Business, Government, and Politics

Charles R. Eckert

[A speech delivered in the U.S. House of Representatives, 16 June 1938]

Mr. Speaker, it is related that our ancient ancestor, Adam, on account of some untoward behavior in the Garden of Eden, was put under a ban by the Creator, conditioned that during the rest of his days he should eat bread in the sweat of his face. This ban, with the same condition, was placed on his progeny; so here we are, bound to work if we want to eat. And inasmuch as life is sweet and the urge to live strong, people will work rather than starve. In this fact is the origin of business.

The major portion of the activities of every generation of men, from the days of Adam to the present time, is devoted to the production of those things that sustain human life. Man's primary needs are food, clothing, and shelter. The world is teeming with industry, commerce, and transportation, all for the purpose of bringing into being the physical needs of man. This process is involved, complex, intricate. It baffles our imagination. It is impossible for the human mind to comprehend all the details of the production of even the simplest articles.

By way of illustration, let us examine briefly a meal such as most of us are accustomed to eat daily. How did it come into being? Did a magician wave a magic wand and, behold, the meal was before us? Is there in truth an Aladdin's lamp? Are there omnipotent genii to work wonders at Aladdin's touch? Not at all. The meal came not by magic, but by the labor of those who set it before us. This is simple, and this we see. But back of what we see there were countless persons whose labor contributed to the meal that we do not see. The food was prepared by a cook. It in turn was obtained from a farmer. So far the story is simple. But the farmer, in the production of the various food products that comprise the meal, employed tools that again were brought into being by the labor of the workers in mill and mine and factory. The labor employed in the preparation and serving of one simple meal presents such a labyrinth of social services as to defy complete description.

What is true of one simple meal is in equal measure true of the infinite variety of articles in common use in modern, civilized society. The business of the Nation and of the world is a vast interlocking and interchanging enterprise - intricate, complex, delicate - in which everyone engaged in useful toil in some way or other plays a part.

Since the sons of Adam are bound by the decree of the Creator to work for the necessities that sustain life, let us examine briefly the conditions under which this sentence was imposed. A few basic facts in the productive process attract our attention. These facts are peculiar to the field of political economy. Political economy is the science that treats of the nature of wealth and of the laws of its production and distribution. The production of the necessities of life, as we have seen, is a very complicated process. Yet the factors involved are few in number and easily apprehended, and understood. The factors involved are land, labor, capital - these three, and no others. The term "land" is defined as "the whole material universe, outside of man and his products."

"Labor" is defined as "all human exertion directed toward the production of wealth."

"Capital" is defined as "wealth in the production of more wealth."

Wealth is created by the intelligent application of labor with the aid of capital - tools - to land and is defined as "all material things produced by human labor for the gratification of human desires having exchange value."

Let us keep these facts and definitions definitely in mind. While the origin of business arises from the elemental physical needs of man, yet the growth and expansion of business are due to man's capacity to live and cooperate with his fellows. Man is more than an individual. He is a social being and his social instincts urge him to associate and work with his neighbors and establish community life. If it were not for this trait with which man is endowed, he could not rise above the living standards of the cave man.

Throughout the centuries, however, man has risen from the cave man's low estate to the present state of civilization. His progress and advance in community life are due to the power of reason. By the exercise of the gift of reason, man is enabled to adapt, contrive, experiment. He builds a simple hut but also erects an Empire State Building. He makes a crude boat but also constructs a Queen Mary.

Aside from being a social being, man is also a spiritual entity. By virtue of a spiritual insight he is able to discern good from evil. Down deep in the heart of every human being there is a something, the still small voice, as it were, which enables him to determine right from wrong. And if man in his association with his fellows would hearken to the promptings of the deeper impulses of his soul there would be no transgressions, no violations of the moral law. Besides, there has been revealed to man a rule of conduct by which his every act, both individual and social, may be checked and gaged. He has been admonished that "All things whatsoever ye would that men should do to you, do ye even so to them," so that by virtue of man's inherent capacity to determine right from wrong, reinforced with the wisdom and virtue of the Golden Rule, there is no reason for the manifold moral transgressions that have made the history of the race one long, weary story of misery and woe.

