New Dealer's Hornbook

Thurman Wesley Arnold is just the kind of irreverent, ready-witted jack-of-all-trades whose presence with the New Deal in Washington since 1933 both businessmen and old-line politicians have found irritating. An amateur politician, he was once the sole Democrat in the Wyoming Legislature and served a term as mayor of his home city of Laramie. A stout New Dealer, he has worked for his friend Jerome Frank as Assistant General Counsel of AAA, for his friend Bill Douglas as trial examiner for the SEC, for his friend Robert H. Jackson as a special consultant in the Department of Justice's trust-busting campaign. An able trial lawyer, he was at one time Dean of West Virginia University's Law School and left there in 1930 with offers of professorships in both the Harvard and Yale Law Schools. He chose Yale, helped Dean Charles E. Clark and Walton Hamilton make it as New Dealish as Felix Frankfurter's Harvard.

Last week Professor Arnold's name was on the tongue of many an inquisitive businessman as well as of many a parlor economist, for he had written a book. Put out quietly last month by Yale University Press, The Folklore of Capitalism achieved so much word-of-mouth advertising that last week its first printing was being rapidly exhausted in book stores from coast to coast.

For Thurman Arnold had poured into it all his talents as a trial lawyer, writing an indictment of the ideas of opponents of the New Deal which was calculated to delight all those who already agreed with him and titillate to the point of apoplexy all those who did not. His formula was simple: to turn popular economic beliefs upside down and apply tar with a brush so broad as to hide the occasions when he begged the question and otherwise offended logic.

Result was a stimulating book to warm the heart or ruffle the hackles of every born controversialist. By the folklore of capitalism Thurman Arnold means "those ideas about social organization which are not regarded as folklore but accepted as fundamental principles of law and economics." He sets out to show that the lot of them are myths. Among the "myths" he attacks are:

P:That corporations are "big men who own things."

P:That the money consumers pay for goods and services is spent voluntarily but the money that they pay for Government services is spent involuntarily. (He says that both are taxes.)

P:That men can be trusted to make laws, but only the Supreme Court can be trusted to say what the law means. (He believes that in practice the Supreme Court can decide any question either way given time, as it did in overthrowing New York State's minimum wage law and then upholding a similar one passed in Washington. His parable: Suppose that an old statute taxed horses at $10 a head and ducks at 10-c- that in time horses became worthless and ducks valuable. At this point legal scholars would redefine the duck, would inevitably rule that "Thomas Jefferson once remarked to his wife that his horses were worth much more than his ducks. Differences between feathers and hair were never mentioned by any of the founders. Therefore, it is apparent that the web-footed animals are really horses, and the creatures with hoofs are really ducks.")

Typical excerpt:

"The sale of foreign bonds in this country for the benefit of South American republics may be likened to a great public-works campaign. It built schools, and parks, and roads, and armies in South American countries. Of course, not all of it went into public works. Some of it was used for bribes and all sorts of subrosa activities which are an inevitable part of public activities. But in its larger aspects it meant that the United States had worked and schemed to improve South American republics, collecting for that purpose taxes on institutions in this country, including orphanages and hospitals.

"This public-works program had none of the psychological hazards attending public-works projects promoted by the Government. For example, nobody worried about the character of South Americans. Their characters were not highly regarded, and we felt no responsibility for them as we did for our own people. Therefore, if Chileans leaned on their shovels or sat in the shade while building roads in Chile or El Salvador, no outraged newspaper editors filled their columns with protest at the wastage of American money. No one worried about where the money to pay for these improvements was coming from, because the taxes to pay interest on the bonds had to be met by foreigners and hence were not a burden on our own posterity."

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