A Matter of Conviction

by CLARENCE B. RANDALL

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THE American enterprise system must is on trial throughout the world. We must recognize that. It may be a rear-guard action. We may be protecting the last zone from which the counterattack can be made. And all of our business thinking must be directed towards the conservation of the great heritage that exists in the American enterprise system. That is a very challenging thing.

I am tremendously excited about the problem of the communication of ideas, the explanation of business to every segment of the American public. The strength of the American enterprise system lies in the infinite variety which we bring to the solution of our problems, and we learn from one another in conferences of this kind by exchanging ideas.

In my judgment, there is only one group to whom we must explain American business, and that group is people. There are people among employees, people among stockholders, people among educators and clergymen, and there is also the mythical man in the street.

You will find among people some who are lazy and indifferent in their thinking, who never hold convictions deeply or the same idea for long. They may be disregarded because they don’t count. But among all people, everywhere, there are thoughtful, sober-minded, good citizens, who seek the truth and who wish to adjust their conduct to the right when they understand it. That kind of person is just the same whether he is an employee or a stockholder or the man in the street, and he probably exists in about the same proportions in all groups. He is our target. We seek to explain to the man who wants to know, the truth, the merits, and the values that inhere in the American enterprise system.

In every field of human affairs, it is understanding that counts. Men quarrel and nations quarrel when they don’t understand one another. It is very seldom that two men square off and call each other names after each fully and honestly understands the other’s point of view. When that occurs, they may agree to disagree; bul they part without anger, and often with mutual respect.

That is also true between nations. I feel very certain that we do not understand Russia, and it would seem quite clear that Russia does not understand us. If there were only some way that mutual understanding could be brought about, peace might flow from an agreement to disagree.

At the basis of all good communication — to whatever group, and particularly to employees — lies understanding. It seems to me, therefore, that the beginning of a good explanation of business is the understanding of business, and that must go from the top man down.

There is no use in building an expensive power line if you haven’t got a generating station at the beginning of it. There is no use in having a pipeline, whether for petroleum or the communication of ideas, if there is nothing in the tank against which to start the pumps. The beginning of all communication is an idea. If the boss man hasn’t got an idea, if there is nothing he understands and believes with clarity and deep conviction, he can get the best public relations consultant in the world and he will get nowhere with explaining his business to his employees.

The thing we need first of all is clarity as to what it is we believe; then earnestness and depth of conviction. If we get to that point, the rest will come easy.

This room is bristling with brass today — presidents of companies, chairmen, top executives throughout the Middle West. You who bear important responsibilities are frequently asked to address gatherings. You are asked to talk to your employees, your church, your Kiwanis Club, vour trade association, or your chamber of commerce. Most of you duck it. And all of you are, most of the time, in terror of it. That I cannot understand.

Does the fact that you can’t talk about business without writing it on a piece of paper mean that you don’t understand business, or believe in it ?

What happens when you call on your best customer? The president of a company calling upon the president of his best customer is never inarticulate. He swoops down upon him like a tiger seizing a goat. He can’t be stopped because he is so convinced that his product is the best product in the world that the words take shape by themselves.

Do you feel that way about the American business system? Are you that much on fire? Do you know as much about it as you do about your product ? If so, why can’t you stand up and talk about it?

There seems to be abroad the impression that somewhere there is a leisure class of executives who have the time, the energy, and the freedom from responsibility to make talks like this. In these parts the impression is that the name of that leisure class is Randall.

I want you to remember these words. I want you the next time the Kiwanis calls up at quarter to twelve and says the speaker has failed them — I want you to go on over and let them have it, as I am letting you have it today. I hold some deep convictions. First, no man can explain the American business system unless he understands the present impact of world affairs on American business and holds precise ideas about it.

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I AM convinced that the present Administration is in a sad situation with regard to its foreign policy. If you were to ask me to express in one sentence the present American foreign policy, I would say we propose to fight half of the world, feed the other half, and have business as usual at home. And that can’t be done.

