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Principal Contents
Comment , • »By the Editor 185
Winds of Opinion 1$£
What Do You Read? Garet Garrett 194
The Dichroic ITO Washington Correspondence 202
The Idea of Liberty Is Western. Ludwig von Mises 207
The United States More Socialist Than Britain Earl Browder 211
Up, the Welfare State R. C. CornueUe 212
living on the Atom B o m b . . Winston Churchill 217
Strangling Our Machine Tools Tell Berna 219
What's in ItforEverybody Washington Correspondence 223
The Supreme Court's Thoughts on Communism A Digest 226
British Socialism Goes Nationalist Staff 230
Book Reviews 232
Writings of the Apostates—G. G.
History by Toynbee—G. Allen Huggins
We Are All People Mrs. Jean Shepard 236
Size The Honorable Charles Sawyer 240
End of the Voluntary life Donald R. Richberg 244
Index to Volume XII 248
SUPPLEMENT
Autopsy on Our Blunders in Asia
B Y WALTER H. JUDD
Member of Congress
of a free people. And we are loath to cut off Indochina, Burma, or the Philippines, or two or
its head lest in doing so we inflict injury upon three at the same time. They can bleed us to
the American traditions of tolerance in which death in thefingersall around the periphery of
the Communists lie coiled. As it is not a conflict the hand, which is China, here in the center."
of ideas, so neither is it a conflict between How much blood can we afford to lose? That
East and West. It is a struggle between, on is the question we do not ask. It is a notorious
one side, all people who even dimly distinguish weakness of our foreign policy that the govern-
light from darkness, and, on the other side, ment forgets the first axiom, which is that the
a power that has made its own compact with use of force is but a continuation of diplomacy,
evil. For an American to embrace communism with the same ends in view. A nation, there-
is treason. It is treason because, first, it re- fore, that makes political decisions beyond the
quires allegiance to an alien enemy, and be- power of its military establishment is absurd
cause, secondly, it contemplates not merely a and invites disaster. But even if foreign policy
change in the American form of government be shaped within the strength and readiness
but the surrender of American sovereignty to of the military arm, there is still the danger
a foreign power. Yet until now any American that the diplomats and the soldiers and even
has had a perfect legal right to commit this Congress will proceed on the assumption that
treason; and we are involved in the amazing the amount of bleeding the country can stand
contradiction that whereas eleven leaders of is X. That cannot be so. A week after the
the Communist Party may be convicted for Korean trouble began people gasped to hear
criminal conspiracy, directed by a foreign that it might cost us $5 billion. A week later
power, to overthrow the American govern- it was $10 billion and in another week it was
ment by force, the Communist Party, never- $15 billion. There was no use gasping about it
theless, is a legal political party with a place any more because the news was just beginning.
on the American ballot. What to do about it is The Marshall Plan for Europe, in view of the
a question that keeps us in absurd confusion. new situation, could not possibly end in 1952,
"True," says Judge Learned Hand, "we must as intended. It would have to go on. There
not forget our own faith; we must be sensitive would have to be also a Marshall Plan for
to the dangers that lurk in any choice. But Asiatic countries to keep them in a peace-
choose we must." loving and democratic mood. More billions
would have to be found for the Atlantic
Defense Pact. Just at this time the Congress
was debating the General Appropriations Bill
of 1951, and decided not to stop building roads
I N a dire analysis of our blunders in Asia, in isolated areas in Africa, hydroelectric
printed as a pamphlet with this issue of
AMERICAN AFFAIRS, Representative Walter H.
power plants in Iceland, a rice cultivation
project in Morocco, a water development
Judd sees China as a gigantic hand with eleven project in Tanganyika, an agricultural project
fingers. Thefingersare Korea, Japan, Formosa, in Cyprus, roads in North Borneo, mechaniza-
the Philippines, Indonesia, Indochina, Siam, tion of rice farming for French West Africa,
Malaya, Burma, India and Pakistan, and one roads in the Belgian Congo for Belgium, a
supernumerary finger named Iran. Then he reclamation project on the Zuider Zee, paper
says: mills in Austria, a project for increasing Italy's
"Communist forces have now moved out into automobile industry by 25%, and on and on,
the Koreafingertipand wefindourselves fighting with Marshall Plan dollars, because to stop
desperately to hold that tip. But if we push them these undertakings, or even to reduce the ap-
back to the thirty-eighth parallel or even back propriations for them, would disappoint the
to Manchuria, they can move right into that people who have understood from President
same finger again, as soon as our attention is
turned elsewhere, or into otherfingers,perhaps Truman's words that we are going "to help
October 1950 187
create the conditions that will lead eventually of the Christian era it was the Roman peace.
to personal freedom and happiness for all In our own time it was the British peace. Now
mankind." When Senator Wherry asked, one begins to hear of the Truman peace which,
"How can we justify taking dollars from our unless it turns out to be very ephemeral, will
taxpayers for projects like these when we are be called the American peace. But policing the
confronted by war?" he was voted down. world is very costly business. Always before
Meanwhile the government of the Philippines whoever did it charged for it, because nobody
was writing checks with no money in the bank could afford to do it for nothing. For a long
to redeem them, expecting the American time the Romans got their money back by
government to make them good. The Com- taxation. The British got theirs back not so
modity Credit Corporation, with $2 billion much by taxation as by exploiting the advan-
more borrowing power to keep agricultural tages of colonial empire in that bonanza
prices high against the American consumer, time of international trade when a nation that
was offering to foreign governments through could export manufactured goods in exchange
the United Nations surplus food out of its for raw material had a permanent and very
vast storage at nominal prices—50 million profitable seller's market. Never before has a
pounds of butter at fifteen cents a pound and nation undertaken to police the world for
£5 million pounds of cheese at seven and a half nothing, and to pay besides for the privilege
cents. Billions, we have them. What are they of doing it. Since the beginning of World
for if they cannot buy what we want; namely, War II, that is to say during ten years, this
peace for ourselves and happiness and pros- country's grants and loans to other countries
perity for mankind? An excited United States have amounted to more than $80 billion and
Senator asks why we should be pikers about it. now are rising again very rapidly toward
Why not buy these blessings once for all, no $100 billion. The beneficiaries have been
matter what they cost, $50 billion or more seventy other countries in every continent,
down on the barrelhead? Then Walter subcontinent, peninsula, isthmus and island
Reuther, not to be overcome in that field of of the world—Great Britain in the first place,
fantasy, sends a plan to the President pro- Russia in second and France third. And what
posing that we pledge ourselves to give the have we bought with it? Neither peace nor
United Nations $lj^ trillion over a period of order and almost no friends. "When will we
years to subsidize the welfare of the world. learn," asks Senator Byrd, "that we cannot
Seeing how easily we call billions out of the buy friends with money?" But we may have
vasty deep, the idea grows in the world that we bought World War III.
have been niggardly with them. Experts of
the United Nations now are working on a plan
whereby American billions would be used to
subsidize full employment of the whole world;
in support of this they offer the calculation
that if $20 billion or $30 billion American W HAT brings a ship back when she lists
over at sea is the resisting counter-
weight of her inert ballast. If the ballast shifts
dollars had been poured into the world econ-
omy at a critical time the world-wide depres- with the list, the ship will turn over. In a free
sion of the 1930's might have been avoided. economy the ballast is the great mass of every-
day buyers whose resistance to rising prices
tends to stabilize the cost of living. This re-
sistance may represent partly a sense of out-
rage, in which case you have what is called
rise there is, paripassu, an increase in the Manufacturers pledged the full cooperation of
people's hands of the money with which to business in mobilizing our country's strength
buy, then your cost of living is a meaningless for war, provided it has adequate representa-
thing, the corrective force of sales resistance is tion in the policymaking, the planning and the
cancelled, and your economy is like a ship with operational agencies of the government."
shifting ballast. Suppose each rise of 5% in the Well, the headline that did appear (New York
statistical cost of living called for an automatic Times, July 11) was this: "FULL AID IN
increase of 5% in all incomes. What would CRISIS PLEDGED BY LABOR," and the
come of that? Nothing day by day, for at the news from Washington was that twenty-two
higher prices people could go on buying as labor leaders had lunch with the Chairman of
much as before—until at last, however, you the National Securities Resources Board and
might have to go to market with your dollars pledged the full cooperation of organized labor
in a bushel basket. If this automatic rise in —on one condition. The condition was clearly
income with each rise in the cost of living wereN set forth in a statement of labor policy after-
for everybody, then nobody would benefit. ward issued by William Green, President of
That is clear. But if one group or one class of the American Federation of Labor. He said:
society can get its income tied to the cost of
living it will be better off at the expense of "We pointed out to Mr. Symington that any
plan for present or future mobilization of Ameri-
everybody else. In that case only part of the can resources must provide full and adequate
ballast shifts and the ship may not turn over; representation for organized labor in the policy,
it may only behave badly in the sea. The new planning and operational divisions of the govern-
fashion of labor contracts is to tie wages to the ment agencies involved. It was also pointed out
cost of living; if prices go up wages automati- that the creation of mere advisory bodies in
cally go up. What happens then is that costs such agencies will not meet the nation's needs,
and that in the past this type of advisory struc-
go up and prices rise again, which brings an- ture has proved ineffective."
other lift in wages, and so on and on, ad
infinitum. In the news a few weeks ago the One of the evil realities of our time is that a
following item appeared: society engaged in total war cannot tolerate
WASHINGTON, Aug. 22.—The Department of disaffection. A little of it may be suppressed,
Labor reported today an increase of 1.4 per cent but if there is more of it than can be sup-
in its consumers price index for the June 15— pressed, it must be appeased. In the last war
July 15 period. One result of the announcement the appeasement of labor for fear of disaffection
was an automatic cost-of-living allowance of was a calculated policy. In Great Britain it
5 cents an hour for employes of the General was promised a welfare state and got it. In
Motors Corporation under the company's con-
tract with the United Automobile Workers, CIO. this country it was promised by President
Roosevelt that whatever else happened it
Labor so protected from inflation becomes would not be asked to surrender any of its
a class immune. Those whose incomes rise "social gains," which made it a class exempt.
slowly or not at all bear the evils of inflation. In return it gave its promise not to hinder the
nation's war efforts by strikes. Nevertheless,
as noted by Edward H. Collins:
The Little Steel Formula, which was supposed
the numbers in the war period ranged from 2,968 turer of air-cooled engines. The Briggs' settle-
in 1942, to 4,956 in 1944, an all-time high. ment brings to an end one of the most stubborn
Because total war is bound to create a critical fights ever to be waged by a local union member-
ship against a big corporation. Prior to a fifteen
manpower problem, organized labor finds it- week strike this spring, there were seventy-three
self in an eminent bargaining position. It other stoppages utilizing the UAW-AFL sporadic
can bargain not for higher wages only but for short strike technique."
social advantage and power. Now apparently
it is thinking that in another war it may be
able to move rapidly toward its next goal,
which is its right to participate in the planning T 1 1 H E bitterness of the dispute about con-
and policymaking functions of government, JL trols for mobilization or war has been
not as a right inherent in all citizenship but as both sign and measure of the change that has
a right of organized labor, as such. That is to taken place in the state of feeling between
say a class right. And as it advances toward government and people since World War I.
that class right there is the implied threat that Nobody then had any fear of controls; every-
if the claim is denied the full cooperation of body accepted them in good part, reserving
labor cannot be guaranteed. Then there may only the human right to grumble. Nor is it
be no such thing as a no-strike pledge. The now controls as such that people dread. I t is
social aftermath of two wars has been greatly something very much deeper. What it is may
to enhance the power and economic well-being be understood when you set in contrast two
of labor. Insofar as the change was fair and postwar messages from the President of the
just, it ought not to have waited on war. Labor United States. On December 3,1918, President
is quick to point that out and will not forget it. Wilson said to Congress:
On the other hand, organized labor as such has "So far as our domestic affairs are concerned
nothing to contribute to the policymaking the problem of our return to peace is a problem
of economic and industrial readjustment.
and planning functions of the government in "Our people do not wait to be coached and led.
war, any more than farmers as such. What They know their own business, are quick and
society needs in a crisis, besides the loyalty of resourceful at every readjustment, definite in
its members in their appointed tasks, will be purpose and self-reliant in action. Any leading
wisdom, superior intelligence and specialized strings we might seek to put them in would
abilities. These are gifts. They are personal. become hopelessly tangled because they would
pay no attention to them and go their own way.
They have no law of distribution. Any or all "While the war lasted we set up many agencies
of them may be found in the ranks of organized by which to direct the industries of the country
labor, as well there as anywhere else; but if in the services it was necessary for them to render.
and when they are found there in the individual But the moment we knew the Armistice had been
and the individual makes his contribution to signed, we took the harness off. Raw materials,
the planning and policymaking operations of on which the government had kept its hands for
fear there should not be enough for the industries
the government at war, does he represent that supplied the armies, have been released and
organized labor as such or is it his country too? put on the general market again.
"It is surprising how fast the process of a
return to a peace footing has moved in these
weeks since the fighting stopped. It promises to
outrun any inquiry that may be instituted and
i
T11HE following note on the new strategy is
from Auto Worker, the Milwaukee organ
of the United Automobile Workers of America
any aid that may be offered. It will not be easy
to direct it any better than it will direct itself."
able to plan for the immediate and long-range ment over the entire economy, touching every-
steps which have now been taken. where the lives of the people. In all of executive
"I urge that the Congress do not adopt a government, after seven years of the New
resolution proclaiming the termination of the Deal and five years of war, there was no
war. Such a resolution would automatically
cause the death of many war powers and war- thought of taking the harness off, as President
time agencies before we are ready; it would cause Wilson said, nor of leaving the economy to
great confusion and chaos in the government. direct itself. The planners had it. The war-
"It is the policy of this Administration not to time bureaucracy did not collapse. It expanded,
exercise wartime powers beyond the point at in order to plan and govern reconversion, and
which it is necessary to exercise them. everywhere since then the sphere of executive
"We should be prepared to undertake a great
program of public works not only to improve the government has expanded and the area of
physical plant of the United States, but to pro- freedom has shrunk. Executive government
vide employment to great masses of our citizens now is so gigantic and multifarious that people
when private industry cannot do so. no longer can feel they control it. Even Con-
"I am directing the executive agencies to give gress complains helplessly that the parliamen-
full weight to foreign requirements in deter-
mining the need for maintaining domestic and tary principle has surrendered more power to
export controls and priorities." the executive principle than can ever be re-
covered, and dreads to surrender any more. It
There is the change. In World War I people is no longer possible for people to feel: "These
said: "We impose these controls upon our- are controls which we impose upon ourselves
selves through the instrumentalities of popular for the duration of the war." What they feel
government, for the duration of the war only. is that government imposes them and what
W^hen the war has been won we will cast them they fear is that the road back will be forgotten.
off." It never occurred to them that the govern-
ment would resist that idea, and it didn't.
With the signing of the Armistice the whole
wartime bureaucracy collapsed, as it was ex-
pected to do. The dollar-a-year men put on
their hats, slammed their doors and went
W ITH such a background of experience
the dispute about controls was bound
to be bitter and sometimes irrational. And all
back to business. The railroads were returned the more pity that is, since even when there is
to their owners. In a little while the economy perfect faith between people and government
was as free, or almost as free, as it was before. controls are an evil to be endured with forti-
But what people now fear is a very different tude and ought therefore to be considered in a
sequel. They have seen what can happen. dispassionate manner purely upon grounds of
During the depression they accepted controls necessity. We know that in time of crisis they
again and Congress surrendered vast powers are necessary. We know also that neither total
to the President, including control of the public war nor total mobilization can be managed
purse—and all of this at first was supposed to within the framework of a free economy, and
be for the duration of the emergency only. we might have learned, if we haven't, that
But the laws that were passed in the name of neither can it be bought within the limitations
emergency brought to pass, and were intended of peacetime finance. The will to survive must
to effect, a revolution in the meaning and uses in the end overthrow all conventions. Imagine
of government. The foundations of the Wel- then to begin with a free economy in which the
fare State were laid. Came then the mobiliza- free market is the controlling mechanism and
tion for defense and after that World War II. all goods are rationed among consumers by
But even during this war the doctrine of a the price, so that according to the price some
planned economy for peacetime was system- buy more, some less, some do without. Now
atically developed, so that when the war ended suddenly introduce there one consumer whose
there was a blueprint for a further extension wants are pre-emptory and insatiable, to
of the power and authority of executive govern- whom price is no object and who in any case
October 1950 191
will take what he cannot buy. That consumer True, it would work that way, given time. But
is total war. What he represents is unlimited with the steel mills already working at top
compulsory consumption. What then happens capacity, how long would it take for a rise of
to the postulates of your free economy? 10% or 20% in the price of steel to bring about
Certainly nobody will deny that in time of an increase in the production of steel? While
crisis scarce commodities will have to be di- waiting for new steel mills to be built we might
vided between this one consumer and the lose the war. Moreover, this insatiable cus-
civilians by some plan of allocation or priority. tomer wants all goods. There is really no dis-
That means rationing by edict. But the minute tinction between war goods and civilian goods,
you begin to ration goods by edict the function down to a can of beans, which may be either.
of money begins to be impaired. You may have Knowing that the actual horror of total war is
the money but you cannot buy the thing with- riding on the wheel of chance, and that if it
out a ration card. With the function of money starts it will start suddenly, it behooves a
so impaired you cannot say that a free market rational people to enact beforehand a complete
mechanism any longer governs the economy. law of controls, any or all of which may be
Necessity governs it. Thirdly, the time factor invoked immediately with no further debate in
is changed. Your war consumer cannot wait. A Congress about it. After that the only question
battle may be lost, and it may be the last from day to day would be: How much mobiliza-
battle for all you know. This is ignored by the tion? For any degree of mobilization deemed
extremists who say: "Nevertheless leave it to necessary, all the way to total mobilization,
the free market and it will work like this: the the law of controls would already exist. It
demand for war goods will cause the price of sounds so simple. And it would have been
those goods to rise faster than the price of any- simple if people had not learned how much
thing else and the production of them will be easier it is for an anaconda government to
increased accordingly by natural incentive." swallow power than to regurgitate it.
