Notes

Editor’s note: all information with brackets [ ] has been added for clarification.

¹ Editor’s note: Kendall’s book The Conservative Affirmation (Henry Regnery, 1963), in particular chapter 6, “Conservatism and the ‘Open Society’,” is quite similar to what Rothbard is criticizing.

² John Stuart Mill, On Liberty (Longmans, Green, and Co., 1921), p. 10. Editor’s note: Rothbard’s original citation was to a different edition.

³ John Stuart Mill, On Liberty (Longmans, Green, and Company, 1921), p. 16. Editor’s note: The Locrians were a tribe in ancient Greece.

⁴ Editor’s note: B. Carroll Reece (Rep. Tennessee) chaired the Congressional Committee to Investigate Tax-Exempt Foundations. The 1954 report of this committee claimed that many foundations were biased toward a one-world state. The “fallacy” is the view that most people shared the committee’s disapproval of the major foundations.

⁵ Editor’s note: Eric Voegelin originally conceived Order and History as a six-volume examination of the history of order. The first three volumes, Israel and Revelation, The World of the Polis, and Plato and Aristotle, were published in 1956 and 1957. The fourth volume, The Ecumenic Age, did not appear until 1974. The fifth and final volume, In Search of Order, appeared posthumously in 1987.

⁶ See Moses Hadas, review of Order and History, by Eric Voegelin, Journal of the History of Ideas 19, no. 3 (June 1958): 442–44.

⁷ Voegelin, Order and History, 3:119, quoted in Hadas, review of Order and History, p. 443.

⁸ Voegelin, Order and History, 3:265, quoted in Hadas, review of Order and History, p. 444.

⁹ Editor’s note: The parenthetical question marks are Rothbard’s own.

¹⁰ Jackson Turner Main, The Antifederalists: Critics of the Constitution, 1781–1788 (Chapel Hill, N.C.: Published for the Institute of Early American History and Culture at Williamsburg, Va., by the University of North Carolina Press, 1961).

¹¹William and Mary Quarterly 12 (1955): 3–46.

¹² Editor’s note: Edwin M. Stanton (1814–1869) was secretary of war from 1861 to 1868.

¹³ Editor’s note: The Bourbon Democrats (1876–1904) were classical liberals who supported Grover Cleveland and, later, Alton B. Parker.

¹⁴ Editor’s note: The Straight-Out Democrats held a convention in Louisville, Kentucky, in 1872 and nominated Charles O’Conor for president. He did not officially accept the nomination and did poorly in the election.

¹⁵ Editor’s note: The reference is to Hayes’s May 1879 veto of “An Act to Prohibit Military Interference at Elections,” which in general prohibited the presence of federal troops at places of election.

¹⁶ Editor’s note: Cleveland refused to support a treaty of annexation of Hawaii, after his agent, James Henderson Blount, reported American collusion in the revolution.

¹⁷ Editor’s note: The Senate did not approve a treaty with the Dominican Republic in 1905, under which the United States would collect Dominican custom duties. Roosevelt then issued an executive order that put the plan into effect.

¹⁸ Editor’s note: Real estate or land property versus personal possessions or moveable property.

¹⁹ Richard Theobald, The Final Secret of Pearl Harbor (New York: Devin-Adair, 1954); Husband Kimmel, Admiral Kimmel’s Story (Chicago: Henry Regnery, 1955); Harry Elmer Barnes, ed., Perpetual War for Perpetual Peace (Caldwell, Idaho: Caxton Printers, 1953); George Morgenstern, Pearl Harbor (New York: Devin-Adair, 1947).

²⁰ Editor’s note: The Morgenthau Plan memorandum signed by Roosevelt and Churchill concluded with “is looking forward to converting Germany into a country primarily agricultural and pastoral in its character.”

²¹ Douglass C. North, The Economic Growth of the United States, 1790–1860 (Englewood Cliffs, N.J.: Prentice-Hall, 1961).

²² Editor’s note: The National Book Foundation was a subsidiary of the Volker Fund that distributed copies of books favorable to classical liberalism to libraries and individuals, based on the recommendations of Rothbard and other reviewers.

²³ William Appleman Williams, The Tragedy of American Diplomacy (Cleveland, Ohio: World Publishing Company, 1959).

²⁴ Editor’s note: What Rothbard refers to as “my 1929 work” was later published as America’s Great Depression (New York: D. Van Nostrand, 1963).

²⁵ Paul W. Schroeder, The Axis Alliance and Japanese-American Relations, 1941 (Ithaca, N.Y.: Published for the American Historical Association by Cornell University Press, 1958).

