Jobs, Freedom, Opportunity
THE FOUR ELEMENTS OF INDUSTRY
By F. C. CRAWFORD, President, National Association of Manufacturers; President, Thompson Products, Inc.
Delivered before the Fifth Annual Northern California Industrial Conference, San Francisco, Cal., April 13, 1943
Vital Speeches of the Day, Vol. IX, pp. 496-500.
THE end of world aggression is rolling off the assembly lines of American industry. In the last two months I have seen victory in the making in the bomber plants of the South, the shipyards of New Orleans bayous, the steel mills of Birmingham, the tank factories of busy Detroit and the aircraft industry of Southern California.
War production in February, according to the War Production Board, jumped 8 percent over the January figure and is going higher and higher every day—already four times as great as in November just before Pearl Harbor.
This year we will launch the equivalent in tonnage of. all the merchant marine in the world.
Our plane production, still not big enough to assure victory, is nearly as great as the rest of the world. The fires of industry blazed so blindingly white in the swift conversion to war production that Mr. Roosevelt and other eloquent phrase-makers called the achievement a "miracle."
Industry has been called many things in the last ten years hut this is the nicest name we've ever been called—"Miracle Men."
But you and I who do not believe in miracles, know that it did not happen suddenly and inexplicably. It was a naturaloutgrowth of long effort, the prime fruit of a plant that had been carefully developed for a century and a half.
By nurturing ingenuity, protecting inventive genius, rewarding individual initiative and encouraging the investment of savings in enterprises, we established American industry as the healthiest and most vigorous in the world, and American standards of living the highest.
But industry is not resting on its laurels.
This year industry—labor and management working together—will produce more than 57 billion dollars worth of arms, ammunition and supplies—300 per cent over 1942's record—the flood gates of production are wide open to sweep aggression into oblivion.
Industry will meet its 1943 war production obligations.
Industry has confidence in its ability to deliver.
Industry knew its own strength just after Pearl Harbor when it pledged to the president and the country that industry's production "will be limited only by the human endurance of the men who man and manage its facilities."
Industry is keeping that promise, and will keep that promise until the last Nazi has cried "kamerad" and the last yellow son of Nippon has hissed "Banzai."
Fighter and bomber planes to blast the enemies of democracy from the face of the north, and ships to supply the
twenty-seven battle fronts of the world must come from out the magic industrial area of this Pacific Coast. Ships and planes, more ships and planes is the American battle cry of 1943. "Give us the tools for quick victory." That's the patriotic challenge to management and worker alike.
It is going to take better teamwork to get such production. Not compulsory teamwork, but the highest degree of national unity based on patriotism and common welfare and not on group-grabbing interests.
Last year raw material was the key to better production, this year manpower is the fatal bottleneck.
We have enough workers if we employ them correctly. Fullest utilization of that manpower does not mean we must take the liberty of choice from the working man and woman, and make dumb driven slaves of them.
This is a battle of free men against the slavery of totalitarianism and free men will win every time, just as free industry has in two years caught up with the great war machinery of the Axis which was years in the building.
Government, labor and industry working together, instead of publicly exchanging indictments, can cut down absenteeism, turnover, labor pirating, job shopping, slow downs, strikes, feather bed rules—paying for work never performed—and other restrictions on production.
Above all, we can institute the encouragement of incentive for maximum war production—more pay for more production. If production is the gauge of victory why hook the rate of that production to the low level of the average worker, why not get better performance by rewarding more production.
Yes! Victory is in the making—if not yet won. But, what of the peace?
What of the hopes and aspirations of those millions of young Americans fighting for you and me?
Can we face our sons, fresh from filthy foxholes and the screaming hell of war, and say to them:
"You've given blood and guts to save the American way. But, we've scuttled it while you were fighting for it. Hope you don't mind too much!"
Or shall we welcome them home to an America of jobs, freedom and opportunity—the America they fight for.
What do we mean—JOBS, FREEDOM and OPPORTUNITY?
Jobs under good working conditions for fair wages. Jobs selected of our own free will and which we are free to change. FREEDOM to live without fear that a dictator or his henchmen will control us, watch our every action, listen to our words, tell us what to read, where to live, what to buy and where to work. We want FREEDOM under laws and institutions which are fair, equitably administered and imposing only minimum restraints necessary for the protection of the rights of individuals and minorities.
