Anything That’s Peaceful

• CHAPTER 2 •

THE AMERICAN SETTING:
PAST AND PRESENT

SOMEONE ONCE SAID: It isn’t that Christianity has been tried and found wanting; it has been tried and found difficult—and abandoned. Perhaps the same running away from righteousness is responsible for freedom’s plight for, plainly, the American people are becoming more and more afraid of and are running away from—abandoning—their very own freedom revolution.

Freedom, it seems to me, is of two broad types, psychological and sociological. The psychological—perhaps the more important of the two, but not the major concern of this book—has to do with man freeing himself from his own superstitions, myths, fears, imperfections, ignorance. This, of course, is a never-ending task to which we should give a high priority.

The sociological aspect of freedom, on the other hand, has to do with man imposing his will by force on other men. It is unfortunate that we need to spend any time on this part of the problem, for it calls for combating a situation that should not be. For instance, it is absurd for me forcibly to impose my will upon you: dictate what you are to discover, invent, create, where you shall work, the hours of your labor, the wage you shall receive, what and with whom you shall exchange. And it is just as absurd for any two or even millions or any agency that the millions may contrive—government or otherwise—to try to forcibly direct and control your creative or productive or peaceful actions.

Light can be shed on this thought by reflecting on the manner in which human energy manifests itself. Broadly speaking, it shows forth as either peaceful or unpeaceful, which is to say, as creative or destructive. If my hand is used to paint a picture, write this book, build a home, strew seed, my energy is manifestly peaceful, creative, productive. But if I make a clenched fist of the same hand and strike you with it, my energy is manifestly unpeaceful, destructive.

My theme is that any one of us has a moral right to inhibit the destructive actions of another or others, and, by the same token, we have a right to organize (government) to accomplish this universal right to life, livelihood, liberty. But no living person or any combination of persons, regardless of how organized, has a moral right forcibly to direct and control the peaceful, creative, productive actions of another or others. To repeat, we should not find it necessary to devote time and thought to this sociological aspect of the freedom problem, but a brief sketch of the American setting, past and present, will demonstrate that an awakening is now “a must” of the first order.

Let us pick up the thread of the historical setting beginning with the year 1620 when our Pilgrim Fathers landed at Plymouth Rock. That little colony began by practicing communism; all that was produced by each member, regardless of how much or how little, was forced (unpeaceful) into a common warehouse and the proceeds of the warehouse were doled out in accord with the governing body’s idea of the need. In short, our Pilgrim Fathers began the practice of a principle that was advanced by Karl Marx—more than two centuries later—as the ideal of the Communist Party: “from each according to his ability, to each according to his need.”

There was a persuasive reason why the Pilgrims threw overboard this communalistic or communistic practice: the members were starving and dying because, when people are organized in this manner, the warehouse always runs out of provender. The stark reality of the situation suggested to them that their theory was wrong and, bless them, they paused for reflection. In the third winter when they met with Governor Bradford, he said to them, in effect: Come spring, we’ll try a new idea. We’ll cast aside this communistic notion of to each according to need and try the idea of to each according to merit. Come spring, and each of you shall have what each produces.

As the record has it, springtime witnessed not only father in the field but mother and the children as well. Governor Bradford reported much later, “Any generall wante or famine hath not been amongst them since to this day.”1

It was by reason of the practice of this private property principle that there began in this land of ours an era of growth and development which sooner or later had to lead to revolutionary political ideas. And it did lead to what I refer to as the real American revolution, the revolution from which more and more Americans are now running away, as if in fear.

A Revolutionary Concept

The real American revolution, however, was not the armed conflict we had with King George III. That was a reasonably minor fracas as such fracases go! The real revolution was a novel concept or idea which was a break with all political history. It was something politically new on earth!

Until 1776 men had been contesting with each other—killing each other by the millions—over the age-old question of which of the numerous forms of authoritarianism —that is, man-made authorities—should preside as sovereign over man. The argument was not which was better, freedom or authoritarianism, but which of the several forms of authoritarianism was the least bad. And then, in 1776, in the fraction of one sentence written into the Declaration of Independence, was stated the real American revolution, the new idea, and it was this: “that all men … are endowed by their Creator with certain unalienable Rights; that among these are Life, Liberty and the pursuit of Happiness.” There you have it! This is the essence of the original American setting and the rock on which the “American miracle” was founded.

