Problems of Political Economy

and Scale Models for the Construction of Prosperity

Henry J. Foley

[This was written as a supplement to a textbook, The Science Political Economy, which was published in The Gaelic America New York City. Reprinted from Land and Freedom, July-August and September-October 1938]

We have completed a study of political economy. We have learned that the law of freedom would solve the problem of maximum production and the problem of scientific distribution, and there is nothing else in political economy.

It is almost incredible that the simple law of liberty would solve all the political economy problems of the world, as incredible as the fact that the law of gravitation and the law of centrifugal force solve all the mysteries of the movements of all the planets in the universe. But the millions of stars have traveled in their orbits for millions of years in obedience to the natural laws, and they will never crash in final chaos unless human laws attempt to improve upon the law of nature and regiment the stars.

The only thing we can do in the way of further study is to watch the working of the law of freedom in the problems which beset the world, and to observe the effect of interference.

What are the problems of political economy?

They are all the situations which have inevitably followed violations of natural law; e.g., over-production under-consumption, low wages, depression.

Are these problems numerous?

They are so numerous that no book could recite then all. There are new problems in the news of every day.

Why so numerous?

1. Because human laws have been made up largely interferences.
2. Because every interference requires a myriad of other interferences to remedy the bad effects of the first interference.
3. Because one interference can produce a myriad problems.

Should a work on political economy treat of all the problems?

It would be a physical impossibility.

Is it necessary to treat of all these problems?

No. It is enough to make a selection of the principle problems, and show how the natural law of liberty would solve them all.

What is an important difference between political economy built on natural law and one built on human law?

The natural law of political economy is one - liberty -- and this is simplicity itself. The interferences of human law are legion, and the result is complexity and confusion. No book on this kind of political economy will ever be complete or comprehensible.

SCALE MODELS FOR THE CONSTRUCTION OF PROSPERITY

A Quebec Bridge or a Mississippi Flood Control Project or a Boulder Dam may be a dismal failure unless it is first worked out to success on a small model. We have wind tunnels to try out airplane models, and towing tanks for model boats.

The greatest construction job on earth is the building of prosperity, and it has never yet been successful. Dozens of plans have been put into operation on a nation-wide scale, one succeeding another after each crash into depression. If any one of these plans had been tried in a small community it might have been a failure without involving a nation in tragedy.

The writer can not secure even a small community to use as guinea pigs, but he suggests that a small group of imaginary men might be subjected to a plan, and if the obvious results are undesirable the plan should be discarded forever. A plan which should bring disaster to a dozen imaginary men could not possibly bring prosperity to a hundred million real men.

If some of the obvious results are so surprising that they are obviously incredible, the reader may at least extract some amusement by looking for the "catch." Our little community of men may prove as interesting as Gulliver's community of little men.

THEOREM I

PRIVATE CONTROL OF LAND MUST PRODUCE DEPRESSION

We will use for our scale models twelve men and the following chart with twelve plots representing places where the men could make a living.

Production per man per month:

• Gold mine - $3,000
• Silver mine - $2,000
• Oil well - $1,000
• Coal mine - $500
• Factory - $300
• Store - $200
• Farm - $150, $125, $100, $50, $25

Men are free to work anywhere, and they go to work at the gold mine and make $3,000 per month until some one secures title to the gold mine and the men must work elsewhere. They go to the silver mine and make $2,000 per month until that also is sold. As each plot passes under private control the men must move, until they reach the plots where they can barely make a living, say $50 per month.

Meantime, the owners of the plots must have workmen. Men will not take employment at less than they could make for themselves, and employers must pay something over $50 per month, and the minimum must be enough to keep the workers alive, but there is nothing to force employers to pay more than $100 per month.

When the men were making $3,000 per month at the gold mine they bought the most expensive food and clothing, houses and automobiles and luxuries, and business was excellent. When their wages went to $100 or $50 per month they could purchase only enough to keep alive, and all kinds of business were suspended or stopped.

This is what is called a depression, and there is no conceivable method of avoiding this condition with private control of land. In the world there are a myriad of complications which we have not covered in our theorem, probably every one of which has been offered as a cause of the depression, until we can not see the forest for the trees. But there is no complication which can be inserted which will prevent depression where men have no place to work.

There is no interference by government which can bring living wages to such men except absolute regimentation, where each man's wages are paid by government regardless of his ability to produce. In other words, the only alternative to starvation is the rationing of labor and wages. This is the extinction of initiative, and reducing mankind to the status of the dairy cow. This is communism, and communism is the only logical answer to private control of land.

THEOREM II

PROSPERITY WOULD BE PERPETUAL WITH LAND MONOPOLY ABOLISHED

We will use for our scale models the same men and the same plots as in the foregoing, but with the land owned by the community, and the rents collected for the com- munity. This is not a proposition borrowed from Utopia. The people are legally the owners of all the lands of the nation under the law of eminent domain. The Constitution of the State of New York reads, Article I, Section 10:

"The people of this state, in their right of sovereignty, are deemed to possess the original and ultimate property in and to all lands within the jurisdiction of the state."

Let us apply this plan to our scale models. Sales of plots are now barred, plots are leased at their annual rental value, and the rents belong to all. Every man has an equal right to work on any plot, including the gold mine.

If the men lease the exclusive right to use a plot they are barring themselves from the right to use it, and allowing themselves to be restricted to less profitable work elsewhere. The lease money is therefore the price of a valuable right surrendered by all, and the money belongs equally to all. It goes into a general fund which must be divided among them on demand, or it could be used for general expenses, rendering taxes unnecessary.

Now suppose that some men have leased all the plots down to the sub-marginal, where the return is $50 per month. Living expenses for a family are $150 per month, and it is impossible for a man to support a family by his work, so he does not try. Instead, these men live as landed proprietors, on the heavy rents paid for the lands on which they could have made a fine living.

