theFreemanVOL. 18, NO.5. MAY 1968

Freedom: "The Wave of the Future"? Edward P. Coleson 259The history of great movements, from the planting of an idea until its floweringas a major force among men, suggests that around the next corner may be theage of freedom.

The Price Is Not RightSomething for nothing invariably costs too much.

Jess Raley 269

Statistics and Poverty Harry l. Smith 272There is no statistical or governmental way to eliminate a "lower third" fromany society, but their lot can be vastly improved through freedom.

How Welfarism Has Led to Britain's Troubles Anthony Lejeune 277A friend from Britain advises Americans to reject the welfare state beforesuffering its inevitable consequences.

The Rise and Fall of England:3. Political Foundations of Liberty Clarence B. Carson 282

A review of political steps taken to establ ish and safeguard the rights of theindividual and limit the powers of government.

Making Travel a Crime William Henry Chamberlin 293A government that can deny a peaceful citizen's freedom to move is well alongtoward absolute tyranny.

A Sure-Fire Remedy Leonard E. Read 299To overcome one's socialistic urge requires only that he take his own medicineto its logical conclusion.

A Lesson in Time John O. Nelson 303The United States government literally didn't know what time it was until privateenterprise fixed the clock.

Equality? Edward Y. Breese 308Equal opportunities to different persons yield unequal results.

Book Reviews 312"The World of Andrew Carnegie" by Louis M. Hacker"The Balance of Payments: Free vs. Fixed Exchange Rates" by Milton Friedman and

Robert V. Roosa"The last Hero: Charles A. Lindbergh" by Walter S. Ross

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

theFreemanA MONTHLY JOURNAL OF IDEAS ON LIBERTY

LEONARD E. READ

PAUL L. POIROT

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Fall of England."

((Wave of the FUture""?

EnwARD P. COLESON

IN 1883 an obscure German ref­ugee died in a London slum. A halfdozen or so attended the funer­al and one of his friends said afew kind words over his remains.Although the deceased had hadthe advantages of a university ed­ucation when this was a rareprivilege and his wife came of theupper class in her native Ger­many, the family had lived foryears under the most wretchedconditions imaginable in a sordidslum while he spent his time inthe reading room of the BritishMuseum writing endlessly, pilingup heaps of illegible manuscript,

Dr. Coleson is Professor of Social Science atSpring Arbor College in Michigan. His latestbook, The Harvest of Twenty Centuries(1967), pertains to Christian education andthe global crisis.

much of which was not publisheduntil after his death.

The writer was Karl Marx andthe friend who supported him overthe years, bade him the last fare­well, and finally published volumestwo and three of his monumentalwork was Friedrich Engels, sonof a wealthy industrialist. Cer­tainly, no "prophet" ever died amore complete failure. Yet no"gospel" has ever spread morerapidly. If present trends con­tinue and communism maintainsits current rate of growth, itwould be very possible that Marx­ism could dominate the earth com­pletely by the centennial of thedeath of its author; that is, by1983 - just in time to provide thesetting for George Orwell's 198.1,,!

259

260 THE FREEMAN May

Small Beginnings ofMighty Movements

Many men of good will in ourtime have been completely over­whelmed by the march of eventsin today's world: the seeminglyinevitable and inexorable sweep ofcommunism across the earth, thespread of violence here and almosteverywhere, the collapse of ethicalstandards, and all the other symp­toms of disintegration all aboutus. One of their problems is thatthey fail to understand the growthof movements across the ages andthus are unduly depressed withthe present outlook because theycannot see the possible develop­ments of tomorrow. They are notalone in their pessimism. Late inhis life Karl Marx lost all hopefor the future of the "cause" hehad given his life to promote andwas very despondent, because hecould not see that it would take ageneration or two for his effortsto bear fruit. He died a broken­hearted old man. Twenty yearslater, in 1903, which was just 65years ago, Lenin launched his Bol­shevik organization with perhapsseventeen supporters - still noth­ing to get excited about but muchmore significant than his contem­poraries could possibly have imag­ined.

Of course, the socialist move­ment was much more than Marxor Lenin, and was long in the mak-

ing, but even perceptive men ofthe time failed to see how verysuccessful they were becoming.According to Margaret Cole,l H. G.'VeIls, a pioneer British FabianSocialist, offended his fellow Fa­bians back in 1905 by remindingthem how "shabbily poor" and in­significant their little organizationreally was. He insisted the mem­bers were generally inactive andthe tracts they distributed werefeeble indeed. He said they per­meated "English society with theirreputed Socialism about as muchas a mouse may be said to per­meate a cat." He then challengedthem to go out into the Strandand see the enormous capitalistestablishments of London whichwere going about their businessas if there were no socialist threat- as indeed there seemed not tobe. One might comment that what­ever competence H. G. Wells hadas an historian, he was certainlyno prophet. He simply could notsee how "veIl they were doing andhow swiftly they would take overEngland. But the seed was sownand would mature throughout theworld, given time, as we are sopainfully aware today.

Lest the reader may assume thatthe communists have some magicformula for success - that it is in­deed the "wave of the future," as

1 Margaret Cole, The Story of FabianSocialism, pp. 119-120.

1968 FREEDOM: "THE WAVE OF THE FUTURE"? 261

they themselves claim - let us ex­amine a few other movements tosee how they tend to grow.

Christ and Mohammed

In 29 or 30 A. D. a Galilean car­penter was crucified at Jerusalemby the Roman governor to appeasethe populace. He had twelve disci­ples, but one betrayed him. Onlyone followed him to the cross. Yet,thirty-five years later Christianswere sufficiently conspicuousaround Rome, 1,500 miles awayacross the lVlediterranean, so thatNero noticed them and thought ofblaming them for the Great Fireafter he burned the "Eternal City"in 64 A.D. In spite of the mostsystematic and awful persecution,the Church triumphed over herenemies and became the officialreligion of the Roman Empirewithin three centuries after theCrucifixion. The teachings of the~laster also spread far beyond thefrontiers of the civilized worldand helped to soften the blow ofthe fall of Rome. Christian mis­sionaries had already partiallyconquered the barbarians with theGospel of the Prince of Peace,which helped to mitigate the hor­rors of the collapse of civilization.

During the long centuries ofdarkness which followed the col­lapse of Western civilization, an­other faith arose not far from thebirthplace of Judaism and Chris-

tianity in the Near East. Its ori­gins were humble and unpromis­ing also, but its triumph wasindeed spectacular. In 632 A.D. anilliterate Arabian camel driverdied. Ten years before, he hadescaped from Mecca when hisneighbors refused to listen to hisnew religion and became' impatientwith his insistent demands thatthey give up their idols. The would­be prophet was received with en­thusiasm away from home andlived to see his new faith trium­phant in Arabia.

The Moslem "blitzkrieg" (light­ning warfare) speedily conqueredAlexander's old empire in the Eastand all of North Africa in theWest. Within a lifetime the fol­lowers of the Prophet had wonmore territory than Rome ruled atits height. The Mohammedan floodwas stopped at the gates of Con­stantinople in southeastern Eu­rope, but in the West they weremore successful. Here, they pouredinto Spain and on into France, asif the world were theirs for thetaking. Never was the ChristianWest in greater peril: "The cres­cent was about to round to thefull." In 732, a century after thedeath of Mohammed, the Moslemadvance was repulsed at Tours inwest-central France. Thus, anothergreat movement was born in an­other unlikely spot and grew be­yond belief to become a mighty

262 THE FREEMAN May

force in the earth. And many otherexamples could be cited.

Keynes' "Economic Utopia"

Now, it would be a great mis­take to assume that just anyonewho gets up on a soap box canset off a chain reaction which willsweep the world; most such at­tempts obviously die on the vine.While it would clearly exceed thelimits of one brief article to ex­plore the why of the rise of move­ments in human history, perhapswe can at least partially trace thegrowth of freedom in the Westduring the last two or three cen­turies and understand the reasonfor the rapid rise of totalitarian­ism today. Such a survey shouldhelp us to see also what the futuremay hold in store for us.

Before we attempt this overviewof the path we have been followingover the years - and, as RobertFrost would say, the "road nottaken" by modern man - a quickglimpse of contrasting periods ofhistory may be most edifying.Such an attempt presents real dif­ficulties, of course, since the prob­lem of bias is very real indeed.I'm thinking especially of the his­tory of England and the UnitedStates over the past two centuries.

T. S. Ashton notes that accord­ing to an exceedingly commonview, "the course of English his­tory since about the year 1760 to

the setting up of the welfare statein 1945 was marked by little buttoil and sweat and oppression."2To counter this mistaken idea mayI quote the British godfather ofthe American New Deal, JohnMaynard Keynes himself.3 LordKeynes, who was born in 1883,the ye'ar Karl Marx died, tells howhe grew up in the "economic El­dorado" of the late Victorian pe­riod when people had forgottenMalthus and his gloomy predic­tions of mass starvation, whenproducts moved quite freely acrossfrontiers over all the earth andmen could travel to any land"without passport or other formal­ity," when men could get anyquantity of gold their credit wouldcommand and invest it anywherethey might desire. Indeed, Keynesdescribes this "economic utopia,",vhat one might call our "ParadiseLost," in even more glowing termsthan I would.

Actually, his high praise of thisera of freedom and rapidly risingliving standards is quite like theestimate of Benjamin M. Ander­son, although Anderson andKeynes may have agreed on littleelse. In the opening pages of hisEconomics and the Public Welfare,Anderson reminds us:

2 F. A. Hayek (ed.), Capitalism andthe Historians, pp. 33-34.

3 J. M. Keynes, The Economic Conse­quences of the Peace, pp. 10-12.

1968 FREEDOM: "THE WAVE OF THE FUTURE"? 263

Those who have an adult's recol­lection and an adult's understandingof the world which preceded the firstWorld War look back upon it with agreat nostalgia. There was a senseof security then which has never sinceexisted. Progress was generally takenfor granted ... decade after decadehad seen increasing political freedom,the progressive spread of democraticinstitutions, the steady lifting of thestandard of life for the masses. . . .It was an era of good faith. Men be­lieved in promises. Men believed inthe promises of governments. Trea­ties were serious matters. In financialmatters the good faith of govern­ments and central banks was takenfor granted. Governments and cen­tral banks were not always able tokeep their promises, but when thishappened they were ashamed.... In1913 men trusted the promises ofgovernments and governmentstrusted one anothe-r to a degree thatis difficult to understand today. Thegreatest and most important task ofthe next few decades must be to re­build the shattered fabric of nationaland international good faith. Menand nations must learn to trust oneanother again. Political good faithmust be restored. Treaties mustagain become sacred.4

The Complex World of J776

Now, many of my contempo­raries would allovi that whatKeynes and Anderson said aboutthe prewar period might be true;

4 Benjamin M. Anderson, Economicsand the Public Welfare, pp. 3-4.

but they insist that what wasfeasible back then is no longerpossible in this "complex modernage." People today consider, andquite correctly, too, that life wasless complicated back in the "GayNineties" or the "horse andbuggy days." By an extension ofthe same logic, Adam Smith'svvorld of 1776 should have beenvery simple indeed since he wroteThe Wealth of Nations at whatmight be called the dawn of theIndustrial Revolution. As a matterof fact, Smith was writing hisgreat work which supplied theideas for the new age while oneof his friends, James Watt, wasperfecting the steam engine whichwas to supply the power.

But this was no age of simplic­ity. This was an era of astoundingcomplexity. Smith never lived tosee those simpler times whichwere in part an outgrowth of hisown economic and political philos­ophy. The Wealth of Nations isfilled with the writer's protestsagainst ,,,hat he considered theinane and oppressive restrictionsof the mercantilist period of whichhe was an unwilling part. Muchis said in history courses aboutmercantilism and "a favorable bal­ance of trade." But suffice it tosay, for our present purpose, thatmercantilism was an attempt bythe government, through a ple­thora of controls, to regulate the

264 THE FREEMAN May

nation into prosperity. Some no­tion of the widespread nature ofthese regulations and their prac­tical consequences may be gainedfrom historian Henry ThomasBuckle's characterization of theperiod:

In every quarter, and at every mo­ment, the hand of government wasfelt. Duties on importation, and dutieson exportation; bounties to raiseup a losing trade, and taxes to pulldown a remunerative one; this branchof industry forbidden, and thatbranch of industry encouraged; onearticle of commerce must not begrown, because it was grown in thecolonies, another article might begrown and bought, but not sold again,while a third article might be boughtand sold, but not leave the country.Then too, we find laws to regulatewages ; laws to regulate prices ; lawsto regulate profits; laws to regulatethe interest of money; custom-housearrangements of the most vexatiouskind, aided by a complicated scheme,which was well called the slidingscale, - a scheme of such perverseingenuity, that the duties constantlyvaried on the same article, and noman could calculate beforehand whathe would have to pay ... the firstinevitable consequence was, that, inevery part of Europe, there arosenumerous and powerful smugglers,who lived by disobeying the lawswhich their ignorant rulers had im­posed.5

5 Henry Thomas Buckle, History ofCivilization in England, Vol. I, pp. 201­202.

Abolish Restrictions

Adam Smith's cure for the con­fusion of his age was straight­forward enough: simply let thegovernment sweep away the end­less maze of controls and let peo­ple take care of their own businessin their own way. Some notion ofhow involved mercantilist regula­tions could become may be judgedfrom the fact that it took overthree thousand pages to print theregulations for the textile industryof France - and all of this beforethe beginning of the industrialage which is supposed to havemade life complicated. Even then,they were changed with such be­wildering rapidity that no onecould keep up with the latest or­ders. French weavers once wentthrough a whole season withoutmoving a shuttle while waitingfor the governmknt to make upits mind. Penalties were so severethat no one could afford to dis­regard the codes: offenders werehanged, broken on the wheel, orsentenced to the galleys. No lessthan 16,000 people are said to haveperished over - of all things - theregulations covering printed cal­icoes. Little wonder that Smithrebelled against the needless re­strictions, although England nevercarried the system to the absurdlength that France or Spain did.

