the freeman 1966 · canute and the counting of noses visit with a headmaster the first liberty...

OCTOBER 1966

Set My People Free

The Cost of Living

The Case of the Free Rider

The Supremacy of the Market.

Men of Prey

Punch Decries IINo Compromise"

The Flight from Reality:25. Political Experimentation,

The Four-Year Plans

Canute and the Counting of Noses

Visit with a Headmaster

The First Liberty Library •

Books:

For Want of Something Better

Edward Y. Breese

Paul L. Poirof

Peter Farrell

Ludwig von Mises

Leonard E. Read

Punch

Clarence B. Carson

Willard M. Fox

Timothy J. Wheeler

Murray N. Rothbard

John Chamberlain

3

8

12

17

21

28

30

44

49

56

60

COAST FEDERAL SAVINGS AND LOAN ASSOCIATION

Department Fl, 9th &Hill Sts., Los Angeles, California 90014

o Please send me a FREE copy of "What's Inflation?"o I enclose my check (or money order) for $ _o Please open a Coast Federal Savings account-

D IndividualD Joint in the name(s) of

NAME _

STREET ----------CITY STATE _

6·112A2

·······:::••·))t~Q ~

COAST FEDERAL SAVINGS~" AND LDAN ASSOCIATION ~l:.>

THE FREEMAN OCTOBER 1966

Vol. 16, No. 10

", One's practice of freedom may behindered by others, but there isn'tany way to be free without doing ityourself , p. 3

", The cost of living tends to rise inproportion to the extent that we letgovernment lead our lives .......... p. 8

Y' Peter Farrell finds occasion, in therash of strikes among transport workers, to re-examine the case of the"free rider" p. 12

", Dr. Mises offers some furtherthoughts on the wages of union violence in a timely selection from anearlier study p. 17

", And Leonard Read follows with hisown interpretation of the causes andconsequences of the predatory actionsof some persons against others

.......... p. 21

", A cartoon from Punch calls for acontrary view of the uses and abusesof compromise p. 28

", In approaching the conclusion ofhis series on The Flight from Reality,Dr. Carson finds in Presidential 4-yearplans some startling departures fromthe American tradition p. 30

", A market research specialist pointsup some of the pitfalls of basing political action on the results of opinionpolls p. 44

", Timothy Wheeler finds somethingnew in educational procedures and results when he visits the Academy ofBasic Education, near Milwaukee

.......... p.49

", Who was Thomas Hollis? MurrayRothbard reminds us of the importantrole Hollis played in establishing lib-erty in America p. 56

", Robert Lekachman's The Age ofKeynes seems to John Chamberlainto be the same old story, howeverwell written p. 60

Anyone wishing to communicate with authors may sendfirst-class mail in care of THE FREEMAN for forwarding.

OCTOBER 1966

LEONARD E. READ

PAUL L. POIROT

Vol. 16, No. 10

President, Foundation forEconomic Education

Managing Editor

THE FREEMAN is published monthly by theFoundation for Economic Education, Inc., a nonpolitical, nonprofit educational champion of privateproperty, the free market, the profit and loss system,and limited goYernment, founded in 1946, with offices

at Irvington-on-Hudson, New York. Tel.: (914) 591

7230.Any interested person may receive its publications

for the asking. The costs of Foundation projects andservices, including THE FREEMAN, are met through

voluntary donations. Total expenses average $12.00 ayear per person on the mailing list. Donations are in

vited in any amount-$5.00 to $10,OOO-as the meansof maintaining and extending the Foundation's work.

Copyright, 1966, The Foundation for Economic Education, Inc. Printed inU.S.A.

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

Permission is hereby granted to anyone to reprint any article in wholeor in part, providing customary credit is given, except the cartoon from ~

PUNCH, lithe Flight from Reality," and IIVisit with a Headmaster."

Any current article will be supplied in reprint form if there are enoughinquiries to justify the cost of the printing.

Unless a man ,is already free within himself,any atte1npt to give him "freedom" by lawmay only succeed in enslavingeveryone concerned.

EDWARD Y. BREESE

IN THE DECADE to come we are going to have the chance to seewhether, in fact, "freedom" canbe "given" to a large segment ofour population by laws carefullydesigned for that express purposeand backed by the full authorityof Federal power. I refer, ofcourse, to the so-called Civil Rightslegislation and the people it isplanned to assist.

Certainly the laws alreadypassed, and those projected forthe near future, remove formerbarriers and open the legal doorsto the free exercise of various andsundry "rights" for all citizens.

The question then becomes one

Mr. Breese is former chairman of the Department of Humanities, School of Engineering,at Embry-Riddle Aeronautical Institute inFlorida.

of whether the new legal status ofthese people does actually constitute freedom. Is freedom really amatter of legal status? Does itdepend upon laws and courts? Isit something that can be conferredor granted? Or is this only an illusion held by the civil rights people and their supporters?

The dictionary (Webster's NewWorld Dictionary of the AmericanLanguage) is not much help here.It defines a freeman as (1) a person not in slavery and (2) a citizen.

If the first definition offeredcould stand alone, then there wouldbe little doubt as to what is takingplace. Laws are being passed whichspecifically spell out a status "notin slavery" for all classes of our

4 THE FREEMAN October

population. Freedom to move legally within the framework of society is being offered to all.

The Qualities of Citizenship

But how about the second definition of the freeman? Is it possible to make a citizen or does theindividual have to possess or earnthe innate capacity for true citizenship?

If it is argued that freedom isentirely a matter of legal status,then it must further be assumedthat all men are born equal in allrespects except for legal position.This is a manifest absurdity andis only professed today by thosewho feel they have no other claimto the respect of their fellows.

Quite the contrary. A freemanmust be, in the fullest sense, acitizen of his society. He must bepsychologically as well as legallyfree. He must be able and willingto assume responsibility, to makeintelligent decisions, to earn andhold his place as an equal amonghis peers.

Men and women who are free inthis sense do not depend uponlegal status for their freedom. Indeed it is impossible to make themanything else but free by even the

, most stringent of laws and themost efficient of police states. History is full of examples which bearout this point from the rebel followers of Spartacus to the black

Marroons of Jamaica to the "Underground" fighters of WorldWar II.

The very presence of blackslaves in the New World was primarily due to the fact that the native Indians, already on theground and militarily helpless before Spaniard and Englishman,either could not or would not beenslaved in any numbers. In thoseareas where the Indians could bebrought to labor on an estanciaor hacienda system there wasnever any major importation ofblacks, but even here the nativewas held in peonage rather thanchattel slavery.

Freedom Lies Within

Through the whole record ofmankind it is the freemen in thesense of the second definition,"those who are free within," whohave been responsible for thegrowth of democratic institutionsand of free enterprise and freedom of intellectual activity. Thesewere the people who wrote theAmerican Constitution and whosought to create legal freedom ofopportunity for all.

But they did not at any timefall into the delusion that a mancould be made free by law unlesshe had within himself the inherent capacity to think and act as afree man.

History is also filled with ex-

1966 SET MY PEOPLE FREE 5

amples of individuals and groupswho have voluntarily surrenderedthe rights and privileges of alegally free status in return forother values which seemed moreimportant to them at the time.Chief among these values has always been "security."

The ancient world is full of examples, perhaps the most spectacular being the tendency ofsmall freeholders to attach themselves to the latifundia at the timeof the decline of the West RomanEmpire. Even in their day thissort of movement was not new.

There must have been much thesame urge which consolidated aformerly village and nomad population under the absolute rule ofpriest and priest-king when Dr ofthe Chaldees was still a new foundation.

In our own day the millions whoflocked to don black or brownshirts or to wave the red flag inthe name of monolithic Europeanstates were psychologically andemotionally motivated to follow asimilar path.

This is also true, to only aslightly lesser degree, of ourfriends who enter governmentalor corporate civil service hierarchies because of what they feelto be a benevolent security factoror who place their emotional dependence upon an authoritarianbased "great society."

The Fallacy of Social Security

The fallacy needs no expositionto the intelligent reader, yet isfar more widespread than manymay realize. When the innate conservatism of thinking of the ordinary man is understood, theprevalence of the attitude is moreeasily grasped.

After all, the iron shield towhich the security seeker turned inA.D. 450 - 650 was reasonably effective in securing him protection,just as the mud brick walls of thecitadel at Babylon had been. Theprice for protection was higherthan a psychologically free manwould want to pay, but at least itbought a considerable measure ofthe desired commodity.

The serf and the master wereboth human and recognized a mutual obligation. A law, on the otherhand, is only a legal entity whichneither feels nor acts of itself.The price of liberty, under law,must still include eternal vigilance.

There are, then, two kinds offreemen, just as the dictionaryrecognizes. There are those whoare legally not slaves, and thereare those others who are free inmind and spirit and in the willingness to act in all ways as freemen. It is the latter group towhich humanity has always had tolook for true leadership.

Freedom is within the individual and a free society must be


composed of men who are psychologically free.

One of the greatest questionsof our day, then, must be the extent to which the masses of people (in the world as well as theAmerican society) who have recently been "given" a status of legal, or nonslave, freedom are capable of assuming the rights of truly free citizens and the obligationswhich accompany these rights.

If a majority of these newlyfreed citizens can stand up asgenuinely free men, or if theycan be inspired, trained, or encouraged to do so, then there islittle cause for concern.

If they cannot or will not do so(and the second is the greaterdanger) then there are, indeed,dark and stormy days to come.

Should our society choose toplace its dependence upon a vaguely legalized "freedom," it will tendmore and more to the creation ofthe ultimate in monolithic stateAuthority. Neither the virtues northe abilities of the free man willbe wanted, no matter how muchthey will be needed.

In this case to what extent willthe dependent prove unable or unwilling to tolerate the presence ofthe free spirit and the independentmind? To what extent will theflight to security tend to hold backwhat should otherwise have beenthe rising tide of the future?

A Qualified Electorate

It is not enough, or even of anyparticular value, to insure freeexercise of the ballot to all residents within a given state or nation. The really important thingis the creation of qualified votersrather than just voters per see

This is the true responsibilitywhich rests today upon the shoulders of our American civil rightspeople and their friends and uponthe shoulders of the "one manone vote" advocates throughoutthe world. If they are to reallyhelp their people, it must be byleading them to "citizenship" inthe fullest and best sense of theword.

The real revolution must bewithin the new freemen ratherthan in the laws of the land. Theymust learn to seek responsibilityinstead of license; service insteadof privilege. They must learn before it is too late that a ballotcarelessly or passionately cast candestroy them as well as the societyof which they are a part.

This is a truth which appliesequally to the new nations ofAfrica and Asia and the old coun...ties in the black belt of our ownSouth.

Unfortunately, many of the"leaders" currently riding thecrest of the tide of change showlittle observable sign of realizationof the tremendous responsibility

1966 SET MY PEOPLE FREE 7

which rests upon their shoulders.As in all "revolutions," the voicesof moderation and of liberalismare already being drowned out bythe increasingly passionate criesof extremists. The voices cry forpolitical organization, for demandsupon the people and the publicpurse, and for more and more extreme legislation. A few are already beginning to cry for blood.

If this trend is allowed to continue, history teaches that it canonly result in reaction, counterrevolution, and repression. Whatlittle has been gained will be lostto all.

Neither do the people in authority at the Federal level showany present indication of providing constructive leadership andneeded counseling to the "newfreemen." Schools are forcibly desegregated, but where are thecourses in true citizenship? Federal marshals, attorneys, registrars, and even troops are sent into the troubled areas, but thesecannot make citizens; they canonly create voters.

If the job of assisting thesepeople to attain true citizenshipis to be done at all, it will have tobe as a result of the efforts of

individuals who recognize the needand take personal action to encourage and promote a solution.

A Job for Individuals

The emergency - for it is a national emergency - should be·brought to the attention of educators and job counselors at thelocal and state level. Civic groupsand citizens associations should bealerted by their members. A concerted effort should be made todemand constructive leadershipfrom political authority at alllevels.

The situation calls for actionas well as consideration by thepresent freemen of our nation andour society. This will, as it alwaysmust, get results. There is nogreater power than the power ofthe aroused and vocal individual.

Above all, we must have faithin the long-run power and triumphof freedom and of the free man.We must have faith in the capacityof large numbers of the "newfreemen" to become new citizens,and we must actively seek to aidin this growth. It cannot be leftto chance or to the leadership ofthe political opportunist or theeconomic exploiter. ~

THE HIGH and rising cost of living is of such grave concern to somany people that further government action is being considered toalleviate the situation. Scarcely aday passes without some mayor orgovernor denouncing the latest advance in the price of bread or milkor a city council or state legislature launching an investigation ofmarketing practices, rental rates,commuter fares, or other complaints of consumers. But theproblem obviously is national inscope, and increasingly the call isfor Federal intervention and relief. Nor has Washington beenhesitant in answering that call.

There is a lo;ng history of Federal regulation and control of business practices through such officesas the Federal Trade Commission,Interstate Commerce Commission,Federal Communications Commission, Federal Power Commission,

8

Civil Aeronautics Board, PureFood and Drug Administration,Department of Agriculture, Department of Health, Education,and Welfare, Department of Housing and Urban Renewal, and manyothers. Congressmen and theircommittees are continuously probing for unethical business practices that might prove detrimentalto consumers. The President hasa Committee on Consumer Interests, and there is a National Commission on Food Marketing,among others.

With so much governmental ac- 'tivity for their protection, American consumers might be expectedto be grateful and let it go at that.But, not so. Housewives continueto complain about the soaring costof living and their inability tomake ends meet when meat ispriced at more than a dollar apound. Meanwhile, Department of

1966 THE COST OF LIVING 9

Agriculture statistics show that"the farmer's share of the consumer's dollar" persists in its longdownward trend, despite the billions of Federal aid pumped annually into various compartmentsof the farm price support program. Since food processors, packagers, and distributors stand between producers and consumers,they are bound to be prime suspects in this situation. And thegovernment is determined to discover and discourage all businesspractices that may be accountablefor the high cost of living.

Under such intensive searchand scrutiny, some sharp operators and some unethical practicesdoubtless will be found. Even themost ardent advocates of competitive private enterprise wouldexpect some participants to foolishly try to pursue their supposedself-interest to the detriment ofothers. But the Federal government never will find the real culprit behind rising living costs. Indeed, no power structure shouldbe expected to recognize and correct its own abuse of power. TheFederal government probably cannot see, and certainly could neveradmit, that its own actions arecausing the high prices consumers deplore. If such a situation isto be corrected, it must be done byindividual citizens, one by one, as

. each comes to realize that govern-

mental compulsion is not an effective substitute for the marketprice system of bringing supplyand demand into balance in thereal world of scarce resources andinsatiable human wants.

