The New Meaning of Business

I

Rise of the Moral Structure

THINK how seldom it is nowadays that you hear anybody say, “Business is business.” Or think what your mental reaction is when you do happen to hear a man confessing that cynical code. You rank him low in the scale of business. Why? Because business is becoming both a civility and a profession and your expectations of it have changed.

Two powerful forces are there acting and reacting. Business expects you to respond to the view it now wishes to take of itself, and even though you may not be aware of it, you do. Business, in turn, responds to your higher expectations of it.

So all structures of moral progress are laid up, one course at a time, in a tedious manner. The beginnings of the foundation are never witnessed. Words and ceremonies begin with the corner stone, which is a middle symbol, already supported by ideas sunk deep in the ground. Presently there is an elevation. You cannot see it originally because it advanced so little by little and you were looking at it all the time. Almost you forget by the time it is finished what was there in that place before.

Regard now the elevation of the structure that may be called the new meaning of American business. In June, 1927, a group of big business men were gathered together to dedicate a group of buildings comprising the George F. Baker Foundation of the Graduate School of Business Administration of Harvard University. George F. Baker is one of the very rich elder bankers of Wall Street. Owen D. Young, who made the dedication address, is chairman of the General Electric Company. He said:

“If I were to speak for men of business, which I am none too well qualified to do, it would be to express gratification that business is recognized at last as a profession, and being so recognized by Harvard, becomes a learned profession. If I were to speak for men of learning, which I am less qualified to do, it would be to express satisfaction that scholars are now to find their way to the market place as they have heretofore to the pulpit, to the law courts, to the hospital and to the forum.

“Looking backward, one wonders why our visit for this purpose had been so long delayed. Why is it that the Harvard Business School was not founded until 1908 and not adequately housed until this hour? The medical school was established in 1782, the law school in 1817 and a divinity school in 1819. The education of the ministry, however, may be said to have been a prime object of the foundation itself, and the chief effort of our earlier years. The founders of Harvard said that they ‘dreaded to leave an illiterate ministry to the churches when our present ministers shall lie in the dust.’ Is one to conclude that Harvard was fearful of an illiterate ministry of religion in 1636 and was not apprehensive of an illiterate ministry of business until 1908?”

II

What Was There Before

And can you remember what was there before—what American business signified before this new elevation of meaning came into it?

Less than twenty years before this, Mr. Justice Harlan, of the United States Supreme Court, dissenting from an opinion of the majority on the construction of the Sherman Antitrust Act, reviewed the background of that famous piece of legislation in these authentic words:

“All who recall the condition of the country in 1890 will remember that there was everywhere, among the people generally, a deep feeling of unrest. The nation had been rid of human slavery—fortunately, as all now feel—but the conviction was universal that the country was in real danger from another kind of slavery sought to be fastened on the American people—namely, the slavery that would result from aggregations of capital in the hands of a few individuals and corporations controlling, for their own profit and advantage exclusively, the entire business of the country, including the production and sale of the necessaries of life. Such a danger was thought to be then imminent, and all felt that it must be met firmly and by such statutory regulations as would adequately protect the people against oppression and wrong, Congress therefore took the matter up and gave the whole subject the fullest consideration.”

His voice even then was of the past. He was insisting that the Supreme Court should interpret the law in 1911 as it had in 1896, literally; but the majority, from wrestling with a sense of new unformulated problems, had groped its way to a different conclusion. Conditions were changing. Change itself had become a condition. The growing magnitude of business had overwhelmed corporations as already partnerships had been overwhelmed. Then had appeared the trust, a group of corporations acting together. Moreover, the relation between business and society was no longer volitional on either side. It was an imperative relation.

Many people believed, and it seemed logically indicated, that what had to be decided was whether business should govern society or society should govern business. But how did society propose to govern business? By device of law, called the Sherman Antitrust Act, intended to impose upon business a rule of competition, thinking thereby to limit the power of business in any one of its body formations. That, of course, was fear. Oppositely, society on its material side was greatly to be served by the very power it wished to limit, since business in big vertical and horizontal formations, theoretically at least, could create wealth in a prodigious manner on a falling curve of cost, thereby not only increasing the quantity of goods that satisfy human wants but at the same time making them cheaper.

Moreover, as to competition—and this was the immediate question—who knew the whole nature of it? Hitherto it had been viewed always in one light, as struggle and survival. What did that mean if not that the strongest and most ruthless were bound to survive? In that case, the ultimate end of competition was monopoly, and monopoly was the evil to be feared.

Was there no other truth about competition? How came it to be that in nature, although the competition was apparently remorseless, still many soft frail forms were seen to survive and flourish? What was that principle?

At that time a thought that has since become commonplace among us was still strange. That was competition in service. The first notable application of it was in the case of railroads. Competition among them as warfare, touching rates particularly, had produced such intolerable evils that the Government, through the Interstate Commerce Commission, was taking the power of rate making away from them. Thus, on one hand, the Government was making it impossible for the railroads to do what it was, on the other hand, trying to make all other business do.

To this contradiction we had come. On one side was fear of the power of business. On the other was contempt of public opinion and rule of the ruthless ego, resisting every effort on the part of society to impose upon it a sense of social accountability. But when the railroads could no longer compete in rates, was that the end of their competition? On the contrary, it became keener than ever before, only in a new character. It was competition in service, social utility, civility, with rates alike to all. Was that something business as a whole might learn?