However, Smith was no anarch­ist. He sought rather to reduce

1968 FREEDOM: "THE WAVE OF THE FUTURE"? 265

the legal code to the simplicity ofthe moral law. He felt that sweep­ing away the complex and deviouseconomic regulations of mercan­tilism would relieve the govern­ment of an intolerable administra­tive burden (the task of mindingeverybody's business) and permitthe sovereign to concentrate onwhat Smith regarded as the trueduty of the state:

All systems either of preference orof restraint, therefore, being thus com­pletely taken away, the obvious andsimple system of natural liberty es­tablishes itself of its own accord.Every man, as long as he does notviolate the laws of justice, is leftperfectly free to pursue his own in­terest his own way, and to bring bothhis industry and capital into competi­tion with those of any other man, ororder of men. The sovereign is com­pletely discharged from a duty, inthe attempting to perform which hemust always be exposed to innumer­able delusions, and for the properperformance of which no human wis­dom or knowledge could ever be suf­ficient; the duty of superintendingthe industry of private people, andof directing it towards the employ­ments most suitable to the interest ofthe society. According to the systemof natural liberty, the sovereign hasonly three duties to attend to; threeduties of great importance, indeed,but plain and intelligible to commonunderstandings: first, the duty ofprotecting the society from the vio­lence and invasion of other independ-

ent societies; secondly, the duty ofprotecting, as far as possible, everymember of the society from the in­justice or oppression of every othermember of it, or the duty of establish­ing an exact administration of jus­tice; and, thirdly, the duty of erect­ing and maintaining certain publicworks and certain public institutions,which it can never be for the interestof any individual, or small numberof individuals, to erect and maintain;because the profit could never repaythe expense to any individual or smallnumber of individuals, though it mayfrequently do much more than repayit to a great society.6

Adam Smith and British Greatness

We commonly assume that itwas all very easy for Adam Smith,great man that he was, tostraighten out the world of hisday. Actually, Smith was a ratherobscure Scottish professor. Whiletraveling in the mid-1760's, hestopped off to see a little groupof French philosophers who werepondering the problems of Franceand mankind, although nobodywas paying much attention tothem, either. They called them­selves Physiocrats, which meansthe "rule of nature."

The founder of this "school" ofeconomics was Fran~ois Quesnay,a self-made man who so distin­guished himself as a physicianthat he became Louis XV's per-

6 Adam Smith, The Wealth of Nations,Everyman's Library, Vol. 2, pp. 180-181.

266 THE FREEMAN May

sonal doctor. According to HenryGeorge's account, Quesnay,

... abstaining from the intriguesof the court, . . . won the sincere re­spect of Louis XV (who) made hima noble, gave him a coat of arms, as­signed him apartments in the palace,calling him affectionately his thinker. . . . And around . . . this "King'sThinker" was accustomed to gathera group of eminent men who joinedhim in an aim the grandest the hu­man mind can entertain - being noth­ing less than the· establishment ·ofliberty and the abolition of povertyamong men, by the conformation ofhuman laws to the natural order in­tended by the Creator. These men sawwhat has often been forgotten amidthe complexities of a high civiliza­tion, but is yet as clear as the sun atnoonday....

That these men rose in France, andas it were in the very palace of theabsolute king, just as the rotten Bour­bon dynasty was hastening to its fallis one of the most striking of th~paradoxes with which historyabounds. Never, before nor since, outof the night of despotism gleamedthere such clear light of liberty. Theywere (however) deluded by the idea... that the power of a king ... mightbe utilized to break the power ofother special interests, and to bringliberty and plenty to France, andthrough France to the world. Theyhad their day of hope . . . when in1774 . . . Turgot was made FinanceMinister of Louis XVI, and at oncebegan cutting the restrictions that

were stifling French industry. Butthey leaned on a reed [the King].Turgot was removed. His reformswere stopped. The pent up misery ofthe masses . . . burst into the blindmadness of the great revolution [in1789] . The Physiocrats were over­thrown, many of them perishing onthe guillotine. . . .

On the continental trip he made be­tween 1764 and 1766 ... Adam Smithmade the personal acquaintance ofQuesnay ... and was, while in Paris,a frequent and welcome visitor atthe apartments in the palace, where,unmindful of the gaieties and in­trigues of the most splendid and cor­rupt court of Europe that went onbut a floor below them, this remark­able group discussed matters of thehighest and most permanent interestto mankind.7

The Wealth of Nations

Adam Smith, like the Physi­ocrats, never saw his ideas putinto practice, although he did pub­lish a "best seller" a decade afterhis trip to France. His great work,A n Inquir-y into the Nature andCauses of the lVealth of Nations,to use the full title, was an in­stantaneous success, was soontranslated into several foreignlanguages, and ran through fiveeditions in his lifetime. It be­came a sort of statesman's hand­book, although it was years before

7 Henry George, The Science of Polit­ical Economy, pp. 149-160.

1968 FREEDOM: "THE WAVE OF THE FUTURE"? 267

it made much difference in prac­tical policy. Finally, some three­quarters of a century later, Parlia­ment took the great step ofdismantling the whole system ofprotection for domestic producers,and Britain emerged as a "freetrade" nation.

The most celebrated case of thedramatic fight for economic free­dom was the so-called "Repeal ofthe Corn Laws," which did awaywith protection for English farm­ers. England had long had a "farmprogram," a high tariff on grain,which kept out foreign agricul­tural products and hence increasedthe cost of living for the Englishlaborer. Since, traditionally, thearistocrats of England werewealthy landowners and had longcontrolled Parliament, it took atremendous popular upheaval toeliminate the Corn Laws. This waseffected in 1846, in part as theconsequence of the "potato famine"in Ireland which brought thechronic problems of human needto a dramatic focus. Somethinghad to be done "right now," sincepeople were starving in large num­bers. Once Parliament startedslashing tariffs, it was only amatter of time until they werealmost completely eliminated.

Most other Western nationsjoined in the movement to opentheir markets also; which led tothe great period of peace, prosper-

ity, and progress so highly laudedby Lord Keynes. Britain becamethe center of world trade and fi­nance. But all of this came to passa century after. Adam Smith andthe Physiocrats pondered the prob­lems of the world, just as we todayare reaping the harvest of KarlMarx's sowing.

Ideas: Bomb with a Long Fuse

Why the "gradual encroachmentof ideas," as Lord Keynes ex­pressed it? Several factors con­tribute to the long delay betweenthought and action. One is thefact that a great teacher ariseswith some new doctrine or a mod­ern version of an old one,but hecan scarcely hope to make muchof an impact on his own age whichis run by men whose thought pat­terns are already set; his hope isthe student of today. This meansthat it will take at least anothergeneration, perhaps even longer,before his ideas can bear fruit.Furthermore, when we humanbeings get in a rut - as we habitu­ally do - we commonly do notchange our ways, however urgentor desirable the changes may be.\Vhen some crisis comes, such asthe "Potato Famine of 1846" orthe "Crash of '29," perhaps thenwe may get out of our rut onlyto fall into another. Our "NewDeal" rut is some thirty-five yearslong by now, and a change may be

268 THE FREEMAN May

anticipated presently; but it willtake quite a jolt to get us out of it.Widespread discontent at the grassroots is an important factor.

One reason why mercantilism,the ancient version of the plannedeconomy, went out of fashion inthe last century was that genera­tions of ordinary people had be­come disillusioned with the at­tempts of the several Europeangovernments to regulate and con­trol their nations into prosperity.A good many people back thenwere aware of this public nui­sance, though they had never readAdam Smith. A lot of folks today,who never heard of Von Mises'Planning for Freedom, have beenvexed with national planning sinceHenry Wallace "plowed under cot­ton and killed little pigs." A mul­titude of Europeans who neverread Hayek's The Road to Serf­dom have seen the "Berlin Wall"or the "Iron Curtain." More than

a billion people now know whatcommunism is all about, and first­hand, too, although few of themhave ever waded through Das Ka­pital. No doubt, many of them arethe bitterest enemies of the sys­tem. On our side of the Curtain,the "welfare state" is bankruptalso, both figuratively and liter­ally.

This dramatic failure of social­ism in all its forms and around theworld gives the man of good willwho believes in liberty an oppor­tunity he has not had in a long,long time - the opportunity to pre­sent Adam Smith's "obvious andsimple system of natural liberty"as the solution to the global crisis.And if we have the persistence ofKarl Marx and the patience of theFabian socialists, it just may bethat tomorrow will be ours - thatfreedom will indeed be the waveof our future. ~

Dumping

When cheap foreign goods flood our markets­

Come into our ports without end -

The best way to punish the aliens

Is to buy all the goods they can send.

WILLFORD I. KING, Economics in Rhyme

RECENTLY our State Legislaturemade it mandatory for any indi­vidual who rides a two-wheel, mo­tor-driven vehicle to wear a crashhelmet. The law seems to havebeen received with open arms byalmost everyone. I can recall nolocal, state, or Federal legislationwithin the past forty years thatfaced less opposition. Consensusappears to be that this law willneutralize any lack of skill orjudgment and protect the irrespon­sible from his own folly, in spiteof himself.

Now I am not, in any sense, op­posed to crash helmets. The large­ly hostile environment in whichman attempts to survive wouldseem to dictate extreme cautionand proper use of all availablesafety equipment. Personally, Iwould not think of riding a motorvehicle without a skid-lid. But thesad truth is the Federal govern-

Mr. Raley is a free-lance author, speaker,philosopher from Gadsden, Alabama.

The Price IsNOT RIGHT

JESS RALEY

ment already protects me from mymany inadequacies so much morelavishly than I can afford, it ap­pears doubtful that further helpcan be endured at this time.

There is something patheticabout man's relationship with law- from the very dawn of historyto this day. We know that civiliza­tion is built on a foundation oflaw. Human nature being what itis, no culture, social order, or na­tion could have emerged withoutcertain basic laws, written or un­written. Once committed to law­making, however, no nation seemsto have found a stopping place. Allappear to have subscribed to thetheory that if a little law is good,a great deal of law must surely bebetter. This theory seems to affirmthat a man who could functionfairly well carrying ten pounds ofweight would do much better load­ed with a ton or more.

There is nothing contradictoryin the proposition that a minimum

270 THE FREEMAN May

of law tends to build civilizationwhile labyrinthine laws tend to de­stroy. In fact, a society of perfectpersons would have no place forlaw enforcement since each indi­vidual would of need be free andtherefore jealous of his or her re­sponsibilities. This being true, alllaws may be viewed as a burden tosociety inasmuch as each respon­sible individual must spend moreor less time producing the wealthrequired to enforce them. Lessthan perfect men may still con­clude that laws enacted solely andunequivocally to protect societyfrom malicious acts of irrespon­sible individuals and groups arenecessary and helpful. All otherlaws need to be recognized as theunnecessary evil history provesthem to be.

Even those laws free men havefound necessary to impose upontheir society can become an im­possible burden. We know that aculture must be protected fromother cultures that would destroyor enslave it. But if the vast ma­jority of powers upon this earthshould attack a given country sys­tematically, that nation conceiv­ably could find the price of pro­tection beyond its means. In thesame vein, society as a whole mustbe protected from the maliciousacts of its own members. Butshould the day arrive when a ma­jority must be restrained by force,

there is no hope that the minoritycould, for long,. pay the bill.

For the undoubted advantage ofliving in a sophisticated society Iam willing, if not happy, to go mybit to protect that culture from itsenemies, foreign or domestic. Imust admit that, from time totime, society may have need for abit of protection from some care­less act of mine. This, too, I amwilling to pay for. But I absolutelycannot afford to be protected frommyself. More than this, I find itnauseating to be forced to pick upthe tab for killing the incentiveand responsibility of other indi­viduals in the name of protectingthem from the facts of life.

Certain laws calculated to pro­tect one from his own folly doubt­less have proven momentarily ad­vantageous for particular individ­uals, but the price adds up toslavery.

No culture that invokes laws toprotect its members from theirvery own mistakes can justlyclaim to afford an opportunity forindividual freedom; obviously, noperson or group can shield anotherunless the defender- controls theactions of its ward. No people whoask for or accept laws designedsolely to protect them from them­selves can hope to earn freedom.

John Stuart Mill would surelybe considered a square by thissophisticated generation, but no

1968 THE PRICE IS NOT RIGHT 271

modern philosopher seems to haveimproved upon his thoughts ex­pressed in On Liberty:

That the only purpose for whichpower can be rightly exercised overany member of a civilized commun­ity, against his will, is to preventharm to others. His own good, eitherphysical or moral, is not a sufficientwarrant. He cannot rightfully becompelled to do or forbear because itwill be better for him to do so,be­cause it will make him happier, be­cause, in the opinions of others,. todo so would be wise, or even right.These are good reasons for remon­strating with him, or reasoning withhim, or persuading him, or entreat­ing him, but not for compelling him,or visiting him with any evil in casehe do otherwise. To justify that, theconduct from which it is desired todeter him must be calculated to pro­duce evil to someone else.

In evening edition language,l\Iill is telling all who can hearthat a free man absolutely cannotbe protected from himself, eitherwillingly or unwillingly. He as­sumes, of course, that all men ofaffairs will understand that thistheory does not apply to legal in­fants.

To apply Mill's thil}king in Amer­ica today would mean that an in­dividual could be forced to respectthe life and property of others, butno power could compel him to par­ticipate in a social security system

as a condition of employment.Those who choose to shilly-shallymight be reasoned with and en­couraged to be more prudent. Butresponsible individuals could notbe forced to pick up the tab forthe folly of others.

I feel strongly that individualfreedom, including freedom ofchoice in matters where no oneother than myself stands to gainor lose, is the greatest achieve­ment man may attain; I cannotcompromise with any law that in­hibits that freedom. Compulsoryprotectionism denies freedom ofchoice and discourages responsibleaction. It lends aid and comfort tothe antisocial breed f:rom whosehostile actions society as a wholemust pay to be protected. Whenthe irresponsible element in anyculture reaches an active majority,first chaos,. then social reorganiza­tion must follow.

It's not that I make no mistakes,that all my decisions are wise, orthat no other person better man­ages daily affairs than I do. Norwould I attempt to deny that theanimal comforts promised by cer­tain laws that enervate freedommay be found advantageous atsome moment· in' life. The wholepoint I hope to make 'is this: Spiri­tually, psychologically, and eco­nomically, the price for protectionfrom my own folly is much, muchmore than I care to pay. ~

THE London Times several yearsago described the British socialistexperiment as "competition with­out prizes, boredom without hope,war without victory, and statisticswithout end."

Government intervention in theeconomy often is based upon spe­cious arguments and statistics de­signed to back them up. But sta­tistics, while purportedly facts,fail to perform one importantfunction. They do not analyzecause and effect.

Government statisticians gloryin the growth of the national prod­uct, as though government hadcaused such growth. Thus, therooster would cause the sun torise!

Governments consume and dis­sipate wealth rather than produceit. Goods and services are forciblytaken from the wealth-creatingprivate sector to cover losses in­curred on government ventures infinance, insurance, real estate,Mr. Smith is a businessman in California.

communications, public utilities,and other economic activities.If the government could createwealth, there would be no needfo'r taxation.

Government statisticians alsoattempt to prove the stabilizingeffect of political controls. Thegreat bid for government spon­sored stability came with adop­tion in 1913 of the Federal Re­serve system, supposed to stabilizeboth the economy and the cur­rency. Yet, the cyclical pattern ofthe economy has continued, witha frequency and amplitude simi­lar to that prior to 1913. The onegreat exception: after sixteenyears of Federal Reserve stabili­zation, there occurred the mostsevere economic depression everrecorded.

As for currency, all nationshave suffered disastrously frominflation and fiscal mismanage­ment following displacement ofthe gold standard by governmentcontrolled central banking. Other

1968 STATISTICS AND POVERTY 273

nations have known worse, buteven the American dollar has losttwo-thirds of its purchasing powerunder political management since1913.

