FEBRUARY 1955 50¢

Should We Trade with Russia?v. Orval Watts

Tribunes of the PeopleJames Bu.rnham

1929: Then and NowHans F. Sennholz

THE

reemanIn an enlarged March issue

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UNITED NATIONSand

ONE WORLDISM

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Readers Also Write... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 288

Washington, D.iC., FRANK C. HANIGHEN 293

Among Ourselves

The FREEMAN is devoted to the promul.gation of the libertarian philosophy: thefree market place, limited government andthe dignity of the individual.

While our editor, Frank Chodorov, was recu­peraHng from his recent operation, he submitteda short article as a possibility for this issue.His transmittal note said: "I hope you like it,but use your own judgment." As aC1ttng editor(my tenture of six weeks is now over), I foundit highly acceptable! Wonder what I'd havedone if I hadn't liked it?

This month we have several new contributorsto the FREEMAN. PERCY L. GREAVES, JR., a free­lance research economist, is also a columnist forChristi,a,n Economics and contributes to otherperiodicals. He has long studied and partic­ipated in the economic and political issues of theday, both here and abroad.

DR. HANS F. SENNHOLZ is Assistant Professorof Economics at Iona College. Weare allpleased that his first book-on the subject ofEuropean unity-has been accepted for pub­lication by D. Van Nostrand.

E. GORDON FOX, who lived and worked in Rus­sia for several years as an engineer, is a re­tired Vice President of the Koppers Company.

A short biography of MRS. NELLIE K. WAD­HAMS is found with her article.

The editor, publisher and other interestedpersons have often discussed the advisabilityof a "Reprint Section" of four or more pagesin each issue of the FREEMAN. The reprintswould be entire articles or extracts from theclassics-as well as modern works-on free­dom, on governme'nt, on economics, on theproper relationships of man to his fellow-men.What do you think?

Here's an inside tip to fellow-writers: Dur­ing my tour of duty as acting editor, I rifledthe confidential files of the magazine and dis­covered the closely guarded secret of how tobe accepted as a writer for the FREEMAN. Hereis the formula: Write clearly-preferably in2,500 words or less-on any phase of the gen­eral subject of freedom, and do it in suchcompelling words that thousands of personswill rush to buy and read the FREEMAN! Couldanything be easier than that?

The March issue of the FREEMAN is beingreferred to as "the UN issue." I suspect thatthis one for February will be facetiously called"the economics issue."

If anyone is curious, the name of your tem­porary editor is Dean Russell. He's been astaff member of the Foundation for EconomicEducation for the past eight years. And heis most pleased to return to that job, eventhough he enjoyed this one. Welcome back,Frank!

Libertarians

A Monthly

For

FRANK CHODOROVMABEL WOOD

JAMES M. ROGERS

FEBRUARY 1955 VOL. 5, N'O. 8

THB

EditorManaging Editor

Business Manager

reeman

C,ontents

BooksA Reviewer's N'otebook JOHN CHAMBERLAIN 321How Europe's Freedom Was Lost HUBERT MARTIN 323Passage to India C. O. STEELE 323Communist Strategy ROBERT DONLEVIN 324Constitutional Fallacy? RAYMOND L. CAROL 324Saying What You Mean PETER CRUMPET 325Well Worth Reading 326

ArticlesShould We Trade with Russia? V. ORVAL WATTS 295Yalta: Anniversary of Humiliation

WILLIAM HENRY CHAMBERLIN 298"Uraniumaires" FRANK CHODOROV 301Does Government Spending Bring Prosperity?

PERCY L. GREAVES, JR. 302Religious Roots of Liberty REV. EDMUND A. OPITZ 305Fundamentals of Education NELLIE K. WADHAMS 307Tribunes of the People JAMES BURNHAM 3091929: Then and Now HANS F. SENNHOLZ 312The Government's Freight Business PAUL L. POIROT 316The American Way E. GORDON FOX 319

EditorialsHow Communism Came to America 289February 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 290Slavery and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 290Taxes and the Individual 291Freedom Works Both Ways 291Pessimism 292

THE FREEMAN is published monthly. Publication Office, Orange, Conn. Editorial andGeneral Offices, Irvington-on-Hudson, N.Y. Copyrighted in the United States, 1955,by The Irvington Press, Inc. Leonard E. Read, President; Fred Rogers Fairchild VicePresident; Claude Robinson, Secretary; Lawrence Fertig, Treasurer; Henry Hazlittand Leo Wolman.Entered as second class matter at the Post Office at Orange, Conn. Rates: Fifty centsthe copy; five dollars a year in the United States; nine dollars for two years.The editors cannot be responsible for unsolicited manuscripts unless return postage, orbetter, a stamped, self-addressed envelope is enclosed. Manuscripts must be typeddouble-spaced.Articles signed with a name, pseudonym or initials do not necessarily represent theopinion of the editors.

R--. eader"s

also wrrl:-e'

Expos'ition of Principles Needed

I should like to take frliendly issue withArthur V. Parete's letter (December)in which he voices disappointment withthe new FREEMAN. My reaction to the'new editorial poldcy was exactly theopposite-as a matter of fact, I wasnever -quite so inspired by anything ina publication as by that magnificent~ditorial, "The Time Is Always Ripe,"In the August issue!

It is symptomatic of our politicaleducation that even libertarians some­times lose sight of basic principlesof gover'nment. What Mr. Parete terms"glittering generalities" are not sucha t all-they are the fundamentals inwhich our libertarian philosophy isgrounded, and which have been so neg­lected these past two or more decades.

Articles in support of the BrickerAmendme'nt, etc., can be found in anynumber of publications, but it is onlyin the FREEMAN that we find firmlogical expositions of those principle~of which we must have thoroughknowledge before we can even begin tologically support such causes.

Bayside, N. Y. GERTRUDE J. BUCK

The Girl Scout Affair

It is interesting to note that on March26, 1953, Langston Hughes testifiedbefore Senator McCarthy a'nd hisPermanent Subcommittee on Investiga­tions, and revealed himself to be dis­enchanted with communism. I am in­debted to Charles E. Rice for bdngingthis to my atte'ntion through his letterin the December FREEMAN. One of thepoints to keep in mind is that whilethis happened in March of 1953, theastonishingly generous praise of Mr.Hughes appeared in the February 1953Girl Scout Leader, and presumably wasin preparation a month or so prior topublication date.

We are surprised to learn thatLangston Hughes was able to establishhis con-communist status by means ofThe First Book of Negroes. It is abook which praises the UN highly, andlis openly antagonistic to the South. Ittends to stir up sectionalism and anti­American ,- feeling along racial lines­an objective very dear to the Com­munist International for many years.Colorado Springs, Col. ROBERT LE FEVRE

288 THE FREEMAN

A Correction

Alfred Kohlberg, in his review of thebook McCarthy and the Communists(November), alleged that the AmericanCommittee for Cultural Freedom hadreceived one million dollars from theState Department in the last five years.I want to point out that the AmericanCommittee for Cultural Freedom hasreceived no money whatsoever fromthe State Department. The several"lavish shows" in Europe to which Mr.Kohlberg refers were financed by theFairfield Foundation. Our entire finan­cial support is derived from contribu­tions from individuals, foundations,labor unions and business organiza­tions.

Mr. Kohlberg says that the authorsof the book, James Rorty and MosheDecter,are "connected with the Voiceof America." I should like to point outthat at the time the authors wereengaged to write the book on McCarthyneither had any connectio'n whatsoeverwith the Voice of America.New York City SOL STEIN

Executive Director, AmericanCommittee for Cultural Freedom

That California Smog

Your editorial "Political Smog" (De­cember) revolves around GovernorKnight's request that the oil companiesof the Los Angeles basin temporarilyclose their refineries to determine ifappreciable difference would be madein the noxious condition which prevailsin our Southland under certain atmo­spherie conditions. His request, youseem to think, was a piece of politicaldemagoguery, and you recommend heshould have instead stated "franklythat until the chemists learn the causeof smog" our people will have to go onsuffering. And then you add, "suchhonesty and decency in a politician isnot to be expected."

Governor Knight has no quarrel withyou for whatever opinion you hold..•.However, since your piece is incom­pletely and inaccurately reported, mayI relate certain facts. . . . Smog, in themain, is air polluted by hydrocarbonparticles, by-products •.• of petroleum.By scientific research experts havedetermined our five oil refineries looseevery day 250 tons of gasoline vapors.. . . The oil companies themselves,recognizing their obligation to thepublic, have spent millions of dollars inattempting to abate their portion of thisplague. They contend that they havebeen, in large measure, successful. . . .

Governor Knight, believing in their

sincerity, felt he was offering them thegreatest opportunity they have everhad to clear their skirts. If, as theysaid, their plants now have little ifany effect on the atmospheric conditionwithin the basin, here was their op­portunity to prove it. If, after comply­ing with his request, the smog per­sisted, it would be proof positive thatoil refinedes should no longer beblamed.

You also took exception to the Gov­ernor's suggestion that their employ­ees, during this five-day no'nproductionperiod, be maintained on the payroll.Governor Knight realized it would bean imposlition on the companies toabsorb this dead loss, but he also knewthat ... it would be a relatively minorsetback to the companies for the gainthat was promised them if their con­tention was borne out; whereas, to theindividuals involved, loss of a week'spay might prove catastrophic. His wasa pyrrhic choice.•..Sacramento, Cal. JOHN J. SYNON

Private Secretary to the Governor

The Baby Boom

Mr. F. A. Harper's article, "Prosperityby Procreation" (December) neglects,I think, an underlying action takingplace concurrently with the popularityof this population theory. Namely,many businesses are not o'nly believingthis thesis but are actively planningfor the increased potential demand bythe largest investment, supplied by thelargest level of savings ever seen bythis country. Investment per capitaand savings per capita have never beenso high. Through the multiplier proc­ess, not only the tools of productionand their end products, but also themeans to purchase them will have beenplaced in the hands of this new popula­tion element, or that represented bytheir parents- other things remainingequal.

I believe that this should not havebeen omitted in describing this theory.Larchmont, N. Y. D. A. WILKINSON

Conscription

Congratulations on the most stimu­lating and important article "A Warto Communize America," by FrankChodorov (November). He brings outthe very true fact that our two warsin Europe and one (so far) in Koreawere only possible because our boyswere conscripted.Kirkwood, Mo. CYRIL CLEMENS

THE

reemanFEBRUARY 1955

How Communism Came to America

I F ALL the card-carrying members of the Com­munist Party in the United States were put in

jail or deported, it would have little or no effect onthe growth of communism in America. True, mem­bers of the party are especially dangerous becausemost of them have pledged allegiance to a foreigngover.nment. But so far as advancing the principlesof communism is concerned, they are not nearly aseffective as the average Republican or Democratwho professes to hate communism and all it standsfor.

'That's a strong statement! Proof? Reach foryour dictionary and turn to communism: "Anysystem of social organization involving commonownership of the means of production, and someapproach to equal distribution of the products ofindustry." This, of course, is to be done throughand by the authority and force of government.

How much communism do you believe in andsupport? The so-called average American is cur­rently demanding that about one third of the nationbe communized, when measured by the government'stax-take; one fourth when measured by govern­ment's ownership of land; more than one fourthwhen measured by government's ownership of totalnational wealth other than land; almost one fourthwhen measured by government's production of elec­tricity; about nine tenths when measured by govern­ment's ownership of school and subsidies to educa­tion; better than one half when measured by govern­ment's share of the earnings from industry; and soon and so on.

Ah! you say, but democratic ownership and con­trols by government in America isn't true com­munism; when you say communism, you mean thedictatorial program laid down by Karl Marx in hisCommunist Manifesto in 1848.

OK, reach for that document and read: "We haveseen ... that the first step in the revolution by theworking class is to raise the proletariat to the posi­tion of the ruling class; to win the battle ofdemocracy. The proletariat will use its politicalsupremacy to wrest, by degrees, all capital fromthe bourgeoisie; to centraliz'e all instruments ofproduction in the hands of the State."

Mark well the phrases "to win the battle ofdemocracy" and "to wrest, by degrees, all capital."No revolution there! While we have heen passinglaws against those who might advocate the violentoverthrow of the government, the real threat tofr:eedom in America-democratic government own­ership and controls----has leaped to new heights.

But let us refer again to the communist programas laid down 107 years ago by Marx and Engels intheir Communist Manifesto: "These measures will,of coursre be different in different countries. Never­theless, in the most advanced countries the follow­ing will be pretty generally applicable." Then theylist the long-time objectives of communism. Amongthem are government ownership of land, a heavyprogressive income tax, abolition of inheritancerights, a national bank, government ownership orcontrol of communication and transportation facil­ities, State-owned factories, a government programfor soil conservation, government schools and freeeducation.

How many of theS'e planks of the CommunistManifesto do you support? Federal Reserve Bank?Interstate Commerce Commission? Federal Com­munications Commission? Tennessee Valley Au­thority ?The Sixteenth (income tax) Amendment toour Constitution? The inheritance tax? Governmentschools with compulsory attendance and support?

Did the card-carrying Communists bring any ofthes'e to America? R'emember, these ideas were gen­lerally repudiated in the United States of 1848 whenMarx recommended them. Would any of them dis­appear if the party members were imprisoned ordeported?

But maybe you would prefer to consult the worksof a modern American Communist, rather than anold European one. Well, how about Earl Browder,the former leader of the Communist Party inAmerica? In a 1950 pamphlet, "Keynes, Foster andMarx," he lists 22 items which "express the growthof State capitalism ... an essential feature of theconfirmation of the Marxist theory." Among themare the following governmental actions: deficitfinancing, insurance of bank deposits, guaranteed

FEBRUARY 1955 289

mortgages, control of bank credits, regulation ofinstallment buying, priee controls, farm price sup­ports, agricultural credits, RFC loans to business,social security, government housing, public works,tariffs, foreign loans.

How many of these measures-which a leadingCommunist identifies as MarxiS't-do you oppose?All of them? H'alf? Would any of them disappearas a result of jailing the Communists?

The opening sentence of this editorial is: "Ifall the card-carrying members of the CommunistParty in the United States w,e,re put in jail ordeport'ed, it would have little or no effect on thegrowth of communism in America." Governmentownership and government controls have come toAmerica because we the people have demandedthem, not becaus'e the Communists brought themfrom Russia. We can rid ourself of the communismof governm'ent ownership and government controls-and return to private ownership and a free mar­ket----any time we want to.

That's the ques1tion! Do the American peoplewant to return to the responsibilities of freedomof choice? Do many of us really desire to returnto the original American concept of a strictlylimited governm,ent? I believe w'e do-fundam'en­tally-and that we will yet turn back before it's toolate. But if I'm wrong in this hope and belief, atleast let's not blam'e the Communists for our ownreJection of freedom and responsibility. Let's putthe blame where it belongs-with you and me andother Americans who hav,e avidly accepted thesubsidies of a paternalis,tic government while self­righteously prof'essing to detest the communisticprinciple of government paternalism.

February 22

D DRING the Constitutional Convention in Phila­delphia in 1787, progress toward agreement

was oft,en diseouragingly slow. There were timeswhen it seemed as though there would be no agree­ment at all and that each of the thirteen stateswould go its own way.

'The "large State" delegates were hammeringaway at the idea of 'equal repres'entation demandedby the "'small State" delegates. The advocates of"~tabes'rights" were at the throats of the equallysincere defenders of a powerful central govern­ment. There were those who wanted the Presidentelected for lif'e, and there were those who wantedhim r,estricted to one term. The delegates whowanted"a republic were heckling those who wanteda democracy. The "practical politicians" were voic­ing their customary fears about what the peopleback home would say. In short, the constant andoften bitter wrangling called for the wisdom andleadership of an individual who could command thevoluntary respect of all the delegates.

290 THE FREEI\1:AN

Fortunately for them-and for us-such a personwas present. He was George Washington. As pres­ident of the Convention, he seldom took an activepart in the pros and cons of the discussions. Butone of the delegates, Gouverneur Morris of Penn­sylvania, tells us that during an especially heateddebate Washington slowly rose to his feet andcalmly offered this advice to his fellow-countrymen:"If to please the people, w,e off,er what we ourselvesdisapprove, how can we afterwards defend ourwork? Let us raise a standard to which the wiseand honest can repair. The ,event is in the hand ofGod."

'There still had to be compromises, and no onegot everything he wanted; but thes'e words ofWashington did offer a timeless measurement uponwhich patriotic men of good will could-and stillcan-agree. The standard which our forefathersfinally rais'ed under the leadership of Washington-the Constitution of ,the Unit,ed States-has beencalled the greatest docum,ent ever drafted by man.

But as we commemorate the birth of a great man,let us r,emember this: while Washington and otherslike him established the framework of freedom forus, it will last only as long as you and I study tounderstand it and work to keep it.

Slavery and Taxes

H UMAN SLAVERY is still practiced against the pig­mies in the Belgian Congo-under government

supervision and permission, of course, since theinstitution of slavery cannot exist unless it is en­forced by the prevailing, government. But in allfairness to the government of B,elgium, it must bestated that the pigmies w'ere already enslaved bythe normal-sized Africans when the colonizers firstarrived from Europe, and that the present govern­ment has abolished some of the most inhumanefeatures of the slavery they found there.

The pigmies ar,e hunters, and they must supplytheir masters with m'eat. Since the governmentwon't permit the slaves to possess firearms, thisduty is sometimes difficult.

But at any ra'te, the pigmy slaves don't have topay taxes-while their masters do! This fact is afavorite topic of ,conversation among the slaves.They observe that ,every man is forced to share hisincome with a master of one sort or another. Theslaves debate whether they would rather be freeand share with the governmental m,asters, orremain slaves and share with their individualmasters whom they know and who sometimes givethem vegetables and permit them to have celebra­tions. Observers 'who have lived among them re­port that the pigmies pr'efer their slavery to theirmasters' taxes! (Madami, by Putnam and Keller;Prentice-Hall, 1954, $3.95).

I intended to write an editorial about the signif-

icance of this choice of slavery rather than taxes.But, honestly, I don't know just how to handle it.Do you?

Taxes and the Individual

I T IS ,still possible for you personally to help adeserving boy or girl to secure an education, but

you should be informed that your governmentfrowns upon such practices. You see, your govern­ment now favors groups and group actions at theexpense of individuals and individual actions.That's why it permits you to "deduct from taxableincome" your gifts to government-approved groups,but makes you pay a tax on gifts to individuals.

If you had any real choice in the matter, maybeyou would prefer to emulat'e the Good Samaritanand do your charity as an individual and for anindividual. The law doesn't yet forbid you to followthe individualistic examples of Christ, but throughits tax policy your government is doing as much asit can to discourage such "primitive" Christianactions. That's why the tax laws on charity forceyou, :in effect, to pay double when you decide tohelp the individual instead of the government­approved group.

Governments have little faith in individuals;deny it as they will, those who govern us preferto deal with groups, masses, blocs, majorities,organizations and so on. They are well aware thatgroups ar,e ·easier to control than individuals. Groupaction is slow and cumbersome and predictable; inboxing terminology, the punch of the crowd isusually telegraphed well in advance of its arrival,and thos'e who govern us can lay their plans accord­ingly. But they can seldom anticipate the actions ofjust one individual. That's why they design the taxlaws to submerge the individual and elevate thegroup.

The government no longer looks with favor upon"rugged individualists" like Edison, Ford, Stein­metz, Carnegie and others who reaped huge fortunesbecause of their ability to make Hfe easier for therest of us. In an effort to put a stop to that sort ofthing, those who enjoy the job of governing us havewritten tax laws to deprive the successful individualof about 90 per cent of his income. This pulls theunpredictable individual back down into the crowdwhich government knows how to handle.

During the so-called "dark ages" of Americanhistory, when individuals were conquering a wilder­ness and laying the foundations which have resultedin a nation with the highest standard of living theworld has ever known, the successful individualcould leave his money to his children or to anyperson he wished. But since this put some individ­uals ahead of the group, our officials turned to theinheritance and gift taxes in an effort to draw all

of us back toward a common or mass level. Thegovernment designed its tax laws in a fashion toencourage successful individuals to give or willtheir property and money to groups, ~rowds, foun­dations and various other organizations approvedby government.

It used to be that our tax laws were designedfor the purpose of raising revenue needed for thelegitimate expenses of a government limited toprot,ecting equally the life, liberty and propertyof each individual citizen. Our government stillperforms these functions to some extent, but theyare now purely secondary. Modern tax laws aredesigned primarily to penalize the successful, toequalize the unequal, and to appeal to the baserinstincts of the crowds who have the masses ofvotes. _

Those who govern us haven't yet stopped the in­dividual ,and his instinctive determination to exceLI doubt that the governm'ent ever can stop theindividual for long. But it won't be from lack oftrying.

Freedom Works

Both Ways

EVERYBODY says he's in favor of freedom. Eventhe Soviet leaders claim to be fighting for free­

dom.So did Hitler. Our own leaders are also forfreedom. So was my slave-owning grandfather.

But my grandfather failed to understand the factthat freedom is a mutual relationship; that it worksboth ways. He thought that he hims·elf remainedcompletely free even though he restricted the free­domof others. He never grasped the obvious factthat his participation in slavery controlled him andhis actions just as it controlled his slaves and theiractions. Both my grandfather and his slaves wouldhave been richer-materially as well as spiritually-if he had freed his slaves, offered them the com­petitive market w.age for their services, and leftthem totally responsible for their own actions andwelfare. But like most of us ,today, he continued tobelieve that some persons-without injury to them­selves-can legally force other persons to conformto their wishes and plans. He learned the hard way.

