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Industrial statesmanship in a changing world
Industrial Statesmanship in a Changing World* by THOMAS B. MCCABE
Chairmun of the Board, Scott Paper Company
Thank you very much, Laurence LePage, and thank you, ladies and gentlemen. Only a very prejudiced friend like Laurence LePage could utter such kind words and extend such a gracious welcome. To receive a Franklin Institute award is a high honor which gives me, as I am sure it gave my distinguished predecessors, a great sense of humility. The heartiness of your welcome and the friendly faces of this large audience will he a cherished memory. As Laurence was reading the citation, one of the things Franklin wrote came to mind, “Now that I have sheep and a cow, everybody bids me good morrow.” I was not unaware, of course, that tonight of all nights I would be among friends. Several here are responsible for whatever success has come my way. Without their devotion and dedicated assistance I would not be receiving this award. I refer especially to my wife Jean, to the Directors of Scott, to the officers of Swarthmore College, to the Trustees of the Eisenhower Fellowship Program, the Marketing Science Institute, and the Federal Reserve, many of whom are present here. I am especially grateful to those of you who have come long distances for this occasion, and to the many directors and officers of institutions with which I am or have been associated. It is almost paradoxical to me that The Franklin Institute should set a time for recognizing contributions to the field of industrial management. Surely no area of American life today benefits more from the Institute’s own immense contributions than does industry itself. It would seem more fitting, therefore, that we in industrial management should honor this marvelously creative and imaginative monument to Benjamin Franklin. I am pleased that Scott’s Director of Research, Jim Eberl, is on your Board of Managers and that we strongly support and participate in your program. None of us could do more for the future of our country and of those who come after us than to help expand the activities and influence of institutions of this kind. Our world, as the scientists and the technicians of the Institute know so well, is one of rapid change. The pace of scientific and technological progress has been increasing ever since it was possible to use such words to describe the acts of man, and it has accelerated materially in the past aeven or eight years. * Delivered at the November 20, 1963, Stated Meeting of the Institute, in acceptance of the Vermilye Medal.
166
Industrial
Statesman&p
During this period expenditures for research and development have equaled all such expenditures for all of the previous years of our country’s history. According to Professor Derek Price, the numbers of scientists have multiplied by ten for every mere doubling of the population. “For three centuries,” he says, “science has been exploding into our civilization at a rate that makes the much-publicized population explosion look like a pop. And if you can believe it,” he says, “almost 90% of all the scientists who have ever lived are alive now.” Changes have come so rapidly that we’ve been forced to accept them without study of all that they portend. One result is that oftimes we fail to discern just what we are accomplishing. It was Winston Churchill who said, “It is wise to look forward, but not further than you can see.” Each day from the window of my oflice I can watch scores of large commercial jetliners taking off and landing, carrying hundreds of passengers on varied errands. A brief decade ago the only American jets on the ground or in the air were military ones. The speed of commercial planes has doubled each decade since this means of transportation was introduced, and the commercial planes now being designed will have three times the speed of the present ones. We are told that the planes of tomorrow will take off vertically as well as horizontally, and that eventually the air will be as congested as the highways. In other fields the story is the same. The initials IBM (and Thomas Watson, Mr. IBM himself is right here) are so familiar to all of us that it is quite easy to be brought up short with the fact that in 1953 International Business Machines was just preparing to market its first business computer. We are told that the computers already on the drawing board will make obsolete those now in existence, and that the new ones will be used for such diverse purposes as air and land traffic control and the planning, if you will believe it, and purchasing of menus designed to fit the needs of any family. I am dazed when scientists refer to the combination of advanced data processing and the biophysical and chemistry work in progress as a result of the space program and its effect on preventive medicine and the longevity of human life. When scientists talk of a life expectancy of a hundred to a hundred and fifty years, I do not delude myself that I shall personally attain any such goal. But, new drug products and advances in the field of medicine are almost bewildering in their ability to prolong human life, even though they frustrate me with their esoteric and unpronounceable names. In chemistry the creation of fluorocarbon compounds and polymers by DuPont and a score or more of man-made fibers has contributed materially to our economy, as have the many advances in food production and papermaking. Only six years ago the space surrounding the earth was occupied solely by such a matter 88 .pertained to nature. Today, however, an ever increasing number of man-made objects are orbiting the globe. Paralleling these developments are countless others in various industrial fields. The mechanical revolution has been superseded by the electronic and nuclear. Developments here will eliminate barriers of time and distance in even the most complex enterprises.