²⁶ Chicago: Henry Regnery, 1958

²⁷ New York: Veritas Foundation, 1960

²⁸ Editor’s note: Zygmund Dobbs was the author of Keynes at Harvard, a fact of which Rothbard apparently was unaware at the time of this report.

²⁹ Editor’s note: The pamphlet alternates between “Keynesism” and “Keynesianism” throughout, even in its chapter titles.

³⁰ London: Longmans, Green, 1947

³¹ New York: Barnes and Noble, 1955

³² This does not imply that democracy is evil. It means that democracy should be considered as a desirable technique for choosing rulers competitively, so long as the power of these rulers is strictly limited.

³³ The cause of rising prices is generally an abundance of fiat money created by past or present government deficits.

³⁴ Independent expenditures = private investment + government deficit.

³⁵ Irving Fisher, The Purchasing Power of Money (New York: Macmillan, 1913), esp. pp. 13ff.

³⁶ Editor’s note: The page ends with this (incomplete) paragraph:

We have been charitable in not analyzing in detail Fisher’s money side of the equation E = MV, the average quantity of money in circulation in the period times the average velocity of circulation. V is an absurd concept. Even Fisher, in the case of the other magnitudes, recognized the necessity of building up the total from the individual exchanges. He was not successful in building up T out of the individual Q’s, P out of the individual p’s, etc., but at least he attempted to do so. In the case of V, what is the velocity of an individual transaction? Velocity is not an independently defined variable, as its place in the equation would indicate. Fisher can only derive V as equal to...

The rest of this report is missing.

³⁷ F.W. Taussig, Principles of Economics, 2nd ed. rev. (New York: Macmillan 1916), p. 527. Taussig went on to assert that “the theoretical validity of this argument has been admitted by almost all economists,” and that the difficulties lay in the practical application of the policy.

³⁸ Cf. Jules Backman and Martin Gainsbrugh, Economics of the Cotton Textile Industry (New York: National Industrial Conference Board, 1946). Some of the reasons for the shift in capital from North to South were (1) lower wage rates for comparable labor in the South—about half in 1900; (2) development of power in the South; (3) more rapid unionization in the North, and hence, shorter hours, and great work restrictions, raising the unit labor cost; (4) earlier wage and hour legislation in the North; (5) higher taxes in the North. These factors took on greater importance after World War I, when immigration restrictions sharply reduced the supply of mill labor in the North, while the labor supply of the poor Ozark Southerners continued to be plentiful, and when unions and social legislation became more powerful.

³⁹ Cf. Jacob Viner, Studies in the Theory of International Trade (New York: Harper and Brothers, 1937), pp. 71–72.

⁴⁰ Cf. Carey, Essays in Political Economy (Philadelphia: H.C. Carey & I. Lea, 1822); Joseph Dorfman, Economic Mind in American Civilization, vols. 1 and 2 (New York: Viking Press, 1946).

⁴¹ New York: Columbia University Press, 1955

⁴² Toronto: University of Toronto Press, 1955

⁴³ Gordon W. McKinley, “The Federal Home Loan Bank System and the Control of Credit,” The Journal of Finance 12 (1957): 319–32; McKinley, “Reply,” The Journal of Finance 13 (1958): 545–46; and Donald Shelby, “Some Implications of the Growth of Financial Intermediaries,” The Journal of Finance 12 (1958): 527–41.

⁴⁴ Credit union shares, redeemable at par, as well as savings deposits in credit unions, must then also be included in the money supply.

⁴⁵ See Helen J. Cooke, “Cash Borrowing of the United States Treasury: Nonmarketable Issues,” in The Treasury and the Money Market (New York: Federal Reserve Bank of New York, 1954), pp. 17–21.

⁴⁶ On the other hand, the face value of accident or fire insurance policies, or of term life insurance, may not at all be considered money because they are not redeemable at the will of the policyholder. They can only be cashed if the disaster—presumably unforeseen—occurs. If it is “foreseen,” then we have a case for the criminal courts.

Furthermore, pension funds, not being redeemable, are not part of the money supply. And, contrary to McKinley, neither are shares in “open-end” mutual funds, which are only redeemable at market value and not at par, and are therefore no more money than any other stock.

McKinley surely errs also in saying that “every extension of debt... involves the creation of money,” since, on his own grounds, not all liabilities are “generally and usually considered as money,” nor are credit transactions (involving the issue of claims to money at a specific future date) the same as issuing claims to money on virtual demand. The latter, being redeemable at par in money, are themselves effectively money. See McKinley, “Federal Home Loan Bank System,” pp. 325–26.

⁴⁷ In one sense, savings deposits have a greater claim to inclusion—and a claim clearly as great as demand deposits. For in some cases, time deposits are used directly to make payments, with individuals using cashier’s checks on them directly as money. See, for example, Business Week (November 16, 1957): 85.