If progress shall continue and peace and prosperity bless the race, man must learn to respect the rights of others as scrupulously as he would have his own rights respected. As Henry George truly says:

The law of human progress - what is it but the moral law? Just as social adjustments promote justice, just as they acknowledge the equality of right between man and man, just as they insure to each the perfect liberty which is bounded only by the equal liberty of every other, must civilization advance. Just as they fail in this, must advancing civilization come to a halt and recede.

Violations of the natural rights of man contain the seed of social disease, and herein lies the reason for government.

Society and government, contrary to common opinion, are not synonymous. Thomas Paine, in his treatise, Common Sense, makes this quite clear when he says:

Some writers have so confounded society with government as to leave little or no distinction between them, whereas they are not only different, but have different origins. Society is produced by our wants, and government by our wickedness. The former promotes our happiness positively by uniting our affections; the latter negatively by restricting our vices; the one encourages intercourse; the other creates distinctions; the first is a patron; the last a punisher.

Paine here points out the distinction between society and government. Society is a positive good; government is a reactionary force. Its origin is due to the inability of moral virtue to govern the world.

Government may be defined as "sovereignty in action" and "sovereignty" as "a power of the whole people functioning as a unit."

The primary functions of legitimate government are expressed in three terms - police power, land tenure, highways.

Police power is public because it is a necessary function of sovereignty.

Land tenure, which is inevitably related to the revenue system, also is public, because it is a necessary function of sovereignty.

Highways are public because it is only by the exercise of sovereignty that roads and streets and channels of communication may be established.

If these functions were justly administered, no need would arise for governmental regulation or direction of private enterprise. The misuse of governmental power is to be found in its use for personal gain. Men seek to gratify their desires with the least exertion possible. By controlling government these desires may be gratified with little or no exertion, and so designing and unscrupulous persons strive to control government. Human nature is weak and the temptation is great to seize the power of government and use it, not to secure the natural rights of men or promote the general welfare, but as a short cut to private fortune. The misuse of government has been called to the attention of the American people by a noted publicist and writer, Albert J. Nock, in these words:

So long as the state stands as an impersonal mechanism which can confer an economic advantage at the mere touch of a button, men will seek by all sorts of ways to get at the button, because law-made property is acquired with less exertion than labor-made property. It is easier to push the button and get some form of state-created monopoly like a land title, a tariff, a franchise, or other concessions of government, and pocket the proceeds, than it is to accumulate the same amount by work.

The history of the American Republic is a striking example of the truth of this statement. From the very beginning of our national life to the present day there were those who sought to control government for their own aggrandizement. Their number has increased from the inception of the Government to the present time. Today there is hardly a group that is not casting covetous eyes on the Capital City of the Nation and directing its energies to exact aid and help from the Federal Government. First there came the manufacturers asking for a protective tariff; then the railroads pleading for subsidies. These were followed by the public utilities; and now we see the farmers and others all constituting a mighty host, representing practically every line of human endeavor, imploring, beseeching, praying for aid and help at the hands of the Government. It will be noted that this mighty host of governmental supplicants are seeking favors - favors that in essence are special privileges.

The effort to obtain favors at the hands of the Government is inspired by the desire to make a living in the easiest way possible. In doing so, the still small voice is silenced and the command "Thou shalt not steal" is ignored. The aim is to get possession of a privilege, and with a privilege in hand the exploitation of honest business is easy.

"Privilege" is defined as "a special advantage granted to and enjoyed by some to the exclusion of others."

There are many types of privilege, but the major ones are the privileges enjoyed by the public-service corporations, the banking fraternity, the owners of natural resources, the owners of valuable land sites, and the beneficiaries of special legislation and concessions of Government.

Let us examine privilege in its true light. Let us remember that its chief characteristic is favoritism, that it gives the possessor a special advantage at the expense of others, and that to own or possess a privilege means the power of procuring wealth or making a living by the labor of others. It is this fact that makes privilege such a coveted prize, and in order to acquire it many influential citizens will engage in politics and violate every rule of decency and honor. Is it reasonable to suppose that single citizens would contribute thousands of dollars to campaign funds with which to influence - yea, corrupt - the electorate, if there were no hope of recovering the money spent for election purposes many times over? The history of our political struggles proves that these huge election contributions are made with an eye single to electing the political henchmen of the beneficiaries of privilege so as to control government, in the hope of securing new privileges at the hands of the Government and protect the privileges they already enjoy.

