First Among Equals
Novus Ordo Seclorum.
When the Founding Fathers set these words--A New Order of the Ages--in the Great Seal of the United States, they had in mind a social order that would guarantee the individual political and personal freedom under law. They only dimly foresaw that they were also establishing a new economic order that would break the bonds of scarcity that had bound men's actions, thoughts, hopes and dreams in earlier times. In 1955 this new order of the world--the free, competitive, expanding American economy--not only showed the world the way to a plenty undreamed of only a few years ago, it was also the keystone of the defense of the West against the Communist world. Because the U.S. was strong, the West was strong --and more prosperous than it had ever been.
"Our prosperity could never exist," said Sir Norman Kipping, director general of the Federation of British Industries, "without a prospering United States."
"Let's face it," said Wilhelm Vorwig, general manager of the German Auto mobile Manufacturers' Association, "our present achievements are based on the copying of the American economy."
Because of the success of the American economic system, the U.S. rolled through 1955 in two-toned splendor to an alltime crest of prosperity, heralded around the world. Much of this prosperity was directly attributable to the manufacture and sale of that quintessential American product, the automobile. Some 8,000,000 of them were produced and sold, and a good half of them were made and marketed by General Motors under the direction of President Harlow Herbert Curtice--the Man of the Year.
Yet this production alone would not make Harlow Herbert Curtice, 62, the Man of the Year. Nor would the fact that he is president of the world's biggest manufacturing corporation--and the first president of a corporation to make more than $1 billion in net profits in a year. Curtice is not the Man of 1955 because these phenomenal figures measure him off as first among scores of equals whose skill, daring and foresight are forever opening new frontiers for the expanding American economy by granting millions to colleges, making new toasters that pop up twice as fast, or planning satellites to circle the earth. Harlow Curtice is the Man of 1955 because, in a job that required it, he has assumed the responsibility of leadership for American business. In his words, "General Motors must always lead."
How does Curtice lead?
Bet a Billion. In the early days of 1954, there was gloomy talk of a slowing --and possible end--to the postwar boom. Though the economy was still strong, business was falling off and the total of jobless was growing, along with uncertainty about the future. In this critical period, "Red" Curtice stood up before 500 of the nation's top businessmen and industrialists and gave his own pronouncement on the future. General Motors, he said, would spend $1 billion to expand its plants for the increase in auto sales to come. Screamed the headlines: G.M. BETS BILLION: NO SLUMP.
Curtice was aware that the U.S., with its growing population, growing bank accounts, growing suburbs and decentralized industry, could well afford to buy more new cars than it ever had before--if everyone had confidence that the boom would continue. As head of G.M., with more income and more resources at his command than most sovereign nations, he was in the best position to do something about confidence. As a result of his billion-dollar bet, confidence spread throughout G.M.'s own sizable world. The 514,000 employees in 119 plants in 65 cities in 19 states quit hoarding for layoffs and began buying--among other things, autos. By midyear most of the 17,000 Chevrolet, Pontiac, Buick, Oldsmobile and Cadillac dealers in the U.S. were selling more new and used cars than they ever had before. Some 21,000 independent G.M. suppliers had to step up their buying of steel, copper, aluminum and other materials. Ford Motor Co., with $500 million already ticketed for expansion, added $625 million last spring to expand its plants. Then Chrysler added another billion. Meanwhile, Curtice had upped his own expansion spending to $2 billion. On all sides, other businessmen also raised their own sights, putting more dollars into pockets to spend, and sending the economy booming through 1955's record year. Says Curtice: "People had money and credit. I think I pushed them off the fence to the right side."
Time for Decisions. The Russians, of course, did not like Curtice's kind of confidence, but they finally gave up their repeated predictions of an early collapse of the U.S. economy and, for a brief period, even showed signs of thawing the cold war. Because that brief thaw took place while U.S. military and economic strength remained steadfast, 1955 was not--as many thought it might be--a Year of Decision. It was, rather, a Year of Decisions, as the U.S. turned from preoccupation with crisis to get on with the business of making America work. Items:
P: In literature. Novelist Herman Wouk upset the cliches by letting Marjorie Morningstar discover the difference between modernist sophistry and durable values like home, faith and family. Marjorie Morningstar was no masterpiece, but she indicated that American intellectuals could find their voices after years of what the late Russell Davenport called "this inability to explain to others our most cherished goals."
