All Commentary
Monday, April 1, 1963

A Reviewer’s Notebook – 1963/4


 It is a contemporary article of faith in our interventionist age that subsidies were absolutely necessary to build the American railroad grid and to get the Amer­ican merchant marine going in the age of steam. But even in the days when the West was only sparsely populated, James J. Hill built the Great Northern Railway without benefit of government handouts. And in the midst of de­pression and war in the nineteen thirties and forties a remarkable Danish-American, Hans Isbrandt­sen, created a profitable world­wide American steamship com­pany without aid from Washing­ton and without participating in rate-fixing “conferences” or car­tels.

Thus it has been proved that vital transportation can be had on pure Adam Smith terms even though only one man in, say, a mil­lion believes it in our day of foun­dering railroads, federally-financed throughways, and high-cost cargoships. The story of how Hans Is­brandtsen riddled the most cher­ished theory of the intervention­ists has been dramatically told by James Dugan in a salty, rip-roar­ing chronicle called American Viking (Harper and Row, $5.95).

Isbrandtsen, known as “the sea wolf” to everyone who went up and down the shipping lanes of the Seven Seas, did it on Ameri­can terms, paying the higher wages the American seamen had come to regard as their rights. He bickered with shipping boards, he undercut standard conference freight rates, he tangled with congressmen, he was often em­broiled in a running battle with the U. S. State Department, and he rationed lead pencils to his of­fice force at the old Standard Oil building on Manhattan‘s Lower Broadway. But his fanatical cost-cutting and his successful insist­ence that he be allowed to compete on pure laissez-faire terms were not achieved at the expense of human beings. Underneath a tough Scandinavian hide and a brusque manner he was a good deal of a sentimentalist; he was a soft touch for any Dane who hap­pened to be “on the beach” in Brooklyn or Manhattan, and he made it a quiet habit of helping those who had been widowed or orphaned by the sea.

A Merchant at Times

The unorthodox way in which Hans Isbrandtsen managed to wring a pure Adam Smith profit out of hacking bulk cargo about the world appeared incredible to his competitors, but it would have seemed merely standard practice to our forefathers in the age of sail. Like the enterprisers of old Salem, Isbrandtsen was frequently both merchant and carrier in one. When importers discriminated against his ships, preferring to stick to a cartelized freight serv­ice because they were fearful of incurring the displeasure of a sea­going “establishment” that could give or withhold cargo space at will, Isbrandtsen became an im­porter on his own. He bought cof­fee in Latin America, or jute in India, or rubber in the Indies, not because he relished the specula­tive chances he was taking but simply to fill the holds of his black ships which bore such names as the Flying Trader or the Flying

Arrow or the Flying Enterprise. Though he necessarily lost money on his merchant bets at times, he was generally successful in his in­cursions into the commodity mar­kets.

Year after year the Isbrandtsen lines made a profit as the brusque “sea wolf” moved his ships around the chess board of the world by sending expensively detailed ca­bles out from the home office “Main Deck” at 26 Broadway. Is­brandtsen’s quick ways of cutting a loss or grabbing an opportunity on the fly would have appealed to the Derby family or the Cabot family of old Massachusetts North Shore ports, for they, too, were men of bold decisions based on an imaginative feeling for possibili­ties that escape the routineers in any line of work.

A throwback to the nineteenth century in all ways, Isbrandtsen believed in trading with anybody without asking questions about ideology. He believed in an abso­lutely undeviating application of the old doctrine of “comparative advantage,” justifying exchanges with countries like Red China or Soviet Russia on the ground that a swap of noncontraband goods is always politically “neutral.” If the Red Chinese, for example, wished to buy western wheat, they would have to pay for it by detail­ing workers to produce something of use to the western nations. The energies of Red Chinese workmen would thus be diverted to peace­time activities.