Hitler and Stalin were also victims of the sys­tems they created and enforced. Their "foodtasters," bullet-proof cars, personal bodyguards andconstant fears of assassination were the visible evi~

dence of a part of the freedom they lost when theydecided to force peaceful persons to conform totheir wills and viewpoints. Knowingly or unknow­ingly, they lost a great deal of their own freedomvihen they deprived others of -their freedom. That'sthe way it always works.

Apparently, our own political leaders, regardless

FEBRU ARY 1955 291

of party, are also unaware that freedom is a mutualr,elationship among persons; that it works bothways. Like my grandfather, they ,are under the de­lusion that freedom is something which one personcan take from another with no effect on the free­dom Qf the person doing the taking-especially ifit's legal. If they thought otherwise, they wouldstop most of the things they ,are now doing. Inthe good name of freedom, our leader,s now forceothers to conform to their viewpoints and preju­dices on housing, savings and retirement, mili­tary s,ervice, electricity production, hours of work,wages, educ-ation ,and ,a host of other items whichform the m,ajor part of every person's daily life.All of these are restrictions against freedom be­cause they are enforced against peaceful personswho would not participate voluntarily. The freedomof the American people-like the freedom of legalslaves~is lost to whatever ,extent they 'are forcedto conform to the ideas, whims and viewpoints ofothers. That is all that ,slavery is. And the fact thatthe current restrictions and compulsions are legaldoesn't deny that they are acts against freedom;the slavery of 1860 was also legal!

As long as our officials continue to deprivepeaceful persons of their right to us'e their timeand earnings as they please, the officials will con­tinue to lose a part of their own freedom along withthe rest of us. As long as they continue to believethat freedom permits or obligates them to forcetheir ideas upon peaceful persons who do not wishto participate, the system they have created enslavesthem also. They obviously don't understand it, butthey ,are somewhat like the man sitting on the chestof a person he has pinioned to the ground; as longas he sits there, he restricts his own freedom aboutas much as he restricts the freedom of his victim.

The officials who ,endorse and defend this syst'emof legalized compulsions and prohibitions againstpeaceful persons ,are compelled to spend most oftheir time diseussing ways and means-such aspropaganda, s'ecrecy, guile, deceit, laws, policemen,courts, jails, fines and so on-to force the r,est ofus to conform to their ideas and plans which wewould reject if we were permitted a real choice inthe matt'er. As long as they continue to enforce thismutually degrading process, they restrict and de­stroy the potentialities they have within themselvesfor advancem,ent toward human understanding andsorn'e worth-while ideal or goal. Sooner or later, therestrictions and compulsions they enforce againstothers will culminate in some type of an upheavalby ,a'~ arous,ed and angry society which the offieialscan no longer control. Aets against human freedom-legal or iUegal-have always worked that way.The fact that the intentions of most of our officialsare so good only makes it sadder.

Some day we may realiz'e that freedom is a re­lationship of mutual nonmolestation among personswherein no person uses violence or the threat of

292 THE FREEMAN

violence-legal or illegal-to impose his will orviewpoint upon any other peaceful person. Wh~n

enough of us understand this idea, the law WIll

be properly used to stop-instead of to support­the persons who attempt to force their ideas uponpeaceful persons who would not sUbscr~be to. themvoluntarily. When that happens, we WIll enJoy asmuch peace and prosperity as it is possible for usto have on earth.

ALL. TOO MANY top-notch libertarians claim thatthe world is going to hell in a handbasket; that

there's no real hope for a continuation of humanfreedom; that it's only a matter of time until gov­ernm'ent-our own or some other-takes completecontrol of our lives.

Since I'm an incurable optimist on the subjectof human liberty, I justcrun't understand thisdisheartening pessimism in others. It seems to methat their pessimism has to be based on one of onlytwo possibilities: 'either they hav'e little confidencein their own ability to present the freedom storyattractively, or they have reached the conclusionthat "other peop1e" are just too damn dumb ever toknow what's good for them.

Since it has to he one or the other, I suspeetthat it's the former-that the pessimists are in­capable of explaining liberty convincingly to others.While that's unfortunate, it's not necessarily dis­astrous, since they can learn to do a better jobalong with the rest of us. But if their pes'simismis bas'ed on the second possibility-that is, peopleare too dumb to do what's right-the pessimistsare flirting with the rationale for dictatorship.They can't be libertarians while following that lineof reasoning!

Actually, there's no reason for despairing of lib­erty even though we've lost a lot of it and may yetlose 'more. As long as even a few persons refrainfrom using foree or the threat of force to imposetheir ideas and viewpoints upon their peacefulneighbors-and as long as they do their best toexplain to their neighbors why they desir'e to livein peace with them-the ideas of liberty will neverdie, but will grow and flourish in the hearts andminds and actions of an increasing number ofpersons.

Go ahead,call me a Pollyanna! I don't mind.

Frank Chodorov is recovering nicely from amajor operation. He is now able to resume hiseditorial responsibility for the contents of theFREE'MAN. Meanwhile, Dean Russell has writ­ten the editorials and selected the articles forthis issue.

D.C •Wl\.SRI"NGTO'N ,

by Frank c.llanig;hen

One of the problems perpetually facing newspapereditors is to elevate a rising young reporterfrom the category of "covering fires." At first,the cub is sent out to get the facts on a con­flagration, say, in the shipping room of a busi­ness concern. There's no suspicion of arson, noreason to "synthesize" the incident with somefla'mes-and-smoke affair in another part of the city.All very well for the lad on the Fire Departmentbeat. But to cover the City Hall "run," back­ground and knowledge of the patterns predominantin municipal government is necessary. A budgetproblem of one day must be reported in the lightof the city's fiscal situation of last year and theyear before. Those who interview Mr. Mayor haveto stop "covering fires," each one of them separate.

Many papers, it seems to this correspondent,were simply "covering fires" when recently theyreported the fate of Mr. Evan R. Dale, SouthernIllinois labor leader. A federal judge sentencedDale to pay a $10,000 fine and to serve a term offifteen years in prison for an attempted million­dollar shakedown at the Joppa (Illinois) plant of(the Electric Energy Corporation, a power supplierof the .Atomic Energy Commission. Dale's trialbrought out testimony that the labor leader had putthe price of labor peace at Joppa at 1 per cent ofthe contract-$1,030,000-but was given the coldshoulder by the big utilHy interests. Cripplingstrikes followed.

But Joppa was the plant designed and constructedunder the supervision of ERASCO (subsidiary ofthe Elecitric Bond and Share Company), a firmthat has been successfully building a large numberof all the private power plants of the country since1907. And EB:ASCO was (and is) a storm center ofthe complicated Dixon-Yates controversy, raisingquestions on the comparative efficiency of publicand priva1te power development and operation.

Public power advocates cite the "EBASeO fiasco"as an example of the inefficiency of private ascompared with public power. Why? BecauseEBiA'SCO was fired off the Joppa job. And whywas that? The "covering fires" psychology in manypapers prevented the reader from linking the Daleconviction with EE'ASCO. Featherbedding, slow­downs and more than forty work stoppages in1951-53, laid at the door of the defendant labor

leader, so badly hampered construction thatEBASCO had to give up the job. No correlationof these two facts was forthcoming from leather­lunged senators who denounced Dixon-Yates.

Nor would such legislators hark back to thisexperience as they cry "steal," in connection withthe alleged exorbitant profits which Dixon-Yatesmight reap in the contract now under controversy­if costs are kept down. But the whole EBASeOfiasco shows that costs, when affected by theactivities of corrupt labor leaders~ do run up.

Naturally, also, the public power propagandamill remains discreetly silent about how costs onpublic power projects get out of line. Thus, theColorado-Big Thompson project was originallyestimated at $44,000,000, but it eventually costover $160,000,000. Costs of the Hungry Horseproject in Montana, originally estimated at $39,­000,000, now loom as more than $100,000,000,Costs of work on the Oahe project, at first put at$72,000,000, recently were estimated at about $240,­000,000. Rising prices and other factors affect suchinstallations, and Dixon-Yates are not the onlypeople who pardonably regard the future asinflationary.

In extenuation of the "fire covering" commenta­tors who fail to link up these facts, it should besaid that the Dixon-Yates controversy has becomeso complicated, involving so many factors-polit­ical, econo1mic, scientific, mechanical-that inevita­bly a publicist seeking to deal with them loses him­seU in the maze of detail and forensic distortion ofdetail. (Few outline so clearly the strands of argu­ment about Dixon-Yates as did Mr. Byfield in lastmonth's FREEMAN.)

The private power groups, advancing their case,perfor'ce bog down in a mass of specific technicalpoints at issue; and, since their operating com­panies have to deal with the government, theyapparently feel themselves foreclosed from carryingthe public-vs.-private power issue to its logicalconclusion. Few care to cut through the denseundergrowth of material to place the matter on anideological basis, as did Mr. Herbert Hoover in amemorable speech on April 11, 1953.

The for1mer President said: "The intellectualswho advocate these federal activities .carry abanner on which they falsely inscribe the word

FEBRUARY 1955 293

'liberalism.' ... It is a false liberalism that ex­presses itself by federal operation of business incompetition with the citizen. It is the road not tomore liberty, but to less liberty. True liberalism isfound not in striving to spread bureaucracy, but instriving to set bounds to it."

Such principles command utterance now, as thenew Democratic Congress brings forth demands toprobe the "sinister interests" behind the Dixon­Yates contract. For much of the motivation behindsuch demands-many observers here believe­arises from a desire to ensure the triumph of publicpower and the complete socialization of this areaof our economy. Therefore, it is refreshing to hearone voice which has put the whole affair in clearperspective-that oiDr. Clarence E. Manion,formerly Dean of Notre Dame Law School.

Manion was appointed, early in the EisenhowerAdministration, chairman of the Inter-Govern­mental Relations Commission. An advocate of statesrights and enemy of government in business, hesought to utilize the proceedings of that commissionin the fight against statis1m. Courageously, he pub­licly advocated that our government should sell theTennessee Valley Authority. Washington still recallsvividly the storm that followed. The "liberal"columnists and commentators launched one of theircharacteristic campaigns against the retention ofManion. In a press interview, the President gentlychided him for his TVA statement. Before long,Manion was not so gently ousted by Mr. ShermanAdams, "Executive President," from the chairman­ship of the commission. Typically, the White Hous·ena'med as his successor a Chicago businessman, Mr.Meyer Kestnbaum, a supporter of Eisenhower'snomination. (Manion was a Taft man.)

But Manion is still at it. On November 28, overthe Mutual Broadcasting Syste1m, he delivered anaddress on the Dixon-Yates affair which causedmore than one ripple, and suggested that Manion'svoice may prove a powerful one in arguments onCapitol Hill during the 84th Congress. On the air,he claimed that, in the Dixon-Yates affair, "neitherthe President nor any other person faces up to thereal question-can private enterprise, be it Dixon­Yates or anybody else, and socialism coexist in theTennessee Valley or elsewhere in the UnitedStates?" He asked why members of Congress aswell as the President seem afraid to recognize thatTVA is not "creeping socialism," but "gallopingsocialism."

Again he specified the logical imperative for thesolution of the problem, saying that the onlyalternative is to sell TVA and all similar govern­ment-operated enterprises to private investors. "Ifwe sold them all," argued Manion, "we would reducethe public debt by more than thirty billion dollarsand save approximately nine hundred million dollarsin interest"-the bill which the American tax­payer has to foot on money "advanced for govern-

294 THE FREEMAN

ment business boondoggling." In private hands, thespeaker pointed out, such enterprises would paytaxes, instead of "eating up taxes for governmentownership."

If conservatives wish to win the Dixon-Yatesbattle in the opening session of Congress, theymust-so runs much opinion in the Capital-stopapologizing for private operation of such utilitiesand take the offensive against the socializers. Insuch a counteroffensive, they could do worse thanadopt the final appeal of Manion in his speech: "Ifwe are really determined about our world-widefight against socialistic slavery, the first place tounderscore that determination is at home. Lincolnwas right. Sooner or later our house will cease tobe divided against itself. It will become all slaveor all free."

The Capital is anticipating a prolonged conflict­which may reach the halls of Congress-over thestate "right to work" laws outlawing labor contractprovisions that workers must become union mem­bers. Such laws are in effect in seventeen states,mostly in the South and West. Labor unions areperhaps even more concerned with getting theselaws repealed and preventing enactment of newones than they are with changing or repealing thefederal Taft-Hartley law. Both the CIa and AFLhave outlined campaigns to persuade state legisla­tures to get rid of these laws during the next year.Some business and employee groups are reportedlyinterested, in a national way, to see that "right towork" laws are extended to additional states.

Secretary of Labor James .P. Mitchell recentlymade a speech to the CIa annual convention inwhich he flatly opposed "right to work" laws andpractically invited their repeal. The laws, heclaimed, resulted in "undesirable and unnecessarylimitations upon the freedom of working men andwomen and their employees to bargain collectively."It is known that conservative GOP senatorsstrongly protested to the President against theLabor Secretary's stand on this question.

Former Congressman Fred A. Hartley of NewJersey has entered the fray, in a letter to theWashington Post, "liberal" organ, objecting to thatpaper's editorial backing of Secretary Mitchell'sposition. The coauthor (with Taft) of the famouslegislation to reform union practices, attacks"compu]lsory unionis'm," which is what the "unionshop" and its near relative, the "closed shop,"actually constitute. Hartley protests that the Postis in effect supporting a labor monopoly, and quotesthe great antimonopolist, Justice Brandeis, whosaid: "The objections, legal, economic and social,against the closed shop are so strong, and the ideaof the closed shop so antagonistic to the Americanspirit, that the insistence upon it has been a seriousobstacle to union progress."

Hartley comments: "These words apply equallywell to the union shop."

Should We Trade with Russia?

By V. ORVAL WATTS

A. popular assumption is that trade between Russiaand the United States will aid the Communists andhurt us. Does blind acceptance of that idea by ushelp the Soviet bosses maintain the Iron Curtain?

The Iron Curtain came into existence long beforeChurchill gave it the name. When and why ithappened is of vital importanc'e in considering thecontrov,ersial issue of trade with Russia today.

When the Bolsheviks seized power in 1917 andrepudiated all financi'al obligations, both publicand private, they suddenly found themselves with­out credit at home and abroad. Who could trusta government that had declared all debts to be awicked form of exploitation? Such Bolshevik pol­icies as this caused economic chaos in Russia andnear-total destruction of her foreign trade, whichfell to 4 per cent of 1910-13 levels in 1918, andto 1 per cent or less in 1919-20. The Bolsheviksand their sympathizers denounced this as a tradeboycott, although it was only the natural resultof the distrust produced by their own policies andpronouncements.

Despite this Bolshevik record, trade improv,edfor a few years during the 1920s, and severalgovernments of Europe advanced credit to Sovietagents. In the 1930s the United States govern­ment helped them get credit in this country. In­stead of boycotting Soviet trade, the leading gov­ernments of the world helped to promote it!

But meanwhile, the Bolsheviks themselves wereimposing increasing restrictions on all contactsbetwe,en their subjects and foreigners. At first,the aim of this barrier was simply to keep outthe White-Russian enemies of the Revolution.Next, the Bolsheviks sought to establish a govern­ment monopoly of foreign trade in the same mannerthat they tried to monopolize domestic trade.

Finally, during the famine of 1930-31, they foundthey had to exclude almost all foreigners fromRussia except Communists and fellow-travelers.They had to do this in order to continue thedeceit on which their foreign propaganda dependsfor its success. Had they permitted foreignersto visit Russia and travel about freely, the terriblef'ailure of Soviet policies soon would have beenknown throughout the world.

More than this, the Soviet bosses found thatthey could not prevent a complete breakdown ofmorale within Russ!ia as long as foreigners keptbringing in scraps of truth about conditions onthe outside. The only way they could maintain theirtyranny was to keep foreigners from talking freelyto Soviet citizens, and keep them from flaunting

foreign goods and their well-fed bodies before theragged and starving.

An American, for example, cannot walk down aMoscow street without conveying to passersby cer­tain truths about the outside world-through thequality of his shoes, the cut of his clothes, hisunafraid bearing and peaceable manner. Every­where he goes, and in every contact, he does orsays things which teach the meaning of freedomand expose the lies on which the Soviet rulersdepend for inculcating fear and hatred of capital­ism and of the peoples practicing it.

Purpose of the Iron Curtain

Terror alone can repress or paralyz'e. But aftera time it loses its effectiveness, and eventuallygenerates a sort of ratlike courage. In order tosurvive for any considerable length of time, adictatorship must combine terror with deceit andbribery, even to the point of bestowing a modicumof freedom as a form of special privilege for afew underlings and members of the ruling class.The Iron Curtain is necessary for this deceit onthe part of the communist dictators, both formaintaining their rule at home and for gainingfootholds in the governments of other lands. Thepurpose of the barrier is to cut off communicationbetween Russians and the peoples of other lands;and in order to achieve this purpose, it mustapply to trade as well as to travel, speech and thepress. For exchange of goods and services neces­sarily causes some exchange of ideas.

Today, ther,efore, the Soviet government cannotlet even its officials travel freely abroad. Whenit sends one of them on a foreign mission, whetherfor purposes of trade or assassination, it must besure that it keeps some of his family behind ashostages, and it must send along a pack of spies towatch him as well as one another. And still, despiteevery precaution, these agents are continually beingsubverted by contact with non-Communists.

Government "planners," including Communists,don't like trade with foreign countries (otherthan defenseless satellites), because they can't con­trol it as they do domestic trade. Foreign suppliersand customers are not subject to the same dicta­tion, or "planning," as the government can ex­ercise over its own citizens. Exchange and cur-

FEBRUARY 1955 295

rency requirements for foreign trade reveal theextent and costs of "planned" domestic inflation.Competition in foreign markets shows up the lowquality and high costs of production in a "plannedSoviet economy." It is highly frustrating, not tosay dangerous, for a Soviet ag,ent to find that hecan't peddle his wares abroad except at prices farbelow thos'e that his masters at home have dictated.

Moreover, the Soviet gov,ernment strives fornational self-sufficiency for military reasons. Re­gardless of cost, it seeks to build its own industriesso as to be independent of the rest of the worldin time of war.

Russia's Foreign Trade Always Small

For these reasons, Russia's foreign trade underSoviet rule has always been small both in relationto Soviet production and incom'es and in relationto total world trade. This was true even in thelate 1930s, when its trade was not subjeet tospecial restraints by foreign governments. In thoseyrears it amounted to no more than one fourthof the average levels under Tsar Nicholas.

The best years for Soviet trade were 1925-31,\vhen the governments of Germany, Italy, Austriaand other countr.ies were guar,anteeing Sovietcredit. T,rade in those years rose to 80 per centof 1910-13 levels. But, even so, it amounted tono more than the trade of small countries likeSwitzerland and Sweden, which have populationswell under 5 per cent of that of the Soviet Union.On a per capita basis, even with the help of foreigngovernments, Soviet trade lagged at levels less thanone twentieth that of Switzerland and Sweden.

Governmental extension of credit to Russia wasundoubtedly one of the reasons for the world-wideinflation of the 1920s. During the ensuing liquida­tion of 1929-32 and the increasing restrictions onforeign travel in Russia, the decline in internationaltrade fen particularly hard on the Soviet Union.And despite efforts of the United States govern­ment to promote trade with Russia in the late 1930s,it remained at less than one third of the 1925-31levels, or about $1.50-$1.75 per capita.

And if the experience with government trading,operations in other countries is worth anything,the real cost of Soviet exports was so high that theentire foreign trade was actually conducted at anet loss to the Soviet government. A profit fromgovernment trading operations is as rare and asshort-lived as a two-headed calf. Furthermore,Americans who have dealt with Soviet ag.ents re­port that they are generally less efficient thanbureaucrats of other countries. That should beexpected, for Communists hav,e little opportunityfor training in genuine business enterprise. Theyare chosen for political reliability or subserviencerather than for their business sense or ability.

At this point someone may say that Red agenciescan always make a profit, despite their inefficiency,

296 THE FREEMAN

because they control wages and other domestlC.prices, and so they can always fix their costs aslow as they please. If necessary, they can useslave labor to produce whatev,er they sell inforeign markets. The Soviet rulers themselves be­lieve this to be true.

But that argument fails to take into account thefact that total labor costs depend not only uponwage rates but also upon the efficiency or out­put of the laborer.

Forced labor of any sort is notoriously in­efficient, and the costs of managing it are notori­ously high. Not only does it lack incentive, butequally important, when government forees wagesdown by de,cree, it destroy.s their usefulness asmeasures, or indexes, of the worth of individualworkers. Managers, or employers, need wage dif­ferences as arrived at in competitive markets inorder to allocate different kinds of labor to theirmost economical uses. When they lack these meas­ures of worth, planners and managers cannot helpbut waste scarce and highly useful labor in per­forming relatively unimportant tasks.

As David Dallin and other competent ohserversof Soviet methods have shown, the Russian slave­labor camps are not efficient or profitable meansfor getting work done, but are merely politicalinstruments for suppressing dissent.

State Control Raises Costs

Similarly, we find that other methods for reduc­ing nominal costs by force actually raise realcosts. For example, when government fixes pricesof goods, it deprives business managers of neces­sary guides and incentives for economizing onmaterials and tools. This causes waste of capital.It deceives the managers themselves as to the trueresults of their efforts. Or consider how the costof the Soviet spy system r'aises the costs of itsforeign trade. Yet, without this surveillance, theSoviet government dares not let its agents goabroad to make purchases.

Some persons think that the Soviet governmentcan increase output merely by buying Americanmachines and forcing Russian producers to imitateAmerican methods. Nothing could be further fromthe truth, as the results of Soviet farm policiesclearly show. Transplanting American machinesand methods to Russia caused an actual fall in farmoutput and helped cause several famines there dur­ing the past twenty-'five years. Insofar as the Com­munists were able to speed up mechanization ofagriculture or industry by buying foreign machinesand hiring foreign engineers, they merely in­creased their defi.cits.

