Vl



''They Call It Free Enterprise
— But

ii

• • •

the freedom is for those who possess

great resources and dominating
strength

rather than for the weak or those who de-

pend simply on their own labor for
their

well-being."

From the annual message of the
Catholic Arch-

bishops and Bishops, Administrative
Board of

the Welfare Conference, February 7,
1940.

BY

Rev. William J. Smith, S.J.

Director

Crown Heights Associated Activities

Brooklyn, N. Y.



NihU Obstat:
Franciscus X. Delaney, SJ.,

Censor Deputatus.

Imprimi Potest

:

Franciscus A. McQuade, SJ.,

Provinciae Praepositus.

Imprimatur:

^ Thomas E. Molloy, S.T.D.,

Episcopus Brooklyniensis.

Brooklynij die IV Martii, 1948.

DeaoMNted



NOTE

This pamphlet is a reply to a booklet en-

titled “The Church and our Economic

System” published by Reverend Edward

A. Keller, C.S.C., Director of the Bureau

of Economic Research, University of

Notre Dame.

Price, 15 Cents

CROWN HEIGHTS ASSOCIATED ACTIVITIES

Reprint Department

1150 Carroll Street : Brooklyn 25, N. Y.



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Part One

NOTRE DAME vs. NOTRE DAME

NO one should
reasonably raise objection to an apol-

ogist for the capitalistic system who would
merely

cite the benefits derived from it, if at the
same time he

were to warn us of the unsound foundation
upon which

it rests. Gloating over the materialistic
advantages of

an economy while ignoring the basic social
deficiencies

of the structure, which may bring about its ultimate

collapse, is not to our way of thinking either a prudent

or a proper approach to the subject. When it is in-

timated that the papal encyclicals of the
Catholic

Church support such a thesis, it is the obligation
of

some one to make reply. We assume that burden in

this pamphlet.

Within recent months, two booklets have come forth

bearing the names of two faculty members of Notre

Dame University.

One is called “Social Justice in the Modern World”

by Dr. Francis Joseph Brown. The other : “The Church

and our Economic System” by Reverend Edward A.

Keller, C.S.C., Director of the Bureau of Economic

Research of the University.

Dr. Brown’s booklet is a new translation of the

encyclical “Quadragesimo Anno” with a detailed out-

line, subtitles and some comment. The work is the

result of a careful study made by a group of scholars

at Catholic University a few years ago.

[S]



Father Keller’s booklet is an interpretation
of the

papal encyclicals as they relate to the
United States of

America. We wish to take exception to a number of

statements in the second booklet and intend
to use Dr.

Brown’s translation as our medium of refutation.

“This article makes no attempt to give jull
exposi-

tion of the social justice program of the
Church,” runs

the first sentence in “The Church and our
Economic

System.”

“This article is concerned primarily with a
diagnosis

of our economic system, for only on a basis
of a correct

analysis can proper remedies be made,” is
the last

sentence of the first paragraph.

The booklet gives neither a complete analysis of
our

economic system nor does it attempt to apply
the full

force of the papal document in the
diagnosis or the

remedy. It is in fact a justification of the
stotus quo

which omits salient statements that would be
detrimen-

tal to the author’s thesis.

The booklet aims to establish two points:

1. “That the encyclicals do not condemn
our eco-

nomic system of free enterprise, but
instead give a

strong moral foundation for such a system.

2. “That the main economic problem in
the United

States is not extreme concentration of
wealth and in-

come, but rather a lack of balance
among different

worker groups and different geographical
segments of

the economy.”

We wish to dissent from or distinguish both propo-

sitions.

On Page One, the author states “the encyclicals

deal only with principles.”

[ 6 ]



Pius XI, as quoted by Dr. Brown, says, “Free

competition has destroyed itself; economic dictatorship

has supplanted the free market; unbridled ambition for

power has likewise succeeded greed for gain; all eco-

nomic life has become tragically hard, inexorable and

cruel.”

Is this the mere enunciation of a principle or is it

a statement of fact?

“.
. . it is obvious," the Pope remarks, “that not

only is wealth concentrated in our times but an im-

mense power and despotic economic dictatorship is con-

solidated in the hands of a few, who often are not the

owners but only the trustees and managing directors of

invested funds which they administer according to their

own arbitrary will and pleasure.”

Is this merely the enunciation of a principle or the

statement of a fact?

“The encyclicals do not condemn the ‘free enter-

prise’ system of the United States,” remarks the author

of “The Church and Our Economic System.” “What

the encyclicals do condemn are the ‘unlimited competi-

tion’ and extreme ‘laissez faire’ doctrines of the early

English classical economists.”

On a previous page the author wrote “the supreme

pontiffs wrote for the world, not merely for the United

States.” In the above quotation he implies that Pius XI

wrote for the world but not for the United States.

Comment: The United States of America shows

forth the greatest and most powerful example of the

capitalistic economy anywhere in the world.

Pius penned his indictment in 1931, not in the days

of the early English classical economists.

