What of Free Enterprise?


By WILLIAM G. CARLETON, Prof, of History and Political Science, Univ. of Florida, Gainesville, Florida

Delivered before the State Conference of the Junior Chambers of Commerce of FloridaDaytona Beach, Fla., February 27, 1944

Vital Speeches of the Day, Vol. X, pp. 401-408.


BELIEVE it or not, I do not intend to extol the virtues of free enterprise or to excoriate planned economy and its twin hand-maidens, bureaucracy and bureaucrats.

The usual speech made on occasions like this would castigate bureaucracy as the destroyer of free enterprise. If it did not insinuate that bureaucracy has grown up quite by accident, without rhyme or reason, it would suggest that it has been foisted upon us by clever, ambitious, and evil politicians. The now famous denunciation of bureaucracy by Representative Sumners of Texas, repeated at hundreds of Chamber of Commerce luncheons and widely disseminated by conservative publications, is a case in point. Representative Sumners left his hearers dangling in mid-air, with no hint as to the real and compelling reasons why government agencies have steadily developed during the last half century.

Such exhortations are, of course, nostalgia for a by-gone age. They represent the evangel of a departed generation. They are incantations to conjure up the past. They will not and they can not restore the free market of the nineteenth century. When men speak in such fashion they speak into a void; they fail to come to grips with realities. American businessmen simply must learn to speak again in terms of the actual world in which we live or lose effective in-


What of free enterprise? Where is the free market of old ? Where is the competitive market of the mid-nineteenth century?

Do we in America live today in an economy of free enterprise? Even if all governmental agencies regulating business and economic activities were this instant abolished, would we in America live in an economy of free enterprise?

Would the tobacco farmers of west Florida sell their tobacco in a free market? No, the bulk of them would be compelled to sell it in a market dominated and controlled by four or five big tobacco companies, whose "community of interest" fixes the prices paid the tobacco farmer. Would the wheat farmers of Minnesota and the Dakotas sell their wheat in a free market ? No, they would sell it in a market dominated and controlled by a few big elevators and mills. Would the cattle men of the prairie states sell their beef in a free market? No, they would sell it in a market dominatedand controlled by a few big packers. Do the farmers of America buy their wire, tools, implements, and machinery in a free market? No, they buy these in a market dominated and controlled by a few big trusts and holding companies. Do the retailers of America buy their goods in a free market? No, they buy nationally advertised products at set prices and can take them or leave them at that. And so it goes through the gamut of American industry.

Today in America almost every field of industrial activity is dominated by a few big survivors. These survivors are well known and their names are household words. In tobacco, sugar, meat, textiles, leather goods, steel, aluminum, rubber, oil, chemicals, automobiles, electrical equipment, radios, movies, farm machinery, office supplies, and plumbing fixtures it is the same story of monopoly or semi-monopoly. The few survivors in each field parallel policies and fix prices through communities of interest, stabilization accords, and gentlemen's agreements. And the survivors in one field have the most amazing tie-ins with survivors in other fields.

Who owns these great industrial feudatories? Berle and Means in Appendix K of their classic, The Modern Corporation and Private Property, point out that the number of individuals who owned stock in all corporations of the United States in the prosperous year of 1927 was only between four and six million, but that of this number only a very small minority, about a half million, owned an appreciable amount of stock. Indeed, about seventy-nine percent of all dividends paid to individuals that year seems to have gone to only a half million people. No doubt the depression years have further liquidated the number of stock holders in the United States and caused an even greater degree of concentration in the ownership of stock.

And of those who own, still fewer control. As is well known, our giant industries in America are in most instances now controlled by a small minority. In some cases minority control is done through a legal device—pyramiding, or a voting trust, or non-voting common stock, or special vote-weighted preferential stock, or a combination of several of these. In other cases- it is done through ownership of a strategic minority block of stock, the other stock being widely distributed. In still other cases minority control takes the form of management control.

At this point some of you will say, "That fellow talks like a Populist That is old stuff. Doesn't the speaker know that the trend toward centralization in business has been halted and that the trend toward decentralization has begun? Doesn't he know that huge hydro-electric developments in various parts of the country have made possible the movement of industry away from the populous centers and caused them to be more widely scattered over the country?" Alas, this dispersing of industry over the country has been almost negligible. It exists largely in the predictions of conservative journals seeking an alibi for big business and in the wishful thinking of idealists like Herbert Agar. And even if this decentralization movement had taken place it would not modify the decisive problem of our time: the concentration of ownership and control in American big business. Geographical decentralization would solve little so long as ownership and control were centralized. Ten scattered plants controlled by one centralized management are as dangerous to the free market as one huge plant controlled by that same management.

