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Commencement Address
by Darryl R. Francis
Mississippi State University
June 1, 1969

It is good to have this opportunity to be in Mississippi.
This part of the state is included in the Eighth Federal Reserve
District, thus providing me with a satisfying reason for an
occasional visit with Mississippi friends. Many people of North
Mississippi, including President Giles who is a member of our
Memphis Branch Board of Directors, have made great contributions to the Federal Reserve and to the monetary policy of the
nation. But most important of all, the graduates of this and
other schools have made a major contribution to the economy
of this area and to the general welfare of all people throughout
the country.
It is not a discussion of economics, however, that is
the primary purpose of my visit. It is rather to some other
issues and responsibilities which you must face that I should
like to direct my thoughts.
As I visualize your future, it holds two most interesting
areas for action — your occupation and your role as a citizen.
Both your own happiness and the long-run success of civilization

-2depend upon how you pursue these roles. Let me lay out two
or three areas relative to these roles which seem to me to be
crucial. First is the widespread unhappiness and dissatisfaction
of great masses of our people, especially youth. The other is
what appears to me to be the tremendous progress that we have
been making and the high level of well-being which we have in
the nation today.
Social Discontent
Despite the great gains which have emanated from our
relatively free enterprise system and free government, there
is great dissatisfaction in our country.

In recent years we

have observed the march of the poor on Washington, the
destruction of offices associated with our military establishment,
and numerous other protests and disturbances in our cities and
on university campuses. One might look at this record of protest
and wonder if our system of free government and private enterprise has failed. Some dissatisfaction can be a basis for further
progress. Nevertheless, there exists a level of dissatisfaction
which cannot be interpreted as progressive.
History teaches that we generally see a reaction to most
violent social disturbances. We can demonstrate this principle
time and again. When mobs made the streets unsafe during the
later decades of the Roman Republic, the population welcomed

-3a dictatorship. The French Revolution, which followed on the
heels of our own, is a similar example. French people, not
content with a limited monarchy, decided to liquidate all opponents
of the proposed republic. The excesses in this design caused
such a reaction that the population welcomed Napoleon, and a
series of West European wars began which ended only after a
great number of Frenchmen had been slaughtered. Even in my
generation, the discontented and disorderly groups of Italy and
Germany ushered in Mussolini and Hitler, which led to the
Second World War and another mass slaughter of humanity.
I shall not dwell on the cause of our extreme unhappiness.
I leave this to the social psychologists and other experts. I can
only express optimism that, as we extricate ourselves from Viet
Nam and achieve a more satisfactory way of enlisting personnel
into the armed forces, we will lose some of our present dissatisfactions. Yet, let me suggest that we may have responsibilities
at home and outside the United States which we must accept.
So long as nations confront each other with power, citizens of
any nation, in order to survive, must discipline themselves and
do some things which they would prefer not to do.
Our Record of Progress
I seriously question whether our problems which cause
our discontent are sufficiently great to risk the social reaction

-4which follows a major disturbance. True, our system is not
perfect. Only in recent years has total racial equality been
recognized. We have not done a perfect job in eliminating
poverty. The draft merits some discontent. Nevertheless,
numerous achievements can be found. I shall briefly enumerate some factors indicating our current well-being and the
great progress which we have been making.
1. Our relatively free economic institutions have
provided consumers with goods and services that they wanted ~
not by government direction, but through incentive provided
by money payments in a free market.
2. The quantity of goods and services provided through
this system has been phenomenal. Last year Gross National
Product in the United States totaled $4,300 per person, the
largest of any nation in the world. Our growth rate has been
relatively steady and high. Since 1940 per capita output of
goods and services measured in constant dollars has more than
doubled. Furthermore, this rate of gain in real output has
occurred with regularity since the early 1800's.
3. In the area of race relations, tremendous progress
has been made. Time Magazine recently reported that the gains
of the Negro during the past eight years have been spectacular.
His median family income has moved up 53 per cent. A far

-5larger per cent is now finishing high school, and almost the
last vestige of segregation has been wiped off the law books.
4. In the educational field I am persuaded that no
nation has ever before maintained so great an educational system
as our own. It can be improved. It should be improved. But
it will not be improved by denying the tremendous quantity and
high quality of the education which we have achieved.
In contrast to these major gains in the United States
and a few other nations such as Germany, Japan, Canada and
Italy, most of the world lives in extreme poverty. In India,
Indonesia, the Arab countries, and in much of Africa, the
populations have made little real progress in income per capita
in the last 2,000 years. Some gains in total production have
been achieved, but the improved health measures were generally
able to reduce the death rate sufficiently to offset the production
In this matter of progress and accomplishment, I do
not allude solely to our economic progress. Probably of even
greater importance are the social and moral gains. Let me refer
to the matter of treating all men equal. As I have observed this
matter, it seems to me that we have made greater progress in
the past 20 years than in any other period in history. We do not
have a perfect situation. I hope that progress will continue.

