Fundamentals of Democracy


By PHILIP D. REED, Chairman of the Board, General Electric Company

Delivered at a luncheon meeting of the Sales Executives Club of New York at the Hotel Roosevelt New York, July 2, 1940

Vital Speeches of the Day, Vol. VI, pp. 633-636.

AS one who knows but little about the art of selling or the science, if it be one, of salesmanship, I was very hesitant to accept your Chairman's invitation to speak to you on any subject germane to that great field. While there are common denominators for everything, and

no doubt I could discuss a few fundamental rules which all of you, whatever products or services it is your job to sell, would accept as axiomatic, I would thereby neither enlighten nor entertain you, but would be guilty of the all too common practice of talking without saying anything.

So I am going to assume that the composite, the collective knowledge and experience of you members and guests of the Sales Executives Club on the subject of sales and sales promotion is equal to and perhaps greater than that of any similar group in the world. And on that assumption, or shall I say on the basis of that obvious truth, I am going to talk to you for a few minutes and pose for your consideration a sales problem that is, or should be, a challenge to every sales executive in America, a challenge that must be met if we are to continue our system of competitive free enterprise under which the arts of sales promotion and advertising have grown and flourished so enormously.

Need I say that the job I refer to is that of selling the American way of life to Americans? It may seem paradoxical that this should be necessary or that we as a people should be considering even for a moment any other way of life. But the stark truth is that we are doing precisely that. And we are doing it because our fellow-citizens have not been told enough about or sold sufficiently upon our own American product. That, gentlemen, is where you come in—where you who are trained in the art of telling the truthful story of good products can be of immeasurable value in seeing to it that when the great question must finally be decided, it will be dealt with by an awake and understanding people.

What the future holds for us no one can accurately foretell. But it requires no clairvoyance to see that the next five years will in all likelihood be the most vitally important ones in the history of our nation. The things to be done during that period, the legislation to be adopted, the leadership to be developed, the reaction and response of the American people to the events which lie ahead in the struggle between dictatorship and democracy will, in my judgment, irrevocably fashion the pattern of life to which we, our children and our children's children will of necessity conform.

The interest, importance and value, therefore, during the years immediately ahead, of men and women who know and understand the methods and techniques of education, of advertising and of sales promotion, cannot be overestimated. It follows that those trained in these arts must not only make their influence felt during these formative years, but that they must base their judgments and their action upon a real understanding of the issues, the trends and the problems with which we as a nation are confronted.

Today we are in the first throes of organizing an enormous program of national defense. No one, I think, will doubt this country's need of greatly enlarged military, naval and air defenses. To accomplish this herculean task quickly, efficiently and well, there must be the closest kind of cooperation and teamwork between government, industrial management and labor. It is inconceivable that there should be a lack of it from any quarter, for the ultimate purpose and objective of this program is the preservation of our homes, our institutions and our way of life. Patience and understanding will be needed. Delays and disappointments occur. Sacrifices and concessions will be required. But as Americans all—and always—with the vitality and resourcefulness and organizational ability that have enabled us to create the greatest and most efficient production machine in history, we will do this job and we will do it well.

Last week the Republican Party chose its candidates for high office. A fortnight hence the Democratic Party will do the same and the campaigns will then get under way. The responsibility that falls upon the delegates charged with the duty of selecting the Presidential and Vice Presidential candidates in this period of world crisis is exceeded only bythat which must rest upon the shoulders of the men selected. Whatever our political preferments, I venture to say that the events of last week were gratifying to all who believe that the effective functioning of our American democracy requires not one but two strong parties, each under active, intelligent and vigorous leadership.

The great issues today are not those we are accustomed to associate with party politics. They are cosmic questions, affecting on the one hand our relationships and ability to live with the other peoples of the world, and on the other hand the review and redetermination of our own doctrines of self-government. As normal human beings we all want to find the right answers to these vitally important questions. There can be no doubt of the sincerity and loyalty of our political, industrial and labor leaders. But they and all of us must recognize before it is too late that the problems before us are far larger than the individual interests of any party, section or group.