In short, we in America no longer live in an economy of free enterprise. We are living, we have been living, and we shall continue to live in an economy of monopoly capitalism, not an economy of free-enterprise capitalism. Enterprise is trill private, but it is not free in the nineteenth century sense.


Who destroyed the free market in America? Was it destroyed by government bureaucracy? The free market was destroyed long before government bureaucracy waxed strong. Was it destroyed by the New Deal? The free market was destroyed long before March 4, 1933. Was it destroyed by the progressive leaders of the early twentieth century-William J. Bryan, Robert H. LaFollette, Sr., Theodore Roosevelt, and Woodrow Wilson? These men merely advocated the creation of government regulatory agencies to protect those groups which were already being squeezed by the decline of the free market and the rise of monopoly restrictions. Was it destroyed by the early agricultural organizations like the Grange, the Agricultural Wheel, the Farmers' Alliance? These organizations came into being to protect the farmer from monopolistic closed markets already in the making. Was it destroyed by the early labor organizations and early labor organizers like Terence V. Powderly and Samuel Gompers? These men were merely trying to build organizations which could bargain with some little approach to equality with the huge industrial combinations developing, Was it destroyed by Eugene V. Debs and the early American Socialists? Organized socialism in America was then and is now negligible.

Who, then, destroyed the free market? The answer is: Business. Business itself. The great industrial and financial giants of the late nineteenth century. Vanderbilt and Gould and Harriman and Hill in railroading. Carnegie and Frick and Gary in steel. Pillsbury and Crosby in flour-milling. Armour and Swift in meat-packing. Havemeyer in sugar. Rockefeller in oil-refining. The House of Morgan in any number of combinations effected, mergers engineered, and holding companies built. In the name of individualism these men destroyed individualism in business.

Are these men, then, the villains of the piece? By no means. They were but responding to the needs and urges of their time. They were the products of their age. They merely moved to take advantage of the developing technology and to secure the advantages of large-scale mass production and distribution which that technology made possible. Big machines and expensive technology required the consolidation of capital, the centralization of control, and the coordination of management. Back of the decline of the free market, then, stands the amazing technological developments of the modern age.

And this process of centralization which was gathering momentum in the late nineteenth century continues today. This is not something in a book. It is all around us, if we have but eyes with which to see.

In my own lifetime I have seen spectacular evidence of this centralizing process in the business world. I was reared in an industrial city of about eighty thousand population. In that city, in the days I was growing up, there were two flour mills, two plow works, two stove factories, an iron foundry, and a packing plant, all operated by local capital. Today these businesses have disappeared altogether, or have been absorbed by nationally known holding companies, or have been supplanted by national concerns with centralized capital.

Again, in my home city of Gainesville, a small college town of about fifteen thousand population, the same process is observable. Along the five main business blocks of that town are forty-five business concerns. Of these, twenty-eight are locally owned and seventeen are owned by aggregations of outside capital. But those owned by outside capital probably exceed in volume of business those twenty-eight locally-owned concerns, and most of the outside concerns have come to Gainesville only during the last ten years. Observe the businessmen who gather at your local Chamber of Commerce meetings or at your local civic luncheon clubs. How many are really free and independent businessmen? On the other hand, how many are dependent or semi-dependent agents of national concerns ? How many are agents of national insurance companies? How many are agents of national oil companies? How many are agents of national tobacco companies? How many are agents of national rubber companies? How many are agents of national public utilities? How many are agents of chain stores? How many are semi-dependent contractors for national automobile manufacturers? This process of centralization is continuing. The war itself is accelerating it. In the placing of war orders the big concerns, naturally enough, have been favored. The deepest economic forces of our age will continue centralization even after the war is over. Many small businesses will continue, of course, but the volume of business done by small concerns will become less and less of the total volume of American business, and what little freedom it now enjoys will be confined to narrower and narrower limits.

According to the scholarly researches of Berle and Means, the wealth of the large corporations and that of all corporations should each continue to increase at its average annual rate for 1909 to 1929, seventy percent of all corporate activities will be carried on by the two hundred leading industrial corporations by 1950, and half the national wealth will be owned by these big corporations by then. These estimates were made on the basis of statistics covering through the year 1929. Since 1929 the Great Depression and the Second World War have further liquidated small business and accelerated the trend toward consolidation and centralization.


