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·How undustrialization can serve the world book on economics necessanlv undertake to describe all the main features in the lues of tho e whose needs are served by the country in which they live The relationships of each of thes features to the other must be explained EY TO ECO- MOVIC PROGRESS sets forth clearly and simply tox mass purchasing power mass production and m consumption can be combined to brin a Tisin st ndard of living to the greatest majority Th author gyes then cessary factors of social and polit cal life their proper weighi--so that alone vith the more technical aspects of productivity monetary and fi cal policies the p erequisies for Democratic Industrialism are demonstrated.

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·D GLOUSOULAS
Produt on
KEY
M
uo Junsuoy 1N
TO
ECONOMIC
PROGRESS
Mss Purchasing Power
BALLANTINE BOOKS • NEW YORK

·O 158 by DG Lousoulas
I
Congress Catal & Card Mo 58-13578
in the Uaited States of America

·CONTENTS PREFACE 9 PART ONE I. IS THE REAL An u economic strenoth The major innovation of the Amencan economic system 15 21 II. SOVE BASIC FEATURES OF THE AMER ICAN ECONOMY Mass production with a small profit per Unit Mass purchasing power The two dimensions of a mass consumer market. Forms of comptition Constant search for new prodacts and methods Business and education Productivity and buman relations The search for talented men A mod mn way of thinkuog for the la dustrialist The important role of advertising. Labor unions in a free cconomy The Amencan government as a balancing factor PART TWO DIL. SPEAKING OF PROFITS Do larg profits mean exploitation? Profits as a source of c pital. Other funcuons of profit. 31

·1958 by D G housoulas
brary of Conoress Catalog Card No $8-13578
Printed in the Uated States of Ameri 2

·ABOUT THE AUTHOR - Dmitrios G kousoulas come to the United States in 1951 under a Fulbright Scholarship to study at Syracu.e Uni Fersity He already had his Las degree from the Uni versity of Athens Greece Bom 1 Khalkıs Greece on the Island of Eboea, he spent muay years on another Greek island Crete In 1943 haviağto d some trouble with the German Occupauon Au thorities h went to the mainland In December 1944 dunog the Communust revolution he was arrested by th Communist guerrillas and escaped exccution by a day only because a pact was signed b tween the British Commander General Scobi and the ELAS guernllas Latr dunia, the Communist revolt of 1947-49 he served with thw Greek Army in Macedonia. la Syra use University he received his MA in Political Scence in 1953 His thesis was published in th same year by Syracuse University Press under the title "The Pnce of Freedom Greece in World Affairs 1939 1953 A Greek translation of this book appeared in 1955 Since April, 1955 he has been contribuung a seekly analysis of world eients which appears in su Greek daily newspapers regularly la 1956 ML housoulas received the Degree of Doctor of Phlosophy in loternational Relations from Syracuse University Hs fam banity with dnerse economic institutions and practices in underdeseloped countris in the United States, and in the Sourt Union, has provided Dr Kousoulas with a unique background for the preparation of this unusual and absorbig book.

·IV PRODUCTIVITY WAGES AND PRICES 37 Mass production a foe of culturc? High wages and low prices How does productivity increase? Increased productivity and a nsiog standard of living -- 43 59 V A MASS CONSUMER MARKET Prerequisites for a mass consumer market. Removog man made obstacles to trade The role of transport and communcations. Personal income and a consumer market. The re stratification of personal incomes Consumer credit and the Amencan market. VI. COMPETITION OR MONOPOLIES? Monopoly of price competition? Combaung monopolistic practices Compeution in the American economy Several forms of competition VII THE BUSINESS WORLD The Corporation People s Capitalism Research and Development. Business and Education Advertising in a compcture economy Mouves and obj cuves VIII ORGANIZED LABOR The major objective of the labor unions The growth of the labor movement in the United States Labor as a bal acing factor Labor union pracuces L. IN SEARCH OF STABILITY Economic stability in a free c onomy? The causes of economic in tability Instruments for preserving stability Monetary politics Fiscal policies Statistics and Economics an ard to govem meat. 72 87 97 EPILOGUE · 109 ·ABOUT THE AUTHOR Dimitrios G Kousoulas came to the United States in 1951 under a Fulbright Scholarship to study at Syracuse Uni versity He already had his Lax d grcc from the Unu versity of Athens Greece Born in Khalkıs Greece on the Island of Eboca, bo spent m.ay years on another Greek island, Crete In 1943 baying had some trouble with the German Occupation Au thonues he went to the manland In December 1944 during the Communist revolution he was arrested by th Communist guerrillas and escaped erecution by a day only because a pact was signed between the Briush Commander General Scobr and the ELAS guerrillas Later darin the Communist revolt of 1947-49 he served with the Grcek Army in Macedonia In Syracuse University he received his M.A. in Pouucal Science in 1953 H s thesis was published in th sum year by Syracuse University Press under the title "The Price of Freedom Greece in World Allars 1939 1953 A Greek translation of this book appeared in 1955 Since April 1955 h has b en contributiog a neckly analysis of world cvents which appears in sux Greck daily newspapers regularly In 1966 M Lousoulas received the Degree of Doctor of Philosophy in International Relations from Syracuse Varersity His familiarity with diverse economic insututions and practices in underdeveloped countries in the United States, od in the Soviet Ucion has provided Dr Kousoulas with a unique background for the preparalica of this pausual and absorbing book, ·IV PRODUCTIVITY WAGES AND PRICES 37 Mass production a foe of culture? High wages and los prices How does productivity increase? Increased productivity and a rising standard of living 48 59 V A MASS CONSUMER MARKET Prerequisites for a mass consumer marlet Removing man made obstacles to trade The role of transport and communcations. Personal income and a consumer market. The re stratification of prsonal incomes Consumer credit and the American marlct. VL COMPETITION OR MONOPOLIES? Monopoly of price competition? Combating monopolistic practices Competition in the American economy Several forms of complution VII THE BUSINESS WORLD The Corporation People s Capitalism Research and Development. Business and Education Advertising in a compeutie cconomy Motives and objectives VIII ORGANIZED LABOR The major objective of the labor unions The growth of the labor moi cment in the United States Labor as a baladcing factor Labor union practices IN SEARCH OF ST IBILITY Economic stability in a free cconomy? The causes of economi in tability Instruments for preserving stability Monetary policies Fiscal policies Statistics and Economics an aid to govern 72 87 97 ment EPILOGUE 109 ·PREFACE The central fact of today s life is the cust crce is the world of tho great phuo ophies of man wid govern They are in a contest for th frndship loyalty and support of the world s peon plas With these words President Euscahoner struck the heart of a dilemma mankind faces today Indeed one of th bas es ues of our time ish ther peop can attain economic well being without sacrificing their polu al and personal freedom on the altar of an omnipotent stal. This is not an abstract qu suon th future of humanity may well d pend on how peopl resolve it. Since the b einning of civilized soci ty men who were abl to wield political or economic power were in a posi tion to lead and comm ad. In our modern world, a to.al tarian Staw fusas both the political and the economic functions mto one monolithic structure controlled by a bandful of indindu-is seated at th top of a sinal politicoeconomu pyramid in a modern democracy on the other hand power whether slimin from political or economic a tivities, is vested in a myriad of separate bat int id prodent political and economic units As these units rep- Terent practically all sugments of society no privileged 9

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·PREFACE The central fact of today s life is the exist ence in the world of two great philosophics of man and government. They are in a cont st for the Inend hup loyalty and support of the world s peoples With these words President Eisenhorser struck the heart of a dilem.na mankind faces today Indeed one of th basic issu s of our time wh ther people can attain economic well being without sacrificin, their political and personal freedom on the altar of an omsipotent state This is not an abstract question the future of bomaruty may well d pend on how people resolte it. Since th b grois, of civilized soci ty men who were able to weld pout al or economic poner were in a posi tion to le d and command In our modem world a total tar an State fusas both the political und the economic funcuons into one monolithic structure controlled by a handful of individuals seated at th top of a singl politico ecosom pyramid la a modem democracy on the other hand, power whether si mming from poliucal or economic activities is vested in a myriad of separat but interdum peodent poliucal and economi Opats As these units rep res at practically alicements of society no privileerd 9

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·Prejace mng poy rty and a small menonty in prosocatie kcalth I most confess that I too shared this musccaccption unti I came to th United States sesen years ago under a Ful bnght Scholusshup and observed capitalism 13 Am ricam. From the first moment I was perplexed by the ima se of a capitalist country in which there was neither a majority of paupers nor a minonty of all poxerful rich For fire ytars I studi d the inviting subject with insatiable cun os ty Esentually I became convinced that he was a capitalist country which had somehowy put to practice - the theoretical demands and promises of the most progressive socialist thinkers above all the qu st for fair shamn of the national sealth And I came to th conclu sion that in the United States the old style cap talism had given way to a new economic system based on diferent principles What I had learned I lelt should be brought to th attention of my countrymen in Greece who like myself a few years ago had a rather muddl d and uprealistic conception of what makes Amenica great. I presented my observa tions on the present day American economic system in a senes of fifteen articles which were published in sıx Greek Du spapers and a poliucal review as part of my regular column on the Amencan scene and the world at large entitled Letters from Washington The favorables ac tion in Greece to these Ticles bas encouraged me to undertake this book, watt a in En Lish so that more people around the world could read it. The Amencan system of cours is not a utopian pana cca whuch can remedy all the world s social and economc ills with despatch. There is, in fact, no fixed blueprint by wbuch I has developed Rather tb re is a set of Bexible economic pnnc ples developed through trial and error Oier the years within a framework of democracy Most signifi ·10 Hey to Economic Progress group or class is alloned to gain absolute control over the entire social structure One of the fundamental characteristics of a des cloped society is its industrial basis In this sense both the United States and the Soviet Union have one thing in common they are industrial states But at this point the similarity ends While the industrial system in the Soviet Union is part of a monolithic politico-econonuc structure in the Untted States it operates within a demorali, framework On the basis of these general features of the American de mocracy one may use the term democranc in 'ustrials to identify the set of principles which underlic the Ameri can economic system today + To a world groping for usuers the experien c of the American people who lave an industrial sistem operat ing within a democratic framework is af pra tici suli cance The phenomenal krowth and achievements of the American system of democrati inuu ina m in terms of individual living standards art en jurifin end nce that social justice and economic prosperits en bet be attained in societies where th individual is freu Many people tend to regard the prog css of America as it had occurred in a vacuum in rint in the process he factors wbich m.de process possibl the political and *conomic system Some people thou,h deduated to mono thic state systems of economic devek print find they cinaot ignore the facts and arrive at the di Award positi a (acknou ledging the Amencin achments hut rc; cling le system and particularly the economic system of capi sm The term capitalism bike so manı other sords in our tas ac juired too many meanings to be suffici ntly puie To niany it is a notorious word almost nu - ally associated with a vast majority Inving. depress- ·PART ONE

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·PART ONE

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·I IS THE AVERICA ECONOMIC SYSTEM REALLY DIFIERENT? Tem mencans would claim their economic systm has scached pet ction Libe all products of human capri e ce it has flaws ard weaknesses Furthermore it is in a stal of constant development new froblems and new n.cds continuously arise An un ompromising perfectionist will find many frulis to criticize But this is neither a construct ic nor a ful istic approach wht is important is to under tand th dynamics of th American economic system huch explain its achcrement for the fact is that Americans have achieved the highest standard of living on earth without s cnficin personal and political freedom With less than seven prcent of the worlds land area and population, America produces nearly fifty percent of th world s manu factured goods and well over thirty five percent of the world s roods and services and although their werkvek has been constantly reduced the great majority of Imeri cans today have better food better clothing better hous ing fa ilities better education and more vaned recretion than cier bulore Amenc sou ces of econom C strength Th ph nomenal produsuon of the Americal economy is of... ualea for granted by both Americans and foreign 15

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·I IS THE AVERICAV ECONOVIC SYSTEM REALLY DIFFERENTI Few Americans rould claim thir economic system has reached pe fection. Like all products of hum erpan ence it has flaws and weaknesses Furthermore it is in a state of constant d velopm nt new probl ms and new Diceds continuously anse As uncompromising perf cuonist will find many fault to criticize But this is neath ( a constructive nor a real istic approach What is important is to understand the dynamics of the American economic syst mn uluch explain its chievement for the fact is that Amencans have achuned the highest standard of living on carth without sacrificia personal and political freedom With less than sesen percent of the worlds land area and population Am rica produces nearly fifty percent of the worlds manu factured goods and well over thirty five percent of the worlds goods and services and although their wecky cek has been constantly reduced the great majority of imen cans today have better food better clothing better hous in facilit s beiter education and more saned recreation than ever b fore Ame ica s soi ces of ecorom c stength The phenomenal production of the Amencan economy is of.en taken for granted by both Americans wed ſortign 15 ·16 Am, TT Key to Economic Progress crs Txplanations advanced fo ut 2 $271 c. som accurate others ub urd People of a fractament and natural resources as the sole cau is a rich c juntry bles ed with ſerule fildkreat for any ond rich depos i of coul ol on conner und we The cut niver wuch crisscros the land 2 go for n vis atson for fiy dro-electric power and for met purpx Ilie chmale is on th whol teena Ill al , say that America enjois #prot Vif sri Yt market of 10 million coa unt I American Iduly and it wrure Cultura fr lyft me get erucal by IT1 1 ir suau! kulchir (15CLI: mn SH turur Iserni ( !! เd and frt 2 New Y millms or Chu WU n c 1 1 1 VEH C n 1 T + ) 1 est Crn I II T + S Trum der 1 en w 407 for ions I rem propu r ily On Indd 1 ctu 17 crc310 1 In it woul! jutom3, in rd of I viny Tli- clerr a cspindin, pa pul 139 THI Vagsolut ikisi and prosperity of a from c ·Is the American Economic Sistem Really Different? 17 tion does not increase faster than population th standard of livino will f3l not rise There is another condition which he shall erplore more thoroughly at a later point oamely that for population to become a factor in economic progress the people must participate fully in the economic life lo other words it is not enouch to have many millons of people merely Lux 10 within an economy The decisive factor is how in ny people participate fully as producers and, even more - portant, 25 consumers In brief natural resources and growing population--by themselves cannot guarantee prosperity and progress These factors may be compared to reactants in a chemi cal process The reactants are inactive unul a catalyst is add d to transform them into a new compound In the American case the catalyst which activates the various factors and transforms them into prospenty for all is the system--the political and economic system of democrauc industnalism. Th majo in oration of the American economic system We oft a hear that the American economic system is something d fferent something unique in the etpenence of mankind. There is little doubt that many of its features are unique and deserve our fullest attention a major part of this book will be devoted to thom Some are like the vi ible parts of an iceberg which loom white above the surface of the sea But to comprehend the uniqueness of the American economic systems he must see all its proci ples in luding the four fifths beneath the surface Marx stres ed that capitalist production was based on the economic law that labor was & con mod t) and Ile any other commodity hd a certain value He defined the value of labor as the sum of a heap of commodities (goods and services) pecessary for the survival and repro- ·16 CU B T Key to Economic Progress crs Explanations advanced for it are varied somc partly accurate others absurd People often credit geography and natural resources as the sole cluse America they say is a nich country blessed with ſerule fields broad forests and rich deposits of coal oil i en copper and uranium The preris the land are suitable power and for irrigation holc temperatc 1 enjoys the great ad 100 million consumers agriculture can movem Ti artificial barriers to fation soap manu n selling millions of to honda and from ducing millions of tron costs and sell C So 1 of ( 1 r 1 co مداوا ، ! - 1 t ) 1 - ( 1 s opinion fall short itd States und the only country es self-sufficient Vast productive is considerable copper man { ין plan..lion for h large popu which con ton Inuced in crcating d automati clcmcntary 1 is not al u produse - IS 1 ·Is the American Economic System Really Diferente 17 uoc does not increase faster than population the standurd of Livin will fall not rise Tb re is another condition which we shall explore more thoroughly at a later point namely that for population to become a factor in economic progress the people must participate fully in the economic life In other words it is not enough to have many millions of people merely day ing within an economy The decisiv factor is how many people participate fully 23 producers and cven more im portant as consumers In brief natural resources, and growing population by them.cl es cannot guarantee prosperity and progress These factors may be compared to reactants in a chemi cal p ocess The reactants are inactive until a catalyst 15 added to tran form them into a new compound, lo the American case the catalyst which activates the various factors and transforms them into prosperty for all is the system--the political and economic system of democratic industrialism. The mai rinu o ation of the Amer can economic system. We often hear that the American economic system 15 something different, something unique in the etpenstice of mank ad. There is little doubt that many of its features re unique and deserve our fullest attenuod a major part of this book will be devoted to thm Some are like the visible parts of an iceberg which loom white above the surface of the sea But to comprehend the uniqueness of the American econoruc systm we must see all its princi pl s includ ag the four 6fths beneath tbe surface Marx stres ed that capitalist production is based on th cconomic law that labor was a commodity and bile any oth commodity had a certain alue He defined the valu of labor as th sum of a heap of commodities (goods and services) necessary for the survival and repro- ·18 Key to Economic Progress duction of the working class According to Varx capitalist would never pay laborers more than the labor values no matter how much production mett increase through technological innovation and hicho productivity From this theoretical nucleus most Vartisi theory followed including of course the pet them d capitalist exploitation of the workers Marx took as his model of the capitalist system the con ditions he could obsene dunog his own ume Coosm quently he erred in part when defining the value of labor In his lifeume labor was considered a commodity Indeed in some parts of the world labor is still considered and compensated only as a commodity in the United States bowever a new element of far reaching significance has been introduced Laborme every Imencan working for a living is no longer merely a commodity with a certain value working people are also viewed as potenual consumers On the basis of this revolutionary approach many measures have been adopted with one major objac tise to preserve and expand the purchasing poner of the average American Individual compensation of course is automatically scaled to the economic importance of a persons work Since indriduals dificr widely in ability energy training and initiative rewards vary under any economic system But the basic point is this under the Imerican economic system the labor force--all working Imericus-off in the argregate compensated in a way that tends not merels to assure its survival and reproduction but also to presne and crpand its purchasing power For in a free cconomy based on mass production the presenation of the pur Chasing power of the people is vital Old style capitalist production 475 ind in some coun ses still is geared to the satı faction of a select clite con mer market The crploitation of labor was a very real | ssibility But wheo laborer and consumer were com ·19 Is the American Econoruc System Really Different buned in one and the same person--thoa the laborer-con sumer became an acknon led ed enuty--basic precipies of the old capitalist system underwent mdical changes Th Capitalist could no longer exploit the laborer be cause the laborer was also a potential consumer Th theory of th exploitation of the worker“ does not apply in a pnsate enterprise economy v here workin. people are also v ned as potenual consumers This identificauon of the Laborer-consumer" is a basic innovation of the American system How deeply this con stept has chanced Amencan economic thinking as shown by thu rca ton of the labor unuops to the revoluuonary process of automation. Automation is already a reality in American industry In this advanced form of production the worker as repla red by automatic control devicus In other words automalic controls operate complex machinery and whole fac tones without direct participation by workers except as supervisory technicians at key points in the process Automation is not lugited to manufactunng plants so-called electronic brains are taling over the tasks of office clerks accountants and other white collar workers As a result of automation fever workers are needed to achieve the same or even greater production goals Under the old capitalist system workers whose services were no longer needed obviously possessed no aluc as far as the employer was concerned This is thic if labor is viewed only as a commodity Bal now labor is also the consumer who makes mass producuon economically profitabic Automauc control devices cannot buy the cars the appliances the clothes or the food Thus vast unem ployment is incompauble with mass production. Obviously government, business and labor unions have a common interest in preserving the purchasin power of the laborer-consumer For this reason men like Walter P Reurb Via President of the American Federation of ·18 hey lo Economic Progress duction of the working class According to Marx the capitalist would nuver pay labor is more than their labor values no matter how much production micht increase through technological innou do and higher productivity from this theorctical nucleus most Vartist theory followed including of course the pet theme of capitalist erploitation of the workers Marx took as his model of the capitalist system the con diuons he could observe during his own tinc Consc quently herred in part when defining the “value of labor la his lifetime labor as considered a commodis. Indeed in some parts of the world labor is still considered and compensated only as a commodity in the United States however a new elment of fartu linu sinificance has been introduce 1 l ahore every In ric in working for a hung--! ni kinger merely a Om ne dity with 3 curtain value wrking reuple are al used as potenual consuriers On the 253 { this revelul mir approach nany measures have been adi pled with (ne major obj lic to preserve and expand the juhe 114, on or of the erage Imerican Individual compensation of course is automatically Id to the cronomic importance if a persons work e individuals diller widely in abiliti energy training initiative rewards nry under any economic system 13 the basic point is this und r the American cconomic om the labor force working 1mericans in the mgale compensated in a way that I nds not m rely to its survival and reproduction but also to presne 1 pand its purchasin. power For in 1 free economy il on mass produ tion the preservation of the pur poner of the people is vital 01 tyle capitalist production us, and in some coun lis gcur d to the satisfaction of a select clit con arket Th cıploitation of labor wts Icn reil com But when laborer and coasurier 117 F ·II -SOME BASIC FEATURES OF THE AMERICAN ECONOVIY From the fundamental principle that mass produchon calls fo n ass consumption which in tun depends i pon niass purchasing poner a number of interesting features of the American economic system stem These features char acterize an economic system which does not fit at all the image of Capitalism people in many land have in mind when they speak of monopolies exploitation or class strule Mass product on wth a small proft pe unit Th pursuit of profit emains a man objective of private enterprise Houerer far from measurin exploitation of the workin class profits play an extremely vital economic role in addition to providing a reasonable return for the niestor profits are a majo source of capital for the renovation and expansion of productive wealth. In 1955 for example the American economy grossed $391 7 billion Durin the same year get corporate profits after tax s amounted to $21 billion of this amount, approx mately $11 bill on reached milions of individual insestors in the form of dividends and interest The remaining $10 bil on was used for renovation expansion and re earch, Twenty-one bill on dollars is undeniabl, a large sun of mon y Yote however that it was not the result of a surge profit per unit but of a tremendous volume of sales 21 ·20 Aey to Economic Progress Labor-Congress of Industnal Organizations do not drend the advent of automation instead they welcome it. As Mc Reuther has pointed out Science and technology harc at last given us the tools of economic abundance and we are no longer con fronted with the need to struggle to divide up scarcity We are confident that we will not have to fight the sew machines and devices Rather we will use them to bring health and happiness secunty and leisure and peace and freedom to mankind everywhere (Testimony beforc the US Congressional Subcommittee on Economic Ste-* bility October 17 1955) This confidence is not responsible apumism or empty prose It is based on the knowledge that automation need not lead to vast unemployment. On the contrary it is economically more realistic to expect that in sustaining the purchasing power of the laborer-consumes industry will gain time to develop nes products and new jobs Problems of course will be numerous It will take fore sight and ingenuity to cope with the difficulties affecting individuals and cren whole communions But to use the words of Mr Reuther of vast social dislocations are pre "cated this time it will be only because the combined 15 dom of private groups and government will be used to prevent them In preventing social dislocation and sols ing the problems associated with the revolutionan process of automation the guide aill be the principle that in order 10 maintain mass produchon there must be mkass concurry tion which in turn depends on sustained mass purcl anns power Io the American cconomic sysem 3 high standard of living for the ancrage citizen is not only a matter of bumstanian bcociol nce but an economic necesity ·II --SOVE BASIC FEATURES OF THE AMERICAN ECONOMY From the fundamental princip! that mass production calls for irass consumption wh ch in turn depends upon mass pu chasing poi er a number of interesting features of the Amencan economic system stem These features char acterize an economic system which does not fit t all the 3 c of Cap talism people in many land have in mind when they speak of monopolies exploitation or class struggle Mass production with a small profit per urit Th porsust of profit remains a main objecuve of privato enterprise However far from measuring exploitation of the workin class profits play en etirerecly vital economic role In add tion to providing a reasonable return for the investor profits are a major sol c of capital for the renovauon and expansion of productie wealth In 1955 for crample the American economy grossed $391 7 blion During the same year net corporate profits after tares amoun ed to $21 billion. Of this amount approxi mately $11 billion reached millions of indiy dual investors in the form of dividends and interest The remaining $10 bulion was used to renovauon expansion and research. Twenty-one bill on dollars is undeniably a large sum of money Tote however that it was not the result of a Large profit per unit, but of a tremendous volume of sales 21 ·K 20 Ley to Economic Progress Labor-Congress of Industrial Organizations do not drend the advent of automation instead they welcome it As Mr Reuther his pointed out Science and technology have at last given us the tools of economic abundance and we are no longer con fronted with the need to struggle to divide up scarcity We are confident that we will not have to fight the new machines and devices Rather we will use them to bring health and happiness security and leisure and peace and freedom to mankind everywhere (Testumony before the US Congressional Subcommittee on Economis Siteler bility October 17 1955) This confidence is not irresponsible optimism or empty prose It is based on the knowledge that nutomation need not lead to vast unemployment. On the contrary it is economically more realistic to expect that in sustaining the purchasing power of the laborer-consumer industry mull gun time to develop new products and new jobs Problems of course will be numerous It will tale fore sight and in enuity to cope with the difficulties affecting indisiduals and even a hole communities But to use the Tords of Mr Reuther if vast social dislocations are pre sented this time it will be only because the combined his dom of physic groups and government will be used to prevent thum In presenting social disiac ation and solv In the problem a scoated with the revolutionary process of automation the sui te usll be the principle that in order 10 mcintun ma selle run there must be mass consump non which is fun denends n si band 1955 purci asin noner In the Imerican c ni misis mahih standard of lning for the as I ge citizen is ni only a matter of I umanitarian benci oluace but un ccun mic nccessity ·Some Basic Fcctwes of the Ame Icon Cconomy 23 zontal it must stretch from on end of the country to the Other Th other is vertical all strata of the population must have the financial ability to participate in the economic cycle as consumers This means that in order to maintain a mass consumer marict goods carrot remain in short supply for very lons Luxury" items must quickly be made into items of side consumpt on. To thus end, the Anicnican economy relies on res arch and constant cffort to find more efficient, less expensive methods to rodu c all goods Forms of competition In a fully monopolistic economs such as that of th Soviet Union the consumer has no choice He must con tent himself with the products of monopolistic state enler prises On the other hand the enterprise sure of a capuc consumer public has no compelling cconomic reason to concer itself seriously with what the consumer might like to have The opposit is tru in a free enterprise economy As we shall see later there are at least three different forms of competition 10 the American economy One is the di rect competition among enterprises producing the same kind of goods Another is the ndirect compeution among ent rprises furnishing commodities or services of a similar kind eg various types of transport, such as buses trucks airplanes railways miver barges or fuels like or gas coal and el ctncıtv Finally there is another form of competition or rather an interplay of counter balancing forces retailers Ys manufacturers producers of finish d soods vs producers of basic matenus labor unions vs employers consumers vs producers wad all facing a dif fuse yet powerful public opinion.