I have been tremendously interested in the emotional reaction of the American people to the return of General MacArthur. And I say to you that the great preponderance of the people who stood on the curb and cheered didn’t know why they were cheering. They didn’t know what they were in favor of, and if we were to poll all the people in this room we would get a strange mosaic of what they think should or should not be done by America in her foreign affairs.

Yet, isn’t it clear that what happens in Korea, or Berlin, or Iran can have more impact on your business during the next twelve months than anything you can do about it yourself? If you are going to explain business to your employees it is very important that you have an intelligent, positive idea of what our foreign policy should be, other than just invective against the Administration. Don’t forget that your employees’ boys are doing the dying; and don’t try to talk to them unless you know in your own mind what you think the United States should do, other than have an election.

The same is true in the field of domestic affairs. Do we in the business world really understand the economic problems of America today, such as inflation? Have you a clear idea of what inflation is, other than the blankety-blank Washington Administration? You know that whatever the Administration does is wrong. You’re committed to that. But you can’t be forever formulating your understanding of the American economy by opposing a particular administration. You’ve got to stop being against something; you’ve got to start being for something. Furthermore, when you talk with your employees, remember that they voted for this Administration and you’re not going to get very close to them with your profanity unless you have an understanding of America’s problems.

Have you an opinion on controls?

You don’t like the controls in your business; that’s clear. Do you want to lake them all off? You had better think that one over. If you’re going to be against controls, you have to be prepared for the consequences of taking them off.

How about taxes?

You’re perfectly certain that the proposed tax bill is wrong. Do you know why?

Suppose someone walked up and said to you: “All right, Wise Guy, you write the tax bill!” Could you write a tax bill for the United States? I don’t mean in detail.

Have you an idea of where the revenue should come from to support our debt ?

We have the debt; there’s no doubt about that. You think it ought to be paid off. Have you a clear idea of where the money should come from? Well, you know you shouldn’t pay it, but are you clear as to who should pay it ? Is it fair to yell about controls and false economy in high places if you haven’t thought through, yourself, what is the sound tax basis?

When you start talking to your employees they’ll ask you some questions on that, but it’s no use talking to them until you have an answer. I don’t care whether you have the right answer or not, as long as it’s your answer; as long as it’s held with integrity; as long as you can talk about it with your voice down and be pleasant.

And what about the system of free enterprise itself? What is there in it that you believe in? And why do you believe it.’ Just because it makes money for you? That’s what the Communists are telling your workers and that’s why we’re going towards socialism. Employees don’t trust guys like you, who have no interest in anything except in making money. You have to get above that.

No, the reason you believe in the enterprise system is that you are honestly convinced that it brings the greatest good to the greatest number of people, and that you have ihe whole world for your laboratory to demonstrate that truth.

You are not ashamed of profit. Non know that the incentive to make money is a worthy thing; but you also know that it’s the striving that counts in terms of the good of the people.

But the free enterprise system isn’t just a “hunting license.” It carries with it its obligations; and one that I hear talked about less and would like to hear talked about more and frankly and openly — is that the free enterprise system must be policed by a free market.

Free enterprise has a tendency to make each of us selfish. We are held on the beam toward the protection of the public welfare by honest, direct, vital, real competition; and any man who directly or indirectly, by private agreement or private understanding, attempts to limit the free market for his goods is asking for nationalization.

I have many friends in the British steel industry. They asked for nationalization. They were afraid of the free market, and they turned to government for a controlled market. They asked for price agreements because they feared the impact of honest competition, and they ended up by being nationalized.

If you want to bring on the end of free enterprise, just continue to take part in the limitation of free markets. We can’t have the benefits and not accept the responsibilities. We have to play the game honestly with regard to the free market.

On the other side of the coin is the social responsibility of the free enterprise system.

The world has demonstrated that there will be no more social vacuums. People crave the good things of life, and they believe that American business doesn’t want them to have those good things. If you want to give us a long shove down the road towards socialism, ignore 1the social problems of your community. But if you want to preserve the heritage of free enterprise, get in there and pitch, and make everybody in your organization pitch. Make your town the best town to live in, and you’ll get the Host workmen. Forget your town, let it decay, and you’ll be strangled for good workmen, because today the working man is discriminating, He wants to bring up his children in a community where there are good schools, good churches, good recreational facilities, and a fine moral tone.