Statistics purportedly show gov­ernments successfully maintainingfull employment. The more totali­tarian regimes do it throughforced labor and a low rate ofproductivity per worker - some­thing like having two workmenfill each job. The United Statesachieves high employment by ab­sorbing many workers into gov­ernment ranks and subsidizingothers. During the 1920's unem­ployment averaged less than 4 percent while about 6 per cent of thework force was employed by Fed­eral, state, and local governmentsand the armed forces. The latestavailable figures still show about 4per cent unemployed, whereas gov­ernment employees and members ofthe armed forces now account for18.5 per cent of the work force.

Government statisticians would

have us believe that maximumemployment is attained throughadroit official planning. We see,however, that it is accomplishedthrough government hiring, attaxpayers' expense.

Among the most popular argu­ments for government interven­tion is the necessity for redistri­bution of income. Businessmen aretoo selfish to effect an equitabledistribution, say the planners, andonly impartial government officialscan bring about "social justice."The New Deal, Fair Deal, NewFrontier, and War on Povertyidentify successive attempts bygovernment to rearrange incomesin a new and "fairer" pattern, allto the net effect that the poor arestill with us.

The following breakdown offamily income statistics, preparedby the Bureau of the Census andadjusted to dollars of 1965 pur­chasing power, might give theimpression that government re­distribution plans had succeeded:

274 THE FREEMAN May

It would seem that in the daysof the Fair Deal 30 per cent ofthe families were impoverishedwith less than $3,000 per year andthat the number had shrunk toonly 17 per cent under the GreatSociety. All that the figures prove,however, is that there has been aconstantly rising standard of liv­ing. This can be attributed to onecause only - the creation of newwealth, an entirely private func­tion. When constantly increasingincomes are fitted to fixed incomebrackets it appears that the dis­tribution of income is also vary­ing. Socialists point to this statis­tical aberration as proof that thegraduated income tax, the pre-s­sure of labor unions, and govern­ment control of the economy in

general have had the effect offorcing the rich to disgorge partof their income and pass it downto the less fortunate.

However, there is an impartialstatistical process which elimi­nates the effect of arising livingstandard on the pattern of incomedistribution and resolves the arg­ument as to whether governmentplanning or the free market isresponsible for the manner inwhich incomes are apportioned.This is done by showing the per:­centage of the national incomereceived by each fifth of the fam­ilies over the same series of years.Also shown for each year is thepercentage of national income re-­ceived by the top 5 per cent of allfamilies:

Except for some slight scalpingof the very top earners, it appearsthat the various government"deals" in modern America haveachieved no significant redistribu­tion of incomes among families.The 40 per cent of all families

with lowest incomes still receivethe same 17 per cent of the na­tional total.

Dr. Gabriel Kolko, generally fav­oring bigger and better taxes inhis book, Wealth and Power inAmerica, states: "The basic dis-

1968 STATISTICS AND POVERTY 275

tribution of income and wealthin the United States is essentiallythe same now as it was in 1939,or even 1910." Even the powerfulgraduated income tax seems toaffect the pattern but little. Thismay be explained in part by thefact that costs of redistributingincome may exceed the amountreshuffled. The "commission" forthis service is apparently high andstays in the hands of the relativelywell-paid social workers and pov­erty fighters - many of whom arein the top 10 per cent of incomeearners. Other government inter­ventions, such as minimum wagelaws, cause unemployment amongthe poor and tend to reduce thepercentage of income received bythe lowest groups. It might bepointed out that the governmenttaxes the poor also. A study bythe Tax Foundation estimates that28 per cent of incomes under$2,000 a year goes for taxes.

At the close of the nineteenthcentury an Italian scholar namedPareto made a study of incomedistribution in times past wher­ever he could find that an incometax had been levied. Such a taxis the only source of statistics forsuch a study. He found a church­imposed income tax in Peru some200 years ago, certain incometaxes in Europe over the centuries,and the American income tax dur­ing the Civil War. Income dis-

tribution proved to be startlinglyconsistent regardless of time,place, or degree of tax graduation,the pattern very much resemblingthat shown by more recent sta­tistics for families in the UnitedStates.

Writing in 1928, the economist,Joseph Schumpeter, had this tosay about his exhaustive study ofnineteenth century Britain:

Until about forty years ago manyeconomists besides Marx believedthat the capitalist process tended tochange relative shares in the na­tional total so that the obvious in­ference from our average might beinvalidated by the rich growingricher and the poor growing poorer,at least relatively. But there is nosuch tendency. Whatever may bethought of the statistical measuresdevised for the purpose, this muchis certain: that the structure of thepyramid of incomes, expressed interms of money, has not greatlychanged during the period coveredby our material- which for Eng­land covers the whole of the nine­teenth century - and that the rela­tive share of wages plus salary hasalso been relatively constant overtime. There is, so long as we arediscussing what the capitalist en­gine might do if left to itself, noreason to believe that the distribu­tion of incomes or the dispersionabout our average could in 1978 besignificantly different from what itwas in 1928.

276 THE FREEMAN May

So often it is stated that in un­developed countries there are onlytwo classes - the very rich andthe very poor. This is an economicillusion. In a country such asIndia with per capita income un­der $100 per year, there appearsto be nothing but poverty. Anyman of means stands out in star­tling contrast to his impoverishedsurroundings and creates the im­pression that there is no middleclass. But careful analysis willreveal a pattern of income dis­tribution similar to that in themore advanced countries - all fol­lowing Pareto's curve.

The only antidote to poverty iswealth. And wealth, by definition,is created by those who makethemselves wealthy through serv­ing others in open exchange. FredKent's story of The Well helpsto explain why this is true.

In a pastoral community composedof 101 independent and self-suffi­cient farmers, each worked 13 hoursper day to keep body and soul to­gether. Other than rain, the onlysource of water was a spring on ahillside which each farmer visitedeach day. This cost him an hour ofwork daily. Working overtime, oneof the farmers dug a trench downto the valley and by forming a well,provided running water to each ofthe farmers for which he chargedlh hour of work per day. As can be

seen, the provident farmer becamerich to the extent of having 50 hoursof labor redound to his benefit daily,yet each member of the communitybenefited by lh hour less work perday.

Wherever the heavy hand ofgovernment interferes in economicaffairs, things become more ex­pensive rather than cheaper. Hos­pitalization, education, and postalrates, for example, grow evermore costly while private enter­prise continues to create more andbetter and cheaper products andservices.

You can be sure that if eachAsian worker were backed by$30,000 in capital, there would beno mass starvation and no 25-yearlimit on the average life span.Such is the miracle of wealth.Only a few know how to create it.And the impartial and all-wisefree market will distribute it in amanner which creates harmonyrather than conflict among men.

The American economist JohnBates Clark observed years ago:

Free competition tends to give tolabor what labor creates, to capital­ists what capital creates, and to theentrepreneurs what the coordinatingfunction creates. To each agent adistinguishable share in production,to each a corresponding reward­such is the natural law of distribu­&a •

ANTHONY LEJEUNE

FOR THE BRITISH to say, as somefrequently do, that America oughtto become more of a welfare stateis rather like a drug addict tryingto get other people hOQked on hisown suicidal habit.

What worries me when I lookwestward across the Atlantic isnot that there is too little welfar­ism in America but that there isstarting to be too much. In allsorts of ways I see America head­ed downthe sam_e19_ad Britain hasalready traveled, and I long toshout, "Go back, go back, beforeit's too late!"

Britain's present sad plight, ofwhich devaluation and the govern­ment's austerity package are onlythe latest and most spectacularaspect, has not been caused sole­ly, perhaps not even directly, by

Mr. Lejeune is a British journalist. This articleis reprinted here by special permission fromThe National Observer of January 29, 1968.

her welfare policies. But welfar­ism, the attitude of mind that en­genders and is engendered by awelfare state (and this is some­thing quite different from thegenuine welfare of individuals),has certainly been a major factor.

It is no coincidence that Brit­ain's three devaluations - "thisdisastrous treble," as the LondonTimes described them - have takenplace under Britain's three Laborgovernments, under governments,that is, which started out withwelfarism as their chief aim.

Self-Generating Demand

The progress of the welfarestate was, admittedly, not muchslo,ved down, let alone reversed,by the intervening Conservativeadministrations. And this, too, wasno coincidence. Welfarism, once itgets into a nation's blood stream,is self-generating. The demand for

277

278 THE FREEMAN May

it increases as people become moredependent, both financially andpsychologically, on services fromthe state and less capable of pro­viding for themselves.

There may even be a point ofno return, after which a majorityof voters, their independence erod­ed by inflation and taxation, reallydo have more to gain from an in­crease in welfare benefits thanfrom a marginal decrease in taxes.The politicians inevitably respondby bidding against each other withpromises of bigger and more wide­spread benefits.

The Conservatives in Britainrepudiate with horror any sugges­tion that they might want to dis­mantle the welfare state. Theyfought the 1964 election on a plat­form that would have entailed evenmore government spending thanthe socialists offered. Recent eventshave sobered them a bit, but itremains to be seen whether theycan really refrain from welfarismwhen the next election campaignbegins.

Each advance of the welfarestate takes another bite out of in­dividualliberty, for the essence ofwelfarism is that people's money

is taxed away from them, redis­tributed, and spent in ways theywould not have chosen for them­selves. Otherwise there would beno point in it.

What is happening to Britisheducation makes a. bleak example.The universities, having allowedthemselves to become almostwholly dependent on state finance,are just waking up to the fact thattheir freedom has disappeared;they have to conform to the gov­ernment's plans, whether they likethem or not.

But, compared with the gram­nlar schools, universities are lucky.Twenty-five years ago most ofBritain's ancient grammar schools(secondary schools that preparestudents for universities) acceptedan offer of complete financialmaintenance and agreed, in re­turn, that a majority of their gov­ernors should be political appoint­ees.

Now, in its pursuit of socialistequality, the Labor governmenthas decreed that the grammarschools shall be abolished alto­gether, and neither the originalgovernors nor the parents haveany means of resisting.

1968 HOW WELFARISM HAS LED TO BRITAIN'S TROUBLES 279

The Trap Clicks ShutThis is the characteristic pat­

tern of state benevolence. Thestate assumes responsibility forproviding something that individ­uals want - education, or medicalcare, or transport; it picks up thetab, it doles out grants. Since thestate has no money of its own, thecost has to be met through taxes,thus rendering individuals lesscapable of providing these thingsfor themselves. Then the govern­ment says: "Since this is publicmoney, we must decide how itshould be spent, and who shouldget it, and we are entitled in re­turn to expect obedience to whatwe consider the public interest."So the socialist trap clicks shut.

The theory of welfarism is thatpeople prefer security to freedom,and perhaps they do. But in thelong run - and, as developmentsin Britain show, it may not be avery long run - the security of­fered by a welfare state can bemore vulnerable than the securityoffered by private savings in thebank. The individual has lost anychance of control over his ownfuture.

Even if the welfare state man­ages to avoid economic disaster,the normal standard of its socialservices is more likely to be atleast slightly squalid than affluent.However much welfarism the vot­ers may demand, they will always

be reluctant to pay taxes highenough to produce services as goodas individuals would be willing tobuy for themselves.

The National Health Service inBritain is grossly undercapital­ized, and always will be unlessnew money can be brought in, notthrough taxes, but directly fromthose who use it. The prescriptioncharges that have now been re­imposed are too small to makemuch difference. If fees, evenquite small fees, were paid bypeople who could afford them, notonly would more much-neededmoney be available for equipmentand research and to prevent thedrain of doctors to America, butthere would also be a far healthierrelationship between doctors andpatients.

The same is true of education.Even nominal fee-paying wouldgreatly increase parents' interestin their children's schooling, aswell as helping to raise the stand­ard of state schools nearer to thatof private schools.

A Need for Private Spending

People ought surely to be en­couraged to spend money on theirchildren's education, on health, onproviding for their old age, thusboth helping themselves and re­lieving the burden on the servicesthe state must provide for thosein need. But welfarists actually

280 THE FREEMAN May

disapprove of money being spentin this way. Private doctoring andprivate schools are constantly at­tacked by the socialists in Britainas selfish and antisocial. And, if aman accumulates wealth for hisold age, he becomes a capitalistand therefore wicked.

The roots of welfarism lie in afeeling that the advantage enjoyedby the wise virgins over the fool­ish virgins is unfair, and shouldbe corrected by the community.The wise virgins must thereforebe taxed for the benefit of thefoolish ones, and, if even this isn'tenough to produce equality, thewise virgins must be preventedfrom flaunting the superior fruitsof their wisdom - or their luck.

Whatever its philosophic attrac­tions, this is clearly a recipe foreconomic disaster. Some of thebeneficiaries of Britain's welfarestate find it more profitable to liveon state handouts than to work;but these layabouts are not thereal problem. The problem lies inthe crushing disincentive welfar­ism imposes on ordinary people.

Working-class families, whichperhaps in previous generationshad little opportunity to save and

invest money, could now afford todo so, but see no point in it. Thewelfare state will look after themon a rainy day, and savers seem toenjoy no significant advantageover spenders. The middle classes,for whom thrift was a traditionalvirtue, have been ground betweenthe millstones of inflation and tax­ation: inflation caused partly bythe reckless public and privatespending that welfarism has pro­voked, and taxation levied partlyto pay for the welfare servicesand partly, on purely politicalgrounds, to handicap the wise vir­gins. So all but the most deter­mined savers and investors havelost heart.

The penal effect of taxation hasblunted the urge to work hard atall levels, from top managementto the factory floor. People aresimply not prepared to sacrificeleisure or to take risks.

Incentives Blunted

It has become completely im­possible for companies to provideadequate incentives for their sen­ior executives. And this ceiling,imposed by progressive taxationon the salaries of men at the top,

1968 HOW WELFARISM HAS LED TO BRITAIN'S TROUBLES 281

depresses remuneration, and there­fore incentives, throughout thewhole salary structure. And, atthe same time, the business itselfis clogged and weighed down withtaxes.

So hypnotized are they by theirown ideology that the socialistsremain willfully oblivious of thisresult of their policies. Since theyare prevented, both by the phi­losophy and by the consequencesof welfarism, from providing gen­uine personal incentives, they fallback on vain exhortations to workharder and the implausible argu­ment that "collective consump­tion" is as attractive a goal asindividual consumption. Whenthese exhortations fail to elicit thedesired response, they are sur­prised and pained.

The Labor government has beenheartened during the past grimweeks by the initiative of fivetypists in a London suburban of­fice who volunteered to work anextra half hour a day "in orderto help Britain." The story wassplashed by sentimental news­papers with a fanfare of praiseand a glare of publicity. PrincePhilip and Harold Wilson sentmessages of congratulation.Bishops and schoolmasters saidhow splendid it was. A few othergroups of workers (though not

very many) followed the typists'example, "I'm Backing Britain"badges sprouted like mushrooms,and some pathetic school children,old-age pensioners, and Pakistaniimmigrants sent donations to thechancellor of the exchequer.

