Chapter 3--Triangular Intervention (continued)
Previous
Section * Next
Section
Table
of Contents
Chapter
3—Triangular Intervention
(continued)
K.
Antitrust Laws
It may seem strange to the reader that one of the most important
governmental checks on efficient competition, and therefore grants of
quasi monopolies, are the antitrust laws. Very few,
whether economists or others, have questioned the principle of the
antitrust laws, particularly now that they have been on the statute
books for some years. As is true of many other measures, evaluation of
the antitrust laws has not proceeded from an analysis of their nature
or of their necessary consequences, but from an impressionistic
reaction to their announced aims. The chief criticism of these laws is
that “they haven’t gone far enough.” Some
of those most ardent in the proclamation of their belief in the
“free market” have been most clamorous in calling
for stringent antitrust laws and the “breakup of
monopolies.” Even the most “right-wing”
economists have only gingerly criticized certain antitrust procedures,
without daring to attack the principle of the laws per se.
The only viable definition of monopoly is a grant of privilege from the
government.
It therefore becomes quite
clear that it is impossible for the government to decrease
monopoly by passing punitive laws. The only way for the government to
decrease monopoly, if that is the desideratum, is to remove its own
monopoly grants. The antitrust laws, therefore, do not in the least
“diminish monopoly.” What they do accomplish is to
impose a continual, capricious harassment of efficient business
enterprise. The law in the United States is couched in vague,
indefinable terms, permitting the Administration and the courts to omit
defining in advance what is a “monopolistic” crime
and what is not. Whereas Anglo-Saxon law has rested on a structure of
clear definitions of crime, known in advance and discoverable by a jury
after due legal process, the antitrust laws thrive on deliberate
vagueness and ex post facto rulings. No businessman
knows when he has committed a crime and when he has not, and he will
never know until the government, perhaps after another shift in its own
criteria of crime, swoops down upon him and prosecutes. The effects of
these arbitrary rules and ex post facto findings of
“crime” are manifold: business initiative is
hampered; businessmen are fearful and subservient to the arbitrary
rulings of government officials; and business is not permitted to be
efficient in serving the consumer. Since business always tends to adopt
those practices and that scale of activity which maximize profits and
income and serve the consumers best, any harassment of business
practice by government can only hamper business efficiency and reward
inefficiency.
It is vain, however, to call simply for clearer statutory definitions
of monopolistic practice. For the vagueness of the law results from the
impossibility of laying down a cogent definition of monopoly on the
market. Hence the chaotic shift of the government from one
unjustifiable criterion of monopoly to another: size of firm,
“closeness” of substitutes, charging a price
“too high” or “too low” or the
same as a competitor, merging that “substantially lessens
competition,” etc. All these criteria are meaningless. An
example is the criterion of substantially lessening
competition. This implicitly assumes that
“competition” is some sort of quantity.
But it is not; it is a process, whereby individuals and firms supply
goods on the market without using force.
To preserve
“competition” does not mean to dictate arbitrarily
that a certain number of firms of a certain size have to exist in an
industry or area; it means to see to it that men are free to compete
(or not) unrestrained by the use of force.
The original Sherman Act stressed “collusion” in
“restraint of trade.” Here again, there is nothing
anticompetitive per se about a cartel, for there is
conceptually no difference between a cartel, a merger, and the
formation of a corporation: all consist of the voluntary pooling of
assets in one firm to serve the consumers efficiently. If
“collusion” must be stopped, and cartels must be
broken up by the government, i.e., if to maintain competition it is
necessary that co-operation be destroyed, then the
“anti-monopolists” must advocate the complete
prohibition of all corporations and partnerships. Only individually
owned firms would then be tolerated. Aside from the fact that this
compulsory competition and outlawed co-operation is hardly compatible
with the “free market” that many antitrusters
profess to advocate, the inefficiency and lower productivity stemming
from the outlawing of pooled capital would send the economy a good part
of the way from civilization to barbarism.
An individual becoming idle instead of working may be said to
“restrain” trade, although he is simply not
engaging in it rather than “restraining”
it. If antitrusters wish to prevent idleness, which is the logical
extension of the W.H. Hutt concept of consumers’ sovereignty,
then they would have to pass a law compelling labor and outlawing
leisure—a condition certainly close to slavery.