Vol. 277, No. 2. February 1964
167
T)#rnaS
B. McCabe
Man has done so much, but he still has so much to do. We know the Godgiven creativity and ingenuity of the mind of man is capable of transcending almost any obstacle. I firmly believe the immense industrial complex of the United States can make greater contributions to the knowledge of man in his relationship with his fellow man than ever in the past. If we are to do this, industrial management, for all its record of accomplishment, will have to demonstrate a level of statesmanship unprecedented in its history. I say this because only through enlightened industrial leadership in the United States will we recognize that industry is the goose that lays the golden egg, that industry and commerce produce the wealth to finance the arts, the education, the research, the institutions of this kind, and the employment necessary for fulfillment of our dreams. Without economic statesmanship of the highest order we cannot retain our leadership in world affairs. Industrial leadership in the United States has never faced greater challenges or carried greater responsibilities. At the same time, it has never had a better opportunity to contribute to the progress of this nation and that of the whole world. How can we most effectively work out this objective? How important is industry’s role in this nation and its future? Undoubtedly one of the most important problems facing industry is the impact of mechanization and automation. Many people confuse the two and I’m not going to attempt to define them. I will simply speak of automation, but in 90% of the things mentioned about automation I will really mean mechanization. Last week George Meany, President of the Labor Unions, AFL-CIO, declared war on automation as “a real curse.” The New York Herald Tribune in its editorial had this to say: “Automation is a continuation of the industrial revolution at a pace that is so enormously increased that it constitutes, in effect, a new revolution. And it cannot be met, as the handworkers tried to meet the original use of machinery, by breaking the machines. What is needed is the courage and imagination to face up to the altered patterns that automation involves. It is a great challenge, as demanding in its own way as the challenge to statesmanship of nuclear weapons.” Through mechanization, retraining, development of new products and markets, diversification, and marketing research many steps have been taken to expand manufacturing and distribution and to alleviate the areas of economic hardship which have arisen. Unfortunately, there are still businesses where the lack of long-range plans, the lack of knowledge of modern marketing, and the lack of industrial statesmanship in the transition to automation have resulted in loss of employment and caused serious social and economic distress. We can really be proud of the many companies farsighted enough to meet the problems of automation and to deal fairly with the human considerations involved. In many companies the welfare of the employees has been of paramount consideration, and the transition has proved to be successful. I have mentioned new products, new markets and diversification as aids in combatting the economic problems posed by automation. In these areas
168
Journal of the Franklin Institute
government can play a vital role in fostering the growth necessary to absorb our increasing labor force and to create the wealth necessary to meet the demands of society. First, government should clear-up the confusing mass of regulations and legislation pertinent to business so that management will be able to understand more precisely what is and what is not subject to goveinmental attack as a violation of law. For some time it has been almost impossible to know before the fact what the government will welcome or frown upon. It was gratifying that one of Governor Scranton’s first acts on assuming office was to welcome businessmen and facilitate their access to his administration in Harrisburg. A second step which Congress should take is reduction of taxes. I am sure there are today thousands of new products needing only sufficient marketing funds to be introduced onto the shelves of stores across the nation, creating thousands of new jobs in the process. A more substantial reduction in corporate taxes than is provided in the current House bill would make those funds available and would be a very positive step toward alleviating the pressure of unemployment. Such reduction in corporate taxes would assist materially in maintaining and, in some instances, even lowering the price levels of industrial products and in making business more profitable. Current public reaction seems to call for curtailment of government expenditures along with a tax reduction. Apparently the Puritan ethic concerning government fiscal policy is deeply imbedded in the minds of a large segment of the public, and Senator Byrd’s committee is going to wait to see what the new budget will be before acting on a tax bill. If Federal expenditures are lowered and more significant reductions made in corporate taxes, such a favorable psychological climate would be created that our economy would be vastly stimulated. The more profitable U. S. businesses become, the more foreign capital will be encouraged to invest here ; and so a collateral result would be an improvement in our international balance of payments. Another weapon which I mentioned as an aid in solving the problems of automation is marketing research. Industrial management can significantly increase its technical knowledge in this field. Our present understanding of what motivates people to buy, or refuse to buy, is very slight, and this weakness extends to our established products as well as to the new products of our research laboratories, Many of the companies which are most successful in developing new products have found themselves sorely pressed upon marketing them. It is estimated that of about 6,000 new products introduced each year only 10% succeed. Most of the products fail, due to inadequate research before their introduction into the market. Think of the colossal economic waste in this procedure. I believe it was the late Owen D. Young, one of the really great economic statesmen, who said : “It is not the crook in modern business that we fear, but the honest man who does now know what he is doing.” I have advocated for many years the use of scientific methods in solving marketing problems. Three years ago, after considerable investigation in the