Enoch Powell, the former Con­servative cabinet minister and, itoften seems, almost the last sur­viving champion of free enter­prise, said that the campaign'smotto ought to be "Help Brain­wash Britain." He was shouteddown for his pains, but he wasquite right. Without realizing it,those five well-meaning but in­genuous typists have shown veryclearly what lies at the end of thewelfarist road - the collapse ofthe normal relationship betweenwork and reward, of the systemwhereby the community is en­riched by the efforts of individualsworking to earn wealth for them­selves and their families.

Welfarism turns everybody intoa state pensioner. People's atti­tudes, ambitions, even their vir­tues, shrink to those of pensioners.I have seen this happen in Britain,and am infinitely saddened by it.Perhaps the process is reversible.I hope so, though the historicalprecedents are not encouraging.Meanwhile, I do not want to seethe same thing happen in America.

~

CLARENCE B. CARSON

f1£uglnub

3. POLITICAL FOUNDATIONS OF LIBERTY

ENGLAND'S RISE to a greatnesswhich flowered in the nineteenthcentury was preceded by an orderof developments, an order whichcan be summarized in this way:constitutional- the laying of thepolitical foundations for liberty;intellectual - the development ofideas and spread of beliefs whichsupported liberty; and moral - re­ligious developments which pro­vided the drive and discipline forconstructive achievement. Theroyal navy, which was to be thepower symbol of greatness, hadbegun to playa leading role on thehigh seas by the latter part of the

Dr. Carson, Professor of American History atGrove City College, Pennsylvania, will beremembered for his earlier FREEMAN series,The Fateful Turn, The American Tradition,and The Fli~ht from Reality.

'lQ'l

sixteenth century, in the time ofElizabeth 1. But England's leader­ship in civilization was still a longway off. Tudor despotism degen­erated into Stuart oppression, aswe have seen, and oppression wasfollowed by civil war, revolution,and reaction. On the ruins of mo­narchical absolutism, however, theEnglish began to lay more nearlyenduring political foundations ofliberty. It is this work that is tobe called up here.

There are two elements that en­ter into the establishment of lib­erty. One is the formal means forcircumscribing and inhibiting thepower of government. The otheris the ideas and beliefs held bythose who control the governmentregarding liberty. It is doubtful

1968 POLITICAL FOUNDATIONS OF LIBERTY 283

that extensive liberty can exist forvery long without the presence ofboth of these elements. Belief inliberty alone may not be expectedto restrain for long those who havebeen given the power of govern­ment, for the enticement to the useof power is probably greater formost men than any general love ofliberty. On the other hand, anyforms of government may beturned to despotic ends when theforms are not undergirded by adesire for liberty. At any rate, ex­tensive liberty in England awaitedthe historical junction of formalrestrictions and beliefs which sup­ported liberty.

Englishmen have long calledthose forms by which they aregoverned and which, it may be,have restrained those who govern,The Constitution. They havespoken of the constitution as if ithad an unquestionable concreteexistence. Yet, to an American, itis quite often not clear what theEnglishman can be referring to.In the United States when some­one refers to the Constitution, herefers to an actual document - us­ually, anyway - which was drawnby men in convention in 1787 andhas been added to from time totime. It has bodily existence, as itwere. This is not the case, in themain, for the British constitution.True, there are some documentswhich are reckoned to be a part of

the constitution, such as MagnaCharta, or the Bill of Rights, orthe Act of Supremacy. But theyare only the concretizing of someaspect of the constitution at agiven time. These concrete provi­sions may become irrelevant orfall into disuse, may be subtlyaltered by changes in institutions,may be revised by later parliamen­tary enactments, or may no longerbe applicable; yet, the constitutionremains. What, then, it is properto ask, is the constitution?

A Shifting Balance of Power

The first thing to note about itis that it is not fixed. It changeswithout any specific action beingtaken as institutions and proce­dures change, and it may bechanged by act of Parliament. Nounusual procedure is required tochange it. Succinctly stated, theconstitution of England consistsof all those rules, written and un­written, which prescribe howthings governmental are to bedone. These prescriptions mayhave taken shape by customaryusage or by royal recognition orby legislative enactment. Gener­ally speaking, any practice of longstanding having to do with themodes of governmental operationwould most likely be reckoned apart of the constitution. In addi­tion, long established rights andprivileges of persons are thought

284 THE FREEMAN May

to be constitutionally safeguarded.For example, freedom from ar­bitrary imprisonment (the rightto a writ of habeas corpus) is apart of the constitution. Yet, nounusual procedures would have tobe followed to abridge this right,or any others.

Liberty in England, then, hasdepended not so much upon sub­stantive protections of it acknowl­edged in documents - though thesehave played some part - as uponthe existence of effective counter­weights to the powers of thosewho govern. The crucial conceptionfor understanding how liberty hasbeen protected in England is thatof a Balance of Powers. More pre­cisely, it has depended upon thecounterweight of those who donot have the power to govern, atleast, not at a given time. In theUnited States, there was a con­certed effort to establish a balanceof powers within the government.This has never been so to any ex­tent in England, and it is a veryimportant difference between theUnited States and the Britishconstitution.

The Loyal Opposition

There is no balance of powerswithin The Government in Eng­land, nor has there ever been tomy knowledge. The Government inEngland does not have the samedenotation as "the government"

in the United States does. Indeed,when Americans refer to "the gov­ernment," they refer to the wholeparaphernalia of government pow­er, all the institutions connectedwith it, and all those who com­prise its arms. To put it anotherway, Americans refer in this wayto everything having to do withgovernance and to nothing in par­ticular. When speaking formally,the British do not do this. Theyrefer specifically to those whomake governmental policy as TheGovernment. In contemporaryEngland, The Government is us­ually comprised of a Prime Min­ister and his cabinet chosen fromthe ranks of the majority party(though a coalition governmentmay also exist). In earlier times,the monarch and his chief min­isters would have comprised whatis nowadays referred to as TheGovernment.

The Government in England,then, is the result of a concentra­tion of power, not a balance ofpowers. The checks upon this gov­ernmental power are not within it,strictly speaking (though theymight be in a coalition cabinet),but outside of and in oppositionto it. In short, The Governmentexercises all the powers of govern­ment, but there may be contestsfor control of The Government,and those who contest may serveto limit and restrain the use of

1968 POLITICAL FOUNDATIONS OF LIBERTY 285

that power. The Government, atany moment, has the exclusive useof governmental power, but anyextension or change in this powermay be contingent upon the con­sent of others. There may, then, becounterweights to the exercise ofpower; and when these have suf­ficient strength and independence,it can be said with sufficient ac­curacy that a balance of power ex­ists which will inhibit an extensionof power by The Government oreven result in reducing the amountformerly available. It is this sit­uation that has produced the for­mal protections and safeguards toliberty in English history.

For most of the history of Eng­land, the monarch has been, in ef­feet, The Government, though theterminology would not have beenused in this way. In consequence,most of the attempts to limit, re­strain, regularize, or inhibit gov­ernmental action have been effortsof various forces in opposition tothe exercise of power by the king.The great and revered documentsof the British constitution - Mag­na Charta, Petition of Rights, Billof Rights - are concessions andacknowledgments wrested from orimposed upon monarchs. Thoughthe political foundations of libertywhich concern us here were laidin the seventeenth and eighteenthcenturies, they were built of ma­terials which have a much greater

antiquity. Therefore, it is appro­priateto review briefly the historyof some of the early constitutionalstruggles and the forces involved.

The Norman Conquest- J066

A convenient and useful placeto begin is with the Norman Con­quest of England in 1066 and theensuing years. William the Con­queror was hardly the first kingof England, but he was probablythe first to rule a unified Englandwith so much power concentratedin his hands. After William's con­quest he attempted to set up asituation in which all force in theland was ultimately under his con­trol.

No power, independent of hiswill, could, in theory, be exercisedin the land. The great tenants-in­chief, or barons, had their fiefsdirectly from him. All vassals, ofwhatever rank, owed their final al­legiance to him. No castle couldbe built in the land unless helicensed it. The Roman Catholicchurch, while it might technicallybe independent of him, was de­pendent upon his will in manyrespects for its operations. Wil­liam was potentially as absolute asany medieval monarch, though heis not remembered for being anarbitrary king. Later kings, par­ticularly Henry II (twelfth cen­tury) , increased their sway bythe establishment of king's courts

286 THE FREEMAN May

which began to make rulings onthe basis of a common law.

Even so, counter forces to thatof the king continued to exist orshortly came into being. One thatevery wise king would recognizein the Middle Ages was customand customary law. People wereprofoundly conservative, as theyusually are, and whatever hadbeen done in the past. must con­tinue to be observed or there wouldmost likely be trouble. Local cus­toms were early given the effectof law. Even the common lawwhich began to be shaped in thetwelfth century was mainly a lawfor all England abstracted fromcommon features found in localcustoms and laws. The courtswhich dispensed such law mightbe the king's, but the law wasthat of England and served po­tentially to restrain monarchs.

Moreover, the tendency was forall holdings and privileges to be­come hereditary. The nobilitymight owe their fiefs originallyto the monarch; but over the yearsthese holdings were passed onfrom father to eldest son, and thenew holder held his fief as if byright. Hence, the nobility beganto think of themselves as havingrights not dependent on the willof the king. Similarly, charters totowns and universities tended tobecome perpetual, and the rightsand privileges derived from them

to pass in perpetuity to profes­sors, students,' and burgers. TheChurch was based at Rome, andit had weapons - excommunicationand interdict - with which to checkand restrain monarchs. The clergyalso enjoyed certain privilegeswhich were not conceived of asdepending upon any arbitrarygrant or rescission by the mon­arch. In short, the classes andorders of medieval Englandemerged as counterweights to thepowers of the king.

The Magna Charta-l2lS

How this balance of powers orforces could be brought into playwas dramatically demonstrated inthe early years of the thirteenthcentury during the reign of KingJohn. The first of these forces tomeet John head-on was Pope In­nocent III, the most forceful andpowerful of medieval popes. Theirtroubles arose over the appoint­ment of an archbishop to the Seeof Canterbury. When the Popecaused Stephen Langton to benamed Archbishop, King John re­fused to accept him, and these twobecame locked in a seven-yearstruggle for dominance. InnocentIII excommunicated John and laidthe realm of England under inter­dict. "This interdict meant thatall the churches were closed: nomasses sung, no marriages or fu­nerals conducted. Only baptism

1968 POLITICAL FOUNDATIONS OF LIBERTY 287

and confession for the dying werepermitted."1 Before the threat ofbeing deposed by the Pope andhaving the sentence carried out byKing Philip of France, John finallycapitulated. Indeed, he went so faras to declare that he was a vassalof the Pope, and that he had re­ceived England as a fief from thepontiff. In general, it should bepointed out that papal powers gavethe clergy some independence ofroyal authority.

King John was hardly out ofdifficulty with Innocent III beforehe was in deep trouble with otherforces in the land. There was wide­spread dissatisfaction with the ar­bitrariness of John's rule. The bar­ons took up the cause against theking, and they defeated John atRunnymede in 1215. They requiredof him that he make writtenacknowledgment of importantrights and privileges possessed byhis subjects and of restraints uponhis use of power. This was done inthe Magna Charta. Magna Chartanot only affirmed the rights andprivileges of the barons but alsoof the clergy, of merchants andtradesmen, of the towns, and offree men in general. One clauseread, "No free-man shall be seized,or imprisoned, or dispossessed, oroutlawed, or in any way destroyed;

1 Christopher Brooke, From Alfredto Henry III (New York: W. W. Norton,1966), p. 218.

nor will we condemn him, nor willwe commit him to prison, exceptingby the legal judgment of his peers,or by the laws of the land."2 MagnaCharta was so revered because itwas the most thorough of the earlydocuments affirming the rights andprivileges of the classes in Eng­land against the king. The majorpoint here, however, is to showhow other forces limited the powerof the king.

Tlte Model Parliament-J 295

Developments for the remainderof the thirteenth century, underHenry III and Edward I, continuedgenerally along the lines of limit­ing monarchy. Magna Charta wasreaffirmed on a number of occa­sions. A major problem arose overhow to keep a monarch to hisword. Committees and commis­sions, made up of barons, weretried, but with indifferent suc­cess. These committees to hold theking in check were the immediateforerunners of Parliament. Parlia­ment took its classic shape withthe meeting of the Model Parlia­ment under Edward I in 1295. Itis called the "Model" because theclasses which were so long to com­prise it were there: the nobles, theclergy, the knights, the townsmen,and so on. In the next century

2 Engen Weber, ed., The WesternTradition (Boston: D. C. Heath, 1959),p. 196.

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England became even more defi­nitely a limited monarchy. In addi­tion to being limited by the classeswho were represented or sat inParliament, the notion spread thatthe king was under the law. HenryBracton, the great jurist of thethirteenth century, said: "Theking should be under God and thelaw."3

The traditional elements for re­straining and counterbalancing thepower of The Government - theking - were the classes, Parlia­ment, and the common law. Itmust be kept in mind that in theMiddle Ages these did not so muchestablish liberty for Englishmenin general as protect the char­tered privileges and prerogativesof the various classes, themselvesdevoted to maintaining status andstability. Realistically, too, theclasses could only provide counter­weights to the power of the kingso long as they were independentof him to considerable extent.

By, or in, the sixtee.nth centurythe classes largely lost or were los­ing their independence. This setthe stage for Tudor absolutismand for the Stuart despotismwhich has been earlier examined.In the late Middle Ages, kings be­came less and less dependent uponthe nobility as warriors. Feudal­ism disintegrated; the nobilitywere decimated by the Wars of

8 Brooke, Ope cit., p. 221.

the Roses (latter part of the fif­teenth century); and Henry VII,the first of the Tudors, subduedthe remainder of the nobility,mainly with the instrument of hisCourt of the Star Chamber. Theclergy lost such independence asthey had enjoyed with the breakfrom the Roman church, effectedin 1534. The guilds had long beendeclining in vitality, and manorialserfdom had been replaced by ten­ant farming.

The Petition 01 Right- J628

Parliament - consisting of theLords temporal and spiritual, andthe Commons - continued to becalled into session and to take ac­tion. But, for the Tudor monarchsit was largely an auxiliary to theirabsolute and, frequently, arbitraryrule. The early Stuarts (James Iand Charles I) enjoyed no suchpleasant relationship with Parlia­ment in the first half of the seven­teenth century. Parliament (andsome judges, notably Sir EdwardCoke) balked at simply being aidsto the despotism of monarchs. Thekings dropped the pretense thatParliament had any independenceand tried, so far as possible, torule without them.

But Parliament was still a po­tentially organized center of re­sistance: and when Charles I dem­onstrated his determination torule without that body as far as

1968 POLITICAL FOUNDATIONS OF LIBERTY 289

possible, the potentiality becamean actuality. -The House of Com­mons became the center of a re­sistance which turned into a civilwar in 1642. Failing in their ef­forts to restrain the king, theyoverthrew him. In 1649, Charles Iwas beheaded, and there followed11 years of rule without a king.Civil war turned into revolution.But, as so often happens, revolu­tion resulted not in the establish­ment of constitutionally protectedliberty and balanced governmentbut in military rule. The Englishexperience without a king was nota happy one. The rule of OliverCromwell with the support of thearmy was hardly more palatablethan that of the Stuarts. Shortlyafter Cromwell's death, monarchywas restored in 1660. The struggleto restrain and limit the monarchcontinued.