·22 Key to Ecoromic Progress made possible by an existing mass consumer market 1 striking feature of the American economy is th small profit per unit realized by most private concems Onc penny profit on each of many millions of cales of soap amounts to millions of dollars each year If the selling price of a product is inflated crcessively to assure a larger profit per unit the consumer public may be unable or unwilling to purchase it for this reason the American enterpreneur does not try for a large profit per unit Heim through better methods s production with I In the last tw nty years Inited States enterprises percent of total sales (rol 7 S 2 r r 1 ) rit per unit is a dis (conomy But mass s people are finan ( cuon has no raison (onscquently mass power that is on nabling the great Jest volume and S - } 71 1 17 ISAC Srise "too much Iven production, 1 free interplay a fine bulance $ sustained - fc t rarhet and a f ctor Onc is hors ·Some Basc Fatures of the American Economy 23 zontal it must stretch from one end of the country to the other The other si stical all strata of the population must have th financial ability to participate in the economic cycle as consumers This means that order to maintain a mass consumer morict goods cannot remain in short supply for very long Luxury items must quickly be made into items of wide consumption To this end, the American economy relies on research and constant effort to find more efficient, Iss expensiic methods to noduce all goods Forms of compention In a fulimonopolistic economy such as that of th Soviet Union the consumer has no choice He must con tent him elf with the products of monopolistic state coter prises On the other hand, the enterprise sure of a capuc consumer puble has no compelling economic reason to concem its li seriously with what the consumer might like to have The opposite is tru in a free enterprise economy As we shall see later th re are at least three different forms of competition in the Amencan economy One is the da rect competition among enterprises producing th same kind of goods Another is the indirect competition among enterprises furushin commodities or services of a similar kind eg various types of transport, such as buses trucks aurplanes railways fier barges or fuels ule oil gus coal and electricity Finally there is another form of competition or rather an interplay of counter balancing forces retailers is manufacturers producers of finished goods ss producers of basic materials labor unions vs employers consumers vs producers and all facing a di fuse yet powerful public opinion ·year 22 Key to Ecoromic Progress made possible by an existing mass consumer market A striking feature of the American economy is the small profit per unit realized by most private concems Onc penny profit on each of many millions of cakes of soap amounts to millions of dollars each If the selling price of a product is inflated excessively to assure a larger profit per uait the consumer public may be unable or unwilling to purchase it for this reason the American enterpreneur does not try for a large profit per unit He aims to reduce costs through better methods of production and to combine mass production with you the floor sales and a small profit per unit In the last tu nty years the average net profit retained by United States enterprises has not exceeded more than five percent of total sales Mass purchasing power Mass production with a small profit per unit is a dis tinguishing feature of the American economy But mass production cannot be sustained unless peope are finan cially able to absorb it After all production h.s no raison detre unless it serves human needs Consequently mass production depends on mass purchasing power that is on a relationship between wages and prices enabling the great est number of people to afford the largest volume and variety of products In a mass production economy of prices rise "too much" or wages remun too low in relation to gtien produchon the economy will be in trouble Through free interplay of business labor unions and government a fioe balanc is lept so that a mass consumer market is sustained. The two dimensions of a mass consurrer market For a consumer market to be both stable ndal Tor for progress it must have two dimensions Orc is hon ·Some Basic Features of the Amencan Econonty 23 zontal it must stretch from one end of the country to the cther The other is vertical all strata of the population must have the financial ability to participate in the economic crcle as consumers This means that in orde to mantun a mass consum r market goods cannot remaja in short suppl for very long Luxury items must quickly be made into items of wide consumption. To this end, the American economy relies on research and constant effort to find more efficial, less expensive methods to produce all goods Fo ms of competition. In a fully monopolistic economy such as that of the Sonet Union the consumer has no choice He must con tent himself with the products of monopolistic state enter prises On the other hand, the enterprise sure of a capuc consumer public has no compelling economic reason to concern itself secously with what the consumer might like to have The opposite is tru in a free enterprise economy As BC shall se later there re at least three different forms of compution in the American economy Oac is the di rect competition among enterprises producing the same Land of goods Another is the indirect compeution among enterprises furbishing commodities or services of a similar kind eg vanous types of transport such as buses trucks airplanes railways river barges or fuels like oil gas coal and elcctncity Finally there is another form of competition or rather an interplay of counter balancing forces retailers vs manufacturers producers of finished goods us producers of basic water is labor unjoas vs croplosers consumers vs producers, wd all facing a dif fusu yet powerful public opinion.

·22 hey 10 Economic Progress made possible by ao eusting mass consumer market A stoking feature of the American economy is the smull profit per uat scalized by most private concerns Ooc penny profit on each of many millions of cakes of soap amounts to millions of dollars each year If the selling pnce of a product is inflated crcessively to assure a larger profit per urut the consumer public may be unable or unwilling to purchase it for this reason the American cnterpreneur does not try for a large profit per unit He aims to reduce costs through better methods of production and to combine mass production with paraffin sales and a small profit per unit In the last twenty years the average net profit retained by United States enterprises has not exceeded more than five percent of total sales Mass purchasing power Mass production with a small profit per unit is a dis tinguishing feature of the American cconomy But mass production cannot be sustained unless people are finan cially able to absorb it After all producuon h 5 no raison detre unless it serves human needs Consequently miss production depends on mass purchasing power that is, on a relationship between wages and prices enabling the great est number of people to afford the largest volume and variety of products In a mass production cconomy of prices rise too much" or wages remain to 1 in relation to gen production, the economy will be in trouble Through free interplay of business labor union and fremment a fine bilance is lept so that a miss consumir mark t is sustained. The tho dimensions of a mass consumer ma le! For a consumer market to be both stable and ctor for progress it must have two dimensions Onc os hort ·pre Bac Features of the American Econy 25 portant s torth sector of human relatons Em yees re no longer regard d 35 TC hands they are pondered individuals entitled to respect. The psycho'l past Jas become an indispensable stall m mber of many cor poration. Th result is a h althuer rei tionship betsi cea management and workers Thus is not intended merely to win good all for my n aecmeat. Thus b althier relationship is actually a prereq ut for higher productivity in a fre* mass producton cconomy good human relations are an integral part of the 5 fic methods used to 3.sure ecorom.c progress. The search fo talented mer Ia the competitse American cconomy Llent is highly valued. Since tal nt 15 pot necessanly passed on from futher to son the old type of family business bas gradually mven way to the modern corporajon. In this type of busid ss organizaron a Den professional is coming to the for the business ex cutive Hi onun 25 and viuual his family background and similar con siderations are pot of prime importance Talent for ad ministration intelligence edu a son ability these are the qu.lifications that count Th panniless immigrant or th son of a miner can reach the top and become chairman of a gant corpora ion like US Steel or Trentieth Century ToXmas B Djamin Fairless o Spyros Skouras has done The son of a lugh executive has a better chance to fol Ion bi fathers footsteps if he can prove equal to the de mands of lead rship and t sponsibility Hoxcyer in a com feltre economy an enterprise can h rdly afford to be burdened with d ad weight for too long of th nking to the nd strial st These o professonal men--the bus bess executives ·24 Key to Economic Progress Constant scarch for new products and methods A competiuc economy has little room for complacency and self satisfaction If a rival develops a better mouse trap-a better product your position in die market will be wcalened It is essential thcrcfore for the businessmin to keep constantly alert To accept dogma instead of thin! ing to maint "sis the way we have been doing things bbornly to old attitudes and obsoleto cidal for private enterprise in a frcc mase the slogan of the General Elec I the most important product of Irre to Inrogress American business has to In develop non and better products new the more efficient th more tive is no longer the loncly effort vyd inventor but a conscious pross as one of its most important American corporations spent sit 1 and development tot SS 1 1 t IS IT) $ 1 1 rr 1 day become a major task of The scientist the edu ator stranger to the business world 7an the uncouth oson often u nists Mo e often than not dit is now quite common to ducators on the top lcsels of ns The interdepend nce of ther seiling feature of the Te IS 1 CL } 1 li icatifi world in 200ther ·Some Base Features of the Ame Icon Ecoronry 25 important stor the sector of human relations Em ployees are no longer recarded as more hards" they are considered individual entitled to respect The psychologist hus become an indispensable stall member of many cor parauons Th rəsult is a healthier relationship butseen management and workers This not intended m rely to a good will for man agement This healthier relationship is wetually a prereq wsite for higher productivity in a free ass production economy good human relations are an integral part of th $1 fic methods used to a sure economic progress The search for talented mer. In the competitive American economy talent is highly valued Since talent is not necessanly p ssed on from father to son the old type of family business has gradually given wy to the modern corporation In this type of business organization a new professional IS cottung to the for the business ex cuti His origins as an individual, his family background and similar con siderations are not of prime unportance Talent for ad minetration intelligence education abihty--thes are the qualifications that count The penniless immigrant or th son of a miner can reach the top and become chairman of a giant corpor tion like US Steel or Thenbeth Century For--35 B namn Fairl ss or Spyros Skouras has done The son of a high executive has a better chan e to fol low his fathers footsteps if he can prove equal to the de mands of lead rship and responsibility However 10 a com peutic e onomy an enterprise can hardly afford to be burdened with dead a cight for too long A modern way of thinking for the ind str alist These professional men---the business executives ·24 Key to Economic Progress Constant search for new products and methods A competitive economy has little room for complacency and self satisfaction If a rival develops a better mouse trap a better product your position in the mulct will be neakened It is essential therefore for the businessmin to keep constantly alert To accept dogma instead of thund ing to maintain this is the way he have been doing things all along to cling stubbornly to old attitudes and obsolute practices is almost suicidal for private enterprise in a frco economy To paraphrase the slogan of the Gencral Elec tric Co Progress is the most important product of free economy To assure progress American busines- has to work round the clock to develop den and better products Constant search for the next the more effici nt the more uscful or the more attractive is no longer the loo Icfort of an often misunderstood inventor but a conscious pro cess carried on by business s one of its mst important functions In 1997 alone American corporations spent six bilhon dollars for research and developm at Business and education Scicnufic research has today become a major task of American private enterprise The scientist th edu ator the specialist is no longer a stranger to th business world Nor is the modern businessman the uncouth person often portrayed b cartoonusts More often than not e and it is now quite common to and educators on th- top levels of orations The interdep ndeove of > another striking feature of the lations the sucotit sorld in another ·Some Basc Features of the American Ecrromy 25 mportant st tor the sector of human relations Em ployees are no lon er regarded as mere hands they are consid red individuals entitled to respect The pychologist has become an indispensable stali m mber of many cor porations The result is a b alther relationship bet veen magacem nt nd workers This is not intended merely to win good- for man agement Thus bealthier relationship is actually a prerea uisit for hu_hor productivity in a free mass production economy good human relations are an integral part of the Sci-fc methods used to assure econom.c progress. The scarch to talented men In the competitive American economy Llent is highly valud Since talent is not necessarily pussed on from fath r to 07 the old type of family business has gradually given say to the modern corporation, In this type of business organization a new professional 13 coming to the for the business executar His ornas as an individual, his family background and simular con siderations are not of prime importance Talent for ad ministration intelligence educajon, ability--th se are the qualifications that count. The penniless immigrant or th son of a miner can reach the top and become chairman of a gant corporation like US Steel or Twentieth Century Fox--as Benjamin Fairless or Spyros Skouras has done The son of a buch erecutire has a better chapce to fol low his f th rs footst ps of be can prove equal to the d mands of lead rshup and responsibility Honevet in a com puile econom an enterprise cua hardly fford to be burdened th dead weight for too long A mod mwen f think ng for the industrialist These 2 w professional men--the business execuules ·in quik 1T P nihirr tit mikinu Thanks to a broad 26 key to Economic Progress are not uniform standardized business wizards TL ** human being with the strengths and limits of other things everywhere Their motiv itions van just as mu h 3f est personal tastes and hackgrounds They seem, homeier have one thing in commco a realistic atutude toward thouse saunl fun tion of bu iness The day of the indastra.si uho e thirkina helan and ended with the word pouco is past The compl wit of mod rn busines and its infilerem all aspects of sor!! demand that the business execu* of t du bani in unters with profits marigocenega pr du tion curs but sth the larger socuar structura of whi h bu in ? part 1 xtern business CTOCUDIT must h pruri ines in u tund prospent — , S? pun 1 n ir ne la in lu ! Tundr tanding of the busin Intind more business cacem illi respoosible * 10 lirivel of America TI 7h the i Th in mu Amei akt) to do 1 Ik he brr 1 ridsertisin miphasized. 11 fr allered in reis 11 requires industry n - 11 ! 1 ber crudne dni 1 ms must In the public already sire for new product wh purchasers Futherm re ward a bro.d public tends to level skil walini Lions HO no { u 1 ss to TA ·62 Basic Features of Arrencon Cronome 27 1 de mobiles of W not only durable bus post ng t t the average Aspencan m y censider wil Fuck Adveru sag may sometimes be charred with sul ganity bad taste ostre sres, et S or what not neer It is a leading ta lor la sustalong the American was consum market. abor won t a free economy In addicon to pryste cat ronse and a walant govern "Lorong the system dopreads for its smooth fun-uonirg on th Exstence of frer and stron, labor vnions Dy thou ccastant pros ure for more benefits to the workers upons have been ustrumental in the development and preserva 10a of a mass Consumer market. American labor unions ca the centieth century in large punt berkas of the luence of Samuel Gompers a long time president of the AFL, accept the basic icpets of the fre enterprise system and concentrate their efforts on $210103 larger share of the nations acom for their members The Amencan worker's bigh standard of lines proves th or wisdons in having chosen this path. Labor kaders best sene the long term interests of sage Earners if they live up to their responsibility to the nation as a whole and new labor as part of an over all social structure More and more labor leaders are proving equal to the rsk. The American gosernment as a balancing facto The federal goserum st is another facte of prime im portance in the economy Though there may be dulcrenees of opinion over the proper extent of its role there is no Seterus d sagreement as to the czustence of such govera mental resow blues In en cotomy baxd og private enterpric economic ·26 Key to Economic Progress are not uniform standardized busin ss wizards They are human beings with the strengths and limits of other men ! everywhere Their motivations vary just as much as their personal tastes and backgrounds They seem honcver to have one thiog in common a realistic atutude toward the social function of business The day of the industrialist whose thinking began and ended with the word profit is past The complexity of mod mn business and its influcocc on all aspects of society demand that the business executic of today be concerned not only with profits marksismo production curies but also with the larger ocal structure of which business is a part oder business erecutives must be primarily interested in sustained prosperits ---not in quick irresponsible profit making Thanks to a broad liberal education and a better understanding of th basi principles of the system more and more business erecu tives are becoming the creative socially resporsible men needed to conduct affairs at the top fusel of American industry The iniportant role of adiertisins The sound and economii significance of adsertising 10 the United States today an hard he orcremphasized Though it often comes under shirp crucism for allered misdeed the ads ru ine indu try plays a l uding role in Americi, pogres Am?s produ lion economy n quires a wide aud nce and it is up !) the advertising industry to deliver the American economy must 1 tinut which the desire cm in Ini cncu ng 1 dis it is to Il social distinctions and 1 ·Sorre Basic Feasures of the Arrencan Economy 27 make the amenities of It not only desirable but al o something that the averame American m y considr within reach. Adverbisag may sometimes be charged with vul mirty bad Last Oier aggressiveness or what not neser theless it is a leading factor m sustaining the American mass consumar.ct. Labor un ons in a fee economy In addition to prvate ent prise and a vigilant govern have the system d pends for its smooth functioning on the existeace of free and strong labor vnions By their con stant pressure for more benefits to the workers unions bayc been instrum otal in the development and preserva tion of a mass consum r market Amenican labor unions in the twentieth century in lar • part because of the influence of Samuel Gompers a long time president of the AFL, accept the basic tenets of the free ert pri e system and con entrate their efforts on groing a lrger share of the nations income for th it members The American worker's high standard of living p oves their wisdom in having chosen this path Labor leaders best sene the long term interests of wage tarters if they live up to their responsibility to the nation as a v hole and vi labor as part of an over all social structure More and more labor lead rs are proving equal to the task The Ame can government as a balancing facto The federal goverom nt 15 another factor of prime im portance in the economy Though there may be differ nces of opinion over the proper extent of its role there is no serious disagreement as to the cxistence of such govern mental respons bilities In sa ecoaomy based on private enterprise economic ·26 Ley to Economic Progress are not uniform standardized busin_ss wizards They are human beings with the strengths and limits of other meal everywhere Their motrvanons van just as much as their personal tastes and backgrounds They seem howcier to have one thing in common a realistic aftstude toward Ibe social function of business The day of the 19dustrialist whose thinking began and ended with the word profit" 15 i modern business and its influeace on demand that the business executive i not only with profits mark secretary also with the larger ocal structurc I part Modern business crccutises rested in sustained prosperity_200 profit making Thanks to a broad le better understanding of the basic 1 more and more business EXLCY creatne socally responsible man is at the top level of Am ncao CE t it 1 1 1 1 ( L > ✓ Terting 10 significance of advertising 10 an hudh be overemphasued der sharp criticism for alleged Idustry plays 11 ading role in production economy n quires up to the adıertising industn $ ? t> r < iu 1 r Americin economy must mine pr lucts which the ullo desre iem uhr ncier fin I enousha ng Sigricu 7s 1 is in Tel soci distinctions ord