But if we confine the
definition of “restraint” to restraining the trade
of others, then clearly there can be no restraint
of trade at all on the free market—and only the government
(or some other institution using violence) can restrain trade. And
one conspicuous form of such restraint is antitrust legislation itself!
One of the few cogent discussions of the antitrust principle in recent
years has been that of Isabel Paterson. As Mrs. Paterson states:
Standard
Oil did not restrain trade; it went out to the ends of the earth to
make a market. Can the corporations be said to have
“restrained trade” when the trade they cater to had
no existence until they produced and sold the goods? Were the motor car
manufacturers restraining trade during the period in which they made
and sold fifty million cars, where there had been no cars before? . . .
Surely . . . nothing more preposterous could have been imagined than to
fix upon the American corporations, which have created and carried on,
in ever-increasing magnitude, a volume and variety of trade so vast
that it makes all previous production and exchange look like a rural
roadside stand, and call this performance “restraint of
trade,” further stigmatizing it as a crime!
And
Mrs. Paterson concludes:
Government
cannot “restore competition” or
“ensure” it. Government is monopoly; and all it can
do is to impose restrictions which may issue in monopoly, when they go
so far as to require permission for the individual to engage in
production. This is the essence of the Society-of-Status. The reversion
to status law in the antitrust legislation went unnoticed . . . the
politicians . . . had secured a law under which it was impossible for
the citizen to know beforehand what constituted a crime, and which
therefore made all productive effort liable to prosecution if not to
certain conviction.
In
the earlier days of the “trust problem,” Paul de
Rousiers commented:
Directly
the formation of Trusts is not induced by the natural action of
economic forces; as soon as they depend on artificial protection (such
as tariffs), the most effective method of attack is to simply reduce
the number and force of these protective accidents to the greatest
possible extent. We can attack artificial conditions, but are impotent
when opposing natural conditions. . . . America has hitherto pursued
the exactly reverse methods, blaming economic forces tending to
concentrate industry, and joining issue by means of antitrust
legislation, a series of entirely artificial measures. Thus there is to
be no understanding between competing companies, etc. The results have
been pitiful—a violent restriction of fruitful initiative. .
. . [The legislation] does not touch the rest of the evil, enlarges, in
place of restraining, artificial conditions, and finally regulates and
complicates matters whose supreme needs are simplification and removal
of restrictions.
L.
Outlawing Basing-Point Pricing
An important example of the monopolizing effects of a program
supposedly designed to combat monopoly is the court
decision outlawing basing-point pricing. On the
free market, price uniformity means uniformity at each
consuming center, and not uniformity at each mill. In
commodities where freight costs are a large proportion of final price,
this distinction becomes important, and many firms adopt such price
uniformity, enabling firms further away from a consuming center to
“absorb” some freight charges in order to compete
with local firms. One of the forms of freight absorption is called
“basing-point pricing.” Ruling this practice
“monopolistic” and virtually decreeing that every
firm must charge uniform prices “at the mill” not
only prevents interlocational competition in such industries, but
confers an artificial monopolistic privilege on local firms. Each local
firm is granted the area of its own location, with a haven set by the
freight costs of out-of-town rivals, within which it can charge its
customers a monopoly price. Firms better able to absorb freight costs
and prosper in a wider market are penalized and prevented from doing
so. Furthermore, the decreasing-cost advantages of a large-scale market
and large-scale production are eliminated, as each firm is confined to
a small compass. Firms’ locations are altered, and they are
forced to cluster near large consuming areas, despite the greater
advantages that other locations had offered to these companies.
Furthermore, such a ruling
penalizes small businesses, since only large firms can afford to build
many branches to compete in each local area.
M.
Conservation Laws
Conservation laws restrict the use of depleting resources and
force owners to invest in the maintenance of replaceable
“natural” resources. The effect of both cases is
similar: the restriction of present production for the supposed benefit
of future production. This is obvious in the case of depleting
resources; factors are also compelled to maintain replaceable
resources (such as trees) when they could have more profitably engaged
in other forms of production. In the latter case there is a double
distortion: factors are forcibly shifted to future production, and they
are also forced into a certain type of future
production—the replacement of these particular resources.
