Economic Stabilization—A Management View
THE PEOPLE WILL DECIDE WHAT THEY WANT
By T. F. JOYCE, Vice President R.C.A. Manufacturing Co.
Delivered before the Society for the Advancement of Management, New York City, December 4, 1942
Vital Speeches of the Day, Vol. IX, pp. 216-219.
WHEN Mr. Foster, of your program committee, invited me to take part in your program this afternoon on the subject: "Economic Stabilization—A Tool for Good Management," I said: "I'm sorry, I'm not qualified to talk on the subject of economic stabilization. I'm not an economist. I'm not a financial expert. I am not the spokesman for business. I'm not the spokesman for the management of RCA."
But Mr. Foster persisted, and the evidence of his good salesmanship is that I am here.
Before saying "yes" to Mr. Foster's urgings, I asked him to change the title of the subject to "Economic Stabilization —A Management View." Thus, the views that I express to you this afternoon are the views of an individual engaged in business management. What percentage of business management would agree with those views, I do not know.
Not only are there many divergent views on this subject in the field of business management, but there are equally as divergent views on the part of government economic planners and other economists. Frankly, the more I read on the subject, the more I become confused. But all of the writing and study and discussion on the subject of Economic Stabilization, with which must be associated Economic Planning, is not wasted. It is part of the very necessary process of education on this vitally important subject—education of the leadership of our nation: i.e., the leadership in all walks of life—political, labor, business, education, religion, etc., and, too, it is educating the public, which is extremely important. Any plan for economic stabilization or economic planning must have the support of both groups if it is to be successful. That support can only be brought about by increasing the knowledge and understanding of the subject by more and more people.
As a result of the assignment given to me by Mr. Foster, I know a little more about the subject than before he talked to me. And as I am learning a little more each day, week or month about the subject, so, too, are millions of other Americans. Discussions on radio programs, the reports on meetings of this character in the newspapers, articles in our great magazines, books and discussion groups are all adding to the sum total of knowledge and understanding of the subject and, therefore, enable the people to draw more intelligent conclusions as to the course of action that they should take.
Some might ask: "Isn't all that we need an understanding and agreement on an Economic Stabilization Plan by the leadership of our country?"
My answer is: "No."
There must be an understanding of such a plan by the public. For, if the public does not understand the plan, it will fail to support the plan. And if it fails to support the plan, the plan cannot succeed.
In discussing economic stabilization and economic planning, we are not, as I see it, primarily concerned with the operation of such planning during war time. To begin with, we already have economic planning and economic stabilization. They are being supported by the public. As a matter of fact, the Gallup Polls have consistently shown that the public has been ahead of Washington in its recog-
nition of the need for economic control for the successful prosecution of the war and that the public has been prepared to make whatever sacrifices were required to carry such plans into effect. The only discussion of economic planning and economic stabilization during war time that would be appropriate, as I see it, is the degree to which and the intelligence with which such plans are carried out.
The man in the street is thinking ahead to the time when this war is going to be over. And because the average American is an optimist, he doesn't think that this war is going to last forever. So, what about economic planning and economic stabilization when peace comes?
Even if I could intelligently discuss all of the aspects of economic planning and economic stabilization from a management point of view, which I am not qualified to do, there wouldn't be enough time on your program this afternoon to cover the subject. Lengthy text books have been written on the subject—but in the books and articles that I have read, I have failed to find much said on one very important aspect of the subject—namely, public attitude. As a matter of fact, I saw nothing, but that may be due to my limited reading on the subject. In a dictatorship, public attitude is not very important, for it can be kept under control by those in power by the simple means of the bayonet, the pistol, and the hangman's rope. But we are fighting to preserve what we call Democracy, the freedom of the individual.
The titanic struggle that is going on in the world is to determine whether or not the state control of political, military and economic affairs, which Japan, Germany and Italy call "the New Order" shall prevail over, insofar as we are concerned, Democracy. The principle which guides the rulers of Japan, Germany and Italy is that the state is supreme and that the citizens are the slaves of the state. With that view, we do not agree, for it is to us a reversion to the tyranny of old. Americans believe that the state is the servant of the people—not the people the servant of the state.
The other day, I was talking with a government representative from Washington about post-war problems. In answer to one of my questions, he said: "Oh, we've got that all figured out. We'll take care of that with our PP Plan."
In my ignorance, I said to him: "What do you mean 'PP Plan'"?
"Why, Post Priorities Plan," he replied.