He summed up his condemnation in one devastating

sentence. We quote from Dr. Brown’s edition:

[7]



“This concentration oj power and might, the
char-

acteristic mark, as it were, of contemporary
economic

life, is the fruit that the unlimited freedom
of struggle

among competitors has of its own nature produced,

and which lets only the strongest survive;
and this is

often the same as saying those who fight the most
vio-

lently, those who give* the least heed to their conscience.”

“Characteristic” means typical, pertinent to the na-

ture of the thing, the unique note that sets
it off from

something else.

“Contemporary” means today, as things now exist.

Have conditions changed since 1931 when Pius XI

made this original charge? Only for the worse.

We have at present in America forty-seven billion
—

(or better)—dollar corporations. There are only ten
States in the U. S. A. whose corporate assets are

the

equal or better than that of these corporations.
Indi-

vidually, they represent greater financial power,
and

all that goes with it, than thirty-eight individual
sov-

ereign States. There has been a greater increase
in

mergers and consolidation of power among the cor-

porations since World War II than at any time in the

history of our country. (1,800 in mining and manufac-

turing alone since 1942.)

What chance has any new concern of entering into

competition with any of these giants?

The Special Senatorial Committee to Study Prob-

lems of American Small Business transmitted its
find-

ings on January 23, 1946. Recounting the report
of the

Xational Resources Committee of 1935, the Committee

stated that of the two hundred largest
non-financial

corporations and the fifty largest financial corporations

“only twenty-five of the corporations had no director
in

common with at least one other corporation on the list.

[ 8 ]



Between them jour hundred men held
nearly one-third

of the 3,544 directorships on
the boards of the two hun-

dred fifty corporations. In the
case of 151 of these

companies each had interlocking
directorships with at

least three others in the group.
These 151 companies

comprised three-quarters of the
combined assets of the

two hundred fifty.”

“Eight interest groups (e.g.
Morgan-First National,

Kuhn-Loeb, Rockefeller, etc.)
controlled \06 of the

250 larger corporations and nearly
two-thirds of their

combined assets.”

What happens to “free enterprise” when
you have

interlocking directorates, controlled
from central finan-

cial sources? If control of credit
of two-thirds of the

combined assets of the 250 largest concerns
in the coun-

try is not concentration of wealth and
economic power

—^what is it?
These quotations are merely a few items

taken from

the Committee’s report. For greater
details, we refer

the reader to the monographs of the
Temporary Na-

tional Economic Committee (TNEC). This
was the

million-and-a-half-dollar investigation that
was inaug-

urated before the war, under the
chairmanship of Sen-

ator Joseph C. O’Mahoney of Wyoming.
Two reports

of the Small Business Committee (one 359
pages; the

other 379 pages) offer a wealth of material
on the sub-

ject.

David Lynch in his book, “The Concentration
of

Economic Power,” gives snatches in summary
form of

the results of the TNEC investigation. Price-fixing

techniques, control of market distribution,
the role of

the trade associations, holding companies
are a few of

the factor’s which the author enumerates.

Stuart Chase in “Democracy under Pressure”
tells

[ 9 ]



you of the monopoly, legal and illegal, on patents and

the pressure means used by the lobbyists to protect

their clients. _

“Cartels in Action” by Stocking and Watkins pre-

sents the picture from the international angle.

It all adds up to a nice little bundle of economic

domination.

The author of the booklet under discussion speaks

of the distribution of wealth and income. He fails to

refer even slightly to this economic domination which

the Holy Father calls the characteristic mark of capi-

talism. There, indeed, is where the indictment rests,

but no word of it appears in this booklet. “This dicta-

torship,” says the Pope (as quoted by Dr. Brown), “is

being most forcibly exercised by those who, since they

hold the money and completely control it, control credit

also and rule the lending of money. Hence they regu-

late the flow, so to speak, of the life-blood whereby the

entire economic system lives, and have so firmly in their

grasp the soul, as it were, of economic life that no one

can breathe against their will”

Mr. Henry Kaiser, the lone example of an adven-

turous enterpriser in recent years, could verify this

statement if he were to relate his experiences when he

first attempted to break into the tight combines of the

steel and auto industries.

The author cites the anti-trust laws as proof that

the encyclicals do not apply to the “free enterprise”

system of America. We grant that there are such

statutes upon the books, but;

1. They have been fought tooth and nail from their

inception by the money-magnates of America and the

corporations who depend upon the financiers.

[ 10 ]



2. They have not prevented
mergers and concentra-

tion of economic power in
the hands of the giant cor-

porations.

3 Loopholes in the law
allow monopolies to come

into being. The law then futilely
attempts to dislodge

them from their pre-empted
position. The ineffective-

ness of the means is evident.

4. No guilty party has ever gone to
jail in the whole

history of the anti-trust
legislation.

5. Which of the giant combines
that today rule

their specific field of
industry has gained supremacy

without resorting to “cut-throat”
competition?

