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Published online by Cambridge University Press: 02 September 2013
President Truman's stubborn determination to build on the New Deal's embattled foundations an imposing edifice called the Welfare State is stirring the business community and its spokesmen to renewed and outwardly bold hostilities. This present outcry for “welfare,” it seems, is not what it used to be: “The irresponsible clamor of the mob for bread and circuses.” “Welfare” is now recognized as “a justifiable demand, consonant with the necessities of social evolution,” and in keeping with our political tradition. The old jungle economy, at long last, must be discarded. All this is now cheerfully conceded. But whose responsibility is it to bring order out of chaos, whose business is it to formulate and administer the welfare program? There is the rub. Certainly not government's, business leaders assert, for ultimately that would spell not a glorious welfare society but an inglorious welfare state. This ignominious prelude to statism, to totalitarianism, to despotism, must be avoided at all cost. That is why certain publicists, ex-New Dealers, industrial leaders and university officials are alerting the business community to a fresh responsibility, the unique venture of capitalism today—“the greatest opportunity in the world,” Russell Davenport calls it, and peculiarly the concern of Free Enterprise.
Harvard's Business School Dean, Donald K. David, also points ominously at “The Danger of Drifting,” and sharply differentiates between “freedom to” and “freedom from,” between “equality of opportunity and equality of results,” etc., etc. These refinements are important, Dean David decides, because in them lies the crucial difference between welfare society (which he approves) and welfare state (which he deplores). How easy it is, he warns, to drift into the lethal arms of the welfare state. To foil the octopus of welfare, businessmen must be vigilant and aggressive. “Responsibility for this program,” Dean David concludes, “is going to be placed in the hands of the businessman, because we have, whether some people like it or not, an industrial civilization; and the businessman, whether he likes it or not, has to assume new responsibilities.”
1 See Davenport, Russell W., “The Greatest Opportunity on Earth,” Fortune, Vol. 40, pp. 65 ff. (October, 1949)Google Scholar.
2 David, Donald K., “The Danger of Drifting,” Harvard Business School Review, Vol. 28, pp. 25–32 (January, 1950)Google Scholar.
For William Graham Sumner the distinction was much the same—that between equality of “results” and equality of “chances.” See What Social Classes Owe to Each Other (New York, 1883), pp. 163–164 Google Scholar.
3 David, op. cit., p. 32.
4 Adams, Charles Francis, The Works of John Adams (Boston, 1851), Vol. 9, p. 376 Google Scholar.
5 Proceedings and Debates of the Virginia State Convention of 1829–80 (Richmond, 1830), p. 319 Google Scholar.
6 Berle, Adolf A. Jr., and Means, Gardiner C., The Modern Corporation and Private Property (New York, 1932)Google Scholar.
7 Theodore K. Quinn, “I Quit Monster Business: An Appeal for Independent, De-centralized Enterprise—To Save Individual Opportunity and Freedom in America,” published in 1948 by Public Relations, Inc., 522 Fifth Ave., New York City.
In explanation of his extraordinary action, Mr. Quinn says: “I quit monster business because it is undemocratic, because it is inhuman and not socially responsible, because most of it is big only for the sake of bigness or for purposes of concentrated power and control, because it is inefficient and corruptive, because it is causing a dependent society where only masses count, genuine individual freedom languishes and opportunity and expression are restricted, because it glorifies leaders whose interest is too much in them-selves, and because, through its essentially collectivistic forms and methods and mockery of ‘free enterprise,’ it is leading our country, just as surely as the sun sets, to a brand of totalitarianism which is a perversion as far from individualism, civil liberties and the democratic process as Russian communism.”
For a brilliant case study tending to support Quinn's unusual move, see Latham, Earl, “Giantism and Basing-Points: A Political Analysis,” Yale Law Journal, Vol. 58, pp. 383–399 (February, 1949)CrossRefGoogle Scholar. See also the reply by B. P. McAllister and M. T. Quigg, ibid., pp. 1068–1078 (June, 1949).
8 New York Times, August 11, 1949, p. 3 Google ScholarPubMed.
9 Speaking at the Southern Governors' Conference, and reported in the New York Times, November 22, 1949, pp. 1, 40 Google Scholar. Byrnes elaborated his position in “Crisis Government Can Ruin Us,” Collier's, Vol. 125 (March 4, 1950)Google Scholar.
10 Address, Combined Luncheon Clubs, Galveston, Texas, New York Times, December 9, 1949, p. 23 Google Scholar.
11 Language of Walther Rathenau, quoted by Berle and Means, op. cit., p. 2.
12 See Mima, Edwin, The Majority of the People (Toronto, 1941)Google Scholar and Commager, Henry Steele, Majority Rule and Minority Rights (New York, 1943)Google Scholar.
