The Freeman 1972 - fee.org · The Educational Dilemma Donald M. Dozer 359 Identifying the lines of...

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FreemanVOL. 22, NO.6. JUNE 1972

When Men Appeal from Tyranny to God Edward Coleson 323A bicentennial for the men behind the freeing of slaves in England.

Pollution and Property Oscar W. Cooley 336Not the socialists but the capitalists have the solution to pollution.

The Founding of the American Republic:11. The War for Independence Clarence B. Carson 341

Concerning the distinction between declaring for independence and achieving itin practice.

The Cure for Poverty Henry Hazlitt 355Those who truly wish to help the poor will save and invest to create more andbetter-paying jobs.

The Educational Dilemma Donald M. Dozer 359Identifying the lines of authority and responsibility in educational affairs.

"I Was a Slumlord ..."An East Harlem owner buys his freedom from rent controls.

George Frank 365

Business Baiting - 1972 Style Merryle Stanley Rukeyser 367A plea for an attempt to understand the nature and function of business beforedestroying the entire economy.

Blood from Turnips Terrill I. Elniff 372Notes toward an understanding of John law's economic errors.

Book Reviews:

"Welfare: Hidden Backlash" by Morris C. Shumiatcher"Joseph Story and the American Constitution" by James McClellan

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

378381

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FreemanA MONTHLY JOURNAL OF IDEAS ON LIBERTY

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public," liThe Cure for Poverty" and III Was a Slumlord ..."

When men appeal from

EDWARD COLESON

OPPRESSION is as old as mankindand unfortunately is still with us.A few decades ago we were certainthat we were rapidly outgrowingthis ancient affiictionwith the advance of civilization, but thesehopes have not materialized. Stillthe quest continues. There arethose who look back to, a golden ageof freedom and brotherhood in thepast, while others seek to find theirearthly paradise with the childrenof nature on a remote tropical island somewhere. It may be an interesting exercise of the imagination to dream up an idyllic state ofnature where "noble savages" aretruly brothers and they all livehappily ever after. Yet, Rousseauand a lot of other romantic visionaries notwithstanding, there havebeen relatively few Utopias overthe ages.

Dr. Coleson is Professor of Social Science atSpring Arbor College in Michigan.

to GODHobbes l much more realistically

described life in this state of nature as "nasty, brutish and short."It is not only that primitive manfinds it difficult to satisfy his needswith his bare hands or crude tools,but that men prey upon each other.To Hobbes men were brutes so lifedegenerated into a perpetual condition of "war of every managainst every" other in a strugglenot just to survive, as Darwinwould say, but to dominate his fellows. For man is possessed of "aperpetual and restless desire ofpower after power that ceasethonly in death." President Wilsonpressed for "self determination"as a right of all peoples duringWorld War I on the assumptionthat they wanted to rule themselves. According to Hobbes, theywant to rule each other. Nor isthis view unique.

Adam Smith2 suggests that this

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324 THE FREEMAN June

lust for power may be the principal motive for slavery: "The prideof man makes him love to domineer, ... therefore, he will generally prefer the service of slaves tothat of freemen." In fact Smithcouldn't find much excuse for the"peculiar institution" but thisurge to dominate others. He wasconvinced that "work done byslaves ... is in the end the dearestof any," for the slave "can haveno other interest but to eat asmuch, and to labor as little aspossible." He was certain that "thecultivation of corn degenerated"and became unprofitable underslave labor in ancient Italy andGreece. He observed that "a smallpart of the West of Europe is theonly portion of the globe that isfree from slavery," but that thissmall part "is nothing in comparison with the vast continentswhere it still prevails." Smith thuslinked prosperity with freedom.and believed that the human family paid dearly for the luxury ofpermitting a few to enslave theirfellows. If slavery is immoral anduneconomic, how can \ve banishthis ancient evil from the earth?

Total Tyranny and

Split-Level Freedom

Historically, slavery has existedon two levels. Sometimes therehave been slave states where almost everyone was subject to the

whim of a despotic monarch. Longago the Near East had its rulerswho could execute their subjects,even those about the throne, oncommand without even the pretense of a trial. Ancient Greecehad its tyrants, too, who wereoften not much more restrained,in spite of all their democratic pretensions. We used to think thattyranny belonged to the dark agesof the past or to some primitivearea of the earth inhabited bycannibals, but Joseph Stalin dem:"onstrated that a ruler today canhold a nation in bondage as noancient despot could have done.We are finding that the tools ofmodern science which we hopedwould liberate us can most effecttively enslave us, and perhaps wehave seen only the beginnings ofscientific despotism in the "BraveNew World" of the future. Whether the masters who run the apparatus will get caught in the machinery and will also be enslavedis a good question, but historicallyit has been found that the otherend of the slave's chain also boundthe master.

The world has had considerableexperience with societies whichwere presumed to be half slaveand half free. The democraticGreeks attempted to operate atboth levels, and the aristocraticmasters of our Old South claimedall the "rights of Englishmen"

1972 WHEN MEN APPEAL FROM TYRANNY TO GOD 325

which they denied to their ownslaves while they were fightingGeorge III. Even slaveholders recognized their inconsistency andsought to have the situation remedied as they set up their new government. At the time of the Constitutional Convention, ColonelGeorge Mason of Virginia, himself a slaveholder, condemned slavery, the great evil of his day, inwords that were indeed prophetic:

The western people are alreadycalling out for slaves for their newland. Slavery discourages arts andmanufacture. The poor despise laborwhen performed by slaves. They produce the most pernicious effect onmanners. Every master of slaves isborn a petty tyrant. They bring thejudgment of Heaven on a country.As nations cannot be rewarded orpunished in the next world they mustbe in this. By an inevitable chain ofcause and effect Providence punishes national sins by national calamities.3

The Foundations of Our Freedom

Our Founding Fathers quiteproperly had a bad conscience because of their own inconsistencies,for their claims to freedom werebased on an appeal to a HigherPower, not just to some abstractprinciples as with the French Revolution a few years later. After all,their ancestors had resisted thetyranny of their rulers for cen-

turies by insisting that "the Kingis also under God and under theLaw." The Puritans had evenfought a war with Charles I a littlemore than a century and a quarterbefore our Revolution to maintaintheir God-given right to freedom.Patrick Henry later remindedGeorge III that Charles I had hadhis Cromwell just as Caesar hadhad his Brutus, but the figure ofspeech was not appropriate. Itwould have been more fitting toremind His Majesty that Davidhad had his Nathan, Ahab hisElijah, Belshazzar his Daniel, andHerod his John the Baptist, toname a few kings and their prophets; like Byron's "Prisoner ofChillon,"4 the Puritans were wontto "appeal from tyranny to God."This was more than a pious gesture or a political gimmick, morethan high sounding rhetoric without any basis in reality. The Puritans were men of a Book and theyfound principles therein that applied to the Old Testament eraand to the England of the Stuartsas well.

The typical oriental despot ofthe ancient Near East was a godking, head of both Church andState. When religion was a powerful force, this gave his subjects noappeal from his authority. TheHebrew prophets resisted. similarpressures from their rulers andnever let them forget that "the


most High ruleth in the kingdomof men...." (Daniel 4 :25) This\vas the Puritan approach. In likemanner a few hardy Germansmore recently reminded Hitler,"Gott is mein Fuhrer." Suchthinking is so foreign to modernphilosophy and legal theory thatHitler had his way with the German nation - to its ultimate destruction. But it has not alwaysbeen so.

The men who founded our nation were very conscious of theconcept of a Higher Law. It wouldnot be an exaggeration to say ourgovernment was founded on thisprinciple. Ten years before our"embattled farmers fired the shotheard round the world" at Lexington and Concord, William Blackstone began the publication of hisfamous Commentaries on the Lawsof England, dedicated to the proposition that God is the ultimateauthority. The colonists so avidlyseized on his writings that a decade later Burke told Parliament,on the eve of the American Revolution, that there were more copies of Blackstone's Commentariesin the Colonies than in England.

It has been customary in the"debunking era" of the recent pastto insist that our colonial leaderswere not saints and that those whomay have made any religious pretensions were more apt to beDeists than Christians. Certainly

there was a considerable' influencefrom the Enlightenment on thisside of the Atlantic, but at leastDeists believed in God's Law.Even such a notorious enemy ofthe "religious establishment" asVoltaire is quoted as saying thatif there were no God, we shouldhave to invent one. By contrast,contemporary philosophers say, according to Harvey COX, 5 "If Goddid exist, we should have to abolish Him." We have come a longway since the founding of this'nation and it has not all been uphill. If they did not always live upto the standards set by their ownconsciences, as in the case. ofslavery, they were still painfullyaware of their shortcomings. Theyalso believed in their accountability to the Judge of all the earth"God is not dead, nor doth hesleep," as Longfellow tells us inthe familiar Christmas carol.

God's Law and Human Freedom

A significant but little-knowndevelopment of the pre-Revolutionary era was the abolition of slavery in England. In 1765, the sameyear Blackstone began publicationof his Commentaries, an obscuregovernment clerk, Granville Sharp,met an injured slave on the streetsof London near the office of hisbrother, a kindly physician. Theslave had been severely beaten byhis master and cast out into the


street to die. The Sharps eventually nursed him back to health andstrength, and got him a job. Thatmight have ended it all but the exmaster later saw his slave, nowrecovered in value, and attemptedto get him back. When the slaveresisted capture, he was throwninto jail; but Granville Sharp gotword of it and had the man released because he had been arrested without a warrant, contraryto English law. When Sharp tookthe unfortunate man to his homefor shelter, the master prosecutedhim for theft of his slave.

In the ensuing litigation andother cases that came up in thenext few years, Granville Sharpbegan pressing for the abolition ofslavery. Although no lawyer andcertainly no part of the rulingclass, his propaganda campaign,largely directed toward the legalprofession at this time, was soeffective that the "King's Bench,"the British Supreme Court, finallyliberated all the slaves in England.This historic decision of LordChief Justice Mansfield was passeddown on June 22, 1772, just twocenturies ago. Said Mansfield,"Tracing the subject to naturalprinciples (the Moral Law), theclaim of slavery can never be supported." Actually, the number ofslaves freed was relatively small,perhaps fourteen or fifteen thousand, mostly servants of retired

West Indian sugar planters, but itwas a start. Here was a clear application of Blackstone's principlethat the Law of God should be theultimate standard.

Sad to say, Blackstone had notbeen that helpful in the protractedlitigation: he was also concernedwith previous legal opinions andproperty rights. After all, themaryet value of the freed slavesmay easily have exceeded sevenhundred thousand pounds sterling,6 no small loss to the slaveholding class.· Nevertheless, it wasBlackstone's doctrine of the MoralLaw which was clearly basic tothe decision, .though the conceptwas neither new nor unique. JohnWesley, the popular preacher ofthe day, said the same thing: "Inspite of ten thousand laws, rightis right and wrong is wrong still."Can it be that the law-abidinghabits of the English people arerooted in the ancient convictionthat there is an ultimate right andwrong which even the king is powerless to alter? With lawlessnessthreatening to destroy our nation,perhaps it is about time to reexamine the foundations of ourlegal code. Why should anyone respect law when he knows that toomuch of it represents the conniving of pressure groups, seekingto rig the market in their favorand to rook the rest of us ?

The next success in the cam-


paign against slavery was slow incoming and was largely the workof another, William Wilberforce.Unlike Sharp, Wilberforce was anaristocrat, a member of Parliament, and an astute politician. Hewas also recognized as a giftedspeaker, even in an age of greatorators. In spite of his obvioustalents, Wilberforce almost leftParliament when he rather suddenly became a Christian convertof the Reverend John Newton, aformer slave-trading sea captainturned preacher and author of"Amazing Grace". Wilberforcenearly decided that politics wasunsuited to a Christian. At thiscrucial point in his career hisfriends enlisted him in the waragainst slavery, and the fight dominated the rest of his life.

The abolitionists chose first toattempt to stop the commerce inslaves across the Atlantic. Wilberforce gave his first great antislavery address in Parliament in thespring of 1789, introducing hisbill for the abolition of the slavetrade. Two months later, the Bastille was stormed in Paris acrossthe Channel and the French Revolution was on. Unlike EdmundBurke, Wilberforce was enthusiastic about the changes coming inFrance ("Bliss was it in thatdawn to be alive," said Wordsworth), and had high hopes that"Liberty, Equality and Fratern-

ity" meant freedom for the slaves.The French Revolution and the

Napoleonic Wars which followedno doubt hindered the English abolition campaign, but finally in1807 Wilberforce pushed the antislave-trade bill through Parliament. The big job then was toenforce it. The Royal Navy policedthe tropical waters of the Atlanticbetween Africa and the Americas,the notorious "Middle Passage,"for the next half century and moreuntil our Civil War effectivelystopped the trade (theimportation of slaves had been illegal herealso for decades but smugglingcontinued as long as there was amarket) .

The British naval patrol operated out of the excellent harbor atFreetown in Sierra Leone, WestAfrica. Here the maritime courtsat, and here captured slaverswere brought for judgment. Ifthey were convicted, they lost theirship and cargo, an assorted collection of several hundred Africans. The liberated slaves weresettled in villages about Freetownto be civilized, educated and, hopefully, Christianized. English missionary societies invested manypounds and many lives in the venture. After all, this was the"White Man's Grave." Since theslaves came from any point alongthe Guinea Coast of Africa wherethey could be obtained, they were


very diverse linguistically and culturally. It was said that a hundreddifferent languages and dialectswere spoken on the streets of Freetown in those days. It was a costlyproject, and often a heart-rendingone too; and the British stood togain nothing in the transaction.Yet, Wilberforce and others continued to press the battle on everyfront in spite of continuing frustration.

The final victory in the Englishabolition campaign came longafter the slave trade was outlawed. The remaining step wasemancipation of the slaves in theBritish colonies, mostly plantationworkers on the sugar islands ofthe West Indies. Wilberforce hadgrown old in the fight. He died in1833 as the emancipation bill wasmaking its way through Parliament, but he lived long enough toknow it would be enacted. An interesting feature of the law beingpassed was the provision that theslaveholders should be compensated by the British governmentfor the loss of their slaves. "ThankGod," said the aged Wilberforce7

a few days before his death, "thatI should have lived to witness aday in which England is willingto give twenty millions sterlingfor the abolition of Slavery."