Of course, this condition is not profitable for the lessees, who must have workmen if they are to pay the rents and make a profit, and they start offering higher and higher wages until men are again induced to work; or else the leases are surrendered, and men must either go to work for themselves at the gold mine for $3,000 a month or starve. This would hardly be called a depression.

These rents would not have to be actually divided among the men. Men who are equally free to work anywhere could not conceivably be unemployed. But let us imagine the impossible, that some of our men are out of work. These men could be supported out of the rents of the properties, of which they are the legal owners under the law of eminent domain, and they could be supported without the taking of a dollar in taxes from the earnings of the people who are working.

If New York State or any other sovereign state would actually own its lands, depression would be a physical impossibility. There is no condition or complication in any country on earth now suffering from depression which could introduce a depression into the problem we have been considering.

The thousands of paupers on "relief" in the State of New York, who are legally the owners of "all the lands in the State of New York," including the sites of the Woolworth Building and the Empire State Building, are an indictment of human intelligence.

THEOREM III

PRIVATE CONTROL OF LAND REDUCES THE EARNINGS OF PEOPLE WHO DO NOT TOUCH LAND

We will use the same scale models as in Theorem I. The gold mine and the silver mine have been purchased, but men are free to work on any of the other plots, and they can work for themselves at the oil fields at $1,000 per month. This figure sets the standard of wages. We will now introduce a physician and a school teacher.

Both these men had to spend years in expensive and unpaid study to prepare themselves to serve the public, and no one would expect them to work at the pay of the mine workers, $1,000 per month, and they would undoubtedly receive a compensation of $2,000 per month, one as fees, the other as salary.

Our small world continues to progress, and men buy property until no free land is left except the $50 farm, and wages go to $50 or $75, with half the men out of work. The school teacher who should expect a salary of $2,000 per month while the parents of his pupils are making $50 or nothing will be a disillusioned man. And the doctor who should expect to accumulate fees of $2,000 a month from $50 patients will come to a rude awakening. His fees must be drastically reduced, most of his patients will be served on credit, and a great part of his work will be done in free clinics.

To think that the preacher, the teacher, and the artist have no interest in the land system is to think that the steam-heated apartment has no need of the coal mine or the oil well.

THEOREM IV

MACHINERY CREATES UNEMPLOYMENT WHEI LAND IS MONOPOLIZED

We will use for our scale models twelve men and the three plots diagrammed below. The other plots are available, but we are disregarding them.

• Factory plot product, $300 per man per month
• Farm product, 300 per man per month
• Farm (sub-marginal) product, 50 per man per month

All the plots are privately owned except the $50 farm. Six of the men are employed at the factory and six at the better farm. Times are good, and wages are $150 per month. The product of the two enterprises is enough to supply all the men, and as they are getting good wage the entire output is purchased.

Now the factory installs new machinery which allow; one man to do the work of the six, and the farm install a tractor with which one man does all the work. The men are discharged and go to work on the poorest farm making $50 per month.

The factory and the farm produce, as before, enough for twelve men who formerly spent twelve times $150, $1,800. There are now two men with combined wages of $300 and ten men with wages of $500, a total of $800 against the previous total of $1,800. They buy $800 worth each month, leaving $1,000 worth to pile up. Of course, the factory and the farm must either close up or work on short time, with more unemployment, less buying, and more over-production.

Where men have no access to land on which they can make a living, they have no other way to live except by holding a job. When these jobs are done away with by machinery or by anything else, the men have no alternative but to starve, or to make a wretched living on useless land.

THEOREM V

MACHINERY COULD NOT PRODUCE UNEMPLOYMENT WHERE THE LAND BELONGS TO ALL

Our twelve men are working for themselves on the farm and at the factory plot. Now a captain of industry wishes to lease the factory plot, and a gentleman farmer wants to lease the farm.

Before the men will consent to lease these plots they will see that the rental figures are high enough to compensate them for the splendid living they are sacrificing. The leases are made at a satisfactory sum. In the course of time, machinery is installed, and ten men are discharged.

These men will go to work on other plots and make a good living with the aid of the leases they have made; or if they have rented all the desirable plots they will live on the rents alone; or they could live with short hours of work, with ample leisure for study and recreation and self-improvement, but an "unemployed" man would be as impossible as a bonfire at the ocean bottom. The only kind of "unemployment" would be of the kind inflicted upon the Astors now permanently moved to London.

Short hours and good wages will result from machinery or when the people really collect the rent of the land. They will never result from strikes nor from legislation so long as when displaced by machinery have no place to go, and hordes of helpless men must compete against starvation for the few jobs left by machinery.

THEOREM VI

LAND VALUES ARE THE CAUSE OF LABOR WARS

For simplification, let us take as our scale models only two plots, the gold mine, and the farm producing $50 per month, and twelve men. The gold mine is private property, the owner leases it to a mine operator, and there is, of course, no legal limit to the rental he charges. The men can make $50 per month on the farm, but the gold nine operator offers them $150, and employs six of the twelve.

Our men produce $3,000 each at the mine, $18,000 per month. They receive $900 per month, and the rent has been set at $15,000 per month, leaving $2,100 for the employer.

Times are good, every one is working, half the men at good wages. Real estate values are bound to advance, because "real estate values are the index of prosperity," and the rent of the mine property is raised to $17,000.

Prosperity does not put more gold into the ground or make corn grow faster, and the only place from which the $17,000 can come is from the $18,000 product. This leaves $1,000, $900 for wages and $100 for the operator.

The employer is a conscientious man, hating to cut wages, and perhaps dreading strikes. The men are anxious to participate in the world-wide prosperity, and they are getting restless for a rise in wages. Meantime prosperity marches on, real estate values mount, and the rent is now $18,000, the entire product.