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·38 Key to Economic Progress constant effort is made in the United States to adjust machines to the needs of the human beings who operate them Factories redesign machinery to eliminate awkward controls and modify work routines which require too much stooping bending or carrying As for uniformity of prod ucts most American enterprises achieve some degree of individuality in articles where individuality counts most Certainly no American woman can complain that women s clothes are depressingly uniform Aside from these considerations critics of mass production seem to overlook its main effect They forget that masterpieces of old which we admire today in mu seums or stately mansions do not present a truc picture of the past Possession of those arucles we consider today to be products of a high culture was restricted to a small privileged minonty A silver cup designed by Benvenuto Cellini is undoubtedly a masterpiece but it was created for a king or a priace not for ordinary people For a long time culture was a luxury item " sesencd for the privileged few Before the advent of mass production people did differ an aristocrat or a ucalthy merchant Inved in a different world from the lower classes Less than a century ago. and in some countries esen today--& visitor from another planct would have bad no difficulty in distinguishing bc tween an anstourat and an innlceper because of their sharp differences in action and dress Mass production has changed this in the United States By making most products available to most people it has led to considerable el vation of the general cultura level and has toned down marked differences Go to an American church on a Sunday morning Il you ctpect olcarn who is a wealthy businessman and who is a I orker who is the mayor s wife and who is the janitors (ughter by the way they dress and bebare you will hasc a rather dulicult umc ·39 a Productivity 13 ages and Pnces } A basi objective of Americans is that the greatest majority of the people should be able to afford the sidest Ivar ty of products and services Amencan industry con Istantly strives to transform as many of today s luxury P 15 as possibl into items of wide consumpcon This does not men of course that Americans erpect to clipuriate luxury items Itogether One of the many ranil stations of progress is th d selopm nt of n w prod ucts Inevitably every such new product is ta short supply at the beginnie until metod for its mass productoa dvised By the time this us accompush new prod ucts are creat d and the pocess starts oser akala Unless He put a ceiling on progress and ban new products ther A con never be a time when th re will be no luxury items In spite of certain promises th day when cveryone will have according to his need secms rath r remote if by thes se m an everyone is to have all he needs of even luxury goods At the same time technology and increased products its may reduce the lag between development of a new product ard its mass production and d stribution Ameri can fre enterprise has constantly reduced the time gap between stages of production, Hch ages ard lo prices Th relationship of prices to wages and salaries is im portant in sustaining a m ss consumer market It is quite natural for the consumer to favor low prices he can thea but more products Rith his money On the other hand the producer naturally favors high prices and low Hages in this way be can realize the highest possible profit por unt Thus is basic thinkis, under the old captalist system But democratic odustnalism and mass roduction base introduced new economic thinking In I of the close relationshup beineen mas production ·38 Key to Economic Progress constant effort is made in the United States to adjust machunes to the needs of the human beings v ho operate them Factories redesign machinery to eliminatı awkward controls and modify worl routines which require too much stooping bending or carrying As for uniformity of prod ucts most Amencan enterprises achicve some degree of individuality in articles where individuality counts most Certainly no American woman can complan that women s clothes are depressingly uniform Aside from these considerations critics of mass production seem to overlook its main effect They forget.. that masterpieces of old, aluch we admire today in mu seums or stately mansions do not present a true picture of the past Possession of those articles we consider today to be products of a bigh culture was restricted to a small pnyrleged minority A sulier cup designed by Benvenuto Cellini is undoubtedly a masterpiece but it was created for a kung or a prince not for ordinary people For a long time culture was a luxury item rescned for the privileged few Before the advent of mass production people did differ an aristocrat or a wealthy merchant lived in a different world from the lower classes Less than a century ago. and in some countries even today--3 visitor from another planet would have had no difficulty in distinguishing be tween an aristocrat and an innleeper because of their sharp differences in action and dress Mass production has changed this in the United States By maling most products available to most people at has led to considerable elevation of the general cultural Icvel and has toned down marked differences Go to an American church on a Sunday morning If you cxpect to learn who is a wealthy businessman and who is a worker who is the mayor s wife and who is the janitors daughter by the way they dress and bobase you will hasc rather dulticult um ·turi 39 Productivity ages and Pnces A basic objective of Americans is that the weat t majority of the people should be able to afford the sidest ety of products and services American industn con antly trives to tran form as many of today s lu tury steras as possible into items of wide consumption This does not dean of course that Amennars erpect to eliminate luxury it ms altomether On of the many manifestations of progress is the d velopin at of ow prod ucts. Inevitably every such new product is 13 short supply at the beginning until methods for its mass producton we dvised By the time this is accomplished new prod ucts a C created and the pocess starts over again Unless ne put a ceiling on pro-ress and ban new products ther can ncier be a time when there will be no futury it ms In spite of certain promises th day when everyone will hase a cording to his necds seems rath s remote if by this ie mean everyoae is to have all he needs of cven lutury goods At the same time technolony ard increased productiv ity may redu e the la bets een development of a new poduct and its mass production and distribution Amen can free entrpris has constantly reduced the time-sap between stages of producton. Hgh ages a dlo Dices Thilationslup of prices to wag s and salaries 15 10 portant 10 su taining a mass consumer market. It is quite natural for the consumer to favor low pric s be can then buy more products with his money On the other hand the producer naturally favors high prices and low wagos in this way be can realize the highest possible proft per unit. This is basic thinking under the old captaust system But democratic industrialism and mass productios have introduced new economic thinking. In Vi w of the close relationshup betteen mass production ·38 Rey to Economic Progress constut effort is made in the United States to adjust machines to the needs of the human beings who opcratc them Factories redesign machinery to eliminate au kwaru controls and modify work routines which require too much stooping bending or carrying As for uniformity of prod ucts most Am rprises achieve some degree of vere individuality counts most. nan can complain that womens form rations critics of mass prots main effect They forget ich we admire today in mu o not present a true picturc se articles we consider today re was restricted to a small up designed by Benvenuto rpiece but it was created r ordinary people for a reserved for the y item fuction people did differ hint used in a diferert ess than a century ago --a visitor from another ty in distinguishing he per because of their SS So the United States e to most people it the general culturni ifferences Go to an ping Il vou espect nan ind who is a who is the punitors 5a1c you will barc ·Productnaty Wyages and Prices 41 Quite often n Ouations are protract d and argum nts become heated but as a rule a compromise solution is reached One may cite as examples the agreement giving the automobile workers a guaranteed annoul ware the recent increase of $? 50 per day for miners (So Chapter X) The key factor in the coastant readjustment of prices and wages is productivity or Hon does productority increase? Productivity in the Unit d States has increas.d i gularly on an average of 2 percent yearly durog the last fifty Years Productivity of course does not increase automatically nor does it come about by natural law On th contrary the increase in productsity of American industry and aonicalture has been the result of pracucal incen tives and imaginative techniqu s The mouve of profil, for one makes increasing productivity a must in an economy of competitive privat enterprise The sound way to increase profits is to cut the cost of production per unit and expand the margin of profit by increasing productivity je by using both capital and labor more efficiently This is what American industry and agriculture have done with remarkable vigor To this end Amer 21 enterprises have rel cd heavily On scienufic research and have introduced with the least possible delay innovations able to larrease productivity A recent study of American economic development (Amenca's Aceds and Resou ces A New Suney by J Freder Dewburst and associates) points out that the net output of goods and services in 1950 was thenty five um s what it was in 1850 while the workan force in creased only eight times Allowing for the shorter work week of 1950 th American economy with less than five times as large an actual input of bumas chergy achieved ·40 Key to Economic Progress and mass consumption it is clear that the long ranme interest of the producer lies not in quick and buch profits per unit but on a sustained mass consumer market This market obviously depends on sages and prices which permit the largest number of people to afford the ud st vanety of products Thus high waçes and low prices arı not only in the interest of the consumer but also of the producer Of course the phrase high wiges and low prices ! not very precise What really counts is the relationship be tween prices and wages not thur actual level at a gren time Yet if there is a broad community of interest betuten laborer-consumer and producer the rendur may in terject--- Why are there labor disputes in the United States? One should not lightly dismiss hum in winesses which often take preceden Oltr sound cc nomic thinking Sul disputes may ari e from un hnest ditt rence of opinion oser a very imprent factor pr du tivity Without an increase in productivity an incrie in wages will create inflationary pressurus But prduulit cannot be mca sured accurately in all typ (f werk laul more precise measures of produtivare i velped lihr management disputes are bound to com up U vier US labor management dispute has limu h extrem bit terness of earlier dins (In thinnt they are resolucd at the confur nie tute th uuh lle e bar gainng Estimates pr pred by the SB tu I Labor Statistics show that in 194 inpl fcicry 25 new labor managem nt intrat peacefully Belxeen 1947 and is loss of time from strikes has less than ( the total man-days worked And in 1954 the 1: the cause of work stoppages was only on pieni di total maa-days worked littuled nt ·Productivity Bages and Prices 41 Quite often I gotiations are protracted and arguments become hea.ed bat, as a rule a compromise solution 15 reached. One may cite as cramples the agreement pining the automobile Porkers a guaranteed annu 1 ware the recent increase of $2 50 per day for miners (Se Chapter Y) The key factor in the constant readjustment of prices and wages is productivity or Hon does product vity increase? Productivity in the Unit d States has increased regularly on an average of 2 percent yearly dunng the last fifty years Productivity of course docs not increase automatically nor does it come about by natural law On the contrary the increase in productivity of American indus try and agriculture has been the result of practical micette uves and tauginative techniques The mouve of profit, for one makes increasing productivity a must in an economy of competitive privat enterprise The sound way to increase profits is to cut the cost of production per unit and expard the margin of profit by increasing productivity ie by u ing both capital and labor more effi uently This is what American industry and agriculture have done with remarkable vigor To this end Amencan enterprises have reled heavdy on Sci ntafic research and have introduced, with the least possible delay innovations able to increase productivity A recent study of American ecoDomic development (Americas Aeeds and Resou ces A New Suriey by I Frederic Denburst and associates) points out that the act output of goods and services in 1950 was thenty five umes what I was in 1850 while the workin force in creased only eight times Allowing for the shorter work week of 1950 the Amencan economy with less than five times as large an actual loput of human energy achieved ·42 Key to Economic Progress an over all production tnenty five times as large us tha! of 1850 In other words U S labor productivity in th last hundred years has multiplied more than five timus It would have taken a worker three weeks at 70 hours per week in 1850 to produce as much is an averae Norber turns out today in a single 40 hour week If the present rate of productivity increase continues in another hundred years the Amencan economy will produce as much i one 7 hour day as it now produces in a 40 how week. How did this great increase in productivity per worker come about? Certainly it did not result from the ability of the average man to produce more with his muscl power Productiity is enly to a limited degree cither the result or the measure of liber effiuencs The competence of management the skull of the individual worker or the diligence of the farmer have been secondary factors in the sharply ascendini productivity cure over the past several decades The mo i energetic and skillful shoe maker working lon. h urs under the ablest superi ision but with the handto is of a centur ago could not apu proach the output of todays semi killed operator who works feuer hours but with power driven machinery Tr fabulous increase in US pr du livity has been achieved not because Amerijns now work harder or more skill fully it has been the re ult of contant cffort to devise and usc better techadu and more ind better michinery America has multipiad thu output of hum a cllort through vast inanimate energy Nevertheless skull effort and th c roperation of the individual in the process of pr du ti n ntinue to be of geat importance Their licin de travail Icast de crease the eficiency of good machunen plann d factory organuzation and ample power Re un zink this rect ican business management has quien purucular attention ·43 Productnity Wa es and Prices to the human factor in production Management psychol omsts have shown that the moral of the worker 19 vztally import.at in increasing prodactisty Industrial psychology is a new branch of science whicit d als with th human factor in production. It began prec tically speakin only three decades ago almost by acci dent. One corporation the Westem Electric Co wanted to determin to what extent production would increase af linhting were improved in a department where guls as sembl d telephone equipment. To everyone s surprise locluding the psychologists it was found that merely cx perimenting with the light brought greater production --rerardless of whether light was increased or decreased Production even rose when the experimenters pretended to put in stronger light bulbs but actually put the same on sb ck, West ra Electric realized something strange was hapu peruag the firm spent five years banting the true rezon for the production nse Finally it dawned on the researchers the workers simply responded to attenuon being pad tham The experiment itself told them the company was interested in them, they felt important and they worled hard-t Other interesting and useful psychologcal discoveries have followed The researchers have learned for example that the old time industrialist was utterly mistaken in his belief that his employees would accomplish wore if kept on the job for tea or twelve hours They have learned that rest penods contnbute to efficiency as a result the cofice brcal dunog such workers stop to rest and talk is universal in Americ a business Also at last partly as a result of their researches the modern American factory is a masterpiece of indus thal architecture often located in pleasant rural surround IDS and is a far cry from the London sweat shops of ·42 Key to Economic Progress an over all production twenty five times as large as they of 1850 In other words U S labor productivity m the last hundred years has multiplied more than five umes. It would have taken a worker three weeks at 70 hours per week in 1850 to produce is much as an averas Worker turns out today in a single 40 hour neck If thr present rate of productivity increase continues in another hundred years the American economy will produce as much in oge 7 hour day as it now produces un a 40-hour week How did this great increase in productivity per workee come about? Certainly it did not result from the ability of the average man to produce more with his musci power Productivity is only to a limited degrec either the result or the measure of lahor efficiency The competerce of management the skill of the individual worker or the diligence of the farmer huse be n secondary factors 10 the sharply ascending productivity curve over the past several decides The mst energetic and skillful shoe maler working lon hours under the blest supervision but with the hundtools of 1 century 710 could not approach the output of todas s semi will d operator who works fewer hours but with power-unven machincry The fabulous increase in US pr du till has been uchicicd not because Amencans now work harder or more skill fully it has been the result of contant etf rt to devise and use better techniques and more ind hett r machinery America has muluplied the output of hum n effort throuch vast inanimatc coergy Mercrtheless skull effort and the coperit in of the individual in the process er pr du in ntinue to be of great importance Their la á can de try rit le 3st de crease the efficiency of good mi hincn plann u fitory Ret uninh thi Trier organization and ample po er ican business management bas giica puru ulur alicnuoa ·43 Productivity 75 ages and Prices to the human factor in production. Management psychol ogists have shown that the morale of the worker is vitaly important in increasing productivity Indastnal psychology is a new branch of science which deals with the buman factor in production It began prac trcally speaking only three decades ago almost by acci dent. One corporation, th Western Electac Co wanted to d termine to what extent production would increasc if lightag were unproved in a department where girls as sembled telephone equipment. To cveryone s surprise including the psychologists it was found that m rely er perimenting with the lighting brought greater production --regardless of whether light was increased or decreased. Production eren rose aben the experimenters pretended to put in stron er light bulbs but actually put the same ones back. Bestern Electric realized something strange was happening the firm spent five years bunting the true reason for the production nse Finally it danned on the re scarchers the workers simply responded to attention being paid them The experiment it-elf told them the company was interested in them they felt important--and they worked harder Other interesting and useful psychologcal discoveries have folosed The researchers bave leamed for example that the old time industrialist was utterly mistaken in his belief that his employees would accomplish more of kept on the job for ten or twelve bours They have learned that rest penods contribute to efficicacy as a result the colice break duriog which workers stop to rest and talk is uniuersal in American business Also at least partiy as a result of their researches, the modern American factory is a masterpiece of indus tal arch tecture often located in pleasant rural surround Lagand is a far cry from the London Heat shops of ·42 Key 10 Economic Progress an over all production twenty five times as large as that of 1850 In other words U S labor productivity in the last hundred years has multiplied more than five tint so It would have taken a worker three weeks at 70 hours per week in 1850 to produce as much as an average worker turns out today in a single 40 hour neek If th present rate of productivity increase conunucs in another hundred years the Amencan economy will produce 25 much in one 7 hour day as it dow produces a 40-hous week How did this great increase in productivity per order come about? Curtains it did not result from the ability of the average min to produce more with his muscle poner Productivity is only to a limited degree cither thu result or the mea urt of lib relli sency The competence of management the skill of the indridual worker or the diligence of the farmer have been secondary factors 13 the sharply ascendini produtivity curie over the past several decides The tener and skillful shoe maler working I nih urs under the jblust supension but with the hindt is fd ntury the could not approach the output of todas kill d operator who works fewer hours blewhur Iris amichiner The fabulous in rise in US pr tus hi heen achieied not because Imenin ni #ri hrosis more still fully it has been the re ult int ttnt to desise and usc better technique inimit og helt machinery America has multiplied thu utput it hu in f rt throuch vast inanimatt energy Mevcrtheless skill cffort and th n of the dividual in the prxes f pr ฝน 1 at importance Thur! crease the efficiency of food muchan organization and ample power Re Amir ican business management has enca puru ular ication u sem 1. Cmer itinu be of - I fa tory ·Produchmity i ages and prices 45 103n economy lacenuses de ermine the willingness of hu man beings to work and produce Recognition of personal diority decent working conditions a sense of purpose and material incentives are all considered indispensable factors in achieving greater productivity In such a fram. work, th Marust concept of "class struggle (10 class oppression by the capitalists vs Cluss rebell on by the work ers) has no place Indeed It is focompatible with d mocrauc industrialism because it hinders productivity Increased product in and a nising standard of living Lenin once wrote 'Surplus capital will never be utilized for the purpose of raising the standard of living for the masses for this would mean a decline in profis for the capitalists An elementary und rstanding of the Amencan econom c system betrays the absurdity of Len in s statem nt For increasing productivity has gone hand in hand with a nising standard of living for the masses The improvement in the standard of living is crpressed in the relauonship of wages and prices The present-day American wage-eamer can buy more and better goods whde working I ss time than ever before in history The surplus capital created by increased productivity has been used steadily to raise the living standards of the masses again for the reason that mass production requires mass consumpuon and both depend on mass purchasin. poner For practical results consider the work time necessary to earn the price of consumer items in the t#o largest in dustrial nations of our time The average American worker must work e ght or ten hours to buy a pair of shoes hus Soviet counterpart must work 70 to 100 hours to by a pair of comparable quality The American must work 25 to 30 hours to buy a sort the Soviet must work I 0 to 140 hours 1th one hour 5 wages the American can buy more than ·44 tr Ley to Economic Progress Karl Marx erpenience Not long ago I visited the worlers club at the International Business Machiacs plant Poughicepsie NI It included a theater with a giapuc revolving stage bowling alloys tennis courts, shooler, gallunes a golf course library swimming pool and lounce More than 25 000 American companies maintain recre ational program for their employees accordins to the National Industrial Recrentun Association of Chicago industry spent 1 bilhin dollars in 1956 alone og recreation for employee Tuday most American firms have large rained indu trial relat ns stafls experts who are truined in the i chmiyu or furthering a healthy re lationship between c mpini and emploveis Their guld ing priociple is that fith moral is best to high produce tivity The const int ir pr luci ity is not confinad to industry in ulturt filit impit The im to can farmer (inshi inlo Hho th tron est per sonal incentas lu 111 farger crops per 31 m in hi hrin hand his family While indu try soured the doors Tulptur hus likewise erpandud es n en I quing the land to join urban ini niv way to meet the inr tu I was and is to incre pr wutlar farms Aided by indu try na ! Ili m with machinn milu his nsen to the opportuniti trit od Only 15 6 of working im ran aday Yet they produ e m nition and to supply the agrı ulur ! dustry Increased farm pr ductivits binauon of material in cntcs nd I ques and facilities Inccotics have been primaruth Uit incr t ' ܝܢ ܐ in no rulation has n } } f com ·Productivity 1 ages and Prices 45 Ican economy Incentives determine the willingness of hu man beings to work and produce Recognition of person 1 dignity decent working conditions sense of purpose and material incentives are all coosidered indispensable factors in achieving greater productivity In such a framework the Marxist concept of class struggle (10 class oppression by the capitalists is class rebellion by the work crs) has no place Indeed it is incompatible with d mocratic Industrialism because it binders productivity masses Increased produch ity and a ns ng sta dard of laing Lenin once wrote 'Surplus capital will never be utilized for the purpose of raisin the standard of Ining for the for this would mean a decline in profius for the capitalists An el mentary understandin of the American economic system betrays the absurdity of Lon in a statement For increasing productivity has gone hand in hund with a rising standard of living for the masses The improvement in the standard of living is expressed in the relationship of wages and prices The present day American age-earger can buy more and better goods while working less time than ever before in fustory The surplus cap tal created by increased productivity has been used steadıl to raise the living standards of the masses again for the reason that mass production requir s mass consumpuon and both dep ad op mass purchasin, power For practical results consider the work ume necessary to cam the price of consumer items in the two largest in dastrual nations of our time The average American worker must work erght or tea bours to buy a pair of shoes his Soviet counterpart must work 70 to 100 hours to by a pair of comparabl qual ty The Amenian must work?5 to 30 hours to buy a sut th Soviet must work 1 0 to 140 hours With oae hours wages the American can buy more than ·46 Key to Economic Progress a kilo of meat, while his Soviet equal must work threapur four hours In 20 days the American can eam th of a modern refrigerator or clectnc store the Soviet news work at leist tuo months for these items Americans have reaped the rewards of productivity * only in milerul pra du ts but also in leisure time art reure 11 1 Tics har heen blessings of increasing ductivity lusure time his nearly doubled for the avera employed American sin · 1900 and seems likely to larp on in rlin, Londres i mpiled since 1910 indicat thu Amen ins have tunted to tid two-thirds of the pot null increase in ids interv s and the remaining third 21 short rukin hour ind mr lusure time This im intun, ur timt has been instrum otel in the a I print i mn new mulu million dollar i dustr or render series for reure itinin The new industries Servcth Thihits of Americans. ini tu hing or playing would h hi [ day neither would Tu ur and lugher per sontling ni Tith cultural elesa tion of the Int J States culturc 15 nyt suhtly niin pirundister poses Itth. Il sumphony of chestrisni #mullion backs are sild hi At ps Heh ur days cach uch but the tri and I nuer radi ( automa tron the red Itince he ในเ ก เทเ duction of impre cumcu bring huuher worker DEWJI Juct on in turi prie Sunst lju ied so uitur I puro 1 dr 119 1 1 $ + Here weet A intro- 1 ·Productritty Bages and Prices 47 the #7th fewer boors of effort people will be able to buy more and better goods This is not idle prophecy it us sound prediction based on th Amencaa economy s past aod present.