Such reflections as these animated the majority mind of the court and moved it to express an opinion on the law that had nothing to do with the case. It said the law could not be understood to prohibit every form of contract in restraint of trade, because almost any contract you could imagine had in it some element of restraint; nevertheless, on specific ground, it dissolved the defendant trust, saying it was bad as a proposition of fact. Mr. Justice Harlan concurred in the verdict and dissented from the exposition. He did not overdraw the picture as it was in 1890. What he did not share was a vision of faith that was in his associates. They had somehow got sense of a new principle transacting in these matters. They had recognized the signs of a movement in business from a law of the ego to one of the herd.

What has happened to the law by interpretation is the obverse of what has happened to the regard in which business holds itself, and this is very striking on both sides. The law has been completely revolved.

The Sherman Antitrust Act says: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal.”

In 1896, deciding the celebrated Trans-Missouri Freight case, the court definitely refused to construe into the law either word “undue” or “unreasonable,” before restraint. Twice it did this and then declined to hear the matter argued. It had made up its mind and the law was clear.

In 1904, deciding the famous Northern Securities case—the Northern Securities holding company, resulting from the Northern Pacific corner on the New York Stock Exchange, was an idea of locking up control of railroads away from men like E. H. Harriman—the court said: “The mere existence of such a combination and the power acquired by the holding company constitute a menace to and a restraint upon the freedom of commerce which Congress intended to recognize and protect.”

The first interpretation now is complete. The words of the law are absolute, permitting of no definitions, and bigness or power in itself is a menace and illegal, regardless of how it is used.

Then came the Standard Oil and American Tobacco cases in 1911 and 1912 respectively. The court dissolved both trusts, not because they were trusts, not because they were big, but because they were proved by the evidence to be bad. Here the court begins to hold with Theodore Roosevelt’s distinction between good trusts and bad trusts, and it is in each case a moral question on the merits. In both cases, however, the court paid more attention to the law than to the deserts of the defendants, and declared that the law must be construed by light and rule of reason. In doing this, as Mr. Justice Harlan said, the court reversed itself; moreover, he said, it committed an act of judicial legislation.

Well, but it could not stop there. It had done what it had said it could not do. It had construed into the law the word “unreasonable,” before restraint. It had yet to undo the dictum that bigness or power was in itself illegal. This it did in 1920, deciding for the United States Steel Corporation and against the Government, on the ground that although this trust had been formed in defiance of the law, although it had committed acts in the same spirit, still this had been long before; and meanwhile its behavior, its relationship to the industry as a whole, all economic conditions surrounding it, had changed. The Government contended that power to do wrong was unlawful, no matter how it was used. The Government, said the court, was wrong. The law was directed against monopoly, not against the expectation of it, and the United States Steel Corporation had ceased to behave as a monopoly. Therefore it need not be dissolved.

As writing, the law has not been touched. Its meaning has been revolved.

But this did not happen, could not have happened, until business was ready to see itself by implication of such words as these: “The spirit of the business world was exploitative and speculative. Make use of every resource that comes to hand, buying labor and materials for as little as possible and selling dear that you may profit well. This may seem but a page torn from the business code of today, and so it is, but it is only one page. The others reveal faith in the problem of service as a source of satisfaction both in pecuniary profit and in professional pride.

“This newer note is a product of many forces, not the least of which, perhaps, is the growth of enterprises so extensive that men of large caliber, fully the equals of the merchant princes of an earlier day, but divorced from the direct appeal of profits, have had to be hired to manage them. Administration and management, as distinct functions apart from those of either entrepreneur or capitalist, now occupy thousands of men whose work impels them to think of business as something more than purely a profit-producing procedure. The former one-sided philosophy of egoism which so generally characterized the business ethics and morality of the past generation, which declared business was business, is giving way to the new philosophy which sees that business ‘is also an altruistic public service and commerce a system of coöperative social conveyance.’”

That is business talking to itself. It is a quotation from a bulletin addressed to the production executives of American industry by the American Management Association, which represents big business.

III

Motives

Business for the first time in its life is articulate about itself. In a few years it has created an enormous library of self-regarding literature, most of it dated since 1900. On the other side, as to the public’s view of business, there is a mass of garrulous writing, much of it wholly unresponsive to the changing state of facts.

Taking it back to the personal reference, suppose we try asking ourselves what our common expectations of business are.

First, perhaps, we think of value, quality, service. These integrities we take for granted in a manner that would have astonished those of the preceding generation. Our wrath when we have been disappointed is evidence that disappointment is not the rule. Formerly the hazard of buying was in both price and quality, and the idea of service was so exceptional that—as, for example, in the matter of replacement parts—the manufacturer’s general notion was that once he had sold you the machine you had to have the parts and these he could sell to you at a high profit, exploiting your necessity. Now service—here limited to the sense of continuous customer satisfaction—is a universal and competitive rule of business.

As to price, or value, you may still believe there is some hazard there, and of course there are many instances of apparently unreasonable discrepancy between the cost of producing a thing and the price at which it reaches the consumer. Generalizations are necessary here. First, the price, whatever it is, is one that everybody pays, and is in itself an open challenge to competition. It was not until after the Civil War that retail merchants generally adopted the one-price system of merchandising. Before that every transaction was by higgling over the counter. When, in New York, A. T. Stewart began marking prices on his goods, permitting no deviation, other merchants could not imagine that he would not be ruined. If he stuck to it and honestly meant it, then it would be simple for his competitors, knowing his prices, to undersell him just enough to get all the trade. It did not work that way. No one could afford to undersell him, because with the fixed prices went also quality, and the profit was reasonable. What happened was that in a few years all the important business of retail merchandising was obliged to adopt the one-price system.