Indeed, the seventeenth centurywas the scene of a prolonged ef­fort to limit the monarch and toestablish other sources of powerto.counterbalance his. One line ofthe effort was to get the monarchto concede limits to his power.The major constitutional docu­ments of the century are of thischaracter, in the main. The firstof these of major importance wasthe Petition of Right, assented toby Charles I in 1628. By its terms,there was to be no taxation with­out the consent of Parliament, no

detaining or imprisonment simplybecause the king commanded it,nor arbitrary use of martial law.4

Another landmark on the wayto preventing arbitrary action bythe monarch was the Habeas Cor­pus Act of 1679. It had been longestablished that a man being heldprisoner should be shown cause­be charged with violating somelaw - why he was held. On theother hand, individuals were some­times held in prison arbitrarilyby the monarch. The Habeas Cor­pus Act required judges to issuethe appropriate writs upon re­quest, and it provided stiff penal­ties should they refuse. In likemanner, those who held them inprison could be penalized for re­fusing to release prisoners whenpresented with such a writ. Inshort, the right to a writ of habeascorpus was firmly established.

The Sill of Rights-1689

The most famous document ofthe seventeenth century is, ofcourse, the Bill of Rights. It waspropounded by a convention in1689, after James II had fled fromEngland and before William andMary came to the throne. In viewof the circumstances, it is under­stood that the acceptance of itsterms was a condition of their

4 See William L. Sachse, ed., EnglishHistory in the Making (Waltham, Mass.;Blaisdell, 1967), pp. 249-50.

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coming to power. By its terms,there was an attempt to preventall those abuses with which theywere so familiar from the recentpast. A few of its provisions willindicate the general tenor of them:

That the pretended power of sus­pending of laws or the execution oflaws by regal authority without con­sent of Parliament is illegal. ...

That levying money for or to theuse of the crown by pretense of pre­rogative without grant of Parlia­ment, for longer time or in othermanner than the same is or shall begranted, is illegal. ...

That the raising or keeping astanding army within the kingdomin time of peace, unless it be withconsent of Parliament, is againstlaw.

That the subjects which are Prot­estants may have arms for their de­fense, suitable to their conditionsand as allowed by law.

That election of members of Par­liament ought to be free.5

A Time of Testing

One thing seems certain: onceagain, constitutional monarchy hadbeen established in England. It iscommonly said, also, that Parlia­ment had triumphed, that hence­forth it was the dominant branchwithin government. Such a posi­tion certainly overstates the caseso far as the actual business ofgovernance is concerned. The king

5 Ibid., p. 318.

was still, in effect, The Govern­ment. As one writer says, "He stillhad his prerogative of making warand peace, choosing his own min­isters, pardoning criminals, creat­ing peers, summoning, proroguingand dissolving Parliament, andminting coin."6 Indeed, there wasstrong sentiment in the last yearsof the seventeenth century againstmembers of the House of Com­mons participating in The Gov­ernment. Jarrett describes the sit­uation in this way:

The House of Commons viewed theExecutive in very much the sameway that the heroes of the tradition­al school story view their masters.They saw a great gulf fixed betweenthe authorities and themselves anddespised as a careerist and a toadyanybody who sought to bridge it.Like the schoolboy heroes, they con­sidered that they were there to ham­per the establishment, not to helpit. . . . [The] Act of Settlement of1701 . . . forced upon the King aclause providing that anyone holdingan office of profit under the Crownshould be ineligible for membershipof the House of Commons.7

This last provision was short­lived, but it does indicate that theHouse of Commons distinctly didnot consider itself a part of The

6 Derek Jarrett, Britain: 1688-1815(New York: St. Martin's Press, 1965),pp. 11-12.

7 Ibid., p. 17.

1968 POLITICAL FOUNDATIONS OF LIBERTY 291

Government at the beginning ofthe eighteenth century.

Limiting the Monarch

The reality that took shape,however, did not fit neatly intothe theory of government as it hascommonly been held. In fact, akind of" balance of powers existedin the eighteenth and well intothe nineteenth century. The kingstill governed, or ruled, in theoryand, largely, in practice, thoughthe first two of the Hanoverianmonarchs (George I, 1714-1727,and George II, 1727-1760) did al­low much of their power to slipaway. The king still chose hischief ministers, still made majordecisions of state, could effect elec­tions to the House by various de­vices, could influence members ofParliament by perquisites at hisdisposal, and could increase themembership in the House of Lordsby new appointments.

On the other hand, he could notrule for long without Parliament.He was dependent upon that bodyfor appropriations, for the passageof laws, and for the meeting ofobligations. A recalcitrant Parlia­ment could bring the monarch tohis knees, and that rather quickly.Moreover, the House of Commonswas well on the way to establishingitself as independent in its sourceof power from the Crown. Itsmembers were elected, and they

owed their place to the electorate,not to the king. The point of in­sisting upon freedom of electionswas that the monarch might notinterfere in, determine, or manip­ulate elections. Freedom of speechin Parliament and freedom fromarrest were also important ad­j uncts to their independence. Also,judicial independence was fully es­tablished in the eighteenth cen­tury. "For the judges, though ap­pointed by the Crown, were nolonger subject to its influence intheir decisions, since they couldnot be removed except on an ad­dress from both houses of parlia­ment." There was a rule that theirtenure ceased when a new mon­arch came to the throne unless hereappointed them, but "George IIIhimself, at the beginning of hisreign, promoted the Act abolishingthis rule."s

A Limited Government

England had not only limitedmonarchy but, much more impor­tant, limited government. Theking was limited by Parliamentand by an independent judiciary,as well as by documentary consti­tutional provisions. The House ofLords was limited by the House ofCommons, for the latter bodyalone could initiate appropriations.

8 Basil Williams, The Whig Suprem­acy (London: Oxford University Press,1939), p. 56.

292 THE FREEMAN May

The House of Commons was lim­ited by the electorate, by an hered­itary House of Lords, and by themonarch. Each of these had some­what different sources of power:the House of Commons was elected;the House of Lords inherited orattained position by royal appoint­ment, the judiciary by royal ap­pointment, and the monarch byheredity.

More checks upon power weredeveloped in the eighteenth cen­tury. The Cabinet began to takeshape. It was, in theory, the king'sinstrument for government, but,in practice, the king found it nec­essary to appoint members of Par­liament to places on it. Moreover,as Parliament gained in power,this was accompanied by an in­terior division into political par-

ties which checked its exercise.Political parties emerged in thelatter part of the seventeenth cen­tury, but they came into their ownin the eighteenth. Close divisionsin parties inhibited the exercise ofpower by the majority party.Moreover, it enabled an astutemonarch to cling to power' by be­ing a balance wheel between them.

One of the major foundationsfor liberty had been laid, then, bythe eighteenth century: struc­turally limited government. Theother one is belief in and commit­ment to liberty. We must nowturn to the development andspread of ideas which extended re­ligious liberty, freed enterprise,spurred inventiveness, and loosedthe energies of the English people.

~

The next article in this series will dis­cuss the "Intellectual Thrust to Liberty."

Why Liberty?

WHAT has made so many men, since untold ages, stake their all onliberty is its intrinsic glamour, a fascination it has in itself, apartfrom all "practical" considerations. For only in countries whereit reigns can a man speak, live, and breathe freely, owing obedi­ence to no authority save God and the laws of the land. The manwho asks of freedom anything other than itself is born to be aslave.

ALEXIS DE TOCQUEVILLE, The Old Regime and the French ~evolution

WILLIAM HENRY CHAMBERLIN

THE PROPOSAL to make travel out­side this hemisphere a crime is atremendous step backward fromthe ideal of working for maximumfreedom of movement for men,goods, and capital- the three free­doms that made the nineteenthcentury, after the end of Napo­leon's wars, one of the most peace­ful and prosperous in human his­tory.

The proposed tax has aboutevery fault a tax could have. It isinherently unj ust, because itmakes a crime of something thatis inherently innocent and benefi­cial. It is discriminatory. It is re­strictive. It is most probably un-

Mr. Chamberlin is a skilled observer and re­porter of economic and political conditions athome and abroad. In addition to writing anumber of books, he has lectured widely andis a contributor to The Wall Street Journaland numerous megazines.

enforceable. It is a confession thatthe dollar is no longer good for avery important purpose: paymentof travel expenses.

One of the latest Soviet "anec­dotes," or sour jokes, is about acommunist professor who waxesenthusiastic before his studentsabout Soviet achievements in theexploration of space.

"Soon," cried the professor,"you will be able to go to the moon,to Mars, to Venus."

Whereupon a student timidlyinterjected: "Yes, Professor, butwhen can we go freely to Viennaand Rome and Paris?"

One of the clearest distinctionsbetween the citizen of a free coun­try and the subject of the totali­tarian state is the inalienablenatural right of the former to

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travel, even to take up permanentresidence abroad. For the latter itis a privilege, sparingly grantedand usually to persons of provedenthusiasm for the regime. Shouldthe United States penalize and re­strict and discourage foreigntravel to certain parts of theworld, it would move with one bigstep into the totalitarian camp.That such a measure could evenbe proposed is an ominous sign ofthe restrictions on individual lib­erty which are threatened whenmanaged money and a managedeconomy begin to replace the nor­mal operations of the free market.

The excuse for making travel inEurope a crime is that Americansspend more in Europe than Euro­peans spend in the United States,that the United States has beenrunning a deficit in its balance ofinternational payments and that acutdown in American touristspending would be a means of re­ducing this deficit. This line ofargument is utterly specious andfallacious, especially for represen­tatives of a country which hasbeen constantly preaching to Euro­pean nations the virtues of freeinternational trade and the scrap­ping of restrictions.

One might just as reasonably,indeed with less harmful resultsfor individual liberty and thebenefits of free international con­tact, propose an embargo on the

half billion dollars of foreign al­coholic drinks which are annuallyimported into this country or onour billion dollars a year of for­eign coffee.

Actions and Reactions

The weakness in all such uni­lateral restrictions is that they in­vite and sometimes force repri­sals. A punitive tax on Americanstraveling in Europe will not en­courage European tourists to visitthis country. Nor is it likely tostimulate the market for sales ofAmerican goods abroad. Forei.gnairlines which will be hard hit byrestrictions on American travelwill cut down their purchases ofAmerican planes. In short, in thecase of travel as of trade, one re­striction provokes a counterre­striction on the other side, untilthe whole world is drawn into adownward spiral of depression.

It is worth remembering thatthe United States, at the outset ofthe 1929-33 depression, adoptedthe highly protectionist Smoot­Hawley tariff on the ground thatthis would soon make businessboom again. It didn't; indeed, thistariff legislation was one of thecontributory causes in making thedepression one of the longest andmost severe in modern economichistory.

No law is worth passing that isnot enforceable. The American

1968 MAKING TRAVEL A CRIME 295

public should have learned this les­son from the sorry experience ofnational prohibition, adopted foridealistic reasons and abandonedin disgust and disillusionmentwhen its principal consequenceswere widespread disrespect forlaw and a formidable increase inracketeering and crime. Such leg­islation, given today's conditions,is riddled with obvious loopholesfor evasion. An American todaymay transfer dollars to any Euro­pean country and exchange themfor British pounds, French orSwiss francs, German marks, andso on.

So the proposed requirement­degrading and unpleasantly remi­niscent of procedures in commu­nist-ruled countries - that everytraveler, before departure, showto some inquisitive bureaucrat hisstock of funds in cash and travel­ers' checks, would also be com­pletely futile. He might have dis­patched a much larger sum toLondon, Paris, Frankfurt, or Zu­rich before boarding plane or ship.

Control of Foreign Exchange

To make enforcement of a taxon travel even remotely plausible,the government would have totake one of the most retrogradesteps in United States economichistory. It would have to imposestringent, all-out exchange con­trol, requiring official approval for

any exchange of dollars for for­eign currencies. The disastrouseffect of any such measure on thegreatest trading nation in theworld, where banks daily handleenormous numbers of transfers ofdollars into foreign funds, wouldbe almost incalculably disastrous,assuming that any such task weremanageable at all.

It is almost impossible to calcu­late the amount of outright suf­fering, to say nothing of exas­perating inconvenience, that ex­change control - the demand thatevery individual convince somefaceless bureaucrat of his needfor foreign funds - would involve.One thinks of such contingenciesas the death or disability of arelative or close friend livingabroad, for instance.

Moreover, the United States, asthe biggest trading nation in theworld, necessarily carries outevery day uncounted thousands oftransactions in foreign exchange.Imagine the chaos that would fol­low if every such transaction hadto be submitted for bureaucraticapproval, with long explanations,filed in triplicate or quadruplicate,to prove its necessity! Only peo­ple who have lived under a regimeof exchange control can appreciatewhat a blessing it is to have a cur­rency that is freely and readilytransferable and exchangeable.

One can reduce the case against

296 THE FREEMAN May

the proposed punitive tax on traveloutside the western hemisphere tothe simplicity of an axiom ingeometry. Such a measure wouldbe quite futile and open to scoresof evasive devices unless foreignexchange control in all its rigorwere clamped down. But such adevelopment would bring ruinousconsequences to the foreign exporttrade which helps our interna­tional balance of payments infi­nitely more than it is injured bytourist spending.

Toward a Dead End

Should the United States be somisguided as to adopt measurespenalizing and controlling thetravel expenditures of its citizens,it would be starting down a roadfollowed, at various times, by manynations, a road that has always ledto failure and frustration. At theend of World War II almost all thecountries of Western Europe weretied up in hard knots of red tape,with exchange control, artificialfixed rates of exchange for theircurrencies, rationing at home andquotas for imports. Their tradewith each other was practicallyon a barter basis, with every na­tion demanding that its tradingpartner buy as much from it asit sold.

All experience shows that inter­national trade is a dynamic, com­petitive enterprise which flour-

ishes best with the least govern­ment meddling and interference.Europe had no more chance to re­gain its potential in productionand international exchange withits postwar handicaps than anathlete could \vin the hundred­yard dash encumbered with an as­sorted variety of crutches andbandages. Except for the "blackmarkets" in everything from goodsto currency, setting at nought of­ficial rules and regulations, eco­nomic life might well have groundto a complete standstill.

Bit by bit, rationing and its in­evitable accompaniment, blackmarkets, went into the discard.Honest money replaced the in­flated paper currencies, officiallyvalued far above their real worthas measured in the realistic "blackmarkets."

Once money was thus able to re­sume its proper function as amedium of exchange, the absurdlapse into beggar-your-neighbor,barter methods went the way ofrationing and phony fixed valuesfor inconvertible paper currencies.It no longer became necessary fora country to fear, like bubonicplague, the development of an un­favorable balance of trade withsome other country. Under a sys­tem of multilateral trade, madepossible by stable, freely exchange­able currencies, a deficit in deal­ings with one country was made

1968 MAKING TRAVEL A CRIME 297

up by a surplus in exchange withanother.