Vol. 271, No. 2, February 1964
169
Thomas R. McCabe
academic and business fields, I proposed that a non-profit independent organization be formed for the purpose of accelerating the use of scientific techniques in marketing. As you may know, this initial objective has been accomplished. The Marketing Science Institute was organized last year and is in operation here in Philadelphia under the able leadership of Dr. Wendell R. Smith, who is here this evening. The Marketing Institute has received enthusiastic support in the educational world, particularly from the leading schools of business administration. We believe that over the years it will contribute substantially to the development of a technology of marketing. I should like to pay my respects to those men here tonight whose companies are sponsors of the Marketing Science Institute: Crawford Greenewalt of DuPont, Fred Borch of General Electric, Tom Watson of IBM, Bev Murphy and Jack Dorrance of Campbell Soup, Elmer Engstrom of RCA, Charlie Kellstadt of Sears-Roebuck, Harry Dunning of Scott Paper. Still another great challenge to business leaders is the necessity for a broader appreciation of education, not only at the college and graduate school levels but in the public schools. One has only to read what is taking place in our local schools in Chester and Philadelphia to realize that we are facing a very serious problem. United States corporations gave 470 million dollars last year for cultural, educational and philanthropic purposes, and more than one-third of this was for education. I am pleased to see that there is an organized effort on the part of business to assist more generously the Negro colleges that are so desperately in need of aid. Since 1940 corporate giving has increased at nearly four times the rate of corporate profits. But, I am concerned that business leaders are not expending the time and effort commensurate with their dollar contributions to win a greater degree of support from the college faculties and students for the fundamental concepts, the advantages, and, may I say, the romance of the American competitive private enterprise system. If we are to make our educational dollars productive it would seem imperative that business leaders take a more active and constructive part in the administration of colleges and in counseling with college faculties and students. We have made exceptional progress in bridging the gap that existed between education and business when I was a student and Woodrow Wilson, the educator, was President of the United States. Then most businessmen thought Wilson had horns and a tail. He was referred to as “that Princeton professor.” Yet it was Woodrow Wilson who wrote: “The men who act stand nearer to the mass of men than do the men who write. The men who write love proportion; the men who act must strike out on practical lines of action and neglect proportion. Here, unquestionably, we come upon the heart of the perennial misunderstanding.” While there was not much contact between the academic world and business in Wilson’s day, there are today indications of a growing mutual interest. In Scott Paper Company, for example, we employ many consultants: physicists, chemists, psychologists, economists, professors of business administration
170
Journal of the Franklin Institute
Industrial
Statesmanship
from college faculties. We offer summer employment to a host of college students and some professors. We give scholarships in thirty-odd colleges and universities and make liberal contributions to several of them. Some of our chief executives lecture in college classrooms. Professors are invited, in turn, to talk to our men and women. But we could and should do more. Whenever our business leaders employ the power, imagination and experience which they possess to solve a problem something happens, and something significant is beginning to happen to higher education. Let’s hope the same interest will be shown in the secondary schools. There are many other challenges: the need for a higher standard of industrial statesmanship in labor-management relationships, in communications, in our foreign trade activities, and in meeting the live issue of providing more employment for underprivileged minorities. But the last great challenge I wish to mention is the necessity for men in business to participate more actively in public affairs. In spite of the heartaches and frustrations which one encounters in public service, no experience is more rewarding, for none offers a comparable opportunity to broaden one’s outlook and prepare for greater service to one’s country and to business in general. The business leader has an obligation to his company and to the people who look to him for guidance to keep his mind alive and to participate in the events of the world around him. During World War II hundreds of business executives served in government and gained experience of tremendous value to the nation in the postwar recovery period. In helping to perform miracles in war production businessmen learned there was a vast world outside of the parochial environments of their own companies, and they were thrown into competition with men and forces that were far more complex and powerful than anything they had encountered before. When they returned to private business the problems there seemed much easier to cope with than before. Admiral Byrd has said: “A man doesn’t begin to attain wisdom until he recognizes that he is no longer indispensable.” Now we’re in a cold war and more of our young, able and best executives should be taking sabbatical leaves to engage in some phase of public service. Certainly the government needs more such men, and there should not be any hesitancy in serving. Naturally, there are certain positions of a highly political nature that should be avoided, but with those exceptions I believe strongly that business leaders owe it to society, to their companies, to their families, and, most importantly, to themselves to break away from their business environments for limited periods to serve in some public endeavor. I say this in face of a newspaper editorial of only this morining which said: “The Senate has been giving some pretty convincing demonstrations lately that good men had better say no to government service unless they have tough stomachs and tougher hides and can rise above the slings and arrows of a public-minded Senate.” Ex-President Truman once aptly said: “If you can’t stand the political heat, you had better stay out of the kitchen.”