As for prices in general—value, that is to say—one must look not at a specific bargain, at one or two among millions occurring every minute, but to the average economic cost of the total quantity of goods consumed. Is that rising or falling? Everyone knows it is falling. Proof is that we are able steadily to increase the quantity and variety of our satisfactions. This or that may be dearer; other things, by offset, are cheaper. Coal and lumber are dearer, automobiles and electric appliances are cheaper.

The rule is that those things have been cheapened most that represent the highest degree of fabrication; and this, when one thinks of it, seems an incredible fact, with wages steadily rising. It shows what skill, imagination and power can do when intensively employed. Living in general, measured by the average person’s command over goods, is cheaper here than ever before, and cheaper than anywhere else in the world. Prices, after all, are relative. What do we have and consume? That is value in the right sense. Apart from any theory of its social function, merely as sound modern principle, business is obliged to lower the price of goods continuously in order to sustain its volume. Profit in our scheme is from volume. And volume is from pressing goods lower and lower through the social pyramid to the every base.

Value, quality, service—such are commonly our expectations of business. Only, perhaps, we do not realize that thirty years ago one who had taken so much for granted could not have been trusted to spend the budget of an ordinary household. However, as you see, if these three virtues of business are moralities at all, the character is utilitarian. They create customer confidence, build assets of goodwill and name, and turn out to pay very handsomely. Why, therefore, had they been wanting in business?

They had not been always wanting. Here again is curious history concerning the effect of the machine upon business behavior. Old-fashioned business was honest. The importance of goodwill was understood. Service, of course, had not been thought of; there was no need to think of it. Merchandise did not include such things as motor cars, tractors, private light, heat and power plants, automatic electrical appliances, farm implements with moving replaceable parts, all requiring continually more or less service. That was another world. Merchants had relations with one another extending to distant places and foreign countries, and these were governed by a code older than any modern language.

The relations of the merchant to his public, however, were local, and he himself was subject to community pressure. Unethical practices, quickly found out, not only got him into trouble with his customers; he found himself in disgrace with public opinion as a citizen and might be singled out for words of reproach even as he sat in his church pew. This happened to Robert Keayne, one of the founders of the Boston Town House, who, when complained of before his church for having overcharged his customers, “did with tears acknowledge and bewail his covetous heart, yet making some excuse for many of the particulars which were charged upon him, as partly by pretense of ignorance of the true price of some of the wares and chiefly by being misled by some false principles.”

Then suddenly the world is another kind of place. Machine craft displaces handcraft. Industrialism and factories succeed guildism and small workshops. What was trade, concerning itself only with exchange, becomes business, concerned also with production. At the same time new means of transportation are created. The affair between business and the public is no longer local. It tends to become anonymous, and business morality passes under the strain which moralists used to propose as a test of individual behavior, asking, “As against the certainty of large private gain, how would you weigh the life of an unknown man in China?”

In his dedication address at the Harvard School of Business Administration, Owen D. Young explained it in this manner:

“Then the area of business operations widened. The products dealt in became highly specialized and technical. A man could not sell a spavined horse as sound in his own community without penalty, but he could sell a spavined motor as sound in some other community, perhaps indeed halfway around the world, without being quickly discovered at home. Even if discovered, the penalty was not so great. The sale of a spavined horse to one of his own community may have been a moral delinquency. The sale of a spavined motor to people quite unknown may have been regarded locally as a clever piece of business. The church became increasingly powerless, and local opinion might well be not too critical of a man who brought wealth from other places to his home community, especially if he contributed to the local hospital and was otherwise generous in its distribution. In a word, the widening area of business . . . outstripped all local sanctions and tended to leave the individual free from restraints.”

Greed is the most futile kind of ugliness, and has, moreover, no imagination. Business by this rule—let the buyer beware—was not only insecure and in the long run unprofitable; it was bound to fail for precisely the same reasons that caused piracy’s downfall. There is much more profit in the continuity of trade than in fraud or pillage. If you cheat people they will stop trading; if you plunder them they will have nothing left to trade with.

What next happened was inevitable. There was no limit to the growth of business but the consuming power of the whole world. The physical limits of the world were fixed, but as business grew, this world contracted. The post, the telegraph, ocean cables and steam transportation, foreshortened the time dimensions of space. A distant market ceased to be an opportunity you could exploit with impunity. You were too quickly found out and published, and then you lost the trade. Moreover, you gave your community or your country a bad name, hurting all trade, and for this you were not easily forgiven at home. Tears in the local church would not absolve you. In foreign trade, for example, a few shipments of shoddy goods might create against all goods of the same national origin a buyers’ prejudice, and that would be the nation’s loss.

Out of all this came trade-marks, brands, standards, new codes of business practice, all with a view to creating customer confidence. Now when a Chicago implement maker sends a threshing machine either to Kansas or Australia, or when a Detroit motor-car maker sends forth an automobile to be sold to whom it may concern, he sends his reputation with it and plans beforehand to follow it with service. “Satisfaction guaranteed” ceases to be a hollow selling phrase. It is a principle without which business could not progress. This intelligence now holds throughout. When sugar was sold in barrels—and that was in our own childhood—sand in the sugar was a staple almanac joke. Who put it in no one ever knew. It had to be either the grocer or the refiner, and they accused each other. Now sugar is sold on the refiner’s reputation, in sealed packages, and anyone proposing to put sand in it would be examined for lunacy.