⁴⁸ But see the hint on life insurance policies in Arthur F. Burns, Prosperity Without Inflation (Buffalo, N.Y.: Smith, Keynes, and Marshall, 1958), p. 50.

For a summary of many economists who have, and have not, included time deposits in their definition of money, see Richard T. Selden, “Monetary Velocity in the United States,” in Studies in the Quantity Theory of Money, Milton Friedman, ed. (Chicago: University of Chicago Press, 1956), pp. 184–85, 237–44. Selden is certainly correct in including Treasury cash, and Treasury demand deposits at the Federal Reserve Banks, in the money supply.

⁴⁹ Many heavy bank runs in 1931–33 took place in time deposits, which were recognized as effectively deposits on demand by bankers and Federal Reserve officials alike. See Senate Banking and Currency Committee, Hearings On Operation of National and Federal Reserve Banking Systems, Part I (Washington, 1931), pp. 36, 321–22, and the excellent, neglected article by Lin Lin, “Are Time Deposits Money?” American Economic Review (March 1937): 76–86.

⁵⁰ See Lin Lin, “Professor Graham on Reserve Money and the 100% Proposal,” American Economic Review (March 1937): 112–13.

⁵¹Money creators is a far better term than the currently fashionable “financial intermediaries,” which implies that both commercial banks and the other financial institutions are not really money creators but simply credit intermediaries between savers and investors. There is no space here to re-argue the old currency school-banking school controversy, as would be necessary for a full critique of this attempt to revive the banking-school doctrines.

⁵² Princeton, N.J.: D. Van Nostrand, 1959

⁵³ Editor’s note: John Chamberlain was a frequent book reviewer for National Review and the Freeman, and Rothbard knew him as a colleague.

⁵⁴ New York: The Business Bourse, 1931

⁵⁵ New York: The Business Bourse, 1932

⁵⁶ C.E. Bockus, “The Cost of Overproduction in the Bituminous Mining Industry,” in The Menace of Overproduction: Its Cause, Extent, and Cure, edited by Scoville Hamlin (New York: J. Wiley and Sons, 1930. Reprint, Freeport, N.Y.: Books for Libraries Press, 1969), pp. 14 and 13. Page references are to the 1969 edition.

⁵⁷ K.R. Kingsbury, president of the Standard Oil Company of California, declared that “the government... should encourage and sanction agreements to promote economy in production and distribution.”

⁵⁸ Rexford Guy Tugwell, The Democratic Roosevelt: A Biography of Franklin D. Roosevelt (New York: Doubleday, 1957), p. 283.

⁵⁹ Arthur M. Schlesinger, Jr., The Coming of the New Deal (Boston: Houghton Mifflin, 1958), p. 160. See chapters 6 through 10 for a history of the NRA.

⁶⁰ In addition to the Swope, Frederick, and Schlesinger books already mentioned, see Arthur M. Schlesinger, Jr., The Crisis of the Old Order, 1919–1933 (Boston: Houghton Mifflin, 1957); David Loth, Swope of GE (New York: Simon and Schuster, 1958); Margaret Colt, Mr. Baruch (Boston: Houghton Mifflin, 1957); Wallace B. Donham, Business Adrift (New York: Whittlesey House, McGraw-Hill, 1931).

⁶¹ Lionel Robbins, The Great Depression (London: Macmillan, 1934).

⁶² In Britain the expansion was generated because of the rigid wage structure caused by unions and the unemployment insurance system, as well as a return to the gold standard at too high a par; and in the United States it was generated by a desire to inflate in order to help Britain, as well as an absurd devotion to the ideal of a stable price level.

⁶³ London: Macmillan, 1958

⁶⁴ Editor’s note: Rothbard’s reference to the “Turner error” is to Frederick Jackson Turner’s famous “frontier thesis,” first advanced in his 1893 paper “The Significance of the Frontier in American History,” which ascribed the American character to the constant presence of the frontier.

⁶⁵ 2nd ed., McGraw-Hill, 1959

⁶⁶ Benjamin M. Anderson, The Value of Money (New York: Macmillan, 1917).

⁶⁷ Institute of Economic Affairs, 1961

⁶⁸ Clark, Growthmanship, p. 34

⁶⁹ Smith, Wealth of Nations, Modern Library, pp. 56–57

⁷⁰ Smith, ibid., pp. 118 ff.

⁷¹ Smith, ibid., pp. 61–62

⁷² Ricardo, Principles, Everyman ed., pp. 229 ff.

