American business in world markets

Part I America's New Economic Status Chapter Pagb

I The Business Man's Era 13

The Business Man Coming into His Own — The Politician's Influence Wanes — Where Power Rightfully Belongs — Ancient Civilisations Compare Poorly with That Which Business Enterprise Has Brought — War Inspired Industry with Disposition to Resist Oppression — Its Spirit of Pacifism Is Gone.

II Shares in Winning the War 17

The War Was a Commercial One at Least in Its Finish — World's Greatest Military Power Proved to Be Industry — A Foreign Tribute to Share of American Business Men — Those Who Have Proven Title to Leadership — Rights of Business Will Be Asserted.

III Congress or Business Men 20

The Gathering at Atlantic City — How Future Congresses May Be Conducted — Things to Be Taken for Granted — Action and Decision on Action Their Proper Function — Those Who May Participate — Workers Also Are Industrialists — Others Who Merit Title of "Honorary Business Men."

IV The Right of Combination 25

Combination Was Essential to Victory — The Handicap of Restrictive Laws — Advantages and Possible Dangers of Industrial Union — Business Men Best Qualified to Work Out the Solution — Union Needed to Alleviate Unemployment — How the Creation of New Industries is Promoted — Price "Stabilisation."

V A New Ideal of Competition 30

Unnecessary Waste a Gross Injury to the Country — The Enforced Competition that Fostered Disloyal Trade Practices — War Industries Board Showed a New Way — Fair to Government and Fair to Industry — The Legislation That Is To Be Desired.

VI Industrial Lessons of the War .... 35

Standardisation — Its True Meaning — A Middle Course Between Extremes — How Industry May Be Benefited —

v vi CONTENTS

Danger of Preaching Abstractions. Business Courage — Its Absence Helps Wasteful Competition — How the Great Industries Showed Up Under the Test — The Courage That Is Desirable — Conservation in Peace — War Policies Do Not Apply — Ill-Conceived Conservation Would Retard Progress — Cost Accounting — Lax Methods Lead to Waste — A Uniform System Is Demanded.

VII Need of More Power in Industry 46

Why the American Workman Is Unrivalled — More Power at His Service — Importance of Developing Water Power — Business Congress Adopts Resolution — What a British Committee Discovered — The Best Cure for Low Wages — Other Nations Alive to the Need.

VIII Slanders Against American Business .... 54

Tales Spread Abroad About "Commercial Corruption" — A Dr. Jekyll and Mr. Hyde Idea — Responsibility of Our Own Politicians and Organs of Publicity — A Charge Made by Mr. Gompers — Remedies Needed to Re-estabilsh a Right Understanding.

IX Industrial Relations 60

Capital — Catch- words That Stigmatise American Business — Labor the Nursery of Capital — Their Interests Undivided — Labor — The American Workingman Refuses To Be Labelled — Appreciates His Rights as an American — Representation of Labor — Participation in Industrial Administration — Error of Judging from Extremes — The La Follette Law — Where Labor May Be Brought In — Welfare Work Improperly Conceived — Minimum Wage — 111 Success in French Cities — A British Plan — The "Minimum Plus" — International Proposals.

X Influences Against Bolshevism 75

Germany's Foul Crime — A Typical Russian Nihilist Group — Wolfish Leader and Following of Defectives—Organised for Sabotage in Industry — Waves of Crime That Follow War — The True American Worker^Immune — The Remedy of Publicity.

XI The Doctrines of Americanism 82

Scheme of Existence — America's New Relation to World Affairs — No Longer in a Charmed World — We Must Uphold American Principles — No Standing Still — Government Paternalism as an Alternative — Control — The Democratic Principle — The Foundations — Who Shall Conserve the Republic? — The Politician's Claim — That of the Industrialist — The Control That Belongs to Labor — Responsibility — Power Without Responsibility — Need of a New Rule — Where Capital, Labor and the Community Have Been Delinquent — The Case of the Newspaper.

XII Statesmen's Judgments 89

Secretary Lane's Views and Prospects — Confidence in the American People — The Get-Together Habit — Disposition

CONTENTS vii of the Administration to Co-operate in Solving Business Problems — Commerce Department Plans — Statement by Secretary Redfield — Aid for Industry — Bureau of Standards — Bureau of Foreign and Domestic Commerce — Conservation Division — Mr. Lloyd George on the Changed Conditions — The Rule for Success — Rights of Capital and Labor — Both Must Receive Increased Recognition.