Opponents of the bill and thefaint hearted promised dire calamities when the law became ef-

fective on the first of August thefollowing year (1834). Militaryreinforcements were sent to theCaribbean to maintain order, butthey were never needed. As RalphWaldo Emerson tells us, writingten years later, everything wentoff smoothly:

On the night of the 31st of July,they met everywhere at their church"es and chapels, and at 'midnight,when the clock struck twelve, on theirknees, the silent, weeping assemblybecame men; they rose and embracedeach other; they cried, they sang,they prayed, they were wild with joy,but there was no riot.... The first ofAugust came on Friday, and a release was proclaimed from alf workuntil the next Monday. The day waschiefly spent by the great mass of thenegroes in the churches and chapels.The clergy and missionaries throughout the island were actively engaged,seizing the opportunities to enlightenthe people on all the duties and responsibilities of their new relation,and urging them to the attainment ofthat higher liberty with which Christmaketh his children free.8

Good Works and Laissez Faire

The reformers who abolishedslavery throughout the BritishEmpire are a fascinating group,both for what they did and forwhat they believed. It is standardsocialist doctrine that the menwho made the Industrial Revolution in England, the laissez-faire


economists and practical businessmen from the time of Adam Smiththrough the reign of Queen Victoria, were a money-grabbing lotdevoid of compassion and "socialconcern" (to use the contemporaryjargon). No doubt part of themfit the stereotype perfectly; butthere were many others who wereChristian gentlemen, in the bestsense of that much abused term,and used their wealth and influence for the good of mankind.

A recent writer, Robert Langbaum,9 has prefaced his book onthe Victorian Age with an interesting contrast between the menwho pushed reform in England,including the abolition of slavery,in the decades before and after1800, and their grandchildren whobelonged to the Fabian Society acentury later and l,aid the foundations for the British welfare stateas instituted by the Labor government of our own time. The formergroup, William .Wilberforce, hisrelatives and friends, were devoutChristians who used their politicalpower - they had an influence outof all proportion to their numbers- to promote worthy causes. Theyalso invested large sums of theirown money in private charity.This "power elite," derisivelynickna~ed the "Clapham Sect" orthe "Saints" by their political enemies, believed, said Langbaum, "inpiety, reform of church and state,

moral action and laissez-faire economics." Their posterity a hundred years later (the famous"Bloomsbury Circle," includingJohn M,aynard Keynes) "disbelieved in religion and moral action, and did believe in government regulation or ownership ofindustry. . . ." Thus, too briefly,is described "the century-long migration of English liberal intellectuals from Clapham to Bloomsbury," from a Christian freeenterprise philosophy to a secularsocialism.

It should be remembered that tospeak of the Bloomsbury Circle asthe children of the Clapham Sectis no figure of speech; they cameof the same distinguished f.amiliesand were .in fact the grandchildren and great-grandchildren ofthe Evangelicals who had beenWesley's disciples and who hadsuccessfully promoted so many reforms. Yet today, a multitude ofAmericans consider socialism asthe moral and ethical alternativeand laissez-faire capitalism as utterly unchristian. Obviously, someone is confused, then or now; orthe question is irrelevant.

Protectionism Abandoned

What makes the problem sofascinating is that the next British attempt to promote the abolition of slavery, beyond continuingantislave-trade naval patrol, was


to no small degree the work ofthat arch free trader and freeenterpriser, John Bright of theAnti-Corn-Law-League. Shortlyafter the last slaves were liberatedin the colonies, a new propagandacampaign w,as launched in England to abolish protective tariffs.We don't commonly associateslavery and tariffs, but FredericBastiat, a French contemporaryof Bright, connects the two in afamous passage, discussing theproblems of the United States:

... look at the United States (in1850). There is no country in theworld where the law is kept morewithin its proper domain: the protection of every person's liberty andproperty. As a consequence of this,there appears to be no country in theworld where the social order rests ona firmer foundation. But even in theUnited States, there are two issues- and only two - that ~ave alwaysendangered the public peace.

What are these two issues? Theyare slavery and tariffs. These are theonly two issues where, contrary tothe general spirit of the republic ofthe United States, law has assumedthe character of a plunderer.

Slavery is a violation, by law, ofliberty. The protective tariff is a violation, by law, of property.

It is a most remarkable fact thatthis double legal crime - a sorrowfulinheritance from the Old Worldshould be the only issue which can,and perhaps will, lead to the ruin of

the Union. It is indeed impossible toimagine, at the very heart of a society, a more astounding fact thanthis: The law has come to be an instrull1ent of injustice. And. if thisfact brings terrible consequences tothe United States - where the properpurpose of the law has been pervertedonly in the instances of slavery andtariffs - what must be the consequences in Europe, where the perversion of the law is a principle; asystem ?10

Certainly Bastiat's words havebeen prophetic. Slavery ne.arlywrecked our nation in the 1860'sand the Smoot-Hawley Tariff of1930, following the Crash of '29,intensified the Depression and precipitated an international tradewar that helped to bring on WorldWar II. And the problem is stillwith us. John Bright did not helpus rid ourselves of our tariffs,although he did do much to promote free trade for Britain in1846 and thereafter; but he madea real contribution to our attemptto free the slaves at the time ofour Civil War. We owe him much.

John Bright's Role

John Bright, a prominent member of a new generation of reformers that grew up with the passing of the Clapham Sect, makesan interesting character study. Hewas an earnest Christian, a humble Quaker who never outgrew the


little· Meeting House which he hadattended in his childhood. He wasa self-made man, a successfulcotton manufacturer from theManchester area and long a member of Parliament; but he tookhis faith into his business andpolitics, and refused to compartmentalize his religion. WhenBrightll found free trade in theScriptures and proclaimed, "As anation of Bible Christians, weought to realize that trade shouldbe as free as the winds of heaven,"the cynical could smirk that hestood to gain by the Repeal of theCorn Laws and free trade in general; to them he was just usingreligion to bolster his economicposition. The criticism was notfair. It is true that when he promoted the repeal of the Corn"Laws,he was a national figure and wasexceedingly popular; but when hebitterly opposed the Crimean Wara decade later, England turnedviolently against him. Still, hedid not adjust his conscience tothe whims of the passing moment.

The American Civil War wasthe real test of Bright's character. He abhorred war, althoughhe was not a complete pacifist; heabhorred slavery also, but he wasa cotton manufacturer and waswell aware of the dependence ofthe Manchester area on Southerncotton. His good friend Richard

Cobden, with whom he had labored so mightily in the days of theCorn Law agitation, tended tofavor the Southern free tradersas against Northern protectionists; but Bright convinced himthere were more important principles at stake. Many Englishmenopenly symphathized with theSouth and there were enough incidents like the Trent Affair\ (theeapture by a Northern naval commander of a British ship carrying a couple of Southern agents)to bring the North and Englandto the brink of war.

On the Side of freedom

Queen Victoria's husband,Prince Albert, is credited withhaving helped to avert a conflictin this case, but he was fatally illat the time and died soon afterward. It was John Bright who remained the constant friend of Mr.Lincoln's government throughoutthe war, although his self-interestas a textile manufacturer wouldhave inclined him in the oppositedirection. The American people expressed their gratitude, too, in anumber of ways. Perhaps themost interesting tribute was contained in an address given by adistinguished American to a groupof English school children afterthe war. He told them that, ofcourse, American school childrenloved George Washington first of


all, then Abraham Lincoln, butJohn Bright12 came third "because he is the friend of ourcountry."

This' friendship should not beminimized because it is quite obvious that the North had about allit could handle in defeating theSouth without European intervention. Had Britain gone to theaid of the Confederacy, it wouldno doubt have changed the courseof history. And it was the Englishconscience, the deep-seated opposition to slavery throughout thenation, that tipped the balance infavor of the North. Once againthe English were prepared to payfor their convictions, this time inwidespread unemployment, particuarly in the cotton mills, andeconomic distress for the nation.But freedom is more importantthan prosperity, when that is thechoice.

Conscience and Laissez Faire

The freedom story is fascinating, but one can read it as a human interest story and still missthe point. Present-day scholars\vho know of the mighty labors ofa couple or three generations offree enterprisers who sought torid the world of the blight of slavery long ago, tend to feel that theEnglish abolitionists were inconsistent. If laissez faire means noninterference by government in

business, then why should theslave business have been singledout for destruction. Of course,those who raise such questions today are not defending slavery butquestioning the logic of laissezfaire.

This is an exceedingly important consideration because it reveals a total lack of comprehension by our contemporaries of themotives and philosophy of thoseengaged in that earlier effort. IfWilberforce, Bright, and their associates had been anarchists, thepoint would be well taken; thenall they could have done consistently would have been to wait forslavery to wither away of itselfas the Soviet government is supposed to do some day. While it istrue that there are and have beenlaissez-faire anarchists over theyears, these abolitionists cannotbe so classified; nor was AdamSmith, the father of the free enterprise tradition, out to abolishgovernment.

Smith did want to do away withthe innumerable and senseless mercantilist restrictions so characteristic of his age, because he wascertain that they reduced productivity (which they were intendedto do) and hence resulted in needless poverty and suffering. ButSmith'sl:~ "obvious and simple system of natural liberty" was basedon "the laws of justice" (the Mor-


al Law) ; he was no anarchist. Hebelieved, as did many of his contemporaries, in a natural harmonious order; that God had so arranged His Creation that "allthings work together for good,"if we but obey Him (Romans8 :28). If this is true, the endlessattempts to rig the market androok the neighbors were unnecessary, immoral, and a cause of needless conflict. As Bastiatl-! asked,"How could God have willed thatmen should attain prosperity onlythrough injustice and war?"

Mercantilism, ancient and modern, is based on the "frightfulblasphemy," that God has so ordered the world that the right isimpractical, common decency issuicidal, and the oppression of theweak and helpless is good business. This view Adam Smith andhis followers emphatically rejectedon philosophical and ethicalgrounds.. While they might disagree as to how much governmentis necessary and appropriate, theydid agree that slavery is contraryto the Higher Law and should beabolished. To them it was badbusiness ·and worse morals.

Christian Gentlemen

It may seem preposterous to amultitude of people to speak ofthe laissez-faire economists andpractical businessmen of the Industrial Revolution as Christian

gent!emen much concerned withreform. According to the popularnotion, as T. S. Ashton1;") tells us," ... the course of English historysince about the year 1760 to thesetting-up of the welfare state in1945 was marked by little buttoil and sweat and oppression."There was some of this certainly,but this is only part of the story.A contemporary historian, EarleE. Cairns,16 writing of Wilberforce and the Clapham Sect in thedecades before and after 1800, insists that they accomplished moreof a constructive nature than anyreform movement in history andthere were others who followedthem who accomplished much also.

Then why the very bad reputation of this era? Certainly fewperiods of history are more notorious than the early IndustrialRevolution. Generations of Socialists blackened the good nameof these men who did have theirfailings and this age which didhave its problems. Some of theirbitterest critics were their owngrandchildren, the BloomsburyCircle. Today, sadder and wiser,we realize that we could certainlylearn much from them, if we wouldforget our prejudices long enoughto· examine' the record. Indeed, acontemporary scholar, Karl Polanyi,17 tell us that the four greatinstitutions of the ,nineteenth century - the balance of power, the


gold standard, the market economy and lirriited government"produced an unheard-of materialwelfare" and also "a phenomenonunheard of in the annals of Western civilization, namely a hundredyears' peace" (1815 to 1914). He is,of course, aware of the CrimeanWar and the Franco-PrussianWar, for instance, which he regards with some reason as fairlyminor disturbances (since he isspeaking from a European pointof view, the American Civil Wardoesn't count) . It should be addedalso that Polanyi is a Socialist, according to his own testimony, sohis kind remarks about Capital-

ism take on additional significance.Perhaps we have come full circle

back to our beginnings, as oneEnglishman wrote recently: "Inour own unpleasant century weare mostly displaced persons, andmany feel tempted to take flightinto the nineteenth as into a promised land. . . ." Retreating to thepast is clearly impossible, if itwere desirable, but we can facethe future with courage, as didour Fathers, and take as our mottoJohn Bright's slogan: "In working out our political problem, weshould take for our foundationthat which recommends itself toour conscience as just and moral."

~

• FOOTNOTES •

1 Michael Curtis (ed.) The Great Po!itical Theories, Vol. I, from Plato andAristotle to Locke and Montesquieu, pp.296-302.

2 Adam Smith, Wealth of Nations(Modern Library edition), p. 365.

3 Garet Garrett, The American Story,p.,87.

4 Lord Byron, "On the Castle of ChilIon."

5 Harvey Cox, The Secular City, p. 61.

6 Edward C. P. Lascelles, GranvilleSharp and the Freedom of Slaves in England, p. 27.

7 Sir Reginald Coupland, Wilberforce,a Narrative, pp. 516-517.

8 Emerson's Essays (Modern Libraryedition), Pp. 839-840.

9 Robert Langbaum, The VictorianAge, pp. 9-10.

10 Frederic Bastiat, The Law, pp.18-19.

11 Asa Briggs, Victorian People, p. 207.

I:! George Barnett Smith, The Lifeand Speeches of John Bright, M.P., Vol.2, pp. 113-114.

1:~ Adam Smith, p. 651.

14 Frederic Bastiat, Economic Sophisms, p. 88.

15 F. A. Hayek (ed.), Capitalism andthe Historians, p. 32.

16 Earle E. Cairns, Saints and Society,p.43.

17 Karl Polanyi, The Great Tran.'~for

mation, pp. 3-5.

nd

PropertyOSCAR W. COOLEY

IN ALL THE WELTER of worry about"the environment," seldom is property and its relevance to pollutionmentioned.

To own property is to have ameasure of control over a definableportion of one's environment. Ifone has property, he has a degree ofpower to prevent his environmentfrom being despoiled. Indeed, thepurpose of property, it seems, isto enable man, the owner, to bringenvironment under control andmake it yield up a maximum ofsatisfactions.

It has often been noted thatpeople pollute least - that is, takebest care of - that part of the environment which they themselvesown. The householder is more solicitous of the home he owns thanthe renter is of the house in which

Mr. Cooley is Associate Professor of Economicsat Ohio Northern University.

336

he is but a temporary tenant. Afamily which, on a picnic, mightleave litter in a public park andbeer cans by the roadside will notdump waste on their own frontlawn.

Is it possible, one might ask,for an owner to "pollute" his ownproperty?' To the extent that it ishis to utilize as he sees fit, whatever he does with it will be, in hisview, its best use. And when aresource is being put to its bestuse, it can hardly be said to be"polluted."

If I deliberately pipe sewage into a pond on my own land, presumably I consider using thepond as a cesspool to be its optimum use. Hence, there is noabuse, no pollution. If however,either purposely or inadvertently Iallow my sewage to flow into aneighbor's pond, against his will,

1972 POLLUTION AND PROPERTY 337

I am without question polluting.lam lowering the value of hisproperty. The obvious remedy isfor him to assert his propertyright and ask me to cease; if I donot, he may ask the public authorities, a major function of whichis to protect his and everyone'sproperty rights, to enjoin my action. This is the normal way inwhich property is protected in acivilized society.

It does not follow that in thecase cited the neighbor would, invariably, bring an action againstthe polluter of his pond. This depends, on the one hand, on howmuch damage he is suffering orabout to suffer from the pollution,and on the other, on how much itwill cost him to get the mattercorrected. If the damage is trivial,he will not press the matter; or ifhe does, his case probably will bedismissed. Even if the damage isconsiderable, the cost of proving itmight be greater, in which casehe would endure it as an unavoidable "neighborhood effect" orminor externality.