Large portions of the world's population have in recent years surrendered democratic freedom for dictatorship. The state has replaced the individual. These changes abroad have evidenced themselves in this country in many small ways. Each step is comparatively insignificant when taken by itself, but in the aggregate they constitute a definite and unmistakable trend toward centralization and enlargement of government powers and toward government by men rather than by laws.

We have been through ten years of serious economic disorder. During that period we have made progress in certain directions, but none at all in others. For example, no one can question the fact that very real social progress has been made. The value and desirability of these accomplishments from the social standpoint are self-evident. Nor would any of us wish to see them lost, if we as a nation can support and justify their continuation. The difficulty is that social legislation almost invariably costs money, large sums of money, and can be supported only if the economic condition of the country is healthy and prosperous. We all agree, I am sure, that American citizens should not be permitted to starve, that made work is better than the dole, that old age and unemployment insurance, and guaranteed bank deposits are fine and worthy things, that maximum hours and minimum wages are all to the good in sweat-shop industries, that reclamation and rehabilitation of the soil is essential for the future of America, that slum clearance and low-cost housing are much to be desired. But I repeat that these enactments cost money, billions in the aggregate, and they can be supported through the years only if our economic system is sound and successful.

The fact is, however, that the economic record of the past decade is just as disappointing as the social record is gratifying. In a recent editorial Fortune magazine points out that our national income is back to 1919, our unemployment problem completely unsolved, our national debt up 19 billions (now amounting to $1,250 per family) and that comparing the period 1933-39 with 1923-29, the only significant increases among twenty-two basic economic measurements were in population, strikes, strikers, Federal taxes, Federal expenditures and national debt. All the other items show a decline varying from 9 per cent to 84 per cent and include manufacturing employment, industrial production, wholesale prices, factory pay rolls, national income, new construction and corporate financing.

We must, I submit, place more emphasis on economic recovery, lest, failing to achieve it, we are forced to abandon— as we surely would be—the social advances of the last decade. For government cannot create wealth. All it can dois redistribute existing wealth. A great deal of new wealth must be created to support our social program, and this can

be done only by increasing output, the production of useful goods. To reach this goal we must move forward on theeconomic front.

Oliver Wendell Holmes once said, "The longing for certainty and repose is in every human mind. But certainty is generally illusion and repose is not the destiny of man." I do not know the circumstances which prompted Holmes to make that statement, but if it was true then, how deeply, how desperately true it is today. Certainly—that is to say, assured security—is generally illusion, and repose—that is to say, escape from hard work—is not the destiny of man. That quotation, gentlemen, is heavy with truth. May we all heed and profit by it.

The question of what is wrong with America's economic system, what has caused the long-continued apathy in our industrial and financial mechanisms, has produced a long list of conflicting explanations and as many suggestions, equally conflicting, for the correction of the difficulty. Stemming from totally different concepts of the cause of our lagging activity, the proposed corrective measures are not only diverse and inconsistent, but certain of them would alter fundamentally our traditional view of government and its functions and the jealously guarded freedom of action which American citizens have so long enjoyed.

This brings us face to face with a serious problem—a problem that is real, because it goes to the roots of our system of constitutional democracy, a problem that cannot be ignored. Let us examine ourselves as adult Americans. Are we good judges, competent critics, and intelligent readers of our country's history? Are we well enough grounded in political economy to judge what is good for our future, and what is bad? Do we understand the fundamentals of the American system under which we have grown up? Lacking that knowledge of fundamentals, how can we distinguish between proposals which are consistent with the pattern of that system, and those which would impair or destroy it? Can we fashion for ourselves some kind of simple projector by which the trends and tendencies of the day can be clearly viewed and contrasted with the doctrines upon which this nation was founded? These questions, gentlemen, are far easier to ask than to answer.