PART II THE SCIENTIFIC METHOD IN COMMERCE I For a New Moral Code 101

Men's Sensibilities Dulled by Revelations — German "Science" of Commercial Expansion — Others Have Studied in Same School — Prospect of Germany "Coming Back" — Her Real Purpose in Bringing America into the War — German Business Men to Lead Government — Frightfulness in Commerce — No Sign of Change of Heart.

II Protection of American Trade 112

Government Apathetic in the Past — American Interests Attacked With Impunity — Business Men Must Unite for Their Protection — Task Involves Work Administration Cannot Undertake — What American Trade Faces in the Future — How Germany Stands Industrially.

III Germany's Peace Plans During War . . . . 117

Open and Underhand Methods — Transition Economy — Institutions for Industrial Concentration — Raw Materials and Shipping — Foreign Exchange — Germany's Continued Power in Foreign Countries — Organisation Needed to Meet Organisation — German Methods Differ in Different Countries.

IV How Countries Were Exploited ......124

Denmark's Free Port — Germans Used It to American Detriment — How the Dye Combine Imposed Itself on France — Italy Still in Danger of German Clutch — Turkey and Russia Under German Economic Domination — Rights Abroad Which American Business Has Now Acquired by Actual Purchase.

V The German Cartel 131

The Science of Industrial Combination — The Cartel Developed by Evolution — Government Enters as Partner — Dumping Carried Out with All the Power of the State — When German Locomotives Were Imposed on Italy and France — Foreign Imitations of American Machinery — Agriculture Also Preyed Upon.

VI The "Chain" Method of Expansion . .... 140

Concentration of Industries Facilitated Expansion Abroad — Germany Controlled Foreign Enterprises through a viii CONTENTS

Minority Interest — Great Corporations Started a "Chain" Which Constantly Lengthened — How Local Owners Were Ousted from Own Properties — The "Chain" in Italy. Spain, France and Other Countries.

VII Concealing Economic Strength 147

The Foreign Visitor's Experience at Krupps — Keep-Out Signs Elaborately Courteous — German Industries Under Careful Watch — Difference of American Methods — Development of Central Europe Carried on Quietly — Important River and Canal Works and Shipbuilding.

VIII Germany's Banking System 154

Forced Growth of German Banking — Capital Mobilised to Catch Up with Commercially Older Countries— Comparison with English, French and American Systems- How the Six Great Banks Grew — Government Representatives Made Directors — Oil Stock Promotions and Bank Rivalries — The Grossbanken and the Great Industrial Corporations.

IX German Banks Abroad 164

Economic Theory of the Foreign Bank — Characteristics of the German Banks Abroad — Value of State Direction — Prestige of the German Great Banks Utilised — Banks Founded with the Foreigner's Money — Silent Partnership Arrangement with American Banking Houses — Experiences of American Business Men Who Dealt with Them — Even Blackmail Resorted to — The Banking Web Around the World.

X The Spy System in Trade 176

Secret Service Methods Systematically Employed — Experience of an American Agent in Germany — The German in France Possessed of Private Trade Details — Investigation of the German Practices — The Military Commercial Traveller — Demand That German Ways Be Mended.

XI Influencing the Press 184

Court Martial Exposes German Ways of Press Corruption — German Female Spy Marries Pre-Selected Italian Sailor — She Handled Newspapers — Publicity Organisation of German Corporations — Denounced as " Corruption Agency" — Socialist Internationale Used as Intermediary.

XII To Protect" American Products 190

The Distinctives of Merchandise — Germans Systematically Appropriated Those of Other Peoples — "Vienna" Hand Bags Made in Germany — No Business Too Trivial for Imitation — Incident of the "American Saints" in Mexico — United States Products Particularly Exposed to Appropriation.

CONTENTS ix

XIII Bribery in Trade Promotion 196

Mystery of American Trade Misfortunes Abroad — Sabotage a Typically German Weapon — Italian Premier Denounces Bribery — When Krupps Were Exposed — An Apology for Commercial Immorality — How Shimmelpfeng Credit Agency Obtained Its Famous Lists — German Professors as Corrupters in Italy.