The Government as Consumer

In the market economy, the consumer is the ultimate decisionmaker. His purchases determinewhat may be profitably producedand sold. The market, as such, isneutral; market prices may serveto guide but never to compel aconsumer to choose one commodity or service above any other.Nor does the market distinguishamong consumers or discriminateagainst one as compared to another. As far as the market is concerned, the government is just another consumer bidding for theavailable supplies of scarce goodsand services.

The government, of course,would be expected to police themarket to see that honesty prevails among buyers and sellers andthat fraud and violence are curbed.A supplier's package ought to contain what his label says it does.And a buyer's money, or whateverhe brings in exchange, ought notto be counterfeit. The apprehension and punishment of counterfeiters presumably is a governmental duty.

In the customary market trans-

10 THE FREEMAN October'

action, each party offers something the other party wants. Abuyer also is a seller, and viceversa. That a buyer offers moneycustomarily signifies that he hasearned it and saved it from a priormarket transaction. Sellers acceptmoney in faith that it may be usedto purchase some other useful itemin turn. But a counterfeiter creates money fraudulently withoutbringing any useful goods or services to the market. If he can passthe counterfeit money undetected,he withdraws from the marketuseful goods and services butleaves in the market an extra supply of money. This means thatmore money is chasing fewergoods and services. The level ofprices may be expected to rise insuch a situation.

Fluctuations and Trends

Now, a crop failure or disasterof one kind or another may resultin the temporary scarcity andhigher prices of certain marketable items. Or, more or less sudden changes in consumer preferences may cause some pricesto fall, or perhaps to rise, for atime. Prices of individual itemsmay be expected to fluctuate to reflect changing supply and demandin an open market. But if the costof living soars across the boardfor nearly all items, and continuesto rise month after month and

year after year, the great probability is that a master moneymaker (inflater) has entered themarket on a major scale. And thisis precisely what has happened tothe cost of living in the UnitedStates in our time.

So, it is important that counterfeiters be apprehended and keptout of the market; and this taskordinarily is delegated to government. But the rub is that the Federal government itself can be andhas been the great inflater, withdrawing scarce goods and servicesfrom the marketplace in exchangefor irresponsible promises to pay.

This is not to say that all government purchases are inflationary. To the extent that the government withdraws money from taxpayers or bond buyers who haveearned it in the market, the government has more money to spend,other buyers have less, and thetotal quantity of money in themarket remains substantially thesame as before the taxes were collected or the money borrowed frombondholders.

But the Federal government also obtains purchase orders on themarket by issuing bonds and selling them through the Federal Reserve banking system, the banksin turn using those bonds as legalreserves and thereby adding enormously to the total supply ofmoney in the market. And this

1966 THE COST OF LIVING 11

deficit financing through a fractional reserve central banking system is the process by which theFederal government acts as thenational inflater of the currency.

The prices of pork and beef andred meat generally are high in theUnited States today, not becausefarmers are deliberately withholding supplies or packers takingextra margins or distributors andretailers gouging consumers, butbecause the government as theleading consumer has been buyingnot only meat but all kinds ofother goods and services, withdrawing them from the marketand pumping into the economybillions upon billions of fiat moneywhich the market has no way ofdistinguishin-g from the dollarsof its honest customers.

Fiat Money Inflation

Everything the Federal government spends in the so-called "public sector" - public housing andurban renewal, Federal aid to education, farm support programs,special privilege handouts to striking unioneers, foreign aid, military expenditures, moon shots,and on ad infinitum - every dollargovernment spends in excess ofwhat it currently collects from taxpayers and bondholders other than

banks comprises fiat money thepresence of which is reflected inthe so-called "private sector,"showing in the family budget ashigh priced bread and meat and arising cost of living

VVhen the government buysguns with fiat money, that moneyflows through the market andeventually into the hands of housewives who use it to bid up theprices of butter and of other consumer goods that go to make upthe cost of living.

If the housewives of Podunkwant the price of food in localgrocery stores to decline, thenthey'll have to vote down Podunk'sproposed new Post Office, Podunk'sFederal Urban Renewal and Public Housing projects, Podunk'sshare of Federal aid for education,and every other VVashington promise of something for nothing. TheFederal government has nothingstored away from which thesehandouts may be painlesslyplucked. They can only be handedout insofar as they are currentlywithdrawn from the market. Andevery such withdrawal by inflation - by consumers who put backnothing useful in return-is boundto show up in the rising price ofbread and other necessities, in thehigher cost of living. ~

PETER A. FARRELL

THOSE among us who persistentlysupport economic arrangementsof a compulsory nature and who,ironically enough, are called liberals, have rallied stoutly to theproposition that no worker shouldbe allowed to withhold support froma union favored by the majority.The worker who resists such aunion exposes himself to heavy attack. One clergyman, for instance,refers to the activities of the"free rider" (the nonunion manon a unionized job, in case youhaven't heard) as being "inequitable, unj ust, and immoral"l (emphasis added). A college ethicstext describes2 the nonunion man

1 Jerome L. Toner, a.S.B. in Rightto-Work Laws and the Common Good,a pamphlet by the United Steelworkersof America, p. 10.

2 Herbert Johnson, Business Ethics(New York: Pitman Publishing Corp.,1956) pp. 262-63.

Mr. Farrell is Instructor of business and economics at Marist College in Poughkeepsie,New York.

12

on a union job as "a parasite" who"share (s ) in the common goodwithout contributing to thatgood." According to this learnedview it would seem that a workerearns his way in society not byactually working but rather bypaying his union dues.

The argument by which the independent worker has been transformed into a social leech has beenexposed and refuted time andagain but, like the "machinesthrow men out of work" fallacy,it refuses to die.

In the first place, union dues areused for many purposes otherthan the support of collective bargaining which allegedly makespossible the good things whichworkers receive. They are used tosupport political candidates andprograms, and, as has been abundantly documented by various official inquiries, they are sometimestapped by unscrupulous union

1966 THE CASE OF THE FREE RIDER 13

leaders for their own personal use.That a worker should be forced

to contribute funds to politicalcauses which he actually opposesseems illiberal and undemocraticto say the least. Nor can unionparticipation in American politicsbe written off as insignificant. Itis indeed a crucial factor in manyelections. That a worker impairsthe common good when he refusesto subsidize the various undesirables who have gained power inthe labor union movement is ridiculous on the face of it. It is wellto recall in this regard that theTeamsters Union with 1.5 millionmembers is the largest singleunion in the United States.

Those favoring the union linein the compulsory union controversy usually imply that the unionis forced to "service" nonunionworkers by representing them atthe bargaining table. But as onecritic of compulsory unionismhas aptly replied:

What is not told is that "exclusive representation" (by which aunion bargains for all employees inthe bargaining unit and not just itsown members) was fought forstrenuously by the unions on thegrounds that if they did not bargain for nonunion workers, the employer could use favoritism towardthe nonunion workers as a meansof destroying the union . . . therefore it should be pointed out that

nonunion workers in an open shoptoday are not free riders but forcedriders since under the Taft-Hartley Act they lose their right to bargain with their employer and areforced to bargain through the union.3

The issue is thus in clearer focus. The union chieftains foughtfor the elimination of the rightof nonunion workers to contractfor their own wages. Havingachieved this, they and their intellectual champions have proceeded to castigate the nonunionmen for not supporting the veryorganizations which have causedthem to lose an important right.The last thing the unions wouldwant would be a situation wherethey no longer had the extraordinary power to bargain for allworkers within the bargainingunit.

Limits to Union Achievements

As decisive as these points arein deflating the free rider indictment, more basic factors deserveconsideration. The free ridercharge, after all, is based on theassumption that unions do in factproduce higher wages for workers. Now, economic theorists arein general agreement that throughconcerted action (refusing to work

3 Edward A. Keller, The Case forRight-to-Work Laws. (Chicago: TheHeritage Foundation, 1956), p. 42.


at less than a prescribed wage),resource suppliers (workers) canforce the price (wage) that theyreceive for their resource (anhour's labor), above the level thatwould otherwise prevail. All ofthis, of course, is exactly what aunion attempts to accomplish.

However, the higher price forlabor bears with it unpleasant sideeffects. Most notably, the substitution effect would set in at two possible levels. The employer, for one,would substitute those alternativeresources (automated machines,for example) which under the newconditions are cheaper than manpower. Consumers of the finishedproduct, on the other hand, wouldbe encouraged to substitute whatever finished products the marketprovided at a now cheaper price.The greater the possibility of substitution at the two levels, themore drastic would be the reduction in the use of the resourcefollowing an increase in its price,or in our case, the greater wouldbe the number of workers laid off.

With this analysis in mind it isnot surprising to learn that widelynoted statistical studies haveshown that a great many unionsare ineffective in raising wages.4

4 Albert E. Rees of the University ofChicago estimates that one-third of U.S.unions have had no effect on wages. SeeWage Inflation (National IndustrialConference Board, New York, 1957)pp. 27-28.

The union leaders in question recognize that higher wages wouldresult in widespread and immediate unemployment. They areforced, therefore, to accept whatis offered. Such unions seldommake the headlines and their presence, therefore, is likely to go unnoticed. Clearly, the free ridercharge is meaningless in this situation based as it is on the assumption that the union does produceresults.

Sometimes, however, substitution of other resources by the employer or other finished goods bythe consumer is unfeasible in theimmediate future. Here, the unionleader is likely to make bold demands for wage increases. If thedemands are not met, a strike willbe called and efforts made to insure that operations are suspended for the duration of thestrike. If the company voluntarilyshuts down, the strike likely willproceed on an uneventful note; butif it attempts to continue operations (which, of course, it hasevery right to do) union-incitedviolence becomes a likely result.Mass picket lines will be set up toisolate the plant from raw materials and willing workers. Carsentering the plant will be overturned, while workers attemptingto enter by foot will be punchedand shoved and subjected to therawest kind of verbal abuse. Acts,

1966 THE CASE OF THE FREE RIDER 15

which in any other circumstancewould result in prompt arrest, willcuriously enough be overlooked bylocal authorities.

In May of this year when a taxistrike developed in New YorkCity, eight drivers who defied theunion by continuing to operatehad their windshields smashed.5

Another had sugar placed in thegas tank of his cab. The mayorof the city reportedly consideredthis situation "... normal as canbe with a taxi strike."6 No arrestswere reported. In a 1965 taxi strike,several uncooperative driversfound their cabs gutted by fireand numerous others were terrorized by roving goon squads. 7 Theseepisodes, unfortunately, are onlyrecent examples of a pattern thatcontinually repeats itself wherever unions are powerful.8

If, as often happens, the company capitulates to these tacticsand grants the higher wage demanded, the union will appear tohave won a smashing victory forthe workingman. The nonunionman will be ridiculed more than

5 New York Daily News, May 13,1966, p. 3.

6 Ibid.

7 New York Herald Tribune, July 1,1965, p. l.

8 For a comprehensive analysis ofunion tactics see Professor SylvesterPetro's Power Unlimited': The Corruption of Union Leadership (New York:The Ronald Press).

ever for receiving benefits at thehands of the union without payinghis share of the cost of maintaining the union.

No Lack of Substitutes

However, one can think of numerous reasons why the free ridercharge is still lacking in validity.For one thing, substitution is stilllikely to occur after market participants have had time to adjustto the new situation. New substitute resources will be developedby producers. Substitute productspreviously considered too expensive will be marketed by competitors. Importation of foreign goodswill be increased, and at the sametime, research and developmentmay bring forth entirely new discoveries making the original product obsolete (just as governmentprice supports have stimulatedthe development of synthetic fabrics inj uring the cotton and woolindustries which the price supports were intended to help). Inall these ways and more, a freemarket can adjust to an increasein the cost of labor induced by aunion.

A worker lacking senioritymight well realize that he- wouldbe among the first to be laid off.In resisting the union, therefore,rather than taking a "free ride,"he would be protecting his verylivelihood. If he is obliged to sup-


port the union, he would be forcedto subsidize the very organizationthat is doing him in.9 Among socialists generally there is a presumption that the interests of allworkers are identical, but, asthis instance shows, that presumption is wrong.

For another thing, the workermay justifiably abhor the violentand coercive tactics that the unionthreatens or actually invokes. Theend, most people would agree, doesnot justify immoral means.

Finally, the nonunion man mayrealize that any wage increase heactually receives through theunion will be paid for: (1) by adecrease in the real income of consumers, who, for the most part,are workers themselves, and (2)by a loss of e'arnings by thoseworkers who are forced into lessdesirable jobs. His gain will betheir loss. It is just possible thathe may prefer not to join in theexploitation of other workers.That a union, rather than thegreedy capitalist of socialist lore,is the real exploiter of the working man is, of course, a substantialirony in itself. The union mayhurt the employer in the short runbut not indefinitely. This is truebecause any plant may be closed

9 For an excellent analysis of thissituation see Professor Philip D. Bradley's study, Involuntary Participationin Unionism (Washington: The American Enterprise Association, 1958).

down when profit margins shrinkbelow acceptable levels. Capitalmay then be re-invested wheremore profitable opportunities arethought to exist.

All of this points to the conclusion which numerous statistical studies have substantiated,that unions have not actually enhanced the workingman's overallshare of national income.1O Rather,through their monopolizing tactics, they have increased thewages of a relatively small groupof workers while causing manymore workers to suffer a reductionin real wages. If anyone emergesfrom this situation as a "freerider," it is the union itself andthose who support it rather thanthe worker who resists it.

We are now in a position to appreciate David McCord Wright'sadvice:

... that we deflate our absurdlyover-expanded idea of the net beneficence of unions . . . and see themfor what they are - often reactionary agencies of personal privilege. l1

10 In Philip D. Bradley's study notedin the above footnote, the conclusionsof, seventeen relevant studies are summarized as follows:

1. Unions have not raised the generallevel of real wages in the United States.

2. Unions have not increased labor'sshare in the national income.

11 David McCord Wright, "The Canadian Compulsory Conciliation Laws andthe General Problem of Union Power,"Notre Dame Lawyer, XXV, No. 5(1960), 651.

