevitable than row’s employment for anyone without
io 4 dence of the demoralization and intellect- poverty, or preferable to it. planning his occupation, spending, saving
. d our- 1 ual devastation wrought in the business : and consumption for him. tem the x
Ei 3 community during the past decade. lo 3 3 et us not conceal from them the rigor-
e when E any disinterested observer of the ideas and Labor Likewise ous iron chain of cause and effect which
fy not i | behavior of business in face of these fun- We must not imagine that organized has always bound together and still links
o them £ damental issues of the future it must be labor has escaped this process by which compulsory security, compulsory saving,
“ft our E evident that its capacity to think or act expanding government power demoralizes, compulsory labor, compulsory consump-
Ce do E about them with candor, intelligence and dissipates and destroys the self-respect and tion, compulsory occupation, location, lei-
’ taco it. Integrity has been seriously damaged by integrity of groups of free citizens in the sure, speech and, finally, thought. No one
to this E ten years of exposure or surrender to the community. For its part it has been en- yet has broken that chain wherever it has
oe i political word-changers, the academic dowed or drugged by the State with a been forged by the hammer of political
. ended 3 cake-eaters and public-opinion poll-catch- false sense of power which has its roots ambition on the anvil of mass ignorance,
’ unique 4 ers of our time. Today, in every funda- and nourishment in the same guilt-com- indolence and fear, and never will, except
h here. 3 mental matter that affects the future of plex and sense of inferiority which has so by force of violent revolution to which it
ty had 8 American life it mistakes a synthetic sta- profoundly crippled business, and which inevitably leads.
ers for = tistic like a national income estimate for we may be sure will bring its own bitter Let us not pretend to them that, for the
we for- E a moral standard or a philosophical truth, disappomtment, disillusionment and frus- first time in human history, something has
merican and it has no ideas of its own till it has tration to organized labor as time marches happened in America while they were gone

consulted the totem-poll and computed on. that makes the words “national planning”



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

46
THE
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Jul
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und ead er, ¢ or 1 t wh t ugh y est whi wisd , self-
Ter tha Teaso ot in Tr any- pare g to thes in since - cc
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Suffering om the : because all. Th e back as ever WEre a. member 1. may ou ¢ fr Lato is th
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seen oy ‘are fi crushe [here oy they its fail ore, sh ‘today a part and th n deca: — year sconte an d wh
coking & their ghting the reversible cnyone in. ond tte its. and as - business ica, ol of va ago, ated coll is th
good os ed, th ’ and . av injus 2 Tanc a. T eme s virt dynam an id caus ion y tw I
term. to o ited e ulti wit e t tice e or he nts wi ues ec id eal e we of Am 0 : it
th go tim hou he whi gre erro with ’ fr and eal w to ¢ had e
tren s of co ers vernm ate 1 y grea ch ed IS 0 ev- ratern th hich om no fl ost
che ncent , at h ent impli- any t de may ha the i r erim yo rnitie e Ja Hitl pete w am- :
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t ruinec n c or ab ert ess e p sion br enc > look . B provi se nd M he
thou us tell uined ci Amps road ic m es of ast, w of t ought e or ed ut if ded officia, uss y
the gh the them hoes » CoTpse- > 10 unity al, to ere th he Thirti down hole on. the Anerin for a ‘murder er
h mm. nd ma ese thin, filled where 1 ere 1 which e com ties ave f nd in i eri oung cir er
ave ab Se wd not car gs trul abov m NS i none oh we or list : pound a its seri: Te people oa : at
and the andone i of our © anythin y, even apove them ° worl d m a the real The or 1 oyal te essentials cord n ad of
and pe dangers the flesh wna ho record Jor bor Who Those pei ee today ounizy if and on purpose would of
aseries i do he nd th who no RB en e or for i bet 0 Ww = enty s the ch w ir thei to e . i
com ies in wn i worl e devi h grou , as al or im ter, ere “Wh year re fi e ar 1 n= sn
futur porta. ioving that es Ts itv or a poly and no. sho the a yea ing is Am ago g pe
e th nt, or . g th ese b cratic ity o Tr wi of gui no ws t la r aft to d eric , and
but let an a = Jess at civil boys ma pret r any sdom gut or gvernmet land ns the Aotimil? 2 that : wl
or lab us not bell problem berty y It tend oth others this e of inn ent ithout e held ollaps or m we ar en
th or 1 , as y. L atic . y 18 is t erwl we h conomi ocenc would the the e of F ore are : b
her beli eaders goonomy et them in the Ameri reason oo is wo ave end 1c ata arsen | have h Engli ge ag rance, E x. a
give th eve th et sts, busi choo all can Lif o th rse th ured m.  8ood of d ad oo Bi st ainst Hi ng. pa
em at o th USI se , sh €; e spiri an . T od h em ot and tl ot
beca ve all . or gov y ri wh shoul e bamiliated es and fai ood. "a have of. yuck Bu becom erica mi
an use bust let ernm ng atev d 1 ated s lead aith todas Ww bee: eric t wit e the | . an
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and a hall, b DENI porn ol ot It d the R tity or “Th civiliza have cs Le ave rd bri
i ‘4 usiness > in the the T : om may os not e cord are Loa is anon. ast it f S vote wo ha
pri day pas , Dotwayed past century forth y or a t Speak od record o defend of A ' human- :
-ch past Ys ey a r the © om en so. the what ‘the s ag en o e old a pe
nessm angers 1 decad as we’ re bei 0 me Wa linet S se thin oth youn heart 0 envi ur yo ho ople |
fals en a s in W. e, n hav ng whi the shungt mooth gs hi ers id g m s of nied th ung pe, th :
eh nd 1 ashin ot onl e be ch typi on ~ton ence ent en, di ter’ e fl peopl e
flesh ood m abor gto yb en Ameri the ° ical twiste el cued wiz- tim ity of "they bac lamin ple a
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any he s Ss W an an it 1 = want e pa as b d prid ion wi efugee were and M 0 whic note t S col
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millon a sth par of ep tun 10, s sad Bd nd the days of hei the Hite tor coming 1s wr The ch
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purg ch i of em aith i - gra; in m o “W lif mer ood meri : or
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===== PAGE 19 =====

1944.

July, 1944 THE ECONOMIC RECORD ar
July, 194%

erican

grican ood we can an d should admit that we Books stitution consisted in setting at the heart
might have done better, and hope to do . of government a self-acting mechanism of
s that it, we must take America all together as . limitation called the checks and balances.
youth she was and is and will be, an inseparable Two Sha S : That was the device of three separate and
y two SE whole, priceless and irreplaceable. pe equal powers—the legislative, the exzecu-
Amer. 3 When we speak to our sons and broth- tive, and the judicial —each designed to
) Ham- ers on the battlefront or to our comrades of Thought limit and to be itself limited by the other
Fg at home of the aspirations and problems two.
aurder of the future against the efforts or failures As We Go Marching, by John T. Flynn A time of limited government was then
own of our past, whether as business or labor Doubleday, Doran & Co. Inc., publishers beginning in the whole world. The prodi-
e had Jeaders, let us not abandon or abate the Mobilizing for Abundance, by Robert R. gious energies of free men were going to
in the smallest bit of our integrity, loyalty or Nathan. McGraw-Hill a C iy be released and the consequences were un-
would self-respect or pride as a group or as a Tnc., publishers > predictable. Few will deny that the one
to en- people, or repudiate or bargain away for hundred years from the close of the Na-
pulses. whatever benefit or favor from the pres- Y READING these two popular poleonic wars to the outbreak of the First
ending ent or the future the least thing, good or books in sequence, Mr. Flynn’s first, World War in 1914 was the magnificent

» and a bad, in the qualities or the record of the one may see how current thought is fash- century in the economic story of mankind.
past of our country or our people. To do ioned. It is as if by an effect of brilliant Why was it? Why was it possible to cre-
otherwise for a moment is to leave these lighting, and without meaning to do it, ate in one century more wealth than had
millions abroad spiritually homeless, exiles “Mr. Flynn had made the dimness in which been created in all the time of man on
and castaways on alien soil. They may Mr. Nathan juggles the beautiful bauble earth before?—possible to advance the

"pot care, or know now whether they do or of miraculous abundance under perfect material well-being of the race to the point

ve are
"e than
:, Eng-
Hitler.

meric,

me the’ not; but let us remember that if we are social control. at which man for the first time conceived
ut the to win this war, we have not merely to = If government is what Mr. Flynn thinks the thought of abolishing poverty? Neither
ngland bring these boys back to America, but we it is, freedom is probably lost. We are Mr. Flynn nor Mr. Nathan seems much
mighty ‘have to bring America back to them. marching straight into the swamp that concerned with that question. Each in
ve th e swallowed it up in Europe; we have al- his own way passes it by, as if we could
ote for ready adopted “four of the factors of five find the answer in the elementary text-

that make Fascism,” namely, (1) con- books.

muman-
The Unchosen Instrument sumption subsidized by public debt, (2) The great feature of the magnificent

people The May twenty-fourth Transatlantic planned economy, (3) militarism as an century was invisible. You may define it
pe, the Edition of the Daily Mail contains an ac- economic institution, and (4) imperial- as a decline in the power and authority
:ople a 3 count of further Parliamentary debates on ism on the horizon. of government touching the economic
8 faith : postwar civil air policy. The policy of If, on the other hand, government is affair. Government did not actually
solin’s the British Government is to have one What Mr. Nathan thinks it is, freedom shrink nor did it relax the hand of
gto Lae chosen instrument which would receive all can be saved by an act of surrender, that control. That is not what happened.
crusad- subsidies. During the debate, Lord Roth- is, by submitting itself to be planned and In the nature of government that could

managed by government; and it will be, not have happened. Simply, the world
after all, a pleasure. “Sometimes,” he that government controlled withered in
says, “the most effective medicine is most its grasp. In place of it came a new world

ermere made this observation:
“I fear that if America is going to have

:? The

ica for competition by private enterprise, that ] t 1 0
ims of competition will, in the end, be far too pleasant but people usually prefer the that contained the industrial revolution,
ate for great and effective and efficient to be bitter medicine. Actually, the solution the development of credit banking, the in-
1sented of our economic ailments can be most tensive application of science and inven-

beaten by a single monopolistic chosen in-

strument.” palatable.” tion to the multiple production of wealth.