A Private Lake Erie?

If, now, the pond is Lake Erieand has no specific owner, but issaid to be "social property" or "inthe public domain," people. willtake a quite different attitude. Topollute it is to injure well-nigheveryone in general but no one in

particular. "Everyone" does not goto court and seek inj unction. Hence,it seems one may pollute this"pond" with impunity, there beingno owner to object. And so it becomes a public sewer.

As such, it is· at first very useful, for the dilution is so greatthat no harm is evident; but asthe sewage content of the waterincreases, inj ury is done to thosewho would drink the water, towould-be bathers, to fishermenwhose catch dwindles, to huntersof waterfowl, and even to peoplewho live along the banks. None ofthem takes action, however, mainly because he does not considerthat he owns that body of water.He does not consider that it is histo utilize and that he can therefore exclude - and enlist the Stateto help him exclude - all othersfrom its use. In short, Lake Erieis unlike the farm pond, it is notprivate property. That is why it ispolluted. It is public domain, andthe public domain easily becomesa public dump.

If, now, Lake Erie were converted into private property - letus assume it becomes· the recognized property of the "Lake ErieCompany," which proves itself thelegal heir of those who bought itfrom the aborigines - we wouldhave a quite different situation.The company would want to maximize income from the lake, as from


a tract of owned farm land, residential property, forest, coal-bearing land, or other asset. It mightdo so by selling rights to fish, tosail, to bathe, to transport passengers or freight, and by sellingwater to cities. It would undoubtedly improve its property by stocking with desirable species of fish,deepening ship channels, improving beaches, and so forth.

The owner would naturallystrive to conserve its lake propertyin the most practical ways possible, so that it would reap a generous income, both now and in thefuture. At the moment, it mightpay to sell to the cities along thelake the right to use it as a sewer;but this would threaten the futureincome to be gleaned year afteryear from the fishermen, bathers,shippers, boaters, drinkers, andother potential users. Only if thecities would pay the company asum greater than the present valueof all the streams of anticipatedfuture income would the lake beturned into a sewer; and that, onemay surmise, would cost suchcities as Cleveland and Toledo apretty penny.

In all the voluminous literatureof conservation,l seldom is itpointed out that only under pri-

1 An exception is Exchange and Production: Theory in Use by Alchian andAllen (Belmont, Calif.: Wadsworth,1969) p. 563.

vate ownership are the resourcesof the earth most fully conserved,since it is the private owner whohas the keenest incentive to maximize his returns in future as wellas at present. This is because theprivate owner is conscious of having sacrificed to get his property,a fact which has indelibly impressed upon him that it is a scarcegood, to be carefully husbanded.Public property, on the other hand,is regarded by the public as a"free good," unlimited in amountboth now and forever. Since it belongs to everyone, no one personcan prevent others from using it.Hence, each reasons that he hadbetter get his while the getting i'sgood, that is, now. The result, farfrom conservation, is rapid exploitation and waste. The prevention of pollution is, of course, buta special case of the general principle of conservation.

Correction by Law

Environmentalists are wont tovisualize land, water and air beingprotected and conserved by policeaction. Laws will be enacted - wiselaws, enacted by socially mindedlegislators who somehow are gifted with the knowledge of just howeach natural resource should beutilized to achieve the greatestgood for the greatest number, bothnow and in the future. These lawswill set the private, profit-seeking,

1972 POLLUTION AND PROPERTY 339

polluting entrepreneur back on hisheels. Once such laws are passedand enforced, the problem of pollution will melt away. This is thepolitician's solution to what is essentially an economic. problem.

Undoubtedly, changes in thelaws are needed,. Certainly we needchanges which will spell out anddefine the rights of property owners more clearly and specificallythan has been done up to the present. For example, just what arethe property rights in a flowingstream? In a body of shifting air?In the ocean deep? In the fish thatswim, birds that fly, animals thatwander now largely at will aboutthe environment? The present lawsof property are concerned mainlywith the solid land, but this constitutes only about one-fourth ofthe earth's surface and representsan even smaller fraction of herresources.

Gordon Tullock in his booklet,The Fisheries . . . Some RadicalProposals (Columbia, S. C.: Univ.of South Carolina) now out ofprint, foresees the privatizing ofthe ocean fisheries. Once the ocean,at least the shallower parts of it, isdivided into privately owned plots- and Tullock suggests in some detail how this might be done - itwill be "farmed" much more productively than it is at present, hebelieves.

There was a time when man al-

lowed the land to produce what itwould - animals, birds, trees,fruits ,.- and he hunted the product. But it was a laborious andhazardous business, and one mayimagine every family ranging overmany square miles to bag a living.Then, man learned to domesticateanimals and to till the soil andgrow crops. This vastly increasedhis production. But as to fish andother sea wealth, both organic andinorganic, we are still largely inthe hunter stage. We have harnessed only a small fraction of theearth's resources, yet we are already obsessed with the threat ofover-population.

The Origin of Property Rights

As man evolved from hunter toherdsman to tiller, he devisedproperty in land, for only as eachcould exercise control over his little corner of the environmentcould he be sure of reaping wherehe had sown. As Harold Demsetz2

puts is: "Property rights arisewhen it becomes economic forthose affected by externalities tointernalize benefits and costs." Hecites Eleanor Leacock's study ofthe Indians of eastern Canada. Inearly days, when they huntedmerely for food and a few furs forthemselves, conservation of wild-

2 In "Toward a Theory of PropertyRights," American Economic Review,May 1967.


life did not pay, and hence theyhunted far and wide, recognizingno property in land. But when thewhite men came and the fur tradebecame profitable, hunting landsand even individual beaver houseswere allotted to families. In thelanguage of economics, they internalized external costs and benefits. The cattle grazing industryacted similarly when the cattlemendiscontinued the "free range" andfenced their individual holdings.

Man has been slow to defineproperty rights in water and air,not only because of its seeming inexhaustibility, but also because ofits fluidity. It is recognized, however, that an owner has a right topure ,vater on his land, eventhough it flows from his neigh-

bor's land. In like manner, a householder has a property right topure air over his house and lot, forwhat would the latter be worth ifoverlaid with a vacuum? Thegrowing insistence that powerplants, steel mills, and the likecease polluting their neighbors' airis a recognition of this right.

To. pollute my neighbors' land,air, or water is to trespass on hisproperty. The rights of propertyneed to be more sharply delineatedand respect for· them intensified.For maximum protection and conservation, resources now said to bein the public domain should be reassigned to the private domain.

Not the socialists but the capitalists have the solution to pollution! ,

IDEAS ON

LIBERTY

Social Reforms

,SOCIAL REFORMS which require the citizen to depend too directly

on his government for food, occupation, employment, crops,

clothes, and homes, compel abrogation or abandonment of consti

tutions and bills of rights .... The false laudation of the strength

of these instruments naturally creates an impression that they

constitute an unbreakable barrier against oppression. But nothing

could be farther from the truth. They are futile in every respect

if the general principles of government are not observed. They

have value only in an economic structure of free enterprise and

private property.

From "Liberals" and the Constitution by HENRY PLOW DEEPER

CLARENCE B. CARSON

THE

FOUNDING

OF

THE

AMERICAN

REPUBLIC

11The War

for Independence

IT WAS ONE THING to declare independence; it was another to acquire it. It was one thing to rebelagainst British rule; it was another to bring off a successful revolution. It was one thing to makewar; it was another to win it. Itwas one thing to deny the old authority; it was another to establish a new rule. The pledge whichcloses the Declaration was one tobe taken seriously; those whosigned it committed their "Lives,"their "Fortunes," and their "sacred Honor." True, those whogathered around to sign the document engaged in some bravado.John Hancock scrawled his namelarge enough that the king couldread it without his spectacles.When reproached with the factthat there were enough people bythe same name in his state to assure him virtual anonymity,Charles Carroll from Marylandadded "of Carrollton" to his signature, noting that there was onlyone man who would fit that description. But the task that layahead required endurance and tenacity to match the decisivenessjust exercised.

The difficulties confronting thePatriots - for so those who favored independence have been most

Dr. Carson shortly will join the faculty ofHillsdale College in Michigan as Chairman.ofthe Department of History. He· is a notedlecturer and author, his latest book entitledThrottling the Railroads.

341


commonly called - were numerousand resistant to resolution. Onesuch difficulty is frequently. ignored by revolutionists, thoughfailure to deal effectively with itthwarts the purposes for revolt;for the American colonists it wasto see that the revolt against England did not turn into a revoltagainst all authority. The usualcourse of revolution is for a breakdown of authority to follow the repudiation of the old authority.When this happens, there ensuesan often brutal contest for power,accompanied by the disintegrationof society, bloodletting, and the development of well-nigh irreconcilable divisions among the people.Power is usually consolidated onceagain and order restored by anautocratic rule. The object for theoriginal revolt, however noble, iscommonly lost from sight as theyearning for order supersedes thequest for the good society.

The deepest source of the disintegrative impact of revolution nodoubt lies in the human conditionitself. What man is there whowould not like a fresh start, whowould not like to be free of hisdebts, who would not like to be relieved of the tangle of duties andobligations in which he finds himself, who would not relish the opportunity for starting over. Revolution appears to offer such an inviting prospect. As he made his

way home from the First Continental Congress, John Adams encountered a man fired by emotionssuch as these. The man said: "Oh!Mr. Adams, what great thingshave you and your colleagues donefor us ! We can never be gratefulenough to you. There are no courtsof justice now in this province,and I hope there never will be another."l

John Adams understood thatthis was not a laudable opinion,and there were many others whointended to prevent the dissolutionthat would accompany the domination of events by men holding suchopinions. The Americans were generally successful in avoiding manyof the pitfalls of revolution. But, bythe refusing to arouse the populaceby holding forth visions of beatitude that would follow from theirefforts, they also forfeited fanaticalzeal in their followers. The American Patriots had quite limitedmeans for achieving their limitedends.

Divided Opinion in America

A more obvious difficulty at thetime was posed by the Loyaliststhose who remained loyal to theking and to England. So long asthe colonies retained their connection with Britain, most Americansjoined in the opposition to Britishpolicies during the period of risingdiscontent. They sometimes dif-

1972 THE WAR FOR INDEPEDENCE 343

fered over tactics and as to thecorrect theoretical position on theconstitution. But once the decisionfor independence was made, somegoodly number of people retainedtheir loyalty .to Britain. Thesethreatened to turn the war into adomestic civil war as well as a waragainst Britain.

How many' Loyalists there werewas in doubt at the time and hasremained so ever since. Those prosecuting the war in Britain wantedto believe that Americans in general retained their loyalty, especially that the sober and substantial inhabitants did. Hence, theywere favorably disposed to exaggerated acounts of their numbers.Such a view made sense of theidea of subduing the "rebels," forafter such a conquest Britain stillmight rule America if a substantial portion of the population wasloyal. Moreover, British armieswere continually being encouragedto come to this or that province onthe grounds that Loyalists wouldturn out to support them in greatnumber. The extent of loyalismhas been revived as an importanthistorical question in the twentieth century by those attempting tomake a Marxist or class-struggleinterpretation of American origins. These historians have resurrected what was once the Britishview for reasons quite differentthan those that would have inter-

ested King George III. On thisclass-struggle interpretation, menof wealth and position in Americawere usually Loyalists, and thethrust for revolt came from thelower classes.

This interpretation is not substantiated by the facts. A modernhistorian describes the social status of the Loyalists in this way:"Some came from quasi-aristocratic families, like the Fenwicksof South Carolina, and others werethe humblest folk. They were rich,like Joseph Galloway of Pennsylvania, and they were poor; theywere large landowners, and theywere middling and small men ofproperty; they stood behind counters, and they possessed hands unwrinkled by trade or toil. . . .Truth to tell, the Loyalists wereof every station and every occupation.":! He goes on to point outthat Anglican clergymen and otherofficials dependent upon Britainfor appointment or livelihood werelikely to remain loyal. He alsonotes that some men of' conspicuous wealth were among the Loyalists,3 a point that is offset by thefact that there were prosperousmen among the Patriots as well.

Textbook lore has it that thepopulation was divided in thisfashion: one-third Patriots, onethird Loyalists, and one-third neutrals. About the. only thing to commend this estimate is that it is a


. formula easily remembered by undergraduates for test purposes.Since no census was ever taken todetermine the number of Loyalistsand Patriots, most evidence ofnumbers is indirect. The mostcritical of such evidence indicatesthat the Patriots generally preponderated over the Loyalists. Loyalists were able to achieve militarysuccesses only in conjunction withBritish armies. They could noteven hold territory gained by theBritish. Once the main armymoved on, Patriot militia usuallyswarmed over the Loyalists. Thefollowing estimate of Loyaliststrength may be very near themark: "In New England they mayhave been scarcely a tenth of thepopulation; in the South a quarteror a third; but in the Middle colonies including New York perhaps nearly a half."4

There were, then, Loyalists inconsiderable number in Americaafter the Declaration of Independence. They did not, however, succeed in turning the conflict into afullfledged civil war. They were athreat to internal security; theyoffered encouragement to Britainto continue the war; they hampered the mustering of the resources of the states ~ and they attempted to undermine the war effort. Itis not surprising, then, that thePatriots dealt with them ferociously when they encountered

them in battle or that they weresubject to persecution when theywere discovered.

Wartime Problems

The leaders of the revolt haddifficulty enough without civil war.They had to lead by way of makeshift governments during most ofthe war. The colonial governmentswere no more, once independencewas declared. Indeed, they had already been replaced with provincial congresses or legislatures before that event in most states.They subsisted for some timewithout formal constitutions, andtheir exercise of authority smackedof extra-legality, to put the bestface on it. Though the states werefaced with the crisis of prosecuting a war, they were under thenecessity of moving carefully inorder to· carry as many peoplewith them as possible. The stateswere hardly united, and their wareffort was plagued by the fact thateach state tended to go its ownway. The only union governmentwhich existed from 1775 into 1781was that provided by the SecondContinental Congress. It had noconstitution, nor any authority except that which derived from thestates. It was not a government inthe usual sense of the word,though it attempted to performthe diplomatic and military functions of one.


The most perplexing difficulties,however, were military and financial. To confront the most powerful navy in the world, the stateshad only a few ships that could becalled warships; most of the damage they were able to do againstthe British was done by privateerswhich depended upon speed ratherthan armor. The armies should becalled occasional rather than regular or standing. True, Congressauthorized a Continental Army,made requisitions on the states formen and supplies, appointed generals, and undertook the directionof campaigns. There was a Continental Army from the time of itsformation until the end of thewar; but at times - usually inwinter - it dwindled to the pointthat it more nearly resembled aparty than an army. When someregion was threatened, the armycould be fleshed out with numerous increments of militia. TheBritish did not usually conductwinter campaigns, .so that an occasional army was nearly enough- for defensive purposes.

