Prosperity After the War
OUR WEAPONS ARE PRODUCTION AND PERSUASION
By WALTER D. FULLER, President of The Curtis Publishing Company and President of the National Association of Manufacturers
Before the Cleveland Advertising Club, October 15, 1941
Vital Speeches of the Day, Vol. VIII, pp. 71-75.
AN optimist has been defined as a person who believes that everything is ordered for the best. You will agree with me, I am sure, that by that definition there are mighty few pure "optimists" among American businessmen today. I think you will agree with me that under present conditions there simply is no logic in any businessman being either an "all-out" optimist, or an "all-out" pessimist.
Common Sense Approach Needed
Between the two extremes there is a "common-sense" ground. Just as Thomas Paine's "Common Sense" set America thinking realistically about its problems and the answers in another great crisis, there is need today for a common-sense approach to our difficulties and their solutions.
Anyone who talks with businessmen, defense workers, taxi-drivers, waiters, housewives, and men and women unemployed from coast to coast, as I have done in recent months, in some 20,000 miles of travel for the National Association of Manufacturers, finds that our American thought today is as confused as scrambled eggs.
The real American spirit of "never-say-die" is beginning to die among those of faint heart. There is appearing the fatalism of "What's the use—the big depression is coming and we'll all hit the toboggan again, anyway" and "believe me, I'm going to get out on a farm and watch the world go by."
Some people seem to have forgotten that "God helps those who help themselves." Let's remember that the surest way to lose a game is by default. Many have put their faith in the efficacy of politicians, only to discover that the economic Messiahs haven't solved the last depression, are baffled by the complexities of the present emergency, and look forward fearfully to the post-war crisis. Others, of weak conviction or pessimistic inclination, say it may now be too late to save the American way of life.
Let's be realistic about the situation. Let's try this noon to clear the air of some of this confusion of thought. Let's look at the forest instead of the trees.
I want to talk straight from the shoulder about our problems.
I want to talk about a greater American way of life. Yes, I want to talk about a way to prosperity.
A Way to Greater Opportunity
There is a way through this wilderness. There is a way to greater opportunity and progress. It is a way that calls for faith in the future, that depends upon initiative and ingenuity and upon using our successful methods of production, distribution, advertising and selling. It calls for the firm putting aside of pessimism and an honest and clear-eyed facing of the facts.
There is no sense in selling America short.
That is the only kind of selling we do not need.
If we strip away the confusion, we find we have two major problems to solve. If we solve these, and solve them in typically American fashion, we will get ourselves out of the woods, safely past the dangers of socialism, fascism, communism and any other "new order" which may be waiting to pounce upon us.
Defense of America at Home Important
These two problems are the defense of America at home and the defense against aggressors. The national defense program is intended to provide defense against the aggressors. But the defense of America at home is in our own hands. It is no less important than the military defense.
What does it gain us to save the world from totalitarianism if we cultivate totalitarianism at home?
The American people know there is no adequate substitute for democracy and free enterprise. That is why we are enduring sacrifices today. Sacrifices and more sacrifices will be endured where necessary, in the name of the defense of American freedom, because we the people of America have faith in democracy and in the future.
It is our freedoms we are all out to defend—all of our freedoms; our freedom of speech and worship, freedom of the press, freedom for initiative and invention, freedom of political determination, freedom of enterprise, freedom to create, freedom to sell, freedom to use.
We are not all out to defend want amidst plenty. We are not sacrificing to make permanent the WPA, the CCC or the NYA. We are building today's arsenal of democracy as a citadel of our hopes and dreams of the future, not as tomorrow's powder keg of depression.
Defense of America against the aggressors is being accomplished the only way it can be, by production—American production. And it is by production and selling that we will save America at home from totalitarianism.
Defense Deliveries Exceed Expectations
American production will win this war, American selling can win the peace, just as production and selling have won the fight for a higher American standard of living. Yet strange and unpatriotic as it is, there are those who would see the American way of life go down without doing their damnedest to save it.
