The Rights of Man
"A FREE ECONOMY UNDER A FREE GOVERNMENT"
By HON. JOSEPH C. O'MAHONEY, Senator from Wyoming
Delivered before the Virginia State Chamber of Commerce, Richmond, Virginia, April 13, 1944
Vital Speeches of the Day, Vol. X, pp. 454-457.
IT would be difficult to find a spot in all the world more appropriate for a discussion of the principles which must guide us in reorganizing the postwar world than here in Virginia, for of all of the states in the Union none made a richer contribution than Virginia to the founding of the nation. The leaders of this state in the formative period of the Republic had a clear understanding of the principles upon which free government must be built.
Certainly, too, it would be impossible to find a day more appropriate than this for the discussion of any theme involving freedom of the individual, for this is the birthday of the author of the Declaration of Independence. The fame of Jefferson increases with the passing years. Nothing can dim the luster of his reputation as the philosopher of human rights.
"Nothing is unchangeable", said he, "but the inherent and inalienable rights of man." That was his faith, political and economic, from the day he penned the Declaration of Independence until that day in June, 1826, half a century later when he wrote the last message that ever came from his hand.
I need not tell this gathering that the Mayor of the City of Washington had invited Jefferson to attend the celebration that was planned for the nation's capital on the fiftieth anniversary of the signing of the Declaration and that Jefferson, unable to leave Monticello, sent him message in response:
"All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth that the mass of mankind has not been born with saddles on their backs, nor a favored few, booted and spurred, ready to ride them legitimately by the grace of God."
With these final words there passed from the active scene the great Virginian who, in the Declaration of Independence, had asserted that governments are instituted among men to secure the inalienable rights they derive from their Creator and that the just powers of government come only from the consent of the governed. This principle of the relation of government to men is now enduring its most dangerous attack. The appalling conflict in which we are engaged was initiated by men whose views were at utter variance with those of Jefferson. The war was started for the purpose of making government supreme and of denying to men the right to control it.
We now know that this attempt to destroy the principles of free government has failed. We know that though military victory may be delayed and though we must still pay a terrible price, nothing can now prevent the forces of freedom from achieving it.
Military Victory Will Vindicate Jefferson
When that victory comes it will be a vindication of the philosophy of Jefferson and the principles of political freedom which this nation has always cherished. It has been the contribution of the people of America, the people in whom Jefferson had such profound faith, that has made this victory possible. Totally unprepared as we were at the outbreak of the war in Europe, our people have transformed this nation from one which was devoted only to the pursuits of peace into the mightiest military power that ever existed. We have produced the implements without which Britain and Russia could not have withstood the totalitarian might of Germany. We have produced the food necessary to maintain not only our own military forces, but to supplement the supplies of all our Allies, as well.
Agriculture and industry, both have been organized by a free people in such a manner as to exceed the most efficient achievements of concentrated arbitrary state power. We entered this war with only part of a one-ocean navy. Now we have a navy capable of dominating two oceans, a navy greater by far than that of which any dictator ever dreamed. We entered the war with only a handful of airplanes. Today we are driving Japanese planes from the sky and in cooperation with our British Allies are slowly but certainly destroying the Luftwaffe on the ground and in the air.
In a single month our industrial machine is now producing three times as many airplanes as we were capable of manufacturing in an entire year before the war began. Our industrial organization is today out-producing both Germany and Japan in the manufacture of all types of combat material.
This is the achievement of a free people, an achievement which beggars all description, an achievement which will be remembered long after the annoyances we have endured and the sacrifices we have made will have been forgotten. It is an achievement which justifies the faith of Jefferson and all those other Americans from all thirteen of the original colonies who built the American Republic upon the indestructible foundation of popular control.
But if we look back upon the legacy which was bequeathed to us and seek to peer into the future to discern the outlines of the new structure of free men that is to arise, we must ask ourselves how it came about that 168 years after the signing of the Declaration of Independence, the principles of human freedom came to be in such grave danger. Hitler and Mussolini warned us long before the war began of their intention to make the state the master of men instead of their servant. They told us in words of one syllable that democracy was outmoded and could not endure in the modern world. We heard them, but we did not believe them. We waved aside their declarations as the unimportant rantings of demagogues, but we know now that if it had not been for the heroic defense of Britain by the freedom-loving people of England and if it had not been for the extraordinary productive output of our own people, Hitler and Mussolini would have made their boasts good. It is incumbent upon us, therefore, in our plans for reorganizing the future to search out the causes of this great horror which might have turned out to be complete disaster for the rights of man.