Economic progress in Russia, as elsewhere, comesonly through indiv-idual initiative and incentive.rrhis the Soviet government has greatly restrictedin all lines, but especially in the prison camps,on the collective farms in the 1930s, and in foreign

trade, which it keeps as a government monopoly.Where it has carried the suppression of freedomfurthest, it has suffered greatest loss. Foreigntrade is one of these fields.

Therefore, if the Soviet government had to paymarket prices for its imports of foreign goods andservices, without the aid of subsidies or otherspeeial privileges, we could be confident that itwould regularly lose on what little it imports, justas it loses on other operations in which it establishescomplete government control and monopoly.

Effect of U. S. Foreign Aid

Of course, the Reds can show a profit when theyget their imports by gift or looting, as theydid in great quantities from 1941 to 1949. And,unfortunately, the vast outpourings of "foreignaid" by the United States government still enablesthem, along with other governments, to get Amer­ican goods, subsidized at the expense of the Amer­ican taxpayers.

Such "aid" is rationalized on the ground thatit helps induce other governments to reduce theirtrade with the communist governments. The effectof these bribes, however, is to send goods out ofthe United States, and there should be no doubtthat many of these goods finally land in Soviethands. Part of the evidence is that our governmenthas blacklisted many American firms for sellingto foreigners who deal with the Reds. Figuresshowing increasing exports from various foreigncountries to Russia since 1949 and numerous re­ports from well-informed observers also tell ofcontinued sales of banned materials to Russia.Furthermore, since the original recipients of the"foreign aid" in effect get our goods at less thanmarket prices, they can resell them to the Sovietgovernment at less than market priees if theywish.

One reason why the United States governmentcannot prevent trade with the Soviets is that theIron Curtain around the communist bloc is morethan 45,000 miles long. This is almost twice thedistance around the earth at the Equator. Evenif other governments were as eager as our ownto prevent trade along such a border, they couldnot do it without subjecting their own citizensto controls as complete as those in force behindthe Iron Curtain. Fortunately, they have stoppedfar short of such folly.

Yet the controls which the leading Westernpowers have imposed in the futile and unnecess'aryefforts to reduce trade with the Reds do burdenand restrict all commerce outside the Iron Curtain.For, in order to stop certain goods from goingto any country, it is necessary to control andrestrict all exports of those goods. Thus, gov­ernments restrict 95 to 98 per cent of world tradein hundreds of the most important lines in a vainattempt to stop the other 2 to 5 per cent of it.

This weakens the anti-communist forces outside theIron Curtain.

At the s'ame time, these "free world" controlsof trade and travel reinforce the Iron Curtain,which is a chief instrument of communist tyranny.We must never forget that the Communists wantthe Iron Curtain; that's why they have it.

The Light of Truth

Finally, these restraints give the Communistsone of their best propaganda weapons. Theycouldn't buy much more than they do now, evenif all these restraints were removed, unless theygave their own people more freedom. They couldn'tprofit from any increase of trade as long as theyconducted it as a government monopoly. And theycouldn't expand their trade without letting intothe darkne,ss behind the Iron Curtain the onething which can overthrow them-the light oftruth. But they can make their own people andmillions of others believe just the opposite as longas other governments help them maintain the IronCurtain.

Is it not futile to hope that any trade boycottcan overthrow the Soviet government or evengreatly hurt it? If ever it could have done so,the time was in 1918-21 when the Communists weremost vulnerable and when the trade boycott cutRussia's foreign trade by 90 to 99 per cent. Sinceit didn't work then, what logical reason is thereto hope that it will work now?

By all means, let us work for a revolution behindthe Iron Curtain. But for this, we need carriersof revolutionary ideas. In selecting the best meansof accomplishing this revolution in Russia, let usnot arbitrarily and emotionally reject the effectivemeans of peaceful traders and travelers.

EDITOR'S N'OTE: In a letter received from Dr.Watts just as the magazine was going to press, heidentified the primary sources of his statisticsas the Unit'ed States Department of Com1merce andthe book, Russia's Soviet Economy, by HarrySchwartz. Dr. Watts also suggested that thisthought should accompany his article: he isn'tdiscussing whether "we" as individuals should orshould not trade with Russia. He doesn't wish tobe put in the position of advocating that anyoneshould buy from Russians or the Soviet govern­ment. As far as he is concerned, that should beeach person's own decision, so long as it concernshis own time and his own honestly acquired prop­erty. Here is the real question: should the UnitedStates government make it a crime for its citizensto trade with Russians and other people who wantto trade with us?

FEBRUARY 1955 297

Yalta: Anniversary of Humiliation

By WILLIAM HENRY CHAMBERLIN

February 11, 1955, marks the tenth anniversaryof the most dishonorable and disastrous diplomaticdeal in United States history. This was the YaltaAgreement, concluded on that date in 1945 betwe,enRoos'evelt, Churchilland Stalin, and covering awide variety of subJects: the fate of Poland, futureboundaries in eastern Europe, the treatment ofGermany after the war, the price to be paid forinsuring Soviet intervention in the war in the FarEast.

Yalta was dishonorable because it sacrificedfriends in a vain effort to placate enemies, becaus'eit renounced historic principles of justice and lib­erty for which this country has stood and becauseit -made a mockery of the moral ideals, stated inthe Four Freedoms and the Atlantic Charter, forwhich the war was supposedly being fought. It wasdisastrous becaus'e i,t created a dangerous unbalanceof.!pow'er in Europe and in Asia, which is the rootcause of almost all our more serious internationaldifficulties today.

The significance of the Yalta capitulation toStalin's vaul,ting ambitio.n has been obscured be­cause, from the moment the agreem·ent was an­nounced, the naked ugliness of its terms was cam­ouflaged by thick coats of official whitewash. Manyof the provis'ions of the compacts concluded at theCrimean health resort were kept secret and leakedout gradually. The first-hand accounts of the YaltaConference have been written by persons wHh astrong vested intere,st in put,ting the best possibleface on what happened there, members of theAmerican delegation like James Byrnes and EdwardStettinius and the gushing eulogist of Franklin D.Roosevelt and Harry Hopkins, Robert E. Sherwood.

Concluded at a time when wartime passion hadreduced to a minimum the capacity for independentand objective judgm'ent, Yalta got away to a flyingstart in public relations. H,arry Hopkins thoughtthe first victory of peace had been won "for thewhole civilized human race." For W'illiam L. Shirer,Y·alta was "a landm,ark in human history." WarbledRaymond Gram Swing, then an influential newscommentator: "No more appropriate news could beconceived to celebrate the birthday of AbrahamLincoln." Time rather prematurely asserted: "Alldoubts about the Big Three's ability to cooperatein peace as well as in war seem now to have beensw'ept away." Senator Alben Barkley, the futureVeep, drew on his vast stock of knowledge of in-

298 THE FREEMAN

Ten years ago the United States surrenderedmoral principles and betrayed its allies ina shameful deal to appease the Communists.

ternational affairs and came up with the verdict:"One of the most important steps ever taken topromote peace and happiness in the world."

In the face of such a chorus of hurrahs andhallelujahs (Bishop G. Bromley Oxnam of theMethodis·t Church saw in Yalta a triumph of theAtlantic Charter), the shots with which scores ofdesperate Polish soldiers on the Italian front endedtheir lives as they realized they had been robbed oftheir country sounded very faint and far away.

Transparent Frauds

Yet somehow the synthetic glamor of Yaltarefused to stay put. The high-sounding promisesof "Ifree, unfettered elections" in Poland, of "jointlyassisting the peoples of liberated countries to solveby democratic means their pressing poUtieal andeconomic problems," were soon shown to be trans­parent frauds by Soviet actions in clamping downcommunist dictatorships in the countries underSoviet military oecupa'tion. As normal internationalrelations gave way to the cold war, it became clearto all but the most obtuse minds that the onlyrealities in the Yalta deals were the tremendoussurrenders, material and moral, to Stalin's demands.There was no pretense of fulfilling even one of thepromises which s'erved as a fig leaf to conceal, fromthose who wanted to be deceiv'ed, the gravity andmagnitude of these surrenders.

With the passing of time American public opin­ion became more and more allergic to propagandawhich aimed to prove that the Yalta Agreementwas a noble feat of democratic statesmanship and/or an unavoidable strategic and diplomatic necessity.The Republican platform of 1952 struck a popularnote when i,t roundly condemned Yalta and all otherdeals which sacrificed the freedom of friends andallies in an effort to appease the Kremlin. PresidentEisenhower r,eceiv'ed a notably w,arm burst ofapplause when he sa'id, in his first State of theUnion message:

"We shall never a.cquiesce in the enslavement ofany people in order to purchase fancied g,ain forourselves. I shall ask the Congress at a later dateto join in 'an appropriat'e re~olution making clearthat this government recognizes no kind of com­mitments contained in secret understandings ofthe past with foreign governments which permitthis kind of enslavement."

Thi,s seemed to portend outright repudiation bythe new Administration of the Yalta Agreementand of the equally obnoxious Potsdam pact betweenthe Big Three, signed a few months later. Unfortu­nately, what began with a bang ended with awhimper. The resolution that was later presentedto Congress implicitly approved the text of theY,alta Agr~~m~nt by confining criticism to Sovietviolations. It would be interesting to learn whoprepared this resolution, which followed the line ofDean Acheson, Averell Harriman and other Dem­ocratic apolog,ists for y,alta (HA good deal, if onlyStalin had kept his word"), not ,the correct ap­praisal of the Republican Party platform. Realizingthat this resolution would be worse than no resolu­tion on the subject at all, Senator Taft took theinitiative in having it shelved.

Similar political ineptness was displayed in therecent campaign for governor in New York. Thesuccessful Democratic candidate, Averell Harriman,was present at Yalta in his capacity as Ambassadorto the Soviet Union at that time. Ever sinee, hehas been a vociferous and persistent defender ofa deal that handed over thirteen million Polishcitizens to Soviet tyranny and imposed on Polandgrotesquely unnatural and unhistorical frontiers.Yet these facts, which would scarcely have endearedMr. Harrim,an to PoHsh-:American voters in N'ewYork, were mentioned lit,tle, if at all, during thecampaign.

The tenth anniversary of Yalta is a suitableoccasion for stocktaking, for recalling whatactu­ally was agreed on there and why the consequenceswere equally disastrous for American honor andAmerican pr,actical interests in Europe and inAsia.

The Yalta Agreement is profusely sprinkled withprofessions of respect for the principles of theAtlantic Charter. The first three clauses of thatdocument affirm with the greatest emphasis theright of all peoples to self-determination. But theYalta pact authorizes the most brutal violations ofthis right, affecting tens of millions of human

beings. Almost half of Poland's prewar territoryand about one third of Poland's population werehanded over to the Soviet Union without even asuggestion of a free plebiscite.

J<t was also specified that "Poland must receivesubstantial accessions of territory in the northand west." What this meant in practice was thatnine million Germ,ans were driven from their homesin lands which had been German for centuries andwhich were arbitrarily joined to Poland. This wasemphatically a case when two wrongs did not makea right. These new boundaries, drawn in completedisregard of ethnic and historical considerations,assigning culturally Polish cities like Lvov andWilno to the Soviet Union, and essentially Germancities like Breslau, Danzig, Koenigsberg and Stettinto Poland and the Soviet Union, are a very probablecause of future conflicts.

Substitute Poland for Czechoslovakia, Stalin forHitler, Roosevelt and Churchill for Daladier andChamberlain, and one finds an almost perfect par­allel between Munich and Yalta. The Yalta dealwas the more shameful of the two, because Polandhad been a loyal ally in the war and because theaftermath of Munich should have indicated thefutility of trying to purchase the friendship of atotalitarian dictatorship through appeasement.

Germany Divided

The Yalta Agreement authorized the dismember­ment of Germany (another peculiar example ofrespect for Atlantic Charter principles), the use ofGerman slave labor as reparations, an appallinglapse from American ideals and standards of inter­national conduet, and prescribed that Soviet citizensin Western zones of occupation be handed over tothe Soviet authorities. This last deal placed theAmerican and British military authorities in therole of Islave-catchers, rounding up refugees fromSoviet tyranny and delivering them to death orimprisonment in slave labor camps.

The bad effect of these and many other surrend-ers of basic principles of internationallaw and humanity upon America'slater effort to rally the peoples ofEurope outside and inside the IronCurtain against com1munist tyrannycan hardly be estimated. It is fareasier to lose a reputation for· justiceand fair dealing with other nationsthan to regain that lost reputation.At Yalta we broke faith with alliesand enemies impartially and sowedthe seed of Soviet domination of avast area of Europe.

Equally discreditable was the partof the compact dealing with theFar East. The Soviet governmentwas given a large bribe for inter­vening in the war against Japan

FEBRU ARY 1955 299

-the Kurile Islands, where air and suhmarine hasescould threaten Alaska; South Sakhalin; an economicstranglehold on China's richest industrial province,Manchur.ia. The bribe was unneces.sary. Nothingcould have kept Stalin out of the w,ar when itbecame clear that Japan was near collapse.

And the Soviet intrusion into Manchuria andNorth K:orea was the direct cause of almost allour postwar troubles in the Orient. There wouldhave been no Korean war if there had been noSoviet-sponsored North Korea, with an army lav­ishly equipped from Moscow. The Soviet occupationof Manchuria was a very important factor in theconquest of China by the Communists. Manchuriawas a rallying point for the Chinese Red armies,and the Soviet military authorities obliginglyturned over to these armies the considerable stocksof arms which were captured from the Japanese.

Fallacies of the Apologists

The apologists for Yalta rest their case on fivemain arguments:

1. The agreement was essentially sound, ifStalin had kept his part of the bargain.

2. Yalt'agave the Soviet Union nothing it hadnot taken or could not have taken anyway.

3. It was a great moral victory to obtain Stalin'ssignature to promises of "free, unf.ettered electionsin Polland" and observance of "democratic proces­'ses" in "liberated countries."

4. Concessions to Soviet demands at Yalta wereunavoidable, in order to keep Stalin in the warag,ains't Germany and to insure his interventionagainst Japan.

5. The only alternative to Y'alta was politicallyimpossible: w'ar with the Soviet Union.

All these arguments seem aimed at the confusionin American public opinion as to Ithe circumstancesof the Crime'an conference and ignorance of theprecise terms which were agreed on. Not one hasany solid underpinning in fact or logic. Let's con­sider them one by one.

1. Even if Stalin had kept his part of the bar­gain, the Yalta arrangements about Poland, aboutGermany, about the use of German war prisonersas slave labor, about the return of unwilling Sovietrefugees, about the alienation to the Soviet Unionof Chinese rights and interests in Manchuria wereoutrageously wrong. And there was no reason toexpect, on the basis of past performanee, thatStalin would feel bound by any paper promises.

2. Military occupation in the course of hostilitiescreates no right of permanent annexation againstthe will of the peoples concerned. On this basis,the Unit'ed States and Great Britain might haveclaimed the right to annex large sections of Franceand I,taly. The late Chester W.ilmot, in his admi­1"'able military-political history of World War Two,The Struggle for Europe, got to the heart of theYalta issue when he wrote:

300 THE FREEMAN

"The real issue for the world and for the futurewas not what Stalin would or could have taken,but what he was given the right to take. Thisagreement provided Stalin with a moral cloak forhis aggressive designs in Asia, and, more im­portant, with almost a legal tiltle enforceable at thePeace Conference to the territories and privilegeswhich he demanded."

3. To accept a:t face value Soviet promises wasabout on a mental level with honoring withoutquestion the checks drawn by a notorious fraud­ulent bankrupt.

4. This argument unconvineingly assumes thatStalin was not serving his own interests in tryingto deliver a knockout blow against the two powerswhich represented the greatest checks on the reaH­za'tion of his ambitions, Germany and Japan. Awise and farsighted policy would have thought interms of a moderate peace with a defeated Germanyand Japan, not of creating a lopsided balance ofpower, leaving the Soviet Union without a strongrival in Europe and in Asia.

5. Nor is ilt true that appeasement of Stalin atYalta was the only alternative to war with theSoviet Union. It should be remembered that inearly 1945 the Soviet Union had been bled. whiteby war and des1tructive invasion. The United States,with relatively small casualties, was reaching thepeak of its military and industrial power.

Suppose that the United States, instead of ac­quiescing in the partition and subjugation of Polandand the many other undesirable features of theYalta Agreement, had simply announced that itwould not accept the legitima,ey of any Soviet ex­pansion beyond the prewar frontier of the SovietUnion. It is not likely that Stalin, conscious of theexhaustion of his forces, well knowing tha't theforward sweep of his armies depended on Americantrucks, telephones, canned food and many otherlend-lease items, would have disregarded sachadeclaration. And, if he had proved intransigent,1945 would have been a far better time for ashowdown than a later da'te, when the Soviet Unionhad armed itself with atomic weapons.

Yalta was not an a,ccident or an isolated lapseof Am'erican statesmanship. It was the culmination,the crowning consequence of the gigantic illusionthat dominated Franklin D. Roosevelt's courseduring the war. This was the illusion that theSoviet Union could be safely trusted with predom­inant power in Europe and in Asia; that the Sovietgovernment, on its record, could be trusted to actas a cooperative do-gooder aft'er the most effectivechecks on its expansion had been weakened ordestroyed.

Yal:ta was also the climax of what seems in ret­rospect an age of almost incredible folly and de­lusion in American public opinion. It was an agewhen Soviet spy rings functioned with little hin­drance, when State Depa~tmentofficials were afraidto be seen in the company of known anti~Commu-

nists, when Senators signed tributes to the com­munist publication, the New Masses, when normallyconservative magazineg threw their pages wideopen for the contributions of Soviet propagandists,when Alger Hiss and Harry Dexter White werebusily going about their master's business, enjoy­ing the esteem of their unsuspecting fellow-eirtizens.Appropriately enough, Hiss was a leading Americanofficial at the Yalta Conference. H,is chief, theguileless Stet,tinius, remarks (Roosevelt, and TheRussians, p. 31) :

"Hiss performed brilliantly throughout the Dum­barton Oaks conversations, the Yalta Conference,the San Francisco Conference, and the first meetingof the UnHed Nations Assembly in London. I al­ways had reason to believe thait Hiss acted honor­ably and patriotically in the performance of hisduties at these conferences."

Here is testimony from a Roosevelt-appointed

"Uraniumaires"

Uranium is in big demand. Uranium is in shortsupply. When there is demand for something thatis scarce, those who want it take reeourse to theprofit motive: they rais'e their bids to the pointwhere cupidity will stimulate prospective suppliers.That's the function of price-to encourage peopleto invest their time, effort and capital in thefinding or m,anufacture of the scarce commodity.

Recognizing this principle, the Atomic EnergyCommission gave notice a few years ago that itwould pay a pretty penny for uranium, and sincethat tim'e a number of good citizens have beendigging around with their "pickaxes ano shovels"in search of the precious ore.

A "pickaxe and shovel" in this part-iculiar caseis a rather expensive piece of capital. Reportsare that it takes at least $50,000 to start prospect­ing for uranium, even in those few areas where thescientists think the ore might be. Of cours.e, thereis no assurance that after you have invested thatkind of capital you will even get your moneyback, for uranium is only where you happen tofind it. N'evertheless, the price offered is so at­traetive that som'e very large American corpora­tions are risking some of their idle capital in thehazardous venture.

The directors of a large corporation with a fewloose shekels in the till are in no way differ'entfrom the worker or housewife with a modest bankaccount. As a matter of fact, the little saver isusually a bit more daring in his ventures thanthe fellow who knows how hard it is to pile upa considerable amount of capital. Anyhow, theuranium price attraction is so strong that a con-

Secretary of Stwte that· Hiss played a prominentand trusted role both at Yalta and at the meetingswhich set lip the United Nations. Perhaps this wasno mere coincidence.

The Yalta Conference belongs to history; and itis high time that it received more dis'cerning andobjective appraisal than it has won from chroniclerslike Sherwood, Byrnes and Stettinius, who hadstrong reasons for placing the conference in themost favor'able light. The evil it caused lives on andwill probably not be outlived in our time.

The Chinese for a time observed as a day ofnational humiliation the anniversary of the accept­ance by a corrupt goviernment of a series of Japan­ese de'mands. It would be fitting if the Americanpeople would observe February 11, anniversary ofthe Yalta deal that marked the high tide of ashameful process of self-deception and appeasementof Soviet tyranny, in the same way.

By FRANK CHO,D'OROV

siderable number of "butchers, bakers and candle­stick makers" are putting their money into smallmining companies organized for the purpose offinding the ore.

Already there are reports that the producingmines found on the Colorado plateau---,includingthe states of Utah, Colorado, Mexico and Arizona-have produced a number of "uraniumaires."Human be'ings being what they are, these reportsare inducing more and more "butchers, bakers andcandlestick makers" to transfer their savings intostocks issued by new prospective companies. Thesestocks are priced low enough to attract even thepiggy banks. They are called penny stocks, andare probably not worth any more than their pennypar values, simply because there is nothing behindthem except hope.

Most of the investors in these penny stocks willlose their money. Taking advantage of the gullibilitythat human cupidity spawns, stock manipulatorsare reportedly organizing companies which willnever invest a dime in a "pickaxe and shovel."Aside from that, the very high pric'e offered foruranium is proof enough that the chances of findingit are small; hence much of the capital investedwill never come baek.

Nevertheless, uranium will be found-and thatis the important thing. The high price offered bythe AEC for this rare commodity will have ac­complished its purpose. It is the function of priceto direct labor and capital toward the productionof goods or services in short supply. There is noother way.