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·49 A Brass Consumer Market Fast majority of all strata of people must take part in the economu process as consumers The market must Eat both 120th and depth. In many countries, it has the former but not the latter that is the market is shal how to matter how populous to se countries may be productio-mand prospenty--must remain limited Their coc umet markets lack depth. In the United States there was a constant effort over the seans to achiere both, with the stress first on width, and Bow on depth. The first objective was accomplished by removing obsta cles to free, unrestacted flow of interstate commerce Removing man made obstacles to trade The ansat.factory expenence of the onginal 13 Ameri can st tes in developing interstate commerce under the Arucles of Confederation was influenual in the thinking of the men who framed the Federal Consutution in 1789 Arucie I Section 10 establish d that no State shall without the consent of Congress lay any imposts or duties on imports or exports This in effect, created a free trade area within th boundari s of the United States At the same time the Constitution made the Congress Te ponsible for regulatin commerce between the states and with fore en nations In these early years of the new cation most comm rce #25 camed via nater along the Atlantic seaboard and the tiver waternays Roads were few and primitive and land transportauon costy For these reasons the first detailed kugasl. tion affecting interstate commerce dealt with sca and Incr Aavigation The freedom of interstate commerce i om local inter ference was also streagthened by several carly decisions of the US Supreme Court la 1824 the Court ruled that there is any one objcct nding over every other in the ·VA VASS CO SL VER MARKET Capitalı m has hinuinkmni by its critics as the € onoli1 sem hib nnt th few IVh ther the accusatin us re that cd-style capitalism 15 immat Ot mu hur riil al ventfiline is that Amer an PL (pit lin of foxday is geared--by Its very tu tur 1)tih Mass produc tion of c n um ih wris cun goen wibout a mass coo sumer markt 1 וחרות Irreg ? 7 1 nh! n1 ili jnice mass con sumrrish wth nns millions of рі р! ! i i ndard of his ing But ! 's (nly when they take part full in th key to a mas consumo Isc with territori in un' inn illy able to participle in th Pop! uh 7 csstics of life mb far as this mass numi miark ! was untuppen ural e AS Han led cart richt! market must be UCTINID nuously from on thứ 3 4 5 6 Iuli unut tu te vihr und 48 - - ·49 A Mass Consumer Market the vast majority of all strata of people must take part in the economic process as cocsumers The market must have both width and depth. In many countries it has the former but not the latter that is the market is sbal low No matter how populous these countnes may be production--and prospentz-must reman limuted. Theu consumer markets lack depth In the United States there was a constant effort over the years to achieve both, with the stress first on width," und now on depth. The first objective was accomplished by removing ob ta cles to free unrestricted flow of intersate commerce Remourg man made obstacles to trade The uasausfactory expenence of the original 13 Ameni can states a developing interstate commerce under the Articles of Confederation was influential in th thinking of the men who framed the Federal Constitution in 1789 Article I Section 10 established that no State shall without the consent of Congress lay any unposts or duties on mports or exports This in effect created a free trade area within the boundaries of the Unit d States At the sam time the Constitution made the Congress responsible for regulating commerce betwten the states and with foreign nations In these early years of the des nation most comm ice was camned via water along the Atlanuc eaboard and th river wat-rways Roads were ſew and primitive and land transportation costly for these reasons th first detailed legislation affecting interstate commerce dealt with sca and river Cavigation. The freedom of interstate commerce from local inter Ierence was al o stroogthened by several early decisions of the US Supreme Court In 1824 the Court ruled that u there is any one object ndin ovet cvery other in the ·V-A MASS CONSUMER MARKET Capitalism has been condemned by its critics as the economic systm which 5 nuhts tht fcw Whether the accusation was lusel I rrectly at old-style capitalism is immutersal Of much artit prits als nificance is that Amtri in Pc ople (pitali mi of today is geared by its Yery tru turi netieth many Mass produc tion of consumur borist innt on without a mass con sumer macht A1 Prer (11 nvict Ilir polis Turunilec mass co sumer mrk ir tt with mins millions of people wouli jul ish tandard of 1 ing But pel il niks when they tabc part fully in in the Act to a mass consum i mult ! lns live within territorial haunti it tinan ally able to particip it in th nt Popluh cin Lire o cessities of life mihi of far as 15. mass cnsumir mal! Isemble in a Bus untupn dni ural 1 Asias nitud cust richt ier rket must b7c (10) dininin Il nuca.ly from one end of a loro nu mi urut tut uuter and 12 ·51 A Mass Consumer Market mi-s of tracka e of all kinds the total erceedin 25 ting the cu umference of the carth. Running on these tracks are some 43 000 locomotives the million freight cars and 44000 passenger coaches and sleepers, plus another 1 0000 cars of special or auxiliary types In ddigon th re are mine million trucks on American roads and bout 30 000 interstate and long-distance buses, travelia betšeen cities and towns and servis, rur 1 areas. Last year 53 million motor vehicl s 44 million of them priatel, owned-travelled more than 500 billion mit st The most important early m ans of transportation the water touts have continued to play an important role 11 Am fican economic life Inland waterways have greatly expanded their traffic capacibes having been improved by locks and dams and by the introduction of specially de signed diesel-driven towboats Raw matenals agricultural products and fuels still comprise the bulk of waterways cargo but semi finished and finished goods, like uron and steel products petroleum goods chemicals and machun ery arc row being carried via lakes nyers and canals in Пcrea ing volume The startling crpansion of air transportation can hardly be oscrlooked. Today more than 25 million people travel by air each year within the United States Equally the tul-phon s and telegraph networks are now so finely dis persed that even comparatively sparsely s ttled areas are well surved Currently there are more than 50 million tclephones in use throughout the Unted States Hoe were to confront a map of the American n tion that showed railroads canals navigable lakes and risers berlin s huchways and the communicat ons systems we Fould see a ventable maze of criss-crossin, lines Like the uteries of the human body these arten s of transportation and commun cation channel the life-blood of the Amencan economy to the remotest corners of the land They make tb horizontally wide market a reality ·50 hey 10 Economic Progress adoption of the Coosutution it is to keep comm rcial tercourse among the States free from all invidious and particular restraints Later de sons: tablisbed that pouers granted to Car gress One Mrsatt mmer e by hc Constitution **** condo what wer #1 an unr in usu at the to of the instituu nad pin hul followed the progr ssc! the country By I nt if devel on nii the rauroads R thu C 1g stoutu. first F durul luws regul. Overlind in The SC : hn Artic om mere had the opponents in m i urs et rid pressur fu stuu luon in it all tunc ft IT 1 Supr m ( urt held such regulating Shus niin Il Pier ! nsidered as a3 clinin unin ih i there can be do dividuri and that rului! ns Ihruchout tb years that! I in that in 21 ( Arts 1) Icon sump! t nny commerce B: : נתון 1 1 1 and the 1 it from re 1 riid fra The r k 1 Low boon erd of Jun!!! product ma side mirki would be sold r Without th Oh scan legislative abilit n been meaningl s The greatest 4 merka! since the end of the anni 20th Century rulrouds in the lates mately 240 000 mu s of mus jis j 1 ricultur uld h31 com mu roxy ·51 A Mass Consumer Market mies of trackage of all kinds of total erceedog 25 ur s the circumſ rence of the earth Running on these tracks ar some 43 000 locomouves two million freight cars and 44000 passenger coaches and sleepers plus bother 120 000 cars of special or auxiliary types In addition there are nine million trucks on American roads and about 30 000 interstate and long-distance buses trave..g betwe n cits and towns and serving rur i areas Last year 53 million motor vehicles.--44 million of the privately-owded-taveled more than 500 billion miles! Th most important early m aos of transportation, the water roles bave continued to play an important rol in American economic life Inland waterways have gre dy expanded the traffic capacrues, having been improved by locks and dams and by the introduction of specially de wgned diesel-driven towboats Raw materials agricultural products and fuels still comprise the bulk of waterways cargo but sema finished and finished goods like iron and steel products, petroleum goods chemicals and machin ery are row being carried via lakes nyers and canals in ibcreasing volume The starting expansion of air transportauon can hardly be overlooled Today more than 25 million people travel by air cach year within the United Stat s Equally the telephons and telegraph a tworks are nok so finely dis persed that even comparatively sparsely settled areas arc cll surved. Currently there are more than 50 million telephones w use throughout the Voited S.al s If we were to confront a map of the American nation that showed railroads canals navigable lakes and miyets a.rlines h ghrays and th communications systems we would see a vencable maze of criss-crossing lines Like the arteries of the human body these artenes of transportauon and commun.cation channel the life blood of the American economy to the remotest com rs of the land They made the borizontally wide market a reality ·52 key to Economic Progress Personal income and a consumer market But width alone is not enough A mass consum mat market must also have depth To achieve depth covers me it business and labor have worled together and sepi rately to rt stratify personal incomes Often not all parting were conscious that the end result of their efforts was d velopment of the mass onsumer market Mouves ancu. Yet planned or not the outcome has been the gronth and maintenance of th market The basic part of this market are the middle 1oCOTE families Statistical studies de monstrate that an increa e L1 personal inlc me is not nu i Sant followed by an eq increase in consumpen A family with a total income of $1 700 is bikely to spend ulm t the entire amount on cod sumption On the thr hind family with a $15 000 income mai rend nks 000 na n umption and 3.31 the rest A fimilsithiinlar after tart mv 11C in ini i mare than two-thirds of the total Otiul ndes not increase 21 direct prop til A low in it f min I nd all its money (* consumption ! suull be rallt small The hi h thr hand is 2Ft to spend onls snil 77 withholdini there! miket can drenin a wealthy min rits Il on a vast muddle in around a level uhr consume ES satisfilt int mu sas S50 000 n . nsuniption constri fiurers nor og iu i deper the incor Anuty to The re stranh an n The devel pment file been the result or cica the obje us ! s not buloso ·53 A Vass Consumer Balet phimin or d liberate planning Yet gosernment, business and organiz d labor bare contributed in many ways to 13 growth. Often measures were taken for humanitarian rea Sons, to improve the lot of working people d mocrauc fathlons undertook to correct the inequalities of the old ca, talist system Wher these ricasures proved economi cally sound, they became integral clements of th new systein. Other channes have been the result of prectical experi eace and economic Decessity In 1914 Henry Ford raised the daily minimum wage of his auto workers to $5 At the ume he was probably interested in attracting more skilled workers to bus factory in order to step up production cut the cost per unit and sell at a lower prce-thereby increasin hus sales volume He may not have understood the vast implırations of his decision, which is often cited as the begneing of the r w approach to prosp nty through plass production and consumption Aware of the implications or not Ford was impelled by the basic principles of the sys tema abih were already 18 th shapin to adopt a labor and wage policy destined to have a broad impact on Amer Icaa economic thinking. As mi_ht be expected, the Ford wage policy was not greated by contemporary businessmen with enthusiasm It did violence to their conception of old style capitalism. In blazin now trails of business behavior Ford, like most prorcers encountered derision and anta onism colleagues and compeutors resented the intrusion of new pracuces In their well-known shells they felt safe Who knew what lay outside? But times were changing fast Th American industrialist today accepts as basic sach concepts as miss production and small profit por unit and high wages and low prices He recognizes the trand for a great bull of middle scom Lamiles The coolinuing growth of the middle income group is ·52 key to Economic Progress Personal income and a consumer marker But width alone is not enough A mass cooSUTAT market must also have depth To achiese depth govem me it business and labor have worked together and seps rately to re stratify personal incomes Often not all partas were conscious that the end result of their cfforts was velopment of the miss consumer market Motives ancho Yet planned or not the outcome has been the gronth zad maintenance of the market The bisk part of this market are the middle rochure familcs Statistical studics d monstrate that an increa e 11 personal income is not ne cssants followed by an equal Increase in consumption 1 family with a total incore ! $1 700 is likely to spend almost the entire amount on COT sumption on the thr hind a family with a $1500 income mi spend ny S4 OXXO) on consumption and sat* the rest A family with airs Inrue income say S50 000 after tires MIY JVC ind inte i mort th in two-thirds of the tal Obu un Unuiiri on dexts not increase u direct proprint iner A los incam fuils mi Iull pend all its moncy consumpti n Vniue will stall be rather small The hch in the ither hand is of to spend onls usmill p ?nsumption withholding the rei in mas consumº marict cand pendin fpeurers nor ca a scalthy minarit mis depend on a vast middle in around a level wher consumc is satisfairy U It > incomes plnity to The re sranficar n The d elopinent I th beca the result or eco the obje uve ut ni s rot loro ·55 A Mass Consurer Market tat. Ind d, to take home S64000 a TV quiz cont stant mutu almost $500 000 Huides the progres ne te Lion system m y seem on the quez wmaer its purpose is not to pobash wealth On the contrary American tar 1373 contain many prof astons m Leeded to channel the greater income of the soulthy into fexdati sectors of the economy This is accomplished by testing losestment income more leniently Os the whole the American taxation system is far as well as economically sound By levelling is come diferences and strengthening middle incom groups it has been a major factor m deycloping the Amencan mass consumer muket. Co Jumet credit and the American market Consumer credit has been criticized for scveral reasons Fet it has played a key role in the development and main len.sca of the Amencan mass consumer market. Let us se how consumer credit oparates in practice Cons der a young couple mamned just a year and ex pecten a child. They eara $5 000 and would like to base 2 house that sells for $15 000 Theur income and way of hfc allow them to save perhaps $800 or even $1000 annually Under these conditors they would have to save for 15 wars to buy the house But by then their child will be grown and preparin to leasc his parents for a separate The The couple would no longer need a house and the market for houses would have lost a customer There are millions of new fam bes facing similar circum flances obviously if the price of houses h d to be paid in full at the tim of purchase the demand for houses would be sharply reduced. At this point consumer credit steps in. Our imaginary coupl with an income of $5 000 a year cannot buy a $15 000 bouse all at once But over 20 years the family will have earned an income of $100 000 So ·54 Key to Economic Progress traccable in large part to the labor unions with their com stant elfort to sin greater pay and improved workins com ditions Technolonical protress has supported the unvors efforts It has broucht the need for better-educated mr * greatly skilled men in the finturies The jobs for unskill labor greu loss the workertas tended to become at the cian earning more pay and with it a chan ing may of Lim His higher income and chanced lune patior put him in to middle inc mu hroup nu pre u ally speaking he can ron afford thu £ d ind me perusty besond reach An cqually silnik antri in in mi re stratification has been plavedli th Ameri in vernment u in prima 15 fiscal ind in unrlu The lutral income tar is of particular intr 1 Tirs pit 11 ind larre mconstrt hil the family with a $5 000) in I PA run print of the total the fimily with (H) 111 ulls 000 or 20 percent Runt 241 h ibu ning rates The famils with 7 in XXIII give up or than halt in 1 The levellin In quite a teresting an 11 annutlin 10 000 Simplc anthnic 1 5 umos the inc Aftur tres ! OXX) and it Second Sof) (XW) nly six limes the in People all i popular Ameriuin it! test int mihr cult question Iy to Shalespeare te will take $6. (XXU Ini Revenue will tak lalu chin ח ne with an ure pard n ?? ? c0 IdM 1 ·A Mass Consur Market 35 Lav. Indeed, to take home 564 000 a TV quiz contestat must win alunost $500 000 Hud as the prooTeSSive taration system may seem on the quz winner its purpose is pot to punish wealth. On the contrary Amencan tax laws contain many provisions 1.- tended to channel the greater uncome of the sealthy ...to productie sectors of the economy This is accomplished by treating insestient income more leniently On the whole the American taxation system is fair as well as economically sound. By levelling income differences and strengthening middle income groups it has been a major factor in descloping the Amepan mass consumer market. Consumer credit and the American market Consumer credit has been cntseized for several re3sons yet it has played a key role in the development and mais tence of the Amencan mass consumer market. Let us how consumer credat operates in practice Consider a young couple marri d just a year and ex pecun a child They earn $5 000 and would like to have a house that sells for $15000 Their income and say of bfe allow them to save perhaps $800 or even $1 000 anrully Under these conditions they would have to savo for 15 years to buy the bouse Bot by then their child will be grown and preparing to lease bus parents for a separate hle The couple would no longer need a house and the market for houses pould have lost a customer There are millons of new families facing similar cucum stances obviously if the price of houses had to be paid in full at the time of purchase the demand for houses would be harply reduced At this point con umer credit teps in Our ima in ry coup! with an income of $3 000 a year cannot buy a $15 000 house all at once But over 20 years the family will have earned an income of $100 000 SO ·56 Key to Economic Progress using consumur credit they buy the house non-shun they really need it and pay for it uitdc by little while they enjoy its use The buy nou pay later concept his vastly changed th habits of the Ameri un consumer He can buy on credit everything from a diuus or a pair of shocs to a stove or a tractor Hundreds of the usint of husewives visit th stores every day ind mahe huge numbers of credit pur chises They uc Chile ! sunt whi henible custom crs to diftr palm ni for . Wuds until a specified umc Wher credit is extended in a charle 10 uni the customer p315 no more than if he hud pidinci hit the time of purchase In the other kind of credit buying in the well known installment plin the sum til f the in tallments equals the cash price plu d carrying or servi e charge of Mrs Jones wanted incubink mı hint that carried a price tay of $199 she milh did! hus itin an easy ra) munt plin Shi mu ho mine i wpismeni of $5 and 12 monthly paym nis f> 50exhlhi #uld add up however nit Հ}}} Իvit t is the additional $16 would be rru Isa hurma Snell Mrs Joncs preferred the n the tallment in and not for ca h Why B uld have paid the cntirc amunt in in dlment plan makes it rs lu enjoy the tungs they want hen the intu The Inc in nu Fitte Ju d hurdco of ITVIN 1) Il she had $199 und sind it is for it in cash sh #uid } washing muhr But doun puni 11 pay for all <f them later 1 Ilments Thus she enj I min) things sh nu un ods would prefer that their better fodd gui huu u 1 170 24 1 ile 1)-the 110 mil nc acd r ·M1251 Consumer Market 57 trresistible inducements to buy But busbands too think qurte bighly of installinent plans as a method of acquiring a Dex car In any case consumer credit is wat important Last of Am ncan economic life Son of the cases of consaper credit are totally un foueded. It has been pointed out that consurrers could save the necessary sums and buy goods for cash avoiding the extra cartyin charg Yet it seems a quirk of human Darure that people are more likely to save in ord to pay detts than to put money aside for later purchases Oikr entics say consumer credit crerts inflationary pres ure on the economy While not wholly invalid, this charge should not lead to the extremt step of bangin credit as altogether barmful. In practice Ameri un consumers have been moderate in their use of credit They have tended 10 borrow less than their foual holdings Thus in 1954 Am ricans owed $75 billion in housing mortgages $30 billion for durabl purchases charge accounts and personal loans, and $10 billion for so-called financial loans that as loars from banks and insurance firms The total con surges d bt was about $115 bill on. This is a stag.enng sum acknowledgedly Yet, at th some time American consumers held claims on others for $380 billion Consumers were owed a large part of the busi ness debt, as well as a large part of the government debt. Consumers also held a large part of the ums owed by financial institutions in the form of insurance policies and bank d posts All in all American consumers have tended to spend less than their total incomes The American cyst sa bas developed a variety of incen tives and devices over the ears to meet specific economic needs Th Federal government through trade social and fiscal legislation the business community through in creased poducusity consumer et dit and contractual ·56 hey lo Economic Progress using consumer credit they buy the house non-hen they really need ind pay for it little by little while they enjoy its use The buy nou pay later concept has vastly changed the habits of the Americ in consumer He can but on credit cverythin, from a dress or a pair of shoes to a store or a tractor Hundredst thousand of housewiles visit thu stores every day and mic hune numbers of credit put chases They use charte di tants whi h enabl customi crs to defur parment for us until a sprettied umu Wa crcdit is extended in a charl di Dunt the customer pis no more than it he had pudinti h at the time of purchase In the other hand it credit buving in the well known installment plan the sumn la calor the installments equals the cash prie plus a urrunL or cruce charge Il Vos Jones wanted Marime nu hine thit carried a price tas, of $19) she misht do id ! but it on an easy rasy ment plan Sh mi mi un pusment of $5 and 12 monthly pasmnl h This seuld add up however it 15 the additional $16 would b thirrin Stul! Vs Jones preferred tatu Ip n and not for cash Why B J 1: { } { } uld have paid the cntirc an Iran Ile in tallment plan > 1 ) cn} the thines they want in th The Anili 1 dburden of in 11 If he had $19) und want u in cash In the Washin III chin doun poulent ne and pay for tl leilit Il neris Thu she u thing sh id would prefer th of their bullet is dunir it make up 1 1 1 - n T } 1 lans od's UL ·57 qu.cl A Mass Consumer Market irresistible and rem del credit is an important a den fact of Arencan economic life one of the criticisms of consumer credit are totally un founded It bas been pointed out that consumers could save the necessary sums and buy goods for cash avoidiny the extra carrying charge Yes, it seems a quirk of hunan nature that peop! are more likely to save in ord r to pay dbts than to put money asıd for later purchases Othr crucs say consumer credit crerts inlationary pressure on the economy While not bolly invalid this chare should not lead to the extreme step of banning credit 23 altorather harmful In practice American consumers have been moderate in their use of credit They have tended to borrow less than the r tolal holdings. Thus in 1954 Am ni ans owed $75 billion 10 housing mortgagns $30 bill on for durable purchases churge ccounts and personal loans and $10 billion for so-called financial loans that is loups from banks and insurance firms Th total con sumer d bt was about $115 b bhion This is a staggerin sum chnon ledgedly Yet at the same time Am ncan consumers h ld claims on oth is for $380 billion. Consumers were owed a large part of the busi 11 ss d bt, as well as a large part of the governm nt debt. Consumers also held a large part of the sums oned by financial institutions in the form of insurance policies and bank d posits All in all Arrencan consumers hayc t aded to spend less thus their total incomes The American systm bas descloped a variety of incen aves and devices over th jea s to meet sp.cific economic seed. The Federal government throuch trad social and iscal ley lalon, the business community through in Teased producurity consumer credit and contractual

