The Forward View

VOLUME 154 NUMBER 3

SEPTEMBER 1934

BY ALFRED P. SLOAN, JR.

INDUSTRY is incurably optimistic; its beacon is hope, and change is its lifeblood. Except for these there would be no widespread material progress, and inventions would remain museum pieces instead of coming into common use. This steadfast optimism has brought notable boons to humanity; and even in slumps created by the fears of those outside of industry few of us surrender to despair. In the darkest days industry keeps trying.

The very sales resistance which our goods and services encounter spurs us to develop new values and find improved methods of producing old ones; this is our first reaction to any decline in trade, and by the end of a slump industry is usually able by improved processes to decrease prices and lift the standard of living. That this is the case at present is indicated by the industrial programmes revealed on the eve of the reopening of the Century of Progress Exposition in Chicago in May, and in correspondence on the subject which came to me as sponsor of what we chose to call ‘Previews of Industrial Progress in the Next Century.’ No depression since man began to use machines effectively has lasted long enough to break down the consistent optimism of generation after generation of inventors and industrialists. This faith has been justified by events. Disregarding temporary dips, and concentrating upon the long swing of industrial civilization, we find that real wages have increased, new wants have been created and supplied, famines and shortages almost erased, and the standard of living so raised that a responsible workingman enjoys a wider range of comfort and culture than did barons in the Dark Ages. Goods and services unknown of old, but now widely used and taken for granted, are the social dividend of individual and group initiative. While the driving motive of these individuals and groups was private and corporate profit, the indirect result has been to spread boons which all civilized men in some degree enjoy.

This is sound doctrine which has stood the test of time, and it still holds true in spite of temporary setbacks. But new problems bring shifts of opinion and emphasis. Certain broad, world-wide movements of a social and political nature now affect industrial operations conducted on a large scale. While profit is still the goal, industry realizes more fully than ever before that the goal can hardly be reached unless the public is able to buy and has leisure to consume the goods which modern processes produce in unparalleled abundance. One of the lessons learned by industry in my time is the importance of maintaining buying power by keeping wages well above the point of meagre living costs. The Iron Law of Wages is no longer evoked; the principle of the minimum wage is no longer contested, and child labor is taboo. Large-scale industry must accept not only as a duty, but also in its own self-interest, the obligation to pay not merely a living wage, but a comfort wage. In determining our attitude toward the future, as set forth here, I consider that our guide and gauge for industrial progress should be the advancement in well-being, socially and economically, of the American worker — both the person who works for a wage or salary, and the one who is dependent on his own effort and capital in trade, agriculture, or a profession.

Copyright 1934, by The Atlantic Monthly Company, Boston, Mass. All rights reserved.

In suggesting this standard of judgment, I am not overlooking the rights of stockholders and the equities due to them. In America, fortunately, nearly every able-bodied mature person carries part of the inevitable burden of toil; either he or she works, desires to work, or has worked during his or her productive years. Vast numbers of industrial shares are held by employees and former employees, by persons who invested in those securities the savings of their effective years, and by institutions and foundations which contribute largely to social welfare and the relief of acute distress. To deprive these various classes of investors of their dues would injure the worker either directly by reducing his income or indirectly by increasing competition for jobs. A considerable part of all dividends are saved and become new capital available for setting up new enterprises or expanding old ones, in which process jobs are inevitably created. Fair return on investments is essential, but, within this limitation, the worker’s advancement may be considered paramount.

From this point of view let us examine the present status of the recovery programme. What have American workers gained by it? Manifestly they have gained a great deal — more jobs, shorter hours, higher hourly rates. The principle of the minimum wage has been accepted; likewise the ban against child labor. Labor as well as capital has shared in the renewed confidence stirred in American hearts by President Roosevelt’s courageous and successful struggle against the fear psychology. Labor has also gained certain rights of organization and collective bargaining. But there is one phase of the recovery programme from which the American worker, in the mass the overwhelming element in our population, definitely stands to lose, unless all industrial and social evolution has been in error up to this point. I refer to the tendency to treat material progress as ended, to divide work as if there would never be any more work than there is at present. This would mean to stabilize the standard of living on a reduced basis.