Like a mighty pest, privilege is eating out the very vitals of trade, commerce, and industry. Not unlike the parasitical insects that subsist on the lifeblood of their victim, privilege subsists on those who toil and labor and produce the wealth of the Nation - in short, subsists on business. Just as the flea-ridden dog or the louse-ridden hen will become pale, anemic, and weak, so business, under the steady and constant drain of privilege, loses its virility and strength. To improve the health of the dog or the hen, the owner seeks to do away with the fleas and the lice; and likewise, to improve the health of business, privilege must be exterminated.

Much difficulty is encountered in abolishing privilege. It will battle for its life with every weapon at its command. Privilege has monopolistic control of many of the necessities of life, and with this control in the hollow of its hands it has a persuasive influence over the agencies that create and influence public opinion. It influences, controls, and directs great bodies of men. It corrupts the voters and perverts the public will, so that its henchmen are frequently placed in public office to do its bidding and carry out its will.

At one time in the history of our country it was our proud boast, "Millions for defense, but not one cent for tribute." But things have changed. Now we offer as tribute on the altar of privilege upward of one-third of the national income. In this one fact there is the explanation of the inequitable distribution of wealth. The national income in the peak days of our so-called prosperity was estimated at $90,000,000,000 per year. To avoid the disaster of panics and hard times, wealth must be distributed justly and honestly. Natural justice demands that the national income - that is, the sum total of all the wealth produced by the farmers, miners, manufacturers, merchants, and all the helpers and workers in the Nation's workshop-must be distributed to each in accordance with the contribution that each makes in the way of productive labor.

Now, if by virtue of our economic set-up - which in essence is monopolistic - the farmers, manufacturers, miners, merchants, and the helpers and workers in the Nation's workshop are compelled to contribute to monopolies the tidy sum of thirty billions annually, it stands to reason that the annual income of those who produce the national income will be materially reduced. In fact, the figures indicate that $30,000,000,000 is equal to a contribution to privilege of $1,000 by each family in the United States.

If privilege were abolished, agriculture and industry would be free of the paralyzing and destructive burdens of taxation, and thus the way would be opened to produce in abundance. Production then would be limited only by the demands of the people. With agriculture and industry freed from the present-day oppressive and depression-breeding taxes, there would be no need to limit production of any kind. There would be a free field and no favors, and the natural laws of production and distribution would automatically control and determine the need of things for which there would be an effective demand. Many of the artificial attempts at regulation could be abandoned. The irritating bureaucrats could be handed their hats and invited to go home.

This is no idle dream. This is exactly what will happen as soon as the American people display sufficient economic knowledge and the will to abolish privilege. The annual tribute that privilege exacts from the producers of wealth is the reason why the few are rich and the many poor.

Ill fares the land, to hastening ills a prey,
Where wealth accumulates and men decay.

Confronted with this situation, what is honest business to do? Obviously, the task at hand, in order to establish opportunities to all on equal terms, is to abolish the privileges now enjoyed by the few. And the first problem to consider is, who are the privileged? The major privileges - those whose exactions are unduly onerous to business - may be summed up under the titles, public utilities, land, money, taxation, patents.

Much confusion prevails, especially in the minds of businessmen, as to the part that Government may properly take in the control and regulation of business. First, it must be understood that there are two kinds of business, public and private. Public business ought to be controlled and regulated by Government; private business ought to be left severely alone. While it is the distinct duty of Government to control and regulate all public business, it is equally true that Government must pursue a policy of hands off so far as private business is concerned.

What is private business? The answer is obvious. All business enterprises that do not enjoy the power of sovereignty are private.

It is recalled that the primary functions of Government are limited to the maintenance of highways, management of landholdings, and police power therefore any business that requires a constant and continuous use of the highways and enjoys the power of sovereignty, is properly public business. The services rendered by the various public utilities, such as transportation, power, communication, and the like, are governmental functions; in short, public utilities are engaged in public business and are agents of the Government and subject to governmental regulation and control. This becomes necessary for the very obvious reason that services that are monopolistic in nature must be under governmental supervision in order that the rights of the public may be protected and the law of competition function freely and fully in the field of private enterprise. As has been truly said:

Private monopoly in anything tends to destroy competition in all things.

