What Next for America-In Industry?


By HENRY I. HARRIMAN, Industrialist

Delivered before the First National Town Hall Conference at the Hotel Astor, May 9, 1941

Vital Speeches of the Day, Vol. VII, pp. 519-522

WE are all Americans. We all believe in Democracy, both in government and in industry. We are all confident of the ultimate triumph of democratic principles throughout the world and we are all united in supporting the supreme effort which this nation is making to give aid to all peoples who are threatened by totalitarian aggressors.

Let me also say that I do not look upon the future of America through dark glasses, or with dismal forebodings for two primary reasons; the first being the universal appreciation by thoughtful citizens in every walk in life that difficult problems do lie ahead of us and that only through united effort can they be solved. This is an entirely different spirit than animated America at the end of the First World War. Then most of us expected a speedy return to the mode of life which had dominated the country throughout the nineteenth century. "Back to Normalcy" was the motto in 1918.

My second reason for optimism is that we now know that we have the man power, the natural resources and the technique to produce in abundance the basic necessities of life for every human being in the country. Until the beginning of the twentieth century the problem throughout the world had been to produce all that was required. Technology and mass production have now made that achievement possible and what we have yet to learn is how to distribute the goods which we have the ability to make. Let me add that from careful studies recently made, I am convinced that under proper organization approximately one-half of our working population of fifty-four million people can produce and distribute in a forty-hour week the food, clothing, shelter, education, medical care and recreation which our one hundred and thirty-two million people require, leaving the other half free for defense, for other necessary governmental functions, and for the making of the luxuries and finer things of life.

We all believe in and are striving to preserve democracy. It is, therefore, appropriate that I first give you my definition of Democracy and then my conception of the needs and desires of Democratic America.

I define Democracy to be, in the first place, a method of life and, in the second place, a form of government. As a method of life, it is one in which the freedom and initiative of the individual is preserved. It is a form of life led under the principles of our Bill of Rights which has as its essential aims, freedom to choose one's work, in life, freedom to speak ones thoughts, freedom to assemble in common council, freedom of the press, freedom from illegal arrest, and freedom to worship according to the dictates of one's conscience. As a form of government, Democracy means to me one in which the people at stated periods and after full and free discussion elect their representatives through whom their laws are to be made and executed. It may be a strong government, or it may be a weak government, according to the needs of the times. It may be a government with great centralization of power, or it may be one that is relatively weak or decentralized; but in any event, it is a government as Lincoln said, "of the people, for the people, and by the people."

Furthermore, I conceive the following to be the five basic needs and desires of the people of Democratic America.

First, as children and youth, they are entitled to proper training and education—training for work, training for leisure and culture, training for citizenship, and training that each individual may lead the broadest and the finest life within his or her capacity. This is my conception of the scope of education.

Second, throughout the normal working years of life, each individual is entitled to an opportunity to work at a job suited to his or her mentality and physique and at proper pay for the services rendered. There are few men or women who really wish to be supported by their families or the state. There is indeed in mankind an intuitive urge for work and a love of accomplishment. There is a desire to do something useful and to be paid for it.

Third, it is natural for people to desire to be free fromthe fear of want which arises from unemployment, sickness or old age, A good job is the greatest assurance against this fear but we have wisely recognized that in the complicated life of today private or public insurance is a prerequisite and our social security laws are an important factor in that field.

Fourth, good health should be the inalienable right of every individual so far as medical science can assure it. The science of health has made great strides in the last four decades and we have learned much in the fields of nutrition, and of preventative and curative medicine. That knowledge must be made available to all of our people.

Fifth and finally, the American people earnestly desire an international order which will obviate the recurring sacrifices and the horrors of war and are willing to do their part to that end.

These needs and desires are, I believe, reasonable and are ones that are possible of gratification. You may accuse me of undue idealism in setting up these five goals for democratic America but as I review the progress of the last one hundred fifty years, I do not think they are impossible of accomplishment.

I have named five basic needs and desires. May I very briefly discuss them with you.

1. Education and Training

The first is the training and education of youth. I conceive that there are three main objectives of education. First, in the early years, we should give to all of our children certain basic informations and skills which are necessary for any sphere of life. In this catalogue I would include the effective practice of reading, writing and arithmetic, a basic knowledge of the trends of history, a reasonably accurate acquaintance with geography, a clear concept of our system of government and the obligations of citizenship, and finally an introduction to the work field of the home market.

Having given a youth this basic knowledge, then the second objective of education is, I take it, to train youth for a proper induction into the tasks of life. The education needed for this objective will, of course, vary with each person's native ability, with the location and character of his home, and with the opportunities which will probably be open to him. It must, I think, be recognized that no common standard of education, beyond the basic informations already referred to, can be set for all. Mental capacities differ widely and this is a fact that must be recognized in all educational planning. However, modern psychology has made it possible to make at least a rough approximation of the aptitudes of a youth and this knowledge should be increasingly taken into account by our educational system.