vol. 277, No. 2, February1964
171
Thomas B. McCabe
Some of our finest business leaders have been badly “burnt and wounded” in the battle of the Potomac, but thank God for them. Two of the finest examples of businessmen who have risen above personal considerations to serve their government are the former Secretary of Defense, Tom Gates, who is a Director of Scott, and Bob McNa,mara, a former Director of Scott and Tom’s successor in the Defense position. It is with great personal pride that I speak of these two men. I had an opportunity to observe their deep soul-searching before they accepted their positions in government. Both of these men have made extraordinary financial and other sacrifices to serve in Washington. Each has performed brilliantly and has been of immeasurable value to our nation. Our industrial leadership has proved its value to this nation so often that neither I nor anyone else need defend it. The increasing complexity of our society and economy, however, warn against any letdown in our efforts. American industry will have to extend itself as never before if it is to fulfill its obligations to our country, our way of life, our people, and ou: future. Success was never a more difficult task ; it was never more promising. Thank you. (Applause as audience arose in standing ovation.) President
LePage:
Thomas McCabe, you are indeed a most illustrious addition to our distinguished group of Vermilye Medalists. We congratulate you again, and thank you and all our guests who came here this evening to do you honor. This meeting is now adjourned.
172
Journal of the Franklin Institute
Chairmun of the Board, Scott Paper Company
Thank you very much, Laurence LePage, and thank you, ladies and gentlemen. Only a very prejudiced friend like Laurence LePage could utter such kind words and extend such a gracious welcome. To receive a Franklin Institute award is a high honor which gives me, as I am sure it gave my distinguished predecessors, a great sense of humility. The heartiness of your welcome and the friendly faces of this large audience will he a cherished memory. As Laurence was reading the citation, one of the things Franklin wrote came to mind, “Now that I have sheep and a cow, everybody bids me good morrow.” I was not unaware, of course, that tonight of all nights I would be among friends. Several here are responsible for whatever success has come my way. Without their devotion and dedicated assistance I would not be receiving this award. I refer especially to my wife Jean, to the Directors of Scott, to the officers of Swarthmore College, to the Trustees of the Eisenhower Fellowship Program, the Marketing Science Institute, and the Federal Reserve, many of whom are present here. I am especially grateful to those of you who have come long distances for this occasion, and to the many directors and officers of institutions with which I am or have been associated. It is almost paradoxical to me that The Franklin Institute should set a time for recognizing contributions to the field of industrial management. Surely no area of American life today benefits more from the Institute’s own immense contributions than does industry itself. It would seem more fitting, therefore, that we in industrial management should honor this marvelously creative and imaginative monument to Benjamin Franklin. I am pleased that Scott’s Director of Research, Jim Eberl, is on your Board of Managers and that we strongly support and participate in your program. None of us could do more for the future of our country and of those who come after us than to help expand the activities and influence of institutions of this kind. Our world, as the scientists and the technicians of the Institute know so well, is one of rapid change. The pace of scientific and technological progress has been increasing ever since it was possible to use such words to describe the acts of man, and it has accelerated materially in the past aeven or eight years. * Delivered at the November 20, 1963, Stated Meeting of the Institute, in acceptance of the Vermilye Medal.