The revolutionary idea was at once a spiritual, a political, and an economic concept. It was spiritual in that the writers of the Declaration recognized and publicly proclaimed that the Creator was the endower of man’s rights; and, thus, it follows, that the Creator is sovereign.

It was political in that it implicitly denied that the state is the endower of man’s rights, thus holding to the tenet that the state is not sovereign.

Our revolutionary concept was economic in this sense: that if an individual has a right to his life, it follows that he has a right to sustain his life—the sustenance of life being nothing more nor less than the fruits of one’s labor.

It is one thing intellectually to embrace such a revolutionary concept as this; it is quite another matter to implement it—to put it into practice. The implementation came in the form of two political instruments—the Constitution and the Bill of Rights. These were essentially a series of prohibitions—prohibitions not against the people but against the political arrangement the people, from their Old World experience, had learned to fear, namely, over-extended government.2

The Constitution and the Bill of Rights more severely limited government than government had ever before been limited. There were benefits that flowed from this limitation of the state.

The first benefit, once this new concept became effective, was that individuals did not turn to government for security, welfare, or prosperity because government was so. limited that it had little on hand to dispense; nor did its limited power permit taking from some citizens and giving to others. To what or to whom do people turn for security, welfare, and prosperity when government is not available to them? They turn to where they should turn—to themselves.

As a result of this discipline founded on the revolutionary concept that the Creator, not the state, is the endower of man’s rights, along with these instruments of limitation, there was developed, on an unprecedented scale, a quality of character that Emerson referred to as “self-reliance.” The American people gained a world-wide reputation for being self-reliant.

A second benefit that flowed from this severe limitation of government: When government is limited to inhibiting the destructive actions of men, when it sticks to its sole competency of keeping the peace and invoking a common justice, which is to say, when it minimizes such unpeaceful actions as fraud, violence, predation, misrepresentation —when it is thus limited—then there is no organized force standing against the peaceful, productive, creative actions of citizens. As a consequence of this limitation, there was a freeing, a releasing of creative energy, on a scale unheard of before.

I repeat, it was this combination which was chiefly responsible for the veritable outburst of creative human energy and that accounted for the “American miracle.” We must everlastingly keep in mind that its roots were in the revolutionary concept that the Creator, not the state, is the endower of man’s rights.

This keeping-the-peace design manifested itself in individual freedom of choice as related to all peaceful, productive, creative efforts. Citizens had freedom of choice as to how they employed themselves; they had freedom of choice as to how they priced their own labor or steel or whatever; they had freedom of choice as to what they did with their own income.

This is the American setting—as it was.

The Situation in America Today

But let us examine the American setting as it is, a reversal in form, one might say. It seems that the persons we placed in government as our agents of peace discovered a weakness in our unique structure. Having acquisitive instincts for power over others—as indeed so many of us do—they found that the police power they had been given to keep the peace could be used to invade the peaceful, productive, creative areas the citizens had reserved for themselves—one of which was the business sector. And they also discovered that if they incurred any deficits by their interventions, the same police force could be used to collect the wherewithal to pay the bills. The very same force that can be used to protect against predation can also be used predatorily!

It is this misuse of police force, so little understood, which explains why we Americans who inveigh vociferously against socialism are unwittingly adopting socialism ourselves. For it is clear that the extent to which government has departed from the original design of inhibiting the unpeaceful and destructive actions; the extent to which government has invaded the peaceful, productive, creative areas; the extent to which our government has assumed the responsibility for the security, welfare, and prosperity of the citizenry is a measure of the extent to which socialism—communism, if you choose—has developed in this land of ours.

Can we measure this political devolution? Yes, with near precision. Reflect on one of the manifestations of the original structure: each individual having freedom of choice as to how he disposes of his own income. Measure the loss in this freedom of choice and you measure the gain of socialism. Merely bear in mind that freedom of choice exists except as restraint is interposed. Thus, the loss in freedom of choice shows the gain in authoritarian socialism.