It is clear that any of these are utilitarian motives. They pay. They would more easily prove that an ancient pride of trade has been restored to modern business than that any new meaning has appeared. That is all true; it is further true that so far as you can examine the mind of modern business, expressing itself in codes of ethics and ideals of behavior, you will find the practical element to be always chemically present. Well, as to that, there is a school of thought to hold that the basis of any morality is utilitarian; moral is only a mode of conduct that somehow rewards itself. That may or may not be, and it is irrelevant. There is a new meaning in American business. All such motives as are represented by ideas of value, quality and service may together be put aside, and still our expectations of business are not exhausted. What more do we expect of business?

Harvard University now confers degrees in business as she confers degrees in law, and President Lowell speaks of business as the oldest of arts and the newest of professions. A few years ago one who had referred to the profession of business would have had some difficulty to make the meaning clear. Now everyone knows what it means and more or less of what it implies.

The distinction between a profession and a business or between a profession and a trade is not merely that a profession is supposed to call for formal training and a high degree of specialized skill. That would mean only a difference of capacity or education. There is a much deeper difference, and this is in the way a professional man regards his work. It may be a gainful occupation, but in his exercise of it he will be guided by considerations other than those of private gain. He will feel, in the first place, a sense of obligation to the profession itself, not by any act of his to injure its good name—that is, disappoint the public’s expectations of it. He will be jealous of its ideals. And with a view of his own work and the profit thereof, he will combine a view of social ends.

The mechanic is not expected as a mechanic to see his work in the light of its social implications. The engineer is. Therefore engineering is a profession. In this country it is, and it was not until engineering had come to be a profession here that the engineer extended his view to include social facts. Formerly he had been content to keep a technical field. Now nothing that concerns the scientific management of business is beyond his view, so that he includes, along with problems of power and productive method, such other problems as those of distribution, social benefit and human behavior.

IV

The Age of Dread—Socialism, Revolution or Self-Conquest?

It may not have been inevitable that a profession of business should appear. It has appeared nowhere else, though the need of the light it breaks into economic darkness was universal.

Not for this country alone, for all industrial countries, the last third of the nineteenth century was an age of dread. Pessimism, foreboding, a kind of cruel cynicism, cast ominous shadows on a scene of triumphant material achievement. By use of machines and science, man had integrated a power he apparently could not control. Certainly he did not comprehend its meaning or foresee its consequences. This was not merely a power to externalize things. The increase of things was the obvious result.

What the power did unawares was to alter the status of humankind on earth. Not only did it change the environment; it created a new race—namely, that part of the population which is called industrial because it lives by modern industry and could not live by any other means. In Western civilization this now is more than half the total population.

Rightly to perceive the status of it, you have only to imagine what would happen to it if suddenly the world in all respects were again as it was a century and a half ago. Do you think it would return to the land? It was never on the land. Moreover, the agricultural population now existing is certainly quite all—probably much more—than the land could sustain without the tools, the power, the method and all which have been supplied and continue to be renewed by industry and industrial science; and all this, according to the supposition, would be wiped out as if it had never been. The industrial race would perish. That is what would happen to it, for it is plus upon the earth and industry is its mother.

Industry, including all the mechanical and scientific knowledge in which it consists, is only a hundred and fifty years old. In that time it has created a new civilization, a new race, and has introduced change as a visible condition of life. The only certitude is change. The only stability is the rate of change. Think what that means.

For thousands of years before, change was so slow that it could not be measured in the contrasts of one lifetime. People died in the same environment in which they were born, unchanged; life as they left it was life as they found it, even to its material forms. One generation could not see both the beginning and the completion of an important building, such as a cathedral. Life was repetition: change was historical.

Then suddenly man discovers the secret of power—Science is the law of it; machine is its being. Knowledge thereafter is pursued with a new intention. The intention is practical. Knowledge must work. Man no longer beholds the sun as a heavenly body and admires its geometries in space. He studies it cunningly as a chemistry, hoping to learn more about the properties of matter. He regards the earth not as a goddess to be wheedled but as a mass of matter in tension, containing hidden sources of energy that perversely evade his control. He does not solicit her secrets. He demands them. Once clumsily he found a thing first, wondered at it, spent a long time thinking what he might do with it. Now his intentions run beyond his knowledge. First he wants something and then sets out to find it. He knows beforehand what he will do with it. Industry, the new mother, is waiting for it.

V

Sudden Advent of a Power No Law Could Tame

The tempo of existence begins to change. It changes more in a few years than in all past human experience, actually; and the rate of change is self-accelerating. The environment becomes fluid. It alters in one lifetime beyond recognition. Try, for example, to imagine American life without automobiles, radios, movies, electricity. You cannot imagine it. Yet you need not be an old man to remember that there was life without these things. What transforms the environment and produces all change is that power of machine and science rising higher and higher together.

Where wheat was reaped last year does an industrial city stand this year? That is the creative magic of this power.

Where there was a human relationship between master artisan and journeyman, is there now a class conflict between capital and labor? That is the social disaster of this power.