All through the ages, wherever the upward spiral of material progress has dipped a little in a depression, the cry has been raised that the end of human advance is at hand. Asiatic kings had that sombre fallacy carved on monuments rescued from oblivion by the far-ranging archæologists of our dynamic era. Clerics and statesmen alike have decreed at various times a static economic world. As late as 1886 the first United States Commissioner of Labor solemnly reported that the next fifty years would show no such progress as the preceding fifty years. ‘The nations of the world,’ said he, ‘have overstocked themselves with machinery and manufacturing plants far in excess of the wants of production. . . . This full supply ... is the most important factor of the present [1886] industrial depression. . . . The day of large profits is probably past.’

This government official considered that the cycle of progress ended when it was just about to usher in a wider use of the notable inventions and discoveries of a laborious century. Discouraged by a now almost forgotten depression, he concluded that henceforth there could be no sudden accessions of wealth, no chance for a worker to gain a fortune, no startling increases in wages, no revolutionary revisions of tools or methods, no rising standard of living. If he had been correct, the going wage rate would still be a dollar for a ten-hour or twelve-hour day of backbreaking labor, the horse would be the swiftest means of highway travel, we should still be reading by gas or dim carbon-filament electric lamps, and no worker could afford a bathroom or electric refrigerator. The skies of America would still be innocent of radio waves and airplanes, and our land would still be ravaged by epidemics of yellow fever, cholera, and other communicable diseases. The imagination of the race, the creative faculties of our people, have turned into nonsense the gloomy prophecies of that once-eminent pessimist.

Such is ever the case; all are certain to be wrong who fix a date for a limit to man’s curiosity and organizing power. Instead of calling it a day, dividing what work and wage income were available at the moment, the common sense of humanity, even against legal handicaps on progress, has refused to take seriously all pessimistic proclamations announcing the futility of further inquiry into the problems of energy and matter. Laboratory experiment has gone forward, learning has been collated, research financed, industrial processes shortened, new commodities created, until, as a result of myriad random efforts brought to focus in an industrial system unparalleled in efficiency, an age-old condition of scarcity has given place to a temporarily embarrassing condition of plenty.

Since it is impossible to separate motor cars from all the other aspects of our common life, we who manufacture them are required by financial risks to limit our production with relation to effective demand as clearly as we can forecast the latter; yet I think it is true that the desire for our products, over the whole world, far exceeds our capacity to produce at top speed. ‘The saturation point’ is an old bogey of the automotive industry, and we know with good reason that it does exist as the world stands at the moment; nevertheless it can be truly said that practically everyone wants a new motor car. You may feel that you have to keep the old one, in view of your other responsibilities, but you would prefer a new one, since a new car is also a better car embodying features not obtainable in old models. I use an example from my own business because I know that business best, but the thought applies to many other wares. The wants of man continue insatiable; what we call overproduction is merely a lack of distribution; a surplus is usually something men want and cannot buy — in effect a challenge to improve the system of distribution and increase the buying power until the one-time surplus has been used to sustain, dignify, or otherwise improve the lot of mankind. To destroy a surplus wantonly is to remove a strong incentive to social progress.

As industry multiplies goods and services through organization and invention, it creates jobs in two main directions. Selling, installing, and servicing its products offer opportunities to vast numbers. Nearly as many persons work on automobiles outside of factories as work on them inside. But industry’s largest contribution to a progressive economy is of course its consistent addition of new enterprises with new products and services which the public comes to accept in quantity.

The extent of this contribution passes all calculation; but a few broad statements will serve to frame a panorama which the reader can fill in with details from his own experience. While the number of gainfully employed persons in the country increased, census by census, until 1930, this increase resulted chiefly from new industries which either were unknown in 1890 or were then in their infancy and have since matured. Agriculture and mining, among the oldest of all occupations, lost 2,000,000 workers from 1910 to 1930, while the manufacturing and mechanical industries gained more than 4,000,000. This year at the reopening of the Century of Progress Exposition in Chicago it was said that more than half the commercial exhibits represented lines of work new since the previous World’s Fair of 1893. More than half of the persons on the grounds drew their incomes from industries not even in existence forty years before, chief among them being the automobile, aviation, motion pictures, artificial-fibre industries, and a broad range of activities based upon alloy steels, synthetic resins, and improvements in the use of oil, coal, and electricity.

