Business Adrift

It is natural that criticism shall follow failure, shall increase in quality and strength in proportion to the failure's intensity and duration. The present business depression has brought forth many investigations of the errors which caused it, even of the Capitalism under which it came. "The capitalistic system is on trial," said Thomas Lincoln Chadbourne to the sugarmen of the world at Brussels. "A system . . . under which it is possible for 5,000,000 or 6,000,000 able-bodied men to be out of work . . . cannot be said to be perfect--or even satisfactory," was what Daniel Willard, president of Baltimore & Ohio Railroad told the Wharton School of Finance last week. Yet no criticism has been so definite in its statements, so sure in its suggestions, so alarming in the price it says will mark continued failure, as one set forth last week. Criticizer and suggester was Wallace Brett Donham, dean of the Graduate School of Business Administration at Harvard University. His views were set forth in a book called Business Adrift, to which Alfred North Whitehead, Harvard's topnotch philosopher, contributes an introduction "On Foresight."*

To the businessman who would rationalize into the future, Dean Donham's discussion of "Foresight and its Elements" sets forth a sane method of logic. But the meat of the book comes when he asks & answers this crucial question: "How can we as business men, within the areas for which we are responsible, best meet the needs of the American people, most nearly approximate supplying their wants, maintain profits, handle problems of unemployment, face the Russian challenge, and at the same time aid Europe and contribute most to or disturb least the cause of International Peace?"

The essence of Dean Donham's solution is that the U. S. must not engage in ruthless competition with Europe. To do so will result in an eventual lowering of the U. S. standard of living, in a financial prostration of the Western countries, in a spread of Communism to England and Germany, thence eventually to the U. S. with the resultant destruction of Western civilization. Against expansion by exports, he advocates a steady upbuilding of the home market, planning by business and Government to give the U. S. workingman satisfaction of his greatest intangible demand, Security. For the desire for in- tangibles is always in competition with the consumption of needs, retarding a sound prosperity.

The coming era, as Dean Donham sees it, is one of higher tariffs, yet he advocates neither opposition to this nor wholesale cooperation. He would have tariffs to protect those U. S. industries whose destruction would cause great social changes (e. g., shoes). He would have no protective tariffs for new industries whose development would hurt old European industries. In this reasoning there is the thought which underlies his whole thesis: a prosperous, strong Europe is essential to the welfare of the Western world.

Much of Business Adrift is quotable, for Dean Donham writes forcefully, shuns frills. Sections over which the reader's eye and mind are likely to linger include:

P: "The danger in our situation lies not in radical propaganda, but in lack of effective business leadership. Great problems, upon the decision of which the whole history of the future may turn, are receiving no adequate attention. Even the mechanism of thought necessary to the rational handling of such problems is not understood. ... I see nowhere signs of a general philosophical attack on problems of the relationship of American business to civilization. . . . Yet failure to bring this about may jeopardize our whole economic and social structure."

P: "France, which is still predominantly agricultural . . . has so far avoided the worst of the present business depression."

P: ". . . Unemployment is as much a general social problem as it is a business problem and . . . solutions . . . must be worked out by business and politics in combination."

P: "The most serious task now facing all civilized governments is the task of maintaining sufficiently stable social conditions in the midst of rapid change."

P: "We assume that the Russian experiment must fail. . . . Nevertheless, the most superficial type of analysis . . . will show that the Soviet government has a good chance to maintain itself . . . and that we cannot with reasonable safety assume that they will fail."

P: ". . . Soviet Russia has a big job on her hands to train her labor to use machinery. I doubt, however, if her task is half as difficult as our task of training our business men to work cooperatively in carrying out a general plan."

P: "The job of each generation is to consider not only economic theory but the whole gamut of the complex sociological factors existing at the time and to stimulate progress. ... So far as possible it should avoid creating new dangers for its successors."

P: "The whole principle of insurance as applied to unemployment is unsound. The remedy for unemployment is work."

P: "The direction in which we are heading is the way to chaos . . . chaos ending in the destruction of individual initiative and personal freedom."

P: "Security for workers must be sought and men will work for it. Without this, security for capital is impossible."

P: "The time has come for a complete reappraisal of the attitude toward competition which is expressed in the Sherman Act."

P: "I have, however, no doubt about the soundness of my conclusion that we must have a philosophy, a plan, and a method of thinking about the future. Without these, the influence of American business on civilization will be destructive."

The Author. Unlike many professors of economics. Dean Donham has had a successful business career. He was graduated from Harvard in 1898 and then studied law, was admitted to the Bar in 1901. He entered the legal department of Boston's Old Colony Trust Co. that year and from 1906 to 1919 was vice president. He is still an Old Colony director, and also sits with the boards of Haverhill Gas Co., Cambridge Savings Bank, Raymond & Whitcomb Co.

Since 1919 he has been dean of the Business School. He is 53, stocky, blue-eyed, slow-spoken. He stuffs his large-bowled pipe with Cake-Box mixture, has a passion for locating and "flaking" (taking apart and numbering pieces for re-erection) old cottages of the Cape Cod type. Many of these he has set up again on his own grounds. His office is dominated by his desk, which used to be the old, oval Harvard Faculty table and is about 18 ft. long and 10 ft. wide. One end has been fitted with drawers and Dean Donham usually sits there, big-framed, easygoing.

Under Dean Donham the Harvard Graduate School of Business Administration has grown in prestige and size. Its enrolment at present is 1,074 students. They come from all over the U. S., but the big Eastern universities send more and more, and now few seniors at Yale, Harvard or Princeton do not at least consider a course at "Harvard Business." A large measure of the School's success has been due to Dean Donham's efforts in attracting tycoon support, not only financially but also in the contribution of accurate, timely statistics. Many of these figures go into the Harvard Business Review (monthly) and Harvard Business Reports (case histories of companies). Harvard Business School students are not made feeble by being placed in a rarefied atmosphere of theory. They are given case histories to work out, facing problems which have baffled famed directorates. They also make learned reports in a manner which they retain in business practice, combining factual statement with fluent expression. And beneath all the learning at Harvard Business School there is a philosophical undercurrent, the ingredient most recommended by Dean Donham to his countrymen.

*BUSINESS ADRIFT--McGraw-Hill Book Co. ($2.50).

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