Limited Objective
(See Cover) Postwar planners for whom only the sky is the limit serve a great purpose. They point to the truth that Peace on this planet is indivisible. They reflect the foresight--and the insight--that some day (100 or 1,000 years from now) the human race is likely to order its affairs as one big family, happy or quarrelsome.
But planners whose eyes dwell too much on the far horizons of things must be balanced by those who, in the American phrase, "keep their eye on the ball." The ball in this instance is postwar employment--or unemployment. And currently the keenest sight on that ball is being stimulated by the Committee for Economic Development.
C.E.D. will be a year old this week. Its chairman, Paul Gray Hoffman, 52, has been president of Studebaker Corp. for eight years, has led other mass movements in business. But none has approached the size of C.E.D.'s job. C.E.D. is working on the assumption that private industry can and must produce 40% more goods and services after the war than it did in 1940, and thereby employ at least 20% more workers than in that fat year.
The Plan. The Hoffman-C.E.D. idea is to start at the grass roots of private enterprise--with the nation's 2,000,000 employers (90% of whom employ less than, eight men)--and see what can be done about arranging for this production and this employment. If enough businessmen will do their smart part, the sum total may equal the beyond-the-horizon frontier toward which U.S. hopes are directed.
So C.E.D. has embarked on 1) a nationwide sales job (with a Field Division); 2) an ambitious study project (with a Research Division). But the most important thing about C.E.D. is that, however big it sounds, the job it has taken on is strictly confined to what business can reasonably be expected to do on its own hook. If C.E.D. achieves its limited objective--and that is still, of necessity, a big if--U.S. businessmen can truthfully say that they have done all that businessmen can do to obviate widespread unemployment after the war.
Conversely, probably the greatest danger facing C.E.D. is that, in evangelizing employers with the "business can do it'' point of view, it may mesmerize too many citizens into thinking that C.E.D.'s slogan is "business can do it alone." Paul Hoffman's job is to see to it that business does its utmost without appearing to assume responsibility for more than it can be expected to deliver.
Who is Paul Hoffman? Paul Gray Hoffman is a mild-mannered, mildly good-looking, nonsmoking, teetotaling gentleman of medium size, whose most distinctive feature is a pair of startlingly blue eyes. He is a friendly family man with a bustling, buxom wife, five sons--all in uniform today--and two daughters. He works in South Bend, Ind. and spends his meager spare time at home--in the winter in a "mildly exclusive" part of South Bend; in the summer at unpretentious Lakeside, on Lake Michigan.
His one "vice" is that he loves to gamble -- on golf (which he plays in the 80s), on bridge (which he plays even better), on poker, on almost anything. His favorite tactic is to double his bets until he wins.
Paul Hoffman is also an extremely successful businessman. He is a recognized power, well beyond the size of his company, in the rough & tumble automobile industry. What is more remarkable, he got there as a salesman, not a production man.
He is the rarest kind of supersalesman: an uncomplicated man who is genuinely deprecative of himself and sold on his product.
Paul Hoffman has always bet on winners --big winners. First, it was the automobile. As a boy, he learned about cars from a decrepit secondhand Pope-Toledo that he heckled his inventor-father into buying. When Paul quit the University of Chicago at 18, he began selling autos in Chicago by the simple but unusual method of driving one up Michigan Avenue and not returning until he had sold it.
By 1911, when he was just 20, he picked Los Angeles as a site for operations even before its citizens recognized its manifest destiny as the world's greatest automobile market. He also learned to love competition by practicing it; auto selling in those days was a murderous free-for-all. Angelenos still remember that even so noble-minded a salesman as Hoffman bought up wrecks of competing makes, regaled his customers with lurid tales about the fate of their hapless owners.
By these and other less spectacular sales methods, Paul Hoffman owned Studebaker's Los Angeles outlet by 1919. When Studebaker President Albert Russell Erskine persuaded him to move to South Bend as vice president in charge of sales in 1925, the Paul G. Hoffman Co. was doing $7,000,000 worth of business a year and Hoffman had made his million.
Industrial Statesman. At South Bend, Paul Hoffman got to be a big shot. He and Studebaker Production Manager Harold S. Vance took over the company's management, as receivers, after President Erskine's attempts to buck the Big Three in the middle-priced field and to ignore the Depression landed Studebaker in the courts. By 1935 it was President Paul Hoffman and Board Chairman Vance.
After three years of planning--and a whopping 1938 deficit--Hoffman and Vance took a chance on the lightweight Champion. It put Studebaker back on its feet. Then came a share in the biggest job in history: war contracts, including a big order for Wright airplane engines, that will skyrocket its sales to around $350,000,000 this year.
While he turned Studebaker into "the leading independent," Hoffman became a sort of industrial statesman. He fathered the Automotive Safety Foundation, became a trustee of the University of Chicago, and of little Kenyon College in Ohio, where his eldest son went to school. He became a director of Chicago's Federal Reserve Bank; he was asked to make speeches and to represent industry in Washington powwows. Early in 1942 he organized an outstandingly successful $10,000,000 United China Relief campaign and he is still chairman of U.C.R. Since last June he has also been a director of United Air Lines.
That, on the record, is Paul Hoffman: no world-shaking figure but a man who has done what he intended to do, and done it well.
During all this activity, Paul Hoffman began to discover that professors were people and that some were men of sound sense. He also began to worry about how to free U.S. politics from pressure groups, including the monopoly-minded business-as-usual bloc on his side of the fence.