The operator has saved some money, and he hates to see the end of his business. Perhaps he can hold out by cutting wages and dipping into his reserves, and he announces a cut in wages to $100 per month. The men can not understand why their wages must be cut in an era of boundless prosperity, they hold meetings to execrate employers who grind the faces of the poor, and they inaugurate a strike. The only hope of the employer is to hire at $100 the men who are making $50 on the poorer farm.

Then follows a contest between strikers and strike-breakers which ends with the mine shut down, perhaps destroyed, and strikers and strike-breakers making $50 per month on the farm, except those out of work and those in the hospitals. The mine property has been deflated, real estate values are down, and a depression is on.

Meantime, the owner of the mine property has accumulated a fortune at the rate of $18,000 per month, and unemployment to him means only leisure. He knows that the stoppage of his income must be only temporary, that some one must use his mine and pay him tribute, unless men die off and the world comes to an end. He can rest comfortably in Europe, or he may be the public-spirited citizen who gives freely of his time to organize conciliation meetings, urging Christianity and brotherly love upon employer, striker, and strike-breaker, and the constitutional rights of strike-breakers.

We have three factors in our problem:

1. Men who have no place to work for themselves and must work for some one else, at whatever wages are offered.
2. Employers whose profits are limited, out of which they must pay living wages, plus unlimited demands for ever increasing tribute under the name of rents.
3. The land owner, who furnishes no labor, no capital, no management, no cooperation, but who is privileged by law to take 80 or 90 or 100% of the proceeds, leaving the employer and employee to battle over the division of the remainder.

No more satisfactory set-up could possibly be provided for the production of labor wars.

"Consequences are unpitying," and the results will not be altered if our twelve men become 130,000,000, and our employer becomes the nation-wide industrial system, and our landowner becomes the national system of private control of land. Neither will it be altered by the fact that the employer is also the landowner. If he is not paying yearly rent he has already paid it in the purchase price of the property, and the rent must be subtracted to pay returns on the investment.

THE COMPLETION OF THE CYCLE AND THE RETURN OF PROSPERITY

The mine is idle, perhaps for years, and can not be rented for $18,000. The owner at last finds another gold mine operator who will rent it at $15,000. Men can readily be hired at $80 per month, and six men are hired. The product is $18,000 per month, rent is $15,000, and wages $480, leaving $2,520 per month profit.

Business is so good that wages are raised to $100 and then to $150, prosperity is coming back, real estate values "appreciate," and the rent of the mine goes up by easy stages to $18,000, with the same results as before the mine is idle, the men are out of work, depression is on, and the cycle is completed. The mysterious "Cycle of Depression," is nothing but the continuous and accelerating bleeding of industry by "land values" until industry faints from exhaustion, and the grip of land values must be relaxed until industry recovers sufficiently for a new course of bleedings.

THEOREM VII

The Sit-down Strike. Employers who refuse the right remedy for labor troubles are forcing a wrong remedy far more drastic.

The logical ending of a system which bars men from the land and natural resources and renders them helpless in the hands of employers, is the seizure of the plants, the ending of private property, the reign of Communism and the extinction of the captain of industry.

Let us take for our scale model twelve men and a capitalist, and the same farm and factory as in Theorem VI. The land is no longer monopoly-controlled, men are free to work anywhere on equal terms, and they make a good living.

The capitalist decides to start a factory, and he must offer better than a good living to induce men to leave their places on the farm. The enterprise is started, and as the years go by, the capitalist desires to increase his profits by cutting down expenses, and he announces a cut in wages. The men announce an immediate return to self-employment, leaving the factory idle. The capitalist reconsiders his decision, and will be content with present profits. The factory remains running, with peace and prosperity for capitalist and workmen.

Now an outsider enters the picture as a landowner. He has bought up all the land, both farms and factory site. The men can work on the farm only at the wages he offers, and they are very low. A handsome rental is also charged for the factory site, and the capitalist's earnings are cut down.

Once more the men are faced with a wage cut, but now they have no farms on which they can make a living. If they leave their jobs the capitalist, for his own protection, must hire other workers, and he plans to employ strike-breakers, leaving the men high and dry. Faced with the choice between low wages and idleness, the men decide to sit down at their machines and prevent the entrance of the strike-breakers.

This is the taking of the employer's property, and it is the essence of Communism. The law, which has allowed the private monopolization of all the natural resources, which has taken from the men the right to any place to work for themselves, has left them only the two alternatives of submitting to any terms of employers, or retiring peacefully to idleness and death.

Our small nation of fourteen men have made laws to insure life, liberty, and the pursuit of happiness. The laws have resulted in a condition where twelve men have no way to live except by the seizure of the property of the other two. Perhaps conditions indicate a change in laws.

The Dilemma of the Men. Two legal choices, low wages or no wages at all; and one illegal choice, the seizure of the plant.

The Dilemma of the Employer. He has a choice between submission to the men, and a succession of sit-down strikes and the ultimate extinction of his race.

The Dilemma of the Law. It may choose between submitting to the demands of the men and to the ending of private property, or it may eject men into idleness and helplessness, with its shadow of revolution.

No government has as yet been brave enough to uphold the right of corporations to eject workers from the plan in a sit-down strike. Government has ample laws for such ejection, but it recognizes that it would be too dangerous to carry out the laws.

If human laws did not bar men from the land and natural resources, if men were as free as their employers to use the earth, both the law and the employer would be justified in demanding that men either work for the wages offered or work for themselves elsewhere. There could be no such dilemmas as the foregoing.

There is no final resting place between freedom and slavery. The two will not mix. There is no final resting place between letting men make a living for themselves and the seizure of private property. Human laws may aim at a middle course, but there is no such middle course in nature or in natural laws.