There is the possibility, however, that This new world was free because it was
the nature of government is what it al- new, and because it was free the reckless
After a decade of toleration, interests ways was and has not changed at all, spirit of enterprise soared. Banking was

)00 un- will have become vested who will find for which would mean only that the problem the banker’s business, production was the
1ope © continuance of controls and theorists will of how to reconcile government with lib- enterpriser’s business and trade was the

rise to defend them and even to argue for erty is still unsolved. We thought we had trader’s business, all saying to govern-
a totalitarian economy. One group will solved it here and we appear to have been ment, “Only let us alone.” Government
be apprehensive of inflation, another of wrong. The forefathers thought they had did let them alone, not by a deliberate
"deflation, if the controls are removed. solved it when, calling it a republic, they or intelligent choice but because it was
These apprehensions have some warrant created a constitutional, representative, bewildered. This new world that had got
in theory and in precedent, but they fail limited government, with emphasis on free was strange and apparitional and
to give due consideration to the necessi- limited. It is important to remember moved with incredible speed. No govern-
ties of the individual enterprise system. If where the emphasis was. You could have ment understood its mechanisms; even the .
the price: of any commodity rises or falls a constitutional government or a repre- levers of control were mysterious. The first
with respect to the prices of other things sentative government or ome both con- problem of government, therefore, was
due to scarcity or plethora, the rise is tell-  stitutional and representative and still it how to know this world, how if possible
tale and self-corrective; it is prices that might be unlimited; and all the history of to know it better than it knew itself. The
direct production and distribution; it is man’s effort to solve the problem proves next problem was to overtake it.
Prices that guide the economic system that unlimited government and freedom The excellent part of Mr. Flynn’s book
when markets are free—Prof. Ray Wes- cannot exist in one sphere. The supreme is a special account of the overtaking. By
terfield of Yale. political invention of the American Con- a kind of instinct government perceived


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

48 THE ECONOMIC RECORD July, 1944

that the source of magic was finance, and chasing power when they are unable to parliament of the Reich. He had to
when it understood this and had learned provide it for themselves, or enough of 1t spend money and borrow what he spent.
the theory of finance, public debt began to support a standard of well-being. And he had fo pretend that all this was
. vy : quite new and novel.
io bs opapliyed hey Ey of politi Mr. Flynn tells how Mussolmi did it: “He spent vast sums on all sorts of
riallv in fact p emt had b limit. “It is entirely probable that Musso- things. He outdistanced his neighbors § :
y » BOVeL i een Lm) lini believed a balanced budget a good in looking after the submerged tenth. Ar
ed. less by law or revolution than by 1ts thing and consistent with his other He launched projects to create work, .
purse. It could spend only what its tax promises. But Mussolini’s policies were He spent money on projects to increase It
gatherers brought in, plus what it could made for him by the necessities of the birth rate, improve health and re- pl¢
borrow in a pinch from the money lenders, power, not by the laws of economics. At duce crime, on schools, roads, railways, ke
which was never much and generally had ~~ the very moment he was boasting of a playgrounds, house-building projects, is
to be somehow paid back. But with the balanced budget he was on the eve of home repairs, farm subsidies, and even de
amazing mechanism of credit banking pro- a huge deficit of nine billion, in 1926-27. on his widely publicized scheme to en- as
vided, and free access thereby to the res- The year after that he balanced the able Germans to enjoy at low rates ex- po
ervoirs of private capital, new vistas of budget once more so far as his books eurgions of oll sorts. Then after 1633 no.
d deu ’ ¢ showed, and this was his last. From he launched his grandiose schemes of tat
power and grandeur were open 10 govern then on Italy was to float upon a sea militarism with the restoration of con- .
ment. By going mto debt a government of deficits, of spending and ever-rising scription and a great program of arma- p re
could for the first time redeem its promises national debt. . . . ment building. Some of the money was ho
to confer benefits upon the many; by “Mussolini made no secret of the raised, of course, by heavy taxation. tio
pawning the future it could bribe its fact that he was spending. What he ~ But most of it was obtained by the use . ha:
people in the present. It had only to pay concealed was that he was loading the of government credit. . . . These by
the interest on what it borrowed. When state with debt. The essence of all this vast sums were borrowed from the gu!
the principal came due it could be re- is that ‘the fascist architect discovered people to as great an extent as propa- ’
funded. In reason that might continue for that, with all his Promises, he had no ganda appeals and compulsion could ne An
. ; : formula for creatine employment and duce them to lend. But the mainstay of S
a long time, provided the public debt : g emp oym : ine i ] my
. ’ good times save by spending public borrowing in Germany, as here, despite
increased no faster . than the growth of funds and getting those funds by bor- all the fancy tales told of new and in-
actual wealth. It did in fact continue for rowing in one form or another—doing, genious fiscal inventions by Schacht, | .
a long time under a fiction of solvency. in short, precisely what Depretis and were the banks.”  } 1
Then came the First World War and with Crispi and Giolitti had been doing, fol- A i
it the ultimate revelation, which finance lowing the long-settled practice of Italian And then how the New Deal did it: B 3
itself did not foresee and could hardly be- governments. Thus spending became a “Just as Mussolini and Hitler de- i
lieve. The revelation was that a govern- settled part of the policy of fascism to nounced their predecessors for borrow- t
ment could conduct war for an indetermi- create national income, except that the ing and spending and then yielded to . | t
ate time without a gold chest. Tt. could - fascist state spent upon a scale unimag- the imperious political necessity of do- 1
print the money, or print bonds and ex- inable to the old premiers save in war. ing the thing they denounced, so the C
h them £ ’ hich came onl But in time the fascist began to invent New Deal, once in power, confronted 3
change hem lor money, winch came ony a philosophical defense of ‘his policy. with a disintegrating economic system I
to the same thing. Indeed, the thing to What the old prewar ministries had and with no understanding of the phe- f
do in time of war was to forget money and done apologetically the fascists now did nomenon that was in eruption before I
throw solvency out of the window. with a pretension of sound economic its eyes, turned to the very thing it de- t
It was then that private finance lost support. ‘We were able to give a new nounced in Hoover. But there was a c
control of its own world. The ultimate turn to financial policy,” says an Italian difference. Hoover's deficits were the § L
power to manipulate credit and debt pamphlet, ‘which’ aimed at improving result of failure of revenue and were t
passed to government. Private finance the public services and at the same time unplanned. Mr. Roosevelt’s first deficit e
lost at the same time its moral authority. securing a more effective action on the was a deliberately planned deficit. : c
It could mot i b part of the state in promoting and fa- Having denounced timid deficits, the f
could not penalize a government that cilitating national progress.” It was the administration embarked upon a pro- w
had in a deliberate manner embraced in- same old device plus a blast of preten- gram of huge deficits, but it did it in SE ¢
solvency and repudiation, as for example tious economic drivel to improve its characteristic American fashion, with fi
in the case of Germany. After the great odor. Thus we may now say that fas- proclamations of righteousness as if § t
mark swindle, international finance was  cism is a system of social organization America had suddenly discovered some-
obliged for political reasons to lend Ger- Which recognizes and proposes to pro- thing new. In fact, it was called a New 1
many the gold on which to base a new tect the capitalist system and uses the Deal. Actually, it was America dropping 3 Mr.
currency and start all over again, as if device of public spending and debt as a back into the old European procession. us
nothing had happened. After that, re- ‘means of creating national Income to “The recession of 1987-88 marked a ° wea
. : ’ increase employment.” turning point of the greatest importance
pudiation by government was respectable. ) . in American public policy. Up to this are
Every great government in the world re- And how Eitler did It: point spending had been "done on the win
sorted to it in one way or another, even ‘Once Hitler was in power the mo- pump-priming theory. That is, public wh
the American Government, and deficit ment for mere promises was over. He funds, flowing out into business, were § fact
spending—the debt be dammed—came to had to deliver. He had denounced expected to produce a resumption of not
be recognized as an honorable and neces- Bruening for the sing unemployment business activity. But business utterly : ord;
sary technique of government. Lastly, the and the whole republican regime for its failed to respond to this treatment. Ap- the
’ . .. spending and debts. Now he had to arently the pump itself w riousl :
rationalization, now advanced to the plane parently pump as seriously Soci
of social doctrine—the doctrine, namel end upemployment. But he had no out of order. From this point on we Ital
that government is obliged be def ch plan. He had to resort at once to the hear no more about balanced budgets. bees
} ged Dy denci time-worn device that had been used by We find the administration committed
spending to sustain the national income, Pericles, Augustus Caesar, Louis XIV, to the same policy that marked the fo

or, that is to say, provide people with pur- Bismarck, Giolitti, and the republican fiscal programs of republican Germany.