The Supremacyof the Market

LUDWIG VON MISES

IN THE MARKET ECONOMY the consumers are supreme. Their buyingand their abstention from buyingultimately determines what the entrepreneurs produce and in whatquantity and quality. It determinesdirectly the prices of the consumers' goods and indirectly theprices of all producers' goods, viz.,labor and material factors of production. It determines the emergence of profits and losses and theformation of the rate of interest.It determines every individual'sincome. The focal point of themarket economy is the market,Le., the process of the formationof commodity prices, wage ratesand interest rates and their derivatives, profits and losses. It

This article is from Planned Ch'aos, writtenas an Epilogue for a Spanish edition of Socialism, and first published as a book in Englishby the Foundation for Economic Education in1947.

makes all men in their capacity asproducers responsible to the consumers. This dependence is directwith entrepreneurs, capitalists,farmers and professional men,and indirect with people workingfor salaries and wages. The market adjusts the efforts of all thoseengaged in supplying the needs·of the consumers to the wishes ofthose for whom they produce, theconsumers. It subjects productionto consumption.

The market is a democracy inwhich every penny gives a rightto vote. It is true that the variousindividuals have not the samepower to vote. The richer mancasts more ballots than the poorerfellow. But to be rich and to earna higher income is, in the marketeconomy, already the outcome ofa previous election. The only meansto acquire wealth and to preserve

17


it, in a market economy not adulterated by government-made privileges and restrictions, is to servethe consumers in the best andcheapest way. Capitalists and landowners who fail in this regardsuffer losses. If they do not changetheir procedure, they lose theirwealth and become poor. It is theconsumers who make poor peoplerich and rich people poor. It isthe consumers who fix the wagesof a movie star and an operasinger at a higher level than thoseof a welder or an accountant.

Every individual is free to disagree with the outcome of an election campaign or of the marketprocess. But ina democracy hehas no other means to alter thingsthan persuasion. If a man were tosay: "I do not like the mayorelected by majority vote; thereforeI ask the government to replacehim by the man I prefer," onewould hardly call him a democrat.But if the same claims are raisedwith regard to the market, mostpeople are too dull to discover thedictatorial aspirations involved.

SeconJ-Guessing ,the Customer

The consumers have made theirchoices and determined the incomeof the shoe manufacturer, themovie star and the welder. Who isProfessor X to arrogate to himselfthe privilege of overthrowingtheir decision? If he were not a

potential dictator, he would notask the government to interfere.He would try to persuade his fellow-citizens to increase their de- ,mand for the products of thewelders and to reduce their demand for shoes and pictures.

The consumers are not preparedto pay for cotton prices whichwould render the marginal farms,Le., those producing under theleast favorable conditions, profitable. This is very unfortunate indeed for the farmers concerned;they must discontinue growingcotton and try to integrate themselves in another way into the \whole of production.

But what shall we think of thestatesman who interferes by compulsion in order to raise the' priceof cotton above the level it wouldreach on the free market? Whatthe interventionist aims at is thesubstitution of police pressure forthe choice of the consumers. Allthis talk: the state should do thisor that, ultimately means: thepolice should force consumers tobehave otherwise than they wouldbehave spontaneously. In suchproposals as: let us raise farmprices, let us raise wage rates, letus lower profits, let us curtail thesalaries of executives, the us ultimately refers to the police. Yet,the authors of these projects protest that they are planning forfreedom and industrial democracy.

1966 THE SUPREMACY OF THE MARKET 19

Privileged Labor UnionsIn most non-socialist countries

the labor unions are granted special rights. They are permitted toprevent non-members from working. They are allowed to call astrike and, when on strike, arevirtually free to employ violenceagainst all those who are preparedto continue working, viz., thestrikebreakers. This system assigns an unlimited privilege tothose engaged in vital branches ofindustry. Those workers whosestrike cuts off the supply of water,light, food and other necessitiesare in a position to obtain all theywant at the expense of the rest ofthe population. It is true that inthe United States their unionshave up to now exercised somemoderation in taking advantageof this opportunity. Other American unions and the Europeanunions have been less cautious.They are intent upon enforcingwage increases without botheringabout the disaster inevitably resulting.

The interventionists are notshrewd enough to realize that labor union pressure and compulsionare absolutely incompatible withany system of social organization.The union problem has no reference whatsoever to the right ofcitizens to associate with one another in assemblies and associations; no democratic country de-

nies its citizens this right. Neitherdoes anybody dispute a man'sright to stop work and to go onstrike. The only question iswhether or not the unions shouldbe granted the privilege of resorting with impunity to violence.This privilege is no less incompatible with socialism than withcapitalism. No social cooperation

under the division of labor is possible when some people or unionsof people are granted the right toprevent by violence and the threatof violence other people fromworking. When enforced by violence, a strike in vital branches ofproduction or a general strike aretantamount to a revolutionary destruction of society.


A government abdicates if it tolerates any non-governmental agency's use of violence. If the government forsakes its monopoly ofcoercion and compulsion, anarchicconditions result. If it were truethat a democratic system of government is unfit to protect unconditionally every individual's rightto work in defiance of the ordersof a union, democracy would bedoomed. Then dictatorship wouldbe the only means to preserve thedivision of labor and to avoid anarchy. What generated dictatorship in Russia and Germany wasprecisely the fact that the mentality of these nations made suppression of union violence unfeasibleunder democratic conditions. Thedictators abolished strikes andthus broke the spine of laborunionism. There is no question ofstrikes in the Soviet empire.

Arbitration No Solution

It is illusory to believe that arbitration of labor disputes couldbring the unions into the framework of the market economy andmake their functioning compatiblewith the preservation of domesticpeace. Judicial settlement of controversies is feasible if there isa set of rules available, accordingto which individual cases can bejudged. But if such a code is validand its provisions are applied tothe determination of the height of

wage rates, it is no longer themarket which fixes them, but thecode and those who legislate withregard to it. Then the governmentis supreme and no longer the consumers buying and selling on themarket. If no such code exists, astandard according to which a controversy between employers andemployees could be decided is lacking. It is vain to speak of "fair"wages in the absence of such acode. The notion of fairness is nonsensical if not related to an established standard. In practice, if theemployers do not yield to thethreats of the unions, arbitrationis tantamount to the determination of wage rates by the government-appointed arbitrator. Peremptory authoritarian decision issubstituted for the market price.The issue is always the same: thegovernment or the market. Thereis no third solution. . . .

Men must choose between themarket economy and socialism.The state can preserve the marketeconomy in protecting life, healthand private property against violent or fraudulent aggression; orit can itself control the conduct ofall production activities. Someagency must determine whatshould be produced. If it is notthe consumers by means of demand and supply on the market,it must be the government bycompulsion. ~

LEONARD E. READ

THE NEWEST and the most radicalidea in political history has as itspremise, "that all men ... are endowed by their Creator with certain unalienable Rights, thatamong these are Life, Liberty andthe pursuit of Happiness." Andthen the idea's implementation:"that to secure these rights, Governments are instituted amongmen. ..."

Government's purpose, in otherwords, is to curb the oppression,the plundering - exploitation inthe sense of being preyed uponof man by man. These actionswhich are abusive of man's rightsare to be codified and then postedfor all to see (the law) ; these arethe forbidden acts which government must restrain, inhibit, penalize. Let government stand guardagainst oppression, that is,against violence and/or fraud, andotherwise leave all citizens free toact creatively as they please. This

is the American ideal expressedin the Declaration of Independence.

But this inspired ideal has comea cropper. Oppression occurs onan enormous scale, and growsapace. And, contrary to most expectations, the greatest oppressorof all turns out to be the veryagency designed to curb oppres..sion! Among the reasons for society's protector turning predatoris a faulty understanding of government's essential nature.

Woodrow Wilson put his fingeron the nature of gove,rnment:"The essential characteristic ofall government, whatever its form,is authority.... Government, inits last analysis, is organizedforce."l (Italics mine.)

Observe the distinction between

1 See The State: Elements of Historical and Practical Politics by WoodrowWilson. D. C. Heath & Co., 1898, reviseded., p. 572.


you as an agent of government andyou as a private citizen. As anagent of government you have thebacking of a constabulary; youissue an edict and I obey or takethe consequences. Remove thebacking of the constabulary andyou are restored to private citizenship; your edict has no morecompulsive power than a chamberof commerce resolution. I do as Iplease. Clearly, the constabularyorganized police force - is government's distinctive feature.

True, individuals in governmentservice are also private citizens;but, acting in the role of governors, they are set apart from therest of us by having coercive forceat their disposal. A governor isone of us - plus armament.

What is it that armament canand cannot do? It can restrain, inhibit, destroy, penalize. It cannot,by any stretch of the imagination,serve as a creative force. All creativity - no exception - is volitionalin origin and is characterized bysuch spiritual phenomena as invention, discovery, intuition, insight.

What Should Be Restrained?

The above poses the next question: What, in good conscience,should be restrained, inhibited, destroyed, penalized? The answer,in a word, is the oppression ofman by men of prey. The moral

codes, extending over the millennia, long before Christianity, caution us not to kill and not to steal- that is, not to use violence orfraud. The Bhagavad-Gita is quiteexplicit: "Sin ... is the assertionof the independence of the egowhich seeks its own private gainat the expense of others." Organized police force - governmentcan be properly invoked to curboppression; that is at once its potentiality and its limitation,morally and ethically speaking.

Another re,ason for society'sprotector turning predator is agenerally accepted definition ofprey too broad for government tocope with. The only part of thedefinition fit for governmental attention is "... an animal [human]hunted or killed for food [or whatever] by another animal [human] . . . to plunder; pillage;rob."

Perhaps one can feather his ownnest at the expense of others without the use of fraud or violence. Ileave that point to the intellectualhair-splitters. Further, I'll grantthat oppression, however achieved,is not to be sanctioned, and thatdefenses should be erected againstit in all of its nefarious forms.But there are defenses and defenses. My point is that organizedpolice force - government - caneffectively serve as a defense onlyagainst that brand of oppression

1966 MEN OF PREY 23

which is founded on fraud andviolence; that when governmentforce is used for any other purpose, then government itself willbecome an oppressor. For instance,armament cannot put down stupidity or cupidity or avarice orlaziness or conjured-up fears orcovetousness or evil thoughts.Yet,more and more we turn to thepolice force - fruitlessly - as asubstitute for our own alertness,moral rectitude, and wisdom; thuswe make of government the grandoppressor - collectivized men ofprey!

Robbery, pillage, embezzlement,plunder, marauding, misrepresentation, violence or the threat thereof - whether to keep another fromaccepting a job one has vacated orfrom a market one has pre-empted- are instances of a,ggressiveforce. This type of force, at leastin our present state of understanding, can be met only by defens'iveforce - the principled role of government.

But the only defense againstignorance is wisdom, not authority, not police force. Governm,entis limited in what it can appropriately do by its nature. Physicalforce can only counter physicalforce. For example, a great dealof what we think of as "preyingupon" is possible only because somany people are gullible. Theshell-game artists, who formerly

infested the midways of countyand state fairs, ·were attractedthere by an abundance of yokelsor suckers. The existence of a conman presupposes a sufficient number of people who can be conned,that is, people bent on somethingfor nothing and so lacking inskepticism that they can be "takento the cleaners." Shell games neednot be outlawed, but will disappearas soon as people awaken to theobvious chicanery involved.

Yes, the reason why so manypeople can be conned is that theyare gullible. The only defenseagainst gullibility is to comeawake. And precisely the same defense -- enlightenment - must apply to conjured-up fears of oppression, the kind that turns ourhoped-for protector - government- into a predator. Of the numerous examples that might be used,let's pick one at random: the minimum wage law.

Take the Minimum Wage Law

Time and again I hear it said,"Why, if we didn't have a minimum wage law, workers would beexploited!" Such statements havetheir origin in fear and ignorance- fear of imagined evils, and ignorance of how the market, iffree, tends to give every man hisdue. In the market, each -personis rewarded by his peers according to their assessment of the


value of his services to them. Thisis truly the "just price" for hislabor.

The very persons, in and out ofgovernment, who advocate a minimum wage law are themselvesguilty of the "dreadful" practicethey fear in others. Their fear isthat some employers, if not legallyrestrained, will hire workers at aslow a wage as possible. And theywill, indeed! But observe thatthese fearful ones do precisely thesame: they themselves shoparound for bargain pric'es.

No housewife - not even a unionofficial's wife - will pay 70 centsfor the same quality eggs that shecan buy next door for 60 cents.She will no more indulge herselfin such economic nonsense than themaker of cans will pay an abovemarket price for sheet steel. Whatare eggs or sheet steel but theproducts of human energy! Whatmatters whether one's wage ispaid in dollars per hour or as aprice for the thing one produces?No difference, whatsoever! Whenthe housewife buys her groceriesor shoes or hats or whatever atthe bargain counter she is, in thefinal analysis, paying the lowestpossible price for labor. When shefears that some employer will dowhat she does day in and day out,and when she advocates a minimum wage law to keep others fromdoing likewise, she displays not

only an ungrounded fear but anignorance of economic abc's.

Whoever advocates the minimum wage law not only makes anoppressor of government but ofhimself as well. If this seems contrary to fact, it is only becausewe are accustomed to think of theoppressor - he who preys uponas one who harms others strictlyfor his own advantage. Clearly,many of those who advocate minimum wage laws get nothing in return for their advocacy. But thefact that an advocate gets no lootfor himself from the oppressionhe promotes in no way diminishesthe oppressive force of the minimum wage law or absolves the advocate.

Who Gets Hurt?

Who is oppressed by a minimumwage law? The number, of course,is determined by how high therate is.2 But it is the multitude ofmarginal workers who preferworking for less than the minimum to not working at all, plusanother multitude of marginalproducers who prefer to hire be-

2 Were the minimum wage law set at10 cents an hour, probably there wouldbe no robbery, no oppression, no disturbance of the market; if at $1.25, as presently, a considerable unemployment; ifat $1.65, as proposed, a greater unemployment; and if, shall we say, at $15,then, perhaps everyone would be unemployed, for the economy would disintegrate; it could not function.

1966 MEN OF PREY 25

low the minimum to not hiring atall. These people, all of them, arerobbed of employment, and of allthe gains. to each that might havebeen.3

Conceding that no gain accruesto most advocates of a minimumwage law, how can its advocacybe classified as oppression? Theanswer would be easy were ourthought of oppression or preyingupon not limited to the forcibletransfer from the robbed to therobber of material things such ascash, or an auto, or whatever. But,in this instance, the forcible transfer is, initially, not of goods butof a right. The right to earn one'sown living is a precious possession. This is forcibly taken frompeople and turned over to government. What was once a person'seconomic right to make his ownway now becomes the right of government to make his way for him.He is removed from the market,featured by self-responsibility andself-determination, and put at thedisposal of the political apparatus.In a word, the minimum wage lawis an oppressive abuse of humanrights and it is brought about byorganized police fore-e.

