Business Statesmanship

By Kenneth Smith

Secretary-Manager, Lumber a Allied Products Institute, Los Angeles

Address delivered lefore the Rotary Club, Vernon, Cali[., and the Institute of \iloodwork Manutacturers at Los Angeles

The great need of our nation today is a new type of business leadersh;p. Our salvation will come not from teachers or preachers but from business men first adapting themselves and the conduct of their business to a changing social conscience and then learning to become articulate, to "sell" the man in the street be he employee, artist or a member of the professions, an understanding of what the traditional American system is and what is his stake in it.

The real problem is changeless in a changing age. Change-new conditions-new horizons -is the normal expectation of business for as far ahead as we can see and adaptable men are needed to meet themmen, as Mr. Rukeyser said so picturesquely the other day " .geared to flux instead of being weighted down to immovable anchors."

He pointed out that attainment of the largest possibilities of American life hinged upon " . . . the capa'city of government and business, on the one hand, and management and labor, on the other, to find ways and means of working harmoniously together."

Mr. Raymond Moley, editor of TODAY, the other day set down as the first essential of progress the correlation of conflicting human factors as applied to relations with competitors, relations between employer and employee and "relations between the different elements of the economic structure-banking, industry, merchandising and transportation." He points out that failure to meet this essential "invites regulation from the outside"; that is, by law makers.

It is as the result of having taken it for granted that "it can't happen fis1s"-s1 having lacked business statesmanship-that we are confronted with the gravest problem faced by Pacific Coast business in our lifetime. We irot only find our water transportation stopped and every industry in our city and on the \Mest Coast injured but we find the general public so uninformed as to the true facts as to be largely apathetic if not actually sympathetic.

I can cite an excellent example of "how" to get the story over used by Mr. Ralph Chandler in talking to employees of his company out on strike. Substantially he said to them: "We are in reality just a collecting agency for you. We collect for you from the public the money with which to pay you. Incidentally, we collect from the public the money with which to pay taxes to the government with which it in turn pays government employees for their work and supports the unemployed and unemployables; the money with which to pay interest for money borrowed; the money with which to pay for food and other supplies necessary to operate our ships; and, if any is left (which has not been the case for some years now) 2 or 3 per cent for the people who put up the money to buy these ships in the first place. But, primarily, we are a collecting agency for you."

His analysis is just as applicable to your business' What are you but a collection agency for your employees and don't you believe that they will agree, if explained that way to them, that you are entitled to pinch out a few per cent of the dollars that flow thru your hands (if you can). Remember they get paid first whether you get anything, and even if you are losing the accumulation of other years.

Henry Ford is rated a billionaire but he paid out eighteen b:llions to employees from what he collected (not to mention machinery, supplies, taxes, etc.). Lewis 11. Brown, President of Johns Manville, put Mr. Chandler's idea in other words the other day when he said: "Profits are not, and must not be, the end of business, but merely a measure of a service that has been well rendered."

I believe it is along these l;nes that we can re-win the loyalty of employees and confidence of the public. Wise, open-minded, adaptable leadership is accepting the social responsibility of industry, is turning back to the old virtues of an individual responsibility to employees for human treatment. And human treatment extends not only to employees but to the honest seeker of a job, whether you have one for him or not. I am not one of those who believe the old fundamentals on which we were reared of duty, honor and pride in work rvell done have departed our land to be succeeded by men looking only for a dole, but I do know that no resentment is more lasting, or more inclined to break down morale, than mistreatment by an employer of a man honestly seeking a job.If you never make any other contribution to meeting this problem at least see to it that no one around your place ever gets tough rvith the man who is looking for a chance to earn his living.

I have dwelt at length on this phase of management because it is the gravest and most urgent problem before us and because solving it will automatically bring about the right approach to most of the other problems.

However, I feel that not only on this issue but on all of the issues rvhich vitally affect the cost of dorng business; upon measures which decrease the wage fund and which therefore <ietermine the amount that can be paid to any individual except at the expense of his fellows; upon taxes and upon government competition with the private citizen, business men generally have been altogether too fearful of stating their honest convictions' I feel that business men must become articulate, must learn to go out and convince the general public of the soundness of those things in which they believe.

Because I agree heartily with him, I call your attentton to the statement made by Mr. C. M. Chester, President of the National Association of Manufacturers and Chairman of the Board of General Foods, in which he says that, "Silence in the face of the attacks being made upon us implies that we are either guilty of the charges made against us or that we are lacking in moral courage." He urges that, "In the spirit of true enlightenment, without rancor, or malice or political blas industry should speak. llow can we longer continue to seek the seclusion of silence and expect any judgment except that which has been passed upon us in recent years."

Col. Leonard Ayres made the point the other day that regardless of how much we may dislike or distrust it, and regardless of who may be the Executive head of our government in the future we are faced with the great basic fundamental fact that the responsibility of the Federal Government for the economic conditions under which individuals live and work has become accepted, approved and firmly established. It is one-and the greatest-of those changes that break changless men and demand, as I said earlier, leadership that is adaptable and "geared to flux."

I referred a while ago to a study of this subject by Mr. Moley, and I want to pass along to you briefly two highly important essentials to business men who would intelligently meet the challenges of this new day.

One of these he sets down as a "new conception of relation of business to government" and argues that the busi- ness man must learn to represent himself and to give so much of his personal time to it as may be necessary. That he must make politics a part of his job.

The other-and he sets it down as the most important"is a knowledge of the means by which public confidence can be secured." He points out that "business has an enormous advantage in the job of winning the confidence of the public. No politician and no government can make a more abundant life. Government can divide what is already there but-is not a machine for production You must get over to the public the fact that material benefits are the result of an economic structure of which the public itself is a part. It is the economic system whose political manifestation is democracy. Democracy and individual economic enterprises are two sides of the same coin. The public cannot destroy one without destroying the other."

This looks like a tough assignment, and it is, but meeting it is the price of success. Business men will meet this challenge or they will slide back down hill. No one can stay where he is.

And may I add one more thought. I have not been talking just about making money. I have also been talking about making a life. Just to make money is not the only end and aim of a business or of a man. The pleasure that it adds to life to associate amicably with your partners in your own organization-and in your industry-are one of its richest rewards. To so conduct yourself as to make money pleasantly, comfortably and without bitter after-tastes is the highest form of commercial wisdom.