Zurich V5. Prague

Sometimes a visible object les­son is worth pages of theoreticaldisquisition in showing the con­trast between a system that isworking well and one that is work­ing badly. Some years ago, in thecourse of a European trip, I hadoccasion to fly from Zurich, inSwitzerland, to Prague, the capi­tal of communist-ruled Czechoslo­vakia.

The Kloten airport in· Zurichwas stocked with everything ingoods and services a traveler mightdesire. There were magazines andbooks in many languages; a vastassortment of Swiss chocolate;watches and cuckoo clocks. Therewere exchange booths where onecould buy or sell any currency inthe world. Here 'were the outwardfruits of a genuinely free econ­omy. One might add that therewas not the slightest difficulty inentering or leaving Switzerland­only a minute's glance at passportsfor identification.

From the moment when theplane touched down at Prague theatmosphere was completely differ­ent. Passports had to be surren­dered for an indefinite period toarmed police. The atmosphere inthe airport was as drab and drearyas the atmosphere in Zurich had

been pleasant and friendly. Noth­ing was on sale from any foreigncountry, except, as I recall, a be­draggled copy of an Italian com­munist newspaper. Zurich lived byfree international intercourse, andlooked it. Prague lived in the shut­in isolationism of a totalitarianstate and a totalitarian economy ­and looked it. Punitive travel re­strictions will be a long step fromthe Zurich model to the Prague.Is this really what Americans de­sire?

Of course, the arguments maybe heard that the proposed penal­ties are for a limited period, twoyears, and that they represent anecessary means of protecting theexchange value of the dollar,threatened by America's inabilityto sell as much abroad in goodsand services as it buys abroad.Neither of these arguments car­ries much weight.

Ignoring the Basic Problem

It is a matter of general exper­ience that restrictions and penal­ties are far easier to impose thanto withdraw. The new hordes ofbureaucrats who, under the pro­posed legislation, will start theircongenial task of prying, snoop­ing, and spying into the affairs ofAmerican foreign travelers willbe reluctant to relinquish theirnew powers. And what assuranceis there, or can there be, that the

298 THE FREEMAN May

dollar or America's stock of goldwill be in any better plight twoyears hence than they are today?There has been a thundering si­lence about any intention to adoptthe measures which would relievethe pressure of domestic inflation,which is a prime cause of Amer­ica's balance-of-payments difficul­ties.

Such measures would be drasticcuts in swollen government spend­ing and a check on the recklesspumping of new money into oursystem by the Federal Reserve.One of the wisest comments on thefolly and undesirability of penaliz­ing travel is that of ProfessorGottfried Haberler of HarvardUniversity, an internationallyknown authority on currency andbalance-of-payments problems:

General nondiscriminatory pay­ments restrictions could perhaps bejustified as a temporary measure ifsomething decisive were done at thesame time to correct the fundamen­tal disequilibrium. But nothing ofthis sort has been proposed. On thecontrary, the Federal Reserve con­tinues to pump money at a recordrate into the economy. Hardly aweek passes without the President

signing into law new programs cost­ing billions of dollars, criticizingCongress at the same time for notspending more.

If inflation is not stopped and thefinancial house put in order, a de­valuation of the dollar becomes un­avoidable. An open devaluation,preferably in the form of a floatingrate, would be far better than onedisguised in a multitude of haphaz­ard, discriminatory taxes and con­trols of which the existing andpresently proposed batch is only thebeginning.

It seems doubtful whether de­valuation of the dollar, should itbecome necessary, would have se­rious practical consequences forthe value of the dollar in terms ofother currencies, as it would al­most certainly be followed by simi­lar moves in other countries. Inany case, nothing could be worsethan a step into the fatal bog ofexchange control, whether fromthe standpoint of the Americanpeople, the American economy, orthe world economic situation. Theproposed levy on travel is a strik­ing example of trying to deal witha superficial symptom while leav­ing untouched the basic causes ofdisequilibrium and inflation. ~

Complications

WE were the first to assert that the more complicated the formsassumed by civilization, the more restricted the freedom of theindividual must become.

BENITO MUSSOLINI

AFTER 35 years of probing, I havefinally hit upon a sure-fire remedyfor socialism - the disease sufferedby those who call for state inter­vention in order to do good orgive help to their fellow men. Thecure can be effective, however,only if the patient can be per­suaded to take his medicine. Avery large if!

But, first, let us understand themalady and its symptoms.1

There is nothing unusual aboutan early symptom of the disease:a perfectly normal compassion forthose who, for whatever reasons,fail to emerge from the povertylevel. The first real sign of break­down comes if the compassion

1 Socialism is a double-phased malady:the planned economy and the welfarestate. While the two seem always to gohand-in-hand -a.s perhaps they must­my remedy is aimed specifically at thewelfare state phase.

A Sure-FireRemedy

LEONARD E. READ

sours, curdling into a deep-seatedresentment and indignation when­ever conscientious effort or laboris rewarded less than no effort orlabor at all. For instance, one manreceives only a dollar a day forditch digging while someone elseis given a $10,000 check for sim­ply posing momentarily while hispicture is snapped. The patient'ssensibilities are offended: Rankinjustice! Miserable economic in­equities! Although these are thedanger symptoms, the case is notnecessarily hopeless. Many of usare similarly infected.

The malady does not reach themalignant or virulent stage untilthe i-ndignant individual turns tosocialism, that is, until he advo­cates coercion as a means of cor­recting what he regards as eco­nomic disparities and inequities.Diagnosis is now easy: the patient

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will turn to minimum wage laws,rent and other price controls, Fed­eral urban renewal along withgovernment housing and the like,subsidies to farmers for not farm­ing and to others for services neverrendered, strikes as a pricing mech­anism for labor, restrictions onacross-the-border travel, trade, andinvestment, and so on. When thesesymptoms appear, beware, for thedisease is contagious!

What can be done for these vic­tims? Scolding, name-calling, im­patience, intolerance is false ther­apy and should be scrupulouslyavoided. No sound diagnosticianfools around with surface mani­festations; he approaches theproblem systemically, as the phy­sicians put it.

A Mistaken Sense of Values

What delusion lies at the rootof the malady? It is a notion asold as mankind and so ingrainedin our tradition and thinking that,like a vestigial organ, it stayswith us not only as utterly use­less but as positively harmful. Thetraditional notion: the value ofany good or service bears a directrelationship to the a1nount of ef­fort or energy exerted. It is thecost-of-production idea of value;economists call it the labor theoryof value.

Were this theory of value car­ried to its logical and absurd con-

elusion, the ditch digger wouldreceive far more than the actorwho only had his picture snapped.The patient, however, is less con­cerned with these exaggerateddisparities than with the com­monplace ones. For instance, hesees the highly educated collegeprofessor as "underpaid." Hepities the poor farmer, on whoseproduce all of us depend, who la­bors from early morn until afterdark; the wage earner who doesn'thave a "decent standard of living" ;on and on. But note that the sym­pathies engendered have theirroots in the patient's theory ofvalue - he measures a man's worthin terms of the effort or energyexerted. "That just isn't fair," heexclaims, and he takes coercivesteps "to put things right."

This is the advanced stage ofthe disease, the germs of whichlie in the traditional mode ofthinking and action.

Until 1870, there was no basisfor prescribing a remedy. Thencame an important discovery: thevalue of any good or service is'what will be willingly exchangedfor it. Value, in short, dependsnot so much on the objective costof production as on the subjectivejudgment of the customer. Thiswas discovered nearly a centuryago; yet only a few in the popula­tion have any apprehension of thisunassailable economic fact.

1968 A SURE-FIRE REMEDY 301

The important fact is that themarket value of my labor is notthe value I put on it, nor does itmatter what anyone else says myfair wage ought to be. The valueof my production is determinedby what you and others will freelyexchange for it. There is a worldof difference between our inher­ited, vestigial notion and this re­cently apprehended economic truth.

Our patient, it turns out, is in­fected by the vestigial notion andthe contradiction it forces uponhim. He allows his emotions to begoverned by what he thinks an­other's wage or reward should be;whereas, what he thinks is irrele­vant, unless he's the buyer. Hethen contradicts his own theoryevery time he shops around forbargains - the latter a perfectlynormal and correct behavior. Theerror of his theory is exposed byhis own actions, for when he shopsfor bargains he is trying to buyother people's labor as cheaply aspossible. Living such a contradic­tion is bound to have psychologicaleffects, the ill effect in this casebeing the resort to coercion. So­cialism, in other words, is a psy­chological illness.

To Each According to Need

Now, what is the curative medi­cine so distasteful to socialiststhat few will try it? The first stepis for the patient to abstain from

coercion and rely entirely on per­sonal demonstration and persua­sion to help those whose plight hedeplores.

The next step is for the patientto abstain from using price andquality as criteria for purchases.Shopping for bargains is taboo.Instead, he shall find those per­sons who are the objects of hiscompassion, those further downthe economic ladder than theirefforts seem to him to warrant.He shall then purchase their goodsor services -labor - at a pricewhich he thinks befits their effortsand needs. The patient's tailor, forinstance, shall be chosen not forhis competence or the desirabilityof his suits but for how strenu­ously he works at his trade. Andthe patient will then reimburse thetailor at a rate to assure him a"decent standard of living." Fur­ther, the patient shall follow thisrule in all transactions for allgoods and services. Henceforth,he shall look no longer to his ownrequirements but only to what hesees as the requirements of others.

Preposterous ? Yes, this remedyis the counsel of error. But it isabsolutely consistent with the la­bor theory of value, the vestigialnotion that lies at the root of thepatient's illness. Will the patienttry it? If he did, he soon wouldtire of it. He won't take advicefrom others; but if he will only

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test his theory against his ownactions, he is cured. This is a do­it-yourself remedy; the dosage:read the prescription each morn­ing on arising.

A Fair Field;

No Favors to Anyone

How, now, is economic justice tobe served? Justice is served whenthe door of opportunity is as opento one individual as to any other.Whether or not a person serveshimself well or ill or caters to thesatisfactions of others efficientlyor inefficiently is in a realm otherthan justice.A fair field and nofavor is our stand if we would en­shrine justice. It is none of ourbusiness how a person makes outwhen justice prevails; that's en­tirely his own affair.

Are we then to let the unfor­tunate go unattended? Is there tobe no thought of them? Of course,that will not be the case! The

record as well as sound theorydemonstrate that the coercive wayof life Ie-ads to general impoverish­ment; the record and theory at­test to the fact that the willingexchange method of cooperationaffords prosperity on a scale here­tofore unknown to mankind.

And for the relatively few whoremain unfortunately situated, leteach of us give of his own, notsomeone else's goods as a meansof alleviation. This is the highlycommendable Judeo-Christianpractice of charity, heartening tobenefactor and benefited alike.While charity is in a realm beyondeconomics, it is evident that with­out sound economic practices char­ity is impossible.

In the final analysis, it is thosewho produce, not bleed, for hu­manity who are the benefactorsof mankind. Noone need prescribeany remedy for them for they arein good health. •

Reciprocity

TSEKUNG asked, "Is there one single word that can serve as a

principle of conduct for life?" Confucius replied, "Perhaps the

word 'reciprocity' will do. Do not do unto others what you do not

want others to do unto you."LIN YUTANG, The Wisdom of Confucius

TIME

JOHN O. NELSON

A Lesson •In

On the Current Frenzy to Multiply Government Regulation

A VERITABLE FRENZY to multiplygovernment regulation presentlyrules almost every electorate andevery legislature. What are we tosay of this obsession? We mightpoint out that it has a close affin­ity to the practices of socialism.But is it, therefore, wrong? Mayit not be justified? Is not law agood, something we all desire? Letus examine the last question first.

We do not desire our own op­pression. That can be affirmed withcertainty. Do government laws op­press us? And if so, all laws, oronly some? The answer is: somedo, and some do not.

Some government laws prohibitwhat we find it no effort not to do

Dr. Nelson is Professor of Philosophy at theUniversity of Colorado where he has taughtsince 1950. Articles and papers by him haveappeared in numerous scholarly journals andbooks in the United States and abroad.

and command what we find it noeffort to do. There are, for in­stance, laws against murder andlaws that command us to drive onthe right-hand side of the street.

These and like laws are not op­pressive nor do we find them to be.But plainly, many laws that arelegislated by government do exactfrom us an effort in our obeyingthem. The farmer, for example,has to curtail or ignore his ownjudgment and desires in obeyinglaws that tell him just how muchhe may plant. That takes effort.And so does having to measurehis acreage, having to fill out themany forms that always accom­pany such laws, and so on. Whena law exacts effort from us it is,to that extent, oppressive. Thus,we may conclude that most currentgovernment regulation is oppres-

303

304 THE FREEMAN May

sive. Moreover, even laws that takenseparately might not be oppressivebecome oppressive when multipliedsufficiently. It does not require anyparticular effort, for instance, todrive on the right-hand side ofthe street; but if this regulationis combined with a hundred othersas innocuous, just keeping in mindwhat all the regulations are andattempting to obey them all re­quires effort. Thus, we find op­pressive the mere number of lawsand regulations.

What justification is offered,then, for this present insistenceon multiplying laws? A typical ex­cuse is that without governmentregulation men's lives and affairsmust lapse into chaos. This preva­lent belief makes it seem incum­bent that every nook and crannyof our lives and affairs be regu­lated by government, no matterhow oppressive such regulationmay be; for nothing, we shall beinclined to admit, is worse thanchaos. I take exception to the be­lief that without government reg­ulation men's affairs and livesmust lapse into chaos. How,though, can the validity of myview be demonstrated?

If we could cite a case whereorder in a certain area of men'saffairs prevailed without govern­ment regulation, we should havegone a long way in substantiatingour claim. But, even more conclu-

sive would be to cite a case wheregovernment actually opposed pri­vate efforts to produce order outof chaos and, yet, order was pro­duced. For this case would be tan­tamount in kind to what is some­times called a "crucial experi­rnent" in science. All importantvariables would be accounted forand controlled: a certain chaoticcondition in man's affairs; privateeffort; and government action. Adeterminate result would be ob­tained through the direct agencyof private effort - namely, orderwhere there had been chaos. Sincegovernment action was moving inan opposite direction to private ac­tion with respect to the result ob­tained, it could not be held thatgovernment action was somehowindirectly the cause of this result.Thus, private effort must havebeen the cause; and hence, govern­ment regulation could not beclaimed to be the necessary condi­tion of order in men's affairs.

