The Silent Partner

Dean Russell, formerly of the Foundation staff, is professor of economics at Rockford College. This article is from a study he has recently made on the automobile and its impact on the American economy and government.

We American are only 6.4 per cent of the world’s population, liv­ing on less than 6 per cent of the world’s land area. But we produce more than 60 per cent of the world’s cars, trucks, buses, trac­tors, and other such automotive equipment. We also lead every other nation in the production and use of steel, rubber, oil, clothing, books, housing, medicines, meat, milk, and almost any other prod­uct or service that the people want or need. The reason for our pro­ductive leadership is not natural resources ; for several other na­tions equal or excel us in that re­spect. Nor are we inherently more intelligent than others ; for, after all, we Americans are merely a con­glomeration of peoples from every nation on the face of the globe. And certainly we don’t work any harder than the people of various other countries. Thus the only major difference between us and others would appear to be our form of government. For a mo­ment, let’s return to that Consti­tutional Convention of 1787 and try to discover just what those founding fathers were trying to accomplish.

The primary objective of our forefathers was to insure maxi­mum freedom of action and equal­ity of opportunity to every citizen in his personal and business af­fairs. To insure that primary ob­jective of the Revolution, the founders of this nation designed a cumbersome governmental system of checks and balances, of limited powers, and much division of those powers between the federal and state governments. And by ar­ranging for frequent elections of officials, they hoped thereby to prevent any one person or group from holding for long the few powers that the government did have. With a few minor excep­tions, the founders did all in their power to bar the government from the general area of economic ac­tivities. In fact, they deliberately designed one of the most econom­ically inefficient forms of govern­ment ever known. The reason for that becomes more understandable when we remember that they had just led a successful rebellion against the planned economy of the government of King George III. They were in no mood to en­dorse in a new form what they had just rejected in an old form.

Except in time of war, the gov­ernment wasn’t expected to do much of anything. And it didn’t. It bumbled along slowly and inef­ficiently, generally doing only those few things that had to be done in order to keep it operating at all. On occasions, the duly elect­ed and appointed officials of our government rose to great heights of statesmanship. On other occa­sions, they sank to equally great depths of sordid logrolling. All in all, the system of government established by our forefathers was a pretty good mechanism to insure the primary objective for which it was established—maximum free­dom for the individual citizen.

In the area of economic goods and services, the government gen­erally confined itself to encourag­ing and aiding others (both per­sons and companies) to exploit, develop, and settle the nation. Throughout the early history of our nation, the main highways were generally built and operated by private turnpike companies. Water transportation was con­trolled by private interests. The railroads were all privately owned. The active part played by govern­ment varied from nothing to very little in meeting the economic needs and desires of the people. Never before in the history of the world had a government sat idly by while its people did almost any­thing they wanted to do. And as a direct result of that inactivity, this nation experienced a release of human energy and accomplish­ment that astounded the world.

Inevitable Mistakes

Were there injustices? Of course there were. Was there suf­fering? Yes, there was. Did some persons exploit other persons? They did. Were the votes and in­fluence of some senators and gov­ernors for sale? They were—and they were bought. Was there any favoritism? There was indeed. Were there many examples of greed, stupidity, and outright criminality? Yes, there were countless such examples—by both governmental and private inter­ests.

Point out all the mistakes and evils you wish (they are easy enough to find), and then look again at the over-all record. Never before in all history were so many people so well fed, clothed, and housed. There was more laughter and human happiness in this land than in any other. Never before had the world ever witnessed such an outpouring of the material things of life—as well as an un­paralleled abundance of charity, love, and respect for the individual person. Thousands and hundreds ­of-thousands of schools and churches sprang up across the land. Here the Biblical injunction to feed the hungry and clothe the naked became a part of our daily lives. Provision was made for the widow and the orphan, the sick and the poor, the halt and the blind. We first helped ourselves, and then we helped our less pro­ductive neighbors—both at home and abroad. For the most part, our government remained strictly passive in the market place. It seldom concerned itself with what was produced or how it was dis­tributed. And millions of people, from lands where governments ac­tively participated in both pro­duction and distribution, came pouring into the United States.