Who are the real friends of genuine free enterprise ? Surely not those glib speakers before business and civic luncheons who toss off stereotyped praise of free enterprise without coming to grips with the economic realities of our day. The real friends of free enterprise are those who would honestly enforce the federal anti-trust laws, "bust-up" big business, and restore the small and competitive business units of fifty and seventy-five years ago. In other words, the real friends of free-enterprise capitalism are men like the late Senator William E. Borah and like Senator Joseph C. O'Mahoney and Thurman Arnold today.

Thus we are presented with a paradox. In order to win free enterprise we must have government intervention to restore it and to enforce it. In other words, we have reached a stage in industrial history where free enterprise can exist only by virtue of government fiat.

But will the anti-trust laws really be enforced? Alas, we know in our hearts that they will not. They exist as a kind of vicarious atonement for big business, not to break up big business. That is why the late Senator Borah was such a quaint figure. That is why Thurman Arnold, in his trust-busting activities, appears forlorn and quixotic.

The Sherman Anti-Trust Law was passed in 1890. For fifty-four years we have had anti-trust legislation on the statute books. Yet every decade has seen big business get bigger and bigger. In 1900 business was more consolidated and centralized than it was in 1890. In 1910 business was more consolidated and centralized than it was in 1900. In 1920 business was more consolidated and centralized than it was in 1910. In 1930 business was more consolidated and centralized than it was in 1920. In 1940 business was more consolidated and centralized than it was in 1930. And when 1950 rolls around even we shall be amazed at the great increase in centralization and consolidation produced by the war. In other words, anti-trust legislation has not altered the irresistible trend toward economic consolidation and centralization.

Even back in the 1890's a real attempt to "bust the trusts" would have had difficulties. The laws were vaguely drawn. Federal law enforcement officials were skeptical and even hostile. Federal courts created additional legal obstacles in the way of enforcement. And even then there were those who believed that large-scale production, coordinated management, and centralization were desirable because they meant higher standards of living.

However, had the small businessmen of that day united to "bust the trusts" they might have been successful. The small businessmen had enormous political influence fifty years ago. But the small businessmen were themselves not united. They were mentally confused and did not see clearly whether business individualism was on the side of a Rockefeller or against him. Many of them secretly hoped that they would survive to become the big fellows in their fields of endeavor. Still others owned stocks and bonds of the growing industrial giants and hence suffered divided economic interests.

Today, we may, I think, say definitely that big business is here to stay and that no real effort will ever be made to "bust it up." Too many people are now convinced that our ever-higher standard of living is the result of big business efficiency. Today small businessmen have far less influence in politics than they had fifty years ago, and political power is passing to the industrial wage-earners and the millions of white-collar employees created by the technological and business revolution of the last fifty years, and these groups will want to regulate big business in their own interests but they will never seek to destroy it. Again, American economic life is now geared to monopoly capitalism, and a frontal attack on all big business, an attack which really meant to break up business into the small and genuinely competitive units of several generations ago, would cause a business panic of the gravest implications. Finally, the trend toward centralization and trustification has gone far in all industrial countries, and American industry would be seriously handicapped in foreign trade and in its bid for foreign markets if it were reduced to the small units of decades ago and if these small units attempted to compete with the giant syndicates of other industrial countries.


The American people, in spite of lip service to anti-trust law enforcement, have made the decision to accept big business as a permanent and major part of our American system. They have made this decision even though this means a drastic change in our older conceptions of economic competition and the free market. They have made this decision even though it means a certain amount of regimentation by the bureaucracy of big business, for these giant business principalities are of necessity vast and ramifying bureaucracies.

At the same time the American people have come to another equally important decision. They have decided that if big business is to be accepted it must also be regulated by government. For these vast business feudatories would become virtual states within a state if they were not regulated. But this decision has involved the erecting of more government machinery to do the regulating. As this government machinery grew, it too developed into a bureaucracy. Andso there was built up the Leviathan of Big Business on the one hand and the Leviathan of Big Government on the other.

Bigness in business means that rules affecting millions of investors, employees, and consumers are made and enforced by officials usually remote from the investors, employees, and consumers affected. Bigness in government means that rules affecting millions of citizens are made and enforced by officials usually remote from the citizens affected. This means regimentation. In other words, regimentation is inherent in bigness. Now if regimentation is the inevitable price we pay for a higher standard of living and greater leisure and more education, then regimentation by government is preferable to unregulated regimentation by business. Because big business is an autocracy ruled by few at the top, whereas big government is and continues to be a democracy subjected to universal suffrage and free elections.

In other words, centralization in government came later than centralization in business and was the result of centralization in business. Government bureaucracy was the answer to business bureaucracy.

