This article presents a dilemma for libertarianism. It argues that libertarian principles of acquisition and transfer without regard for the pattern of inequality do not support a minimal state, but can lead just as well to a monarchy with full the full power of taxation without violation of self-ownership. The article considers and rejects several ways in which libertarianism might try to argue against a monarchy. Once the government ownership of property is shown to be consistent with just acquisition and transfer of property rights, monarchy, socialism, or state-managed capitalism can be seen as patterns of the distribution of property rights. Libertarian advocacy of a minimal state is simply a preference for one pattern of the distribution of property rights over another. Thus, libertarians must choose between the principles and the state they advocate.