Clearly, one aim of conservation laws is to force
the ratio of consumption to saving (investment) lower than the market
would prefer. People’s voluntary allocations made according
to their time preferences are forcibly altered, and relatively more
investment is forced into production for future consumption. In short,
the State decides that the present generation must be made to allocate
its resources more to the future than it wishes to do; for this service
the State is held up as being “farseeing,” compared
to “shortsighted” free individuals. But,
presumably, depleting resources must be used at some time, and some
balance must always be struck between present and future production.
Why does the claim of the present generation weigh so lightly in the
scales? Why is the future generation so much more worthy that it can
compel the present to carry a greater load? What did the future ever do
to deserve privileged treatment?Indeed, since the future is likely
to be wealthier than the present, the reverse might well apply! The
same reasoning applies to all attempts to change the market’s
time-preference ratio. Why should the future be able to enforce greater
sacrifices on the present than the present is willing to undergo?
Furthermore, after a span of years, the future will become the present;
must the future generations then also be restricted in their production
and consumption because of another wraithlike
“future”? It must not be forgotten that the aim of
all productive activity is goods and services that will and can be
consumed only in some present. There is no rational
basis for penalizing consumption in one present and privileging one
future present; and there is still less reason for
restricting all presents in favor of some
will-o’-the-wisp “future” that can never
appear and lies always beyond the horizon. Yet this is the goal of
conservation laws. Conservation laws are truly
“pie-in-the-sky” legislation.
Individuals in the market decide on the time structure in their
allocation of factors in accordance with the estimated revenue that
their resources will bring in present as against future use. In other
words, they will tend to maximize the present value, at any time, of
their land and capital assets.
The time structure of
rental income from assets is determined by the interest rate, which in
turn is determined by the time-preference schedules of all individuals
on the market. Time preference, in addition to the specific estimated
demands for each good, will determine the allocations of factors to
each use. Since a lower time preference will connote more investment in
future consumers’ goods, it will also mean more
“conservation” of natural resources. A high time
preference will lead to less investment and more consumption in the
present, and consequently to less “conservation.”
Most conservationist arguments evince almost no familiarity with
economics. Many assume that entrepreneurs have no foresight and would
blithely use natural resources only to find themselves some day
suddenly without any property. Only the wise, providential State can
foresee depletion. The absurdity of this argument is evident when we
realize that the present value of the entrepreneur’s land is
dependent on the expected future rents from his resources. Even if the
entrepreneur himself should be unaccountably ignorant, the market will
not be, and its valuation (i.e., the valuation of interested experts
with money at stake) will tend to reflect its value accurately. In
fact, it is the entrepreneur’s business to forecast, and he
is rewarded for correct forecasting by profits. Will entrepreneurs on
the market have less foresight than bureaucrats comfortably ensconced
in their seizure of the taxpayers’ money?
Another error made by the conservationists is to assume a technology
fixed for all time. Human beings use what resources they have; and as
technological knowledge grows, the types of usable resources multiply.
If we have less timber to use than past generations, we need less too,
for we have found other materials that can be used
for construction or fuel. Past generations possessed an abundance of
oil in the ground, but for them oil was valueless
and hence not a resource. Our modern advances have taught us how to use
oil and have enabled us to produce the equipment for this purpose. Our
oil resources, therefore, are not fixed; they are
infinitely greater than those of past generations. Artificial
conservation will wastefully prolong resources beyond the time when
they have become obsolete.
How many writers have wept over capitalism’s brutal ravaging
of the American forests! Yet it is clear that American land has had
more value-productive uses than timber production, and hence the land
was diverted to those ends that better satisfied consumer wants.
What standards can the
critics set up instead? If they think too much forest has been cut
down, how can they arrive at a quantitative standard to determine how
much is “too much”? In fact, it is impossible to
arrive at any such standard, just as it is impossible to arrive at any
quantitative standards for market action outside the market. Any
attempt to do so must be arbitrary and unsupported by any rational
principle.