FEBRUARY 1955 301

Does Government SpendingBring Prosperity?

By PERCY L. GREAVES, JR.

Many leaders in high places now promise us thatour government will never again permit povertyand depres,sion to devastate our land. They proposemore government spending as a cure for everyeconomic evil. And millions of people believe thatsuch a program will work.

The underlying philosophy behind political spend­ing is not new. Similar ideas have appearedthroughout all history. They came to full flowershortly after the economic collapse of 1929, whenunbalanced budgets were generally accepted' asnecessary economic measures for relieving those indistress. You could not let innocent people starve,could you?

People pointed to idle factories, unemployedworkers and their unsatisfied wants. All we needto do, they said, is to get the government to startpriming the pump. A little government spendingwould provide the would-be workers with thewherewithal to buy the things they desperatelyneed. This would encourage businessmen to putthe unemployed to work in the idle factories.This solution sounded so simple, and its politicalappeal was apparent. So we tried it.

People just plumb forgot all that economists hadever taught. Many desperate persons reached forwhatever share they could get of the apparent pros­perity that followed. Until war changed the picture,the price they paid was chronic unemployment bythe millions. Are we now asking for a repeat per­formance?

Most people seem to forget that the governmentcan payout only what it borrows or collects intaxes. They also forget one of the most elementaryfacts ofa free economy-men who will not acceptgoing wage rates must remain unemployed. Like­wise, they fail to understand the real causes ofdepressions. A logical examination of pertinentdata would show them that it was Federal Reservemoney manipulation that brought on the depressionwe all deplore. We Americans truly need to knowsome very simple economic facts.

No free man works, buys or sells unless he fullybelieves that such action will bring him greatersatisfaction than he could enjoy if he did not takethat action. This means that in a free economy no

302 THE FREEMAN

That is the big economic question of ourage. All hope for our future prosperitydepends upon finding the correct answer.

man ever takes a job at any wage unless he believeshe is better off working at that wage than he wouldbe if he did not take it. Likewise, no employer everemploys a m'an at any wage unless the employerfeels that he will better his situation by employingthat man at that wage. So~ in a free economy, em­ployees and employers believe that they have thebest available terms. When they feel otherwise,they shift jobs or employees.

In the same vein, no woman ever buys a dressunless she believes that dress will bring her moresatisf,action than any other use she could make ofthe same amount of money. On the other side of thetransaction, no storekeeper ever sells a dress unlesshe places a higher value on the money he receivesthan he does on the dress he sells. As a result ofthe sale, both buyer and seller are happier.

'Thus, in a free economy, every freely madetransa.ction benefits all participants. Consequently,any interference with freely made transactionsmust result in a decrease in the satisfaction andhappiness of all persons concerned. An economythat is free from restricting regulations thus per­mits its people to enjoy the greatest happiness theyare capable of producing.

The Proper Sphere of Government

However, in order to enjoy the full pleasures ofprosperity, it is necessary for peaceful people tobe protected from all robbers, thieves and fraud­ulent schemers who seek something for nothing atthe expense of their fellow-men. For this pro­tective purpose, men have instituted governments.Governments, like all valuable assets, have a price.This price is collected in some form of taxes.Reasonable taxes are a legitimate expense for allprotected persons, property and production.

'Taxes are like insurance premiums. In fact, agood government might be called a form of Ufe,fraud and robbery insurance. It is as necessary formodern society as accident insurance is for everycar driver of moderate means. Without it, the riskof living, owning property and driving might wellinvolve financial risks that only a few could afford.Good governments permit people to pursue their

pleasures and production while protected from therascals who would infringe on their rights by forceor fraud. Taxes paid for this protection are an in­vestment which permits men to pursue theirpersonal satisfaction and prosperity as each onesees fit.

When governments spend money for other thanprotective purposes, they must first get that addi­tional money. They can only get such funds by oneor more of three different methods. They can amasssuch funds by collecting more ordinary taxes,borrowing from private savers, or simply printingthe extra money they want to spend. Most moderngovernments use all three methods. Gan suchgovernment spending increase the transactions andsatisfactions of individuals and, thus, the happinessand prosperity of the people as a whole?

A most common economic error is the failure tosee or realize the complete price of what one buys.People are too apt to reach for something theywant now, without weighing the costs they cannotvisualize at the moment. Many fail to realize thatmore beer and merriment today may well meanno bread or meat tomorrow.

So it is with government spending. We see theresults of government spending all around us.Government services are sold at bargain ratesbelow cost. The bureaucrats are good steady cus­tomers, and the subsidy receivers spend money morefreely than those who earn it. But many do not seethe complete price. They do not see the schools,homes, hospitals and factories that could have beenerected if the same funds had been left in privatehands. They do not see that present bureaucratscould be private citizens producing goods not nowavailable, and that such an increase in marketablegoods would tend to reduce all prices and thusincrease the satisfactions and living standards ofevery buyer. They do not see the taxes that creepinto the prices of every loaf of bread and pair ofshoes, placing the prices of such necessities beyondthe reach of the most needy.

When the government raises the money it spendsby borrowing savings or taxing its citizens, itmerely transfers spending power from privateowners and earners of the money to the politicalspenders in power. This creates no new wealth.It reduces the amount private citizens can spendwhile increasing the a'mount government can spend.With less money in their pockets and bank accounts,private individuals and corporations must reducethe amounts they spend or invest. Assuming pricesand wages remain the same, they must buy fewergoods and employ fewer workers on private payrollsproducing what people want most.

Money spent by governments cannot createany more jobs or produce any more wealth than itcan when spent by private persons. In fact, itcreates less, because both the tax collectors andtax spenders must be paid a cOffi;mission. Theirlabors add nothing to the wealth of society. The

shift of the money from private citizens to politicalspenders must result in fewer productive jobs, andthus a smaller amount of goods and higher pricesthan if the money had been left in private hands.

Pattern of Production 'Changed

Political spending also changes the whole patternof the nation's productive forces. If the governmentspends its money by giving out subsidies to oneprivileged group, the productive facilities of thecountry are then partially directed toward satis­fying the desires of that group instead of thedesires of those who originally earned the money.Many workers and investors must shift from pro­ducing goods and services for consumers who earntheir money, to producing goods and services forthose who first receive the dollars distributed dur­ing the government's spending spree.

Then, too, much government spending is notbased on the economic principle of getting themost for the least. This permits political spendersto grant privileges to their friends. Such politicalplums provide more satisfaction and prosperity fornonproducers at the expense of producers. The netresult must always be a reduction in the productionof wealth. Any such reduction in the quantity ofgoods and services available in the market tends toraise all prices and thus reduce the satisfactions andliving standards of every buyer in that market.So spending to help one group, laudable as it mayseem, does not, and cannot, create general pros­perity.

If the government spending is for war or de­fense, then some of the nation's investors andworkers must go to work producing munitions andmilitary supplies. All the savings and workers soengaged are withdrawn [from industries satisfyingthe private needs and wants of individual con­sumers.The end result, of course, is a reductionin the satisfaction of the needs and desires of allthose who prefer consumer goods over war goods.The nation may have full employment, but in­dividuals must certainly get along with fewer con­sumer goods. Such lower personal satisfactionshave never been considered greater prosperity.

The only reason men and factorie,g are ever unem­ployed is that they will not produce what consumerswant most at prices consumers can and will pay.Both men and factories can always be employed,if they will accept market wages and prices. Whenthey consider these too low and rely on govern­ment to pay higher than market wages and priceswith funds obtained from private citizens, theimmediate result must always be unemploymentor lower wages for those formerly engaged insatisfying the desires of those whose money thegovernment now spends. Unless supported in idle­ness, these workers will soon gravitate to thoseindustries or pursuits that benefit most from theincreased government spending. Their competition

FEBRUARY 1~55 303

will bring wages down to market levels, and thenno workers will any longer benefit from the in­creased government spending.

Any switch of money from private owners topolitical spenders can only result in a redirectionof the nation's productive forces and temporary,gains lior those who first receive the governmentorders or subsidies. In the end, a readjustmentof the nation's productive forces will becomenecessary. During the interi'm, total human sat­isfactions will be reduced and the general welfarewill suffer.

The question now asked is whether a substantialreduction in present government spending wouldcreate a depression. Under the present restrictivelabor and monetary laws, the painful readjust­ment might well be long and severe. Under a free'economy, '. with free market wages and interestrates, the necessary readjustment could be quicklymade and soon everyone would be enjoying a muchhigher living standard.

If the government reduces both taxes and spend­ing, it will leave more money in private hands.This money then can, and will, employ Imore peopleat higher real wages to make more of what peoplewant most. The nation's productive forces wouldbe redirected toward satisfying the wants of pro­ductive persons, rather than satisfying those whowere the recipients of government expenditures.In a free market economy, every worker and in­vestor tends to seek those outlets which willproduce ~what consumers want most, as indicatedby the wages and prices consumers will pay. Soworkers and investors now engaged in satisfyingpolitical spending would soon find more profitableoutlets satisf.ying the increased spending of privateproducers. Everyone would soon have more. Thatis not a depression. That is prosperity.

Results of Inflation

In cases where the government prints the money,either directly or indirectly, by first printing bondsand then issuing new money with only its ownbonds as security, the result is inflation. Inflationis a tax on everyone who owns or is owed adollar. Its effects are more hidden than those ofother taxes. Another important difference is thatinflation transfers economic wealth from one groupof people to another group, as weB as from privatecitizens to their government. The inflation taxis a boon to all who owe dollars and a burdenon all who are owed dollars. It changes the valuesof every contract that specifies a future paymentin dollars. It reduces the value of the money in­volved. This is a temporary boon to the payerbut. in effect, a tax on the recipient.

Under such inflationary conditions, wise busi­ness1men become hesitant about signing long-termcontracts, so necessary for our present-day com­plicated production system. Government inflationary

304 THE FREEMAN

spending thus places an additional damper onprosperity, over and above all drawbacks and re­direction of productive forces brought about bygovernment spending of funds amassed by taxes orbond sales.

Those who first receive the newly printed moneyare able to buy a part of the nation's productionwithout having made any contribution. They mustprofit at the expense of all those who have con­tributed to the total production offered on themarket place. Since the rewards of productivecontributors are less, some will retire or reducetheir future contributions to the market. Pro­duction will be further reduced by the Ifact thatsome of the printed money recipients are supportedin nonproductive pursuits. Total production must,therefore, be lower. This means there will be lessfor everyone who spends dollars in the market place.

Taxes which raise prices or curtail private spend­ing cannot increase total human satisfaction. In­creased taxes reduce the voluntary transactionsof a free people and thus reduce their total sat­isfactions. Contrariwise, any reduction in gov­ernment spending and taxing will increase theindividual transactions of a free people and thustheir individual satisfactions and prosperity.

The Way to Prosperity

Government spending is an expense or burden ontotal production and human satisfaction. Govern­ment taxes are personal economic sacrifices andshould be paid only for the protection of lifeand private property. When taxes are so limited,they are an aid and stimulant to total productionand human satisfaction. When they are collectedto help some at the expense of others, they area brake on both production and human satisfaction.Any reduction in government taxes and spendingincreases the goods and satisfactions availablefor all those who have dollars of their own tospend.

Competition in the service of consumers is theone and only sure way to produce a prosperitypermanently spiraling upward. All political spend­ing for purposes beyond the protection of lifeand property are a snare and a delusion. Theydiscourage wealth production both by decreas­ing the rewards of productive workers and bysupporting others in idleness or nonproductivepursuits. In order to keep up the appearancesof prosperity, government spending must be con­stantly increased, with an ever-increasing shareof total production going to the nonproductive.If these constantly increased expenditures are notstopped in time, the result will be a runaway in­flation like that which took place in Germany in1923. Government budgets balanced by inflationaryspending can but bring a national headache, forwhich the only permanent cure is the intelligentuse of our God-given freedom.

/\." ..~10 !J'

Religious Roots of Liberty

By REV. EDMUND A. OPITZ

Every variety of tyranny rests upon the beliefthat som,e persons have a right-or even a duty­to impose their wills upon other people. Tyrannymay be fastened upon others by the mere whim ofone man, such as a king or dictator under variousnames. Or tyranny may be impos,ed upon a minority"for their own good" by a democratically electedmajority. But in any case, tyranny is always adenial-or a misunderstanding-of the mandates ofan authority or law higher than man himself.

Liber1ty rests upon the belief that all properauthority for man's relationships with his fellow­men comes from a source higher than man-fromthe Creator. Liberty decrees that all men-subjectand ruler alike-are bound by this higher authori!tywhich is above and beyond man-made law; thateach person has a relation to his Maker with whichno other person, not even the ruler, has any rightto interfer,e. In order to make these conceptionseffective for liberty, they must be deeply ingrainedin the fundamental values of a people. That is tosay, they must be part of the popular religion.There was one people of antiquity for whom thiswas true, the people who gave us our Old Testa­ment. It was among the ancient Israelites that theconviction took hold and emerged into practice thatthere was a God of righteousness whose judgmentsappHed even to rulers.

No Royal Inscription

The science of archeology has unearthed somespectacular ruins in Egypt, in Babylonia, in Creteand in Greece. All over the Middle East, patientresearchers have turned up monuments and vain­glorious inscripHons carved into rock or pressedinto clay at the behest of proud kings. Except inPalestine! There has been nothing brought tolight in Palestine comparable to the monumentsextolling the vain kings of Egypt. An authoritystates that there is not a single royal inscriptionfrom any of the Bible kings. The Prophets saw tothat! N'o boastful king in ancient Israel wouldhave presumed to leave an ins.cription dedicatedto his own glory, much as he felt he deserved such.The Prophets would have quickly put such a kingin his pla.ce, and popular resentment would haverun high again~t such inflation of human pr,ide.

In Greece and Rome there were men noted asgreat lawgivers: Lycurgus, Solon, Justinian and

From anc'ient Palestine through early Americato the present, the source of our libertieshas been an authority or law higher than man.

others. In other countries there were royal decreesby the thousands. A law would be promulgated withsome such words as, "I, the King comm'and...."In Egypt and in Babylon, even as in Greece andRome, authority for a law stemmed from a man,the Ruler. But in Palestine the situaNon was dif­ferent. In Biblical literature there is not a singlelaw emanating from kings or other secular author­ity which was recorded and preserved as per1ma­nently valid. Nor have archeologists in Palestineunearthed royal decrees inscr1ibed on clay tabletsor graven on rock.

Now, no people live together without conformingto a commonly accepted code, and without hav,ingrecourse at time,s to law. The people of an,~ient

Palestine lived under authority, not in a conditionof anarchy. If the king was not the source of theirlaw, there must have been another and highersource. There ,is no doubt as to what their authoritywas: they looked to God as the sour.ce of their law."The Lord is our judge, the Lord ,is our lawgiver,the Lord is our king." (Is. 33 :22) All, or nearlyall, of the basic laws of this people were writtenas though emanating from God Himself. Insteadof "I, the king," it was "I, the Lord." "And yeshall keep my statutes and do them: I am theLord." (Lev. 20 :8) "Thus saith the Lord: Executeye judgment and r.ighteousness, and deliver thespoiled out of the hand of the oppressor; and do nowrong, do no viiolence to the stranger, the father­l.ess, nor the widow." (J,er. 22 :3)

This is the system of law, laid down in theScriptures, expanded and interpreted by humanreason, of' which the Psal'mist said, "... his delightis in the law of the Lord; and in his law doth hemeditate day and night." (Ps. 1 :2) Nearly everyman was learned in this law, and also deeply in­volved in the religious relation to God in whichthe law was rooted-and liberty was a preciousby-product of these conditions. Establish theseconditions-that is, widely held religious values inwhich God is regarded as the source of authorityand justice, superior to any earthly power-andthey provide a firm foundation for political Uberty.In these circumstances there is a .continuous checkto tyranny, should any such attempt to raise itshead. Neglect these conditions, and liberty has noroots. It is like a cut flower which has no vitalityin itself and does not last beyond the life it derivedfrom the plant. The way is prepared for tyranny.

FEBRUARY 1955 305

This is not to say that there are no economicand political problems peculiar to liberty itself, northat liberty is not at times impaired by ignoranceamong a people whose religious values are intact.It is to stress the importance of maintaining thethings on which liberty depends-and these are thethings of religion. This foundation must be sound,but the structure erected on it must be sound, too.

Collectivist regimes, in the nature of things,must be profoundly irreligious, even to the extentof pressing a corrupted religion into service toshore .up tyranny. Genuine reMgious experienceentails the recognition of an inviolable essence inmen, the human soul. It inculcates a sense of theworth and dignity of the person and breeds resist­ance to efforts to ·submerge individuals in the mass.Men whose personal experience convinces themthat they are creatures of God wHI not becomewilling creatures of the State, nor attempt to makecreatures of other men. For them, God is the Lord,Whose servic~ is perfect freedom; and Caesar isthe ruler, whom to serve is bondage." It was upon such a faith that this country was

founded. Those who migrated to these shores inthe early days did not always see the full implica­tions of their beliefs, and sometimes acted contraryto them. But in the end those beliefs prevailed, andthey are recognizable in American institutions.

I know it has been fashionable of late to depre­ciate the motives of the men who made the earlysettlements on American shores, but I am convincedthat the judgment made by Alexis. de Tocqueville120 years ago is nearer the truth. Writing of themen who established Plymouth colony, de Tocque­ville said, "... it was a purely intellectual cravingthat called them from the comforts of their formerhomes; and in facing the inevitable sufferiings ofexile their object was the triumph of an idea."

This idea was one which had been spreading inEngland since even before the Reformation, but itbears more directly upon the time when the Englishpeople had, for the first time, the Bible in theirown tongue. The idea of a new commonwealth, firedby reading in the Old Testament of the people ofthe covenant, launched in America what de Tocque­ville described as "a democracy more perfect thanantiquity had dared dream of." The first ministerof the church in Boston in 1630 was John Cotton.Cotton Mather wrote of him, that he "prepoundedunto them an endeavor after a theocracy, as nearas might be, to that which was the glory of Israel,the 'peculiar people.'"

The Puritan r'egime, taken by itself, was prettyrigorous. But it matured, and in its maturity re­ceived an infus,ion from something radically dif-

ferent-the rationalism of the Enlightenment. TheEnlightenment by itself in Franee ran its courseand became its own caricature. It teamed up witha revolution at the end of which was-Napoleon.But in Amer,ica the seemingly diverse elementsfused. Here, we conceived the idea of a limitedgovernment under a written Constitution; the ideaof a separation of powers in the federal governmentand a retention of sovereignty in important spheresby the indiviidual states; the concept of the im­munity of persons from arbitrary encroachment bygovernment. An experiment based on those prin­ciples was launched on these shores less than twocenturies ago. It was the result of a consc,iouseffort to forge an instrumentality of government inconformity with the Higher Law, based on thewidely held conVliction that God is the Author ofliberty.

Basis of Political Liherty

Our political liberties were not born in a vacuum,but among a people who had a sense of their uniquedestiny under God. Our religious foundation hasbeen alluded to in a Supreme Court decisiion (1892,143 U. S. 457) : H ••• this is a religious people. Thisis histor,ically true. From the discovery of thiscontinent to the present hour, there is a singlevoice making this affirmation."

So long as men accepted the basic affirmationsof religion-that there is a God of all people withWhom each individual has a personal relationship-our liberties were basically secure. Wheneverthere was a breach in them, we possessed a pr,in­ciple by which we could discover and repair thebreach. But when there ceases to be a constantrecurrence to fundamental principles, our politicalfreedom is placed in jeopardy. Political liberty is notself-sustained; it rests upon a relig1ious base.

All men desire to be free, and the will to befree is perpetually renewed in each individual whouses his faculties and affirms his manhood. But themere desire to be free has never saved any peoplewho did not know and establish the things on whichfreedom depends-and these are the things ofreligion. The God-concept, when cherished in thevalues of a people, is the universal solvent oftyranny, for, as Job said, "He looseth the bondof kings." (Job 12:18)

Many "monuments for posterity" are being builttoday in our country. Are they mostly dedicatedto man and his vain decrees, or to the Creator ofman and the Higher Law? The future of our eiv­ilization rests on the answer to the spirit of thatquestion.

Ideals are like stars; you will not succeed in touching them with yourhauds. But like the seafaring man on the de,sert of w,aters, you choosethem as your guides, and following them you wUI re,ach your destiny.

CARL SClIURZ (1829·1906)

3Qi TUE f:REEMAN

Fundamentals of EducationBy NELLIE K. WADHAMS

Since 1928, Mrs. Wadharns and herfamily have lived on a once-abandoneclfarm in the ,mountains of New Hamp­shire. During the depression, their cashincome averaged about $150 a year, withtaxes taking about $50. Mrs. Wadhamswas graduated from the University ofNebraska as a Phi Beta Kappa honorstudent. She earned a Master's degree ineducation from Yale University, and be­came a professional Director of ReligiousEducation. Later she wrote articles andlessons for a church publishing house.This article is extracted from a longermanuscript, more of which Dlay beprinted in later issues of the FREEMAN.

"If you marry me, you'llalways be poor," said Er­land one evening duringour courtship. "I'm notone of those guys who pilesup the rocks."

"Would I be any richerw,ithout you?" I queried."And besides, there areother things more impor­tant than being r.ich."

"Such as what?" heasked Ime.

"Oh, just living-reallyliving; spiritually, I mean.Having a chance to getone's breath once in awhile. Being free to thinkthoughts that somebodyelse doesn't put into your mind full-grown andready to be born."

"I guess you'll have plenty of chance to think,all right. That is, if you can think with your handsin a dishpan."