Such FREEDOM is the birthright of our nation—a nation dedicated to tolerance, to the protection of the individual, to the grand old American principle of "live and let live."
OPPORTUNITY to work and get ahead under our own steam, the chance to plan our own future, to raise our children so they may grow and learn and live with that self-respect which is the right of free men.
JOBS—FREEDOM—OPPORTUNITY—these three, together can provide for Americans the only security which comes when free citizens can look to the future with confidence.
Of the three—JOBS—FREEDOM—OPPORTUNITY—JOBS will be the keystone of post-war prosperity. Now management can and must do many things to makemore post-war jobs possible, but it cannot guarantee jobs. Government alone can't guarantee jobs for very long. The only guarantee of jobs lies in a free competitive enterprise system that is both free and competitive, and ever expanding with the growing nation—that is where the future jobs are to be found.
To do this enterprise must be free of restraint and government regulation other than that necessary to the public welfare and fully competitive within itself, but not with government or government subsidized enterprise.
The answer to jobs, and more jobs, lies in the multiplication of wealth—not in mere division. In producing more to make more jobs, not in dividing up the jobs in a dwindling controlled economy.
It might be a bit too realistic for the times to believe that we must have more horses for more people to go horseback riding, instead of cutting up a few horses for distribution-even as popular as horse meat is becoming. But ever since old man Euclid, or some other ancient discovered arithmetic, we have been horribly embarrassed by the fact that we cannot divide more when we have less.
America of all nations has made the cherished discovery that producing more to have more lies at the very heart of the more abundant life.
Free competitive enterprise is not a concoction of a few cussed capitalists bent on plundering the gentlefolk, but a method devised by human beings to care for their exchange of labor and the building of their lives and future through an economy of their own making.
It is the best means we or any other nation have devised to produce and distribute wealth to all.
Let me illustrate this national triangle of plenty through production, which is only another name for free competitive enterprise.
Industry, under competitive free enterprise, is an unusually vital triangle of interdependence, a triangle with four elements:
Industry is an unusual triangle in that it has four, instead of only three elements:—
(1) WORKERS; (2) INVESTORS or stockholders (for in industry $6,000 of capital is required for each job supplied); (3), most important of all, the consumers or MARKET; and (4) MANAGEMENT. Management belongs in the center of the triangle, with a corner each for workers, stockholders, and consumers.
Let's examine our triangle: At the top corner is really the most important of all, the consumers—let's call them MARKET. The American MARKET alone is 130 million people. Americans will always want MORE good things, and their demand will ALWAYS be, as it has been, "Better things at cheaper prices." Americans are bargain buyers. They buy objects, not policies, at the lowest possible price. Note that their demand upon business and industry is a fundamental demand—a natural demand of human nature—of self-interest.
Over in the second corner of the Triangle of Industry is CAPITAL. And, looking closely, we see that CAPITAL is also 130—and the same 130—millions of Americans. CAPITAL is anyone who has a life insurance policy, a bank account, an automobile, or, indeed, a pair of shoes—for even a pair of shoes represents an investment of capital. Note that the demand of CAPITAL on industry is a basic human demand, "How can I get the most of my investment?"
In the third corner of the triangle is LABOR. And again, this element is the same 130 millions of Americans we found in the other corners. LABOR'S demand on industryis for Jess work and MORE money. Observe again that this is a natural human reaction—self interest.
Thus the three demands on industry are just the natural demands of everyday human nature. The buyer wants to pay less money into the Triangle of Industry; yet capital and labor insist that they each get more out of it. These are three seemingly irreconcilable factors in the triangle.
Now, the fourth element in our unusual triangle is MANAGEMENT—in the middle as always. To be successful MANAGEMENT must reconcile the three apparently irreconcilable forces.
But MANAGEMENT is always being pulled or hauled by one or the other of the three corners. When MARKET pulls, it says, "Give me lower prices or I won't buy." LABOR yanks, saying, "Give me more pay for less work." And at the same time CAPITAL hauls, crying "More returns or you'll be fired." That's MANAGEMENT'S predicament.