"We have a materials control plan to take care of materials allocation after the war. You'll be told how much material you can have. We'll tell all your competitors how much material they can have. And we will tell all the other manufacturers in the United States how much material they can have."
I said to him: "That's very interesting. Are you going to be able to carry out the plan?"
His assured reply was: "Certainly. Why, did you ever hear of so-and-so (naming a big government economic planner)? He's got this thing all blueprinted right down to the last detail. Sure, we'll be able to carry it out. You and every other manufacturer will be told exactly what you canand cannot do."
I said to my friend from Washington: Maybe JoeKakolovitch will have something to say about how much you will be able to tell us what to do and what not to do."
Whereupon he inquired, "Who is Joe Kakolovitch? I haven't heard of him around Washington."
I told him that Joe was just about the most powerful man in the United States; that is, so long as the United States continues to be a democracy. Joe Kakolovitch is just one of the plain people of the United States—one of 136 million. His vote and the votes of millions like him determine what our economic policies will be in the post-war period.
My friend from Washington was not a politician. He was a government employee. If he were a politician, he would have agreed that Joe was a pretty important fellow in the American scheme of things. But he didn't agree that Joe was important. The economic planners were all important. Now, any political leader knows that Joe has one vote at the polls and that his vote is just as important as Vice President Wallace's or Robert Nathan's or General Marshall's or Donald Nelson's or Mr. Sloan's of General Motors.
I said to my friend from Washington: "Let's see what may happen when the war is over if the government continues the economic control of the people.
"Joe and millions like him, during the war period, have been making big money in war industries. But they couldn't spend the money for the things that they desired, for they were no longer available—automobiles, refrigerators, radio sets, new bathtubs and a hundred and one other items. Joe and millions like him have been exhorted by government leaders to buy War Bonds so that when peace comes, they can buy the products for which they have always longed. So peace comes, as we know that it ultimately will.
"Mr. and Mrs. Joseph Kakolovitch, one generation removed from Europe, are real, honest-to-goodness American citizens—the kind that are the bulwark of our country. The day after the whistles blow, proclaiming that the war is over, Joe and Mrs. Joe decide not to go to work at the war plant, where both of them have been working six or seven days a week for many, many months. They are going to take the day off—to go down town to buy some of the things for which they have been buying War Bonds. Mrs. Kakolovitch, for months and months, has been dreaming of the day when she could replace her old ice box with a gleaming new white electric refrigerator. But the dealer doesn't have an electric refrigerator. However, he can take Mr. and Mrs. Joe's order for one, saying at the same time: 'We've been told by the manufacturer that in two or three months we can expect some shipments.'
"Mr. and Mrs. Joseph Kakolovitch have a sinking feeling around the heart. But they understand. And, after all, two or three months will not be long in going by.
"What Mr. and Mrs. Kakolovitch did not know that day or that week was that there were hundreds of thousands of others who were disappointed because they, too, could not buy an electric refrigerator. All they could get were promises of future delivery.
"While Mr. and Mrs. Kakolovitch were working long hours in war industries, Mr. and Mrs. Smith were working and sacrificing and saving, too. For what? For a new automobile. And the day after the war is over, or the next week or month, Mr. and Mrs. Smith are going shopping for their new automobile. They, too, will be disappointed. For they will learn the same story that Mr. and Mrs. Kakolovitch have learned—except in this instance, they will be told that they will have to wait five or six months for the automobile. There will be millions of Mr. and Mrs. Smiths who will hear the same story.
"Mr. Harper, like millions of others, has been working in a war industry. In this case, at Camden, New Jersey. Mr. and Mrs. Harper don't have a home. They live in a trailer. Space is cramped. Facilities are primitive. And a trailer is a mighty cold place to spend a winter in Camden, New Jersey. But they are. This is war. They are willing to make the sacrifice. Besides, Mr. Harper is making big money. And, wisely, he and Mrs. Harper are following the government's advice by putting their savings into War Bonds—dreaming every night of the time when the war will be over and they can build a little home—a home where their son and daughter can each have a room to themselves and not have to sleep in a double bunk.
"The war is over now. And Mr. and Mrs. Harper are off to see a building contractor. Oh, what a disappointment! The building contractor is honest. He says: 'Gee, I'd like to start building right away for you, but it will be months before I can get the materials to complete your home—bathtubs, furnace, radiators, door hinges, locks, nails and the hundred and one other items that go into a home.' But Mr. and Mrs. Harper want to get their order placed. And the contractor says: 'Maybe in three or four months I'll be able to start building.' There will be millions of Mr. and Mrs. Harpers.
