PAGEPAGE8I,PencilMyFamilyTreeastoldtoLeonardE.ReadIamaleadpencil—theordinarywoodenpencilfamiliartoallboysandgirlsandadultswhocanreadandwrite.*Writingisbothmyvocationandmyavocation;that’sallIdo.YoumaywonderwhyIshouldwritea Well,tobeginwith,mystoryisinteresting.And,next,Iama mystery—moresothanatreeorasunsetorevenaflashoflightning.But,sadly,Iamtakenforgrantedbythosewhouseme,asifIwereamereincidentandwithoutbackground.Thissuperciliousattituderelegatesmetolevelofthecommonplace.Thisisaspeciesofthe grievouserrorinwhichmankindcannottoolongpersistwithout peril.For,thewiseG.K.Chestertonobserved,“Weareperishingforwantofnotforwantofwonders.”I,Pencil,simplethough Iappeartobe,merityourwonderandawe,aclaimshallattempttoprove.Infact,ifyoucanunderstandme —no,that’stoomuchtoaskofanyone—ifyoucanbecomeawareofthe miraculousnesswhichIsymbolize,youcanhelpsavethefreedommankindissounhappilylosing.Ihaveaprofoundlessontoteach.AndIcanteachthislessonbetterthancanan automobileoranairplaneoramechanicaldishwasherbecause—well,becauseIamseeminglysosimple.Simple?Yet,notasinglepersononthefaceofthisearthknowshowtomakeme.Thissoundsfantastic,doesn’tit?Especiallywhenitis realizedthatthereareaboutoneandone-halfbillionofmykindproducedintheU.S.A.eachyear.Pickmeupandlookmeover.Whatdo yousee?Notmuchmeetseye—there’ssomewood,lacquer,theprintedlabeling,graphitelead,abitofmetal,andanInnumerableAntecedentsJustasyoucannottraceyourfamilytreebackveryfar,soisitimpossibleformetonameandexplainallmyantecedents.ButIwouldliketosuggestenoughofthemtoimpressuponyoutherichnessandcomplexityofmybackground.Myfamilytreebeginswithwhatinfactisatree,acedarofstraightgrainthatgrowsinNorthernCaliforniaandOregon.Nowcontemplateallthesawsandtrucksandropeandthecountlessothergearusedinharvestingandcartingthecedarlogstotherailroadsiding.Thinkofallthepersonsandthenumberlessskillsthatwentintotheirfabrication:theminingofore,themakingofsteelanditsrefinementintosaws,axes,motors;thegrowingofhempandbringingitthroughallthestagestoheavyandstrongrope;theloggingcampswiththeirbedsandmesshalls,thecookeryandtheraisingofallthefoods.Why,untoldthousandsofpersonshadahandineverycupofcoffeetheloggersdrink!ThelogsareshippedtoamillinSanLeandro,California.Canyouimaginetheindividualswhomakeflatcarsandrailsandrailroadenginesandwhoconstructandinstallthecommunicationsystemsincidentalthereto?Theselegionsareamongmyantecedents.ConsiderthemillworkinSanLeandro.Thecedarlogsarecutintosmall,pencil-lengthslatslessthanone-fourthofaninchinthickness.Thesearekilndriedandthentintedforthesamereasonwomenputrougeontheirfaces.PeoplepreferthatIlookpretty,notapallidwhite.Theslatsarewaxedandkilndriedagain.Howmanyskillswentintothemakingofthetintandthekilns,intosupplyingtheheat,thelightandpower,thebelts,motors,andalltheotherthingsamillrequires?Sweepersinthemillamongmyancestors?Yes,andincludedarethemenwhopouredtheconcreteforthedamofaPacificGas&ElectricCompanyhydroplantwhichsupplies themill’spower!Don’toverlooktheancestorspresentanddistantwhohaveahandintransportingsixtycarloadsofslatsacrossthenation.Onceinthepencilfactory—$4,000,000inmachineryandbuilding,allcapitalaccumulatedbythriftyandsavingparentsofmine—eachslatisgiveneightgroovesbyacomplexmachine,afterwhichanothermachinelaysleadsineveryotherslat,appliesglue,andplacesanotherslatatop—aleadsandwich,sotospeak.SevenbrothersandIaremechanicallycarvedfromthis“wood-clinched”sandwich.My“lead”itself—itcontainsnoleadatall—iscomplex.ThegraphiteisminedinCeylon.Considertheseminersandthosewhomaketheirmanytoolsandthemakersofthepapersacksinwhichthegraphiteisshippedandthosewhomakethestringthattiesthesacksandthose