Man with a Puzzle

(See Cover) "Do you know the story of the centipede with gout?" asked Joe Dodge. "Well, this poor centipede limped painfully for miles to consult the philosopher of the jungle, the monkey. After taking thought, the philosopher gave his solution: 'If you became a mouse and had only four legs, you would be 25 times better off.' The centipede said: 'That's a good idea. How do I get to be a mouse?' The monkey shook his head. 'I can't tell you that.' he said. 'I only make policy.'

Joseph Morrell Dodge, no philosopher --but a hardheaded Detroit banker--knows that President Eisenhower did not bring him back to Washington five weeks ago just to "make policy." As coordinator of the foreign economic activities of the U.S., Dodge is supposed to bring about a result almost as difficult and far more inspiring than turning a centipede into a mouse. His objective: to bind together the hundreds of scattered and often contradictory foreign economic activities of the U.S. into an intelligible whole that will make reality of the U.S. economic leadership in the free world.

The Export of Principles. The decade of handouts--UNRRA, ECA, FOA--is ending, not because Uncle Sam has reverted to Uncle Shylock but because handouts are no longer pertinent to the world's need. The need now is for installing around the world the mainsprings--not merely the products--of U.S. prosperity. These mainsprings are mostly principles: reasonably stable money, reasonably free play of the price mechanism, unrestricted movement of money, goods and labor within a competitive market large enough to support and encourage mass production. If other countries absorbed these principles, their economic progress might begin to match that of the U.S., which is still moving ahead much faster than other nations, still widening the frustrating and envy-breeding gap that makes the success of U.S. capitalism a liability as well as an asset in the Cold War.

But principles, especially economic principles, are much better taught by practice than by preachment. The failure of the U.S. to develop a world economic policy is twofold: 1) it has not enunciated clearly and in relation to world problems the principles of its own success and 2) it has not realized these principles in concrete actions of international business. The failure in practice has been especially severe. Looked at from inside, the U.S. economy clearly expresses the lessons of private initiative and free competitive markets. Looked at from outside, the U.S. presents a contrary and dangerously misleading example, e.g., tariff walls, governmental--as distinguished from private--exports. The U.S. tariff walls and quotas on farm products seem to teach economic restriction; the U.S. aid programs seem to teach socialized international business. These are precisely what the U.S. does not stand for, precisely the opposite of what the U.S. has to tell the world about the road to prosperity.

Capitalism in Chains. In other countries, restrictions on international trade are associated with internal restrictions. The non-Communist world is not capitalist, or rather capitalism is asked to function in chains that stultify progress. Communism looks better than it should because capitalism is forced to show its least inspiring side and to bear the onus for the shortcomings of socialism.

Capitalism gets the blame for unemployment in Italy; few remember that only a quarter of the Italian productive system (other than agriculture) is privately run. Capitalism gets the blame for the near stagnation of France, but in France two-fifths of all new industrial capital is provided by the state. Is the wretched condition of French housing the fault of capitalism as a system--or is it more closely connected with anti-capitalist restrictions, e.g., 40 years of rent control and the fact that government red tape slows down construction to the point where it takes 2 1/2 years to build a house (TIME, Jan. 10)?

Obviously, the U.S. cannot command France and Italy to lift internal restrictions on capital. But the U.S. ought to be able to encourage a climate of economic freedom by lowering barriers to international trade--beginning with its own barriers. Freer trade would make possible the freer flow of U.S. capital for the development of other countries and the export of American business know-how.

Most Americans fail to realize how U.S. foreign trade and foreign investment have virtually stood still while every other side of the economy was expanding. The dollar trade and investment figures have gone up--but only because the dollar is inflated. Thirty-five years ago U.S. foreign trade amounted to 15% of the gross national product; today it is 7%. Last year U.S. investors added about $2 billion to their foreign holdings. Total U.S. foreign investment is only $23 billion, and more than half of that is in the Western Hemisphere.

Individual investors cannot be blamed. The climate has not been favorable for trade or investment. The climate will not change unless the U.S. changes it.

Man-Made Barriers. President Eisenhower is determined to shatter this bad example and to express by preachment and by practice the true meaning of the U.S. economy. In his State of the Union Message and in last week's foreign-trade message he achieved the strongest, clearest official statement of the economic principles that has been made in the postwar period. Said the President:

"For every country in the free world, economic strength is dependent upon high levels of economic activity internally and high levels of international trade. No nation can be economically self-sufficient. Nations must buy from other nations, and in order to pay for what they buy they must sell. It is essential for the security of the United States and the rest of the free world that the United States take the leadership in promoting the achievement of those high levels of trade that will bring to all the economic strength upon which the freedom and security of all depends. Those high levels of trade can be promoted by the specific measures with respect to trade barriers recommended in this message, by the greater flow of capital among nations of the free world, by convertibility of currencies, by an expanded interchange of technical counsel, and by an increase in international travel . . ."