America has been the prime home of conservation laws, particularly on
behalf of its “public domain.” Under a purely
free-enterprise system, there would be no such thing as a
governmentally owned public domain. Land would simply remain unowned
until it first came into use, after which it would be owned by the
first user and his heirs or assigns.
The consequences of
government ownership of the public domain will be further explored
below. Here we may state a few of them. When the government owns the
land and permits private individuals to use it freely, the result is
indeed a wasteful overexploitation of the resource. More factors are
employed to use up the resource than on a free market, since the only
gains to the users are immediate; and if they wait, other users will
deplete the limited resource. Free use of a governmentally owned
resource truly inaugurates a “war of all against
all,” as more and more users, eager for the free bargain,
attempt to exploit the scarce resource. To have a scarce resource and
to make everyone believe (because of the free gift of use) that its
supply is unlimited, causes overuse of the resource, favoritism,
figurative queuing up, etc. A striking example was the Western grazing
lands in the latter half of the nineteenth century. The government
prevented cattlemen from owning the land and fencing it in, and
insisted it be kept as “open range” owned by the
government. The result was excessive use of the range and its untimely
depletion.
Another example is the
rapid depletion of the fisheries. Since no one is permitted to own any
segment of the sea, no one sees any sense in preserving the value of
the resource, as each is benefited only by rapid use, in advance of his
competitors.
Leasing is hardly a superior form of land use. If the government owns
the land and leases it to grazers or timber users, once again there is
no incentive for the lessee to preserve the value of the resource,
since he does not own it. It is to his best interest as a lessee to use
the resource as intensively as possible in the present.
Hence, leasing also depletes natural resources excessively.
In contrast, if private individuals were to own all the lands and
resources, then it would be to the owners’ interest to maximize
the present value of each resource. Excessive depletion of
the resource would lower its capital value on the market. Against the
preservation of the capital value of the resource as a whole, the
resource owner balances the income to be presently obtained from its
use. The balance is decided, ceteris paribus, by
the time preference and the other preferences of the market.
If private individuals can
only use but not own the land, the balance is destroyed, and the
government has provided an impetus to excessive present use.
Not only is the announced aim of conservation
laws—to aid the future at the expense of the
present—illegitimate, and the arguments in favor of it
invalid, but compulsory conservation would not achieve even this goal.
For the future is already provided for through present saving and
investment. Conservation laws will indeed coerce greater investment in
natural resources: using other resources to maintain renewable
resources and forcing a greater inventory of stock in depletable
resources. But total investment is determined by
the time preferences of individuals, and these will not have changed.
Conservation laws, then, do not really increase
total provisions for the future; they merely shift investment from
capital goods, buildings, etc., to natural resources. They thereby
impose an inefficient and distorted investment pattern on the economy.
Given the nature and consequences of conservation laws, why should
anyone advocate this legislation? Conservation laws, we must note, have
a very “practical” aspect. They restrict
production, i.e., the use of a resource, by force and thereby create a
monopolistic privilege, which leads to a restrictionist price to owners
of this resource or of substitutes for it. Conservation laws can be
more effective monopolizers than tariffs because, as we have seen,
tariffs permit new entry and unlimited production by domestic
competitors.
Conservation laws, on the
other hand, serve to cartelize a land factor and absolutely restrict
production, thereby helping to insure permanent (and continuing)
monopoly gains for the owners. These monopoly gains, of course, will
tend to be capitalized into an increase in the capital value of the
land. The person who later buys the monopolized factor, then, will
simply earn the going rate of interest on his investment, even though
the monopoly gain will be included in his earnings.
Conservation laws, therefore, must also be looked upon as grants of
monopolistic privilege. One outstanding example is the American
government’s policy, since the end of the nineteenth century,
of “reserving” vast tracts of the “public
domain”—i.e., the government’s land
holdings.
Reserving means that the
government keeps land under its ownership and abandons its earlier
policy of keeping the domain open for homesteading by private owners.
