Free Enterprise Is Not a Hunting License

by CLARENCE B. RANDALL

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THESE are very sobering days for the American businessman. The world as we have known it is falling to pieces around us. The relentless and paralyzing creep of socialism day by day draws nearer to the things in which we most deeply believe.

The other evening I happened to be at the home of a friend of mine in one of our Chicago suburbs which is very remote, and as I sat there in his lovely country home, I said, “What do you do around here when the house catches fire?'

He said, “Perfectly simple. We know exactly what to do. We get on the telephone immediately. All the neighbors rush over and watch the house burn.” We mustn’t be that way in the business field today.

Or to put another metaphor to you, think of the villagers who live on the side of Vesuvius. Suddenly they see the top of the mountain blow off. The hot lava starts flowing relentlessly down the side of the mountain, burning here a bush and there a tree, and they wonder whose house will be first. They stand idly by with a sense of desperate futility because they don’t know what to do about it. That must not be true with us. And in my judgment it need not be true with us. This avalanche can be stopped.

I have searched my mind as to why it is, as businessmen, we seem so paralyzed with fear these days, and so certain that we are going down the chute. We know that socialism is a failure. If ever the people of the world needed a laboratory experiment to disprove the theories of the Fabian socialists, they have it in the conditions in England. And it is no mere accident that the one nation strong enough to bear the troubles of the whole world is the last citadel of free enterprise.

Across the seas we have seen our Anglo-Saxon cousins try the experiment which is offered now to us, and have seen them go down close to complete bankruptcy and destruction. I have watched it with my friends in the British steel industry. Because of my service in the Marshall Plan I have come to have wide acquaintance with men in the steel industry in Europe.

I once talked with an officer of one of the great steel companies of England, and he told me: “I say to you something I have said to no countryman. I don’t think I can take it. I think I must stop. All the things that I believed in are gone. I have no incentive to go forward. If I win, nobody will give me credit; if I lose, I will be blamed. I think I must stop.”

Now, what can that mean in the economic stagnation of a country? What will it mean if the men who should be the national leaders suddenly feel they can’t take it, that they have to stand aside?

That great laboratory experiment in socialization is before the world; and yet, in the face of it, disguised socialization is offered to us day by day in myriad forms, and we know it, are disheartened, but are not certain what to do about it.

I have searched my mind as to what may be the reason why the American businessman today is not making headway against this trend with the same vigor, the same determination, that he ought to have, and I am afraid I am led rather sorrowfully to this conclusion: that in his own natural circle of influence the American businessman today is not looked to as the leader. I say that sadly, but I am afraid it is true. Yet if we in our own individual circles of influence are not the natural leaders of the people, we cannot collectively form public opinion.

Now, it was not always thus. A hundred years ago, when our prairies were being broken into civilization, the businessman was the leader. He formed the communities. He built the churches and the schools and established the courts; he participated in the territorial and then the state government; he went to Washington; when war threatened, he raised the company of volunteers; it was he who formed public opinion, and it was toward him that people looked for guidance and leadership.

That was still true fifty years ago in my boyhood, and I think of a figure in the village I lived in in New York State who typified the things I am talking about. In my little town of less than 800 people, a farming community, my father kept the general store. We had just one industrialist in that town, and he was the blacksmith.

Now, he was the best blacksmilh in all those parts. There were other blacksmiths in the villages near by, but whenever there was a tough job it came to our man. He had a good forge, good tools, he was absolutely tops in his craft; but that wasn’t why he was the leader in our village. Without that he could not have qualified, but he knew that when he went home at night from the forge, having been a good craftsman all day, his job wasn’t done. In addition, he was the superintendent of our Sunday School; he was the one under whom I learned the Ten Commandments and the Sermon on the Mount, and learned to sing the beloved old hymns. But that wasn’t enough. He was also the president of our school board, and when I graduated from high school, he handed me my diploma. As his fame spread from our village to the surrounding villages, he came to be widely known in the county, and we sent him to the legislature as the representative of all the people.

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FOUR things about that old blacksmith typify the qualities needed today in business leadership. The men in the steel industry and the forging industry are the lineal descendants of that early blacksmith, spiritually speaking. We must be tops in our job. We owe it to American production to let no man excel us in competence in our business jobs, but we have no right to think that that in itself establishes us as leaders in our communities, because it doesn’t.

Who among us is superintendent of a Sunday School or is having a part in some other characterforming agency? We decry double morality in government and corruption in high places; yet what as businessmen are we doing to form sturdy characters in the young men and women who will bear those responsibilities in another twenty years? We turn to the universities for the best brains they have to bring into our businesses. We seek them avidly. What are we doing about maintaining those educational institutions? We know perfectly well that with a privately endowed institution the student’s tuition pays less than half of the cost of that education. Are we willing to take that education as a gift to us and do nothing to perpetuate those institutions that mean so much to us? Who among us seeks out the principal of the local high school and brings him home to dinner for a chat, and who invites the professors of the colleges and universities to his business places that they may understand firsthand his business problems?