This decision to erect a centralized government structure which could regulate our centralized business structure came slowly. The development of this government structure has been the product of decades of gradual growth. This process did not begin with the New Deal. It did not begin on March 4, 1933. Many administrations and both parties have contributed to it over the years, but owing to the nature of their support the Democrats have contributed somewhat more than the Republicans.

As far back as Cleveland's administration the Interstate Commerce Commission was created and the Department of Agriculture established.

The administration of Theodore Roosevelt gave us an increase in the powers of the Interstate Commerce Commission, the passage of the Pure Food and Drug Act and the Federal Meat Inspection Act, the creation of the Bureau of Corporations, and numerous public works and regulatory measures to conserve our natural resources.

The Taft administration, considered today to have been conservative, gave us the Corporation Tax, the Income Tax Amendment, the Parcel Post, the Postal Savings Banks, the Tariff Boards, the Department of Labor, and still more powers to the Interstate Commerce Commission.

In the Wilson administration there was almost an avalanche of regulatory legislation. Indeed, the New Freedom of Woodrow Wilson was in its day considered about as radical as the New Deal has been today, and the administration of that day was denounced for its alleged truckling to Sam Gompers just as this administration has been denounced for its alleged truckling to John L. Lewis and Philip Murray. The Wilson administration gave us the first modern graduated income tax and the graduated inheritance tax. It established the Federal Reserve System which tightened the control of the federal government over the country's banking system and for the first time gave the federal government the power to fix the re-discount rate. It passed the Clayton Act and established the Federal Trade Commission. It passed the Smith-Lever Act and established the Farm Loan Banks. In the Adamson Law it guaranteed railway workers the eight hour day and time and a half for over-time. It passed the LaFollette Seamen's Act and enacted the Federal Child Labor Law, later declared unconstitutional by the United States Supreme Court. It began the large-scale matching of state funds by federal funds in a variety of fields, particularly in the building of public highways. In practical application Wilson's New Freedom extended the regulatory powers of the federal government in all directions.

Even the Harding, Coolidge, and Hoover administrations could not stay this trend. The Harding-Coolidge administration repealed little of the Wilson program and in addition gave us the Capper-Volstead Cooperative Marketing Act and established the Intermediate Credit Banks. The Hoover administration gave us the Federal Farm Board and created the Reconstruction Finance Corporation.

And, as all of us know, the present administration has given us a veritable deluge of federal regulatory legislation.

Seen in historical perspective, then, this administration did not begin this trend and it did not create the conditions which began this trend. This administration found the trend well under way and continued and accelerated it.

At this point I can anticipate what some of you are thinking. You are saying to yourselves, "How does the speaker reconcile this steady growth of federal power with the philosophy of Thomas Jefferson? The speaker is known in Florida as an ardent believer in the philosophy of Jefferson. How can he be a believer in Jefferson and at the same time look with approval upon the development of vast powers in the federal government? Because if Jefferson stood for anything it was for little government, particularly little federal government."

Yes, I think I can with honesty say that I am a Jeffersonian. But the central idea in Jefferson is faith in the common man and hostility to all forms of special privilege which seek to exploit him. We must not confuse ends with means. In Jefferson's time government intervention in economic affairs meant the adoption of mercantilistic policies to stimulate the businessman—protective tariffs, bank subsidies, transportation subsidies, and a host of government gratuities and special favors to business interests. But the mass of ordinary citizens—farmers and laborers—could not see, how they would be benefited by these measures. A protective tariff made the cost of living higher. A deflationary banking policy helped creditors but hurt debtors. Subsidies to transportation interests meant that the public paid to build roads and canals and later railways, but that these agencies wound up by being owned by private corporations. The direct benefits of government intervention went to business; the mechanics and laborers and farmers bore the burdens. For these reasons the Jeffersonians opposed the increase in governmental powers. On the other hand, Hamilton, who spoke for the business interests, favored an extension of the powers of government, particularly of the federal government, because the direct benefits of governmental intervention at that time went to the business community but that community felt few of its burdens because in those days taxation fell heaviest on land and the cost of living, and only lightly on intangible personal property and incomes. Thus in the early history of the Republic a good Hamiltonian believed in more government and a good Jeffersonian believed in less.

Today, however, a reversal of conditions has brought a modification of philosophies. Today, when government intervenes it intervenes for the most part to regulate business and not to grant it special favors. And the business community pays for a large part of the growing cost of government because intangible wealth and incomes now hear the greatest burdens. On the other hand, it is now the farmer, the salaried man, and the laborer who derive the direct benefits from government intervention. Today, the giant business corporations, grown fat in part as a result of the early mercantilistic policies of Hamilton, Webster, Clay. Blaine, and McKinley, now ask to be let alone, for if Id alone they can work their will in America. On the otfc* hand, the common men of the nation now ask governmentto save them from the encroachments of irresponsible and uncontrolled corporate monopoly.