"The war is over. Corporal Brown, Private Jones, Seaman Edgar—millions and millions of American boys who have been fighting to 'preserve the American way of life' are being demobilized. Yes, being demobolized much faster than the economic planners had planned. Why? Because the fight is over. They want to get back home. Oh, the economic planners won't let that happen? The Army and Navy won't let them out right away? Then the avalanche starts. Mothers. Fathers. Sweethearts. Brothers. Sisters. Relatives—yes, all of them—start writing to their Congressmen and Senators. Please. Please. We need our boy at home. His mother is sick. His sweetheart is anxious to get married—to start to raise a family. He has done his job. The war is over. The Congressman understands. Yes, he understands that behind every letter is the power of anywhere from two to ten to twenty votes—depending upon how many relatives and how many close friends Corporal Brown or Private Jones or Seaman Edgar has.
"And if the Congressman does not understand? Well, there's an election just ahead. Harry Smith is running against the incumbent Congressman. Harry's platform? It's very simple. One the people can understand much easier than the textbooks on the subject: 'The Consequences of Demobilization on Employment, Price Stabilization and Economic Policy.' Harry's platform reaches the heart! It's simply, 'I'll have your boy home by Christmas.'
"You say that's not right? Maybe that's so. But this is politics. 'I'll have your boy home by Christmas' will get the votes. Remember the election promises of the 1940 campaign by the leaders of both parties?
"So Corporal Brown and Private Jones and First Class Seaman Edgar come marching home. That is, if we still have a democracy! They and their seven to nine million buddies. They get married. They and their pretty wives want refrigerators and automobiles and radios and homes and the thousand and one things that help to make the American Way what it is. But they, too, get the same answers as the Kakolovitches and the Smiths and the Harpers have had.
"Months go by. Deliveries of merchandise have started. But the demand is greater than the supply. So the Kakolovitches don't get their refrigerator when they expected. The dealer tells them: 'It's the government's fault. If the government gave the refrigerator manufacturers more materials, the manufacturers would be able to make more refrigeratorsand you could have your refrigerator by now, Mrs. Kakolovitch.'
" 'They can't do that to us!' say Mr. and Mrs. Kakolovitch. That is, if we still have a democracy.
"The Smiths wait two, three, four, five months. Each week they stop by to see the automobile dealer. Each week the same answer: 'Sorry, the manufacturers are doing the best they can. But, you see, Mr. and Mrs. Smith, the economic planners in Washington will only allow the manufacturers so much material. It's too bad you have to suffer just because some dope in Washington thinks automobile production should be limited.'
"'They can't do that to us!' say Mr. and Mrs. Smith. That is, if we still have a democracy!!'
"The Harpers wait two, three, four, five months. Each month the trailer seems to get smaller and smaller and colder and colder. Besides, the children are growing up. Each month they get the same answer from the contractor: 'Yes, I know how you feel. Sure, I've ordered the material. No, it's not the building materials manufacturers' fault, Mr. Harper. You see the economic planners in Washington only allot so much material for domestic building. You see there is a big reconstruction job to be done in Europe and most of the building material is going there, right now. Didn't you read that article by Economic Planner So-and-so about "America's responsibility to war-torn Europe"? Yes, I know it's a crime. But what are you going to do about it?'
" 'They can't do that to us!!!' say Mr. and Mrs. Harper. That is, if we still have a democracy.
"And Corporal Brown. And Private Jones. And First Class Seaman Edgar and the millions of their buddies join in the chorus.
" 'They can't do that to us!!!!'
"That's when the PP Plan goes into effect," I said to my friend.
"Oh, yes," my friend said. "The Post Priorities Plan."
"No," I said. "THE PEOPLE'S PLAN. The people may decide to install a new government with instructions to do just the opposite of all that you are thinking and planning."
"What a hell of a mess that would be," he said.
I did not answer my friend for, frankly, I do not know the answer. I know that there are some things wrong with our pre-war American economic system. But, in spite of all of its faults, it has given to our people a higher standard of living than that enjoyed by any other group of people in the world.
In the United States, we have 7 percent of the world's population and 6 percent of the world's land area. But we had, before the war:
14 million home owners
56 million savings accounts
64 million owners of life insurance policies
16 million owners of industrial securities
45 percent of all the radios in the would
90 percent of all the electrical refrigerators in the world
50 percent of all the telephones in the world
75 percent of all the automobiles in the world
35 percent of the world's railroad mileage
34 percent of the world's electric power
Some people may and do say: "But look at the natural advantages which the United States has." We have some advantages. But they are not all on our side. No, that is not the answer. The answer lies in the spirit and character of the American people. Natural rubber is not a United States product. Yet, before the war, we consumed 50 percent of the world production.