Clearly, most advocates of the

3 I use the term, unemployment, in itsbroadest sense: the employer employsemployees, as all agree, but the employeeshould remember that he employs an employer.

mInImum wage law do not gainany rights over the persons whofall below the minimum becausethe advocates are not a part ofthe political apparatus. But, theyare accessories to the immoral act,and primarily because (1) theyfear that others will not act moremagnanimously than they do, and(2) because they have no under-standing of how the free' marketconstantly exerts its forces in thedirection of economic upgradingfor all.

From Protection to Predation

However, the minimum wagelaw, like strikes and all other interference with the market, finallygets into the cash drawer. Employers do not pay wages beyonda worker's worth to them. Thus,those workers who cannot produceand earn that minimum wa.ge aredisemployed -legally and compulsively thrown out of work. Theright to look after themselves hasbeen taken away and given to thegovernment, so the governm.entmust provide their living. But,having nothing of its own, howcan government do this? Simple:government forcibly takes cashfrom those remaining on the workforce, and from accumulated capital, and uses the cash to financesuch make-work projects as Federal urban renewal, or to provideunemployment insurance, or any


one of countless devices.4 It is inthis manner that government, designed as our agency of defense,becomes the great oppressor. Andpartly because so many personsinclude in their definition of"preying upon" the common andethical practice of shoppingaround for bargain prices. It isself-evident that there is no fraudor violence in a willing exchangeof your cash for my labor, regardless of how little your cash or howrelatively inefficient my labor.

The minimum wage law hasbeen used· only to illustrate howgovernment is turned from protector to predator, how the agencyfor minimizing oppression has itself become the great oppressor.And the big question is: What defense do we have against our erstwhile defender, now one of thegreatest and most powerful oppressors ever known? Certainly,our defense cannot be organizedforce, for this oppressor has amonopoly of that. Whether we likeit or can see any hope in it or not,only one avenue remains open tous: enlightenment, understanding,overcoming our naivete, comingawake. Is not this oppression

4 See Encyclopedia of U. S. Government Benefits, 1,000 pages and listingover 10,000 so-called benefits. Obtainablefrom Doubleday Book Shop, 724 FifthAve. at 57th St., Customer Service, NewYork, N. Y. Reg. Ed., $7.75; De LuxeExecutive Ed., $9.95.

pretty much of our own making?And isn't it possible that our applied intelligence, eventually,might correct these mistakes wehave made?

Steps Toward Correction

An awakening to the nature oforganized police force is step number one. We shall never knowwhere force should not be employed unless we are sharplyaware of its limitations. And theonly problem is to figure out whatcan and cannot be accomplishedwith a billy club. Were this widelyunderstood, our oppressor wouldwilt away in the face of the resulting skepticism. Yet, given ourpresent state of understanding,even this would leave· most peoplewith the feeling of a hollow victory. With the All-Promising dethroned, to what do we look now?The Myth has vanished; who orwhat is to perform our miracles?An empty promise is better thanno promise; all appears to bevoid!

It takes a second step to fill thatvoid: an awareness of the potentialities of individual libertypersonal insight and understanding of the wonder-working miracle of cooperation via the freemarket process. This is much moredifficult than· understanding whata billy club can and cannot do. Thefact that nearly everyone pro-

1966 MEN OF PREY 27

claims for liberty - authoritariansand interventionists by the millions - suggests that those whohave not experienced this insightare oblivious of their nonexperience. And what can one who isaware of liberty's potentialitiesdo about inducing a similar insight in another who doesn't knowhe hasn't experienced it?

Liberation

I asked of an inquiring spirit,"How long have you been interested in this nonoppressive philosophy?" She replied, "I have nowbeen liberated for six months!"What brought on this "liberation,"this insight? It was quite bychance, a skillful explanation by afriend concerning self-responsibility. Immediately, there was a freeing of the spirit of inquiry, an intelligent curiosity, a state of"wanting-to-know-it-ness." Parenthetically, no person is as much aseducable on the free market, private property, limited governmentphilosophy until his "liberation."And we know, from years of observation, that there is no masterkey to inducing such insight inanother; the aforementioned selfresponsibility explanation mightnot trigger more than one in athousand. Thus, it is plain thatwhat you or I can do to affordothers an enhanced grasp of lib-

erty and its enormous, unbelievable potentialities is limited to howextensive a repertoire of explanations we can encase in our ownintellectual portfolio. If one explanation has no triggering effecton an unliberated person, it is possible that one of several hundredother explanations will.

Yet, this limitation on what wecan accomplish with others maybe a blessing in disguise. It hasa profound message for those ofus who have a glimmering oflight:

Wake wp! Come even more aliveto the meaning of individual liberty,. it is one of the great challenges this moment in human evolution p"resents. Meet the challengeby knowing more of liberty'spromise, or face the consequences.Bear in mind that scarcely anyone - even you - is very far outof the slumber stage. And, for thisreason, do not be taken in by thecliche, "Weare only talking to ourselves." Search for bhe "liberated"; they are to be found among"ourselves." If you can discoverwho they are, you can learn fromthem and, hopefully, they maylearn from you. Therei.s no otherway to put down men of prey.

That's how the message comesthrough to me; it doesn't flattermy ego but it makes sense. ~

PUNCH Decries "No Compromise"

Reproduced by permission of Punch, London.

28

THE FREEMAN AsI~s,

" WHY Compromise?"

THE SEAMEN'S STRIKE in Englandwas disastrously prolonged, suggests Punch, because of an unbending, uncompromising attitude

. by all parties to the controversy.The American Machinists'

Strike which grounded five airlines was disastrously prolonged,in many minds, for the same reason.

What goes on here? It seemsthat justice can be served onlyas everybody bends to the whimsand desires of those who holdpower. To what a low estate hasjustice descended: what's right isthe outc'ome of bending to ambitions for power!

Who likes to compromise? Employees are as averse to backingdown as are employers. Yet, thereis no other recourse than compromise in managed or socialisticeconomies - as in England and theu. S. A. When coercive powersrule the economy, adjustments ofthe numerous powers must be cededby the warring factions. With failure to compromise, the economycomes to a halt. Further, compromised or dictated adjustments are

no more than temporary expedients, for no one has the knowledge or the ability to accuratelypredict the future.

Noone likes to compromise, norshould anyone be expected to doso. Be done with the planned economy and its inevitable compromises and failures. Give no morecoercive power to a labor unionthan to a chamber of commerce.Free the market! L.et governmentprotect all willing exchange andinhibit all unwilling exchangeand not indulge in the forbiddenexchange itself!

In the free market, humiliatingcompromise gives way to a gratifying freedom of choice by everyone, be he employee or employer,consumer or producer. If one supplier's price for a can of beans orhis system of management doesn'tsuit, you have the freedom to shoparound. And, if he doesn't likeyour bid for beans or your services on your terms, he has thefreedom to look around.

Why compromise when we couldbe free to choose? ~

29

25.Political

Experimentation:THE FOUR-YEAR PLANS

CLARENCE B. CARSON

WOODROW WILSON, 1912

HARRY TRUMAN, 1949

JOHN F. KENNEDY, 1961

I stand for the square deal. But when I say that I am for the square deal, Imean not merely that I stand for fair play under the present rules of the game,but that I stand for having those rules changed so as to work for a more sub

stantial equality. . . . THEODORE ROOSEVELT, 1910

And the day is at hand when it shall be realized on this consecrated soil, - a

New Freedom, - a Liberty widened and deepened to match the broadened lifeof man in modern America....

I pledge you, I pledge myself, to a new deal for the American people.

FRANKLIN D. ROOSEVELT, 1932

I hope for cooperation from farmers, from labor, and from business. Everysegment of our population and every individual has a right to expect from ourGovernment a fair deal.

... So that, although the United States is an old country - at least itsGovernment is old as governments now go today - nevertheless I thought wewere moving into a new period, and the new frontier phrase expressed thathope.

Building the Great Society will require a major effort on the part of everyFederal agency in two directions: - First, formulating imaginative new ideasand programs; and - Second, carrying out hard-hitting, tough-minded re-

forms in existing programs. LYNDON B. JOHNSON, 1964

30

1966 THE FOUR-YEAR PLANS 31

THE FUNPAMENTAL SHIFTS,

changes, and direction of American government in the twentiethcentury have not been generallyclearly outlined in historical accounts. The shift of the office ofPresident from primary concernwith execution of the laws to legislative innovation, the yielding upof legislative initiative by Congress, the subtle intellectual impetus to shift the American respect for the Constitution to adulation of the decisions (or at leastacceptance of them) of the Supreme Court, the change of government from protector of rightsto granter of privileges, have notbeen much emphasized by thosecharged with keeping the recordstraight. Superficial continuitieshave been allowed to obscure fundamental changes.

Of course, historians have notedthe appearance of the SquareDeal, New Nationalism, NewFreedom, New Deal(s), Fair Deal,New Frontier, and Great Society.These names have often beenused as convenient pegs fromwhich to hang the assorted information and developments associated with presidential administrations. But the phenomenon itself and what it may signify that aline of Presidents should get upa program, name it, attempt toembody it in legislation, and haveit associated with them - has not

been much attended to. There isin these things a new form ofpresidential activity, somethingthat had not occurred in the nineteenth century. As a form, its appearance symbolizes the takingover of leadership in the Federalgovernment by Presidents; butmuch more than this is involved.

No one, to my knowledge, haspointed to the analogy between theSquare Deal, New Freedom, NewDeal (s), Fair Deal, New Frontier,and Great Society on the one handand the five-year plans of theSoviet Union on the other. Yet,there is an analogy that warrantsexamination, and the reference tothe American programs as four(or eight-) year plans is used tocall attention to it. Such an examination will be useful in revealing the character of much thathas been happening in America.

Different in All Details

There are many differences ofdetail between the· Soviet five-yearplans and the American four- (oreight-) year plans. The five-yearplans are not coterminous withsome electoral period. They arenot identified with the whole administration of some Soviet . premier. The leaders of the SovietUnion are openly committed tothe achievement of socialism,those of the United States arenot. Moreover, the Communists


avow the revolutionary characterof their way to socialism, andAmericans have adopted no suchway. The five-year plans are broadand comprehensive blueprints forsocial and economic reconstruction. Joseph Stalin said of thefirst five-year plan, begun in 1928:

The fundamental task of the FiveYear Plan was, in converting theU.S.S.R. into an industrial country,fully to eliminate the capitalist elements, to widen the front of Socialist forms of economy, and to createthe economic base for the .abolitionof classes in the U.S.S.R., for theconstruction of Socialist society....

The fundamental task of the FiveYear Plan was to transfer small andscattered agriculture to the lines oflarge-scale collective farming, so asto ensure the economic base for Socialism in the rural districts andthus to eliminate the possibility ofthe restoration of capitalism in theU.S.S.R.l

By comparison with such boldness, the American four-year plansappear timid and pale. Moreover,the American four-year plans began before the Russian ones,though the point is of no importance as to any fundamental similarities. There are many other differences, but let them all be

1 Richard Powers, ed., Readings inEuropean Civilization since 1500 (Boston: Houghton Mifflin, 1961), pp. 63233.

summed up by this observation: Indetail, the Soviet plans differ inevery respect from American ones.

The Same in Essence

But analogy deals with essences,not with differences of detail.There is an essential difference between the Soviet way to socialismand the American one. It has beenalluded to above. The RussianCommunists have pursued a directrevolutionary approach to socialism. American meliorists havepursued an indirect evolutionaryapproach to socialism. Communists have proceeded by destroying the old order as completely asthey could and erecting a new onein its stead. Meliorists have attempted to operate within theframework of the old order, tokeep as much of its superficies andforms as possible, and to turn thereceived instruments of power tothe task of gradual social andeconomic reconstruction. The fiveyear plans are Soviet programs inthe revolutionary road to socialism; the four-year plans areAmerican programs in the gradualist route to socialism. They areboth instruments of national planning by central authority; theyemploy a quite different assortment of paraphernalia; they differ as to methods; they have thesame goal in view.

The four-year plans are really


devices for using the Presidencyfor social reconstruction. The kindof planning which will move acountry toward the goal of socialism must be centrally directed.Policy making, legislating, and execution must be coordinated. Congress can pass laws, but it cannotexecute them. Moreover, left totheir own devices the members ofCongress are not apt to thrustthe country in any consistent direction. Power is dispersed amongthe many members. They represent a great diversity of intereststhroughout the country. Legislation that originates in Congressis usually subjected to numerouscompromises before it is enacted,compromises that turn it to endsnot originally conceived or thatvitiate its impact. The very division of Congress into two housesmakes it virtually impossible forany leadership that arises in oneof the houses to have any influenceor control over the other. ThePresidency is the only office established by the Constitution thatcould provide such central direction. The four-year plans aremeans for giving Presidents apparent electoral authorization fortaking over in legislative innovation.

Presidents did not concoct suchprograms in the nineteenth century. They usually were satisfiedto restrict their endeavors to the

more modest activities of administering the laws. Presidents didsometimes emerge as strong leaders, but this leadership was eitherexercised in war and foreign affairs, where the President hasgreat constitutional authority, orin the form of a restraining handupon Congress. Excepting forLincoln, the man who stood outas the most vigorous leader in thenineteenth century was AndrewJackson. He summed up his policyin this way: "The Federal Constitution must be obeyed, staterights preserved, our national debtmust be paid, direct taxes andloans avoided, and the FederalUnion preserved. These are theobjects I have in view, and regardless of all consequences, willcarry them into effect."2 Presidentsdid, of course, sometimes pressfor some innovation and some particular line of legislation in thenineteenth century, but none ofthem advanced any four-yearplans.

Theodore Roosevelt

The twentieth century washardly under way, however, beforea man came to power who wouldgive shape and form to the newmethod. The four-year plan does

2 Quoted in Samuel E. Morison andHenry S. Commager, The Growth ofthe American Republic, I (New York:Oxford University Press, 1942, 3rd ed.),472.


not appear to have come by wayof any advance calculation. Theodore Roosevelt forged its outlinesduring nearly eight years in thePresidency. But Roosevelt did notcome to the Presidency, initially,on his own. Lore has it that "Boss"Tom Platt got him nominated tothe Vice-Presidency in 1900 to gethim out of New York.3 PresidentMcKinley was assassinated in1901, however, and Roosevelt succeeded to the Presidency. Thephrase, "square deal," was used byRoosevelt in the campaign of 1904to describe his actions in the coalstrike of 1902. He wanted bothlabor and capital to get a squaredeal, he said.4 The phrase caughton and has since been used by historians as a vague label for Roosevelt's administration.