The Continental forces, duringmost of the war, however, were notsufficient to go on the offensive.The army frequently lacked· mostof the things which make an army:discipline, effective officers forsmaller units, uniforms, blankets,tents, firewood, food, adequateshot and powder, sufficient mus-

kets or rifles and bayonets, andcontinuity. The initial enlistmentswere for one year only: only longenough, as Washington observed,for them to absorb some trainingand come under discipline beforetheir officers had to begin to treatthem with great deference in thehope that they would re-enlist. Themilitia were undependable and unpredictable in combat in the openfield; they were of greatest usewhen they outnumbered the enemy.

Financing was so ineptly managed and the consequences were soimportant both to the conduct ofthe war and the founding of theRepublic that it will receive treatment in a separate chapter.

Advantages of the Patriots

It is appropriate to focus attention on the difficulties confrontingthe Americans in the War for Independence. It enables us to seehighlighted the sacrifices, bravery,and tenacity of those who did persevere to victory. But it is appropriate also to note that the Patriots had advantages as well as difficulties. Americans were fighting,usually, on their own soil. Theyhad the potentiality of supplyingmany of their wants at home.They did not have to conquer Britain, only to drive her forces fromthe states. They had much greaterprospects of gaining friends amongEuropean nations than did Brit-


ain, for Britain's successes in theSeven Year's War had been at theexpense of other major powers.The American Patriots had acause, too, which much outrankedthat of their enemy. They werefighting for liberty and independence; the best that the Britishcould do was appeal to monarchy,empire, and tradition, and theircase for tradition was flawed bythe innovations which had provoked colonial resistance.

Even the method of assemblingand maintaining armies was moreappropriate than is often appreciated. It is true, of course, that thearmy should have been better fed,clothed, shod, munitioned, andhoused. A strong case can bemade, too, that if Patriot commanders had had larger numbersof seasoned and disciplined troopsthey might well have won decisivevictories long before they did. Butit is quite possible that an armycomposed of men with long-termenlistments in resplendent uniforms, who were extensions of thewills of their officers and who hadgarnered a series of brilliant victories, would have endangeredAmerican liberty. Many thoughtful Americans feared just the sortof army wanted by any man confronted with the military tasksbefore him. Congress was loatheto encourage long enlistments.They feared a standing army, as

might be expected of men of British descent. Americans were conscious not only of British historybut of Roman history, and of thethreat posed by successful generals. America did avoid the shoalof military dictatorship followingthe revolution, and a plausible reason why is that there was no armywith which anyone inclined to suchexploits could be confident of accomplishing them.

Outstanding Leadership

The Americans had another advantage, too; they had GeorgeWashington as commander-inchief. Whether he was a greattactician or not is a question thatcan be left to military historians.But there should be no doubt thathe had that peculiar combinationof qualities of a man to whomothers turn in difficult situations.He was dignified, tenacious, farsighted, disciplined, correct, and agentleman. His personal braverywas of the sort that is called fearless among soldiers and sometimesfoolhardy for a general. Morethan once he rallied his troops byexposing himself to enemy bullets.A lesser man than he would havecommitted and lost several armies,if he could have assembled thatmany. Washington was sorelytempted to risk his army to rescueand redeem his reputation. Yet heresisted this temptation time and


again, believing that it was moreimportant to keep an army in· thefield than hazard the Americancause on the chance of gainingpersonal glory. He said after being driven from Long Island: "Weshould on all occasions avoid ageneral action, or put anything tothe risk, unless compelled by anecessity into which we oughtnever to be drawn."5 He persevered, persevered when beset bycritics in Congress and the states,by the shortages and inadequaciesof his army, by superior armies,by a war of attrition in the lateryears, and by mutiny of some ofhis forces. He had not only to direct his armies against enemyforces that frequently outnumbered his, were better equipped,better disciplined, and better supported but also to keep up a continual correspondence with Congress and with state officials togain support and to get men andsupplies. Small wonder that heoften longed to return to Mt. Vernon and pursue his own affairs.Yet he persevered for more thaneight years, from 1775 to 1783.

There were, of course, othergenerals and officers whose leadership and ability contributed to theAmerican cause. Among themwould be listed: Benedict Arnold(until his betrayal), Henry Knox,Anthony Wayne, NathanaelGreene, and Daniel Morgan. The

Continental Army benefited much,too, from foreign volunteers, notably, Lafayette, De Kalb, and VonSteuben. And there were privatesoldiers, whose names do not adornthe pages of books, but who endured untold misery to remainwith the Continental Army andprovide the troops without whichgenerals are of no account.

The British Forces

On paper, the British were sofar superior to the Americans thatno contest might have been expected. They had the most powerful navy in the world. They had anestablished government, the recognition of foreign powers, centralized taxation, established credit, amuch larger population on whichto draw, much greater productivecapacity, and an existing and disciplined army, though it was small.They hired thousands of Germansto supplement their own forces.Moreover, Loyalists in Americamight support them.

But the task of the British wasmuch more complex and difficultthan that of the Americans.Armies had to be transportedacross 3,000 miles of ocean in unpredictable sailing ships. Not onlythat, but the army and navy hadgenerally to be supplied fromhome, and this transport was frequently exposed to Patriot privateers along the thousands of miles


of coast line of the American continent. Once their armies left theshelter of the supporting naviesand moved inland, they wereamong a generally hostile population which rallied against them,as Generals Burgoyne and Cornwallis were to learn to their sorrow. They were· always short oftransport for inland maneuvers,and George Washington saw to itthat very little fen into theirhands. If America was divided athome, so were the British, thoughit did not tell much for the firstcouple of years.

British strategy was threefold:to isolate the continent from therest of the world by blockade, todivide and conquer America, andto destroy Washington's army.The policy of divide and conquerhad many facets: rally the Loyalists to the cause, separate the regions from one another, capturethe major seaports, and so on.Patriot strategy was, above all, tokeep an army in the field, and,hopefully, to drive the Britishfrom· the continent. The Britishaimed to keep down the atrocitiesso as not to turn more of theAmerican population against them;in this they were frequentlythwarted by armies which plundered and raped wherever theywent. Washington's armies wereunder strict orders not to plunder,but. they did engage in confisca-

tions to gain stores and supplies.Hostilities broke out in Massa

chusetts, of course, in April of1775, more than a year before thedeclaring of independence. For theremainder of the year and intothe next, the bulk of the Britishforces were concentrated at Boston and environs. This force wasunder siege and cut off on landby Patriots.

The first major battle of thewar took place June 17, 1775. Ithas gone down in history as theBattle of Bunker Hill, though, infact, it was a battle over Breed'sHill. The Americans, some 1,200strong built a redoubt on Breed'sHill, which the British attackedwith 2,200 men against a slightlyreinforced American force. TheBritish· took the hill, but at acost of 1,000 casualties, two anda half times the losses by thePatriots. General Gage observedthat he could ill afford anothervictory like that. Shortly afterward, Washington assumed command of the Patriot forces, and astalemate ensued for the next several months.

Expedition Into Canada

The scene of action shifted elsewhere. For some time, BenedictArnold, and others, had been promoting the idea of an expeditioninto Canada. It was hoped thatsuch an undertaking would bring

1972 THE WAR FOR INDEPEDENCE 349 .

the Canadians in on the side of thestates, would remove a havenfrom British forces who couldfrom that vantage point launch anattack against the states, andwould show to the British the determination of America. The planwas the more attractive becauseCanada was lightly defended. Congress was reluctant to authorizethe expedition because there wasstill hope of reconciliation. Evenso, permission was given for itfinally.

Two armies were launched intoCanada in late 1775. The mainarmy which set out byway ofLake Champlain was initially under the command of General PhilipSchuyler, but he fell ill and wasreplaced by the much more· energetic Richard Montgomery. Thisarmy met with a series of successes by taking Forts Chambly andSt. John's, followed by Montreal.The way to Quebec, the historickey to dominance of Canada, nowlay open.

Meanwhile, the second army under the command of Benedict Arnold was making its way towardQuebec by a more easterly route.Arnold set out up the Kennebecriver through Maine along a routethe difficulties of which were onlyhazily grasped at the start. Arnoldand his men braved rapids, unsuspected waterfalls, long overlandportages, and some of the most

miserable weather ever recorded toreach their destination. "So greatwere the hardships that officers ofthe two rear divisions turned backwith 350 men. But the rest plungedon through a forbidding wilderness, overcoming almost incredibleobstacles. Some of them becamelost; some died; all who could,struggled forward. . . . After amonth of desperate effort, 600scarecrows of men straggled intoa camp on· the headwaters of theChaudiere."G This was in earlyNovember; they reached Quebec afew days later.

On December 2, 1775, Montgomery's army joined forces with Arnold outside Quebec. Althoughthey now had superiority in numbers over the British, they wereunable to take advantage of it because Sir Guy Carleton chose todefend the city from behind itswalls rather than come out intothe open. An assault upon the cityon December 31 failed. GeneralMontgomery was able to get asmall force within the walls, buthe was killed, and Arnold's menwho were supposed to make a rendezvous with Montgomery's wereturned back after Arnold, who waswounded, relinquished the command. For several months, Americans continued to lay Quebec under siege, but to no avail. SuperiorBritish forces eventually arrived;though American reinforcements


were also sent to Canada, theywere driven out in 1776.

Washington vs.Howe

Early in the year of 1776, Washington succeeded in placing cannonon Dorchester Heights overlooking the British positions aroundBoston. Sir William Howe, now incommand of the British army,judged his position to be too exposed, and in March the Britishabandoned Boston. Howe withdrewby sea to Halifax to await reinforcements. Meanwhile, Washington moved his army to New Yorkin the expectation of a British attack there. It came in August.Howe drove Washington's armyfrom Long Island, from Manhattan, a:nd then from White Plains.It then became a near rout as theBritish under the field commandof Cornwallis followed Washington in a retreat through New Jersey. Washington managed to haltthe British advance at the Delaware River in early December. Hehad gathered all the boats in thevicinity to transport his armyacross the river; once he had theboats on the· other side, he keptthem there.

In any case, Howe did not follow up his advantage. He wentinto winter quarters in New YorkCity, leaving much of his armyspread out over New Jersey. Forthe Continentals, it had been a

year of defeats and withdrawals.On the heels of the Canadianlosses had come the ousting ofWashington's army from New·York. The British were now within a few miles from the capitol atPhiladelphia. Washington had onlythe remnant of an army to opposethe military and naval might ofBritain.

Howe could retire to the comforts of New York; he had victories enough to sustain himthrough the winter. No such pleasant option was open to Washington who was faced with the imminent dissolution of his army and,the way things were going, noprospects of another one. If theBritish would not attack, he must.Under the cover of darkness onChristmas night he crossed theDelaware with his army to attackthe Hessian army at Trenton atdaybreak. The Germans surrendered shortly after the attack began. A few days later, Washington engineered another victory atPrinceton. From his base at Morristown, Washington continued todrive the British from their positions. The extent and impact ofthe continuation of this campaignis spelled out by Samuel Eliot Morison: "In a campaign lasting onlythree weeks, at a time of yearwhen gentlemen were not supposedto fight, the military genius ofAmerica's greatest gentleman, and


the fortitude of some five thousand of his men, had undone everything Howe accomplished, recovered the J ersies, and saved theAmerican cause."7

British Occupy Philadelphia

In 1777, the British launchedtheir great offensive aimed at dividing America and destroying thePatriot ability to resist. At thebeginning of the year, the massive force of British arms was centered in New York City. Anotherlarge army was in Canada. It wasplaced under the tactical commandof General John Burgoyne. General Howe conceived initially ofthe grand strategy of attackingnorth from New York to make ajunction with an attacking forcefrom Canada. Such a victory alongthe line of Lake Champlain, LakeGeorge, and the Hudson could havecut off New England from the restof the states. However, Howechanged his mind, decided to attack Philadelphia instead, and putto sea with that destination inmind. He did leave behind anarmy, of sorts, under Sir HenryClinton, but it was insufficient toperform both its tasks of occupation and conducting a major offensive campaign.

For a good portion of the summer, Howe's destination was amystery to Washington. The fleetwas delayed first by an extended

calm and then by contrary winds.Upon hearing that the fleet hadbeen sighted to the south, Washington took the main body of hisarmy to the vicinity of PhiJadelphia, leaving Burgoyne to themercy of the New England militia,as he said. Washington tried toblock Howe's advance with a smaller army at Brandywine Creek inearly September, but was defeatedand driven off. Howe moved on tothe occupation of Philadelphia,which Congress had lately abandoned in haste. Washington's. attack early in October on the mainBritish force at Germantownfailed to dislodge it. He withdrewhis army to Valley Forge afterthis defeat.

Burgoyne's Surrender

Burgoyne had about 8,000 menat his disposal, including Loyalistsand .Indians. A detachment underBaron St. Leger was dispatchedthrough the Mohawk valley fromOswego. toward Albany. This detachment was dispersed by troopsunder Benedict Arnold. Burgoyneproceeded southward at a leisurelypace, one not entirely of his ownchoosing, since his path was frequently blocked by trees newlyfelled by Patriots. Meanwhile, militia began to assemble around acore of Continentals whose taskwas to stop Burgoyne. Eventually,so many militia had gathered to


augment the Continentals underthe command of General HoratioGates that Burgoyne was outnumbered two to one. His supply routewas cut by Patriots. Burgoyne'shope of being relieved from NewYork City did not materialize;Clinton made only a foray up therivel", stopping well short of Albany. Burgoyne was cut off, surrounded; he surrendered his armyintact at Saratoga on October 17,1777. Gates was credited with thevictory, but men such as JohnStark and Benedict Arnold led theaggressive actions which bottledup Burgoyne.

France Enters the War

Saratoga was the first greatAmerican victory. Trenton andPrinceton had been important battles for keeping up morale, butthey had been won at the expenseof contingents of British forces.Burgoyne surrendered one of themajor armies in America at Saratoga. There had been much sympathyamong Frenchmen for theAmerican cause from the beginning. America had sent emissarieseven before declaring independence. By 1777, Congress had sentto France the best known American at the time and America'spremier diplomat, BenjaminFranklin. An alliance was drawnup between France and the statesin February 1778, and shortly

thereafter France was drawn intothe war.

Not only did Saratoga bringFrance to the side of the American Patriots, but it showed to anyof the British willing to learn theimmensity of the task that lay before them. Contemporaries thoughtGeneral Howe was much too cautious, even lazy and indifferent, ifnot a secret sympathizer with thePatriots. Historians of a laterdate have belabored him for unimaginative tactics. Yet Howe wasthe only commanding general whoever put Washington's army torout and administered successivedefeats. But to those who wouldsee, Burgoyne's defeat showedwhat could well happen to anyBritish general who committed hisforces beyond naval support. Farfrom finding numerous Loyalistsin the hinterland, Burgoyne foundthe countryside swarming withmilitia waiting to demonstrate themarksmanship of the backwoods.Nor would the continent succumbto the capture of this or that eastern port city, even if one was thecapital. America had no centralcity; it was a land of farmersmainly who knew not the dependence, common in Europe, on asingle city. There was no Rome tofall in America.

