Mobilizing Industry for National Defense


By RALPH K. STRASSMAN, Lt. Colonel U. S. Army and Vice President, Ward Wheelock Company—Advertising

Delivered before The National Office Management Association, New York City, September 18, 1940

Vital Speeches of the Day, Vol. VI, pp. 751-754

I AM sure you are all in agreement that private enterprise is the foundation of our country's political freedom as well as its economic development. Last year I was detailed as United States Army Instructor at Jackson Barracks, during the Mobilization Conference. At this military gathering, the subject of protecting personnel for Industry was not only seriously discussed by the Army, Navy and Marine units, but actual recommendations for procedure were established. The welcome fact is, the War Department today not only recognizes Industry as the first line of national defense but also realizes that the men engaged in Industry are just as important in the winning of a war, as the fighting men at the front.

It may be well to call to your attention that during the past ten years of economic dislocation, the War Department has come to a new understanding of the importance of decentralizing Industry—also, that the organizing of Industry for potential production of essential war supplies and other military needs is uppermost in importance—and that some immediate construction is necessary. It is believed, however, that it is no longer feasible to prepare for possible future aggression by piling up large reserves of fighting materials. With technical advances proceeding so rapidly, equipment may be obsolete almost as soon as it is produced. It is necessary, of course, to have up-to-date plans and sufficient supplies of essential raw materials.

The continued crisis in Europe demonstrates clearly the terrific importance of aerial attack, not only in the threat to civilian population, but in the power of superior air forces to paralyze quickly the production and distribution of essential supplies. The aerial bombardment of industrial centers by both the British and the Germans has seriously crippled, and in many cases brought an end to, effective resistance by destroying existing military supplies and the machinery for replacement, and by smashing lines of communication with agricultural regions.

Just as whole nations have become battlefields, so the whole of Industry, in all its ramifications, must be mobilized for national defense. We all know that potential aggressors are deterred most effectively by the knowledge that every resource of a powerful combined industrial machine can be geared overnight to form a united front for defense.

Unified defense effort must become the primary motivating force in every factory, farm, shop and home before our country can even make a beginning in attesting her own strength.

Any contribution to the stabilizing and expanding of normal business activity has a direct bearing on the success of re-armament activities. It is everlastingly true that Industry is the first line of fire in this crisis and that our national success or failure depends first on Industry's ability to recognize its responsibilities and then to carry them out through patient, unspectacular daily work.

Let us consider first the question of paying for our projected armament program. No one doubts the necessity of taking on this huge financial burden, but it is dangerous to dodge or soft-pedal its implications. We have already a huge national debt and high taxes; it would indeed be folly to pile up more debt without giving serious thought as to how we are to meet the bill.

Obviously, increased business prosperity and a bigger national income will increase tax revenues. The most productive tax measures will be those which handicap business least. More efficient methods of manufacturing and distributing goods will reduce unit costs, open new markets and create new customers. These are all business truisms, and I mention them only to bring out the point that a strangely popular philosophy which denies these self-evident truths has for years slowed down the operation of the factors which make for higher living standards, a higher national income, and hence, higher tax yields.

We have all heard men who should know better repeating defeatist patter to the effect that our era of expansion has ended, our frontiers have vanished, and that we must change our thinking and our methods to fit a static economy. If this be true, or even if enough people are induced to accept such a distorted view, then it would indeed be impossible for us to safeguard our national institutions and preserve our democratic way of living. The crushing burden of financing a re-armament program with a static and restricted business structure would inevitably crush the last remnant of our free institutions, wipe out our great middle class and make every citizen the weak dependent of an impoverished and disordered state.

Of course I do not believe for an instant that such a condition confronts us now. In common with the vast majority of business men and industrialists, I have confidence that the American system is more than equal to the great task before it, if it is permitted to function in high gear and if it has the loyal and active support of an informed public opinion. Creating and disseminating such opinion is one of the great responsibilities of everyone who believes sincerely in the future of private enterprise in a free and independent nation.

