Business Speaks

This week U. S. Business, long a whole sale foe of the New Deal, put its feelings in particular form. They were not all black. Ignoring That Man, the managers of U. S. industry told which of his measures they liked, which they disliked. If businessmen and New Dealers are to cooperate more closely in Term III than in Terms I & II, the views expressed by businessmen this week were a good basis for a practical agenda.

The medium for expression of these opinions was FORTUNE'S third Forum of Executive Opinion. Two years aborning, this Forum gave U. S. business management the first sounding board against which its total voice could be heard (TIME. Sept. 2). For it FORTUNE persuaded some 15,000 executives to form a permanent panel. Invited were : 1 ) presidents of all firms rated AA1 by Dun & Bradstreet, 2) directors of the biggest 750 U. S. corporations (which own 52% of all corporate assets), 3) all businessmen whose salaries indicated clearly that they play an important part in management. The third installment of this Forum was the most detailed self-portrait for which U. S. business opinion has yet sat, revealed how it feels about: 1) New Deal policies, 2) price fixing, 3) defense and recovery. Findings:

Recovery and Defense. Most nearly unanimous opinion was on how to put the U. S. economy back on its feet. If "certain deterrents" are removed, 85.4% believed that private industry can in time absorb all the unemployed. More surprising was the line-up on what the deterrents are. Only 40% believed them to be all on the Government's side. A clear majority of 58.9% agreed that management is not blameless, that only by a change in business policies combined with a change in Government's attitude can industry absorb the unemployed. In this willingness to share the blame, finance and investment executives had a smaller part (55.5%) than commercial and retail men (63.1%).

Deterrents or no deterrents, New Deal economists now preach that the U. S. is on the road to recovery through rearmament. With this view Business emphatically disagreed. An ominous 67.4% felt that temporary prosperity stimulated by rearmament "will leave us with our economic problems worse than ever because we failed to set our house in order before the boom started." Thus the recent sluggishness of the stockmarket, despite soaring production indices, is evidently deeply rooted in Management's long-range mistrust of the defense hypodermic. This mistrust was confirmed by the Forum's feeling on whether now is a good time for business to expand: 26% thought expan sion unjustified by present conditions, 61% saw it justified in war industries only.

Prices. FORTUNE suggested to its Forum one reason for unemployment that was not Government's fault. This was the old Brookings Institution thesis: that industry itself had failed in many instances to expand its markets (and payrolls) by reducing prices. With this thesis a significant majority agreed wholly (16.2%) or in part (49%). Pinned down to the question of whether decreased prices in depression industries would have upped volume sufficiently to reduce layoffs, 27.2% answered yes, 35.4% perhaps, 37.4% no. Of the yes-men, one-fifth thought the increased volume would have boosted profits, 46.7% felt they would have remained the same, 29.5% thought they would have increased losses. Those who saw a loss were most common among utility and rail executives.

Probed further on price philosophy, FORTUNE'S Forum tossed a cautious but impressive bouquet to Trustbuster Thurman Arnold. His statement that "The first concern of every democracy is the maintenance of a free market" brought 58.7% agreement (27.7% in toto, 31% in part), with utility and railmen again lagging behind. Asked to make a choice between General Johnson's defunct NRA pro-price-fixing policy, and the Arnold anti-price-fixing program, the Forum gave Arnold the edge: NRA, 22%; Arnold, 33%; "depends," 45%. More striking were its views on particular prices. A clear majority (from 63.1% to 81.8%) reasoned that lasting recovery is impossible until the building industry acts to encourage new construction, until railroads act to stimulate greater movement of freight; and that neither builders nor railmen can stage recovery--exclusive of defense contracts--until they get their costs and prices down.

New Deal Policies fared far less poorly than in the first FORTUNE Forum, when only 2% approved all Roosevelt measures, only 18.9% approved any at all. This time members were asked to evaluate individual reforms. Some results:

> "Always bad" were silver subsidies (90.2%), Guffey Coal Act (75.3%), gold policy (60.6%), taxation policies (67.7%), pump priming (61.7%), NRA (57.4%), AAA (53.6%), Wagner Labor Act (48.2%, a plurality).

> Business would "continue or revive" Hull reciprocal trade treaties (53.2%), housing and home loan acts (39.2%, a plurality).

> "Good ideas badly handled" included the anti-trust drive (49.4%), Wages and Hours Act (47.7%), PWA (47.4%), WPA (43.2%), export subsidies (43.2%).

> Adding the "continue or revive" votes to the "good ideas badly handled" votes, FORTUNE found a majority who approved in principle of at least six New Deal measures: the anti-trust drive (72.5%), Housing and Home Loan Acts (70.9%), Wages and Hours Act (68.9%), the Hull trade treaties (67.2%), PWA (55.8%) and the Wagner Act (51.2%). Yet 94.1% agreed that such measures were preventing recovery. Some reforms which the Forum had approved in principle were also high on its list of deterrents: Wagner Act (74.5%), taxation policies (66.8%), Wages and Hours Act (48.5%), anti-trust drive (40%). Outstanding for unpopularity were taxation policies: considered an important deterrent to recovery (66.8%), they were also voted "always bad" in principle (67.7%).

Altogether, FORTUNE'S voice of business shared some of Wendell Willkie's preelection huskiness. Throughout the poll Forum members pounded home collectively what they had been saying individually for years: economic resuscitation can be accomplished through a system of free enterprise. Only 14.6% believed the U. S. must plan for a permanent body of unemployed. If Management had no faith in the New Deal, it still had faith in itself.

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