Armageddon
Scene of the Supreme Conflict between Nations
And he gathered them together into a place called in the Hebrew
tongue Armageddon. And the seventh angel poured out his vial into the
air; and there came a great voice out of the temple of heaven, from the
throne, saying, It is done. And the great city was divided into three
parts, and the cities of the nations fell: and great Babylon came in
remembrance before God, to give unto her the cup of the wine of the
fierceness of his wrath.
And every island fled away, and the mountains were not found.
—Revelation xvi:16
Winds of Opinion
A man in the moon who had never known the it right. When at last decisions have been reached
democratic process in the United States would say on both these disputable points, the politician is
to the Republican Party, "Your position is on the left with the hopelessly difficult task of persuading
right—there's no room for you on the left," and to the electorate that his roundabout solution of the
the Democratic Party, "Your position is on the problem of poverty is the right one, and that the
left—there's no room for you on the right." He obvious and easy solution will, in fact, ultimately,
might go further and say there were persons and make the poor poorer, not richer.—Douglas Jerrold
officials in both parties who were not in their own in The English Review.
spiritual homes.— Herbert Hoover.
There is an awful lot of talk in Texas about free
enterprise. There is more talk than there is free
Paradoxically, any change for the better in the enterprise, if you ask me. If you have any interest
Asiatic peasant's miserable circumstances seems to in that matter, let me remind you of the second
wake him out of his fatalistic lethargy only to render thing before you start a war with Russia in order to
him more receptive to communist whisperings that quit being nervous about it: after World War III,
he ought to be getting more. — The Economist, you won't have to worry about free enterprise—
London. there won't be any.—Dr. Umphrey Lee, President of
Southern Methodist University,
It is simply not true that planning and national-
ization have maintained full employment in Britain The conversion of atomic energy, which "has-
in the last five years. Full employment here—as in tened the defeat of Japan," to radioactive isotopes
France or Scandinavia or the Commonwealth—has offers untold possibilities in physiologic research.
been maintained partly by Marshall Aid, partly by The changing of radar, which "won the battle of
the level of postwar demand and partly by the Britain," to microwave diathermy promises to be-
phenomenal prosperity of the United States. What come the most effective means of heating bodily
has done the trick has not been the successful tissues. The alteration of sonar, which "aided our
application of socialist principles in Britain but the supremacy of the seas," to ultrasonics may offer
successful working of capitalism in America.—The new methods of medical diagnosis and improved
Economist, London. procedures in therapy.— Frank H. Krusen, M.D.,
chairman of the Baruch Committee on Physical
Medicine and Rehabilitation.
We have achieved in recent years a very large
measure of agreement in this country that the gov-
ernment—whatever its complexion—must accept The very process of having government assume
responsibility for the general economic health of the the role of guardian or father of its citizens is
whole community. That is a revolution in economic regularly held up as something novel and pro-
thinking and in government responsibility, a revolu- gressive in political science. In truth it is as old as
tion so complete that it is often entirely overlooked. government itself. Practically every king, dictator,
—Sir Stafford Cripps, British Chancellor of the and benevolent despot of old professed to operate
Exchequer. a welfare state. He claimed the right to function as
a father and thus to make his subjects his children.
That is the very system that our American fore-
When you have great riches visibly enjoyed by fathers would not tolerate. Reverting to that sys-
some, and others in great poverty, the easy decision tem cannot be liberalism, nor is it progress. It
is to take the money from the rich and give it to the merely means a reversion to the age-old philosophy
poor. That is a decision which the electorate will of government that cursed humanity until the
understand and accept. The right decision, of course, American experiment lighted a new way.—Malcolm
is to look for the cause of the poor man's poverty. McDermott, professor of law at Duke University.
The moment you have done so, you will find that,
whatever the cause may be, it does not lie in the
riches of the rich. It is very likely, however, that Up to a few years ago we had in this country
there will be disagreement as to what is the precise what was known as a representative and constitu-
cause, and still more disagreement as to how to put tional commonwealth—a republic. Contrary to
October 1950 193
much of the present-day talk, it was not and was out of the window bodily, with shrill cries of jubila-
never intended to be a democracy or a welfare type tion. One can hardly pick up a new book on labor
of government. The United States Army Manual nowadays without finding the author jumping
still states: "The Government of the United States gleefully on what he thinks is the corpse of Demand-
is not a Democracy but a Republic"; that the word and-Supply, or proclaiming with trumpets, "The
"democracy" nowhere appears in the Declaration Labor Market is Dead, Long Live Human Rela-
of Independence, in the Constitution of the United tions."— Professor Kenneth E. Boulding, University
States, in Washington's Farewell Address, in of Michigan.
Jefferson's Inaugural, nor in Lincoln's Gettysburg
Address. As applied to our Federal Government it I think it is the height of immorality to call
did not come into general use until Woodrow young men to the colors, to take them from their
Wilson's famous pronouncement of World War I, homes and careers, and leave others behind to
"make the world safe for democracy."—Frank E. profit and profiteer. Profiteers are not only the men
Holman. who raise their prices, but also the people who
hoard food and essential material. Both of these are
The blasphemy of the omnicompetent state is equal enemies.—B. M. Baruch.
that it seeks to annihilate the individual conscience.
The totalitarian state is the crowning irony of a
scientific age. The terrifying truth about totalitarian The one prime method of transmitting the bene-
man is that he has no conscience. His personal fits of industrial progress to consumers at large—
integrity has been eaten away. He flip-flops with prompt price reduction commensurate with declines
changes of party line, embraces evil as good, calls in real costs—has not as yet been adopted as
falsehood his truth without batting an eye. —The generally or applied as broadly as the necessities
Rev. Dr. Clubert Rutenber. of a dynamic industrial system require. Greater
advances than those of the last 50 years impend,
and a productivity increment of massive propor-
There is another reason why the general armed tions is within our grasp, but this increment can be
assault by the Communists against the Western realized to the full only if it is widely shared.—
democracies may be delayed. The Soviet dictator Professor Frederick C. Mills.
has no reason to be discontented with the way
things have gone. Since the World War stopped in
1945, they have obtained control of half Europe Never mediocre, always excelling in both good
and of all China without losing a single Russian and evil, the arrogant and disciplined Germans
soldier, thus adding nearly 500 million people to demand the best. Compared to the flagrant appeal
their own immense population.—Winston Churchill. of totalitarianism, democracy is colorless and weak.
To a people who respect and admire only strength,
who have never really known freedom, who have
If I were an American, I think I'd be demanding persistently returned to slavery through their own
that the State Department line up the countries choice, democracy is a difficult ware to peddle.—
receiving Marshall Aid and all others hoping to re- Ann Stringer and Henry Ries in "German Faces."
ceive it and tell them while their resolutions of sup-
port make interesting reading, Americans are not
going to do all the paying and all the dying to save American capitalism has evolved the defense
the rest of the world from Communist domination. against its own doom. It has created a new middle
—Arthur A. Calwell, formerly Minister of Immigra- class in a manner that Karl Marx never suspected.
tion and Information in the Labor Government of It has made the wage earner and the white-collar
Australia. worker its principal customers.— Dr. Stefan Osusky,
professor of political science at Colgate.
Can government that always operates in the red
keep business forever in the black?—Samuel B.
Pettengill. It is a mistake to believe that any additional
effort of which our economy is capable necessarily
There is a strong (and to my mind a deplorable) must be made abroad through public or private
tendency among the bright young labor specialists loans or grants. Money wisely spent at home will
not merely to let economics go by default out of have the same immediate economic effect and in
ignorance, as was customary among the older addition benefit our own citizens in the future.—
generation of writers on this subject, but to cast it National Planning Association.
194 AMERICAN AFFAIRS
By Garet Garrett
of its own ignorance. The press, herald and minstrel And on teaching communism, Professor Chafee
of the new crusade, becomes the servant of the popular again, saying:
dream: it is their press. The Italian dream of renewed
empire was corrupt and corrupted its servants; the "The difficulty about speech is that what is poison in
psychological lesson remains—for a time, aided by its one country seems to be the chief and favorite dish
press, the nation marched! . . . in another country. . . . The poison here is com-
"Apart from any question of Russian performance, munism and I have to spend a great deal of time trying
the ideal of a national purpose and faith pervading to persuade people that they ought to allow com-
the life of a people with the aid of its press is a con- munism to be put in print and to be put in oral dis-
ception we need not dismiss either as devoid of value cussions and even to be discussed in educational in-
or as necessarily inconsistent with freedom. . . . For stitutions.
us the challenges presented by the Soviet experiment "We have a bill, I regret to say, pending in our state
are to be seen less in its practices than in the possi- legislature, that no person who is a member of the
bilities it suggests. Does our version of press freedom Communist party or who advocates its doctrines shall
submit too readily to its own evils as a necessary im- be permitted to teach in any school or college in Mass-
plication of liberty? Has the liberty of each, in our achusetts, including the institution in which I am a
system, made mincemeat of the liberty of the united teacher. And if such a person is permitted, not only
whole? Seeing the necessity of diversity, is it true that can the teacher be put in jail but also the college can
a certain treasuring of diversity, for its own sake, has be heavily fined and the president put in jail.
encouraged the freedom of every weed as having a "Now the arguments that are used in behalf of this
right to live, so that the one thing that has no freedom bill are that communism is poison and therefore the
is—the garden?" tender little children who attend my classes should
not be permitted to imbibe any of its poison.
I t was Professor Hocking, Mr. Hughes found, "We cannot tell what is poison and what is not
who formulated for the Commission on Freedom poison in advance. But our faith is that human beings
of the Press its framework of principles. He is themselves, given time and given discussion, will be
able to separate the wheat from the tares. Whether
emeritus professor of philosophy at Harvard. communism will turn out to be the wheat or the tare,
On what we have in common with Russia he I don't know, but I want to give people an ample
found Professor Harold D. Lasswell saying: chance to find out."
"With the defeat of Nazi racialism in this war, Professor Chafee was vice-chairman of the Com-
Russia and the United States, together with other mission on Freedom of the Press. He is professor
major powers, become unified once more in formal of law at Harvard. The statement quoted above,
declarations of purpose. America and Russia unite, in in effect that he did not know whether communism
particular, in proclaiming the dignity and worth of was right or wrong, was one he made while serving
the individual. . . . as a member of the United Nations subcommittee
"Unmistakably, the outstanding spokesmen of on freedom of the press. He had been appointed
proletarian socialism and of American idealism talk
the same language of respect for human personality." to that job by Alger Hiss, who was at the time in
{This is from a book written by Professor Lasswell while power in the State Department, not yet disgraced.
he was sitting on the Commission on Freedom of the
Press. He is a professor of law at Yale.)
IV
On state control of the press he found Professor
Zechariah Chafee, Jr., saying:
"Technical instruments make for a more complete
O NE by one this reporter took them—the
thirteen wise men—and found among them
not one conservative. He found instead from their
control of many social activities by the government,
more particularly in order to redress disproportions works and their records that "far more than a
and injustices created in the economic process. The majority of them have helped and supported the
same instruments make for a state control of public Communist Party in its manifold activities," and
opinion. To put the point more broadly, the govern- that first and last the thirteen of them "had man-
ment has got into the habit of intervening in most aged to amass at least 68 affiliations with organiza-
other businesses, so why should it keep its hands off tions the Attorney General and Committees of
communications businesses? Why should the tendency Congress declared to be Communist fronts." This
toward collectivism stop when it is a question of reg- does not mean that any of them were Communists.
ulating newspapers? Mr. Hughes goes no further than to say it is a
"Stalin has compared the Soviet press with the record of affiliation such as professors who claim to
American press and claimed the first is 'free* and the be honest and objective historians could hardly be
second 'not free' because the people of the United
States do not have access to paper, presses, etc. This proud of. Then he adds:
is not only the classical Communist challenge. It is "It is interesting that Chancellor Hutchins has con-
repeated in one form or another on every progressive demned any attempt to identify college professors
level." with Communist organizations as 'guilt by association,'
October 1950 197
a doctrine which he has declared is neither 'American' protect the citizen or the community. The freedom of
nor 'just.' It is exceedingly strange the credence the press can remain a right of those who publish only
Chancellor Hutchins has gained for his pronouncement if it incorporates into itself the right of the citizen
that 'guilt by association' is something wrong and unjust. and of the public interest" (p. 18).
" 'Guilt by association' is a fact. It is a fact which "Not only positive misdeeds but omissions and
has clear and unequivocal weight in the whole body of inadequacies of press performance have now a bearing
law, from Roman and English law straight through on general welfare. Freedom to express has hitherto
the Code Napoleon and into American law. . . . It included freedom to refrain from expressing; for the
is interesting that Chancellor Hutchins, defending his press this liberty is no longer perfect" (p. 124).
university in the 1949 legislative investigation at Spring- "Today, this former legal privilege wears the aspect
field, Illinois, declared that there could not be much of social irresponsibility. The press must know that its
communism in the University of Chicago because it faults and errors have ceased to be private vagaries
had so many 'capitalists' on its board of trustees. Here, and have become public dangers. Its inadequacies
perhaps, is the doctrine of 'vindication by association.'" menace the balance of public opinion. It has lost the
common and ancient human liberty to be deficient in
Mr. Hughes finds in the work of the Commission its functions or to offer half-truth for the whole"
on Freedom of the Press what might be called (p. 131).
the technique of the fatal embrace. First the sound
American doctrine is restated in a blameless man-
ner, then with slow precision it is murdered by
definitions, dialectics and the application of new
principles for a new time. For example under the
name of general truth, the Commission said: T HIS way of thinking leads naturally to a
sympathetic understanding of what the Rus-
sians mean when they say the Russian press is free
"Freedom of speech and press is close to the central and the American press is not. Stalin says the
meaning of all liberty. . . . Free expression is therefore Soviet press is free because it is the people's press,
unique among liberties as protector and promoter of whereas the American press is a capitalistic press
others; in evidence of this, when a regime moves to- owned by a few, and the people have no press of
ward autocracy, speech and press are among the first their own. The Commission on Freedom of the
objects of restraint or control" (p. 107).
Press finds merit in this piece of Slavic humor.
That is the embrace. From there the Commission With devastating effect Mr. Hughes sets out in
goes on to say: parallel columns the ideas of the Commission on
Freedom of the Press and the Russian idea of a
"If the freedom of the press is to achieve reality, free press. The Soviet idea was officially expounded
government must set limits on its capacity to interfere by the Russian delegate to the Social and Economic
with, regulate, or suppress the voices of the press or Council of the United Nations, Alexander P.
to manipulate the data on which public judgment is Morozov.
formed. Government must set these limits on itself"
(p. 8). The Russian delegate said:
"When we use the phrase 'freedom of the press,' "Everybody knows that, since a newspaper, if it is
we mention but one party at interest; the term 'press' to survive, requires the investment of vast funds which
indicates an issuer of news, opinions, etc., through the are not possessed by the bulk of the population, the
media which reach mass audiences. But since no one freedom of the press proclaimed in the Constitution
cares to utter news or opinions into the void, there becomes in actual fact the privilege of a few newspaper
must be at least one other party at interest, the reader owners, publishing houses, and telegraph agencies."
or listener as consumer of news, opinions, etc.; we shall
refer to him collectively as the audience" (p. 109). The Commission on Freedom of the Press says:
"But, as this analysis is intended to indicate, under "The owners and managers of the press determine
changed conditions, the consumer's freedom might which persons, which facts, which versions of the facts,
also require protection. If his need became more im- and which ideas shall reach the public. . . . Through
perative, and if at the same time the variety of sources concentration of ownership, the variety of sources of
available to him were limited, as by concentration of news and opinions is limited" (pp. 16, 17).
the press industry, his freedom not to consume partic-
ular products of the existing press might vanish. It The Russian delegate said:
would then be no longer sufficient to protect the issuer
alone" (p. 112). "For instance, in the United States of America,
"Since the consumer is no longer free not to consume, and in Great Britain, it is essential to possess tens of
and can get what he requires only through existing millions in order to be able to establish a big newspaper
press organs, protection of the freedom of the issuer capable of survival."
is no longer sufficient to protect automatically either
the consumer or the community. The general policy of The Commission on Freedom of the Press says:
laissezfaire in thisfieldmust be reconsidered" (p. 125). "Although there is no such thing as a going price for
"To protect the press is no longer automatically to a great city newspaper, it is safe to assume that it
198 AMERICAN AFFAIRS
would cost somewhere between five and ten million The Russian delegate said:
dollars to build a new metropolitan daily to success"
(p. 50). "Such a guarantee has been fully realized in the
Soviet Union."
The Russian delegate said:
The Commission on Freedom of the Press says:
"It is obvious that in such countries freedom of the
press really exists only for a few people." "It is worth noting that the Soviet constitution,
while limiting publishable ideas within a fixed orth-
The Commission on Freedom of the Press says: odoxy, undertakes within these limits to implement
press expression for a wide segment of the people who
"The few who are able to use the machinery of the own no presses" (pp. 119, 120).
press as an instrument of mass communication have
not provided a service adequate to the needs of society
(p. 1). . . . The press is not free if those who operate it
behave as though their position conferred on them the VI
privilege of being deaf to ideas which the processes of
free speech have brought to public attention" (p. 9).
T HE first amendment to the Constitution—
Article I of the Bill of Rights—saying that
Congress shall make no law to abridge the freedom
The Russian delegate said:
of the press, is embraced in the same fatal manner.
"Such a situation requires decisive remedial In the beginning it was valid and vital. That was
measures." so, says the Commission on Freedom of the Press,
because:
The Commission on Freedom of the Press says:
"Our ancestors were justified in thinking that if
"No democracy, however, certainly not the Ameri- they could prevent the government from interfering
can democracy, will indefinitely tolerate concentrations with the freedom of the press, that freedom would be
of private power irresponsible and strong enough to effectively exercised. In their day anybody with any-
thwart the aspirations of the people. Eventually thing to say had comparatively little difficulty in getting it
governmental power will be used to break up private published. The only serious obstacle to free expression
power, or governmental power will be used to regulate was government censorship. If that could be stopped,
private power—if private power is at once great and the right of every man to do his duty by his thought
irresponsible" (p. 80). was secure" (p. 236).