P: In giving, Henry Ford II announced the Ford Foundation's grant of $500 million to privately supported colleges, universities (for increases in teachers' salaries), nonprofit hospitals and medical schools; including Ford's record-breaker, private foundations, prospering with business, passed along nearly a billion dollars in grants during 1955.
P: In labor, George Meany, the plumber who has never been on strike, became president of the new, 15-million-member American Federation of Labor and Congress of Industrial Organizations. Among his first acts: a friendly speech to the National Association of Manufacturers, and a suggestion that unions invest their millions in housing projects. Among his reasons: union members are now in such high income brackets that they can no longer qualify for Government-subsidized low-rent housing.
P: In law, Chief Justice Earl Warren read out the Supreme Court's unanimous order calling for desegregation of public schools "with all deliberate speed"--a classic application of the unchanging principles of constitutional law to ever-changing, everyday U.S. life.
But the decisions that men saw changing the skylines of the cities, turning poor farm land into prosperous factories (and parking lots), bringing new credit and buying power into backward areas--these were the decisions of American businessmen. (In fact, while the Supreme Court attacked segregation in schools, businessmen attacked it in industry by: 1) raising living standards of Southern Negroes, and 2) teaching whites and Negroes to work side by side in new Southern factories.) All through the year, industry exploded to catch up with the twin demands of the mid-20th century: a rapidly rising standard of living and a long-range increase in population.
Everywhere that industry grew, the managers studied how to pull all the far-flung parts together and make them work more efficiently--so that, in effect, shareholders, executives and workmen would get increasing return from an hour's productive work. And what they studied hardest was the amazing efficiency of General Motors and how it had achieved it.
Shares for All. Like most of today's great corporations, G.M. achieved it because giants of old had laid the foundations with big, visionary ideas. The man who founded General Motors was William C. Durant, an ex-carriage, ex-bicycle, ex-wagon maker who first hit the jackpot by backing an auto designer named David Buick. In 1905, Billy Durant capitalized Buick for a staggering $10 million, three years later tried to corner the auto manufacturing business. (Henry Ford agreed to sell for $8,000,000, but at the last minute Durant's bankers backed away from the $2,000,000 down payment.) Durant settled instead, in 1908, for a combine that included Buick, Oldsmobile, Cadillac, Northway and Oakland, and called it the General Motors Co. Detroit called it "Durant's folly" until, in 1910, G.M. sold $34 million worth of automobiles and netted $10.5 million (since it was before taxes, literally).
When Durant's optimistic expansions and mergers ran him out of cash, the bankers began talking of the "saturation point" in the auto market, and moved in on him. After Durant went out of G.M., he drew on his enormous prestige with mechanics and investors alike, to found Chevrolet as part of a plan to regain control of G.M. In little more than a year, Chevrolet was valued at a fabulous $94 million. He offered a bargain trade of five shares of Chevrolet for one of G.M., while he also bought G.M. stock (G.M. stock went from $82 to a high of $558 within a year). Thus he gained control of G.M. and added Chevrolet to the corporation. Meanwhile, the Du Ponts had become large G.M. stockholders, and when Durant went under in the 1920 crash (trying to bolster the price of G.M. stock), they bought him out. *
Redheaded Energy. Billy Durant endowed G.M. with optimism (1921 was G.M.'s only deficit year), a reputation for good automobiles, a flair for sales, and a spirit of unsophisticated boldness and high adventure that is still the hallmark of Detroit. The man who cast G.M. in its present mold is Alfred P. Sloan Jr., an engineer by training and an organizational genius by instinct. He became president five years after his company (United Motors) was merged with G.M. With him he brought a new concept of decentralized organization that is probably as significant to the science of corporation management today as the U.S. Federal system is to political life. Sloan bred independence and intramural competition, handsomely rewarded hard work and the inquiring spirit. He welded all these diverse talents into a powerful management team that was designed to develop leaders just as engineers develop cars. As G.M.'s eleventh president, Harlow Curtice is as surely a product of General Motors as Dwight Eisenhower is of the U.S. Army.