6. In spite of the law, the
United States of America

today presents the outstandmg
example of the kind

of economic domination against
which Pius XI sent

his withering blasts.

“The encyclicals give a strong
moral foundation

for such a system,” says
the author of this booklet.

“American Catholics,” we are told,
“rejoice that their

country welcomes rather than
repels the advice of the

Holy See on the moral problems
that pervade our eco-

nomic life.” The proof of this
statement is based on

the “widespread interest shown in
the so-called social

encyclicals.’
”

A certain amount of interest has been
aroused over

the papal documents. But to
assume that their prin-

ciples have been applied, even
accepted, as the basis of

American economic life is sheer
nonsense. We would

wager that not one in a hundred
Catholics has a grasp

of their meaning. We have yet to hear of
axcy group

of Catholc employers publicly
subscribing to their con-

tent. The non-Catholic world, with a
few notable ex-

ceptions, is less informed on them.

[ 11 ]



To say that United States Steel, the aluminum

trusts, the cartels in dyes, sugar, rubber and the rest

have any thought of conducting their businesses on the

principles of the encyclicals is a pipe-dream.

In defending the status quo the author does not so

much as mention the positive social proposals of the

Popes in regard to the reconstruction of industrial so-

ciety. If it were true that the principles of the encyc-

licals had been accepted and are now the moral foun-

dation of our present order, would Pius XI think it

necessary to utter the following warning:

“All these things,” he says, “which our Predecessor

has not only suggested but clearly and openly pro-

claimed, We emphasize with renewed insistence in our

present Encyclical
;

and unless utmost efforts are made

without delay to put them into effect, let no one per-

suade himself that public order, peace and the tran-

quility of human society can be effectively defended

against agitators of revolution.”

Evidently, the moral foundation was missing from

our system when Pius XI wrote those words in 1931.

What changes have taken place to say that they do not

apply with equal vigor at the present moment?

It is a simple matter to show that the existing sys-

tem of capitalism in the United States has not been

“canonized” by the Church and that it does not come

within a mile of coinciding with the papal concept of

an ordered and reasonable industrial society.

We will call upon Dr. Brown to supply the testi-

mony of Pius XI, which the author of “The Church and

Our Economic System” omits:

(82) “The social policy of the State, therefore,

must devote itself to the reestablishment of the Indus-

[ 12 ]



tries and Professions. In
actual fact, human society

now' for the reason that
it is founded on classes

wit

divergent aims and hence
opposed to one another

and

therefore inclined to enmity
and strife, continues to

be

in a violent condition
and is unstable and

uncertain.

(84) “Because order,
as St. Thomas well explains,

is unity arising from the
harmonious arrangement of

many objects, a true, genuine
social order demands

that the various members of a
society be united together

by some strong bond. This
unifying force is present

not only in the producing
of goods or the rendering

of

services—in which the employers
and employees of an

identical Industry or Profession
collaborate jorntly-

but also in that common good,
to achieve which a

Industries and Professions together
ought, each to the

best of its ability, to
cooperate amicably. And this

unity will be the stronger and
more effective, the more

faithfully individuals and the
Industries and Profes-

sions themselves strive to do their
work and excel in it.

(83) “Labor, as Our
Predecessor explained well in

his Encyclical, is not a mere
commodity. On the con-

trary, the worker’s human dignity in
it must be recog-

nized. It therefore cannot be
bought and sold like a

commodity. Nevertheless, as the
situation now stands,

hiring and offering for hire in the
so-called labor market

separate men into two divisions, as
into battle lines and

the contest between these
divisions turns the labor

market itself almost into a
battlefield where, face to

face, the opposing lines
struggle bitteriy. Everyone

understands that this grave evil
which is plunging all

human society to destruction must be
remedied as soon

as possible.

“But complete cure will not
come until this opposi-

tion has been abolished and
well-ordered members of

[ 13 ]



the social body—Industries and Professions—are con-
stituted in which men may have their place, not accord-

ing to the position each has in the labor market but

according to the respective social junctions which each

perjorms.

“For under nature’s guidance it comes to pass that

just as those who are joined together by nearness of

habitation establish towns, so those who follow the same

industry or profession—^whether in the economic or
other field

—

jorm guilds or associations, so that many

are wont to consider these self-governing organizations,

if not essential, at least natural to civil society.”

It is a mystery to us how anyone can see any sim-

ilarity between these “Industry Councils” as they are

often called and the unilateral, autocratic, one-sided,

management-dominated structure of United States

Steel, General Motors, A. T. & T. and the other cor-

porate giants.

If a Catholic wishes to repudiate the papal concept

of industrial society, that is his responsibility. But to

do so under the pretense that present-day capitalism

corresponds to the program of the encyclicals is flying

in the face of facts.

The above quotation points out the violent condi-

tion that exists at the present time. By implication,

since it is contrary to the natural state of a self-govern-

ing industrial society, the Sovereign Pontiff refuses to

accept it as a sound basis for social order. Regardless

of the material benefits that may accrue to some under

such conditions, we will stand with Pius and label it as

he does, “(a) grave evil which is plunging all human

society to destruction—^it must be remedied as soon as
possible.”