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

1944

———

July, 1944 THE ECONOMIC RECORD 49
July, 27% |

ad to 3 1t turned to the device of public spend- economic system,” for although the nation telligent and rational solution. The im-
spent. E . ing and borrowing as a continuing and grew in prosperity and wealth, poverty portance of his book is fortuitous, not in-
Is was if permanent means of creating national remained, and at frequent intervals there . trinsic. It is in the stream, it bears the
| income.” : was depression. And here, too, says Mr. imprint of New Deal philosophy and it
ow of 3 } trick to it Me. Fl Flynn, it was the same problem that con- states the orthodox case for deficit spend-
s ty 3 There 18 DO at can i wr ry omy a fronted government, because— ing raised to the plane of social policy.
work. Any gover Nh & « } } Twenty-five years ago it would have had a
crease 3 it can borrow and spend it can create em- pe system of production and dis- very limited circulation because so few
oe 3 es . .
i: | t. But no free government can tribution by private owners 3}
id re- § ployre . A time comes when “the state as a moans of distribation doveiops oon. people would have understood th n what
lways, keep 1t UD- tain defects i i Wh he was talking about. Meanwhile they
‘ects, is in desperate fiscal trouble and the vast elects m operation. . . . en 4 been educated to 1
ee, 3 debt makes the use of further borrowing the victorious Democrats came into ~12Ve SSSR SCHOMEC 9 BEA EVER
. even : e ! tle. But i 4 power (1933) the administration did ment and now it seems quite simple.
to en- ¥ as an escape 1mpossible. ut m a des- h . < . . .
3 ‘ h . what precisely Mussolini and Hitler did What is the solution?
es ex- potic government, where neither people —it threw practically all of its impor- at 1s the solutions
1935 3 nor banks have anything to say, the dic- tant points into the waste basket and First the throttle shall be set for a na-
ies of | tator may impose his will to continue this adopted a wholly different policy. tional production valued at $150 billion
con- 5 practice for a longer time. In the end, . . . The public clamor for benefits, a year. This figure is a statistical impera-
arma- . 2 however, it is an impossible system of na- the cries of insistent minorities for re- tive. Then it becomes the responsibility of
by i tional existence and even Hitler could not lief and work, the imperious demand of government to keep the machine going at
ne use 1 harness his people with it indefinitely save all for action, action in some direction that speed in perfect balance. In order
These 28 by invoking the. patriotic motif and en- J the pressure of the pitiless laws 14 gischarge its responsibility the govern-
FE 3 his nation i » of nature—all this was far more potent a
a the : gulfing his nation in a war.” in shaping the course of the administra- ment must control the distribution of the
oropa- i . The consequences are inevitable. tion’s fiscal policy. than any fixed con- national income; it must mind what people
ud in- 3 America, Mr. Flynn thinks, is on the last victions based on principle. An un- 90 with their money, how they divide it
tay of Ep mile; and here he speaks despairingly. balanced budget, after all, is a more and how they spend it. A few, if let alone,
Spite 2 Co oo or less impersonal evil, not easily grasped would save too much, and one who saves
hacht. 5 3 We began this experiment in 1933 by the masses; but an army of unem- too much is one who withholds immediate
3 under the pressure of an internal eco- ployed men and the painfully conspicu- purchasing power from those below him
iB nome lL When the war ends, with ous spectacle of shrinking purchasing who do not or cannot save at all. There-
it: its inevitable chaos, unemployment, and power are things that strike down sharp- fore to offset unnecessary and anti-social
| world commitments, we must continue ly on their consciousness. It is not . hich with an | ¢ $150
rv de- Sf it under the inexorable compulsion of easy, perhaps, to eat one’s words about Soy es © JOT WILL an ToCOmC of $l
row- SE the postwar crisis. And there, indeed, is balancing the budget. But it is easier billion might amount to $15 or $20 billion
led to 2% the secret of this whole black chapter. than facing all these angry forces with 2 year—the government must spend where
of do- It is born in crisis, lives on crises, and no plan. It is easier to spend than not the people won't, because total spending,
0 the cannot survive the era of crisis. By the to spend. It is running with the tide, says Mr. Nathan, is the key to prosperity.
ronted | very law of its nature 1t must create for along the lines of least resistance. And “Government spending,” he says, “in order
ystem itself, if it is to continue, fresh crises hence Mr. Roosevelt did what the pre- to absorb or offset idle savings can be
: hae 3 rom year to year. Mussolini came to riers of urope had been doing for financed in one of three ways. First, the
: 4 power In the postwar crisis and became ecades. y he called it a New Deal.” revenues can come from direct taxes at
it de- himself a crisis in Italian life. Then he th . levels where 1 .
was a ‘if conjured up new crises—the imperious The defects of free private capitalism, ose Lneotme evels where large savings
re the 3 need for Italy’s domination of the Medi- regarded as a system, may or may not are made; second, there can be a continued
. were terranean, the need for further colonial prove fatal. Mr. Fl ) He js ‘ncCrease 1n the government debt; and fi-
| A _ . . Flynn isn’t sure. e 18 ee
deficit :§ expansion that produced the Ethiopian gyre that if Fascism comes to America it nally there can be the printing of paper
. . crisis, after which crises were produced a" Corp ponds of perfectly a money.” His own preference is for the
ts, the ZF for him in the aggressions of Hitler to = * . ands, ol perteClly al iy ee ways in the order named.
a h : . thentic Americans who are convinced that :
1 pro- if whom he instantly attached himself. : : Since there must be total spending, and
| it in 3 Hitler’s story is the same. And our the present economic system is washed i 1 L A i g, al
with gf future is all charted out upon the same UP; that the present political system in since social security, which of course must
as if turbulent road of permanent crisis.” America has outlived itself. But—“If be greatly extended, DOW Tepresents cora-
some- ‘3 : national socialism is not the answer to pulsory saving at low income levels where
2 New ak This, we say, is the excellent part of the troubles of the capitalist system, then there should be no saving at all, Mr. Na-
opping if Mr. Flynn's book. Then suddenly he puts what is?” Having asked himself that ques- than comes to a problem. The solution,
ession. 3 us adrift on a nameless sea in very bad tion he has no answer, or at least not yet. he says, 1s to require from the beneficiaries
ed a -% For himself alone he would take the - of social security, and from the employers,

weather. In that sea even governments

ot his FE: are helpless. They have to run before the capitalist system with all its evils, but token payments only; then let the real
no the wind. “The most terrifying aspect of the he doubts if the people will, because its cost of social security be met by direct
public whole Fascist episode,” he says, “is the evils are such, “weighing as they do upon taxation.
, were 3 fact that most of its poisons are generated the least favored elements of the popula-- “If,” says Mr. Nathan, “the revenue for
ion of =f n0t by evil men or evil people but by tion, that some intelligent and rational social security benefits comes primarily
itterly ordinary men in search of an answer to solution must be found or the fraudulent from direct taxes, in effect the system
az Ap- the baffling problems that beset every messiahs will have their way.” serves as a mechanism for a moderate re-
nou : hocty” If it had not been Mussolini in Unhappily, he does not know what that distribution of income. That is, the mid-
1dgets taly or Hitler in Germany it would have solution is. dle and the higher recipients will be fi-
mitted een someone else. During more than forty No wonder then that the people turn nancing a considerable portion of the bene-
.d the =F Years Germany had been struggling with to a book like Mr. Nathan’s. He says fits received by those in the lower income

Certain defects seemingly inherent in the he has the answer. He knows the only in- brackets.”