The sit-down strike is the beginning of the end. It is Communism in practice. Where the natural resources and the earth are locked up from the human race, the question before civilization is, "Shall the workers choose helplessness or Communism?"

THEOREM VIII

DESTRUCTION OF WEALTH CAN NOT BRING PROSPERITY

Jones is a farm worker and Smith a factory worker. Each is making $2.50 per day, and living expenses are $5; i.e., a depression is on. The government attributes this to low prices for food and materials caused by over-production, and orders the destruction of half the food and materials, causing a rise of 100 per cent in prices.

The cost of living is now $10 per day, and wages do go up, perhaps, to $3, certainly not to $10, and the men can now purchase one-third of a day's supply, instead of one-half as formerly.

I must apologize to my readers for this chapter. Prosperity means an abundance of food and materials. The proposition that wealth (or prosperity) can be increased by the destruction of wealth is on a par with the proposition that health can be increased by murder. The newspapers carried a story that the mules on the cotton fields balked when they were forced to plow the cotton under. The mule might be a mule, but the philosophy of destruction is too crude for any one but the mule driver's driver.

THEOREM IX

A TARIFF CAN NOT POSSIBLY INCREASE PROSPERITY

Prosperity means that men have an ample supply of food and materials. We will take as our scale models two men, in a place where the land is owned by the community and men are free to work. Jones is raising food and Smith is manufacturing materials. Jones can produce twice as much food as he needs, and Smith twice as much "materials" as he needs. Each man trades half his products with the other, and both men are fully supplied.

If money is used instead of barter, and wages are $10 per day, each man buys $5 worth from the other, each is fully supplied, and there is prosperity.

Now let us suppose that soil and conditions in South America are so favorable for food production, or that wages are so low that food can be produced, and sold in the United States for $2.50 instead of $5. But the scarcity of raw materials and the lack of machinery make it difficult to produce clothing, and a day's supply of clothing costs $10.

Food from South America is offered at $2.50, and Jones can no longer sell food at $5. Our two American workmen are now producing materials because Jones has gone where he can get the most for his work. Each man produces two day's supply of materials, keeping one for his own use, selling the other in South America for $5, buys a day's supply of food for $2.50 and saves $2.50. Compared with his previous condition of prosperity, he is now enjoying a super-prosperity. The "materials" business in South America is abandoned because the goods can be bought in the United States for $5 instead of $10, and they save $5 on each day's supply.

ENTER THE TARIFF

The American government lays a tariff of $2.50 on food, and the price of food rises to $5. South America lays a tariff of $5 on materials, and the price rises in South America to $10. Jones, who had left the farm to make more money at materials, must now return to the farm, making $10 and spending it at the higher prices, leaving no money for savings. Every American is spending $2.50 more per day for food, and every South American is spending $5 per day more for materials.

Or to look at it from another angle: Smith is making suits of clothes to sell for $30, which could be purchased abroad for $20. A tariff of $10 is laid on clothing so that Jones must pay $10 more for clothing and allow Smith to keep his price at $30.

The greatest possible benefit which Jones, as a worker, could receive from the tariff is the extra $10 taken from him as a consumer. From this $10 must be taken the cost of custom houses and highly paid officials. Even the remainder does not go to Jones but to his employer, who is under no obligation, legal or otherwise, to give it to Jones, and Jones gets little, if any.

The tariff is a device for robbing Peter to pay Paul, and robbing Paul to pay Peter, except that the loot does not reach either Peter or Paul. The advocates of a tariff are justified in claiming that it creates work. It forces a man to furnish two days' work for one day's supplies.

HOW THE TARIFF WORKS WITH PRIVATE CONTROL OF LAND

We will use the same men and the same plots as in the last problem, but the plots are now owned by a landlord. Production of food and materials has been speeded up under mass production to $20 per day, the share of wages being $10. Jones, instead of being a farmer, is a farm hand, and Smith, instead of a manufacturer, is a mill hand.

The best unowned land can produce $50 per month, and this sets the minimum wage; but industry is prospering, labor unions are powerful, and wages are set at $10 per day. The men are comfortably fixed, food costing $5, and materials $5 per day.

Then it is once more found that food from South America can be sold here for $2.50. Jones' employer can no longer sell his food at $5, the American farm business must end, and neither Jones nor his employer has any place to make a living. Now there arises a clamor from farmer and farm hand for a tariff on South American food, so that every American must pay double prices to support a food industry which can not support itself and pay a heavy tribute in rent.

Where the land was not under private control and men were free to work, Jones could work where he wished and at any occupation, and he would go into the production of high-priced materials to exchange for low-priced food. Under private control of land, where men have no place to make a living for themselves, industries which can not support themselves in competition must be supported by double prices extracted from the people.

ANOTHER SCALE MODEL TO SHOW THE WORKINGS OF A TARIFF

Three men are working individually, and each produces in a year his food, his clothing, and an automobile. One is an expert mechanic and could produce six automobiles, another is an expert farmer and could produce food for six men, and another is a tailor who could produce enough clothing for six men.

Now each devotes himself to his favorite work, and the mechanic trades two automobiles for two years' food supplies, and two automobiles for two years' clothing supplies, keeping two automobiles for himself. Similarly, each of the other men has two years' supplies; each man is wealthy.

The use of money in these transactions will not alter the results. Money is only a medium of exchange.

No man can eat a double supply of food, and no one wishes double quantities of clothing or automobiles, but they would like some of the luxuries. A man in Spain can produce excellent wines, a man in Havana can make fragrant cigars, and a man in France has learned the art of making perfumes. Our farmer exchanges his extra supplies for wines, cigars and perfumes.

