If We Behave Wisely

Mr. Mullendore, Chairman of Southern California Edison Company, also is President of the California State Chamber of Commerce, Agriculture and Industry. His unofficial views here presented are from an address of September 1, 1956, before the Thirtieth Annual Sacramento Host Breakfast.

That extraordinary and far-reaching changes have occurred in this century and particularly in the past quarter century is not a matter of dispute. Insofar as the argument about them continues, it is only as to what they mean —in which direction are they taking us? In this past quarter century, we have experienced the greatest depression, the greatest war, the biggest and most prolonged boom in our history. More important has been the alteration in our polit­ical, social, and economic institutions — in our cohesiveness, our be­liefs, our self-reliance, and atti­tudes toward each other with re­spect to our mutual rights and obligations as fellow citizens and fellow human beings.

When the great mutations in our institutions were proposed and made in the decade of the thirties, there were, as most of you can still remember, widespread and excited discussion, consternation, and much organized, unorganized, and determined, if not effective, opposition. Many in this audience will remember the shocked amaze­ment with which the New Deal measures enacted by the Hundred-Day Congress of 1933 were re­ceived by those who were aware of their meaning.

The New Deal

And the Hundred-Day Congress of 1933 was only the beginning! Thereafter, it is true, the Blue Eagle of the Recovery Act, with its codes and absolute power over labor and industry, was killed by a decision of the Supreme Court. But, in its stead, there was en­acted a series of laws giving gov­ernment power over labor-manage­ment relations, hours, wages, price-fixing, the farms and farmers, money and banking, credit and income, rents and hous­ing, and so forth — powers over the income and savings and lives and livelihood of the people which, in toto, went far beyond the first Recovery Act. Then the Supreme Court which held the Recovery Act unconstitutional was designedly replaced by a Court, the majority of whose minds "went along with the Chief Executive," as he de­manded.

Yes, during the earlier years there was opposition from those who still believed in the Constitu­tion, in a free people, and strictly limited federal government. And until World War II rescued the experiment in unlimited govern­ment from its failure to produce recovery, the opposition which flared up now and then in the Con­gress, and in the protests of large groups of citizens, gave some promise that the New Deal would not become the permanent deal. Then came the war — the war which 80 per cent of our people did not want to enter, but which we entered just the same. With the war and the war powers thus added to that shift of power to government which had already been accomplished, such opposition to the Revolution and such hope as still existed that there might be a restoration of limited consti­tutional government, largely dis­appeared.

Prosperity Silenced Opposition

Now what was it that so effec­tively silenced the opposition? What brought about the acquies­cence in, even the enthusiastic en­dorsement of, the great social rev­olution of the past twenty-three years? What made wrong right? The answer can be given in two words: boom prosperity.

The American people are not so much interested in ideology as they are in results. They believe in a system which "produces the goods," and they seem now to be convinced that the new way of life does just that. Most business, political, labor, and educational leaders also seem to approve the results and to rationalize easily the conclusion that we are on the high road of enduring and ever-increas­ing prosperity.

Arguments for the New Way

The new system is one, we are assured, which cannot fail be­cause the government is in con­trol; it has "built-in," safeguard­ing stabilizers. "Wise and far­seeing" men, we are told, are both spending our money and manag­ing our fiscal, debt, industrial relations, and all other relations. "They" are doing all this with such wisdom that never again can there be a depression or even a serious recession. If anyone dares express a doubt, he is hit with this clincher: "Why, ‘the gov­ernment’ doesn’t dare allow a de­pression, because if ‘they’ did, `they’ would lose their office and their power; and, you know, ‘they’ want to hold on to those."

It is further emphasized that we are now enjoying full employ­ment at the highest figure in his­tory; the greatest gross national product; the greatest produc­tivity; the highest wages and highest disposable income; the highest level of sales; the greatest of all capital expansion; the big­gest government expenditures, federal, state, and local (and we can be sure they will get bigger and bigger); finally, here in Cali­fornia in particular, the size and the rate of growth of the popula­tion, we feel, guarantee both a desire and a need for all we can produce. What more proof do we want that the new system works and is free from the flaws of the old?

True or False?