A Time to Remember

Let us envisage, first, the pos­sible case of every city and gen­eral locality in the United Stateshaving its own time, determinedby the position of the sun at noon.And let us compound this varietyof times by supposing that a vastnetwork of railroads exists andthat each railroad employs thetime of its home terminal in all its

1968 A LESSON IN TIME 305

operations and schedules. In pic­turing this state of affairs, we pic­ture - I think it must be agreed­a temporal chaos. We may suppose,moreover, that this chaotic multi­plicity of times would impose al­most unsupportable' burdens ontravelers, shippers, and the rail­roads. Presumably, we have beenenvisaging a mere possibility. Hasany such state of temporal chaosever in fact existed in the UnitedStates? A look at history revealsthat it has.

Before 1883, local time - that is,time determined by the local noon­day position of the sun - prevailedthroughout the United States.Thus, there were more than 26local times in Michigan, 38 in Wis­consin, 27 in Illinois, and 23 inIndiana. A traveler going by railfrom Maine to California had tochange his watch 20 times duringthe trip if he meant to keep ac­curate time. In addition, each rail­road operated its trains accordingto the local time of its home ter­minal. The Pennsylvania Railroad,whose home terminal was in Phila­delphia, employed a time that was5 minutes slower, for example,than New York's, the home ter­minal of the New York Central,and 5 minutes faster than Balti­more's, the home terminal of theBaltimore & Ohio. Not surpris­ingly, this multiplicity of timestandards confounded passengers,

shippers, and railway employeesalike. Errors in keeping time andcorrelating local times resulted ininnumerable inconveniences andcostly disasters. Passengers missedtrains in wholesale lots; the trainsthemselves frequently collided.1

Something obviously had to bedone. Given our contemporaryprejudices, we would naturallythink that government had to stepin and did step in to bring orderout of chaos by le,gislating thetime zones with which we arefamiliar today. But not so at all.

What actually happened waspoles apart. By 1872, a majorityof railroad executives were con­vinced that some system of timezones should be established. Ameeting of railroad superintend­ants was convoked in St. Louis,calling itself initially the Time­Table Convention and later theGeneral Time Convention. Underthe guidance of its secretary, Wil­liam Allen, former resident engi­neer of the Camden & AmboyRailroad, plans were drawn up toeliminate the chaotic multiplicityof local times. The first plans pro­j ected the adoption of time zonesbounded by meridians an evenhour apart. None of these planspassed the muster of close exami­nation. Finally, in 1881, Allen con-

1 See, Stewart H. Holbrook, The Storyof American Railroads (New York: CrownPublisher, 1947), pp. 354-55.

306 THE FREEMAN May

ceived the idea of five time zonesbas'ed, not on theoretical consider­ations, but practical knowledge ofgeography, economics, the locationof large cities, and the generalhabits of the populace. The planprovided for time zones roughlydivided at the 75th, 90th, 105th,and 120th meridians west ofGreenwich and thus falling ap­proximately on the longitudes ofPhiladelphia, Memphis, Denver,and Fresno. The General TimeConvention adopted Allen's. planon October 11, 1883, and selectedthe noon of November 18 as themoment it should go into effect.At that precise moment the rail­roads, all acting in perfect con­cert, changed their operations andschedules from local to the newtime.2

Let us note: this regulation oftime initiated by the railroads wasa purely private undertaking. Thenew time zones had no force oflaw. No one except railroad em­ployees was compelled to set hiswatch by the new standards. What,then, was the response of the gen­eral public ?Except for a fewpreachers who thundered that thechange of time "was a lie" and"un-Christian," a few newspapereditors who objected that the rail­roads were tyrannically dictatingtime to 55,000,000 Americans andshould be stopped by law from

2 Ibid., pp. 355-56.

doing so, and some local politicianswho cried that the act was "un­constitutional, being an attemptto change the immutable laws ofGod Almighty and hard on theworkingman by changing day intonight"3 - a typical political mis­interpretation of plain fact - ex­cept, in short, for the predictablefulminations of some local politi­cians, clerics, and journalists, thegeneral public found the changegood and adopted it. Withoutbeing forced, people. by and .largeset their watches by the new rail­road time; towns and cities fol­lowed - indeed, had to follow­suit.

Government's Role

Now, all this time, what was theattitude or response of govern­ment? As we have already noted,some local governments and theirofficials opposed the new dispen­sation, though the oppositionproved ineffective. What about theFederal government? Surely - be­hind the scenes at least - it musthave loaned a helping hand to theTime Table Convention and en­couraged or indeed inspired thebringing of order out of chaos!But, again, not so. In fact, thevery opposite. Let me quote fromHolbrook's illuminating account:

The traveling public, and shippertoo, quickly fell in with the new time-

3 Ibid., p. 356; see also p. 357.

1968 A LESSON IN TIME 307

belt plan, and naturally found itgood. But Uncle Sam wasn't readyto admit the change was beneficial.A few days before November 18ththe Attorney General of the UnitedStates issued an order that no gov­ernment department had a right toadopt railroad time until authorizedby Congress. The railroads wentright ahead with the plan, and theAttorney General, according to agood but perhaps apocryphal story,went to the Washington depot latein the afternoon of the 18th to takea train for Philadelphia. He wasgreatly astonished, it was reported,to find he was exactly 8 minutes and20 seconds too late.4

It might be added that onMarch 19, 1918 - a full generationafter the general adoption of rail­road time by the country - Con­gress passed the Standard TimeAct, which gave (to what purpose,it is hard to see) a governmentcommission power to define by lawthe boundaries of each time zone.One is reminded here of a pla­giarist who, having stolen and inthe process mangled another man'swork, then takes credit for itscreation.

We have demonstrated as con­clusively as such things can bedemonstrated that governmentregulation is not necessary to theexistence of order in men's livesand affairs. The belief that it is,

4 Ibid., p. 359.

therefore, is false. Does it followthat we have shown that the cur­rent multiplication of oppressivegovernment regulation is unj usti­fied? Not quite. We have shownthat this current practice is notjustified by the belief that with­out government regulation men'saffairs would lapse into chaos.

It might be claimed, however,that the present multiplication ofoppressive law can be justified onother assumptions. For example,it might be argued that thoughprivate effort as well as govern­ment regulation can produce orderin men's affairs, government regu­lation can produce greater order,or greater safety, or greater se­curity, or greater prosperity; andthat, on these grounds, the multi­plicity of government regulationcurrently taking place is justified,even though oppressive. Now, Iam sure that each of these claimscan be shown to be absolutelyfalse. I merely want to point outthat we have not shown this in thepresent paper. Our results havethus been more limited.

The many-headed monster ofsocialistic misconception whichdominates the modern mind is notlikely to be slain by one blow.However, cutting off one of itsheads is a step toward its eventualdestruction. We have, I believe,lopped off the most central andvoracious one. +

EQUALITY?

EDWARD Y. BREESE

LIBERTE, Fraternite, Egalite, theJ acobins proclaimed, and set aboutoiling the brand new guillotine.These were stern and practicalmen when it came to the dailymechanics of revolution. Some oftheir professed ideas might taketheir heads into the clouds, buttheir actions instinctively con­formed to the realities of a trou­bled time.

They knew, without troublingto theorize, that political equalityin their time could only be had bythe knife. The man who wants tolevel a forest can't possibly jackup all the immature or stuntedtrees. It's a lot more practical totry cutting the tops out of thosewhich tower above the rest. Thisway, equality of a sort can ulti­mately be achieved.

Mr. Breese has taught Industrial Manage­ment at Georgia Tech and headed the De­partment of Humanities at Embry-RiddleAeronautical Institute in Florida. At presenthe is a free-lance writer.

In the end, of course, it willhave to be equality at the levelof the smallest and weakest trees.

Equality among people in theirrelations with each other is alsolikely to be at their lowest com­mon level.

It is only in the ancient, pre­Christian era that we find exam­ples of people who sought equalityby pruning out the weaker growthrather than the stronger. TheSpartans eliminated at birth thosewho could obviously not grow upto be warriors or the breeders ofwarriors. So, according to report,did the Amazons.

There are occasional reports ofother primitive tribes living atsuch marginal levels that all whocould not "pull their weight" hadto be ruthlessly eliminated to en­sure the survival of the group.

If equality is really desirableper se - and I'm not trying to saythat it is - this cutting away of

1968 EQUALITY? 309

weak and defective units wouldseem the logical method for hu­manity to follow. It would improvethe norm of achievement and theavailable breeding stock at a pro­gressive rate as the generationspassed. It is logical.

Fortunately, or unfortunately,as you wish, I doubt that it ispractical in the twentieth centuryof the Christian ethic. We havebeen taught too long and toothoroughly that it should be "wom­en and children first in the life­boats."

A full generation of politicaland economic socialism and mono­lithic statism in our own day hascapped the process of indoctrina­tion.

This is why I am continuallypuzzled by the current semanticsof "equality." In a day and ageof careless and sloppy usage, it'shard to tell just what is meantby the word.

The professed intellectuals and"liberals" appear to mean anequality of humanity at four lev­els: economic, political, educa­tional, and social. But they havenot explained why equality at allfour levels would be desirable forhumanity as a whole.

They are less frank - and con­siderably less clearheaded - thanwere the Jacobins or the followersof Toussaint or Spartacus. Noneof them come right out and say

the equalizing should be accom­plished by beheading the tall trees.Some of them may not realize thatthis is the only way it could bedone.

There also seems to be a highlevel of confusion as to just howthis alleged latter-day paradise isto be brought about. They areagreed upon certain a priori as­sumptions as to the desirabilityand necessity of reaching theirgoals. Question these, and you'repromptly labeled bigot and enemyof the race. But their own think­ing as to pragmatic implementa­tion of the Four Equalities isboth primitive and fragmentary.

Educational Equalization

I have heard it seriously ad­vanced that equality of educationat the highest level can be reachedby requiring the top universitiesto lower their admission and scho­lastic requirements, even to thepoint of abolishing competitionand grades. If this is only done,its advocates hold that even theeducationally and mentally "disad­vantaged" can receive a top leveleducation (?) at Princeton orM.LT.

The question mark (?) aboveis mine. There is no question inthe minds of the proponents ofthis absurd doctrine. Specifically,I question what education, if any,could possibly be obtained at an

310 THE FREEMAN May

institution which had obliginglyadjusted itself downward to thelowest common level.

I won't try here to pursue thisthought further or to questionequality at the social and politicallevels. But, I want to examines9me of the possible results offuzzy thinking about "economicequality."

First of all, any such thing ismanifestly impossible. Even itsgreatest advocates are presentlyadmitting this in practice, if notin theory. Any economic system­no matter what it may be called ­has to embody three classes ofpeople.

There must be primary pro­ducers (Le., workers) who usesynthetic or extractive processesfor the alteration of raw materialinto finished goods or who pro­vide services. Some of these willbe better rewarded than others,if for no other reason than thediffering utility of the products.

There will be drones - some,through no personal fault, as withthe very old and very young.Others will seek support out oflaziness or antisocial tendency. Inany case there will be drones ineven the most efficient organiza­tion.

Finally, there will have to be aclass of entrepreneurs or manag­ers. This is one human functionwhich cannot be built into a cy-

bernetic machine or delegated toeven the most sophisticated ofrobots.

Grant this, and it becomes ob­vious that "economic equality" inany society must be stratified inat least these three levels. It maybe possible, though I doubt it, toforce all workers to labor for onewage. But they may never be ex­pected to work for an income nobetter than that of the drones,for they, too, would become dronesin that case. Nor will the manag­ers exercise their specialized abil­ities without tangible and meas­urable reward.

In Contrast to Russia

Let any doubter study the pres­ent managerial class within theSoviet Union. Let him especiallyponder the results of surveyswhich show the "commissar" classnearly psychologically, tempera­mentally, and motivationally iden­tical with their Western counter­parts in the "executive" ranks.

Yet, this impossible levelingprocess is inherent in any suchproposal as a "guaranteed annualincome" for all Americans. Putsuch a system into operation, andmore and more individuals willstoop to take advantage of it.

As the drones increase, so willthe burden upon the backs of theremaining workers and managers.More and more of their produce

1968 EQUALITY? 311

will be diverted to the nonpro­ducers. This process has its ownbuilt-in breakdown factor. The endhas to be disaster for all.

Opportunities Earned

What about "equality of eco­nomic opportunity"? Of all things,this sounds the most possible, themost beneficial to all, and the mostnearly in line with the ideals ofa free society. Up to a point, itcertainly is.

"Equality of opportunity," how­ever, cannot be given, any morethan can freedom, education, cour­age, or status. It has to be earnedor made for oneself by the individ­ual concerned. Neither liberty norintelligence can be legislated. Norcan equality of any sort except ata dead bottom level.

Attempts to work out an elab­orate legal or social system to en­sure any sort of equality are in­evitably self-defeating. Humanitycould save itself endless struggle,suffering, and frustration if thistruth were recognized.

Once the issue is seen clearly,there is something we can doabout equality of opportunity. Wecan strive to establish a systemwhich will enable each individualto advance to the limit of his owncapacity and ability. We can thus

aid each one to be and becomeand achieve to the upper limit ofhis potential. This is what Platodefined as "justice." And this isthe only way in which those atevery level can be raised.

There's really no mystery abouthow such a favorable climate canbe attained. It's been done - righthere - only a little while ago ashistory runs. Our Founding Fath­ers opened American life to thefreest economic system yet at­tempted by any people.

As long as we held to the free,competitive economy our people,as individuals and as a whole,made giant strides. Our societywas both vertically and horizontal­ly mobile and fluid. The net re­suIt was growth, progression,achievement.

Only when we attempted to ac­celerate or improve the process bycoercive legislation did our trou­bles begin. A free economy can nomore operate within a tight frame­work of regulatory law than cana man bound in a strait-jacket.The natural, beneficial processesof open competition are fatallyinhibited by controls.

Individuals must be free to helpthemselves if mankind is to beelevated. ~

A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN

IF YOU SCRATCH a historian, youfind a politician. At least that'sthe way it's been ever since theNew Deal and the New Economicsconquered the academy. ArthurSchlesinger, writing about theAge of Jackson, couldn't resistimposing the face of FranklinD. Roosevelt on Old Hickory. HardMoney and Free EnterprisingDemocrats of the eighteen thirtieswere turned into partisans of theNew Frontier and the Great So­ciety. William Graham Sumner,who attacked the plutocracy of hisday and actively opposed theSpanish-American War, wastransmogrified by our RichardHofstadters and our R. G. Mc­Closkeys into a Social Darwinistand an imperialist. The Populisttracts celebrated in Vernon Par­rington's Main Currents in Amer­ican Thought figured in a wholeliterature of the nineteen twen-

1)10

ties and thirties as the Wave ofthe Future. So it has gone for twoor three historiographical genera­tions.

The rage to turn the past intothe present has made for livelycontroversy, and helped many aman to a Ph.D. No doubt it is asure cure for unemployment inAcademe, for, if the past has al­ways to be made over into a blue­print for what is going to happennext week, it means that the his­tory books must be changed everydecade. But what happens to theExterior View in all this choppingand changing? How can we treatour ancestors with simple under­standing of their own reactions totheir own contemporary problems?How can we read reality into theireconomics, their morality, theirreligious feelings?

In his The World of AndrewCarnegie: 1865-1901, Louis M.

