Industry, Government and Labor


By FRED SMITH, V. P., American Broadcasting Co., Former Assistant to the Secretary of the Treasury

Delivered before the New York Employing Printers' Association, New York, May 28, 1945

Vital Speeches of the Day, Vol. XI, pp. 689-693.

TONIGHT I want to talk about some of the things that have happened to industry in the past three years. To be more precise, I want to talk about what has happened to the attitudes and interests of the American people in so far as industry is concerned,

I have had an unusual opportunity to watch business reposition itself in American opinion. Along with everyone else I watched business come into bad repute, and watched it get itself into worse repute through a lot of not-very-well-planned maneuvers to get out. I was identified with business at the beginning of the war, when the great change started. For the past two years, however, I have sat as near to the heart of the New Deal as anyone, not a New Dealer, could.

I have had an opportunity to watch a great many people in Washington change their minds about business, and about businessmen, and about business motives.

I think this is the time to be discussing the future behavior of industry, because we have a great opportunity to fully re-establish ourselves with the public; but at the same time, we face the possibility of public censure such as we have never seen or heard.

We have the ball. We can run with it, or we can fumble it. Now is the time for industry to go into a huddle and get its signals straight.

With the coming of peace, all of us in business will have many problems, but one of the biggest is our future attitude toward and dealings with Government and Labor.

It would be a wonderful thing if Industry, Government and Labor were to agree among themselves—and find 100% support in all their camps—to continue to work out their problems together, quietly and without malice or distrust. Perhaps that will happen. Perhaps, on the other hand, it won't. Certainly it won't if somebody doesn't take the leadership.

I think taking the leadership is up to business.

It is an extracurricular activity that can well afford to be a personal assignment for all of us, because our prosperity—and the survival of our way of life—depends upon the future cooperation and mutual interest of all the elements that go to make up this complex country, and this infinitely more complicated world which is shrinking faster than a 98-cent shirt.

Business people should take on this job because they are responsible people. They are intelligent and influential people who have proved during the war that they can sell ideas as well as commodities. From their ranks can and must come real leadership to take us through tomorrows trying times.

A whole new world is waiting to be built, and let us not underestimate the size of this infinitely important task. Every man in business should be charged with his share of the job to be done, and every business man should realize that to the extent he helps build this new world, his interests and convictions will be incorporated into it. To the extent that he lets other groups do the reconstruction, his ideas, no matter how fundamentally sound, will be overlooked or ignored.

In the coming period of reconstruction, the people are going to demand that we go forward and not backward: and that industry utilize what it learned in the war about working, with all the elements of our society, to get a job done.

And they are going to demand that we apply ourselves to the task of creating and maintaining peacetime prosperity no less than we applied ourselves to the task of winning the war.

If the partnership of effort which Business, Government, and Labor developed during the war should deteriorate, the people will be quick to place the blame. And the collective insight of millions of people is likely to be more nearly right than wrong. Abe Lincoln once said that there is somebody smarter than anybody, and that's everybody. And everything that the more contemporary George Gallup has discovered about America's mass decisions bears out Lincoln's contention.

In the years to come, the American people will demand that Industry and Government and Labor conquer their differences and keep at the business of building the kind of a country they have come to think they are entitled to. And they have the right to make such a demand.

Let's take a quick look at the impact that Industry has come to have on the lives of ordinary people.

Once upon a time, going into business was purely a private affair. A man could get together some money, develop or otherwise secure some kind of a product, and there he was, in the manufacturing business. With a good product, and good salesmen, and good advertising, if he was a good manager, he soon had a pretty sizeable enterprise with a lot of employees.

If he someday grew tired of his business or didn't manage it right, if his product wasn't good enough to make its way in the market, perhaps the business might come to a stop.

Well, what happened then?

Frankly, not much of anything as far as society in general is concerned.

He lost his money. The people who had loaned it to him to start in business lost some too. The employer could go off and do something else and board up the factory, and the handful of employees would drift away.

But here is the important thing: There was always some place for the workers to drift to.

Some could go back to the farm. Some to other jobs. Some might be unemployed for a little while—perhaps even from choice. Life was pretty easy in those days, and being unemployed did not necessarily mean starvation, hardship and shame.

But the picture is different today.

Suppose Mr. General Motors, Mr. General Mills, and Mr. General Foods should one day decide they were tired of business, and wanted to close up shop. Suppose they just walked out, or went broke. Where now would all those millions of workers go? What would they do? How would tfiey eat? What would become of their families, their homes, their hopes?

Today they couldn't go back to the farm, because it has probably been a couple of generations since many of them have been near a farm.

The ugly fact is that these people now are dependents. They are wholly and completely dependent upon the industrial system. They are wards of the American economy.

