Spencer Heath Archive

Item 1370

Carbon of a letter, written partly in Maryland and completed in New York, to Harry Scherman, President, Book of the Month Club, 385 Madison Avenue, New York City

March 18, 1941

Dear Mr. Scherman:

This letter is about your book, The Promises Men Live By. It is a great book. It is not only a great book, but it is the first book I have ever read and then sent a written commendation to its author.

Very seldom do I read a book. Nearly all books are dead — mere incrustations of dead material, the tradi­tionary, the authoritative and the commonplace. To see what they are made of, it is only necessary to bore a few holes in them, as the geologists, the engineer makes borings in the crust of the earth to see what dead materials are there. Live things cannot be understood by taking samples from borings. Your book is alive. I neither bored nor was bored by it. I had to read it.

Your book is, indeed, a new approach to economics. Departing from all tradition, you have written primarily not about things, but about relationships and not about relationships between men and things, or the earth, but about the relationships between men. And you have chosen those relationships between men by and through which they constitute themselves into a societal life-form or social organism.

Not the earth, not the things of nature, constitute the subject matter of any social or economic science. The relationships between man and material things, natural or artificial, can never be anything but physical relationships. The only social relationships, the only social processes are those which take place among and between men. The earth and its materials, as modified by men, are only the instruments into which services are incorp­orated and by means of which services are exchanged.

It is by their promises and by this alone that men have any social life or being. All contracts are double promises; they are promises to exchange services or to exchange things into which services have been wrought and combined.

Your book is new in its field because it is scientific; because it is the first in the field of the social sciences to take social structures and relationships and not physical ones for its basic subject matter.

You have made a fine analysis of the various kinds of promises by the fulfillment of which men live as social and civilized beings, and by the failure of which, if complete, they must lapse back into total barbarism. You have shown that nearly all short-term promises are either fulfilled or renewed, that long term promises are the most precarious, that default is almost /always/ due to inability rather than unwillingness to perform. You also show that inability to perform arises almost always out of dishonest acts perpetrated either by the promisor himself or, more often, by those upon whose promises he depends, and you have traced dishonest acts almost exclus­ively to those who are entrusted with the conduct of corp­orate organizations — the relatively small ones that are economic, but especially to those who have control of the relatively large political corporations all of which latter are founded upon and have no ultimate technique but that of force and fraud. You have shown that, apart from corpora­tions, practically all economic processes are carried on through free relations of contract and consent and promises that are faithfully performed, and that where default does occur, it is but rarely due to bad faith, outside of the corporate field. This is but to say that our corp­orate relationships have not been completely social-ized, and our political relationships, resting almost completely on compulsions, confusions and deceit, have been social-ized practically not at all.

What a wonderful work you have done in showing that economic society exists by reason of the exchange relationships among men, that most of the exchanges are de­ferred as to their second half, and that when any of these promises fail, the whole exchange system is deranged. On top of this, you show that there is a huge volume of promises, namely, those made by governments that men are prone to believe will be fulfilled, but which practically never are. And then you show that when many men finally come to distrust these promises and demand that they be kept and this occasions a large default, then the whole exchange system is permeated with failure and default and most tragically bogs down. You have made a wonderful analysis of the exchange system and you have wonderfully diagnosed the cause of its periodically breaking down. You find this baleful cause to be the failure of govern­ment to keep its promises, and you explain the cyclic character of depressions by showing the inveterate habits of men superstitiously to believe, over long periods, that the promises of their governments will be kept, and to their habit of dealing with the paper promises themselves as though they were the fulfillment itself.

I particularly appreciate your effectual analysis of the American monetary system. It is most illuminating. There is probably no other public matter upon which there is so much darkness and confusion in the popular mind, and even in the academic and educated mind. In this matter alone, I have become very much your debtor. A few years ago I announced that about the only thing I felt sure of in connection with the monetary system was that the government ought not to be allowed to have any­thing to do with it — that money was not an original invention of government, that government only corrupted it, and that the world owed all its most serviceable inventions and their applications to the originality and the energies and activities of private men.