Now a paternalistic government undertakes to protect these men against competition, and to assure them work. It takes a quarter of each man's production to finance the work, and government lays a tariff on wines, cigars and perfumes.

The farmer is now left with three-quarters of his produce, leaving one-quarter available for exchange. Due to the tariff, foreign products are twice as expensive, and the one-fourth of the farmer's produce buys only half as much as the same one-fourth would have bought before. The foreign goods he buys have been halved twice, once by taxes and again by the tariff.

All the wealth of the world is nothing but the natural resources worked up by labor. If every man were free on equal terms to use these natural resources he would produce his maximum of wealth in his line. Every other man would be producing his maximum of wealth in other kinds, and each would be exchanging for the maximum of the kinds of wealth his heart desired. No tariff and no other interference of government could possibly improve upon this happy condition.

THE TARIFF IS ONLY ONE VARIETY OF GOVERNMENTAL INTERFERENCE, ALL OF THEM HINDERING PROSPERITY

Every interference by government with the legitimate activities of a man or of a corporation must either reduce the product or increase the expense, either of which means a reduction of the wealth produced for consumption. The huge cost of administration and of waste in such bureaucratic systems must also be taken from the proceeds of industry, further reducing the amount to be distributed.

If interference could benefit a business every business would welcome interference by people and governments, a reduction to absurdity.

New York City is providing an actual working model in interference, called racketeering, and the working model is working. The racketeer graciously allows the business man to continue business on the payment of a satisfactory tribute, and the danger to business has become so wide-spread that the Mayor has appointed a committee to end the abuse.

Meantime, the citizens of New York City and New York State, the owners by right of eminent domain, of "all the lands in the State of New York," are told by their government that they make a living at any place provided they will contribute, in whatever unlimited amounts may be demanded, to the support of those who have been given control over the lands on which the citizens can make a living.

Interference by private racketeers is a drop in the bucket compared with the interference by state and national governments with the conduct of business; and the staggering total of such interferences is as the dew on the mountains to the waters in the ocean, when compared with the one colossal interference of depriving the population by law of a place to make a living.

THEOREM X

OVER-PRODUCTION WOULD BE IMPOSSIBLE WHERE LAND IS NOT PROPERTY

We will take for our scale models twelve men, and the three plots below. The nine other plots are available but we are disregarding them.

• Factory property product, $10 per day
• Farm product, 10 per day
• Sub-marginal farm product, 1 per day

The people own the plots. Six men work at the factory and six at the better farm. Each man needs $5 per day for food and $5 for materials, and the $10 per day are ample for all requirements.

No matter whether a man's scale of living is at $10 per day or $10,000, the only reason men work is to fill their wants, and any man in his right mind will stop work when there is nothing else he wants. When our six farmers have raised all the food they can eat, when they have sold all the food the factory workers can eat, and have purchased all the materials they want, they will certainly not produce more food so that they can watch it decay.

If some of their wants must be filled from abroad they will produce enough food and materials to exchange for the foreign goods, but they will stop as before when their wants in foreign goods are supplied. The workman or the employer who should continue to produce what no one wants or can buy should be examined for his sanity.

Now let us suppose that our twelve men, instead of working individually, are working for an employer for wages of $10 per day. Suppose that over-production begins, and the employer announces a cut in wages to $5. The men immediately go to work on the other plots and make a living, employers without workmen have no money to pay the rents, the leases would lapse, and men would go to work anywhere. Employers could no longer hire men at half wages while they pile up products in the insane hope that some one will buy them, perhaps the inhabitants of the moon.

There would still be room for employers and captains of industry without over-production. The man who would organize production so that our twelve men could reduce all their requirements in less time and with less drudgery, would deserve and should receive a higher return which would give him a better standard of living and the well-earned status of a public benefactor. But he could never start the infernal train of low wages, under-consumption, over-production, and panic.

ENTER LAND MONOPOLY

The factory land and the better farm are now owned by private person, who leases them to a manufacturer and farmer. The men are working for $10 per day. Production is $20, the other $10 going to employer and landlord.

The men, as before, purchase $10 worth of the products per day, and whether or not their wants are supplied they have no wages with which to buy more, and half the food and materials, $10 per day, must remain unsold, must over-production.

The employers with unsold products on their hands are finding money scarce, and are forced even against their better instincts, to cut wages, say to $5, half as much as men need to supply their wants, and over-production piles up at the rate of $15 per day.

The men can no longer stop work, because they will have no money for tomorrow's wants. They have no place to work for themselves, and they must hold the job or die. Neither the farm nor the factory can stop production, because they are under a heavy rental, but the time must come when their funds will be exhausted, tied up in decaying food and useless materials.

THEOREM XI

MONEY SCARCITY AND NATIONAL DEBT ARE CAUSED BY PRIVATE CONTROL OF LAND

Our scale model consists of the twelve men and the twelve plots of Theorem I. The farmer exchanges food for clothing and other wants. The clothing-maker exchanges clothing for food and other things. The total production is ample for all, and each man can see to it that he gets a fair return for what his labor has produced, that he gets approximately a day's production of clothing for a day's production of food; otherwise he would take up the production of clothing.

The conditions would be the same if money were used. The farmer who could not sell his day's production for enough to buy a day's production of clothing would go into the better paid business of making clothing.

Now we introduce private control of land. Robinson buys up the land, or is given a grant by a beneficent government. He has no desire to use the land, but allows any one to use it on the payment of a satisfactory figure. Jones formerly produced $5 worth of food and turned it into money, and spent it on clothing and other things. He still produces $5 worth per day and sells it, pays $2 for rent, and spends the remainder.

Suppose the government has placed $10,000 in circulation. The twelve men are earning and receiving $60 per day, $24 of which goes to the landlord. Robinson does not eat more than the day laborer, nor wear many more clothes though they may be more luxurious, but we will suppose he buys three times as much of the production as any of the twelve, $9 per day, leaving $15 in his money box.