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

50 THE ECONOMIC RECORD July, 1944

Certainly. The middle and higher in- could have brought them out $41.3 billion dance.” Not only is the answer not there; i

come recipients could have guessed that instead of $39.3 billion, and so on and on. the question is entirely left out. You will
for themselves. Thus instead of killing the golden goose find both the question and the answer in safeg
How much can the higher brackets you put it through the wringer and the Mr. Flynn’s book, and we recommend - pe
stand? Mr. Nathan, of course, would silly animal will thrive on it. Mr. Nathan to read it. State
think of that. Thinking of it brought Mr. Nathan says there is nothing in ~~ The common ground between Mr. SUPP
him to a discovery which, if only it were his proposals “not consistent with the Flynn and Mr. Nathan is that both de- por
true, would solve everything. By squeez- continuation of our free enterprise sys- nounce the system that was because the para:
ing the rich you make them richer. That tem.” They are, he thinks, “entirely com- abundance it produced was not distributed pd ”
is the discovery. To be sure we make no patible with economic and political de- in an ideal manner, and because notwith- oe
mistake we quote the text. mocracy.” standing a prodigious increase of wealth, ne

Co Such emulsive words, freely introduced, poverty remained. Both make an image =
“If through a moderate redistribution are evidently intended to make the cure of the system and project upon it all ho
of income we could reach and maintain pleasant to the taste. There is to be-no blame for the sins and failures of people. ©
a much higher total production, all bitt t all unl 1 : Thei | is with le reall d binec
classes of society would benefit. If, for . ILLerness a ’ ess people want to er quarrel Is with people ready, and velor
instance, through taxation and social !P2810¢ it. they do not know it. Would Mr. Flynn plas
security measures, we effected a shift The cure is compulsory abundance, denounce Christianity as a system of natic
in income distribution so that the high- meaning a standard national income, fixed moral values because people have never tion
est 109% of income recipients received, and guaranteed by the government, and been able to live up to it? The weak- | of
let us just assume, 25% instead of 35% then, of course, standard employment, ness of capitalism, regarded as a system, °f. natic
of all the income and the poorest third standard wages, standard consumption is that it demands from people more as st
received 10% more of the total income, which would be in fact compulsory too, character, more foresight, more fortitude |
with the result that the national produc- 559 in the end we suppose a standard of and self-discipline than they generally

tion rose to $150 billion rather than human happiness. Mr. Nathan is so in- possess. Nevertheless, it was free capital
$100 billion as in 1929, all groups would . . : . . A
be better off The highest 10% of in. Lent upon trying to prove that his perfect ism that did, with no benefit of govern: i”
come recipients would have $37.5 bil- must” economy would be bound to work ment, diminish the evils of poverty to a Brit
lion rather than $35 billion.” that it seems never to occur to him that point at which the grim and hopeless ning
there may be a liability in the shape of = misery that was accepted as the common - by L
‘We cannot understand why Mr. Nathan people. He seems unable to imagine that lot of common man at the beginning of ing 1
stopped there. Xf he had squeezed his some might not like to live in that kind the 19th century now is almost unknown He s
rich one-tenth again, reducing their share of world. If you ask whether government in the Western world. Certainly it is un- ‘
another 80% from 25 to 17%, and if in can guarantee abundance for all and se- known here. The only poverty we know, mt
the same way, the effect were to increase curity for all without requiring at the the only poverty that remains with us is in
the total national income by one-half, he same time, in the words of Jordan, “a relative. No government past or present cal
could have brought them out with $39.3 progressive sacrifice of civil liberty and has a record like that. Yet now it is gov- cot
billion instead of $37.5 billion. If he had personal freedom for all,” you will not ernment that proposes to abolish poverty as
done it again in the same proportions he find the answer in “Mobilizing for Abun- by law and compulsion—G. G. kel
{
bu
onl
Planned vs. Free Markets ve
An address by Mordecai Joseph Brill Ezekiel, Economic Advisor to the Secretary of Agriculture, ie
at the Forum Session of the 259th Meeting of the National Industrial Conference Board : ha.
LL production is plarined. No farmer increase in industrial production since The other set of ideas holds that some : ba

harvests a crop, no manufacturer 1940, with output now more than dou- kind of administered, planned, or sched-

makes a product unless some one has first bled, shows what American industry is uled production and exchange are neces- Th
planted seed or built a factory. The ques- capable of turning out when it is sure of sary if business affairs are to be conducted § ~~ Whicl
tion, however, is whether those production markets for its products. with any degree of order. This concept meth
decisions of individuals are made solely With respect to postwar markets, two = seems to be dominant in England and Views
in response to the price on a competitive extreme sets of ideas are abroad in the among Continental businessmen who stress trade
market, or whether they are made in re- world. One set holds that the major thing the need for planning by organizations of ¢
sponse to an appraisal of the economic we need to do to create full employment private businessmen, and who minimize § pos
situation which, in some organized way, is to enable private businesses to buy and . the danger of resulting monopolistic ac- bre
looks beyond the price itself and which sell in free markets without restraints or tions. It is used by the great interna- § to
involves some conscious program as to guidance, except those necessary to pre- tional cartels and the French, German, bui
future developments. vent monopoly or restriction of competi- British, and American concerns which cor
In wartime, there is no question but tion. This philosophy is represented in our make up these cartels or cooperate with § oat
that production must be planned, and domestic affairs by the anti-trust acts and them, to justify their monopolistic activi- | on
planned under public direction. During the Federal Trade Commission, and in ties, including some practices which would ber
the war, the Army, Navy, Maritime Com- international policy by the trade agree- not be condoned by the exponents of arr
mission, and Lend-Lease Administration ment program and Article VII of the planning. goc
plan the market on the basis of an ascend- lend-lease agreements. This set of ideas A second variant of the same ides J ma
ing scale of demands that strains our pro- is peculiarly American, and we are its stresses the need for planning, but with ie
I

ductive capacity to the limit. Our great chief exponent. public agencies or governments participat-



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

July, 1944 THE ECONOMIC RECORD st

B ing to insure that the general welfare is “Industries should examine this prob- maintain prosperity unless we keep busy
: safeguarded: This form of the idea 1s lem to see if it is possible or desirable —unless we find ways of providing useful
esent in the farm program of the United to negotiate international arrangements work for all those who wish to work, of

ot Jtes, with its governmentally assisted with similar industries in other coun- en,hling the workers to share in the con-

prices, production goals, and ever- tries. The proposed International Eco- sumption of what they have produced,

ort : : p
arallel farm programs of most other great that these arrangements operate in the POWeT as to support continued high activ-
agricultural nations before the war. Our common interest.” ity. Some emphasize not merely high em-
direction and advance scheduling of ar ployment but also highly efficient employ-
: roduction by an ar Foo . . ope ment. They stress wage systems which
A ministration, and the wartime integra- Believers mn Comp etition encourage high individual hin encour-
tion of production and exchange among The American preference for competi- agements for technological progress which

the Allies through all the various com- tion instead of planning after the war has maintain or accelerate improvements in
bined boards, represents an extreme de- been clearly stated by Eric Johnston, of methods of production, and incentives to
velopment of such government-controlled the United States Chamber of Commerce, the replacement of obsolete plants and to

planning to meet wartime needs. The full who told the British Chamber of Com- the prompt utilization of newly discovered

national planning of investment, produc- merce, in London, on August 18, 1943: methods or processes.
tion, and consumption in the Soviet Union “oy; , Efforts to plan markets through private
’ . tuall . .
is, of course, the single case of complete gre at rations alone United the rors actions may tend to run counter to this
national planning of the internal economy legislated emphatically and repeatedly general objective of full and expanded
as standard peacetime practice. against artificial monopoly and artifi- output. Cartels and monopolistic arrange-
: cial trade practices. Our laws utterly ments have the avowed purpose of main-
The British Idea forbid such domestic devices as the di- taining prices of the particular industry

. viding of markets, the allocating of out- concerned at stabler and higher levels
A thoughtful unofficial statement of the puts, the fixing of prices by trade than would otherwise obtain—in the

British point of view which supports plan- groups. . . . It follows that no Awmeri- words of the Federation of British Indus-
ning under government auspices was made can can intelligently and sincerely prom- 4s. «pq protect both producers and con-
by Lord de la Warr, one of Britain’s lead- ise you any cooperation in any system sumers from the loss and risk for which

: : i of world-wide controls. Our law is un- .
ing labor peers, in a speech last January. y extravagant fluctuations of market con-

sympathetic toward it; and our tem-

He said: perament is uterly hostile toward it. ditions have been responsible in recent
“Maximum production and maxi- ~~ The average American would call it times.” Unfortunately, such “protection”
mum consumption is only possible economic imperialism, and he is against to the producers can come only from
in a world that is socially and economi- it.” : maintaining prices and profits higher than

would otherwise prevail under the same
conditions, or from preventing or delaying
the introduction of technological improve-
ments. In either case, the higher prices
mean lower sales; the lower sales in turn
mean lower employment, less production, -
and less consumption. While the profits
of the industry may be higher, the rest of
the economy has less goods and less work. -

cally organized. Why? Why not en- . . cee»
courage everybody to produce as much This American position is reaffirmed by

as they like and then sell to a free mar-’ the National Association of Manufactur-
ket? Plenty will make for cheapness €rS, in its pamphlet on “Jobs-Freedom-
and cheapness will enable everyone to Opportunity.” It recommended that bus-
buy. All very easy, is it not? The iness should “make every effort to bring
~ only answer is that we've tried it and about the ultimate restoration of compe-
we are Js sufficient fools to try 1t tition, restricted or eliminated as a result
that we will te ami Tact of the war, and thereafter do everything
duction unless producers in all countries possible to mamtam a healthy vigorous
have security of market and of price to competition; for it is through competition
enable them to make long-term plans = W© get the rivalry among business enter- Alternatives
based on confidence.” prises which leads them to produce new
and better things at lower prices for con-

The Federati f Briti i :
ion of British Industries, sumers.” With respect to foreign trade,

This is, of course, the classical argument
against monopolistic restrictions. It may

5 hich 1 op orts 1 the private planting the NAM report added: be well, however, to contrast this general

concept gf . ~~ *10d, gave a detailed sia ement o its argument with the alternatives which the

nd and} VWs in its recent report on international “Fair competition is equally appli- producers and consumers may face in par-

0 stress 3f trade policy. That report said: gable whether by concerns domestic Or ticular industries in the postwar period.