Within forty years these achievements expanded the national wealth and income tremendously, raised wages to new levels, and provided new comforts and conveniences for the masses. Yet the tempo of change is faster now than it ever has been. A little patience now, a brief respite from fear and uncertainty, during which the vast financial reserves which caution has gathered can be placed behind the new ideas and methods developed by research, and we shall be on our way toward a higher standard of living than the world has ever seen

II

What capital and labor both need at this pass is the birth of a new industry which, like the automobile industry of twenty-five years ago, will grow swiftly into large production, with direct beneficial effect on wages, investment values, and living conditions. Necessarily this must be a broadly based industry whose products will appeal to the masses; and presumably it must be one which can adapt itself to the mass-production methods which have reached their highest efficiency in the manufacture of automobiles. One new industry that seems to meet these requirements is the manufacture and assembly of machine-made homes.

For a long time we have been building office, apartment, and factory buildings of pre-fabricated materials, on steel frames of more or less standard designs. The new mass-housing projects, as explained to me in considerable detail, contemplate adapting this thoroughly tested system to home construction, where the broadest of all markets will permit further economies, thereby bringing to the average citizen values and conveniences hitherto beyond his economic grasp.

To appreciate the significance of this impending change, let us remind ourselves that technology to date has brought no such change to unit housing as it has brought to transportation, communications, food production, clothing, or multiple housing. The man who drives a low-priced mass-production car, whose words are carried to his neighbor or across the continent by telephone with the speed of light, and who wears mass-production clothes of a quality not otherwise attainable at equal costs, dwells in a house erected by antiquated means, yet pays a high price for his accommodation. The farmer, whose efficiency in wheat production is as 60 to 1 compared to primitive husbandry, lives in a shelter erected by almost primitive hand methods. These houses of the present are not well adapted to the installation of modern mechanical devices, and their upkeep is heavy beyond all need. A ten-year-old house, unless it was exceptionably well built and has been frequently modernized, is as antiquated as a ten-year-old automobile.

From many sources interested in these new housing developments come details which group themselves into this composite picture of the new housing. A house can be erected in three days’ time from the breaking of the ground for cellar excavation to completion for occupancy. In this short period the lot will be graded and planted with shrubbery, and connections made with public services, such as sewers and electricity. The house will be air-conditioned, with all facilities for heating, cooling, humidifying, drying, and washing the air its inhabitants breathe. It will have all modern conveniences for reducing housework, on a scale and of a variety not surpassed in the costliest mansions of the day. Its equipment will include special devices for bringing instruction and recreation into the home — the teletype for news dispatches, television apparatus to portray the world’s great events as they occur, and radio sets embodying visual projection, so that motion pictures and operas can be brought directly to the view of the home circle.

The cost of these thoroughly modern homes will vary, of course, not only with their size and equipment, but also with the quantity of them which can be produced and sold. The first house in any given series will be one of the most expensive houses ever built, because its completion must entail all the planning, tooling, and factory organization common to the whole series. Just as the automobile buyer, by accepting a standardized product, gets for a few hundred dollars a car on which millions have been spent, so the house buyer, by accepting a standardized dwelling, will reap a tremendous price advantage through the pooling of costs under mass production. It is estimated that a small house, the equivalent in size of a present-day workingman’s cottage, can be fabricated, erected, furnished, and completely equipped as indicated above for considerably less than the cost of erecting a wooden house, unfurnished, and with none of the electrical devices and service connections mentioned. Also the pre-fabricated house will be durable and fireproof, with decreased charges for upkeep and insurance.