"The press of those days consisted of hand-printed
The Russian delegate said: sheets issuing from little printing shops, regularly as
newspapers, or irregularly as broadsides, pamphlets,
"Of course, the complete guarantee of freedom of the or books. Presses were cheap; the journeyman printer
press for the people is communal ownership of means could become a publisher and editor by borrowing the
of information." few dollars he needed to set up his shop and by hiring
an assistant or two" (p. 25).
The Commission on Freedom of the Press says:
But times have changed, and now, says the Com-
"Under these circumstances it becomes an impera- mission on Freedom of the Press:
tive question whether the performance of the press can
any longer be left to the unregulated initiative of the "Through concentration of ownership the variety
few who manage it" (p. 17). of sources of news and opinion is limited. At the same
time the insistence of the citizen's need has increased.
The Russian delegate said: He is dependent on the quality, proportion, and extent
of his news supply, not only for his personal access to
"This is the only way to ensure access of the broader the world of event, thought, and feeling, but also for
masses of the people to methods of information and the materials of his duties as a citizen and judge of
their effective control by democratic and peace-loving public affairs. The soundness of his judgment affects
organizations." the working of the state and even the peace of the
world, involving the survival of the state as a free
The Commission on Freedom of the Press says: community. Under these circumstances it becomes an
imperative question whether the performance of the
"Nor is there anything in the First Amendment or press can any longer be left to the unregulated initia-
in our political tradition to prevent the government tive of the few who manage it" (p. 89).
from participating in mass communications: to state "Freedom of the press for the coming period can
its own case, to supplement private sources of informa- only continue as an accountable freedom. Its moral
tion, and to propose standards for private emulation. right will be conditioned on its acceptance of this
Such participation by government is not dangerous accountability. Its legal right will stand unaltered as
to the freedom of the press" (p. 81). its moral duty is performed" (p. 263).
October 1950 199
And therefore, says the Commission on Freedom how difficult it was in 1790 to start a newspaper
of the Press: or any kind of periodical, and how meager were
"The general policy of laissezfaire in this field must the means of communication. The Commission
be reconsidered" (p. 125). on Freedom of the Press had said:
"The press of those days consisted of hand-printed
sheets issuing from little printing shops, regularly as
VII newspapers, or irregularly as broadsides, pamphlets,
or books. Presses were cheap; the journeyman printer
could become a publisher and editor by borrowing the
B EYOND moral and philosophical reflections,
the Commission on Freedom of the Press
makes its case for reform of the press by govern-
few dollars he needed to set up his shop and by hiring
an assistant or two."
ment if necessary on certain assumptions of fact, To this, Mr. Hughes answers:
and here the reporter goes to work. Among the
assumptions of fact were these: "The reader will recall that there were only 103
printing establishments in the American nation in
(1) That when the Constitution was written 1790, serving nearly four million citizens. Even
anybody who had anything to say could get it though the 'broadsides' and 'pamphlets' amounted to
printed, and that if he could not, then with a few a few thousand titles in 1790, for four million people,
dollars he could start a newspaper of his own. they were nothing at all compared to the millions of
(#) Now, in contrast, freedom of the press is a titles of 'broadsides' and 'pamphlets' produced today,
privilege open only to a few who can command by America's free press, for a population only thirty-
eight or forty times as great. As for the books produced
millions, whereby freedom of expression is, or by those 103 presses in 1790, there do not seem to have
tends to become, monopolized by capitalists. been any except almanacs and those on religion.
(3) That many with something to say are unable "The nation's 103 publications, poorly edited, poorly
to get it printed because, as the Russians say, they printed, generally scurrilous, small in size, lacking in
have no access to presses or paper. news, and limited in circulation were, along with
Mr. Hughes digs into early American history to letters and a few pamphlets and books, virtually the
only medium for exchanging opinion over distances.
find out what newspapers were like and what it Today, people travel everywhere throughout America
cost to start one in the year 1790 when, accord- by automobile, railroad, airplane, and bus, swiftly,
ing to the Commission on Freedom of the Press, economically, and safely. Use of telephone, telegraph,
the first article of the Bill of Rights that made radio and teletype is tremendous. There are special
freedom of the press an inalienable right was valid tickers available in many places carrying specialized
because the means of communication then did information for those who desire it. There is even sky-
meet the needs of society. The Federal Bureau of writing. To the great metropolitan newspapers, cir-
the Census in a work entitled, "A Century of Prog- culating in manifold millions, is added the nearly 2,000
ress and Growth," tells that in 1790 there were only smaller dailies of tremendous influence, and the thou-
sands of weeklies. To these are added the thousands of
8 daily papers in the whole country, 88 weeklies periodical magazines and publications, pamphlets,
and 7 periodicals. I t adds: books, specialized papers, and even handbills. To all
"In 1790 the contents of newspapers were chiefly this is added the thousands of printers and hundreds
advertisements, notices of auction sales, shipping of publishing houses whose services can be purchased.
news, short clippings from papers in other states, There are billboards, car signs, electric signs, projectors,
letters from places in the West and from the West and television. Undoubtedly, there are several hundred
India Islands, and extracts from European newspapers. times more ways of communicating than there were in
There were also a few broad jokes and anecdotes the so-called 'golden age.' Yet the Commission on
scattered through the pages. Events of local interest Freedom of the Press, without presenting any partic-
were seldom published, and editorial remarks were ulars and ignoring these facts, produced the flat asser-
few in number, although sometimes vigorous." tion that the means of communication in 1790 was
satisfactory to that society and the means of communi-
Early American history tells anyone who will cation today is not satisfactory to our society."
read it that the press at that time not only was
very inadequate; it was bitterly partisan, foul
mannered and scurrilous. Washington was perhaps VIII
more basely vilified in the newspapers of his time
than any President since. Nevertheless Jefferson
could say, "Our liberty depends on the freedom of
the press and that cannot be limited without being
T HAT ought to demolish the assumption that
today only the rich can compete for freedom
of speech because one must have millions to begin
lost." That was the great American belief. I t was with. But Mr. Hughes goes further. His guess is
the very keystone of the American structure. Mr. that the wise men looked at something like The
Hughes then goes on to prove by historical research New York Times and asked: "How,many millions
200 AMERICAN AFFAIRS
would it take to reproduce a paper like that?" two per cent of the communities in this country, all
Many millions, of course. But The New York Times but the bigger cities, have only one local newspaper.
did not begin with millions. Mr. Ochs, a small In a hundred small communities, the only newspaper
newspaper publisher from Chattanooga, bought it owner also owns the only radio station. This creates a
local monopoly of local news" (p. 43).
largely on credit, then found some old debts that
had to be paid off, and really started in New York To this, Mr. Hughes replies:
with no working capital at all. How much would it
cost to reproduce the Reader's Digest? Many, "Disregarding for a moment the fact that the Com-
mission's quoted statistics are not precisely accurate,
many millions, if millions could do it. But when the inference of 'local monopoly,' or 'monopoly' of
De Witt Wallace started the Reader's Digest he any kind, which it has drawn from them is a distor-
had so little capital that his friends very earnestly tion so amazing as to be exceeded only by the fact that
begged him not to try it. The wise men might have it has been presented to the American people under the
asked Mr. Luce how much capital he had to start cloak of 'scholarship' in a report signed by heads and
his publishing empire. I t was probably less than he faculty members of some of our largest institutions
might now spend in one week to advertise Time, of higher learning. For the facts, let us consider, for
Life and Fortune in the daily newspapers. In fact, example, just one of the forty-eight states, turning
one cannot think of one great publication now in again to the Middle West, where Chancellor Hutchins
existence, newspaper or magazine, that started lives, this time to Iowa.
with millions. "The state of Iowa, chiefly agricultural, has a num-
ber of small cities. Among these cities which have only
Perhaps the weakest of the wise men's three one daily newspaper, and whose inhabitants are the
assumptions of fact is that owing to the way they subject of the Commission's sorrow because they are
imagine the press to be controlled many people are afflicted with 'local monopoly' of news, are Fort Dodge,
unable to get their ideas heard, the implication of Estherville, Boone, Charles City, Mason City, Cedar
this being that ideas are suppressed by capitalistic Rapids, Burlington, Fort Madison, Ottumwa, Atlantic,
conspiracy. The answer to that, as Mr. Hughes Marshalltown, Dubuque, Cherokee, and Sioux City.
knows, is the answer that makes a radical furious. There are other such cities in Iowa but these are suffi-
I t is to ask: "What does anybody want to say that cient to illustrate the point, covering the state as they
cannot be said? What ideas are missing from the do from river to river and border to border. In all of
newsstands of New York, Chicago, or San Fran- these cities, which are part of the 'ninety-two per cent'
of those in America having only one daily newspaper,
cisco?" the Commission on Freedom of the Press would make
There is no such thing as a capitalist press so- its readers believe the residents have the choice of
called, either as imagined by the Commission on reading only one newspaper.
Freedom of the Press or by the Russians. There is "The ridiculous part of this notion is that in every
a conservative press believing in the system we one of these fourteen 'monopoly' cities, carrier boys
call capitalism. But there is also a Communist for the Des Moines dailies ply regular routes, laying
press believing in communism, and a Socialist press on the citizen's doorstep copies of a newspaper pub-
and a religious press and a Negro press and a labor lished in the capital city of the state. This newspaper
press and a foreign language press, and so on. And costs the citizen no more than the local paper, and
it is curiously true that of all of these the conserva- sometimes it presents important local news that the
local daily failed to carry. In all but two of these
tive press is the most tolerant. In The New York 'monopoly' cities, the local newspaper is an afternoon
Times, for example, you may find many radical edition closing its forms about 3:30 or 4 p.m., and the
and anticapitalist views in communications to the reader who prefers his news with his breakfast coffee in
editor, and in the news also, if either the ideas or these cities can get a home-delivered copy of the morn-
the persons uttering them are important. But no ing Des Moines newspaper put to bed at 10:30 p.m. to
anticommunist idea could appear anywhere in the midnight the previous night.
Daily Worker. In this land of the unfree press, "To supply the latest local news to readers in these
Communists can find their literature everywhere, outlying 'monopoly' cities, the Des Moines newspapers
on the newsstands and in the book shops; in Soviet employ competent and well-paid local correspondents,
Russia a newsdealer found dispensing capitalist and keep an airplane instantly ready to fly their re-
porters and photographers to the scene of any im-
literature will be shot. portant event in the state."
On monopoly, the Commission on Freedom of
the Press said:
"Only 117 (approximately one out of twelve) of IX
the cities in which daily newspapers are published
now have competing dailies. Altogether 40 per cent of
the estimated total daily newspaper circulation of
forty-eight million is noncompetitive. Rival news-
W HEN Mr. Hughes had finished his own re-
search job he had an interview with the
Chairman of the wise men, Chancellor Hutchins
papers exist only in the larger cities" (p. 38). "Ninety- himself. His report on this is very interesting. He
October 1950 201
wanted to know why the Commission on Freedom all he must keep his circulation, and if he makes
of the Press had not searched out the facts. Why had the kind of publication he would like to make he
it failed to document its charges that newspapers would probably lose it, in which case he has no
"have not provided a service adequate to the needs medium at all. What he does, therefore, is to make
of society"? Dr. Hutchins replied that that was not the kind of newspaper or magazine that will sell
the job of the Commission. It never intended to and smuggles into it as much mental food as it will
do an elaborate research on the facts. It based its stand. Such is the public standard; and wouldn't
findings on factual material that everybody knew, it occur to you that the educators might have some
for example, sensationalism—everybody knew that responsibility for it?
from looking at the newsstands. The job of the Well, then, about the goals and objectives of
Commission on Freedom of the Press was to "inter- society. Who determines what they are? By what
pret and think about the subject." known process does the total abstraction called
society determine upon goals and objectives in
such a way as to be able to say to the press, "These
must be your objectives too"? The wise men do
not say how that can happen. They avoid the
I N its report entitled "A Free and Responsible
Press" the Commission on Freedom of the Press
kept returning to the charge that the American
difficulty by making the simple assumption that
government represents the goals and objectives of
press had failed society by not identifying itself society. The government is the state. Thus, almost
with the goals and objectives of society, saying, unawares, you are led to a philosophy of statism.
"The press must now take on the community's And the charge at last takes on its true guise. It
press objectives as its own objectives," and that is the government itself that is, or may be, denied
"the important thing is that the press accept the proper access to the media of mass communication.
public standard and try for it." But what is the The Commission on Freedom of the Press said:
public standard? The answer to that is open to "We recommend that the government, through the
anyone who will stop for an hour at any large media of mass communication, inform the public of
newsstand and note what people are buying. the facts with respect to its policies and of the purposes
Are the people to be blamed for taking the worse underlying those policies and that, to the extent that
and leaving the better? No indeed. It is no longer private agencies of mass communication are unable or
intellectually fashionable to blame the people for unwilling to supply such media to the government, the
anything. Are the educators to blame? The wise government itself may employ media of its own (p. 88).
men might have thought of that. No; only the press Doubtless some governmental officers have used their
is to blame. For what? For not accepting the public publicity departments for personal or partisan ag-
standard and trying for it. grandizement. But this evil is subject to correction by
normal democratic processes and does not compare
The Commission on Freedom of the Press was with the danger that the people of this country and
so obsessed with the idea that the press had done other countries may, in the absence of official informa-
something to people that it never thought to inquire tion and discussion, remain unenlightened on vital
what people had done to the press. What happened issues" (p. 89).
to two such examples of great journalism as the
Evening Post and the old morning Sun in New York, What news of the government's policies and
or, for that matter, Pulitzer's World, which although purposes has ever failed to receive wide and im-
far on the popular side was nevertheless a finely mediate distribution in the newspapers? If you
edited newspaper? People stopped buying them. mean propaganda, that is another matter.
That was all. And what is the good of filling your One criticism of Mr. Hughes' book will be that
paper with social essays and hard fare for the mind the quotations are selective. So they are. But if
if people stop buying it? The Commission on you will take the trouble yourself to read the report
Freedom of the Press was disturbed to find a of the Commission on Freedom of the Press you will
feeling of frustration among the newspaper workers understand why. The subject is the press; but
as they responded to the first question on its through all the discussion of that subject a theme
questionnaire, which was: "What worries you?" is intoned and the theme is ominous. The residual
It was interested only in such frustrations as effect of Mr. Hughes' book is to give you a very
might represent a feeling among newspaper workers uneasy feeling about an intellectual world in which
that they were repressed by ownership. But there is there is no longer a God to endow the individual
a larger frustration that might have been explored, with inalienable rights, where there is no truth that
namely, that of editorship and ownership. There is is in itself true, where there may be design in con-
hardly ever an editor or an owner who does not fusion, and where a cancerous process of disaffec-
wish to make a better magazine or a better news- tion is almost perfectly concealed by the Aesopian
paper, nor one who does not know how; but first of language of conspiratorial communism.
202 AMERICAN AFFAIRS
High tariffs and rigid quotas raise the cost of Charter comes into force may be continued,
those goods and therefore limit the volume of trade. subject to reduction only through negotiation.
Some tariffs are originally erected to protect infant (6) New preferences may be instituted and can be
industries, but unfortunately they are often main- maintained for periods up to 15 years, provided
tained long after the maturity of the infant. The such preferences are for purposes of economic
result is a restriction of fair competitive trade, in development or reconstruction.
which the consumer is the ultimate loser. The imposition of quantitative import restrictions
The ITO establishes long-term principles, prin- for the purpose of promoting economic development
ciples that would set the general direction of the or reconstruction is permitted. Import quotas con-
members' trade policies for the future. Many of stitute an extreme form of restriction on the move-
these principles can be fully applied by all member ment of goods in international trade and, for that
countries today. But the ITO does not overlook reason, are objectionable as measures for promoting
the fact that the realities of today's world make it the industrial development of a country.
impossible for many countries to apply them all The exceptions allowed in the Charter to the
immediately. It also recognizes the fact that the general prohibition against quantitative import
needs of its members will not all be alike. restrictions could lead to widespread discrimination
The ITO therefore permits certain deviations and could be a source of irritation and damage to
from its principles. But these deviations are limited the trade of any nation discriminated against.
to the cases where all members agree that deviation
is legitimate.
The
Idea of Liberty Is Western
By Lvdvrig von Mises
trigues and machinations on the part of the cham- unfeignedly a return to subjection and bondage.
pions of servilism could stop the trend toward But antiliberalism got hold of people's minds
liberalism. camouflaged as superliberalism, as the fulfilment
and consummation of the very ideas of freedom and
II liberty. It came disguised as socialism, communism,
planning.
I N dealing with the preponderance of the liberal
social philosophy there is a disposition to over-
look the power of an important factor that worked
No intelligent man could fail to recognize that
what the socialists, communists, and planners were
aiming at was the most radical abolition of the
in favor of the idea of liberty, viz., the eminent role individual's freedom and the establishment of gov-
assigned to the literature of ancient Greece in the ernment omnipotence. Yet the immense majority of
education of the elite. There were among the Greek the socialist intellectuals were convinced that in
authors also champions of government omnipo- fighting for socialism they werefightingfor freedom.
tence, such as Plato. But the essential tenor of They called themselves left-wingers and democrats,
Greek ideology was the pursuit of liberty. Judged by and nowadays they are even claiming for themselves
the standards of modern liberal and democratic the epithet liberals.
institutions, the Greek city-states must be called These intellectuals and the masses who followed
oligarchies. The liberty which the Greek statesmen, their lead were in their subconsciousness fully aware
philosophers and historians glorified as the most of the fact that their failure to attain the far-flung
precious good of man was a privilege reserved to a goals which their ambition impelled them to aim at
minority. In denying it to metics and slaves they was due to deficiencies of their own. They were
virtually advocated the despotic rule of a hereditary either not bright enough or not industrious enough.
caste of oligarchs. Yet it would be a grave error to But they were eager not to avow their inferiority
dismiss their hymns to liberty as mendacious. They both to themselves and to their fellow men and to
were no less sincere in their praise and quest of search for a scapegoat. They consoled themselves
freedom than were, two thousand years later, the and tried to convince other people that the cause of
slaveholders George Washington and Thomas Jef- their failure was not their own inferiority but the
ferson. It was the political literature of the ancient injustice of society's economic organization. Under
Greeks that begot the ideas of the Monarchomachs, capitalism, they declared, self-realization is only
the philosophy of the Whigs, the doctrines of possible for the few. "Liberty in a laissez-faire
Althusius, Grotius and John Locke, and the id- society is attainable only by those who have the
eology of the fathers of modern constitutions and wealth or opportunity to purchase it."* Hence, they
bills of rights. It was the classical studies, the essen- concluded, the state must interfere in order to
tial feature of a liberal education, that kept awake realize "social justice." What they really meant is,
the spirit of freedom in the England of the Stuarts in order to give to the frustrated mediocrity "ac-
and George III, in the France of the Bourbons, and cording to his needs."
in Italy, subject to the despotism of a galaxy of
princes.