whoputthemaboardshipsandthosewhomaketheships.Eventhelighthousekeepersalongthewayassistedinmybirth—andtheharborpilots.ThegraphiteismixedwithclayfromMississippiinwhichammoniumhydroxideisusedintherefiningprocess.Thenwettingagentsareaddedsuchassulfonatedtallow—animalfatschemicallyreactedwithsulfuricacid.Afterpassingthroughnumerousmachines,themixturefinallyappearsasendlessextrusions—asfromasausagegrinder-cuttosize,dried,andbakedforseveralhoursat1,850degreesFahrenheit.ToincreasetheirstrengthandsmoothnesstheleadsarethentreatedwithahotmixturewhichincludescandelillawaxfromMexico,paraffinwax,andhydrogenatednaturalfats.Mycedarreceivessixcoatsoflacquer.Doyouknowalltheingredientsoflacquer?Whowouldthinkthatthegrowersofcastorbeansandtherefinersofcastoroilareapartofit?Theyare.Why,eventheprocessesbywhichthelacquerismadeabeautifulyellowinvolvetheskillsofmorepersonsthanonecanenumerate!Observethelabeling.That’safilmformedbyapplyingheattocarbonblackmixedwithresins.Howdoyoumakeresinsandwhat,pray,iscarbonblack?Mybitofmetal—theferrule—isbrass.Thinkofallthepersonswhominezincandcopperandthosewhohavetheskillstomakeshinysheetbrassfromtheseproductsofnature.Thoseblackringsonmyferruleareblacknickel.Whatisblacknickelandhowisitapplied?Thecompletestoryofwhythecenterofmyferrulehasnoblacknickelonitwouldtakepagestoexplain.Thenthere’smycrowningglory,inelegantlyreferredtointhetradeas“theplug,”thepartmanusestoerasetheerrorshemakeswithme.Aningredient called“factice”iswhatdoestheerasing.Itisarubber-likeproductmadebyreactingrape-seedoilfromtheDutchEastIndieswithsulfurchloride.Rubber,contrarytothecommonnotion,isonlyforbindingpurposes.Then,too,thereare numerousvulcanizingandacceleratingagents.ThepumicecomesfromItaly;andthepigmentwhichgives“theplug”itscoloriscadmiumsulfide.NoOneKnowsDoesanyonewishtochallengemyearlierassertionthatnosinglepersononthefaceofthisearthknowshowtomakeme?Actually,millionsofhumanbeingshavehadahandinmycreation,nooneofwhomevenknowsmorethanaveryfewoftheothers.Now,youmaysaythatIgofarinrelatingthepickerofacoffeeberryinfaroffBrazilandfoodgrowerselsewheretomycreation;thatthisisanextremeposition.Ishallstandbymyclaim.Thereisn’tasinglepersonin allthesemillions,includingthepresidentofthepencilcompany,whocontributesmorethanatiny,infinitesimalbitofknow-how.Fromthestandpointofknow-howtheonlydifferencebetweentheminerofgraphiteinCeylonandtheloggerinOregonisinthetypeofknow-how.Neithertheminernortheloggercanbedispensedwith,anymorethancanthechemistatthefactoryortheworkerintheoilfield—paraffinbeingaby-productofpetroleum.Hereisanastoundingfact:Neithertheworkerintheoilfieldnorthechemistnorthediggerofgraphiteorclaynoranywhomansormakestheshipsortrainsornortheonewhorunsthemachinethatdoesthe knurlingonmybitofmetalnorthepresidentofthecompanyperformshis singulartaskbecausehewantsme.Eachonewantsmeless,perhaps,thandoesachildinthefirstgrade.Indeed,therearesomeamongthisvastmultitudewhoneversawapencilnorwouldtheyknowhowtouseone.Theirmotivationisotherthanme.Perhapsitissomethinglikethis:Eachofthesemillionsseesthathecanthusexchangehistinyknow-howforthegoodsandservicesheneedsorwants.Imayormaynotbeamongtheseitems.NoMasterMindThereisafactstillmoreastounding:theabsenceofamastermind,ofanyonedictatingorforciblydirectingthesecountlessactionswhichbringmeintobeing.Notraceofsuchapersoncanbefound.Instead,wefindtheInvisibleHandatwork.ThisisthemysterytowhichIearlierreferred.Ithasbeensaidthat“onlyGodcanmakeatree.”Whydoweagreewiththis?Isn’titbecausewerealizethatweourselvescouldnotmakeone?Indeed,canweevendescribeatree?Wecannot,exceptinsuperficialterms.Wecansay,forinstance,thatcertainmolecularconfigurationmanifestsitselfasatree.Butwhatmindisthereamongmenthatcouldevenrecord,letalonedirect,theconstantchangesinmoleculesthattranspireinthelifespanofatree?Suchafeatisutterlyunthinkable!I,Pencil,amacomplexcombinationofmiracles:atree,zinc,copper,graphite,andsoon.Buttothese