In the nineteenth century this doctrine had much to commend it. Before the days of modern totali­tarian dictatorships, production for export invariably created a “peace party” inside a state. This was even true in the more author­itarian countries like Hohenzollern Germany and the Russia of the Czars. But today, when all the big nations are, in effect, variants of the “nation in arms,” even trade that merely serves to keep people alive has a military aspect: every healthy man is a potential soldier or war worker. When the Is­brandtsen captains were waiting at the mouth of the Yangtze River to run Chiang Kai-shek’s blockade of the Red port of Shanghai, the Chinese communist dictator Mao Tse-tung needed western trade goods to keep his myrmidons paci­fied. The theoretically noncontra­band stuff that Isbrandtsen, the complete free trader, hoped to land in Red China was thus far from “neutral”; it stood to help communists as they went about fastening their shackles on China.

Alfred Kohlberg and the so-called “China Lobby” were quite correct from their own radically anticommunist point of view when they labeled Isbrandtsen’sattitude as “objectively” procom­munist. The brusque Danish-American sea wolf did not see it that way, of course. But that was simply because he didn’t think it the business of the United States to try to bring down the com­munist regime in Peiping. Well, it wasn’t very long after the block­ade-running squabbles between Mr. Kohlberg and Mr. Isbrandt­sen that the armies of Red China were killing U.S. soldiers in Korea. Mao Tse-tung had used his west­ern imports to help cement his power in China—and had then turned this power against all the western nations in the Korean War. So the doctrine of “compara­tive advantage,” when applied un­der modern circumstances in the Asia of 1949 and 1950, did not turn out to our advantage at all.

The Carlsen Saga

Mr. Dugan’s acceptance of Hans Isbrandtsen’s own philosophy is so unquestioning that the subtleties involved in trying to understand the shortcomings of the doctrine of comparative advantage in the modern age of totalitarian armed camps quite escape him. Like Is­brandtsen himself, Mr. Dugan is a romantic. He likes action and he glories in color. The piece de re­sistance of his book is provided by the heroic exploit of an Is­brandtsen captain, Henrik Kurt Carlsen, who insisted on staying aboard his wrecked ship, the Fly­ing Enterprise, for two dreadful weeks of gale and hurricane in the English Channel in 1952. The whole world watched as Carlsen clung to a vessel that had virtually split in half. By actual page count, almost a fifth of American Viking is about Carlsen, who was only an employee of the Viking who gives title to the book.

Nevertheless, the Carlsen saga very definitely belongs to the Is­brandtsen story. For the old sea wolf had infused all his captains with his spirit. Carlsen had so thoroughly absorbed the doctrine that an Isbrandtsen captain must try to get his ship into port at all hazards that he refused to quit his post even after Isbrandtsen him­self had given up on the Flying Enterprise. At that, Captain Carl­sen might have gotten his ship towed into the British West Coun­try port of Falmouth if there had not been a final flick of horrible weather just when safety was in sight.

There are other sagas in this story of Isbrandtsen’s embattled life; the story of the sea wolf’s abortive attempt to revive the American whaling industry has only slightly less interest than the account of Carlsen’s ordeal. This is a grand book with a lesson for free men.

TV: From Monopoly to Competi­tion by Wilfred Altman, Denis Thomas, and David Sawers (Lon­don‘s Institute of Economic Affairs, Eaton House, 66A Eaton Square, London SWI. 7/6)

Reviewed by Melvin D. Barger

The British broadcasting sys­tem, a government monopoly, had the airwaves to itself for thirty-five years. It now shares them with commercial broadcasting, in the form of the Independent Televi­sion Authority. The story is told in TV: From Monopoly to Com­petition. Mr. Altman traces the history of British broadcasting, taking the reader from its begin­ning in 1920 down to the present. Interestingly, British broadcast­ing had a brief flirtation with private enterprise in 1922, but al­most immediately the government-owned Post Office department claimed jurisdiction and helped set in motion the forces that were to lead to state monopoly. The BBC came into being that same year, a single broadcasting serv­ice that justified its monopoly with such arguments as the “shortage of wave lengths” and “public service”—reasons which were to persist until 1955. (Mr. Altman acknowledges a heavy in­debtedness to R. H. Coase’s pio­neer study, British Broadcasting—A Study in Monopoly, for his­torical source material. See Coase’s

“Why Not Use the Pricing Sys­tem in the Broadcasting Indus­try?” The Freeman, July 1961. p.62.)