Those engaged in the administration of public utilities constitute a powerful, privileged group. Land ownership is a legal privilege. As such it enables the owner to appropriate to his own use the profits arising from the value of land. This is clearly a violation of natural justice, for the value attaching to land, due to the progress of human society, is a social product and therefore the benefits and advantages arising therefrom belong to all the people.

The administration of the value of land and the profits arising therefrom is public business; in other words, it is the first duty of government to collect for public use the income derived from socially created land values. And it is well to note that if this were done the multitude of oppressive and depression-breeding taxes now borne by business could be abolished. Then private business would be freed and both capital and labor could engage in the production of wealth in the assurance that both would receive as recompense the full share of their joint product.

Owners of land, to which values attach by reason of the activities of the people and the services of government, also constitute a privileged group.

Other privileges, such as are enjoyed by the banking fraternity and owners of patents, must be reformed so that the power to exact tribute be abolished. Bankers and patentees also constitute a privileged group.

At the risk of repetition, let it be repeated that there are two types of business - public and private. Public business is properly the concern of government, while private business should be free from governmental interference, excepting such police regulations as may be necessary for the maintenance of safety and sanitation.

It may also be well for business to remind itself that much of the interference of government in private business is occasioned by the inability of moral virtue to govern the world. Pure-food laws, laws in relation to weights and measures, legislation in regard to sanitation, regulations to insure fair trade practices, together with the multitude of regulatory measures under the police power of government so vexing and annoying to business and responsible for the horde of bureaucrats, came into being because of the moral delinquencies of certain branches of business. When business learns to police itself and set up standards of business and social behavior that have the sanction of moral rectitude, the annoyances and interferences of governmental bureaucrats will vanish from the picture. This day will come to pass if and when business will purge itself of its own antisocial and immoral practices.

Business is in distress. It is sorely tried. It has many real or imaginary troubles. In the hope of improving the lot of business, all manner of artificial schemes are proposed. From time to time there come into being governmental programs that bear euphonious titles, such as "Old Deal," "Square Deal," "New Deal," and others. Much of the legislation that is enacted under the caption of these euphonious titles is disturbing and annoying to business and yet there is a very sound and good reason why it exists.

In the interest of enlightened self-preservation the attention of business is directed to an observation of Albert J. Nock, in an article published in the May issue of the Atlantic Monthly. Mr. Nock discusses in illuminating fashion the reason for the attempts of government to regulate human society. Mr. Nock says:

Why are New Deals? Simply, my dear friends, because of two almost universal superstitions. First, that natural law does not operate in the realm of economics just as inexorably as in the realm of physics - which it does. Second, that a government can work some sort of magic that will nullify or modify the operation of natural law - which it can't. These two superstitions are as widespread as the belief in witchcraft back in Cotton Mather's time. We have been brought up in them from infancy as part of the air we breathe, and hence we all firmly believe in government by sleight of hand-or should I say in government by incantation? - and we all squeal like stuck pigs when we have to take the consequences of that utterly silly belief. There is no excuse for this, and no sympathy coming to the victims of their own foolishness, especially in the country of Franklin, Jefferson, and Paine - all of whom gave them warning enough. Eighty years ago, Herbert Spencer dissected those superstitions right down to the bone in a volume of essays whereof I'll make you a small bet that you can't buy a first-hand copy in the United States today without sending to England for it.

Moreover, since I am in a betting mood, I'll pay you a liberal bounty for the name of every American man of affairs you can produce who has read those essays or even heard of them. I promise you won't get purse proud on the proceeds. Well, then, have I any sympathy with the downtrodden and bedeviled American businessman now that his superstitions have returned to plague him? The plain truth is that these two superstitions have for years been breeding a choice job lot of rotten brains among us, and we now have nothing but rotten brains wherewith to meet the consequences. Statesmen like Franklin, philosophers like Spencer, kept telling us that government's only proper concern with business is to punish fraud and enforce the obligations of contracts, and beyond that it should let business strictly alone; but, no, that was not good enough. We kept running to the Government for subsidies, grants, concessions, franchises, and every imaginable kind of intervention and interference, coaxing it to stick its finger into every pie, until now at last the pie dish is so full of fingers that there isn't room for any pie.

Emerson's counsel is still sound:

Fear, craft, and avarice cannot rear a state.