miracleswhichmanifestthemselvesinNatureanevenmoreextraordinary miracle has been added: the configuration of creative energies—millionsoftinyknow-howsconfiguratingnaturallyandspontaneouslyresponse to human necessity and desire and in the absence of any humanmaster-minding!SinceonlyGodcanmakeatree,IinsistthatonlyGodcouldmakeme.Mancannomoredirectthesemillionsofknow-howstobringmeintobeingthanhecanputmoleculestogethertocreateatree.TheaboveiswhatImeantwhenwriting,“IfyoucanbecomeawareofthemiraculousnesswhichIsymbolize,youcanhelpsavethefreedommankindissounhappilylosing.”For,ifoneisawarethattheseknow-howswillnaturally,yes,automatically,arrangethemselvesintocreativeandproductivepatternsinresponsetohumannecessityanddemand—thatis,intheabsenceofgovernmentaloranyothercoercivemasterminding—thenonewillpossessanabsolutelyessentialingredientforfreedom:afaithinfreepeople.Freedomisimpossiblewithoutthisfaith.Oncegovernmenthashadamonopolyofacreativeactivitysuch,forinstance,asthedeliveryofthemails,mostindividualswillbelievethatthemailscouldnotbeefficientlydeliveredby menactingfreely.And hereisthe reason:Eachoneacknowledgesthathehimselfdoesn’tknowhowtodoall thethingsincidenttomaildelivery.Healsorecognizesthatnootherindividualcoulddoit.Theseassumptionsarecorrect.Noindividualpossessesenoughknow-howtoperformanation’smaildeliveryanymorethananyindividualpossessesenoughknow-howtomakeapencil.Now,intheabsenceoffaithinfreepeople—intheunawarenessthatmillionsoftinyknow-howswouldnaturallyandmiraculouslyformandcooperatetosatisfythisnecessity—theindividualcannothelpbutreachtheerroneousconclusionthatmailcanbedeliveredonlybygovernmental“master-minding.”TestimonyGaloreIfI,Pencil,weretheonlyitemthatcouldoffertestimonyonwhatmenandwomencanaccomplishwhenfreetotry,thenthosewithlittlefaithwouldhaveafaircase.However,thereistestimonygalore;it’sallaboutusandoneveryhand.Maildeliveryisexceedinglysimplewhencompared,forinstance,tothemakingofanautomobileoracalculatingmachineora graincombineoramillingmachineortotensofthousandsofotherthings.Delivery?Why,inthisareawheremenhavebeenleftfreetotry,theydeliverthehumanvoicearoundtheworldinlessthanonesecond;theydeliveraneventvisuallyandinmotiontoanyperson’shomewhenitishappening;theydeliver150passengersfromSeattletoBaltimoreinlessthanfourhours;theydelivergasfromTexastoone’srangeorfurnaceinNewYorkatunbelievablylowratesandwithoutsubsidy;theydelivereachfourpoundsofoilfromthePersianGulftoourEasternSeaboard—halfwayaroundtheworld—forlessthanthegovernmentchargesfordeliveringaone-ounceletteracrossthestreet!ThelessonIhavetoteachisthis:Leaveallcreativeenergiesuninhibited.Merelyorganizesocietytoactinharmonywiththislesson.Letsociety’slegalapparatusremoveallobstaclesthebestitcan.Permitthesecreativeknow-howsfreelytoflow.HavefaiththatfreemenandwomenwillrespondtotheInvisibleHand.Thisfaithwillbeconfirmed.I,Pencil,seeminglysimplethoughIam,offerthemiracleofmycreationastestimonythatthisisapracticalfaith,aspracticalasthesun,therain,acedartree,thegoodearth.*Myofficialnameis“Mongol482.”Mymanyingredientsareassembled,fabricated,andfinishedbyEberhardFaberPencilCompany.LeonardE.Read(1898-1983)foundedFEEin1946andservedasitspresidentuntilhisdeath.