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"THE INDEPENDENT
BANK AND
CAPITALISM"
A n Address
Delivered B y
Mr. R. M. ("Spike") Evans
Member of the Board of Governors,
Federal Reserve System
Washington, D. C.
N A T I O N A L CONVENTION
DETROIT, M I C H I G A N
I t is a distinct pleasure for m e once m o r e
to visit w i t h y o u about a subject upon w h i c h
I have v e r y f i x e d ideas. Those f i x e d ideas
did not come as a result of something I r e a d
i n t h e textbooks, b u t t h e y c a m e f r o m m y
experience i n g o v e r n m e n t , a n d m y e x p e r i ence i n business i n a s m a l l t o w n i n A m e r i c a .
So, i n W h a t I h a v e to say to y o u h e r e today,
I w a n t to say it, a n d r e l a t e i t to capitalism
a n d the capitalistic system.
I t h i n k , if y o u w i l l look a r o u n d the w o r l d
today i n a dispassionate sort of w a y , y o u a r e
b o u n d to come to the i n e v i t a b l e conclusion
that t h r o u g h o u t t h e w o r l d t h e r e is a tendency t o w a r d some k i n d of socialistic government.
P r o b a b l y t h e most effective defense against
t h a t t y p e of organization a r e organizations
such as y o u r o w n t h a t foster t h e small, independent business enterprises of this c o u n t r y .
I do not w a n t to u n d e r t a k e to define capi t a l i s m p a r t i c u l a r l y i n a h a r d a n d fast w a y ,
b u t I t h i n k i t is correct to say t h a t a capitalistic system is one t h a t relies upon free, competitive, p r i v a t e enterprise. O f course, t h e r e
is no such t h i n g as absolute freedom, for w e
must have a reasonable a m o u n t of p u b l i c
r e g u l a t i o n i n the public interest. T h e Encyclopedia B r i t a n n i c a lists t h r e e c r i t e r i a b y
w h i c h capitalism m a y be characterized. O n e
relates to p r i v a t e o w n e r s h i p of land, mines,
i n d u s t r y , etc., a n d the second relates to "production b y p r i v a t e i n i t i a t i v e for p r i v a t e profit."
B u t , t h i r d , i t adds, a n d I t h i n k this is v e r y
interesting, " T h e i n s t i t u t i o n of b a n k credit
is so essential to the f u n c t i o n i n g of the capitalistic system that, though not s t r i c t l y i m p l i e d i n the definition, it should be added to
t h e other t w o c r i t e r i a . "
W h i l e n e i t h e r capitalism nor a n y other
economic order is i n itself m o r a l or i m m o r a l ,
I deeply believe t h a t those w h o l i v e u n d e r
a n d p r o f i t b y t h e capitalistic system m u s t be
v i g i l a n t to see t h a t it operates u n d e r a n d adheres to those h i g h m o r a l standards w h i c h
P A G E
T W O
f o r m t h e cornerstone of p u b l i c f a i t h a n d confidence.
N o people i n the w o r l d h a v e progressed so
r a p i d l y a n d so f a r as those of us w h o h a v e
b e e n p r i v i l e g e d to l i v e under the A m e r i c a n
capitalistic system. I do not b e l i e v e t h a t w e
could h a v e achieved this u n r i v a l e d standard
of l i v i n g h a d w e f o l l o w e d a dog-eat-dog philosophy. or one of sheer greed a n d m a t e r i a l ism. A n d I l i k e to believe, a n d I do believe,
t h a t I h a v e seen i n m y l i f e t i m e a steadily
b r o a d e n i n g sense of m o r a l responsibility on
t h e p a r t of the t h o u g h t f u l leaders i n business,
i n d u s t r y , a g r i c u l t u r e a n d labor. I t is inconceivable to m e t h a t a n y other " i s m " could
t a k e deep root i n this c o u n t r y at the present
time.