The men and women who are giving their effort to the production and distribution of consumer goods are contributing to the national welfare just as much as their fellow-workers in industries which deal directly with the manufacture of war materials. They are helping to keep stable the normal structure of business which is the basis of our national economy; and they must be made to realize that they form the back-log without which a real defense program would be impossible.

Efficient management has long understood the importance of the human element in business. The always-important question of employer-employee relationships has been brought sharply to the foreground in connection with the national defense program. I believe that the great majority of American workers are thoroughly loyal to their country and ready to do whatever is needed to defend it. But they need to be shown just how their efforts are contributing to national safety and to be made to feel their own importance as units in a great common enterprise.

A widespread survey made among representative businesses showed some surprising discrepancies between the actual grievances of employees and the things which their employers imagined the workers wanted. For example, employers thought that higher wages represented the principal desire of their employees. However, the most frequent cause of complaint among the workers themselves was an apparent lack of appreciation of their efforts on the part of management.

Now, this perfectly natural human desire to have effort appreciated can be utilized by management to bring about increased efficiency. When workers are made conscious that contributing to national defense is their personal responsibility and that their efforts are appreciated, then we shall have made great headway in protecting them—and Industry —from the influence of destructive and un-American propaganda.

Of course, it is impossible for the employer of hundreds or thousands of people to have personal contacts with them or to know much about them as individuals. But everyone with major managerial responsibilities can impress upon his subordinate staff the necessity for maintaining a friendly atmosphere and for encouraging special effort.

In every large organization, it is easy to find countless instances of good-will lost, dissatisfaction created and efficiency lowered through trivial instances. From the practical business aspect, this situation is wasteful. Every employee with a grievance is a negative salesman for Private Enterprise.

Obviously, machinery is needed by which employees can be made to feel that they are a real part of the company for which they work. Unionism is destroying its own effectiveness in many cases by factional struggles and the employees who have depended on union leadership for representation, are increasingly dissatisfied- While, under the law, the employer is handicapped, he can do a great deal toward restoring peace by building up a feeling of confidence in management.

One way to do this is to give employees more information about the business. Balance sheets are a mystery to most of them, and the company's financial statements tell little they can understand. They see lists of large corporation salaries published in the news, and reports of corporation earnings; contrasting these figures with their modest earnings, they acquire a feeling of injury that their own share seems so small. They should know what these figures actually represent, with tax deductions; how many small investors share in the profits, and how large a share of the net goes for labor. Another need is for the development of systems whichwill give some form of security in compensation for good services. People are looking rather fatuously to the "government" to give them what industry could have supplied more efficiently and in the end, more cheaply.

Public education, likewise, should proceed along the same lines, if confidence is to be restored. People should be made to realize that "big business" is not an abstraction, but merely small business on a larger scale. The corner grocer, the mechanic who has bought his own shop, the druggist, the bootblack, are all "business." The whole structure of our national life rests on buying and selling things and ideas, goods and service; the making of things people want and bringing them to where people can buy them.

The need of the times demand that management take stock of all assets, mechanical and human, to the end that waste and delay may be eliminated insofar as possible. More speed will be gained in the long run if some time is devoted now to the re-valuation of personnel, to the matching of people to the jobs for which they are best fitted, and to scrutinizing the morale and state of mind of employees.

In connection with compulsory military service, management faces some dislocation of personnel; but this need not prove serious if advance preparations are made to meet them. Plans are already under way, in key communities, to train potential workers for semi-skilled employment through intensive courses and to restore the skills of workers who have not had recent opportunities for working at their trades. Private employers must cooperate to the fullest extent with such endeavors. Employees should also be made to feel that they have a definite responsibility in helping newcomers carry on the work abandoned by the men called to military service.

We can never have real national unity and all-out preparedness so long as our people are divided into mutually exclusive groups, with jealousies and suspicions between them. There are some alarming signs that organized efforts are at work to foster group hatreds through a business-smearing campaign, even at a time when our national safety depends on the ability of all classes of society to work together in complete harmony.

The people have a right to know the real reasons for delays in awarding military contracts and all the factors involved, before placing responsibility. They need to be shown that the real implication of the high-sounding phrase "conscription of capital" is nothing more nor less than outright confiscation of property. People should be made to see that capital, in the genuine sense of productive investment, is already "conscripted" inasmuch as it is working for the general welfare by giving jobs, paying taxes and producing consistently lower prices.