Many people follow my picture thus far. Many think at this point that someone tosses in a fixed amount of money and the Triangle becomes a poker game in which, if one corner wins, another must lose.
This is not true? Industry is a device for the creation of wealth—a device by which all can share in the new wealth produced.
To illustrate: Imagine a small umbrella factory with a single worker—Joe. Joe stands at an old-fashioned bench, running a hand spindle. He makes one umbrella an hour and gets one dollar an hour for his work.
After Joe has made the umbrella, MANAGEMENT says:
"Now, Joe, I haven't any money. I've got to sell this umbrella before I can pay you."
And so, MANAGEMENT goes to the gate—to the top of our triangle—where the great AMERICAN MARKET is going by, and he cries, "Umbrellas for sale." Management must get at least one dollar for the umbrella to pay Joe's wages.
"Too much—won't pay it!" snaps MARKET.
But, finally, the umbrella is sold and MANAGEMENT returns with the one dollar which he pays to Joe. At the end of the first day, then, we have an unhappy buyer—he wanted a lower price. Joe is unhappy — he wanted a raise. And CAPITAL calls up and asks MANAGEMENT, "Where is the return on my investment?"
There isn't any return—the stockholder is mad and he warns that MANAGEMENT will be fired unless the problem is solved and quickly!
MANAGEMENT, to save its job, burns midnight oil. MANAGEMENT discovers that Joe lost time working by hand and got tired standing at the bench. So MANAGEMENT decides to improve the tools of production. A motor is hitched to the spindle, Joe is given a stool, and to save more time Joe's material comes to him on a conveyor.
Joe comes in next morning and somewhat reluctantly tries out the new-fangled gadgets. To his amazement, at the end of an hour, he has made two umbrellas with less difficulty than he had making one the day before.
Taking the two umbrellas, MANAGEMENT goes back Op to the top of the triangle and again calls out to MARKET, "Umbrellas for sale." Yesterday's disgruntled buyer says, "Nothing doing! Your price is too high!" MANAGEMENT says, "Not now, I've got just what you want—umbrellas at 75c¢." The buyer is pleased. "Fine," he says, "I'll take two. That's what I want—a bargain."
MANAGEMENT returns to the middle of the triangle and says to Joe: "We've discovered the secret of the production of wealth. I've a dollar and a half where I had only one dollar yesterday. I'm giving you a 25¢ raise. Here's $1.25."
Joe is happy and MANAGEMENT calls CAPITAL to say, "Because there is a quarter left in the cash drawer, some dividends may be possible."
For more than 100 years the triangle of American competitive free enterprise has actually worked. We've produced the best goods at the lowest prices, the greatest accumulation of capital and the highest wages paid anywhere in the world.
There are no classes in American industry. 130 million Americans are Market, Capital and Labor. To prove this, let's go back to Joe and the typical day.
From eight in the morning until four in the afternoon, Joe is labor. He's conscious of it. He's mad at Capital and mad at Market. He wonders why he doesn't get more money.
At four o'clock Joe goes home and goes shopping with Mrs. Joe. He forgets that during the day he was labor. He's now Market. He's a tough buyer. "Why can't you sell this stuff cheaper." he demands.
On the way home, Joe stops to make a deposit in the bank. Now he's Capital. Again, he's a tough guy. "What are you doing with my money? Why can't I get 4% instead of only 1%. Can't you run a bank any better than this?"
He forgets that he has been Labor, Market and Capital in the same day.
But Joe, as Labor, picked up a 25-cent raise on the second day because wealth was produced. He picked up a 25% increase, as Market, when he purchased umbrellas at the cheaper price and, as Capital, he picked up a better return on his savings or life insurance.
The standard of living rises because, at each corner of the triangle, wealth is distributed. Joe is the American people who go around this triangle, day by day, picking up an ever increasing standard of living.
This might be too simple an explanation for the economist to understand, but I submit that it has done more, and can do more in the future to bring a better life to all the people than all the edicts, laws and decrees the government can ever promulgate.
The triangle story shows us that—Profits mean increased investment. Increased investment means increased wages. Therefore; profits increase wages.
Is this a contradiction, a fantasy?
Dr. Sumner Slichter of Harvard eloquently supports the connection between "larger profits" and "larger payrolls."