Curtice brought little but redheaded energy with him when, with only a business-school education, he landed a job in Flint, Mich, as a bookkeeper for the AC Spark Plug Division of G.M. in 1914. His energetic curiosity led him behind the ledger down into the plant, to find out what his figures meant in terms of men and production. In a year he knew AC so well that, at 21, he was made comptroller. At 36 he was AC's president and one of G.M.'s junior-grade hot prospects. Put in charge of ailing Buick, he pulled the division out of a mid-depression slump, ran it through the war years. It was the fourth-biggest-selling car when he was boosted to a G.M. vice presidency. In 1948, as the postwar market got rolling, G.M. President Charles Wilson made Curtice an executive vice president. Three years ago, when Charlie Wilson went to Washington to be Secretary of Defense, Red Curtice, at 59, became president. His current salary, plus bonuses: more than $800,000 a year.
"The rough process of elimination at G.M.," says a knowing competitor, "absolutely prevents a phony from getting that job."
Legitimate Prince. Curtice would be the first to snort at the suggestion that he is a throwback to Billy Durant--because his Sloan-bred sense of organization rebels at the memory of Durant's wild and woolly ways. But Curtice, the corporate statesman, and Durant, the irrepressible, share an uncanny instinct when it comes to the average American's feelings about automobiles--an even sharper sense than the engineering-minded presidents between the two who developed the annual model change and the customer research system. Curtice is generally typed as a supersalesman, but he is much more: he is the legitimate prince of the auto buyers, in close communion with his subjects, the size of their garages, their chance for advancement (say, from Chevrolet to Pontiac), their bank accounts, and the exact degree of new styling, e.g., the panoramic windshield required to make them accidentally stop by a dealer to see how much he might give on the old car.
Red Curtice loses some of the friendly crinkles around his eyes when he settles down between his two desks to run the corporation from the 14th floor of Detroit's General Motors Building. As he scans the reports from G.M.'s earth-girdling ventures in autos, Frigidaires, diesel locomotives, radios and earthmovers, he becomes again the eagle-sharp comptroller who can tell from figures how men and machines are doing. His predecessor, rumpled Engineer Charlie Wilson, used to gab cheerfully with friends, and occasionally gave friendly advice to some of his lesser competitors, such as Nash and Kaiser. Curtice rarely finds time for such activity, a fact that has not endeared him to his fellow corporation executives outside of G.M. For example, Curtice is a member of the Department of Commerce's Business Advisory Council but hardly ever attends the meetings.
But inside G.M., Curtice's brisk efficiency is genuinely respected. Wilson used to keep the staff (including Executive Vice President Curtice) waiting around for hours while he made decisions. But Curtice is swift in decision and rarely wrong. If executives do not expect compassionate sympathy, they do expect--and get--justice. One result: there is little infighting in G.M.'s executive suites. Says Executive Vice President Albert Bradley: "We are all living in glass houses, and we go to great lengths to play fair with each other."
Fast Company. No G.M. president could ever be a dictator, even if he had the inclination, because the unwritten constitution of G.M. has its full quota of checks and balances. Big decisions at the top are made in committee, and the president must sell the top committees (of which he is a member) on his policies before he can execute them. Curtice had to sell the powerful Operations and Financial Policy Committees (which report directly to the board) before he could bet his big billion in January 1954. Says a fellow committeeman: "He prepares his presentation for the committees just as if he expects 100% opposition."
The committee system can move fast when it has to: for example, after the laments of a few G.M. dealers were widely publicized in the hearings before Wyoming's Senator Joseph C. O'Mahoney last month (TIME, Dec. 12), Curtice and the Operations Policy Committee went into session one Sunday, came out that evening with a far-reaching decision to extend all G.M. dealers' contracts from one to five years. This also indicated how the committee system can put pressure on Curtice. He thought that the complaints of dealers were exaggerated, that he did not have to pay much attention to them. But other top men thought that Curtice was wrong, and they made no bones about saying so.