166
Industrial
Statesman&p
During this period expenditures for research and development have equaled all such expenditures for all of the previous years of our country’s history. According to Professor Derek Price, the numbers of scientists have multiplied by ten for every mere doubling of the population. “For three centuries,” he says, “science has been exploding into our civilization at a rate that makes the much-publicized population explosion look like a pop. And if you can believe it,” he says, “almost 90% of all the scientists who have ever lived are alive now.” Changes have come so rapidly that we’ve been forced to accept them without study of all that they portend. One result is that oftimes we fail to discern just what we are accomplishing. It was Winston Churchill who said, “It is wise to look forward, but not further than you can see.” Each day from the window of my oflice I can watch scores of large commercial jetliners taking off and landing, carrying hundreds of passengers on varied errands. A brief decade ago the only American jets on the ground or in the air were military ones. The speed of commercial planes has doubled each decade since this means of transportation was introduced, and the commercial planes now being designed will have three times the speed of the present ones. We are told that the planes of tomorrow will take off vertically as well as horizontally, and that eventually the air will be as congested as the highways. In other fields the story is the same. The initials IBM (and Thomas Watson, Mr. IBM himself is right here) are so familiar to all of us that it is quite easy to be brought up short with the fact that in 1953 International Business Machines was just preparing to market its first business computer. We are told that the computers already on the drawing board will make obsolete those now in existence, and that the new ones will be used for such diverse purposes as air and land traffic control and the planning, if you will believe it, and purchasing of menus designed to fit the needs of any family. I am dazed when scientists refer to the combination of advanced data processing and the biophysical and chemistry work in progress as a result of the space program and its effect on preventive medicine and the longevity of human life. When scientists talk of a life expectancy of a hundred to a hundred and fifty years, I do not delude myself that I shall personally attain any such goal. But, new drug products and advances in the field of medicine are almost bewildering in their ability to prolong human life, even though they frustrate me with their esoteric and unpronounceable names. In chemistry the creation of fluorocarbon compounds and polymers by DuPont and a score or more of man-made fibers has contributed materially to our economy, as have the many advances in food production and papermaking. Only six years ago the space surrounding the earth was occupied solely by such a matter 88 .pertained to nature. Today, however, an ever increasing number of man-made objects are orbiting the globe. Paralleling these developments are countless others in various industrial fields. The mechanical revolution has been superseded by the electronic and nuclear. Developments here will eliminate barriers of time and distance in even the most complex enterprises.
Vol. 277, No. 2. February 1964
167
T)#rnaS
B. McCabe
Man has done so much, but he still has so much to do. We know the Godgiven creativity and ingenuity of the mind of man is capable of transcending almost any obstacle. I firmly believe the immense industrial complex of the United States can make greater contributions to the knowledge of man in his relationship with his fellow man than ever in the past. If we are to do this, industrial management, for all its record of accomplishment, will have to demonstrate a level of statesmanship unprecedented in its history. I say this because only through enlightened industrial leadership in the United States will we recognize that industry is the goose that lays the golden egg, that industry and commerce produce the wealth to finance the arts, the education, the research, the institutions of this kind, and the employment necessary for fulfillment of our dreams. Without economic statesmanship of the highest order we cannot retain our leadership in world affairs. Industrial leadership in the United States has never faced greater challenges or carried greater responsibilities. At the same time, it has never had a better opportunity to contribute to the progress of this nation and that of the whole world. How can we most effectively work out this objective? How important is industry’s role in this nation and its future? Undoubtedly one of the most important problems facing industry is the impact of mechanization and automation. Many people confuse the two and I’m not going to attempt to define them. I will simply speak of automation, but in 90% of the things mentioned about automation I will really mean mechanization. Last week George Meany, President of the Labor Unions, AFL-CIO, declared war on automation as “a real curse.” The New York Herald Tribune in its editorial had this to say: “Automation is a continuation of the industrial revolution at a pace that is so enormously increased that it constitutes, in effect, a new revolution. And it cannot be met, as the handworkers tried to meet the original use of machinery, by breaking the machines. What is needed is the courage and imagination to face up to the altered patterns that automation involves. It is a great challenge, as demanding in its own way as the challenge to statesmanship of nuclear weapons.” Through mechanization, retraining, development of new products and markets, diversification, and marketing research many steps have been taken to expand manufacturing and distribution and to alleviate the areas of economic hardship which have arisen. Unfortunately, there are still businesses where the lack of long-range plans, the lack of knowledge of modern marketing, and the lack of industrial statesmanship in the transition to automation have resulted in loss of employment and caused serious social and economic distress. We can really be proud of the many companies farsighted enough to meet the problems of automation and to deal fairly with the human considerations involved. In many companies the welfare of the employees has been of paramount consideration, and the transition has proved to be successful. I have mentioned new products, new markets and diversification as aids in combatting the economic problems posed by automation. In these areas