We are told that the average American has received no more than a seventh-grade schooling. It is clear, therefore, that the ordinary citizen cannot be expected to understand and pass intelligent judgment upon the complex questions which are ever before us in business, banking, agriculture, government and many other fields. But it is he, nevertheless, who will determine whether and to what extent America will continue to live by the principles so firmly established by our forefathers. What can we do to keep these simple and fundamental doctrines ever before us?

No one knows better than I the difficulty of keeping even reasonably well-informed on the major problems of the day and the hours of reading and study it takes to satisfy not a New England but merely a Mid-western conscience that one's views and pronouncements on current questions are not simply parroted from his favorite columnist but are bottomed by thoughtful analysis and honest conviction. And because our government is and must be active in so many fields, and because the legislative and administrative questions before it are so diverse and numerous, it is most difficult to preserve perspective, to see the forest despite the trees, and to maintain an objective and consistent viewpoint. The task of thinking simply, unemotionally and directly has perhaps never been more difficult and surely never more urgentlyneeded than in this forty-first year of the twentieth century.

Formulae for thinking, like rules for making friends and influencing people, must be open to the charge of oversimplification and must prove to some extent ineffectual. Nevertheless, in this disturbed and complex day in which we live, when in foreign lands outlaws and iconoclasts seem successfully to be defying the validity of the virtues we have always embraced, when character and integrity appear almost to inhibit rather than to help one's cause, it may not be unprofitable for each of us to sit down quietly and restate to ourselves as simply and briefly as we can the fundamental principles which made, and if we hold firmly to them which will preserve, our American way of life.

Were we each to do this, the enumerations would doubtless differ, both in number of items and in the order of importance of the common ones. The central core, however, would surely be the same. If from that core we could formulate a simple one-page statement, a primer if you like, of the doctrines of American self-government, and if we could spread that statement far and wide across the land for every American to read and live by, the present trends toward government by men rather than by laws, toward enlargement and centralization of government functions and toward government by small but articulate pressure groups, would be arrested in their tracks.

And were I asked to set down in brief and simple fashion the items I would include in a Primer of American Self-government, they would be these seven:

Our American Constitution is of inestimable value. In clear language it safeguards the fundamental rights of the individual. It limits the powers of government to those expressly and by clear implication granted to it. Because amendment is difficult and time-consuming, it stands as a bulwark against hurried, ill-considered or emotional change. The first item of my Primer of American Self-government is, therefore:

1. Understand, honor and preserve the Constitution of the United States.

American government, whether national, state or local, comprises three branches, which in order to prevent concentration of power, must always be kept separate and distinct. They are the Legislative branch, whose duty it is to enact all laws subject only to the principles and limitations laid down by the Constitution; the Executive branch, whose duty it is to administer, but never to make, the laws of the land and to operate all government services; and the Judicial branch, whose duty it is to interpret the laws made by the legislature, to decide whether they conform to the Constitution, and whether acts or omissions of the people or the other departments of government are in accordance with the law. The second item of my Primer is, therefore:

2. Keep forever separate and distinct the legislative, executive and judicial functions of government.

Government is created by and belongs to the people. It has no rights or powers except as the people grant them. The cost of government must be paid for by the people through taxation, and the tendency is for government to grow and become increasingly costly. Because government is not like private enterprise, in which competition and the profit motive provide a tremendous incentive to careful planning and efficient operation, government is inherently less efficient than private business. Therefore it should be permitted to do only those things which government alone can properly do and which are necessary for the welfare of the people. Thus the third item of my Primer becomes:

3. Remember that government belongs to the people, is inherently inefficient, and that its activities should he limited to those which government alone can perform.