-6But I think we should recognize that progress had been made,
and on the basis of that recognition, take heart for the future.
Never has the people of any nation been so well fed,
housed, clothed, schooled, and transported as in the United
States today. Furthermore, no nation has enjoyed a higher
degree of freedom than our own. This observation applies to
every class of the population. It is important that we recognize
these facts. What virtue is there in achieving the highest level
of living in the history of the world if we excoriate ourselves
and pull the house down over our heads because we have not
progressed yet more rapidly? Would we be more satisfied if
progress had been greater? I fear not. Yet I would not suggest
that we pause in our efforts for improvement. I do suggest,
however, that we take some satisfaction in the great progress
we are making and in what we have achieved.
Let me now refer briefly to some aspects of our society
which seem to me to explain the great progress and the high
state that we have achieved. The one word which I will use to
explain our progress is "freedom." This is demonstrated most
clearly in the economic sphere. Yet, economic freedom cannot
be separated from a true liberal philosophy which involves
freedom in other areas.

-7The Origin of Freedom
At this point I would like to remind you, with a brief
survey of some historical facts, that freedom did not come
easily to mankind. I look upon true liberalism as the type of
freedom which grew slowly out of the writings and ideas of
Roger Williams, John Locke, Adam Smith, John Stuart Mill,
Thomas Jefferson, Herbert Spencer and a host of others from
the mid-1600's through the 1800's. These great men advocated
that government ought to restrict a person's freedom only
when necessary to protect another person's basic rights.
Accordingly, no society was considered free in which these
liberties were not respected. The great philosopher, Spinoza,
once said: "I call him free who is led solely by reason."
The ancient Greeks discussed freedom and lived at times
under relatively free conditions. In most of the period since
then, however, man has been forced to bow in both thought and
actions to harsh taskmasters. More often than not, his social
position, his income, his occupation, and his religion were
forced upon him. Some rays of freedom began to be noticed in
much of Western Europe about the time that America was discovered. In the late 1600's freedom of thought and action in
the Netherlands was well ahead of that in other European countries.
Similarly, economic progress was most noteworthy there. During

-8this period streams of Western Europe's persecuted citizens
migrated to the American colonies. Most of these migrants
had definite ideas about freedom. They came from areas where
the state controlled their economic life and the church controlled
their thoughts. Roger Williams led the way toward freedom in
the American colonies with a constitution in Rhode Island that
provided for relatively little governmental interference with the
daily lives of the citizens. Jefferson incorporated much of
Locke's thinking into the United States Constitution.
Locke, in the Seventeenth Century, postulated a state
in which men were free and equal before the law and before each
other. His ideal government was one which represented majority
rule rather than an exclusive structure for a king or dictator at
the top. He recognized that most economic problems were selfadjusting. In the economic area, however, we must come forward
another 100 years to Adam Smith's day before a harmonious theory
was developed showing how the economy can work at maximum
efficiency under relatively free conditions. In fact, to the confusion
of most people in his day and of our own time, Smith showed that
most government efforts designed to improve economic activity
actually retarded growth. He, along with other great philosophers
in later years, pointed to a free and efficient enterprise economy.
Added to the freedom to select government officials, this provides

-9by far the greatest freedom from coercion and from want of any
system that has so far been devised. Most of these ideas were
incorporated in the United States Constitution.
Despite our great progress, a large portion of our
population appears to be discontented with our system of free
enterprise and government. I am not sufficiently trained in
psychology to analyze these dissatisfactions. I do, however,
suggest some broad principles that will perhaps avoid costly
errors in national policy.
I am persuaded that rapid improvement in our nation
and the world depends largely on the free flow of ideas and trade.
It will not come from increasing restrictions within a nation or
between nations. Such restrictions tend to take us back to the
status from which we emerged.
Social Reaction to Problems
I am more concerned with our reaction to imagined
problems than with the problems themselves, especially when
the treatment proposed is further restrictions on trade, prices,
resource adjustments and freedom of choice.
I could provide you with numerous examples of the type
of restrictions which tend to reduce both freedom and the rate
of economic growth, but only a few will suffice to demonstrate
the point.