XIV How to Keep American Industry American . . 207

Revelations of Extent of German Commercial Domination — Consideration of Measures That May Prevent Repetition in Future — British Plans for Protecting Trade — German Metals Company Controlled World's Markets — Incident of St. Andrew's Bay — For a Monroe Doctrine of Commerce.

PART III • WORLD PLANS AND FOREIGN TRADE I European Outlook on the New Era 217

Old Individualistic System of Trading Has Gone — Governments Will Participate in Industry and Trade — Self-Sufficiency as a Political Necessity — Control of Materials — Protection of Key Industries — General Agreement Reached at Paris Economic Conference.

II Great Britain 220

Extensive Plans Already Matured — Ministry of Reconstruction Has Started New Era Projects — Combination in Banking and Industrial Corporations — Report of Committee on After- War Policy — Government Assistance to Certain Industries — British Labor Party for Nationalisation Scheme.

III France 230

Reconstitution of Devastated Territory is Chief Concern — Labor Disturbed by Syndicalist Doctrines — Project of National Economic Council — America Regarded as " Guardian Angel " — Expectation of Co-operative Service — The Principal Needs of France — Government Proposes National Federation of Employers.

IV Italy 240

Restriction of Emigration — Intended that Italian Workers Abroad Shall Be Skilled — Industrial Development in Italy — Declaration of Rights by Business Men — Industrial Association Issues Proclamation — Capital Will No Longer Tolerate Unequal Conditions — Italy an Inviting Foreign Market — Danger of German Penetration Again Threatens.

V Germany . 257

Twofold Function of Ministry of Economics — An Export Trade Organisation Formed — Bureau for Re-establishing x CONTENTS

German Prestige and Commerce Abroad — New Intensive Study of Foreign Countries with View to Trade — Expected Nationalisation of Many Industries — How Germans Expect to Retrieve Their Losses.

VI Foreign Trade Service 261

State^Department Proposes Consular Increase — To Make Service Strictly American — New Economic Experts — Better Pay for Consuls— Overwhelming Duties Imposed on Them — Foreign and Domestic Commerce Bureau to Expand — Valuable Services Which It Renders — To Explore Foreign Areas.

VII America's Representation Abroad 269

Demand Abroad for Reform of Diplomacy — Bureaucratic Methods to Be Modernised — Economic Rather Than Political Representation Desired — Proposed Directive Council at Home — Specialists to Control Its Sub-Divisions — The Tests for Foreign Representatives.

VIII National Publicity . . . 274

A Form of Propaganda Being Widely Adopted — Foreign Offices Generally Had a Publicity Bureau — How Austria Profited by Hers — German Business Men Originated New Scheme — Economic and Political Publicity — Important That Work Hereafter Be Above-Board — Publicity to Promote Industrial Peace.

IX America's Need for Foreign Trade 283

Adventitious War Trade Developed Production Capacity — Our Normal Market Outgrown — New Outlets Needed — Latin America Generally Counted On — South Africa and Australia — America Practically Pledged Not to Usurp Foreign Trade of Allies.

X American Ships Available for Commerce . . . 287

Widely Varying Statements Regarding Tonnage — Erroneous Impressions Widespread — Mr. Schwab's Figures — Forecasts Will Not Be Realised — Our Effective Ocean- Going Tonnage — How World's Shipping Has Deteriorated — Wear and Tear of War and Inferior Construction-^- Falling off in Construction.

XI Education for Foreign Trade 294

British and German Methods of Approach — Democracy in Commerce — An American Policy Should Be Formulated — Training Must Begin in School — Foreign Trade Is Established Slowly — Two Years to Get Results, Five to Found Permanent Market.

XII Our New Obligations to the World . . . . . 303

Duties That Accompany America's Financial and Commercial Supremacy — Warnings Against One-Sided Trading — America Must Supply Food, Materials and Credit —

CONTENTS xi

CHAPTER PAOB

Will Be Expected to Invest in Foreign Securities — Problems of Relations with Other Peoples — Business Men the Natural Leaders in Difficult Times.

Part IV An Alternative For Foreign Trade

I DEVELOPMENT' OF THE HOME LAND . ) . . . . 307

A Rare^ Opportunity Offers — Replace the War Urge with a Peace Urge — Scheme of "Beautiful America" — Problems of the Hour Would Vanish — How United People Can Work for General Betterment — All Humanity Would in This Way Be Benefited.

