The Spirit of '42
SALESMANSHIP AND FREE ENTERPRISE
By WALTER D. FULLER, Chairman of the Board, National Association of Manufacturers,President, The Curtis Publishing Company
Delivered before the National Association of Mutual Savings Banks, May 6, 1942
Vital Speeches of the Day, Vol. VIII, pp. 551-554.
AMERICAN industry is on the march. The spirit of '76 has become the spirit of '42. It is the spirit of democracy, the spirit of liberty, the spirit of sacrifice. It is the spirit of victory. Donald Nelson has said that we have ahead of us days of trouble greater than any our nation has seen since Valley Forge.
Such days may come. We know that we will have to sacrifice more than ever before. Modern war already has brought shortages of goods and materials, rationing of tires, gasoline, sugar, and other things. We have had to tighten our belts and we are digging deeper in our pockets than ever before.
But patriotic Americans everywhere cooperate in any measures necessary to win this war. There is no sacrifice too great for victory. We can make no sacrifice today that would begin to equal the price all of us would have to pay in defeat. The cost of defeat would be permanent. The sacrifices for victory are only temporary.
Americans know that. They have faith in our Army and Navy. They have faith in our powers of production. And American industry is keeping that faith. Our industry is on the offensive. It is outproducing the Axis in everything.
Today the roaring machines in our war factories are playing a mighty battle hymn of planes, and tanks, and guns. The power of American industry has been turned against the Axis. Let's look at the record.
Remember that only two years ago we had no munitions industry. We had no tanks and no factories capable of producing tanks. Today we are turning out tanks like links of sausage from a grinder. We are far ahead of President Roosevelt's schedule of 45,000 tanks for 1942.
Two years ago we had facilities for producing only 250 military planes a month. Today airplanes parade off the production line like marching soldiers. Production is over 3,300 a month. President Roosevelt's goal of 60,000 planes this year will be fulfilled and more.
So it is in ships and shells and shooting equipment. Ships come down the ways five and six months ahead of schedule. Since Pearl Harbor—that's just five months—we have launched two cruisers, 18 destroyers, 5 submarines and 112 merchant ships. One ammunition plant now makes more cartridges in a year than all United States factories together produced in the first World War. Another plant which makes guns, started operations in December with a schedule of 1,500 units to be reached by February. By Februarythe rate of output was 2,000 units. These are examples of what industry as a whole is accomplishing. It is the same all down the line.
Aluminum production this year will be equal to the need in building 60,000 airplanes. The total output will be far beyond the reach of anything that can be hoped for by the Axis powers, even using the facilities of the occupied countries.
In March, the nation's steel mills produced a record-breaking total of 7,400,000 net tons of steel. This was 150,000 tons more than the previous monthly peak set in October last year.
That is the story of victory in the making. It is the story of what free men are accomplishing because they are determined to preserve freedom, liberty, and democracy in the world. Hitler's coffin is on the American production line today.
It is expensive. But it is worth whatever it costs. Before Pearl Harbor, a total of 64 billion, 329 million dollars had been appropriated or authorized for defense. As of March 5, 72 billion, 603 million additional dollars had been made available—an increase of 115 per cent. And things are going so well that the rate of spending is about to be increased another 14 billion dollars for the 1942 fiscal year.
Those are huge figures, even for bankers. Most of us can't imagine the enormity of this war production job from such figures. But we do know that they represent a conversion from peacetime production to war production, in speed and quantity, such as the world has never known before.
In 1941, war production accounted for 21 per cent of industrial output. In 1942, according to the United States Department of Commerce, it will absorb 53 per cent of our production.
Leon Henderson said the other day that we are producing as much tonnage in war merchandise alone as this country produced in domestic merchandise in 1932. "Even with that," he said, "we still have twice as much left over, after the production of war goods, as the country had to live on in 1932."
This year we will produce three times as many weapons and war supplies as we turned out in the year and a half before Pearl Harbor.
No wonder Donald Nelson was able to say three weeks ago that he could see daylight ahead in war production andto add that we are already "over the hump." The combined output of the United States, Russia, and England is now greater than that of all the Axis nations.
When the production goals were set at 185,000 airplanes, 120,000 tanks, 55,000 anti-aircraft guns and 18 million tons of commercial shipping by 1943, some people called these "fantastic." They were so "fantastic" in relationship to industry's ability to produce that these schedules are about to be increased. Yes, we are going to outdo the "impossible."
But no one should get the idea it has been simple and easy. It has taken blood, sweat, and tears. It has taken planning and work. It has taken ingenuity and enterprise. The sacrifices have been tremendous. You know of many companies that have been squeezed out of existence by the pressure of war. There are many others that have had to sacrifice their domestic markets, built at huge cost over the years. And they will only be regained by investment of large amounts of private funds. There are thousands of managers, in this country today, who have not had enough sleep for weeks, trying to keep pace with changing regulations and trying to speed production at the same time.