: « ign trade. Fair competition under a : ni

An orderly world economy presup- system of prices determined in a free We must recognize that no pl g for

Doses a certain measure of guidance on market affords the best utilization of 2 single industry or a single market can

broad objectives, the ultimate aim being human and natural resources, capital, Cure the difficulties of general depression

Bs encourage the expansion of industry, engineering, etc. Governments cannot OF general stagnation. Efforts to correct

pa to interfere with the day-to-day be trusted to replace the system of free conditions of general unemployment by

actionct, of detail. . International prices developed under the free enter- shoring up individual industries are merely

i; =, i. ased on existing machinery, prise system by central ‘economic plan- applying patchwork to a general problem.
ght be taken to examine the prob- ning’ or other artificial measures which nm if

ems of postwar raw materials (tin, rub- experience shows are dictated by special Industry and government could, : they

ber, wheat, sugar). . . . International - interests rather than by the general eco-’ wished, develop methods of scheduling anc

arrangements for semimanufactured nomic welfare underwriting high levels of production and

) employment throughout industry. No

goods and manufactured goods in the . L . ;
making of which fashion or variety Despite this difference of opinion on such detailed planning for full production

plays a large part might present great competition, all students of postwar prob- under peacetime conditions is being given
@ culties. lems agree that we cannot establish or serious consideration in the United States



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

52 | THE ECONOMIC RECORD | July, 1944

| Juli
at the present time, so far as I am aware. ating the plants to plan future production of the world hope that the expanding —
The following illustrations do not attempt and sales, either with or without govern- world economy as envisioned at the Hg form
to deal with this general problem of the ment participation or control. Completely Springs Food and Agriculture Conference } plam
level of production as a whole, but rather free postwar production and markets are will make such commodity controls up. who
to consider where advance scheduling may a possibility in industries of this type— necessary in the future, they will no doubt who
be useful in specific limited circumstances. but a possibility that present owners or insist on maintaining them as defensive the
Certain products are produced under operators would be likely to contemplate measures ready to be used to protect farm meck
conditions where pure competition may only with a shudder. Yet planning for standards of living if and when the neeq and
increase immediate output, but actually such new industries may seriously under- should arise again. decis
reduce the eventual volume and amount estimate the expansibility of the market. A different planning problem confronts tered
of production. In certain fisheries, and Who would have correctly foreseen in the many communities which today are anist
in sealing, and whaling, excessive catches 1918 the potential expansion of the auto- making plans for maintaining employment it th
may reduce the natural reproduction rate, mobile market in the Twenties? after the war, under the stimulus of the pices
or even destroy the resource. In the case CED and other agencies. Many of these it is:
of lumber, unrestricted cutting can simi- F P C op. communities are considering developing grou]
larly threaten future lumber supplies. rom Pure Lompetilion new industries. Some may decide to build the g
Competitive drilling of oil wells may waste A quite different situation is presented ‘new cotton mills. Many may decide to ers,
a large part of the oil which would other- by industries where good times tend to start the production of plastics. If the tions
wise be recoverable. In each of these produce an overexpansion in output sev- initiation of these enterprises is left solely its a
cases; planned utilization of the resource, eral years later, or bad times tend to cre- to the uncoordinated choice of each com. auspl
including even restriction of the rate of ate an undue contraction. The hog cycle, munity, many more new mills may be to gc
current production, may serve to secure the housing cycle, and the shipbuilding established in these lines than the country try, 1
or sustain the maximum yield. Planning cycle are all examples of industries where can use. If that happens, a period of ex- ke ©
in such cases may therefore be in support pure competition tends to produce exag- cessive production, price-cutting, and being

of long-run abundance rather than of scar- gerated and recurrent swings in production bankruptcy would result before a new } tive
city. Whether ‘such production planning above and below the point of price equili- balance is struck. The alternative is some elect;

inevitably calls for sales and price plan- brium, with resulting losses and instability form of planning—some adding up of plan:
ning as well, and whether the arrange-- to producers, and with idle capacity and What is proposed to be done in each in-
ments should be privately administered or workers much of the time. Tt is conceiv- dustry, some matching of proposed capa-
under public control, raises other issues able that some form of planning might city with potential demand (even at mini-
not discussed at this point. be developed for such industries which mum prices), and some assigning or pro-
would lessen the specific industrial fluctua- rag of proposed wepadly, Again, by
tions without harm, or even with benefit whom or how the job might be done
The War Plant to, the rest of the economy. would influence the results of the plan- W
A different set of problems will exist in Then there are the producers of primary ping. The absence of planning might in- reliar
certain industries that have been greatly commodities, such as sugar, wheat, and crease the number of disappointed towns, ods
overexpanded as a result of the war. cotton, who in times past have found bankrupt concerns, and idle plants, Obvi- suffic
Shipbuilding, aircraft, aluminum, and themselves faced with a continuing excess ously, any effort to plan or control such offic
magnesium are cases in point. Both here production above what the markets would types of new development would be con- wa
and abroad productive capacity for war take at any price, yet where low prices did trary to our established concept of a free i
purposes has been expanded far above po- not reduce output sufficiently to eliminate enterprise system. Yet it is also true that those
tential peacetime needs, even for full em- the oversupply. In the long run, perhaps, when we do face the enormous shift from tent
ployment. One alternative in settling the enough of the producers might have Our expanded war economy to a peace impo
affairs of these industries would be to starved to death or lost their farms to economy, there will be need for an ex- is the
employ pure competition. That would in- have balanced output with demands, but ceptionally large volume of new mvest- to tk
volve knocking down all the government- humans are peculiarly unwilling to coop- ment. If too much of this new invest- the I
owned plants to the highest bidders, en- erate in economic laws which work only ment is poorly planned and unwisely made, § ica’s
couraging all the plants to try to keep in by regarding them as pieces of machinery We may have a resulting waste of poten- 4...
production, and then standing on the side- which can be laid aside to rust until there tial resources of extraordinary magnitude.
lines and applauding while overproduction is need for them again. Farm producers M:
and low prices encouraged expanded uses of these basic commodities have felt that . . of t
for the aroduct, This Soul drive some they were attempting to live by free com- Many Situations i
of the concerns into bankruptcy, and fi- petitive principles in a society that was The cases outlined cover only a small have
‘nally narrow down the field to those everywhere else bound or supported by portion of the situations that might be econ
plants whose production was needed by monopolies or restricted prices, and so presented. The problems of public utili- nomi
the expanded market. A second alterna- have turned to domestic programs of ties and concerns under public ownership have
tive would be for governments, either in- price supports and regulated production have not been touched upon at all. Even can ;
dividually or collectively, to do some plan- and even prices, with international com- so, the cases mentioned serve to indicate dista:
ning for the future of these industries, as modity agreements as auxiliaries to the something of the complexity of the prob- look
to potential market needs, stand-by needs domestic controls. To be fundamentally lem of free versus planned markets, and In pe
for security purposes, etc—and then to helpful, these supports to existing produc- something of the difficulties that may be wher.
scrap some of the government-owned tion need to be accompanied by efforts to encountered in trying to apply any single and :
plants and limit the disposal of the re- shift surplus capacity or surplus workers rule to their solution. idea
mainder accordingly. A third alternative into other lines of production where op- Where we do decide that a particular wide

would be to permit the concerns now oper- portunities are greater. While the farmers situation does justify or necessitate some co-ay



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

“mem

THE ECONOMIC RECORD 53

uly, 1944

- ¢ concerted production or market tions as a whole, and any detail of them. trading system,” though they are vague
fo 0 + we must then face the issue: Publicly controlled planning is planning as to how far this would be a public

2

ot ; .
>nfereny to do the planning? No matter by a responsible public bureaucracy. Pri- agency and how far a private one.

trols ‘ud who on st. the act of planning involves vately controlled planning is planning by Public control agencies are always in
no douly who tablishment of an administrative an uncontrolled irresponsible bureaucracy. danger of being captured by the private
the 2 :sm to collect the necessary facts That is the reason why, in those cases interest groups which they are established
a and administer the necessary where planning—limitation or regulation to regulate. That possibility is generally
and - gs. Planned markets are adminis- of competition—appears to be necessary, recognized, and methods to prevent it
dec arkets. The administrative mech- the modern tendency is to permit such plan- happening can be sought. A further com-
te or bureaucracy, if we prefer to call ning only on condition that it be operated plication, however, is not so generally rec-

«+ that, may be set up under public aus- or controlled by a public agency responsible ognized. Democratic governments such as
es or private. If it is set up privately, to the whole people, and to prohibit plan- ours have a diverse structure and many
p onsible only to the special-interest ning by one of the interested parties re- lines of influence through which public

it 1s res . : : . . .
t ups hich run it. It can then influence sponsible only to its own interest group. attitudes and interests may influence offi-
he general welfare of the producers, work- On this one point American opinion and cial action. Planning by public agencies

ers, and consumers affected by its opera- liberal British opinion are in agreement. may thus tend to substitute for the com-
tions, without public accountability for The Americans I have cited before agree petition of the market a competition be-
its actions. If it is set up under public that private groups should not be per- tween alternative plans of action.