Far from giving the people who pay the taxes a "share" in the problematical profits of our munitions industry, the taking over of factories by the government would result in heavier tax burdens. Far from increasing the output of armament materials, it would cause production schedules to bog down in the hopeless mire of bureaucratic jealousies and bungling.

The French aircraft factories were "nationalized" during the regime of Premier Blum, and the record shows what happened to French plane production. Far from being democratic, the confiscation of industrial plants would be a long step in the direction of the very totalitarianism which we are arming to resist from without.

Attacks on business are being systematically planned by persons who are actively hostile to the principle of private enterprise. They imagine, or pretend to imagine, that a free political state can exist alongside a totalitarian economy.

The chief danger from these fanatical, miscalled "liberals" is through the influence they may have upon entirely loyalpersons who are taken in by their plausible catch-words. These persons are not given an insight into the motives of those who are in reality attacking our system of government through their assaults on private enterprise.

There are encouraging signs that the inherent good sense of the American people has already produced widespread reaction from the business-baiting campaigns of some politicians and self-seeking agitators.

While delegates at the Republican National Convention were saying firmly that any candidate they might name who had any business or utility connections would be fatally handicapped, the rank and file of party members and many thousands of persons without party affiliations were proving, through their letters and telegrams, and through the results of polls of public opinion, that they considered success in private enterprise an excellent qualification for high public office. The national defense program also offers an opportunity for business executives to become real representatives of private industry in government councils. Business has long complained that it has had no real opportunity to put across its story with government officials, since their efforts were all discounted in advance as selfish propaganda.

Much of the friction between government and business has been produced by lack of understanding of their mutual dependence. The national emergency has pointed this up forcefully and has given representatives of private industry a new standing in political and governmental councils. There is a realization on both sides that private feuds and personal grievances are a peace-time luxury which we cannot afford now.

By proving itself capable and cooperative in this emergency, business can do everything to prove the indispensability of private enterprise. This is not to say, of course, that business men should lay aside their principles or retreat one inch from their convictions for the sake of expediency. They understand that policy-making and the details of military equipment and tactics must rightly rest in the hands of duly constituted governmental and military authorities. Like any other private citizens, they expect to express and vote their personal convictions, then abide by the result and do their own jobs. But governmental circles, as well as the general public, are becoming more and more convinced of Industry's importance, and the voice of business is going to be listened to with increasing respect. The country has awakened to the fact that, while the politicians can produce the appropriations and the oratory, real defense equipment can be produced only by Industry.

One of the most important functions of business management will be carried out when government representatives have been convinced that national defense must not be hampered in any way by catering to the demands or cringing before the threats of any special-privilege groups or blocs. There must be absolute fearlessness in enforcing the necessary regulations, without regard to political pressure.

Public opinion has already been strongly antagonized by the excesses of some groups which have shown themselves self-seeking or clearly dominated by subversive elements. The inarticulate, unorganized majority of Americans can safely be trusted to uphold firm action against obstructionists, under any disguise. Those in charge of national policy must be clearly shown that industry cannot do a hundred per cent job and at the same time cater to favorites or be influenced by the demands of any privileged group.

Industry cannot cooperate effectively with government when there is mutual distrust of motives. Government cannot afford to take the attitude that it has let business out of jail on probation, as it were, for the duration of the emergency. If prominent government officials continue totake the attitude that business men are merely waiting for an excuse to grab unlimited profits at the expense of employees and the public, there will be no adequate basis for cooperation.

It is up to management to prove that the great majority of legitimate business enterprises are not now, and never have been, desirous of exploiting workers or consumers. Management has learned by experience that the lowest pricesconsistent with reasonable profit bring the best returns in the long run.

Industry does resent the implication that they are stupid and unscrupulous enough to need constant policing by government to make them conduct their businesses according to decent standards. They can show how needlessly involved record-keeping and the arbitrary application of bureaucratic rulings slow down production and reduce employment.