Who among us takes the active part in the dayto-day political life of our nation that he should? We shrug that off, assuming that somewhere there is a group of wise and able men with lots of leisure to perform those tasks. We cry out for the best of leadership in American life, but who among us has run for office, who has gone down to Washington, who has left his business desk to stand at Charles Wilson’s side to help bear the burden of government in this crisis?

Those are heart-searching questions, my friends, but they bear directly upon this problem of business leadership. I have the feeling that as businessmen we worship production too much. That is a strange thing for me to be saying. I am tremendously proud of the job of production that the steel industry has done. When I look back at what steel capacity was when the other war began, and what it is today, it seems to me unbelievable that in the state of advancing costs that we have faced, the steel industry has brought about the miracle of increase in production that it has.

All of the steel production of the free world outside of the United States is, of course, less than ours; and yet, as I say, I think we can go too far in polishing our own ego by telling ourselves over and over again what great big wonderful men we are in production. After all, production is not an end in life. Production is a tool. God didn’t put man on this earth just for industrial production. He put man on this earth to live the good life, the rich, full life, to develop the powers of his mind and the powers of his spirit, to make the world a better place because he has lived in it. We must keep production in its place as we think about life.

The people in your community, frankly, aren’t terribly excited just because you have increased your production 50 percent since 1945. That leaves them just a little cold. They would like to know what is going to happen to the pavement in front of their house; they would like to know how long you are going to stand by and see gambling places open to their high school seniors. They want to know how long the hospital in your town is going to be unable to take in the desperately ill, and so on through the whole gamut of community and civic services which are your job as well as theirs.

Whenever an industry goes into a new, remote place, what does it do? What has the oil industry done since it has gone into Venezuela? The first thing the oil people do is to build a modern community. They recognize that it is their job to see that there are good housing, good churches, good schools, good entertainment and recreation, and everything that goes to make the good life for the American. That job is your job as much when you live in a congested city as it is when you operate in the remote place, only you don’t quite see it.

Only by re-establishing ourselves in leadership in the things that mean something to the people, and not merely in production, will they turn to us for guidance on these social and economic questions with which we think the country is threatened.

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Now, when people lose the respect of those about them, several things ordinarily account for it. One of the first is always the question of integrity. No man can have an important part in forming public opinion if there is the slightest question about his integrity. I don’t mean vulgar things like stealing money or juggling accounts, but i think we may well do some heart-searching on various aspects of our business creed on the subject of intellectual honesty. We dislike people in government who talk out of both sides of their mouths. We must, however, be very careful that we, ourselves, don’t talk out of both sides of our mouths.

The first and obvious question is whether we have genuine, vital, honest competition one with the other. The free-enterprise system is not just a hunting license to you to get all that you can get without restraint. The free-enterprise system is a way of life which brings the greatest good to the greatest number, but it must be policed by the free market. The two are inseparable.

We resent price controls. We say that price controls are not required because the operation of natural laws, supply and demand, will themselves adjust prices. The thing we dislike about it is that those natural laws are suspended by government. Now, if that be true, and if those natural laws are what guarantees to the public the integrity of the free-enterprise system, we have no right as private individuals to suspend them. We have no right as honest men to tamper with that automatic control mechanism.

My friends of the British steel industry tried it and they got nationalization. They wanted price rigging; they would rather have the guaranteed price than freedom. They took price fixing under government control, and thereby created the handy tool which government needed and used to nationalize them, and I say we can’t have it both ways. We can’t have the freedom of free enterprise and not assure to the American people a free market.

The second thing that bears upon our intellectual honesty is our understanding of the sources of capital. The free-enterprise system must perpetuate itself; it must find the capital for expansion in the savings of the people. If we can persuade enough new people to become partners with us in industry, we shall simultaneously find our required new capital and solve our public relations problem. We have no choice but to turn boldly toward the mass savings of the two most powerful political groups in America — the worker and the farmer. That the worker and the farmer have in the aggregate sufficient savings to relieve the capital stress in heavy industry seems to be clear from every authoritative survey. But it is equally clear that at present neither of these groups is devoting its savings to the purchase of common stocks.

One thing is certain, and that is that there must be no employer pressure. Our job is to explain and to create an atmosphere of understanding, but the action must be voluntary on the part of the worker, He must take the risk because his self-interest is aroused, but he must do it with his eyes open.

I know of no reliable statistics on this subject, bul as nearly as I can guess less than 2 per cent of the men and women employed in the production of steel own stock in their respective companies. And one of the most revealing figures is the low percentage of officials and supervisors who buy the stocks of their companies. They buy new automobiles and television sets, but not common stocks. As their future has become more secure through the operation of pension plans, they have tended to live more and more right up to the limit of their current incomes. They show little understanding of their personal relationship to the perpetuation of the industry that provides their livelihood.

We have help at hand where self-interest is very much at stake. The security exchanges and security dealers across the country sense this problem keenly and would welcome support from the industry.