It is reasonable to conjecturethat the American Patriots shouldhave won the war in 1778. They


now had an ally who could challenge the British fleet and overmatch the British army. TheAmericans had shown that theycould defeat a British army. Britain was not in dire straits, buteven the government was no longer so determined to win. LordNorth got a bill through Parliament in February 1778 aimed atreconciliation· with America. Apeace commission was dispatcheda little later which was authorizedto offer Americans just abouteverything they had asked forshort of independence. A commandcrisis developed in the Britishforces in 1778. Burgoyne returnedhome· on parole and in disgrace.The Howe brothers resigned command of the army and navy inAmerica. General Howe may havebeen cautious, but Henry Clinton,who replaced him, was inept.Surely, all it would have taken todrive the British from Americawould have been a decisive mustering of American strength.

The Winter at Valley forge

This was not to be the case,however. Perhaps a better omenthan Saratoga for the immediatefuture was Valley Forge. The warwas to drag on for the better partof five more years, and the condition of the Continental army atValley Forge in the winter of1777-1778 tells us why, at least in

part. One of Washington's biographers has described conditionsthis way:

Thus, at the beginning of 1778, theArmy was witnessing one of thestrangest of races, a contest betweenthe axes of the men building hutsand the harsh wear-and-tear on theremaining garments of those whostill had sufficient clothing to permitoutdoor duty.... Although hospitalhuts were built early and in what wasbelieved to be sufficient number, theysoon were overcrowded with miserable men who died fast or, if theysurvived, received little attention. Inspite of all exertion, it was the middle of January when the last of thetroops were under roof. Even thenthey did not always have straw totake the chill from the earthen floorof their huts. Thousands had no bedcovering.

Food, of course, was the absoluteessential - and food, more than evenclothing or blankets or straw, waslacking at Valley Forge.. , . "Firecakes"frequently were all the halfnaked men had to eat in their overcrowded, smoky huts. Early in theNew Year most of the regiments hadto be told the Commissary could issue no provisions because it had none,none whatsoever....

These were desperate hours. Washington continued to watch and towarn. "A prospect now opens," hesaid February 17, "of absolute wantsuch as will make it impossible tokeep the Army much longer from dissolution...."8


Indeed, the army did seem to beon the verge of dissolution. "InDecember 1777, for example, overtwo thousand men went home.Hundreds of officers tendered theirresignations; on one day alone,fifty threw up their commissions."!>Nor are these resignations and desertions to be wondered at whenthe hardships of the army are contrasted with the relatively goodlife of civilians. It is generally be..;lieved that about the only peoplein America suffering privationwere in the army. One historiansays, "Civilians· declined to forgo

their pleasures merely because thearmy was in want; at a ball atLancaster, Pennsylvania, in January 1778, over one hundred ladiesand gentlemen gathered in alltheir finery to enjoy a 'cold collation with wine, punch, sweet cakes... , music, dancing, singing ... "which lasted until four o'clock inthe morning."lO These revels weretaking place only a short distancefrom Valley Forge.

The incongruities here accountfor the American impotence. Thereason for their existence needsnow to be explained. t)

• FOOTNOTES •1 Quoted in Merrill Jensen, The Found

ing of a Nation (New York: OxfordUniversity Press, 1968), p. 663.

2 John R. Alden, The American Revolution (New York: Harper Torchbooks,1954), p. 85.

3 Ibid., p. 86.

4 Piers Mackesy, The War for America(Cambridge: Harvard University Press,1965), p. 36.

5 Quoted in ibid., p. 91.

G John R. Alden, A History of theAmerican Revolution (New York: AlfredA. Knopf, 1969), pp. 203-05.

7 Samuel E. Morison, The Oxford History of the American People (New York:Oxford UniversIty Press, 1965), p. 244.

8 Douglas S. Freeman, Washington,abridged by Richard Harwell (NewYork:Scribner's, 1968), pp. 373-74.

9 John C. Miller, Triumph of Freedom(Boston: Little, Brown and Co., 1948),p. 225.

10 Ibid., p. 223.

IDEAS ON

LIBERTY

N ext: The Scourge of Inflation.

Discipline

CALL it high training, or culture, or discipline, or high breeding,

or what you will, it is only the sense of what we owe to ourselves,

and it is greater and greater according to our opportunities.

From an essay by WILLIAM GRAHAM SUMNER

HENRY HAZLITT

THE THEME of this study is theconquest of poverty, not its "abolition." Poverty can be alleviatedor reduced, and in the Westernworld in the Jast two centuries ithas been almost miraculously alleviated and reduced; but poverty isultimately individual, and individual poverty can no more be "abolished" than disease or death canbe abolished.

Individual or family poverty results when the "breadwinner" cannot in fact win bread; when hecannot or does not produce enoughto support his family or even himself. And there will always besome human beings who will temporarily or permanently lack theability to provide even for theirown self-support. Such is the condition of all of us as young children, of many of us when we fallill,and of most of us in extremeold age. And such is the permanent condition of some who havebeen struck by misfortune - theblind, the crippled, the feeble-

Henry Hazlitt is well known to Freemanreaders as author, columnist, editor, lecturer,and practitioner of freedom. This article willappear as the concluding chapter in a forthcoming book, The Conquest of Poverty, to bepublished by Arlington House.

minded. Where there are so manycauses there can be no all-embracing cure.

It is fashionable to say todaythat "society" must solve the problem of poverty. But basically eachindividual - or at least each family - must solve its own problemof poverty. The overwhelming majority of families must producemore than enough for their ownsupport if there is to be any surplus available for the remainingfamilies that cannot or do not provide enough for their own support.Where the majority of families donot provide enough for their ownsupport - where society as a wholedoes not provide enough for itsown support - no "adequate reliefsystem" is even temporarily possible. Hence "society" cannot solvethe problem of poverty until theoverwhelming majority of families~

have already solved (and in factslightly more than solved) theproblem of their own poverty.

All this is merely stating in another form the Paradox of Relief:The richer the com,munity, the lessthe need for relief, but the more itis able to provide,. the poorer the


community, the greater the needfor relief, but the less it is able toprovide.

And this in turn is merely another way of pointing out that relief, or redistribution of income,voluntary or coerced, is never thetrue solution of poverty, but atbest a makeshift, which may maskthe disease and mitigate the pain,but provides no basic cure.

Moreover, government relieftends to prolong and intensify thevery disease it seeks to cure. Suchrelief tends constantly to get outof hand. And even when it is keptwithin reasonable bounds it tendsto reduce the incentives to workand to save, both of those who receive it and of those who areforced to pay it. It may be said, infact, that practically every measure that governments take withthe ostensible obj ect of "helpingthe poor" has the long-run effectof doing the opposite. Economistshave again and again been forcedto point out that nearly every popular remedy for poverty merelyaggravates the problem. I have an;.alyzed in this study such falseremedies as "land reform," theguaranteed income, the negativeincome tax, minimum-wage laws,laws to increase the power of thelabor unions, opposition to laborsaving machinery, promotion of"spread-the-work" schemes, special subsidies, increased govern-

ment spending, increased taxation,steeply graduated income taxes,punitive taxes on capital-gains, inheritances, and corporations,andoutri.ght socialism.

But the possible number of falseremedies for poverty is infinite.Two central fallacies are commonto practically all of them. One isthat of looking only at the immediate effect of any proposed reform on a selected group of intended beneficiaries and of .overlooking the longer and secondaryeffect of the reform not only onthe intended beneficiaries but oneverybody. The other fallacy, akinto this, is to assume that production consists of a fixed amount ofgoods and services, produced by afixed amount and quality of capital providing a fixed number of"jobs." This fixed production, it isassumed, goes on more or less automatically, influenced negligiblyif at all by the incentives or lackof incentives of specific producers,workers, or consumers. "The problem of production has been solved,"we keep hearing, and all that isneeded is a fairer "distribution."

What is disheartening about allthis is that the popular ideologyon all these matters shows no advance -. and if anything even aretrogression - compared withwhat it was more than a hundredyears ago. In the middle of thenineteenth century the English

1972 THE CURE FOR POVERTY 357

economist Nassau Senior was writing in his journal:

It requires a long train of reasoning to show that the capital on whichthe miracles of civilization depend isthe slow and painful creation of theeconomy and enterprise of the few,and of the industry of the many, andis destroyed,or driven away, or prevented from arising, by any causeswhich diminish or render insecure theprofits of the capitalist, or deaden theactivity of the laborer; and that theState, by relieving idleness, improvidence, or misconduct from the punishment, and depriving abstinence andforesight of the reward, which havebeen provided for them by nature,may indeed destroy wealth, but mostcertainly will aggravate poverty.!

Man throughout history hasbeen searching for the cure forpoverty, and all that time the curehas been before his eyes. Fortunately, as far at least as it appliedto their actions as individuals, themajority of men instinctively recognized it - which was why theysurvived. That individual cure wasWork and Saving. In terms of social organization, there evolvedspontaneously from this, as a resuIt of no one's conscious planning, a system of division of labor,freedom of exchange, and economic cooperation, the outlines of

1 Nassau Senior, Journal Kept inFrance and Italy from 1848-52 (London:Henry S. King, 2nd ed. 1871), Vol. I,pp. 4-5.

which hardly became apparent toour forebears until two centuriesago. That system is now knowneither as .Free Enterprise or asCapitalism, according as men wishto honor or disparage it.

It is this system that has liftedmankind out of mass poverty. Itis this system that in the lastcentury, in the last generation,even in the last decade, has acceleratively been changing the faceof the world, and has provided themasses of mankind with amenitiesthat even kings did not possess oreven imagine a few generationsago.

Because of individual misfortune and individual weaknesses,there will always be some individual poverty and even "pockets"of poverty. But in the more prosperous Western countries today,capitalism has already reduced·these to a merely residual problem,which will hecome increasinglyeasy to manage, and of constantlydiminishing importance, if society continues. to abide in the mainby capitalist principles. Capitalism in the advanced countries hasalready, it bears repeating, conquered mass poverty, as that wasknown throughout human historyand almost everywhere, until achange began to be noticeablesometime about the middle of theeighteenth century. Capitalismwill continue to eliminate mass


poverty in more and more placesand to an increasingly marked extent if it is merely permitted todo so.

In a previous article ("FalseRemedies for Poverty," The Freemain, February, 1971), I explainedby contrast how Capitalism performs its miracles. It turns outthe tens of thousands of diversecommodities and services in theproportions in which they aresocially most wanted, and it solvesthis incredibly complex problemthrough the institutions of privateproperty, the free market, andthe existence of money - throughthe interrelations of supply anddemand, costs and prices, profitsand losses. And, of course, throughthe force of competition. Competition will tend constantly to bringabout the most economical andefficient method of production possible with existing technologyand then it will start devising astill more efficient technology. Itwill reduce the cost of existingproduction, it will hnprove products, it will invent or discoverwholly new products, as individualproducers try to think what product consumers would buy if itexisted.

Those who are least successfulin this competition will lose theiroriginal capital and be forced outof the field; those who are mostsuccessful will acquire through

profits more capital to increasetheir production still further. Socapitalist production tends constantly to be drawn into the handsof those who have shown that theycan best meet the wants of theconsumers.

Those who truly want to helpthe poor will not spend their daysin organizing protest marches orrelief riots, or even in repeatedprotestations of sympathy. Norwill their charity consist merelyin giving money to the poor to bespent for immediate consumptionneeds. Rather will they themselveslive modestly in relation to theirincome, save, and constantly invest their savings in sound existing or new enterprises to createnot only more jobs but betterpaying ones ("Private Wealth,Public Purpose," The Freeman,December, 1970).

The irony is that the very miracles brought about in· our age bythe capitalist system have givenrise to expectations that keep running ahead even of the acceleratingprogress, and so have led to anincredibly shortsighted impatiencethat threatens to destroy the verysystem that has made the expectations possible.

If that destruction is to be prevented, education in the truecauses of economic improvementmust be intensified beyond anything yet attempted. *

DONALD M. DOZER

FORMAL systems and institutionsof education always represent agift from the present generationto the next generation.

The school at all levels is ahighly complicated social phenomenon. It depends, first of all, upona controlling or governing bodya body of taxpayers in the case ofpublic schools, a body of parentsand financial donors in the case ofprivate schools. This supportingbody forms the principal in theentire educational complex; it isthe base upon which the systemrests.

To carryon the actual administration of the school, this supporting body selects a committeewhich is called by various namesranging from a board of education to boards of trustees or regents. Representing the originalconstituent body this board em-

Dr. Dozer is Professor of History at the University of California, Santa Barbara.

ploys the administrators of theschool, namely the principal, headmaster, chancellor, president,deans and instructors, who together constitute the implementing agent of the system and whosupply the technical expertiseneeded to operate it.

The· beneficiaries of this systemare intended to be the pupils. orstudents, who are thus enabled tobe brought into contact with persons who are expected to transmitthe skills, amenities, and values ofthe past to present and future generations and to stimulate in themenlarged visions for the future.

This basic structure prevails atall levels of the educational process, from the kindergartenthrough the university, and isgrounded upon certain wen-definedlegal obligations and relationshipswhich are the product of centuriesof educational experimentation.Within this structure have appeared many delicate nuances of

3fi9


administration and elements ofconflict within recent decades. Perhaps the most serious of these hasbeen the penetration of politicalpressures and the resulting clashof political forces within the academic community.

It is now widely acknowledgedthat the great majority of our colleges and universities have lostthe trust of the public. The waveof public indignation which wasdirected against them after theBerkeley riots in 1964 has beenfollowed by a wave of even moreominous public revulsion. Theseinstitutions are experiencing themost serious crisis of confidencethat they have faced in manydecades. They are no longer respected as the quality institutionswhich they once were under sucheducator-statesmen as Charles W.Eliot and A. Lawrence Lowell ofHarvard University, David CoitGilman of Johns Hopkins, NicholasMurray Butler of Columbia, Robert Gordon Sproul of the University of California, and James R.Angell of Yale Universi ty.

Why the Degeneration?

Why has this degenerationoccurred, and what should be doneabout it?

One of the major casualties ofthe social and economic upheavalof our times is the principle ofauthority, or more precisely the

principle of management. In industry the claims of owners andboards of directors to the exerciseof management responsibilities arebeing repeatedly challenged. Ininstitutions of higher learning inthe United States the growingpressure for unionization of teaching faculties and staffs and for involvement of students in the councils of administration raise questions as to the locus of power andthe right to exercise it.

It is a well-known doctrine oflaw that the principal in a legaltransaction controls the actions ofhis agent within the context oftheir agreement and that, if theagent exceeds his authority, hisunauthorized action must be regarded as ultra vires or of nolegal effect.