That is why there can never again be such a thing as a truly private enterprise. Public responsibility of this magnitude can never be fully a private matter. The proper discharge of industry's social responsibility is now as much a part of management as making a profit or keeping sales costs in line.

And the saner minds in Washington—that means the leadership in Washington—have a pretty clear understanding of this situation. They recognize the social responsibilities of business, but they also recognize that business

must be strong and vital and hardy to shoulder these responsibilities. That concept is likely to determine the nature of government's relationship with industry at least for the next four years.

Government leaders fully realize that they are the people's court of last resort, and therefore the government is going to stand by to police the discharge of social responsibilities no less than it polices traffic in the purity of food, or in trade marks, or in fair trade. The people will demand eternal vigilance on the part of their government, in all matters that have to do with whether or not they are able to make a living, and raise kids, and buy homes.

The end result of this, in my estimation, is that the government will encourage industrial risks and expansion through tax relief. They will develop and financially encourage international trade:, particularly if the Bretton Woods plan is crystallized into action. They will wage a quiet sort of propaganda war to prove that they know a sound industrial structure is the very foundation of recon* struction.

But it is only fair to point out that there is a group down there that feels that industry can not possibly expand enough to maintain the present economic structure.

I sat in a London bar a few months ago and listened to one of the disciples of this philosophy prove his point. Over a glass of lukewarm and totally undigestible beer, he pointed out, with figures, that you can multiply the expected expansion of industry by three, then double the income from this expanded industry, and you still won't be near enough to our present 100 billion dollar economy to prevent serious difficulty. It sounded logical, but that may have been the beer.

This expert and his group have ready a safe full of economic blue prints for new highways and parks and housing developments. Whether or not these blue prints remain in safes to be pulled out only if they are needed to support private industry, or whether they will supplant industry, is partially a function of how well industry and the government and labor get along in the readjustment

Business and the government and labor could become so occupied with the problems of rebuilding the economy, with the reconstruction of their own empires, that they would forget how painfully they learned to work together during the war years. They could forget the growing pains they went through, learning to trust one another, learning to get along, to understand one another's problems.

All this can happen because we as a nation have never developed a clear-cut philosophy of peace—a plan for progress—which has the blessing and co-operation of everyone involved.

We developed a philosophy of war—one that has given us a crystal clear conception of where we are going and what we are doing. That was not difficult to do because the common good is easy to isolate, and plan for, when somebody is zooming toward you with blood in his eyes, Survival is an easily comprehensible goal. However, when the physical threat is gone, when there is no immediate spectre of violence on the horizon, then there is time for discussion and for disagreements—and a strong tendency to go out and play golf instead of sticking a problem out.

This is what had happened just before Pearl Harbor. Industry and Government and Labor had arrived at a point where they stood in opposite corners of the ring, each a little punch drunk from eight years of feuding, each ready to let fly at the slightest provocation. All were certain that each was determined to reform the other right out of existence.

In the minds of most businessmen in those days, "the government" was an unattractive package into which everybody on the Federal payroll automatically fitted. Every one in Washington, from the President down, was some kind of a political Peter Lorre. People in business didn't want to have anything to do with those government guys. That popped up again and again, back at the war's beginning, when the advertising business was first organizing itself to go into the service of the country. There was a noticeable reticence on the part of many business people to go to Washington and offer their services. Sure, they knew it was the thing to do; they knew the country was in jeopardy; they knew they could and should help—but if they exposed themselves, they were afraid that they would somehow lose independence, or sovereignty, or something.

However, when these men went down to Washington, and actually sat across a desk from one of the villains, they discovered frequently that the villainy dissolved in conversation. It began to dawn on some business men that all they really knew about government leaders was what they heard by way of gossip and what they read in newspapers; and what they heard and read sometimes came through people who didn't know what they were talking about. A lot of it came from the I'll-hold-your-coat boys, but we'll talk about them in a minute. And the same thing was happening of course, at the other end of the line. Government men were getting some odd stories about us.

I think it is safe to say that few men who took responsible positions in Washington during the war came back without discovering that the government is far more than simply a badly run business. Many sound business men became also sound government officials. They applied themselves to learning new points of orientation. They decided that what this country needs is more business in statesmanship and more statesmanship in business.

They learned, among other things, that economics is not simply the lengthened shadow of the Law of Supply and Demand. In the final analysis, a sound economic system is one that gets the necessary job done. In war, it's one that keeps generals supplied with ample material. In peace it's one that keeps people eating. And there are millions of folks in the United States who feel that if you try to particularize further than that, you are only getting into technical details. Hence, if it should become necessary for the government to financially support industry in peace as in war, we can clearly expect this to happen under Truman as it happened under Roosevelt. Solvency is likely to be a secondary consideration when survival is at stake.

And should it become necessary for the government to temporarily bolster our economy with the taxpayers' money—it will pay industry spokesmen to think twice before they lash out with unqualified and vitriolic criticism.