13 For pertinent excerpts from Convention proceedings in New York, Massachusetts, and Virginia, see my Free Government in the Making (New York, 1949), pp. 382–428 Google Scholar.
14 “It was certainly true,” Hamilton remarked on the floor of the Philadelphia Convention, June 26, 1787, “that nothing like an equality of property existed: that an in-equality would exist as long as liberty existed, and that it would unavoidably result from that very liberty itself. This inequality of property constituted the great and funda-mental distinction in Society.” Farrand, Max (ed.), The Records of the Federal Convention of 1787 (New Haven, 1911), Vol. 1, p. 424 Google Scholar.
In Federalist No. 10 Madison said: “The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government. From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of society into different interests and parties.”
“… it is a great and dangerous error to suppose that all people are equally entitled to liberty. It is a reward to be earned, not a blessing to be gratuitously lavished on all alike. … There is another error not less great and dangerous … that liberty and equality are so intimately united, that liberty cannot be perfect without perfect equality. … In-equality of condition, while it is a necessary consequence of liberty, is at the same time, indispensable to progress.” Cralle, R. K. (ed.), The Works of John C. Calhoun (New York, 1857), Vol. 1, pp. 55–56 Google Scholar.
15 Lloyd, H. D., Wealth Against Commonwealth (New York, 1894), p. 536 Google Scholar.
16 Notable among them are: U. S. v. E. C. Knight, 156 U. 8.1 (1895); Pollock v. Farmers' Loan and Trust Co., 158 U. S. 601 (1895); Lochner v. New York, 198 U. S. 45 (1905).
17 See my article, “The Conservative World of Mr. Justice Sutherland,” American Political Science Review, Vol. 32, pp. 443–77 (June, 1938)CrossRefGoogle Scholar.
The businessman's devotion to free enterprise, to laissez-faire, has always been chiefly verbal. In his American Commonwealth, James Bryce noted that “one-half of the Capitalists are occupied in preaching laissez-faire as regards railroad control, the other half in resisting it in railroad rate matters, in order to have their goods carried more cheaply and in tariff matters, in order to protect industries threatened with foreign competition.” The American Commonwealth (New York, 1921), Vol. 2, pp. 3, 4 Google Scholar.
“The nostalgia of the American business community for the ‘never-never land’ of pure laissez faire is … ironic,” Reinhold Niebuhr observes. “The business community sought, as long as it could, to bend political power to its ends, violating every principle of free enterprise. The tariff policy of the Republican Party is certainly not in harmony with the principles of laissez faire; nor were such*devices as the Reconstruction Finance Corporation, which, originally conceived in the Hoover era, was designed to bail out some of the weakest units of American business. Protests arose against the use of political power in economic life when the masses began to use it to broaden their economic opportunities, to check the centralization of economic power, and to assure basic economic security.” Niebuhr, Reinhold, “Halfway to What?” The Nation, Vol. 170, p. 27 (January 14, 1950)Google Scholar.
18 In Federalist, No. 15, Hamilton asserted that opponents of the Constitution “seem to cherish with blind devotion the political monster of an imperium in imperio.”
19 Annual address of President Edgerton, John E., October 14, 1929. Proceedings of Thirty-fourth Annual Meeting of the National Association of Manufacturers, New York City, p. 16 Google Scholar.
20 Proceedings of the Sixteenth Annual Convention of the National Association of Manufacturers of the United States of America, New York, May 15, 16 and 17, 1911, pp. 65–90, at p. 66Google Scholar.
21 Edgerton, op. cit.
22 For a suggestive study of the military-business alliance, during World War II, to maintain the status quo, see Catton, Bruce, The War Lords of Washington (New York, 1948)Google Scholar. Catton finds no evidence that industrial leaders are capable of fashioning a political philosophy beyond “the assertion that management's reponsibility must not be divided or shared.” The author sees this as the more deplorable in that “the challenge of the war went far beyond a mere challenge to dig more iron and make more steel. … The real challenge said: Your old way of controlling that intricate combination of money, machinery, markets, and human beings which you call modern industry ia no longer favorable to the survival of human freedom–find a new way” (p. 109).
23 Mitchell, Broadus, Depression Decade (New York, 1947), pp. 88–89 Google Scholar.
24 The story is told by Pitney, James C., in “American Liberty League, Inc.” Type-script copy is available at the Princeton University Library Google Scholar.
26 See, in this connection, “Fifty-six Unofficial Judges: Constitutional Lawyers Scan New Deal for Liberty League,” Literary Digest, Vol. 120, p. 9 (August 31, 1935)Google Scholar; “A Conspiracy by Lawyers,” The Nation, Vol. 141 (October 2, 1935)Google Scholar; “Liberty League Lawyers,” New Republic, Vol. 84 (October 2, 1935)Google Scholar; “The Fifty-Eight Lawyers,” United States Law Review, Vol. 69 (October, 1935)Google Scholar and “Discussion,” ibid. (November, 1935); Powell, T. R., “Fifty-eight Lawyers Report,” New Republic, Vol. 85 (December 11, 1935)Google Scholar; and George Soule, “Liberty League Liberty,” ibid., Vol. 88 (September 9, 1936).