II Prompt Action Needed 318

Conditions Now Ripe for New Great Undertaking — American Industries Are Pausing Before Fresh Start — Home Trade Versus Foreign Trade — Financing Needed in Either Case — Machinery Manufacturers Preparing! Campaign — The Most Desirable Purpose in Planning Public Works,

Chapter I The Business Man's Era

The Business Man Coming into His Own— The Politician's Influence Wanes — Where Power Rightfully Belongs — Ancient Civilisations Compare Poorly with That Which Business Enterprise Has Brought — War Inspired Industry with Disposition to Resist Oppression—Its Spirit of Pacifism Is Gone.

"The Business Man's Era." Will this be the title which the future historian will place over the new chapter that now opens in the story of the peoples? The most striking phenomenon which he is apt to consider in the period on which we are entering is the sudden ascendancy of the industrialist to power. The war startled the business man to a realisation of what a poor job was being made of the governing of empires, kingdoms and republics — quam parva sapientia regitur mundusl What little wisdom was being shown in the government of the world, in our day as thousands of years ago. The world had not advanced much in the matter of its government. War, and a "commercial" war at that, was sprung on it before business men had an inkling of what was going on.

With the coming forward of the business man the future historian will have observed the demagogue on the defensive, the politician being elbowed off the stage. Stupendous problems were brought up by the war and the politician was powerless to handle them. Only men of enterprise, energy and decision were qualified to deal with these problems. And such men fortunately were the business leaders. Had they been in charge there would have been no war. If the politicians had remained in charge where would the world be after militarism and Bolshevism and the other scourges had run their course?

Business men have been showing a vague, inchoate consciousness of their own real strength, which gradually seems to be developing into a definite conception leading them to an assertion of their rightful influence in the direction of the Nation's affairs. Who, they may ask themselves, are best qualified to handle the great questions of the hour? Who should have the chief voice in settling contentious matters of international importance — the working form of the League of Nations, the right to the development of sea power, and others that may profoundly affect the whole future welfare of the country? Which is best equipped to instruct and educate the people on subjects of vital moment — the politician, whose chief anxiety is to follow his followers, to interpret "his district," to encourage their want of knowledge and even to flatter their lack of patriotism, rather than to lead, or the business man who by the very force of conditions is constantly driving onward, ever forward?

Who, more than the business men, have contributed to the well-being of the greatest number? Who else have it in their power to bring about the Utopia, to make life better worth living for the whole people — what the poli-

THE BUSINESS MAN'S ERA 15

tician promises, but has it not in his power to perform — to increase the prosperity of the Nation, to impart the most vigorous impulse to the progress of civilisation ?

The ancient Athenians had temples and masterpieces of sculpture to rejoice their aesthetic eye, a system of polity to satisfy their aspirations for freedom, and they may have thought it the acme of mental entertainment to listen under the porticos to disquisitions on metaphysics by the philosophers and the sophists. They attained a notable degree of culture which, like that of other peoples of the past, has often been held up to us for our admiration and in disparagement of our own methods and pursuits, of our own civilisation.

But where was the civilisation of these ancients, in any true sense of the word, if their dwelling places were windowless and dark; if they slept on the ground on rugs; if their food consisted of a few ill-cooked viands; if the winter wind eddied around their bare legs and spiralled up along their bodies under their loose woollen shirts and coarse over-drapes? The world undoubtedly would be poorer without the almost divine morality of Socrates, without the Belvidere Apollo and the Laocoon, without the poetry and drama and oratory of Hellas. But, with all that the ancients have left us, where would the world be to-day without the spiritual courage, the enterprise and the zeal of the manufacturers and merchants of our modern times, without the true business spirit that developed the mariner's compass, that discovered America, that invented printing, that led up to the electrical age in which we live? It would be back still in darkness and semi-savagery, for men are cruel and heartless when, the world is poor. The producers and doers of the business world have been the true heralds of civilisation. They are the benefactors, for it is they who have led us into the era of light and of comfort.

As the doers in one realm of social activity, the men of business had not thought of their capacity to be the doers in the other principal fields. The war opened their eyes. It showed them that not only politics and warmaking and the social fabric generally are fundamentally dependent on them, but that, unless they themselves take a direct hand in it, there cannot be success in modern politics, or in war, or in keeping any great phase of human activity going.