The G.M. constitution reserves considerable power to the semisovereign, ever-competitive divisions. Curtice could probably fire a divisional vice president outright if he wanted to act out a Hollywood version of the tycoon, but he would not. The unwritten law demands that such a grave personal decision be discussed up and down the committees. A divisional vice president with the prestige of Buick's Ivan Wiles spends a huge operating budget as he sees fit, and goes to the top only when he thinks his actions might affect the other divisions, or when he wants new capital.
Fast Recovery. Only in emergencies does Curtice move in and take over. Soon after he became president, he stepped in to straighten out the Allison Division (aircraft engines), which was in trouble because it had been afraid to invest money in research and development unless armed forces orders were assured. By contrast, Competitor Pratt & Whitney had sunk millions in engine development.
In 1953 G.M.'s Engines Vice President Cyrus Osborn told Curtice that there were three alternatives for Allison: 1) continue as is, "which is ridiculous"; 2) get out of the business entirely; or 3) make the moves necessary to ensure leadership. Curtice said that he would "only be satisfied with leadership." Together Curtice and Osborn spent three months visiting military and airframe people, then laid out a $74 million investment to produce "a whole new family of aircraft engines."
Last week Curtice and Eastern Air Lines Chairman Eddie Rickenbacker jointly announced that Eastern's 40 new Lockheed Electra airliners, scheduled for service in 1958, will be powered by $26 million worth of Allison turboprop engines.
Since Curtice's drive for leadership is as relentless as a turnbuckle, his success has naturally brought some new strains for G.M. In the furiously competitive race for auto sales, relations are more tense between G.M. and its major competitor, Ford, than ever before. Ford executives, who used to meet G.M. friends for a Sunday round of golf, now only nod perfunctorily when they bump into the G.M. crowd at the Bloomfield Hills Country Club. G.M. blames Ford for giving in last summer to the United Automobile Workers' Walter Reuther on the guaranteed annual wage. Fordmen blame G.M. for keeping silent while Reuther turned on Ford first.
Stop Sign. Curtice's problems in Washington are tougher to deal with. With annual sales ($13 billion) almost twice as large as those of the second-largest corporation (Standard Oil Co. of N.J.), G.M. is an ever-tempting political target. Moreover, some of Eisenhower's economic advisers are complaining about the rapid increase in consumer credit (up $4 billion in the first nine months of 1955, to $34.3 billion), and at the automobile industry's $14 billion share of it (although repayments are remarkably regular and repossessions low). Because Defense Secretary Wilson is an ex-G.M. man, G.O.P. politicians have tactfully suggested that he taper off on G.M.'s defense contracts. They are now down from 19% of G.M.'s business in 1953 to less than 10% in 1955, although Pentagon purchasing agents give G.M. topmost marks for quick decisions and on-schedule delivery.
Over in the Justice Department's Antitrust Division, the trustbusters keep a close watch on Curtice. The Administration tactfully told him to settle for no more than 50% of the auto market and keep out of trouble.
Curtice will not--and for reasons that are fundamental to the vitality of any large, competitive corporation. "If you stand still," says G.M. Chairman Sloan, now 80, "you go behind." Competition demands efficiency, and the whole efficient, smooth-running corporation could soon turn sour, as the Allison Division did, if it were forced to slow down to an artificial pace. Profits, in a modern corporation, have a function beyond providing earned surplus and dividends (and taxes). Under G.M.'s cost-accounting system, they are the key indicator of worth of divisional management, worth of product, personnel policy and planning.
Curtice refuses to talk in percentages of the car market--talks instead in terms of the expanding gross national product. "We have 3% of the G.N.P. now, and we won't have any less than 3% in 1956," he says. Translating into automobile figures, he predicts 1956 U.S. auto production at 7,060,000 (plus 1,190,000 trucks) --down about a million from 1955. G.M.'s share, if it holds its own, will be 3,500,000 cars.