I t is interesting to recall t h a t t h e V i r g i n i a
a n d P l y m o u t h colonies lacked capital, artisans, a n d the p r o f i t m o t i v e . T h e D i c t i o n a r y
of A m e r i c a n H i s t o r y recounts t h a t " T h e P i l g r i m s d i d not b r i n g a horse, cow or p l o w , . . .
W h e n tih^e meager supplies soon gave out,
t h e r e w a s a p e r i o d of 'starving' because t h e r e
w a s l i t t l e i n c e n t i v e i n either colony for t h e
i n d i v i d u a l to w o r k h a r d to b u i l d u p a surplus, since the settlers w e r e expected to p u t
a l l t h e i r produce into a c o m m o n f u n d f r o m
w h i c h a l l w o u l d b e supported a n d out of
w h i c h the companies f i n a n c i n g the expeditions w o u l d receive r e p a y m e n t a n d p r o f i t , a
system b o r d e r i n g on c o m m u n i s m so far as
t h e settlers w e r e concerned. John S m i t h rem a r k e d , ' W h e n our people w e r e f e d out of
t h e c o m m o n store a n d l a b o u r e d j o i n t l y tog e t h e r . . . t h e most honest a m o n g t h e m
w o u l d h a r d l y t a k e so m u c h t r u e paines i n a
w e e k , as n o w for themselves t h e y w i l l do i n
a d a y . . . ' " I t w a s o n l y w h e n the settlers
g a i n e d g r e a t e r f r e e d o m of enterprise, a n d
w e r e p e r m i t t e d to accumulate p r i v a t e prope r t y , t h a t t h e colonies g r e w a n d prospered.
I t has long b e e n m y conviction t h a t capi t a l i s m w i l l best b e safeguarded b y t h e degree to w h c h a l l w h o live under i t share i n
its b e n e f i t s a n d feel i d e n t i f i e d d i r e c t l y w i t h
i t . F o r t h a t reason I h a v e a l w a y s advocated
measures t h a t w o u l d encourage a n d preserve
P A G E
T H R E E
th,e independent f a r m e r as w e l l as t h e independent b a n k . I n a l a n d w h e r e t h e i n d i v i d u a l
has a n o p p o r t u n i t y , if h e so desires, to go
into business for himself or to share i n t h e
o w n e r s h i p of a n enterprise, t h e r e m a y b e
some w h o a r e simple or d e l u d e d e n o u g h to
espouse c o m m u n i s t doctrine, b u t t h e y w i l l
surely b e t h e r a r e exceptions.
A s I see it, c a p i t a l i s m is a d y n a m i c progressive process; i t is not a static economic o r d e r .
I t is not something w e can t a k e for g r a n t e d .
Essential safeguards i n t h e p u b l i c interest,
t h e p r e s e r v a t i o n of competition, t h e avoidance of monpolies, for e x a m p l e , depend u p o n
w i s e l y conceived a n d m a n a d m i n i s t e r e d l a w s .
I deplore the c o m m e n t w h i c h I h a v e so o f t e n
h e a r d t h a t politics is a sort of g a m e of a l o w
order i n w h i c h no holds a r e b a r r e d a n d n o
rules of decency a p p l y .
I n a c o u n t r y w h e r e g o v e r n m e n t rests u p o n
t h e consent of t h e governed, if politics becomes c o r r u p t t h e f a u l t lies w i t h decent citizens w h o h a v e f a i l e d to l i v e u p to t h e i r responsibilities of good citizenship. G o o d citizens m u s t t a k e a n a c t i v e a n d i n t e l l i g e n t i n terest i n political processes—I a m not t a l k i n g
about p a r t i s a n s h i p — i f our institutions a r e to
be p r e s e r v e d a n d constantly i m p r o v e d . R e m e m b e r t h a t l a w s a n d regulations a r e h a m m e r e d out on the a n v i l of P r a c t i c a l Politics
i n a D e m o c r a c y . H e a v e n f o r b i d t h a t i t should
ever be otherwise.
I h a v e said to t h e I n d e p e n d e n t B a n k e r s
before, as most of y o u k n o w , a n d I r e i t e r a t e
i t n o w , y o u w i l l preserve y o u r independence
o n l y if y o u c a r r y y o u r case to t h e people.