The Growth of Government

Let us, then, proceed with the measurement. About 125 years ago the average citizen had somewhere between 95 and 98 per cent freedom of choice with each income dollar; which is to say, the tax take of government—federal, state, and local—was between 2 and 5 per cent of the people’s earned income. But, as the emphasis shifted from the original design, as government invaded the peaceful, productive, and creative areas, and as government assumed more and more the responsibility for the security, welfare, and prosperity of the people, the percentage of the take of total earned income increased. The 2 to 5 per cent take of a relatively small income has steadily grown to a take of approximately 36 per cent of a very large earned income—and grows apace!

Many complacent persons, undaunted by this ominous trend, remark: “Why fret about this; we still have remaining to us, on the average, 64 per cent freedom of choice with respect to each income dollar.

Parenthetically, may I suggest that we use with care the term “on the average.” Assume a 40-hour week, 8 hours a day, Monday through Friday. The average person, today, must work all of Monday and until mid-afternoon on Tuesday for government before he can begin to work for himself. But, if the individual has been extraordinarily successful, he has to work all of Monday, Tuesday, Wednesday, Thursday, and until noon on Friday for the government before he can start working for himself. He has only Friday afternoon to labor for his freedom-of-choice dollars. This, it seems, is a part of the “new” incentive system!

While we still enjoy 64 per cent freedom of choice over our earned income, this should afford little consolation. For we’ve long passed in this country the historical 20 to 25 per cent tax level beyond which governments seldom have gone without resorting to inflation. We are well into the inflationary stage, which means that constitutional or institutional limits on the taxing power have been abandoned; the government has found a way to take all our earned income if and when it chooses to do so.

Are we inflating? Indeed, yes! Let me explain that by “inflation” I do not mean rising prices, a consequence of inflation; rather, I mean government’s expansion of the volume of money. To the economist or mathematician, inflation is the same as counterfeiting; to the lawyer, inflation is distinguished from counterfeiting by being legal. But, definitions aside, governments always have popular support for their inflationary policies; politicians act in response to popular support; they cannot remain in office without it. Why the popular support? It is because a majority of voters are naive enough to believe that they can eat their cake and still have their cake left to them, which is to say, they can continue to receive handouts and “benefits” from government without having to pay for them. Because they see no direct tax levy and because they do not understand that inflation is a cruel, unjust form of taxation, they applaud the something which they feel is coming to them for nothing.

Inflationary Devices

It is interesting to observe the tricks of inflation—political sleight-of-hand, coin clipping, for instance. The sovereign of old—by police force, that is, unpeacefully—“called in” the coin of the realm, clipped the edges, retained the clippings, and returned the balance to the owners. This skulduggery continued until the coins became too small to return.

The French Revolution put that government in dire financial straits, so it issued, in ever-larger amounts, an irredeemable paper money, known as assignats, secured not by gold but by confiscated church properties. Every American should read and know by heart the catastrophic aftermath.3

In Argentina—following Perón and until recently—the expense of the national government was, shall we say, 100 billion pesos annually. But only half that amount could be collected by direct tax levies. How handled? Simple! They merely printed 50 billion pesos annually. One need not be much of an economist to realize that when the money volume is expanded, everything else being equal, the value of the monetary unit declines; prices rise. Imagine yourself “secure” at the time of Perón’s ascendancy to power: bank accounts, insurance, social security, a pension for your old age. These, along with all forms of fixed income, were politically rendered more or less worthless.

Our inflationary scheme in the U.S.A. is brilliant legerdemain: it is so complex that hardly anyone can understand itl We monetize debt; that is, the more the government spends, the more is the money supply expanded. Since the start of deficit financing and monetized debt, our quantity of dollars has enormously increased. Anyone with an eye to trends can observe that the dollar has declined in value and that prices are on the upswing.

The Russians, in my judgment, have the most honest system of dishonesty: the Kremlin—with guns, if necessary—“calls upon” the people to purchase government bonds. After the people have bought the bonds, the government cancels the bonds. Certainly, one does not have to be an economist to observe the chicanery in this method of inflation.