In Jefferson's day the problem of the common man was to free himself from governments avowedly controlled by privileged interests—monarchs, aristocrats, the merchant princes, and established churches—and to limit governments controlled by such interests. Today his problem is different. Today, with governments democratized and responsive to universal suffrage, the common man is extending the government controlled by him to prevent himself from being regimented by private monopoly and to prevent private monopoly from usurping the powers of government.

And so today a good Jeffersonian believes in more government and a good Hamiltonian believes in relatively less. And both have been consistent in their apparent inconsistency. In substance each stands where he always stood. Each stands for the same groups, classes, and sections he stood for in Washington's time. But because of a reversal of conditions each has had to change his means, his methods, his slogans, his arguments, his rationals, and his philosophy. The substance is the same; the forms alone have changed. That is why today it is rather grotesque to see big businessmen at banquets toasting the name of Thomas Jefferson. They toast only the outworn form and not the substance. The forms of Jefferson are used to destroy the substance of Jefferson.

Roughly since 1896 our political parties have been responding to these changed conditions. Virtually every specific reform advocated by William Jennings Bryan involved an extension of the powers of the federal government. Almost every constructive act of the Wilson administration likewise involved an extension of the powers of the federal government. It goes without saying that this has been the fundamental trend of the Franklin D. Roosevelt administration. On the other hand, the speeches of Calvin Coolidge frequently lauded economy and simplicity in government and pleaded for a return to state rights.

Although the Republicans have in recent decades contributed less to this trend than the Democrats, even they are powerless to check it when in power. Should the Republicans take over the federal government they would have to retain most of the New Deal, and in order to work realistically with the post-war world they would have to continue this trend, with some variations in emphasis. The speeches of Wendell Willkie reveal most clearly this dilemma, because Willkie is too honest to conceal it. In one part of an address Mr. Willkie pays lip service to free enterprise and denounces the increasing powers of government, but in another part of the same address, when he gets down to brass tacks, he enumerates specific policies all of which imply more federal government.

Can this process of centralization continue without destroying free elections? Will not the government grow so powerful that no groups will dare organize to oppose it? In countries which have a vigorous tradition of freedom, this is, I think, largely a bugbear. The trend toward centralization began in this country with the adoption of the Federal Constitution in 1789. That trend has never halted in any period of our history, although its pace has differed from time to time. Its tempo and scope have been greatly accelerated and extended during the past half century, particularly during the past thirty years. Certainly the opposition party today is alive and vigorous. It won impressive victories in the elections of 1942. Were the elections of 1942 less free than those of 1896? Of 1924? Of 1928? Merely to ask this is to answer it.

Liberty springs from diversity. In spite of centralization in this country there is still an amazing array of conflicting groups and group interests. Even should a country with the tradition of democratic elections go all the way to socialism, the diversity of conflicting group interests—managers, engineers, experts, technicians, skilled workers, unskilled workers, farmers, and so forth—would remain to insure free elections.

Can this process of centralization continue without destroying civil liberties? Are civil liberties in danger today? Does the opposition lack free speech? To even ask that question is to convict oneself of lacking a sense of humor. As actual conditions exist today, it would almost be more pertinent to ask if the administration in power has free speech! It is the administration that has a hard time getting an editorial hearing in the American press, not the opposition.

Even in the midst of this war civil liberties thrive. There are fewer curtailments of civil liberties in this war man in the last one. There are fewer arrests, fewer convictions, fewer political prisoners. The federal government today is more centralized than it was in Wilson's time, but civil liberties are more vigorous.

Who are the most passionate defenders of most civil liberties in this country? Who encourage the full expression of human personality in its rich and various aspects? Who are the firmest exponents of human and personal rights? Who stand most staunchly for personal procedural rights in the courts, for free speech, free press, free assembly, free petition, and the rights of minority races and minority religions ? The very men who favor and defend the extension of the powers of government over concentrated wealth and corporate property 1 These men believe that government can be strong enough to curb centralized wealth and still not too strong for the basic liberties of the people.