The phrase, "square deal," didnot fall into a historical vacuum,nor was it uttered by a nonentity.The stage had been set by thedevelopment of ideas for thephras-e to connote and evoke a particular vision. If the view had beenaccepted that Americans were generally getting a square deal, thephrase could hardly have meantanything more than that in a particular instance the President hadsought to see that justice was

3 George E. Mowry, The Era of Theodore Roosevelt -1900-1912 (New York:Harper, 1958), pp. 108-09.

4 Ibid., p. 139.

done. Once it was done in this case,there would have been no occasionfor the phrase to have any continued vitality. But it was utteredat a time when a great clamorwas arising against conditions asthey were, and the cry was forchanges that would bring aboutsocial justice.

Time for a IISquare Deal"

The Progressive Movement wasunderway. Back of it lay morethan a quarter-century of writingand agitation by social theorists,reformers, utopians, and social reconstructers. These ideas and visions were moving from the periphery of American society, wherethey had been uttered by menand women outside the pale ofrespectability, toward the centerwhere they would be taken up bymore respectable and restrainedspokesmen.

Muckrakers, novelists, socialanalysts, professed socialists, andothers were presenting a most unpleasant picture of America.Things were not as they shouldbe, they said. Great concentrations of wealth threatened theRepublic with rule by a plutocracy.The influence of John D. Rockefeller, Marcus A. Hanna, and J.P. Morgan, among others, resultedin .the use of political power tostrange ends. At any rate, economic "power" was outmatching


and overawing political power, sothe story went. A beef trustgouged consumers with highprices and fed them unclean meat.City governments were corrupt,the cities themselves gorged withimmigrants from a swelling tideliving in slums, and alcohol addiction and prostitution growingapace.

Behind all this criticism of externals lay a call for fundamentalsocial reconstruction. Social gospelers were preaching the comingof the Kingdom, progressive educationists working for the transformation of the school, and assorted intellectuals delineatingthe transmuted shape of thingsto come. Talk of a square deal inthis intellectual setting evoked visions of a crusade to remakeAmerica; the seeds of reform con~

tained in a simple phrase fell uponfertile ground.

A Man of Action

The phrase picked up meaningand gained currency, too, fromthe vitality and zeal of the manwho uttered it. Theodore Roosevelt was a man of action. Beforecoming to the Presidency, he hadengaged in a great variety of activities. By turn, he was statelegislator, member of the CivilService Commission, head of apolice board, Assistant Secretaryof the Navy, governor of New

York, rancher, historian, biographer, Rough Rider, and huntsman. As President, he was soonin the thick of all manner of affairs, domestic and foreign: arbitrating a labor dispute, trustbusting, settling international disputes, intervening in Caribbeancountries, and conserving naturalresources. Roosevelt's conceptionof the role of the Presidency wasa lofty and extensive one. "Hebelieved that, acting in the publicinterest, he could do whateverwas not expressly prohibited bythe Constitution or the laws."5 Hisviews of the duties of the officewere comprehensive ~

The President did not confine himself to political matters. He sawnothing incongruous in using hisgreat prestige to urge the reformof English spelling, or to pillory the"nature fakers" who wrote storieshumanizing animals. He deliveredexhortations on the necessity forwomen in the upper classes to bearmore children and for everyone tolive strenuously according to hiscreed of "Muscular Christianity."6

Along with being a man of action he was also a superb publicist. He had that quality knownas charisma, an attractiveness andcharm which helped him to sur-

5 Dumas Malone and Basil Rauch,Empire for Liberty, II (New York:Appleton-Century-Crofts, 1960), 217.

6 Ibid., p. 218.


round his actions with an aura ofrightness-even righteousness, forhe was a moralist. The place ofhis administration in historyneeded a unique phrase to identifyit. That it was the Square Dealmay have been an accident, butthe times and the man united insuch a way as to make it virtuallynecessary.

. . . and a Reformer

Theodore Roosevelt was a reformer, a meliorist. He was thefirst man to occupy the Presidencywho could be so identified. Somehistorians question how deeply hewas committed to reform, or, atany rate, to social transformation.Perhaps he was only an opportunist, they say, and in this theyare echoing the sentiments ofsome of his contemporaries. Hehas even been called a conservativee7 This latter claim stems, inpart, from the fact that he steereda course between calling for reform and making complimentaryremarks about businessmen.8

Whatever the motives may have

7 See, for example, Daniel Aaron,Men of Good Hope (New York: OxfordUniversity Press, 1951), pp. 246-52.

8 There is also a tendency among"liberal" historians to classify melioristpoliticians generally as conservatives,presumably because they do not pressfor violent revolution. Also, these historians have created, or perpetuated, amyth that if reforms had not been made,a revolution would have occurred.

been behind his straddling of thefence on occasion, they served thepractical political object of making reform respectable by dissociating it from out-and-out radicalism.

At any rate, ~rheodore Roosevelt was a reformer. Of that, thereshould be no doubt. He had beena reformer, of sorts, as governorof New York. He had no soonersucceeded to the Presidency before this vein began to be exposedat that level. Roosevelt pressed toextend the powers of the Interstate Commerce Commission, hadhis attorney general begin a rigorous enforcement of the ShermanAntitrust Act, and in general began to adopt a reformist tone.After his election to the Presidency in 1904, when he could hold theoffice in his own right, he becamemore strident in his reformism.As one historian says:

. . . His message to Congress inDecember, 1904, was significantlywithout most of the equivocations ofthe past. Over half the documentwas given over to proposals for neweconomic and social legislation.9

He called for the Federal government to pass an employer's liability act for its employees andthose of contractors employed bythe government. There were requests for such things as requir-

9 Mowry, Ope cit., p. 197.


ing the use of safety devices onrailroads, regulation of hours oflabor of railroad workers, givingthe Interstate Commerce Commission power to establish rail rates,establishing a Bureau of Corporations to license interstate business, the instituting of numerousreforms in the District of Columbia, and so forth. Some of thesewere made into law, and otherreforms were instigated duringhis second administration.

By 1908, most of the ingredientsof the four-year plan had been exemplified by Roosevelt. It remained now only for them to beused by others and made into aregular way of doing things. In1912, the four-year plan as a campaign device was taken up by twocandidates: Theodore Rooseveltand Woodrow Wilson. They calledtheir plans the New Nationalismand the New Freedom. Significantly, these were alternative plans tothe revolutionary proposals of theSocialist party, led by EugeneDebs. The Socialists had beengaining a following rapidly in recent elections. The four-year planbegan its career of draining awaythe appeal from those who calledthemselves socialists.

Main Features of the Plans

Before recounting the story ofthe four-year plans, however, itwill be useful to describe their

main features. First of all, it isworth noting that they were takenup by the Democrats and have,since the time of Theodore Roosevelt, been exclusively employed bythat party. There was a considerable contingent of reformers inthe Republican party between theCivil War and World War 1. Inthe early twentieth century, therewas a lively meliorist wing of theparty, called the Progressives. ButTheodore Roosevelt drew manyof these away in 1912 when heran on the Bull Moose ticket. Sincethat time, meliorists have neverdominated the Republican party,if they ever did. By contrast, theDemocratic party had stuck fairlyclose to its J efferson-Jackson heritage in the nineteenth century. Itbegan its turn toward meliorismwith the campaign of William J ennings Bryan in 1896. WoodrowWilson and Franklin D. Rooseveltfixed it on this path in the twentieth century. Much of the impulsefor the gradualist movement toward socialism has come from theDemocratic, party, and the particular infusions of energy towardthis end have come from a succession of four-year plans.

Several features of the fouryear plan can be described byshowing its relation to the political party. A political party may bethe lengthened shadow of a man,of Thomas Jefferson or of Abra-


ham Lincoln, for instance. At itsinception, a political party mayeven be the political instrumentof an individual, as the Jeffersonian Republican party was forits founder. But political partiesquickly have become institutionsthemselves in our history. Theyare organizations, having continuing existence (beyond the life ortime of those who founded them),are devices for winning electionsat various levels, have a widespread membership which participates in the choice of candidates,and are labels with which a succession of politicians can identifyand be identified. In an importantsense, political parties are impersonal and nonideological. A greatvariety of individuals find political shelter within their folds. Issues come and go, but parties continue as they shift from this position to that.

Sid for Presidential Power

By contrast, a four-year plan isnot the lengthened shadow of aman; it is the shadow cast by aparticular man who has come tothe Presidency. It is the personalinstrument of a President. Political parties may be said to be democratic, or at least federal, in character. Their widespread membership plays a part in determiningtheir stand on issues. Platformsare drawn by committees. A Sen-

ator or Representative may, so faras his district goes, have as muchto say about what the party standsfor as does the President.

With four-year plans, it is notso. They are centristic and autocratic. They are devices which canbe and have been used to bridgethe gap, politically, of the separation of powers. Through a fouryear plan, a President can identify the whole governmental program with himself. He can makethe other branches of the government more or less adj uncts to hisadministration. To the extent thata President can bring off the coupthat is implicit in the four-yearplan, he can centralize power anduse the whole government as if itwere an extension of himself. Thatconcentrated power which is necessary to governmentally directedsocial transformation is madeavailable by the four-year plan.

Four-year plans appear, also, tohave subsumed much of the rolewhich third parties played in themeliorist movement at its outset.No new major political party hasemerged in America since 1860.It would have been logical for asocialist party, by whatever name,to have come to majority statusin the United States in the twentieth century, in view of the courseof developments, as the Labourparty did in England. The original impetus to socialism came


from third parties in America inthe late nineteenth and early twentieth centuries, from the Greenback-Labor party, Populist party,and Bull Moose (or Progressive)party. But since the 1920's, thirdparties have either been ephemeral or have had little appeal.

Two things happened. Such socialism as appealed to any considerable portion of the electoratewas advanced by one or both ofthe major parties. And the impulse for a new surge toward socialization was embodied in thefour-year plans. Third partieswith a penchant for socialism hadtheir issues taken away fromthem as soon as the issues attainedpopularity and were much more attractively packaged by the regularorganizations and presidential candidates for them.

Appeals to Americanism

The names given to the fouryear plans are interesting andrevealing in themselves. Rhetorically, they evoke American valuesand even American experience.Three of them - Square Deal, NewDeal, and Fair Deal - call up animage of sporting behavior andappear to derive from card-playing terminology. Perhaps the references to games of chance areunintended - though the pragmatic stance is that all human actionis a kind of chance taking, and

the proponents of these programsare often called pragmatists. Butthe appeals to fair play are surelyintentional. Americans are muchaddicted to sports and, in that connection, are committed to the virtue of fair play. (It was theBeards, Charles and Mary, I think,who observed that the one thingAmericans would not tolerate inthe twentieth century was crookedofficials in their athletic contests.)

The New Freedom called up oneof the basic values for Americans,for they have understood that oneof the distinctive features of theAmerican system· has been the extent of freedom it provided. TheNew Frontier evoked memories ofan earlier American experience.The only phrase that appears notto have any American context isthe Great Society. Perhaps theutopian vision is now sufficiently apart of the mental baggage ofAmericans that it is politicallyfeasible to appeal to it directly.

At any rate, those terms whichdo rely on American values fortheir appeal place them in a newframework. The call was for anew freedom, a new deal, and anew frontier, for a square dealand a fair deal. The phrases takeestablished values and use them asthe basis for the building of anew order. The battle cries of socialist rhetoric - class struggle,vanguard of the elite, the rise of


the masses, the dictatorship of theproletariat - are foreign and repulsive to the American ear. Bycontrast, the rhetoric of the fouryear plans is familiar, nonradicalin sound, and brings to mind pleasing associations. The territory into which Fabian methods take usis strange, but the markers alongthe way are familiar.

Programs for Translating Ideasinto Political Action

Finally, the four-year plans aremeans for translating melioristideology into political action. Theyare devices for linking ideas (orvisions) to power. The connectionis made by a single man, the President of the United States. Hispersonal historian has said ofJohn F. Kennedy that "he was intensely committed to a vision ofAmerica and the world, and committed with equal intensity to theuse of reason and power to achievethat vision." He desired "to bringthe world of power and the worldof ideas together in alliance...."10

If so, his outlook and aims wereperfectly suited to the role of being President by the requirementsof the four-year plan.

Another way of saying theabove is that the four-year planshave been the creations of intel-

10 Arthur M. Schlesinger, Jr., A Thousand Days (Boston: Houghton Mifflin,1965), pp. 108-09.

lectuals under the sway of ideologies. This accounts for the increasing role played by intellectuals in twentieth century governmental undertakings. A Presidentmay be both an intellectual and aman of action. Theodore Rooseveltwas, and just as he may be credited with founding the four-yearplan so may he be described as theprototype for the kind of man itideally requires. Theodore Roosevelt was probably more the man ofaction than the intellectual, thoughhe had ideas enough, while Woodrow Wilson was more the intellectual than the man of action. Bothof them, however, combined bothtraits in sufficient degree to translate ideology into action with onlya minimum of help from specialists so far as the formulation ofprograms was concerned. Theirsuccessors in the line of four-yearplanning were not so adequatelyequipped. The tendency fromFranklin D. Roosevelt on has beenfor Presidents to gather aboutthem a corps of intellectuals - abrain trust - to provide the ideasand render them into programs.ll

11 The prototype for the "braintrust" may have been provided by Andrew Jackson who had an assortmentof budding intellectuals in his "KitchenCabinet." There was an important difference, however, for his advisers wereliberals of the nineteenth century variety who did not go in much for government intervention.


Men Behind Presidents

There were premonitions ofthings to come, however, in theplanning of the first Roosevelt andWilson. One writer holds thatBrooks Adams was the f ormulator of the basic ideas which Roosevelt advanced. "Had Roosevelt followed his counsels," he says, "(ashe sometimes did, for Rooseveltinstinctively agreed with Adamson some issues even though heprudently rejected Adam's [sic]suggestions when the times calledfor compromise), he might havebecome an even greater and perhaps more sinister figure."12 Therehas been considerable debateamong historians as to the extentof the influence of Herbert Croly'sPromise of Ameri,can Life uponRoosevelt's New Nationalismidea.13 Be that as it may, Roosevelt was undoubtedly influencedby the intellectual currents of hisday. His programs were his, however, not those of some coterie ofintellectuals.

Wilson was, if anything, morethe intellectual than Roosevelt.Despite, or perhaps because of,this, he appears to have reliedmore extensively upon intellec-

12 Aaron, Ope cit., p. 252.13 For contrasting assessments, see

Eric F. Goldman, Rendezvous with Destiny (New York: Vintage Books, 1956),p. 159, and Charles Forcey, The Crossroads of Liberalism (New York: OxfordUniversity Press, 1961), pp. 127-30.

tuals than did Roosevelt. The manclosest to Wilson was Colonel Edward M. House. He was most influential upon Wilson. One writersays, "Nearly all accounts agreethat Colonel House dominated thedecisions on appointments. Wilsonfrankly didn't want to be bothered."14 Colonel House's credentials as an intellectual may not beparticularly impressive, but theyare sufficient to show that he 'wasunder the sway of a vision thatwas the fruit of ideas.

