Mises Daily Articles

Facebook icon
LinkedIn icon
Twitter icon
Home | Mises Library | Looking Back

Looking Back

  • 3659.jpg

Tags Free MarketsMedia and CultureWar and Foreign PolicyEntrepreneurship

09/14/2009Garet Garrett

[This article is excerpted from The American Story by Garet Garrett, 1955]

For 125 years the American omen was splendid in isolation. What it signified was nothing already known. It was not a continuation of anything. It came from nowhere. It was original, improbably born, improbably nurtured, and did not belong to this world; deriving its luminosity from these words:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, and that among these are Life, Liberty and the Pursuit of Happiness. (Declaration of Independence)

Man was free in the device of his own being. He was born that way. Always before it was government that conferred freedom. Now for the first time man did not owe his freedom to government; he owed nothing to government, because government was his own instrument and he could do with it what he liked.

Then in one generation three events worked a metamorphosis.

The first was World War I, which shattered the tradition of nonentanglement in the quarrels of foreign countries. It was a precious vase and could never be restored.

The second event was the Great Depression, the severity of which was owing partly to the giddy behavior of this country in its first experience as the world's banker, and partly to the fantasy, largely supported by American credit, that World War I would never have to be paid for.

During the Great Depression the imperious tradition of limited government was sacrificed, and the ground principles of free, competitive enterprise were compromised beyond redemption.

The people were willing. They were not coerced. They were writhing in economic pain. Many forgot and many more seemed no longer to care that unless they absorbed their own troubles instead of unloading them on a paternalistic government they would never again be as free as their fathers were.

If the government intervened to increase the bargaining power of labor, in order to keep wages rising, it would thereafter control the labor contract by law. If it took extraordinary measures to restore the farmer's profit it would have to mind his sowing and reaping. If it undertook to provide social security it would have to make thrift compulsory. And so on.

Nevertheless the clamor for relief became a frenzy. There had been bad depressions before and always the people had demanded relief — but always before the government — limited government — had said no. Now it was saying yes and making political capital of it.

It is hard for the government to say no. On the other hand, relieving everybody out of the public purse is but a postponement of evil. That is why the New Deal was never able to bring about Recovery.

The government has no money of its own. Its resources are two. By exercise of the tax power it can take from these and give to those. That it did. Secondly, it can print money and scatter it. That also it did.

The public purse, continuously so replenished, was opened for unemployment relief, for the relief of agriculture and for the relief of those called the underprivileged, who are always poor and who suffer extremely in bad times. Many of these were set up in ideal villages and on farmsteads under direction of federal bureaus, thus becoming wards of the government, and were never so well off before.

Farmers accepted regimentation and marketing control in return for guaranteed prices; if nevertheless they produced a surplus which might cause prices to decline the government would take it off their hands.

The banking world, sooner than take its own losses, accepted government control of banking and credit.

Public credit was invoked to save millions of private debtors from the sheriff's hammer. The Reconstruction Finance Corporation loaned public money to railroads to pay off their debts in Wall Street.

And business generally, meaning private enterprise as a whole, in return for illegal permission to limit competition and raise prices, embraced the principle of a Planned Economy.

The debacle was complete.

Laissez-faire was dead. But the formal obsequies were postponed for ten years. In 1946 Congress passed the Employment Act. This was not an emergency law. The enactment of it caused no furor. Yet it was a law of revolutionary purport and delivered into the hands of government ultimate control of the American economy. Under this law the government assumes the following responsibilities:

  1. To maintain full employment in the nation;
  2. To keep the economy in a state of equilibrium;
  3. To see that people have at all times plenty of buying power;
  4. To save the country from depressions, and,
  5. To use its total power to these ends.

Whether or not with all its power the government can do these things had never been proved; yet it was certain that it could not attempt to do them without touching much more deeply all the ways in which people make their bargains, sell their labor, produce and exchange wealth with one another. Free markets would survive, if at all, only by bureaucratic sanction. Without free markets people could not be free, or free only to charge and pay what prices the government permitted and to conform production to an official pattern.

Of the three events that worked the metamorphosis, the third was World War II. We are not yet far enough away to comprehend that this was the incomparable disaster since the fall of man, and a penalty perhaps for the same sin, namely, vanity of knowledge. The temptation was power, and the last form assumed by the illusion of power was the atomic bomb.

All that we can see from here is that World War II launched the American on a career of empire — in one way the strangest empire that ever existed, with everything going out and nothing coming in. Even if it were only to police the world, that is a service for which the world should pay. Policing is a costly business. The Romans policed the world and kept the Pax Romana, and got the cost of it back in taxes; the British policed it and kept the Pax Britannica and got theirs back in the terms of trade. The American pays for the privilege and rationalizes it by telling himself it is for the security of the United States.

The three experiences that changed so many ancient signs had no shape of necessity. The American went forth to meet them. Why? What was new in his thoughts and passions that moved him to trample down his traditions? Why, for example, did the people willingly embrace the New Deal, seeming not to care in the least that it infringed their liberties? To do this they had to overcome the strongest political instinct they possessed, namely, fear of big government. Economic pain does not explain it entirely; moreover, the New Deal continued to be popular after the pain was gone.