Forests, in particular, have been reserved, ostensibly for the purpose
of conservation. What is the effect of withholding huge tracts of
timberland from production? It is to confer a monopolistic privilege,
and therefore a restrictionist price, on competing
private lands and on competing timber.
We have seen that limiting the labor supply confers a restrictionist
wage on the privileged workers (while the workers pushed out by union
wage rates or by licenses or immigration laws must find lower-paying
and less value-productive jobs elsewhere). A monopoly or quasi-monopoly
privilege for the production of capital or consumer goods, on the other
hand, may or may not confer a monopoly price, depending on the
configuration of the demand curves for the individual firms, as well as
their costs. Since a firm can contract or expand its supply at will, it
sets its supply with the knowledge that lowering output to achieve a
monopoly price must also lower the total amount of goods sold.
The laborer need bother
with no such consideration (aside from a negligible variation in
demands for each laborer’s total hours of service). What
about the privileged landowner? Will he achieve a definite
restrictionist, or a possible monopoly, price? A prime characteristic
of a piece of land is that it cannot be increased by labor; if it is
augmentable, then it is a capital good, not land. The same, in fact,
applies to labor, which, in all but long periods of time, can be
regarded as fixed in its total supply. Since labor in its totality
cannot be increased (except, as we have noted, in regard to hours of
work per day), government restriction on the labor
supply—child labor laws, immigration barriers,
etc.—therefore confers a restrictionist wage increase on the
workers remaining. Capital or consumer goods can be increased or
decreased, so that privileged firms must take their demand curves into
account. Land, on the other hand, cannot be increased; restriction of
the supply of land, therefore, also confers a restrictionist price of
land above the free-market price.
The same is true for
depleting natural resources, which cannot have their supply increased
and are therefore considered part of land. If the government forces
land or natural resources out of the market, therefore, it inevitably
lowers the supply available on the market and just as inevitably
confers a monopoly gain and a restrictionist price on the remaining
landowners or resource owners. In addition to all of their other
effects, conservation laws force labor to abandon good lands and,
instead, cultivate the remaining submarginal land. This coerced shift
lowers the marginal productivity of labor and consequently reduces the
general standard of living.
Let us return to the government’s policy of reserving timber
lands. This confers a restrictionist price and a monopoly gain on the
lands remaining in use. Land markets are specific and do not have the
same general connexity as labor markets. Therefore, the restrictionist
price rise is confined far more to lands that directly competed, or
would compete, with the withdrawn or “reserved”
lands. In the case of American conservation policy, the particular
beneficiaries were (a) the land-grant Western
railroads and (b) the existing timber-owners. The
land-grant railroads had received vast subsidies of land from the
government: not only rights-of-way for their roads, but fifteen-mile
tracts on either side of the line. Government reservation of public
lands greatly raised the price received by the railroads when they
later sold this land to new inhabitants of the area. The railroads thus
received another gift from the government—this time in the
form of a monopoly gain, at the expense of the consumers.
The railroads were not ignorant of the monopolistic advantages that
would be conferred upon them by conservation laws; in fact, the
railroads were the financial “angel” of the entire
conservation movement. Thus, Peffer writes:
There
was a definite basis for the charge that the railroads were interested
in a repeal of [various laws permitting easy transfer of the public
domain to the hands of private settlers]. The National Irrigation
Association, which was the most vigorous advocate of land law reform
outside of the Administration, was financed in part by the
transcontinental railroads and by the Burlington and the Rock Island
railroads, to the amount of $39,000 a year, out of a total budget of
around $50,000. The program of this association and the railroads, as
announced by James J. Hill [a pre-eminent railroad magnate] was almost
more advanced than that of [the leading conservationists].
The timber owners also understood the gains they would acquire from
forest “conservation.” President Theodore Roosevelt
himself announced that “the great users of timber are
themselves forwarding the movement for forest preservation.”
As one student of the problem declared, the
lumber
manufacturers and timber owners . . . had arrived at a harmonious
understanding with Gifford Pinchot [the leader in forest conservation]
as early as 1903. . . . In other words, the government by withdrawing
timber lands from entry and keeping them off the market would aid in
appreciating the value of privately owned timber.
For further elaboration, see
Man, Economy, and State, chapter 10.