Few people realize that industry has already finished, and delivered, a dollar volume of defense goods greater than the government specified as necessary for the defense of the country as late as March 10th of this year—eight months after it started to plan for defense.
This is a startling statement. But the facts bear it out. Our defense effort, by government definition, started on July 1, 1940. By March 11, 1941, when the first Lend-Lease Bill became law and we started to arm the world as well as ourselves—the government had requested industry to supply $9,329,000,000 of defense equipment.
As of today, nearly ten billion dollars of equipment actually has been turned over to government—more than even had been ordered less than seven short months ago.
We have done more, in a little over a year, working together as free men, than Hitler accomplished in five years with his much vaunted government dictated economy.
This country since last June, according to government sources, has produced more goods and services than it, or any other nation, ever did in a like number of months. We produced 11 per cent more industrial goods than in 1929.
How was such a miracle possible in a nation which two years ago had no armament industry?
Few people seem to realize it, but such a modern miracle was possible only because advertising and selling over many years had stimulated production so that in the hour of emergency America had the capacity and the facilities which could be turned to manufacturing the weapons of defense.
Selling in Non-Defense Lines Important
Where will America be in the critical tomorrow if we listen to the academic sophistry that it is unpatriotic to sell in non-defense lines, when we know that is the only way in which we maintain public morale, sustain a high standard of living, and realistically counteract inflation in these perilous days and the days to come?
This modern marvel of defense production was accomplished in spite of uncertainties—uncertainties which weigh now on the minds of those who should be concentrating on the production problems of defense against aggressors and defense against a post-war depression.
Causes of Management's Uncertainty
Why does industrial management stand uncertain? Is it because management does not want to make the materials of defense?
No, Even before this country was designated the "arsenal of democracy," American industry was conscious of—and was meeting—its responsibility for fulfilling the defense program. Never has it questioned its function. Industry will produce according to the specifications of whatever defense program the nation may adopt.
Is management uncertain because of dissatisfaction with defense profits?
No. It expects no considerable profits. It supported the adoption of excess profits taxes as an emergency policy.
What symptoms then does industry see now, to put it on the anxious seat?
Industry sees one control after another being established over our industrial system in the name of defense, with no assurance whatsoever that these controls will be only temporary.
Industry sees post-war planning by the Natural Resources Board that talks about utilizing to the utmost "our system of modified free enterprise," and it ponders uncertainly what "modification" means.
Industry wonders how important defense production is, when government sits blandly by while two groups of labor leaders make defense plants the battleground for jurisdictional warfare.
Right to Work Becomes Subject to Whim
Industry builds armaments, prepares food, makes clothing, for the defense of freedom, while the principles and institutions on which that freedom rests are progressively being sacrificed.
Industry sees, for the first time in the Republic's history, the individual's right to work made subject to the arbitrary whims of private organizations, all with the implied sanction of government itself.
Here indeed is the log-jam of defense today. It can be cleared away only when the Administration decides—and announces in ringing and unmistakable terms—a national policy based on something more than day-to-day expediency.
American industry can be counted on to do its job. That job will be done in spite of radical labor leaders or political obstructionists.
Even the pessimists concede that. They are confident we can handle the aggressors, but doubtful we can defeat the transgressors. They have cause to fear those who would
transgress our constitutional rights and liberties—those who would transform our democracy into a "new order" of their own pattern.
But they forget that in their own hands are the means of driving these false prophets out of the temple. They forget that the great portion of the American people have not become disciples of those fanatical priests of experimentation who would sacrifice democracy on a selfish altar of social theory. They forget that the American people are beginning to experience the difference between regimentation in theory and in practice, the difference between "economic planning" as an idea and as a result.
Let's have a look at the record:
Has political experimentation cured the depression? No, that problem has only been swept under the rug with the broom of armament spending.
Has regimentation under the national defense program prevented shortages in consumer goods? Unnecessary sacrifices in our standard of living? Uneconomic price increases? Or brought more economic security? You answer those yourselves.