No less a man than Bismarck, among the nine-
teenth-century statesmen the foremost foe of lib- in
erty, bears witness to the fact that even in the AS long as the problems of socialism were merely
Prussia of Frederick William III the Gymnasium 1 1 a matter of debates people who lack clear
was a stronghold of republicanism.* The passionate judgment and understanding could fall prey to the
endeavors to eliminate the classical studies from the illusion that freedom could be preserved even under
curriculum of the liberal education and thus vir- a socialist regime. Such self-deceit can no longer be
tually to destroy its very character were one of the nurtured since the Soviet experience has shown to
major manifestations of the revival of the servile everybody what conditions are in a socialist com-
ideology. monwealth. Today the apologists of socialism are
It is a fact that a hundred years ago only a few forced to distort facts and to misrepresent the mani-
people anticipated the overpowering momentum fest meaning of words when they want to make
which the antiliberal ideas were destined to acquire people believe in the compatibility of socialism and
in a very short time. The ideal of liberty seemed to freedom.
be so firmly rooted that everybody thought that no The late Professor Laski—a self-styled non-
reactionary movement could ever succeed in eradi- communist or even anticommunist—told us that
cating it. It is true, it would have been a hopeless "no doubt in Soviet Russia a Communist has a full
venture to attack freedom openly and to advocate sense of liberty; no doubt also he has a keen sense
* Cf. Bismarck, "Gedanken und Erinnerungen," New York, * Cf. H. Laski, article "Liberty" in the "Encyclopaedia of
1898, Vol. I, 1. the Social Sciences," IX, p. 443.
October 1950 209
that liberty is denied him in Fascist Italy."* The 1849 he took an active part in the organization and
truth is that a Russian is free to obey all the orders the conduct of the revolution, first in Prussia and
issued by the great dictator. But as soon as he later also in other German states, he was—being
deviates a hundredth of an inch from the correct legally an alien—expelled and moved, with his wife,
way of thinking as laid down by the authorities, he his children and his maid, first to Paris and then to
is mercilessly liquidated. All those politicians, office- London.* Later, when peace returned and the abet-
holders, authors, musicians and scientists who were tors of the abortive revolution were amnestied, he
"purged" were—to be sure—not anticommunists. was free to return to all parts of Germany and often
They were, on the contrary, fanatical communists, made use of this opportunity. He was no longer an
party members in good standing, whom the supreme exile, and he chose of his own account to make his
authorities, in due recognition of their loyalty to the home in London.f Nobody molested him when he
Soviet creed, had promoted to high positions. The founded, in 1864, the International Working Men's
only offense they had committed was that they were Association, a body whose avowed sole purpose it
not quick enough in adjusting their ideas, policies, was to prepare the great world revolution. He was
books or compositions to the latest changes in the not stopped when on behalf of this association he
ideas and tastes of Stalin. It is difficult to believe visited various Continental countries. He was free to
that these people had "a full sense of liberty" if one write and to publish books and articles which, to
does not attach to the word liberty a sense which is use the words of Professor Laski, were certainly an
precisely the contrary of the sense which all people effort "to alter in a radical way the property rights
always used to attach to it. of the rich." And he died quietly in his home, 41,
Fascist Italy was certainly a country in which Maitland Park Road, on March 14, 1883.
there was no liberty. It had adopted the notorious Or take the case of the British Labor Party. Their
Soviet pattern of the "one party principle" and effort "to alter in a radical way the property rights
accordingly suppressed all dissenting views. Yet of the rich" was, as Professor Laski knew very well,
there was still a conspicuous difference between the not hindered by any action incompatible with the
Bolshevik and the Fascist application of this prin- principle of liberty.
ciple. For instance, there lived in Fascist Italy a Marx, the dissenter, could at ease live, write and
former member of the parliamentary group of com- advocate revolution in Victorian England just as
munist deputies, who remained loyal unto death to the Labor Party could at ease engage in all political
his communist tenets, Professor Antonio Graziadei. activities in post-Victorian England. In Soviet
He regularly received the pension which he was Russia not the slightest opposition is tolerated. This
entitled to claim as professor emeritus, and he was is what the difference between liberty and slavery
free to write and to publish, with the most eminent means.
Italian publishingfirms,books which were orthodox
Marxian. His lack of liberty was certainly less rigid
than that of the Russian communists who, as Pro- IV
fessor Laski chose to say, "no doubt" have "a full
sense of liberty."
Professor Laski took pleasure in repeating the
truism that liberty in practice always means liberty
T HE critics of the legal and constitutional con-
cept of liberty and the institutions devised for
its practical realization are right in their assertion
within law. He went on saying that the law always that freedom from arbitrary action on the part of
aims at "the conference of security upon a way of the officeholders is in itself not yet sufficient to make
life which is deemed satisfactory by those who an individual free. But in emphasizing this indis-
dominate the machinery of state."f This is a correct putable truth they are running against open doors.
description of the laws of a free country if it means For no advocate of liberty ever contended that to
that the law aims at protecting society against con- restrain the arbitrariness of officialdom is all that is
spiracies intent upon kindling civil war and upon needed to make the citizens free. What gives to the
overthrowing the government by violence. But it is individuals as much freedom as is compatible with
a serious misstatement when Professor Laski adds life in society is the operation of the market system.
that in a capitalist society "an effort on the part of The constitutions and bills of rights do not create
the poor to alter in a radical way the property rights freedom. They merely protect the freedom that the
of the rich at once throws the whole scheme of
liberties into jeopardy, "f * About Marx's activities in the years 1848 and 1849 see:
Take the case of the great idol of Professor Laski Karl Marx, "Chronik seines Lebens in Einzeldaten," published
by the Marx-Engels-Lenin-Institute in Moscow, 1934, pp. 43-81.
and all his friends, Karl Marx. When in 1848 and f In 1845 Marx voluntarily renounced his Prussian citizenship.
When later, in the early sixties, he considered a political career in
Prussia, the ministry denied his application for restoring his
* Cf. Laski, I.e., p. 445-446. citizenship. Thus a political career was closed to him. Perhaps
t Cf. Laski, I.e., p. 446. this fact decided him to remain in London.
210 AMERICAN AFFAIRS
competitive economic system grants to the indi- dom under capitalism means: not to depend more
viduals against encroachments on the part of the on other people's discretion than these others de-
police power. pend on one's own. No other freedom is conceivable
In the market economy people have the oppor- where production is performed under the division of
tunity to strive after the station they want to attain labor and there is no perfect economic autarky of
in the structure of the social division of labor. They everybody.
are free to choose the vocation in which they plan There is need to stress the point that the essential
to serve their fellow men. In a planned economy argument advanced in favor of capitalism and
they lack this right. Here the authorities determine against socialism is not the fact that socialism must
each man's occupation. The discretion of the supe- necessarily abolish all vestiges of freedom and con-
riors promotes a man to a better position or denies vert all people into slaves of those in power. Social-
him such promotion. The individual entirely de- ism is unrealizable as an economic system because a
pends on the good graces of those in power. But socialist society would not have any possibility of
under capitalism everybody is free to challenge the resorting to economic calculation. This is why it
vested interests of everybody else. If he thinks that cannot be considered as a system of society's eco-
he has the ability to supply the public better or nomic organization. It is a means to disintegrate
more cheaply than other people do, he may try to social cooperation and to bring about poverty and
demonstrate his efficiency. Lack of funds cannot chaos.
frustrate his projects. For the capitalists are always
in search of men who can utilize their funds in the
most profitable way. The outcome of his business
activities depends alone on the conduct of the con-
sumers who buy what fits them best.
Neither does the wage earner depend on the em-
ployer's arbitrariness. An entrepreneur who fails to
I N dealing with the liberty issue one does not refer
to the essential economic problem of the antago-
nism between capitalism and socialism. One rather
hire those workers who are best fitted for the job points out that Western man as different from the
concerned and to pay them enough to prevent them Asiatics is entirely a being adjusted to life in free-
from taking another job is penalized by a reduction dom and formed by life in freedom. The civilizations
of net revenue. The employer does not grant to his of China, Japan, India and the Mohammedan coun-
employees a favor. He hires them as an indispen- tries of the Near East as they existed before these
sable means for the success of his business in the nations became acquainted with Western ways of
same way in which he buys raw materials and fac- life certainly cannot be dismissed as barbarism.
tory equipment. The worker is free to find the These peoples already many hundreds, even thou-
employment which suits him best. sands of years ago brought about marvelous achieve-
The process of social selection that determines ments in the industrial arts, in architecture, in
each individual's position and income is continu- literature and philosophy and in the development of
ously going on in the capitalist society. Great educational institutions. They founded and organ-
fortunes are shrinking and finally melting away ized powerful empires. But then their effort was
completely while other people, born in poverty, arrested, their cultures became numb and torpid,
ascend to eminent positions and considerable in- and they lost the ability to cope successfully with
comes. Where there are no privileges and govern- economic problems. Their intellectual and artistic
ments do not grant protection to vested interests genius withered away. Their artists and authors
threatened by the superior efficiency of newcomers, bluntly copied traditional patterns. Their theolo-
those who have acquired wealth in the past are gians, philosophers and lawyers indulged in unvary-
forced to acquire it every day anew in competition ing exegesis of old works. The monuments erected
with all other people. by their ancestors crumbled. Their empires disinte-
Within the framework of social cooperation under grated. Their citizens lost vigor and energy and
the division of labor everybody depends on the became apathetic in the face of progressing decay
recognition of his services on the part of the buying and impoverishment.
public of which he himself is a member. Everybody The ancient works of Oriental philosophy and
in buying or abstaining from buying is a member of poetry can compare with the most valuable works
the supreme court which assigns to all people—and of the West. But for many centuries the East has
thereby also to himself—a definite place in society. not generated any book of importance. The intel-
Everybody is instrumental in the process that lectual and literary history of modern ages hardly
assigns to some people a higher and to others a records any name of an Oriental author. The East
smaller income. Everybody is free to make a con- has no longer contributed anything to the intellec-
tribution which his fellow men are prepared to tual effort of mankind. The problems and contro-
reward by the allocation of a higher income. Free- versies that agitated the West remained unknown
October 1950 211
to the East. In Europe there was commotion; in the The
East there was stagnation, indolence and indiffer-
ence.
The reason is obvious. The East lacked the
United States More
primordial thing, the idea of freedom from the state. Socialist Than Britain
The East never raised the banner of freedom, it
never tried to stress the rights of the individual Says Earl Browder
against the power of the rulers. It never called into Formerly head of the Communist Party in the U. S.
question the arbitrariness of the despots. And, first
of all, it never established the legal framework that
would protect the private citizens' wealth against
confiscation on the part of the tyrants. On the
E ARL BROWDER, formerly head of the Com-
munist Party in this country, has written a
violent pamphlet against his successor, William Z.
contrary, deluded by the idea that the wealth of Foster, saying of him, first, that in Marxian science
the rich is the cause of the poverty of the poor, all he is mentally bankrupt, and, secondly, therefore,
people approved of the practice of the governors of that he cannot understand what is happening in the
expropriating successful businessmen. Thus big United States. On what has taken place here
scale capital accumulation was prevented, and the Browder says:
nations had to miss all those improvements that
require considerable investment of capital. No "State capitalism leaped forward to a new high point
"bourgeoisie" could develop, and consequently in America in the decade 1939-1949. It became over-
there was no public to encourage and to patronize whelmingly predominant in every major phase of
authors, artists and inventors. economic life, and changed the face of politics.
To the sons of the people all roads toward per-
sonal distinction were closed but one. They could "State capitalism, in substance if not in formal
try to make their way in serving the princes. aspects, has progressed farther in America than in
Western society was a community of individuals Great Britain under the Labor Government, despite
who could compete for the highest prizes. Eastern its nationalization of certain industries which is a
formal stage not yet reached in America; the actual,
society was an agglomeration of subjects entirely substantial concentration of the guiding reins of
depending on the good graces of the sovereigns. The national economy in governmental hands is probably
alert youth of the West looks upon the world as a on a higher level in the U.S.A.
field of action in which he can win fame, eminence,
honors and wealth; nothing appears too difficult for
his ambition. The meek progeny of Eastern parents "The unexampled growth of American productive
forces in the decade 1939-1949, to a level about three
know of nothing else than to follow the routine of fourths above prewar; the results of the war in political
their environment. The noble self-reliance of West- and economic disintegration of the world; and the
ern man found triumphant expression in such acute stage of class and international contradictions—
dithyrambs as Sophocles' choric Antigone-hymn all united in their effects to constrain the American
upon man and his enterprising effort and Bee- bourgeoisie more and more to recognize and deal with
thoven's Ninth Symphony. Nothing of the kind has the national economy as social productive forces that
been ever heard in the Orient. required centralized guidance and control which could
Is it possible that the scions of the builders of the be furnished only by the state.
white man's civilization should renounce their free-
dom and voluntarily surrender to the suzerainty of "Before the war, normal foreign trade was conducted
omnipotent government? That they should seek by private corporations, without intervention of the
contentment in a system in which their only task government except as the diplomatic handmaiden of
will be to serve as cogs in a vast machine designed trade and the collector of bills from defaulting debtors.
and operated by an almighty planmaker? Should
the mentality of the arrested civilizations sweep the "What is new, however, in postwar foreign trade is
ideals for the ascendancy of which thousands and this—that such 'normalcy' is now gone forever, is a
thousands have sacrificed their lives? thing of the past. There is now a new standard of what
Ruere in servitium, they plunged into slavery, is normal. That is normal which is generally necessary.
Tacitus sadly observed in speaking of the Romans And there is nothing more necessary in the postwar
of the age of Tiberius. development of foreign trade than precisely the inter-
vention of the government as organizer, director, and
financier of the whole process. This will become more,
not less, true with the passing years. State capitalism in
its most advanced forms is taking over the field of
foreign trade more than any otherfield.No escape from
this tendency is possible."
212 AMERICAN AFFAIRS
By R. C. Cornuelle
only thing it could be sure of was that it had em- And later:
braced the idea of a Welfare State. As a parliamen- "All these programs are part of the pattern of the
tary performance it was so oblique that Senator Welfare State"
Robertson could say: This was about as definite a thing as could be said
"I doubt that there is any living man who could take about the law, for, while committees of both houses
these nearly 400 pages, which deal with this very difficult had struggled with it for months, accumulating
subject, and could analyze them and could tell exactly thousands of pages of testimony, the working prin-
what is in the bill and how it will work out ten,fifteen,or ciples of a social security mechanism were never
thirty years from now." clarified.
Nevertheless he voted for the bill.
The vote in the Senate was 81 to 2. In the House Evolution
it was 374 to 1.
Along with the law it was passing the Congress At the beginning of social security, in 1935, the
adopted a resolution to appoint a committee to assumption had been that everyone was, to a great
study not only how it would work but also the extent at least, responsible for his own security in
whole subject of social security in a scientific man- old age, and that he would pay for it himself, a
ner. It was idle for Senator Malone to suggest that little at a time by making regular payments to the
the study ought to be made beforehand. The pres- government. Then, when he needed the money, the
sure for a new law to increase all money benefits government would give it back to him. This was to
immediately, and to increase the number of bene- be a business deal, with the government adding
ficiaries at the same time, was irresistible. And some only compulsion.
of the pressure came from industry, because now it Immediately a problem appeared. Some people
is that the higher the social security benefits are the were old already, or were too close to the retirement
smaller will be industry's payments under its new age to accumulate much under the system. What of
pension arrangement with organized labor, as for those who were too late? If the program was to
example, when a corporation guarantees its workers include them, another idea would have to be added
$100 a month less the pensioner's social security to it. So they became the pensioners, and the public
benefits. Thus, if the pensioner's social security assistance part of the program took care of them,
benefits are $70 a month, the corporation will pay since they had nothing and could no longer provide
only $30. for themselves.
The long and tedious debate in Congress was over It was soon evident that others fell into this
points of detail, method and administration. The category, not because of the disablement of old age,
doctrine of social security was implicitly accepted. but for other reasons. Some of them were included
Senator Lehman of New York was right when he also on the ground of need, their pensions being
said: provided as a matter of right.
In this way the social security program developed
"It is comforting to realize that in this debate the in two directions—one on a sort of business basis,
question is not whether we should have social security. the other on the basis of social justice—an act of
That is now accepted in principle by almost all of us.
. . . Today the question is how much social security national sharing whereby the fit provided for the
we should have and can afford, and what is the best unfit. It was expected that the latter program would
method of extending social security to as wide a sector gradually disappear to be replaced by the former.
of the population as possible. I congratulate those of As the pensioners died off they would be replaced
my colleagues on the other side of the aisle who have by people who had been compelled to provide for
October 1950 213
themselves by buying insurance from the govern- if they paid in enough to get the benefit they are sup-
ment. Only a few would be left on the dole. posed to get under the old system, we are not going to
Social security was that simple. If you did not give them twice as much. In other words, we are recog-
gag at the idea of compulsion, and if you felt that nizing in this bill that we have an obligation to pay
the government could run an insurance business old-age pensions to people who are old, simply because
they are old and not because they paid money into
competently and honorably, then you accepted it. the fund. . . .
But in fifteen years of operation, certain other "As I see it, the bill destroys the whole theory of in-
problems appeared. In the first place, the dollar had surance. It recognizes an obligation. Under the new
rotted badly and the pensions had become inade- start principle, a man who pays in practically nothing
quate. In fairness to those who had paid better will get $70 a month. Why should we not give the man
dollars in, the benefits had to be increased. who does not pay in anything $70 a month, or at least
Moreover, while the expectation had been that $65 a month? As I see it, we have practically destroyed
the system would reduce the number of people on the theory of social insurance. All I regret is that we
public assistance, the effect had been to increase it. still use the name 'insurance' when as a matter of fact
This, it was thought, could be remedied by forcing there is no insurance about it.