Before he rose to the eminenceof presidential adviser, he wroteand caused to be published autopian novel, Philip Dru, Administrator. It is about a man whoestablishes a dictatorship inAmerica and brings about sweeping reforms. Among these reformswere a graduated income tax, compulsory incorporation act, flexiblecurrency system, an old age pension and labor insurance, a cooperative marketing system, Federalemployment bureau, and so forth.

As one account of this utopiannovel observes: "This fantasycould be laughed off as the curiousdream of Colonel House were itnot that so many of these reformsstrikingly resemble what the Wilson, and later the New Deal, administrations either accomplished

14 Horace Coon, Triumph of the Eggheads (New York: Random House,1955), p. 87.


or proposed."15 The ideas are notoriginal, but this advocate of themhad the ear of a President. LouisD. Brandeis was another intellectual who had a great deal of influence on Wilson.l6 There wereothers, such as George L. Record,George Creel, and BernardBaruch.

The Brain Trust of F.D.R.

But the practice of assemblinga host of intellectuals around thePresident to provide the ideas andprograms to translate four-yearplans into action was really established by Franklin D. Roosevelt.Harry Hopkins played ColonelHouse to Roosevelt, and FelixFrankfurter was his Brandeis.But helow these in the hierarchyof influence came a horde ofothers: AvereB Harriman, Francis Biddle, George Peek, HenryWallace, Samuel Rosenman, HarryDexter White, Robert E. Sherwood, and so on. Of those whocame, a historian has said that"the common bond which heldthem together . . . was that theywere at home in the world ofideas. They were accustomed toanalysis and dialectic. . . . Theywere . . . generalists, capable ofbringing logic to bear on any so-

15 Ibid., p. 86.16 See ibid., pp. 14-15, 90; Charles A.

Madison, Leaders and Liberals in theTwentieth Century (New York: Frederick Ungar, 1961), pp. 200-01.

cial problem."17 In short, theywere intellectuals with visions ofa transformed America and ideasabout how to bring it about.

Each administration since hashad its complement of intellectualsserving as ghost writers, specialassistants, economic advisers,board members, and memhers ofthe middling rank of divisionheads within established departments. The assembling of intellectuals in Washington reached anew peak during the Kennedy Administration, when the Presidentbade fair to take a goodly portionof the prestigious men from somemajor universities. Among themore famous gathered were Theodore Sorensen, McGeorge Bundy,Arthur Schlesinger, Jr., Walt W.Rostow, David Bell, and WalterHeller.ls Truman, Eisenhower, andJohnson were less at home withuniversity men, but they, too, hador have their intellectuals.

These intellectuals are theAmerican equivalent, in socialistterminology, of the "vanguard ofthe elite." They have moved intothe centers of power by providingthe ideas and programs of meliorism. They bring ideology into thepolitical market place, help to make

17 Arthur M. Schlesinger, Jr., TheComing of the New Deal (Boston:Houghton Mifflin, 1958), p. 18.

18 Lester Tanzer, ed., The KennedyCircle (Washington: Luce, 1961), passim.


it attractive, and thrust politicalaction in the direction implicit intheir assumptions. The fatefulconnection between utopian visions, the new reality, the newcreativity, and meliorist economicson the one hand and political action on the other is made by theintellectuals in the four-yearplans.

This connection needs to be

demonstrated, however, by an examination of the four-year plans.Such an examination will showboth the connection between ideology and action and that there isa direction to these plans, thateach one of them moves the UnitedStates farther and farther alongthe road to socialism. An accountof this development will follownext. ~

The next, and concluding, article of this serieswill pertain to "The Pen and the Sword."

Majority Rule

THERE IS NO MAXIM in my opinion which is more liable to be

misapplied, and which therefore more needs elucidation than the

current one that the interest of the majority is the political

standard of right and wrong. Taking the word "interest" as

synonymous with "ultimate happiness," in which sense it is

qualified with every necessary moral ingredient, the proposition

is no doubt true. But taking it in the popular sense, as referring

to immediate augmentation of property and wealth nothing can

be more false. In the latter sense it would be the interest of the

majority in every community to despoil & enslave the minority

of individuals; and in a federal community to make a similar

sacrifice of the minority of the component States. In fact it is

only re-establishing under another name and a more specious

form, force as the measure of right. . ..

JAMES MADISON, from a letter of October 5, 1786, to James Monroe.

Canute~~~ countlnq

OF nosesWILLARD M. Fox

1966 CANUTE AND THE COUNTING OF NOSES 45

As FREQUENTLY TOLD, the story ofhow King Canute tried to sweepback the rising tide and got soakedfor his pains makes him appearat best not quite bright and atworst an utter fool. The man whogave Denmark its first nationalcoinage and first written legalcode and England a code based onestablished Saxon law was astrong and able ruler of tworealms; and he was endowed witha keen and clear understanding ofthe limitations of human power,even that of absolute monarchs.His attempted sweeping back ofthe sea was his dramatic demonstration that government cannotdo everything its subjects maywant done.

In the advanced stages of thetransformation of the UnitedStates from a representative federal republic of limited power toa centralized democracy in whichindividuals and the several statescount for little, Canute's wisdomis largely forgotten. Citizens andofficeholders alike behave asthough the counting of noses werethe highest wisdom, and the Willof the Majority in no way distinguishable from the Voice of God.The proposition is absurd. Thereis no possible way for those electedto know the real views and motivesof the majority that elected them.

Mr. Fox is a market research executive nowresiding in Costa Rica.

There is the mail from constituents, of course; but only thosepersons who are more or less articulate and who hold pronouncedviews on a subject under activepolitical consideration will takethe time and trouble to write elected or appointed officials. There isno persuasive reason for believingthat the division of letters fromthese people accurately reflects thedivision of opinion among thesilent population.

Polls Untrustworthy

Public opinion polls also are untrustworthy guides, not so muchbecause of the design and drawingof samples, but primarily becauseof weaknesses in the questionnaireand secondarily in the behavior ofinterviewers and respondents.

When respondents are askedabout a question of policy, the survey method becomes useless. Putyourself in the position of a respondent who knows nothing ofeconomics, confronted by an interviewer who puts to him such a hypothetical question as this:

The United States balance of pay1nents is "unfavorable" and there isa net export of gold. Among theremedies that have been or may besuggested are the following: (1)raise the rediscount rate; (2) imposean Uinterest equalization" tax onpurchasers of foreign securities; (3)reduce the amount of duty-free mer-


chandise returning tourists maybring into the United States (or prohibit duty-free imports entirely); (4)prohibit, restrict, or .discourage di'rect foreign investment by UnitedStates based firms and their foreignsubsidiaries,. (5) impose import restrictions (quotas, tariffs, etc.) onforeign goods that can be producedwithin the United States and itspossessions,. (6) other actions youconsider des'irable?"

Just how would you answer?Just how much confidence wouldyou place in the answers of 3,000or any other reasonable number ofrespondents who happened to fallinto either a probability or accidental survey sample?

While I have my own pet answers, the fact is that what I happen to think is not based on expertknowledge of the problem, and somy views are- worthless. Multiplying my incompetent answer by3,000 or any other number of likeanswers from respondents who asa group are as ignorant as I ammay provide an impressive statistical report; but it is certainly notgoing to provide a sound basis fora policy.

What to Do, and How

Asking a sample of the electoratewhat it wants done is useless. Thefact is that a count of noses cannot be used as a means of choosingappropriate courses of public ac-

tion. I suspect that such a count ofnoses would establish that peoplefavor wealth, comfort, health, security, and a color television set inevery room and they oppose death,taxes, poverty, ill health, and theneighbor's radio turned on to fullvolume.

Involuntary poverty is neversought consciously, since it involves a contradiction in terms.Those who seek poverty voluntarily need not concern us. If theyprofess a faith that does not include vows of poverty, they can always choose an ill-paid career ortake up beach-combing in thetropics. Voluntary poverty seekersget their compensating psychic income from their poverty and thatmakes up for other choices foregone.

Most people want to avoid poverty for themselves and do notwant other people to suffer fromhunger, disease, and other effectsof poverty. So, they would agreethat poverty should be abolished.The question that divides them ishow to do it. This is a question notof ends but of means, assumingthat the end is attainable. It is thebusiness of economics to prescribethe ways that people can use toachieve that end. Politics can contribute nothing useful as a meansto abolish poverty, except to prevent the private use of force andfraud.

1966 CANUTE AND THE COUNTING OF NOSES 47

Endless Promises

Canute was astute enough toknow this. Yet, modern politicalleaders throughout most of theworld profess to believe that bypolitically directed measures,which they advocate and standready to implement, poverty canbe eliminated. Whether they believe this or merely trade on theknowledge that most people wantpoverty abolished, they know thatthe way to get the highest countof noses for themselves is to promise such miracles, if elected.

They are persuading people thatwhatever is wished for can be had.In this, they have a lot going forthem. People born around the turnof the century have witnessed thebirth of the airplane, television,plastics, antibiotics, frozen foods,nuclear fission, orbiting satellites,the practical development of theautomobile and radio, and countless other discoveries, inventions,and innovations. Some of thesethings were inspired and paid forby government and taxation. Private industry might have developed the jet plane and it mightconceivably have put satellites intoorbit, but probably not as soon asthey were actually developed. Itmight eventually have developednuclear power for peaceful purposes, but not the bomb.

Since government can claim theatomic bomb as its own creation

and plausibly assert that it is theagent responsible for the development of jet planes, radar and otherdevices that aid air and sea navigation, and orbiting satellites, politicians can point to these thingsas tangible evidence that government (in their hands) can anddoes find solutions to complextechnical problems.

Lack of Performance

They can also point out the undeniable fact that the Americansystem of profit-and-loss can anddoes produce and market an enormous range of products and services. They go on to say quite correctly that the technology existsto permit turning out not onlymore of what is now being produced but also other new productsthat have been developed but notyet marketed. Moreover, they assert correctly that laboratories areconstantly developing new products and refinements and improvements on existing products.

Hence, they conclude in a magnificent non sequitur, it is obviousthat it is only the greed of stockholders for dividends and of entrepreneurs for profits that limitswhat is produced to what the market will absorb. Just let us countyour noses in our favor, say they,and we shall produce abundance sothat you may never know wantor discomfort, from the delivery


room of the government hospitalto the packing of your ashes intoan urn in the crematorium.

They completely ignore the factof scarcity. In their eyes, or intheir pretenses, all goods are asabundant and as readily availableas the air. The only thing neededto supply them in unlimited quantities to everybody is money andmanagement, both of which they'llgladly provide if given control ofthe apparatus of government!Where is the money to come from?That's easy. Taxes will providepart. The rest, the government cancreate by such devices as loadingmore and more government bondsinto the commercial banks. If thatprocess creates some inflation, whyworry? Inflation breeds optimismwhich breeds spending, both byconsumers and by industry, whichbreeds prosperity. Should anyslackening occur, just a little moreof the "hair of the dog" will curematters. Thus, the road to neverending prosperity is open and willremain so just as long as the countof noses comes out right.

Of course, this is nonsense.Goods are not free as air. Theyare scarce and they must be economized and used as wisely asentrepreneurial ingenuity permitsto take care of people's mostimmediate needs and wants. Government has no magic costless way

to transform "thin air" into silverwhich is increasingly in short supply. A bank deposit to the creditof the United States Treasury,created by a book entry in returnfor some Treasury bonds or notes,is not "capital." True, it can bespent with some maker of machinetools who will eventually delivermilling machines or automaticlathes or whatever, which are capital items. This, however, merelytakes them away from some manufacturer who would have usedthem, had he been able to getthem, to make something that consumers would have freely chosento buy at the going market price.

Living as he did in the eleventhcentury when freebooting was away of life, King Canute knewthat government is not omnipotent. It has the power to rob Peterand give to Paul from time to timeand as often and as long as Peterwill consent to being robbed. However, it cannot create economicgoods out of thin air, no matterhow urgently people want it to doso.

King Canute knew that royalpower has its limits. Those whobelieve that a government haspower without limit and the ability to create something from nothing, as long as a count of nosesfavors it, are doomed to a saddiscovery. ~

WILLIAMS. SMEETH

My PRESET NOTIONS of how itwould be did not even last longenough to accompany me into theschool building. When I arrived atthe Academy of Basic Education,on a sun-swept hilltop west of Milwaukee, I was greeted outdoors byHeadmaster and founder WilliamB. Smeeth. There was nobodynearby; judging from the mug ofcoffee in his hand, I supposed Ihad found him taking a break.

Not at all. This was, he explained after we had exchangedamenities, his composition class,Upper Form. Smeeth pointed to a

Mr. Wheeler is publisher of RaIly, a newmonthly journal of libertarian and conservativeopinion geared for the young.

This article is reprinted by permission fromthe July 1966 issue of Rally.

Visitwith a

Headmaster

TIMOTHY J. WHEELER

thick grove that shades the reararea of the school: "One of mystudents." I could see a young manwedged comfortably in the forkof a tree, apparently staring atnothing in particular, doing nothing at all. One in a class of nine.The others were nowhere in sight.

Such as I knew of the Academyuntil that moment was public scut..tlebutt, and it was all wrong. Ac..cording to the legend, the Academy is a showpiece of the nine..teenth century, featuring a reversion to instruction by rote. If thismisconception is widespread, thenthere is need of some imagepolishing: a boy, more or less unsupervised, preparing his composition in a treefork, is hardly the

49


object of mechanical teaching procedures ; nor was he, I was tolearn, producing the sort of undisciplined free expression that isurged by progressive doctrine. Onone point, all observers agree: theAcademy gets startlingly good results. Its students graduate one tothree years ahead of their publicschool counterparts. Learning whywas the reason for my visit.