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·VI-COMPETITION OR MONOPOLIES Am for them of Marxist theory is that a capitalist ccon cmy leads toward ulumate concentration of wealth in a few @paou enterprises whose owners will exploit without restraint a vast expropriat d proletariat Wealth and power will concentrate in the hands of huge monopolies, and the fru is of labor will be enjoyed by a mighty overlords whil labor is left enough for mere subsistence The argu meat is often heard that the American economy is domi nated by these monopolics and that they really control th political and economic life of the nation Against this we have th endence that rampant exploitation is economi cally impossible in a system based on mass production mass con, umpi on and mas pu chasing power and the American clain that tbeurs is a compellic economy This important issue merits close study Monopolv o p ice compti on? Ji may be helpful to recall that monopoly" (one seller) mans in effect complete lack of compel tion lo an econ omy dominated by monopolies the consumer bas no cho ce but to buy the p oducts of monopoustic enterprise There is no other supp! er and this is the essence of monopoly In practical effect, the monopolistic enterprise deals with a capt: Consi me Dcalin with a captive consumer monopolistic enter 59 ·60 non lic 1 dei to Economic Progress prise can determine with impunits the quality and poud products Su ili rĮrab ( in slet lumit production et de marrin of pr til J in murheting and offer-1 Wages to sih hy or employer for this skills Lort tot 1 m an ho me an econom** tvrint und erp iler uh absolute ! on mı The ansat must le in us! Intelit bxecaust for ni athr re und monopolis lunding! du tion and com sumption are in } ir mass production eci non harmful In spe cials rihle A CHY To company one 1 bus CO. party | boals рес р! с п a TLC 0 1 h 2 1 forei mi? n 1 u 7 Il pre 1 t under 1 qulins r un to have As operates Ines Tipura diti 11 1 uhh sumers Po 1 un con- 1 Il 31 Mies ca ? חו! ) posit! 1 f n 11wass mis IT IS C rink Hethit Har irri cat be in furs $ Tiind less ico ·Competition or Monopolies? 61 les fez able costs of production become more or less unlorm throughout an industry the prices of rw mate- Smals s.ty Lade dem fan of profit is practically the suma lor similar egterprises wage agreements with labor unions fchen cover not just the workers of one eni ronse but the post is of 3 tpburt industry For these reasons the pure not compution of laissez faire capitalism applies in only a su.Il sector of the American economy In many cases, unsestrained price competition is not dearable As the components of cost and consequently of stlag price become more uniform, a price-slashing war 2.3mg nival producers may not be advantageous to the over al economy It may lead to dangerous reducuon of profits and curtaiment of funds for expan son and renova lon. Some enterprises facing falure may resort to th exped.ent of lowenag quality standards Farthermore any attempt to minimize losses by lowerio sages would be baterly opposed by labor vnions and might hay senous bocam consequences In briel, unrestrained price competi wow could undermine the very foundations of the system of were pplea at all umes and in all cases Combating monopolist c pract ces The strong opposition of the American public to urrestrased monopoly is not a recent phenomenon This hosblity toward unrestrained monopoly and quesuonable busi Dess combusations goes back to the days of the American colonists One cause of the American Revolution was the at.mpt of English commercial and industrial interests to obtain through legislauon monopol suc power over the Import of manufactured goods into the colonies Brush cap talisis also hashed to CUID colonial manufacturers and make England th sole market for colonial raw materials Thr ughout is history the American nation has held the conviction that individuals should be free to exercise

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·SELECTED BIBLIOGRAPHY 1 - A Adams R.G Political Ideas of the American Rezolution Durham 1999 Becker Carl L. The Declaration of Independence cu lorl 1919 Tie Heatenly City of the Eghteenti Century Phulos ophers Ney Hayen 1937 Bury J B The idea of ProoTeSS London 190 Corwin Edward S The Constituhon and i at it Means Today Priaceton 1948 Progress of Polui cal Theory between the Declaration of Independence and the Meeting of the Philadelphus Conrention American Historical Review April 1995 XXX 511 Dumbauld Edward The Declaranon of Independence and 15 hat It Means Today Norman 19 O Friedrich C] The Age of ile Baroque \ew York 1992. Gabr el Ralph H The Course of American Democratic Tlought New York 1910 Gooch, G P E gl sh Democratic Ideas in 11 e Saenteenth Century Cambridge 197 Holstadter R chard The Amencan Political Tradition New Jork 1919 Holcombe Arthur N Our Alore Perfect Union Cambridge 1900 Lask Harold J Polit cal Thought in England from Locke to Bentham London 19 0 Mcllwain CH Tie Ame can Rezolution Neu Jork 1993 Malone Dumas Jefferson the I gimian Boston 1948 Miller John C Ongins of the American Revolution Boston 1913 Ixvu

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·SELECTED BIBLIOGRAPHY Adams R. G Polit cal ideas of the American Revolution Durham 19 Becker Carl L. The Declarat on of Independence on York 1919 The Heavenly City of the Eighteenth Century Philos ophers Men Haren 1932 Bury J B Tic Idea of ProotCSS London 1990 Corwin Edt ard S Tie Constitution and I hal it Means Today Princeton 1918 Progress of Political Theory beck een the Declararon of Independence and the Meeting of the Philadelphia Contention American Historical Review April 195 511 Dumbauld Eduard, The Declaration of Independence and III at It Means Today Norman 1930 Fredrich C) The Age of the Baroque \ew York 1992. Gabriel Ralph H The Course of American Democratic Thoug) ! New York 1940 Gooch GP E glish Democratic Ideas in the Seventeenth Century Cambridge 19 Holstadter Richard, The American Political Tradition Ney Tork 1919 Holcombe Arthur Our More Perfect Union Cambridge 19 0 Laskı Harold J Poltt cal Tlought in England from Locke to Bentl am London 19 0 Wellwain CH Te Amey can Revolution Men Tork 1973 Malone Dumas Jefferson the li ginian Boston 1918 Miller Jolin C. Ongt s of the American Revolution Boston 1913 lavu F

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·SELECTED BIBLIOGRAPHY Adams R. G Polit cel Ideas of the Imerican Re olution Durham 199 Becker Carl L The Declaration of Independence New York 1919 The Heavenly City of the Eighteenth-Century Plulos ophers rey Haren 1939 Bury J B The Idea of Promtess London 1990 Con in Ed ard S The Constitution and lat at Veans Today Pr nceton 1948 Progress of Political Theory between the Declaration of Independence and the Meeting of the Philadelphia Convention A nerican Histoical Review April 19 LX 511 Dumbauld Eduard The Declaration of Independence and 11 hat Ii Nea s Today Norman 1930 Friedrich C] The Age of the Baroque lew York 199 Gabriel Ralph H The Course of American Democratic Tlought New York 1910 Gooch, G P English Democratic Ideas in the serentgenth Centry Cambr dge 19 7 Hofstadter Rich rd The Ai erican Poltt cal Tradition New York 1949 Holcombe Arthur N Our Vio e Perfect Union Cambridge 1900 Laskı Harold } Polt cal Thoug! t in Engind from Locke to Benth i London 19 O Micilnai CH The Amerian Revoluton New York 19 3 Malone Dumas Jefferson te yg nian Boston 1918 Miller John C. Or gins of the American Revolukon Boston 1913

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·SELECTED BIBLIOGRAPHY Adams R G Political ideas of the American Me olulion Durham 19% Becker Carl L The Declaration of Independence View York 194 Tie Heavenly Cty of the Erghleenth Century Philos ophers New Haven 1932. Bury J B The Ide of Progress London 1970 Cors Ed ard S The Constitution and that it Veans Today Princeton 1918 Progress of Polical Theory bet een the Declaration of Independence and the heet ng of the Philadelplua Convention Amer can Historical Review April 19. XXX 511 Dumbauld Edward The Declaration of Independence and 17 at It Means Today Norman 1950 Friedrich CJ The Age of the Baroq e Vew York 195 Gabriel Ralph H The Course of American Democratic Tlouglt New York 1910 Gooch GP English Democratic Ideas in the Seventeenth Century Cambr dge 197 Hofstadter Richard, Tie Amer con Political Tradition Nex York 2919 Holcombe Arthur N Our More Perfect Union Cambridge 1950 Laskı rold J Pol He 1 Thought in E gland from Locke to Bentham London 19 0 Mcllwain CH The Ame van Revolut on Meu Tork 19 3 Malone Dumas Jeffe son the big n an Boston 1918 Miller John C Ong ns of the American Rezolution Boston 1913 im

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·WHEN 4 THE DECLARATION OF INDEPENDENCE (July 4 inol The unanimous Declaration of the thirteen united Slates of America TY THE COURSE OF HUSIAN EVENTS it becomes necessary for one people to dissolve the poliucal bands wlich ha e connected them th another and to assume among the Powers of the earth the separate and equal station to wh ch the Laws of Mature and of Matures God ent the them a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation We hold these uruths to be self-esident that all men arc created equ l that they are endoned by their Creator with certain unal en ble Rights that among these are L le Liberty and the pursuit of Happ ness That to secure these rights Gas ernments are instituted among Ven deri ng their just po v ers from the consent of the go erned That whenever any Form of Government becomes destructure of these ends it is the R. ht of the People to alter or to abolish it and to insta tute ner Government laying its foundauon of such principles and o gan z ng its po ers in such form as to them shall seem most likely to effect their Safety and Happiness Prudence in deed il dctate that Governments lo established should not be changed í right nd trans ent causes and accordinely all experience hath ho that manlınd are more d sposed to suffer while es ls are sufferable than to r ght themselves by about hing the forms to which they are ccustomed But when a long train of abuses and usurpations pursuing nvariably the same Object exinces a des gn to reduce them under absolute Despot sm it is their n ht, it s the r duty to throw off such Go ernment and to pro: de nes Guards for their future se curity -Such has been the pauent sullerance of these Colonies 3

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·THE DECLARATION OF INDEPENDENCE (July 1 116 The unanimous Declaration of the thirteen united States of America WHEN THEY IN THE COURSE OF HUTAN EVENTS it becomes neces ary for one people to dissolve the political bands which hase connected them with another and to assume among the Po ers of the earth the separate and equal station to which the laws of Nature and of Nature s God entitle them a decent respect to the opinions of mankind requires that they should declare the cause wh ch impel them to the separation We hold these truths to be selle ident that all men are greated equal that they are endoi ed by their Creator with certa n unalien ble Rights that among these are Lile Liberty and the pursuit of Happiness That to secure these Tv hts Gos ernments are instituted among Men deri ing their just po ers from the consent of the go erned That : lienever any Form of Go ernment becomes destructure of these ends at 1 the Right of the People to alter or lo abolish it and to inst tute net Go e nment layın its foundation on such principles and organizing its po ers n such form as to them shall scein most likely to effect their Safety and Happ ness Prudence in deed il d ctate tht Go ernments long established should not be ch nged for 1 ght and transient causes and accordingly all exper ence hath sho in that mankind are more disposed to suller wh le ev ls are sullerable than to tght themselves by abol sh ng the formas to wh ch they are accustomed. But hen a long train of abuses and usurpat ons p suing invariably the same Object es nices a des gn to reduce them under absolute Despot sm it is their t ht it is their duty to throw off such ! Go ernment and to provide nex Guards for their future se curity -Such has been the pauent sufferance of these Colonies 3

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·5 THIE DECLARATION OF INDEPEXDENCE. tenure of their offices and the amount and payment of their salaries He has erected a multitude of New Offices and sent hither swarms of Officers to harass our People and eat out their sub. stance He has kept among us in times of peace Standing Armies without the Consent of our legislature He has affected to render the Military independent of and supenor to the Civil Power He has combined with others to subject us to a jurisdiction foreirn to our constitution and unacknot led, ed by our lans giving h s As ent to their acts of pretended legislation For quartering large bodies of armed uroops among us For protecting them by a mock Trial from Punishment for any Murders h ch they should commit on the Inhalı tants of these States For cutt ng off our Trade with all parts of the world For imposing taxes on us without our Consent For depriving us in many cases of the beneſts of Trial by Jury For transporting us beyond Seas to be tried for pretended olfences For abolish ng the free System of English Lans in a nech bour ng Pro nce establish ng therein an Arbitrary govern ment and enlarg ng ts Boundaries so as to render it at once an example and fit nstrument for introducing the same absolute rule into these Colon es For taking a vay our Charters abolishing our most valu able Laws and alte ng fundamentally the forms of our Gor ernments For su pend ng our own Legislature and declaring them selves in ested th Power to legislate for us in all cases whatsoever He has abd cated Government here by declaring us out of hus Protect on and waging War against us He has plundered our seas ravaged our Coasts burnt our to ns and destroyed the lives of our people

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·5 THE DECLARATION OF INDEPENDENCE lemure of the r ofices and the amount and payment of their salaries Ile has crected a mulurude of New Offices and sent hither swarms of OT cers to barass our people and eat out their sub- $tance He has kept among us in umes of peace Standing Armies Without the Consent of our legislature He has affected to render the Military independent ol and superior to the Civil Power He has combined with others to subject us to a jur sdiction foreign to our Constitution and unackno ledged by our laws giving his Assent to their acts of pretended legislation For quartering large bodies of armed woops among us For protecung them by a mock Trial from Punishment for any Vurders 3 hich they should commit on the Inhabt tants of these States For cutting off our Trade wth all parts of the world For imposing taxes on us thout our Consent For depri ing us in many cases of the benefits of Tral by Jury For transporting us beyond Seas to be tied for pretended olences For abolistuing the free System of English Laws in a neigh bour ng Pro ince establishing therein an Arbitrary govem ment, and enlarg ng its Roundaties so as to render it at once an example and fit nstrument for introducing the same absolule rule into these Colonies For taking away our Charters abolish ng our most valu able Laws and altering ſundamentally the Forms of our Gos crnments For suspend ng our own Legislature and declaring them sei es in ested wth Power to legislate for us in all cases hatsoe er Fle has abdicaled Go ernment here by declaring us out of hs Protection and kaging War against us He has plundered our seas ravaged our Coasts burnt ouz towns and destroyed the lives of our people

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·THIE DECLARATION OF INDEPENDENCE dependent States that they are Absolied from all Illegiance to the Brush Crown and that all poliucal connection be t een them and the State of Great Britain us and ought 10 be totally d ssol ed and that as Free and Independent States they have full Power to levy War conclude l'eace contract Alliances establ sh Commerce and to do all other Icts and Things which Independent States may of right do And for the support of ths Declarat on with a firm reliance on the Protection of Divine Providence se mutually pledge to each other our Lives our Fortunes and our sacred Honor JOHY HANCOCK New Hampshire MATTHEW THORATON JOSAN BARTLETT VA WHIPPLE SA (L. ADASIS Jony ADAMS Massachusetts Bay ELBRIDGE GERRY ROBT TREAT PAINE Rhode Island ILLAY ELLERY STEP HOPKINS ROGER SHERSAY SAXEL HUNTINGTON Connecticut WX VILLASES OLIVER VOLCOTT W FLOYD PHIL LAVINGSTON Vet York FRANS LEWS LIWIS MORRIS New Jersey Riad STOCXTOY JO WITHERSPOON FRAs Horasov Jom HART ABRA CLARK

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·TIIL DECLARATION OF INDEPENDDOE + dependent States that they are Absolved from all Allertance to the Br tish Crown and that all political connection be tween them and the State of Great Britain is and ought to be totally dissolved and that as Free and Independent Stales they have full Poner to le y llar conclude Peace contract Alliances establish Commerce and to do all other Icus and Trung which Independent States may of right do And for the support of this Declarat on with a firm reliance on the Protection of Divine Providence ve mutually pledge to cach ather our Lie our Fortunes and our sacred Honor JOHY Rancock New Hampshire MATTHEW THORNTON JOSIAH BARTLETT W WHIPPLE SA IL. ADA 13 JOHN ADAS Massachusetts Bay ELBRIDCE GERRY ROBT TREAT PAINE STEP HOPKINS Rhode Island WILAY ELLERY ROCER SUERNIAN SAN EL HUNTINGTOY Connecticut Har ILIAVIS OLIVER WOLCOTT W FLOYD Pul LINCSTON New York FRAYS LEWIS LEWIS MORRIS New Jersey ROD STOCKTON JIO WITHERSPOON Fras HOPKINSOY JOIN HART ABRA. CLARK

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·ARTICLES OP CONFEDERATIOV (November 15 1.77) To all to whom these Presen's s} all come we the underst ned Delegates of the States affixed to our Names send greeting THEREAS TIE DELEGATES of the United States of America WHEREAS in Congress assembled did on the fifteenth day of Novem ber in the year of our Lord One Thousand Seven Hundredi and Seventy-seven and in the Second Year of the Independ ence of America agree to certain arucles of Confederation and perpetual Union between the States ol Newhampshire Massa chusetts bay Rhodeisland and Providence Plantations Con necucut New York, New Jersey Pennsylvania Delaware V rginia North Carol na South Carolina and Georgia in the Words following viz. ARTICLES OF CONFEDERATION AND PERPETUAL UNION BE TI EEN THE STATES OF NEWHABI PSHIRE MASSAGIUSETTS-BAY RIIOPEISLAND AND PROVIDENCE PLANTATIONS CONNECTICUT NEW YORK VE JERSEY PES SYLVAVA DELAWARE VARY WD VIBCINIA NORTH CAROLINA SOUTIL-CAROLINA AND GEOR - СА \RTICLE I The sule of this confederacy shall be "The United States of America. ARTICLE II Each Suate reta ns its sovereinty freedom and independence nd every power jurisd at on and right which s not by this confederat on expressly delegated to the United States in Congress assembled. ARTICLE III The sa d States hereby severally enter into a firm leamue of friendship with each other for their common defence the security of the r l beries and their mytual and general welfare binding themselves to assist each other aga nist al} force offered to or arrachs made upon them or 9

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·ARTICLES OF CONFEDERATION apable of be ng a delegate for more than three years in any term of six years nor shall any person being a dcerate be capable of holdin any office under the United States for which he or another for bus benefit receuses any salary fees or emolument of any kind Each State shall mainta n its of a delegates in a meet n of the States and 1 hile they act as members of the committec h 91 tes ds es in Congress Freedom of speech anu uc $5 shall not be mpeached or questioned in any court or place out of Con gress and the members of Congress shall be protected in their persons from arrests and imprsonments durinr the time of the r go ng to and from and attendance on Congress except for treason felony or breach of the peace ARTICLE VI To State without the consent of the United States in Congress assembled shall send any embassy to (t rece ve any embassy from or enter into any conference agree ment all ne or treaty with any king p nce or state nor hall any person hold ng any obce of profit or trust under the United States or any of them accept of any present crnolu ment office or utle of any k nd whate er from any king pnce or fore i state nor shall the United Slates in Conness assembled or any of them grant any utle of nobıl ty To two or more States shall enter nto any treaty confcd cration or all ance hate er bet een them without the con sent of the United States in Congress assembled specifyin, accurately the purpo es for which the same is to be entered into and how long t shall cont nue To St te shall lay any mposts or duties which may inter fere with any stipul tions in treates entered into by the United States in Congress assembled with any kin, prince or state in pursuance of any treaties already proposed by Congress to the courts of France and Spain No vessels of Har hall be kept up in time of peace by any