It is judges like Holmes, Brandeis, Cardozo, Black, Douglas, and Murphy who are the real friends of human rights and civil liberties in this country. On the other hand, it is the so-called conservative judges, those who oppose the extension of government in the economic sphere, who uphold government and strike down individual civil liberties where freedom from religious and racial discrimination and freedom of speech and press are involved. In short, it is the conservative judges who favor individualism in property rights and Statism in human rights; it is the liberal judges who favor Statism in property rights and individualism in human rights.

Back in 1917 and 1918, who stood most stoutly for the personal procedural rights of those accused of violating the war-time Espionage and Sedition Acts? Holmes and Brandeis. Who stood for the widest latitude of individual beliefs as a prerequisite of American citizenship? Holmes in the Rosika Schwimmer case. Who stood most staunchly for freedom of speech and press? Again it was Holmes and Brandeis in the Anita Whitney case and Cardozo and Brandeis consistently in the Herndon case. And in this Herndon case it was Van Dervanter, McReynoIds, Sutherland, and Butler who took a narrow view of free speech. Who stands today for the largest measure of freedom in religion? Jackson, Black, Douglas, and Murphy in the recent Jehovah's Witnesses cases, notably in the case of West Virginia State Board of Education vs. Barnette. Who stood up to defend the procedural rights of the accused, those poor Ft. Lauderdale negroes who were hot-boxed and third-degreed? It was Justice Black in the Chambers case, a decision which will ring down the ages as long as men love justice and liberty.

This fundamental truth—that the men who favor extending the powers of government over corporate wealth are the very ones who most ardently defend personal civil liberties-would be better understood if the American Congress hadrisen to the challenge of the President's court reorganization bill of 1937 and had debated that measure on the high level demanded by the importance of the occasion.


If we are wise we shall prepare not for less government but for more; not for less planning but for more. Conservatives are now busy burying the New Deal. If we are to avoid disaster we had better prepare for government regulations the magnitude of which will make the New Deal look like a pygmy.

More government planning will inevitably involve a large government bureaucracy, but we must plan for a better bureaucracy and for better bureaucrats. We must demand more training of our bureaucrats and an enlargement of the civil service. Government methods must be more systematic and orderly, less chaotic and confused. The parties involved must have more certainty where they stand. But this will come with time and only with time. Administrative law is in its infancy. After all, the common law required hundreds of years in which to develop.

Why must there be more government? Why must there be more planning? There are several reasons, and they are imperative.

First, it is estimated that the federal government now owns about twenty billion dollars in our war plants. This sum represents the toil and sweat of millions of Americans. Our government must not part with this huge investment for a mere song. Rather than part with the people's property at a loss, we may have to resort to continued government ownership under private operation. If the government sells or leases this property certain definite guarantees should be required by those who take it over. Private operators should be required to observe national wage standards, to comply with laws on collective bargaining, and to utilize equipment to full capacity. Monopolies and semi-monopolies, if allowed to buy or operate this property, should not be permitted to practice their old trick of keeping output down and prices up.

Second, the federal government owns vast stores of trucks, jeeps, airplanes, food, and an amazing variety of other goods. Some businessmen are alarmed about these so-called surpluses. Some advocate that they be destroyed altogether. The destruction of these "surpluses" would be criminal. Planned destruction and planned scarcity are unthinkable. The strategic release of these goods by our government from time to time will help us tremendously in the battle against post-war inflation.

Third, a vast system of public works must be provided by local, state, and federal governments during the transition period when war plants are being reconverted to peace plants. We in the United States need more and better and modern schools, hospitals, libraries, play grounds, roads, and air fields. Our inevitable reconversion unemployment offers us a natural opportunity to use idle men to build what we need. Local, state, and federal projects are now being planned. Thus far, these are too limited to meet our needs or to provide relief from unemployment. Public works cannot solve the unemployment problem, but they can mitigate it. Public works will add to the public wealth and the national income. These additions to the national wealth and income will in themselves offset the drain on local, state, and federal budgets.

Fourth, we must prevent a post-war inflation. Rapidly rising prices cause individual suffering. They intensify social conflicts. They destroy the value of our bonds, our bank accounts, our insurance policies. Most important, if prices sky-rocket they will also crash. And this means utter disaster and perhaps even dictatorship.

All signs point to inflation of a most serious kind. Savings accounts and government-bond holdings by the mass of consumers are at an all-time high. This tremendous purchasing power is fairly panting to be released. People are already paying outlandish prices for used cars, radios, and phonographs. Consumers of unrationed goods are being conditioned to high prices. Civilian goods will continue scarce for a time after the war. Businessmen eager to reconvert may compete for an inadequate supply of equipment and raw materials. Such conditions will breed speculation and hoarding. In other words, conditions will be ripe for the greatest inflation in modern American history. Only resolute and courageous federal controls can save the day. Rationing, priorities, price controls, and high taxes must continue in the period of transition from war to peace. Otherwise we shall rocket to dizzy heights and then go over the precipice.