". . . What I want to point out is that this bill
more people into the system and by making it avail- already has gone far toward recognizing the principle
able to others on a voluntary basis. of paying to those over 65 years of age a pension, with
But as the system was reviewed with the idea of little relation to what they paid in during their life.
increasing benefits and extending coverage, social In other words, it is no longer insurance. It is something
security was discovered to be less elementary than called social insurance. It is not insurance and, at least
it had seemed at first. In fact, Congress finally up to date, this system has not been very social either,
passed the new law, knowing only these things because it has covered only a very small portion of the
about it: number of people who are over 65 years of age. . . ."
(1) That the revision was necessary because the
old law had worked badly and had proved unjust Senator Pepper thought the confusion came from
in many cases; the constant and misleading comparisons with
(2) That the new law provided more of something private insurance. He said:
to more people than the original law had provided, "It seems to me that we may as well face the fact
and finally that this is social insurance. It is not private insurance.
(3) That if there were any errors in the old law, The people who pay in do not get back in return in
the new one only compounded them. direct relationship to what they pay. There is a mini-
What the Congress did not know and failed to mum fixed which does not exist in the field of private
insurance. It isfixedbecause we recognize the necessity
find out in the hearings or debates were the follow- of minimum receipts by any citizen in order to approxi-
ing: mate a decent level of living. Once we have accepted
(1) Whether it could properly be called insurance; that principle—and it is a sound principle—why do we
(2) Who really pays for it and how many times; stop with afigurethat yields on the average $26 to the
(3) How much it would cost, and hence whether retired single recipient?"
the nation could afford it;
(Jf) Whether the trust fund conformed to actu- Senator Malone thought that social security
arial principles, and in any case whether the govern- was not clearly either a pension plan or insurance,
ment could be trusted with the money; but a kind of blend of both, the problem being that
(5) Whether any principle of equity could be to the extent that it was social, it could not be
applied to the law and if so, which one. insurance, and vice versa. Senator Malone said:
"Neither the present system nor the one proposed by
the pending bill provides either pensions or insurance.
Is It Insurance? Both are hybrid things, with no particular background
The Senate Finance Committee, in reporting the and no particular objective as to where they are going."
bill, referred to the system always as social insur-
ance. Senator Taft, arguing not about what it Senator Cain sided with Senator Taft, saying:
should be, but simply what it was, said: "If we are to have a social security system at all, let
"I regret that we are calling this a social insurance us have one that free men can accept with self-respect.
bill. The fact is that the changes that have been made Let us accept and act upon this bald truth—that our
show it is not insurance. Take one thing, for example. old people, who have done their life's work and have
Take the fact that we are doubling these payments. If quit, must be helped by those of us who still work. In
the payments under the old-age and survivors insur- due time, our children must look after us. Not in the
ance program paid for the benefits, and were intended old way of old folks on the farm, but in the same spirit
to pay for the benefits, then certainly we could not adapted to the institutions of our day—through taxa-
double the benefits and maintain that principle. Even tion. Let us have done with this nonsense of a contribu-
214 AMERICAN AFFAIRS
tory system, this playing house and calling it insur- estimates, probably can be taken care of by the rising
ance." scale of taxes provided in this bill. The difficulty is that
since we do not know what the costs will be, we do not
know what level of taxes will be necessary to meet
Who Pays? those costs. I say that on the basis of these widely
While the bill provided that the insurance part of varying estimates none of us know whether the tax
the system was to be financed by equal taxes from rates provided in the bill will come anywhere near pro-
viding the revenue needed to pay the costs. . . .
employer and employee, there was an uncertainty
"What is the possible sense of making promises
as to where this tax fell eventually. Senator Taft covering a period 40 or 50 years hence, which may have
said: to be fulfilled with crushing tax levies? How do we
"The payroll tax, while it seems to fall on the em- know that private business in 1990 or 2000 will be able
ployer and employee, really is pretty generally covered to bear such a burden?"
in the cost of production. The wages are calculated on
a take-home-pay basis. Of course, what the employer Senator Cain said:
pays for himself is included in the cost of production "What all this fancy figure work comes down to is
for everybody in the industry, but it adds to the cost, this: The social security actuaries do not know. They
and the consumer pays it. I believe the National will not admit it in so many words—and I can under-
Grange and the Farm Bureau Federation, which were stand that—but the fact remains, they do not know.
originally opposed to the inclusion of the farmers favor "We do know that the number of old people in the
it today largely because they think that the farmer, on country is increasing. We likewise know that if H.R.
the basis of prices paid, is helping to pay for the bene- 6000 passes, coverage will be expanded and the number
fits, and is not getting the benefits." of oncoming benefit claimants must inexorably expand.
"But whether the social-security-tax income will be
Moreover, Senator Malone suggested that since sufficient to pay these benefits Mr. Altmeyer does not
the government spent the money received from pay- know, and his actuaries do not know, and nobody on
roll taxes, it had to tax again when the time came earth knows."
to pay benefits. He said:
"It seems a little confusing . . . that we tax certain Senator George, the chairman of the Senate
citizens who are currently on payrolls 1}^ or 2 per cent, Finance Committee, was aware of the uncertainty
and tax from the employer so much, all of which goes involved in the problem of cost, but was willing to
into the Treasury. We then buy federal bonds with go on faith. He said:
that money and pay interest on the bonds. The interest "The committee is not unconcerned with the even-
on the bonds is paid by the taxpayers. Then, when the tual liability which this revision of the social security
time comes that payment must be made, we cash the program will place upon the government and upon em-
bonds, presumably, in order to obtain the money. But ployers and employees alike, but we have proceeded
when the bonds are cashed we immediately have to sell with faith in America to meet the problem."
more bonds to make up the deficit. So, perhaps what
actually happens is, we merely assess the taxpayers at
the moment and pay currently what we have to pay. The Trust Fund
It finally featheredges out into the twilight zone, and
it is very difficult to determine who is paying for what, When they came in the debate to the problem of
and when." the reserve fund, Senator Wherry had some ques-
tions about it, and he directed them to Senator
Millikin, a member of the Senate Finance Com-
What Will It Cost? mittee, as follows:
To imagine the costs of the new law, it was nec- MR. WHERRY: IS there sufficient money in the fund
essary to know two things—how many old people today to take care of the actuarial liabilities which
there would be in covered employment at any given could be assessed against the fund in the event there
time in the future and what the benefit level would should be a liquidation?
then be. From there it is simple multiplication. But MR. MILLION: The answer is no. We started on the
both these factors are subject to a wide range of theory of a fully funded reserve system, and by one of
error. Senator Butler said: the amendments to the system, that was changed.
What we now have is at best only a partial reserve.
"Our committee report presents us with a wide range
MR. WHERRY: Will the Senator indicate what part
of estimates as to the cost. According to the low cost es-
timate, benefits in 1990 will amount to $7,800,000,000. that is of the total liabilities which would have to be
According to the high cost estimate, they will be practi- assumed if the liabilities were liquidated?
cally 50 per cent greater, or $11,700,000,000. In short MR. MILLIKIN: I do not want to give an off-the-cuff
we are asked to enact legislation on a matter where figure, but it would be several times larger than the
estimates of cost vary as widely as 50 per cent. . . . present amount which theoretically is in the reserve.
"These are costs, which, according to the committee MR. WHERRY: That is correct.
October 1950 215
MR. MILLIKIN : There is nothing in the reserve until between essential and, to some extent, superficially
a taxpayer is taxed to pay it off. As I said a while ago, conflicting principles. We want to provide a minimum
the taxpayer, under wider coverage, becomes the same security base without destroying incentive."
person as the insured man, and he therefore pays twice.
MR. WHERRY: Does that not also strengthen the Then Senator Cain summarized the dilemma as
argument that the so-called "p a y out as you take in" follows:
principle becomes almost mandatory?
"The contention is made that the benefit must vary
MR. MILLIKIN : It makes it so at least from a moral
according to the wage that is earned. The greater the
standpoint. If we do not want to be deceiving the wage, supposedly, the greater the benefit. This is the
people, it makes it mandatory. There will always be, so-called incentive in the system. He who earns more
I assume, what might be called a till fund or small deserves to get more, they say. This incentive is sup-
reserve, to prevent having to come to Congress every posed to operate according to some iron law of insur-
year to keep the outgo adjusted to the income. That ance, firmly based on a formula and a wage record.
kind of reserve fund, if we care to call it that, would be This is supposed to represent an equity. But this in-
necessary, I think, under almost any kind of system centive is fraudulent as far as any insurance-annuity
that we might have. But the present thing is a fake. theory is concerned, for many beneficiaries pay, along
with their employers, only a small fraction of what
Senator Millikin added later that the trust fund they get from the system. . . .
was something that should be examined more care- "This equity, which the incentive man is supposed
fully. He said: to have, by virtue of his taxes paid, is at once violated
by another theory, the theory of *adequacy.' All
"We (the Senate Finance Committee) encountered 'adequacy' means is that if the Social Security Admin-
much criticism involving the reserve fund, and re- istration stuck to their false contributory system, the
ceived many suggestions of proposals to take the place lowest paid workers would receive only a miserable
of the reserve fund. We were not prepared to pass on pittance. This would never do, they feel, so a portion
that question. So we thought that subject should be of the incentive formula is thrown into the trash can
given further study." and the calculations are arbitrarily changed once more,
so that the lowest benefits are raised from a miserable
Which Principle? pittance to just a semimiserable pittance.
"In this way phony equity and phony adequacy get
As the debate progressed, it became more and cosy with one another."
more evident that social security involved a t least
two distinct principles, and further, that they were
contradictory. Senator George, in his speech at the Almost the Townsend Plan
beginning of the discussion, stated them together. And so from the confused history of social secur-
He said: ity, there emerged a strange reversal. The tradi-
"By the adoption of H.R. 6000 we can assist the tionally conservative members of Congress found
wage earners and the small business man of the country themselves suggesting that the whole muddle be
to obtain protection against want in their old age. By scrapped and replaced by a system providing old-
continuing the social insurance principles and relating age pensions for all, to be paid for year by year, out
benefits to contributions or earnings, we shall preserve of taxes. That idea had its beginning in the Thirties
individual thrift and incentive; by granting benefits as as the Townsend Plan. Their reason apparently was
a matter of legal right, we shall preserve the individual
dignity of our citizens." only this: that people are less likely to tax them-
selves to death than to bankrupt a future genera-
But if you considered social security as a matter tion by passing on to their children the liability for
of right, then the system proposed was still grossly their experiments in collective security.
unjust. For example, part-time farmers were kept During the debate in the House, Mr. Angell, who
out only because they were impossible adminis- was one of the original Townsendites in Congress,
tratively. Senator Aiken said: congratulated his colleagues on "approaching the
Townsend Plan," and introduced into the Congres-
"I understand that many people have not been sional Record the following article from the United
covered—and in this class would fall part-time farmers States News and World Report:
—simply because the committee has not been able to
work out any administrative procedure for covering "Pension checks for retired persons will be raised by
this large number of people." October.
"Checks for retired man and wife often will exceed
Senator Smith of New Jersey liked the insurance $100 a month. Checks to single retired persons will
idea because it preserved incentive, but recognized reach up to $75 and above for some.
a conflict. He said: "Retired persons will be allowed to earn $50 a month
on the side.
"We are attempting here to strike a practical balance "Retirement will be made a little more attractive.
216 AMERICAN AFFAIRS
Idea of 'ham and eggs,' or '$30 every Thursday/ pro- The two principal features of the new Social
moted in the 1930's, will be about realized. Townsend Security law are:
plan of $100 a month for every person aged 65 will (a) That nearly 10 million more people are
come into sight. This plan, regarded as crackpot 15 brought under its coverage, including domestic
years ago, doesn't seem so remote now. servants and baby sitters, 7,650,000 of these new
"Trend of old-age insurance, in fact, is toward the
flat-pension idea. It is toward a rather uniform benefit beneficiaries on a compulsory basis, and
for all reaching afixedage, with cost to be supported in (6) That the average of benefits is increased by
important part out of general taxation on a pay-as-you-
go basis. The increase in the payroll tax is postponed until
"Millions not now covered by old-age pensions will 1954. The proceeds of the payroll tax will continue
be covered in months ahead. to go to Washington. As fast as the money arrives
"Little-business men are to come in. Cost, up to $81 in Washington the government takes it out of the
a year for a pension that someday might return $121 reserve fund till and leaves in place of it its interest-
a month. Lawyers, doctors, dentists, and engineers bearing IOU's. Then the government spends the
definitely are left out. They wanted it that way for the money for general purposes so that all the social
time being.
"Housemaids come in. Cost, 1.5 per cent of income security reserve fund has against its liabilities is the
up to $3,600 a year, to be payable both by maid and her government's promise to pay. So far that has
employer, but housewife probably will get the bill. worked, and it may work for a while, because so
Actual cost, $36 a year on an income of $1,200 a year. many of the beneficiaries' claims have not yet
There's this other point: Many housewives now do not matured. What will happen when they become pay-
report income of maids for purpose of income tax. able in full measure is one of the matters in dispute.
Maids may prefer income-tax escape to a future
pension, but the housewife can't take a chance on that As he signed the bill the President said it was
and will be wise to report all income." good but not enough.
ment if a resolute effort is made on the basis not of If this should happily be true, there can be no
our present weakness but of American atomic doubt that the United States possesses at this
strength. This is the policy which gives the best moment a superiority so vast that a major act of
chance of preventing a fearful war and of securing Russian aggression is still subject to an effective and
our survival should it break upon us. even perhaps decisive deterrent. It is for this reason
I have ventured on several occasions to express the
opinion that a third world war is not imminent, and
I do not expect that any of the Allies know how I cherish the hope that it may still be averted.
many atomic bombs the Soviet Government have
yet been able to make, but—here I am only stating
my personal opinion—I do not think that they have
made many yet, or that their rate of production is I noticed in the Debate on Civil Defense on Mon-
at present rapid. As I say, I only candidly state my day, at which I regret I was not present, that there
own personal view to the House. It would be very was a considerable tendency, not confined to any
wrong that the House should attach any undue im- one part of the House, to minimize the effects of the
portance to it, but it is one of the steppingstones atomic bomb, and the government have issued a
upon which my thought advances. carefully thought out booklet on this subject. No
I said to the House two months ago, that if the doubt, it is right nearly always to take a robust and
Americans had a stockpile of, say, 1,000, and the cheerful view, but I expect this booklet, from what
Russians had only 50, and we got those 50, it would I have been able to learn of it, looking through it—
not be pleasant. I was surprised that this crude I have not had time to read it with the attention it
remark did not affect opinion. But then, only two deserves—will be more cheering to the Russians
months ago there was a different atmosphere. All than to us, because the atomic bomb is the only
these matters, quite wrongly, seemed outside the weapon on land, sea and air in which the Americans
range of ordinary politics and daily life. Now they —that is to say the Allies—can possibly have over-
dominate the minds of all thinking and patriotic whelming superiority during the next two or three
men, and will increasingly do so as the months years.
pass by.
* I should have thought, therefore, that it was a
It was stated officially at some Lobby conference mistake in propaganda to weaken or discount the
with, I think, the Home Office, according to the deterrents upon those who are already so much
Daily Telegraph of Tuesday, that each bomb stronger in every other sphere except this. We shall
costs as much as a battleship. This, of course, is need the whole weight of these deterrents to gain us
ludicrous nonsense. It might be that the first two the time which remains while this great advantage
or^three would cost that amount or more if they of ours endures.
were saddled with the whole expense of research and We are, of course, dependent upon the United
production up to date, but once they were in produc- States both for the supply of the bomb and largely
tion the cost would certainly be less than one for the means of using it. Without it, we are more
twentieth or even one fiftieth of a modern battle- defenseless than we have ever been. I find this a
ship. Nevertheless I still adhere to my feeling—I am terrible thought. In 1940 I had good hopes that we
quite ready to be instructed by those who have the should win the battle in the air even at heavy odds
advantages of official information—that so far very and that if we won, the Navy could stave off and
few have been produced, and the extraordinary repel invasion until eventually vast air power was
efforts which the Soviet Government are making to developed here which would bring us out of our
obtain even small quantities of uranium seem—I troubles, even if left alone. But now I cannot feel
only say "seem"—to justify a hopeful view. the same sense of concrete assurance.
output to $775 million in 1941 and $1.32 billion in serious—was the loss of a major share of the indus-
1942! In short, they tripled output in two years. try's foreign market, due to ECA policies plus re-
But as war goes, two years is a long time. For- strictions placed by foreign countries upon the im-
tunately, we had time in the last war. Eventually portation of machine tools from the United States.
our superiority of equipment was built up. But what For a period of many years before World War II,
if we had not had time? And will we ever have time exports accounted, on the average, for about 25% of
again? American machine tool shipments.
In view of the size of our postwar machine tool Germany had an excellent machine tool industry,
industry, this question is a most alarming one. and the British industry—although small by com-
parison to ours—offered important competition.
The Machine Tool Good machine tools were made in Switzerland and
Industry Today in Sweden. A few were built in France. By and large,
however, American-built machine tools were pre-
In the postwar years, volume in the machine tool ferred over those of European make. They pos-
industry has kept dropping until in 1949 it was down sessed certain advantages, both as to technical
to $249,150,000—less than one fifth of the wartime features and as to sturdiness and durability. Be-
peak. cause of American labor rates, by comparison to
With due allowance made for the decline in the those in Europe, prices were higher. The measure of
value of the dollar, this means that the industry market acceptance, however, is indicated by our
operated in 1949 at about the same unit volume as consistent export average of 25% of output.
it did in 1938. The war well-nigh destroyed the German machine
There were, in the main, three reasons which tool industry, but built up the British. There was
accounted for this decline. little change in France, and Sweden and Switzer-
The first was postwar competition by govern- land continued to maintain their respective places.
ment-owned surplus machine tools. These machines, Then came peace, the reconstruction period, and
many of them almost new, were quite properly sold ECA.
by the government to American manufacturers.