A major reason for the presentplight of institutions of higherlearning is that in the area ofeducation the essential relationship of the agent to his principalhas been ignored. In many casesthe supporting body, as we havecalled it above, has neither exercised nor defended its responsibili ty for determining the scope ofthe education which it is financingbut has, on the contrary, allowedits agent· to assume by defaultfree-wheeling authority, withoften anarchic results. Similarlythe agents of the supporting body,who are expected to act as execut-

1972 THE EDUCATIONAL DILEMMA 361

ingofficials for the supporting bodyand to be accountable to it, havebeen faithless servants. Especiallyin the colleges and universitieswhich are supported by taxpayersthey have yielded to the politicalforce exerted by pressure groupsof race and social class and by militant student activists. Higher 'education has accordingly been allowed to become a thing of whimsand fads bending before the changing winds of the moment.

Taypayer Revolt

It is asking too much of humannature to expect that the principal, namely, the taxpayer, willindefinitely support an institutionwhich, while professing to contribute to his enlightenment, infact dedicates itself to the destruction of the society which the principal himself has formed. As ahorde of militant. students werethronging across the campus ofone of the California universitiesand occupying the student center,a local businessman raised hisvoice in protest to the chancellorof the university. The chancellordefended his do-nothing policysaying: "We havebeen teachingthese students for fifteen years tothink for themselves, and now theyare doing it!". A lamentable misconception has

been allowed to develop in highereducation as to who is principal

and who is agent, who calls thetune and who should dance to it,who pays the bills and who shouldfurnish the services paid for.

Dr. Stephen J. Tonsor has statedthe obvious but forgotten truism:"The university does not belong tothe students; it does not belong tothe faculty ; it does' not belong toany special pressure group in thesociety that happens to feel thecall to revolution or a propheticmission. The university belongs tothe whole of the society or thecorporate reality which brought itinto existence and which sustainsit."l

The relationship of taxpayers toeducators in a publicly supportededucational structure is that ofemployer to employee. The samerelationship exists between boardsof trustees of private institutionsand the designated officials ofthose institutions.

In the complex of relationshipsat various levels in the educational structure it is possible to identify a producer-consumer relationship in the classroom betweenteacher and student. The studentcan either accept or reject theproduct, but, as the object ultimately acted upon by both thesupporting body and the executing body, he is not entitled to de-

1 "Authority, Power and the University," New Guard, XI, No; 6, September1971, p. 5.


fine the nature of the product. Inother words education in the classroom cannot be successfully organized around the democratic principle.

If it is organized on the basisof this principle on the assumptionof the existence of an exclusiveproducer-consumer relationshipbetween teacher and taught, thecorollary principle that the consumer is always right must beaccepted. This is to require theteacher to become a classroomdemagogue, an ingratiating salesman, and to elevate the studentinto the position of principal. Under these conditions education becomes a hopeless exercise andeminent professors who expressunpopular views can be destroyedby immature classroom critics.

Conflict of Responsibility

In the triangle of conflict whichhas been accordingly created between administrators, faculty, andstudents, administrators, unlesschecked by firm directives fromthe supporting body, will invariably offer up the faculty as sacrifice to student demands. Commonly, administrators utilize student activism as a lever for suppressing faculty dissent.

These problems have been grievously aggravated by the superimposition of the money and powerof the government in Washington

upon the great majority of ourinstitutions of higher learning,both public and private, duringthe past quarter century. Bold indeed - and almost unique - hasbeen the educator who could resist these advances. Increasinglythe central government itself hasassumed the role of principal inthe educational process, dictatingstandards, imposing conditions,and supplying lavish funds,amounting to as much as $23 billion in the higher-education billfor 1972. The old supporting localbodies have therefore largely abdicated their responsibility.

To the extent that local supporting bodies, whether public orprivate, still retain any directingauthority over education, they mustbe recognized as principal in theoperation, entitled to exert fullcontrol over the scope, purposes,and actions of the colleges anduniversities with whose responsibility they are entrusted. And, inaccordance with the legal rights ofmanagement and the legally recognized doctrine of the relationship between principal and agent,whenever government, whetherstate or national, is acknowledgedto be the supporting body it mustbe accorded the full powers ofprincipal in the educational operation. In other words, finalpower cannot be assumed, eitherwillfully or by tacit consent of the


principal, by the agent, that is bypresidents and deans and least ofall by students. However distasteful this rule of conduct is, it mustbe respected unless the supportingbody in each case decides to standthe educational system on itshead.

The Fallacy in Public Education

But events in the area of highereducation in the last decade havenewly exposed the essential fallacyin the concept of public education.Government at all levels, beingnecessarily primarily political incharacter and .having police powerat its disposal, has interests whichare antithetical to education in thefullest sense. All that it is interested in doing and all that it iscapable of doing in the area ofeducation is to train citizens, noteducate them, in the skills of responsible citizenship. This is avery limited function, and it maybe seriously doubted whether thestate should involve itself even inthis operation, since, by assumingthis minimal training responsibility, it will inevitably undertaketo impose its political will andrigidified formulas upon the citizenry.

Libertarian principles rightlycondemn government control overeducation at all levels. HerbertSpencer· pinpointed the fallacy inhis Social Statics, published in

London in 1851: "What is meantby saying that a governmentought to educate the people? ...What is the education for?" Andfrom these questions he concluded,"Clearly to fit the people for sociallife - to make them good citizens.And who is to say what are goodcitizens? The government: thereis no other judge." He askedfurther, "And who is to say howthese good citizens may be made?"Again, his answer was, "The government: there is no other judge."Spencer's conclusion is as irresistible as it is ominous.

Jefferson's Views

The political uses of institutionsof higher learning to accomplishcertain predetermined nationalpurposes were fully appreciated byThomas Jefferson and have beeenemulated by his successors in government. At a special meeting onMarch 4, 1825 of the Board ofVisitors of the University of Virginia, which Jefferson had foundedand of which he was then servingas rector, the Board, with Jefferson present, adopted the followingresolution:

Whereas, it is the duty of thisBoard to the government under whichit lives, and especially to that ofwhich this University is the immediate creation, to pay especial attention to the principles of governmentwhich shall be inculcated therein, and


to provide that none shall be inculcated which are incompatible withthose on which the Constitutions ofthis State, and of the Ul)ited Stateswere genuinely based, ...

Resolved, that it is the opinion ofthis Board that as to the generalprinciples of liberty and the rightsof man, in nature and in society, thedoctrines of Locke, in his "Essay concerning the true original extent andend of civil government," and of Sidney in his "Discourses on government," may be considered as thosegenerally approved by our fellow citizens of this, and the United States,and that on the distinctive principlesof the government of our State, andof that 'of the United States, the bestguides are to be found in 1. The Declaration of Independence, as thefundamental act of union of theseStates. 2. The book known by the titleof "The Federalist", being an authority to which appeal is habitually madeby all, and rarely declined or deniedby any as evidence of the generalopinion of those who framed, and ofthose who accepted the Constitutionof the United States, on questions asto its genuine meaning. 3. The Resolutions of the General Assembly ofVirginia in 1799 on the subject of thealien and sedition laws, which appeared to accord with the predominant sense of the people of the UnitedStates. 4. The valedictory address ofPresident Washington, as conveyingpolitical lessons of peculiar value.And that in the branch of the schoolof law, which is to treat on the subject of civil polity, these shall be used

as the text and documents of theschoo1.2

As thus envisaged, by Jeffersonpublic education could be converted into a powerful apparatusto serve "good" national ends,which were thus defined in theresolution of March 1825. But isthere a, consensus at anyone timethat the current government ofstate or nation ought to be theprincipal educator? When weacknowledge it as such, we assumethat government now is and willforever remain the kind of governmen which, in the judgment of amajority of citizens, it ought to be.This situation, if it exists at asingle moment, may change in thenext, but the powers of that government in the area of educationwill not automatically diminish.

The principles of a free societytherefore demand that politicalgovernments at both the state andnational levels shall retreat fromtheir positions of control over institutions of higher learning. Thisretreat is rendered especially imperative by the admission ofyouths between 18 and 21 yearsto the franchise, which can onlyhave the effect of intensifying thepolitical tug-of-war in the classroom which was the major causeof the academic crisis of the

2 Jefferson's Works, Vol. 19, pp. 459461, Washington, 1907.


1960's. Only the divorce of government from academic responsibility will prevent institutions ofhigher learning from becomingcompletely politicized and theirinmates reduced to cogs in atotalitarianized political machine.

Education is, largely, the business of stimulating rigorous intellectual discipline. But it must

limit itself to intellectual discipline and should not impose thediscipline of any political party, ofany religious group, or even of anynational state unless it is plainlyadvertised as such and is therefore known to be serving necessarily as a part of the indoctrinatingapparatus of that party, group, orstate. I)

r WAS A SLUMLORD. Here is how rcame to be one.

r was born 69 years ago. rlearned the craft (maybe the art)of cabinet-making in my nativeland, Hungary. This would havebeen my 50th year of workingactively, creating in wood manythings of lasting beauty. My nameis well-known and well-respectedin the trade.

About 20 years ago r bought asmall factory building in EastHarlem, at 508 East 117th Street,where r worked together with myteam of 10 to 12 men. Withchanges, improvements and additional construction, the factorycost me about $65,000.

A few years after I bought thebuilding, the adjoining building,

© 1972 by The New York Times Company.Reprinted by permission from The New YorkTimes, January 30, 1972.

No. 510, was offered to me at abargain price because it was inpoor repair. With the idea of expanding my workshop into it, orusing the lot for parking, I boughtit. For $12,500 in cash r becamethe owner of a four-family house.

The four families living in thehouse are all decent working people. To my knowledge they do notneed and never asked for charity,public help or assistance. Yet thelaw forces me to give them shelterand heat at a lower price than myown cost.

For several years now my cashexpenses have exceeded my incomeby about 25 per cent, and thiswithout interest or amortizationpayments on the mortgage.

The building was in poor repairwhen I bought it. By now it is thefavored hunting ground of everycity inspector.


The building needs a new roof,new walls, new ceilings, newplumbing, new wiring, new doorsand a new heating system. It needsabout $15,000 worth of repairs.

The building now has a grossincome of $2,600 a year, of whichI am paying for taxes and heatabout $3,000.

Why didn't I apply for a hardship rent increase? My accountanttold me there would be a blizzardof paperwork, and that if he wasable to get me any increase, myfee to him would have taken awaywhatever I gained in the first twoyears.

So far I have been fined fourtimes for failure to comply withorders to correct building codeviolations! I was summoned tocourt again only a few weeks ago,and I explained my predicament tothe judge. He assured me of his"sympathy," fined me $40 andpromised that my next fine wouldbe much higher.

I did not go home from thecourt. I went straight to the officesof the local Roman CatholicChurch and asked them to acceptthe building as a free gift. Theydidn't. An hour later I made thesame offer to the Protestants.Again the answer was no. Next Ioffered the building free, withoutany money, to the four tenants.They didn't want it.

Okay, I will abandon the build-

ing, was my next thought. I willstop collecting rents, will not paytaxes or heat. I .will let the citytake over. This sounds like an easyway out, but my lawyer tells meit cannot be done without my being legally financially responsible.

So, here I am with a buildingassessed by the city at $21,000 - Irepeat $21,000 - that I cannot giveaway, I cannot sell, and I cannotabandon. I am forced by law tooperate it.

That is, I was. I am not anylonger.

I have sold the building for$30,000.

As an extra inducement I threwinto the bargain my good old factory. building, which cost me closeto $70,000, for nothing. In otherwords, I sold real estate that costme $80,000 about 15 years ago for$30,000, to be paid without interest in six years.

With the $50,000 that I lost onthe deal - and which is a majorpart of my life savings - I boughtfreedom.

At 69 I am too old to start arevolution, or to fight City Hall.On the other hand I do not liketo be summoned to appear in criminal court, when my only crime isthat I dared to own a building inNew York.

I will badly miss my shop, whereI spent 49 happy years. But .I am no longer a slumlord! I)

MERRYLE STANLEY RUKEYSER

IN THE NINETEEN SEVENTIES, business baiting, no less virulent thanin the past, has become more subtle and sophisticated. It consistsof efforts to equate technologywith utter disregard for ecology.The new attack is sometimeslaunched in a flood of tears forconsumers. Behind the new ~

for national economic backslidingis the runaway expansion of thewelfare state which exalts leanersat the expense of producers. Thenew politics denigrates the system for cultivating progressthrough rewards and incentives.Theorists and their youthful adherents repudiate concepts of development and plump for a zerogrowth in population and materialwell-being. They stigmatize the use

Mr. Rukeyser is well known as a business consultant, lecturer, and columnist.

of electricity in labor-aiding toolsof production as antisocial pollution, and blithely advocate thereplacement of mechanically driven equipment with the primitive"sweat and groan" of human muscle power.

Such academic naivete brings tomind a conversation years agowith an economic minister in India. As we discussed the low levelof living in that sub-continent, Iasked what steps native leaderswere taking to supplement theefforts of the human muscle withadvanced machinery. In a patronizing manner, he called my attention to India's surplus of workers,as though it were self-evident thatIndia, in the circumstances, hadno use for "labor saving" capitalgoods. But what the Minister didnot seem to grasp was the fact

367


that continuance of crude techniques for using men as drayhorses necessarily condemned Indian workers to low, productivityand a meager living.

Conditions Change

Critics of business fall into thebooby trap of assuming that everything is static. More than fourdecades ago, oil authorities wereforecasting that in eight yearsthe supply would run out. Theyproved to be astigmatic, perceiving only the then known reserves.They overlooked the fact that,with incentives, wildcatters wouldferret out new sources of supply.And when, if, and as we consumeall the known supplies of fossilfuel, the creative side of man willfind substitutes in such newertechnologies as atomic and solarenergy. And in the process, theydoubtless will achieve a measure ofpollution control.

The new enthusiasts in ecologycarry a good cause to unreasonable excesses. They ascribe utterirresponsibility to businessmen.They assume that corporate executives are solely concerned with"the bottom line" on the profitand-loss statement, and the deviltake the hindmost. They lack theimagination to sense the opportunities for improvement withinthe system. Earlier in the century, there was in some aspects of

farming, for instance, and in theindiscriminate cutting down oftrees in the forests, a seeminglack of concern for the future.But protests were heard; therehas been measurable progress inthe development of scientific agriclJlture in place of the primitive"n1ining of the soil." And in Oregon and elsewhere pioneer effortswere undertaken to avoid the de~

nuding of forests with the newconcept of tree farms with newplantings to replace cuttings.

In the American system, theguiding motto should be the linefrom the poet Louis Untermeyer,who wrote: "From sleek contentment, keep me free." Progress isnever enough, and the operatingprinciple of topflight business'management is: "Let's seek to dobetter tomorrow what we appearto be doing well today." The con- 'tinuingvigor of the Americancompetitive system depends on theknowledge and courage of the elitewho understand its functioningand have the means of communicating the benefits to others.

Fear of Technology

What we see today is a recurrence of the simplistic revolt inthe nineteenth century of menlike Samuel Butler, who decriedthe Industrial Revolution. In hisErehuJon in 1872, Butler appearedas the enemy of the machine.