168
Journal of the Franklin Institute
government can play a vital role in fostering the growth necessary to absorb our increasing labor force and to create the wealth necessary to meet the demands of society. First, government should clear-up the confusing mass of regulations and legislation pertinent to business so that management will be able to understand more precisely what is and what is not subject to goveinmental attack as a violation of law. For some time it has been almost impossible to know before the fact what the government will welcome or frown upon. It was gratifying that one of Governor Scranton’s first acts on assuming office was to welcome businessmen and facilitate their access to his administration in Harrisburg. A second step which Congress should take is reduction of taxes. I am sure there are today thousands of new products needing only sufficient marketing funds to be introduced onto the shelves of stores across the nation, creating thousands of new jobs in the process. A more substantial reduction in corporate taxes than is provided in the current House bill would make those funds available and would be a very positive step toward alleviating the pressure of unemployment. Such reduction in corporate taxes would assist materially in maintaining and, in some instances, even lowering the price levels of industrial products and in making business more profitable. Current public reaction seems to call for curtailment of government expenditures along with a tax reduction. Apparently the Puritan ethic concerning government fiscal policy is deeply imbedded in the minds of a large segment of the public, and Senator Byrd’s committee is going to wait to see what the new budget will be before acting on a tax bill. If Federal expenditures are lowered and more significant reductions made in corporate taxes, such a favorable psychological climate would be created that our economy would be vastly stimulated. The more profitable U. S. businesses become, the more foreign capital will be encouraged to invest here ; and so a collateral result would be an improvement in our international balance of payments. Another weapon which I mentioned as an aid in solving the problems of automation is marketing research. Industrial management can significantly increase its technical knowledge in this field. Our present understanding of what motivates people to buy, or refuse to buy, is very slight, and this weakness extends to our established products as well as to the new products of our research laboratories, Many of the companies which are most successful in developing new products have found themselves sorely pressed upon marketing them. It is estimated that of about 6,000 new products introduced each year only 10% succeed. Most of the products fail, due to inadequate research before their introduction into the market. Think of the colossal economic waste in this procedure. I believe it was the late Owen D. Young, one of the really great economic statesmen, who said : “It is not the crook in modern business that we fear, but the honest man who does now know what he is doing.” I have advocated for many years the use of scientific methods in solving marketing problems. Three years ago, after considerable investigation in the
Vol. 271, No. 2, February 1964
169
Thomas R. McCabe
academic and business fields, I proposed that a non-profit independent organization be formed for the purpose of accelerating the use of scientific techniques in marketing. As you may know, this initial objective has been accomplished. The Marketing Science Institute was organized last year and is in operation here in Philadelphia under the able leadership of Dr. Wendell R. Smith, who is here this evening. The Marketing Institute has received enthusiastic support in the educational world, particularly from the leading schools of business administration. We believe that over the years it will contribute substantially to the development of a technology of marketing. I should like to pay my respects to those men here tonight whose companies are sponsors of the Marketing Science Institute: Crawford Greenewalt of DuPont, Fred Borch of General Electric, Tom Watson of IBM, Bev Murphy and Jack Dorrance of Campbell Soup, Elmer Engstrom of RCA, Charlie Kellstadt of Sears-Roebuck, Harry Dunning of Scott Paper. Still another great challenge to business leaders is the necessity for a broader appreciation of education, not only at the college and graduate school levels but in the public schools. One has only to read what is taking place in our local schools in Chester and Philadelphia to realize that we are facing a very serious problem. United States corporations gave 470 million dollars last year for cultural, educational and philanthropic purposes, and more than one-third of this was for education. I am pleased to see that there is an organized effort on the part of business to assist more generously the Negro colleges that are so desperately in need of aid. Since 1940 corporate giving has increased at nearly four times the rate of corporate profits. But, I am concerned that business leaders are not expending the time and effort commensurate with their dollar contributions to win a greater degree of support from the college faculties and students for the fundamental concepts, the advantages, and, may I say, the romance of the American competitive private enterprise