auspices, on the contrary, it is responsible mitted to engage in market planning with- In conclusion, we may say that there
to governmental authorities. In this coun- out public control. Lord de la Warr says: © may be situations where the free market
try, for example, that means not only pub- “We certainly should not be prepared to does not work either toward abundance or

eft solely’
ach com §
may bok

e country § lic reporting of its operations, but also give such power over our lives to any toward sustained high production. If
lod of ex; being subject to be called before legisla- but a public body.” Even the Federation planning is to be used to deal with these
mg, ang] tive committees or other democratically of British Industries recognizes the need situations, it must be planning by public
© 2 DeWR ected bodies for full and complete ex- of an International Economic Council to agencies truly responsible to the will of
© 1S some planation and report both of its opera- supervise their proposed planned “world all the people.

g up of

. each in:

sed caps if

a at mini-i§ ) ° ° .

g or pol} Winds of Opinion

\ gain, by SI |

be dong E ARE approaching the end of Freedom is not a condition of life. It was passed by the Continental Congress,

the Dla, mechanical development as a sole is the absence of a condition of Lfe.. The will lead us into trouble —Mark Ethridge,
ought If hance in efficient manufacturing meth- moment we think of it as a condition, we addressing the Democratic State Conven-

ed owns, "ods. The individual worker, if he wishes recognize—no matter what we may say tion at Oklahoma City.
Hs. Obvi fg + sufficiently to do so, can carry productive to the contrary—a super power which
atrol sud efficiency to heights possible in no other can tell us not only what is and what is Industry and labor will never develop
"way. American industry now must go to not freedom, but also just how and why their leaders by looking to the govern-
that much greater source of progress in we must like it. . . . We seem to be ment for an answer to their problems. —
those inherent undeveloped capabilities la- forgetting that a government cannot grant William H. Davis, Chairman of the War
“tent in every human being. . . . The freedom of religion or of speech or of en- Labor Board.

"important thing for management to know terprise. When we speak of granting or
is that crisis and incentive will bring them receiving freedom, we exactly reverse the
to the surface and make them usable to processes of thought that moved those
the profit of all concerned. This is Amer- great men, the founding fathers, to evolve
lea’s postwar plan—J. F. Lincoln, Presi- for themselves and their posterity—that

dent of the Lincoln Electric Company.’ is, for us—the Constitution and the Bill
of Rights.—Dr. Willard H. Dow.

Superficial evaluation of the man and
the world "of today would indicate that
there exists a universal craving for lib-
erty. Upon analysis, however, this is seen
to be something quite different from the
liberty that was intended by those who
founded our nation. It has degenerated

And finally, we must determine mow to the point where, for the individual, it
that any broad deflation of our present is better interpreted as license—Leo T.
price and wage structure will not be per- Crowley.
mitted. We have placed ceilings over -
prices and wages to prevent wartime in-
flation. In the reconversion period, we
must protect prices and wages to prevent
equally disastrous deflation.— Chester
Bowles, Price Administrator. :

Many of our young people, certainly all
~ of those under thirty, know of the enter-
Prise system only as a theory. They
have been interested for years in new
if tonomic theories rather than old eco-

=f omic principles. To those of us who
ownershP have lived in a free enterprise system we
all. Evel, ®n see it in perspective because of its
0 indica} distance back from where we are. If we
the prob. § look forward we probably can still see it
rkets, gr 0 perspective because of its distance from
“8 Where we are. It is going to take time

Democracy, liberty, free men, and pri-
vate enterprise which realizes its responsi-
bility to the individual and to the eco-
nomic welfare of the nation, cannot live

_ in the same environment with highly cen-
tralized government, extended bureaucracy

any sing ad a great deal of effort before the broad Anything short of the recognition that and a government-planned economy. —Dr.

5 lea will gain public understanding and we cannot go back to this will-of-the-wisp Fred I. Kent, chairman of the postwar
particul Wide public approval —John M. Hancock, thing called free enterprise, which never planning committee of the Commerce and
itate sO’ Co-author of the Baruch-Hancock report. has existed since the first regulatory law Industry Association of New York.



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

54 | THE ECONOMIC RECORD July, 1944 § Ju

—
’ But that is beside the point. What we want t, rect
In Europe Ss Footstep S know is what these men are doing to America, bill
We can best determine this through testing min
Excerpts from a speech by Malcolm McDermott before the what has developed here by reference to th, to t
. essential elements of national socialism already

State Bar of North Carolina set forth ! on
. stag
: In the first place, you will recall that at the rear
Mr. McDermott has been Professor of Law them as out-moded and as obstructions to outset of this decade our country was experienc. tere
at Duke University since 1930. Before that progress. ing an economic depression. It was by no meang Am
he was Dean of the College of Law of the 5. Public faith in the legal profession and the first, nor yet by comparison the worst. Here. and
University of Tennessee. He was visiting respect for the courts must be undermined. . . .  tofore, the country shouldered its burdens and’ amt
lecturer on law at the Universities of Krakow 6. The law-making body must be intimidated its losses and pulled through. This time it wag vea
and Warsaw in Poland before the war. and from time to time be rebuked, so as to pre- asserted that the people were unable to handle top
vent the development of public confidence their own problems and hence all must look to ent
TEE danger is that amid the preoccupation therein. Washington for the answers. That was to be the wal
of world problems, with our eyes focused on 7. Economically, the people must be kept SOUrce of all recovery, handed down from pos
the international scene, we are going to overlook ground down by high taxes which under one pre- above. . . . : $3(
; what is being done to our own country on the text or another they are called upon to pay. In the next place, we find that the right of local § Th
inside. Obviously, if America is to play her Thus they are brought to a common level, and self-government, one of the cardinal principles alr
proper part in world affairs, she must be kept all income above a meager living is taken from of American democracy, is being steadily de. Th
strong and sound within. Those qualities that them. In this manner economic independence is stroyed. This has been accomplished in part bya | sys
have made her truly great must be preserved, kept to a minimum, and the citizen is forced to spurious interpretation of the constitutional pro. . erm
not only for our benefit, but also for that of the rely more and more upon the government that vision giving Congress the power to regulate in- nes

B world at large. controls him. Capital and credit are thus com- terstate commerce. Thus it has come to pass that to
» Tt is the peculiar function and duty of lawyers, pletely within the control of government. the central government has assumed power, for pre
: example, to regulate the amount of wheat a farm- ch:

R I submit, to give heed to these vital matters. If 8. A great public debt must be built up so unt
“ our constitutional government is endangered, if that citizens can never escape its burdens. This ©F May grow, even though it 18 fed to his own
the rights of the people are being subverted, if makes government the virtual receiver for the Cpickens and never touches interstate com-

merce. This power has been upheld by the re- {

the foundations of the Republic are being under- entire nation. ;
i mined, then it is the lawyers of America who 9. A general distrust of private business and constituted Supreme Cont upon the gr ound that the
must raise the hue and cry. Asyouknow, weare industry must be kept alive, so that the public B the farmer did not raise wheat he might buy hi
the only professional group who take an oath to may not begin to rely upon their own resources. wheat in intersizie REP and thus estas lic
support, maintain, and defend the Constitution. 10. Governmental bureaus are set up to con- J might bo benefited, while . he did av:
We are the only class of citizens not on the public tro] practically every phase of the citizen’s life. grow wheat he might not buy wheat in interstate thi
payrolls who take that solemn Vow. Further- These bureaus issue directives without number, commerce and thus [erstate CORMErce might sta
more, 1t 18 the lawyer who is best qualified for put all under authority of the leader to whom be d epressed Therefore, this is said to be a regtt- up
this task. He is a free lance. Schooled in aknowl- they are immediately responsible. It is a govern- ation of ptersrate commerce: Such is the sin
edge of the fundamentals of our governmental ment of men and not of laws. astounding amt in the ickard eT By is pe
system, he can perceive what is going on beneath 11. The education of the youth of the nation or reglt I oy of human hie re;
the surface and what others fail to note. - = + is taken under control, to the end that all may oo € rE ated 1m os melon. i po
In the years 1986 and 1937 I spent consider- at an early age be inoculated with a spirit of sub- gy ig ua Se oo oy y ¢ oy hs el my >
able time in Germany. My chief purpose was to mission to the System and of reverence for the py : PH eo d 0 th ea oe b d
find out, if possible, just what national socialism benevolent leader. To rs Io tion ho Tofted Ee — oe
really means. . . . I wondered bow an intelligent 12. To supplement and fortify all of the fore- HO oto ection and marked ne S wo
people, such as the Germans surely are or Were, going there is kept flowing a steady stream of Blanket appropriations were made in huge sums me
would let themselves be thus duped. This led toa governmental propaganda designed to extol all the spending of which was left to oe or i.
study of the various steps by which national that bow the knee and to vilify those who dare cretion » ond mowers. were granted to the i”
socialism had fixed is hold oe Jhat nation. I raise a voice of dissent. . . . President on the basis of an existing emergency, § as
wan 1 ive vou briefly the SB er pr: at Perhaps, as[ have detailed all of this, there has but somehow the emergency never ceased, and fo
To flashed into your minds the deadly parallel be- the powers continued. . . . di
to . . tween the national socialism of Germany and di

what has transpired here in the United States Lo.