Graduates Unprepared to

Cope with Massed Propaganda

In 1948, the late Dorothy Sayersdelivered a stunning address atOxford, in which she expressedconcern that -

- we let our young men and womengo out unarmed in a day whenarmor was never so necessary. Byteaching them all to read, we haveleft them at the mercy of the printedword. By the invention of the filmand the radio, we have made certain that no aversion to reading shallsecure them from the incessant battery of words, words, words. Theydo not know what the words mean;they do not know how to ward themoff or blunt their edge or fling themback; they are a prey to words intheir emotions instead of being themasters of them in their intellects.We who were scandalized in 1940when men were sent to fight armored tanks with rifles, are not scandalized when young men and womenare sent into the world to fightmassed propaganda with a smatter-

ing of "subjects"; and when wholeclasses and whole nations becomehypnotized by the arts of the spellbinder, we have the impudence to beastonished. We dole out lip-service tothe importance of education - lipservice and, just occasionally, a littlegrant of money; we postpone theschool leaving-age, and plan to buildbigger and better schools; theteachers slave conscientiously in andout of school-hours; and yet, as I be-lieve, all this devoted effort islargely frustrated, because we havelost the tools of learning, and intheir absence can only make abotched and piecemeal job of it.

Her answer - which seems tome, if anything, more relevant toeducation in this country than inEngland - was to teach childrenhow to learn before giving themsubject material. She proposed restoration of the medieval Trivium,consisting of Grammar, Logic, andRhetoric: the lost tools of learn-

ing. To what avail, she asked, dowe teach an array of subjects ifthe student is not also instructedhow to learn? How can he learnefficiehtly in school; how can helearn at all after graduation?

These are cogent arguments, butthey are only arguments, perhapsuntranslatable into practice. MissSayers thought so: "It is in thehighest degree improbable thatthe reforms I propose will ever becarried into effect."

1966 VISIT WITH A HEADMASTER 51

Learning How to Learn

She did not reckon on WilliamSmeeth. The reforms are not onlyfunctioning at the Academy; theyare proving their merit. From thefirst day there, Smeeth puts hisstudents to learning how to learn.This is an abrupt departure inmethod from what one would findin other schools, and it must account for a good share of hissuccess.

Even more at odds with publiceducation, but more difficult to pindown on paper, is an attitude onefinds at the Academy, that mightbest be described as a carefullynourished emphasis on the individual. This attitude soaks intothe most humdrum facets of thedaily routine; it is a workingpremise.

These elements seem to combineinto a flawless pattern for success,yet I soon began to feel there wasa missing intangible, something toglue them together. I found whatI was looking for in the personality of the headmaster. WilliamSmeeth is more than a teacher,more than an administrator: he isa man with a dream. It is a partof him no one will ever reallyknow, although he does not alwaysconceal it.

After I had been put at ease inthe school and introduced tosever al of the teachers, I wasturned loose to amble through the

classrooms as I pleased. "Thepupils are used to it," I was assured. "You won't disturb them."

The building is not exceptional.It resembles a large ranch house,and may indeed be a former dwelling converted to school use by theaddition of a classroom wing. Ididn't inquire. Classrooms seem tobe almost randomly placed, but areconventionally and comfortablyequipped.

One striking difference is thebooks - they are everywhere, inhuge cases, sometimes in disorderly piles; always in great number, even in the Lower Forms.

The Academy does not use regular textbooks to any extent, butrelies on a variety of reading andreference books for its purposes.Among the encyclopedias, and inthe children's lockers, I was delighted to see such as Pinocchio,The Hobbit, and the Chronicles 01N arnia. Older students, I learned,are awarded bonuses for outsidereading.

The present student body of 129is grouped into classes by abilityrather than age. Since abilitiesvary in differing areas of study,there is something of a shuffleafter each period. The studentshave no difficulty adjusting to this.It is theoretically possible for theyoungest student in the school tobe in the most advanced class, ifhis ability is up to it. In practice,


it never works out that way. Ability groupings can be overruledwhen age differences are too pronounced, but the need seldomarises.

Basic Subjects, Rigorous Grading,Composition, and Recitation

The curriculum is unusual relative to public education, but notastonishing. For instance, theLower Form is taught Phonetics,Spelling, Vocabulary, Penmanship,Reading,Grammar, Composition,Memorization, Arithmetic, Geography, and Music (a very fine application of the first portion of theTrivium, Grammar). Even LowerForm students are rigorouslygraded on all their work. HonorRolls are prominently displayed,including one for students whohave improved their work markedly. Later on, the student will receive English, Mathematics, Latin,French, Geography, and History.

Because Smeeth believes it invaluable for structuring the mind,composition is stressed from thebeginning. Composition and recitation: students read what theyhave written before the class.

I saw no shyness about reciting.On the contrary, the studentsclamored for their chance. As Iwatched this time and again, I wasstruck by the contrast to a publicschool class, where a few of thechildren raise their hands every

time while the rest remain doggedly silent. At the Academy allwere eager to recite, to share withtheir classmates, I thought, whatthey were proud to have learned.It was striking. What sort of instruction could impart a love ofknowledge in children so young?I wondered.

It occurred to me that we mightbe dealing with exceptional children. Plainly they were not "disadvantaged," as the educators sayof the products of poor or brokenhomes. The tuition ruled that out.I asked Smeeth about it: were hisstudents selected especially fortheir brains? No. In fact, manyare remedial cases from publicschools. They are perfectly normalchildren. "However," he added,"we have to get them early, beforetheir educational experience elsewhere dulls their appetite forlearning."

I could concede the point without reservation on seeing a tenyear-old, apparently a banana-aday addict, carrying a notebookpasted solid with Chiquita-brandstickers: utterly normal. I watchedthe same young man give a mostable presentation on the culture ofIndia, which he had researched onhis own at length. After his recitation, he was questioned closelyby his classmates for details. Itwas an impressive performance allthe way around.


Entrance Qualifications

When could a child start? Iwanted to know. Smeeth referredme to a qualification test. "The applicant will be expected to (1) recite the alphabet and recognize theseparate printed letters; (2) writeor print his name; (3) count andrecognize the printed numbers upto at least 20; (4) state his fulladdress (street number and name,city, state, and country); (5) recite at least two nursery rhymes;(6) divide small numbers of sticksor blocks into equal piles; and (7)listen to a story and answer questions." Fair enough. There is anexplanatory afternote, to parents,worth mention: "Your child willbegin to show interest in readingor numbers some time betweenage 5 and 6. When this miraculouschange takes place in the youngtot, he/she is usually ready to begin formal academics: reading,writing, and soon arithmetic. Therequirements for entrance into theAcademy simply recognize thisfact in the youngster's growthpattern." "Miraculous change" - apretty sentiment, and an indicatorof the Academy's regard for theindividuaI.

It is this regard, above all, thatmakes the school distinct; yet it isextremely difficult to articulate,much less explain in terms of program. In our several long talks,even Smeeth, who makes it work,

struggled on occasion in translating his view of the individual forme.

Personal Attention

On the other hand, there is apart of its programmatic application that is readily explainedteachers. Smeeth handpicks them,and there is no want of applicants.Selection is a matter of judgingcharacter. In the four years of theAcademy's existence, Smeeth hashad plenty of experience at it, butstill misses once in a while.

There is no advantage, he explains, for the applicant to presenthimself as savvy in the rightschool of economics or politics.Neither is it a demerit. The decisive point is that the applicantmust share Smeeth's own intenseregard for the individual. Giventhat attitude, the teacher will havelittle difficulty adjusting to theAcademy's ways, and need learnlittle about its form of instruction.It is thereafter simply a matter ofhighly personal attention to everystudent.

One way the teaching applicantcan disqualify himself is to askhow far he is supposed to take hisstudents during the term - Smeethwill have explained the curriculumas a whole. To one who sharesSmeeth's outlook, the answer isself-evident: "as far as the individual students will go." A teacher


accustomed to giving his chargesmeasured doses of subject material will not fit in.

Helping the Student"Plug Himself In"

Smeeth referred to a concept histeachers had developed, to elaborate. "They have a catch-phrase,getting someone to 'plug himselfin,' coming from the idea that theindividual's personality is something like a switchboard. The personality is complex, like the wiringin the cabinet, but you can seepotentials, the plugs on the board.The teacher looks for ways to helpthe student realize his built-inpotential. To make all the lightsgo on. To plug himself in."

"There is a similar concept theyfind useful," Smeeth continued,"'probing the periphery.' Whatthey mean is the periphery bounding the student's capabilities,which they probe from everyangle, trying to get him tobroaden out, better himself, expand his periphery."

The similes seem laborious, butone gets the idea, and it is not aneasy idea to put across. For theteachers, of course, these are convenient shorthand for the exchange of ideas on how to evokethe best from this or that student.

The right stress, "plugging himself in," makes it clearer to theoutsider what Smeeth is driving

at. The critical recognition by theAcademy is that development isfrom within. The teacher is present as a coach, or (possibly) agoad; never as one to machine-guninformation into the undifferentiated class-group. If such a distinction is permissible, I wouldsay the Academy concentrates onlearning instead of teaching. "Theresponsibility to learn lies entirelywith the student. Our role is simply to help the individual becomeall he can be," Smeeth says.

"You know," he adds, "it is ajoy to be present as the child unfolds into the adult."

The remark was a relativelyrare interjection of self into thediscussion. For all that, the visitoris almost immediately aware ofSmeeth's intense personal involvement with his ideas, and his satisfaction at putting them to workevery day. In a word, he is dedicated. It accents his comments; itshows in his face.

"By any chance" - by then Iwas sure I knew the answer to myquestion - "are you acquaintedwith Dorothy Sayers' essay, 'TheLost Tools of Learning'?" But tomy surprise, he replied in thenegative. Then, "Yes!" - "I didn'tcatch the name right for a moment." He shuffled through a stackof papers and produced a battered,dog-eared copy of it. Constant usehad worn it to a frazzle.


How It All Began

The school-day was drawing toa close as we talked, and there wastime for few more questions. Howdid he come to found the Academy? It is a long story and notparticularly pertinent here, exceptas it exemplifies any man whogives up an established career tostart from scratch in a more idealistic field. Smeeth had been ahighly successful businessman (heis proud that he runs the Academyin a business-like way), active inlocal politics, a member of themartini circuit, and all the etceteras. The day came when he'dhad his fill of it, and got out. Hespent the next months seeking outsuperior ideas about education,although with no conscious idea ofestablishing a school - that developed naturally as a product of circumstances, and of his researchesattracting the interest of the rightpeople. I got the impression that

not until he was engrossed in theAcademy did he fully understandhow right it was for him.

One incidential point. Could hetell me what his morning composition class had been assigned? "Itold them," Smeeth replied, "towander through the school'swoods, select a secluded spot, andset up shop. 'Tune in your antenna; listen; focus on the sounds,wherever they lead you. Observe.Feel. Seek out the secret.' Theywere to describe what they heard,saw, felt, and smelled. And thenthey were to be aware of whatthoughts came to them from thestirnuli of their senses. Their results made me ashamed of my owncollege efforts."

It would be hard to get any farther than this from the publicmythology that surrounds theAcademy. I decided that on mynext visit I would like to readwhat they had composed. ~

We Cannot Escape Ourselves

RESOURCES of the spirit are like savings: They must be accumulated before they are needed. When they are needed, there is nosubstitute for them. Sooner or later, the individual faces theworld alone, and that moment may overwhelm him if he has noresources within himself.

Distraction helps but little and betrays us when we least expectit. We can escape our physical environment and our neighbors,but we cannot escape ourselves. Everyone with any maturity ofexperience and self-knowledge knows that the loneliest momentsare sometimes experienced in the midst of the greatest crowds andthe most elaborate entertainments.

MARTEN TEN HOOR, Education for Privacy

the First

Lt'berty

Library

MURRAY N. ROTHBARD

56

THE LONE individual is seldomgiven credit as a shaper and moverof great historical events; and thisis particularly true when that individual is no famous statesmanor military hero, nor leader of amass movement, but simply alittle-known person pursuing hisown idea in his own way. Yet sucha person, scarcely known in hisday and totally forgotten by historians until the last few years,played an important role in one ofthe most significant events in modern history: the American Revolution. In all the welter of writingon the economic, social, political,and military factors in the Revolution, the role of this one obscureman, who directed no great eventsnor even wrote an influential book,had been completely forgotten;and yet now we know the great influence of this man and his simpleidea in forming an event that hasshaped all of our lives.

Thomas Hollis of Lincoln's Inn(1720-1774) was an independentlywealthy Englishman of the eighteenth century, who came from along line of leading merchants andDissenters (non-Anglican Protestants). From early in life, Hollisdeveloped two passions that wereto guide and consume his life:books and individual liberty. The

Dr. Rothbard is a professor of economics atthe Polytechnic Institute of Brooklyn. Amonghis works are the comprehensive two-volumetreatise, Man, Economy, and State (1962)and America's Great Depression (1963).

1966 THE FIRST LIBERTY LIBRARY 57

devotion to liberty was not surprising, for the Hollis family hadlong been steeped in the libertarian "Commonwealthman" or "RealWhig" tradition, a tradition derived from the English republicanism of the seventeenth century.What was unique about ThomasHollis was his fusion of an intense devotion to books and toliberty, a fusion which led to hisparticular idea, to the cherished"Plan" to which he would dedicatehis life. This was a plan to disseminate the writings of liberty(his affectionately named "libertybooks") as widely as possible tokindle the spirit and the knowledge of liberty throughout theworld.

His Own Kind 01 Public Service

Offered a chance, in his midthirties, to enter Parliament, Hollis refused to join what he considered the inevitable corruptionof the political life; instead he decided to devote himself to his Planto distribute libertarian books.Hollis thus came to spend the bulkof his life ·coIIecting and disseminating books and pamphlets andmementoes of liberty where he be~

lieved they would do the mostgood; when books could not beobtained, he financed the republishing of them himself. Everyphase of their publication anddistribution was shepherded

through by Hollis as a labor oflove. The typography, the condition of the prints, the luxuriousbinding and stamping, all were enhanced by his efforts. When sending a book as a gift to a library,person, or institution, which heusually did anonymously, Hollistook the trouble to inscribe thetitle page with mottoes and quotations appropriate to the book itself. Even "liberty coins," medals,and prints were collected by Hollisand sent to where they might bestbe used.

At first, Thomas Hollis sent thebenefits of his largesse far andwide, throughout Europe and Asiaas well as England and Scotland.But after the Stamp Act troublesin 1765, Hollis concentrated almostall his efforts on the Americancolonies, in which he and his family had always been interested.The family had often contributedto Harvard College, and now a fireat Harvard, coinciding with theeruption of the Stamp Act turmoilbetween America and England,gave Hollis the opportunity tos€nd a host of libertarian booksand· pamphlets to restock the Harvard library, to which he sent noless than 1,300 books! For Holliswas particularly aware of the importance of diffusing the principlesof liberty among youth, and especially among university students.Harvard was particularly recep-


tive soil, for it was at the centerof the growing revolutionaryspirit in the American colonies, aspirit that could only be fueled bythe writings of the English revolutionaries of the previous century and their spiritual heirs:men such as the martyred Algernon Sidney, John Locke, JohnMilton, John Toland, HenryNeville, John Trenchard, and Marcha.mont Nedham.