[ 14 ]



Father Keller asks the question,
“What is the posi-

tion of the Church, then,
on economic matters?

but

he does not answer the query.
He merely states, ihe

Church, as is its traditional
policy, takes a middle

of the road position between
the two extremes of nine-

teenth-century individualism
and socialism between

these two extremes there is a via
media.” There is a

via media but it is not a vague,
negative approach. It is

the positive plan of the
Industries and Professions (as

Dr. Brown terms it)

.

Work it out and you find the
representatives of the

workers sitting across a table
with the representatives

of management, of agriculture,
of the professions, of

the government, determining
not merely the things that

management will allow the workers to
discuss—but all

that pertains to the common good of
industry and of the

country.

It is a planned economy.
Planned, however, not by

government, not by management alone,
not by labor

alone—but by all three, insofar as the
three are needed

to protect the common good.

The words “planned economy”
are not in good

repute today. Mussolini, Hitler
and Stalin so abused

them that they will bear a stigma
for years to come.

As they interpreted the term it
deserves all the scorn

that can be heaped upon it.

So call it a Co-operative Capitalism,
a Co-ordinated

Economy, a Systematized Society if
you like. Call it

what you will, but let us not imitate
those who are

sorely wrought over the murder of
a letter in a word,

but feel no compunction at the actual
violence done to

a man, as Augustine put it.

Some may not like the Pope’s new
order. Never-

theless, unless we wish to repudiate the
papal doctrine

(tin



the logical conclusion is This or Eventual Chaos. The

Church is not responsible for the beginning or the de-

velopment of Capitalism. She has the duty to warn the

world when men attempt to build human society on an

anti-social, unnatural foundation. This She has done.

If there still be some, even among her own, who, enam-

ored of the partial advantages of a pagan system, pre-

fer to defend the dictators who dominate it rather than

to labor in the unpopular and less pleasant task of

promoting the positive program of total reconstruction,

that is a role of their own choosing. We will have none
of it.

“The average person,” writes the author of the

booklet we are discussing, “finds it very confusing when

he hears or reads words of condemnation from Catholic

leaders which could be lifted bodily from the Daily

Worker or any other communistic publication or could

come from the lips of the ‘Wreckers of Christian Civ-

ilization.’
”

The average and the above-average Catholic would

be less confused by some of these statements if he

would take the time to study what the Holy Fathers

actually have said about our present economic condi-

tions. As Monsignor Fulton Sheen has been quoted as

saying: “The Communists are often correct in their

protests; it is in the remedies they propose where they

are at fault.”

We have never read in any Communist publication
a more scathing criticism of our non-Communist eco-

nomic system of today than that leveled at it by Pius

XI. It is only by bringing to earth the hidden fallacies

and defects of Capitalism that the average person will

catch the full significance of the papal pronouncements.

The contrast is necessary for complete understanding.

[ 16 ]



No one in his right senses will say that a “profit”

economy based on morally licit free enterprise is wrong

in itself. In some respects Capitalism is “good”—but
the question is

—
“Is it good enough as a substitute for

a genuine, natural, human, industrial society in keeping

with the concepts enunciated in the papal encyclicals?”

We do not think so and we do not believe the Popes

thought so.

We can understand and appreciate why any person

would prefer to defend what we have in America if the

choice were merely between Capitalism and Commu-

nism. To the Holy Pontiffs who have penned the im-

mortal social encyclicals that is not the choice. They

reject both and propose a third.

To quote only those portions of the encyclicals,

therefore, which condemn Communism and Socialism

and to gloss over the indictments against Capitalism in

order to bolster up a thesis in its favor is unpardonable

partisan pleading in a wrong cause. To lay the blame

for our social inequities upon the effects and disregard

the basic causes is neither good logic nor sound social

philosophy. That is what this booklet does when it

states that the main economic problem in the United

States is in a lack of balance among different worker

groups and different geographical segments of the econ-

omy. We will take up this angle of the question, and

perhaps a few tangent topics, in Part Two.

We will use the message of the American Bishops,

1940 (which Father Keller quotes too sparingly), as

direct proof of our contention.

[ 17 ]



Part Two

THE BISHOPS SPEAK!

would be unreasonable to expect that an eco-

nomic system which has been predicated on jalsc

principles and which has been operative over many

decades could be reorganized suddenly or with the

easy gesture of hasty legislation and new administra-

tive policy.”

This quotation is not the opinion of any early Eng-

lish classical economist. It is a statement from “The

Church and the Social Order” of February 7, 1940,

which is the official interpretation of the encyclicals by

the American Bishops. The criticism refers to the capi-

talistic system which now prevails in the United States

of America.

The Bishops say that it has been predicated upon

false principles even though it has persisted through

many decades. The booklet “The Church and Our Eco-

nomic System” claims “that the encyclicals do not con-

demn our economic system of free enterprise but instead

give a strong moral foundation for such a system.”