They came in search of oppor­tunity for themselves and their children. Here a man could work for others or for himself. Here there was no state religion, no hereditary nobility, no rigid class barriers, and, especially, no gov­ernmental controls over economic affairs. Here a man was his own master, and both he and his chil­dren could rise as high as they were capable of rising. Many of them became rich and famous, and almost all of them improved their lot in one way or another. There were no price controls, and food and manufactured products were both plentiful and cheap. There were no wage controls, and wages were the highest in the world. There were no limits to the profits a man could make, but he had to produce something the people wanted to buy before he could make any profit at all. We were the "melting pot"—for dreams and economic ideas, as well as for persons with different back­grounds. We were a brawling, sprawling melange of all races, religions, nationalities, and lan­guages. Among us were the am­bitious and the lazy, the weak and the strong, the fool and the genius, evil men and honorable men. We could (and did) tolerate strange religious ideas. We could (and also did) tolerate equally foolish ideas about carriages that would run without horses.

Unofficial Growth

Meanwhile, the government con­tinued its traditional policy of doing mostly nothing—except to act as a sort of referee that did a reasonably fair job of restrain­ing murderers, robbers, and out­right frauds. The government didn’t concern itself at all about Oliver Evans and his ideas for a road vehicle that would run under its own power. True enough, in 1792 the new government granted him a patent, but what he did with it was strictly up to him. When Charles Goodyear patented his method for vulcanizing rubber in 1844, the government obviously knew about it since a patent was involved. But it showed no further interest in the process. (The com­missioner who issued that patent, Henry Ellsworth, stated in his 1844 Annual Report that "the ad­vancement of the arts from year to year taxes our credulity and seems to presage the arrival of that period when human improve­ment must end.")

As far as can be determined, the government knew nothing at all about the world’s first oil well that was brought in by E. L. Drake at Titusville, Pennsylvania, in 1859. The government had neither encouraged nor discouraged him. The problem of what to do with the oil (if anything) was left strictly with "Colonel" Drake. In due course, the government also issued patents on several types of internal combustion engines that had been invented or improved upon by its free citizens—but that’s all it did. And when John B. Dunlop, a Scottish veterinary surgeon living in Belfast, Ireland, first developed his idea for an air-filled rubber tire, neither London nor Washington knew anything about it. Dr. Dunlop was merely trying to devise some way to pre­vent his young son from shaking himself to pieces as he rode his iron-tired bicycle over the cobble-stoned streets of that city. When his idea proved to be a practical success, both his government and ours learned about it only when he applied for a dual patent in 1889. While bicycle companies in both countries were most interested in his invention, neither of the two governments appeared to care about it one way or the other.

When, in 1893, the Duryea brothers used a by-product of Colonel Drake’s oil to supply the power for their "horseless car­riage," our government had no idea at all that America’s first practical automobile was finally in operation. The officials in Wash­ington couldn’t have cared less.

Nor did the government have any interest at all in the first fac­tories built specifically to manu­facture automobiles in 1899—the Olds gasoline cars in Detroit, Michigan, and the Stanley Steamers in Tarrytown, New York, and Bridgeport, Connecti­cut. The government treated R. E.

Olds and those twin brothers (F. 0. and F. E. Stanley) exactly as it was later to treat Henry Ford and the thousands of other persons who went into the automobile business—it just ignored them entirely. When, over the years, almost all of those automobile com­panies failed and went out of busi­ness, the government did nothing. When a few of them succeeded and made fortunes for the owners, the government continued to do nothing.