Dawn Patrol. Curtice's genial competitor, Chrysler President Lester Lum ("Tex") Colbert, thinks he works about as hard as any man should, trying to get Chrysler back to 20% of the automobile market. "But most every Monday morning when I'm shaving out home in Bloomfield Hills," says Colbert, "I hear old Red Curtice's airplane flying in from Flint. And every Friday night when I'm home and tired and walking my dog, I hear Red Curtice flying home again." When he is in Michigan, Curtice spends most of his week nights not in his home in Flint but in the nine-room suite in the G.M. Building. On top of this, he is often on the road for days at a time. During the course of a year he probably glad-hands more people than the President of the U.S. But he likes it all--the headaches, the demanding hours, and the vast rewards.
In many ways he lives a life that is beyond the comprehension of most of his car owners. Platoons of subordinates jump when he twitches. Garages filled with gleaming limousines and beaming chauffeurs stand ready to transport him wherever he desires. A private 18-plane air force of multi-engined, red-white-and-blue airplanes is at his disposal. Private secretaries and public-relations men take care of bothersome detail, see to it that Cadillacs, hotel suites, restaurant tables and theater seats are there when and where he wants them. High-salaried assistants smooth his path, greet him wherever he arrives, order his drinks, fetch his newspapers.
Beneath all the glitter, Curtice is regarded by friends as essentially still the small-town boy who came out of Petrieville, Mich. He likes to watch the fights and The $64,000 Question on television, read the papers, hunt, watch the Detroit Tigers (the night games only). He puffs casually on Luckies, likes his Scotch and soda strong and unstirred. His idea of Saturday fun in Flint is a run through the Buick plant in the morning and a poker game with his City Club cronies in the afternoon. He lives in a relatively modest red brick corner house, with a three-car garage. In the garage: his wife's Buick Roadmaster convertible, daughter Dorothy Anne's Buick Century convertible, and his personal, flashy Buick Skylark convertible, now being hopped up with a new experimental engine and transmission.
Safe at Home. Flint is the world's most General Motorized city, and it says more about the state of the nation today than volumes of statistics. To begin with, the tricked-up Buick of the highest-salaried man in the U.S. is hardly noticeable among the bright new Buicks and Chevrolets along Flint's main streets. Flint is the home of the main Buick and Chevrolet plants, the Fisher Body, AC Spark Plug and Ternstedt Divisions (G.M. auto hardware).
There is a job in the Flint area for virtually anyone who wants one. Of a work force of 135,400, some 86,700 are employed by G.M. The 83,000 hourly employees draw wages averaging $109 a week--with some skilled oldtimers at the forge plants earning $10,000 a year. Flint has an automobile for every 2.8 persons, v. a nationwide average of one for every 3.7. Nearly 80% of the residents own their own homes, and 80% of the homes have television (even though 15-or 20-ft. aerials must be stuck on rooftops to pick up Detroit). Spending is heavy, but savings accounts are going up too. "People have got money," says President E. S. Mulholland of Flint's largest department store. "They feel safe."
Sitdown Strike. In 1937 much of Flint was sprayed by tear gas as the U.A.W. staged its first major sitdown strike, against G.M. Today most people agree that the U.A.W. raised Flint's level of prosperity by getting its members a bigger share of G.M.'s increasing income, just as G.M. managers raised the level by continuing to increase the income.
Management and employees are a little proud of the fact that G.M. was the first automaker to accept the labor-dispute umpire system (in 1940), first to hitch wages to the cost-of-living index, first to link wage increases to productivity. Last year G.M. lost an average (nationwide) of only three minutes in labor troubles for each wage earner. Today's happier version of the sitdown in Flint occurs when local U.A.W. leaders, G.M. brass and civic bigwigs sit down at a luncheon meeting to plot the Community Chest campaign.
