• Quotes From Garet Garrett

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    "Insatiable Government," June 25, 1932 – Observe
    a strange bedfellowship. When the railroads throw themselves on
    the hands of the government and demand public credit to save them
    from bankruptcy, the radical forces do not protest, or, if they
    do, it is in an academic sense only; and the reason for this is
    that they believe in the public ownership of railroads, and see,
    perhaps more clearly than others, that such use of public credit
    tends to bring the experiment of state ownership to pass. For the
    same reason they protest lightly or not at all against the use of
    public credit to save the private banking structure, for that will
    tend to bring about state control of credit. They are for anything
    that tends to get the government into business.

    "Concerning Inflation," November 4, 1933 – Capital is
    in flight from the country. Every man with money, be it much or
    little, is thinking less about how he shall adventure it in a spirit
    of enterprise than how he shall make it safe – thinking less of interest
    and profit from his capital than how to defend his principal. This
    is true because the integrity of money is in doubt.

    "Washington Miscellany," December 9, 1933 – Frequencies
    are to broadcasting what tracks are to a railway and what wires
    are to telephone and telegraph. But broadcasting companies have
    no property right in frequencies. How can a wave length be owned?
    The Government allots to each broadcasting company a range of frequencies.
    This, of course, is necessary. That is, some authority would have
    to control and allot them or else there would be anarchy on the
    air. But the allotments are not permanent; they have to be renewed
    periodically, as if a railway had to go to the Government twice
    a year and get renewed permission to continue running trains on
    its tracks, or the telephone companies for permission to continue
    sending messages over their wires, with no possibility of there
    being other tracks or other wires.

    follows that broadcasting companies incline to keep the good will
    of the Government. On the other side, the Government takes leave
    to go on the air when and if it likes. It notifies the broadcasting
    companies that it wants certain time. The Government may say, "We
    want the hour from seven to eight," and the companies move
    their things around accordingly. Thus the radio becomes, in some
    degree, an instrument of Government, and the Government makes effective
    use of it, more and more.

    "The Balance Sheet of Capitalism," May 19, 1934 – The
    whole of the emotional case against capitalism turns on the unequal
    distribution of wealth. But is it peculiar to the nature of capitalism
    to concentrate wealth in a few hands? Here the first aspect truth
    is a little hard. It begins with the human disparities; and for
    these, God is responsible, not capitalism. Much more, perhaps, than
    we wish to believe, economic inequalities answer to human inequalities.

    and again, wealth has been socially divided and then, in a little
    while, it has been again as it was before, that a few were rich
    and many were not. Lycurgus, who did it for the Spartans, heaping
    all their wealth in one pile and then, dividing it equally, thought
    of measures to make this pleasing equality permanent. He banished
    gold and silver money and put in place of it iron money so heavy
    and so nearly worthless that to hoard or save it would be absurd.
    All the same, it was not long until again there were debtors and
    creditors and a concentration of wealth in the hands of a few.

    a very old fact has a kind of simplicity. Somewhat more than nine-tenths
    of us consume all that we receive, and would consume it all, no
    matter how much it would be. The wish to accumulate wealth is universal;
    the will to do it belongs only to a few, and the proportion of those
    few in any kind of society has probably been constant for thousands
    of years.

    "The Forgotten Road," September 29, 1934 – Suppose every
    railroad that was unable to pay its debts had been permitted to
    go into receivership and thence to the auction block. What of it?
    The loss in that case would fall where it belonged – upon the stockholder.
    The stockholder is one who wants more than interest on his capital;
    he wants the profit. To be entitled to the profit, he must assume
    also the risk of loss. He knows that in the first place; he prefers
    the position of proprietorship and takes it voluntarily. He is the
    owner; the bondholders are his creditors. If the railroad is unable
    to pay its creditors and goes to the auction block, either the bondholders
    buy it in and wipe out the stock, or the stockholders, if they are
    unwilling to lose the property, may save themselves by putting in
    new capital. By that healthy process we had again and again, after
    every crisis, junked what was dead in our capital structure, and
    it was one secret of our economic strength that we did it in a ruthless
    manner, no matter how much it hurt. Between 1892 and 1896, 200 railroad
    companies, representing one-quarter of the country's total railway
    capital, went into receivership and were reorganized. In the next
    ten years the entire railroad system was rebuilt with new capital.

