Book Reviews

The rage to turn the past into the present has made for lively controversy, and helped many a man to a Ph.D. No doubt it is a sure cure for unemployment in Academe, for, if the past has al ways to be made over into a blue print for what is going to happen next week, it means that the his tory books must be changed every decade. But what happens to the Exterior View in all this chopping and changing? How can we treat our ancestors with simple under standing of their own reactions to their own contemporary problems? How can we read reality into their economics, their morality, their religious feelings? In his The World of Andrew Carnegie: 1865-1901, Louis M.

1968 THE WORLD OF ANDREW CARNEGIE 313 Hacker has addressed .himself to the tremendous task of explaining the most symbolic of our nine teenth century competitive enter prisers in terms of the intellec tual and moral forces that beat in upon him. This isn't designed to be a history of the Carnegie Steel Company, though you will find such a history in it. What Louis Hacker has done is to reconstruct the ethos of an era, giving us long and detailed sec tions on what was being said and done by judges and law courts and labor organizers and f.armers and railroad men and bankers and schoolteachers and clergymen to enforce the so-called Puritan ethic of nineteenth century America. The socialists and anarchists are here, too, but mostly as a premoni tory growl off stage. Hacker does not overestimate their importance as of the eighteen eighties merely because America became some thing else after Andrew Carnegie had passed from the scene.

Behind the Cliches The ground-breaking impor tance of Louis Hacker's book de rives from the author's willingness to get behind the cliches of a full half-century of historical writing. We have been told often enough that the development of the United States in the post-Civil War period was achieved at the expense of the ANDREW CARNEGIE farmers. This is the Populist ver sion of history. The farmer, so the legend runs, sold his product in a world market at low prices and bought his machinery in a protected market at high prices. To continue the legend, the rail roads rooked him with high freight charges. Moreover, since the railroads had cornered much of the best land, getting alternate sections as free gifts along their rights of way, the farmer sup posedly couldn't add to his acreage without mortgaging himself to the hilt. With the cards stacked against him, the farmer had to go into politics. He created his Farm314 THE FREEMAN May ers' Alliances, his Granges, his Populist Party organizations and eventually captured the gov ernment in Washington when the old Populist platforms were taken over by the New Deal.

The only trouble with this his tory, as Louis Hacker shows, is that it doesn't fit the facts. True enough, we had high tariffs in the late nineteenth century. But the U.S. market was so big and so wide, and there were so many competitive units, that the tariff did not have much effect on the price level once American com panies had grown beyond the "in fant industry" stage. By 1880, says Hacker, the U.S. was making more Bessemer rails than Great Britain; by 1890, more pig iron; and by 1895, our prices for both were lower than those of the Brit ish. While industrial prices in this country were dropping in the 1870-1900 period, the value of America's farm plant - in land, buildings, animals, implements, and machinery - increased 104 per cent in constant dollars as com pared with 24 per cent for 1900 20. The Gross Product per farm worker increased 60 per cent in the four decades following the Civil War.

Agrarian Mythology As for land, it isn't true that the railroads made a killing at the farmer's expense out of the do main they got for next .to nothing. The railroads did everything they could to promote settlement of the West, establishing land depart ments and selling their land grant windfalls on easy terms. Mean while, freight rates went down along with the interest rates charged by the banks. If the growth of check money is made part of the post-Ci vil War equa tion, there was an expanding cur rency throughout the whole period of squawking about the demone tization of silver and the desira bility of retiring the Greenbacks. Since Louis Hacker can quote yards of statistics to bear him out, how are we to account for the agrarian radicalism that colored the latter years of the nineteenth century? Mr. Hacker points out that the old Middle Border states - Wisconsin, Illinois, Michigan, Indiana, Ohio - did not go for the Bryanite nostrums. Populism, which swept the Mountain States, the High Plains states, and the South, had special causes that were bound up with the drought cycle in the treeless plains and the crop lien system wherever cotton was grown. The western farmer went into politics because he was a disappointed speculator. He had sold his Indiana or Iowa land for a high price and had moved out into western Kansas or Dakota in 1968 THE WORLD OF ANDREW CARNEGIE 315 hopes of repeating his real estate killing. But the drought cycle caught up with him in the late eighties. The U.S. Army engineer and geologist, John W. Powell, had predicted the return of drought conditions to what had once been called the Grea t Amer ican Desert, and Powell was a true prophet. When the rains ceased to come after 1887, the speculator farmers streamed back East to complain to the politicians.

The disappointed land specula tors found eager allies in the west ern silver mine lobby and among the tenant farmers of the South. The villains, of course, were the Gold Bugs, the Wall Streeters, the "international bankers." The cry went up that only a national cir culating medium that amounted to $50 per person would prevent de pression. But, as Louis Hacker shows, there was no dearth of money in a country in which "the steady increase of bank deposits and of the substitution of checks for notes kept the total money supply at a high level." Bryan failed in 1896 because the country saw through the Populist delu sions. Remarkable Progress The Hacker conclusion is that there wasn't very much the matter with America in the post-Ci viI War period. Competition had served the public well. The "rob ber barons" took their profits, but these were plowed back into in dustry - and "the American peo ple and th~ American economy were the real gainers."