Finally, I believe that education, and particularly higher education, should have a distinctly cultural objective. The whole trend of our civilization with its technological advance and its specialization of work has led to the ever-shortening of the hours of labor, thus giving greater and greater leisure to the individual. Already the five-day week is becoming almost universal throughout commerce and industry and this means that, for a large segment of our population, there are two days a week, (or with vacation time, more than two-sevenths of the year) which must be filled by recreation or other activities, mental or physical, which have no direct connection with the earning of a living.

I remember the broad smile that went around a classroom of the Massachusetts Institute of Technology, some ten years ago, when I said that one of the great tasks of the education of the future would be training for leisure. Few will smile at this statement today.

2. Employment and Labor Relations

The second need of our people is to have the opportunity to work at a job suited to each person's capacity and atproper pay for the services rendered.

I am a profound believer that the free enterprise system enjoyed by the people of the United States is largely responsible for the outstanding progress which this nation has made in the last one hundred and fifty years, yet our experience with unemployment since the end of the World War forces us to admit that some of our concepts of the carrying out of the free enterprise system must be changed. For the last decade unemployment has on the average been the lot of at least ten millions of our fifty million workers and not only has this brought untold suffering and misery to a substantial segment of our people but it has resulted in a waste of human effort which the American people are not willing to tolerate. If the unemployment of the last decade could have been converted into useful effort, our American cities could have been largely rebuilt; American homes could have been reconstructed; and American life could have been placed on a far richer and sounder basis.

You may ask me how we are to avoid unemployment. The answer is as complex as the question is simple. In the first place, we must give our people proper training and education and thus allow each individual to develop the best that is in him. In the second place, we must remove some hindrances to individual incentive. America was made great and strong by American business taking chances. Many enterprises fell by the wayside, but great rewards came to those who succeeded and this incentive always lay in front of a man working under a free enterprise system. If we would continue that system, we must continue to offer reasonable rewards for success—rewards that come to the man who makes two blades of grass grow where only one grew before, but not rewards for the man who by speculation or manipulation tries to achieve wealth and position. Some of the hindrances to the free enterprise system lie in our method of taxation. This problem is too complex to discuss in the limited time which I have at my disposal but a wise rewriting of our tax laws could probably do more to stimulate private enterprise than any other thing that could be done.

In the third place, we must remove certain handicaps to free competition which is the very essence of the free enterprise system. These are found largely in the concentrated power of very large corporations and in certain corporate practices which have become more or less common since the beginning of the present century.

American enterprise was originally individual in character. Then as larger units of capital were required by industries, partnerships were created and as still larger and larger aggregations of funds were needed to carry on enterprise, corporations became the common vehicle through which business was carried on. The original concept of the corporation was that of an enlarged partnership and with limited liabilities and it was assumed that its sole responsibility was to its stockholders. But as corporations have grown larger, and as they have become the source of livelihood of thousands, or even hundreds of thousands of workers, and as their lists of stockholders have grown in some instances to as many as five hundred thousand, it has become recognized that the modern corporation has three moral, if not legal, obligations. The first is to strive to make a profit for its stockholders. The second is to give reasonably continuous employment to its workers at fair pay. The third is to produce at fair prices the many articles which the public desires. In the corporate reforms and the corporate controls which will undoubtedly be set up, it will, in my judgment,be recognized that all corporations, and not merely railroads and utilities, are affected with the public interest and that the management of corporations will become a distinct function of our industrial and commercial life more or less separated from stock-ownership and with a full recognition of the triple responsibilities which I have outlined.

Fair competition will certainly be stimulated by the recognition of this triple responsibility of management. It will also be stimulated by simpler corporate structures and a sharing in the voting power by all classes of stockholders. We need large corporations to carry out the mass production of today. But we must see, by proper controls, that they do not stifle fair competition and that their corporate structures are simple and fair to all classes of investors.

I also believe that an increasing number of our people must be given jobs by the state. More and more, people are wanting those services or things which the state can best provide. We all want better schools and a more scientific training for the work of life. We all want good roads, parks, playgrounds and recreational facilities. We all recognize the splendid work which our public hospitals are doing; but we also appreciate that in the field of nutrition and of preventive medicine lies a large task both for private enterprise and for the state. Again, we are beginning to appreciate that proper housing and the proper reconstruction of our cities is a combined task of public and of private enterprise. Finally, I would go to the extent of saying that rather than see men idle I should prefer to see the state create useful and worthwhile jobs for those who cannot find work in private enterprise; but this should be done only after private enterprise has been given every opportunity and encouragement to create full employment. The danger of creating public jobs is, in my judgment, less than the waste of unemployment.