We bought an abandoned ninety-acre subsistencefarm on the slope beneath a mountain in NewHampshire, and called it Sprucetip. We had notmade the decision lightly. Our last dollar had goneinto the purchase price, and we were determined tostick it out. The "Old Timer," a salty old bachelorwho owned a ne.ighboring farm, put it in thesewords: "Any way you look at it, life is hell-butjust the same, I'm going to stick around awhileand see what happens I"

At any rate, we now had a toe hold in the goodearth; and it was ours, title clear. We believe itwould sustain us, though we never deluded our­selves that it would give us wealth or leisure orsecurity. But I gave scarce a thought to insecurity,expecting nothing else. For me, only beauty, quiet,serenity were indispensable....

Once when he was very young, my son Ernestwas watching me storling away the last jar froma successful canning season. Standing in admira­tion before the cupboard full of glistening, colorfuljars he said, clapping his hands: "Goody I Goody IWe're not going hungry next winter I"

Was there something pathetic about this childishremark? I think not-unless we are all patheticin our battle for survival. He was learning therelationship between thrift and security, labor andreward. The traditional way of putting it is:"Work, poor Human, work or starve."

The key to the latent occupational talents of any

man is usually to be foundin the things he liked to doas a boy when he hadthe leisure time to do alshe pleased.

In teaching our two boysat home in primary-schoolsubjects, I wanted them tolearn how to study. It wasbetter not to hang overthem constantly, crossingeach bridge for them be­fore they came to it. Iremembered the old saying:"You can lead a horse towater, but you cannot makehim drink." After all, theinitiative was theirs. Itried to confine myself to

stirring up their interest and setting them straightwhen they were falling into error or becomingdiscouraged through misunderstanding.

Aside from fundamental skills and a certainamount of elementary knowledge or backgroundfor life, such as is to be found in the study ofgeography and the simple phases of history, I feltthat there was one more aim of education withwhich I, along with other educators, should beconcerned. We might refer to it as discipline, anddivide it into two phases. The first might be calledsimply disc.ipline~training the child to conformto a pattern, to be like other children, and tocooperate with them. This is a necessary part oflife and should not be neglected. Our public schoolsare generally efficient in this phase. But in thesecond phase, which we might call self-discipline,they often and woefully break down.

Self-Discipline and F'reedom

Sometimes we hear theorists contrasting cooper­ation and individualism, to the detriment of thelatter. This has always seemed to me to be anexample of sloppy thinking, for we need both. Thechild, in preparation for adult life, needs a funda­mental discipline; certain habits of des,irable socialaction must be fixed for life, but education shouldnot stop there. If it does, we have trained a goose­stepping generation, fair meat for propagandistsof every stripe and for the kind of regimentationthat stifled Germany under Hitler and Italy underMussolini. On top of discipline, we must superim­pose self-discipline, if freedom is to survive onearth. Cooperation fails without individualism. For

FEBRUARY 1955 307

how can we cooperate if we as individuals have110thing to contribute? Submission is not coopera­tion. It is my opinion that in recent years, educa­tors and social reformers have been altogether toomuch concerned about cooperation and altogethertoo little concerned about developing individualism,without which there can be no true cooperation.

It has always seemed to me that to give a solidfoundation for individualism, education for thechild should start with those skills developed in theearly days of America in the home.

There were certain definite things I hoped tohave elem'entary education do for my boys. Iwanted them to develop skill in the use of tools bywhich knowledge may be acquired. I wanted themto form habits of thoroughness and intellectualhonesty, to realize that nothing is learned until youcan use it. I wanted them to get discipline; formhabits of cooperation. Above all, I wanted them toacquire self-discipline and learn the art of thinkingfor themselves. In this, I was almost too successful.I once confided to a public school teacher this bitof experience.

I sa.id: "Having taught my boys to think forthemselves, I find that they do not agree with meon everything."

"Aha," she said, "backfiring so soon?" We bothlaughed.

Sherman, when subjected to pressure in theseventh grade of the village school, gave the teachera run for her money. And if his grades in socialscience were not of the best, he could count onunderstanding at home. He was never carried awayby dreams. For him everything was subjected tothe factual test. In one of the daily exercises re­quired in social science, the pupils were asked tochoose the necessities from a list of articles foundin the modern home, dividing them from the lux­uries. The teacher's classification aroused Sher­man's ire.

"Flat irons are not necessities," he insisted."They are luxuries."

"But," said the teacher, "I would lose my job ifI didn't iron the dresses I wear to school."

Sherman retorted: "Maybe you would, but thatwould be because you had to have a luxury to holdyour job."

The result was that Sherman wrote out his owndefinition of what he considered to be a necessity:"something I have to have or I will die."

With proper education, and the self-respect andwholesome individualism that naturally come withit, we shall .find the problems of cooperation solvingthemselves. For self-reliant individuals do not haveto cover up their weaknesses. They do not need topass the buck. 'The individualist (who, I admit, mayappear some'what hardhearted in success) in failureis something other than a parasite. When thegoing is hard, he takes the blows full in the face,and does not pass his problems on to others. He isa source of strength to the ,social fabric because he

308 THE FREEMAN

does not lean. Many of us are helpless these daysbecause we have become dependent. We cannot doanything to solve the problems that challenge usbecause we cannot fight disrupting forces withoutdestroying the platform on which we stand. But acivilization that had ,its feet on the ground couldkeep its head in the clouds without fear of falling.

Power CorruptsWhen a person gains political power to force otherpersons to do his bidding when they do not be­lieve it right to do so, it seelns inevitable thatamoral weakness develops in the person who ex­ercises that power. The full extent of the weaknessis frequently left to the historians to record, butwe eventually learn of it.

Please do not misunderstand me. These personswho are corrupted by the process of ruling overtheir fellow-men are not innately evil. Their mo­tives may be purely patriotic and altruistic. In­deed, they may wish only "to do good for thepeople." But, apparently, the only way they canthink of to do this "good" is to impose more re­strictive and compulsive laws.

Now, obviously, there is no point in passing alaw which requires people to do something theywould do anyhow; or which prevents them fromdoing what they are not going to do anyhow.Therefore, the possessor of the political power couldvery well decide to leave every person free to doas he pleases so long as he does not infringe uponthe same right of every other person to do as hepleases. However, that concept appears to be utterlywithout reason to a person who wants to exercisepolitical power over his f'ellow-man, for he askshimself: "How can I do 'do good' for the peopleif I just leave them alone?" So he begins to passlaws that will force all other persons to conformto his ideas of what is good for them.

That is the dang;er point! The more restrictionsand compulsions he imposes on other persons, thegreater the strain on his own morality. He tendsincreasingly to surround himself with adviserswho also seem to derive a peculiar pleasure fromforcing others to obey their decrees. He appointsfriends and supporters to easy jobs of question­able necessity. The hard-earned money of thoseover whom he rules is spent on grandiose publicprojects at home and abroad. If there is opposi­tion, an emergency is declared or created to justifythese actions.

If the benevolent ruler stays in power longenough, he eventually becomes converted to theseductive thesis that election to public office en­dows the official with wisdom as well as withpower. At this point, he begins to lose his abilityto distinguish between what is morally right andwhat is politically expedient.

ADMIRAL BEN MOREELL1 1951

Tribunes of the People

By JAMES BURNHAM

When the Founding Fathers established ourgovernment structure of liberty under law, theyborrowed from the ancient Romans a remarkabledevice-the Tribunes of the People. The job of theRoman Tribunes, officials elected from the ranksof the Assembly of the People, was ito see that thelaws of the Roman Republic were enforced, thatjustice was done to the ordinary citizen. The Fathersof our country, realizing that this function of theRoman Tribunes was indispensable to liberty, as­signed it to the investig,ating committees ofCongress.

Like the Roman Tribunes, congressional investi­gatorsare immune from arrest or prosecution.They are therefore able to challenge without fearof reprisal the immense power of the police, theArmy and the Executive. Congress~our own As­sembly of the People--.charges its investigatorswith the task of finding out whether the laws arebeing enforced and whether new laws are needed.On the basis of facts unearthed by its investigators,Congress is :also empowered to impeach and expelfrom office any member of the executive and judi­cial branches of government-even the Presidenthimself or a Justiee of the Supreme Court. Shortof impeachment, the investigating committees cancheck executive action by appeal, though publichearings, to the final court of a democracy, theopinion of the citizen-voters.

Congressional inves,tigators are not saints. Likethe Roman Tribunes, they can refl·ect the ignoranceand the pas,S'ions of the people as well as the people'straditional wisdom, loyalty and strength. But theyar'e irreplaceable champions of our liberty.

In 1936 Hugo Black, now a member of theSupreme Court but then at the height of a brilliantsenatorial career, wrote: "This power of the probeis one of the most powerful weapons to restrain theaC'tivities of groups who can defy every other power.Public investdgating committees exist always incountries where the people rule. They have alwaysbeen opposed by groups that seek or have specialprivHeges."

8enator George Norris, the father of TVA, de­clared in the midst of the 1924 Teapot Dome in­vestigation: "Whenever you take away from thelegisla:tive body of any country the pow,er of in­vestigation, you have taken a step that wHl even­tually lead into absolute monarchy and destroy anygovernment such as ours."

Since 1792, investigations of corruption,scandal and espionage. by congressionalconlmittees have championed our liberties.

The first congressional inves1tigation took placein 1792, just three years after adoption of ourConst,itution. The Indians of the Northwest Terri­tory had all but annihil3!ted a government forceled against them by General Arthur St. Clair, andpopular opinion demanded an explanation.

When the House of Representatives selected acommittee to conduct an inquiry into the causes ofthe defeat, one Congressman argued that such aninquiry would be insulting to President Washing­ton, who had appointed St. Clair, and that Congressshould merely request the President to look intothe matter himself. The House voted this down.The majoriity insisted, however, that Congressmake its own investigation in its own way. "ThisHouse," one member proclaimed, "is the GrandInquest of the nation."

The inquiry, as it turned out, absolved GeneralSt. Clair of personal blame, but made constructivecriticis'ms that led to improved organization of theWar Depar1tment.

Investigations Are No Novelty

Under the Const.itution, all but three of our 84Congresses have authorized investigations. Theareas investigated have included every departmentof the executive branch of government; every warexcept the Spanish-American; all sorts of electionscandals; railroads, shipping, oil, hanking, housing,.insurance, utilities-in fact, nearly every majorbranch of industry. Investigations of conspiracyand espionage are by no means a twentieth-centurynovelty. Even before 1800, e.spionage-in behalf ofFrance and Spain-was investigated. Subversiveconspiracy was the issue of inQuiries of 1808 con­cerning Aaron Burr's associates.

Violent controversy has always swirled aroundcongressional investigations. In the 1920s it wasa variety of ,individuals and organizations whodenounced Senators Borah, LaFollette, Wheelerand Walsh for the inquiries that brought to lightthe shocking scandals of the Naval Reserve oilleases. Owen J. Roberts, later an Associa:te Justiceof the U. S. Supreme Court, speaking before theAmerican Bankers Association in 1923, condemnedthe oil investigation as "propaganda for national­ization." The Wall Street Journal dismissed it as"only a political smokescreen." Dis'Cussing this andthe parallel investigation of A,ttorney General

FEBRUARY 1955 309

Daugherty, the New York Times declared in Feb­ruary 1924 that Congress was "investigation-mad,"and was trying to introduce "government by clam­or" and "hole-in-corner gossip." The Times upheldDaugherty as one who was defending "decency"and "honor."

Within six months Daugherty had resigned indisgrace-after the investiga:tors had shown thatduring his two and a half years in Washin~ton on a$15,000 salary, his personal finances had shiftedfrom $19,000 in the red to $100,000 in the black.

At the time of this Teapot Dome probe, theSenate investigators were termed "seandal-mon­gers," "mud-gunners," "assassins of character."Their inquiries were deseribed as "a lynching-bee,""poison-tongued partisanship," "pure malice," and"twibtering hysteria."

But as a direct result of their disclosures, onecorrupt Cabinet member (Harr,y Daugherty) andone who winked at corruption (Edwin Denby) wereforced to res,ign. Albert Fall, a former Cabinetmember, went to jail, along with oil magnate HarryF. Sincla,ir and a variety of lesser figures. Four oilmillionaires skipped the country.

The seandalous leases of Naval Reserve oil atTeapot Dome, Elk Hill and Buena Vista were can­celed, with a saving to the taxpayers of hundredsof millions of dollars. Reorganization of the JusticeDepartment, another consequence of these investi­gations, brought major benefi,ts to the nationthrough stricter, more equitable law enforcement.

Only congressional investigation could haveproduced such results. Individual citizens w,erehelpless. The courts were powerless to initiateaction. The executive agencies were either unawareof what was happening or conniving at it. Tribunesof the People, armed with sufficient power, wererequir,ed to expos,e the wrongdoing, arouse publicopinion and force remedial action.

Congress Needs the Facts

Although few investigations have been as spec­tacular as those of the 1920s, their net service tothe country, and to liberty, would be hard to over­state. 'The first bread-and-butter function of in­vestigating commi,t,tees is to assist Congress in itsconstitutional task of making and changing ourlaws. In order to make laws wisely, Congress musthave before it the relevant faC'ts. But Congresscannot simply take the alleged facts of a situationfrom some other agency, or from the executivebranch. It must take full, independent responsibilityitself. for the information upon which its law­making decisions will rest. Congress gains thisinfor'mation by conducting its own investigations inits own way.

A related function of congressional investigationsis to check up on what happens to laws after theyare passed. Committees like the "watch dog com­mittee" of World War Two, in which Harry Tru-

310 THE FREEMAN

man made his mark, have saved billions of dollarsby keeping a critical eye on the government's mil­Hary contracts and administrative methods.

N,early every important reorganization of thegovernmental structure has come as a result ofcongressional inquiries. Repeated nineteenth-cen­tury investigations of frauds in private mail con­tracts, for example, led to the formation of theGeneral Post Office.

Time and again investigations have been used toclean Congress' own house, from as early as 1797when William Blount was expelled from the Senatefor stirring up the Indians to rebellion. Only acongressional probe was able to penetrate the vastCredit Mobilier scandal which by 1872 had engulfedboth Europe and this country, and involved eventhe U. S. Vice President and former Speaker of theHouse, as well as many of the nation's leadingfinanciers.

Subversives E,xposed Since 1938

In our own day congressional investigations werethe first agency to inform the public concerningtotalitarian threats to liberty. Beginning in 1938,the House Committee on Un-American Activiti~sexposed, first the fascist and Nazi groups that werethen actively conspiring against our security, andnext the communist apparatus that continues toconspire. It was this committee that dug out thecas'e of Alger Hiss, along with the operations ofthe Silvermaster, Perlo and Ware espionage cells.In recent years its work has been supplementedby the Senate's subcommittees on Internal Securityand Permanent Investigations.

These committees, granted their excesses, de­serve chief credit for the fact that today, both bymore adequate laws and through s,terner adminis­trative action, we have at last begun to dealeffectively with the subversive conspiracy againstour survival as a free nation. Despite the attacksto which they have often been subjected-andwhich they have sometimes deserved-congressionalinvestigaHons have thus proved themselves an,essential part of our system of government. Thisis recognized by nearly all constitutional historiansas well as by the basic decisions of the SupremeCourt.

In the principal case that arose out of theDaugherty investigation (McCrain v. Daugherty)the Supreme Court flatly declared: "The Power ofinquiry-with process to enforce it-is an essentialand appropriate auxiliary to the legislative func­,tion."

The new Congress now has before it a number ofproposals for the "reform" of the investigatingcommittees by the establishment of strict rules ofprocedure. Undoubtedly there have been abuses inthe conduct of investigations-gr€at power isalways liable to abuse and corruption. Sometimes acommittee room is turned into a publicity circus.

It is charged that sometimes an inves,tigation isput to extravagant use to advance the personaleareer of a politician. Sometimes the reputationsof innocent men are damaged. SomeHmes investi­gators are careless of the rights of witnesses.

Such practices should be denounced and the dam­age repaired when possible. But it is a questionwhether they can be corrected by detailed ruleslaid down in advance. The reputation of an authormay be seriously damaged by an unfair review,but we do not demand a law that would prescribein detail the methods of book reviewing. A com­mittee hearing is not a trial. It cannot take awaya man's life or liberty. Many of the meticulousrules of the courtroom are inapplicable.

Recent discussion has invariably arisen in con­nection with the committees investigating Com­munist subversion. Although honest liberals arenow advocating reforms out of a concern for civilrights, we should remember that the aim of theCommunists is to put an end to all investigationsof subversion, treason and espionage.

The procedures of the committees are governedby congressional tradition, by special rules adoptedby each committee, and by the personal influenceof leading members, particularly the chairmen. Asa matter of tradition and privilege they accord towi'tnesses nearly all the rights that would be madea matter of inflexible law if the bills now beforeCongress are passed: for example, the right to havecounsel, to submit a written statement, to answeraccusations by other witnesses, and so on.

The effect of transforming these privileges intolaw would be to obstruct or even paralyze the workof the committees. If the law required the presenceof counsel for a witness, then a Communist lawyercould stop a hearing merely by becoming so ob­streperous that it could not continue. If the com­mittee threw him out, it would have to adjourn untilthe witness produced another lawyer who couldstart the whole ruckus over again.

There has been objection to "one-man hearings."Offhand ilt does seem fair that at least two com­mittee members, one from each party, should bepresent when a witness is questioned. But in prac­tice, under such a rule many Senate investigationscould never be finished. There are only 96 senators,and with all they have to do there are just notenough to go around, particularly when many com­mittee hearings must be held in distant parts ofthe country or even abroad. Furthermore, if aninvestigation were hurting one of the politicalparties, the committee members belonging to thatparty could bring it to a halt merely by stayingaway from the hearings.

In reality, the only requirement on this pointthat is both fair and practicable is that all mem-

bers of a committee should have advance notice ofevery meeting, so that they may attend if theywish. The basic problem of "one-man hearings" isthe man, not the rules.

Some critics have said that we should copy the"responsible" and "objective" investigating tech­niques of the English "Royal Commissions." How­ever, those Royal Com'missions are composed oflaymen chosen for their interest in the subject; andthey question only volunteers who desire to giveinforma,tion.

Waste Should Be Eliminated

It does seem desirable that Congress shouldeliminate the "overlapping" of its committee juris­dictions, so that there will no longer be the waste­ful spectacle of three or four different committees"competing," and interfering, with each other inthe investigation of some problem. These investi­gations should doubtless be confined to one com­mittee in each House. Some Congressmen go fur­ther, and have introduced bills to set up a singleJoint (Senate-'House) Committee on InternalSecurity, modeled after the Joint Committee onA,tomic Energy.

In general, however, abuses by investigatingcommittees are not going to be corrected by enact­ment of a code of rules. If the fights of an individ­ual are genuinely injured by an investigating com­milttee, our constitutional system, with its incom­parable safeguards of justice and liberty, permitshim to seek and find redress in the courts.

And if a congressional investigator blatantlydisregards truth, dignity and justice, Congress mayat any time bring about his removal from commit­tee assignment, his censure or his explusion. More­over, the people in their turn will have the op­portunity to vote him out of public life.

Thirty years ago a clamor for changes in pro­cedure arose in connection with the Teapot Domeinvestigations, just as today they arise in connec­tion with the investigations of Communist sub­version. At that earlier time perhaps the mosteloquent defense ever made of congressional in­vestigation came from the pen of the young FelixFrankfurter, destined for lat.er membership in theSupreme Court:

"Critics seek to shackle the future by suggestingrestrictions in the procedure of congressional in­vestigations. No limitations should be imposed.The methods and forms of each investigation shouldbe left for determination of Congress and its com­mittee, as each situation arises. The safeguardsagainst abuse and folly are to be looked for in theforces of responsibiHty which are operating withinCongress and are generated from without."

FEBRUARY 1955 311

1929: Then and Now

By HANS F. SENNHOLZ

Early 1955 finds the American public swamped byforecasts of prosperity and boom. Economic ad­visers to governments, corporations, universities,labor unions and other groups seem to have resolvedin unison to assure the people that a depressionlike that of the 1930s has been banned forever fromthe American scene. "Americans need not fear adepression," they say. "Our government will care­fully watch our economy and interfere when theneed arises."

According to these economists, the numerousbuilt-in safety and stabilization devices operated bythe federal government-plus its vast powers inthe economic sphere-will avert any economicdowntrend and assure us continuous prosperity.

This reassurance from the planners of govern­mental intervention .may seem soothing and accept­able to many political leaders and followers. But itis a frightening thing to the economist who recog­nizes in it the denial of economics and the lessonsof economic history.

In studying this problem, we mus't realize firstthat a trade cycle with its periods of boom andbust is not one of the characteristics of a freemarket economy. These extreme ft.uC'tuations are,and always were, superimposed by government in­terference upon the unhampered economy. Aneconomic crisis in some form is inevitable as soonas government or a pressure group with powers ofcoercion interferes with the smooth operation ofthe market economy in order to advance its ownschemes of "progressive planning."

When government embarks upon a policy of in­ft.ation or credit expansion, everything looks fine.Profits increase because prices rise while businesscosts tend to lag behind for awhile. Business beginsto expand. The demand for the several factors ofproduction-land, capital and labor-increases.We wi,tness a period of high employment and highproductivity. But the increased demand for theseproduction factors naturally raises their prices,which are business costs. These costs climb untilthey reach the point where business is no longerprofitable. At this point, we enter a period ofrecession and readjustment. It lasts until the costshave come down and business becomes profi,tableagain.