Some think that the best medium is the open-end investment trust, designed specially for the farmer or the worker. The thing that might be lost there is the sense of ownership and stake in a particular enterprise. The worker and the farmer do pay insurance premiums, and insurance companies lend money to companies, but the process is so diluted that the ultimate investor does not know our successes or fear our losses.

To these and similar questions I have no specific answers. But twenty-five years ago neither did the engineers who were struggling with continuous rolling. They saw a job to be done and did it. And because they were determined and resourceful, vast new areas of usefulness to the public were opened up to the steel industry. This new challenge is different. It is abstract. It is intangible. But its possibilities are likewise vast. When we reach every responsible segment of the American public through the time-honored method of joint venture, we shall find our future expansion adequately financed.

We shall have the public with us instead of against us.

Unless we can bring into industry the mass savings of the workers, we shall not have sufficient capital for the further development of industry. We have to teach the American public the profitand-loss system of risking for gain. And we must not take the easy way out, of asking government for capital. I say integrity is involved when any advocate of the free-enterprise system turns to government for anything, whether it be money or a special law or a special regulation.

We must be tough; we must recognize that if we believe in free enterprise we have to accept its limitations in order to get its values.

Now, this takes me straight to this point: the time has come when every American businessman must have his own thoughtful, personal philosophy, He has to know what he believes and why. We sometimes think that we have put in a terrific day because we have worked so many hours or kept so many appointments.

I am a little tired of hearing how hard men work, in terms of the hours they put in and the number of places they have rushed to by automobile or airplane. It. isn’t the number of hours you pul in in a day, it is the number of ideas you have in a day, that counts now.

We are in a conflict of ideas, and the forces of darkness are well equipped with men who understand ideas and how to use them. I know a man in business who has a very responsible job, and thinks he is a great success, who to my knowledge hasn’t read a book in twenty-five years. He wouldn’t know what to do with a book if you gave him one.

We need time to think; we need time to reflect and to understand and to do the heart-searching that I have been talking about. We must have opinions on the questions that are perplexing these friends of ours who are in government. We must understand the problems of business. We must also get to the top level and try to understand the implications of the foreign problems of our country. As we approach those difficult questions, we must study, have patience and honest discussion with those who differ from us. We must consciously try to forge a philosophy that is clear in our own minds.

That is all necessary if we are to be restored as leaders in America. Having once formed that philosophy, we must do something about it. We must communicate those ideas to those about us on every conceivable occasion, by every medium at our disposal.

Take the worker. Why should the worker be barred from knowing what the opinion of the boss is about taxes, about Korea, about politics? If the worker is barred from our leadership, it is by our default.

Now, I would be the first to insist that no management plan intrude upon the proper function of labor leadership in such things as collective bargaining. It is right that the worker who is organized should turn to his leaders in the subject matters that deal with employment, but there is no reason at all why he should turn to those leaders any more than to you for guidance and for wisdom in the great social, political, and economic questions of the day.

And I have a sneaking opinion he would rather know your opinion than he would the other fellow’s. Hi’ honestly thinks you know more about these things than his labor leaders and you aren’t telling him, you aren’t doing a thing about it. And in that connection you are certainly overlooking the distaff side. What the woman thinks is awfully important today, and it seems to me not only proper but compelling that the employer have views on these important questions and from time to time, in personal meetings or by letters to the home or any other means of communication, tell the workers and their wives what he thinks.

If we honestly believe that the free-enterprise system is Hod’s greatest gift to man, why can’t we believe in it so deeply and understand it so clearly that we talk about it everywhere we are, to everybody who comes within the sound of our voice? We have to use the written and the spoken word to expound and develop and promote a clear philosophy, but I don’t advise you to start talking until you have begun thinking. It is no good opening the tap if there is nothing in the tank. There are people who do that. You have to have a head of steam before you release it, and that means you must take time out from the busy, bustling worries of your life and make up your mind what it is you think. Then when you know what you believe, you can convince anybody of it if you believe it deeply enough.

What is the essence of freedom in business? It is not the right to do as we please. It is not the right to do all that we want to do, for ourselves. We are restrained, but by what? The essence of the American way is not restraint by law, but restraint by conscience. It is the self-imposed restraints that are the essence of the free-enterprise system. We may press our advantage to the full, but we must stop short of damaging others, and we are to be the judges of when to stop short. It is the abuse of that freedom that creates law. It is when men do not impose the restraint their conscience dictates that we turn to government, and the more we fail in selfrestraint and the more we turn to government, the greater is the likelihood that we will go the socialist way.

We must on the one hand preserve the great drive that comes from freedom. In some forms of society, man is kept to his job by the whip. Under our system we are kept to our job because we know that our interest parallels that of society, but when the time comes that those lines cross, and we press our advantage to where we are causing damage to the common good, law is necessary. Therefore, the greater our abuse, the more the law and the inevitability of socialization.

The freedom that we enjoy in the free-enterprise system is the last strength of civilized man. It is for us to preserve it and develop it. We do that by understanding it and, with scrupulous integrity, maintaining it.