Stable Local Economy Essential
The message I bring you is simple and I think altogether understandable—there can be no successful defense against the encroachments of central arbitrary power until first there is a stable local economy. It has been the loss of economic stability in local communities and subdivisions, in villages, cities and states that has undermined political freedom and made possible the growth of the totalitarian state.
When Jefferson and his colleagues labored for the establishment of this government, our economy was almost excluively individual. Today it is an organized economy and is preponderantly national in scope. This change from the individual basis to the organized basis has taken place all over the world and we have not successfully adjusted ourselves to the alteration. It was the failure to make this adjustment, the failure of a central economy to provide sure and certain employment for all men that created the opportunity for the advocates of totalitarian central power to walk upon the scene.
Our success in reorganizing for the postwar world will be measured by the degree with which we can succeed in stablizing the opportunities of individuals and localities in a world in which the advance of science has made organizational activities necessary. This adjustment can be obtained without injury to any group or class, without the necessity of any class warfare, without the loss of individual freedom if only we open our eyes to certain plain and inescapable facts.
Forty years ago there were in the United States 30,000 more post offices than are in existence today. Good roads and high speed automobiles have destroyed the little post offices and built up the big ones. At the turn of the century we had over 72,000 fourth class offices and only 194 post offices of the first class. Today we have only 27,000 fourth class post offices while offices of the first class have increased in number from 194 to 1,444.
With the change of the instruments that we use in the modern world, there has been a complete change likewise in our manner of living. No one, of course, would want to go back to the days of the dominant fourth class post office. No one would want to sacrifice the improvements and the comforts which have come with the increased number of first class post offices, but unless we understand precisely which brought about this change in the geographical structure of the country we shall not understand how it happens that little business and local business is in such a precarious position from end to end of the country. Precisely the same influences which have been destroying the small post offices have been sapping the vitality of little business, of local business, of individual enterprise.
Let me give you another example. The United States Steel Corporation during the last week in March published in most of the great newspapers of the country an advertisement to show what it has accomplished in the war effort, how much it has produced, what it has received for its production and how its receipts have been distributed. This record shows, for example, that of almost two billion dollars which it received in 1943 from its customers (an increase of 22% over what it had received in 1941) almost one billion dollars was paid to employees who received 45% more than they had received two years before.
The "Population" of Bio Businesses
The advertisement showed that the United States Steel Corporation in 1943 paid out $707,000,000 for the purchase from others of products and services. This was also an increase of 22% over payments for the same purposes in 1941.
Significant as these figures are, the United States Steel Corporation has given us even more significant information in the advertisement by reciting that it has more than 340,000 employees and 222,000 stockholders. Let us add these two figures together and we find that the "population", so to speak, of the United States Steel Corporation, without taking into account at all the families of employees and stockholders, is more than 562,000 persons. How many cities in Virginia, how many counties have a population that great?
Let us suppose that each one of these employees and each one of these stockholders is a member of a family of three—that means a "population" of 1,686,000 persons. There are eighteen states in the federal Union each of which has fewer people than that.
Let me take another example. This is from an advertisement published by General Motors in all the leading newspapers of the country this week. Like the "ad" of the United States Steel Corporation, it tells a story of marvelous achievement, of efficient industrial achievement of a great contribution to the war. But here again we have an amazing revelation of the gigantic size which has been attained by industrial organization. General Motors which manufactures not only five different models of automobile, a popular truck, a desirable coach, the Fisher body and the Frigidaire, but a score of other highly essential and valuable products, tells us that in 1943 its average number of employees was 448,000. Its stockholders numbered approximately 421,000, a total "population" of individual employees and stockholders of 870,000. Multiplying by three we have a total industrial "population" of 2,600,000, again exceeding the number of inhabitants found by the United States Census in 1940 to be domiciled in each of 29 of the 48 states.
General Motors tells us with pardonable pride that in 1943 the physical volume of war materials which it produced was more than doubled that produced in 1942. It tells us that the value of this production amounted to $3,500,000,000 and that it paid for materials and services purchased from others approximately $1,900,000,000.