Now Robinson may endow hospitals and museums, or spend his money in Europe, but there is no way in which this excess money can find its way into the pockets of the twelve, because they have nothing to exchange for it. At the end of 666 days, less than two years, the money has disappeared from circulation.

The government must now inflate the currency, but if it be inflated to any point short of infinity there can be only one ending, money scarcity.

With currency money absorbed, the only course is credit money debt, and the $15 per day deficit in currency in our community of 12, develops in our community of 130,000,000 into a national debt, of $36,000,000,000.

The mathematician who could discover a method of paying a national debt of $36,000,000,000 by daily going into debt should occupy the place now dedicated to Sir Isaac Newton. It is physically impossible for a system of private control of land to end in anything but money scarcity, and an unpayable national debt.

THEOREM XII

PROPERTY IN LAND MEANS THE ENDING OF PRIVATE PROPERTY

Our scale model will be the same twelve men and the landowner, as in Theorem IX, and we will take up the problem where the problem of money scarcity ended. The men have not only a money scarcity, but a staggering total of debt which is impossible of payment.

Let us suppose, what is most unlikely, that all the men are working, and making each $5 per day, of which they get $3 after the rent has been paid.

The government is making heroic efforts to balance the budget, which must include a huge interest on the ever-mounting debt, and this interest, besides the normal expenses of the community, can come from nowhere except the wealth produced, from the $5 per day of our worker, and his $3 per day must be reduced by taxation to $2.50, to $2, to Where can it stop?

Our twelve men are not philosophers nor students of government. They can not discover what is wrong, and the efforts of the philosophers to tell them what is wrong do not make sense. They only know that private ownership of land is the very foundation of civilization, and must not be questioned even if one man owns a territory equal to that of eight states, or if three men should own the entire area of the earth, and that they are privileged to look anywhere else in heaven or on earth for the cause of their poverty.

They only know that all the wealth is the product of their hands, that the wealth is in the hands of some one else, that their families are destitute, and that their leaders have not even the glimmerings of a plan for their relief.

They will do what was done in the French Revolution, what in our own day has been done in Russia and Mexico and France and Spain. They will seize the wealth whereever it is located, in all probability to the tune of fire and slaughter, and no fine distinctions will be drawn between the wealth of the landowner and the wealth of the manufacturer and the merchant. This is not a threat, only a prediction. "I know of no way to judge the future but by the past."

The Spanish merchant or manufacturer whose work was a blessing to the nation, and whose wealth was drained off by the landowner as scientifically as was that of the truck driver, can get little consolation as his factory burns or is taken over by a soviet, from the knowledge that he is not the guilty party. He might have been presumed to have the leisure and the intelligence to know that non-producers with the legal privilege to take without limit from producers could not possibly end in anything but starvation or revolution.

Will American captains of industry take up the problem while there is yet time, or will they leave the solution to be provided by a soviet?

THEOREM XIII

A FAVORABLE BALANCE OF TRADE MAY BE AN UNFAVORABLE STATE OF AFFAIRS

Our scale models will be a farm and a factory, on each of which a man can produce $10 per day. There are twelve men, six on each plot, and another man, Robinson, who has bought both plots The men pay $5 each per day for rent. The product is just enough for the needs of the twelve men, and each man's wages, $10, would be enough to purchase an ample supply. The rent leaves him with enough for half a day's supply.

Robinson is a man of leisure and culture, he can get little enjoyment from associating with twelve busy workmen, and he moves his residence to where he can meet other men of leisure, say in London. Of the products of the twelve men, $120 per day, $60 worth, the amount of their wages, is purchased by the men. As there are no other people in the place, the balance must be sent abroad for sale. It is sold in London, and the proceeds, $60, are just enough to pay the rent to Robinson.

Our community has a very favorable balance of trade, $60 per day, $21,000 per annum in exports, and no imports. Our community should be in the height of prosperity, but no one has more than half enough to eat or to wear.

Now Robinson raises the rent to $6 per day. The men now buy $48 of the products each day, and $72 worth is exported and sold to pay Robinson's rent. The splendid trade balance is now still more favorable, but the men, who produce $10 per day, must now live on [unreadable].

As far as the prosperity of our community is concerned the case will not be altered if Robinson returns. In that case, the $72 from the exports to London will be returned to him. This money, is not wealth, but only a token wealth. It is a certificate that some persons abroad owe to Robinson, $72 worth of wealth which must be returned on demand. There is no one in our community who can cash these certificates, there is no one in the community who can sell anything to Robinson. His gold or paper money can not be eaten nor worn, and until it is used buy goods in Europe it is as worthless as an estate litigation.

The only way in which Robinson can use his piled-up money is to send it back to Europe in exchange for products, and this is reversing the favorable trade balance The only way in which a favorable balance of trade can be of benefit to the community is to cancel it by an excess of imports ever exports. A favorable balance of trade is a delusion.

THEOREM XIV

THE FINAL RESTING PLACE OF ALMS IS IN TH STRONGBOX

We will again use the scale model of Theorem I, with a landlord who is also the captain of industry.

Of the twelve men, three are working at the gold mine, and three on a farm, all at $150 each per month, and six are working on the sub-marginal farm at $50.

A charity drive is inaugurated, and among others, the three men at the gold mine contribute $25 each per month, which happens to be the share in the charity received by ach of three on the $50 farm.

Under private control of land, which bars the worker from any control over wages, there is nothing to fix the amount of wages except the lowest amount for which the man will consent to work, or the lowest amount which will keep him alive. The man who formerly received !50 wages can now live on the same amount, $25 being made in wages, and $25 contributed in charity.