The growth of the BBC through the years also meant the growth of a large body of public broad­casting officials with a vested in­terest in maintaining their own power and influence. Anxious not to permit even a smattering of privately-owned broadcasting out­lets, they campaigned mightily to take over the handful of independ­ent wire transmitting stations in the country. Yet they always had to do constant battle against re­curring public opposition to their monopoly.

Although the British people long delayed their move to over­throw the BBC monopoly by direct political action, they apparently were doing a great deal of “vot­ing” with their radio dials. Com­mercial programs beamed from France and Luxembourg—in many cases sponsored by leading British advertisers—were popular with British audiences. Characteristi­cally, the government tried with­out success to suppress these non-domestic broadcasts. Helped in­directly by the advent of televi­sion, and directly by the Conserva­tive Party’s victory at the polls, the procompetition group began to see some hope in the early 1950′s. In the final sparring for new legislation, they hit the BBC where it was weakest, attacking its bland programming, its bu­reaucratic complacency, and its lack of freedom. Private broad­casting, though tightly regulated, came to Britain in 1955.

What was the social impact of independent television? Mr. Denis Thomas explores this topic in his section of the booklet, and com­pels one to conclude that video came into its own only after the break-through into commercial broadcasting. ITA (Independent Television Authority) was to be­come so popular in the public mind that even leaders of the pro-BBC Labour Party were to find it poli­tically expedient to deny that they contemplated eliminating inde­pendent television. Commercial television actually changed the en­tertainment habits of the British public, and the number of TV viewers in the country grew from 51/2 million in 1955 to 40 million in 1961. Independent television claimed to have some 69 per cent of this nightly audience.

But perhaps the most significant effect of independent television was that it forced a change in the policies of the BBC, which put on a new face to meet the competi­tion for viewers. The BBC even began to outdo its rival in com­peting for some of the American programs that had been so popular with independent viewers. It was, in fact, the BBC that scored in Britain with Sergeant Bilko, the Perry Como Show, Sid Caesar’s series, Harry Belafonte, and Mort Sahl.

The economics of British televi­sion gets an airing in the final section of the booklet, in which Mr. David Sawers also examines the possibility of establishing more services, such as Pay-TV and channels in the UHF (ultra high frequency) range. Although certainly vital to a complete dis­cussion of the British broadcast­ing problem, his portion seems to get heavy with technical and eco­nomic detail.

In a concluding summary, the authors endorse the need for a third broadcasting facility, if only to give viewers a wider choice. They seem to support maintaining the present degree of freedom for the ITA, and also extending it to the BBC by permitting the latter to accept advertising and buy ad­ditional time on the ITA. As for control of programming, they in­sist that the majority must con­tinue to be allowed to watch what it wants (reiterating, somewhat, a point made in the prologue: that people who are capable of choos­ing their political governors should be capable of choosing their television programs!)

 

 

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Ideas on Liberty

Knowledge and Learning

The intellect, which has been disciplined to the perfection of its powers, which knows, and thinks while it knows, which has learned to leaven the dense mass of facts and events with the elastic force of reason, such an intellect cannot be partial, can­not be exclusive, cannot be impetuous, cannot be at a loss, can­not but be patient, collected, and majestically calm, because it discerns the end in every beginning, the origin in every end, the law in every interruption, the limit in each delay; because it ever knows where it stands, and how its path lies from one point to another.

CARDINAL JOHN HENRY NEWMAN

The Idea of a University

 


  • John Chamberlain (1903-1995) was an American journalist, business and economic historian, and author of number of works including The Roots of Capitalism (1959). Chamberlain also served as a founding editor of The Freeman magazine.