Y o u w i l l lose if y o u deserve to lose, b u t I
p r o f o u n d l y b e l i e v e y o u w i l l w i n if y o u deserve to w i n . A n d I do not h a v e to t e l l y o u
a g a i n t h a t I t h i n k y o u deserve to w i n .
I t w a s w i t h the basic t h o u g h t of t r y i n g t o
protect independent b a n k i n g t h a t t h e F e d e r a l Reserve B o a r d of G o v e r n o r s e m b a r k e d
on its long, tedious, a n d expensive
case
against T r a n s a m e r i c a . T h e t h e o r y of t h e
Board's case w a s q u i t e simple. O v e r a p e r i o d
of f o r t y - f o u r years t h e T r a n s a m e r i c a g r o u p
h a d e x p a n d e d f r o m a single b a n k i n g office
P A G E
F O U R
i n San Francisco to a total of 642 b a n k i n g
offices i n the f i v e - S t a t e a r e a of C a l i f o r n i a ,
Oregon, W a s h i n g t o n , N e v a d a , a n d A r i z o n a .
These 642 b a n k i n g offices comprised m o r e
t h a n f o r t y per cent of a l l of t h e b a n k i n g offices i n this f i v e - S t a t e area. T h e B o a r d
t h o u g h t t h a t this w a s " t e n d i n g " t o w a r d s
monopoly. I n fact, t h e y thought t h a t if this
case d i d not come under the C l a y t o n A c t , i t
w o u l d be difficult to i m a g i n e one t h a t w o u l d .
A f t e r a hearing, w h i c h lasted about t h r e e
years, the B o a r d issued a n order r e q u i r i n g
T r a n s a m e r i c a to divest itself of t h e stock of
f o r t y - s e v e n b a n k s w h i c h it owned.
Transa m e r i c a took the case to court. W h e n the proceedings w e r e o r i g i n a l l y i n s t i t u t e d b y t h e
B o a r d of Governors, T r a n s a m e r i c a o w n e d a
l i t t l e m o r e t h a n t w e n t y - t w o per cent of the
stock of t h e B a n k of A m e r i c a . H o w e v e r , b y
t h e t i m e t h e case w a s a r g u e d i n court, t h e
t w o G i a n n i n i s , f a t h e r a n d son, h a d died, a n d
T r a n s a m e r i c a h a d $old a l l of its stock interest
i n the B a n k of A m e r i c a a n d contended t h a t
t h e r e w a s no longer a n y connection b e t w e e n
t h e t w o institutions?—a v i e w t h a t I d i d not
share. T h e court agreed w i t h the B o a r d t h a t
t h e purpose of the C l a y t o n A c t w a s to " n i p
m o n o p l y i n the b u d . " T h e court also agreed
t h a t the B o a r d h a d p r o v e d t h a t the Transa m e r i c a b a n k i n g group h a d g r o w n enormousl y b o t h i n absolute size a n d i n percentage of
t h e total of c o m m e r c i a l b a n k i n g i n the area.
I w a n t to r e a d to y o u a p a r a g r a p h f r o m the
court's decision. T h e court said:
". . . W e agree t h a t this q u a n t i t a t i v e
analysis discloses a tremendous conc e n t r a t i o n of b a n k i n g capital, a n d
t h e r e b y of economic p o w e r , i n the
hands of the T r a n s a m e r i c a group
w h i c h m a y be u n w i s e a n d against
sound public policy. I t m a y be i n the
public interest to curb the g r o w t h
of this b a n k i n g colossus b y approp r i a t e legislative or a d m i n i s t r a t i v e
action. This, h o w e v e r , is not for us to
decide. O u r o n l y question is w h e t h e r
t h e t h e o r y upon w h i c h the B o a r d
based its decision meets the legal
P A G E
F I V E
tests w h i c h a r e r e q u i r e d u n d e r Section 7 of t h e C l a y t o n A c t to determ i n e w h e t h e r Transamerica's b a n k
stock acquisitions t e n d t o create a
monopoly of c o m m e r c i a l b a n k i n g .