Both statements can not be correct.

The author, referring to Pius XI’s admonition to

those possessing surplus income, draws the conclusion

that the investment of income to supply tools for the

American economy in itself, is the “act of real liber-

ality, appropriate to the needs of the time” w^hich the

Pope recommends. The investment bankers now under

investigation by the United States government should

protest any such interference with the virtue of liber-

ality—at 6 per cent. We hope this is not the moral
foundation which the encyclicals are assumed to place

under our capitalistic structure.

[ 18 ]



The author argues that “the main weakness in our

economic system lies is the maladjustment among dif-

ferent workers groups, that is, between agricultural

workers and the non-agricultural workers and between

the highly-organized, highly-paid workers and the un-

organized, lower-paid workers.” The second difficulty

is geographical we are told. It consists in the economic

condition of the South.

We do not quarrel with the fact that there is a great

disparity of income between various groups of workers

in the country or that “the South is the cancer-sore of

our national economy.”

We are always appreciative, however, when the

other side offers us arguments to strengthen our own

thesis. These very conditions confirm the diagnosis by

Leo XIII, Kus XI and the American Bishops. The

author is citing some of the effects of the unsound eco-

nomic system from which they flow. He neglects to

inquire into the cause. The main weakness in our eco-

nomic system, in any system, is not in its effects.

Symptoms are not the disease. They merely indicate

the possible cause.

American capitalism has followed the pattern which

Pius XI pointed out is basically unsound. There are

three steps in it:

“1. First there is the struggle for economic supre-

macy itself.

“2. There is the bitter fight to gain supremacy over

the State.

“3. Finally there is the conflict between the States

(governments) themselves, not only because countries

employ their power and shape their policies to promote

every economic advantage of their own citizens, but

also because they seek to decide political controversies

[ 19 ]



that arise among nations through the use of their
eco-

nomic supremacy and strength.”

We can prescind for the present from the third step

enumerated by Pius XI. The truth of it is all too
evi-

dent. But it does not apply particularly
to the issues

under discussion.

We have remarked before, “Big Business is not
bad

because it is big; it is big because
it has been bad.”

Any one who would deny the pertinency
of the first

two points to America is not conversant
with the history

and development of corporation
enterprise in this coun-

try. It is not necessary to
resurrect our pioneer “Cap-

tains of Industry” from their graves
to offer testimony.

The effects of that struggle for economic
supremacy are

apparent in the present status of our
major industries.

The second step is equally clear, but it should
not

be misunderstood. There has never
been a time when

the industrialists and the financiers
have attempted a

coup d’etat “to take over the government”
here as may

have happened in other countries. The
approach has

been more subtle but none the less persistent,
relentless,

unabating. The “pressure” is still on at this moment.

Why, do you think, it took more than fifty
years

to have written on our statute books the
simple legal

recognition of the natural right of working
people to

organize into labor unions? That right was decreed
in

eternity, promulgated in the Garden of Eden,
cham-

pioned by the Vatican from the beginning of the
indus-

trial era—but it has been denied by the National
Association of Manufacturers and others for fifty

years.

What was this but the use of the resources and author-

ity of the State in an economic struggle
against the

workers of the nation?

Why, do you think, it was impossible for years to

[ 20 ]



get a minimum wage and hour law on the statute
books ?

When finally such legislation was' enacted, who
but

those great defenders of simon pure
democracy, our

Southern Senators, restricted the ceiling
to the mag-

nanimous sum of 40c. an hour? (In speaking of
the

South, it might be well for the research
experts to

inquire into the collusions between the Southern
poli-

ticians and industrialists in their warfare against
the

workers if they want to learn one of the
important

reasons for the economic backwardness of that
section

of the country.)

Money built a bulwark in America from the in-

ception of industrial relations. James Truslow
Adams,

we believe it was who said, “Big Business became
a

virtue in America—to which every other virtue was sub-
servient.” It established an economic system

which left

no place for the exercise of fundamental
rights by

others and no thought of morals or anything else
unless

in the crucible of conflict it could show a profit.
It laid

down the principle and perpetuated the policy that

industrial issues would be decided upon political and

economic strength.

So foreign to even the simplest codes of natural

virtue was this concept that Leo XIII blasted it from

its very birth, clearly and in detail diagnosed its
falsity

,

and predicted its eventual results. Pius XI accepted

Leo’s masterful analysis and brought it up to date.

Pius XII has since supplemented the indictment with

current comments. Unfortunately, the system has

worked out according to the blue-print for error which

the Popes had predicted. The American Bishops attest

to this truth in their annual message, 1940,
“The

Church and the Social Order.”

Neither the farmer nor the industrial worker were

[ 21 ]



given proper consideration in the original plans for the

capitalistic utopia. They had to shift for themselves.

That they have done.