1972 BUSINESS BAITING - 1972 STYLE 369

In this new era ecologists aredecrying technology as a polluter,ignoring the capability of technololgy to develop methods to minin1ize pollution. The alarm ringersassume that they alone want aworld of pure air and pure water.They jump to the conclusion thatthe profit motive is the enemy ofNature. Perceptible gains willcome when there is mature recognition that technology is a humantool and can be devoted to man'sends. If, by way of illustration,existing methods of burning coalor using gasoline in automobileengines pollute, then it makessense to accelerate research anddevelopment to find ways ofachieving the benefits while controlling the adverse. effects. Instead of viewing the problem inthe naive spirit of setting the goodguys against the bad guys, it istime to recognize that leaving theenvironment in the form that menfind it is consistent with goodbusiness. If consumers desire lesspollution, they will need to understand that devices to avoid pollution are a cost of producing goodsand services.

Thomas Robert Malthus, theeconomist, warned in 1798 of oncoming unavoidable poverty anddistress on grounds that population increases by geometric ratioand the means of subsistence onlyby arithmetical ratio. However,

his prophecy has been unfulfilled.Methods of cultivating land havenot remained static. Creativeminds in science, invention andengineering have developed newand better means of production,and in advanced economies a spectacularly smaller ratio of the totalpopulation than in earlier times isproducing vastly more abundantquantities of food and fibers.

In light of the contemporary organized efforts to put a ceiling oneconomic progress, it doesn't makesense for investors, financiers andmanaging directors of great companies to ignore the impact of thenew-style business baiting. Perhaps I can do no better than torepeat here what I said in 1938in my pamphlet "Sell the Businessas Well as the Product":

1mproving the climate of popularopinion would help to remove the barriers to a free circulation of goodsand services from makers to users.... Misstatements and misconceptions about business have been sowidely propagated that dissemination of the truth by business wouldbe .enormously helpful. Businesswould not have to gild the lily, fortruth is much more favorable thancurrent rumor.

The country needs to escape fromthe tyranny of obscure, weasel wordsand from doctrinaire ideology. Simple arithmetic, in double-entry form,as understandable as the family budget, can be used to photograph for


the lay mind the essential processesof business. Such new style "candidcamera" shots which give glimpsesbehind the scenes in the businessworld will help to promote friendlycooperation among government, business and labor. It can make crystalclear that the unwarranted snipingat business is directed at the vital interests of millions of life insurancepolicy holders, owners of savings accounts, ... and of tens of millions ofindividual owners of shares of American corporations.

These comments made thirtyfour years ago are a reminder thatbusiness baiting is not a newphenomenon in 1972. Only the rhetoric has changed.

In the intervening years, greatstrides have been made in humanizing corporate reports, and todaysome alert companies, such asStandard Oil (N.J.), U.S. Steeland others, have used TV commercials creatively to depict the socialusefulness of their enterprises.James M. Roche, who recently retired as chief executive of General Motors, has in recent monthstaken leadership in urging greaterattention to the attacks on thepremises on which free enterpriserests.

The Brave New World

Basic in this approach is objective understanding of the significance- of the revolt of some

articulate young people. Sincethey will in due course inherit theearth, their views, including theirmisconceptions, should not be ignored. Noone questions the rightto dissent, but it is important alsoto develop a sense of responsibility in discussing matters relatingto the well-being of the people.Certainly, the "brave new world"won't be ushered in by escapists.Youths who indiscriminately reject the mature as hypocrites havelittle insight into the history ofman. In downgrading their parents as insincere because theirconduct doesn't always squarewith their professed code ofethics, the young tend to overlookthat through the ages man hasbeen caught in the conflict betweenhis animal instincts and his standards of civilized procedure. Itwould, of course, be millenary ifeveryone invariably lived up to hiscode; but the remedy for humanfrailty certainly is not the rejection of standards.

Much of the venom against theEstablishment springs from anemotional distaste for the competitive system, which calls upon individuals to stand up and be meaSlued. Much loose talk glorifyingthe "underprivileged" and the"disadvantaged" is really quarreling with the Lord for creatingman with an infinite variety ofdifferences in aptitude, skill, moti-

1972 BUSINESS BAITING - 197.2 STYLE 371

vation, and LQ. The demagogicstruggle to level down is an effortto replace divine patterns withman-made molds making all persons identical.

Much of the business baitingresults from an emotional biasagainst competition. It takes character to be willing to be measured,and to face the grim fact that notall of us are topnotchers in everyskill. And it would be a dull worldindeed if we were all cast in precisely the same mold. Instead ofletting destructive emotions become dominant, there should benot only a renaissance of respectfor the work ethic, but also newapproval for self-supporting individuals who achieve up to theirown optimum in all categories oftalent. The diligent hewers ofwood and drawers of water deserve respect, which should not bereserved exclusively for glamorouscreative artists, publicists, professional men, and chairmen of corporate boards.

The threat to economic andother achievement does not come

primarily from overseas competitors, but from ill-conceived, misguided theories developed at home.No investments in growth are attractive if the "wave of the future" is for home-grown communes in place of competitiveeffort. Prosperity will rest on aslender reed indeed if those whovote and ratify public policy don'tunderstand the factors that makefor better living.

Slogans against the Establishment should be examined minutelyto determine whether they hiderejection of self-discipline, thriftand industry. In a free society, noone is forced to work for a higherstandard of living than he desires,but none who undermines the system by circulating misconceptionsshould go unanswered. Just as afreeman is entitled to expresshis views, his neighbor shouldhave the freedom to audit andappraise the other fellow's opinions. Then the validity of conceptscan be tested in the unrestrainedInarket place for ideas. ,

IDEAS ON

LIBERTY

A Precarious LifeANY COMMUNITY which depends for its economic growth up,on the

whims of succeeding Congresses is in economic jeopardy. Some

day, the taxpayers might say "no," and then where is the life of

that region which has become wholly dependent upon federal help?From an address in 1955 by CLARENCE A. DAVISUnder Secretary of the Interior

BLOODfromTURNIPS

~Notes toward anltnderst~ndingof John Law's

TERRILL 1. ELNIFF economlC errors

WHEN JOHN LAW arrived inFrance in 1716, he found Franceon the edge of bankruptcy. Thegovernment debt amounfed to 2.4billion livres plus another 590 million livres worth of billets d'etat outstanding royal promissory noteswhich were worth about one thirdof their face value. The deficit inthe government accounts for 1715was 78 million livres - a deficit ofnine million livres more than thetotal revenues for that year.3 Thepeople were overtaxed and starving, and commerce was at a standstill.4

Law received a charter for hisBanque Generale in 1716. It wasa private operation, handling allthe normal functions of a bank. Itwas also authorized to issue banknotes called "bank crowns," whichwere to be redeemable "in moneyof the weight and denomination ofthe day of issue."5 This was soundbanking policy, even though Law's

Mr. Elniff teaches American history at theBen Lippen School, a Christian preparatoryschool in Asheville, North Carolina.

372

1972 BLOOD FROM TURNIPS 373

"land bank" had an unsound moneybased on anticipated royal revenues and landed securities. (WhatLaw was to do later would havedestroyed even a bank with asound money base.) ConcerningLaw's banking methods and policies, one historian of modern banking wrote: "If the bank had continued upon the sound basis of abank discounting commercial paperand acting as the fiscal agent ofthe Treasury, France would havebeen under a great debt of gratitude to Law for introducing intoher commercial relations themethods of the modern businessworld."6 A period of recovery andgreat prosperity followed.

But the bank did not continue onthat sound basis. Law's next stepwas to organize the Company ofthe West and combine into it several other small French tradingcompanies, as well as negotiatingwith the Regent, d'Orleans, for the#farming of taxes, money coinage,the tobacco monopoly, and the assumption of the entire .nationaldebt.7 On December 27, 1718, hisBanque Generale was made a public institution - the Banque Royale- and payment of notes in bankcrowns (which required specie)was stopped, making the banknotesof the Banque Royale legal tender.When in May, 1719, the Companyof the West was reorganized intothe Company of the Indies, the

speculation began and the newshares were bid up and up - andthe boom was on~ The price on theshares was 500 livres par, but theybrought a premium of 5000 livres.By the end of November they wereselling for 10,000 livres. By year'send, they brought up to 12,000livres, and by January 6, theywere up to 18,000 livres.8 But thenthe tide began to turn. As the market began to drop, "the more prudent speculators were endeavoringto convert their gains into moresolid property by the purchase ofreal estate or by shipping goldabroad."9 On May 1, 1720, a decreefrom Law announced that by December 1st all shares in the company would be· scaled down to 5500livres per share and that all banknotes would be reduced fifty percent in value. A commission appointed by the Regent to examinethe bank found that it had lessthan ten per cent assets againstits three billion livres of circulating banknotes and only 49 million of that was in gold or silver.10

On July 16th there was a run onthe bank, people demanding goldor silver for their banknotes. Tenwomen were killed in the confusion. "Repeated riots expressed thefeeling of the public that it hadbeen deceived· by financial tricks,and that the upper classes hadprofited at the expense of the community."l1


What John Law was trying todo for France has been succinctlysummarized by Will Durant:

His central conception was to increase the employment of men andmaterials by issuing paper money,on the credit of the state, to twicethe value of the national reserves insilver, gold, and land; and by lowering the rate of interest, so encouraging businessmen to borrow moneyfor new enterprises and methods inindustry and commerce. In this waymoney would create business, business would increase. employment andproduction, the national revenuesand reserves would rise, more moneycould be issued, and the beneficientspiral would expand. If the public,instead of hoarding the preciousmetal, could be induced, by interestpayment, to deposit its savings in anational bank, these savings could beadded to the reserves, and additionalcurrency could be issued; idle moneywould be put to work, and the prosperity of the country would be advanced,1~

This was John Law's "system."Law himself summarized it evenmore succinctly when he said,"Money is the blood of the Stateand must circulate. Credit is tobusiness what the brain is to thehuman body."13 When the sameidea was proposed at the beginningof the French Revolution, JacquesNecker, the minister of finance,observed that "They had only to

provide themselves with a papermill and a printing press to makethe nation solvent."14

Two Basic Errors Led to failure of

John Lawls System

Why did John Law's "system"fail? We cannot blame his failureon his motives: there is every indication that he was sincerely benton benefiting France. Even hisenemy, Duc de Saint-Simon, admitted there " was neither avaricenor roguery in his composition."I;)It is common to blame the speculators whose speculative frenzyboth made and broke Law's system: "The principles upon whichhe had established his bank weretheoretically sound; they wouldhave made France solvent andprosperous had it not been for theincredible avidity of speculatorsand the extravagance of the Regent."lG But why did they speculate? If Law's system was basically sound, why did it cause asituation in which speculationwould be expedient? Why, to putthe issue in its starkest form, didJohn Law think he could get bloodout of turnips? Did the rules ofalgebra fail? Or did Law misapplythem?

Involved in Law's system aretwo logically separable, thoughclosely intertwined, economic fallacies: (1) that money must circulate, and (2) that successive


credit expansions will lead to aspiral of economic prosperity.

The error concerning the circulation of money is one of mistaking effect for cause. Money is amedium of exchange, as Law believed, but it is also a market commodity which takes on value inexchange.I7 Therefore if people donot circulate their money, it canonly be because they anticipatethat it will be worth more in exchange at a later time. On theother hand, if people believe thattheir money will lose value in thefuture, they will circulate it in thepresent. 18 Thus circulation isneither an index of prosperity, norof adversity: it is not wise to circulate money in a deflating market, and the circulation of moneyin an inflating economy is not' asign of prosperity, but rather ofsickness. There are times whenmoney must not circulate.

The second error is an extensionof the first: that successive creditexpansions (i.e., lowering the interest rate and loaning moremoney) will lead to a spiral ofeconomic prosperity: that moneycan create business, which wouldincrease production, which wouldresult in greater tax revenues andfoster a new credit expansion,which would create new business,and so on. Law's error may bepointed out with two observations:(a) If the old debt is paid off be-

fore the new credit expansiontakes place, there has been no netgain for the economy. Consumption must be curtailed and savingsinvested in order to finance suchprogress. It is only a question ofwhen one is going to curtail consumption and invest savings - nowor later. (b) If the old debt is notpaid off, and a new credit expansion is made, the net result is ahigher price level for everyone asprices are bid up with the extramoney available. This bidding upof prices, however, does not affecteveryone equally:

While the process is under way,some people enjoy the. benefit ofhigher prices for the goods or services they sell, while the prices of thethings they buy have not yet risenor have not risen to the same extent.On the other hand, there are peoplewho are in the unhappy situation ofselling commodities and serviceswhose prices have not yet risen ornot in the same degree as the pricesof the goods they must buy for theirdaily consumption. For the formerthe progressive rise in prices is aboon, for the latter a calamity. Besides, the debtors are favored at theexpense of the creditors.19

This process may continue for alonger or shorter period of time.How long it lasts depends on psychological factors. It will last aslong as the people maintain con-


fidence in the relative soundnessof the money or faith in the bankor government:

Let Ludwig von Mises finish thestory:

But then finally the masses wakeup. They become suddenly aware ofthe fact that inflation is a deliberatepolicy and will go on endlessly. Abreakdown occurs. The crack-upboom appears. Everybody is anxiousto swap his money against "real"goods, no matter whether he needsthem or not, no matter how much hehas to pay for them. Within a veryshort time, within a few weeks oreven days, the things which wereused as lTIOney are no longer used asmedia of exchange. They becomescrap paper. Nobody wants to giveaway anything against them.~o

The result of such a breakdownis that people return to barter ordevelop a new kind of money. Theresult in France was that the bankwas closed, the legal tender wassuspended, the company's contractswere cancelled, and the stock wasreadjusted.:n There was an attempt to restore both public andprivate obligations and fortunesto the levels which existed beforethe inflation. But "those who hadfled the country with their winnings transmuted into gold, those

. who could command the royal faVOl", and those who were a,ble tokeep their gains in hiding were

the only ones who escaped.":.!:.!David Ogg has observed that "Thisdisaster . . . created no diminution in the amount of nationalwealth but only a change in itsdistribution."~3 But such a redistribution of wealth, of course, always means a terrible waste of resources and efficiency, and thus,while there may have been no diminution in the aggregate amountof national wealth, there was certainly an interruption of economicactivity that is tantamount to adestruction of wealth. This is truebecause human needs and desirescontinue. It is impossible to interrupt hunger or to mark time instarvation while an economy recovers.

Why did John Law think hecould get blood out of turnips?Because he misunderstood the nature of turnips. John Law's mathematics of compound interest werenot in error; his "rules of algebra"did not fail. He simply erred inapplying them to human affairs.His system was broken on therocks of reality - one part of whichis the fact that human beingsplace value on that which they exchange for money.