    "When Wishes Think," February 23, 1935 – When the New
    Deal arrived, prices had greatly fallen, and a great mass of repetitious,
    inflated and imaginary capital, founded on the rainbow, had been
    or was about to be wiped out, as it should have been. No tangible
    thing had been destroyed; it was only that everything had been revalued.
    That was deflation.

    idea first to be embraced by the New Deal was one for which a word
    had been invented. The word was "reflation." Not reinflation,
    which would mean to inflate again, but reflation, which means not
    the bite of the same dog but the dog of the same bite. The undertaking,
    very explicitly set forth, was to slay the dragon by raising prices
    to the predepression level – the average price of goods and commodities
    and labor to that level, and the price of agricultural commodities
    to a still higher level, on grounds of social justice; and whereas
    it had been the thought of business to defeat the dragon by defending
    prices on the pre-depression level, in which it failed, it was then
    for the New Deal to slay him by putting prices back to that level.
    Restoring prices would mean also to restore capital values of all
    kinds, even a great mass of that fictitious, inflated and imaginary
    capital, founded on the rainbow, that was about to be wiped out.
    That fact was let pass as a minor inconsistency. The New Dealers
    themselves never stressed it, and, besides, this was the sweetness
    that reconciled business and finance to much else that was sour
    to their taste.

    "When Wishes Think," February 23, 1935 – The old sequence
    in every depression was first a fall of prices, then a collapse
    of profits, then a reduction of money wages, and presently a terrific
    increase in production. A reduction in money wages is not the same
    thing as a fall in the buying power of wages. The buying power of
    wages is relative, determined by the cost of things.

    standard of living has had some minor setbacks, but never in this
    country was it ever sacrificed, never did anyone propose that it
    should be. On the contrary, during seventy-five years, from 1840
    to 1914 – notwithstanding three great depressions, the buying power
    of American wages increased threefold. There is no reason to suppose
    it would not be repeated in a free competitive system. Indeed, it
    cannot help repeating itself under that system, so long as production
    increases. If production is increased – simply that and nothing else – the
    buying power of wages is bound to rise. Either prices will be reduced
    or money wages will rise. This must happen by a law of necessity.
    There is no other way to dispose of the product.

    opposite is that you cannot buy any means increase the buying power
    of people without first increasing the quantity of things to be

    "When Wishes Think," February 23, 1935 – War debts and
    depression debts possess the same character. All the things needful
    to conduct a war exist at the time. So why the fiction of borrowing
    them from the future? Why create a debt to represent them? In the
    same way, all the things needful to feed and clothe and house the
    unemployed exist in the present. Why a fiction of borrowing them
    from the future? Why create a debt to represent them? The reason
    in both cases is the wish to postpone and avoid payment. Let others
    pay. Let tomorrow pay. Let the next generation pay.

    war that was charged wholly to its own time, one paid for in full
    by taxation, would be a very unpopular war. But it would be a solvent
    war. So also with depression. Every depression hitherto has been
    paid for at the time. Such a thing as issuing bonds for relief was
    almost unknown. And that is why the recovery, when it came, was
    always so amazing. It had no load of debt to drag along; instead
    of it a new, unmortgaged future. Now for the first time we are trying
    to charge a depression to the future, though never before had we
    been so rich in all the means to pay for it ourselves.

    "Economic Fascinations," March 9, 1935 – A ship is one
    of the many implemental forms of wealth, and what is true of one
    form is true of every other form in the sense that follows… Under
    the free economic system, any private person possessing the capital
    is free to command the materials and labor to produce a ship…
    In the exercise of this right the private person must assume some
    risk. Suppose the ship does not pay, owing to the competition of
    many private persons doing the same thing. The owner, therefore,
    is unable to make a profit on his capital. What then? Well, in that
    case he may break the ship up or tie it up at his own risk; he may
    write away as much of its value as represents the disappointed expectation
    of profit and go on with it; he may turn it over to his creditors
    who, if they cannot make it pay, may put it on the auction block
    and sell it to someone who, if he buys it cheaply enough, is certain
    to make it pay. But in no case, under the free system, is it permitted
    that one who has created an unprofitable ship shall both deprive
    economic society of the benefit of cheaper transportation and save
    himself from loss by making the shipper pay him not to operate the
    ship. But that is the new way of thinking.