I cannot close this discussion of employment without a brief reference to the American labor problem. Several years ago it was my good fortune to be a member of a commission which visited England and Sweden, at the request of the President, to study labor relations in those two democratic countries, and I came back thoroughly convinced that the organization of labor was both inevitable and desirable, and that a continuation of the struggle between labor and management over unionization was harmful to the nation. I believe it is desirable that both labor and industry should be organized by industries; that problems of wages and other conditions of work should be settled on an industry (and not single company basis) by the freely chosen representatives of the labor and the management of that industry; that legal procedures should be set up under which such negotiations can take place when desired by either party; that if agreement cannot be reached, mediation should be encouraged, and that strikes or lock-outs should not be permitted until a sincere effort had been made to reach an agreement in accordance with duly prescribed procedure.

3. Social Security

I have said there were five basic needs and desires of our people and I have discussed with you the first two, to wit: Education and Training, and Employment and Labor Relations. The third desire is security against the three major tragedies of life, unemployment, sickness and old age. These are intimately tied up with employment but even with full employment many cannot or will not make the necessary savings to tied over these emergencies. I, therefore, think that our social security acts, based upon laws which have been in effect for many years in England, are wise. They supplement individual effort to create savings and to take out insurance. I would stress, however, that their functionshould be to supplement individual effort for security and not to replace it.

4.  Health and Recreation

The health of far too many of our people is not as good as it should be. Many of our youth, for instance, leave school with bad teeth, bad eyes, or improperly nourished bodies because of faulty diets and with weak and flabby muscles because of a lack of systematic training and this condition too often continues through life. In the last decade we have made great strides in learning how to preserve the health of our people and we have learned the truth of the old motto, "A stitch in time saves nine." We now know that the prompt care of the teeth or the eyes may prevent a long illness at a future date and particularly we have learned that many people are literally starving to death, not because of a lack of food, but because of a lack of vitamins or some other essential element of food. Industry also is learning that it is to its own selfish interests to have healthy employees and that it cannot expect efficient work from men or women who are sick or ailing. The care of health is basically the problem of the home but unfortunately many homes do not have the knowledge or the financial means to care for health and to nip sickness in the bud. We have recognized this fact by establishing hospitals for the cure of diseases. Is it not equally important that by preventive medicine and wise health guidance we avoid sickness and ill health? Good health should be the inalienable right of every individual, so far as medical science can assure it, and private and public effort must be exerted to that end.

5. The Avoidance of War

Finally, the people of our nation and of the whole world are longing for freedom from the scourge of war. In my judgment, the prevention of war requires the creation of a series of federations (somewhat similar to our own federation of states created in 1789) each of which will be reasonably self-contained from an economic standpoint. I do not mean that international trade must cease, but I do mean that throughout the world there are too many small dependent nations which have neither the military nor the economic strength to defend themselves in times of crises, or to carry on in times of peace, because of a lack of the basic resources. These various federations should have the ability to raise much of their own food, and should possess many of the basic raw materials which are required for their industry. This, in my judgment, is not an impossible dream, but it is the antithesis of the Wilson formula of racial self-determination of boundaries. This is what we have done in the United States and what has been done here can also be done in Europe, in Asia and in Africa.

Having built up these reasonably self-contained federations, we must then establish a working code of international law for the settlement of international disputes between them which will be enforced by an international police. Thus we will finally have a great federation of the world, of which the United States shall be an active member, working out international problems in accordance with international law—a world in which youth can grow to manhood with confidence that they will not face the devastation of war.

In discussing "What Next for America" from the standpoint of business, I have dwelt upon the importance of education, of full employment, of the right of labor and industry to organize and bargain collectively, of the maintenance of free competition which is the essence of the "free enterprise system," of social security, of a mode of life which would promote good health for all classes, and of a world orderof such justice that war would be recognized as unnecessary. These ends can be obtained only through the complete and whole-hearted cooperation of the three central groups of our population, to wit: business, labor and agriculture. The American free enterprise system, as we know it, has resulted from the cooperation of these three groups. "This free enterprise system has," as Bishop Oxnan has said, "conquered a continent and developed the most efficient productive machine the world has known." If we would continue this system, the American businessman of tomorrow, in cooperation with the American farmer and the American worker, must create a society in which the well-being of men, as well as the acquisition of wealth, shall be the goal of endeavor; in which the ideals of democracy shall betranslated into economic realities and in which economic practices shall be governed by ethical criteria.

You may accuse me of idealism but I trust it is the realistic hard-boiled idealism which has carried America so far. I think it was Carl Schurz who said, "Ideals are like stars. You cannot reach up and touch them. You cannot fondle them and hold them, but if you follow them you reach your destiny."

How can I better end than by quoting from the poem of Thomas Curtis Clark:

When black clouds lower on every shore,
When war brings threats to every door,
That is the hour for dreams and deeds,
For both as will fulfill our needs."