The facts being what they were, it is small wonder that the Amer ican Federation of Labor, which believed in pushing for higher wages that would have come with increased productivity anyway, should survive where the more Marxian labor movements ex pired. Mr. Hacker fleshes out his story of Carnegie's world with a wealth of fascinating detail. There are beautiful biographies of jurists (example: Supreme Court Justice Stephen J. Field), of sociologists (William Graham Sumner), of Populist radicals (Ignatius Don nelly). There is a whole section devoted to the growth of the Car negie steel companies up to the time of their merger with the Morgan-Gary-Moore companies to make up the United States Steel Corporation. With the growth of Big Govern ment, everything has been changed. Mr. Hacker doesn't think the modern world is necessarily an improvement on the world that created Andrew Carnegie. But whatever our opinions may be, Carnegie's world deserves a more patient understanding than it has 316 THE FREEMAN Ma~ received from our recent histor ians. Mr. Hacker has written a great book that will become more definitive as our perspectives clear. ~ ~THE BALANCE OF PAY MENTS: FREE VERSUS FIXED EXCHANGE RATES by Milton Friedman and Robert V.

Roosa (Washington, D. C.: Amer ican Enterprise Institute for Pub lic Policy Research, 1967), 200 pp., $4.50. Reviewed by Mary Jean Bennett THE PLIGHT of the dollar, as mir rored in the great international money crisis and long persistent U.S. balance of payments deficits, has aroused all manner of debate and actions such as removal of the 25 per cent gold cover from our currency, curbs by the President restricting private overseas lend ing and investing, and possible restrictions on foreign travel. Debate has ranged from pro tectionism to cutting loose from gold altogether - Le., letting the exchange rate of the dollar seek its own level, "floating" among the currencies of the world. The issue of fixed versus float ing exchange rates was skillfully debated at length last year in a public forum sponsored by the American Enterprise Institute fOl Public Policy Research. On thE rostrum were two articulate and highly knowledgeable debaters: fixed-rate defender Robert V, Roosa, former Under Secretary of the Treasury for MonetaryAffair~ under Presidents Kennedy and Johnson and now a partner of Brown Brothers Harriman and Company in New York; and float ing-rate defender l\Hlton Fried man of the University of Chicago, former president of the American Economic Association, adviser to Goldwater during the 1964 cam paign, and no,v a columnist in Newsweek.

Both Roosa and Friedman be moan the accumulated U.S. pay ments deficit of more than $37 bil lion since 1950. This tremendous sum has been financed by pay ments from our gold stock, down by more than half to less than $12 billion, and by a vast build-up in short-term dollar liabilities, up to more than $30 billion. These claims could easily withdraw all the remaining gold in official U.S. monetary reserves - given further breaches of foreign confidence in the dollar. The accumulated deficit also has been "covered" by complex and oftentimes unpublicized cen tral bank arrangements including currency swaps, "Roosa bond" flotations, and London gold pool 1968 OTHER BOOKS 317 contributions. In addition, there has been a rising tide of payments controls ranging from the Inter est Equalization Tax legislated in 1963 to Congressional questioning in 1968 on whether Aunt Louise from Des Moines should be quite free to travel abroad this summer.

At this point, the two debaters part company. Roosa is a defender of the status quo, of the current fixed rate system, of what the Administration has done to plug the payments gap. He comes out four square for a new international "paper-gold" currency unit to help expand international liquidity and sustain growing world trade. (Since the debate, Roosa's suc cessor, Treasury Under Secretary Frederick L. Deming, has also en dorsed without reservation the new Special Drawing Rights (SDR's) authorized by the Inter318 THE FREEMAN May national Monetary Fund meeting in Rio last September.) Professor Friedman, deft inno vator and free market exponent that he is, wants a sharp break with the status quo. He blames the persistent U.S. balance of pay ments deficits on fixed exchange rates, on what he calls bureau cratic price fixing. He holds that currency exchange rates should become free market prices deter mined primarily by private deal ings the world over. He argues that the payments problem would yield to floating exchange rates because there could not be a sur plus or a shortage in the sense of eager buyers unable to find sellers or eager sellers unable to find buy ers; fluctuating prices would stir the necessary ea.gerness. In addi tion, Floating exchange rates would put an end to the grave. problems re quiring repeated meetings of secre taries of the Treasury and gov ernors of central banks to try to draw up sweeping reforms. It would put an end to the occasional crisis of producing frantic scurrying of high governmental officials from capital to capital, midnight phone calls among'the great central banks lining up emergency loans to sup port one another's currency.