-10Tariffs and import quotas are examples of actions which
fall into this category. The ostensible reason given for most of
them is that national requirements are served by such regulations.
Actually, only a few domestic producers are served by these
barriers to trade. Other citizens suffer sizable losses in higher
prices or loss of export markets.
A large portion of our great domestic programs of the
past 40 years fall into this category of programs which retard
growth and reduce individual liberty. The farm program is a
prime example. First we had guaranteed support prices somewhat
higher than market determined levels. Then production controls
were instituted to stop the buildup in supplies as farmers increased
output in response to the higher prices. Next, exports declined
as prices of crops such as cotton were set higher than world
prices and production became very profitable in the rest of the
world. We attempted to solve this by subsidizing cotton exports.
Then foreign cotton mills could buy our cotton cheaper than our
own mills could buy it at support price levels, and the foreign
mills began to ship cotton goods into the United States at prices
below our own milling cost. In addition to this endless set of
problems, other fibers began to replace the price supported
cotton in most all lines of fiber use. But worst of all, the higherthan-market price for cotton caused an excess of labor to be

- limaintained in the cotton production industry. An excess of
labor in agriculture is a drag on the rest of the nation in the
same way that large government payrolls or large welfare payrolls reduce the general welfare.
The nation and the South would have been better off
today had we proposed no price and production control program
for cotton or for any other sector of agriculture. I further
believe that when government moves into pricing and attempts
to control output in order to raise returns to producers in any
industry, that one set of controls eventually leads to another
as attempts are made to eliminate the alleged inequities. Thus,
controls must eventually be instituted throughout much of
the economy.
Government controls on prices and production do not,
in the long run, achieve the desired results. Furthermore,
the market exercises better controls over most prices, output,
and returns to producers than can be exercised by government.
Under free market conditions when prices rise, output will be
increased as producers are provided with incentive to increase
production. Similarly, a fall in prices will cause a decline in

-12Similar problems to those created by controls in
agriculture are caused by minimum wage laws. Such laws
operate unsatisfactorily where market wages are below the
minimum set by law. In the ghetto areas, among students and
the physically or mentally handicapped, minimum legal wages
are probably a major cause of unemployment. One cannot
expect businessmen to hire help for more than labor is worth
in additional income to the firm. Thus, for those people who
cannot earn the minimum wage set by law, the only recourse
is unemployment. This may be a major portion of our ghetto
problem today.
The interest rate regulations work in a similar manner
as other price controls. When the rates are set too low by
legal action, funds dry up and would-be borrowers are not able
to get credit. This drying up of funds occurs both where loan
and savings rates are held too low.
Other cases of alleged liberal legislation designed to
improve the functioning of the market place include the setting
of foreign exchange rates, providing pricing privileges in some
markets, and protection of professions and occupations from
competition through licensing and chartering arrangements.
I am afraid that more of this type of reaction will be forthcoming
as a result of present discontent.

-13The free market does not attempt to distribute income
equally to all citizens. To the contrary, income is distributed
by the market on the basis of one's contribution to production.
To those who allege inequities in market income distributions,
I suggest better training for the least productive members of
society so that they can become more productive and earn a
larger share of income.
The incentive provided in free markets should continue
to function when welfare payments are judged necessary by
society. Such payments should always be supplementary to
salaries and wages for those who are able to work. Such payments should never be set so as to provide incentive for not
This theory of freedom does not deny a government's
obligation to control monopolies and make laws for the protection
of citizens against such abuses. I quickly add, however, that
most of our monopolistic situations are a result of government
protective devices such as tariffs, licensing privileges, chartering and the setting of standards or qualifications.
I suggest that most of the attempts to solve problems by
preventing the functioning of free markets do not follow from a
true liberal philosophy and are not progressive. They actually
retard economic growth and reduce individual freedom. They

-14carry us a step toward the medieval ages when most market
functions were prohibited, when interest charges were sinful,
when a man's vocation and life status were fixed by his parents'
station in life, and when thought and expression were items
subject to state regulation and control. This type of reaction
to discontent may aid a few temporarily, but more often it tends
to retard healthy economic growth. Reactions to social discontent
may also retard or suppress our political freedoms. These are
the issues which you must face. They involve both economic
and political liberalism.
The heart of a truly liberal philosophy is belief in the
dignity of the individual and his freedom to make the most of
his capacities with the one proviso that he not interfere with
the freedom of others to do likewise. With this general guideline
as my sole criterion, I suggest that during the past several
decades we have taken numerous steps away from such a liberal
philosophy. Shall we search for still greater freedom and true
liberalism, or shall we attempt to solve all alleged social and
economic problems by direct legislation which often cuts deeply
into the individual's freedom of choice? To me this is our
greatest challenge today.