One of the strongest lobby groups in Washington

is that of the “Big Four” which represents the farmers

—primarily the large owners. It is an aggressive “pres-
sure” group. They are there to use the “resources and

the authority of the State,” insofar as it is possible, to

safeguard the interests of the agricultural elements in

our national economy. This lobby is an instrument of

self-defense set up to off-set the influence of both organ-

ized management and organized labor.

The rising power of some of the labor unions is

common knowledge today. We have no intention of

defending either those unions or their leaders who, aping

the example of the industrial and financial giants

against whom they do battle, have established an “eco-

nomic dictatorship” of their own. There are such and

they deserve no more sympathy and support than do

their capitalistic proto-types.

“Economic supremacy,” says the Bishops’ message

quoting Pius XI ‘(can not) assume this function of a

true and effective guiding principle,’ for this is a head-

strong and vehement power, which if it is to prove

beneficial to mankind, needs to be curbed strongly and

ruled with prudence.”

Contradicting the contention of the author of this

booklet, the Bishops say: “It is not, however, the ex-

cessive claims of labor on the income from industry

which constitute the most immediate problem in labor

relations today, but rather the abuse of power which

not infrequently results in violence, riot and disorder.”

They go on to state that employers are equally to blame

with irresponsible labor leaders in provoking such

[ 22 ]



conditions. “Leo XIII,” they relate, “spares
neither

group in his denunciation of such immoral
conduct.”

The condition can best be remedied “by elimiiiating

the economic abuses from which the disorder
springs.”

It is evident both from the encyclicals and
the

American Bishops’ commentary upon them that the eco-

' nomic abuses flow from the disordered condition
of

modern industrial relations. The remedy is in the re-

organization of society and the harmonious realignment

of those relationships. That is the basic problem and

the fundamental difficulty. No amount of favorable

statistics on the present status of Capitalism can make

up for the deficiency. No analysis of the situation can

be acceptable as long as this major evil is ignored.

The booklet “The Church and Our Economic Sys-

tem” presents a formidable array of statistics to
show

that there is a widespread distribution of ownership
in

America. We might concede the whole set of them. The

papal and episcopal criticisms would still stand.

The author cites the United States Steel Corpora-

tion and the A. T. & T. as examples of diffuse owner-

ship. “In neither of these corporations,” we are told,

“does any one individual own as much as 1 per cent of

the total stock.” Granting the pretense of democratic

ownership, we reply, in neither of them do the stock-

holders or the workers have the least effective voice in

the disposition of their labors or their property.
The

system is so rigged that aside from the influence of the

unions practically complete control of the economic

elements is in the hands of a small clique. They typify

the characterization of Pius XI
—

“no one dare breathe

against their will.”

In treating of the distribution of the National in-

come, the booklet informs us that 90.2 per cent of it

[ 23 ]



went to groups receiving less than $5,000 a year. We

have always wondered why the defenders of the status

quo peg their figures at the $5,000 a year level.

A well-known economist in a New York City Uni-

sity breaks down the 90.2 per cent figure and comes up

with this for the year 1946:

17% of American families had an income less than $1,000

23% of American families had an income less than $2,000

25% of American families had an income less than $3,000

65%

This 65 per cent of families shared 36 per cent of the

National income. Those over $5,000 a year shared 31

per cent of the National income. The $3 to $5,000

group took the remaining 33 per cent. Taking $2,500

to $3,000 as an estimate for a family income, the least

that this break-down shows is that at least 40 to 50

per cent of our American families do not enjoy the

vaunted “American way of life” which the full page

ads of the NAM and other propagandists prate about.
The booklet, likewise, reveals what it terms an

“enlightening” fact. In a period classified as “normal”

only 40 per cent of all corporations operated at a profit

while 60 per cent operated at a loss. To us the fact

is not only enlightening but slightly devastating. Why

get enthusiastic about a system that is 60 per cent in-

efficient, fails to provide a proper living for half the

families of the nation, has created conditions which the

Pope labels a “grave evil” and which has been termed

“economically unsound and inconsistent with social

justice and social charity” by the American Bishops in

their official interpretation of the encyclicals?

Again, we are told 50 per cent of the American

homes are owned by their occupants; 50 per cent of

American farms are owned by their operators. Only 2.1

[24]



per cent of the total rent
income of the country goes to

persons with incomes above $25,000
a year. There is

no documentation giving
the source of the statistics

so we will leave it to some of
our figure-happy readers

to probe their accuracy.

We do not wish to impugn either
the competency

or the integrity of the
author. But it has been said

there

are “liars, d— liars and statistics.” In spite of the
fact that 'we quoted a few

in a preceding paragr^h,

we are always a bit skeptical
about any of them. The

way they are juggled in most
conUoversies (e.g. the

Nathan report and the NAM rejoinder of last
year)

is a caution to the layman.

We do not think we can go far wrong, in
promoting

the positive program of the
Church and staying wit

the American Bishops when they
declare in their 1

message: “The Church is not
concerned with the ac-

curacy of economic surveys or
the resultant data, nor

the problems of scientific
organization, production,

cost-accounting, transportation,
marketing and a mul-

titude of similar activities.
To pass judgment on their

aptitude and merits is a technical
problem proper to

economic science and business
administration.