W e a r e compelled to agree w i t h
T r a n s a m e r i c a t h a t i t does not do so."
I n essence, t h e opinion of t h e court m e a n t
t h a t under this p a r t i c u l a r A c t t h e r e w a s
n o t h i n g f u r t h e r t h a t w e could do. U n d e r t h e
opinion of the C o u r t of Appeals, the Board,
i n order to prove a case, w o u l d h a v e to show
t h a t th^e t i m e T r a n s a m e r i c a a c q u i r e d a b a n k ,
that bank was in competition w i t h a bank
already owned b y Transamerica, and that
t h e competition b e t w e e n t h e t w o w a s lessened as a result of the acquisition. W h i l e i t
m i g h t seem obvious t h a t t h e r e w o u l d be a
lessening of competition i n such a case, t h e
court said t h a t t h e r e must be t a n g i b l e proof.
T h i s m i g h t i n v o l v e going back ten, f i f t e e n
or t w e n t y years, to the date of acquisition of
m a n y of these banks, a n d g e t t i n g the opinions of local businessmen a n d bankers. A s a
practical m a t t e r , such a proceedings w o u l d
be v i r t u a l l y endless as w e l l as fruitless. T h e
T r a n s a m e r i c a case w a s the first effort to inv o k e the C l a y t o n A c t , a n d i t is f a i r to say,
I t h i n k , t h a t the B o a r d felt it w o u l d b e remiss
if it f a i l e d to test this legislation. T h e result
has p r o v e d t h a t t h e C l a y t o n A c t does not
provide a means for checking t h e g r o w t h of
a " b a n k i n g colossus" (to use t h e court's
words), or of p r e v e n t i n g " a t r e m e n d o u s conconcentration of b a n k i n g c a p i t a l " (again using the court's words).
Y o u w i l l h a v e to look elsewhere a n d seek
other legislation to safeguard y o u r interests
— a n d y o u r independence.
I a m q u i t e f a m i l i a r , as I k n o w y o u are,
w i t h the a r g u m e n t s for b r a n c h a n d c h a i n
b a n k i n g . I t h i n k the most a r d e n t advocates
of b r a n c h b a n k i n g w i l l a g r e e t h a t t h e holdi n g c o m p a n y device is a n ingenious w a y of
c i r c u m v e n t i n g b r a n c h b a n k i n g laws. B e t h a t
as it m a y , I k n o w at least t h a t some of m y
good friends w h o believe s t r o n g l y i n b r a n c h
P A G E
S I X
banking would admit that there probably
w o u l d h^ave b e e n no resort to t h e holding
c o m p a n y device b u t for t h e loopholes i n
b r a n c h b a n k i n g legislation. I a m not undert a k i n g to say t h a t a l l b r a n c h b a n k i n g or a l l
h o l d i n g c o m p a n y b a n k i n g should b e done
a w a y w i t h , b u t I do w a n t to p u t i n m y p l e a
once m o r e for the p r e s e r v a t i o n of t h e independent unit bank and banker.
L o c a l b a n k s a r e a n excellent e x a m p l e of
capitalism, as I define it, because h e r e y o u
h a v e a group of local people w h o associate
t h e i r talents a n d t h e i r m o n e y i n order to
p r o v i d e m a n y k i n d s of service, w i t h o u t w h i c h
no c o m m u n i t y can r e a l l y develop. T h e y a r e
t h e m e r c h a n t s of credit. Because of t h e i r acc u r a t e k n o w l e d g e of local conditions a n d
t h e i r intense interest i n t h e i r c o m m u n i t y ,
t h r o u g h o u t t h e l i f e of this c o u n t r y t h e y h a v e
m a d e i t possible for y o u n g people reaching
m a t u r i t y to get credit a n d develop businesses
t h a t w i l l i n later yetirs m a k e t h e m i m p o r t a n t
leaders i n t h e c o m m u n i t y , providing, of
course, t h e y h a v e operated t h e i r businesses
efficiently. I n this wtty n e w leaders a r e developed, a n d i n due course of t i m e the o l d
people pass c n a n d the younger ones t a k e
over t h e a d m i n i s t r a t i o n of the business affairs of the c o m m u n i t y i n w h i c h t h e y live.