Business can not afford to become known again as antisocial, as anti-humanitarian, as greedy and drunk with self interest.

Business should keep a weather eye on the laurels it has won during the war, and should make up its mind at all costs to protect those laurels by remembering that people are willing to be shown. They react like magic to good Human Relations Treatment.

We can afford to take a pointer from our late President in that matter, because whether you liked him or not, you must admit he was able to hold the loyalty of enough Americans, to keep him in office for 12 years.

The problem—and the fascination—of Human Relations was one of the motivating forces of Franklin Roosevelt's life. In a speech he would have made if he had lived a few hours longer, he had planned to mention that the art of human contacts should be developed into a science, and we should all learn it, and practice it as part of the pattern of our national life. He never said anything wiser than that. His entire philosophy, and the complexion of his attitudes, grew out of his recognition that our foremost problem is one of Human Relationship.

The common denominator of the New Deal was the human element. Above and beyond any of the other considerations in our economy or civilization stood the plight of the forgotten man—a symbol in itself of social maladjustment, of a lack of human understanding.

In the early days of his administration, it was the complex human problem in our disturbed national life which he sought to conquer by telling all of us that we had nothing to fear but fear itself. His predecessor had attacked the problem with the comparatively colorless promise that "Prosperity is just around the corner"—which of course didn't work.

Tonight, business has the sympathy and interest and belief of the American people. Business has the support of its millions of workers; it has the power of all the votes it has won for turning in a good job when the country faced its crisis. Business is sitting pretty from the standpoint of public acceptance.

But I wonder if business really recognizes and appreciates the progress it has made? I wonder if it realizes that the slate is pretty nearly clean, and that at last industry has an opportunity to get completely and forever out of the doghouse where it has been too long.

To illustrate what has happened, let us review quickly what has happened to advertising, something I lived through at both ends of the line, in business and in government.

One of the most competent anti-business lobbies that preyed on the government before the war was a group which claimed that advertising epitomized all that was bad about business. And there seemed to be plenty bad about business in those days. This group kept things pretty well stirred up, too. Lobbyists made regular calls on top government people. They had facts and figures to prove that a poor defenseless public was being hoodwinked at every turn. Had this gone on for a few more years, all of us in and associated with advertising would have had a hurdle erected which could have put us pretty well out of business.

We were losing that battle, largely because we weren't fighting it with any intelligence. So, in one sense, we were saved by the bell.

Actually, we were saved by that arch-New Dealer Henry Morgenthau, Jr. The turning of the tide came when he decided to put his professors and ideologists out to pasture, and call in the Advertising Council to sell war bonds. You never saw such hustling around for a few weeks. The lobbyists and the professors and the ideologists tried desperately to consolidate their positions, but Morgenthau stuck to his guns. The Council moved into the Treasury Department, and selling bonds became the world's biggest business in short order. With Advertising's dust is their eyes, the anti-advertising lobby folded its tent and fled.

Then things started to happen.

The folks in Washington who had been so completely convinced that advertising and all its works were preying upon a gullible public, soon discovered that they could use a little of that preying themselves in getting the people to back this whole new business of fighting total war. These people in Washington found that advertising is nothing

more nor less than good organization and the skillful direction of information. So our erstwhile opposition soon turned itself into our most active client, and gave all of us ad men work, instead of "the works."

And before long, advertising men all but assumed command of the job of instructing the American people how to behave and how to cooperate with the war. They became the omni-present right hand of the war mobilizers on every sector of the home-front. They organized the selling of bonds, collection of junk, saving of fats, fostering of victory gardens, enlisting of WACS and Gobs and Marines, the maintenance of prices, saving of paper, and they did a dozen other vital jobs. And your own Victory Committee was in there pitching.

Well, we've done a job, all of us, that we can be proud of. The important thing is that people do give us credit for doing the job. Officials in Washington who didn't like us three or four years ago are now perfectly willing to admit that advertising and all the allied industries—and that includes you—really went to work because we knew we could contribute something, not because we thought we could get special concessions somewhere along the line. They gave us credit for our contribution—but what is more important, we have won their respect.

That is something we couldn't buy.

It is something we must not lose.

In planning to retain it we must never forget how we got it: by demonstration, not by pronouncements and speeches. If we hold that respect, our job in the field of Human Relations is going to be much easier because people will take us at our face value, and not be continually suspecting our motives.

Now I am confident that there are some in industry who have an overwhelming desire to mind their own business, and let labor and the government mind theirs, and to forget the whole idea of Human Relations, and obligations, and social responsibility. Some of them feel they can discharge their social and economic obligations by hiring a press agent to write high sounding and slightly less than factual statements for them.

Many of these people are sincere in their belief that the ultimate goal of business is to make a profit and declare dividends, and that all other considerations are superfluous and a little radical.