By way of answer, I submit for your consideration the following questions having to do with ele­ments of our present prosperity structure. Will you not ask your­selves privately and candidly, is it true or false, that:

1. The statistical indicators, just referred to (gross national product, etc.), which are relied upon as conclusive evidence of "sound prosperity," are like the figures on the speedometer of a speeding automobile. They reveal only the speed at which we are traveling. They do not reveal the limitations, the weaknesses within and external to the system, the ex­haustion of reserve strength, the direction in which we are going, or the perils of the road ahead;

2.       Growth is not the equivalent of progress. Progress requires balanced development of produc­tion, population, consumption, and the like — and that we do not have;

3.       Desire and need alone do not provide the means for their satis­faction; production of goods and services must come first instead of being called forth by prior crea­tion of debt or the printing of money;

4.       Increased consumption, fi­nanced by a heavily disproportion­ate increase in debt and debt-money, is relatively short-lived and will not support long-term capital expansion;

5.       The enormous public debt is a burden and not an asset; largely it represents only destroyed wealth and not real "savings";

6.       American strength, like the strength of any nation, must be measured by the sense of obliga­tion and responsibility—the moral and spiritual vigor — of its citi­zens; and this strength is being undermined by:

a. The disintegration of human relations through the conflict aroused by the disintegrating forces of racial, class, social, and economic prejudices and envy;

b.     The growing reliance upon government and consequent loss of self-reliance, self-dis­cipline, and self-respect, as well as respect for the rights of others;

c.     The spreading doctrine that the majority has only rights and the minority only obliga­tions;

d.    The redistribution of wealth, the confiscation of savings through inflation, the declin­ing per capita wealth, and the constant shift of power from the people to government.

Grim Facts

I will not burden you with sta­tistics, but in considering the truth or falsity of these questions, we should face the grim facts of the growing public and private debt (now too big for comprehen­sion by the human mind); the mountainous tax burden with its inequalities and stimulation of dis­honesty; the serious and growing dilution of value of the dollar; the menacing burden of an unlimited and unfunded social security pro­gram; the ill-defined, uncertain, and growing American commit­ments in the international field; the increase in both adult and juvenile crime and violence, in­cluding murder on the highways; and the increase in mental ill-health, with its evidence of a grow­ing anxiety and frustration in a population depending more and more upon the manipulations of political power and influence rather than upon honest produc­tion and performance of the per­sonal obligations upon which all rights must rest.

In the fall of 1953, Joseph Dodge, then the Director of the Budget, in describing the situation confronting the Eisenhower Ad­ministration when it took office said, in part:

The Federal Government has firmly established the policy of en­couraging citizen dependence upon it, and in connection therewith, has greatly increased centralization of powers in government and control by government of the affairs of all the people….

The facts suggest we are in a costly trap of built-up dollar de­mands on the government for do­mestic purposes, many of them made mandatory by existing legislation, on which there have been imposed staggering expenditures for our national security. The source of pay­ment is in taxes or in increased government debt.

The record-breaking peacetime budget of $69.1 billion together with the appropriations for this fiscal year, made by the session of Congress just concluded, when added to unspent carry-over bal­ances and new authorizations to obligate, now confronts the Ameri­can taxpayer with federal expendi­tures totaling $143 billion. Apparently we have not escaped from the "costly trap of built-up dollar demands," nor from the policy of encouraging citizen dependence upon the federal government!

Tax Troubles

Some eighty years ago, the Supreme Court of the United States in Savings and Loan Asso­ciation vs. Topeka (22 Law. Ed. 461) declared "to lay, with one hand, the power of government on the property of the citizen, and with the other to bestow it upon favored individuals… is nonethe­less a robbery because it is done under the forms of law and is called taxation." Also in those days be­fore it became legal, and even respectable, to forcibly redistribute the earnings of some citizens in order to secure the vote and favor of others, the forgotten clause of the Fifth Amendment was as care­fully adhered to as is another clause today. I refer to the clause which says, "nor shall private property be taken for public use without just compensation."

Cameron Hawley in a recent speech published in the Saturday Evening Post of July 14, 1956, under the title, "Our Tax Laws Make Us Dishonest," said: "What we have created is not a good cli­mate for the souls of men."

The same may be said of our present system and the prosperity structure which it has produced. And a prosperity structure which is not good for the souls of men is dangerous and will fail. False prin­ciples do not become right and are not sanctified by a period of boom prosperity!