This was one war asset that had real salvage value. Nationalistic
While, from the national standpoint, this repre- Policies
sented sound utilization of available equipment and
recovery of taxpayers' money, it naturally made it ECA adopted from the beginning the policy of
very difficult for machine tool builders to sell in any letting the countries receiving aid decide entirely
volume until they had developed new, more effi- how the money was to be spent; and as far as
cient, more productive models. machine tools are concerned, such decisions were
These new models, which it is estimated made made largely along nationalistic lines.
possible on the average a saving of about one third Each country said to its manufacturers, "If a
in production time for the user, were displayed at machine of the type you want is made here, you
the 1947 Machine Tool Show. But by that time a must buy it here. We will not give you a permit to
second depressant was evident. This was the policy import it from America."
of the Internal Revenue Department with respect The result is that businessmen in England, France,
s Italy and other aided countries of Europe have been
to depreciation, which literally imposed a penalty
upon modernization. unable to get licenses to import from the United
States any of the types of machine tools that are
The Export Picture made in Europe. In case after case, they wanted
American-built machines because they were defi-
Before EC A nitely superior to those of European make. But they
The government has insisted that machine tools had to buy machine tools of European make, even if
be written off over periods ranging from 15 to 25 they preferred American models.
years, the average being a little over 20 years. But The only machine tools that American builders
with postwar prices reflecting the decline in the have been permitted to sell in Europe are special
value of the dollar, depreciation allowances based machines of types not made in European countries.
upon prewar equipment purchases were utterly in- This is the case whether such machines are bought
sufficient to cover replacement costs. The balance with ECA money or whether the manufacturer has
had to come out of earnings after taxes; and many his own money and does not need ECA help. He
manufacturers hesitated, therefore, to make such may prefer an American model to a British or
expenditures. French model, but if that type of machine is made in
The third reason for the industry's decline in Europe, that is where he has to buy it. He cannot
volume, however—and the one which, from the get an import license for an American-make ma-
standpoint of the nation's welfare, is by far the most chine.
October 1950 221
It was obvious when ECA first went into Europe fact, only a short time ago, American exports of
that machine tools were required for rehabilitation. special machines to Great Britain, Sweden and
For machine tools not only make the working parts Italy were held up by the State Department, ap-
of automobiles, railroad engines, farm equipment, parently for fear that the products to be made on
washing machines, telephones, etc., they make the those machine tools might be shipped to Russia!
working parts of steel machinery, paper machinery, From the standpoint of the rehabilitation of
chemical machinery, textile machinery—in fact, Europe, this situation is paradoxical enough. Today,
they are basic to the equipment of every industry. for example, it is very difficult for a manufacturer in
England, France or Italy to get quick delivery on a
ECA Stimulation of machine tool built in those countries. They could get
European Competition quick delivery from us, but they cannot buy from
America. So they have to sit back and wait while
A natural solution might have been to give these machines built in their own countries go to Russia.
countries American-built machine tools immedi- American aid to the war-torn countries was sup-
ately. Think how this might have speeded recovery! posed to be for the purpose of getting them back on
But instead, ECA yielded to "buy-at-home" poli- a productive basis. But are machine tools going to
cies, which perhaps were a natural aftermath of war Russia helping to produce goods and services for the
hysteria. In any event, what happened was that people of Europe? Instead, the United States is sup-
ECA helped revive the machine tool industries in plying them with food, cotton and other materials,
the war-torn countries, and the matter has now while their productive equipment is being drained
gone far beyond revival. off to Russia to build up the potential for another
Before the war, Italy had no machine tool indus- war.
try to speak of. Today, under the stimulus of ECA,
there are more lathe manufacturers in Italy than
there are in the United States. Foreign-built Machine Tools
With ECA aid, the machine tool industry is again in the American Market
arising in West Germany. In 1949, we gave the nations participating in
Meanwhile, with the artificial stimulus of protec- ECA over $2 billion worth of food, cotton and
tion against American competition, plus financial tobacco. During that year we bought for these coun-
aid from ECA, the machine tool industries of France tries approximately $73 million worth of machine
and England—especially England—have not only tools! And yet it is upon machine tools that are
revived; they are producing at a rate far above made all the types of equipment necessary to an
what they did before the war. industrial civilization. Are we helping Europe to get
back on its feet, or are we simply keeping them on
Machine Tool Shipments relief?
to Russia But a still greater paradox is involved from the
The end result was probably never anticipated by standpoint of our own national defense. This derives
the original framers of ECA policy. For the simple from the fact that with the support of American aid,
fact is that American aid has helped to mushroom plus protection against American competition in
British and European machine tool plants to such a Europe, the machine tool industries of England and
point that they are now substantially contributing Europe are now threatening to invade machine tool
to the armament of Russia. markets in the United States.
We know that England is shipping large quanti- British machine tools are now being offered in
ties of machine tools to Russia and Russian satellite this country at prices far below what American
countries. builders must charge for then* product. Unless the
It is very doubtful whether the economy of Italy present situation is changed, we may expect French,
warrants the size of its present machine tool indus- Italian and German machines to be offered at a
try. But we know that Italian machine tools are similar price differential, which reflects the lower
finding their way into the Russian orbit. wage rates in England and on the Continent.
There is nothing to prevent France from shipping While these machine tools, in many cases, do not
machine tools to Russia. For that matter, there is possess all of the advantages of American models,
nothing to prevent the new West Germany machine they are, in the main, good workable machines. If
tool industry, created with our own money, from they can consistently be offered in this country at
shipping to Russia. It is well known that it is already prices substantially below those which American
shipping behind the Iron Curtain. machine tool builders can quote, it will mean that
American machine tool builders are, of course, in years to come we will look to England and Europe
prohibited from shipping to Russia. This action was to supply a large share of the standard machine
taken by our State Department 2J^ years ago. In tools for the United States, and our own domestic
222 AMERICAN A F F A I R S
machine tool industry will dwindle to a fraction of logical to take the next step—which would be that
its present size. of permitting a European manufacturer whose pur-
Machine tools are basic to national defense. But chases are financed with ECA money to get an
ever since the war, our own machine tool industry American-built machine tool if he preferred it.
has been forced downhill. Much of its wartime Certainly it would seem a sounder policy to open
capacity has long since been diverted to other pur- up the European market for American machine
poses. It is seeking new products with which to tools than to close the American market to Euro-
supplement its activities. Its entire active capacity pean machine tools. Let us have more free and open
today is so small as to be utterly incapable of at- competition, and fewer arbitrary political restric-
tempting any major national defense effort. tions.
What will happen if that capacity is still further Meanwhile, shipments of machine tools to Russia
reduced? What will happen if we have left in this should be stopped. If it is a threat to our national
country merely a handful of companies making defense to have our own machine tools go to Russia,
special machines, and we rely upon England and it is an equal threat to have Russia supplied by
Europe for the standard types of machine tools, the England, Italy, France, and Germany.
very types most necessary for war production?
The answer would be that not only we ourselves, The Double
but the Atlantic Pact countries, would depend for
their machine tools—their first line of defense—
Threat
upon England, Italy, France, and West Germany, Our national defense is being endangered both by
the very countries whose plants would be the first shipments to Russia and by the threat of the
to be put out of commission in case of war. eventual transference to Europe of the major por-
Would we locate our atomic bomb facilities in tion of the world's capacity for the production of
England, Italy, France, or Germany? Would we standard machine tools.
transfer the major share of our steel capacity to We have in this country a National Security
England, Italy, France, or Germany? Council; and that Council has allocated to the
On the same grounds, it is vital that we preserve machine tool builders of the United States a series
here within our borders a certain minimum of active of so-called "tentative production schedules" which
operating machine tool capacity—the minimum re- constitute the first machine tools to be built in case
quired for safety. That minimum must remain of emergency. If these schedules were to be acti-
where it cannot be knocked out within thefirstfew vated today with the industry at its present low
hours of war. But if this minimum is to be retained, operating rate, it would be utterly impossible to
action must be taken. complete them within the timetable set by the Na-
tional Security Council.
What Could Be We learned in the last war that the planes, tanks
and guns of today are obsolete by tomorrow. We
Done About It learned that our strength lay in the speed with
One course of action would be to impose restric- which we could produce new models—and we
tions upon machine tool imports into the United learned that this speed depended upon the per-
States. For example, we might increase the tariff; or formance of the machine tool industry. The mainte-
we might apply in reverse the same rule applied by nance of our machine tool industry at at least the
European countries, and say that no American level of safety represents insurance against national
manufacturer can buy a machine tool made abroad disaster.
if a machine of that type is available in the United
States.
Such measures, however, tend to restrict trade For Normal Times Only
rather than further it. It would be far more con- The New York Times
structive to change the picture on the other side.
Certainly one thing might be attempted immedi- It is probably no exaggeration to say that the
ately. We should endeavor to persuade foreign gov- private enterprise system has less to fear from
ernments to permit a manufacturer who prefers an hostile foreign propaganda than it has from those
American-built machine, and has his own money who are either unable or unwilling to grasp the fact
with which to make payment, to buy from America. that if that system is to endure and thrive in normal
In spite of the handicap of currency devaluation, times then it must be saved from the unnatural
this would immediately stimulate purchases from strains and stresses of war and other national
the United States because of the preference for emergencies, as well as from its own excesses, which
American-built machines. have a way of manifesting themselves on such
If that step were taken, it would seem only occasions.
October 1950 223
TBrannan
O the Administration's propaganda for the
Farm Plan, the Women's Division of
the National Democratic Committee has contrib-
uted a sheet of comics. The pieces reproduced here
are selected from the series; they are only enough to
give the idea, the theme and the method. As with
all comics, each drawing is supposed to be self-
explanatory and self-contained; however, for the
AND THE sake of clarity the editor of AMERICAN AFFAIRS has
put some lines under them.
liberals, whose organizations they have captured tion on an abstract proposition which many good
and discredited and among whom they lie in wait citizens, if they have thought of it at all, have con-
for further orders. sidered too academic and remote to bother about.
*
Disguised as leaders of free American labor, they Attempts of the courts to fathom modern political
were in truth secret partisans of Stalin, who, in meditations of an accused would be as futile and
partnership with Hitler, was overrunning Europe, mischievous as the efforts in the infamous heresy
sending honest labor leaders to concentration camps, trials of old to fathom religious beliefs.
and reducing labor to slavery in every land either of *
them was able to occupy. No other important
political party in our history has attempted to use Our Constitution explicitly precludes punishment
the strike to nullify a foreign or a domestic policy of the malignant mental state alone as treason, most
adopted by those chosen under our representative serious of all political crimes. It requires a duly
system. witnessed overt act of aid and comfort to the
enemy. It is true that in England of olden times men
This labor leverage, however, usually can be were tried for treason for mental indiscretions such
obtained only by concealing the Communist tie from as imagining the death of the king. But our Consti-
the union membership. Whatever grievances Amer- tution was intended to end such prosecutions. Only
ican workmen may have with American employers, in the darkest periods of human history has any
they are too intelligent and informed to seek a Western government concerned itself with mere
remedy through a Communist Party which de- belief, however eccentric or mischievous, when it
fends Soviet conscription of labor, forced labor has not matured into overt action; and if that
camps and the police state. Hence the resort to practice survives anywhere, it is in the Communist
concealment, and hence the resentment of laws to countries whose philosophies we loathe.
compel disclosure of Communist Party ties. *
* How far we must revert toward these discredited
Congress has conferred upon labor unions im- systems if we are to sustain this oath is made vivid
portant rights and powers in matters that affect by the Court's reasoning that the Act applies only
industry, transport, communications, and com- to those "whose beliefs strongly indicate a will to
merce. And Congress has not now denied any union engage in political strikes. . . ." Since Congress has
full self-government nor prohibited any union from never outlawed the political strike itself, the Court
choosing Communist officers. It seeks to protect the must be holding that Congress may root out mere
union from doing so unknowingly. And if members ideas which, even if acted upon, would not result in
deliberately choose to put the union in the hands of crime.
Communist officers, Congress withdraws the privi- Nothing is more pernicious than the idea that
leges it has conferred on the assumption that they every radical measure is "Communistic" or every
will be devoted to the welfare of their members. liberal-minded person a "Communist." One of the
• tragedies of our time is the confusion between re-
It would be strange indeed if it were constitu- form and communism—a confusion to which both
tionally powerless to protect these delegated func- the friends and enemies of reform have contributed,
tions from abuse and misappropriation to the service the one by failing to take a clear stand against
of the Communist Party and the Soviet Union. Communists and communism and the other by
* characterizing even the most moderate suggestion
of reform as "Communistic" and its advocates as
Our Constitution is not a covenant of non- "Communists." Unquestioning idolatry of the
resistance toward organized efforts at disruption statusquohsiS never been an American characteristic.
and betrayal, either of labor or of the country.
•
*
But the serious issue is whether Congress has We cannot ignore the fact that our own govern-
power to proscribe any opinion or belief which has ment originated in revolution and is legitimate only
not manifested itself in any overt act. While the if overthrow by force may sometimes be justified.
forepart of the oath requires disclosure and dis- That circumstances sometimes justify it is not Com-
avowal of relationships which depend on overt acts munist doctrine but an old American belief.
of membership or affiliation, the afterpart demands *
revelation and denial of mere beliefs or opinions, The men who led the struggle forcibly to over-
even though they may never have matured into any throw lawfully constituted British authority found
act whatever or even been given utterance. In fact, moral support by asserting a natural law under
the oath requires one to form and express a convic- which their revolution was justified, and they
October 1950 229
broadly proclaimed these beliefs in the document indiscriminately. To ask avowal that one "does not
basic to our freedom. believe in, and is not a member of or supports any
organization that believes in . . . the overthrow of
The idea that a constitution should protect in- the United States Government . . . by any illegal
dividual nonconformity is essentially American and or unconstitutional methods" is to ask assurances
is the last thing in the world that Communists will from men regarding matters that open the door too
tolerate. Nothing exceeds the bitterness of their wide to mere speculation or uncertainty. It is asking
demands for freedom for themselves in this country more than rightfully may be asked of ordinary men
except the bitterness of their intolerance of freedom to take oath that a method is not "unconstitutional"
for others where they are in power. An exaction of or "illegal" when constitutionality or legality is fre-
some profession of belief or nonbelief is precisely quently determined by this court by the chance of
what the Communists would enact—each individual a single vote.
must adopt the ideas that are common to the ruling
group. ^ If I possibly could, to avoid questions of uncon-
stitutionally, I would construe the requirements to
The task of this Court to maintain a balance be restricted to disavowal of actual membership in
between liberty and authority is never done, be- the Communist Party, or in an organization that is
cause new conditions today upset the equilibriums in fact a controlled cover for that party, or of active
of yesterday. The seesaw between freedom and belief, as a matter of present policy, in the over-
power makes up most of the history of govern- throw of the government of the United States by
ments, which, as Bryce points out, on a long view force. But what Congress has written does not
consists of repeating a painful cycle from anarchy permit such a gloss nor deletion of what it has
to tyranny and back again. The Court's day-to-day written.
task is to reject as false claims in the name of civil
liberty which, if granted, would paralyze or impair I cannot deem it within the rightful authority of
authority to defend existence of our society, and to Congress to probe into opinions that involve only an
reject as false claims in the name of security which argumentative demonstration of some coincidental
would undermine our freedoms and open the way to parallelism of belief with some of the beliefs of those
oppression. who direct the policy of the Communist Party,
though without any allegiance to it. To require
I conclude that today's task can only be dis- oaths as to matters that open up such possibilities
charged by holding that all parts of this oath which invades the inner life of men whose compassionate
require disclosure of overt acts of affiliation or mem- thought or doctrinaire hopes may be as far removed
bership in the Communist Party is within the from any dangerous kinship with the Communist
competence of Congress to enact and that any parts creed as were those of the founders of the present
of it that call for a disclosure of belief unconnected orthodox political parties in this country.
with any overt act is beyond its power.
The offensive provisions leave unaffected, how-
Mr. Justice Frankfurter said: ever, the valid portions of the section. Since the
judgments below were based in part on what I deem
unconstitutional requirements, I cannot affirm but
IentTmerely
is one thing to forbid heretical political thought
as heretical thought. It is quite a differ-
thing for Congress to restrict attempts to bring
would remand to give opportunity to obey merely
the valid portions of [the statute].
about another scheme of society, not through ap-
peal to reason and the use of the ballot as democracy Mr. Justice Black said, (dissenting):
has been pursued throughout our history, but
through an associated effort to disrupt industry.
* B LACKSTONE recalls that Dionysius is "re-
corded to have executed a subject barely for
dreaming that he had killed him; which was held
Congress was concerned with what it justifiably
deemed to be the disorganizing purposes of Com- sufficient proof that he had thought thereof in his
munists who hold positions of official power in labor waking hours." Such a result, while too barbaric to
unions, or, at the least, what it might well deem be tolerated in our nation, is not illogical if a govern-
their lack of disinterested devotion to the basic ment can tamper in the realm of thought and
tenets of the American trade union movement be- penalize "belief" on the ground that it might lead to
cause of a higher loyalty to a potentially conflicting illegal conduct.
cause. ^
Individual freedom and governmental thought-
But in my view Congress has cast its net too probe cannot live together.
230 AMERICAN AFFAIRS
Review time should find fertile soil in the only great country
in the world that was entirely founded on the
doctrine of individual liberty.
In his book, *"Men Without Faces," Louis
Budenz says:
"Americans may be experts in mechanical know-how,
Writings of the Apostates as is so often said, but they are babes in the woods when
it comes to conspiratorial know-how. There is little
appreciation of the fact that the basic philosophy of
W E have now an incredible number of books
about communism written by the apostates.
All of them say the same things in a curious lan-
communism makes for the ruthlessness and determina-
tion to achieve world conquest—the 'World October'—
that mark the Soviet dictatorship."
guage of repressed fear and the more you read of it
the more you are at a loss for the answer to this Mr. Budenz is perhaps the most authentic
simple question: Why do Americans embrace the American apostate. He was born in Indiana of
Communist Party? And this is not the same as to German ancestry, took law, became interested in
ask why Americans embrace the philosophical idea the labor movement, and in 1935 joined the Com-
of communism. That could be understood and there munist Party with, as he says, "my eyes open," and
need be nothing alien about it. But an American "agreed to the oath of fidelity to Stalin." His ac-
who joins the Communist Party becomes in fact an count of himself is more persuasive than convincing.
alien. He belongs to a political conspiracy aimed at He had become acutely aware of racial discrimina-
the destruction of American institutions and trans- tion and social injustice and began to study
fers his allegiance to a foreign dictator. Why? For Communist classics, especially Lenin, so that when
people of sophomoric or unmatured minds, espe- he says he joined the Communist Party with his
cially young people, there may be some excuse. eyes open he certainly knew what he was doing.
