Incentives Bring Growth

March 26, 1962

My colleague Raymond Moley has just written the biography of a remarkable man—The American Century of John C. Lincoln (Duell, Sloan and Pearce, $4.95). John Lincoln was a genius peculiarly American—a sort of amalgam of Thomas Edison and Henry Ford. Like Edison, he was a prolific inventor. He took out 54 patents over a period of 65 years. Like Edison, again, his inventions showed amazing versatility—electric motors, brakes, drills, arc lamps, apparatus for curing meat, new types of steel springs. His chief contributions were in the field of electric welding of metals. As with Edison, some of his schemes and inventions were commercial failures, but his successes enormously outnumbered them. Like Edison, finally, his interest was primarily in invention or problem-solving for its own sake, rather than in the profits that it brought.

There were also, in his career and temperament, striking similarities to Henry Ford. His genius was dominantly practical. He was constantly devising methods of reducing costs, of making things cheaper, faster, better. Like Ford, he lived far below the level that his income would have permitted, and kept plowing back his profits into the expansion of his business.

PHENOMENAL WAGES

He started the Lincoln Electric Co. in 1895 with a capital of $200. By 1906 it was duly incorporated with a capital of $10,000. Its twenty employees grew to 70 by 1910, to 100 by 1911, to 150 by 1914. In 1907 Lincoln’s brother, James F., his junior by seventeen years, entered his employ at the age of 24. In 1913, at 47, John decided that he preferred a life of engineering and invention to a career as a business executive. As he found in James all the characteristics that make a successful head of a growing company, they entered into an arrangement in 1914 by which James took over the business management.

Under James’s management, the business of the company grew prodigiously. In 1961 it had 1,345 employees and did a gross annual business of nearly $60 million. Its prosperity has been based on the inventive genius of John C., on an initial lead in building certain types of motors, concentration on finding lower- cost methods, the wise use of engineering talent, and the “incentive management” system of James F., including profit-sharing, piecework, bonuses, employee stock ownership, and merit rating. Lincoln Electric’s wage policy has been extraordinary. The earnings of its factory workers range from $5,500 to $14,000 a year.

LINCOLNS AND FORDS

John C. Lincoln died in 1959, at the ripe age of 93. What is amazing is the range of his activities and inventions after he had passed the conventional retirement age of 65. He was making major inventions after 70. At 78 he took over and rehabilitated the Bagdad copper properties. In his late 70s, he wrote and published an analysis of the New Testament, and was actively preaching and propagating the tax theories of Henry George.

Will there be another career like that of John C. Lincoln? asks Moley at the end of his book. That, I am inclined to answer, depends on our future national policy. Certainly there will be other men born with the temperament of John Lincoln—men to whom life is a constant adventure and an unending quest, men with tireless drive and unquenchable curiosity, men more interested in invention and problem-solving than in any money profit that may come from them. But an atmosphere of hostility toward business, a tax on corporate profits of 52 percent, and of up to 91 percent on the personal income that may remain, must drastically restrict what even such men can achieve.

The profits that men like Henry Ford and John C. Lincoln plowed back into their businesses, increasing employment, production, wages and the amenities, welfare and living standards of the consuming community, were as surely “devoted to a public purpose” as any government activity. It is this capital investment that is the true and only source of that “national economic growth” that our political leaders profess to be so eager to increase. It will not be increased, but retarded, by punitive taxation, reckless government spending, and printing more paper money.