The various plans to achieve this drastic housing reform, with all that it means in erasing slums and strengthening home life, are great adventures in hope and faith as well as in technics and finance. They involve large-scale operations in credit, factory organization, transportation of materials, and localized assembly. While they could hardly have been visioned except for the development of materials and methods used in automobile manufacture and assembly, — notably mass production of interchangeable parts, the use of new metallic alloys, and the wider application of installment credit, — in one respect the pre-fabricated house business must break new ground. Its products must be assembled on the site and not in the factory; but after all it is as easy to transport skilled house assemblers as it is to transport their materials, and every new development in transportation henceforth will assist house construction on the new basis.

III

Progress in all lines is more or less related. We have seen how automobile manufacture is influencing the manufacture of houses; and it requires no great imagination to comprehend how the further improvement of highways will assist the spread of pre-fabricated houses. To an extent the housing development of the future perhaps will be rural. Farm housing is notoriously bad from every modern standpoint; a great farm market awaits if the successful inauguration of this project coincides with the return of farm buying power. In addition, the spread of country living in America, one of the automobile’s chief social effects, is likely to go further now that so many of the communication ties with town can be maintained through the facilities of the new house equipment. Additional incentive will be given to town workers to acquire small plots in areas within easy motoring reach of industrial enterprises. As the country population increases, highways will be improved to speed up the daily travel between town and home. This development is now in process, manifesting itself in highway revision toward greater breadth of road, more highly banked turns, and better-protected shoulders. Next steps in highway practice, which are certain to absorb both unemployed labor and capital, include trunk-line highways avoiding direct contact with towns and cities, separate routes for trucks, the multiplication of clover-leaf intersections where main highways cross, and the replanning of city thoroughfares to ease traffic on business streets and safeguard life through the establishment of dead-end residential streets. All over America it is likely that through highways will be illuminated at night, as is now the case in the environs of the larger cities.

What of the cars in which the inhabitants of the new pre-fabricated houses will move on super-highways from their rural homes to their jobs? The automobile industry changes so much faster than the construction industry or the highway industry that it is hardly safe to make predictions of a definite nature. There will be changes, of course; the history of our swiftmoving, highly competitive industry is one of constant change. Our engineers know that there is enough energy in a gallon of gasoline to drive a small motor car four hundred miles, provided the fuel is fully utilized, an excellent example of the opportunity still awaiting research to serve society in a field where great advances have already been made.

If these possibilities impend in motor developments for land use, what shall we say of the younger sister in the motor-transport field — aviation? The lay mind finds it hard to appreciate the full import of the expected advance in the conquest of time, space, and altitude, as reported by aviation engineers. The Atlantic recently gave its readers that news in great detail. Before we are much older, transoceanic and transatlantic travel by air will proceed at speeds of from two hundred to four hundred miles per hour at high altitudes, with every prospect of greater safety.

In rail transport the prospect is that steam locomotives will give way in some degree to electric engines which generate current by means of improved oilburning Diesel engines. The Diesel engine, long recognized as highly efficient in fuel consumption, was handicapped until certain of its long-standing difficulties were solved as a result of experience with and research on automobile motors. Also as a result of automobile precedents in the use of metallic alloys, train weights can now be reduced. Recently a stream-lined stainless-steel train, driven by electricity generated by one of these improved Diesels, attained a speed of 112 miles per hour and loured the country on a mileage cost far below that of coal haulage. Experts agree that this type of locomotive will require far less servicing than the steam type; they predict that it can be made as dependable as a motor car ready for duty practically every day. With improved trackage and traffic clearance, trains of this kind will travel at much higher speed, with greater economy, cleanliness, and passenger comfort than have ever been realized by means of steam power.

Presumably the passenger train of the future will ride the rails on rubber tires. It will be completely air-conditioned, with mechanical control of temperature, humidity, and dust. The passengers will breathe washed air — no more cinders, no more fumes! From the operating standpoint, railroading will be simplified by avoiding the delays incidental to changing engines. The unit of design will be the whole train rather than its parts, the various pieces of rolling stock now assembled to make a train. Hence the new trains will be closely adapted to their special requirements. Their engines will be built with precise reference to expected load-and-grade requirements, and their cars with reference to specialized traffic needs. Eventually even freight trains may be influenced by these changes in passenger-car design. Apparently the railroads will require large amounts of new equipment and may even find it necessary to relocate and improve roadbeds as speeds increase, all of which will provide an outlet for capital and create jobs.