Many Feel Priorities Unemployment
You need only ask those who are becoming victims of increasing priorities unemployment whether or not they are better off. Being without a job doesn't feed the family.
You need only ask those who can't buy the goods they want and need whether this sample of regimentation is making them happier.
You need only ask those who are going to pay direct taxes this year for the first time whether they believe that government can produce prosperity. Do they now like the theory of spreading the wealth?
Or, you need only ask those whose market baskets are showing the effect of rising prices whether the theory of "plowing under" was in their best interests.
Dangers to American Way of Life
There are dangers to our American way of life in priorities, price controls, shortages and the possibilities of inflation. If we recognize that the expediences of the moment may be the dangers of the future, we are forearmed to meet them.
War necessarily introduces dangers to everyone's economic life, but they are either temporary or permanent, as public opinion permits.
These dangers cannot be permanent if the American people demand that free enterprise be freed of the threat of the pincers movement, started by politicians. They cannot be permanent if the American people demand the preservation of democracy and liberty and opportunity. They cannot be permanent if the American people demand the American way of life with no compromises and no modifications.
A poor way of life can become permanent only if the American people embrace economic and social defeatism—only if the public continues apathetic.
It is the job of American business and industry to help the people in their choice between paternalism with its poisons, and production with its potentialities.
It is a job that has never been done before—most people in America thought it never would need to be done, that results would speak for themselves. But the job that has to be done, must be done, is to do a real public relations job—a job of making friends of people, telling them the facts about free enterprise, telling them what it does and what it can do. How are we going to do this job?
We can do it with American ingenuity, with American initiative, with the same spirit and courage with which we
have always done the impossible. We can do it with free enterprise, the same as we invent, produce and market new products. We can do it with facts against theory, with performance against promise.
Advertising Performs Patriotic Duty
We must produce first for defense. There can be no question about that. But democracy must not lose sight of the millions who can never be active in defense industries and of all of our millions of people who must eat, live and have relaxation during these hectic days.
Advertising and selling, in helping to meet the needs of millions of people for non-defense goods, will perform a patriotic duty.
We must not lose sight of the fact that we can save democracy only with the tools of production and selling—we can save free enterprise only by utilizing free enterprise, we can save advertising and selling only by using more advertising and selling.
Wants and Desires Never Fulfilled
We must not lose sight of the fact that the wants and desires of 130 million Americans have never been fulfilled. There are 51 per cent of the families in our country who have incomes of $25 a week or less. Free enterprise alone can lift these incomes and thus make America happier, healthier and more prosperous.
Consumption has to be pioneered the same as production. We have never consumed to capacity, never sold to capacity, never produced to our capacity. As an example for tomorrow, there are an estimated six million homes in this country which do not have bath tubs. There are 10 million rural homes without central heat. There are hundreds of other illustrations. Production follows demand. Once the demand exists, the production of six millions bath tubs and 10 million central heating units will be relatively simple. Demand is the problem.
American industry has faith in the future. Industry is looking ahead today to making America a better place in which to live after the war. Manufacturers are spending— out of their own budgets and not out of the people's tax payments—an unprecedented $117 millions this year alone for research. This is tangible evidence of industry's faith in democracy, faith in America's future.
We need comparable demonstration of faith in the future by those economic planners who devote themselves to predicting a bigger-than-ever depression, and those radical labor leaders who believe in "getting it while the getting's good" and the devil take their membership and the rest of America.
The wonders that will come from the industrial laboratories, resulting from the work now being done, will counteract the depression forces. Those wonders will mean jobs, payrolls and improved living.
Getting Back to Basic Principles
This is getting back to the basic principles of American freedom and initiative. We need to think and talk about America as a whole—not labor, or capital, or agriculture, or the old or the young—but America, all of us. We need self-sufficiency. We need American leadership that does not wait for the bureaucrats and politicians to say what the pattern of our economic future will be, but finds the solutions to problems themselves, in an American way. More initiative will save initiative.