After these bold words the President outlined a legislative program that he described as "gradual and moderate." It was perhaps too gradual and too moderate to catch the attention or to fire the imagination of the world or bring home the fact that the U.S. has at last em barked on a mission of international eco nomic leadership.

Feet-on-the-Ground Man. The President's modest program is inhibited by a difficult Washington situation, in the middle of which he has placed Coordinator Dodge. The situation: Harold Stassen's Foreign Operations Administration represents a projection of the put-out-the-fire, fill-the-hungry-bellies, shovel-out-the-money policies of President Truman's Administration.

Good and necessary as these programs were in their day, they no more symbolize the basic U.S. economic lesson than the WPA of the 1930s symbolized it. Other nations, including the recipients of the grants, become uneasy in the client's role. Congress is restive at what it considers a waste of taxpayers' money. Treasury Secretary George Humphrey is the leader of the forces inside the Administration that oppose any foreign economic action unless they are dead sure the U.S. will get its money's worth, either in dollar return or political advantage. Stassen has a positive--but outdated--program; Humphrey's approach is sound, inevitable--but negative in a situation that cries for a builder. Humphrey, whose function is to watch the dollars, cannot be expected to develop the program. Secretary of State Dulles understands the desperate need for a world economic policy but is too busy with political policy to do more than inspire. The purely congressional aspect of the policy is in the capable hands of Clarence Randall, who last year developed the program on which Eisenhower's new effort is based.

Between and beyond the responsibilities of Stassen, Humphrey, Dulles and Randall lies a vast area of action where the main outlines of a U.S. economic policy must be hammered out--by practical action, not mere words. As to words, Eisenhower's of last week are good enough if they are given concrete meaning in feet-on-the-ground operations. That is the area where Joe Dodge operates as chairman of the Council on Foreign Economic Policy, which includes Stassen and Secretaries Dulles, Humphrey, Benson and Weeks. Joe Dodge is very much of a feet-on-the-ground man.

In a speech to fellow bankers he said: "We are learning it is not the ideas or ideals that are at fault. It is the pitfalls of practice and application that tend to frustrate our efforts and add to our costs."

Although he has performed brilliantly in several high public posts, Joe Dodge, the man on whom much of the U.S. future now depends, is little known to the U.S. public. There is a reason for this public ignorance. Dodge admits "a congenital dislike to talk about myself. I have a horror of people who make a long putt on Sunday and talk about it for the next two weeks." Mom Knew Best. The first-born of Joseph Cheesman Dodge, a poster artist, and his piano-playing wife Gertrude was brought up in an eight-room house on Detroit's middle-class Kirby Street. Life was pleasant and easygoing. In the evenings Joe and his brother and sister liked to gather around their mother's piano for a family sing, with father Dodge strumming a banjo. Sundays, little Joe sang soprano in the St. Andrew's (Episcopal) choir until his voice changed.

Their father often took Joe and his brother on hiking and camping trips, which inspired Joe with one of his earliest ambitions: to be a forest ranger. But Mom knew better. Said she: "I'm sure Joseph is going to be a banker. He is the only boy of his age who doesn't like to get his hands dirty." After graduation from Central High School and a false start as a glue salesman, Joe began his banking career as a messenger boy at Detroit's Central Savings Bank. Soon he was a bookkeeper and had taught himself accounting on the side. At 20, he became Michigan's youngest state bank examiner, and did so well that Banking Commissioner Edward Doyle, who had not met him, summoned Dodge to Lansing. "Good God, I thought you were a man!" the commissioner exclaimed. Nevertheless, he appointed the baby-faced Dodge as his assistant.

In 1916 Dodge married Julia Jane Jeffers of Charlotte, Mich, and went to live in Detroit, where James Couzens, Michigan's banker-Senator, had given Dodge a bank job. Before long, Dodge's ex-boss, Banking Commissioner Doyle, tapped him to help his son, Tom Doyle, run the nation's largest Dodge auto agency (Joe is no kin to the car-making family).

While Dodge was selling Dodges, he decided that he needed some exercise. He took up boxing with a vengeance, made himself a skilled pugilist. One day a spare-parts dealer cussed out Auto Salesman Dodge, whose secretary dutifully recorded in her notebook what ensued: "Mr. Dodge sought him out to question him about the statements. The dealer made a wrong move and was suddenly flat on his back." Years later, Dodge's boxing coach remarked to a teller in the Detroit Bank that the bank's president "might have made something of himself if he had stuck to boxing."