“I,Pencil,”hismostfamousessay,wasfirstpublishedintheDecember1958issueofTheFreeman.Althoughafewofthemanufacturingdetailsandplacenameshavechangedoverthepastfortyyears,theprinciplesareunchanged.Introduction,byMiltonFriedmanLeonard Read’s delightful story, “I, Pencil,” has become a classic, anddeservedlyso.Iknowofnootherpieceofliteraturethatsosuccinctly,persuasively,andeffectivelyillustratesthemeaningofbothAdamSmith’sinvisiblehand—thepossibilityofcooperationwithoutcoercion—andFriedrichHayek’semphasisontheimportanceofdispersedknowledgeandtheroleofthepricesystemincommunicatinginformationthat“willmaketheindividualsdothedesirablethingswithoutanyonehavingtotellthemwhattodo.”WeusedLeonard’sstoryinourtelevisionshow,“FreetoChoose,”andintheaccompanyingbookofthesametitletoillustrate“thepowerofthemarket”(thetitleofboththefirstsegmentoftheTVshowandofchapteroneofthebook).Wesummarizedthestoryandthenwentontosay:“None of the thousands of persons involved in producing the performedhistaskbecausehewantedapencil.Someamongthemneversawapencilandwouldnotknowwhatitisfor.Eachsawhisworkasawaytogetthegoodsandserviceshewanted—goodsandservicesweproducedinordertogetthepencilwewanted.Everytimewegotothestoreandbuyapencil,weareexchangingalittlebitofourservicesfortheinfinitesimalamountofservicesthateachofthethousandscontributedtowardproducingthepencil.“Itisevenmoreastoundingthatthepencilwaseverproduced.Noonesittinginacentralofficegaveorderstothesethousandsofpeople.Nomilitarypoliceenforcedtheordersthatwerenotgiven.Thesepeopleliveinmanylands,speakdifferentlanguages,practicedifferentreligions,mayevenhateoneanother—yetnoneofthesedifferencespreventedthemfromcooperatingtoproduceapencil.Howdidithappen?AdamSmithgaveustheanswertwohundredyearsago.”“I,Pencil”isatypicalLeonardReadproduct:imaginative,simple yetsubtle,breathingtheloveoffreedomthatimbuedeverythingLeonardwroteordid.Asintherestofhiswork,hewasnottryingtotellpeoplewhattodoorhowtoconductthemselves. He was simply trying to enhance individuals’ understanding ofthemselvesandofthesystemtheylivein.Thatwashisbasiccredoandonethathestucktoconsistentlyduringhislongperiodofservicetothepublic—notpublicserviceinthesenseofgovernmentservice.Whateverthepressure,hestucktohisguns,refusingtocompromisehisprinciples.Thatwaswhyhewassoeffectiveinkeepingalive,intheearlydays,andthenspreadingthebasicideathathumanfreedomrequiredprivateproperty,freecompetition,andseverelylimitedgovernment.ProfessorFriedman,the1976NobelistinEconomicScience,isSeniorResearchFellowattheHooverInstitution,Stanford,California.Afterword,byDonaldJ.BoudreauxTherearetwokindsofthinking:simplisticandsubtle.Simplisticthinkerscannotunderstandhowcomplexandusefulsocialordersarisefromanysourceotherconsciousplanningbyapurposefulmind.Subtlethinkers,incontrast,understandthatindividualactionsoftenoccurwithinsettingsthatencourageindividualstocoordinatetheiractionswithoneanotherindependentofanyoverarchingplan.F.A.calledsuchunplannedbutharmoniouscoordination“spontaneousorder.”Themarkofthesubtlemindisnotonlyitsabilitytograsptheideaofspontaneousordersbutalsotounderstandthatconsciousattemptstoimproveortomimictheseordersaredoomedtofail.“Whyso?”asksthesimplisticthinker.“Howcanhappenstancegeneratecomplexordersuperiortowhataconsciousmindcanconceiveandimplement?”Inrespondingtothisquestion,asubtlethinkerpointso thatspontaneousordersdonotarisefromhappenstance:thecontinualadjustmentsbyeachindividualwithinspontaneousordersfollowaverystrictlogic—thelogicofmutualaccommodation.Becausenocentralplannercanpossiblyknowallofthedetailsofeachindividual’suniquesituation,nocentralplannercanknowhowbesttoarrangeeachandeveryactionofeachandeveryindividualwiththatofthemultitudesofotherindividuals.Intheeighteenthcentury,ahandfulofscholars—mostnotablyDavidHumeandAdamSmith—developedasubtleunderstandingofhowprivatepropertyrightsencourageself-regardingproducersandconsumerstoactinmutuallybeneficialways.Spontaneousorderingforceswerethusdiscovered,andwiththisdiscoverymoderneconomicsbegantotakeshape.Overthenexttwocenturieseconomicsachievedenormoussuccessin