“For such the Church has neither
the equipment nor

the authorization. We frankly declare that
it would be

unwise on her part to discuss
their operation except

insofar as a moral interest might
be involved.

So back again to the “true remedy
according to the

mind of Pope Pius XI” as the Bishops’
report reveals it:

“The social organism,” they tell us,
“has been dis-

membered and broken up into fragments
each seeking

its own selfish interests instead of
the common gO(^

of all. Until the organized
nature of society is again

recognized and reestablished through
vocational groups

[ 25 ]



or guilds, either one of two things must happen. The

State must assume all responsibility, that is, become

an absolute dictatorship or else the individual remains

helpless, defenseless and completely overpowered by

those who enjoy economic supremacy.”

The chief qualifications of those vocational groups

or guilds, as noted by Pius XI, are that they

are autonomous

embrace whole industries and professions,

are federated with other constituent groups

possess the right of free organization

assembly

and vote

that they should dedicate themselves to the common

good and with governmental protection and assis-

tance function in the establishment of justice and

the general welfare in economic life.

In their latest message, November, 1947, the Bish-

ops’ Committee reiterate this need. They said: “The

Christian view of economic life supports the demand

for organiation of management, labor, agriculture and

professions under government encouragement

,

but not

control, in joint effort to avoid social conflict and to

promote co-operation for the common good.”

This is a call for a new type of industrial society

—

or rather the rebirth of one that flourished in a limited

way at one time in the history of civilized society. It

repudiates the present economic domination “by those

who have ownership or control of capital,” so that those

“who have only their labor to invest have been forced

to accept working conditions which are unreasonable

and wages which are unfair.” “This condition arises,”

say our Bishops, “from the fact that labor policies

[ 26 ]



have been dictated by false principles
in the interests

of the owners or capitalists. Secondly,
it arises from

the fact that labor frequently has
had no voice in the

regulation or adjustment of these problems.”

We are fully aware of the objections that may be

raised against our proposals. We are conscious of the

resistence that many will make to them. As a
matter

of fact, so strenuous is the
opposition to change of

any kind and so stubborn is the defense
of the status

quo that many within the Church itself hesitate
even

to repeat the challenging statements
of the Vicars of

Christ.

But what individuals may think or what self-inter-

ested parties may desire has nothing to do with
the case.

There is such a thing as objective truth.
It is upon

such truth, embodied in the principles
of sound social

philosophy, that the papal encyclicals are
built.

Modern American Capitalism is devoid of any
truly

rational guiding principle. Its
advocates prate^ about

free enterprise but its participants,
who exercise the

dominating influence, practice monopoly.
They talk of

competition but resort to economic power and
political

pressure to maintain a pre-empted
position of suprem-

acy.

A million or more small business enterprisers re-echo

the propaganda that is fed to them in
full-page^ ads.

They do not stop to think that the molds of
competition,

of wages, of prices have been set by a
relatively very

small number of gigantic corporations.
They assume

that they are free, not realizing
that they are fettered

by the chains of unfair competition.

“They call it free enterprise,” was the caustic
com-

ment of the American Bishops’ Committee,
“but the

freedom is for those who possess great
resources and

[ 27 ]



dominating strength rather than for the weak or those

who depend solely on their own labor for their well-

being.”

When anyone asks for an ordered industrial society,

in which all those vitally affected will have a decent

representation, an angry and an anguished cry of

“Planned Economy! Beware!” rends the air.

We ask, “What have we now but a planned econ-

omy?” It is planned but the planning is the “private

property” of autocratic groups who over the years

have unfairly attained positions of strategic supremacy.

When the masters of the Steel Industry, for in-

stance, the manufacturers of a product that is of vital

public import, dictatorially and unilaterately decree

that the price of steel will be raised five dollars a ton

regardless of the effect upon the rest of the nation

—

what is that? Is it merely a haphazard accident or is

it a very deliberate and planned action?

When the wizards of Wall Street, who control the

major channels of the credit of the nation, pull the

strings which make industrial puppets dance—giving
economic strength to one party, debilitating another

—

is that free enterprise or is it a planned dictatorship

whose influence is felt in every segment of the economy?

Where is this free enterprise they talk of and in what

does it consist? Would the establishment of democratic

Industrial Councils in the major industries of the nation

culminating in a National Economic Council destroy

legitimate freedom? Why should it?
The whole stability of bur political democracy has

been built upon a written Constitution and representa-

tive government. Has this ordered way of life de-

prived or protected the citizens in their civil liberties?

[ 28 ]



The answer to the question is evident
even in the asking

of it. '
. V u

No similar bulwark of liberty and
security has been

provided in the economic world.
Protection of economic

rights of the citizen has been
left to a wild, undefined,

indefinite something which those
who profit by it like

to label with the sweet-sounding
title “free” enterprise.