This trend in railroading is the immediate result of automotive research and initiative; as such it deserves the thoughtful consideration of those in high places and low. Even while motor-car competition was threatening the railroads, our engineers were producing the means and materials of improving railroad operations. An old industry of a semi-monopolistic character, fully regulated by government as to service and protected as to rates, fell somewhat out of step with progress through neglecting research and relying on old equipment. Meanwhile a young industry, highly competitive and entirely without government support or regulation, forged ahead entirely on its own, eventually developing, incidental to its main business, the means to better railroad service. No finer example can be found for demonstrating my contention that material progress flowers most fully in untrammeled industries, where men have every incentive to discover and bring to market quickly all the improvements they can devise.

What of the human factor? Will man himself, as an organism, have advantages of health and well-being apart from the changed environment which he is creating? The answer is ‘Yes, in several important respects.’ He will live longer and have more leisure, education, and health. The life span is increasing, and the prospect is that it will go on increasing until the life expectancy of man exceeds the Biblical threescore years and ten which was attained by only the hardier specimens in other days. Better nourishment and instruction in the art of living are expected to reduce arteriosclerosis and heart affections in the future as radically as preventive inoculations and improved sanitation have reduced communicable diseases in the recent past. Cancer, it is thought, will soon be under restraint; and one famous surgeon writes me that his art will be practised less in the future than at present, the need for certain operations now common being likely to pass with better diet and improved living conditions.

IV

These few extracts drawn from the large body of progress material developed at Chicago merely skim the surface. Below the levels which have already been plumbed are still further depths of knowledge as yet unplumbed. What they contain we know not; but we do know that science is delving deeper every day, and the further it goes the more our ignorance of the nature of matter and force is revealed. Recently we have been surprised to learn something new and vitally important about water, the commonest of chemical compounds, and about hydrogen, the simplest of the elements. The gratifying part of the scientific equation is not our human ignorance, which is still colossal, but the fact that, in discovering the present bases of our material progress, science has come into the possession of tools and methods for extending discovery into new realms and also for examining more closely the commonplace things in our environment which we have all along been taking for granted.

But it is not enough to know; it is also necessary to use the fruits of knowledge widely for the common benefit. To do this requires the peaceful, constructive coöperation of many groups and interests, among them capital, labor, and government. There are psychological problems to be met and solved here which are precisely as important to the well-being of society as the problems of the laboratory and factory. Unless capital and labor can agree on a reasonable division of the profits of their partnership, unless government can protect the property which is the residuum of initiative and thrift, then it may be difficult indeed to bring to fruition within our time the promised blessings which appear to be in the offing. I have no crystal-clear idea how the discordances of the moment may be solved; but I believe they will be solved when men of good intent comprehend that by quarreling over trifles they are delaying the day when all men can have more than they have to-day for their use, comfort, and security.

Between an industry and its workers there is a natural community of interest. Both must draw their income from the sale of the goods or services produced; both must lose if sales fade away, as happens when products drop in quality or prestige, or when their products are overpriced as regards competing goods. The area of possible dispute between management and workers is always far smaller than the area of profitable concord. Under various employee-representation plans, government-mediation boards, and otherwise, a body of experience in industrial relations is being built up which may in time reduce friction in the labor field materially. The book of experiment in economic relationships is no more closed than are the books of scientific research and business enterprise.

Looking forward, either for a year or for a century, who can doubt the limitless ability of America to continue its industrial progress, provided men are left free to organize their activities? A new day is with us, and I would be the last to deny that it imposes new social obligations on employers; yet those obligations surely cannot be met by accepting any given situation as final, by retreating timidly toward the age of scarcity. Instead, I affirm the duty of industrial leaders to hasten this development, so pregnant with good for all mankind, not merely by originating and producing new goods and services, but also by putting their weight behind changes in the process of distribution, to the end that the material benefits so created may be more widely used. The good life lies ahead somewhere along the road of abundance, and we shall find it by continuing in that direction with stout hearts and open minds.