Where formerly there were slow tides in the wellbeing of people from cycles of fecundity in the earth, now are there sudden alternations of boom and crisis, with mass unemployment as a social scourge, effects as terrible as famine? That is the economic stupidity of this power.

Where formerly there had been rich and poor, known to each other, are there now industrial slums and incredible riches, both anonymous? That is the indifference of this same power to the spectacle of humanity.

Man’s nature had been projected in a grotesque manner, both the goodness and the badness of it, by terrific magnification, and more the badness than any goodness, because in the exercise of this power he conceived himself to be neither moral nor immoral—merely dynamic. Moreover, he had said he did not control this power. He had said the power was controlled by natural laws, wherefore he was not responsible for the results.

The last ten years of the nineteenth century were crucial. Thoughtful men were asking: “What is it worth to go on creating material wealth in this way? Is society as a whole any better off? Are we not beguiled by things to give ourselves into a bondage from which there may be no escape? What is all this running to and fro of people to get themselves better fed and housed and clothed and entertained? They consume a great deal and possess nothing, not even their own lives. Is it not an illusion that we are progressing at all? Are we not selling ourselves out to a power we cannot control, one that may in the end destroy us?”

It is astonishing now to remember who they were that entertained such gloomy reflections. Not demagogues and strife bringers, for these have no reflections, but men full grown in wisdom, seers and elders, even to members of the United States Supreme Court who, knowing what the law was, all the more clearly perceived its inadequacy. The American mind at this time was heavy with foreboding. And yet the power threatening to enslave a free people was a creative power. Without it modern society could not exist. Its life was caught on this wheel.

Capitalism, industrialism, monopolism—these were all embraced in the one distinctively American term, big business. It was the power of big business people dreaded. The only rights existing in it were rights of proprietorship; and the proprietors were feudal minded.

There was nothing new in feudal mindedness, nor for that matter in such ungoverned exercise of the human will by the few as to outrage the humanities of the many.

The problem lay in this, that big business was now met with for the first time in human experience. Nobody understood it. Big business did not understand itself; it possessed no history. Laws representing the solutions of a pre-industrial civilization did not comprehend it, and of course were impotent to deal with it.

That is why society’s first efforts to reach big business by law produced only worse confusion and increased the fear that it would turn out to be uncontrollable; for as the state undertook to regulate it against its will the struggle was invariably disastrous to the complex rhythm of production and exchange by which life was sustained. The law was generally stupid for want of economic understanding in the political mind, and ineffective for the reason that while it was writing conditions were changing. How write a law to anticipate change or to comprehend change itself as a condition? If the state should go so far as to take control of business with intent to administer it, instead of laying down the law to govern it, that would be socialism; to seize it would be revolution.

VI

Business Immemorially Stigmatized as a Vulgar Art

There was all the time an obscure complication. Why was there no sense of socialness in business? Why so far as possible was the business mentality excluded from participation in government? Why was it conceived to be a function of government to protect society from the power of business, as if business were minded to devour society? What was the difference between those who represented business and these who were all other people?

None, really; only an outworn tradition of it. As business by succession represented all the despised activities of mankind, so it inherited a very ancient social stigma.

All the early political economists treated traders and artisans as parasites. Exchange and production. How strange, since we live by these activities, that they should be socially disesteemed! But this had been immemorially true, partly no doubt from a far Oriental taste that causes the æsthete to despise a flower, no matter how beautiful it may be, that has kitchen associations, and partly from a lingering tradition that superiority divinely exists in the warrior or hero caste, whose contempt for traders and producers was sublime.

Sam A. Lewisohn, president of the Miami Copper Company and an active member of the American Management Association, has an interesting essay on this subject in the August, 1927, number of the Management Review. Business, he says, is only now setting itself free from the superstition that gentlemen may not engage in it; and to indicate the great age and force of the taboo he quotes a paragraph from Xenophon, the historian, written four centuries before Christ,

“The arts that men call vulgar,” said Xenophon, “are commonly decried and are held in disesteem by the judgment of states with good reason. They utterly ruin the bodies of workers and managers alike, compelling men as they do to lead sedentary lives and huddle indoors, or in some cases to spend the day before a fire. Then as men’s bodies become enervated, so their souls grow sicklier. And these vulgar crafts involve complete absence of leisure and hinder men from social and civic life. Consequently, men such as these are bad friends and indifferent defenders of their country.”

“A similar attitude,” says Mr. Lewisohn, “has prevailed till today, particularly in England,” with enormous social consequences.

In the American scheme such prejudice was weaker than in any Old World society; nevertheless, the line of distinction here was as definite as anywhere else. Learning was a profession. The law was a profession, leading naturally to politics. Medicine was a profession. The church was a calling and the Army was a career. Engineering had fought its way up to be recognized as a profession. But business was still business. If the attitude of business toward society was insolent, there was on the other side a certain superior social attitude toward business. How unreasonable to denounce business for wanting a high sense of social function when the professions had reserved that pride and virtue to themselves!

The only possible escape of business from a feeling of social inferiority was in a sense of power. This had been the historical escape. But where anciently it was only on occasions that the power of money achieved its irony by bringing the high-caste knee to flex in the presence of the disdained money lender, here in the modern case the power of business had come to be the paramount power. It was at last a power of destiny over society, and there was no social mindedness in it. What appeared to be a desperate impasse turned out, however, to be an opportunity, and the first of its kind to be improved in the world.

VII

Its Social Redemption

Two great needs now stand opposed.