Combing out Geisha Girls. In Depression's depth, Dodge abruptly told Tom Doyle: "Tom, there isn't enough money coming in to keep both of us. I'm leaving." Dodge's path led back to banking, this time to the vice presidency of Detroit's First National. A few months later the nation's banking system, and with it the First National, imploded. But by year's end Joe Dodge had spawned a new bank from the wreckage and was named president of another.

President Dodge once turned down a prominent businessman for a small loan when he learned that the man held some stock shares on margin. "Anyone who buys on margin is a poor financial risk," said Dodge, thus losing the loan applicant's big corporate account. Nevertheless, Dodge multiplied the Detroit Bank's assets tenfold and attracted 380,000 accounts. "We run a kind of basement dry-goods business," he explained.

World War II found Banker Dodge renegotiating Army Air Forces contracts in the Midwest. Soon he was heading the Pentagon's topmost War Contracts Board, which in four years handled $190 billion worth of business, recovered $11 billion for the taxpayers. From the Pentagon, Dodge was taken by General Lucius Clay to Germany as a financial expert. To get war-torn Germany off its cigarette economy, Dodge proposed a 90% currency reduction (one mark for ten), coupled with capital levies on real property to even out the burden of defeat. "Imagine a Detroit banker advocating a capital levy," gulped an aghast colleague.

In 1949, as General Douglas MacArthur's financial troubleshooter, Joe Dodge saved Japan from runaway inflation by imposing a regimen of austerity. He combed the national budget, once caught Japanese officials charging geisha girls to "miscellaneous" on their expense accounts. Dodge gave Japan its first balanced budget in 19 years. For his work of stabilizing the Japanese yen, his most valued plaudit came from a Japanese Cabinet minister, who reported: "The thieves are now stealing money instead of goods."

Dodge's next call to do some budget doctoring came from Dwight Eisenhower, who had met him through Lucius Clay. On election night 1952, as returns pouring into Manhattan's Commodore Hotel spelled victory, Dodge sat placidly spooning up yoghurt. Presently Ike cornered Dodge and made him his first appointee. Budget Director Dodge overlooked no source of potential revenue, however minor. He raised rents in Government housing and admissions to national parks, told agencies to charge for supplying copies of records. He would replace no Government car unless it had six years and 60,000 miles of service, and he never replaced his own official car. His idea was to get a medium-priced make, at no cost to taxpayers, from among those legally seized from dope peddlers. But there was a flaw in his calculation: the dope peddlers' cars were all Cadillacs and Chryslers.

Box for Crises. "When Joe came back to Detroit last spring," says patient Julia Dodge, "I thought we might have some social life again, but I just couldn't plan a thing. Almost every night he brings papers home with him . . . We used to play bridge, but haven't had a game for four or five years." Dodge still has three hobbies that take his mind off money matters: photography, supervising his gardener on Sunday mornings, and playing with his three grandchildren, the offspring of his artist son.

In Dodge's Old State Building office the "In" box is not on his desk, but on his secretary's. When he walks in he picks up one paper, works on it, and then goes to the outer office for another. "One crisis at a time," is his motto. Already the "In" box is stacked high with crises.

In one way, Dodge did not ask for his present troubles, but in another way he did. He says: "Too many people are always trying to be good at something they aren't doing. I never set my cap for another job." The last job that sought him out--the one he has now--was created by Dodge, who expected someone else to fill it. Last fall he learned from a British official that Churchill's government had a Cabinet committee to coordinate foreign economic activity. Dodge recommended the same setup for Washington. President Eisenhower looked at the job description and decided that it fitted Joe Dodge.

Dodge's friends, knowing his dislike of life in Washington, were surprised when he accepted. How did the President persuade him? "The boss has ways of doing that," says a Cabinet member who should know. "Maybe he smiled."

On the wall of Dwight Eisenhower's bedroom is a painting of a Chinese puzzle by Dodge's son, Joseph Jeffers Dodge, curator of the Hyde collection of art at Glens Falls, N.Y. The painting, a gift from Banker Dodge to Ike, represents the friendship between two men of vastly dissimilar backgrounds and personalities. It may also remind the President that Dodge will need all the help he can get in solving one of Washington's most difficult puzzles: how to make a foreign economic policy that is both exciting and practical, one that will imbue the free world with a sense of confident expansion and at the same time teach, in terms practical enough for Banker Dodge, the hard, useful lessons of U.S. business practice.

Last week Joe Dodge read an article with a significant title: "Make Your Money Go Further This Year." The taxpayer's military-expense dollar and his foreign-aid dollar will go a lot further if Joe Dodge finds and applies the means of stimulating economic freedom.

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