The seeds of statism, socialism, Fabanianism, Marxism, and anti-capitalism had been blowing this way from Europe for a long time and had never produced here a crop larger than an anarchist's beard — not until the gardeners appeared.

The gardeners were a cult of intellectual disaffectionists, rising out of the academic world, all owing much, perhaps too much, to the capitalist dollars with which education was more richly endowed here than anywhere else in the world.

They were teachers, writers of text books, doctors of political science, and believed nothing good of American capitalism, which they never understood, supposing it to be like European capitalism, which was not so. They thought the poor were poor because the rich were rich, and adopted the poor not for love of them but out of hatred for the rich. They were academic revolutionaries, in revolt against their natural and historical fathers.

They had nothing to offer capitalism; therefore, capitalism had nothing to offer them. Revolution would be their opportunity, if a leader came to make it; meanwhile their business was to destroy the old Copy Book Maxims and erode away all traditional American values. Patriotism was a racket. Nationalism was but an arrogant assertion of one people's superiority. Individualism was anarchy.

And freedom — what was that? The idea of freedom had been imposed by the strong on the many, and sometimes it meant the freedom to starve. Not one of them could have understood the emotions of the returned native whose first act on debarking from a ship in South Street was to kneel and kiss the cobblestones, for joy at being in his own free land again.

Their philosophy was pragmatic, derived from their hero John Dewey. Anything that worked was right because it worked, except of course capitalism. Their morals were worse. The law of expediency was higher than any principle. If in the name of social justice, as they might define it, private property were confiscated and the integrity of contract destroyed, that was all right. And they hated above all else the profit motive.

Then came the Russian Revolution. The Bolshevik, no matter what else, was a man of strong entrails. He did not mind spilling blood to bring his world to pass. Moreover, he had the scientific technique of revolution. His appeal to the intellectual disaffectionists, too pale to start a revolution of their own, was irresistible. It immediately reddened the textbooks they wrote, their teaching, and their contributions to the academic literature of economic and political science.

Before the Great Depression, four student generations had been exposed to the alienating influence of this new education; and the disaffected intellectuals, all with one voice, acclaimed the Depression as proof of their thesis that the profit motive could lead only to disaster and that capitalism was morally and economically bankrupt. The curious fact was that the leaders of capitalism, all in a panic, behaved as if they were guilty.

But for all of that, it was no activity of the intellect that moved the American to return to Europe with his sword — to the Europe from which his forefathers fled. After the first time his disillusionment was so bitter that he vowed never, never to do it again. The fathers had been right. Americans should have nothing to do with the quarrels of Europe. Then, within one generation, he did it a second time.

Why? The spectacle is one that will not easily dissolve in the generalizations of history. There was no profit in it. There was nothing he could get out of it, and in each case he made it a stipulation that he would take nothing for himself.

It is a familiar saying that leadership was the decisive factor. It is undoubtedly true that if either the Wilson administration or the Roosevelt regime had been resolute against war the country could have been kept neutral. There was not only a strong habit of isolation; there was a powerful tradition behind it. That could have been built upon to almost any point, in place of the war fever; but in both cases isolationism became a word of reproach and a political liability.

On the other hand, if the people had been resolute against war they could not have been pushed, led, or lied into it.

This holds notwithstanding the fact that the Japanese attack on Pearl Harbor instantly united the people for World War II. That was a simple reflex action. Yet anyone who will read the diplomatic history of American-Japanese relations must realize that the Japanese were goaded into making the attack. If the Roosevelt administration had not been looking for the perfect pretext to enter the war against Hitler the attack on Pearl Harbor might have been averted — even afterward Hitler was the number-one enemy.

Many forces were acting. Not all of them visible. That would be so. But one may well believe that the controlling truth was romantic.

Both Woodrow Wilson and Franklin D. Roosevelt were Messiahs, one by temperament and the other by evolvement. Thus in each case there was the messianic voice of a president calling to something in people that was stronger than reason. The only name for it would be the crusading spirit, which was latent then and always had been.

Since the Colonial Revolution, liberation had been the most evocative word in the American language. In neither World War I nor World War II was there a single selfish or self-regarding slogan. For what was written on the banners? Peace Without Victory. The Armageddon of Right Against Might. A New World for Mankind. Down with Aggression. It was not art of title making that caused General Dwight D. Eisenhower to name his book Crusade in Europe. That is what he thought it was.

You could make a list of slogans derived from fear; but they were afterthoughts and, anyhow, the fear was unreal.

From the point of view of a cynical world the American who entered two world wars and won them both, when his own interest was not paramount, was either an inscrutable hypocrite or an unbelievable romantic, and in either case a dangerous possessor of the world's ultimate power. And afterward, unconsciously perhaps, the only symptom of a unifying thought in the world was distrust of that American power.

Shield icon interview