Coffee is not grown on United States farms or plantations. Yet, before the war, we consumed 52 percent of the world's production. Silk is a product of Japan. Yet, before the war, the people of the United States consumed 65 percent of the world's production. We do not mine tin on a large scale in the United States. Yet, before the war, we consumed 37.7 percent of the world's supply. And so I could go down a long list of products that are not native to the United States. Yet the American people consume a percentage of the world production far in excess of what the United States consumption would be on a purely population percentage basis.
Why? Because we have lived under a system that encouraged the initiative and enterprise of the people. Notice, I said, of the people. When we think of the private enterprise system, we think of a Sloan. Or a Ford. Or a Kaiser. But they and a few others are the ones who are in the public eye. American individual enterprise is based on the Kakolovitches. The Smiths. The Harpers. Or the enterprise of a Crawford or a Tracy.
You never heard of Crawford or Tracy? They are two RCA Victor workers whom, together with eight others from American industry, the President of the United States is honoring next Thursday, for distinguished contributions to our Nation's war production drive. It's based on the Corporal Browns. The Private Joneses. The First Class Seaman Edgars. The American is a great soldier or sailor because every one of them is a general or an admiral in his own right. Conlin Kelly. Jimmy Buckley. Butch O'Hare. Mike Moran. They are the men—they and millions of their buddies—who are teaching the enemy something about the American character and spirit.
Yes, the spirit that on the home front has turned the world's greatest peace-time production machine overnight into the world's greatest arsenal of democracy. The spirit and character that, in two years, is out-producing the German war machine which has had the benefit of twenty years of military planning and preparation.
The spirit and character that is producing man power and weapons that, according to Secretary Knox, have given us, unit for unit, in combat a five to one superiority over the Japanese in spite of the fact that they have had the benefit of twenty years of practical experience at war.
There is a big job to be done by the Economic Planners of the United States. But the biggest job of all is to be certain that in our quest for security we do not destroy that character and spirit that has made our nation the envy of all the world. If the economic security of our people is the main objective of our planning, our nation will become bankrupt, both mentally and morally—a type of insolvency that cannot be cured by all the gold we have buried in Kentucky nor the magnitude of our raw material and productive resources. All we need to do is to look at the quest for security by the French people before the war and draw our own conclusions. The French people sought military security behind a Maginot Line and economic security behind laws and decrees governing hours and conditions of labor and work. They lost both, for security in both the military and economic fields is the result not of stabilization but of continuous advancement.
This does not mean that I am an advocate of a conservative or reactionary policy. On the contrary—progress can only stem from continuous experiment to solve our economic problems. We must approach our economic problems with the same open mindedness that the men in our scientific research laboratories approach the unsolved problems in their fields.
Today, every thinking leader in the United States knows that "life, liberty and the pursuit of happiness," must stand for more than the Preamble to the Constitution. It must be more than the political slogan of office-seekers. "Life, liberty and the pursuit of happiness" must mean the same to all men. The American way of individual freedom will not be secured alone by the victory of our arms. It can only be secured, in the long run, by adding to the political and religious freedom of the people, economic freedom. As one writer put it: "The rich man's conception of liberty is the right to do what he wants. The poor man's conception of liberty is ham and eggs."
Today, business leaders must recognize and work for a new kind of justice. ECONOMIC JUSTICE. The opportunity to work. A job for every able-bodied man. Fair wages. Continuity of employment. Provisions for health, education and old age. These are the basic requirements of economic freedom. These are the basic things that the average American seeks. And these are the things that the American way must provide if the American way is to continue.
This is the challenge of the post-war period to management.
All who are struggling to shape the course of the way ahead, should bear constantly in mind that America is the land of freedom—freedom of the individual. Just as the great scientific minds of Europe have sought freedom here from the regimentation of Europe—so, too, do the laborers in the fields, in the factories and in all of the other walks of American life, seek freedom. All of them have high hopes and ambitions for their families and for themselves. The opportunity through hard work to realize these ambitions and hope must always be open. Americans cannot be told what to do. They resent dictatorship in any form—big or little. Government dictatorship. Business dictatorship. Labor dictatorship. Religious dictatorship — or dictatorship under any name or disguise. That is what has made this nation a great nation. The minute our people lose their freedom, then their character and spirit will change. The American way will become some other way. And the United States may cease to be the great nation that it is—a beacon of hope and inspiration to the people of this whole war-torn world.