Philip Cortney
“In April 1945, [Mises] made another important and lasting acquaintance, when he started correspondence with Philip Cortney, at the time the vice-chairman and treasurer of Coty, the perfume company. Mises wrote to congratulate Cortney on a paper in which he had criticized Keynesianism. Cortney, who already knew Mises’s work, wrote back saying there was ‘no person in the world whose opinion I value more than yours’ and that he hoped to meet him soon at dinner with their mutual friend, André Maurois.” From Jörg Guido Hülsmann’s Mises: The Last Knight of Liberalism (Auburn, AL: Mises Institute, 2007), pp. 827–28.
[The following is a speech by Philip Cortney (1895-1971) at the International Chamber of Commerce (ICC) meeting of April 20, 1959, in Washington, D.C.. Cortney was the Chairman of the U.S. Council of the ICC between 1957 and 1959. The speech was published in the April 30, 1959 issue of The Commercial and Financial Chronicle. Edited by Pedro Almeida Jorge, of Instituto Mais Liberdade, Portugal, as a tribute to the 50th anniversary of the author’s passing. For a summary of Philip Cortney’s life and works, see this article.]
This Congress promises to be a memorable one. It will prove once more to the business leaders of the free world that if the ICC [International Chamber of Commerce] didn’t exist it would be our duty to create one. No other association of businessmen is organized to render to the free world the services which the ICC is performing. It is a kind of international parliament of businessmen, dedicated to fight for the preservation of freedom and friendly relations between nations by fostering international trade and investment. The main theme of our Congress is responsibility of business-men in domestic and world affairs. No subject matter could be more vital and more timely. We can’t expect to remain free men for long if we are not ready to answer for our acts. yet it is a fact that our free society behaves at times as if no one pertaining to it is responsible for man-made situations which undermine our basic freedoms. Let me take an example; Inflation, like most monetary problems, is admittedly a complex issue. But the problem appears to be inextricable, simply because everyone responsible for helping inflationary processes is denying his share or responsibility and spends his time blaming someone else. The cost-price vicious spiral is a good illustration. Business is blaming labor unions and sometimes the government, or more specifically the Federal Reserve System for their easy money policies. The labor unions are pointing their finger at businessmen. Government is admonishing businessmen and labor unions to show restraint, while excellent minds contend that restraint in this case is against laws of nature and therefore will not do. While this battle of words is going on, wages and prices continue to go up even during the recession. It looks as if we are living in an irresponsible society.
The nature of our society is aggressively challenged by communism and state capitalism, both systems implying the loss of human freedom. On the other hand, the free world is confronted with many new, baffling and complex problems. It will not serve any purpose to bury our heads in the sand and make believe that we don’t notice them. “Facts are stubborn”, said Lenin in one of his most memorable statements. Some of these problems are simply the result of human evolution and events. Among these I will single out technical progress, the explosion of population increases and the desire of under-developed countries to get industrialized with the hope of thereby in-creasing their standard of living. Other problems are of our own doing. They are man-made. Let me mention the deterioration of currencies and business depressions. These are not due to any inner contradictions of capitalism, as is being argued by the Marxists. Business and currency disturbances are due for their largest part to government, bankers, businessmen, labor unions, farmers and to bad laws which are the result, sometimes of lack of understanding, but more often of politics in democracies with universal suffrage. We must recognize the problems created by universal suffrage.
We must recognize the problems created by universal suffrage because I am convinced that everyone in the free democracies wishes a government by the people for the people. President Eisenhower recently remarked at Gettysburg that people in democracies must develop understanding of basic issues and show the character to rise above their own selfish short-term interest. Otherwise, said he, government would be reduced to nothing more than a device to accommodate the country to the bitter tugs-of-war of conflicting pressure groups which would make free government well-nigh impossible to sustain. Universal suffrage will survive only if we face the problems created by it. Otherwise we run the risk of drifting into some form of totalitarian government.
These new, social, political and technical forces will endanger the very existence of the free society unless the problems created by these forces are faced squarely. The shape of the things to come will be strongly influenced by politics, but even more so by ideas and by our behavior. We are too prone to blame the government and the politicians for all of our troubles. Yet it should be obvious that the future of our society is determined not only by government but by business leaders, educators, churchmen, journalists, etc. In other words, we have the kind or government we deserve.