Flint's current No. 1 campaign is culture. The city is building housing projects, new churches, school buildings and a huge $5,000,000 civic center. In addition the Flint Junior College is expanding to become the nucleus of the new Flint campus of the University of Michigan, which will open next September. One of its main structures: the Harlow H. Curtice Academic Building. Flint's adult education program has an enrollment of 40,000 people, who study everything from classical languages to the fine art of tying trout flies. The Flint Community Music Association comprises 42 independent groups, including a symphony orchestra, civic opera, and square dances that draw as many as 5,000 people--dancers all.
This Town & Flint. Give or take a few dollars and a few square dancers, Flint could represent--qualitatively--almost any industrial city in the land. It could be Arlington, Texas, which jumped in population from 7,000 to 35,000 in five years, as new plants moved into the area between Dallas and Fort Worth, drawing most of their new employees from agricultural areas. It could be Los Angeles, which added as many factory workers in the past five years (277,400) as in the previous 21. Or even New England, which put its brains to work and found new research and electronics industries after textiles slumped. Or Buffalo. Cleveland or Toledo, little Detroits all, and all building in anticipation of the opening of the Lake Erie portion of the St. Lawrence Seaway in 1959.
How far is Flint from London, Paris, Madrid, Rome, Mexico City and the other cities of the non-Communist world? Not far, in the sense that a prosperous, strong U.S. economic system is clearly the basis for the record-breaking prosperity of the whole free world.
What's Good for Flint. In another sense --the sense of setting an example--Flint is farther away but getting closer. Britain, eying the freely competitive U.S., has this year been hearing its strongest parliamentary attacks on monopolies, and may wind up with the first antimonopoly bill in its history. Last summer, news of the U.A.W.-Ford guaranteed annual wage agreement rocked the national convention of France's 2,000,000-member Confederation Generate du Travail, and seriously weakened Communist control. In today's booming Federal Republic of Germany, an industrialist who has not been to the U.S. to study production methods is not seriously listened to. In Mexico, Sears, Roebuck & Co., G.M. and Ford have raised wages, granted pensions and health plans, and given Mexico's unions new leverage for working on rich local capitalists. In Saudi Arabia the Arabian American Oil Co. has staked hundreds of local bright young men to prosperous careers as importers, contractors, teachers. (Its American methods have also created a feeling of sullen restlessness among other natives who are just discovering what the good life looks like.)
Harlow Curtice does not go in much for high-flown economic or social theory, but he is convinced that what Flint has found to be good can be emulated by the rest of the world. Thus, since late 1954 he has committed G.M. to $200 million for European expansions, primarily of its Opel plant in Russelsheim-am-Main, Germany, and its Vauxhall plant in Bedfordshire, England. Also, he is bucking local resistance to move both companies toward the annual model change. He wants to create a secondhand market so that cars can be bought by everyone. At the same time, he is pressing European automobile men to move with G.M. toward a 40-hour week, while maintaining the rate of pay of the current 48-hour week.
Newer for New. Some American thinkers shake their heads at the materialism and the waste implied in the annual model change. But, as in Billy Durant's day, their thinking takes no account of the nature of the American system, where something newer must replace the nearly new so that those who cannot afford the newer can still afford what was once new, whether it is a house, a sewing machine or a car.
But even the sleekest, hottest automobiles, as the proudest new car owner will ruefully admit, are not ends in themselves, but only means--means to roll free of the city into the countryside, to swing from the farm into town for a school-board meeting or a movie, to move the family across the country to find a better job. or to drive the kids to school and the beach and pick them up again. And so it is with the economic system that Harlow Curtice represents. This, too, is but a means to something far beyond fad and fashion, perhaps to a new level of community enterprise and culture-by-plan, as in Flint. Not far distant is the time when Americans need spend comparatively little time earning a living. Then they will be able to unleash their considerable powers for cultural, ethical and spiritual accomplishments of a magnitude yet unimagined.
* Four months later, he incorporated the $5,000,000 Durant Motors, which, on the strength of his name, had $31 million in orders before it had a factory site. He got out of automobiles in 1926, lost everything in the 1929 crash, and died in 1947 at 85.
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