T h e business affairs of a n y c o m m u n i t y
f l o w t h r o u g h the doors of its banks. I t is v e r y
i m p o r t a n t to h a v e managers whose roots a r e
deep i n the soil of the t e r r i t o r y t h e y serve.
T r a n s i e n t managers, w h o come a n d go, do
not h a v e the same feeling for a c o m m u n i t y
as does a person w h o w a s b o r n a n d b r e d
there, whose resources h a v e been invested i n
t h e enterprises of t h a t c o m m u n i t y .
I n f o r m e r years I spent q u i t e a lot of t i m e
i n Canada. Businessmen there, especially t h e
s m a l l ones w h o d i d not h a v e access to t h e
large capital markets, universally told m e
t h a t bur system w a s b e t t e r for t h e m . I feel
c e r t a i n this is t r u e because I h a v e observed
b o t h k i n d s f r o m the inside. A f a r m e r m a y be
a good risk or a poor one, depending upon his
k n o w l e d g e of his business, his h e a l t h , his
e q u i p m e n t , his soil. L o c a l people k n o w t h e
P A G E
S E V E N
answers to such questions. T h e same i n t i m a t e
k n o w l e d g e of local conditions applies to
e v e r y other l i n e of busiiiess i n t h e comrnun-
ity.
H e r e i n D e t r o i t y o u m a n u f a c t u r e some
v e r y i m p o r t a n t products w h i c h a r e sold a l l
over t h e w o r l d . Y e t I v e n t u r e to say these
products a r e sold almost e n t i r e l y b y local
companies or individuals. A t least, w h e n ever I h a v e engaged i n a debate for t h e proper t r a d e - i n a l l o w a n c e on m y o l d car, i t has
been with, local people. T h e y k n o w just h o w
good m y old car is, a n d u n f o r t u n a t e l y w h a t
local people w i l l p a y for i t .
I believe m y needs for credit should b e
passed on b y local people. T h e f r a m e r s of t h e
F e d e r a l Reserve f e l t the same w a y .
When
t h e F e d e r a l Reserve S y s t e m w a s established.
Congress w a s v e r y conscious of the size of
t h e c o u n t r y a n d the g r e a t d i v e r s i t y of its
business interests. These interests a r e affected b y c l i m a t e — c o t t o n a n d f r u i t g r o w i n g i n
the South, corn g r o w i n g i n t h e M i d d l e W e s t ,
etc. T h e y are affected b y t h e location of r a w
m a t e r i a l s a n d m a n u f a c t u r i n g facilities. Congress v e r y w i s e l y decided to decentralize t h e
S y s t e m b y establishing t w e l v e regional F e d e r a l Reserve Banks. L a t e r on, t w e n t y - f o u r
branches w e r e added m a k i n g a total of t h i r t y
offices i n the XL S.
W h y w a s this done? S i m p l y because Congress w a n t e d to m a k e c e r t a i n t h a t w h e n a
b a n k needed to rediscount its paper, people
f a m i l i a r w i t h local conditions w o u l d decide
w h e t h e r or not the rediscount should b e
granted.