Fifth, after the transitional period of reconversion is over, what of the permanent picture? Our people have seen that in war times, as a result of government planning and coordination, the national income can be made to rise from about sixty billions in 1938 and from about seventy billions in 1940 to over one hundred fifty billions today. Thoughtful j people never again will be convinced that it is necessary to have idle factories, idle machines, idle equipment, and idle men. They will never again be satisfied with an economy of scarcity when they know full well we have the machines and the technology to provide an economy of abundance.

For too long we needlessly have lived in an economy of scarcity. We have the machines and the technical equipment and the productive capacity to eliminate poverty in this, country. But we have allowed the giant monopolies to curtail production, to hold prices rigid and high, and to stifle new inventions. What an indignant howl went up in certain quarters when we killed the squealing pigs and plowed up the cotton. Well, we would not have needed to slaughter those pigs or plow up that cotton if our big manufacturers had not deliberately prevented the birth of shoes, textiles, plows, harvesters, radios, ice boxes, and bath tubs. With enormous unused capacity, our big manufacturers curtailed production to keep up prices. No wonder the farmers demanded some approach to parity prices through a comparable policy of agricultural curtailment.

But curtailment is not the answer. Restriction does not provide us with goods. Scarcity does not raise our standard of living. When war scarcities in consumer goods end wc must go on full rations for every man, woman, and child in this country. We must deliberately choose large out-put at low prices with profits geared to reasonable levels and monopoly profits eliminated. Then factories, farmers, and stores will have abundant markets. Then prosperity will become general.

Post-war planning is too big a job for any one group of our citizens. Businessmen alone cannot do it. They lack the coordinated machinery to see and influence the whole picture. They lack objectivity—the lure of immediate profits is apt to be stronger than the ultimate good. The major responsibility for such important coordination must fall on the federal government. A federal agency should be set up at once to plan for full peace-time production, employment, and consumption. Such a federal agency should include representatives of business, labor, and agriculture.

Many businessmen will want to lower the surtaxes, take off all controls, restrict output, and maintain, high prices. This would allow big business to pile up huge capital reserves and thus prepare for the very depression their own restrictive policies would Inevitably cause.

The regulating and rationing of the consumer, although necessary in time of war and during the period of reconversion, is an irritating and infinitely detailed process involving a far-flung and untrained bureaucracy. After the period of reconversion, we shall have to regulate big business at the top rather than the consumer at the bottom. This will involve insistence on full production. Public opinion should be so aroused to the necessity of using our industrial plants to capacity that, where curtailment is being practiced, they will demand that troops be sent to force the making of shoes and tractors and ice boxes at maximum capacity, just as today they demand that troops be sent where war goods are not being produced at maximum capacity. I know this sounds provocative, and I hope it will be understood in the spirit in which it is said. I put it in this drastic way in order to show how necessary it is for our people to realize that the war against unemployment and depression is as important as the war against Hitler. There is, of course, a big difference in war-time production and peace-time production in that in war-time production the government contracts to buy the vast supply of war goods produced by manufacturers whereas in peace time the manufacturers must sell to millions of private consumers. It may be that in order to get maximum production the federal government will have to agree to underwrite the manufacturers and take from them all produced surpluses, but if purchasing power is made continuous there may be few or no surpluses.

The maintenance of continuous purchasing power involves several things. It involves the regulation of prices charged by the manufacturer and the holding of his profits to reasonable levels, and I mean reasonable levels and not the monopoly profits big business has come to expect as a right. It involves the distribution of work by the adoption of a short work day for those who labor, for if we can produce the avalanche of war goods now pouring off the assembly lines with millions of men in the prime of life away in the armed services, then we can produce to full peace-time capacity with a relatively short work day. Finally, it involves minimum wage controls, for wages must be high enough to enable the people to buy back the avalanche of consumer goods that must flow from our factories.

In other words, what we want is cheap goods, not cheap money. Cheap money robs the consumer. Cheap money robs the bond holder and the insurance policy-holder. Cheap money means high prices and a boom, to be followed by an inevitable crash.

Full and capacity production of consumer goods, reasonable profits, elimination of monopoly prices, good wages, short working hours—these alone can bring us permanent prosperity and full employment. These alone can provide us the big national income necessary to sustain our national debt. These alone can provide us the standard of living our technology allows. And paradoxically enough, we must constantly raise our standards of living or perish. There is no middle ground. Finally, capitalist countries which fail to solve the problem of full production of consumer goods are in danger of taking the road to fascism. Failing to solve the decisive question of our time, the full production and consumption of consumer goods, they are likely to turn to the making of heavy armaments.