Businessmen and our free society
This Congress will be concerned with the share of responsibilities of businessmen for the preservation of our free society. I hope that everything we recommend will be tested against the criterion whether it will help or will undermine the maintenance of human freedom.
Business is central in our society. The businessmen assume, in the conduct of their own firms, grave obligations and great risks, but they are also often the beneficiaries of the free enterprise system, at least money-wise, too frequently assorted, however, with heart troubles. Precisely because business is central in our society, the businessmen have a great role to play as active guardians of the free market economy, which is being challenged today as never before. It Is essential to this effect that businessmen do not try to protect selfish, unenlightened, short-term economic interests – as labor unions, farmers and some business organizations do at present. The businessmen should provide the government and the legislators with sound and competent counsel. Their recommendations should be focused on the interests of the economy as a whole, having at all times in mind the preservation of a free society. The businessmen will exercise their influence effectively only If they do not act as a pressure group to defend short-term selfish interests, but support policies for the long term good of all. In a few words, the businessmen should speak as enlightened citizens and not as businessmen. If businessmen do not defend our way of life who will, may I ask? The ICC comes nearest to the concept of making and supporting recommendations for the commonweal of the free International community maybe because they have to reconcile the interests of a great variety of nations.
When I speak of the responsibilities of businessmen, I have in mind particularly the large business organizations. It would not be a good society, that in which men could wield great power and influence without commensurate responsibility. Besides, only the large businesses have the means to support the necessary organizations to defend free enterprise and to help, by the competence and experience of their managers, the fostering of ideas essential to the preservation of a free society.
Importance of Ideas
A few times I referred to ideas. It Is unnecessary, I am certain, to stress the importance and power of ideas. To provide adequate and sensible responses to the new challenges and problems, the free world needs leadership, and leadership means ideas before anything else. Wherefrom is sound and clear thinking to come? I submit that we cannot and dare not leave this essential task solely to the experts or to the academic world. After all, [John Maynard] Keynes was and [Sumner] Slichter is an academic economist of great repute. It is difficult to exaggerate the confusion in thinking attributable to these two great experts. To foster inflation and sick currencies, thus undermining our free society, the world did not need the ratiocinations and specious theories of Keynes and Slichter! The academic economists have fallen too much into the habit of recommending short-sighted expedients, instead of policies designed to eradicate the causes of the ills endangering our free society. We businessmen should of course ask for the counsel of experts, but their opinions should be tested by the experience and good sense which we acquire in confronting the realities of our free enterprise system, thus providing balanced recommendations on public policy. Keynes himself, shortly before his death, probably frightened by the consequences of his ideas, reminded the economists that the classical teaching embodies some permanent truths of paramount significance which cannot be disregarded at the risk that we may just drift on from expedient to expedient and never really get fit again. He referred in his posthumous admonition to the deep undercurrents at work in our economic system, to the natural forces and even the invisible hand which are operating towards equilibrium, and he ended by asserting that we shall need less expedients if the classical medicine is also at work.
Enterprise System in Danger
Our free enterprise system is in serious danger of becoming socialized or of drifting into some totalitarian form. This danger arises primarily from unemployment and from the alleged incompatibility between a high level of employment, economic growth and monetary stability.
I submit that whatever unemployment we have is due primarily to inflation of money and credit and to a complete disregard of the fundamental truths embodied in classic economics, as Keynes asserted, alas! posthumously. As to economic expansion, monetary stability is one of its primary and essential conditions; otherwise we may well have both inflation and unemployment.
My reflections on the mainsprings of a free society lead me to the conclusion that its preservation depends, to a large extent, on the following conditions:
(1) First and above all, the very life of a free society depends on having a sound currency. This can be obtained by a policy of monetary stability, which is not the same thing as a policy aiming at the stabilization of a certain level of prices, assuming that it can be done at all. The fact is, as proven in the 1920s, that we can have monetary inflation and stability of prices.
The monetary report entitled “Monetary Stability Prime Condition of Economic Expansion” which has been presented to this Congress will redound to the great credit of the ICC.