He says that labor and capital will both discover that the conditions which make it possible to arrive at both larger payrolls and larger profits are the very same conditions. He says that this discovery will lead to cooperation between labor and capital and that this cooperation "will make all previous efforts to raise the standard of living seem feeble."
That's the reason I say the best in America is yet to come. Because all the people in all three corners of the economic triangle—labor, market, investors—are not enemies of one another, but the very same people.
This kind of an economy is the best for the future, as it has been in the past, and is in present war production.
We had better put all our faith in that triangle of plenty and make it work if we want a post-war world free from want and economic stumbling and experimenting.
I believe we can very well throw victory away if we're not prepared for a good peace, and that we should be planning post-war now.
My only objection to the long-distance planner is thatthose least experienced in making our past and present are hell-bent on blue printing every detail of a great future.
Most of these plans have something very much in common. They are long on high sounding objectives but short on how to get them.
Reminds me of your late, dearly beloved Will Rogers who in 1917 had a plan to end submarine warfare.
"Just boil the ocean," Will told an Admiral.
"Corking idea," said the Admiral, "But how?"
"Oh, that's your job to scheme that out—I've given you the idea," replied Will.
Too many planners who say they believe in private enterprise as a source of post-war jobs do so with their tongue in their cheek.
They say yes, free competitive enterprise must be the source of only a "majority" of the post-war jobs, but then they look to government to provide the rest of the jobs through government spending. To me that is as ridiculous and economically immoral as a part-time wife. Let's all get together to make the right system work, instead of combining the worst with the best and then being surprised at its failure.
Combining public and private enterprise is making a hybrid affair of the private enterprise system—half private, half public—half free, half slave.
In fact the big post-war planning decision for the American people is whether they want to continue to emasculate our economic system into a nondescript, unworkable combination of impossibilities, or whether they want to get back to the proven workability of the triangle of free competitive enterprise.
We have rediscovered the efficacy of private enterprise in war production. We have discovered the unworkableness of the promises of substitute schemes. The first step to peacetime plenty is to encourage a public renewal of faith in our American institution of undefiled, undiluted, free enterprise. On this decision as to our American economic policy not only depends our national future, but the peaceful welfare of the world.
Many thoughtful Americans are commencing to realize that a permanent peace is dependent on a better understanding and more friendly relationship between nations. Travel, communications and intercourse which in peace times usually follows the trade routes is Necessary toward quieting down this old world's bellicose eruptions every twenty-five years, and gives us more than just "peace in our times."
America has a big job ahead of it after this war. Rehabilitation of shattered countries and peoples is part of that job. Rehabilitation won't be just a big-hearted gesture on our part. It will be just plain common sense to help the world to right itself, to aid in establishing a "live and let live" basis of world economy! That's what we want in America—a free competitive system. In so far as that ideal is obtainable nationally with out injury to our domestic well-being we should strive to bring it about. The war torn countries have materials that we urgently need. They represent rich markets for our goods.
No city in America should have greater interest in this after-war prospect of world trade than San Francisco. This city can be the new world gateway to the trade of two of the greatest of post-war nations—China and Russia, just as Atlantic and gulf ports will exchange with the longer established trade nations of Europe.
A prosperous, modernized China would open up a tremendous market for American goods and equipment.
Industrialization of China seems like a pretty large orderwhen we consider that 320 million Chinese have never heard a radio, read a newspaper or seen a movie. Yet, when war came, 30 million Chinese took on their backs, 77 colleges and universities and the machinery from 472 factories and carried them on foot over a thousand miles of mountain and plain to safety. That amazing feat showed the spirit—and the potentialities—of this great modern new nation.
I know that there is a widespread impression that any industrial development in such countries would tend to reduce the potential export markets of American industries and to reduce employment and living standards in this country. But we have abundant statistics to show that, as manufacturing increases, so does buying power and the demand for imports.
When the war is over Russia will probably have become the world's second largest industrial nation next to ourselves.
The United States is going to trade with this new Russia, too.