Nor did the government in any way encourage Captain Anthony F. Lucas as he began drilling into those strange "dome formations" he had observed all along the coasts of Louisiana and Texas. Actually, Captain Lucas was mostly interested in finding salt and sulphur. He was about as astounded as anyone else on Jan­uary 10, 1901, when his drilling rig was hurled skyward by the fantastic gusher of oil he had tapped at "Spindletop" near Beau­mont, Texas. There was a good market for sulphur and salt, but about the only use for oil lay in the kerosene that could be refined from it. One cynic looked at that 160-foot geyser of gas and oil and asked Lucas, "What are you going to do with it—feed it to the longhorns?" Captain Lucas found the answer to his problem in De­troit, not in Washington. In due course, the booming automobile industry began using so much gasoline—the "useless" by-prod­uct of oil—that millions of per­sons all over the world were soon depending on it for their liveli­hoods. Until the oil industry was a highly successful business, the government left it completely alone.

In short, it is safe to say that the government played no part whatever in the development of the automobile and the primary industries based on it—except the crucially vital part of doing ab­solutely nothing, one way or the other. And for that, we are for­ever indebted to the founders of our nation who deliberately planned it that way.

True enough, the government did build almost all of the roads the automobile now runs on. But it is doubtful if anyone will claim that our highways have kept pace with the development and needs of the automobile. Even if the pro­posed Interstate Highway System is completed, the over-all road situation will still be grossly in­adequate for the amount and type of traffic it must carry.

Just Suppose!

A student of this problem once succinctly summed up the differ­ence between public and private development of transportation facilities in this novel manner: Sup­pose, he said, that around 1900, the government had decided to as­sume full responsibility for de­veloping and building automobiles—and had left the building of roads to private enterprise. What might have happened? He pre­dicted that, under those circum­stances, we would today have a highway system far superior to the few, crude automobiles that would have been produced by gov­ernment. (And he might well have added that a privately-owned "General Roads Corporation" would probably be running a na­tional contest to solicit ideas whereby government might be en­couraged to build more and better cars to run on the private highway system.) Actually, of course, we can never know what might have been. But we do know beyond any shadow of a doubt that the gov­ernment’s roads have not kept pace with the development of the automobile.

In no sense is this a criticism of government as such. Actually, when all is said and done, our gov­ernment has done a far better job of road building than we had any reason to expect. And as time goes on, perhaps it will do an even better job. Even so, we are for­tunate indeed that the developing and building of our automobiles, railroads, and airplanes was left mostly to private initiative. We are further fortunate that the ac­tual building of our highways is also done by private construction companies, with the government confining itself to a supervisory capacity. Otherwise, the present deplorable situation might well be­come intolerable.

The Modern Trend

Be that as it may, the tradi­tional American role of govern­ment as a "silent partner" has been steadily changing over the past 50 years or so in all economic areas. It is changing because we citizens want our government to become more active in our daily affairs. In no sense is the change due to any "plot," either foreign or domestic. We ourselves de­manded it and voted for the per­sons who promised to do it. And as was to be expected, we are get­ting what we want.

Perhaps we are wise enough (and are now experienced enough) to keep our active and largely un­restricted government within rea­sonable bounds. Perhaps we aren’t. No one can say with absolute cer­tainty. But this much is sure: The continuing trend toward more ac­tive participation by our govern­ment in our daily affairs and prob­lems is a complete reversal of the principles laid down by the founding fathers in 1787.

Today, it is becoming increas­ingly popular to scoff at their con­cepts of eternal principles, per­sonal responsibility, and severely limited governmental powers. Those ideas of our forefathers are now often called "horse and buggy" principles that might work in a frontier community but not in an industrial age of rapid trans­portation and communication. The fact remains, however, that it was those "horse and buggy" principles themselves that caused the de­velopment of the automobile and the countless other products and services that have made this earth a more pleasant place to live. Con­versely, the world-wide situation that has been threatening for so many years to plunge us back into the barbarism of complete govern­mental controls is due almost ex­clusively to a rejection of those principles and concepts—in all nations, including our own.