One is the psychic need of business to be included socially, to be esteemed, to be eased of the ancient stigma.

The other is the need of society to civilize business and so incline its power to ideals of human meaning.

You cannot say precisely how or when these needs came face to face in mutual recognition. It was nevertheless a definite event. It happened. No one brought it to pass. The genius of a people was acting.

There were certain obvious movements. For one thing, the allurements of business as against those of the professions became so great as to be irresistible. This was not the temptation of profit principally. There was power to be shared, and power is man’s chief fascination. Business offered occasions of romance, adventure, combat, notable personal achievement. You may see the enticement working. Of the Harvard class of 1896, 35 per cent chose business, the rest professions. Of the Harvard class 1916, 55 per cent preferred business. Also, the problems were such as to engage the unique qualities of the American mind. Men of active imagination wearied of the futility of denouncing business from without, on academic assumptions of what it was and should be, and began to explore it from within, meaning to know what it really was. They discovered it all over again, outside of their textbooks, and found here and there in business an anxiety as to the outcome equal to their own. Different types of mentality began to meet on this bridge.

One must not forget either the epicycle of muckraking, from about 1900 to 1910, when business for its sins was boiled in the caldron of hot publicity. The muckrakers—those of them who were honest—were crusaders, out to destroy what they called the system, which was a half-mythical monster, like the Turk the knights imagined before they had fought with him. The first collisions were fanatical. But man is an animal whose mind is cheered and chastened by conflict. That is how he came to be civilized. Much was learned on both sides; mutual respect emerged. It was not exactly that there were two points of view to be reconciled; rather, the necessity was to combine them, for neither had been complete by itself.

And there was another singularly potent fact. The degree of intelligence that could be employed in mere money-making was, after all, limited; and there was so much of that limited kind of intelligence that personal distinction ceased to issue from it. All kinds of people, polite, vulgar, even morons, could get rich. The competition was disgusting. And then when the rich, having acquired their wealth in disregard of social ethics, began to seek the good opinion of society by great benefactions and people rejected them on the ground that the money was tainted, there was panic at the heart of wealth. Who were the rich? Nobody. If they built palaces and private golf courses they could not get the people they wanted to come and play with them. What was it money could not buy? Social esteem.

There was never any serious attempt to found a cult of wealth, for the reason that the pursuit of money-making left men with nothing in common to think of, talk about or pass their leisure with. They were related only in sense of solitude. In a state of society where wealth is dynastic it is different, of course; here wealth was personal. Men did not inherit it; they made it themselves. Having made it, what could they do with it? If they forgot it and went on with the game for the game’s sake, they became only more lonely and more dreaded by society.

Out of these melancholy reflections grew a passion on the part of business to explain itself. It would tell the truth, and the truth should acknowledge the past. Thus the idea of cultivating public relations, which was naïvely organized, and then exploited by a new figure calling himself a public-relations expert. He would set business right with public opinion. Often he did more harm than good; otherwise, he was handicapped by common suspicion.

That idea was not enough; it was incomplete. What it lacked came partly from the other side, across the bridge, and partly from the new mentality now entering business. This was the idea of a working adjustment between the profit motive and the social motive. As service had proved itself in the hitherto limited sense of customer satisfaction, so service in the much higher sense of social satisfaction would pay. Here we touch one of the deep springs in the American way of thinking. What is right will pay—which is to say, it will be self-sustaining. That is a test.

As the new meaning of the word “service” began to clarify, business embraced it with a kind of ecstasy. It doing so it became a profession. It will cause you no difficulty now to understand how and why the meaning of wealth has changed. Wealth continues to multiply at a rate hitherto unimagined; men as individuals are richer than ever before. Yet nobody any longer cares how rich a man is, nor does society fear the power of business. How that power is used, with what intent and with what result—that is all anybody now regards. And there is an expectation that it will be used under a sense of social responsibility. So, much more than value, quality and service stations, we now expect of business that it shall act upon such problems as the proportional division of the wealth product, the continuity of production, stability of wages, unemployment, elimination of drudgery, the cultural value of labor, human relationships in industry generally. The more we expect it to do so, the more it does and will act upon them.

In the field of education it is making a significant contribution, as something it expected of itself. This is so newly conceived that there is nowhere any proper survey of its extent and character. Formerly it was that business took human material as it happened to be and shaped it roughly to the task. Now more and more it acts first on the man, to discover his aptitudes and qualities, and then finds him his right place. Even long after the subject of personnel had been recognized as one proper for scientific study, the approach was wrong. The personnel management first analyzed the job and then looked for the man to fit it. The new way is to analyze the man and then find the job to fit him, on the theory that both the productive result and the cultural value of work are benefited by suiting the job to the man.

And now for the first time there is a working contact between the academic world and the world of business. The pedagogues said to business: “You complain that the colleges turn out men who have no idea what your world is like. That is true. The trouble is that we do not know your world. Tell us about it.” So now what begins to happen is that business, anxious to get what the colleges can give, but in a form in which business can use it, writes up what are called job specifications.

The pedagogue says to the student, “Here are the particulars of that world outside, the reality of it. Look over these job specification sheets and see what is there that might interest you as work.”

When natural interests have been thus disclosed, business takes the student into its own schools of engineering, specialized training and research, and tries him. He may have been wrong. It may turn out that what he thought would interest him fails to do so. Well, then he is tried in other material; he may be tried many times before he finds what is really his.