The subtle instruments of inft.ation and creditexpansion first lead to the "prosperity" side ofthe trade cycle. The cruder methods of raising

312 THE FREEMAN

What caused the 1929 depression?Why did it continue for so long?Will it likely happen soon again?

costs-----by government or by labor unions backedby government-lead directly to readj ustment oreven to depression.

For example, it is obvious that business mustdecline when, in utter disregard of productivityand profits, either government or labor unions forcecosts beyond what the market will bear, or whenbusiness taxes are raised, or when any other cost­·increasing obstacle to production and trade iserect~d. In each instance, business begins to con­tract immediately.

How the Depression Started

Let us illustrate this effect on the trade cyclewith an analysis of the great depression of the1930s. It all s'tarted with the two big spurts ofcredit expansion created by the Federal ReserveSystem in 1924 and 1927. In both years, the FederalReserve banks bought large amounts of governmentsecurities in the open market in order to ft.ood theeconomy with cheap credit and money and thus toattain prosperity and full employment. The newlycreated money, which rapidly went into securityloans and bank investments in securities, causedthe stock market to rise by leaps and bounds.However, business in general, at that late date,refrained from making full use of the newlycreated funds because the inft.ation-induced rise incosts had begun to lead to difficulties in an in­creasing number of industries. Finally, in Octoberof 1929, after an unprecedented rise in stock prices,the ineviltable downward readjus'tment set in.

The government immediately "came to therescue" again in an atte,mpt to rectify the damageit had already done. In June of 1930, Congresspassed the Smoot-'Hawley Tariff Bill which gavehigh tariff protection to American industries. Thiseliminated much foreign industrial competitionfrom the American market. Foreigners, who nolonger could sell their products and earn Amer­ican dollars, could no longer buy American prod­uClts. The American export industries-especiallyagriculture, which used to export a large share ofits production and which had already been hurt byprevious government interference-began to sufferfrom a rapid decline in prices and from unemploy­ment of capital and labor. All over the world, anirresistible movement to raise tariffs began. Thismerely accelerated the decline in employment.

In 1933, after an inevitable upswing from ex­h"eme panic, the depression was intensified by moregovernmental intervention in the economy, mainlythe Nwtional Industrial Hecovery Act. This Actimposed new internal regimentation and restric­tions on imports. It provided for shorter workhours and minimum wage<s in order to increasepurchasing power by increasing payrolls. Naturally,the immense increase in business cos'ts constituteda most successful anti-revival measure. In theSouth, where the government minimum wage ·wasconsiderably above the free market wage as deter­mined by labor product.ivity, about 500,000 Negroeswere immediately forced out of work.

In 1935, Congres,s passed the Wagner Act whichled to ugly labor conditions, inflicting heavy losseson business. Through the Undistributed ProfitsTax of 1936, Congress again struck at corporatesavings and expansion. In 1937, the governmentpolicy was directed at restricting, if not destroy­ing, the stock market. And in 1938: the Wage andHour Act provided for new increases in businesscosts which severely affected the South and, aboveall, Puerto Rico where labor productivity was low.Immense unemployment resulted.

In 1939, after more than nine years of govern­mental planning for full employment, more thannine million Americans, or 16.7 per cent of thelabor force, were still out of work. During theseyears, unemployment never declined below the sixmillion mark.

W ar and Inflation

Relief finally came to the suffering nation dur­ing World War Two through the unprecedentedmonetary depreciation which eased the burden ofbusiness costs that had been created by govern­mental policies for maintaining high wages andprices. Thus the evil of depression and chronicunemployment was replaced by the evil of mammothinflation.

Again, booms and busts do not lie in the natureof a free economy. If the government refrains evennow from further inflating the money supply,erecting new obstacles to international trade, en­acting new National Indus'trial Recovery acts, im­posing new taxes, raising minimum wages abovethe height of the market, enacting new Wagneracts and Wage and Hour acts" and otherwise inter­fering with the smooth opera,tion of the marketeconomy, 1929-1939 will not happen again. Therewould doubtless have to be some readjustments,but there could be no depression like that of thethir1ties.

But can we assume that government will hence­forth refrain from interfering with the economy?Indeed not! Most planner-economists want ourgovernment "to carefully watch our economy andinterfere when the need arises." They advocate thecontinuous expansion of government power in

economic life and a further increase in the numberof "built-in safety and stabiliza1tion devices op­erated by the federal government." And the ever­growing powers of government hover over oureconomy, to be applied at the discretion of "eco­nomic stabilizers and mobilizers." This knowledgeand the remembrance of the misery of the grea'tdepression should indeed give us cause for alarm.

What are the plans of our economic planners inWashington and in the headquarters of our laborunions? This is the ultimate question which theprognosticator must endeavor to answer. Obviously,the question is political and cannot be answeredthrough economic reasoning. We must know thepolitical and economic ideologies prevailing inpublic opinion, and the ideas, notions and inten­tions of their spokesmen. We can only guess fromtheir ideologies what their future actions may be,and then explain the economic effects of suchpolitical intervention.

Policies of the Present Administration

It is our assumption, based on the understand­ing of contemporary political conditions, that thepresent Administration will continue to conduct"moderately progressive policies." This means thatthe Administration will limit its interference withthe market economy to those measures which aremerely moderately harmful. In this case there ishope tha't the market economy will quickly overcometheir effects through its tremendous ability ofadaptation and recuperation.

Let us therefore assume that the Eisenhowerprogressive policies will include no new obstaclesto international trade, no new NRA, no new taxesor tax increases, no raising of minimurn wagesabove the height of the market, and finally, noadditional Wagner acts and Wage and Hour acts.In that cas'e, many causes of economic declinewould be eliminated. But one formidable causewould remain in the armory of the current govern­ment's moderate progressivism-the policy of in­flation and credit expansion.

Even moderate progressivism seems to meancontinuous inflation. Contrary to the President'sforemost campaign plank-the promise of a bal­anced budget----lthe present Administration is spend­ing on a chronic deficit basis. The fiscal year 1955-56is planned to be the twenty-third deficit year inthe past twenty-six. In the fiscal year ending June1953, the federal government's deficit amounted to$9.4 billion. In the following year it was $3.3 bil­lion. For the current year which ends in June1955, the Treasury's defieit is estimated to be $4.7billion. If we add to these figures the minimumdeficit of $3 billion as es'timated by the Secretaryof the Treasury for the 1955-56 fiscal year, wearrive at a total of more than $20 billion duringthe four years of Eisenhower's Presidency.

After twenty-'five years of almost uninterrupted

FEBRUARY 1955 313

dencH spendjng, there is widespre'ad public ac­ceptance of this feature of progressivism. Butthe economic scientist cannot conveniently winkaway the effects of Treasury deficits in his analysisof present economic conditions. He must take intoconsideration the fact that our politicians ceaseto see anything frightening in a $20 billion deficitand that even this Administration" which waspledged to cope with this feature of progressivism,has itself finally abandoned hope and has embracedthe evil which it set out to eliminate.

Inevitable Results of Deficit Spending

Accepting, as we must, our government's obses­sion with deficit spending, let us briefly analyzeits economic consequences. They are twofold. First,inflation and credit expansion transfer wealth andpurchasing power from the pockets of all creditorsto those of all debtors. If you have saved athousand dollars and the government depreciatesthem by 10 per cent, you lose 10 per cent of yourpurchasing power; you are poorer by 10 per cent,due to inflation by government. If you have loanedout your money-as in a savings account, a lifeinsurance policy, ora government or industrialbond-you must lose when the government de~,

preciates your dollar claims.But this aspect of inflation is mild indeed when

compared with its other offspring, the periodsof boom and bust. As dis-cussed above, the re­adjustment comes with the inevitability of aneconomic law once our monetary planners have em­barked upon the road of inflation and credit ex­pansion. There is no escape.

But as certain as there must be a readjustment,just as determined are our planners to stave offthe day of reckoning. And it is true that thiscan be done-temporarily. The consequences ofpolicies of inflation and credit expansion, as faras the trade cycle is concerned, can temporarilybe pos1tponed through an intensification and ac­celeration of the depreciation process. That isto say, our monetary planners can temporarilyavert the inevitable decline and readjustmentthrough an intensified operation of the printingpresses. As all political parties are dead setagainst any economic readjustment, they are allready and det'ermined to resort to this tasty buttragic medicine in case the boom economy shouldtaper off during their tenure of office.

During the last two years, the Republican Ad­ministration has given the people a full dose ofthis anti-readjustment medicine. When economicactivity began to decline, it twice lowered thelegal reserve requirements of all member banksand thus created with the stroke of a pen more than$10 billion tn new potential bank credit. Twicewithin two years it lowered the discount ratesof the Federal Reserve banks and thus madecredit cheaper. Interest rates on the capital and

314 THE FREEMAN

money markets are now about as low as theycan be kept, barring their complete abolition.Comm.ercial papers and bankers' acceptances aretraded at 1.25 per cent per annum, federal fundsoften at less than .5 per cent. This is credit ex­pansion.

Thus, through an acceleration of the depreciationprocess, readjustment can be averted temporarily­perhaps for five, perhaps for ten or fifteen years.But it must come to an end. Of course, the verygovernment that inflates and depreciates the dollarwili oppose and fight various symptoms of its ownpolicy. Government officials will fight valiantlyagainst the inevitable rise in commodity and stockprices caused by the acts of the monetary offieialsof government! They will clamp down on the stockmarket; but, of course, not on the 'Treasury orFederal Reserve officials. In order to "fight in­flation," they will raise margin requirements to75 per cent or even 100 per cent; of course,they will not abandon their own policies of in­flation. In the later phases of inflation, we musteven be prepared for price controls, wage controlsand other vain measures to be enforced by gov­ernment and its stabilizers in order to "fight in­flation."

The final question which the economist whoanalyzes present conditions must endeavor toanswer is: if it is possible t,emporarily to post­pone the readjustment consequences of inflationand credit expansion policies through an intensifi­cation and acceleration of the depreciation proc,ess,why then did the accelerated policies conductedduring the 1930s fail to have this postponing effect?

The answer has already been indicated above.The numerous progressive burdens and obstaclesimposed upon business, such as the Smoot.;.HawleyTariff Act, the National Indus'trial Recovery Act,the Undistributed Profits Tax, the Wagner Act andthe Wage and Hour Act, nullifi·ed any stimulationconceivable, even that provided by accelerated in­flation.

Barring other interventionist measures, ac­celerated inflation quickly shows its eff'ects. Itaccelerates the rise of commodity prices while ittemporarily lowers business costs, especially realwages, and thus brings about a desired goal-fullemployment. This is especially true today whenthe government has at its disposal a multiplicityof lending agencies through which new money andcredit is channeled directly into all branches ofthe economy. These agenc'ies are willing and ready,if the monetary authorities should deem it neces­sary, even to distribute free money and credit toall applicants. This io8 the difference between1929-1939 and today. Barring radical "progressive"measures, an accelerated inflation and credit ex­pansion will continue to work forsorne time intothe coming years. It will postpone temporarily theinevitable decline and readjustment, up to thepoint of total destruction of the currency. That

is the end of the road on which we are traveling.If we continue, the final crash in 1965 or 1975will make the one of 1929 look insignificant andinnocuous. It will bea terrible awakening formillions of Americans.

One final warning, reluctantly given: we maynot even be fortunate enough to have any marketreadjustment at some time in the future. Instead,spurred on by people who have lost all sense ofeconomic reality, the government m'ay take complete

control of the economy. Then, true enough, therewill be no depression and unemployment in theaccepted sense; but the alternative is not pleasantto contemplate.

The American people can turn back from thisfolly any time they are willing to assume re­sponsibility for their own affairs in a marketeconomy, rather than to surrender their freedomsand responsibilities to Washington and a controlledeconomy.

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FEBRUARY 1955 315

The Government~s

Freight Business

By PAUL L. POIROT

Rumor has it that users of first-class mail s,ervicemay have to go to four cents on a letter. If so,there might be comfort in knowing that th.is wouldhelp subsidize the government's freight business­parcel post. After all, someone has to pay for thespecial privileges offered by the government.

When Congress passes a law, the result is likelyto be a special privilege to one person or groupand a taxlike burden to others. The beneficiariesof the privilege soon come to look upon it astheir private right, to be defended with their lives,their fortunes, and their sacred honor. Once thegovernment exercises its power of coercion to favorcertain citizens, they will demand that the favorbe continued, and charge injustice and discrimi­nation at the least sign of its withdrawal. Any­one who would strive to protect his property fromthe consequent burden of taxation is seen to be apromoter of his own selfish interest. The politi­cally subsidized citizen comes to think of himselfand his special privilege as the m:eans and theend-the very essence-of private enterprise, to beupheld against taxpayers who resent such forcedexchang,e!

Governmental operation of the parcel post serviceillustrates the point. A law was pass'ed in 1912to provide a package delivery service which pre­sumably could not be bought at the price in a freemarket. In other words, this was a special privilegeto those receivers and shippers who used parcelpost service, and a tax burden upon nonusers,including the private operators who were makingtheir own deliveries and thos:e who were offeringto carry freight for the public as a private busi­ness venture.

The bene'ficiaries pushed thei'r newly found"rights," demanding 'extension of the parcel postservice. By 1918 they could ship packages weigh­ing up to 70 pounds within the first three postalzones, and up to 50 pounds in zones 4 to 8, witha dimension limit of 84 inches in length and girthapplicable in all zones. In 1931, the weight limitwas set at 70 pounds for all zones, and the dimen­sion limit was increased to 100 inches. Establishedprivate businesses expanded, and new ones were

316 THE FREEMAN

Can the freight operations of privateenterprise survive the competition andtax burden of subsidized parcel post?

founded upon "r.ights" to a subsidy. All sorts ofbusiness houses specialized in direct shipments toconsumer,s, and various manufacturers and whole­salers welcomed pareel post as a link with theirretail outlets. And all these were firm believersin "good old American private enterprise," in­cluding their "rights" to special privilege!

Then, in 1952, despite vigorous protests, PublicLaw 199 took away certain "rights." This law re­duced the parcel post privilege. Packages exceeding72 inches in dimension, and 40 pounds in weightwithin the first two zones, or 20 pounds in otherzones, could no longer be shipped by parcel postbetween first-class post offices. The intent ofCongress to thus remove the government from asmall segment of the competitive market economywas said to be a denial of the concept of privateenterpris,e. Businesses would be ruined by sucharbitrary violation of their established rights toa subsidy! Apparently, the right to compete isless sacred than the "right" to a special privilege.

"Something for Nothing"

Since the dawn of civilization, men have beensearching for a peaceful or noncoercive methodof balancing the effective demand for commoditiesand services against the available supplies. Inall the years, the only method which has workedwell both in theory and practice is the free marketmethod of allowing prices to fluctuate up and downin response to the voluntary bids and offers ofpotential buyers and ,sellers. This does not meanthat the free market affords everyone as much ofeverything as he could use. It merely allows eachperson as much of whatever is available as hethinks he can afford. Each decides the priorityof his own needs. The need for postal serviceand the satisfaction of that need were thus balancedin this country in the dim past. But visionarieswere not satisfied. They saw a need for moreelaborate postal services than had prevailed undervoluntary exchange. And they thought the govern­ment could do for individuals what they would notattempt of their own accord.

The Constitution authorized the federal govern­ment to provide postal service, but no sooner hadthe government entered the business than it becameapparent that it could not operate according tothe free market guide. If customers were to havemore service than they wanted to pay for, the pricehad to be held down by means of a subsidy. Andthe only way to provide ,such a subsidy was throughcompulsory taxation of one kind or another. Thelower the postal rate, the more service the customersdemanded. Seeing that the users of postal servicewere willing to be subsidized, congressmen thoughtit best to operate the post office at a deficit. Tax­payers who understood the situation found them­selves outvoted by citizens who thought the gov­ernment's post office was a source of something fornothing. The federal postal service thrived uponthe illusion, using its own deficit as the founda­tion for expansion.

In earlier days, a high proportion of congressmencame from rural districts. But people were .migrat­ing to the cities. Rural free delivery was institutedon a trial basis in 1896 in an attempt to makerural life seem more attractive. By the politicaltest, the trial was a huge success: the customersliked the "free" service. But the more readingmatter the rural residents received, the fasterthey moved to town.

Parcel Post Inaugurated

By 1912, further action was deemed advisable.Congress decided to offer a package delivery serv­ice so that the products of urban industry mightbe more readily available to rural residents. OnJanuary 1, 1913, in the name of parcel post, thefederal government made its first direct bid forthe freight business of the United States. Pre­viously, it had subsidized various transportationfacilities and had gradually assumed control overthe rates or prices which privately owned trans­portation agencies could charge for their services.By such indirect means, the ground had been pre­pared for government entry into the freight busi­ness. The market was no longer functioning freelyas a guide to the suppliers of freight services andtheir customers.

Despite years of conditioning under governmentsupervision and rate regulation, privately ownedtransportation services did not accept the parcelpost idea in silence. They complained about thatlatest blow against private enterprise in the UnitedStates. And their protests at least cautioned theCongress to move slowly. At the outset, parcelpost service was limited to packages weighing nomore than 11 pounds and measuring no more than72 inches in length and girth. Not until 1931 didthe limits reach a maximum of 70 pounds and 100inches, where they stood until the 1~)52 reductionof Public Law 199.

The government's freight service proved popular,

especially during these periods when the govern­ment held parcel post rates substantially below thelevels it set for its struggling private competitors.NaturaUy, the parcel post service was subsidized.The Post ,Office Department's reported deficit onfourth-class mail, which consists primarily ofparcel post, averaged $134 million a year from1949 through 1953. The revenue collected fromusers of parcel post service covered roughly threefourths of the costs charged against the service.Taxpayers made up the balance, the subsidy averag­ing about 13 cents on a parcel.

rf'he Tail Wags the Dog

Under such conditions of subsidized parcel postand closely regulated competition, it was not sur­prising that the parcel post tail began to wagthe rest of the postal system, even though otherclasses of mail were also subsidized. In 1951,about 61 per cent of the weight and about 70per cent of the cubic volume of all mail consistedof parcel post. That was the third consecutiveyear during which more than a billion parcels werehandled, weighing nearly four million tons, and in­volving space requirements equivalent to 235,000railroad carloads-a train 2,700 miles long. Littlewonder that the Postmaster General had testifiedbefore the House Committee on Post Office andCivil Service on March 7, 1949:

Because of greatly increased rates on expressshipments, a large volume of parcels formerly han­dled by express have been channeled to parcel post.This has really put the Post Office Department inthe freight business. We have insufficient distribut­ing space, platform space, terminal facilities, trucks,and suitable railway cars to cope with the situation,and all this makes our operations more expensive.

More than forty years ago the Postal Systementered the freight business, presumably as aservice to farmers. Parcel post has grown to be amighty big business, but not all of the customersare farmers. In fact, post office records show thatduring the fiscal year ended in June 1953, the9,000,000 families served by rural free deliveryreceived an average of 14 parcels per family forthe year, whereas the national average was morethan 22 parcels per family. Meanwhile, variousbusiness enterprises have grown upon and now havea vested interest in continuance of this subsidizedparcel delivery service. Today the greater partof parcel post traffic consists of small shipmentsof ordinary commercial freight from manufacturersand wholesalers to retailers. These commercialshippers want Public Law 199 repealed, as many ofthem testified in January 1954 before a subcom­mittee of the House Committee on Post Officeand Civil Service.

The shirt manufacturer, who spent $855,263 forparcel post in 1951, and who complained that hecould no longer ship four dozen shirts in a carton,

FEBRUARY 1955 317

was not speaking of denim shirts for rural cus­tomers but of dress shirts destined for retailersin large cities. The shoe manufacturer who shippednearly 400,000 pairs of footwear by parcel post in1951 was complaining because some 70,000 shoeretailers in the United States could no longer getthe service to which they had grown accustomed.

One might presume from the testimony that thefuture of the wallpaper industry hangs primarilyupon the restoration of the 70-pound, 100-inchparcel post privileges. Ambulance and fire-fightingservice is said to be jeopardized by the fact thatcertain motor repair parts can no longer be mailedparcel post. Tire manufacturers can no longer mailtires to customers served by first-class post offices.The mail order houses will surely be ruined! Musicstores suffer because guitars measure more than72 inches, length and girth combined. The greet­ing card industry is threatened by the loss ofparcel post connections with direct-selling rep­resentatives.

Subsidy Demanded as a Right

As one studies the testimony of the makers ofsoup to nuts and kitchen sinks, he must realizethe difficulty of ever trying to curtail a govern­ment function to which individuals are accustomedand upon which private businesses have dependedfor years. Whether the original justification forthe service was valid ceases to be of consequenceas each new vested interest finds its own defenseagainst a return to competitive conditions. Sub­sidized individuals come to believe they have rightsto continuing subsidy. Political pleading displaceseconomic performance as a guide to what shall beproduced and consumed.

Those who now complain that their loss of cer­tain subsidized parcel post privileges is discrimi­natory do not use the word in the same sense asit was used by the "Raleigh man," the "Watkinsman," the "Baker man," and other salesmen whoformerl,y traveled country lanes delivering theirown parcels. Those forgotten victims of govern­mental intervention are no longer here to defendtheir interests. For they were discriminated rightout of business. Of the old-timers, Railway Expressseems to be about the only one left with a voicein behalf of private enterprise; and that voice hasbeen .strangled to a bare whisper by excessiveregulation and control.

But private enterprise does bounce back fromattempted banishment. Despite all the regulationof private carriers and subsidy of its own small­package freight business, the government has notachieved monopoly control in the field. RailwayExpress survives, and new private ventures suchas the freight forwarders, the united parcel serv­ices, truck and airline freight services are grow­ing in stature as competitors. They illustrate thedetermined response of private enterprise to any

318 THE FREEMAN

real need which arises. Few persons can evenimagine how much better such private servicecould and would be if the government would onlyleave the freight business alone-leave the marketfree to function as man's guide in the satisfactionof his wants.