Sixth, in the area of foreign trade we shall have no alternative at the end of this war but to extend government responsibilities. If, after the fascists go down, the left comes to power in western Europe it is quite probable that the great industrial and financial cartels and syndicates will be taken over by their respective governments. If this swing to socialism goes far enough, our government may have to organize government syndicates with which to carry on the mechanics of foreign trade. On the other hand, if the swing to socialism does not go so far, then our government will have to make agreements with European governments which regulate the activities of die great privately-owned international cartels, agreements which prevent their limiting production, curtailing markets, and restricting competition in the international field. For what would it avail us to require capacity production at home if our work was later nullified by the selfish understandings entered into by these international cartels?

Seventh, social security in the United States is only at the halfway house. Some classes now excluded will in the future come to be included. Some areas not now covered will in the future come to be covered, notably health and hospital insurance.

Eighth, when the war is over many of our veterans will receive government subsidies to enable them to prepare themselves educationally for their future work as civilians. This probably will be an entering wedge for an extensive program of individual subsidization by government of non-veterans. Our war training programs in the colleges are revealing to us the waste of human abilities and talents which in the past we have allowed to go unreleased, untrained, and untapped. Here are individual tragedies and a social tragedy which must not occur again. If by democracy we mean the equal opportunity for all individuals to develop to their full capacities, then we must never again allow higher and professional education to be a matter of chance; we must never again allow these to depend upon the happen-so of family financial ability.


We shall, of course, never attain to the good life unless we forego a foreign policy of American isolation or of American imperialism. For either one of these policies would divert us from the making of consumer goods and would force us to waste our productivity and our substance in the making of heavy armaments and in preparing for future wars. Only in a policy of collective security will we win the peace which will make possible the building of the good life.

Nor must it be supposed that the mere multiplication of goods and services and the mere increase in leisure time will assure us the good life. The good life does not consist of more cheap movies, more pulp magazines, and more boogie-woogie. But goods and services and leisure time will provide us the opportunity to enrich the lives of the mass of our people esthetically and spiritually in a way hitherto undreamed of.


The alternatives in this country, then, are not regulation or free enterprise. The alternatives are regulation or more monopoly. And make no mistake about it, more monopoly will lead ultimately to fascism and after that to socialism.

If we are wise we shall after this war travel far along the road of government regulation. Far as we go, however, it will not be as far or as fast as Europe and Asia are going. Even Walter Lippmann, no friend of a planned society, admits that only in this country will there be remaining any semblance of what he calls free enterprise. Even Eric Johnston says that the United States will be a lone island in a sea of completely controlled economy.

But the storm signals are flying. American conservatives are in a confused and even an ugly mood. Many would like to revolt from the trends of our time. They would like to have one more fling under "free enterprise." They are for allowing the monopolists one more go of it. They say in effect, "lower the high surtaxes. Take off the controls. Crush the labor unions. Let us be free again." The weather-vanes point to an economic binge unparalleled in our history. A back-log of unequaled consumer buying power is waitingto be dissipated. Many Americans are in no mood to be wise or discriminating in what controls they take off and what they leave on.

And should the monopolists have their own way after the war, for a time all will go well. We shall have "prosperity." We shall have a boom. Conservative men will say, "See, I told you so, all we needed to do was to kick out those high-falutin' brain trusters and college cranks. All we needed to do was to get rid of that new-fangled medicine and apply some old home remedies." Then watch! After that backlog of consumer buying power has been spent will come the deluge. American democracy cannot survive another depression comparable to that of the 1930's. Out of the cold, grey misery of another great depression will emerge the specter of fascist dictatorship.

As businessmen it is to your interest to prevent a post-war boom of an inflationary and speculative nature to be followed by a great depression. As small and moderate-sized businessmen it is to your interest to see that the federal government regulates big business in the interest of maximum production and general prosperity. As young businessmen you have less nostalgia for an age that can never be restored, and you will be less swayed by the slogans and shibboleths of free enterprise, so assiduously cultivated by the monopolists to save themselves from regulation and not honestly employed by them to bring back the really free enterprise which they didso much to destroy.

Never forget that we are living in the twentieth century,not in the nineteenth century. Take care lest you cut yourselves off from the creative forces and trends of our time.

America still needs the constructive criticism of its youngBusinessmen.