Every businessman, every industry, every locality and every state today should be preparing to solve the post-war prob-
lem, with energies second only to the needs of the defense program. With eyes forward we can find new opportunities in this land of opportunities. Today's challenge is but a fresh opportunity. It is the opportunity to discover new markets for the future, to perfect new products, to improve distribution.
I know of only one state which has tackled the post-war problem. In Pennsylvania, the Department of Commerce has launched a post-war production plan. Surveys are going forward now as to the future possibilities of the various communities. The resources of the counties are being studied and plans laid for new industries and for tapping new markets.
Free Enterprise Habit of Lifetime
It is useless to depend upon the "priests of paternalism" for ideas and plans for the pattern of tomorrow's existence.
Those of us who believe in and want free enterprise have the advantage now over those who want to sell some "new order" in America. Free enterprise is before the public eye. Any competitor has to get the buyer's attention first. This need never happen if we do our jobs properly. Our way is the habit of a lifetime of most Americans. Free enterprise is the "brand" goods which the public knows, has found satisfactory and wants to continue buying. But, like good manufacturers and retailers, we must constantly sell free enterprise else the consumer may stray elsewhere. We must have a program of improving our economic product. We must make it more and more serviceable and saleable.
We are going to have more opportunity after the war than ever before. We will have the greatest backlog of demand for goods ever known. Not only is there the backlog that has accumulated during the years of the depression, but there will be the addition of wants and needs accumulated during this era of shortages, priorities and high prices. And we will have the rest of the world wanting the things which America produces.
We will have tremendous scientific progress, stimulated by the wartime development. Dr. Robert Millikan recently pointed out that the prosperity of the 1920's came about because we had found everyday uses for the scientific progress that had been made in the 1914-1918 war period.
More Money to Buy Goods in 1942
And there will be more money with which to buy goods. A recent study by government statisticians, projecting the distribution of income through 1941 and 1942 shows a progressively rising level. The number of families with incomes over $1000 a year will increase. There were an estimated 61 per cent of the families in this country in 1939 with incomes over $1000 a year. By 1942 that percentage will be increased from 61 to 72 per cent of the population in the "over $1000" income group.
Production and selling must recreate, in the post-war period, the wealth being lost now in war. There is no other way to obtain wealth.
Our weapons are production and persuasion. The weapons of the opponents of free enterprise are defeatism, compulsion and fear.
The opponents of free enterprise are the ones who, not long ago, preached the falsehood that industry was the enemy of the American people. What a theory! They are the ones who insisted we must plan for a large permanent unemployed population. How foolish that idea sounds today. They said we had reached our limits and must try to freeze everything where we stood. What defeatism!
What Happened to Theory of Scarcity?
What has happened to their theory that legislation made the wheels go round? It hasn't yet, of itself, produced an airplane, a ship, a gun, or a cannon ball.
What has happened to the theory that scarcity was our salvation? Now we could use the food that was sacrificed to scarcity. So could the British.
What has happened to the theory about a little inflation being good for us?
You'll remember that was in 1932 and 1933—not now. Now the "economic planners" say that a "little" inflation is like a little blood poisoning. That is what everyone else said in 1932 and 1933 when the planners clipped the dollar, started buying silver and experimented with the Blue Eagle. Yes, a little inflation is blood poisoning. Leon Henderson has said that "Hitler could win no victory today that would be more destructive to democracy than uncontrollable prices in this country."
Now that the inflation infection is here, the economic doctors say that the only way to cure it is to "plow under" the American way of life. They would drain away good American red blood in our economic veins and inject the totalitarian ice water of price controls and other regimentation.
How about solving American problems in a real American way for a refreshing change? Why not encourage business and industry, instead of making them the whipping boys? Why not rely upon advertising and selling to help solve the problems of today and tomorrow, just as advertising and selling have solved the problems of creating a rising standard of American living and the problems of creating the means for our defense production?
More Production Means Lower Prices
Price controls alone, such as proposed in pending legislation, have never succeeded against the inflation force. Why should we expect them to succeed now? More and more production always has been the successful antidote for inflation. More production means lower overheads, lower costs, lower prices. More production and more consumption of non-defense goods will solve many American problems.