Ludwig von Mises has observed:

The body of economic knowledge isan essential element in the structureof human civilization; it is the foundation upon which modern industrial-


ism and all the moral, intellectual,technological, and therapeuticalachievements of the last centurieshave been built. It rests with menwhether they will make the properuse of the rich treasure with whichthis knowledge provides them orwhether they will leave it unused.But if they fail to take the best advantage of it and disregard its teaching and warnings, they will not annuleconomics; they will stamp out society and the human race.24

John Law failed because he hadan erroneous understanding ofeconomic concepts. Seventy yearslater the French Revolutionistsmade the same mistake, but it wasnot because they did not know.They chose, for political reasons,to ignore the body of truth. Theydid not annul it; but they verynearly stamped out society and thehuman race. I)

• FOOTNOTES •1 Ludwig von Mises, Human Action;

A Treatise on Economics, 3rd revisededition. Chicago: Henry Regnery andYale University Press, 1966, p. 177.

2 Frederick C. Green, Eighteenth-Century France: Six Essays, London: J. M.Dent, 1929, p. 28.

3 Will and Ariel Durant, The Age ofVoltaire.. A History of Civilization inWestern Europe from 1715 to 1756, withSpecial Emphasis on the Conflict between Religion and Philosophy, NewYork: Simon and Schuster, 1965, p. 13.

4 Green, op. cit., p. 6.5 Charles A. Conant, A History of

Modern Banks oj Issue, New York: G.P. Putnam, 1927; reprinted by AugustusM. Kelley, Publishers, 1969, p. 33.

6 Ibid.7 Ibid., p. 35.g Ibid., p. 37.o Ibid., p. 38.10 Ibid., p. 39.11 Durant, op. cit., p. 15.12 Ibid., p. 11.13 Green, op. cit., p. 7.14 J. M. Thompson, The French Revo

lution, New York: Oxford UniversityPress, 1966, p. 196.

15 Durant, op. cit., p. 13.16 Ibid., p. 15.17 Mises, op. cit., p. 401 f.18 Ibid., p. 426 f.19 Ibid., p. 413.20 Ibid., p. 42821 Conant, op. cit., p. 39.22 Ibid., p. 40.:!3 David Ogg, Europe of the Ancien

Regime, 1715-1783, New York: Harperand Row, 1965, p. 255.

24 Mises, op. cit., p. 885.

IDEAS ON

LIBERTY

The Astonishing Similarity

WHAT CHIEFLY STRIKES today's reader is the astonishing similarityof the arguments put forward by our own contemporary inflationists to those of the inflationists of eighteenth-century France. Notless striking, of course, is the similarity in the actual consequencesof paper money inflation in revolutionary France and inflationeverywhere in the modern world.

From HENRY HAZLITT'S introduction toFiat Money Inflation in France by AndrewDickson White, available at $1.25 in paperback from the Foundation for EeonomicEducation, Irvington, N.Y. 10533.

A REVIEWER'S NOTEBOOK

HIDDEN

MORRIS C. SHUMIATCHER'S Welfare: Hidden Backlash (Toronto:McClelland and Stewart, Limited,$10.00), is one of the saddest booksI have ever read. The sadness hasa double focus. First, the booktells the story of what the whiteman, through his blindness, did tothe Indian in Canada. But evenmore ominous (for it could carryboth the white and the Indian intothe same bitter trough of degradation) , there is the between-thelines story of what compulsoryState welfare philosophy threatensto do to everybody in Canada whois within reach of a paternalisticlegislature in Ottawa.

The white man in Canada can'tsay that he hasn't had plenty ofwarning. Mr. Shumiatcher, a lawyer who once served as assistant

378

JOHN CHAMBERLAIN

to the socialist premier of Saskatchewan, was once imbued withthe idealistic notion that the onlything needed to abolish any wrongto an individual was a generousappropriation of money. He livedto learn that the worst thing youcould do to a human being, whether white, red - or, by extension,black - was .to make him a wardof government. A house cat, eventhough fed in a protected kitchenon choicest liver, still manages tomaintain an aura of self-respect.Not so the human animal whenfed by government, as Mr. Shumiatcher discovered in the days ofhis socialist novitiate and duringhis subsequent travels as a legalcounsel for. the Indians in JwesternCanada.

The Queen's commissioners had

1972 WELFARE: HIDDEN BACKLASH 379

good intentions back in the Eighteen Seventies when they embarked on the idealistic course ofprotecting the Indian. Theythought of him as a potentialwhite man who could become selfsupporting if .settled on the land.The assumption need not havebeen fatal if the Indians had beenpermitted to match their wits inthe market place with the new settlers who were pouring into western Canada.

The Perils of Protectionism

True enough, the Indian was notan agriculturalist. But he couldhave learned the hard way, throughcrop failures. The trouble with theQueen's philosophy (Did you knowthat Queen Victoria was a socialist?) is that it insisted that theIndian be protected against thepossibility of being rooked in atrade with an unscrupulous capitalist. Penned in on his reservedlands, the Indian was not allowedto farm for the market place. Thewhite man who was supposed tobe the Indian's keeper became hisjailer, shutting him behind a buckskin curtain for a wholly questionable good.

With enough welfare money inhis pocket to buy' firewater, theIndian was under no compulsionto take jobs building the railroadsor clearing the forests. Japaneseand Chinese laborers came in to

do the strong-arm work and remained to become self-respectinggardeners and restaurant owners.While strong-backed people fromEastern Europe made farms forthemselves and took their chancesin ,the market, the Indian sankdeeper and deeper into sloth. Hischildren, taken from the wild .andforced to sit in governmentschools, learned little of value to afuture on a reservation or in acity ghetto.

The crowning blow came whenthe Northern Indian was forced tobecome a "protected" trapper.Originally, the Indian trappercould sell his furs where hepleased. The Hudson's Bay Company was the big buyer. To get ", acontinuing supply of furs, theHudson's Bay Company would advance the Indian enough moneyfor a season's grubstake. The socialists of Saskatchewan thoughtit demeaning for the Indian tohave to go to a capitalist organization for a livelihood. Accordingly, they set up a State MarketingService and made it a punishableoffense for the Indian to sell hisfurs elsewhere.

Unfortunately the socialistsfailed to follow through with anyof the capitalist services that theHudson's Bay Company had provided. Where the Indian trapperhad once been able to get $400 incredit and food to go on the trap-


line for a full season, the socialists insisted on pay-as-you-go.They limited the size of the initialamount a trapper c·ould borrow tosome twenty dollars. This meantthat the trapper· could only stayout for a week at a time. When hereturned with his pelts, he had towait around for the MarketingService check. It seldom came ontime. Naturally the Indian's periods of drunkenness became morefrequent and more prolonged. Butthe wicked capitalist - Le., theHudson's Bay Company-had beendefeated. -

A Century of Medicare

The Indians of Canada have hadsocialized medicine for a far longer period than their white brothers. But in Saskatchewan, according to Mr. Shumiatcher's evidence,the incidence of sickness, particularly of communicable disease, isgreater among the Indians thanamong the population as a whole.The life expectancy of the Indianhas fallen behind that of the general population. Tuberculosis andvenereal disease once threatenedto end the "Indian problem" by depleting their bands. The deplorable health record of the reservation Indian was compiled at a timewhen he had a right to claim medical and hospital services "withoutmoney and without price." Afterwatching what bureaucratic medi-

cine has done to the Indian, Mr.Shumiatcher trembles to thinkwhat may happen to the population as a whole now that all Canadians have the same medical"rights" that the Indian has hadfor five generations.

Looking into the future, Mr.Shumiatcher suspects that thewhole of Canada will become a vastreservation for everybody. Unfeeling people have talked about the"seven deadly sins of the Indian."First, the Indian is dirty. Second,he is withdrawn from normal society. Third, he won't work. Fourth,he is unreliable and aimless. Fifth,he is a school dropout. Sixth, he ispromiscuous. And seventh, he escapes from reality through alcoholand peyote. These are the sins thatdevelop when one is not forced tocompete in the world. Mr. Shumiatcher sees all these deadly sinsrepeated in the white hippie padsthat have been spreading overCanada.

Reservations for Everyone?

The bloom goes quickly from theflower children. Promiscuity in thepads and communes has increasedvenereal disease among the youngin a terrifying way; one estimateis that the increase has gone ashigh as 1,000 per cent in five years.The hippie is supported in his indolence by a mixture of panhandling, shoplifting, and r~mittances

1972 WELFARE: HIDDEN BACKLASH 381

from spineless parents. This iswelfarism of a sort, especiallywhen the panhandling and shoplifting is condoned. Mr. Shumiatcher has an uneasy feeling thatthe hippie way of life will moreand more spread to the generalpopulation as the politicians, seekin votes, offer bigger and betterhandouts, thus emulating thespineless parents who have allowedtheir offspring to grow up withthe impression that affluence is nolonger dependent on dedication,training and work.

Though Mr. Shumiatcher's bookis limited to Canada, it could, presumably, have drawn upon "southof the border" material to makethe same points. The U.S. has donebadly by its Indians by followingpractices that are very similar tothose instituted by the Queen'scommissioners in Canada. If ourhippie problem has been mitigated,it is largely because many of ourflower children have gone to Toronto and other Canadian cities toescape the Vietnam War. As forour State Welfarism, it growsapace.

Will it soon be "Lo! The poorWhite Man"? Read Mr.Shumiatcher and weep.

~JOSEPH STORY AND THE

AMERICAN CONSTITUTION by

James McClellan (Norman, Okla

homa: University of Oklahoma

Press, 1971) xvii, 413 pp, $12.50.

Reviewed by Gottfried Dietze

THE GREAT HOPE of the AmericanRevolution was that self-govern-

.ment would lead to an increasingemancipation of the individual.Fortunately, the Founding Fathers,in what John Fiske called the critical period of American history,also knew that excesses of democracy could be detrimental to freedom by opening the door to majoritarianism and anarchy. Displaying the kind of common senseBlackstone hoped would prevailamong the members of Parliament- who would consider themselvesbound by the common law and refrain from oppressing life, libertyand property - Americans, in order to secure free government,adopted a Constitution providingfor a more perfect Union. Impliedin this Union was a balance between the rights and powers ofthe states and the nation, actingas mutual checks upon arbitrarygovernment. Since the new nationwas to be formed out of existingstates and since the powers of thenational government were few anddefined, whereas those of the stateswere many and not enumerated,


the immediate implementation ofthe federal balance involved astrengthening of the national government. The difficulty of thattask is reflected in AlexanderHamilton's letter to GouverneurMorris of February 27,1802, inwhich he writes that he was "stilllaboring to prop the frail andworthless fabric." Earlier, TheFederalist had left no doubt thatthe more perfect union was a meremeans for securing the rights ofthe individual. In essay 78 of thatcommentary, Hamilton also statedthat the judiciary was to be theguardian of the Constitution andthe free government it created.

In the exercise of that guardianship during the first decades ofthe new nation, Chief Justice Marshall generally is credited withhaving played the major part.However, upon reading McClellan'sattractive, scholarly book, the student of government may well decide that at least as much credit isdue to Justice Story. Story wasonly 32 years old when in 1811President Madison named him tothe Supreme Court. At that time,the high bench had been presidedover by John Marshall for tenyears and he was to continue tohead it for nearly another quarterof a century. While this reviewerfeels that the Marshall Court haddistinguished itself before it wasjoined by Story, through such im-

portant decisions as Marbury v.Madison (1803) and Fletcher v.Peck (1810), Mr. McClellan emphasizes the importance of Justice

.Story for American constitutionaldevelopment, showing the broadrange of Story's interests andachievements.

When appointed to the Court,Story had been a member of Congress, a Speaker of the House inhis home state, Massachusetts, theauthor of various books on the lawand a volume on poetry. While onthe Court, he published his classicCommentaries on the Constitutionand became a founder of the Harvard Law School where he taughtfor sixteen years. The author marshalls evidence that Story was atrue renaissance man. He couldhave added that Story translatedand commented upon Robert vonMohl's work on the American Constitution, a study which indicatesthat the outstanding Germ.an constitutionalist of his time had insights similar to those of Tocqueville.

The author emphasizes thatStory is unique in that he wasthe first and only disciple of Edmund Burke ever to sit on theSupreme Court. This may be technically correct if discipleship implies an unequivocal acknowledgment of influence. There were, ofcourse, many conservatives on thehigh bench who, like Story, felt

1972 OTHER BOOKS 383

that the Constitution was no merereflection of temporary whims ofthe American general will but w,asa transmutation of constitutionalist principles which had graduallybecome embodied in Western civilization, such as Christian ethics,natural law and the common law.The fact that in recent years theCourt has moved away from theseprinciples must not lead us to forget that up to Franklin Roosevelt'scourt-packing plan, the Court generally was considered a conservative institution and a bulwark forlaissez faire.

A strong defender of privateproperty, Story, in the famousCharles River Bridge case of 1837,dissented from the majority of theCourt. "In a powerful, exhaustivedissent, Story proudly excoriatedthe Court in the name of propertyand th.e constitutionally protectedrights of the common law. Thislast great undertaking on behalfof property was his best, a magnum opus which epitomized yearsof study spanning more than threedecades of dedicated effort." Declaring that he stood behind Marshall's decision. in Fletcher v. Peck,a decision which gave broad protection to property rights throughthe doctrine of implied limitations,Story exclaimed: "I stand uponthe old law, upon law establishedmore than three centuries ago, incases contested with as much abiI-

ity and learning as any in the annals of our jurisprudence, in resisting any such encroachmentsupon the rights and liberties ofthe citizens, secured by publicgrants. I will not consent to shaketheir title deeds by any speculativeniceties or novelties." There was"no surer plan to arrest all publicimprovements, founded on privat~

capital and enterprise, than tomake the outlay of that capital uncertain and questionable, both asto security and as to productiveness." Negating Marshall's doctrine of implied limitationsamounted to an infringement uponthe constitutional provision thatno state shall make laws impairing the obligation of contractslaws which had prompted the desire for the Philadelphia Convention and a more perfect union.

Like Marshall, Story favored astrong national government. Sinceour time had been characterizedby a march of power to Washington to the detriment of freedom,it could be argued that Story'semphasis on· national power potentially hurt the very values hewas favoring, namely, Christianethics, natural law, the commonlaw and the Constitution withtheir far-reaching protection ofhuman rights, including those ofproperty. Such a verdict would beunfair to Story who wanted national -'power (rudimentary as it


was at his time) only as a meansfor the protection of those rightsfrom the states, whose power atthat time was considerable. Justas he resented oppression by thestate governments, he also wouldhave disliked a despotic nationalgovernment. Similarly, it wouldbe unfair to blame Story for favoring judicial review. For~ again,he conceived of that institution asa mere means for the preservationof free government and not as onefor the promotion of social legis-

lation and perverted concepts ofcivil rights.

Mr. McClellan is to be congratulated for having shed new lighton one of America's greatest jurists - perhaps the greatest of themall. Given the recent publication ofGerald T. Dunne's Justice JosephStory and the Rise of the SupremeCourt, the important role JusticeStory played in the developmentof the American Constitution atlast may well get the recognitionthat has long been its due. ~

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