The Real Question

The debate over Public Law 199 has not andprobably will not get into the question some per­sons might like to discuss: why should the gov­ernment be in any part of the postal business? Thecurrent ques,tion merely asks how far the govern­ment ought to go in the freight business. Is theregood and sufficient reason why the heavy freightbusiness should be left to private enterprise in acompetitive market if the government is to offera subsidized service for small packages? Just whydoes the shipper of a 20-pound parcel of the properdimensions have a better claim to tax-paid subsidythan does the shipper of an awkward-sized ton ofthe same product?

It might be argued that a small package is morenearly the size and weight of a letter than is alarge package~that small parcels are more easilyaccommodated to the governmental facilities alreadyavailable for handling the mail. The same couldbe said for one's entire pay check, instead of theportion now withheld as tax; the government al­ready has handy facilities for processing the entireamount. Government has the facility for assumingany kind of a responsibility any individual chooses'to relinquish. It can totally displace private com­petitive enterprise if the spirit of enterprise isdead. But if there are those who still believe inprivate enterprise, perhaps they ought to start,acting like it instead of casting votes to decide howmany shirts can be shipped by a manufacturer to aretailer.

To put the size of a man's parcel to a vote is todeny the principle of private enterprise. Give thesmall-package freight business over to government,and the argument is lost for retaining any kind offreight service under private management. Andthen will come the advocate of nationalized pas­senger-post service. He could shout that privateenterprise has failed. Voluntary commuters willtestify that they cannot afford to travel at prevail­ing rates. It could be argued that added mobilityof labor is in the national interest, particularlydesirable for the isolated inhabitants of rural areasand the underprivileged residents of congestedslums. New jobs could be promised. Surely, theadded service might absorb some of the overheadcosts of the Post Office. The clinching argumentwould be that such a passenger-post service is vitalto national defense!

'There is the pattern. llow is anyone to argueagainst it in principle unless somewhere along theline he stands firmly in defense of private enter-

prise and private property, refusing to be a partyto the process of voting the government into con­trol of any business-the passenger business, thefreight business, or anything else that could beone's own business!

The peaceful practice of one's own business al­lows cooperation and trade with anyone else who iswilling. It is not one's business or right to use clubsor guns or the power of taxation against thosewho do not choose to cooperate with himvolun­tarily. For instance, the Railway Express Agencyhas no business insisting at gunpoint that all

packages be shipped by Railway Express. Thatwould be considered an unwarranted attack uponthe lives and property of individuals. It is generallyconsidered to be the function of government tosuppress such criminal tendencies; therefore, it isthe business of government to carry clubs andguns. But is it also the business of government tocarry packages up to a certain size, using its clubsand guns and powers of taxation to make sure thatcitizens accept such subsidized freight service?That is the real question behind the furor overPublic Law 199!

The American WayBy E. GORDON FOX

The world will emulate our political andeconomic system as it does our technology,if we hold fast to our heritage of freedom.

It has been my privilege to have lived in twoworlds, the world of statism and the world ofindividualism. I have had a long and intimate lookbehind the Iron Curtain in Russia. I have workedwith the Russian people. I have visited them intheir own homes. I have conversed with them intheir own language. I have traveled with them.Also, I have traveled alone in their country. I havebeen arrested and marched down the street atbayonet point by their GPU.

Because of this background and exper.ience, Icould recite to you many entertaining stories andincidents. But I shan't, because they might tendto obscure the less entertaining but more vitalissues pertaining to human freedom. Our cryingneed is thoughtful study, not sensationalism.

Today, two conflicting ideologies clash in a coldwar. They threaten to clash in a hot war whichmight attain catastrophic proportions. The contestbetween these two ideologies pervades the entireworld. The threat of the communist ideology to thetranquility of our Western civilization is the maj"orproblem of our times.

I would first mention-and it is not a trite state­ment-that our war with communism is a war ofideas. It is a 'Contest to win the minds of men.This is a contest which cannot be won throughmilitary supremacy. It will not be won or lost onbattlefields. It will be fought, and decided, in mines,farms and factories, in research laboratories, ondrafting boards, in the marts of trade, in class­rooms, in churches, at the ballot box. It will bedecided through processes of economics, politics,diplomacy, education, evolution.

Because such labels as liberalism, conservatism,democracy, and so on are ambiguous and steeped

in intentionally erroneous implications, it is essen­tial that we do not resort to them, but that weresolve the competing ideologies into their definitiveattributes. What is it that we Americans are seek­ing to sell the world? In what direction are wetrying to orient men's minds? I submit that theposition of the free world is represented, in thehighest embodiment yet attained, in what has cometo be termed the American way of life.

The founders of our nation 'Pioneered the prin­ciple that the citizen is vested with God-givenrights, that he is free to make his own decisionsand to establish his own personal pattern of life,so long as he does not trespass upon the equalrights of others. Our nation also pioneered theprinciple that government has no sovereign rightsand no inherent functions other than those volun­tarily and specifically delegated to it by its citizens.

That concept of human relationships, revolution­ary at its inception and still revolutionary in theworld today, is our legacy of liberty. It is whatI mean by the American way of life. It holdsthat the prime function of government is to pro­vide a favorable environment in which individualsmay work with maximum freedom and with rewardscommensurate to their efforts and their contri­butions. It maintains that governmental activi­ties should be restricted to the functions of de­fending life and property, of protecting legiti­mate trade, of suppressing predatory practicesand of invoking equal justice under law.

The Declaration of Independence, the Constitu­tion of the United States and the Bill of Rightsare among the world's greatest documents, mark­ing an epochal advance in man's progress, becausethey emphasize, as never before in history, the

FEBRUARY 1955 319

prerogatives of the citizen as contrasted with thepowers of government. Our Constitution was de­signed to protect the freedom of the smallestpossible minority~one penWTI. The idea of theinalienable rights of the individual person is thefundamental spirit of the American tradition ofgovernment.

On the one hand, we have ownership of produc­tive facilities by the investing public; nonpolitiC'aladministration of industry and commerce, dis­persed powers and decisions, individual freedom,self-reliance, limited government. On the otherhand, we have government ownership, governmentadministration, government domination, governmentcoercion-in short, limitless government and the in­evitable corollary of individual subjection andservitude.

If you will endorse my view that the traditionalAmerican way and the socialistic Soviet wayrepresent the two alternative courses offered forworld acceptance-and if you will accept my furtherbelief that the prevalence of one or the other ofthese two incompatible courses, throughout theworld, will result from evolution rather than fromwar-then I think you will agree that it is highlyimportant that we appraise carefully our ownpresent ideological attitudes and that we takedue cognizance of the direction in which we seemto be trending.

First of all, I think that we should not over­look the fact that most of the countries of Europe,suppos,edly our cold-war allies, have never attainedthe degree of freedom represented in the tradi­tional American way. They are indoctrinated, insome measure, with the Sov,iet idea. Some of themhave traveled far on the road to socialism. 'Theyhardly comprehend the concepts which we defendand they do not give them wholehearted allegiance.We cannot expect from them a strong and deter­mined stand for the cause of individualism andagainst the cause of statism to which they arealready, in some measure, committed. If there isto be a champion of the American way of life,that champion must be America.

Questions for Americans

Secondly, I submit that it behooves us to raisea question as to the integrity of our own adherenceto the principles which constitute our heritage.

Do we steadfastly preserve the primacy of theindividual, or are we tending to glorify the Stateand to belittle the importance of the citizen?

Do we insist that the administration of industryand commerce is within the province of free men,or are we steadily expanding government en­croachment upon the principle of free exchangeby free citizens in free markets?

Do we adhere to the view that the ownershipof the mean.s of production should rest in thepeople through voluntary investment, or do we

320 THE FREEMAN

prefer communal ownership by the federal gov­ernment?

Do we retain to the citizen the power of decision,or are we shackling him with a n1ultiplicity ofgovernmental controls?

Do we respect the natural or God-given laws­such as that of supply and demand-or do we tryto negate them through amendment by puny men?

Do we believe that control of the .creative activi­ties of our people should center in government,or do we think that such control should be pre­served for direct action by the people themselves?

If it be our view that the rights and freedomsof the individual have priority and that the func­tion of government is to serve the citizen-andif we conform our activities to this view, adheringsteadfastly to methods of volition, persuasionand incentive-then we shall continue to surpassthe rest of the world in our accomplishments, andthe world will eventually comprehend the reasonsfor our success. It will then also emulate oursystem of political and economic organizationjust as it is now emulating our technology, solelybecause of its demonstrated worth.

If, on the other hand, we conclude that men asindividuals cannot voluntarily measure up to therequirements of a free society-if we decide thatgovernment must dictate their actions and exacttheir compliance; if we think that compulsionsrather than incentives will gain from men theirbest performance; if we prefer fear to profit asa driving force; if we 'believe that man dressedin the garb of government is inherently superior,either in ability or in integrity, to man bearingthe insignia of industry; if we view the individualas primarily a servant of the State and a ward ofthe State-then we ourselves are already in thecamp of the 'enemy. And we are foolish indeed tocommit ourselves to great expenditures of life andof treasure in the name of principles which weourselves repudiate.

A collective economy inevitably debases citizen­ship. It denies the exereise of individual judg­ment. Servility replaces initiative. Independenceresigns to blind obedience. Self-sufficiency sur­renders to dependence. Enterprise fades to in­difference. 'The disciplines in such a society areimposed from without by regimentation, the blightof men's souls.

Free enterprise, on the contrary, places a pre­mium on individual .effort. It stimulates resource­fulness, ingenuity, enterprise, initiative. It opensthe door to opportunity. It places no limits onaccomplishment. It is not based on compulsionand coer.cion. It is based on self-discipline, whichis the only truly effective discipline.

'The abundant life cannot be legislated by anygovernment, nor can it be conjured up by anypolitical or pseudo-economic formula. It must beapproached through constructive, effective, nobleliving, widely practiced by the whole citizenry.

A Reviewer's NotebookBy JOHN CHAMBERLAIN I

Harold L. Ickes, as Mr. Roosevelt'swrathy, self-righteous Secretary ofthe Interior, believed he had a mis­sion, and that was to give history anudge every half hour on the dot.He also believed in recording everylittle thing about his nudges, wheth­er they were important or not.Between the mission and the record­ing of such, a fascinating chroniclehas resulted. Called The Secret Diaryof Harold L. Ickes, it has nowreached the publication stage ofV olume I II: The Lowering Clouds:1939-1941 (695 pp., New York:Simon and Schuster, $6).

The fascination of this chronicle,however, is not ,vhat Ickes mighthave supposed it would be. Ickesvery probably dictated his diaryentries with the idea that theywould some day constitute the vividraw material for a history thatwould tell the exact truth about theNew Deal. But the entries, now thatfifteen years have passed, standcruelly exposed by the irony ofevents.

The fascination of this volumeis to see the "liberal" made toseem almost incredibly naive. Fewof Mr. Ickes' chosen means turnedout to be appropriate to his hoped­for ends; as someone has said, manproposes but God disposes. The jokeon Ickes is that the idea of nudginghistory should have been invoked bya man who had no appreciation ofthe irony of history. Ickes had neverpondered Bobbie Burns' "The best­laid plans of Imice and men gang aftagley"; if he had, he would eitherhave desisted from his diurnal at­tempts to kick history along, or hewould have been more humble in hisdiary entries about playing the roleof New Deal deus ex machina.

It is not that Ickes was partic­ularly arrogant. Reading his diary,it suddenly struck me that he wasa Ring Lardner character in reverse.

I recall a Ring Lardner story aboutan ancient gaffer who could think ofonly one commendation worth set­ting down when speaking of anacquaintance. This gaffer would de­scribe Mr. Smith, or Mr. Jones, asbeing "forty years old, a good horse­shoe pitcher, and a Rotarian."(Italics mine) Mr. Ickes' chant,which makes him seem like themirror image of the Lardner gaffer,was this: "Robert M. Hutchins iswell located geographically, is force­ful, and a liberal." Where it was in­conceivable to the Lardner characterthat there could be good, bad and in­different Rotarians, it was equallyinconceivable to Harold Icke.s thatthere could be good, bad and indif­ferent liberals.

Well, well, what Ickes didn't know.At the very time he was proposingto Mr. Roosevelt that Bob Hutchinswould make a good vice-presidentialcandidate on the Third Term ticketfor 1940, Mr. Hutchins was busyattacking Franklin Roosevelt's habitof double-talking on the subject ofwar and peace. Hutchins didn't wantto be known as an "AmericaFirster," for he held that such aphrase implied a selfish estimate ofthe rest of humanity, but he was, inthose days, something of an i'sola­tionist. Ickes, of course, was inter­ventionist from the word "go." ButHutchins had been described to himas "liberal," and that was enoughto evoke the virtually automaticcommendation that followed when­ever the word "liberal" registeredon Harold the Ick's brain.

The liberals crowd the entrypages of the Ickes diary. Ickes setsdown the comings and goings ofFrank Murphy, Tommy the Cork,Ben Cohen, Archibald MacLeish anda host of others, until we are leftwith no illusions about the wheelswithin wheels that constitute a

modern Administration. The pagescrackle with sour remarks about thenefarious doings of reactionariesand conservatives. But the "liberals"are permitted to get away withmurder.

For example, Ickes notes (page321) that "Senator Guffey called meon Friday. He had sent a man out tophotograph the tombstones of Will­kie's grandfather and grandmother.The spelling on these stones is'Wilcke.'" This ghoulishness on thepart of Guffey elicits no accompany­ing comment from Ickes. But if aRepublican had gone snooping abouta graveyard to see if Roosevelt hadever been spelled "Rosenfeld," canyou imagine what Ickes would havesaid?

Ickes hated dictators. But asSecretary of the Interior he was apower collector. He wanted virtuallyeverything to be brought under hisown domain. It pained him thatTVA should be autonomous, and itwas a standing source of annoyancethat Henry Wallace had jurisdictionover Forestry and Rural Electrifica­tion. When Lilienthal opposed himon TVA, Ickes wrote: "Lilienthal isthe type that wants his own littlestick of candy to suck in the cornerwithout anyone's being allowed to goanywhere near him. His concern isin his own stick of candy."

The reader in search of ironymight rise to remark that this de­scription of Lilienthal could be ap­plied with equal force to Mr. Ickeshimself. Only in Ickes' case it wouldbe a "big stick of candy," not alittle one.

The Lowering Clouds, like theearlier books in the Ickes series,will be of inestimable value to his­torians of the New Deal epoch. Butit will not do much for Mr. Icke,s'reputation as a human being. Theman had courage, he could speakbluntly, and he was loyal to hi~

FEBRUARY 1955 321

chief. But he was a "progressive"only in the narrow sense of theword, thinking that government isthe source of all that is good. Thefree play of human energy wasanathema to him. He "loved" man­kind, but woe to individual men whodisagreed with hi'm on fundamentalphilosophy! If they weren't "Fas­cists," they were probably evenworse.

Where contact with human frailty-or with what he regarded asfrailty-soured Harold Ickes, it hashad no such effect on John KennethGalbraith, another of the N'ew Deal'sfaithful servitors. Always the soulof geniality, Mr. Galbraith is at hismost pleasant in a little book calledEconomics and the Art of Contro­versy (111 pp., New Brunswick,N.J.: Rutgers University Press,$2.50) .

Mr. 'G,albraith's thesis is that mostof the current-day battles overeconomic issues do not amount tomuch. According to Galbraith, allthe issues that still provoke us topolemics have really been settled.Collective bargaining is here tostay; capital has digested the ideaof the labor union; support pricesfor agriculture have almost univer­sal· acceptance; economic "automa­ticity" has been rej ected by bothRepublicans and Democrats; thebalanced budget is no longer a fe­tish, and so on. It looks like a cosylittle world as Ken Galbraith writesabout it in prose that twinkles withgood-humored digs at those who stillcontinue to shout about such thingsas statism or the menace of social­ized medicine.There is no doubt whatsoever that

Mr. Galbraith is right when he im­plies that a new economic orthodoxyhas taken hold of practically every­one who makes our laws. Betweenthe "interventionism" of Republi­cans and Democrats there is little tochoose except in regard to mattersof timing and pace. But if Mr.Galbraith is merely being a realistwhen he says the New Deal approachto economics is here to stay for awhile, he tends to be an utter ro­mantic when he assumes that theinterventionism of the past two dec­ades has accomplished wonders. Mr.

322 THE FREEMAN

Galbraith may be a good technicaleconomist, but surely he overlookssomething when he argues that itwas State action that killed the de­pression of the early thirties.

On the contrary, what FranklinD. Roosevelt succeeded in doing wasto institutionalize the depression.The New Deal raised prices by mak­ing the dollar less valuable; itcaused a lot of commotion by itsNRA; it saw to it that farmers gotmore income by making it morecostly for everybody else to eat. Butit did not wipe out unemployment,which was still very much with uswhen the war broke out. The dif­ference between 1932 and 1939 wasthat the dole, under a nicer name,had been made a per1manent featureof our political landscape.

The point that will some day beargued, when economics once morecatches up with the art of contro­versy, is that the American systemhas come back in spite of everythingthe politicians have done to weakenit during the period of the New andFair Deals. While the Roosevelt gov­ernment was busy moving in circles,American technology marched on.The factory of 1955 bears almost norelation to the factory of 1933. Aslabor grew less efficient, or lesswilling to do a day's work, the ma­chine tools made incredible strides.A V-8 cylinder block for a Ford ora Pontiac is now Imachined by anautomatic hook-up of tools that is aslong as a football field, with no hu­man hand touching a thing exceptto change a drill here and there ascutting edges wear out. The effi­ciency of the American ,factory issuch that it has enabled the economicsystem to digest the inflation, thefeatherbedding and everything elsethe politicians have done throughouttwenty years of futility on thePotomac.

What the New Deal did was tomake the United States a high-costnation. We pay for everything thegovernment does either in taxes ormonetary infl'ation, and both thetaxes and the inflation have beenloaded into price. But as the moneysupply has been increased, priceshave been kept within the reach ofour pocketbooks by the singularblessings of technological ingenuity.

The marvelous shortcuts of the ageof electronics have enabled the build­ers, the makers and the doers toabsorb the mistakes of the politicos.

Mr. Galbraith is a first-rate econ..omist of the new persuasion thatlikes to deal with global concepts.But I wish he would forget Wash­ington and the gross national prod­uct for the next couple of years andgo out and look at industrial proc­esses. Since he is a reasonable [man,I am certain he would come backwith a new respect for the techno­logical shortcutters who have enabledus to survive two decades of infla­tionary politics.

The trouble with curmudgeonlypragmatists like Harold Ickes andgenial pragmatists like Ken Gal­braith is that they unite in believingthat positive, or man-made, law canoverride natural law. The medievalsknew different, as Ewart Lewisshows in the two volumes of Medi­eval Political Ideas (661 pp., NewYork: Alfred A. Knopf, $12.50). Themedievals tried all the tricks thathave become standard in the moderninterventionist State: they soughtto fix "just" prices, they tried to bindeveryone into a society that wouldtake care of people automaticallyfrom cradle to grave. But their ideaof the natural law that underliesgood positive law enabled the peoplesof the West to burst out of the medi­eval cocoon; when they realized thatthe "just" price was a delusion, theworld of plenty became a possibil­ity.

Modern science grew up by follow·ing a star, and that star was theidea that there was one best way toaccomplish anything, or to under­stand anything. In economic science,the star was the idea that certainclearly definable practices tend torelease human energy. But with therebirth of interventionist economics,men have gone back to the older, themedieval, idea that people will workand invent no matter what is doneto them by the State. Lacking thebelief in natural law that sustainedthe earlier medievals, how are themodern medievals ever to escapefrom the new treadmill that peoplelike Galbraith tend to dignify asthe earthly paradise?

How Europe's Freedom Was Lost

Freedom and Compulsion, A Surveyof European History between1789 and 1939, by M. C. Morgan.344 pp. New York: St. Martin'sPress. $3.50

It is one of the great paradoxes ofhisitory that the movement to lib­erate man which began with theFrench Revolution should haveended in the most extensive sup­pression of human liberty whichContinental Europe has ever suf­fered, a suppression so completethat the lost freedom could not berecovered without aid from out­side. Mr. Morgan's book tells thestory of how freedom was destroyedin Europe. Since today freedomis being threatened all over theworld in a similar manner, his nar­rative has universal significance.

The French Revolution, like ourown, was inspired by two ideas: apassionate desire for freedom andan unshakable trust in humanrationality. Unfortunately, conflictsbetween these two are frequent andmen are always inclined to sacrificethe one to the claims of the other,although neither of them can sur­vive alone. As freedom cannotprosper if rationality is abandoned,so rationality cannot be maintainedif freedom is lost. But the taskof constructing a system of checksand balances which will preserveboth is not an easy one. The Frenchwere spared tbe necessity of tryingto undertake it by the ingenioussophistry of Rousseau who per­suaded them that true freedom con­sisted, not in being allowed to dowhat one wanted, but in submis­sion to a mystical General Will.Out of Rousseau's irrational doc­trine grew European nationalism,which sacrificed man's freedomto the mys,tical idea of the nation;out of nationalism grew Hegelian­ism, which sacrificed it to theclaims of the State; out of Hege­lianism grew Marxism, which sac­rificed it to the exigencies of classwarfare. Napoleon, on the otherhand, who was concerned withrationality rather than with the

General Will, regarded liberty asa disturbing factor that preventedthe efficiency of the State, an aL­titude which the planners of todayhave made popular even in our owncountry.