Yes, industry has made gigantic sacrifices. Many of them will never be generally known. If it is to complete this gigantic job—this job of saving democracy and liberty for all—as quickly as possible—and that is what we must have so that precious lives will be spared and peace will reign again—industry must have the fullest possible cooperation from government and from labor. We need a clear track in delivering our bullets and bombs to the enemy.
Sideshows like the current agitation for a closed shop only distract from the main event. This is war. War production is all that matters. We can settle purely domestic issues when the common enemy is destroyed. Are we going to try to solve jig-saw puzzles while our house is on fire? Nero fiddled while Rome burned. No one would care how much selfish labor leaders fiddle today if their discordant notes did not interfere with the tempo of war production.
In such times as these it is unfortunate that there is need for criticism. These times call for harmony. But criticism must be voiced when the occasion demands. Criticism is the first step to correcting the injustices existing in some parts of the current labor set-up, and those injustices need correcting.
Some labor leaders seem determined to take advantage of the war to create a nation-wide labor monopoly. This, in spite of President Roosevelt's urging that no group take "undue advantage" of the situation to further selfish interests. Some selfish labor leaders seem determined to clamp a closed shop policy on industry, regardless of what the cost may be to our victory effort.
When the National Labor Relations Act was passed, there was not much agitation publicly for extending the area of the "closed shop." But with the beginning of the National Defense program last year, some union leaders turned on the heat. It became common practice for them to include closed shop clauses when they proposed terms of contracts with employers. And they began to call strikes to achieve their ends.
Many times in the interest of industrial peace in these war days, employers have submitted to these union demands. In other cases, the appointed labor boards have forced the employers to surrender rights which always have been considered fundamental.
The closed shop, being forced upon many industries by those who are taking "undue advantages," means, for one thing, that only paid-up union members are permitted, in many plants, to work on war orders. It isn't a question ofability to help produce the goods our soldiers and sailors and our Allies need. Loyalty to a union has been put ahead of loyalty to the nation. In such shops only union members in good standing have the right to defend their country on the production line, no matter how much the services of others may be needed. I ask you—is that what the American people want in this hour of danger?
A "closed shop" means that ex-union members, who have resigned or been expelled from the union may be placed on a black-list and may be denied the right to work wherever they please or wherever they are needed and can contribute most. Is that what democracy has come to mean to the people of America?
We are fighting aggression elsewhere in the world but the aggression of some labor leaders is being condoned in the United States. The closed shop principle today is being extended beyond previous requirements that an employer maintain union membership. On April 8, the War Labor Board imposed a maintenance-of-membership contract on the Walker-Turner Company of Plainfield, New Jersey. According to the decision, members of the union must remain members. If they quit the union, they automatically quit their jobs. The company must fire them.
On April 15, the War Labor Board re-asserted this policy in a similar decision that affected the workers of international Harvester Company plants.
As a result of these two decisions, it is clear that the War Labor Board, like the Defense Mediation Board ahead of it, considers it its proper function to order management-union relationships, no matter what objections management or unions or employees may have.
American industry believes that a worker has the right to join a union if he wants to, and an equal right to quit of not to join if that is his desire. That is the democratic wayisn't it?
Employers nave no right to destroy the freedom of individual choice by compelling workers to join or stay in aunion against their will. And no one else should assume suchright. Freedom of opportunity is no less important to theindividual than freedom of religious worship or freedom ofpolitical determination.
Management, in this crisis, seeks no "undue advantage." Management does not seek to nullify any existing gains for labor. But it does want a sound labor policy and it wants this labor policy decided democratically by Congress. It does not want long drawn out delays while appointed, not elected individuals try to build a national policy, company by company, day by day, and month by month.
Congress should decide once and for all whether our Army and Navy are going to be equipped with all-out production of industry and labor, or only with goods stamped with a union label.
There are too many lost territories marked with the epitaph "too little, too late."
American industry will do everything in its power to see that there never is another.
Industry's responsibility, first and last, is to the American people. Just as the first responsibility today is to do everything possible—and more—to speed victory over the Axis, the second is to help win the economic war to follow— the war against depression. Unless we win that war, too, we may fail to save freedom and democracy.
There are a few people who say this is no time to talk about post-war. I disagree. If we have learned any lesson at all in the last two years it should be the lesson of preparedness. Are we going to emerge from war into peace as woefully unprepared as we jumped from peace into war!
Unless we want to go back to days of depression, of idle plants, idle men and idle money, we had better give some thought to ways of finding happiness, opportunity and greater prosperity for all. Another "economy of scarcity" won't solve the problem. We are going to have tremendous plant capacity when this war is ended. The government has invested nearly nine billion dollars in new plants and expansions for war production. That is more building than we have ever had in a similar period. These plants are producing war goods today but they can be changed over to make vacuum cleaners, automobiles, and a thousand other things to meet the demands of peace.