These no doubt find in it the excitement of con- Later he discovered that the party was "completely
spiracy, the thrill of revolt and some childish sense controlled by aliens hidden from the public view,"
of secret power. But what of the adult-minded— and this discovery, he says, "was a distinct shock."
professors, scientists, educators, writers, doctors, He does not explain how that could have been a
preachers, artists? Why do they do it? They cannot shock after he himself, on joining the party, had, in
plead innocence. In the writings of Lenin and his own words, "agreed to the oath of fidelity to
Stalin, in the manifestos, in resolutions, in innumer- Stalin." At the end of ten years, during which he
able party publications, the Communist intentions rose to be managing editor of the Daily Worker, he
in the world have been set forth in stark and brutal broke with the Communist Party and made his
terms. More than that, all the means both legal and peace with the Catholic Church. He now is teaching
illegal, all the techniques of revolution, all the arts in a Catholic university. He devotes one chapter of
of sabotage, infiltration and deception have been so his book to the "Capture of the Innocents," which
openly and cynically taught that no person who begins:
really wants to know how the conspiracy works
could be in any doubt about it. Having read it all in "Not the least of my official assignments on Thir-
the words of the Communists themselves, one has teenth Street was setting the nets to capture intellec-
only to look about and to watch the news to dis- tuals and professionals—writers, artists, actors, educa-
cover it in action. Yet for all of that, it is possible tors, churchmen, scientists, editors, politicians and the
for the American Association of University Pro- like. As the Thirties advanced into the Forties, this
fessors to declare in the name of academic freedom fishing for nonproletarian innocents increasingly
occupied a number of leading Reds.
that Communists have a right to teach, "as long as "I watched, fascinated, as men and women of world-
the Communist Party remains a legal political wide reputation were duped into carrying out plans
party." And the Communist Party is a legal party laid for them by Stalin's secret police and special
with access of its own to the American ballot, emissaries. Wrap party-line bait in 'liberal' phrases
because the American people so far have been un- and certain celebrities would bite over and over again.
willing to outlaw it on the ground that to do so There was also help for us in the fact that a great many
would be an unconstitutional suppression of ideas. well-meaning and intelligent men and women, genuine
Since the barbarians embraced Christianity and put liberals who were independently sympathetic to some
the Prince of Peace on their war banners in place of the causes—worthy enough in themselves—that the
Communists sponsored, were often too busy or too un-
of their pagan gods and went on fighting as before,
nothing could have been more improbable than
that an evangel of human servility propagated by * "Men Without Faces. The Communist Conspiracy in the
U. S. A." By Louis Francis Budenz. Harper and Brothers, New
the most unmoral and ruthless dictator of modern York.
October 1950 233
suspecting, or both, to investigate the nature and writers who are doing an excellent job for the Com-
backing of the organizations to which they were per- munist cause over the air waves. Both of them have
suaded to lend their names. And though in some cases been repeatedly signed up for Communist fronts; one
they may have known Communists were also involved, of them particularly has belonged to almost every front
they were too unfamiliar with Communist practices to declared subversive by the Department of Justice.
realize that the comrades were not interested in the Each time he has expressed surprise that the new front
cause itself but only in the way it could be twisted and was Red in origin, and has said he was just too busy to
used to further Soviet objectives. Again, many people know what he was doing. It is interesting to know,
lent their names to these organizations at a time when however, that he had time to persuade many other
our relations with Russia were much better than they writers to join these organizations about which he
are now. claimed to know so little. Both of these men are in key
"I was constantly amazed at the facility with which positions to confuse public opinion badly.
the Red agents operating among the intellectuals es- "At one of the several receptions for the so-called
caped exposure, though detection was comparatively elite of the party which I attended at the town house
simple. Their records proclaimed loudly who they were of Frederick Vanderbilt Field, there were present:
and what they were up to. Yet whenever their true a man who has made a notable success in the publishing
allegiance was suggested, some reputable newspaper field, partly in connection with comic sheets but also
was certain to express indignation at the charge. To much more intellectual pursuits; a noted singer who is
many of them the public paid huge royalties, out of a kind of hero in certain professional groups; and a
which they turned over large sums to the party for sub- writer of books which have enjoyed wide popularity
versive work. They hoodwinked their colleagues in the and who was one of the most bloodthirsty in his calls
cultural field as easily as they did the public." for action against the United States."
progress and very little in human and social rela- must use human beings, their minds and their
tions. General Omar Bradley said recently, "The bodies, to perform the greater part of our industrial
world has achieved brilliance without wisdom, tasks. The great problem then is to help human
power without conscience. Ours is a world of nuclear nature fit a business aim. It is an infinitely more
giants and ethical infants. We know more about war difficult task to understand a human being and to
than we know about peace—more about killing get an effective and desired performance from him
than we know about living." than it is to understand and run effectively a ma-
chine. It means bringing some understanding of the
Whether individual worker as a human being, with all his
needs, his desires, his hopes, his particular ways of
We Eat reacting, into the day-by-day employer-employee
• Our society is dominated by two powerful institu- relationship.
tions—government and the economic system. We Nor is the entire answer to be found in employing
are all citizens and we are all workers in the broadest bigger and more expert personnel departments, to
sense within the economic system. Of the two the select more discriminatingly, to train more dili-
economic system has the greater feeling or emotional gently and to discipline more strictly. The responsi-
value for most of us because it is closely connected bility lies with management, from the top down to
with our survival—whether we eat, or whether we the petty supervisor. The real personnel relations
attain those possessions which contribute to our job must be done by the executives and supervisors.
comfort, our welfare and our happiness. In times The major training job of any organization is that of
such as these, when our institutions are being training its executives in their supervising relation-
threatened and we feel the need to defend our way ships, in their understanding of people and in their
of life, we realize that our chief problem lies in our handling of people. Personnel policies are not just
relationships with people. the policies of a personnel department. They are the
As individuals must determine their responsibili- policies which each supervisor or executive carries
ties toward human beings in their immediate circles out in his day-to-day work relationships with people.
of influence, so business must do some soul searching Top management gives a lot of lip-service to
to define its responsibilities and obligations to the personnel policies which they are sometimes unwill-
human beings over whom it has so much economic ing to abide by themselves in their relationships
power. with executives on down the line. In large organ-
Solutions are not to be found in vague theories, izations, individual members of management often
which at best can only give direction and "climate." have vastly different conceptions of their responsi-
They must be worked out by the practical men and bilities in the field of human relations, and different
women of business. It took England 150 years to ideas of the best way to handle subordinates, which
abolish the chimney sweep—a cruel and inhuman are reflected in their daily behavior, regardless of
system of child slavery; 200 years from now will company policy. In such organizations there is no
many of the things we do to human beings under the enthusiastic teamwork, no central integrity of pur-
guise of superior and subordinate relationships in pose and policy which sifts down to the individual
business and industry seem just as cruel and in- worker. What is needed is an organization which
human? Will the business and industry of that time from the top encourages its executives to under-
look upon us as backward and unenlightened and as stand the human factor, to develop skills in dealings
having failed to develop the human potentialities of with people in the organization and to develop the
p our time? kind of organization in which these knowledges and
We hear everywhere that greater production is skills can be developed and put to use.
the answer to our present economic problems. But
when we think of production do we think of human Security and
beings becoming more skilled, more productive, at- Ego Satisfaction
taining more of the satisfactions that make all of us
better citizens, better neighbors, better parents for An understanding of the human being is to
the future of our democracy? Do we think of people recognize the two basic human needs—security aid
in a work situation as workers primarily and social ego satisfaction.
beings incidentally? The personal problem of all of us, whether we be
Our problems in business and industry would be executives or so-called workers, is to learn how we
so simple if we could work entirely through ma- may insure to ourselves our survival as individuals,
chinery. We could select the proper machines and and our impulse will be to achieve the maximum of
then hire engineers who understood those machines safety and comfort for ourselves. It may seem a far
to see that they performed the tasks for which they removal from the child who cries for what he wants
were made. Such simplicity is denied us because we to the man who maps out his career in order to earn
238 AMERICAN AFFAIRS
a living. Yet both are responding to the same funda- 3. He wants to know where he stands and how he
mental need. is doing.
Many of us enjoy comparative security through- 4. He wants to be placed on a job for which he is
out life. The man with a steady job, a comfortable suited and can do well, and be given the proper
wage, family and friends, has outward security but training and help in learning it.
there is always present consciously or unconsciously 5. He wants to have a relationship with his imme-
a feeling of insecurity. Such feelings are particularly diate supervisor in which there is confidence. He
present in that part of life with which industry has wants a supervisor who knows what his job is, who
to deal. In the present confused and troubled times is interested in him as a person, someone to whom he
general insecurity has been manifest to a greater can go to discuss his problems, who will understand,
degree and has put tremendous pressure on indi- and, most of all, someone who will treat him with
vidual security. Such insecurity shows up in per- fairness and justice.
formance. Few of us are able to do any job well if 6. He wants to get somewhere, or, as the average
we are beset by fears and feelings of insecurity, and person terms it, to get ahead; he wants to feel that
the quality of our performance improves propor- if he qualifies and has the ability, he will have an
tionately as our feelings of security increase. opportunity.
The second fundamental need is for ego satisfac- Opportunity must also mean improvement for the
tion. From infancy, human beings tend to repeat group. Those who do not want to be leaders and
and enlarge performances which have brought at- have not the ability must have some feeling of get-
tention and recognition. Statesmen and poets are as ting somewhere. They must feel that business,
much its creatures as machinists and sales clerks. It through successful operation, will improve their lot;
provides much of the human drive and ambition. that their opportunity to achieve is in direct ratio
It implies an impulse to survive not only as an to the success of the business that employs them.
organism but as an entity. If a man must live in this What helps business will in turn help them.
world he must somehow make himself felt as an
individual. It is the answer to a deep human urge to
be somebody, to express one's self apart, to be Security Is
recognized, to be appreciated. To fail to win such Not Enough
recognition is wounding, while to gain it is pro-
foundly pleasing and satisfying. Business as an im- But, for a human being, security alone is not
portant part of our social order is quicker to make enough. One must have the satisfaction that comes
demands than to compromise with human frailty. from being appreciated, wanted, needed. To feel
People cannot be forced to work toward organ- that he belongs to a company or business of which
izational ends. Work should be associated with the he can be proud; that his particular job, however
satisfaction of personal needs, so that it becomes not small, is an important one to the whole; that his
a form of punishment but in itself creative, satisfy- ideas about his work are important and worth while;
ing and enjoyable. Neither can wages, vacations, that he has had a share or made a contribution to
pensions, recreational facilities and other benefits the decisions which are reached that affect him or
compensate for the neglect of these basic human his job; that he knows why certain policies are
needs at work. formed. Such a person will express himself in terms
of "we are doing so and so," rather than "they are
doing so and so," meaning the bosses, and such a
What Does the person becomes for the business the real public,
Worker Need? relations person, more powerful than any public
relations department as such.
When we speak of security it must be borne in I should like to tell you of a problem that was
mind that there are obviously limits beyond which
business cannot go in providing security. There is no handled by an immediate supervisor. It illustrates
such thing as absolute security in business or in life how a person can be made productive by the super-
itself. Such security would destroy all individual visor's understanding of the problem from the view-
initiative or, in fact, any growth or development. point of the person.
What does the worker need in the way of security Miss B is a woman past middle age, friendly,
to enable him to perform to the best of his ability? capable and cooperative. At first acquaintance, she
seemed nearly ideal in her job, which was of some
1. He wants to feel that as long as he performs responsibility in the department. She was an excel-
his particular job well he can feel reasonably sure of lent stock keeper, knew her merchandise extremely
keeping it. well, and her customer contact was quite satisfac-
2. He wants a wage more nearly based on his tory. However, as you got to know her better, it was
needs for himself and his family. noticeable that she was thoroughly discontented
October 1950 239
with everything—her salary, co-workers and treat- to display it seemed to give back a little of her
ment. She was unduly sensitive to any criticism. former "glory." Since her discontent was lessening,
She made frequent remarks such as, "No one ever the next step was to change her behavior toward
found fault with me until I came to Lord and new salespeople. This was done by taking her aside
Taylor." That remark was made when she was before the new girl was put in her section, giving a
asked merely to explain some illegible handwriting. brief picture of the person and asking that she take
As a matter of fact, the first time this was men- a special interest so that the girl would not feel
tioned, she cried. She was also unpleasant to other frightened. She was asked to supervise their sales
salespeople (particularly new, young girls), but checks and stock work and told that a young person
rarely within hearing of the buyer, assistant or had to be shown a very friendly attitude in order to
service manager. feel secure among so many excellent older sales-
She made a constant bid for our attention, in a women. Miss B responded very well and while she
rather childish way, and succeeded in getting herself occasionally lapses, on the whole she has matured a
babied a good deal. She pitied herself and made good deal. Subsequent ratings have gone up and
incessant, unflattering comparisons between the successive raises have finally made her feel that she
past and present. is a valued and appreciated member of the depart-
ment.
Good Recently, we had reason to be thankful that
Miss B had acquired this new outlook. Her eyes had
Salvage become troublesome and again she began to worry
For a good many years Miss B had been a buyer, a lot. When her doctors finally told her that she
in another store, of the same merchandise she now would not necessarily be blind, but that the defect
sells and was, from all reports, a very good one. Her would cut her vision somewhat, she did not go to
knowledge of the field was excellent, but she was pieces as expected. She came to us in a mature way,
known as a "tough boss." She made frequent trips suggesting that we transfer her to a department
to Europe, lived comfortably and found life enjoy- where eye work is less important, or, as she put it,
able. She was unmarried, one of four sisters and the "I'll stay here and do my best if you people are
pet of a blind mother, whom she adored. With the willing to string along with me." She is going to
depression, like a good many others, she lost her job. stay. She is still a valuable person, and that part of
When she came to us she was touchy. She felt let her work which takes undue eyestrain has been
down. During her first physical checkup a tactless voluntarily taken over by the people in her section.
remark about her eyesight and the thickness of her Although her stock duties have been lightened and
glasses started the first of a chain of fancied insults. things made easier, instead of lessening her value, it
Her eyes are not good, she is extremely near- has actually increased it. She now makes a great
sighted, but only long acquaintance can tell you her effort to do twice as good a selling job to counter-
dreadful fear of eventually being blind like her balance any concessions given her.
mother. We must keep in mind that democracy itself rests
Several months later, her mother died and, of on the integrity of the individual—so does religion
course, Miss B's whole world of security collapsed. and so must the industrial system. Any form of
She must have been very difficult to work with at government or any industrial system that treats
this time because she was given a rating showing her people as means rather than ends, which exalts the
work to be excellent, as always, but her attitude and state or the institution above the importance of the
behavior, poor. This low attitude rating stuck to her individual, will not survive.
for some years, long after it had ceased to be that
bad.
Since outright criticism was out of the question,
she was babied to some extent and made aware that
an interest was taken in her as a person rather than
a saleswoman. She cheered up almost immediately,
became cooperative and more friendly to the people
in her section. Gradually, she was less indulged,
I N the British socialist weekly, New Statesman
and Nation, we read: "Mr. Dalton's relaxa-
tions of town and country planning control,
more often consulted on the adjustment problems described by him as an experiment in freedom,
she knew so well and encouraged to teach her wide are on the whole to be welcomed."
knowledge of the merchandise to a more than willing This is England, experimenting with free-
service manager.
Miss B became more mature in her attitude at dom; England in the fifth year of a Socialist
this point and picked up considerable assurance. Government that undertook to create a society
She was proud of her knowledge, and allowing her both planned and free.
240 AMERICAN AFFAIRS
Size
By the Honorable Charles Sawyer
Secretary of Commerce
output of over $500 million there were somewhat to take over business—which is socialism. Strangely
more increases than decreases, while the reverse is enough, most of these benevolent guides of our
true for industries under $500 million. Dealing with economy see no danger in bigness in labor, although
the change in concentration of the first four com- the concentration of power is far more absolute and
panies in the industries involved, there was an the increase in concentration clearly more definite.
increase in 58 and a decrease in 72 of these indus- *
tries. Taking the first eight companies, there was an
increase in 57 and a decrease in 76 industries. These It is also contended that large size, in business
figures indicate some slight increase in concentration and government, results in centralization of deci-
in the industries with the biggest companies but no sion-making, in a very few leaders and a great mass
over-all increase for business in general. We do not of order-takers; that denial of responsibility tends to
as yet have sufficient facts to be able to attach turn men into robots, and to decrease their desire
significance to these figures. for adventurous exercise of self-reliance and initia-
tive.
Lastly, there are what we might call the senti-
Businesses grow in size in many ways. We have mental objections to bigness. There are the wistful
the single enterprise which starts small—in a base- wishes to get back to "the good old days" of small
ment or a garage—and through successful manage- government, small businesses, small unions, and a
ment, and perhaps good luck, accumulates profits nation of neighborly small towns.
which it plows back into the business. As the de- These attacks on bigness have been made so many
mand for the product increases, the business gets times that they have become part of the folklore of
bigger. The classic example of this is the Ford the American people; and each point has a certain
Motor Company. merit.
Two supplementary businesses may combine to
form a single firm; a producing company may com- IV
bine with or acquire a distributing company.
Large size may result from a merger of competing
firms. For the most part, this is to be discouraged,
and where it does lessen competition is illegal and
W HAT do we want to do about size? What can
we do about size? If we attack size in business
and government, shall we ignore it in other fields—
should be prosecuted. labor, for instance? Is a big corporation a menace
It is well perhaps to point out that there are cases and a big union a blessing? Is a big co-op a menace
where merger of competitors stimulates rather than or a blessing?
restricts competition. If two ailing concerns, each of *
which is about to fail, can by combination gain There have been many measures proposed by
enough strength to fight successfully against other persons or groups who allege that if their particular
larger concerns, competition has been strengthened panacea were adopted the problems of bigness and
and not weakened by the merger. the concentration of private economic power would
vanish.