Our Responsibility

Finally, to those who ask: Why discuss this disturbing situation? I respectfully submit that we have an inescapable responsibility to face facts as they are and not as we wish them to be! We occupy positions of leadership and influ­ence in our communities — some official and others unofficial. We are exerting an influence either for or against the order of things now existing. We are approving both by words and action the inflation, the debt creation, the new system under which our bosses in Washington take the lead and run the main show for all of us. We pro­test when they slow down on spending, lending, or granting aid in our special interest areas. We ask their assistance in getting higher wages and shorter hours and in price maintenance or the protection of our markets. We proclaim to the world that we have a wonderful prosperity, under­written and guaranteed by the foreign and domestic policies and program of our federal govern­ment.

Since we endorse these policies and programs, and take credit for the increased business which they foster, we cannot escape responsi­bility for untoward results. We should remember who got the blame in 1932 and 1933 — the "money-changers in the temple," the "lords of business," "princes of privilege," the "false leaders" whose "greed and speculation mis­led the people and caused the dis­aster of the depression."

No Effective Opposition

Yet, where is there effective op­position in this hour of peril? The overwhelming majority of both major political parties seems to ap­prove the present trend. This is interpreted as popular approval of the dominant policy — that the federal government should be vested with whatever power is nec­essary to attempt to maintain full employment and an ever-increas­ing standard of living for the voters. To this overriding but futile aim and purpose, the life, liberty, property, and pursuit of happiness of the individual is now subordinated. Do we quite realize where this policy is taking us? In­evitably, it leads to the disintegra­tion of American free institutions, the destruction of the liberty and eventual impoverishment of the citizens.

I repeat that in this growing crisis we have an inescapable re­sponsibility. We cannot evade our responsibility by insisting that it is a job only for the politicians and that we are exclusively occupied running our own office or business or farm. We are in on it — whether we mean to be or not. We are en­dorsing full government interven­tion, not only through our support of candidates for public office who advocate these policies, but also through our active participation in programs which implement policies, such as full employment, government lending and manage­ment of money, credit, and other economic controls which have re­placed the free market.

What Can We Do?

We can, at least, as individuals, cease drifting with this current which is carrying us toward so­cialism. We can wake up! We can cease joining in the chorus: "Isn’t our prosperity wonderful?" We can use our influence, and insist that we prefer to return to the ways of free men. We can, as in­dividuals, and in our groups and associations, heed the warning voiced at the recent Republican Convention by one of the wisest and most farseeing statesmen America has ever produced, former President Herbert Hoover, when he said: "If you temporize with Socialism in any of its disguises, you will stimulate its growth and make certain the defeat of free men."

Addressing a recent industrial conference under the auspices of the State Chamber, Dean Grether, of the University of California, told us of brilliant prospects and potentialities for growth and prog­ress in California and the West during the next ten or twenty years. But Dean Grether prefaced and conditioned his prophecy with this powerful and significant phrase: "If we behave wisely."

It is that phrase which I would leave with you as expressing the great fundamental challenge con­fronting us. As perhaps never be­fore, we now find it difficult and impolitic to "behave wisely"; but such is the price of delivery from our historic dilemma! This gen­eration is charged with the preser­vation of our free institutions. Those institutions are in grave peril.

We have the strength, the cour­age, and intelligence for a return to sanity — to the true road of re­covery and progress. It is not too late to try, and it is utterly un­worthy of our heritage to admit defeat and drift into socialism and its slavery. If we are to turn aside from our present course, we must again and again remind ourselves that the American way is not the easy way of drift and dependency; but that it is the way of constant, cooperative striving for balanced progress and the preservation of our free institutions — while main­taining our "Freedom under God."

Our Duty in Life Insurance

Those of us in the life insurance business must grasp the initia­tive in this country in leading the fight for sound money. Millions of American citizens have entrusted their life savings to us for safekeeping. We have a legal obligation simply to return to them the number of dollars promised, but we have a moral obligation to use all our influence to see that the dollars promised have the purchasing power expected. We cannot discharge our responsi­bilities by sitting idly by should government adopt policies which rob policyholders and annuitants of their savings.

RAY D. MURPHY, Chairman of the Board, The Equitable Life Assurance Society
of the United States. From an address to the National Association
of Life Underwriters, September 26, 1956