To put it mildly, Friedman's position doesn't sit well with Dr. Roosa. Fixed-rate defender Roosa, while conceding the fixed-rate sys tem is far from a perfect model, says that at least it provides an established scale of economic meas urement, easily translatable from one nation to another, enabling merchants, investors, and bankers of one country to do business with others on known terms - knowing, for example, with reasonable ac curacy just how many Japanese yen would be equivalent to one Swedish kroner or one Mexican peso. In other words, contends Dr. Roosa, without fixed exchange rates international trade and in vestment would deteriorate. Mer chant, investor, banker, and for eign exchange dealer would grope for the exchange rate that would enable them to make workable economic calculations. Uncertainty would foreclose many a deal. Hedg ing through forward exchange transactions would be all but im possible because no exchange dealer could handle wild currency swings.

"I am very much afraid," says he, "that the rate for any cur rency against all others would have to fluctuate so widely that the country's own trade would be throttled and its capital misdi rected." Friedman rebuts, pointing to the stable Canadian currency ex perience from 1950 to 1962 when 1968 OTHER BOOKS 319 the Canadian dollar "floated," and to the increasing financial chaos caused by the "voluntary"invest ing-lending guidelines of Presi dent Johnson (further aggravated since then by the new mandatory controls announced on New Year's Day). Clearly, Friedman gets the upper hand in the argument. So the brilliant debate goes, pro and con, rebuttal and counterre buttal, including some incisive questioning of the intellectual ad versaries themselves by competent forum participants. One question overhanging the debate like the sword of Damocles was not raised but maybe its answer was too ob vious: That question is: Whither the dollar? ~ ~ THE LAST HERO: CHARLES A. LINDBERGH by Walter S.

Ross (New York: Harper & Row, 1968), 402 pp., $7.95. Reviewed by Robert M. Thornton CHARLES LINDBERGH has been in the public eye since 1927 when he piloted a single engine plane non stop across the Atlantic from New York to Paris. A tragic kidnap ping case five years later brought unwanted publicity; and during the period just before Pearl Har bor Lindbergh was involved in the controversy over American foreign policy. These things most of us know, but there is much more to Lindbergh's life than has appeared in the headlines. There is, for instance, Lind bergh's pioneering work in the early days of two modern-day wonders: organ transplants and space travel. Lindbergh worked with French scientist Alexis Car rel during the nineteen thirties in the development of a perfusion pump to keep organs alive outside the body. He was helpful also in securing financial backing for Robert Goddard's experiments in rocketry and offered much-needed encouragement to the neglected inventor. And all the while Lind bergh has been an enthusiastic promoter of aviation science, choosing to earn his pay as a com mercial airline consultant rather than seeking a big salary for the use of his name. His goal has ever been real accomplishment, not mere fame and fortune.

Ross called Lindbergh "the last hero" because the flight across the Atlantic was so much a one-man feat. Lindbergh raised the money to finance the flight, helped to de sign and build his plane, The Spirit of St. Louis, plotted his own course, provisioned his plane - planned the entire trip with re markable care for detail. No dis paragement of today's astronauts is intended, but they can function only as members of a huge team 320 THE FREEMAN May backed by billions of dollars in tax payers' money, corps of techni cians' and batteries of computers. And Lindbe·rgh was a hero because years of adulation did not shake his integrity. Nor did strong oppositionpreventhim from relying on his own judgment, even at the risk of his life. vVe can better un derstand his spirit of independ ence after reading how he was raised. Lindbergh senior believed a youngster should learn responsi bility at a tender age, and young Charles was encouraged to act on his own initiative.

Contrary to his public image, Lindbergh is not withdrawn or aloof. In the weeks after his solo flight to Paris, when he was al most held in reverence by every one he met, a flying buddy from early days delighted him by a bit of roughhouse after Lindbergh had accidentally sent him tumbling. How much better this, said Lind bergh, than to be treated like roy alty. And, too, Lindbergh was fond of pulling practical jokes on his friends and family. Here was a warm, sensitive human being forced by the poor taste of report ers, columnists, and newspaper readers to resort to· all sorts of subterfuges so that his family might enjoy privacy and live a fairly normal life. Lindbergh was one of the best known members of America First, Rn or~9.nizaHon opposing Amert can entrance into World War II. but he put aside his objectioT.ts once this country had entered/the conflict. Lindbergh's opposition to the war had made him persona non grata with the Roosevelt ad ministration, and he was refused a commission in the Air Force.

However, a plane manufacturer did take advantage of his talents, and Lindbergh, in order to do a good job advising his employer, actually flew fifty combat missions in the Pacific Theater as a civil ian! He was then in his forties an old man among fighter pilots but he was a skillful pilot and his experience and knowledge proved invaluable. A people cannot survive with out heroes, and it cannot flourish unless its imagination is captured by heroes of the right sort. Amer ica has had its share of such men, and Lindbergh would be the first to say that more are yet to come. ~ the Freeman VOL. 18, NO.6. JUNE 1968 No More Drinks on the House! Leonard E. Read 323 Concerning the problems competitors face when the government fixes rates and denies their right to compete pricewise. The Untruth of the Obvious Ya,le Bruzen 328 Those who think that hiking the minimum wage helps the poor should try to understand the harmful effects of their good intentions.