The Twelve Steps during the past decade. I confess it struck me Lastly, the Constitution
Tn order f tional sociali I _ with full force when I returned from Europe just One of the most striking similarities between
a ner e or na ona soci ism to or certain at the time when the fight was launched to make the present Administration and a national social
e fe y eps oust e fa en, an they are e the Supreme Court of the United States subser- istic government is its attitude toward the Con-
same for fascism, for the two difter In name only: vient to the will of the Chief Executive. This led stitution. There was a time in this country when
1. The people must be made to feel their utter me to make a comparison of details, a practice I ihe Constitution was reverently regarded as the
helplessness and their inability to solve their own have since continued. It has driven me to the  gycred instrument protecting the people in their
problems. While in this state of mind there is conclusion that there is a deliberate purpose to rights and liberties even as against their own

held up before them a benign and all-wise leader supplant our constitutional government with government. . . . A study of the attitude of our §

to whom they must look for the cure of all their the German brand of national socialism. Ifyou present government toward this great document er

ills. This state of mind is most readily developed will study the situation carefully, you will ind  gjscloses not only a spirit of disdain but even of v

in a time of economic stress or national disaster. that no other explanation can make sense out of flagrant disregard. Thus Congress was bl anitly mn:
2. The principle of local self-government must the conduct of our National Government by told to pass the Guffey Coal Act regardless of its st

be wiped out, so that this leader or group in con- those who have enjoyed practically complete  constitutionality. The very principles on which

trol can have all political power readily at hand. .control throughout the past ten years. the Constitution was drafted and adopted have’ m
8. The centralized government, Jrhile appear. been held up to ridicule and relegated to the

ing in form to represent the people, must uti- . , days of horse and chaise. . . .

fully register the will of the leader or group in Motives Not the Question Lastly, let me call your attention to the sub- § y

control. I am not impugning the motives of any man ject of government control over public edv of
4. Constitutional guaranties must be swept or set of men. Motives are not the issue. These = cation. . . . Thus far the Washington Gover’ w

ment has refrained from open efforts in this drr

aside. This is accomplished in part by ridiculing gentlemen may have the highest motives. . . .



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

July, 1944 THE ECONOMIC RECORD | 5s

/, 1944
TT
ve want A tion, but ROW the step is about to be taken. A and discussed with all of the attention it de- now, when we are considering plans for the post-
Americs % oh has been introduced with support from Ad- serves. . . . war period—and we must be considering them;
gh To 3 b © istration circles providing for -an allotment The guise in which the movement is being that is the reason for the existence of the office
ace to ty oo the States of $300,000,000 a year to be spent clothed in this country would be ludicrous, were held by the noble lord, Lord Woolton—is that
sm alre ade’ t ublic education. . . . Here is the nation it not for the tragedy of the thing. The entire any combinations or trusts which by their nature
V3 on hd ering under a public debt which will soon process of putting the citizen in a governmental are restrictive must be against the public inter-
‘hat at the | ee the $300,000,000,000 mark. Just the in- = strait jacket is constantly being called liberalism. est. The government, I understand, is committed
experien. terest alone on that debt is going to cost the fo an e<pansionist. policy, and the very object of
¥ 10 nea; American people about $9,000,000,000 annually Freedom in Prison Toit it y parte 's Yo Jestrict produ ‘hon and to
orst. Her? ond that is a sum far in excess o e largest } } it to the supposed capacity o e market.
ardens and’ smount collected in federal taxes during any A liberal government, properly defined, is one An expansionist policy, whatever may be the
time it y : | ear prior to our entry in the present war. On which leaves its citizens alone to develop their desire of the cabinet and of Lord Woolton, will
> to han wo Top of this enormous interest charge will be the own capacities and resources, to learn by their not be possible if these cartels, which are now so
ust look bo enhanced cost of government resulting from the own mistakes, and to control their own earnings. extensive, are allowed free play nationally and
25 t0 be the war. And yet, in the face of all that, the pro- Such a government interferes only toa minimum internationally. Without an expansionist policy
lown fron osal is blandly made to hand over to the states degree necessary to insure proper protection of —and here I know that I have Lord Woolton
rE E $300,000,000 annually for public education. the rights of others. It was that kind of govern- with me—the Prime Minister’s declared program
ght of loca]. There is not a state in the Union that does not ment our forefathers sought to establish in of work, food, and homes for all will not be
i principle. already have a creditable public school system. American democracy. They know that the possible.
teadily g ; There is not a state that is unable to support its sweetest freedom known to man is the freedom I do not expect to convert any of your Lord-
| " .
in part by i | gystem. Nevertheless, there is the Federal Gov- to come and go as one pleases; to work when, ships who have not already come to the same

ernment submerged in debt, constantly seeking where, and for whom he pleases; to make mis- conclusion from an independent study of this

ational pro.? pew fields of taxation, and regularly appealing takes, it may be, and thus learn to stand on great subject, but I will fortify myself by quota-

regulate ine

to pass that’ to its citizens to lend money on its bonds, now his own. oo tions . . . . I will begin with my right honorable
power, for § proposing to pile on another $300,000,000 annual That freedom of individual action, you may friend, the Home Secretary, Mr. Herbert Morri-
reat a farm if charge by way of gift to the states. : have noted, is nowhere mentioned in the Atlantic son, a colleague of Lord Woolton in the War
to his own} . Charter. The four freedoms there set forth are Cabinet . Se Speaking at Leeds on April 3 last,
state com One Explanation readily obtainable In any government prison. - Mr. Morrison said:
by the re} Only one sane explanation can be offered, and By getting yourself committed to the peniten- “Let us face the fact that such monopolies
ground that that is that it constitutes a move to enable the tary, you can enjoy freedom of speech and of are restrictive in their very essence. That is
might buy'f ~~ Washington Government to get its hand on pub- worship, for there will be no one interested in the reason for their existence. You will never
s interstate’ lic education throughout the country. On the interfering. You will enjoy freedom from fear, alter their nature by patching and tinkering

if he did
n interstate, §
1erce might.
© be a regu.”
uch is the’
ase. By its'F
f human life §

average each state will receive annually some- for you will be amply guarded and protected by with them. ih eir whole setup, and relation 8

Bing over $6,000,000 fom this fund. A soon as governmental agents. You will enjoy freedom, $10 commumity must be profoundly alered

states have their public-school systems geared from want, for government will supply you not ent with national well-being is full and effec-
up to these additional expenditures it will be oly with sheer, but also wha all necessary tive public control.”

- simple indeed for Washington to begin to dictate food and clothing. 8 for tae clothing, the . . .
olives in education. No local officials will dare Stripes thereon may run the wrong way—that | Again I quote. Mr. Herbert Morrison, and this
refuse to cooperate and thus forefeit the sup- i, horizontally rather than vertically—but that 3 from the Daily Mail of June 20—an unim-
posed benefaction. What this may lead to is a. Should matter little to one who is interested Peachable source:

po judiciary, f matter of speculation, but it does present the merely in obtaining freedom from want. ._ Before fhe war our industrial system was
e executive § education. } ] doms, you will have sacrificed the most precious private enterprise at all, but a system of pri-
or Congress’ From. all .of the evidence the conclusion freedom of them all, and that is just plain ordi-

r } vate semimonopoly governed by restrictive
ced “must.” seems inescapable that the real issue on the do- nary personal freedom. . : . agreements and arrangements which were the

t huge sums,” mestic front is whether national socialism shall It may be that the American people want the absolute negation of enterprise. The result
recutive dis: supplant American democracy—American dem- change, but by all the traditions of our profes- was that our country was falling into a decline.
ited to the ocracy as we have known and grown up under it, sion, by our solemn oath to support the Constitu- Its productive power was dropping back by
emergency; as our forefathers established and maintained it tion, you and I as lawyers are bound to see to it comparison with other ou pies, particularly
ceased, and § for us. In all honesty there ought not to be any that the issue is fairly and squarely presented as ood a ral os pry orld hove dope ng
:§ disguising of this issue. It ought to be brought to the great body of citizenship. It is high time 8 ving )

5 directly into the open where it can be considered we began to discharge that obligation. I could quote a great deal more—all on the
> BN same lines, obviously showing that Mr. Herbert
8 Morrison, Home Secretary, member of the War
Cabinet, and a very respected member of my own

tion

ties between’

ional social Bd party, is unhappy about this state of affairs and

Houal socal British Ideas of the Cartel System Dopey thors won out, tie state of affits and
i . . . : i hared b le friend Lord

ountry whe, From Hansard—the Official Report of Proceedings in the Wolk oe shared by my moble friend Lor

arded as i oe . .

ople in theil } British Parliament Tee Mmister oF Reconstruction (Lorp

st their owl F . ] so, LL ] . . Woorron). Imagination.

bitude of 0 Lord Strabolgi rose to ask His Majesty’s Gov- inevitable that the result is to stimulate com- .