General Motors tops the list of all the organizations in the country to which the government has awarded its war contracts. It and 99 others have received war contracts amounting in value since the beginning of the war effort to more than 70% of all the billions of dollars which the federal government has expended out of its deepening deficit—70% to 100 huge organizations, 30% to all others. Here again you have the same condition of little groups drying up and big groups growing bigger that I showed you at the outset in the story of the nation's post offices.
How Whole Country Is Affected
It is undoubtedly true that this country could not have made the marvelous record in the manufacture of war materials of which we are so proud without the highly efficient, well organized activity of these giant industrial institutions. But it is only necessary to consider for a moment the magnitude of the purchases made by these units to realize that the prosperity of every community in the land is dependent upon what the managers of these organizations do and the decisions they make. When United States Steel, which last year bought $707,000,000 of products and services from others or when General Motors, which last year bought almost two billion dollars of such materials and services, reduces the amount of its orders, mines and factories, farms and stores all over the country will experience a reduction of business. Communities and states from coast to coast are intimately affected by the decisions reached by the managers of these units and nothing that the people in those communities or in those states can do is likely to affect the result.
But the condition is even worse if instead of United States Steel or General Motors, we consider "General Government" the title which I give for the moment to the huge central government organization we have had to establish in Washington to wage totalitarian war against totalitarian dictators.
It has been necessary for the federal government to control production and allocate materials in order to organize the war effort because we had to have the guns, the airplanes and the battleships with which to over-match the aggressorsof Europe and Asia. This was all done necessarily by increasing the national debt to unimagined proportions. The orders which have come from Washington from the Army and the Navy, the Maritime Commission, the Defense Plant Corporation and all the rest amounting in value to about 150 billion dollars, account for more than 50% of all the goods and services which are being produced in the United States. In other words, Uncle Sam is buying with deficit dollars more than one-half of all the things that are produced and all the services that are rendered in this country by the people of the country. When the peace comes and that purchasing stops, when Uncle Sam withdraws from the market, then indeed unless we are ready in advance, every community in the land will feel the effects. This is the picture of the effect of economic concentration upon the lives of people. This is the story of the effect of an organized economy upon an individual economy.
Here is the reflection in our country of the very conditions which in Europe and in Asia produced arbitrary central power. Here is the illustration of the two conflicting principles which lie at the root of this war—individualism versus arbitrary central power. Fascism and communism both stem from central economic power. They came into existence because men did not know how to adjust the necessary huge organizations of the modern world to the needs of individuals and localities. Because men did not know how to make that adjustment, they began to struggle among themselves for control oi the government upon which, in turn, they were ready to depend for the complete control of their economic lives. People divided into groups, workers or proprietors or farmers and each sought to protect its own interest by seizing and holding the government and excluding the members of all other groups from that position of advantage.
Meaning of "The American Way"
If the American experiment in government means anything, if this "American way of life" of which we all speak so readily means anything, if the principles that Jefferson taught and Washington fought for mean anything, they mean that in America government is the instrument of all of us and not the instrument of any group or class. The American ideal of living is that both economically and politically we are all free men and no part of us has any right or shall be permitted to regiment all the rest of us.
The problem of the modern world is the problem of the preservation of economic independence. Without economic independence, as the terrible events of the last four years have taught us so well, there can be no such thing as political liberty. One depends upon the other. The founding fathers were able to build a democracy in America because men were economically free. The very existence of democracy has been threatened all over the world because the growth of economic organization has been such as to unstabilize the economic basis of our society.
When, therefore, we look to the future we must give our thought .to the reestablishment upon a stable basis of the economy of the people in their local communities. This does not mean the destruction of big business at all. It does not mean the sacrifice of any of the great achievements, of any of the great efficiencies that big business has brought. It means first of all the protection of the local economy from arbitrary central power whether it is exercised by public or private authority.
A big country needs big business. Much of the enterprise which modern civilization demands can not be carried on except by huge organization. The airplanes with which we are battering down Fortress Europa were possible of production only by huge organizations like General Motors. When the war is over we shall have to depend on the same organizations to build the planes which will carry the new commerce of the air across all continents and all oceans.
Just as when in the middle of the last century we spanned the continent with railroads, now that we expect to girdle the globe by air transport we must expect to utilize huge accumulations of capital and large armies of workers under expert management. But we shall make a mistake if we imagine that we can turn the direction of the future over to the managers of these great units without government supervision in the public interest. Government is just as essential as industrial organization. What is needed is not the elimination of industrial managerial authority or the elimination of government supervisory authority, but the establishment of a rule by law under which the responsibility of all groups, public and private, to the whole people shall be recognized and maintained.