26 Desvernine, Raoul E., Democratic Despotism (New York, 1936), pp. 176–183 Google Scholar, passim.
27 Senate Report No. 711, 74th Cong., 1st Sess., pp. 41–44, passim (1937).
28 For a discerning account, see Corwin, Edward S., Constitutional Revolution, Ltd. (Claremont, 1941)Google Scholar.
29 Lerner, Max, “The Fate of the Supreme Court,” The Nation, Vol. 142 (March 25, 1936)Google Scholar.
30 Confronted with the proposal of universal suffrage in the New York Constitutional Convention of 1821, ChancellorKent, James remarked: “Universal suffrage once granted, is granted forever, and never can be recalled. There is no retrograde step in the rear of democracy.” Reports of the Debates and Proceedings of the Convention of the State of New York, 1821, p. 222 Google Scholar.
Kent uttered a half truth, for although universal suffrage has never been “recalled”, the property interests found a variety of effective ways to ward off the dangers he feared. For examples, see Twiss, Benjamin R., Lawyers and the Constitution: How Laissez Faire Came to the Supreme Court (Princeton, 1942)Google Scholar.
31 Address of Professor John F. Sly before the California Taxpayers Association, Los Angeles, California, February 21, 1950.
32 “The Opportunity in the Law,” an address delivered May 4, 1905, before the Harvard Ethical Society. Reprinted in Business—A Profession (Boston, 1933), p. 338 Google Scholar.
33 Adams, Brooks, The Theory of Social Revolutions (New York, 1913), pp. 209–210 Google Scholar.
34 “Welfare Capitalism Versus the Welfare State,” an address before the Atlanta Chamber of Commerce, Atlanta, Georgia, September 28, 1949.
35 For an illuminating analysis, see Appleby, Paul, Big Democracy (New York, 1945), Ch. 1Google Scholar.
36 Brooks Adams, op. cit., pp. 207–208, 213.
37 “N.A.M.: Spokesman for Industry?” Harvard Business Review, Vol. 26, p. 357 (May, 1948)Google Scholar.
38 “Concentration of power [economic] has been shown to be dangerous in a democracy, even though that power may be used beneficiently.” Testimony of L. D. Brandeis before U. S. Commission on Industrial Relations, Senate Document No. 415, 64th Cong., 1st Sess., p. 7663 (1915)Google Scholar.
39 Madison in Federalist, No. 10.
40 ibid.
41 Madison in Federalist, No. 51.
42 Federalist, No. 10.
43 Gorer, Geoffrey, The American People: A Study in National Character (New York, 1948), pp. 39–40 Google Scholar.
44 U. S. ex. rel. Milwaukee Social Democratic Publishing Co. v. Burleson, Postmaster General of the U. S., 255 U. S. 407 (1921) at p. 436 Google Scholar.
45 Olmstead et al. v. U. S., 277 U. 8. 438 (1928) at p. 479.
48 See “National Security and Our Individual Freedom.” Statement on National Policy by Research and Policy Committee of the Committee for Economic Development, December, 1949.
47 See Hobbes', Leviathan (Everyman, ed., New York, 1928), Ch. 29Google Scholar.
Rousseau was equally suspicious of individual and group temptation to break off from civil society, and for the same reason:
“Each individual, as a man, may have a particular will contrary or dissimilar to the general will which he has as a citizen. His particular interest may speak to him quite differently from the common interest: his absolute and naturally independent existence may make him look upon what he owes to the common cause as a gratuitous contribution, the loss of which will do less harm to others than the payment of it is burdensome to him-self; and, regarding the moral person which constitutes the State as a persona ficta, because not a man, he may wish to enjoy the rights of citizenship without being ready to fulfill the duties of a subject. The continuance of such an injustice could not but prove the undoing of the body politic.” The Social Contract (Everyman, ed., New York, 1938), pp. 17–18 Google Scholar. See also p. 91.
48 Niebuhr, op. cit., p. 28.
49 Lynd, Robert S., “Can Liberalism Do It?” New Century, Vol. 1 (May, 1948)Google Scholar. Published by the Princeton Liberal Union. See also Lynd's article, “Who Calls the Tune?” Journal of Higher Education, Vol. 19 (April, 1948)Google Scholar.
50 For Senator Robert A. Taft the answer is clear: “We are close to the line where government expansion must stop, or our free enterprise system is lost.” See an elaboration of this view in “How Much Government Can Free Enterprise Stand?”, Collier's, Vol. 124, pp. 16 ff. (October 22, 1949)Google Scholar.
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