To get a fill-in on these phenomena, he and his friend, University of Chicago's Vice President William Benton (now C.E.D.'s vice chairman), had planned a meet-the-professors business round table just before Pearl Harbor stopped such extracurricular activities.
As war news brightened and postwar planning became respectable, Hoffman's and Benton's plans merged with those of Secretary of Commerce Jesse Jones's Business Advisory Council. Jones and B.A.C. had also begun to worry about industry's place in the peace. Hoffman was already vice chairman of B.A.C. When C.E.D. was set up last September, he was almost automatically head man.
C.E.D.'s Program. Paul Hoffman likes to tell people that he is "a simple-minded man with simple objectives." Baldly stated, C.E.D.'s objective is simple: In 1940 there were 49,000,000 people in the U.S. who were gainfully engaged--in & out of Government--in turning out $98 billions of goods and services. Today there are some 62,000,000 and the gross national product is around $150 billions a year. After the war, even assuming that the Services, Government and large-scale public works can employ as many as 8,000,000 men (and that some 4,000,000 men & women stop working), U.S. private industry, including agriculture, will have to find useful jobs for some 50,000,000 men & women, to avoid "intolerable" unemployment. The postwar breadline may run up to 15,000,000 if the U.S. merely returns to where it was in 1940.
Says Hoffman: to the extent that U.S. industry does not achieve this goal (which requires a 40% increase in gross output over 1940), the U.S. public will rightfully insist that the U.S. Government achieve it--"expansion is the one idea we have to sell America." He also says that "when you get a businessman in a tight enough corner, he reluctantly starts thinking his way out of it." Thus C.E.D. was set up with a Field Division to help each U.S. employer think about how to expand his own business.
The Research Division was formed to help him think about the "climate" favorable to the expansion of U.S. business as a whole.
The Field Division, under Marion Folsom, treasurer of Eastman Kodak, has a relatively short-term objective: to get more people more jobs fast when war ends. By last week it had twelve regional chairmen, 130 district chairmen and 667 community chairmen (v. a final goal of 1,000). Though autonomous, each chairman was supplied with a voluminous "package of know-how" from C.E.D.: to show individual companies how to "plan boldly."
The Research Division's job is tougher. It must explore the whole spectrum of postwar economic problems--and also find a way to persuade the business community to put its conclusions to good use.* Its agenda ranges from the immediate problems of conversion to peace to the long-term question of business incentives.
Research Committee head is Ralph Flanders, who heads Vermont's tool-building Jones & Lamson Co. Chief Research Adviser is Harvard's top-drawer Economist Sumner Slichter, famed for his conventional ideas on Government spending (as contrasted with Harvard's other renowned economist, Spender Alvin Hansen).
But most of the actual work will fall on C.E.D.'s research director, Chicago's tall, suave Theodore Otte Yntema (whose salary is $20,000 a year) and on his assistants : Gardiner Means, of the now-defunct National Resources Planning Board, and Howard Myers, ex-economist for the WPA.
Ted Yntema is best known to business men for the price studies he prepared for U.S. Steel during the TNEC investigation, which proved -- at least to Big Steel's satis faction -- that the industry's pricing poli cies were about right. His contribution to C.E.D. cannot yet be judged: the Division's first studies come out this fall.
C.E.D.'s bylaws provide that they may be published (though not at C.E.D. expense) even if C.E.D.'s board disagrees with them. Research has been put down for 40% of the $1,000,000 that C.E.D. is trying to collect from businessmen and corporations for the next sixteen months.
The Dangers. Cynics have already begun to attack C.E.D. and Paul Hoffman.
They say:
> C.E.D. has made itself vulnerable to political attack because 1) its origin links it too closely to Jesse Jones; 2) its grassroots autonomy has led to the appointment of some regional and community chairmen hitherto known as Old Dealers, Republican and Democratic. It is charged that some bitter Roosevelt-hating big shots are more interested in C.E.D. as a potential political weapon than as a potential builder of employment.
> Even C.E.D.'s pet community committees have already showed up some difficulties in the Hoffman approach. Peoria, C.E.D.'s first test city, made a fine case history statistically; its businessmen made concrete plans to employ 30% more people after the war than they did in 1940. But when it came to publicizing their survey, all individual company plans had to be left out: they were trade secrets.
> So far, the only concrete help C.E.D. has advanced to the little businessman--whose main concern is bound to be next week's payroll--is advice and a plan for a research brochure. In his less evangelistic moments, Hoffman admits 1) that he is not worrying about the 400-500 really big businesses: he thinks they can take care of themselves; 2) that the very small enterpriser will be hard to reach in any concrete way. Yet the future of U.S. employment is almost certain to be made by these extremes of enterprise.
The Hopes. The great hope for Paul Hoffman's C.E.D. is simply stated: to the extent that businessmen create their own economic environment, a national, expansionist, company-by-company program can do incalculable good.
At the least, such a program can measurably shorten the crucial time lag between war and peace production, by making a sizable number of employers blueprint their conversion to peace in advance.
At the most, C.E.D. could itself affect the postwar business "climate" by making business believe in expansion and competition, and act upon that belief. Every individual business is a cell in the body economic. Only if each cell is active and healthy can the body be healthy. This is the condition that C.E.D. is trying to create.
But the body cannot be healthy, no matter how active its cells, if the organization and functions of the whole are defective. And organization and function depend on many things beyond cellular health: the Government's economic and political policies, the people's own disposition towards spending and taxation, the nation's trade relations with the rest of the world.
Over these neither C.E.D. nor the individual business has any control. But C.E.D. hopes that its Research Division will propose such reasonable measures that the Government and the public will make it possible for business to carry out its good intentions.
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