If big business is necessary, as we must recognize, to furnish the commodities and the services which the modern world demands, little business is no less necessary, for upon it depends the maintenance of the market which all business requires.
Purchasing Power of People Essential
It is not necessary to tell any group of businessmen that there can be no prosperity unless the people have the means with which to purchase that which business handles. We have had a higher standard of living in the United States than ever was established anywhere in all the history of civilization only because a larger proportion of the people here have been able to enjoy the output of all industry. The wise businessman first of all builds his markets, for unless he can sell his goods he has no interest either to produce them or to deal in them. Every chamber of commerce, therefore, which devotes attention to the problems of the post-war world must give heed to the creation of a stable purchasing power by the people throughout the nation to take the place of government purchasing when the war is over. That in turn means that one of the primary concerns of every chamber of commerce should be to help create new opportunity for employment in every community. Stable employment at good wages in every town, village, city and state should be one of the primary objectives of local business everywhere, for only thus can a private economy be maintained.
We know that there is no other course to follow because we have tried the alternative courses, and each of them has failed. The private managers of our concentrated industrial economy were not able to prevent the collapse of 1929. Government managers by public spending did create subsistence jobs for the unemployed in the ten years that followed, but a self-sustaining private economy was not established because concentrated public management is just as unable as concentrated private management to provide opportunity for all. Moreover, it must be perfectly obvious that deficit financing by the federal government in the postwar period offers no hope for the establishment of a stable economy.
Already the government deficit is climbing toward two hundred billion dollars, or almost $1,500 per capita for 135,000,000 people. The annual interest charge upon this deficit is more than three billion dollars, and this in turn is greater than the aggregate debt of all 48 states.
A Program for a Dynamic Democracy
The substitute for public spending is private spending.
We know from the records of the banks and insurancecompanies, and from the reports of the United States Treasury Department that the people have been saving. They 1 have the money, and it seems to me to be the plain conclusion of common sense that if we really want a private economy, if we really want an individual economy, if we really want men to be economically free as well as politically free, we have no recourse but to take those measures that are necessary to stimulate the investment of these savings in local private business, in new competitive industry, and then protect these investments against the destructive action of both private monopoly and arbitrary central government power. The tax laws can be revised in such a manner as to promote and encourage the investment of private capital, and thereby stimulate the substitution of private spending for government deficit spending.
New enterprises thus brought into existence by the investment of private capital can be protected from destruction by monopoly through laws which will more clearly define the powers, responsibilities and duties of all economic organizations.
This new enterprise can also be protected from regimentation or restraint by government by laws which, though recognizing the necessity for public supervision, shall deny to all administrative bureaus the power to be both judge and jury, manager and master, of private business. It should not be difficult to draw the line between local business and national business. It should not be difficult by law to stake out the respective jurisdictions of the two, so that while escaping from central government domination we shall be in danger of falling back into the control of private managerial power, which through national and international cartels and combinations can close the door of opportunity to little business and to the individual.
Finally, we should seek to revive our confidence in state and local authority. We should undertake to stimulate the local development of local resources, and to develop everywhere throughout the country a new community consciousness, a new pride in our local subdivisions. We have had altogether too great a tendency to look to either concentrated financial power in the hands of big business or concentrated political power in the hands of big government to provide the employment which our local communities have neglected to provide by their own initiative. We have permitted class consciousness and pressure groups to grow at the expense of the integrity of the communities in which we live, and thus the vitality of both the economic and the political systems has been drained away.
Democratic society is the most difficult of all societies to maintain, but it is the society which is natural to man, because man is free.
The theories of Fascism and Communism are defeatist theories. They have been conceived by men who do not believe that the individual is competent to direct the modern economy. It is because of their lack of faith in man that they erect the state as the source of all power and authority.
The people of America have already demonstrated by their tremendous accomplishments in this war that they are not defeatists. They still believe in the principles of individual freedom, and I have no hesitation to say that they are competent to direct a free economy under a free government.
The Republic which Jefferson and the colonial fathers founded will lead the world to the reestablishment of a free economy, just as it is now leading the world toward the redemption of free government.
One thing only is needful, faith in ourselves, faith in the heritage that is ours, faith in those inalienable rights which Jefferson taught us were given to man by the Creator of the universe.