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·11 ARTICLES OF CONFEDERATION apable of being a d legate for more than three years in any term of six years nor shall any person being a delegate le apable of holdin any office under the United States for which he or another for his beneſt recentes ang salary less or emolument of any kind Each State shall mainta n its own delegates in a meeting of the States and while they act as members of the committee of the States in determining questions in the United States in Congress assembled each State shall have one vote Freedom of speech and debate in Contress shall not be impeached or questioned in any court, or place out of con gress and the members of Congress shall be protected in their persons from arrests and imprisonments dur ng the time of ther go ng to and from and attendance on Conness except for treason felony or breach of the peace ARTICLE VI To State without the consent of the United States o Congress assembled shall send any embassy to or rece ve any embassy from or enter into any conference agree ment alliance o treatyth any king prince or starc nor shall any person holding any office of profit or trust under the United St tes or any of them accept of any present emolu ment office or ule of any kind hatever from any king prnce or foreign tate nor shall the Un ted States in Conness assembled or any of them gt nt any title of nobıl ty lo tu or mo e State shall enter into any treaty confed erat on or all ance whatever beti een them thout the con sent of the United States in Contess assembled specfunn accurately the purposes for wh ch the same is to be entered into and how long it shall continue No State shall lay any imposts or duties which may inter fere with any stipulations in treaues entered into by the United States in Congres assembled with any king prince or stale in pursuance of any tre ties already proposed by Congress to the courts of France and Spain lo sessels of war shall be kept up in time of peace by any

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·13 ARTICLES OF CONFEDERATION that sh Il be incurred for the common defence or general wel lase and allowed by the Un ted States in Congress assembled shall be defrayed out of a common treasury which shall be suppled by the se eral States in proport on to the value of all I nd th n each State gr nted lo or surveyed for any person as suci i nd and the bu ldings and improvements thereon shll be est maled a ord ng to such mode as the United States n c ngt s assembled hall from 1 me to time direct and appo nt The tale I P that pr port n hall be lid and ley ied b th nd I rect on [ the Legislatures of the se eral 5 nuntet me agreed upo b the United States Cn res 55 nbled 1 t such in { e of an pe ArticLF IV The l ted St les nC gress assembled shall h ile nd eu lu er glt nd pu er of deter min ng n pea e nd rept the a nenuoned in the s xth il senin dece ng i bass dors-enter ingn tre pod dzli no ureaty of comm hll be de he by the le llepo er of the respect este 1 !! be reland frm inpo posts no gner 3 the own people are subjecte i Impr !!! 2 the expr tion or mportation Igxuds Icon not I alsoe e of estab Ishing ul 1 11 bi uptures on land or water h I tylna him nr zes taken by land orn Te ne thel telst tes hll be d IPF Id- &gt nt & kuers of marque and ер 1 ine fpe pr in ut for the trial of Pra ma n th 1 gl eas nd estab- Ihn ist e e & i det man finally appeals in P del tha no membr of Congress dgn of the sd urts en lo gress as embled hall also be the nces now subor more States concern ng bound 18 } Ce cause what all case sh 11 bc 11

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·13 ARTICLES OF CO FIRATION person 25 hat shall be incurred for the common d lerce or poneral wel and alloned by the Lnited States in Cores assembla. shall be defra ed out of a comin n treasury which shall be sontled by the e eral Siales n pr porting to the n se ol all land - th n each State ga i d to or survered for in ch Ind nd th bu ld ns and tapo monts thereon shall be est ted sing touch mow the United St is nn 1. se: bied all li to tim d rect nd put 13 ng P port n all x a ! dler ed by thirt Turent ni the len Turks ett serer 1 Slate greed up n bth Land States 1 C mbl Tiet 1 1 pots ! ARTIC Il Thril Si les nantess asserable) sh 11 h the soie i power of d 17 minin Vintec ses m ntioned in the mbass d -enter dren th dth utats of ing To comm €! I b b) their lief net of the La neid respect such in 3 m 1 he peopl are sub jected they omportation of 1 I gund in all wh lsomer-ol estab Iish ng ií ici 11 se * {captu ponor Wat nd n hun C! ken by land ID f the list los hall be did dot nu letters of m rqut and PD nt 3 uts to the tnal of P nm in th tgh se and stab & midt mn ng finally appeals in all case Pl01 Jed that memb teu į dge fa f the Th Lius on ngress ssembled hall also be the 1 tresot nppeln lld p tes and a fe enices now sub sin or tht be e Iter marise between two or mo c States co Crni bo ndary jur d ton or ny other cause what reisin Congress sh Il be 1

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·pr wel also ile it which p & at the TE t 1 the 1 the per 1 15 ARTICLES OF CONFEDERATION jud es of the supreme or superior co it of the State where the cause shall be tried well and urly to hear and determine the matter in quest on accor in to the best of lud ment thout la our all t on гі ҡ { re that 1 St te sh ll be di d I te ritnir the benefit of the ln led St tes lll contr C ern te 1 ht of soil cl med u der liter gr nis in or n re Suates whose jurid 11 spel uh Indant le Stalcs dj std the al grants or e tier fin! net ch mich e orig inated nt e lenti h setle vent í ju in hall on t th C f the Inter State bfi ildt па be in the same man er bire P In li les respect ing terr nbet e d fritt! The is en ng mall di ll Isolve the sole nu lu Ile nl poneri ng the alloy and ru K+ th I u or b that of h gile! fe hus at I meas- I TC h itu ed Stt-egui teu de and mn Umbe I any of th St iu 1 the 1 Suate (bn lider bl st one Sutet nther thr ugh ! St d i po ta c th c be 4 tlet lel įth - IX nt ng 11 off cers h iu Un ing g muf - FPO (Blih the naval d 1 2 !! the whate € -Ang ul th go mnment and erul did nd na | rces and direcung the ileln nc Tes en bled shuth e author t to appo nt a mntet be de minacd Comm ilee of the States ther pe } tolfi 1 t nth PI d St tes except ff er ervice n the f dst In the eces of Congress to and to cons st

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·of h il a ques 17 ARTICLES OF CONFEDERATIOY ume of peace nor enter into any treaties or alliances not coin money nor regulate the alue thereof nor ascertain the Sums and expenses necessary Ir the defence and welfare of the United States or any of them nor emit Ils nor borrow m ney on the credit of the Inted States not appropriate money nor te upon the ber of essels of ar 10 be built or pu h el or te umixr ol la id or sea forces to be na sed no apoi ! a omm nd ndel of the army or navy unless n St tesssent to the ame uon on any out { nt cxc ptir l; urn ng from day to day be det mned ul le of majority of the United State n mes isent led The Congt { the l ted State. All come to ad jour l al t me ith leer nit a pl ce within the intesti i faljrim nt be for a longer du innth pce of not 1 h the , un fue dngs onih ex epl such el eligt 50 ml tary opera lions as nu 1 and the cas and nays of hst quest on sh 1l be entered relb and thu Stt nn len at hus or their 1equest 11 Init so it itle sard jour nal ex itull ს ſ ted 10 1 v before the Leg I tu thall pul v th t no pe ed part o dimm Í v delegate T ATC 11 s mtt States or any nine of thern hl ti X ut three of Congress such Ith T 10 na as the inted States in Con gre mt! Ib ] se in Stic Tall from the to i te th 1 them wth pro ded that no pontba fels b 1 rum tice is the exerc se of wh ch b f (nied it on the O ce of pine States ning víuela led States assembled requi ste IRTI LE 1 Cnd cced ng to this confederat on and jo n ng n the msues of the Un ted States shall be ad

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·17 ARTICLES OF COVFEDERATION upon th 1 or sh li a ques T navy unless f 1 ume of peace not enter into any wealies or all ances nor con m ney not regulate the alue thereof nor ascertain the sums d expenses necessary for the defence and welfare of uel Ited St tes or any of the rem bills nor DOTTOW money on the credit of th ted Sl. les nor appropriate money nor at n bere sels of war to be built or pun I or uet bir í la d or sea for os to be raised n) drp ta mm h 1 of the army or St te sset to t 12 tion on Inc ir 1 urn om day to day be det n u btl jority of the United States С птте den !! } The Cn Ithel to Si tes lull} WeT to adjourn tai ile within the L tedy s that pe ent be for als er rundt Ih the jou n llue tingimul xcept such P rts the + tons ti C e ti as and nays qu? nhll be entered 1 1 de n ad the I their icquest ! Il T! I the said jour Pts 1 e before the I SL 3 nit Il pub- { r mit opera d legile 1 t nle AxTICIE 1€ Si tes rany nine of them sh ll be th of Congress uch I th} 16 ngt zu id St is in Con gress se uit Line Still om t me tot mith Kd t w th} del th no pone be det tt f the xercise of which bt Ic[ed ce f nine fuel a ted States a sen bi d is requi 1 1 n the Stins t ARTICLE V Cand cdn to th confederat on and I in ng in th mas es of th Un Led States sh Il be ad

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·19 ARTICLES OF CONFEDERATION In witness whereof ie hase hereunto set our hands in Con gress Done at Philadelphia in the State of Pennsylvania the ninth day of July in the year of our Lord one thousand seven hundred and seventy-eigti and in the third year of the inde pendence of America. On the part & behalf of the State of New Hampshure JOSLAR BARTLETT John WIENTI ORTU Junr August 8th 128 On the part and behalf of the State of Massachusells Bay JOHN HAS COCK FRANCIS DANA SAMUEL ADA IS JA IES LOVELL ELBRIDGE GERRY SA IL EL HOLTEX On the pa t and bel all of the State of Rhode Island and Providence Planlalions WILIJAN ELLERY JOHN Couns HENRY MARCIANT On the pa t and bel all of the State of Connecticut ROGER SUER SAY Trus Hos IER SA ILEL HUNTINGTON A DREW AD AXIS OLIVER VOLCOTT On the part and behalf of the State of New York JAS DUANE GOUY MORRIS FRA LE IS I DUER On the part and behalf of the State of New Jersey Nour 6 17/8 Jo W MIERSPOON MATHL. SCUDDER On the pa i and bel all of the State of Pennsyluania ROBT VORRIS WILLIA 1 CLINCAY DANIEL ROBERDEAU JOSEPH REED 2 d July j1o BIHARD SITTU 1 18

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·19 ARTICLES OF CONFEDERATIOV In witness whereof we have hereunto set our hands in Con gress Done at lh la lelphia in the State of Pennsylvania the minth day of July in the year of our Lord one thousand seen hundred and se entyes, ht and in the third year of the inde pendence of America. On the part t bel alf of the State of New Hampshire JOSIAH BARTLETT Jouts WENTI ORTH Junr August 8th 17,8 On the part and behalf of the State of Vassachusells Bay Jorv HANCOCK FRANCIS DANA SAMUEL ADA AS JA ES LO ELL ELBRIDGE GERRY SAVLEL HOLTEN On the part and behalf of the State of Rhode Island and Prouide ice Plantations WILLIAM ELLERY Joirs COLLINS HIE RY MARCIANT On the pa i and bel all of the Stale of Connecticut ROGER SWER AS Trus Hos (ER SA ILEL HUNTINGTOV ANDREW ADA 15 OLIVER VOLCOTT On the part and bel alf of the Stale of New Work JAS DUANE GOUY MORRIS FRA Lewis 11 DUER On the part and in bei alf of the State of Vew Jersey NOUT 26 17/8 Jvo II MIERSPOON MATUL SCUDDER On the part and belialf of the State of Pennsylvania RotT MORRIS WILLIAM CLINGAN DANIEL ROBERDEAU JOSEPH REED 994 July Jlo BAZARD SIIT! 1778

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·THE BASIC DOCUMENTS THE CONSTITUTION IN THE MAKING

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·WHEREAS THERE e e led u RESOLUTION OF CONGRESS (Feb uan II IS PROY 1510\ n the Irt cles of Confedera ne pe pet al l non for mak alter lions therein by the Awe cof nutes I the lid 5 tes nd f the leg islatures the ral States !! here exper ence hath ev nice! Uhe der is the present Confederation as a mean to medy I cher ! fth States and rucularly the Stat of Yirkt espres ! 1) the r delegates in Connte 1 einer the purposes ex pressed n the foll ng re o!! and ul Con ention appear ngth npr h tle n i est thing in these states i mnt ant Resol du ningte I s expedient that on the nd V nd It ention (delegates who h !! t prill the ee states be held at Phl d lih le ni pe ! pose i revising drept Conness and the el ons therein as h ! In edin nd nfum db the lates end Iciri djuate le ex encies of Go em intat i es t I thin on ile P t ndir 1

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·RESOLUTION OF CONGRESS (February ’1 1787) WHERE EREAS THERE IS PROVISIOY in the Arucles of Confedera tion & perpetual Union for maling alterations therein by the Assent of a Congress of the United States and of the leg islatures of the several States And whereas experience hath evinced that there are defects in the present Conſederation as a means to remedy which several of the States and particularly the State of New York by express instruction to their delegates in Contess ha e suggested a consenuon for the purposes ex pressed in the follo ving resolution and such Convention appearing to be the most probable means of establishing in these slates a firm national go ernment Resolved that in the opin on of Congress it is expedient that on the second Monday n May next a Con enuon of delegates who shall ha e been appointed by the several slates be held at Philadelphia for the sole and express purpose of revising the Arucles of Confederation and reporting to Congress and the several legislatures such alterations and provisions therein as shall when agreed to in Congress and confirmed by the states Tender the federal constitution adequate to the exigencies of Gozernment & the preservation of the Union ·age of THE VIRGINIA PLAN AS OFFERED BY RANDOLPH {Alay 29 1787] 1. RESOLVED That the articles of Confederation ought to be so corrected and enlarged as to accomplish the objects proposed by their institution namely common deſence secu rity of liberty and general welfare 2 RESOLVED therefore That the rights of suffrage in the Na tional Legislature ought to be proportioned to the Quotas of contribution or to the number of free inhabitants as the one or the other rule may seem best in different cases 3 RESOLI ED That the National Legislature ought to consist of the branches 4 RESOLVED That the members of the first branch of the National Legislature ought to be clected by the people of the several States every for the term of to be of the years at least to receive liberal stipends by which they may be compensated for the devotion of their time to public service to be inchgible to any office established by a particular State or under the authority of the United Stries cxcept those peculiarly belonging to the functions of the first branch during the term of service and for the space of after its expiration to be incapable of reclection for the space of after the expiration of their term of service and 10 be subject to recall 5 RESOLVED That the members of the second branch of the National Legislature ought to be elected by those of the first out of a proper number of persons nominated by the indi vidual Legislatures to be of the age of hold their offices for a term sufficient to ensure their independ ency to recene liberal stipxends by which they may be com pensated for the devotion of their time to public service and to be incligible to any office established by a particular Suric or under the authority of the United Strics except those pe years at least to ·3 TJIE VIRGINIA PLAY I caluarly belonging to the functions of the second bracch dur alter the ing the term of service and for the space of exp ralion thereof 6 RESOL ED That each branch ought to possess the rht of ori inat ng Acts that the \ional Lem lature ought to be Rghts ested 10 Congress vered to enjo the Lenslat impo by the Confed rat n and moreo e to legisl te in all cases to wluch the s prate Siates are ncompetent or in wluch the h rmony of u Uted States may be interrupted by the exer cise of ind à l Legislat on to negal e all laus passed by the se e al States nura enin in the of nion of the la inal Lem I tu e the al les of Un on and to call forth the force of the in na nt any member f the Lnon failing to fulfi i lury nd r the art cles thereof DII ( a nau n l execute be nst tuled to be chosen bt1 inal Le I tu ef r the tim of years to rec ep Ils at st ted time Exed compensauon for the ser le duh ch n ncrease r dim nulion shall be mad At the Maguir eri ling i the time of narea e nd to be vel ble a sc nd time a I tho RC 1 3 thority to ecute the National the Ex ut er hts ested i Congress by the C 8 RE 11 tt rute and on en ent number I the nal fut htt mpose a council of te 25 nuti mn ry t of the Vauonal nd e ery act of a particu la Lens bi Veg te th teon h 1 be final and d Cunal shall amount ! a rejec tion ul {th lat Leg urbe ara n passed oth ti Igi ture be g n negau ed by of ten Lind T lyden be established to con meu i unal and of nienoribunals to be hy \unal Legisl ture i hold the offices du Ich nd to ree t mes fixed co npens uns lot the ser ces in which no in e pubctually at stated 1n 1 n n 0 t 1 u un .ܐܢ

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·I cul THE VIRGINIA PLAN AS REPORTED BY THE COMMITTEE OF THE WHOLE (June 13 18 ) RESOL ED That it the P on of ths Committee that 1 a natit o mm ni ought to be e tablished consisting of a Supreme Legs lau Jud nd Executic RESOL F1 Thu 10 ILg lature ought to consist of T OB he 3 RE L Th tih Vien ber (the rulranch of the national Leg 1 iu e ught to be elected by th People of the se eral Stat trn Three rea s to rece cxcu stipend by hth na be o jxnsated fi the devotion of the rt et publc ser I be doul of the Vational Tre su Igll ! ny Om e esubih d by a par St te runi r the a thor I the nid States (ex cept th xe pec II bel nging to the Imio I the first branch, di g the ce and unde the val onal 8 ern a alt is xyirat on 4 RI 11 il nie the se il Branch of the ninil intly h sen b the nd dual Leg tih ld ther Ice t fh ure the ndependency fx d stį nd b which they m3 b te de of nofile e to puble se itie tolle to be in el g bli Od ill hed l patrie or under th e pecul arly be !) du ig the term In nal of nc RE Lt 11 terl s the ri ht of n t t e na 1 1 St tes (ex tlth fue e (nment fr the space 1 { it to pos 1 Th Frand F ds 1 th 5 dia c IT Rd hy Carl I Th sed t permis It pH bers, lh Poss. 7

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·3 - tually 1 1 3 o t TJIE VIFCINIA PLAN II to hold their offices during good behaviour to recent punc stated times a fire compensation lor their services in wh! no naease or d minut on shall be made so as to affec de pein tuuall in fc at the time of such inatase or liminuuon RESOLE Th 4 the nat rl Legs lature be empowered lo appoint Til unal 13 RESOL Dlh the ju I he nat onal Judiaary shall extedt pe I the oll ction of the na tional re oi Vat onal Accrs and quesuon pe end harmony 11 RESO ID TI Iti be made for the ad miss o Esti fuil I 100 ihn the 1 mils of the Un red St ir jui uon of go en ment and th (nscent of a num ber of Ils than the whole 15 RES 1 1 ught t !n le for the con unuan 1 ET tes uit! given day alte te 1 h IL sh ll be adopted and for the nnt TER? eg bl ni tut n and its crist 1 u nie do a hit by the United St 1 7 gli i bes de ir the un id i les hensoes it shall seem nes n. REN Il Le lie Ex cute and Judiaary pone (al Si tes u li to be bound by oath to il 19 R t And onts h 1 shll be offered 1 Спnt o oli at a proper te o ni Congress to be sub- I s bles of represent ti es rec on mn ille cs to te ubon tied to an nbl, Trep esent ! es recomin nded by the es to be expressly chosen by the People to con d r and ude thereon 1 1 w 1 UPP I ir ob m assen bi

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·31 THE \EW JERSEY PLAY | authorized to make such requisitions in proportion to the whole number of white and other free atizens and inhabitants of e ery age sex and cond tion including those bound to servitude for a terra of years and three fifths of all other per sons not comprehended in the foregoin, description except Ind ans not pay taxes that if such requisitions be not com pled with in the t mne specified there n to d rect the collec tion thereof in the non-compl ing States and for that pur pose to de use and pass acts d recting and authorizing the same pro ided that none of the powers hereby vested in the United States n Congress shall be exercised without the con sent of at least States and in th proportion of the nun ber of confederated States should hereafter be increased or dimin shed 4 RESOLVED That the United States n Congress be author ured to elect a federal Executi e 10 consist of persons to continue in office for the term of years to recei e punt tually at stated mes a fxed compensat on for the r services 10 hich no increase idim nut on hall be made so as to affect the persons compos ng the Execute at the time of such increase or d m nut n to be p d out of the federal treasury to be ncap ble of holding any other office or appointment during the term of serve and for years thereafter to be inelig ble a cond uime nd removable by Congress on appl cat n by a m j r ty i the Execut es of the se eral States That the execut e bes des the r general authority to execute the federal acts ought t appoint all federal officers not other wise provided for and t direct all mil tary operations proded that none of the persons compos ng the federal exccu uc hall on any occas on take command of any troops so as personally to c ndut any n l tary enterprise as General or n any other P 5 RESOL ED Tht a federal Jud ciary be established, to con st of a sup eme Tr bunal the Judges of which to be ap po nied by the Executive and to hold the r offices during good bel our ! rece e punctually at stated times a fixed com e pensation for the services in wh ch no increase or diminu