    "The Wealth Question," August 31, 1935 – Wheat farmers,
    corn farmers, hog farmers and others, signing up with the AAA and
    beginning to receive United States Treasury checks for what they
    did not produce, were generally pleased until they began slowly
    to reflect on what they had done. They had signed away the right
    to do as they pleased with their own land…

    if a farmer is not a lord on his own land, what is he? Would he
    give up being lord of his own land for a difference of forty or
    fifty cents in the price of wheat? Whether he would or not, he has
    done it.

    "New Government," February 1, 1936 – Before the New
    Deal, had Washington been feeling the depression?

    When the Republican Administration departed, in March, 1933, Washington,
    like nearly every other city, had the appearance of being overbuilt.
    The principal hotels and most of the new apartment houses were either
    in bankruptcy or staring at it. Private houses could be had for
    the taxes and upkeep. Many mansions were boarded up. Shops were
    closing, leaving whitened plate-glass windows behind them. Your
    taxi fare was less than the tip in New York and the driver was so
    grateful that you were ashamed. Elsewhere people might still be
    hopeful, not knowing the worst; but here, with all the sources drying
    up, it was not going to rain for four more years. Was not the incoming
    Administration pledged to lay the ax against government and cut
    it down one-quarter?

    it rained. Miraculous rain from an invisible cloud in a new world.
    First the hotels filled up and overflowed. Next all the apartments
    and private houses were taken and they were not enough. Rents began
    to rise. The closed shops reopened. New ones appeared. Walking on
    errands of government ceased, because everyone was so earnestly
    making haste in the new world. The leisurely, old-fashioned left
    turn, wide around on the red light, had to be abandoned and one-way
    streets had to be ordained, owing to the increase in motor traffic.
    Taxicabs multiplied prodigiously. Gaiety took back its place in
    the life – eating, drinking, dancing, with all the most expensive
    places crowded; and touching all of this a kind of guilty embarrassment,
    as of people taking pleasure in unreconciled circumstances.

    "National Hill Notes," February 29, 1936 – Nobody ever
    exactly understood what the monetary policy was. It involved debasing
    the currency, repudiating the redemption clause engraved on all
    Government bonds, and led to the weird spectacle of the United States
    Treasury trying to raise the price of gold by buying it all over
    the world with paper dollars – not because it wanted the gold, or
    needed any more of it, but only for the purpose of making the price
    of gold go up. Foreigners sold us gold for paper dollars, and then
    used the paper dollars to buy American securities, so that in fact
    we were swapping titles of ownership in our industries and railroads
    for gold that we didn't need and didn't know what to do with. We
    have now more than half of all the monetary gold in the world, and
    yet we have no gold money. The Treasury is hoarding the gold. It
    could not spend it if it would, for the curious reason that by the
    law of this monetary policy it is a crime for an individual to possess
    a piece of gold.

    "National Hill Notes," February 29, 1936 – Acts in themselves
    do not constitute a course of action. From a progression of acts
    it may be possible to deduce a fundamental policy, only provided
    the acts are consistent with one another, or consistent as a whole
    with a controlling principle. But the acts of the New Deal bewilder
    that process. In the entire book of the New Deal's self-revelation
    and self-exegesis there is a certain paragraph that would reconcile
    all of its acts, not one with another but with one principle of
    contradiction. It is the passage in the last annual message in which
    suddenly the President speaks of the new instruments of governmental
    power that have been created, and then says of this new power that
    it is such that as in other hands "would provide shackles for
    the liberties of the people." But it is in his hands.
    Well, conquest of power for purposes of all-doing – that in itself
    could be a controlling policy, and such a policy, impossible to
    acknowledge, would involve many inconsistencies of immediate policy,
    because the peaceable course to the seizure of great political power
    is a zigzag path.

    "Security," September 19, 1936 – And how will
    [Social Security] funds of such magnitude be invested? They will
    be invested entirely in Government bonds. What is a Government bond?
    It is the promise of the Government to pay at some future time;
    it is, simply, the Government's promissory note. There is here one
    little difficulty to be cleared up. The inventors have not mentioned
    it. The difficulty is this: How can the Government earn money by
    investing money in its own promissory notes?