The lack of any ordered process
for determining

economic issues has thrown back
upon the political

frame-work burdens which do not
rightfully belong to

it. Matters that can be handled
only by the partici-

pants in industrial relations,
if the economy is to be

really free, clutter up the legislative
arm of the govern-

ment and “disordered chaos yields
to organized con-

fusion.”

The result has been a wage-price
spiral that denes

solution, artificial curtailment
of production for in-

creased profits, crippling strikes,
anti-trust restrictions

which do not curb monopoly, labor
laws which become

a weapon of aggression to the
party in favor, encour-

agement of the evil of legislation by lobby,
and univers^

disregard of the public welfare
on all sides. This is

the disgraceful condition that is
ardently defended in

the name of “Competition.”

Some appeal to the doctrine of private
property as

the reason for their defense of
“things as they are.

No one has ever insisted upon the right and the
need

of private ownership for a sound
basis of society, as

have the Sovereign Pontiffs of the
Catholic Church. We

fail to see, however, the application
of the principle in

our present set-up. The trend is
constantly in the

direction of greater and greater concentration
of credit,

resources and power in the hands of
the few to the

[ 29 ]



detriment of the many. The social implications of the

papal doctrine of private property are hardly known.

Now and then we even hear of private price-control

as a proprium of private property. Prices are not

property. They represent a relationship. They are

the connecting link between costs and profits.

There can be no relationship by one party looked

upon as an isolated entity, standing alone, some kind

of an absolute. The word “relationship” presupposes

at least two terminal points.

Price-determination affects the wage-earner, the in-

vestor, the public, the government. All should have

some voice in the matter. Only an organized economy

can give the essential partners in that economy the

rightful and vital representation that belongs to them.

Our present system minimizes the rights of other

social groups other than management and the financiers.

Under the pretense of protecting “freedom” it actually

disregards the dictates of democracy, invites industrial

warfare, fosters an indefensible “Individualism” at the

expense of “Social Responsibility,” and places all eco-

nomic life on a plane of unabating, relentless conflict.

Security and a stable social order are sacrificed, not to

the ideals of true liberty, but the insatiable cries of

illegitimate selfishness.

The “Vocational Group” or “Industries and Profes-

sions” plan gives a voice to labor, to the farmer, to the

professional man in the direction of the elements in our

economy which affect the lives of all of them. The

control of the economy is no longer left to the arbitrary

whims of one very self-interested party—the capitalists.
Economic democracy supplants economic dictatorship.

Security, as well as liberty, becomes the concern

of all the major social agents in society. “We do not

[ 30 ]



wish to imply,” the Bishops say,
“that individual em-

ployers as a class are willfully
responsible for this pres-

ent state of insecurity but we do
claim that a system

which tolerates such insecurity is
both economically

unsound and also inconsistent with
the demands of

social justice and social charity.”

Where we ask is the moral
foundation from the

encyclicals for such a system?
^ ^

But the Popes’ proposals are
impractical in a mod-

ernern world! Practical or
impractical—they are the

proposals of the Church. The present
capitalistic sys-

tem runs counter to them. That
was the thesis we

started out to prove.

How impractical are they? Was Hitler
s solution

more practical? Is Stalin’s solution
more practical? Is

the present chaotic condition
of class-warfare in Amer-

ica a more practical approach?
It is not the Popes

who are illogical and impractical.

It is the present generation of
God’s creatures who

are guilty of mental myopia.
They try to split man in

half, thinking only of the
materialistic side of life and

then complain when the Church refuses
to follow them

in their idiocy.

In the final analysis the papal plan
is nothing more

than a plea to marshal and mobilize
all the brains,

energy, talent, resources of present
day life into one

unif5ring force to provide for a just
allotment of the

things of earth. To those who point with pride
to the

achievements of the past, we reply, “If so much
could

have been accomplished in conflict and
turmoil, how

much more can be expected on a principle of
co-opera-

tion in a society that would follow the
natural law

rather than run counter to it?”

Human nature, we know, is cantankerous. That

[ 31 ]



“alibi” may be soothing to a calloused conscience, but

it will be small comfort to any of us when present con-

ditions culminate in a collapse.

Conscious of this human deficiency the encyclicals

link a second demand to that of the reorganization of

society. It is a return to a virile life of Faith and

morals. The Church has little hope that the world can

see salvation from a study of statistics. The natural

relationships of men to men and of groups to groups

must once again be brought into line. The saving light

of the Gospels must again illumine the minds and warm

the hearts of men. Reformation on both levels is im-

perative.

There is nothing in Capitalism which indicates that

it has the power to perform such a miracle. As the sys-

tem now operates it is a major obstacle to both objec-

tives. Leo XIII, Pius XI, Pius XII, the American

Hierarchy have affirmed this judgment. It is time, we

think, that all Catholics take seriously the suggestions,

the cautions, the warnings and the positive pronounce-

ments of the Holy See.

[ 32 ]





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