There are happy accidents from this method, apart from the average result. One of the great motor companies had a young college man who apparently possessed every quality save the one of sustained interest. Why he kept failing nobody knew.

At last he said, “I must have been wrong entirely to think I was interested in business. I’ll look for something else.”

The personnel management urged him to try it a little further and moved him blindly to the sparkplug department. There suddenly he became deeply interested in a thing nobody could have guessed. Enameling, it was. In three years he became not only an expert but an authority in the world on enameling.

One function of the American Council on Education is to keep and improve the contact between these two worlds. This is from the report of last year’s annual meeting of the Council:

“Industrial coöperation was the theme of an address by Mr. J. W. Dietz, of the Western Electric Company. Mr. Dietz represents the American Management Association, which joined the council last fall to help develop close coöperation between colleges and industry in solving their common problem of personnel training. He first traced the evolution of present business and industrial philosophy concerning education. . . . The most interesting feature of this growth has been the discovery of the importance of the individual in industry. . . . Through . . . practical experiences in helping individuals to help themselves industry is learning how to liberate individual talent and is evolving a real democratic philosophy of business. . . . This evolution in industry has paralleled the evolution in education. Schoolmen also have discovered the importance of the individual. Therefore, we have a common problem in dealing with the individual. . . . We are now ready to start on a new basis. We will report to you significant facts concerning the requirements of industry. . . . We ask you in turn to report to us significant facts about personnel and training.”

VIII

The Word and Spirit of Service

And with all there is yet a deep trace of snobbery among us. It has unconscious manifestations. One way of its appearing is in the form of a melancholy solicitude about people lest they be demoralized with prosperity. Is there not great danger that in running after things they will lose their souls? This dread of materialism is at bottom snobbish. When material things were differently divided, the few having much and the many very little, there was almost no fear that the few, by reason of their possessions, would lose their souls.

It appears again more pointedly as ridicule of the word “service.” Foreigners sneer at it. Well enough. But some Americans sneer at it, too, and most of all such as have for any reason taken to themselves the vanity of dedicating their work to social service, preferably to mind the morals and manners of society or to scold it upon them. It is as if they were saying, “Service is all right if you have the culture to know what it means, but when bankers and plumbers begin to talk of service it is too common to mean anything.”

The word is common and much ill used, yet in its true meaning it may well turn out to be one of the important words of this century. They sneer at it who would be embarrassed to answer you this question: What does it mean that once a week at midday, in more than two thousand cities and towns, one hundred and twenty-five thousand men sit down together under a self-imposed rule of compulsory attendance, beneath the slogan Service Above Self and mingle their thoughts and experiences “in the effort to reconcile the conflict between the desire for profit for oneself and the obligation and duty to serve others”—according to the text of Rotarianism?

Rotary is only one cult of service. It has absurdities. So has any religion. If it were fundamentally absurd or insincere, its growth from a meeting of four friends in Chicago in 1905 to a group of two thousand four hundred and twelve clubs in the United States would reduce life to the importance of a comic strip. It has spread to forty other countries, all taking their charters from the Rotary International at Chicago. An evangel of service above profit in business going forth to the world from Chicago. How little we understand it ourselves!

But it is difficult for other countries to master the idea. At a dinner in Vienna a Viennese Rotarian asked an American guest what kinds of people were Rotarians in the United States. All kinds, he was told; anybody in business subscribing to the code. At this the Viennese was disappointed, for there they had been trying to make it aristocratic, open only to the elite of business. In Italy also they make that mistake. In England not quite so much, but the English were the most distressed by the singing and robust geniality. Once they had tried the singing, they liked it better.

A Belgian visiting this country on a Rotary errand was asked if the movement in Belgium was touching the intimate public relations of business. As he did not understand the question, it was illustrated in the simplest way. A small-town American plumber had been heard complaining of the trouble he was having with a certain job from defective material and other frustrations, and to the general tale he added, “You know I belong to Rotary now, and—well, that makes you think.” The Belgian listened attentively, with a bothered expression and shook his head. It was illustrated then in another way. A Chicago Rotarian invited the whole club to lunch at his factory, with no word that anything out of the ordinary was to happen. When the club members arrived each one was met at the door by a workman in overalls, and so they paired off and sat down to lunch. This puzzled the Belgian even more.

“We are beginning,” he said. “We have not this spirit.”

When in two illustrations the thought of service both touches the quality of a plumbing job and acts upon human relations in large industry, you must suppose it has gained over men’s imagination the authority of a spell. If that were all, one might take it provisionally as being perhaps ephemeral. But there is all the time a deep need for this idea of service to exist. The zeal with which it is embraced is a measure of that need. As it is important that men should have a sense of cultural value in their common tasks, so it is necessary that other men of the same piece of human nature should have a sense of social value in their daily business. It is the same thing. The need of it is at the top as it is at the bottom.

It is necessary for the kind of men now in control of the steel industry to see themselves as steel producers, with competition to meet, mechanical and chemical problems to solve, costs to be considered, profits to be calculated, all as before; it is necessary also that they shall see the industry in its social aspect. It is not steel primarily they are producing. Steel is only the accidental form of a tissue stuff required by the whole social organism. Steel making in that view is a process of metabolism. It is the breaking down of crude materials in order to bring forth forms of substance essential to the life of society.

It is a necessity of the inner mind for those now in control of business to see that the difference between good times and bad times is much more than a difference between profit and loss; it is a difference between society well and society sick. Thus stability becomes a social ideal, and as you work to realize it you are serving both society and profit.