Business relations with Russia have always been more friendly than the differences between the ideals of government have led the public to believe. American engineers and American machinery have been a major aid in building the Russian ideal of greater industrial production, which has really supplanted the communistic state. Pure communism is rampant today only in the agitating minds of American "softies." Russia has adopted the production ideal and this ideal to provide benefits to the people thrives on a lasting peace and world trade, and not on cycles of production followed by the utter destruction of war. Therefore, enlightened national interests on the part of both nations will demand a trade rapprochement between American and Russian industry.
The American businessman should look to the Central and South American markets too as some of the most productive fields for immediate development after the war.
Our domestic well-being in the post-war world demands more trade among these and all nations. We should make every effort to work out international agreements under which nations will voluntarily adopt and maintain tariff policies. But no agreement should be allowed to disrupt the trade of any country.
We know the importance of fair competition and free enterprise in our domestic economy. These conditions are no less necessary in foreign trade. It is the proper function of government to protect domestic producers and labor against dumping, discrimination, and unfair competition. Government is justified in encouraging private research to develop industries, processes, or products that may appear suitable for protection and in protecting these industries, processes and products until they have become firmly established.
The life of the Reciprocal Trade Agreements Act ends this year, unless it is extended by Congress. This is a matter of great concern not only to American farmers but also to American business and industry.
Complete elimination of the principal of reciprocal agreements at this time would have unfortunate repercussions in the countries with which we are now allied in the war and in those with whom we hope to resume friendly relations after the war. We are fighting as a world nation. After the war, we must trade as one. Diplomatic peace and economic warfare cannot live side by side. Self-sufficiency is not a sound ideal in the modern world. It would do irreparable harm to our cause if we gave the nations at whose side we were now fighting any reason to suspect that we were going to renounce our interest in world affairs and retire to the selfish inaction of economic isolationism.
Our own industrial genius has forced us out into theworld. Whether we like it or not, we are part of a world economy.
The National Association of Manufacturers believes that this nation has outgrown economic nationalism. This means of course a growing degree of freer trade than in the past but not the abrupt dropping of all tariffs to the ruination of American industry. The board of directors of the Association has declared that this country should be willing to make reciprocal trade agreements after the war, although certain amendments to the present act seem advisable. There are amendments that should be made to the act in the light of our experiences under it!
It should be the declared policy of government not to approximate total free trade; the adjustment of tariff rates should of course be gradual, not precipitate, enabling businessmen to adjust themselves to new conditions. Post-war foreign trade should be in the hands of private enterprise, not government; reciprocal agreements should consider carefully the effects of the most-favored-nation clause in respect to imports from third countries; after any product is first put on dutiable list there should be no reduction except by Congress for five years; benefits should be denied to countries whose currencies fluctuated in terms of dollars more than a given percentage in a year; our government should move promptly to protect American interests against any violation of the Reciprocal Act; the Tariff Commission should study effects of reciprocal treaties and report to Congress regularly and finally protection should be given American industry, labor and agriculture from dumping and other destructive foreign competition of nations employing forced labor, depreciated currencies or similar means of underselling our domestic market.
These safeguards combined with the best possible worldinformed U. S. negotiation department should not only help to reestablish international commerce but restore a global peace trade equilibrium.
What we want in an international sense is exactly the same as we want here at home. We want a free world in which the goods produced by agriculture and industry can move easily, not to the advantage of a few or to the injury of a few, but to the benefit of all. We have marveled at the facility with which American industry can produce the goods the world wants and needs. Our foremost job in the post-war era will be to develop means of placing in the hands of consumers, abroad as well as at home, the necessities and even the luxuries which we can produce so abundantly.
Critics say we cannot Americanize the world—that forcing the American way down the throats of foreign peoples smacks of dictatorship and power politics.
Let me assure you—no force will be needed. Foreign industry envies us our productive capacity and skill—mimics us wherever it can. The people whenever they've had the opportunity to know American goods, have reached eagerly for more. Denied the American standard of living at home, they have thronged to our shores by the millions.
The American way of life is something concrete, something vital to these people, even if we here at home sometimes forget it. We must not only maintain the American standard; we must lift it higher and higher. We can do it through the medium of production.
We must make certain that production is not stunted by the whimsical restrictions of bureaucrats burdened with the blueprints and designs of economic planners. It must be free to exercise its proper function—to give us more and still more of the good things of life—to lead us ever onward and upward as a free nation and as a world power.