The same applies to education. Industry has come to the point where it is willing to support institutions for higher learning in the technical studies, but il has been very hesitant about lending its support to the liberal arts studies. Yet today the problems that are plaguing industry are not those caused by inadequate technology. Possibly we have too much technology. The problems that are plaguing us today are not in the realm of facts, but of ideas and ideals, and those are tackled in the liberal arts institutions.

Now we have fine state universities throughout the country. Do you want every university to be state-controlled and state-financed? Isn’t there a grave danger that eventually government will direct the policy of teaching if every institution becomes publicly owned and publicly operated.?

The state institutions are kept on the beam by the standards set by the privately endowed institutions; und those institutions cannot survive and maintain those high standards of free inquiry without help from the American business groups.

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HOWEVER, there are several road blocks before us. In educating the employee we encounter road blocks in the persons of the senior supervisor and the foreman. You cannot go around them in communicating ideas to your workers. You must go through them. And by tradition they are not men who have ever thought it their business to communicate ideas to anyone. They keep the machines running, and go home at night, wash their hands, and watch television. That is true even at the senior level. And when the president of a company writes a letter to an employee to explain his business, it isn’t going to help much if the next morning the worker asks his foreman a question about that letter and the foreman can’t answer.

I don’t know just how to correct this situation. I think il is partly the function of technical education, and I say that not critically because, heaven knows, the man on the production line must have technical competence. But he has been so busy in these competitive days gelling the necessary technical knowledge that he has sometimes lost interest in social and economic problems and certainly has become inarticulate.

We have to find a way to bring to the senior supervisor and the foreman the boss man’s enthusiasm about the communication of ideas. They should know the opinions of the boss man and believe in them, not as directives, but for the content of the ideas themselves. They should think and believe as though it were a part of their job to spread education about American business.

I am aware of one very serious road block in the stockholder relationship, and this is close to the employee subject. It seems to me that it is very important that a stockholder of my company living in Los Angeles know what goes on in our plant and understand the problem of the relationship with the employee. We ought to tell that stockholder our opinions on social and economic questions that affect the business. But we are blocked off from a very important segment of our stockholders by an accident.

I don’t know how many of you have thought of this point, but in our company, over twenty per cent of the stockholders do not appear on our records. Their stock is held in the name of nominees — a trust company or some other institution — and we never have direct access to the stockholder. A major portion of these people are women. We hear It said that the women of America own American industry, and I guess they do. They outlive us by about ten to fifteen years per man, per ton.

Joe, you see, was busy when he was living; he didn’t have time to explain to Jane anything about business: and he thought, anyhow, that she was too sweet to explain anything about it to her. But off he went with a coronary, and she wrote to her bank and said, “I know nothing about these. Here are some papers that I found in the box.”

The banker replied, “We’ll relieve you of all of that matter. It will be very simple.”

So once a month he sends her a remittance for ten dividends, including that of our company. The fellow that sends it is a trained analyst. He’s a statistician, and he knows all about depreciation and taxes and so on, and he tells her: “They’re solvent; the dividend seems secure, period.”

He hasn’t the slightest interest in the social problems we’re struggling with. We send him our material and he heaves it into the wastebasket. We got back from one institution over six hundred copies of our annual report, which they had refused to send out to stockholders because they said they didn’t have the funds to cover the mailing expense. That is a road block to communications that must be broken down.

It”s the women of this country who own American industry; it’s the women who vote: and the women are voting us into socialization because they don’t understand the American industry from which they draw their income.

I must add one more point.

Speaking of stockholders, the ultimate education of the worker, the payoff, is for him to know so much about your business that he wants to become a stockholder. We have been teaching him not to take a chance. In our War Bond campaigns we told him there was only one good security — namely, Uncle Sam and his bond. We have told him never to risk anything. We have to teach the working man profit and loss. We have to teach him to risk for gain. And the place to do it is in our own business. We can’t dragoon him into it. He must come in because he wants to, and he will come in if we have been successful in explaining our business to him. He will come in with pride and enthusiasm, and open, then, the best possible avenue of communication.