There are such people in labor, and in the government, too.

Left to their own devices, these isolationists in all three camps would sooner or later change their minds as a result of evolution.

But unfortunately, they are seldom left to their own devices. Standing close beside them are always the professional coat-holders.

It is time we recognize these "I"ll-hold-your-coat" boys, because each camp has more than it needs of them. Among labor groups, the coat-holders are usually racketeer organizers, who see in unionism a pleasant, profitable form of blackmail. They are not interested in creating any sort of understanding between the American workman and his environment. They are interested in labor because it means easy money. They have a vested interest in discontent, because their "take" is dependent upon distrust. They feel they must convince the worker he is being "protected" if they are to continue collections.

On the government side, there are plenty of people, usually snuggling safely in the security of the Civil Service laws, who are the coat-holders on the public payroll.

They are usually the ones who want to upset the world; the wild-eyed dreamers. They foster distrust because they , feel it somehow protects their position; they feel that the only way that they can stand above their environment is to reduce the environment until it is smaller than they are.

And in industry—in our own camp—there is a comparable group of people. Many of these are smart enough to make a pretty penny out of being destructive. They have a vested interest in discontent, too. Their technique is to explain to industrial leaders how the government, or labor, or some other force is about to steal industry's shirt. At the proper moment they offer to hold the industrial leader's coat for twenty-five thousand dollars a year. And if the industrialist is sufficiently disturbed, he is likely to pay off.

Now is the time to keep wary of the coat-holders in all three camps, for they will do everything in their power to discourage cooperation, to muddle the Human Relation* ships among the segments of our society. They will sabotage the continuation of industrial advisory groups, in the government, labor management committees in industry, and anything else that tends to reduce the possible areas of disagreement between these three major forces.

The industrial isolationists, who see no need for industry and labor and the government to stick together, ought to contemplate what will happen if they don't get together. What will happen if they decide to fight each other for superiority.

The cold fact of the matter is that each of these camps is tremendously powerful. If industry is not smart enough, nor far-seeing enough, to move in and create three-way cooperation, then most certainly it will wake up one day to find that there is a well organized two-way cooperation against industry.

Let's don't forget that the people and their government have an inevitable affinity. It is difficult to separate the voted for from the voters.

It is conceivable that a man might be elected president again, again, and again, with all of industry against him, so long as enough people are for him.

There was a time when a presidential candidate needed the support of big business, needed the help of newspapers, needed the communications that only the well-heeled and well organized could provide But that is not true today. For one thing, the air belongs to the people, and during the last election the CIO made that fact abundantly clear to its entire membership. A man who wants to be president can stand before a microphone and reach practically every voter in the nation. Because of our highly developed media of communication, a man could suddenly out of nowhere, become a presidential nominee. The late Mr. Willkie proved that.

Those things are possible today, whether industry likes it or not. Those are the facts that industry must understand.

Should the government maintain industrial advisory committee in the peace? Should the government continue to Iran on American industry?

Should American industry continue to invest its money in some of its good men, in helping government leaders to run this most complex of all countries? Should labor management committees be continued after V-J Day?

I think the answer to all those questions is yes. It must be yes. The government is a huge force because it has power industry is a huge force because it has money," labor is a huge force because it has votes; and any one of them, setting out on its own, could upset the boat, even if it couldn't gain very much for itself.

Industry's self preservation requires that industry take every precaution to create understanding and to preserve the interest and sympathy of the people and their government.

The size and strength of the government is not going to grow less. The old adage about the best government being the government that governs least, is out of date. This nation is now so complex; the traffic in money and goods is so extensive, the interdependencies of all the elements of American life are so great, that we are always going to have a large and powerful government. If government leaders should decide otherwise, the American people, who will not forget that they have a voice in running things, will change government leadership in short order. And in spite of what you hear around election time, the people's interest in voting their representatives into office is mounting, not declining. The number of voters in the last election was considerably more than double the number who voted in 1924.

The forces of labor are not likely to be less organized in the future. The twelve million and more troops in labor's standing armies will continue to be a mighty factor. When a difference of opinion arises, labor and government are likely to be on the same side of the fence if for no other reason than because organized labor has twelve millionvotes.

What, frankly, can business do against such a concentration of workers or such a fountain of power? The obvious answer is that it must not be put in a position of being against any such concentration of forces.

Industry must maintain at all costs a working arrangement with these other two great organized groups. Industry must work with these groups, because it is impossible to work against the groups and still survive in the way that we know it.

The whole future of industry lies in cooperation, in leading the way, in striving to be sound and straightforward in developing its Human Relationships.

If we in industry take up the challenge, labor and the government will come along.

Together, we can work out the details of a cooperative plan to build a prosperous peace with the same determination and success that we fought a war.