The war inspired new feelings, including an increased spirit of courage, a disposition to fight, to smash oppression. Business men had suffered from oppression — on the part of the self-appointed statesman, the politician and the demagogue, who for selfish reasons had kept the fires of strife and contention glowing, and at times also, they complained, on the part of others, including occasionally such specialists as the lawyer and the banker, who made the path of business difficult. Too many were assuming the right to dictate to it. Business had stood for being browbeaten ; it had become to some extent affected with a spirit of pacifism. But oppression will no longer be tolerated. The day of pacifism is gone by forever. Business men hereafter will stand up for their rights.

And so our future historian, as he contemplates the new chapter — the chapters on the rule of the patriarch, of the despot, of the monarch, whether Caesar, king or military captain, and of the lawyer-politician being definitely closed — may, perhaps, intimate that he expects it to remain open indefinitely.

Chapter II Shares In Winning The War

The War Was a Commercial One at Least in Its Finish — World's Greatest Military Power Proved to Be Industry — A Foreign Tribute to Share of American Business Men — Those Who Have Proven Title to Leadership— Rights of Business Will Be Asserted.

It has often been stated that the late war was a commercial war in its origin. It certainly was a commercial war in its finish, for it was in the designing room, the laboratory and the factory that it was won more than in the field. In other words, it was no mere war. Some more adequate term should be found to indicate the colossal struggle of nations against other nations in which all the resources of men, machines, raw materials, manufactured products, human energy of every kind were assembled and exploited with demoniacal energy. The word "war" is utterly inadequate to represent this conflict, which was greater than we now realise and which, only through a certain vista in the perspective of the past, will begin to be adequately appreciated in its overwhelming magnitude.

Germany was the world's greatest military power by her own claim and by the concession of a great many outsiders; but that greatest military power did not win the war. As a matter of fact Germany was not the greatest military power. The greatest military power in the world to-day is industry. It is industrial power carried out to its fullest exploitation. As time goes on, business men will gradually come to realise that their share in the winning of the war was paramount. A foreign statesman, in fact, has casually paid a pointed compliment in the matter to the business men of the United States. The noted Japanese envoy, Baron Nobuaki Makino, delegate to the Peace Conference, passing through New York in January of this year on his way to France, referred, in a statement for the press, to "the American leaders of industry, trade and commerce, who have perhaps done more than armies or navies to win the war." The graceful remark was not uttered as a sententious expression of opinion but as a casual announcement of fact which was to be taken for granted. And this is the way it will finally come to be taken by the business men of the United States. Gradually, they will realise that in the day of the nation's crisis theirs is the predominant function. Gradually, also, they may be expected to claim for themselves the elementary rights and prerogatives to which such an exalted position in the community entitles them. These probably will include the right to have a say in the administration of the nation corresponding to their status in it and the right to refuse to have their vital interests, their industries and the off-shoots of their industries regulated in any high-handed way by those in the community whose status, when measured on any justifiable basis, is lower than theirs.

The leaders of American industry and commerce will not, of course, seek to have the national administration vested in their particular class. That is not the point What they may be expected to do is to claim a due and equitable share in the direction of public affairs and in

SHARES IN WINNING THE WAR 19

deciding policies that refer to their own special concerns. The test of war has shown that to them must be entrusted the direction of vital interests in the hour of crisis, and it would be absurd to expect that they should yield up all control of them the moment the crisis has passed.

Leaders in business are leaders by proven title. Bitter feelings have stirred the business world on account of the undue domination of others, and allusion has often been made to undeserved control in many respects on the part of politicians, attorneys and office-holders. Not, be it remembered, that it is the sense of American business that those who fall into these classifications are outside of American business, since, as a matter of fact, in cabinet and other offices are men of distinguished business ability who in every strict sense are business men, and among the lawyers and the bankers the same fact is verified. But the intensity of the feeling that business has too often been differentiated against and that the lawyer, the politician and the banker are among those who too often have made the path of industry and commercial development unnecessarily difficult, can be lessened only by the exalting of business to its true rank in the direction of the national affairs of the community.

Chapter III Congress Of Business Men

The Gathering at Atlantic City — How Future Congresses May Be Conducted — Things to Be Taken for Granted — Action and Decision on Action Their Proper Function — Those Who May Participate — Workers Also Are Industrialists — Others Who Merit Title of "Honorary Business Men."