It w'as the great misfortune ofContinental Europe that the menwho tried to restore peace andstability after Napoleon's fall andwho recognized the dangers ofmystical and irrational national­ism attempted to counteract it, notby a return to rationality but bymatching it with an equally mysticaland irrational idea of legitimacy.In the tug of war that followed,nationalism won out and presentedour age with Hitler and Mussolinias embodiments of the nations'General Will.

Mr. Morgan's book traces thestages of this process with admir­able conciseness; if it has a weak­ness it is the failure t,o draw at­tention to the basic kinship of com­munism with fas,cism. Indeed, whenhe speaks of the break betweenStalin and Tito, he permits him­self the hope that a balance couldbe struck between freedom andcompulsion in a communist as wellas in a 'capitalist society. Yet allthe facts he presents-and Mr.Morgan manages to cram more factsinto three hundred pages than theaverage author can get into athousand-contradict this hope.

Mr. Morgan regards liberty asthe great force which makes forstability, order and efficiency. Hefinds confirmation of this view inthe development of the countriesof the British Commonwealth, par­ticularly of Canada, where free­dom has created order andstrength. Hence he is deeply con­cerned over the fact that todaynot enough people are being edu­cated for a life of liberty. As hesees it, Western ideas and Westernindustrial techniques have per­meated the whole world, but pres­ent-day educational systems tendto develop man as a technicianand to atrophy him as a person.

However, civilization is maintainednot by techniques but by wisdom;and wisdom is the fruit of thebalanced growth of the individual­ity, which it should be the aim ofeducation to secure.

HUBERT MARTIN

Passage to IndiaAn American in India, by Saunders

Redding. 277 pp. New York: TheBobbs-Merrill Company. $3.50

The one-man safari got off to a badstart. The State Department, afterhinting at a foreign assignment,kept the author dangling monthsbefore telling him he was to go toIndia "to help interpret Americanlife to the people of India." The FBIchecked on him so diligently that hisquestioned friends wondered if hehad been dabbling in crime. He wascurious as to why he, an AmericanNegro, a college professor, had beenpicked for the job-curious and alittle suspicious.

He set out unimpressed by hisappointment and without enthusi­asm. At the Geneva airport he wasirked by the behavior of a group ofrowdy Americans. In Bombay, daysbehind schedule, he found that"Police and customs officials seemedintent on blocking me," as if thatweren't standard practice in mostports of the world. "They spokeEnglish with an Oxford accent," hetells us, "and it was easy to guesswho had trained them."

But then the clouds lift, andSaunders Redding follows throughwith close to three hundred pages ofthe most informative, entertainingand altogether delectable writingthat has been done on India in 10,these many years.

He made the circuit from Bombayon the west coast to Trivandrumand up the east coast to Calcutta. Hevisited Poona, Hyderabad, Mysore,Benares, Aligarth, dozens of univer­sity centers and numerous villages.He talked to professional intellec­tuals, to writers and journalists, tomunicipal officeholders and chiefs ofstates. He got an eyeful and an ear­ful, not to say a noseful-"the fac­tory chawls of Bombay, the clustered

FEBRU ARY 1955 323

mud huts of the leather workers,the choking, filth-packed alleywayswhere uncommitted lepers, whoserotting flesh ... assailed the nostrilsat thirty yards, took refuge."

Undoubtedly, 1V1r. Redding gotcloser to the Indians than a whiteman could have. He was repeatedlytold that his color "makes you one ofus." But they-the most color-con­scious people on earth, he tells us­couldn't understand his defense ofthe United States "with its lynch­ings and race prejudice."

Communism is stronger in India,he thinks, than Americans realize:Everywhere he encountered the usualcommunist frothings that Americais a nation of money-grubbers with­out culture, their very materialprogress a sign of moral rottenness;that we conducted germ warfare inKorea, and why couldn't we agree toRussia's reasonable peace proposals?Why our antagonism to the ChinesePeople's government; why the per­secution of Howard Fast, PaulRobeson and others?

Mr. Redding concludes that thePoint Four program hasn't accom­plished a great deal. Indians look onAmerican aid, whatever its form, asa bribe. The Fulbright program isgood, but there are twenty-fiveIndian students in America to oneAmerican student in India; it wouldbe better if the figures were re­versed.

Those are only a few of the manyinteresting points raised in thishighly interesting book concerning avast and mysterious land.

c. O. STEELE

Communist StrategyThe Techniques of Communism,

by Louis F. Budenz. 342 pp.Chicago: Henry Regnery Com­pany. $5.00

A little knowledge can be a danger­ous thing, especially when you'retrying to fight· communism. Profes­sor Budenz' latest book offers theanti-Communist a compact load ofammunition. The author doesn'tpromise to show in three easy les­sons how to understand the com­plexities of Communist strategy andtactics. "The task," he warns inhis introduction, "demands the samecareful reading, examination andanalysis as does any course In

324 TIlE FREEMAN

economics, sociology or any of thephysical sciences."

His first chapter lays the foun­dation for the accomplishment ofthis task with a concise treatmentof the philosophical underpinningsof Soviet communism. Through thewords of Marx, Stalin and Malenkovt

the author makes it clear that to­day's communism is a logical ex­tension, and not a perversion, ofMarxism-Leninism. The underlyinggoal, which he notes has not changedone whit under Malenkov, is worldrevolution.

Profes1sor Budenz' discussion ofstrategy and tactics is particularlyuseful. He points out the Commu­nist~' amazing faculty for thinkingone thing and saying another. Thismade it easy for Moscow to talkpeace and coexistence while pre­paring a war in Korea, directinganother one in Indo-China andmaster-minding a third rebellion inMalaya.

After giving an illuminating in­sight into Communist phraseology,which can serve as a key to readingbetween the lines of the Red press,the author shows how the Kremlinrelies upon fellow-travelers andduped liberals to push its line.Recognizing the obstacles to theestablishment of a Soviet Americain the near future, the Communistsbend their efforts toward stayingour hand from firm action on theinternat.ional scene. At home, theyseek to befog public opinion inorder to prevent the flushing outof subversives from positions inwhich they continue to damage ourRepublic.

Unfortunately, Professor Budenzdoes not really come to grips withthe problem of those anti-Commu­nists, however well-meaning, who bytheir excesses lend substance to theusually flimsy charges of the be­foggers. The primary danger hereis not one of slipping into total­itarianism ourselves, as some of theanti-anti-Communists would have usbelieve. It is rather one of dis­tracting the public from the centralproblem of defeating communismwherever it threatens us, and focus­ing attention instead on uni,mportantsouabbles between personalities.

The author',s assertion that, to hisknowledge, 95 per cent of the mem­bers of Communist fronts are mem­bers of the Communist Party con-

tradicts his earlier statement thatR'ed fronts are designed to win thesupport of varying groups of un­thinking people and then are oft'endissolved when their pro-Communistcharacter becomes so apparent thatthey cannot carry considerable num­bers along with them. This incon­sist'ency needlessly exposes the bookto a barrage from the anti-anti­Communist confusionists.

In spite of these shortcomings,The Techniques of Communism isa valuable primer for anti-Com­munists. Readers would do well toponder Professor Budenz' warningthat "Every move within this coun­try against the Soviet fifth columnwhich is not firm as wen as intel­ligently aware of this Red deter­mination to conquer all, will. . . .turn out to be worse than useless."

ROBERT DONLEVIN

Constitutional Fallacy?The American Political Tradition,

by Richard Hofstadter. 401 pp.New York: Vintage Books. $.95

Richard Hofstadter is guilty of T. S.Eliot's "greatest treason": he hasdone "the right deed for the wrongreason." In his essays on the menwho helped to shape or perpetuatethe American political tradition, hedebunks some of the myths whichhave been built around prominentfigures in American history. Al­though a little iconoclasm is bothhealthy and necessary, the author,having exposed the foibles and fail­ings of the men around whom legendhas been created, is nevertheless ir­ritated that these men were not ashistory has depicted them, or evenmore, the heroes whom the politicalname-droppers of our era invoke inthe support of some dubious causp.,His chief objection to many of thpsubjects he has chosen is that theywere, after all, ordinary human be­ings subject to intellectual limita­tions, personal ambitions, politicaland economic pressures, and werenot messianic reformers who couldhave used their positions of in­fluence to bring about revolutionarychanges for the greater good of thecollectivity.

The first chapter concludes withwhat is possibly the most startlingstatement in contemporary histor­ical writing:

But no man who is as well abreastof modern science as the [founding]Fathers were of eighteenth-centuryscience believes any longer in un­changing human nature. Modernhumanistic thinkers who seek for ameans by which society may tran­scend eternal conflict and rigid ad­herence to property rights as itsintergrating principles can expectno answer in the philosophy ofbalanced government as it was setdown by the Constitution-makers of1787.

In succeeding chapters, the authoris not quite as articulate about hismajor premise, yet it haunts thegreater part of the book. The readerlearns that Jefferson was morearistocrat than democrat; that Jack­son was responsible more for in­vigorating laissez-faire than forliberalizing political institutions;that Calhoun was more willing tocollaborate with Northern capitalthan is general1ly depicted; and thatLincoln was ,more the ambitious op­portunist than the crusader againstslavery.

Some of the portraits are true,some are half-true, and others arecompletely out of focus. The treat­ment of Lincoln is shabby; by con­trast, Hoover and Calhoun aretreated with more understanding, ifnot approval, than they usually re­ceive. The only person who meritssome of Hofstadter's admiration isWendell Phillips, a minor figure inthe ganery of greats, who was asingle-minded abolitionist ready totear apart the constitutional frame­work to achieve his objective. All ofthe others earn a measure of con­tempt because they were not mid­twentieth-century progressive eco­nomic thinkers or modern socialbuilders.

In his backhanded way, the authorunconsciously reveals a true Amer­ican tradition: that m'en who haveachieved high office have realized, invarying degrees, the responsibilityfor bringing about a concert of in­terests in the nation and have hadto modify some rigid preconceivednotions of policy. It is precisely be­cause so much of human nature isunchanging that the restraints em­bedded in our Constitution haveproved their value. The Constitution­makers were not obsessed, as Hof­stadter implies, by the terror of ananimal mass; but they were men whodrew upon their own colonia1 ex­perience with the Iseparation ofpowers and adapted it to a new

situation. Since most of the materialon this phase sounds li~e the earlywritings of Charles Beard warmedover, it is obvious that the authorneeds to learn much ,more about con­stitution making, and even moreabout tradition.

RAYMOND L. CAROL

Saying What You MeanPlain Words, Their ABC, by Sir

Ernest Gowers. 307 pp. NewYork: Alfred A. Knopf. $2.50

So you think you can write! SirErnest Gowers, a 75-year-old Briton,will probably convince you some­where along his 295 precise pagesthat you cannot-at least, not verywell.

He addresses himself to you, thebusinessman, the civil servant, thejournalist and advertiser. If youar,e none of these, but simply a manwho indulges in occasional letter­writing, you will still find the bookamusing and informative. It willshake you to the bottom of yourscribbler's soul.

Sir Ernest gives you a set ofrules. Be short, he says, be simpleand human. He adds, be correct inyour vocabulary 'and grammar. Hethen develops this nugget of maximsinto chapters which suggest the fol­lowing precautions: avoid the super­fluous word; choose the familiarword; choose the precig.e word;handle your words with scrupulouscorrectness; don't sling commasaround to clear up sentences wherethe syntax is essentially confused.

You might feel like stopping here.You might say, "Of course. Whata bunch of tiruisms. I don't need thebook." I thought so, too. Yet whenI reached the fourth chapter, deal­ing with corr1ections in vocabulary,I found that I fell into nine oftwenty-two common errors. Everytime I have fallen into one of theseerrors, I have left the reader con­fused. I hav'e muddied the mean­ing and made things unnecessarilydifficult for him. Purposeless ob­fuscation (there's one!) is not goodwriting. As Sir Ernest says, it isinefficient, wasting the reader's time.He defines good writing as gettingan idea from one mind into another.This is not easy.

Take the choice of words. When

you "decimat'e", what do you mean 1Has the decimated population beenreduced to one-tenth or by one­tenth? Ar'e you using the word inits proper sense (by one-tenth)?Or are you befogging the explicit­ness of the English language?

Can you handle the words thatyou choose? How about the ubi­quitous if? Example: "Please in­form me if there is any change inyour circumstances." Gowers com­ments, "Does this mean, 'Pleas'e in­form me now whether there is anychange' or 'if any change shouldoccur please inform me then?' " Thereader cannot tell. If whether andif become interchangeable, uninten­tional offense may be given by thelover who sings:

What do I careIf you are there.

Sir Ernest has primary concernfor his old profession-the CivilService. He argues that muggy writ­ing can make a mockery of anhonorable career. When a bureaucratwrites, "Prices are basis prices perton for the representative-basis­pricing specification and size andquantity," what can the reader do?He must laugh or curse.

This example happens to havebeen culled from American officialese.Sir Ernest's book should be sentas a Christmas gift to our friendsin government. Whether it will doour friends any good is proble­matical. Rudolf Flesch, author ofThe Art of Plain Talk, has beenhonored by the Air Force in thata manual has been based on hisbook. The manual is not read. Itis considered an impudence. Usingplain language, the homey "I under­stand" instead of "It is consideredas a tenable actualization of com­ponent thoughts on said subject[sic] ," would make a colonel feel asnaked as an unfeathered eagle. SirE:rnest points out that there is acertain amount of protection for anofficial in ambiguous writing. Ifhe couches his thoughts in obscurity,he is in a happy position to dodgethe responsibility for what he said.Similarly, ,if he receives an orderwritten in gibberish, he does nothave to answer for what he did.

Maybe 'the solution lies in notbecoming a bureaucrat to beginwitho PETER CRUMPET

FEBRUARY 1955 325

Give Me Liberty, by Rose WilderLane. 55 pp. Caldwell, Idaho: TheCaxton Printers, Ltd. $1.00

This is a revised and enlarged 1954edition' of the book published in1936. Mrs. Lane gives the personalstory of how she turned from com­munism to become a staunch advo­cate of individualism. Her experi­ence in bureaucratic European coun­tries taught her that personalfreedom is the only true path tohuman progress. Here is clear think­ing and fine writing on the role offreedom in America's advancement.

Communist Manifesto, by KarlMarx. 4 pp. Printed in the publicinterest by the Warner ElectricBrake and Clutch Company, Beloit,Wisconsin. Free

"In 1848 Karl Marx, in the Com­munist Manifesto, outlined the stepsnecessary for a socialized state. Thecounterparts of many of his doc­trines have been proposed or enactedinto law in this country." After thisintroductory statement, the tenpoints of the Manifesto are quotedin full- followed by a statementthat summarizes, "from present U. S.programs," pertinent material to in­dicate what is being done in thiscountry to implement, whether con­sciously or otherwise, each point.

The American Economic System,by Edwin Vennard and Robb M.Winsborough. 96 pp. Evanston,Ill.: Row, Peterson and Co. Avail­able from the Foundation forEconomic Education, Irvington-on­Hudson, N. Y. $1.00

Why do we own three fourths of theworld's automobiles? With only onefifteenth of the world's people, whydo we own one half of all the tele­phones and radios, and drink onehalf of all the coffee?

There's a re,ason for this, all right.It is the simple reason of a freemarket economy. That's the onlyreason we have better medical careand recreational facilities, as wellas better education, better housing,better clothing,than any other ma­jor group of people in the world. Itis the cons'equence of individual

326 THE FREEMAN

freedom of choice and personal re­sponsibility for one's own decisionsand welfare.

Faets and ideas like these-espe­cially the eye-opening story of thedivision of industrial income amongowners and employees in the UnitedStates-are clearly and interestinglyexplained with words, charts andtables in The American EconomicSystem. This book, with its reviewquestions after each chapter, is anexcellent text or supplement foradult education classes, discussiongroups, high school and collegeclasses in social studies or economics,and similar uses.

In Periodicals"The Great European Experimen­

tal Laboratory," by Willard F.Rockwell. The Flow Line, Rock­well Manufacturing Co., 400 N.Lexington Ave., Pittsburgh 8, Pa.,September-October 1954. Singlecopy free

Mr. Rockwell's official and personalstudy of economic and political ex­periments in western Europe andthe United Kingdom reveals the op­portunity for tremendous savings inour own country if we could learnfrom their mistakes. In that case,we might not authorize our govern­ment to support the domestic priceof an item such as linseed oil, ac­cumulating a surplus to be dumpedabroad at a low price, thus givingforeign paint manufacturers a de­cided advantage over our own heav~

iIy taxed industry.We might learn from French ex­

perience that a country will beflooded wi,th wine if wine producersare subsidized enough, and will bedestitute for housing if rent controlsare stringent enough. From WestGermany and Holland, we mightlearn that the best a government cando for its seemingly helpless andprostrate people is to free themfrom excessive taxation and giveprivate enterprise an opportunity tofunction. From Austria, we mightlearn how to stop inflation by bal­ancing the governmental budget.Even from the Soviet Union, wemight learn that a man will produce

more from the acre of land which ishis own than from the acre.s whichare owned and controlled by thegovernment. We could learn that thegreatest benefit to the workmanflows from investment in tools forhis use, and that investment is mos tencouraged by increased returns oninvestments.

Mr. Rockwell concludes that "thecombined wisdom of a few govern­ment bureaucrats has never provedto be equal to the common sense ofthe many people who manage farms,ranches and factories."

"Can Our Republic Still Be Re­vived ?" by Rev. Walter M.Haushalter. National Republic,511 Eleventh St., N'.W., Washing­ton 4, D. C. Reprints available;single copy $.25, 100 -copies $6.50

In this scholarly article, Rev. Haus­halter sees a return to the republi­can form of government as our onlysalvation from dictatorship, and aresurgence of religion as our onlymeans of effecting this. The Found­ing Fathers of our Republic learnedfrom history the dangers of an om­nipotent State, he points out. Todaywe have discarded their wisdom andexper,ience and have adopted an en­tirely new form of government,beginning with the Welfare Stateand on its way to absolutism unlessthe trend is reversed.

"Federal Regulation vs. Compet­itive Enterprise in Natural GasProduction," Monthly Letter onBusiness and Economic Condi­tions, National City Bank, 55Wall St., New York 15, N. Y.,December 1954. Single copy free

A recent Supreme Court decisionheld that the Federal Power Com­mission could regulate the indepen­dent producers who sell natural gasto interstate pipelines, as well as thepipeline companies themselves. Thisraises serious questions as to howthe government will proceed with itsregulatory powers, and how that willaffect the production of gas, theseareh for additional supplies, theavailability to dis,tant customers ascompared with those nearby, andother economic problems. More basic,however, is the question of why thegovernment should have the powerto control prices and production andconsumption in such a highly com­petitive industry.

,by returning to the

GOLD COIN STANDARD?

ship and democracy. We must be proud of it ...display it fearlessly to the world ... make itthe principle that will persist for free men ..and keep them free!

for twenty years the recently deposed federaladministration pooh-poohed this principle. Ourcitizens suffered-became more and more theeconomic slaves of government. The value oftheir earnings and savings shrank-up to 60%.

Fortunately, technological advancements, suchas Kennametal, increased industrial productivityduring this period-and helped partially to off­set the evil effects of irredeemable currency

The President, important Cabinet members,Senators, and Congressmen are aware of theinherent relationship between the Gold CoinStandard and individual freedom. WhY7 then,should legislative action on it be delayed?

The tremendous impact on all other nations ofsound money in the United States will lead theway to international economic stability ... im­pel a new high level in human relationships, andp~ovide a healthful domestic atmosphere inwhich American industry, of which KennametalInc. is a key enterprise, will provide ever-increas­ing benefits for all our people.

We must resumE without devaluation or delay.

WORLD 7S LARGEST Independent Manufacturer Whose Facilities are Devoted Exclusivelyto Processing and Application of CEMENTED CARBIDES

ff"I he surest way to overturn an existing social

order is to debauch the currency." These por­tentous words, credited to Lenin, point the wayto defeat Communism, at home and abroad.Make monetary strength the weapon-and soundmoney the ammunition.

The only sound money system that has everbeen successful is the Gold Coin Standard.* Itstabilizes the value of money-prevents issu­ance of fiat currency ... gives the individualclose control over government policy since hecan redeem his currency for gold coin wheneversuch policy is inimical to preservation of indi­vidual rights and liberty.

This sovereignty of the citizen over govern­ment is the great difference between dictator-

Excerpt from Republican"Monetary Policy" Plank

~ The right to redeem currency forgold will help keep Americafree ••• ask your Senatorsand Congressman to work andvote to restore the Gold CoinStandard. Write to The GoldStandard League, Latrobe,Pa., for further information.The League is an associationof patriotic citizens joined inthe common cause of restoring(I sound monetary system.

what difference does the"horseless carriage" make?

No industry believes more in changes than the auto-makers.That is because they make progress through changes.

Let's look back. Models that were so modern not long ago areantiques today. They have been made so by the constant effort ofauto-makers to improve their product-to make it more attractive,more comfortable, smoother-running.

The modern auto is a triumph of creative engineering, in whichsteels made by Jones & Laughlin play an important part.

J&L supplies steel Sheet and Strip to the stamping presses thatform streamlined auto bodies, hoods and fenders. Springs madeof J&L Steel Wire put comfort into auto seats. J&L rolls ruggedsteel sections for frames and tire rims. And, J&L makes the exact­ing quality Cold Drawn Bars needed for spark plugs, steering andtransmission assemblies.

In applications like these, J&LSteels contribute greatly tothe continuing progress ofthe auto industry.

~fJIIM~ltlMlf~STEEL CORPORATION -Pittsburgh

Look to J&L ... for the steels that work for modern industry