Frankly, I wish we were employing the Russian system of dishonesty rather than our present complex system. Were we inflating in this crude Russian manner, many Americans would be aware of what is being done to them. People who can’t see through shell games are likely to be taken in.

This is what we must realize: Inflation is the fiscal concomitant of socialism or the welfare state or state interventionism—call these unpeaceful, political structures what you will. Politically, it isn’t possible to finance government expenditures by direct tax levies beyond the point at which direct tax levies are politically expedient—20-25 per cent, as a rule. The overextended state is always beyond this point. Thus, anyone who does not like inflation can do nothing about it except as he assists in divesting our economy of socialism.

A good economy, in one respect, is analogous to a sponge; it can sop up a lot of mess. But once the sponge is saturated, the sponge itself is a mess. The only way to make it useful again is to wring the mess out of it.

Inflation in Modern France

Inflation may be better understood if we analyze it in some country other than our own; it is difficult to see our own faults, easy to note the mistakes of others. France serves our purpose, for that country, economically, has many likenesses to the U.S.A.

In 1914—only 50 years ago—modern France began what is now underway here; that is, her government invaded the peaceful, productive, creative areas and more and more assumed the responsibility for the security, welfare, and prosperity of the French people: socialism.

If my previous contentions be correct, the franc should have lost some of its purchasing value during these 50 years. To repeat, I have contended that socialism can be financed only by inflation which is an expansion of money volume—with a consequent price rise as money value declines. If my reasoning is valid, the franc should have declined in purchasing value. Has it? Yes, more than 99½ per cent!

In Paris, during World War I, I bought a good dinner for 5 francs, the equivalent of a 1918 dollar. On my next visit to Paris—1947—I took a friend to luncheon, admittedly a better restaurant than I visited as a soldier boy. How much for the two luncheons? 3,400 francs! Two years later I took my wife to the same restaurant and had the same luncheons, because it is instructive to check prices. How much? 4,100 francs! On a recent visit, same restaurant, same luncheons—6,000 francs!

Visualize a French lad in his early teens, forethoughtful, looking to 1964 when he would reach retirement. He bought a paid-up annuity, one that would return him 1,000 francs per month beginning in 1964. In 1914, the year of purchase, he could have lived quite handsomely on this amount. Yet, in 1964, the thousand francs will buy no more than a skimpy, low-grade meal, pretty poor fare for a whole month! This fictional catastrophe, in no way exaggerated, was brought about by an inevitable inflation in the name of social security.

The validity of this line of reasoning is confirmed historically: Only 35 years ago the take of earned income by government in Russia was 29 per cent; in Germany, 22 per cent; in England, 21 per cent. Keep in mind that we are now at 36 per cent and that our government has the policy of increasing expenditures as it reduces taxes, assuring more inflation which, of course, increases the take.

The “Galloping” Stage

Inflation, in popular terms, is of two types: “creeping” and “galloping.” Ours is often described as “creeping,” a term that appears rather weak to describe a dollar that has lost between 52 and 63 per cent of its purchasing value since 1939—according to which index one uses.

“Galloping” inflation is the type that Germany experienced following World War I and France during her issuance of the assignats. China’s money went “galloping” not too long ago, and the same can be said for the Latin American currencies right now.

I own one piece of Bolivia’s currency—10,000 Bolivianos. In 1935 it had the purchasing power of 4,600 of our 1964 dollars. What now? Eighty cents! There is galloping inflation for you and brought about—they had no wars—by socialism. In every instance “galloping” inflation has been preceded by “creeping” inflation. Not too strangely, inflation creeps before it gallops; and anyone having a dread of inflation should be on the alert whenever it begins to creep.

Any rational person should dread inflation, more so in the U.S.A. than elsewhere, and for self-evident reasons: Americans have a more advanced division-of-labor society than has heretofore existed; we are more specialized and further removed from self-subsistence than peoples of other times and places. I, for instance, do not know how to build my home, raise my food, make my clothes; with respect to most of what I consume, I know next to nothing. Like all other Americans—even farmers, for they are mechanized—I have become dependent on the free, uninhibited exchange of our countless specializations. Try to visualize existing on that which you alone produce!