IX

Penetrations

Business could not hope to become a profession without becoming also a civility. In a few years there has taken place an extraordinary change in its manners and customs. As an idea of service has come to govern its external relations, so the thought of let live is coming to be its internal law. Competition is perhaps keener than ever, but the old ferocity has gone out of it. Competition is in achievement, not in killing.

A fine example of the new spirit occurred during 1927 in the automobile industry. As the outsider imagined, a drama was preparing. Henry Ford, having lost a great share of the low priced motor car market to the General Motors Corporation, whose Chevrolet had overtaken his Model T, went out of production and was recreating his industry to produce a new car, obviously with intent to recapture that market. Wall Street, thinking in the old language of lethal struggle, said there would be no more profit in the motor car industry until Ford had either lost his capital or caused his competitors to lose theirs. It could see nothing less than a collision of giants in mortal combat, as in the days when merely an offensive gesture among the behemoths of industry was enough to produce a Stock Exchange convulsion. In the midst of this suspense Alfred P. Sloan, jr., president of the General Motors Corporation—Ford’s only great rival—gave an interview to the newspapers, saying: “I do not think many of us appreciate the tremendous debt we owe to Mr. Ford, not only for his conception of an idea, but his sticking to it. . . . If the past is any indication of the future, the new Ford car will be a car that will appeal to a great mass of people. . . . Any manufacturer that will give to the public a definite number of dollars’ worth of value and do it constructively and honestly will get a certain proportion of the market that belongs to that number of dollars. There is plenty of opportunity in the world today for Mr. Ford to give the public honest value, which of course he will do, with the result that he will sell an enormous number of cars per year, and there is equal opportunity for General Motors to give the public honest value at a higher price and likewise sell a very large number of cars per year.”

And Mr. Ford, when entertained with the outsider’s notion of the struggle that was coming, said simply: “No, no. Nothing like that. They’ve got their job to do and this is ours. If we can’t do our job better than anybody else then somebody else will do it. That’s all.”

Business is not a finished civility. Neither is civilization finished. It is almost as easy to prove as to say that practices do often depart from the code to which the practitioner has solemnly subscribed. That means very little, or only that human nature is what we already know it to be. What remains is significant. That is the need of business in the sense of its own meaning to have codes, even codes higher than the average of practice. The ideal is more important than the default.

Under the head of business ethics one might collect a most extraordinary set of documents—the codes, that is to say. There is hardly any definite group of big or little business that has not written for itself a code of ethics—undertakers, coffin makers, photographers, restaurant keepers, jewelers, fishermen, druggists, advertising men, credit men, optometrists, lumber dealers, grocers, icemen, plumbers. Generally the code is a restatement of the Golden Rule, to which will be added specific prohibition of internal practices peculiar to the trade, together with a declaration holding the group morally accountable to the public for fair dealing. There are seldom any penalties. What is stated therefore is a standard, not a law. Delinquencies, of course, are very frequent.

But what does all this code making represent? First a desire on the part of every business group to raise its self-esteem; secondly, a desire to possess the good opinion of the public. Neither one desire nor the other is likely to decline; both will rise. The moral basis is firm.

In much larger aspect are the great trade associations, each one representing a major division of industry and business. Here a very old principle is newly acting, which is nothing else than the true principle of civilization, requiring first and fundamentally that the individual shall be willing to forego his own immediate advantage for the good of the group. Trade associations in this character, setting the welfare of the industry above the selfish interest of any member of it, stand for law in place of anarchy and contain the idea of self-government. Their authority is founded on the possession and interpretation of facts concerning the industry itself, its relations to other industry and its relations to the public. If the industry needs housecleaning the association will do it; if it is out of rhythm in the economic scheme, that also is the association’s concern. With the Government there is contact by committee. There are now seventy trade-association committees—called the Hoover committees, because so much of it is the work of his suggestion—through which business brings to the Government problems it cannot solve by itself, sometimes for the reason that, although it may know all the facts in its own case, it does not know them for industry at large; or, again, because the prestige of the Government is needed to impress certain facts on the imagination of business.

For example, committees representing the building-material industries came to the Government saying they foresaw a great building boom and were fearful that for anything they could do to restrain it there would be a speculative runaway market in building materials. Though they were the makers and sellers of building materials, they did not want that kind of market to happen. In the end it would react upon everybody in a disastrous manner and cause depression in building. What could the Government do? Mr. Hoover, as Secretary of Commerce, published the facts and upon the facts proposed that building be rationally conducted. Dwellings first, industrial building only as it was really needed, public building to wait. The suggestion was enough. One result of it was that during three years the largest building program in the history of our country was carried through without a runaway market in building materials.

From the trade association that enables an industry to see itself whole and govern itself by the tyranny of facts it is only a step to a form of apex authority that shall enable business entire to see itself in the same way, as a system of reciprocal functions with one rhythm to keep and one vision to hold. And when this happens we shall begin to glimpse the true vistas of modern industrial society.

So, at any rate, the dread power of business is taming itself. The forces acting upon it are intelligent selfishness, civilized perception and a feeling of social solidarity. It is unimportant to note that it is not quite tame, nor is it necessary to prove that any of these new meanings discovered in it are completely established. Once the right way has been found, that is enough. Destiny is not served by a bump of location. What it requires is a sense of direction.