Hollis supplemented these a.ctivities by sparing no effort on behalf of the American colonists, including writing letters, public andprivate, wherever he could and reprinting and distributing writingsfavorable to the Americans. Theseworks included tracts by Americanand English authors, as well asletters by Hollis' friends writtento the London press, usually afterbeing prodded into writing themby the indefatigable Hollis.

Samuel Johnson Pays Tribute

While far from famous in hisown day, Thomas Hollis and hisPlan were well known in Englishintellectual circles, where thatcrusty old Tory, Dr. Samuel J ohnson, angrily pinned upon Hollisthe responsibility for the American Revolution. Ironically, J ohnson had at first brusquely dismissed the unprepossessing Hollisas a harmless "dull poor creature."Professor Caroline Robbins, who

has done yeoman work in rescuingHollis from total obscurity, eloquently concludes that Dr. Johnson's final assessment was not sovery wrong:

When his gifts to Americans ofhis "liberty books" and his propaganda for them are considered, Dr.Johnson's attribution to Hollis ofsome share at least in the AmericanRevolution seems hardly exaggerated....

The famous plan of Thomas Hollisof Lincoln's Inn was itself a microcosm of the activities of all his liberal contemporaries. Those books,pictures, medals, and manuscripts hebegan to collect as a young man inthe reign of George II representedto him and to his friends the greattradition of English liberty. Hewanted to spread knowledge of thissacred canon around the world. Ashe saw in the policies of George IIIand his ministers a threat ·to all hemost valued in his dear, native land,he concentrated his efforts to sendoverseas American friends as muchof the heritage as could be confinedin print and portrait. The NewWorld would provide an asylum forthe freedom his ancestors hadfought for in the old.

Hollis was right. In America theacademic ideas of the Whigs of theBritish Isles were fruitful and foundpractical expression. Americans opposing English policies made claimswhich could be contradicted frompast experience and practice, but inusing the natural rights doctrines

1966 THE FIRST LIBERTY LIBRARY 59

they were appealing to tradition stilllively among their English sympathizers....1

Influence in America

Thomas Hollis' most direct influence in America fell upon itsmost eminent libertarian minister,the Congregationalist divine fromBoston, the Rev. Jonathan Mayhew. Having discovered Mayhewas a fervent champion of religiousfreedom and disseminated Mayhew's work in England, Hollis began an ardent lifelong friendshipby correspondence with Mayhewwhich rapidly expanded the horizons of the New England ministerfrom religious to political liberty.Mayhew's biographer testifies tothe enormous influence wielded byHollis' correspondence and by hisperiodic shipments of boxes filledwith libertarian books, manu-

1 Caroline Robbins, The EighteenthCentury Commonwealthman (Cambridge,Mass.: Harvard University Press, 1959),pp. 268, 384-85. Miss Robbins first resurrected the role of Hollis in her "TheStrenuous Whig, Thomas Hollis of Lincoln's Inn," The William and Mary Quarterly (July, 1950), pp. 406-53, and in her"Library of Liberty-Assembled for Harvard College by Thomas Hollis of Lincoln's Inn," Harvard Library Bulletin(Winter and Spring, 1951), pp. 5-23, 181

96.

scripts, pamphlets, and assortedmemorabilia.2

Thomas Hollis was not destinedto see the fruit of his beloved Planin the American Revolution. Butthough this lone man of learningwas quickly forgotten, recent historians, in the wake of the researches of Caroline Robbins, havebegun to recognize the tremendousinfluence upon the American Revolution, not only of Hollis himself,but of the entire English libertarian tradition which Hollis didso much to revive and disseminate.The recent works of Charles W.Akers, David L. Jacobson, andparticularly Bernard Bailyn havedemonstrated how much the birthof America owed to the Englishlibertarian tradition carried onand transmitted hy a few stalwartCommonwealthmen of the eighteenth century.3 ~

2 Charles W. Akers, Called Unto Liberty: A Life of Jonathan Mayhew, 17201766 (Cambridge, Mass.: Harvard University Press, 1964), pp. 139-48 and passim.

3 See Bernard Bailyn, "General Introduction," Pamphlets of the American Revolution, Vol. I (Cambridge, Mass.: Belknap Press of the Harvard UniversityPress, 1965); David L. Jacobson, ed., TheEnglish Libertarian Heritage (Indianapolis: Bobbs-Merrill, 1966).

A REVIEWER'S NOTEBOOK

FOR Wtud

JOHN CHAMBERLAIN

OF SOMETHING BETTER

ROBERT LEKACHMAN'S The Age ofKeynes (Random House, $6) isaptly titled. As Professor MiltonFriedman puts it, "We are allKeynesians now." At least we allhave had to make adaptation tothe realities of Keynesian politicalmanipulation. But, since JohnMaynard Keynes said so manythings at so many different timesin his life (he ended by expressinghis worries about the future ofindividualism to Professor Hayek), professions of loyalty to theMaster don't really get us veryfar. Marx said in his old age thathe was not a Marxist, and Keynes,if he had lived, might have followed suit.

Keynesianism, as Professor Lekachman demonstrates, hegan asa special response to the economiccondition of Britain in the nineteen twenties and thirties. Thosewere the days of stagnation andthe dole. As Keynes said, WinstonChurchill, who held the uncongenial post of Chancellor of theExchequer in the mid-twenties,had committed himself "to force

60

down money wages and all moneyvalues, without any idea of how itwas to be done." The attempt toreturn to the gold standard at adollar valuation of the poundwhich made British costs andprices too high for competition inworld markets was highly unrealistic. For better or worse, thestrength of union organization inthe twentieth century is such thatno democratic government daresmake the attempt to restore profitability by forcing money wagesdown. Thus, an inflationary biasis built into the system of twentieth century capitalism. Realistthat he was, Keynes recognizedthe power of the labor unions. Hisproposals for "government investment" were pitched to building up"aggregate demand" to the pointwhere capitalists could makemoney and still pay union wagesto a lot more people. For want ofsomething better, he offered a special formula for getting off asticky wicket.

It is easy to understand howKeynesianism got its hold on the

1966 FOR WANT OF SOMETHING BETTER 61

"VVor1J. {n. {he n.{n.~{~~n thirti~g.

The trouble is that it created anew breed of economists, of whomProfessor Lekachman is at leasttentatively one, that sees the wholefuture history of the human raceas a continuation of the specialsituation that existed between thetwo world wars. This breed continues to think of government"investment" of one sort or another as the only sure guarantee ofenough "aggregate demand" tokeep the enterprise system goingwithout falling prey to the socialists.

The "massive spending" theoryseems to have been justified bywhat happened in World War II,when government purchases ofwar material put all our factoriesto work and wiped out the unemployment which had defied themost earnest cogitations of Franklin Roosevelt's brain trusters. Butit did this by breaking the dollarin two. At the same time it destroyed the currencies and theeconomic plant of two big continents. When the war was over,a new "special situation" existed.As Will Clayton said, the "worldwas naked." It had to do businesswith and in U.S. fifty-cent dollars.And reconstruction had to becarried forward. Psychologically,the age of stagnation had cometo an end.

What picked things up to create

such phenomena as the "Germanmiracle," the Japanese revival, andthe long U.S. booms? If the playon words .may be pardoned, wedon't find the key in Keynes, whowas hipped on the monetary aspects of economics. Schumpeter,who kept his eye on technologicalchange, is a better guide to postWorld War II history.

Pushers vs. Pullers

Economists seem to fall intotwo loose categories. There arethe "pull" theoreticians who thinkthat "aggregate demand" is afunction of the money and creditsupply. And there are the "push"theoreticians, beginning with theSay of Say's Law of Markets,who think that the creation ofgoods and services makes for anexchange situation that automatically builds up "aggregate demand." Whether one is a "pull"theoretician or a "push" advocatemay very well be a matter of glandular endowment. The "pull" philosophy proceeds from a pessimistic view of the possibilities inherent in human ingenuity andhuman energy. The "push" viewis inseparable from an optimistictrust in what inventive men arecapable of. doing.

During· the thirties, I spent thefirst half of the decade readingbooks about the plight of the world.Though I am congenitally an opti-

62 THE F~EEMAN October

mist, I forced myself into thenegative mold that was then allthe rage in the intellectual circlesthat fed the New Deal. Duringthe second half of the decade Iworked for Fortune Magazine, doing corporation stories. The latterexperience was worth far morethan the earlier dalliance amongthe pessimists.

For what was happening in thethirties at the laboratory andfactory level was proof to a neophyte's wondering eyes that thetides of economics move in responseto the tinkerer, the laboratoryman, the inventor, the ingeniousrearranger, even more than theymove in response to the fiscal andmonetary priests. Economistsshould spend more time visitingfactories! In the decade of thethirties the seeds were plantedthat led, after 1945, to the dazzling efflorescence of the synthetics market. The Du Pont company owed far more to professorsof chemistry than to professorsof economics.

The Keynesians, trying to raiseaggregate farm income by acreagerestrictions, thought they had theagricultural situation well in hand.But the new fertilizers and insecticides and genetic discoveries,coming out of the laboratories ofthe thirties, made a mock of restrictionism, and the modern farmrevolution, which forced many an

inefficient producer off the land,happened anyway. The jet planecame with the war, and is onlynow coming into its own commercially, to the point where ityields higher wages to machinistswho have succeeded in floutingKeynesian wage-price guideposts.The TV market, held back by governmental busybodies in the thirties, finally got off dead center.And the whole world of electronics, pushed along by the war-bornneed for such things as radar,boomed along with TV.

So, is it Keynesian wisdom thathas kept us going since 1945, oris it the older wisdom that putsits trust in the constant emergenceof so-called "ladder industries"?The "pull" theoretician will takeProfessor Lekachman's word forit that Keynesian governmentservants have kept us prosperous.The "push" advocate will look backto older economists such as theforgotten Garet Garrett, or to Professor Schumpeter, or to the Austrians who think that if the moneytinkerers desist, the inventors willhave a better chance of gettingtheir innovations to the buyingpublic.

A Way with Words

Having posed my glandular biasagainst that of Professor Lekachman, it remains to be said thatThe Age of Keynes is a delight-

1966 FOR WANT OF SOMETHING BETTER 63

fully written book. Keynes himself was a literary man of highability, and his way with wordshas rubbed off on many of his modern disciples. Indeed, the influenceof the neo-Keynesians may be duemore to their gift for phrasesthan their economic logic.

Professor Lekachman's historyis mainly correct as to the facts heuses to support his theory. Butthere are some' telling omissions.It is at least slightly unhistoricalto give Professor Alvin Hansenthe credit - or the obloquy - forevolving the theory of permanent

American secular stagnation; Rexford Tugwell came before him,and, what is most important, itwas Tugwell who sold the idea ofthe overbuilt economy to PresidentRoosevelt. Again, it is a littlestrange to find Keynesians in general, and Professor Walter Hellerin particular, reaping all the highpraise for the 1965 income taxcut. Conservatives have beenshouting for 10, these many yearsthat high taxes are a drag on productivity. When Keynesians return to common sense, it should betreated as a conversion, not a dazzling discovery. ~

Binders with Issues insertedfor Calendar Years 1963 and 1964:

HANDSOME BLUE LEATHERLEX

FREEMAN BINDERS

Either year

Both

$ 5.00

10.00

Binder only, $2.25 each

Have You Seen RALLY Yet?You should. In fact, weare so sure you will likeRALLY, we will send youa free copy ...

. . • So you can see' for yourself themost exciting journal in a decade.RALLY is a new monthly created by theyoung conservatives and libertarians ofthe "Revolt on the Campus" generation.You'll find clear, compelling writing.Graceful format. A fresh, vigorous,youthful, good-humored outlook thatmakes it a joy to read. These are someof the features that make RALLY "avaluable new voice of a new generation," in the words of the CharlestonNews & Courier.

The be,st way we know to introduceyou to this great new journal is to sendyou a free copy ••. and let you decidefor yourself if you want to continue receiving RALLY each month. Simply mail

the no-risk trial subscription form belo~

We will send you your free copy breturn mail.

If RALLY is not all you expected, jUllet us know; your trial sub will be carcelled immediately. If, on the othehand, you find RALLY to your likin~

you need do nothing more - it will 01

rive automatically. And if you act no~

you can still enjoy RALLY at mone)saving introductory rates!

r-I--il--I-I-I----::~~.:d~:::O:::~:~r:~:~:~~::~~:::~• I and send me a free copy by return mail. (Check term)

D Bill me Name----------------------D Payment

enclosed* AddressD 1 year at $5 -----------------------

D 2 years at $9 City/State ZipD 3 years at $12.50 *Entitles me to an extra issue for each year.

D Please begin my subscription with Volume 1, Number 1.~- n • -__... - " ---.... • ....

BOUND VOLUMES OF

The J1reemilo-19G5Attractively sewn in a single volume

with hard cover, the 12 issues fromJanuary through December, fully indexed-768 pages, for handy reference

to the latest literature on freedom.

Onlf 15.00These bound volumes of THE FREEMAN match in appearance and otherwisecontinue the 12-volume series of Essays on Liberty containing selectionsfrom THE FREEMAN and other Foundation releases back to 1946. (A separatecumulative subject matter, author, and title index is available for the 12volumes of Essays on Liberty. $1.00.)

Bound volumes of THE FREEMAN for 1966 will be available shortlyafter the end of the year.

ORDER YOUR BOUND VOLUMES NOW!

THE FOUNDATION FOR ECONOMIC EDUCATIONIRVINGTON-ON-HUDSON, N. Y. 10533Please send me:THE FREEMAN for 1965 $ 5.00 0THE FREEMAN for 1965 and 1966 (The 1966 volume

to be shipped when ready) $ 9.00 0ESSAYS ON LIBERTY (Set of 12, with cumulative index) Cloth $30.00 0

Paper $20.00 DD CHECK ENCLOSED D SEND INVOICE

NAME, _

STREET _

CITY _

STATE ZIP CODE _

THE LAW

• No society can exist unless the laws are respected to a

certain degree. The safest way to make laws respected is to

make them respectable. When law and morality contradict

each other, the citizen has the cruel alternative of either

losing his moral sense or losing his respect for the law.

In order to make plunder appear just and sacred to many

consciences, it is only necessary for the law to decree and

sanction it. Slavery, restrictions, and monopoly find de

fenders not only among those who profit from them but

also among those who suffer from them.

FREDERIC BASTIAT (1850)

the freeman 1966 · canute and the counting of noses visit with a headmaster the first liberty...

Documents