A necessity is anything on which we have become dependent. Free, peaceful, unfettered exchange is as necessary to present-day Americans as is air or water.

There is, however, a key fact to keep in mind: In a highly specialized economy it is not possible to effect these necessary exchanges by barter. The woman who inspects transistors makes no attempt to barter the service she renders for a pair of shoes; nor do you observe a car owner trying to barter a goose for a gallon of gas.

No, an advanced division-of-labor economy cannot be made to function by direct swaps of this for that. Such an economy has only one means to effect the necessary exchanges of its numerous specializations: an economic circulatory system, that is, a medium of exchange—money.

Thinning the Blood

This economic circulatory system can be likened, in one respect, to the circulatory system of the body, the blood stream. Among other functions, the blood stream effects numerous exchanges: it picks up oxygen and ingested food, carrying these life givers to some 30 trillion cells of the body, and, at these trillions of points, it picks up carbon dioxide and waste matters, returning these items for disposal. But let someone insert a hypodermic needle into a vein, thin the blood stream—destroy its integrity—and the victim can be referred to in the past tense.

Likewise, one can thin the economic circulatory system by inflating—assured by socialism—and bring on the same catastrophic results; exchange will be impossible with each of us wedded to our specialization but unable to exchange our own for the specializations of others. The integrity of the medium of exchange has to be presupposed to assume that a division-of-labor economy can function for any sustained period of time.

To illustrate: Following the 1918 Armistice, my squadron was sent to Coblenz in the Army of Occupation. The German inflation was under way. I knew no more about inflation then than do most of our citizens now. And like many people, I enjoyed what I experienced: more marks each pay day, but not because of any increase in salary. The government was taking care of my food, shelter, clothing—I had “security.” My marks were used mostly to play games of chance—the more marks the more fun. Why shouldn’t I enjoy inflation?

The German inflation continued with mounting intensity; by 1923 it reached a point where 30 million marks would not buy a loaf of bread.

About the time I arrived in Coblenz (this is fiction, but sound) an elderly German passed on, leaving his fortune to his two sons—500,000 marks each. One was a frugal lad; he never spent a pfennig of it. The other was a playboy; he spent the whole inheritance on champagne parties. When the day came in 1923 that 30 million marks wouldn’t buy a loaf of bread, the lad who had saved everything, had nothing. But the other was able to exchange his empty champagne bottles for a dinner! The economy had been reduced to barter. To fully grasp the present American setting, we must be able to see that this very process is gaining momentum in our own economy. And primarily because we are substituting socialism for the peaceful ways of the free market.

At this point it is appropriate to be hardheaded and ask a practical question: Has there ever been an instance, historically, when a country has been on our kind of a socialistic toboggan and succeeded in reversing herself? There was a 10-year turnabout in the city-state of Lagash circa 2500 B.C., a 2-year reversal in the France of Turgot in the eighteenth century and, perhaps, there have been other minor cases of such political heroism. But, for the most part, the record reads like “the decline and fall of the Roman Empire.”

The only significant turnabout known to me took place in England following the Napoleonic Wars. The nation’s debt, in relation to her resources, must have been greater than ours now is; the taxation was confiscatory; and the restrictions on the peaceful production and exchange of goods and services—along with price controls—were so numerous and inhibitory that had it not been for the smugglers, black marketeers, and breakers of the law, many would have starved.4 Altogether, a bleak economic picture, indeed! Here, assuredly, was a setting worse than ours yet is.

Something happened, unique in history; and it is well that we take cognizance of it. One thing for certain, the change was wrought by a handful of men. We have a good account of the work of Richard Cobden and John Bright in England and of their two French collaborators, a politician named Chevalier, and the political economist and essayist, Frederic Bastiat. Cobden and Bright, having a far better understanding of freedom-in-exchange principles than their contemporaries, went about England speaking and writing on the freedom philosophy. The economy was out of kilter; Members of Parliament listened and, as a consequence, there began the greatest reform movement in English history.