American industries took a notable step forward in their own interest in 191 8, when in the month of December they showed they could act as an organised whole by meeting in congress at Atlantic City. The War Industries Board had prepared the way for this by forcing American manufacturers to get together, by making men, who never expected to do so, shake hands with one another and sit on opposite sides of the same table and discuss questions vital to themselves in a frank and open way.

The four days of the Atlantic City congress were consumed in the holding of fractional meetings to discuss questions affecting individual industries and groups of industries, and general meetings to listen to addresses by selected speakers and in voting on the resolutions picked out and condensed by a Clearance Committee from the multitude of more or less elaborate resolutions proposed by the groups.

Perhaps this Congress of the manufacturers' and mer-

CONGRESS OF BUSINESS MEN 31

chants' side of industry and commerce could not have been got together if its programme had not been planned in accordance with the programme more or less generally established for conventions. The great outstanding advantage of the congress was indicated in the simple fact that it had actually got together. A further advantage exists in the fact that it showed a way for utilising subsequent congresses of the kind for specific action that can be of material benefit to American industry and commerce united as a whole.

It is clear that the next time that American business meets in congress, the fruitless time-wasting features of the average convention will have to be eliminated. Individual industries and groups of industries can hold their special meetings in advance, so that their representatives may reach the congress ready to take part in it as a congress.

There is much also that must be taken for granted in behalf of the delegates to such a congress. It will have to be taken for granted, for instance, that they are familiar with the great questions of the day and the problems of industry and commerce; that they do not need to be lectured to at great length on ethical topics; that they are men of action and decision and that if they assemble in a business congress they expect it is for the taking of action in matters affecting business, so that every meeting of the congress may be a landmark in business progress. The presence of notable personages as speakers undoubtedly lends prestige to a gathering and such personages are to be presumed to have with them a message of importance. But, as the time for such a congress is necessarily limited, long addresses on special subjects could be distributed in advance, instead of being read to the congress, and the messages of importance could be gathered by the Clearance Committee and made available for those assembled without encroachment on the time available for the vital and essential work of the congress.

Resolutions, even though more or less anodyne, and trimmed and pared to conform to all views and to get by expeditiously, probably have some real effect. But the purpose of a congress of business is action or decision on action. Action in the interest of business as a whole; not the mere formulating of resolutions, but the taking of steps to follow up or carry out resolutions; not merely the deciding on plans, but the execution of them; this must be the aim — to turn effectively to account the quite extraordinary advantage of being able to gather American industry and commerce into a congress.

Those who organised the Atlantic City Congress have put American industry under a debt of obligation to them. It is to be hoped that they will continue the work and organise other congresses. Perhaps they may find it possible to go further and to bring into a single congress all the essential elements of our business life, all who are industrialists, the workers of industry and commerce as well as the manufacturers, merchants and financiers.

And here again there would be much that should be taken for granted. For instance, the American worker need not be lectured to, any more than the manufacturer. It may be taken for granted that he too is familiar with fundamental questions of the hour, that he has been keeping pace with developments, that he is ready to consider action and that, satisfied with the fair-

CONGRESS OF BUSINESS MEN 23

ness and equity of the plans proposed, he will lend his efforts to promoting the benefit of American business. Let it be taken for granted that he is not so terribly sensitive about his status as a worker, as is sometimes imagined ; that it can even be alluded to without his sensibilities being wounded. He will be open to conviction that, as a matter of fact, all engaged in industry have the right to be regarded as workers. Were this not the case, there might be the expedient of putting overalls on the whole hierarchy of a manufacturing business, on the president and treasurer, on the executive force and on the office force, as well as on the men at the machines. No absurd action, however, is necessary, but only common sense and tact and frank and friendly advances toward him, to weld the worker into the common bond and to satisfy him that the intriguing politician is no less his enemy than the enemy of the head of his concern and that his interests are the interests of the industry as a single entity.

One thing more that may be taken for granted, without further explanations, is that there are statesmen, lawyers, officials, bankers, "professional men" of many kinds who have deserved well of industry and commerce, who consequently merit the conferring on them of the title of "honorary business men," and who accordingly might rightfully take their seats in a congress of business.