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·THE EW JERSEY PLAY authorued to make such requ sitions in proporuon to the xtole number of abile and other free auzens and inhabitants of every age sex, and conduuon including those bound ta BTS cude for a leim of years, and thuree fiths of all other per sons not comprehended in the foregoing description except Indsans not payan, Laxes that if su hi requis u rus be not com pled with in the line speafied therein to direct the collec uon thereof in the con-compl ing States and for that put pose to devise and pass acts d rect n and uthorizing the same pro ded that no e of the powers her by estel in the United States in Congress shall be exe sed ut out the con tent of at least Stales and in that prop rton if the kumber of confederated Suates should hereafter be inacaseu dimin.shed. 4 RESOLVED That the Un led States n Congress lse author ued to elect a federal Esccuts el cost of persons to conubue in office Ir the term of car to tecele punc Iually at stated times fi edc mpxen ton fr their services in wh ch no ncrease or diin nut on all be made so as to affect the personas composi the E ecurs c at the tme of such increase dm ut on to be pd ul of the i derul casin to be incap be of holding an ther ffce or appointment du g their term of sers ce ndir years ther after to be inel gible a second ume and em able bs Ciness on ap plcat n by a m jority of the E cut soith « eral States. That the execute bes des theu general auth 11 to execute the federal acts ght to ppo : all i de al other not other wise por dedi nd to duect all millar per tons provided that on of th person mpos n the ledde i execu uile sh loan 1 lake c mm nd i ny i oops 50 25 personally to cod Y ml tary enterp e a General or 7 any other capacity 5 RESOLVED That ſel ral įud a ry be est ! I shed to consist la upreme Tr bunal the Judge of wh ch to be appo ted by the Execut) e nd toh Id the offices during good bcha 1 ur to recei e punauall I stated times a fixel com spensation for their services in which no ncrease or d minu t

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·THE BASIC DOCUMENTS
III
THE CONSTITUTION

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·A BRIEF SL VIVIRY Althoug! m st of the pr nap ito ns of the Consu tution ha e ben touched on the introductory essay it may be u elul I th s po nt to set donn a br el sistemat c analysis of the locun entisers tej urposes of both sum mary and chat - 1 n n Prato n t I CELER IL TRINCIPLES OF THE CONSTITUTION TI ftlet The in erican nation ha bec plr e qu ted elsewhin these pags et ucullt cmposed of inde struct I les nd il px pelu ich cter of the conti nt hul been re on red both in I ndi thr dn the on before that Th nii r th de alt n are com be naged that the Trucle 1n ce deded! Ic perpetual and thi thle hrni tut n del res tht the objet 1 Tpx ila I once the per pet ty ne til mplied For ano he ti yu it Itho gh the Consti ht tes adm tied to tle in 111 SE $ tets up no ma chant d reisn solt era ded (Art de V Pr T ght ratify a st le ch hinni Ith ugh theoreucal lissent It ind hut otheru se the 1 ment in [ the C (tul n aside the C1I1 ild th que ! 1 ot I lynhn A ejl war or the amend 1 tutni ch pos bx Im nt 17 luble arrange des ruct b 1 ty on a h fr the amend ng poner

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·A BRIEF SLY LARY of state trad regulations are forbidden because they in rade the dormant commerce pos et of Congress and that the states may not directly tax an instrumentality of the federal go ernment (a prohibition which has also been appl ed in reserse so as to restha the nauonal govem ment in taking the states) Veither of these legal con cepts is expressed in any specific clause of the Constitu lion they a e sa d to arise from the nature of the federal system itself + Interstate Relations The prov s ons in Article I Sections 1 and ? relat ng 10 this subject are survivals of the interstate com ty provisions of the Irids of Con federat on Other pro 1ons are the interstate compact clause of Arucle Sect on 10 Para raph S whose pos iblities as a soirce of inte state cooperation are only re cently be n real cd and the arran ement n Article III Section wh ch ges the federal judici jurisdiction over interstate d pules F nally the commerce clause has been held to pe ent the tates f om crect ng commercal barr ers graint ther ner hbors so as to lavor their own cuzens at the expense of the rest of the nat on 5 Elect ns The poner i prescr be ol ng qualıſıca tions was left in the on! Const tution to the several states though th some qu 1 [cations and subsequent amendm ni he extended these qual ſaai ons much furthe Aicle 1 Sccin pro ides that those who vote for Rep sentt must ha e the qualif au ns of those who ote for the mi nume u banch of the state legusi lue and th Se enteenth Amendment prescribes the sam qual fic i on for those ho elect Senators The statcs 21 also forb dden to deny the silframe on the ground of Iceo olor (Amendment F (teen) and on the ground of sex (4m ndment Vineteen) The right to cast ote lo feder i fficers n accordan enthalıd stale regul lions can be pr tected by Confessional legislation As for le uon to the pres deng, the states are left free to presaibe qual fi ation to Ole for the Electoral Collere (ubje t of co se to Amendments Fifteen and a neteen) and t was originally assumed that the Electors so chosen Hold mke a tree cho ce But in practice the Electors

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·$9 A BRIEF SLOWCARY existence s inferred from the nature of the legislatne function and the power 10 control the appellale jurisdic tion of the Supreme Court (Article III Section The upsht of this impressi e array of authority and the list could be extended substantially--is that the Contess is enda ed n th the full ranre of powers generally expected of a so ereim nat n and that onstitui onally speaking it stands fo th as the dom nant brand of the lacral tri t 12 appo imet pro the un un irate 2 Tle P CTS f the Pesident The Constitution males the P s dent an extremel print executive Ar ticle I Sectn spec fcally make him commander in chief of the rmed for e grants him broad con trol o er the í remple of the in ted States through the te ty pak ng power and authority e the admin streae ce of B inment th h the poner of nd emo al It is true that the Senate pa i apte n both th ittymin an! Ipo ntment and that bod bn me n negl 8 blc But the Tres dentnh natu e of the case h lds the nuatic and th n thi he s u ull the dom n nt partner tre petite fu to The dtngu shing char acter t i 1c st tut al author y how e His art 1 m nder achief and h the are that the s be la thfully ex ecuted (It! 1 Ill) are both ld to define and so hemd much (ther Vlore ст thůl g ith the test w11tte ex ecut ер 1 11 th gen ral I rm the f3 Unloc ngres in lm ndate It all n po e fil fgure ile Cngres p bably depends not n h Ex ili nas upon the facts of poltroll! TITI The al ent fat about the Ip aret the authot to re ew the acts ( the skis wh ch is supposedly d fron th pm cat on of lol lll and the auth ty to re ex acts of thor is to per thi funci n quite apart th the 5 en t 1 L Lt T. d use and from the impl

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·41 A BUEF SL ( IARY them as reasonably jusufed by some public danner Amendments Four throu h Ei ht protect certain pro cedural n hts of the individual-generally speaking the right to be free Lom arbitrary treatment by police oficers and the right to a lair trial Amendments Thirteen through Fifteen are the so-called Civil llar Amendments passed alter that confl at largely 10 ensure the newly freed Wegro his ausil rights From the point of ics of Itigation the Fourteenth has been by far the most important ror some Lenty years after its passare in 1868 the duc process clause of that Amendment was interpreted chiefly as a protection for property holders but today it is construcd to restrict the states in somewhat the same way that the first €ght Amendmenu limit the national go ernment

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·LETTER OF THE COVVENTION TO CONGRESS In Contention September 17 1787 SR WE HAVE NOW THIE HONOR to submit to the consideration of the Un ted States in Congress assembled that constitution which has appeared to us the most ad sable The friends of our country ha e lon seen and desired that te po c of maling war peace and treaties of levying money and regulaung commerce and the correspondent exec uue and jud cal authorities should be fully and ellectually vested in the general go ernment of the Union but the im propriety of delegating such extensi e trust to one body of men s ev dent- Hence results the necessity of a diferent or gan zation It s ob ou ly impra i cable in the federal government of these States to ecure all r ghts of independent so ereignty to each and yet pros d for the interest and safety of all-- Ind du ls ntering nto society must give up a share of I berty to preserve the rest The magnitude of the sacrifice mu t depend a ell on s tuation and circumstances as on the object to be obta ned It s t all t mes d [cult to draw with n the I ne between u ose r ghts which mu t be sur rendered and 4 ose n h may be reserved and on the pres ent occas nu is d ffic ly was noteased by a difference among the sexcral States to their situation extent habits and par lar nterests. In ll our d l ber t ons on th s sub} ct we kept steadily in that wh ch appears to us the greatest interest of e ery uu Amer can the consol dation of our Union in h ch n ol ed our p osper ty jel aty safety perhaps our ntion existence Ths important c nsideration seriously and deeply impressed on our minds led each State in the 43 рес our e

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·RESOLUTION OF THE CONVENTION {Septembe 1 I In Convento Ve la lepte le i ! 19 Haps! sai usetts PRESENT The states Connect cut VH Jersey Pennsykan a Dela a Vr! !! Ca la South Carol na nd Ge Resolved That the cor (u! be 1 dtxl the lnted States in Congress en b!! dhil L } If the a cot con ention that it h Id altr vention of delegates chos n the pe ple thereof under th 17 med nfulgii (fr their assent and ficau n d the n! SC 111 3 10 and rauf ng the am h lugt ueel to the En led States nchie dxen ble 1 Resol d That th ein that as toon a th i fcd u is wonstitt indst en Helt ald xx a day wh hl h uld be politici tid the d who the lectors sh uld te f th Pr nd the jme nd pl el n nen ng proud tt Con it lution tht it I pull in th h uld be ippointed nd h trs d rep SC tt 1 led at he elect is Tould nth d {red i cle in of h Pres d ni nd h Idi natal t r red gned caled nd d iddl Cont tu Ttary of th ed 5 Congress semi d thi the enat rs nd P e esh ld ne t the ume nd lace 7ů tht th en tors h uld ppo nt a pes dent {th Sen clr the sol pu pose ( re ing pen ng and punt n otes for Pesant and that after he shall be 45 n t m 0 e bi let the sec DIEU e t

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·n the opn RESOLUTION OF THE COVVENTION (Sepie ber 1) In Convent o i lo da Septe iber I :) I 8. I veu H n psl a Massacl uselts PCORN The State Connecticut Ha it n leuk le Jersey Pennsyl ania Dela are y nla als loth Carolina South Carolina and Gigi Resolved That the con i lut on bei d before the en ied States in Congress embld nd that ! u ор in of this con enuon that I h uld fterwa d be ulotted to a con yenuon of delegates ho 1 ne h Si te ly the people thereof under thr 11 me dion of leg I tu el u eir assent and ficat on a d that e h nt on assenting to and rauf ng th me 1 uld gienie thereof to the Luted States n logi as en bied Resol ed Tht In fth nent n that as soon as th n St te h Ilha e rifed this onsutut on ihlid St e Conte embled should ex a dyn h h elect rs hould be ppointed by the States hich shall ? rted the nd do wh cl the lectors hould sn bli ot the Pre Int and the time a d pla 11 n ne PO under th Con sutuu n that Iter u h publc ton th le tor h uld be ippo nted nd the ato nd ep e ent elected that he electors h uld nt th dy fix d for the leci n of dl uld unnther otes ert fed signed caled and drid b con i tutn requ es to the sec tiary of the In d St is n Congress a sembled that the te hould en ene 1 the time and d hi th sen lo should appoint a president I the Senec th sole purpose of ecer ing opening and punt n otes fo Pres dent and tht after he shall be 45 t On ne ed he Pres d nt sen nur! 1eagh

·46
THE BASIC DOCL VIENTS
chosen the Congress together with the President
Without delay proceed to execute this Constituuon
By the unanimous order of the contention
GEORGE WASHINGTOV Preside!
WILLIAM Jacksov Secretary

·THE CONSTITUTION OF THE UNITED STATES WE THE PEOPLE OF THE UNITED STATES IN ORDER TO FOR. IA MORE PERFECT UNION ESTABLISH JUSTICE, INSURE DOSIES. TIC TRANQUILITY PROVIDE FOR THE CO MOY DEFENCE, PRO MOTE THE GENERAL I ELFARE, AND SECURE THE BLESSINGS OF LIBERTY TO OURSELVES AND OUR POSTERITY DO ORDWIN AND ESTABLISH THIS CONSTITUTIOY FOR THE UNITED STATES OF A TERICA SECTION ARTICLE I ECTION 1 All legisl ti e Pwers herein granted shall be ested in a Contess of the United States which shall consist of a Senate and House of Representatives SECTION (1) The House of Representatives shall be canned of Vembers h sen esery second Year by the l'eople Plectors in each State shall ha Branch of the State ( o person ball be a Representative who si au atta ned to the Age of Twenty fc years rd been seven cars a Ciuren of de nited States and who shall not when clected be ninh b tant of that State in wluch he sh ll be chosen (3) Representaties and direct Taxes shall be apportioned among the se e al State which may be included within ths Unio i accord ng to the respecu e Numbers which shall be determined by add ng to the whole \umber of free Persons includ n those bound to Serv ce for a Term of lears and ex clud 1 Ind an not i red the fifths of all other persons The act al Enumeration shall be made within three Years alter the first Veet ng of the Congress of the United States and within every ubsequent Term of ten Years in such Man 47

·46
THE BASIC DOCL VEYTS
chosen the Congress together with the President should
Without delay proceed to execute thuis Constitution.
By the unanimous order of the convention
GEORGE WASHINGTOY President
WILLIAN JACKSON Secretary

·49 TIIE AMERICAV CONSTITUTION () The Senate shall chuse their other Oficers and also a President pro tempore in the Absence of the Vice President, or when he shall exetase the Office of President of the United States (6) The Senate hall have the sole Power to try all Impeach ments When silting for that Purpose they shall be on Oath or Affirmation When the Pres dent of the United States is tried the Ch ef Justice shall pres de And no Person shall be convicted it out the Concurrence of to thirds of the lemn bers present. (7) Judgment in cases of Impeachment shall not extend further than to remo al from Office and disqualification to hold and enjoy any Office of honor Trust or Profit under the United States but the Party convicted shall nevertheless be liable and subject to Indictment Tnal Judgment and Pun- 1 hment according to Lax SECTION 1 (1) The Times Places and Vanner of holding Elections f r Sen cors and Representatives shall be prescribed in each State by the Legi lature thereof but the Congress may at any time by La male or alter such Regulations except as to the Place of du in Senators (2) The Congress sh 1l assemble at least once in every Year and such Veeting shall be on the fi st Vonday n December unless they shall by Lan appoint a different Day SECTION (1) Each House shall be the Judge of the Elec Ins Returns and Qual fications of its ou n Members and a Vajor ty of e ch shall constitute a Quorum to do Business but a smaller Vumber may adjourn from day to day and may be auth rued to ompel the Attendance of absent Members in such Vannt and under such Penalties as each House may pro ide Each House my determine the Rules of its Proceed ngs puni h i Members for d sorderly Behavior and with the Concurrence of two thirds expel Vember (3) Each House shall keep a journal of its Proceedings and from t me 10 me publ sh the same excepting such Parts as may in their judgment require Secrecy and the leas and

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·se 51 TITE SERICA COSTITUTION the Votes of both Hou es shall be determined by icas and Vays and the Names of the Persons volin for and ainst the Bill shall be entered on the Journal of cach House respec ! ely If any Bill shall not be returned by the President ith n ten Da 5 (Sundays ercepied) after it shall ha e been presented to hm the Same shall be a lw alle Vänner as if he bad s gned i unless the Congress by the r Idjournment pre ent its Ret in in h ch Caet hall not be 3 Lax Evers Order Resolut on r lote to 1h the Concur rence of the S nate dH use of Rep esentat es may be nec essary (except on a quest on of Aljur ment) hll be pre sence to the Pre id nt ſ the Inted > le nl belore the Sarre shall take Ellect h!! be allo I ly hin or being disappred b hm hll be ep sel bitirls of the Senate and H ise Rejt enit CC 1 to the Rules and L m tai on pes bed ntel f Bit SECTION 8 (1 Th Css si il el To lay and collect T Die impot DE t the Debts and pro de fo than nDine and g ne s' Wellare of the Und Stell Dut Impot nd Exc se shall be uníonn tho gl out the ined St te 2) Το ne on th Cell I the ned States (3) To Cnner ul rent ns and among the I St les n! 4 th th Inlan T te (4) T t}} ni un mm R le trl: lion and un form LW the subjec of B nk up! es thr ughout the Un ted St te egui te thel luteof an 1 of for eign Connd fixth St nl rd of lleght nd Measures (6) TOP th Pun hm nt of counterle e ng the Se urile ndu nt Caſtel tabl h Post Oſhce ani post Rd (8) Topon le ule Prgtes of S ne and useful lrts by secur n nid Tinest futh is nd In entors the ex clusi e Relie de respect et tnts and Disco eries (9) To ons tute Tr bunal inſerir to the Supreme Court (10) To define and Punish Piraces and Felonies committed e ( ) To ted St les OT

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·or Iron те 5$ THE AMERICA Y CONSTITUTION k suspended unless wen in cases of Rebellion or Invasion ta public Safety may require it ) No Bill of Atuainder or ex post facto Lax shall be passed u lo Capitation or other d rect tax shall be laid unless mm Proportion to the Census or Enumeration I eruin before durected to be taken. A) \o Tax or Dut shall be laid on Irucles exported from 225 State 6) No preference h ll be gi en by an Reg lat on of Com We or Re enue to the Prt of oe Si te I those of an cher nor hall Vessel und ! ne State be oblived to enter clear rp Dule n another lo Voney sh ll be laun fro n but in Consequence of Ipproj 131 mad by L*ad a remular Statem.nt and Accouii I the Re eļi and Fxper d lures of all public Mone hall be subl led from je to me (8) \o Tide of bit Ille gited b the Unite 1 States And n Per on Sold al Ofb e of Pr flor Trust under them sh !! uut the ent I the Conness ac cept of any present Emol Colle Tile of any kind Whate er from ny hP e TL Stre SECTION 10 (1) \t Tallur into an Teaty Al lance or Conle ! tn grant L tte I Va que and Re pasal cavo e m Bil [Crdt m he ans Th ng but gold and si с 3 Tn le PNCHI of Debts pass any ex po i fa to La Lau mpairing the Oblimu n of Car Sat y T tle of blity (Stat sh Il but de Con ent of ti lay any Impo ts or Dutes on Inp its o Expo ts except what may be absolut necessa lo x at ng t in pect on Laws and the nt Podu e of !! Dul nd Impot I d by any Expe is hll be fo the le of the Treas uty of th dll uh lan sh ll be subject to thR nnd ni ul of th ( ness (3) \o Stell th ut th Consent of Contess lay ny Duty of In me keep T oops or Sh ps of War in time of Peace e ler Dio any Agre ment or Comp ct with another B of Arta nd Congress t Stale on In pots ed Stes

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·53 TIIE A. IERICAV COSTITUTION te puspended unless hen in Cases of Rebellion or Insasion Le public Safety may require it. no Bill of Itta nder or ex post facto Lax shall le passed (9 to Capitation or other direct tax shall be laid unless in Proportion to the Census or E umerauion herein before directed to be taken. ) \o Tax or Du shall le laid on Irticles esported from any Sate O lo preference shall le gi en by any regulauon of Com merct or Re enue to the Ports of oe State I th se of an other nor shall Wessels bound to or fr 11 one State bc obli, ed to enter clear or sa Dut es n another O lo Money h ll be la n fronte Tre ry but in Consequence of Ippropri 1 s mad b Law and a regular Statement and Accouni of th Re e pi ani Fxpenditures of all public Mone shall be pull hed ( om e to time (o) o Title of Toble Ill be grant I by the United States And no P Off e of Proft or Trust under them sh 11 thot the Cnent of de Congress ac cept of any prese Imolun ent of T tle of any knd sh tc trọn nin Pr rir gn St LC SECTION 10 (1) Villl noan Treaty A1 lance Confed T nt L ttc Ma que and Re pasal coin Von TIB! fr d make ny Th ng but gold and ! Con a Te ir Pa mnt of Debus pass any Bll of Art nder ex po if L or Law mpair ng the Obigat n of C or grant n TI I lob I ty o lo Stat hou the Cns nt lay any Impo es o Dies n In ports o Exports except what may be bs lune ry for executa is n pect on Lans and the net pou I ll Dui es nd Impoi la d by any State on Impots Expo hll be the lse of the Treas ury of the L ed St nd Il su h Laws si all be subject to the R nnd ontroul of h Congress tho 1 th Consent of Congress lay { T nn ge i ep Troops or Sh ps of War in i me te nto any Agreement or Compact with another е IT un I the Congress L ct € (5) los ny Du Pea

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·1 n 55 TIE AFRICA, CONSTITUTION be suspended unless I en in cases of Rebellion or Invasion the public Safety may require it. (3) Vo Bill of Attainder or ex post facto Lat shall be passed (o lo Capitalion or other d rect lax shall be lud unless m Proport on to the Census or E meration her in before directed to be taken. 6) to Tax or Duiy hall be l d on Irticles exported from 205 Stale To prelerence shall be g en van Regulauion of Com me or Re enue to the Ports of e Stt I those of an o.her nor shall les is boun i to or ir ne State be obliced to enter clear pas Due es n an ihr lo Vonev hall be dd Te ry but in Consequence of Appropri db L aid regular Statenent and Accout Re pl and tap nditures of all public Vn pbl i d from ett me ) T tle of bit id by the United Slates And no ler liga ON e of Proſt or Trust under them sh 11 th ut the ent of the Cngress ac rept of n present I or T ti of any and wba.cier from gn St le Secto 10 1 11 "Treaty 11 r Cru gT Lett i Va que and Re prisal con lo IPN fred m he any Thn but gold nd slec men Bll of Ata dr XP 1 to L npa ring the Obl gat on ot (nt TOS! th ut tie C) ent of the Congress lay any Impri r Du n Inp Fxpo is except what may be abs lu l i fo u ng is npe i on Lans adth nil { ll Duties and In pot laid by any Staten In pois Expo tsh lb fthel of the Treas wry of thin ed s les nd l uh La to the R ntr ul f the Contes (3) St thout the Consent of Contess lay any Duty of I nn ge Leep I oops or Sh ps of War in time of Pea cne no any Agreement or Comp ct with another I OM ? { t liance ID bt pa any i lobit) t X shall be subject