For one, we can counteract the dangers of inflation in this country today with five typically American actions. They are actions which we must take now as the basis upon which to build post-war prosperity. We can't leave the job to theory and political experimentation if we want to avoid the black pit of depression.
Five Point Program Against Inflation
First, we should increase production and selling of non-defense goods—goods containing no needed strategic materials—this action to be backed by advertising and promotion. In spite of all the talk about shortages, we also have abundances. We have an abundance of food, of health, of recreation, of many items of clothing, of many other things that make living in America a pleasure instead of an existence. Through all our history, lower prices have only come from increased volume. Why not stimulate the production of needed and available raw materials, even at the risk of some increased cost, since any such increase can be offset by the economies of volume manufacturing.
Second, the government itself can help by reducing non-defense expenditures which feed the inflationary fire. With national debt expected to rise above $100 billion, with taxes at the highest level in history, with the need for money so great that more of those in the lower income groups are going to be hit, and hit hard, by direct new taxes, and everyone by the new indirect taxes, the government and politicians should do some of the sacrificing. Annual non-defense expenditures are $3.6 billions higher than 1932, and now is the time to stop such waste, to put priorities on appropriations of the people's money.
Third, why not shut the faucets designed to increase consumer spending by a flow of funds from the federal treasury —curtailing those agencies which have outlived their avowed purpose. The WPA still spends $875,000,000 a year and $3 billions of federal funds still go into relief, although business is crying for men to do the job that must be done. The CCC., the NYA, the farm security administration and others, continue activities with "business as usual." Why?
Fourth, why not stop the reputed hoarding by federal agencies. Hoarding by such big buyers naturally boosts prices.
Pessimism Only Fans the Flames
Fifth and last—let's stop selling America short. Those in high places who promise nothing for the future but debt, taxes and depression, fan the flames of inflation with their hopelessness. Where is the incentive to save for the future, to help build a backlog for the post-war period if we believe another depression is unavoidable? Those who are convinced of this black forecast will be likely to say to each other, "Let's enjoy life while we may and spend while the money is good."
I am not ready to accept the armament boom as the last meal of the condemned before the execution. Nor is anyone else who has faith in American courage, initiative and industry. No one who knows what invention, production, distribution and selling have done in the last 150 years to lift America from a thin and poor line of civilization along the Atlantic coast to the most powerful nation the world has ever known will accept such pessimism.
Hard Heads Needed—and Soft Hearts
We had better face these post-war situations realistically. The future is uncertain but the problems will be solved bythe fundamentals of real American free enterprise—that is, if we defeat the defeatists and face the coming years with real courage and hard-headed thinking.
We need hard heads—and soft hearts for the days ahead.
Debt will be enormous. But a great expansion of business volume will make the ratio seem less. There is the danger, with rising debt, that like a balloon, it may explode in the future. But we have the time element in our favor and can capitalize on that by halting the debt pressure before it is too late. If the debt rise can be halted in time the big danger may be averted.
If by the magic of free enterprise and good management we can double or treble the turnover of goods in the future, the national debt will not seem so big. The same is true of unbalanced budgets. The miracle of turnover will put them back in equilibrium, if nothing else will.
Dreams, perhaps, but stranger things have happened.
The American people must remember that we have all of the men, the money, the manufacturing and the markets to make possible a dream of prosperity to come. With these we need superlative selling, competent leadership and organization.
Those of us who know free enterprise best must help lift the fog instead of adding to the gloom. We must help all America to see the road which alone can lead to the promised land—the land of milk and honey. We must help in reestablishing the principle that in America government was created to protect the people while they do business—not to do business while the people protect themselves from government.
America Has Weathered Many Storms
Those who are fearful of the future should realize that America has come through many Gethsemanes in the last 150 years and each time has emerged greater and stronger than ever before.
We will do it again, no matter what assails us, what dangers face us or what groups conspire against us.