A regional F e d e r a l Reserve B a n k or b r a n c h
can p r o v i d e m o n e y to local b a n k s b y rediscounting t h e i r paper w h e n e v e r this w o u l d be
i n the public interest. I m e n t i o n this because
I w a n t to emphasize the fact t h a t Congress
w a s c a r e f u l to set u p rules a n d regulations
t h a t w o u l d t a k e local conditions into account
i n the g r a n t i n g of credit. I n other words, as I
i n t e r p r e t a l l t h e i r actions, Congress w a n t e d
to keep the g r a n t i n g of credit as close as possible to the people. T h i s i n itself is a n end o r s e m e n t of the p r i n c i p l e of the u n i t b a n k P A G E
E I G H T
i n g w e e n j o y i n this c o u n t r y . A l a r g e b r a n c h
b a n k i n g system, w h e t h e r of t h e straight
b r a n c h t y p e or t h e h o l d i n g c o m p a n y t y p e , —
t h e y b o t h serve e x a c t l y t h e same purpose
a n d m u s t be considered t h e same k i n d of
i n s t i t u t i o n — c a n n o t h a v e the intense l o y a l t y
a n d interest i n a local c o m m u n i t y t h a t y o u
w i l l f i n d i n t h e local banks, w h e r e b y t h e
v e r y n a t u r e of things t h e m a n a g e r s a n d directors a r e p a r t of t h e economic l i f e of t h e
community.
I w a n t to say j u s t a w o r d here, if I m a y ,
about m o n e t a r y p o l i c y as f o l l o w e d b y t h e
B o a r d a t this p a r t i c u l a r t i m e .
E v e r since
business started to slide off, a n d a l i t t l e before i t a c t u a l l y became visible on t h e horizon,
t h e B o a r d s t a r t e d to pursue w h a t is k n o w n
as a n easy m o n e y policy. T h e B o a r d of G o v ernors of the F e d e r a l Reserve Banks, f o r m i n g t h e F e d e r a l Reserve System, have t h e
p o w e r to create m p n e y . I t is impossible to
h a v e a r u n on a F e d e r a l Reserve B a n k . I t is
t h e i r responsibility to see t h a t t h e r e is sufficient m o n e y a v a i l a b l e a t a l l t i m e s for t h e
l e g i t i m a t e needs of a g r i c u l t u r e , i n d u s t r y a n d
commerce, to p r e v e n t u n d u e expansion of
credit i n a p e r i o d t h a t m i g h t lead to i n f l a t i o n ,
a n d to be p a r t i c u l a r l y c e r t a i n to see t h a t
m o n e y is not so t i g h t t h a t i t w o u l d deter i n v e s t m e n t i n a p e r i o d of r e a d j u s t m e n t such
as w e a r e going t h r o u g h a t t h e present t i m e .
O u r policy has been described as a policy
of active gains. T h a t is not a precise definition, a n d it could not be. I t m a y change n e x t
s p r i n g or some other t i m e . B u t for t h e foreseeable f u t u r e , the F e d e r a l Reserve S y s t e m
w i l l see to i t t h a t t h e r e is sufficient m o n e y
a v a i l a b l e for those w h o h a v e l e g i t i m a t e needs
f o r credit.
T h e r e a r e several w a y s i n w h i c h t h e F e d e r a l Reserve S y s t e m can increase or decrease
t h e v o l u m e of m o n e y . T h e local banks, t h e
F e d e r a l Reserve Banks, can rediscount b a n k ers' paper. U n d e r special conditions, w a r or
s o m e t h i n g l i k e t h a t , th,ey can do i t f u r t h e r ,
t o o , — w h i c h increases y o u r supply of m o n e y .
T h e y can go i n t o t h e m a r k e t a n d purchase
g o v e r n m e n t securities, w h i c h introduces n e w
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N I N E
m o n e y into t h e m a r k e t . I f t h e y sold governm e n t securities, i t w o u l d reduce t h e s u p p l y
of m o n e y . T h e y can reduce reserve r e q u i r e m e n t s of m e m b e r banks. I f t h e y a r e reduced
one per cent straight across the board, t h a t
puts into c i r c u l a t i o n $1,300,000,000 t h e n e x t
m o r n i n g . I f t h e y increase i t b y t h a t same
percentage, t h e m o n e y s u p p l y w o u l d decrease b y t h a t a m o u n t t h e n e x t m o r n i n g .
B u t , for the foreseeable f u t u r e , t h e r e is going
to be p l e n t y of m o n e y a v a i l a b l e for a l l of t h e
needs of t h e people, p r o v i d e d y o u as comm e r c i a l b a n k e r s a r e w i l l i n g to accept t h e i r
notes. W e do not m a k e loans ourselves, e x cept u n d e r w a r t i m e circumstances.