The charity drive has changed the location of the money and as follows: The $50 man is still a $50 man; the $150 man is now a $125 man. The income of the landowner-business man has been increased in this small section of the drive by $75 per month.

THEOREM XV

A PLANNED ECONOMY IS PLANNING FOR DISASTER -- ORGANISMS vs. ORGANIZATIONS

There are two kinds of organizations: Those which are operated by human intelligence, and which are properly called "organizations," such as an army; and those which operate themselves, and which are properly called "organisms," such as a tree. An organization and an organism are diametrically opposite in everything except that each is a collection of individuals which work together.

An organization is a lifeless thing which can be operated only by an outside force which pulls the strings. An organism is replete with vitality which can be destroyed only by the destruction of the organism.

An organization functions through the direction of human intelligence. An organism is an unintelligent thing, devoid of any power to think or to choose, and its operations are performed under the impetus of natural and unchangeable laws.

An organization can be created and maintained only by a directing human mind. An organism develops itself and operates itself.

The purpose of an organism is its own welfare and the welfare of its members. A tree does not exist to adorn the landscape nor to feed men. These may be incidental results, but a tree could be a perfect tree if there were neither men nor landscapes. An organization is a body whose object is outside itself. The object of an army is to conquer an enemy, even at the cost of its own injury or destruction.

Other examples of organizations are a factory, and automaton. Other examples of organisms are a human family, and human society.

Society is composed of living men with intelligence and free will, but society, like a business corporation, which is also composed of living men, is a thing without soul or mind. It can no more choose its way nor control its operations than a tree can do. It organizes itself under the driving force of the natural law which impels men to join together for the better production of wealth and for other purposes. It is an organism.

Under the compelling force of natural law, each man chooses the position in society where he can best produce wealth, and this is the position in which he can best serve the interests of every other man in society, just as each leaf in a tree chooses the amount of sap it needs for its growth, and secures its own growth and the growth of the tree.

The treatment of two things so essentially different as an organization and an organism must be essentially different, and the treatment proper to one would bring disaster to the other. An army left to organize itself and operate itself would end in a colossal tragedy. A tree whose growth should be at the mercy of human intelligence which should direct the movements and the composition of the sap, the placement and coloring of the leaves, and performing for the tree the million of activities which the tree now directs for itself, would end in a withered tree and a disordered mind.

The proper functioning of the millions of activities of all the people in a nation is a task of infinite complexity, as far beyond the possibilities of any man or group of men as it would be for these men to take from nature and the natural laws the work of making all the grass and the plants and the trees of the world to grow. And if these men could succeed in this impossible undertaking, the results could not possibly be better than those the organism would have worked out by itself, and the work of the supermen would have been in vain.

A planned economy means the turning of society from an organism into an organization, and turning men, the individual members of society, from intelligent beings into mechanical robots.

The only thing which a directing human intellect can possibly do for an organism, whether a tree or human society, is to guarantee it freedom to develop under the natural laws.

The driving force in political economy is the urge of individual men to create wealth to satisfy their desires not the desires of some one else, or of a state. This is the fundamental law under which society was born, and under which it must develop and function, as the law of gravity holds the universe together.

A state is a thing as lifeless as a stone, and more lifeless than a tree. It could no more harbor a desire for wealth than could a cloud. Production under the control of a state is an engine without the steam, an electric dynamo without the motor. No such state has ever operated to the happiness of its citizens. It is the prostitution of political economy, whose fundamental law is that men seek wealth to satisfy their desires. Such a state can act only as a ventriloquist's dummy, the real motive power is in the hands of individuals, and men are working at forced labor to satisfy the desires of some one else.

THEOREM XVI

HOUSING -- A SUCCESSFUL SLUM CLEARANCE PROJECT IS AN IMPOSSIBILITY

We will take as our scale model a community of four men with incomes respectively of $4,000, $2,000, $1,000 and $500 a year, and each has as good a dwelling as he can afford. Each man is paying one-fourth of his income for house rent, $1,000, $500, $250 and $125. The dwelling renting for $125 a year is a hovel which offends the sensibilities of the more prosperous, and the government undertakes to come to the poor man's assistance, and to build for him a home as good as that of the next prosperous neighbor, a $250 home to rent for $125.

Government needs $125 per year for this project, besides large sums for administration, and it can not draw money from the air. The money can come from nowhere but the four men, and taxes are levied on food and clothing, reducing each man's income by approximately $30 a year. The slum is torn down and the new building is erected.

The poor man's income has been reduced by taxes to $95, it is impossible for him to pay $125, and he goes nowhere. Each of the other three men has also suffered a loss of income, and he moves to a cheaper home, and somewhere along the line a good house is offered for rent, with no takers.

If the slum dweller were given access to the earth and its resources he would create wealth for himself, and, as laborers did in the time of the world war, he would move into a better house with no assistance from housing schemes.

No housing scheme in the history of the world has been a success, because they are foredoomed to failure. The history of every housing scheme is that the houses are occupied by people with the next higher grade of income, and the slum dweller is left without even the slum. He may retire to the docks, or to the city dumps.

ALL MEN SHOULD HAVE EQUAL ACCESS TO THE NATURAL RESOURCES, INCLUDING THE LAND

How is wealth produced?

By the application of labor to the materials of the earth.

Can not labor, by itself, produce wealth without the natural resources?

There is not a dollar's worth of wealth in the world which was not in existence in the form of natural resources before the first man lived.

How about the work of bankers, scientists, accountants, and other people who never work upon material things?

These men work indirectly upon the material things which constitute wealth. Their work is in aiding the work of the farmer and the manufacturer, who are working on the material things. If the material workers ceased their work, the banker, the scientist, and the accountant would find their occupations gone.