Your book is so original and so comprehensive and so fluently written, it makes me feel ungracious to call attention to what appears to be an important omission. I wish you had discussed the legal tender law and thrown some light upon what purpose, if any, it serves. What is the consistency, if any, in forbidding men to make promises to all and sundry while not forbidding them to make promises to specific persons with each promisee designating, in turn, the specific person to whom his promise is made. I refer, of course, to the law which forbids the issuance of promissory notes payable to bearer and intended to circulate freely but does not forbid the circulation of these notes when they are transferrable by endorse­ment only, and not intended to circulate freely. Is the original backing of the promise any better in the one case than the other? It seems to me that the res­trictions of legal tender must have some foundation other than the matter of security that promises will be kept. From your own very proper illumination of the matter, it appears that governmental promises are, in the long run, the most hazardous of all.

Jeremy Bentham regarded the governmental collection of private debts as an impractical and anything but utilitarian device. Business men of today seem to take the same view of it; witness the reluctance and the infrequency with which they resort to it. I wonder if this practice of debt collection by political authority did not give rise to the legal tender laws? It seems to me that such collection would be impossible to enforce with­out some arbitrary designation in advance of the kind of promises that must be accepted in lieu of those which have been broken or denied. It seems quite probable that the legal tender laws serve no practical purpose beyond that of making possible the governmental enforce­ment of debts. Whether the collection of debts by poli­tical process is a desirable public policy may be seriously open to doubt; to the mind of Jeremy Bentham (and also of Henry George), it was decidedly not desirable.

Another matter raises serious questions in my mind. You have much to say about public borrowings as being a device enabling politicians to spend more than they can forcibly collect. You treat of this as a great evil which it, undoubtedly, is. But are we to infer from this that taxation is a lesser evil or, perhaps, no evil at all? You explain a great deal about the direct and indirect evil effects of government borrowing and its habitual failure to repay. Is there not a great deal to be said against the direct and, especially, against the indirect effects of government seizures? Is it possible that the property and services so taken can be so admin­istered as not only to restore the victims to their ori­ginal condition of well-being, but also in such manner as to compensate them for all their indirect damage and loss and, in addition to all this, to provide enormously valuable and indispensable public services besides. Of course, so long as we know of no better way, we may have to hold towards the mass-slavery of taxation the same tolerant and apologetic attitude that Plato and Aristotle held towards chattel slavery. It is to be feared that the philosophers and the public men of our day can no more think of government without taxation than Plato and Aristotle could think of a civilized society without slavery.

It seems to me that all civilized progress depends upon the extension of free contractual and exchange relationships into those areas where they have not existed before. With respect to all private services, we give practical acknowledgment of the efficiency of the contractual technique. Whether we believe or not in the democracy of the market, we still practice all that we have of this equal freedom for the obtaining of every­thing that as civilized beings we have or to which we have any indisputable right. Yet when it comes to the public services, the whole process is reversed. Here the compensation is taken in advance of any service being performed. It is taken by compulsion and force, and if and when any services are performed they are imposed and must be accepted with little or no reference to the merit or deserts of the recipients or their respective contributions and desires. This paradox between private business and public business certainly ought to be resolved. I have attempted to do this in my pamphlet, “Private Property in Land Explained.” This you will observe is a functional analysis much in contrast with and much more realistic than the static analysis of Spencer, Mill and George. The social serviceability of private ownership and administration of land having been disclosed, there is, of course, an engineering technique whereby the full functioning of this institution can be freely and profit­ably put into effect. This practical application is set out in some detail under the general title, “Real Estate, How to Raise and Restore its Income and Value.”

My friend, Gilbert M. Tucker, of Albany, gives me to understand that you are familiar with the “Philosophy of Freedom” as expounded by Henry George. You may, therefore, be interested in a little paper I have been preparing entitled, “Why the Henry George Idea does not Prevail.” A copy is enclosed for your reference and, possibly, helpful comment.

This book of yours has cut across all the traditional lines. It is like a huge draught of intellectual fresh air blowing from the mountain tops through the foggy valleys of a social and metaphysical obscurantism. This makes it dangerous to existing political institutions as they are now carried on. If the censor is wise, he will clap his lid on you long before he suppresses his blood brothers in tyranny, the communists and their fellow travelers. May your book live long and prosper (you).

Very truly yours,