I w a n t to say just a w o r d , if I m a y , a b o u t
the independent f a r m e r a n d the i n d e p e n d e n t
b a n k e r , because, I t h i n k , w h e n y o u a d d i n a
f e w professional people a n d the f e w s m a l l e r
businesses, y o u r e m a i n about a l l t h a t is l e f t of
t h e system t h a t I g r e w u p u n d e r as a v e r y
y o u n g m a n , a n d for w h i c h I hjave a v e r y , v e r y
tender feeling. A m e r i c a became g r e a t w h e n
w e h a d these independent people i n business
themselves, r i s k i n g t h e i r t i m e a n d c a p i t a l i n
a n effort to assume t h e i r position i n life. A n d ,
I hope t h a t a n organization such as y o u a r e
a p a r t of today w i l l continue to f u r n i s h t h a t
o p p o r t u n i t y to the y o u n g people of A m e r i c a .
I t is so i m p o r t a n t .
Y o u k n o w , w e h a v e w a t c h e d , I h a v e part i c u l a r l y , I suppose—the p l i g h t of the f a r m e r
i n Russia. I h a v e h a d p r e t t y close contact
w i t h t h e m t h r o u g h a lot of E u r o p e a n people
that I know quite well. T h e y had liquidated
t h e l a n d - o w n i n g class over there. M a y b e as
I a m a l a n d - o w n e r , I a m not p a r t i c u l a r l y f r i e n d l y to t h e m , a n d for t h a t purpose
I expect t h a t I w o u l d be one of t h e f i r s t t h a t
t h e y w o u l d catch, a n d t h e y w o u l d catch a lot
of you, too. T h e y h a v e t a k e n a w a y f r o m t h e m
t h e o p p o r t u n i t y to o w n lands themselves.
T h e y h a v e t a k e n a w a y f r o m t h e m t h e opp o r t u n i t y to produce for t h e i r o w n personal
p r o f i t . O f course, t h a t is t h e v e r y essence of
t h e capitalistic system. B u t , it is i n t e r e s t i n g
to note t h a t as of today, w i t h t h e i r p o p u l a t i o n
t r e m e n d o u s l y increased, t h e i r livestock popuP A G E
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lation, according t h e n to t h e i r o w n figures,
is less t h a n w h e n these gents came i n t o
p o w e r . T h e y h a v e not b e e n able to convince
t h e f a r m e r t h a t this c o m m u n i s m is a good
t h i n g for h i m . T h e y h a v e k i l l e d t h e m off b y
t h e millions. B u t , u p comes a n e w generation,
w i t h the same love of the l a n d i n t h e i r hearts
t h a t w a s i n the h e a r t s of our ancestors w h e n
t h e y came to this c o u n t r y .
I t h i n k it is u n u s u a l a n d u n i q u e t h a t w e
l i v e i n a c o u n t r y , the o n l y c o u n t r y w h e r e
y o u h a v e a surplus of a g r i c u l t u r a l commodities o n a large scale. W e h a v e n e v e r used
those commodities i n our dealings w i t h foreign people as m u c h as w e could or should.
I f y o u w i l l t u r n y o u r m e m o r y back just a
l i t t l e ways, y o u w i l l r e m e m b e r t h a t w h e n
t h e y d i s t r i b u t e d free food along the borderline between West G e r m a n y and Communistic East G e r m a n y , the people f r o m East G e r m a n y came over tljere at the actual risk of
t h e i r lives, m o t h e r ^ a n d fathers, to get a little h a n d f u l of food for t h e i r children. A n d
t h e c o m m u n i s t p r e v e n t e d it. A n d , w h y d i d
t h e y p r e v e n t it?
S i m p l y because t h e y could not duplicate
t h a t operation. T h e y could not g i v e those
people t h e necessities of life. T h e r e f o r e , t h e y
m a d e i t impossible for those people to f o r m
a comparison b e t w e e n capitalism a n d communism.