system. If we are to make our educational dollars productive it would seem imperative that business leaders take a more active and constructive part in the administration of colleges and in counseling with college faculties and students. We have made exceptional progress in bridging the gap that existed between education and business when I was a student and Woodrow Wilson, the educator, was President of the United States. Then most businessmen thought Wilson had horns and a tail. He was referred to as “that Princeton professor.” Yet it was Woodrow Wilson who wrote: “The men who act stand nearer to the mass of men than do the men who write. The men who write love proportion; the men who act must strike out on practical lines of action and neglect proportion. Here, unquestionably, we come upon the heart of the perennial misunderstanding.” While there was not much contact between the academic world and business in Wilson’s day, there are today indications of a growing mutual interest. In Scott Paper Company, for example, we employ many consultants: physicists, chemists, psychologists, economists, professors of business administration
170
Journal of the Franklin Institute
Industrial
Statesmanship
from college faculties. We offer summer employment to a host of college students and some professors. We give scholarships in thirty-odd colleges and universities and make liberal contributions to several of them. Some of our chief executives lecture in college classrooms. Professors are invited, in turn, to talk to our men and women. But we could and should do more. Whenever our business leaders employ the power, imagination and experience which they possess to solve a problem something happens, and something significant is beginning to happen to higher education. Let’s hope the same interest will be shown in the secondary schools. There are many other challenges: the need for a higher standard of industrial statesmanship in labor-management relationships, in communications, in our foreign trade activities, and in meeting the live issue of providing more employment for underprivileged minorities. But the last great challenge I wish to mention is the necessity for men in business to participate more actively in public affairs. In spite of the heartaches and frustrations which one encounters in public service, no experience is more rewarding, for none offers a comparable opportunity to broaden one’s outlook and prepare for greater service to one’s country and to business in general. The business leader has an obligation to his company and to the people who look to him for guidance to keep his mind alive and to participate in the events of the world around him. During World War II hundreds of business executives served in government and gained experience of tremendous value to the nation in the postwar recovery period. In helping to perform miracles in war production businessmen learned there was a vast world outside of the parochial environments of their own companies, and they were thrown into competition with men and forces that were far more complex and powerful than anything they had encountered before. When they returned to private business the problems there seemed much easier to cope with than before. Admiral Byrd has said: “A man doesn’t begin to attain wisdom until he recognizes that he is no longer indispensable.” Now we’re in a cold war and more of our young, able and best executives should be taking sabbatical leaves to engage in some phase of public service. Certainly the government needs more such men, and there should not be any hesitancy in serving. Naturally, there are certain positions of a highly political nature that should be avoided, but with those exceptions I believe strongly that business leaders owe it to society, to their companies, to their families, and, most importantly, to themselves to break away from their business environments for limited periods to serve in some public endeavor. I say this in face of a newspaper editorial of only this morining which said: “The Senate has been giving some pretty convincing demonstrations lately that good men had better say no to government service unless they have tough stomachs and tougher hides and can rise above the slings and arrows of a public-minded Senate.” Ex-President Truman once aptly said: “If you can’t stand the political heat, you had better stay out of the kitchen.”
vol. 277, No. 2, February1964
171
Thomas B. McCabe
Some of our finest business leaders have been badly “burnt and wounded” in the battle of the Potomac, but thank God for them. Two of the finest examples of businessmen who have risen above personal considerations to serve their government are the former Secretary of Defense, Tom Gates, who is a Director of Scott, and Bob McNa,mara, a former Director of Scott and Tom’s successor in the Defense position. It is with great personal pride that I speak of these two men. I had an opportunity to observe their deep soul-searching before they accepted their positions in government. Both of these men have made extraordinary financial and other sacrifices to serve in Washington. Each has performed brilliantly and has been of immeasurable value to our nation. Our industrial leadership has proved its value to this nation so often that neither I nor anyone else need defend it. The increasing complexity of our society and economy, however, warn against any letdown in our efforts. American industry will have to extend itself as never before if it is to fulfill its obligations to our country, our way of life, our people, and ou: future. Success was never a more difficult task ; it was never more promising. Thank you. (Applause as audience arose in standing ovation.) President
LePage:
Thomas McCabe, you are indeed a most illustrious addition to our distinguished group of Vermilye Medalists. We congratulate you again, and thank you and all our guests who came here this evening to do you honor. This meeting is now adjourned.
172
Journal of the Franklin Institute