See John W.
Scoville and Noel Sargent, Fact and Fancy in the T.N.E.C.
Monographs (New York.: National Association of Manufacturers,
1942), pp. 298–321, 671–74.
F.A. Hayek, Individualism
and Economic Order (Chicago: University of Chicago Press,
1948), chap. V.
Municipal ordinances against
“vagrancy” or “loitering” are
certainly a beginning in this direction and are used to impose forced
labor upon the poorest sectors of the population.
Isabel Paterson, The God
of the Machine (New York: G.P. Putnam’s Sons,
1943), pp. 172, 175. See also Scoville and Sargent,
Fact and Fancy in the T.N.E.C. Monographs, pp.
243–44.
Paterson, God of the
Machine, pp. 176–77.
Paul de Rousiers, Les
Industries Monopolisées aux Etats-Unis, as quoted
in Gustave de Molinari, The Society of Tomorrow
(New York: G.P. Putnam’s Sons, 1904), p. 194.
See United
States Steel Corporation, T.N.E.C. Papers (New York: U.S.
Steel Corp., 1940), II, 102–35.
See William M.
Simon, “The Case Against the Federal Trade
Commission,” University of Chicago Law Review,
1952, pp. 320–22. On basing points, see also
Scoville and Sargent, Fact and Fancy in the T.N.E.C.
Monographs, pp. 776–82; Wayne A. Leeman,
“Review of Paul Giddens’ Standard Oil
Company (Indiana),” American Economic
Review, September, 1956, p. 733; and Donald Dewey,
“A Reappraisal of F.O.B. Pricing and Freight
Absorption,” Southern Economic Journal,
July, 1955, pp. 48–54.
Economists have, until recently,
almost completely neglected conservation laws, leaving the field to
romantic “conservationists.” But see
the brilliant analysis by Anthony Scott, “Conservation Policy
and Capital Theory,” Canadian Journal of Economics
and Political Science, November, 1954, pp. 504–13,
and idem, Natural Resources: The
Economics of Conservation (Toronto: University of Toronto
Press, 1955); see also Mises, Human Action,
pp. 652–53.
Scott points out that this
attitude rests on the contemptuous and unsupported view that future
generations will not be as competent to take care of themselves as is
the present generation. See Scott, Natural
Resources, p. 94.
As Scott aptly asks: Why agree
“to preserve resources as they would be in the absence of
their human users?” Scott, “Conservation
Policy,” p. 513. And further: “Most of [our]
progress has taken the form of converting natural resources into more
desirable forms of wealth. If man had prized natural resources above
his own product, he would doubtless have remained savage, practicing
‘conservatism.’” Scott, Natural
Resources, p. 11. If the logic of tariffs is to destroy the
market, then the logic of conservation laws is to destroy all human
production and consumption.
Strictly, investors will attempt
to maximize their “internal rates of return,” but
maximizing the present value is close enough for our purposes. On the
difference between the two goals in “Austrian” vs.
“neo-classical” thought, see
André Gabor and I.F. Pearce, “A New Approach to
the Theory of the Firm,” Oxford Economic Papers,
October, 1952, pp. 252–65.
In some cases, however, lower time
preferences and greater investment activity will deplete natural
resources at a more rapid rate, if there is a particularly great demand
for their use in the new activity. This is likely to be true of such
resources as coal and oil. See Scott, Natural
Resources, pp. 95–97.
Entrepreneurs with poor foresight
are quickly expelled from their positions through losses. It is ironic
that the “plight of the Okies” in the
1930’s, widely publicized as a plea for conservation laws and
the result of “cruel capitalism,” actually resulted
from the fact that bad entrepreneurs (the Okies) farmed land that was
valueless and submarginal. Forced “conservation”
investment on this submarginal land or government subsidization of the
“Okies” would have aggravated a dislocation that
the market quickly eliminated.
Much American soil erosion, furthermore, has stemmed from failure to
preserve full private property rights in land. Tenant farmers, moving
every few years, often milked the capital of the landlord’s
property, wasting the resource, in default of proper enforcement of the
contractual necessity to return the land to its owner intact. See
Scott, National Resources, pp. 118, 168.