    American Affairs:

    "Review and Comment," January 1946 – By an act of seizure
    to end a strike the government is now in possession of the soft
    coal mines. Having nothing to lose but the taxpayers' money, the
    government is an easy and generous boss. To induce the miners to
    return to work it made a better bargain with them than the private
    boss was willing to make. And so, as it always is at first, the
    miners are better off.

    they lost anything? Is this benefit of government without price?
    Suppose now they should want to strike. If they refused to mine
    the coal on the government's terms the would be striking against
    the government.

    how the language changes. Formerly if the miners refused to mine
    coal one could say, when it became very serious, that they were
    striking against society, but that was an abstraction. Most
    people thought of it simply as an economic struggle in which the
    consumer was getting hurt, and public opinion turning strongly one
    way or the other would presently end it, because neither side could
    afford to go too far. But now when that same kind of struggle reaches
    a certain point the President announces that it begins to assume
    the character of a strike against the government, and that
    is a very different thing. Thus little by little we become accustomed
    first to the words and semantic tones and then to the experimental
    acts of authoritarian government, commanding obedience.

    "Status for the Poor," April 1947 – [It was a] proud
    American maxim that every schoolboy wrote in his copybook: To
    be poor is no disgrace. In the whole civilized world that was
    only true here, and it was true here because no stigma, no hint
    of caste, no sense of status attached itself to the condition of
    being poor…

    as the form of the Welfare State begins to rise…there are high-bracket
    people and low-bracket people and it is the law that makes a distinction
    between them. You may say still that the distinction is economic,
    not social, and this is for a while a supportable fiction. But it
    holds only until you come to public housing. There the line is struck,
    and now definitely a social status attaches to the condition of
    being poor…

    first argument for public housing is that it is the only way to
    reach that one-fifth of American families whose housing is substandard.
    The secondary argument is that although private enterprise has been
    freer here than anywhere else in the world, it has not solved this

    way of speaking of private enterprise as if it were a power in itself,
    as if it were a total entity with parts and functions and responsibilities,
    belongs to the nonsense of modern demonology. There is no such demon.
    Private enterprise is not a thing. It is a body of natural spontaneous
    economic phenomena rising out of the activities of people who produce
    and exchange wealth with one another with no interference by government.
    It is not the function of private enterprise to house the people.
    It is the business of people to house themselves.

    "Comment," January 1950In the act of granting
    the railroads another increase in passenger rates the Interstate
    Commerce Commission suggested that if the railroads' passenger revenue
    continued to fall, Congress might have to consider a federal subsidy
    to make up the loss. At one of the hearings on Bigness before the
    Celler Committee this question was raised: What if a corporation
    got so big that the government, having accepted the responsibility
    of full employment, could not afford to let it fail? Thus one may
    note the birth of the idea that the Federal Government may be obliged
    to pay old age pensions for capital.

    idea was bound to follow from the delusion that by the free application
    of federal subsidies to any seat of pain we may secure the great
    blessing of a painless economy. This of course is quackery. There
    is no such thing as a painless economy; and if you overcome the
    sensation of pain by anesthetics, how shall the economy know when
    it is sick or why? The use of pain in a healthy body is to give
    notice of wrong living. The only way to cure it really is by right
    living. Many people have forgotten, if they ever knew, what happened
    in a free profit and loss system to capital when it ceased to earn
    a profit. If it could think of no way to get its profit back by
    improving its tools and methods, then simply it was lost –
    wiped out. But that is all that did happen. The great economic mechanism
    was not hurt at all. Indeed it was generally improved and worked
    much better when relieved of the weight of old and obsolete capital.

    there was any Interstate Commerce Commission to say that railroad
    rates should be such as to guarantee a reasonable return on the
    capital, railroad bankruptcy was very common. Once two thirds of
    all the railroad mileage in the country was in receivership. The
    courts operated the railroads as trustees for the creditors. The
    trains went on running just the same; wages went on being paid to
    employees as before. Receivership certificates with prior lien on
    the assets were sold to buy new equipment and new rails. After a
    while the owners, who were the stockholders, sat down with the creditors,
    who were the bondholders, and together they worked out a reorganization
    plan. The capital structure was scaled down. The heavy loss fell
    on the stockholders, which was only fair, because for the sake of
    the profit they had voluntarily taken the owner's risk. Then a new
    company was formed, new stock was sold, the bankrupt railroad went
    on the block and was sold to the new company, and that was the end
    of receivership.

    American railroads were rebuilt many times, with new capital taking
    the place of old, and the cost of transportation fell until it was
    the lowest in the world. There was pain in it, of course, but it
    was pain that cured itself; and there came to be a hard saying of
    great wisdom – that the measure of the country's prosperity was the
    amount of bankruptcy it was willing to stand.

    11, 2003

    Ramsey [send him mail]
    is a journalist in Seattle and editor of Defend
    America First
    and Salvos
    Against the New Deal


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