N o w , A m e r i c a has become the w o r l d ' s
greatest p o w e r , a n d w i t h it comes a l l t h e
responsibility of leadership. I t has been m y
contention i n the past, a n d is today, a n d I
speak f r o m q u i t e a l i t t l e experience i n W a s h ington, t h a t one of the g r e a t tragedies of this
c o u n t r y today, the t h i n g t h a t is going to g i v e
us m o r e t r o u b l e i n the years a h e a d t h a n a n y
o t h e r m i s t a k e w e have m a d e — a n d w e h a v e
m a d e a lot of t h e m — is t h e constant increase
i n the size of these business institutions i n
t h i s c o u n t r y , a n d t h e decline of t h e s m a l l ind e p e n d e n t business m a n . T h e s m a l l independ e n t business m a n understands h u m a n nat u r e , a n d he understands people because he
has to deal w i t h t h e m e v e r y hour of his business day. H e is e q u i p p e d to k n o w h o w people
P A G E
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act, a n d h o w to deal w i t h t h e m . I b e l i e v e
v e r y , v e r y f i r m l y , a n d v e r y , v e r y sincerely,
t h a t w h e n y o u t a k e a w a y f r o m th,e s m a l l
business m a n of this c o u n t r y t h e o p p o r t u n i t y
t o go i n t o business for themselves, y o u h a v e
robbed t h e m of one of t h e basic v i r t u e s of
our c o u n t r y . O u r c o u n t r y w a s n o t f o u n d e d
t h a t w a y . T h e y w e r e l i t t l e fellows, t h e y w e r e
poor; t h e y w e r e y o u r ancestors, t h e y w e r e
m i n e . T h e y came here, a n d w h y d i d t h e y
w o r k so hard?
O f course, t h e y h a d a lot to w o r k w i t h i n a
c o u n t r y l i k e this. B u t t h e y d i d i t because i t
offered t h e m t h e o p p o r t u n i t y t h a t e x i s t e d
n o w h e r e else i n t h e w o r l d a t t h a t t i m e , to do
something for themselves, a n d t o be t h e
masters of t h e i r o w n destiny a n d t h e i r o w n
t i m e . A n d , i t created A m e r i c a . I t is t h e same
spirit that made Great B r i t a i n great, i n the
years b e f o r e t h e i n d u s t r i a l r e v o l u t i o n .
T u r n back t h e pages of h i s t o r y just a l i t t l e
f u r t h e r , a n d y o u w i l l see t h a t R o m e b e c a m e
great, w h e n t h e f a r m e r s a n d t h e l i t t l e business e n t r e p r e n e u r s t h r o u g h o u t t h e l a n d w e r e
active i n g o v e r n m e n t a n d i n business. A n d as
t h e y s l o w l y passed o u t of t h e p i c t u r e a n d
c r o w d e d i n t o t h e g r e a t cities, t h e y c r e a t e d
t h e circuses i n order to k e e p a n interest. B u t ,
R o m e passed on d o w n t h e r o a d i n t o h i s t o r y .
A n d I believe t h a t unless w e i n A m e r i c a p r e serve a large segment of t h e business of t h i s
c o u n t r y for those l i t t l e f e l l o w s w h o w a n t t o
go i n t o business, I , too, b e l i e v e t h a t o u r sun
w i l l start coasting d o w n on t h e shady side of
the mountain.
A n d I repeat, i t is a g r e a t pleasure a n d a
p r i v i l e g e for m e t o m o r e or less close m y
career i n g o v e r n m e n t a n d r e t u r n to p r i v a t e
l i f e , as I a m , b y speaking to a g r o u p of people
who, in m y h u m b l e judgment, are going to
h o l d i n t h e i r hands a v e r y large share of t h e
d e s t i n y of m y c o u n t r y i n t h e f u t u r e . I hope
y o u h a v e courage, a n d I hope y o u a r e n o t
easily discouraged; I hope y o u go f o r w a r d
a l o n g th,e lines y o u h a v e started.
I w i s h y o u luck, a n d Godspeed.
I t h a n k you.
P A G E
T W E L V E
@FedFRASER