A typical conservationist
complainer was J.D. Brown who, in 1832, worried over the consumption of
timber: “Whence shall we procure supplies of timber fifty
years hence for the continuance of our navy?” Quoted in
Scott, National Resources, p. 37. Scott also notes
that the critics never seemed to realize that a nation’s
timber can be purchased from abroad. Scott, “Conservation
Policy.”
This system was dimly adumbrated
by the Homestead Law of 1862. However, this law imposed an arbitrary
and pointless maximum on the size of farm that could be staked out by
the first user. This limitation had the result of nullifying the law
further West, where the minimum acreage needed for cattle or sheep
grazing was far larger than the antiquated legal maximum would allow.
Furthermore, the maximum limitation and the requirement that the land
be used for farming led to the very “ravaging” of
the forests that conservationists now deplore, for it hobbled private
ownership of large forest tracts.
See E. Louise
Peffer, The Closing of the Public Domain (Stanford:
Stanford University Press, 1951), pp. 25–27. On the
advantages of private ownership of grazing land, see
the petition of the American Cattle Growers Association, March, 1902, ibid.,
pp. 78–79. See also Samuel P. Hays, Conservation
and the Gospel of Efficiency (Cambridge: Harvard University
Press, 1959), pp. 50–51. The government’s failure
to extend the homestead principle to the larger areas had another
important social effect: it led to constant squabbles between the
users—the cattlemen and the other homesteaders who came later
and demanded their “just share” of the free land.
For an illuminating discussion of
private property rights in fisheries, see Gordon
Tullock, The Fisheries (Columbia: University of
South Carolina Bureau of Business and Economic Research, February,
1962). See also Anthony Scott, “The
Fishery, A Sole Resource,” Journal of Political
Economy, April, 1955, and idem, Natural
Resources, pp. 117–29.
High demand for the product
increases the value of the resource, and thereby stimulates its
preservation, investment in it, and exploration for it. High-cost
sources of supply will now be tapped, thus further increasing the
effective supply of the product on the market. See
Scott, Natural Resources, p. 14.
See ibid.,
pp. 21–22.
There is another similarity
between tariffs and conservation laws: both aim at national
self-sufficiency, and both try to foster national or local industries
by coercive intervention in the free market.
For an analysis of government land
ownership and government ownership in general, see below.
On the free market, the demand
curve for each firm in equilibrium must be elastic
above the equilibrium price; otherwise the firm would reduce output.
This does not, of course, mean that the demand curve for the
entire industry must be elastic. When we refer to a possible
monopoly price, the demand curve consulted by each monopolistic firm is
its own.
Another example of government
creation of a monopoly gain in land has been cited by the Georgist
economist, Mason Gaffney: “City governments all over the
country deliberately keep ‘dead lands’ off the
market, with the avowed purpose of ‘protecting’
other land prices.” Gaffney cites the head of the American
Society of Planning Officials as advising that a vacant one-third of
urban land be “more or less permanently removed from private
ownership” in order to keep up land values for the owners of
the remaining two-thirds. Gaffney concludes: “Following this
advice, many state and local governments avoid returning tax-reverted
lands to use.” Mason Gaffney, “Vituperation Well
Answered,” Land and Liberty, December,
1952, p. 126; reprinted in Spencer Heath, Progress and
Poverty Reviewed (2nd ed.; New York: The Freeman, 1953).
Peffer, Closing of the
Public Domain, p. 54. Senator H.C. Hansbrough also pointed
out that the railroads paid $45,000 annually to a leading
conservationist magazine, The Talisman, and
financed the Washington conservation lobby. H.C. Hansbrough, The
Wreck: An Historical and Critical Study of the Administrations of
Theodore Roosevelt and William Howard Taft (1913), p. 52.
J.H. Cox, “Organization
of the Lumber Industry in the Pacific Northwest,
1889–1914” (Ph.D. diss., University of California,
1937), pp. 174–77; cited in Peffer, Closing of the
Public Domain, p. 57. See also Hays, Conservation
and the Gospel of Efficiency.
Previous Section * Next Section
Table of Contents