Of the many rights and guarantees which Americans enjoy under the Federal and State Constitutions, perhaps the most important are freedom of speech, freedom of worship according to one's own conscience, and freedom of decision and action in such matters as where to live, what kind of work to engage in, whom to work for and at what pay. This freedom of action, coupled with the right of the American citizen to have and to hold the fruits of his labor and to save or dispose of them as he wishes, is called the Enterprise System, and it provides opportunity and incentive to improve one's position in life. Our fourth item, accordingly, is:

4. Be vigilant for freedom of speech, freedom of worship, and freedom of action.

The enterprise system under which thousands of private businesses and millions of men and women are constantly searching for now, better and more useful products and services, and for ways to improve and lower the cost of existing ones, has produced a standard of living in this country higher than any which the world has ever known. The enterprise system cannot function successfully without incentive to improve, expand and to create new enterprises. Accordingly if the profits of business are taxed inordinately, or if restraints and limitations are imposed which deprive the managers of reasonable freedom of action, or if government competes or threatens to compete with private business, the enterprise system will languish. These things should therefore be avoided, and if they are, the inherent incentives of the system will cause business to expand, to create new enterprises and profitably to produce ever better, ever cheaper goods for more people to buy. Along this road lies progress and the only permanent solution of our unemployment problem. The fifth item is therefore:

5. Cherish the system of Free Enterprise which made America great.

Thrift and economy are still the great virtues they were in our grandmothers' time. Debt burdens the future and too much of it impairs one's credit. Borrowing, therefore, should be resorted to only in periods of real emergency. These principles apply equally to government and to private citizens. The difficulty is that government can borrow more readily than the citizens, and having borrowed for the benefit of one group, it is very difficult not to do so for other organized groups. Our national debt has risen enormously in the past ten years despite substantial increases in taxation. All this money must some day be repaid out of future taxes. Our immediate problem is to stop piling up more debt. This is not easy, indeed for the moment it is impossible. The safe-guard we must seek is widespread understanding of the problem plus realistic and courageous leadership. Briefly stated, our sixth item becomes:

6. Respect thrift and economy, and beware of debt. Integrity of contract and respect for the rights of othersare foundation stones of civilization. They have been all but destroyed in many quarters of the world, and until they are restored barbarism will stalk the earth. Let us keep the candle of integrity burning brightly in America. If we do so we shall one day use it to rekindle the flame of mutual trust, fair dealing, and respect for others in a suffering and chastened world. The seventh and last item of our Primer is, therefore:

7. Above all, let us be scrupulous in keeping our word and in respecting the rights of others.

This, then, is one primer of American Self-government. If each of you would write your own I am sure I would be satisfied to accept them. For it seems to me that the principles are so simple, so clear, that having thought them through we may say of them in the language of our forefathers, "These truths we hold to be self-evident."

But thinking on these subjects, and particularly thinking through on them, is not sufficiently widespread. Is it not our task as Americans to encourage and stimulate such thinking in every way at our command? For if our educators, our business and professional men, our churchmen and our farmers, our trade and civic organizations, would write their primers of American self-government and tell the story on a national scale through the press, the radio, the pulpit, the classroom and the public forum, how could we fail to re-inculcate in the minds of our 130 million home-loving citizens, the rules for living the American way? It is a selling job gentlemen—the kind of job at which you are expert.

And now in closing let me say that I have deliberately avoided anything but passing reference to the wars abroad. Tragic and disastrous as they are for those involved and for ourselves, and essential as it is for us to view them realistically and to prepare for bitter times ahead, let us emphatically remember that these wars may obscure but they cannot and will not cure our domestic ills. Indeed, if on a peacetime basis we view dangerous tendencies toward the extension and concentration of government, toward the creation of too powerful bureaucracies and toward paralleled enlargement of our national debt, is it not clear that the preparation for or actual engagement in wars must speed and aggravate these tendencies? Let us, therefore, keep our vision unclouded by emotionalism, and let us recognize that conditions beyond our borders make ever more compelling the need for understanding, for teaching and for living our Primer of American Self-government.