What is the effect of forbidding some men to use the natural resources?

It is equivalent to forbidding these men to work for a living.

How is this prohibition brought about?

By laws which allow private ownership and control of land and natural resources.

Is not private ownership of the natural resources sanctioned by legislation?

Yes. But legislation can not prevent natural laws from producing their effects.

What is the effect of private control of the natural resources, upon the men who are barred from their use?

These men are unemployed, or they must sell their labor at any wages offered.

What is the effect upon society?

Society is divided into two groups; one group in absolute domination, and in complete control of the wealth, and another group in helplessness and poverty.

What can human laws do in this situation?

They can only interfere with employers, and force them to release some of the wealth to which they are entitled under the law.

What effect has this upon the law?

The laws become a jumbled mass of interferences.

What is the effect upon private property?

Private property loses its meaning. No man has a right to own anything if the government decides to take it away from him.

What is the effect upon business and industry?

Industry can not function without plans, and plan are not possible with a government which must break all plans to prevent the extinction of a population.

What is the effect upon democracy?

Democracy is a government by free men. A government by freemen not "free" to make a living can no more endure than any other absurdity. Its progress is to the philanthropist, the demagogue, and the dictator.

What is the effect upon political economy?

Political economy can be nothing but a collection of prohibitions, a study in the inhibitions of human nature and efforts to prevent the catastrophes inevitable with a violation of the natural laws.

Or the parent science, political economy, can be decently buried to make room for the baby sciences of banking and farming and transportation and exchange and finance.

AN EXPERIMENT TO END EXPERIMENTS

Of all the foregoing experiments, every one which ended in depression and poverty was an interference with the citizens' freedom to work or to trade. We might go on to hundreds of other experiments with interference, and every one of them would work out to poverty. Therefore, instead of endless experiments with interference, let us make one experiment with non-interference.

If a man were alone on earth he could make a living, because he would be let alone. If a million men occupied earth and kept to themselves every one of them could make a living as easily as a million birds or beasts if they were let alone. If these million men came together to cooperate, with the aid of science and machinery and division of labor and mass production they could make an infinitely better living if they were let alone.

But the strong would exploit the weak, would refuse to let them alone, and society and cooperation would be impossible. Therefore men invented government, not to furnish interference, but to keep the strong man from interfering, to assure that the citizen would be let alone.

But the strong man took the reins of government, and here the citizen might have forced the strong man to let him alone, he is absolutely powerless to force government to let him alone. There is hardly a government on earth today which is much more than a collection of devices to interfere with the citizen's legitimate activities; and there is not a government on earth where the masses are not in distress, with the government floundering between old deals, new deals, socialism, communism, fascism and other isms, all of which are only variations of the theme -- interference. And the only difference between them all is as to the victim and the amount of interference.

The basic interference of all governments is the bestowing of the lands upon private persons, and condemning the remainder of the population to work for whatever wages may be offered. This is why men can not support themselves, even while the wild animals thrive.

Unemployment is not a sad result of the advance of civilization, nor of the advent of machinery, nor of "technological" disarrangement. It is the logical and inevitable result of a perversion of government power.

If the United States were inhabited by 130,000,000 sheep instead of by that many human beings, there would be no unemployment. Any band of enterprising sheep attempting to persuade or to compel 130,000,000 sheep to abstain from the grazing grounds would find the undertaking absolutely impossible.

If the sheep, in their desire for the more abundant life, should organize a government based on private control land, that government, with the moral and military support of 130,000,000 sheep might bar 130,000,000 sheep from the right to nibble grass. The commonwealth of sheep would have done what no band of racketeering sheep, and no band of murderous wolves would have even attempted to do.

The use of the law, the organized power of all men, to enforce the barring of all men from the right to use the earth, is an unbelievable prostitution of law, and the most scientific device which the brain of man could conceive for the production of unemployment, low wages, and depression.

Let us make clear what we mean by "letting us alone." We mean that every human being shall be as free as if he were the only human being on the earth, except as his liberty is restricted by the equal liberty of every one else. A man is free to work and to trade, but he is not free to murder or rob, nor is he free to jockey any man into a position where he is helpless and subject to exploitation. Every man is free to work alone or to cooperate, but forcing any man to do anything is a crime. The prevention of this crime is the duty, and the only duty of society and government.

An important part of this duty is to see that foreign nations let its people alone. The government must provide for defense against foreign aggression as well as against domestic racketeering.

CONCLUSION

I am looking out upon a giant tree which spreads its branches to the sky. That tree, like all its ancestors for a million years, has grown without assistance from man. From its own inherent powers it has conquered enemies, insects, and droughts, and storms which strove to tear its branches from the stem and its roots from the ground. Had men taken charge of its growth and decided what chemical elements it might take from the ground, and when and how it should put forth its leaves, the tree would be a twisted eye-sore. If men had torn it from the ground as men have been separated from the earth from which tree and man and insect must draw the wherewith to live, the tree would long since have become a rotten log.

Our magnificent tree asks nothing but access to the earth, and protection from interference. Every drop of water, and every atom of every chemical absorbed by the roots seeks that spot in the tree which suits it best, which, by some marvelous law of nature, happens to be the spot where it will best nourish the tree, and the result is one of the noblest works of God, a perfect organism.

Society is an organism more wonderful than any tree. Every man in society seeks the spot where he can best live, which happens to be the spot where he can best cooperate with other men, and the result would be a world where every man is working, consciously for his own betterment, and unconsciously for the building up of a complete and perfect world.

Private racketeering, interference by criminals, is a canker which the tree might overcome. Legal interference by government with private initiative transforms the tree of society into a gnarled and ugly mass. Tearing the tree from the ground, and barring men from the earth from which all their wants must be supplied, can not be classed as anything but atrocities.