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·55 TUIE A (ERICA COSTITUTIOY one lote quorum for this purpose shall consist of a Mem ber or Vembers from tho-thirds of the States and 3 Vajority of all the Stales shall be necessary to a Choice in every Case after the choice of the President the person huing the grcal est Number of Votes of the Electors shall be the Vice President But if there should remain t o or more who have equal otes the Senate hall chuse from them by Ballot the Vice Presı lent. (3) The Congress may determine the Time of chusing the Electors and the Day on which they shall gi e their Votes which Day shall be the same throughout the in ted States (4) no Person except a natural born Cat zen or a Citizen of the Un ted States at the time of the Adoption of this Con stituu n shall be eligible to the Office of President neid er sh II any person be eligible to that Office ho shall not have altained to the Age of thirty five I ears and been fourteen Years a Rest lent thn the United States (5) In Case of the Remo al of the President from Off ce or of hs Death Res gnation o Inability to di charge thic Powers and Duties of the said Orce the same shall de olve on the Vice Pres dent and the Congress may by Law provide for the Case of Removal Death Resignat on or Inability both of the Pres dent and V ce Pres dent decl ring wat Of fcer shall then act as President and suc! Officer shall act ac cord noly unt I the D sabul ty be remo ed or a I resident hall be elected (6) The President y all at slated T mes recer e for his Ser ces a C mpensat on which hall neither be encreased nor dim bished durn the le od for hic he shall ha e been ele ted and he h ll n t rece eu thn that period any Other Emolument from the in ted States or Y of them (7) D fore he enter on the Execut on ol his Olh e he shall take de follo noth or Afirmation - I do solemnly swear (or affirm) tl t I will faithfully exccute the Office of President of the Un ted States nd will to the best of my lbil ty pre sne prolet and defend the Const tution of the United SECTION 2 (1) The President shall be Commander n Chief States

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·52 THIE AJERUCAV CONSTITUTION one lote A quorum for this purpose shall consist of a Vem ber or Members from two-thirds of the States and a Vajority of all the States shall be necessary to a Choice In citry Case after the choice of the President the person has in the great est Nurnber of Votes of the Electors shall be the V ce l'resident But if there should remain luo or more who ha e cqual sotes the Scoate sh II chuse from them by Pallot the Vice President. (3) The Conrress may determine the T mc of chusin the Electors and the Day on wl ch the shall give their Votes wuch Day shall be the same throughout the Lnited States (1) No Person except a natural born Cut zen or a Citizen of the United Sta es at the time of the Adoption of this con st tution hall be el gible to the Of ce of President neither shall any person be el gible to that Ofice who shall not hase attained to the Age of thirty fi e Icars and been fourteen Years a Res dent wth n the United States (5) In Case of the Remo al of the P esident from Office or of hs Death res gnation or Inab I ty to discharge ile Powers and Duties of the said Office the same shall devolic on the Vice President and the Concress may by Law pro de for Le Cae of Remo al Deal! Res nation or Inab I ty both of u e President and Vice President decl ring what Of ficer sh ll then act as Pres dent and sul Officer tall act ac coru n ly unul the Disabil ty be remo ed or a President shall be elected ( The President hall at stated T nes recei e for his Services a Compensation wh ch hall ne ther be encreased no diminished durin the Per od for hd he shall ha e been cle ted and he sh ll not recei e with n that period any other Emolument fron the United State or any of them Bloe he entr on the Execut on of hs Office he shall take th follos in Oath or Affrmation - I do solen niy si car (or affirm) th till faithfully execute the Office of President of the Un ted States and wil to the best of my Ibility pre STIC protect and defend the Const tution of the United States SECTION 2 (!) The Pres dent shall be Commander in Chief

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·98 Key to Economic Progress lent fluctuation at a high level of prospent is a primary Iesponsibility of the American government Often economic progress results from the conception and introduction of new id as creaung economic oppor tunities Brilliant new concepts or discoveri Sharnessing cl ctricity the development of plastic matenal atomic fission-do not folk ui utine sah Jul Thy occur al most unpr det ibly and at irregular interval The progress they cngender thr tor unnot flow in a continuously smooth str am Nor an th nation pr du in and on umpuon be held in ruid bilan e Muld fluctuati nis n vrmal in the proc ss fur wth ind (Km del pm ni Deep de pre son or un in inflati ninth ihr hand arc neith rnrmilnin Ar their nt 1 breakdown in th normal fun ti ning i frem pr du tio cCOD omi At last twie inc thes (nd Wild Wir timely used of th Emmi 0 I his antud mild rele Infrmilpen in ur u 10 Many ccon milli etht Tint un r 11 Calamulies th An | in 1 I turcs of built in latih Sull lart nor the human factor in il 1 1 failurc fan en m ability of mica to ran i pre 1 1 Thule Let u tibility in a fruc ccun m my 10* i oprati nofil 17 nici mnpurcats ut I his mony to buy th th ta hun tani do of lubri nurd di tributin nu a Icsulting Bus ut po iu i and semics and lot.* ·In Search of Stability 99 La everyday life the farmer pays his belp the factory man ager pays the mechanic the airline pays the pilot, the cor poration pays interest to bond holders, and so on. Th people getting paid for their services pay the grocer for food, the gas company for beat the doctor for profesional services the city for sanitation and police protection, and the Federal govertmeat for postal services highways wod cven jet fighters There are therefore two continuous streams runni3 20 opposite direcuons one is the strcam of goods and services the result of the efforts of people to produce and distribute what consumers will want the other is the stream of money payments the result of people being paid for theu work and paying others for products and services. If both streams flow at fugh and stable levels the economy wall operate at satisfactory levels of relative stability Fluctuations will be muld, without violent change in prices of goods and services or in the totals of employment and Income Many problems however are inched in leeping th two streams in balance Th flow of goods and services is ever changing both in size and composition. Some prodacts are sold during certain seasons yet their production goes on throughout the year New products appear on the market, affecting producuon and employment in other lines International complications cause shuts in producuon and distnbution. Defense peeds duert labor and matenals to the production of armaments Floods droughts or sunkes cause unpredictable chan es in the smooth flow of the tho streams These causes of change are more or less common to all modera economies there is an additional significant cause of change in a free economy the individual freedom of cho ce Th consumer as a rule is free to buy what h lucs and in whatever quantities his budget can stand. More important, the management is free to decide whether to ·100 Key to Economic Progress expand facilities start production of new items introduce new machinery or distribute larger dividends to stock holders instead of re investing company profits Millions of individual decisions taken together can cause impor tant changes in the flow of the tho streams and consequently in levels of income and employment In a monolithic industrial int frec cconomic choice is almost non-existent De isuns are inad by a political elite which holds the pinnacle of th poliu Oeconomic pyra nud This stilling of freedom is a primitive method of acluering stability Seen histonc illy it is in ther instanco of a society subordinating the individual tv thu omnipotent will of the State In a democratic society on the other hand it is con sıdured paramount that in fom of hace for the individ ual be preserved to achi se relante stability sithout unduly (urbing into a luul fret mis a mun objective of government To achil thi and the Am rican people have voted their a) ernm nt certain to These are in tended pnmurly o reguli lume and low of moncy t Instruments for pre cring tih liry The u tual mixnitu t th i nes strcim in the Amer ican ccon my d pend in in firs the quantity of mon y (that is th numbrid or in irculation) and the frequen y with hi hi! mny chances hunds If the moniv ! 1h ml n rulati e biance with the flow of nu thre mu the control of either the t til quanuts i d ll et th rate at wbuch money pi ses fr non per n to an thor or both In the (nit d Stal rile at whih peop! spcad their money is influenced by lculul n fat ringd sclopment a il group of mid lle inc 710 froilies with a high tendency to c insuni. This influence honcser us Loto ·la Search of Stabiury 101 duect and th government does not con.rol the decisions of individuals But gouernm at is equipped with a number of tools to regulate, sodirectly and directly the supply of Toat) Lnder the Employment Act of 1946 the American gar trument is formally commited to the preservation of com homuc stubdity The gist of the Act is that goverment shall cooperate with industry labor and a nculture to promote maumum employment and production arod senous de pressions, and present disruptive changes in price levels and thus wzhin th framework of frce competitive eater prise The Act das become a cornerstone in th develop ment of the Amencar economic system la the post of years its panciples were credited with staviag off serious cconomic dislocation despite unsettled world condit 55. A gouemment may tale drastic action like rallongg goods fixing prces and allocating materials and labor But u a tres ciety such restrictive measures are ccepiable only la scrious emer cock as in wartime or in the event of economic catastrophe The Amencan government recs primarily or indirect regulatory instruments At its dis posal are many sools with which it can promote a steady tuse i Lacom and employment and iron out fuctuations around points of balance Monetary poucies Ose broad category of tools comes under the heading of monetary polcies The monetary policies deal mausty with the commercial bukug systea and are for the most part administered by the Federal Res ne System Ode device used by the Federal Resene System to control th volume of mon y is manipulation of so-called reserva requirements Approumately seven thousand poate baaks ac meubers of the Federal Reserve System. These member badls must comply with reserve requirements L.C ·102 Key to Econonuc Progress must deposit a certain percentage of their assets with Com of the twelve Federal Re.cnic Banks Reserc rcquube ments are not ngd they can be increased or d crcas.d by the Board of Governors of the Federal Resenc Sys com When the Federal Reserve decreases reserve requiremca. banks can lend and invest more freely The general to... of the market becomes casy with a corresponding de crease in the cost of borrowing ic in the rate of interest. The opposite becomes true when the Federal Rescore riscs rescrie requirements With the experience of the past decades American bankers are very seasitive to Federal Resenc acuons and consider even a slight increase in reserve requirements a caution signal Thus raising roseric requirements, in ad dition to its direct elfcut on money supply has a psychological influence on the banking community wbuch should not be underrated Another weapon in the Federal Reserve arsenal is it power to adjust the interest rate on rcdiscounting A member bank can increase its cash funds or deposits with the Reserve Bank by depositing commercial paper ic al evidence that d bts are owed the m mber bank to be redes counted by the Reserve Bank If the Federal Rescnc wishes to encourage credit flor and spending the redes count rate is low red if it decms contruction of credit Misur, the Bank rai as the di count rat Sul unoth r Fed ral Rc ne in trument is open mar Let op ratin The Bank mas bus or sell certain gov. crament sc urities on the open mirhet o'lcring them to mumber bank When I der il Re se huis money tous into circulation when it sell int is into th Rc senic and steps cir ulating unul the Bord of Goscrrors de ms it appr priats By manipulatine rediscount raics and engaging in pen mark i operatin th red rul Re cryo maintains a regular check n the upply of morey Besid s having duct cconomic t1 is the cop'oyar al of the ·103 In Search of Stability desises senes also as a signal to the nation of prevailing Febral Resene attitudes and its reading of economic trends There is a major difference between rediscountın, opera toas and open market operauons In open market opera tons the initiative rests exclusively with Federal Reserve. In other words it is up to the Federal Reserve to decid of pu chas, or sale of governmeat securities in the market is advantageous to the over ?!! y Stock market credit consumer credit, and real estate cred L It is gen rally acknowled ed that by regul ting margn Tequirements me the proportion of cash required by law for the purpose secunuies--the danger of excessive credit in the stock market is minimized the market fluctua Loc, are lept within safe limits. Anoth r tool at the aisposal of government is the temporary restraint of consumer credit in times of energency Throuch proper manipulation of consumer credit con sumer demand can be brought in line with current supply Removal of restricuons on the other hand can spur demand then increa ed consumpuon is deemed necessary A similar set of der ces may be used to regulate real estate credit, especially for residential properties Author ity to regulate curtain Wnds of real estate credit was tem porarily granted the President in September 1950 bn strong inilationary pressures d defense requremcots m de such authonty decussary Thes restrictions have Susce beca bited, Fiscal Poi cies Old sound fin.nice theory maintained that govem ments could afford to go ahead with iced d projects ·104 Key to Economic Progress only in periods of prosperity Thus theory is now d funct no modera cconomist would support a policy of economy in a penod of economic depression Lostcad modern com nomic thinking holds that taxation and speading polics de fiscal policies should provide an array of useful tools for woning out economic flu tuations The chance in thinking is fairly reccnt. Three decades ago it was generally believed that government acuon ca sufficient scale to ci pe with d pre ion could not be talca without jeopardizing the monctary and fiscal structure. In a climate of such economic thinking fiscal policy was conceived in narrow and restricted terms When the scicrc depression of the early thirti s set in the United States as unprepared to meet the challenge Yet thanks to its demo cratic framework the countri prout d from thc crrors of the past soon positive mer ur for a vunter depression fiscal policy were adopted into law At present the Am sic in guvernment has the fiscal tools and th economi thinkine un 1 sdministradıc machinery to use them properly Th exi re nit f rolpr of they are being steadily sit ngthen dani supplemented by apu propriate legislation The land lemoracy is that it can mett th challun sich ut scwrung lo bloodshed or self-de trui What are the buildve it the di psal of the Amr ican gvernmint ideas ( udist them into two broud c3t Lori Somc furc tion all the line 1 others are used by goverm rtu ruitin e require lo tro first cat Lory 1 0 1 xial sccunty benefits firm sut Au rinfccd by the Federal i ! ATC 51 c incomo tar In th rother 1 (coltess to raise or Iwer tur nd in it r de 20 pullic pending Th sc art thresuces of inome in a freu ccorgmyn n u 15 is T3T - ·105 In Search of Stability bus.dess investments consumer spenung wd government tipenditures Only the third can be wholly under govern ment control sithout excessive repression of individual freedom. While govermect can fuence the Ocher two sources of come th influence must be indirect, through monciary policy Fiscal policy therefore acquires great ignificance, especilly in view of the expansion of gov cronicat operauons lo modern times Through th operation of automatic stabilizers the gov eran-ct gains tune to proces nith discretionary measures deemed necessary to met disruption in Icvels of income and emplostzent. More specially in umes of decliniog buss Dom. acuity and increased waemployment, automauc stabilizers like social secunty and unemployment compano Sation go quctly to work providing many consumers with purchasing power If farm prices are falling farmers rocente subsidies which also maintain their purchasing power And, in times of economic pro perity as in one increases, tax recei is increase automatically While automatic stabuizers unobtrusively exert their in fluence governm at can go forward with more drastic legislauve measures If the country appears headed for a period of de lining economic a tivity Congress may reduce taxes and authorize expenditures for public soils to sumu late the economy In times of infauonary pressure the au comati stabilizers exert a restraining infuence while the government rises taxes and cuts infationary spending. one of the monetary and fiscal devices can by itself present economs fluctuations But their combined and coo dna.cd use can alleviate economic d slocations Th menetury tools can be used more quidly because their application is entrusted to a single ncy the Federal Re sne. The automatic fiscal stabilizers also work swiftly respor:din automatically to rise and fall in levels of income and employment ·106 key to Economic Progress Statistics and econonucs an ad to Government The choice of appropnate fiscal and mon tary policies not left to chance The Employment Act of 1946 club lished the Council of Economic Advisors The Council gathers timely authontative information on econom o clopments and trends it apprais sth programs and a. tivities of th Federal government in its effort to ma 23 maximum employment production and purchasing pos er it develops and re omm nds to the President nato economic policies d signed to ar ile onomic luctus tons or diminish the effects there and t nally it assus. and advises the Pre id nt in pr purn his Econom Message to Congress This annual report ones as a blue print showing cl ark where the meri in c onomy stanus and where it is ging in v of th t influence of the American economy on the rest of the wrld this Messure is probably one of the mi t impartint d numents of our tunc By gathering reliable stati 11 al d 11 the Imeri in gou cmment obtains a c mp hant til nttonal economy The Employment Act of 1946 1! pril the machin ery of economic Inies lutti nfin ! 1 laturc The Act e tabl hdaj in! ( 111 11s n the 1 nomi Report of th Pre il rt nr nm milers of the Senate und x en 3 I her 1 Ropre scntatises Thi ( mm m ing rudy of matters pertunink I thir Raou submits t Scnat and ti 1 Toins and recommendatuns + lur 1 npe I wth an I woonc The Amencan rovernment in impressive array of in Irument IT fluctuations and ihe maintenanc 200 cmploym ab ·107 In Scarch of Slubility All these instrumcats and devices may appear com Pamated to the layman--and they are But their outstand ing feature is that they represent a sincerc and mostly successful effort to achieve stabùity without destroying, in the process the individuals freedom of action Thes, nostruments were not developed overnight they are the results of experience gained by trial and error It would be unwise to suggest th y be copied by other countrus Conditions differ greatly from one country to w Other Nevertheless these instruments tuent study They are hi toric evidence that in a democratic society solutions can be found for most social and economic problems with out sacnficing individual freedom and dignity

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·EPILOGUE Even in this age of resolutionary change the basic aspirations of ordinsry men hold constant in every land. The wo Ws millors pursue personal dignity and freedom, Latonal independence and material well-being. Yet, de spite common goals there is much confusion as to the roads lading to them Alea otten advocate or use means wbuch vrtually begate their ends and their hopes This coahusion bas bsed strife and talry further obscunag basic objecuses and leaving only bitter baised frustra Don, and benaderment. If a poucrful search bght could probe through the beavy log of toisinformation and calcu latca distortion it would reveal the ideas contending for the support and loyalty of mankind. One is that the amnipotent Suate most bave total control over the life of the individual. The other upholds the ability of Man to lead bis omn lite and contnbute to the common well-being within a democraucally accepted legal framework As a small contribution in the scarch for better udder standin of the issues that confront us I have tried to outlin fuadamental principles and features of an economuc system which upholds the freedom and dignity of Man, whul assuring his material well-being. This economic system is a sätepung rebuſ to exploitat og it could not sur le unless it produced for the benefit of the many* Mass Puducudo cannot be sustained unless there is mass con sumpuon xbuch, in turn depends upon mass purchasing ·110 ke) 10 Economic Progress power This is a creative circle in which people participate freely not only as producers but also as enjoyers the fruits of their labor By satisfying not merely in theory but in practice to major aspirations of Man-freedom and material se! being--the American system is a fur teaching advare over old style capitalism and Sovitt monolithic indus Inalism Still one may ask what practical meaning can all this have for the million in the vast expanse of Asia or to the agitated vouth who hout un Hest in slogans 13 the streets if a Tear Fast capital or the mulutudes of Africa startled by uud nahan ng to the complexus of the twentieth ( ntur The ansucr is that the mod.ro world is a compi x kortti & think I se complicated cvery day Mankind cunn ir turn to the idyllic simpli ity of earlier time On thi nirrill natien arc stcaddy moving into th ir mfindu trialz itt a 1 he choice feu ing the peiri nih nahills simplity and the modum c mpl ris Indu tri 11231 n and mpi xity are suc Thu th 1 i neni 11 ndi talianants The opp n nt i i mir! illir uc that democratiu processes ull unei lent thimp tiene nations of the un ierdes ! whum of latu that the inefth nti th n mike it less difficult Irth und rte hxc thic democratic 1 un mbining the tools f with ! Will 11 mi principcs can find chan!! rent un sine ith cur peo ples Thex pin ip! nhinn! hath VK 15 circle of inner ndt 1191 and open thu road to Trip Finnaint mhu!! Irrund on hov thc ad u with the un derueI I the indu thal nauons w ur that use on, I u Ith road to tur 1 1 ·Epilogue 111 industrialism cannot be oferestunated. And not only hasc they a responsibility to help the underdescloped nations their self interest demands they do so Battles of hydro gea bombs and ballısu missues may never be fought but the battle between derpocracy and totalstananism goes on relentlessly csen in the form of compeun, economic systems This battle is rarely spectacular yet its outcome wall determine the world we live in for the forseeabl futuro. A major adsanta e of the American economic system k is elasticity It can adjust to meet particular needs It can expand or contract is response to the changiog rcquirements of a nation. In 1861 Abraham Lincoln wrots cpigrammatually "The legitimate object of governinent is to do for a community of people whateser they need to basc done but cannot do at all or cannot so well do for to msches in their separate and individual capaci ucs. This philosophy of government th vast majonty of Americans has come to believe in and to practice It em braces gant private enterprises like General Motors and government projects of equal magnitude like the Tea Dessee Valley Authonty or the atomic plants at Oak Ridue, Tennessee and Hanford Washington Countries enter og industnalization can apply this pbilosopby of government to their own conditions and problems The extent and scope of government responsibility from one country to another may vary considerably Most impor tant is that the people are spared the suffering and dignity of a totalitaran state Acceptance of these prociples does not mean the world will be shaped in the Amencan we The totalitarian ideologies of our time promise to ·112 Key to Economic Progress solve the world s economic and social ills by piu..ng toilet poner in the hands of an elite Expcnence has shown that this promise involves the sacrifice of human freedom 200 the sacrifice of many human hves Vot even the members of the elite are safe Besides heavy sacnfi es crtorted by the totalitarian Sint ar not nece arily matuted by be stantial material uns for th people On the other hand, American exp rin hi di mon trai uthite onom. z social in uiti r m died and r al pregress can be attained in fr x1 t1 The Am 11 I temi d m rrath West triali malim thi prin in the ru ibc of Som tic able 1 ur I hi h tanda 1 th great in nit In thi h the air hy cipl 11 urahus own con lun 11 mi n { Ի. բոր n 5 s

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