The report will make some sensible recommendations tested by experience on how to obtain monetary stability. The report had the approval of businessmen and experts from 40 nations, and the free world may well be startled by the simplicity of the means proposed, while many governmental committees are still investigating the causes of inflation, as if there were any mystery about them!
Choice Between Inflation and Freedom
The truth is that we have to choose between inflation and freedom, while too many still believe we can have both. Besides, sound currency is a question of morality, because inflation is robbing some for the benefit of others, and ending with the destruction of all. We can’t have an enduring free society based on immorality. We shall have sound currencies or our free society will perish!
How to get politicians of the free world to follow what we regard as sensible fiscal and credit policies remains a very serious problem. It is up to us businessmen to refrain from making requests or recommendations of an inflationary character. Neither should we adopt, in running our businesses, policies fostering inflation physically or psychologically. An objectionable policy in this respect is, for instance, the adoption in labor contracts of cost-of-living escalators or continuous yearly increases in wages.
Among the dangers menacing freedom none is more serious than the prevailing skepticism toward the importance of sound currency. You will never repeat often enough that we shall have sound currencies or we shall lose our freedom.
Because of the credit and sometimes prestige they enjoy, the intellectuals who are spreading fallacious or outright false ideas, and thus are distilling poison in the minds of men and particularly politicians, under the pretense of sophistication in economic thinking, are among the most serious enemies of our free society.
I am particularly happy that the President of the United States is speaking so vigorously on the importance of a balanced budget and of the mortal danger inherent in the monetization of government debt. In contrast, it is most unfortunate that some intellectuals of great repute, who, as they advance in age, become skeptical of many sound precepts, make themselves the conscious or unconscious instruments of forces destructive of our free society, or worse yet, of some sordid and ignorant special interests, private or nationalistic.
Nobody will deny, I hope, that my country has rendered, at great sacrifice, invaluable services to the free world since the end of the war. It shouldn’t be a secret that this help has undermined our monetary and financial situation. Therefore, I take the liberty to state that those in foreign countries who are at present advocating inflationary policies are rendering a great disservice to my country, which may in the end have serious repercussions on the rest of the free world. Indeed, our banking system has a colossal potential of credit expansion while seemingly still having an adequate gold coverage for the liabilities of the Federal Reserve System. Nor are there any red signals, for the time being at least, like for instance balance of- payments deficits, to warn us of the deterioration of our dollar. Under such conditions, monetization of government debt and abuses of inflationary credit by commercial banks are extremely pernicious and dangerous. These being the circumstances, those abroad who advocate further inflation of money and credit (this advocacy directed primarily at the United States) are playing with fire. We have enough monetary cranks in our own country to be able to dispense with those from abroad. It should be obvious to any student of monetary problems that Keynes’ teachings have done more harm to our country than to England.
(2) The second condition for the preservation of a free society is that the market forces should be free to determine all prices, including rates of interest of money. Vigorous competition is essential to a free society, the human motivating force of which is self-interest.
(3) The third condition is that we should avoid serious economic disturbances which may result in prolonged and large scale unemployment. To obtain this it is necessary and sufficient that we do not commit abuses of money and credit, and that the wages be determined freely on the market place like any other price (assuming, of course, public vigilance against business monopolies or oligopolies).
Opportunities of Businessmen
We businessmen can by our actions or inactions, in the conduct of our own businesses, help or hinder the forces which put in danger our free society. Moreover, the businessmen will have to organize themselves – more comprehensively and effectively than heretofore – to influence the course of our society in the realms of thought, politics and economics. Their aim should be the welfare of the society as a whole, measured as widely as possible in dimensions of the free world. The International Chamber of Commerce, by tradition and by the quality of its leaders, comes nearest to such a concept.
Our great business-statesman Bernard Baruch recently made the following statement: “Rome fell not because the barbarians swarmed in but because the character of her citizens grew soft and their capacity for self-discipline waned.” Toynbee echoed the same thought recently in a speech at Harvard.
The ICC will render a great service to the international business community by arousing the consciousness of the businessmen to their share of responsibility for the preservation of a free society.