tu | I . . . . . e ,Lorp StraBoLGI. I beg your pardon.

at document} ‘ment whether they will state their policy bines and associations. The government depart- i

but eveno |] "ith regard to trusts, cartels, and combines, ments do not want to deal with individual manu- Lorp Woorron. Iwas merely congratulating

was bluntly | [3tional and international, in postwar recon- facturers and traders, and, if there is not a manu- ~ YOU on your imagimation.

ardless of its struction; and to move for papers. facturing or trade combine in existence, they tell Lorp StraBOLGI. Why? Because I venture

Jes on which Lorn Srramorer My Lords, I beg leave to the people concerned to get together and form a to suggest that Lord Woolton’s and Mr. Morri-

«dopted have Move the motion standing in my name . . .. It trade or manufacturing association so that they. son’s minds might be working on the same lines ?

gated to th ¥ill be common knowledge that between the two can be dealt with as a corporate whole. That is Surely there is nothing extravagant or imaginary
° § Ys, and indeed during this war, monopolies quite natural and not objectionable in itself, but about that . . .
1 to the sub ad cartels, both national and international, it has the result of stimulating and assisting the I must now refer to what I consider is the

public ed Ve greatly increased. When various measures formation of combines, associations, trusts, and gravest aspect of this whole problem, and that
ton Govers' of government control are introduced during a eventually monopolies . . . is the international aspect. Your lordships, I
ts in thisd} "3 as they have to be in a modern war, it is Why the matter is so urgent and important am sure, know now that the international cartel



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

56 THE ECONOMIC RECORD July, 1944 F

system helped Germany very much indeed in her Lorp Woorron. We are already engaged intervene, but the noble Lord has enough experience %*
military preparations before the present war. the process of preparing our views on the question of governments to know that if you wait for the 3
The German cartels induced their partners.in as to how we are going to obtain full employment government to intervene probably all engaged ip E
Britain, America, and other countries, but par- in this country, and when we came to that sub- the industry will be ruined. This problem sounds 3
ticularly in Britain and America, to rationalize ject then we found ourselves faced with the sO easy to state, but it is difficult to deal with, :
and restrict production, and in exchange, ‘of problems that the noble Lord has raised this Every combination which has for its object to 3
course, their partners were given a monopoly in afternoon. In due course His Majesty's Govern- enable goods to be sold at a reasonable price tq E
certain markets. The German cartels secured ment will lay before the House a Paper embody- the public, including a reasonable and not an un.
closed markets in their own areas. Then, under ing those views. reasonable profit, is perfectly fair. Every com. :
the Nazi system, when they became in effect part Viscount Maveuam. My Lords, I hope your bination which is directed to raise the price to ap 3]
of the Nazi totalitarian government, they built  1,ordships will forgive me saying something, not extravagant amount, so that the public do not :
up their own war potential. Profits did not mat- fom a government point of view in the least, in get properly served in connection with that par. J
ter to them; the German Government saw 10  yeference to the very important topic which is ticular article, is wrong. I challenge the noble ;
that. They were able, under this cartel scheme  hefore the House. I have long been interested in Lord to produce a bill which will carry out those
in their closed markets, to build up an enormous this matter of combines and cartels, and I have two objects. The United States have done their %
war potential, the results of which we saw soon Jone what few members of this House can have Dest, but, if I may say so without any offense to §
enough. They obtained manufacturing secrets gone, studied the Sherman Act and endeavored that country, they have not been particularly
and formulas from their copartners in Britain, {4 ypderstand the vast difficulties of the problem . Successful in their efforts. 3
America, Italy, Japan, and other countries. There i+} which the United States Government have
was, of course, some reciprocity, but that did not found themselves confronted after the passing of To E
matter, because the cartels in Britain and that act. I am acquainted with some portion of Facing the Postwar Cartel E
America were not part of a government plot t0 the very many actions that have been brought . a. . 3
prepare for war . . . . in the United States to enforce the act and am All evidence indicates that cartels in the post- |
Now what has happened since the war? The aware of the fact that the great majority of them war period will operate in foreign countries more |
greater part of Europe has been overrun, or have failed. No more difficult problem could be widely than ever, and American businessmen |
dominated as in the case of Spain, by Germany, before any legislature than that of attempting to must. face the Lssue a and realistically. 1
and behind the German Army have come the deal with this question. It is a very important °° The Uslied States Je practically the only f |
German industrialists and monopoly financiers, one, and the difficulties at the root of it can be country where combinations between business :
the men who built up and controlled these trusts appreciated by anyone. enterprises are considered contrary to law. E 4
and cartels. In France, Czechoslovakia, and the The noble Lord who opened this debate de- This makes it obligatory for this country to re-
Low Countries particularly, and in other coun- clared himself in favor of the view that every rot. its position, even if America’s present 3
tries as well, they have got control of the great combine to limit production was wrong. I wholly attitude may prove to be right. If one powerful ;
key industries, the great heavy industries, the disagree with that proposition. It seems to me country insists upon a program out of line with E |
manufacture of electrical equipment, iron and perfectly and demonstrably a mistake. The noble that adopted by Giles nations, a disturbing A
steel, coal mining, and so on. There they are, in Tord forgets for the moment the terrible effects element may be fnjecied ai a time when leaders §
virtual control of all Europe's industry. of unrestricted effort by people to compete everywhere will wish-to make an honest attempt
In German-occupied Europe and in countries against each other. fo establish economic collaboration. rom The 4
like Switzerland, Spain, and Sweden, which until Unrestricted competition is a terrible thing in 10 > the New York Trust Company's quarterly. ;
recently have not dared to refuse anything on the an industry. I am only going to say a very few
economic plane, they have got a complete net- words, but I cannot help mentioning one industr, : .
work of industrial, manufacturing, and trading with which I was at one time Sry well ac. The Uncreative State E: |
control. They have their “hide-outs,” if I may quainted, that of rubber. There was unrestricted It is not to the State that we owe the multitu- ‘$f
use that word—their financial hiding places—in competition at one time in the matter of rubber.  dinous useful inventions from the spade to the ig
Spain, in Switzerland, possibly in Sweden (I do The trees take seven years to grow and be in a telephone; it was not the State which made pos- ig
not know about Sweden), and probably in the condition to be tapped. When they are ready to sible extended navigation by a developed astron-

Argentine and Bolivia. be tapped everyone wants to get rid of his rub- omy; it was not the State which made the dis-.3§
However the war ends, and probably while the ber. It cost at that time about one shilling six- coveries in physics, chemistry, and the rest, 1

governments of the United Nations are busy pence a pound to produce. which guide modern manufactures; it was not 3

rounding up war criminals and disarming Ger- Of course that has greatly diminished now. the State which devised the machinery for pro- f

many, the leaders of German monopoly-finance Yet by unrestricted competition the price went ducing fabrics of every kind, for transferring men ;
will try to reestablish contacts with their old . down, I think, to two pence a pound. That was and things from place to place, and for minister-
friends in Britain and the United States of a wholly unremunerative result. It threw a great ing in a-thousand ways to our comforts. The ¥
America. They will have an economic and finan- number of growers, especially the smaller grow- world-wide transactions conducted in merchants’
cial empire of great potential value to offer. ers, into a state of bankruptcy, and plantations offices, the rush of traffic filling our streets, the J
There may be political difficulties in unscram- were sold for a song. Nobody, I think, can retail distributing system which brings every j
bling the omelet of the German-dominated cartels reasonably suppose that it would be unfair in a thing within easy reach and delivers the neces
in France and other countries. It will depend a case like that, or that it was unfair in that case, saries of life daily at our doors, are not of govern-
great deal on the nature of the governments in to make some sort of bargain between the vari- mental origin. All these are results of the spon- i
those countries. I understand that, in France ous growers in the different countries concerned taneous activities of citizens, separate or grouped
particularly, the German control of French indus- so as to prevent ruin to the industry as a whole. Nay, to these spontaneous activities govern
try has been most cleverly concealed—nominee That is only a single instance. There are in- ments owe the very means of performing their %&
shareholders, Quislings, and so on, hiding the stances that could be given of other products all duties. Divest the political machinery of all §
real power behind the majority shareholders— over the world. Take the question of coffee in those aids which Science and Art have yielded it §
and they will have a great prize in this almost Brazil. Coffee grows so easily in Brazil that —leave it with those only which State-officials
complete European monopoly of great basic in- Brazilians have found it perfectly impossible to have invented; and its functions would cease. §
dustries. This is not fanciful. I do not say for a sell their coffee in a large measure, and in order The very language in which its laws are regis E
moment that they will get a response in this to prevent it being sold at half or one-third the tered, and the orders of its agents daily given, i8 %
country; I cannot answer for the United States. cost of production the government have stepped an instrument not in the remotest degree dueto F
I do not suggest that for a moment, but that is in and thrown the coffee into the sea. I believe the legislator; but is one which has unawares
the danger, and we cannot rely on its not meet- that was going on a year ago. I donot knowifit grown up during men’s intercourse while pur-

ing with a response, even an innocent re- is still going on. You want some limitation there. suing their personal satisfactions.—“Man versuS 3

sponse . . . . You may say that the government should in- the State,” Herbert Spencer. 3