One suggestion is that the government take over
Concern about bigness comes from within as well and run our giant industries. The adoption of such a
as from without business itself. Many years ago, drastic suggestion would not solve any of the basic
Alfred P. Sloan, Chairman of General Motors, problems of making a large organization work, nor
stated: "In practically all our activities we seem to would it answer the social objections to centraliza-
suffer from our great size. There are so many people tion of decision-making.
involved and it requires such a tremendous effort to
put something new into effect that a new idea is Another formula for solving the problems of large
likely to be considered insignificant in comparison size in industry consists of two parts: "Break the
with the effort it takes to put it across. Sometimes big ones down into little ones," and "Set some upper
I am almost forced to the conclusion that General limit to the size of any enterprise." These sugges-
Motors is so large and its inertia so great that it is tions deserve careful and serious consideration. It is
impossible for us to really be leaders." probable that beyond a certain point the increased
There are attacks on bigness merely as bigness. efficiency and the increased opportunities for re-
Some political scientists have contended that politi- search enjoyed by big corporations no longer exist.
cal democracy and economic oligarchy cannot live A third major proposal, very attractive at first
together in the same country. They argue that if hearing, is "Let an enterprise be big enough to be
business gets too big and centralized the result will efficient, but no bigger."
be that business will take over the government— How will "enterprise" be defined? By name? By
which is fascism—or that government will be forced ownership? By the amount of real control and direc-
October 1950 243
tion exercised by top management and the Board of funeral of small business. The fact is that of the
Directors? 3,900,000 business units in these United States
about 95% are small business, and until the year
And what is "efficient"? It might be possible to 1949 the number of small business units had grown
calculate the efficiency, from a unit-cost standpoint, steadily and dramatically. The slight reversal of
of a single firm in a single plant using the very this trend in 1949 should give us pause. This statis-
latest type of machinery, plant layout, and operat- tical exposure and my contacts with businessmen
ing methods to produce a constant volume of a single over the country during the year 1949 lead me to
item. How many such firms exist? How do you cal- the conclusion that the tougher competitive battle
culate the efficiency of afirmproducing many differ- which businessmen face today is having its chief
ent items, some items for which the market may be casualties among the little fellows.
declining, others coming out in an expanding mar-
ket, and still others in an embryonic state and for
which there is as yet no market at all?
*
It might also be well to investigate the matter of W E must ask ourselves this fundamental ques-
tion : When everything else in America is get-
ting bigger, shall we expect business to get smaller?
incentive in connection with business concentration.
What are the incentives to newspaper concentra- And if we expect or wish it to get smaller, why? In
tion? We get an illuminating reply by quoting comment upon the first question, it is proper to
Thomas W. Dewart, former president and publisher point out that every economist giving thought to
of the New York Sun, at the time of the merger of our future progress emphasizes the need for a con-
the Sun with the New York World Telegram on tinually growing national product. Our population
January 4, 1950: "Mounting costs of production, is growing, our number of employables is growing;
unaccompanied by commensurate increases in ad- to meet the needs of our population and give work
vertising revenues, have made some such course to those who want it, business must grow.
inevitable. Chief among the rising costs have been If growth is desirable generally, is it undesirable
those of labor and newsprint. . . . In the ten-year in particular places and how can we prevent it or
period from 1939 to and including 1949, the average why should we want to prevent it? There is nothing
advance in individual pay of the Sunys employees sacrosanct about a corporation—big or little—nor
was 80.1%. In the same period, the price of news- is business entitled to any special privileges. If,
print rose from $48 a ton to $100 a ton. Prices of all however, we undertake to interfere with the processes
other supplies increased in corresponding ratios. of growth, some inquiries are in order.
. . . Recently advertising revenues of the Sun and Business, as I have said before, is somewhat like
the World Telegram have not kept pace with mount- the human anatomy. It is an organism, tough to be
ing production costs. Both papers have long ap- sure, but in many ways very delicate.
pealed to a literate and intelligent public. Between What are the symptoms which indicate a mal-
them they have divided approximately 650,000 function? Specifically, what is wrong? We hear occa-
circulation—enough to assure the economic stability sionally the statement that concentration of eco-
of one newspaper, but not enough for two." nomic power is destroying our liberties. It is proper
* to ask what liberties are being destroyed. We hear
that small business is being crushed out. What
It is clear enough to me that we need all sizes of businesses are being crushed out?
business in this country—big, little, and in-between. Let us continue specific questions. In what way is
Much of the research, production and distribution our business body not functioning properly? Is it
which have made us great industrially can only failing to maintain or raise our standard of living?
come from the concentration of financial strength Is it selling its products at fair prices? Is it giving
and contacts which are the privilege of big business, employment at good wages? Is it considering the
so-called. welfare of its employees? Is it earning money for its
My own feeling is that the most sensible approach shareholders? Is it contributing its share of taxes for
to the problem of concentration is an effort to the support of the government? Is it doing its part
strengthen small business and to help it grow—and in time of war?
grow stronger. We are inclined, I think, to exag- These and many other questions should be asked
gerate what can be done to help small business, but and asked searchingly. They should be asked and
I am thoroughly in sympathy with the effort to do answered—first, to enable us to act, when action is
everything which we can. necessary, on the problem of concentration; sec-
ond, to dispel baseless rumors and unfounded asser-
Here too, of course, some myths should be re- tions which worry many sincere and well-inten-
moved. Many people have attended the premature tioned people.
244 AMERICAN AFFAIRS
fare is that the masses of the people are morons who the proved vigor and productiveness of a system of
should not be trusted to spend their own money. It private enterprise, we have ample evidence that we
is assumed that they should be glad to have their could meet our social responsibilities without ac-
money spent for them by professional politicians cepting a compulsory socialism. We could go for-
trained and experienced in the art of spending other ward patiently to expand the cooperative powers of
people's money. Of course this argument isn't made our present private, voluntary associations. The
openly because even humble people resent being government would lend its aid in legalizing such
treated like children. So they are told that they are collective projects as the organization of corpora-
made more secure by investing their money with tions, cooperatives, trade unions and trade associa-
politicians than with businessmen. Businessmen tions; and the government would impose such re-
are pictured as cold, greedy, fat exploiters, while straints as are necessary to prevent private monopo-
politicians are those genial backslappers who call listic controls of commerce and to preserve competi-
you by your first name and work day and night to tion and a free purchasing power as the natural and
find ways to buy things for you with your money impartial regulators of prices and production.
which you wouldn't buy for yourself. Furthermore, it should be accepted that, in the
There are many things of common use which may emergencies of war, national disaster, or serious
wisely be paid for through government, such as economic disorder, the government should take such
roads and parks and common school facilities. But action as is temporarily necessary to develop and
the Welfare State proposes to take more and more of make effective the maximum power of our nationally
a man's earnings to buy things for his individual use organized resources to meet the emergency demands
which he ought to be free to buy less or more of upon them. But it should be our established doc-
according to his individual need or desire. It pro- trine that such political controls of our lives and
poses to substitute a common standard of living and work are fundamentally evil, like fighting fire with
a common, compulsory pursuit of happiness for the fire and bullets with bullets. We should make it an
individual rewards and the individual pursuit of everlasting rule to end political tyranny and denials
happiness which have inspired the American people of individual liberty just as soon as the emergent
to raise themselves through voluntary cooperative calamity that enslaves us has been overcome.
enterprises to the highest standard of living, coupled There are two major excuses for substituting
with the greatest individual liberty, ever enjoyed by political support for self-support, and political dis-
150 million human beings. cipline for self-discipline, which merit brief discus-
But why shouldn't you buy your own health sion.
insurance, or any other insurance against misfor- One is the excuse that because some men make
tune, from your own selected insurance organiza- too much money out of others, they should be com-
tion? Millions upon millions of people have done it. pelled by taxation to share their gains with those
Why shouldn't you organize voluntary cooperatives whom they exploit; or, because some localities are
to buy and sell things for you? Millions of people all more prosperous, their gains should be shared with
over the world have done it. Why shouldn't you use poorer localities. Let us disregard the counter-
your own labor organizations to provide unemploy- argument that the forced service of the more com-
ment insurance either alone or in cooperation with petent to the less competent, and the leveling down
employers? Labor unions can pay strike benefits of humanity to a common standard of living, is not
when men refuse to work; why should they not pay a democratic but a communistic doctrine. Neverthe-
benefits when men are unable to find work? less, we may well agree that the exceptional profits
of fortunate individuals or favored communities
should be taxed away to maintain the common de-
VI fense and to promote the general welfare. But, it is
a proved fact that if every dollar of income in
T HE point which I am trying to make briefly is
that the major offerings of a Welfare State are
simply offerings to do for you what you can do
excess of a fair compensation for personal services,
or for the use of private properties, were siphoned
into the United States Treasury, this would provide
better, more cheaply and with greater satisfaction, only part of the federal revenue needed to pay for
for yourself. In so doing you can save yourself from national defense, national administration of justice
dependency on political favor, political integrity and national expenditures for public works of gen-
and political wisdom, those three weak reeds upon eral value. A major part of all essential public
which no man who has common sense and a knowl- revenues must be obtained by a direct or indirect
edge of history will ever wish to become dependent. tax deduction from the earnings of the great mass of
Three weak reeds upon which no man who has a workers of small or moderate incomes. So the reve-
backbone of self-reliance will be willing to lean. nues of the expanding Welfare State will necessarily
If, on the other hand, we were resolved to preserve come from increased deductions from the earnings
October 1950 247
of those who are the proclaimed beneficiaries of this the general welfare. It could not tax him to enable
additional government spending. the government to take care of his individual welfare
The second excuse for a paternal collection and or the individual welfare of his neighbors. It could
spending of a worker's earnings is that voluntary not deprive him of his "unalienable right" to take
cooperation will fail to advance the welfare of the care of himself, or to make a fool of himself.
cooperators as far as compulsory cooperation would. But, today, following the socialist dogma that the
It is argued that the thriftless or unfortunate who individual citizen should be made the bond servant
most need protection will not or cannot insure of the general welfare, the courts have invented a
themselves. It is also argued that in any industry a new "due process of law" with which the national
chiseling minority will break down the best devised government can deprive a farmer of the right to
programs for preserving an ideal balance between raise grain on his own land for his own consumption,
producing and consuming power. As one of the unless he obeys government orders limiting the
administrators of the notable NRA experiment, I amount of grain he can raise andfixingthe prices at
am familiar with these arguments and believe that I which he can sell it. Today, the national govern-
can appraise their merits with the aid of an unusual ment, by using this new "due process of law," can
amount of experience and with, perhaps, an unusual deprive a worker of the right to spend, to save and
impartiality of judgment. I still believe in the invest his own earnings as he wishes, for the eco-
voluntary self-government of industry, which was nomic support and protection of himself and his
the announced objective of the NRA. I never be- family. He can now be compelled to pay taxes
lieved in the compulsory political government of which transfer a substantial part of his earnings to
industry which NRA dabbled in, while floundering the government so that it can then provide such
down the road to Limbo. protection for him and for others as the govern-
There will always be chiselers and black marketers ment decides to be for the general welfare.
to sabotage and subvert every cooperative program If ten to twenty per cent of a man's subsistence
of private associations or political governments. earnings can be taken from him today there is no
But business and social ostracism is more effective legal barrier against taking from him thirty to forty
than criminal prosecution to discipline recalcitrants. per cent tomorrow, which, according to British
There is always some sympathy for the rebel against precedents, will be required to support a young
government who asserts his right as a free man to Welfare State. In such a political economy, of what
live and work as he pleases. There should not be the use will be private, voluntary associations, except to
same sympathy for the cheat or sharper who will not serve as pressure groups to try to elect and control
abide by the rules of fair play adopted by his public officials so that, in the political distribution
neighbors and co-workers. And so, to gain an unde- of a worker's earnings, he may get back as much as
served support, the business cheater always poses possible after paying a few million political em-
as a little David fighting the Goliath of Monopoly. ployees for spending his money for him?
The American people are rightfully afraid of For such lowly and limited functions private
monopolies, but they have been educated to recog- associations may survive in the Welfare State. They
nize only a business management monopoly. They may also serve to maintain the illusion that we are
tolerate labor monopolies that curtail production, a free people, free to organize, to debate, and to
create scarcities and raise prices with a ruthlessness petition the government for the redress of griev-
that no business management monopoly ever dared ances, subject, of course, to laws restricting and con-
to exhibit. They are being seduced into approval of trolling lobbying and propaganda, so that a dominant
the oppressive monopolies of a Welfare State, al- political party will not be unduly hampered by a
though for centuries the common people of every too vigorous opposition.
nation on earth have been fighting to free them- It would not be accurate to define associations as
selves from compulsory service to government "private" or "voluntary" which are, and will be,
monopolies operated by political tyrants. organized and maintained by political aid to make
effective government regulations. Such associations
might well be compared to "company unions,"
VII which national trade unions have always denounced
NCE upon a time it was the supreme law of our as mockeries of voluntary organization.
O land that there was no "due process of law"
by which our national government could deprive a
Private, voluntary associations, as an influential
factor in our political economy, will not and cannot
man of the liberty to support and protect himself survive in a compulsory Welfare State. Their
and his dependents by his free labor and his free use powerful influence in the expansion and enrichment
of his own earnings. The government could only tax of our American way of life will disappear in the
him to support the strictly limited powers of the politically planned and directed economy of Na-
government to provide for the common defense and tional Socialism.
American Affairs Index
VOLUME XII
No. 1—Winter, 1950
Page Page
Comment By the Editor 1 Book Reviews 47
Winds of Opinion 7 A New Philosophy of Laissez Faire—R,
This Adventure in Human Enterprise Vannevar Bush 9 Machines That Are Buried Alive-G. G.
I f W e H a dN o t S a v e d
Farmer Fix Your House Correspondence 17 ^?^L
Gm er(d
The Debacle of Planning Garet Garrett 18 w , fQ . _ . _ ^ Q /'^ °' f , fQ
„ . , . a . 1o . & „ , n What Soviet Russia Really Fears Senator Harry F.Byrd 53
C y
^X° t ^ ^Correspondence 32 w w P o i n t ¥om w m u fie? Correspondence 55
If We But Stumble James F. Byrnes 35 T h e I n t i m i d a t i o n o f P r i v a t e Medicine AMA 51
Forgetting How T o Fly Frank E. Holman 38 How Shall a Welfare State Get Rid of I t s Unfit?
Germany in the Balance Felix Morley 42 News Digest 58
Why Communists Should Not Teach New Gimmick in Welfare Funds. Clarence E. Bonnett 59
Robert G. Sprout 44 The Parliamentary Mind of Britain. .Foreign Report 61
SUPPLEMENT: We Hit the Jackpot—An Example in Mass Communication
No. 2—Spring, 1950
Comment By the Editor 65 The Public Roof Over Britain Morton Bodfish 107
Winds of Opinion 70 Why Not Export Free Enterprise. John L. McCaffrey 110
As Left Speaks to Left Staff 72 Horoscopics Staff 111
The March Garet Garrett 73 Threat of a Garrison State
Design for a Welfare World Committee for Economic Development 114
Report to the United Nations 81 Book Reviews 121
Three Legs of O p t i m i s m . . . . General Robert E. Wood 86 The NotmSo.Cold War-Freda Utley
Sovereign Bankrupt Joseph Stagg Lawrence 89 How To Act on the Kremlin's Fear—G. G.
The New Economic Insight Beardsley Ruml 90
What Lies in Point Four Edna Lonigan 94 The Soviet Worm in School Libraries Staff 125
Story of Subsidized Agriculture Staff 102 Letters 127
SUPPLEMENT: Life with the Tax Gremlins—Illustrated
No. 3—Summer, 1950
Comment By the Editor 129 The Silent Banker and the Rotting Dollar
Winds of Opinion 136 Senator Harry P. Cain 168
Jobs and the Man Garet Garrett 138 Playing with Ruin Walter E. Spahr 170
Birth of Point Four Washington Correspondence 145 The Closed Shop Murray T. Quigg 171
Elephant Traps in the I T O . . .Michael A. Heilperin 149 Book Reviews 174
Joy of Public M o n e y . . . . Washington Correspondence 154 rp^e Minotaur QQ
We Encounter World Law News Digest 160 Lahor versus a Free'Economy-R. C. C.
Helping Britain to the American Market The Enigma of Treason—G. G.
British Notes 163
Song of the Turning Worm. . . .Benjamin F. Fairless 164 We Stagger from Crisis to Crisis. Bernard M. Baruch 179
Fantasy of Nationalized Credit F. Raymond Peterson 167 A Letter from Dr.J.M. Clark 183
SUPPLEMENT: When Big Labor and Big Government Strike Hands—By Donald R. Richber
No. 4—Autumn, 1950
Comment By the Editor 185 The Supreme Court's Thoughts on Communism
Winds of Opinion 192 A Digest 226
What Do You Read? Garet Garrett 194 British Socialism Goes Nationalist Staff 230
The Dichroic ITO Washington Correspondence 202 Book Reviews 232
The Idea of Liberty Is Western.. .Ludwig von Mises 207
The United States More Socialist Than Britain Writings of the Apostates-G. G.
Earl Browder 211 History by Toynbee-G. Allen Huggms
U p , t h e Welfare S t a t e . . . R. C. Cornuelle 212 W e A r eM PeopJe Mrs Jean shepard 2 3 6
Living on the Atom Bomb Winston Churchill 217 ot . „ m) „ ^, 7 n ...
Slze The
Strangling Our Machine Tools Tell Berna 219 Honorable Charles Sawyer 240
What's in I t for Everybody End of the Voluntary Life Donald R. Richberg 244
Washington Correspondence 223 Index to Vol. X I I 248
S UPPLEMENT: Autopsy on Our Blunders in Asia—By Walter H. Judd, Member of Congres
American Affairs Pamphlets
American Primer
By AGNES MORLEY CLEAVELAND
(Supplement to the Spring Number, 19J$)
The Government's
Reach for Education
By DONALD J. COWLING and CARTER DAVIDSON
(Supplement to the Winter Number,
PRINTED IN U. S. A.