One thing is sure. These plants are not going to stand idle in the days to come. Either they are going to be operated by private industry to make the things that people of America and elsewhere want and need or they are going to be operated by government. Call that socialistic if you want, but it is the handwriting on the wall, unless private industry is ready to take over.
What are the prospects for private industry to develop need for utilizing these plants? There will be the greatest army of buyers waiting for goods that business has ever known. Forget the people of Europe and elsewhere who already have been through more than two years of privation, clinging desperately to a bare existence. In our own country alone, the shelves will be as bare as Mother Hubbard's cupboard. People will want automobiles again, and new tires, vacuum cleaners, furniture, everything imaginable. The wants and needs of the 130 million people in America will be the biggest backlog of demand imaginable.
And it will come with a flood and a roar, when the battle ends.
It will come from people who have saved because, in many cases, there were not goods available for purchasing. The Department of Commerce has estimated that roughly one half of the dollars received in extra income by the American people during recent months has been saved. That expansion, according to records of the U. S. Department of Labor for average weekly earnings amounted to 25 per cent last January over January of 1941. Despite the large increase in savings during 1941, consumer expenditures rose by $10 billion between January 1941 and January 1942.
We have the capacity to produce for peacetime needs. The market for the goods will be in existence. But markets have to be developed. Consumers are a passing parade, not a standing army. People buy where they are attracted. Business and industry must serve the consumer. Markets are as important as plants. One without the other is useless. Too many potentially worthwhile businesses have found that out to their sorrow. They had every advantage in bricks and mortar, but they neglected to properly develop their markets.
Many businessmen are again going to be misled when this war ends. They will reason that because people have money to spend, they will get their proper proportion without effort. They forget that they must compete, in a free enterprise system, not only against every other producer of similar goods but against the producers of every other kind of goods. A dollar will go only so far. The dollars that go to buy automobiles can not be spent for housing or furniture or anything else. That is why the science and art of marketing is of extreme importance.
The post-war period is going to be an era of selling. That is where bankers will find new opportunities for business and also will have cause for concern in the review of their loans. It will take considerable investment to rebuild the markets that have been lost while producing war goods.
The public forgets easily. In the days to come, we will have to sell and sell and keep on selling in order to keep the wheels of industry turning. It does no good to produce the finest article in the world if no one wants to buy that article.
We will have to sell in order to maintain the security of investments. We will have to sell in order to prevent a post-war depression. We will have to sell in order to provide a high level of employment, a high level of payrolls and a high degree of prosperity in this country.
It is either that, or we may find that in spite of all of our efforts to preserve democracy, with free enterprise, the seeds of socialism or so-called "modified" enterprise have been sown in the economic garden. After all, the way to protect private initiative is by more initiative.
We have never done enough selling. We are the exponents of selling, but we have never practiced its arts to the fullest. Our whole way of life is built upon the principles of selling and persuasion, as opposed to dictatorship and regimentation, yet we have neglected to apply those principles to the limits of their possibilities.
Do you realize that before the war there were an estimated six million homes in this country which did not have bath tubs? There were ten million rural homes without central heat. There were 19 million without telephones.
According to the best standards of nutrition, 73 per cent of we Americans are ill-fed. Seventy-five per cent of us suffer from vitamin deficiencies and more than 90 per cent of us suffer from lack of sufficient minerals.
Not because of a lack of ability to produce. We had idle plants, idle men and idle money. We could have produced these needs and more. Never in peacetime have we produced to capacity, sold to capacity, or consumed to capacity.
Even so, we have made amazing gains in our standard of living and in the ways of prosperity through selling and persuasion. From the years 1888 to 1914, or about 25 years, our national income rose from 10 billion dollars to 31 billion. In the next similar period, from 1914, to 1941, our national income increased another 200 per cent. Whether we go forward, in the days to come, to another such increase is anyone's guess. But certainly we have tools to work with.
Current estimates are that our national income now is above 100 billion dollars a year and will go still higher for 1943.
The job that we have to do now, while we are fighting with both hands to win this war, is to figure ways by which the national income can be kept at that level in the post-war period and then pushed higher and higher. That is the way of happiness, opportunity and prosperity.
It will take courage to do the job ahead. But it took courage and determination to found this nation and to preserve it so that we might now have the privilege of defending it.
In the dark winter of 1780, it was principally five men who kept the national spirit alive. They were Washington, Franklin, Morris, John Adams and Jefferson. They believed in democracy and liberty when nearly all others had lost faith or turned into sunshine patriots. All the statistics and all the odds were on the side of defeat. Five master salesmen were on the other side. They had met discouragement after discouragement. There was need of funds for the army. They were scraping the bottom of the barrel. The whole fate of democracy and freedom hung upon those five men. Were we to have a United States or not. Salesmanship won out.
Do we, in fighting this world war and the economic war tocome, to preserve all that those five master salesmen won for us in that critical period of our republic, need a more inspiring example? Do we, who believe in the potentialities
of our free enterprise system, need have any doubts that free enterprise, with American salesmanship, can live up to its opportunities?