Business Isn't Scared b y
Peace
C H. GREENEWALT, President, E. i. du Pont de Nemours & Co.
A t industry and t r a d e association meetings w e have a t t e n d e d during the past f e w months there a l w a y s seems to b e at least one p a p e r or address b y an economist who talks of recession, or even depression. These gloomy individuals see all kinds of pitfalls a h e a d , and if business leaders took them seriously we would all c r a w l into our shells and w a i t for the worst. Fortunately most industrial and business leaders a r e optimistic a n d see g r e a t opportunities in the future. An e x a m p l e is President C r a w f o r d H. G r e e n e w a l t of Du Pont. Recently he was asked b y Financial Editor E. S. Banks of the Philadelphia Inquirer to write a guest column. Greenewalt put into words w h a t w e would like t o have said on many occasions as w e sat listening to the economists dispense gloom. W i t h the permission of the Philadelphia Inquirer we a r e reprinting his guest column.—The Editors U X P E R I E N C E has shown us t h e futility of speculation on the specific physical s h a p e of the future. W h a t we do know, however ( a n d it is quite e n o u g h ) , is that the horizons are limitless and that if t h e vigor of our scientific establishment can be m a i n tained, it will carry us fax beyond anything w e can now foresee. Many of those who have presumed to predetermine the accomplishments of succeeding generations have turned out to b e rank pessimists. Jules Verne, the early science-fiction king, lived to see his o w n fantasies become other men's creations. T h e imaginings of Edgar Rice Burroughs, whose works intrigued rne as *» b o y , a p pear in some respects to have been highly conservative. I recall, for example, his tales of Martian aircraft that could travel at the unheard-of speed of 400 miles an hour! Even Benjamin Franklin, certainly a more eminent scientist and philosopher than either Verne or Burroughs, made t h e remarkably bad guess that settlement of the .American continent would require several centuries. Despite this historical example, w e still have our prophets and many of them still tend toward the pessimistic. After t h e second world w a r , there were grave warnings that t h e bottom would drop out of things with t h e end of war business. W h a t these forecasters failed to recognize was t h e dynamic nature of our economy. They h a d assumed that we would go b a c k to prewar standards, with normal d e m a n d established at prewar levels, whereas actually business went ahead with new plants and n e w products to meet new consumer demand—all unrelated to earlier experience. W a r !s a C a l a m i t y t o Business In recent months, w e have seen a n e w outbreak of gloomy forecasts, based on t h e economic effect of pence in Korea. Underlying much of it is t h e fear that business 3742
will face h a r d going, once the p r o p of an active defense program is withdrawn. It has even b e e n t a g g e d in the financial h e a d lines as " p e a c e scare," with solemn w a r n ings that Government must continue its spending p r o g r a m lest the economy collapse. If we a r e to believe that business will suffer through p e a c e , t h e n w e must believe that business gains through war. Nothing, of course, could b e further removed from t h e fact. W a r is a calamity to business as it is to t h e nation generally. T o look only at t h e financial side, w a r is terrifyingly expensive and t h e share of its cost b o r n e b y business is very substantial. Since t h e Korean w a r b e g a n , for example, the D u Pont Co.'s a v e r a g e return on its investm e n t has fallen off nearly one-quarter b e low the average of t h e three preceding years. T h i s roughly parallels t h e experience of t h e second world w a r w h e n earnings d r o p p e d 2 1 % below p r e w a r levels. T h e future is m o r t g a g e d : research and d e velopment are delayed and interrupted; personnel is diverted from creative pursuits to t h e t a u t necessities of the m o m e n t . Clearly, those w h o see war as a business blessing have no talent for simple arithmetic. Business Will Gain If Government Spending Drops Business isn't scared b y peace. It is scared b y t h e intimation t h a t peace c a n h a v e undesirable economic consequences. It is aghast, also, at t h e belief that Government should step in and create an artificial d e m a n d for goods to k e e p things going. Business has far m o r e to gain from a d r o p in government spending t h a n it has to lose. At present, according to figures I h a v e seen, w e are turning o u t a gross national product of about $360 billion a year. S o m e $50 billion, or about 1 4 % , represent g j v ernment purchases. B u t the government C H E M I C A L
p r o g r a m rides piggy-back; a very large p o r t i o n of its cost comes out of wages and salaries and dividends and corporate earnings, which, if u n b u r d e n e d , would flow into the n o r m a l channels of t r a d e . It w o u l d be s p e n t for additional consumer goods. It w o u l d b e available for investm e n t in n e w enterprise. It w o u l d bring a b o u t lower prices w h i c h would themselves stimulate d e m a n d . T h e s e are the creative m e t h o d s t h r o u g h w h i c h our business and industrial system progresses. T h e r e is, in m y opinion, n o m o r e reason . to credit current pessimism than t h e r e was to t a k e to t h e woods in 1945. Any assumption that business is u n e q u a l to t h e tasks of p e a c e d o e s a disservice e q u a l to a c h a r g e that it is u n e q u a l to t h e task of war. T h e record would indicate, I submit, that it is fully e q u a l to b o t h . A n d in t h e cries of t h e pessimist, I see a further danger. I n this country, o u r standard of living is such that a substantial part of our income is available for purchases that we may make t o d a y or put off until tomorrow. If w e a r e confident of t h e future, w e b u y t o d a y . If w e are not, w e decide t o m a k e t h e old c a r d o another year, to d e l a y our house p a i n t i n g until spring, or, if w e are u p to it, t o tell our wives that they can't have that n e w coat after all. S u c h decisions in t h e American home determine our relative state of business prosperity. T h e y h a v e an i m p a c t far outweighing t h e sober deliberations of Senators and statesmen. And b e c a u s e people react with great sensitivity to signs and portents, t h o s e w h o predict in public take on a great responsibility. I would therefore u r g e that w e think twice before we sell t h e future short. T h e surest way I k n o w to start a depression is to predict ourselves into o n e . T h e surest w a y to harvest those n e w products, whose seeds are sprouting in our laboratories, is to keep o u r hopes high, oilr incentives strong, and our economy d y n a m i c . AND
ENGINEERING
NEWS