⁷³ Ricardo, ibid., p. 165

⁷⁴ Charles Gide and Charles Rist, A History of Economic Doctrines From the Time of the Physiocrats to the Present Day, Heath, 1930, pp. 357–58

⁷⁵ John Stuart Mill, Principles of Political Economy, Appleton, 1901, II, p. 547

⁷⁶ Lewis H. Haney, History of Economic Thought, Macmillan, 1949, pp. 347–48

⁷⁷ Léon Walras, Elements of Pure Economics, Irwin, 1954, p. 440

⁷⁸ Walras, ibid., p. 436

⁷⁹ William Stanley Jevons, Theory of Political Economy, Macmillan, 3rd. ed., p. 87

⁸⁰ Jevons, ibid., pp. xlv-xlvi

⁸¹ Edgeworth, ibid., p. 18.

⁸² Alfred Marshall, Principles of Economics, Macmillan, 1938, 8th ed., p. 540

⁸³ Marshall, ibid, pp. 849–50

⁸⁴ New York, Macmillan, 1901

⁸⁵ New York, Macmillan, 1907

⁸⁶ Shorey Peterson, “Antitrust and the Classic Model” (1957), reprinted in Readings in Industrial Organization and Public Policy (Homewood Ill.: Irwin (for the American Economic Association, 1958), p. 323.

⁸⁷ Clark, Essentials, p. 534

⁸⁸ Ibid., pp. 380–81

⁸⁹ Ibid., pp. 201–02

⁹⁰ Marshall, Industry and Trade, pp. 395–98, 405–09

⁹¹ Arthur C. Pigou, Wealth and Welfare, 1912

⁹² Also see Pigou, Economics of Welfare, 4th ed., 1950. Pigou was virtually the creator of “welfare economics.”

⁹³ Houghton Mifflin, 1921

⁹⁴ In addition to the references listed above, see George J. Stigler, “Perfect Competition, Historically Contemplated,” Journal of Political Economy (Feb. 1957): pp. 1–17.

⁹⁵ Macmillan, 1960

⁹⁶ Editor’s note: Republic of Korea.

⁹⁷ Frank S. Meyer, The Moulding of Communists: The Training of the Communist Cadre (New York: Harcourt, Brace, 1961).

⁹⁸ Editor’s note: Rothbard and Frank Meyer were colleagues at both National Review and the Volker Fund and were friends, despite their disagreements on foreign policy and political strategy.

⁹⁹ Editor’s note: Walter Reuther (1907–1970) was a prominent American labor-union figure and long-time president of the United Auto Workers (UAW). In the 1930s he was considered pro-Communist, but in 1947 he helped found the liberal Americans for Democratic Action (ADA).

¹⁰⁰ Editor’s note: This paragraph was in the original text but appears to have been added in error. It has no relation to what precedes or follows it.

Meyer does not inform the reader that the explanation for this is very simple and nonsinister. The reason is that the Communists follow the economics of Karl Marx, and Marx wrote at a time when all economics was called “political economy.” Hence, the Communists still cleave to the name—just as do the Henry Georgists, and for similar reasons. The term “economics” only came in toward the end of the nineteenth century.

¹⁰¹ Meyer, The Moulding of Communists, pp. 127–28.

¹⁰² Also see page 68, where Meyer is opposing the Communist view of the State as pure force—when that, of course, is exactly what the State is.

¹⁰³ Editor’s note: Many of the points in Meyer’s memorandum were incorporated into an article by Meyer, “Communist Doctrine, Strategy and Tactics,” Modern Age (Summer 1961).

¹⁰⁴ Harold Macmillan (1894–1986) British prime minister, 1957–1963. Robert H.W. Welch, Jr. (1899–1985), founder of the conservative John Birch Society.

¹⁰⁵ Editor’s note: “Megacorpse” refers to calculations by Herman Kahn of the RAND Corporation, especially in his book On Thermonuclear War (1960). The term means one million deaths.

¹⁰⁶ Editor’s note: Frank Meyer had joined the British Communist party in 1931, while a student at Oxford. He abandoned communism sometime in the period 1945–1950.

¹⁰⁷ Walter Millis, ed., A World Without War (New York: Washington Square Press, 1961).

¹⁰⁸ George F. Kennan, Russia and the West under Lenin and Stalin (Boston: Little, Brown and Company, 1961).

¹⁰⁹ Editor’s note: Camillo Benso, Count Cavour (1810–1861), was prime minister of Piedmont (1852–1861) and the first prime minister of Italy (1861). With Giuseppe Garibaldi (1807–1882), he was the principal figure of the Italian Risorgimento (Unification).

¹¹⁰ Edmund Fuller, Man in Modern Fiction: Some Minority Opinions on Contemporary American Writing (New York: Vintage Books, 1958).