The reform consisted of the repeal of restrictive law; the peaceful ways of the market were made possible by the removal of unpeaceful governmental interventionism. The Corn Laws (tariffs) were repealed outright; the Poor Laws (relief) were greatly curtailed; there were numerous other repeals. And, fortunately for the people, their newly limited government, nominally headed by Queen Victoria, relaxed the authority which the people themselves believed to be implicit in their Sovereign; the government gave the people freedom in the sense that a prisoner on parole is free: he can be yanked back! But the government exercised no such control; Englishmen by the hundreds of thousands roamed over the face of the earth achieving unparalleled prosperity and building a relatively enlightened empire.

This development continued until just before World War I when the same old political disease set in again. What precisely is this disease that must result in inflation and other unpeaceful manifestations? It has many popular names, some already mentioned, such as socialism, communism, the welfare state, government interventionism, authoritarianism. It has other names such as fascism, nazism, Fabianism, the planned economy. It has local names like New Deal, Fair Deal, New Republicanism, New Frontier; and new ones will be contrived to suggest that the identical political arrangement has something novel about it.

Faith in Government Intervention

However, popular names are but generalizations and oversimplifications. What, then, is really the essence of the above-mentioned “progressive ideologies”? Careful scrutiny of their avowed aims will reveal that each has a characteristic common to the others, this characteristic being the cell in the body politic that has the capacity for inordinate growth and from which stems our countless unpeaceful troubles. It is in the form of a belief—a rapidly growing belief—in the use of organized police force (government) not with the emphasis on keeping the peace but on a political manipulation of the peaceful, productive, creative activities of the citizenry. An increased intervention in all markets—commodities, exchange, finance, education, housing, or whatever—is what the proponents of this multi-named system set forth as their promise. I am only repeating the claim they present with pride; check it out for yourself.

To illustrate: I can remember the time when, if a house were wanted, the customer would look to the free market to supply it. The first step involved someone wanting a house in preference to other alternatives; the initiative rested with the desiring consumer. Next, the reliance was on those who wished to compete in the building. Last, we relied on people who thought they saw some advantage to themselves in loaning the money for the tools, labor, and material. With our reliance on the peaceful procedures of the market, we built more square feet of housing per person than was ever built in any other country at any other time.

Yet, despite this remarkable accomplishment, more and more people are coming to believe that the free market should be shelved and that, in its stead, government should use its police force to take the income of some and give it, in the form of housing, to the government’s idea of the needy. In other words, we are now practicing the principle used by the Pilgrim Fathers in 1620-23, and proclaimed as an ideal by Karl Marx in 1848: “from each according to his abilities, to each according to his needs,” and by the use of organized police force! (Keep in mind that I have used housing only as an example; the same policy is being extended to all segments of the economy.)

Here is a crucial, important, and self-evident fact: With increasing belief in police force as a means to productive ends, the belief in men acting freely, competitively, cooperatively, privately, voluntarily must correspondingly diminish. As a reliance on political authoritarianism advances, a faith in free men suffers erosion and, finally, obliteration.

It would seem to follow that there is no remedy for our current devolution except as a faith in free men be restored. The evolution of such a faith, I suspect, will rest as much on an unbelief in authoritarianism as on a belief of what can be wrought by voluntarism. I propose to share and explain my unqualified skepticism of political rigging as well as my faith in the creativity and miraculous performances of free men in an unfettered, peaceful market.

So much for the American setting—past and present!

________________

1 Taken from Bradford’s History “of Plimoth Plantation” from the original manuscript. Printed under the direction of the Secretary of the Commonwealth by order of the General Court (Boston: Wright & Potter Printing Company, State Printers, 1898), p. 162.

2 The Constitution and the Bill of Rights specify 46 negations of governmental actions.

3 See Fiat Money Inflation in France by Andrew Dickson White (Irvington-on-Hudson, N. Y.: Foundation for Economic Education, Inc., 1959), $2.00 cloth; $1.25 paper.

4 When the law runs amuck, lawlessness often ensues.