1968 THE WORLD OF ANDREW CARNEGIE 313

Hacker has addressed .himself tothe tremendous task of explainingthe most symbolic of our nine­teenth century competitive enter­prisers in terms of the intellec­tual and moral forces thatbeat in upon him. This isn'tdesigned to be a history of theCarnegie Steel Company, thoughyou will find such a history in it.What Louis Hacker has done is toreconstruct the ethos of an era,giving us long and detailed sec­tions on what was being said anddone by judges and law courts andlabor organizers and f.armers andrailroad men and bankers andschoolteachers and clergymen toenforce the so-called Puritan ethicof nineteenth century America.The socialists and anarchists arehere, too, but mostly as a premoni­tory growl off stage. Hacker doesnot overestimate their importanceas of the eighteen eighties merelybecause America became some­thing else after Andrew Carnegiehad passed from the scene.

Behind the Cliches

The ground-breaking impor­tance of Louis Hacker's book de­rives from the author's willingnessto get behind the cliches of a fullhalf-century of historical writing.We have been told often enoughthat the development of the UnitedStates in the post-Civil War periodwas achieved at the expense of the

ANDREW CARNEGIE

farmers. This is the Populist ver­sion of history. The farmer, sothe legend runs, sold his productin a world market at low pricesand bought his machinery in aprotected market at high prices.To continue the legend, the rail­roads rooked him with highfreight charges. Moreover, sincethe railroads had cornered muchof the best land, getting alternatesections as free gifts along theirrights of way, the farmer sup­posedly couldn't add to his acreagewithout mortgaging himself tothe hilt. With the cards stackedagainst him, the farmer had to gointo politics. He created his Farm-

314 THE FREEMAN May

ers' Alliances, his Granges, hisPopulist Party organizations­and eventually captured the gov­ernment in Washington when theold Populist platforms were takenover by the New Deal.

The only trouble with this his­tory, as Louis Hacker shows, isthat it doesn't fit the facts. Trueenough, we had high tariffs in thelate nineteenth century. But theU.S. market was so big and sowide, and there were so manycompetitive units, that the tariffdid not have much effect on theprice level once American com­panies had grown beyond the "in­fant industry" stage. By 1880,says Hacker, the U.S. was makingmore Bessemer rails than GreatBritain; by 1890, more pig iron;and by 1895, our prices for bothwere lower than those of the Brit­ish. While industrial prices inthis country were dropping in the1870-1900 period, the value ofAmerica's farm plant - in land,buildings, animals, implements,and machinery - increased 104 percent in constant dollars as com­pared with 24 per cent for 1900­20. The Gross Product per farmworker increased 60 per cent inthe four decades following theCivil War.

Agrarian Mythology

As for land, it isn't true thatthe railroads made a killing at the

farmer's expense out of the do­main they got for next .to nothing.The railroads did everything theycould to promote settlement of theWest, establishing land depart­ments and selling their land grantwindfalls on easy terms. Mean­while, freight rates went downalong with the interest ratescharged by the banks. If thegrowth of check money is madepart of the post-Civil War equa­tion, there was an expanding cur­rency throughout the whole periodof squawking about the demone­tization of silver and the desira­bility of retiring the Greenbacks.

Since Louis Hacker can quoteyards of statistics to bear himout, how are we to account for theagrarian radicalism that coloredthe latter years of the nineteenthcentury? Mr. Hacker points outthat the old Middle Border states- Wisconsin, Illinois, Michigan,Indiana, Ohio - did not go for theBryanite nostrums. Populism,which swept the Mountain States,the High Plains states, and theSouth, had special causes thatwere bound up with the droughtcycle in the treeless plains and thecrop lien system wherever cottonwas grown. The western farmerwent into politics because he wasa disappointed speculator. He hadsold his Indiana or Iowa land fora high price and had moved outinto western Kansas or Dakota in

1968 THE WORLD OF ANDREW CARNEGIE 315

hopes of repeating his real estatekilling. But the drought cyclecaught up with him in the lateeighties. The U.S. Army engineerand geologist, John W. Powell,had predicted the return ofdrought conditions to what hadonce been called the Great Amer­ican Desert, and Powell was a trueprophet. When the rains ceasedto come after 1887, the speculatorfarmers streamed back East tocomplain to the politicians.

The disappointed land specula­tors found eager allies in the west­ern silver mine lobby and amongthe tenant farmers of the South.The villains, of course, were theGold Bugs, the Wall Streeters, the"international bankers." The crywent up that only a national cir­culating medium that amounted to$50 per person would prevent de­pression. But, as Louis Hackershows, there was no dearth ofmoney in a country in which "thesteady increase of bank depositsand of the substitution of checksfor notes kept the total moneysupply at a high level." Bryanfailed in 1896 because the countrysaw through the Populist delu­sions.

Remarkable Progress

The Hacker conclusion is thatthere wasn't very much the matterwith America in the post-CiviIWar period. Competition had

served the public well. The "rob­ber barons" took their profits, butthese were plowed back into in­dustry - and "the American peo­ple and th~ American economywere the real gainers."

The facts being what they were,it is small wonder that the Amer­ican Federation of Labor, whichbelieved in pushing for higherwages that would have come withincreased productivity anyway,should survive where the moreMarxian labor movements ex­pired.

Mr. Hacker fleshes out his storyof Carnegie's world with a wealthof fascinating detail. There arebeautiful biographies of jurists(example: Supreme Court JusticeStephen J. Field), of sociologists(William Graham Sumner), ofPopulist radicals (Ignatius Don­nelly). There is a whole sectiondevoted to the growth of the Car­negie steel companies up to thetime of their merger with theMorgan-Gary-Moore companies tomake up the United States SteelCorporation.

With the growth of Big Govern­ment, everything has beenchanged. Mr. Hacker doesn't thinkthe modern world is necessarilyan improvement on the world thatcreated Andrew Carnegie. Butwhatever our opinions may be,Carnegie's world deserves a morepatient understanding than it has

316 THE FREEMAN Ma~

received from our recent histor­ians. Mr. Hacker has written agreat book that will become moredefinitive as our perspectivesclear. ~

~THE BALANCE OF PAY­

MENTS: FREE VERSUS

FIXED EXCHANGE RATES byMilton Friedman and Robert V.Roosa (Washington, D. C.: Amer­

ican Enterprise Institute for Pub­lic Policy Research, 1967), 200

pp., $4.50.

Reviewed by Mary Jean Bennett

THE PLIGHT of the dollar, as mir­rored in the great internationalmoney crisis and long persistentU.S. balance of payments deficits,has aroused all manner of debateand actions such as removal of the25 per cent gold cover from ourcurrency, curbs by the Presidentrestricting private overseas lend­ing and investing, and possiblerestrictions on foreign travel.

Debate has ranged from pro­tectionism to cutting loose fromgold altogether - Le., letting theexchange rate of the dollar seekits own level, "floating" amongthe currencies of the world.

The issue of fixed versus float­ing exchange rates was skillfullydebated at length last year in apublic forum sponsored by the

American Enterprise Institute fOlPublic Policy Research. On thErostrum were two articulate andhighly knowledgeable debaters:fixed-rate defender Robert V,Roosa, former Under Secretary ofthe Treasury for MonetaryAffair~

under Presidents Kennedy andJohnson and now a partner ofBrown Brothers Harriman andCompany in New York; and float­ing-rate defender l\Hlton Fried­man of the University of Chicago,former president of the AmericanEconomic Association, adviser toGoldwater during the 1964 cam­paign, and no,v a columnist inNewsweek.

Both Roosa and Friedman be­moan the accumulated U.S. pay­ments deficit of more than $37 bil­lion since 1950. This tremendoussum has been financed by pay­ments from our gold stock, downby more than half to less than $12billion, and by a vast build-up inshort-term dollar liabilities, up tomore than $30 billion. Theseclaims could easily withdraw allthe remaining gold in official U.S.monetary reserves - given furtherbreaches of foreign confidence inthe dollar.

The accumulated deficit alsohas been "covered" by complexand oftentimes unpublicized cen­tral bank arrangements includingcurrency swaps, "Roosa bond"flotations, and London gold pool

1968 OTHER BOOKS 317

contributions. In addition, therehas been a rising tide of paymentscontrols ranging from the Inter­est Equalization Tax legislated in1963 to Congressional questioningin 1968 on whether Aunt Louisefrom Des Moines should be quitefree to travel abroad this summer.

At this point, the two debaterspart company. Roosa is a defenderof the status quo, of the currentfixed rate system, of what the Ad-

ministration has done to plug thepayments gap. He comes out four­square for a new international"paper-gold" currency unit to helpexpand international liquidity andsustain growing world trade.(Since the debate, Roosa's suc­cessor, Treasury Under SecretaryFrederick L. Deming, has also en­dorsed without reservation thenew Special Drawing Rights(SDR's) authorized by the Inter-

318 THE FREEMAN May

national Monetary Fund meetingin Rio last September.)

Professor Friedman, deft inno­vator and free market exponentthat he is, wants a sharp breakwith the status quo. He blamesthe persistent U.S. balance of pay­ments deficits on fixed exchangerates, on what he calls bureau­cratic price fixing. He holds thatcurrency exchange rates shouldbecome free market prices deter­mined primarily by private deal­ings the world over. He arguesthat the payments problem wouldyield to floating exchange ratesbecause there could not be a sur­plus or a shortage in the sense ofeager buyers unable to find sellersor eager sellers unable to find buy­ers; fluctuating prices would stirthe necessary ea.gerness. In addi­tion,

Floating exchange rates would putan end to the grave. problems re­quiring repeated meetings of secre­taries of the Treasury and gov­ernors of central banks to try todraw up sweeping reforms. It wouldput an end to the occasional crisisof producing frantic scurrying ofhigh governmental officials fromcapital to capital, midnight phonecalls among'the great central bankslining up emergency loans to sup­port one another's currency.

To put it mildly, Friedman'sposition doesn't sit well with Dr.Roosa. Fixed-rate defender Roosa,

while conceding the fixed-rate sys­tem is far from a perfect model,says that at least it provides anestablished scale of economic meas­urement, easily translatable fromone nation to another, enablingmerchants, investors, and bankersof one country to do business withothers on known terms - knowing,for example, with reasonable ac­curacy just how many Japaneseyen would be equivalent to oneSwedish kroner or one Mexicanpeso.

In other words, contends Dr.Roosa, without fixed exchangerates international trade and in­vestment would deteriorate. Mer­chant, investor, banker, and for­eign exchange dealer would gropefor the exchange rate that wouldenable them to make workableeconomic calculations. Uncertaintywould foreclose many a deal. Hedg­ing through forward exchangetransactions would be all but im­possible because no exchangedealer could handle wild currencyswings.

"I am very much afraid," sayshe, "that the rate for any cur­rency against all others wouldhave to fluctuate so widely thatthe country's own trade would bethrottled and its capital misdi­rected."

Friedman rebuts, pointing tothe stable Canadian currency ex­perience from 1950 to 1962 when

1968 OTHER BOOKS 319

the Canadian dollar "floated," andto the increasing financial chaoscaused by the "voluntary" invest­ing-lending guidelines of Presi­dent Johnson (further aggravatedsince then by the new mandatorycontrols announced on New Year'sDay). Clearly, Friedman gets theupper hand in the argument.

So the brilliant debate goes, proand con, rebuttal and counter-re­buttal, including some incisivequestioning of the intellectual ad­versaries themselves by competentforum participants. One questionoverhanging the debate like thesword of Damocles was not raisedbut maybe its answer was too ob­vious: That question is: Whitherthe dollar? ~

~ THE LAST HERO: CHARLESA. LINDBERGH by Walter S.Ross (New York: Harper & Row,1968), 402 pp., $7.95.

Reviewed by Robert M. Thornton

CHARLES LINDBERGH has been inthe public eye since 1927 when hepiloted a single engine plane non­stop across the Atlantic from NewYork to Paris. A tragic kidnap­ping case five years later broughtunwanted publicity; and duringthe period just before Pearl Har­bor Lindbergh was involved in thecontroversy over American foreignpolicy. These things most of us

know, but there is much more toLindbergh's life than has appearedin the headlines.

There is, for instance, Lind­bergh's pioneering work in theearly days of two modern-daywonders: organ transplants andspace travel. Lindbergh workedwith French scientist Alexis Car­rel during the nineteen thirties inthe development of a perfusionpump to keep organs alive outsidethe body. He was helpful also insecuring financial backing forRobert Goddard's experiments inrocketry and offered much-neededencouragement to the neglectedinventor. And all the while Lind­bergh has been an enthusiasticpromoter of aviation science,choosing to earn his pay as a com­mercial airline consultant ratherthan seeking a big salary for theuse of his name. His goal has everbeen real accomplishment, notmere fame and fortune.

Ross called Lindbergh "the lasthero" because the flight across theAtlantic was so much a one-manfeat. Lindbergh raised the moneyto finance the flight, helped to de­sign and build his plane, TheSpirit of St. Louis, plotted hisown course, provisioned his plane- planned the entire trip with re­markable care for detail. No dis­paragement of today's astronautsis intended, but they can functiononly as members of a huge team

320 THE FREEMAN May

backed by billions of dollars in tax­payers' money, corps of techni­cians' and batteries of computers.And Lindbe·rgh was a hero becauseyears of adulation did not shakehis integrity. Nor did strong op-position prevent him from relyingon his own judgment, even at therisk of his life. vVe can better un­derstand his spirit of independ­ence after reading how he wasraised. Lindbergh senior believeda youngster should learn responsi­bility at a tender age, and youngCharles was encouraged to act onhis own initiative.

Contrary to his public image,Lindbergh is not withdrawn oraloof. In the weeks after his soloflight to Paris, when he was al­most held in reverence by every­one he met, a flying buddy fromearly days delighted him by a bitof roughhouse after Lindberghhad accidentally sent him tumbling.How much better this, said Lind­bergh, than to be treated like roy­alty. And, too, Lindbergh was fondof pulling practical jokes on hisfriends and family. Here was awarm, sensitive human beingforced by the poor taste of report­ers, columnists, and newspaper

readers to resort to· all sorts ofsubterfuges so that his familymight enjoy privacy and live afairly normal life.

Lindbergh was one of the best­known members of America First,

Rn or~9.nizaHon opposing Amert­can entrance into World War II.but he put aside his objectioT.tsonce this country had entered/theconflict. Lindbergh's opposition tothe war had made him personanon grata with the Roosevelt ad­ministration, and he was refuseda commission in the Air Force.However, a plane manufacturerdid take advantage of his talents,and Lindbergh, in order to do agood job advising his employer,actually flew fifty combat missionsin the Pacific Theater as a civil­ian! He was then in his forties­an old man among fighter pilots ­but he was a skillful pilot and hisexperience and knowledge provedinvaluable.

A people cannot survive with­out heroes, and it cannot flourishunless its imagination is capturedby heroes of the right sort. Amer­ica has had its share of such men,and Lindbergh would be the firstto say that more are yet to come.

~