Henry Ford’s “My Life and Work” book explains how capitalism can benefit both individuals and the national community.
These quotations from Henry Ford's book contain Ford's business philosophy. The book can be legally downloaded free in e-book format via Internet because it's in the public domain (out of copyright.)
Henry Ford’s ideas for an industrial society.
Quotations from “My Life and Work”. By Henry Ford.
These are the main ideas from Henry Ford’s work.
1. Power and machinery, money and goods, are useful only as they set us free to live. They are but means to an end. For instance, I do not consider the machines which bear my name simply as machines. If that was all there was to it I would do something else. I take them as concrete evidence of the working out of a theory of business, which I hope is something more than a theory of business--a theory that looks toward making this world a better place in which to live.
2. I am now most interested in fully demonstrating that the ideas we have put into practice are capable of the largest application--that they have nothing peculiarly to do with motor cars or tractors but form something in the nature of a universal code. I am quite certain that it is the natural code and I want to demonstrate it so thoroughly that it will be accepted, not as a new idea, but as a natural code.
The natural thing to do is to work--to recognize that prosperity and happiness can be obtained only through honest effort. Human ills flow largely from attempting to escape from this natural course. I have no suggestion which goes beyond accepting in its fullest this principle of nature. I take it for granted that we must work. All that we have done comes as the result of a certain insistence that since we must work it is better to work intelligently and forehandedly; that the better we do our work the better off we shall be. All of which I conceive to be merely elemental common sense.
3. There is in this country a sinister element that desires to creep in between the men who work with their hands and the men who think and plan for the men who work with their hands. The same influence that drove the brains, experience, and ability out of Russia is busily engaged in raising prejudice here. We must not suffer the stranger, the destroyer, the hater of happy humanity, to divide our people. In unity is American strength--and freedom.
4. The primary functions are agriculture, manufacture, and transportation. Community life is impossible without them. They hold the world together. Raising things, making things, and carrying things are as primitive as human need and yet as modern as anything can be. They are of the essence of physical life. When they cease, community life ceases. Things do get out of shape in this present world under the present system, but we may hope for a betterment if the foundations stand sure. The great delusion is that one may change the foundation--usurp the part of destiny in the social process. The foundations of society are the men and means to grow things, to make things, and to carry things. As long as agriculture, manufacture, and transportation survive, the world can survive any economic or social change. As we serve our jobs we serve the world.
5. The welfare of the country is squarely up to us as individuals. That is where it should be and that is where it is safest. Governments can promise something for nothing but they cannot deliver. They can juggle the currencies as they did in Europe (and as bankers the world over do, as long as they can get the benefit of the juggling) with a patter of solemn nonsense. But it is work and work alone that can continue to deliver the goods--and that, down in his heart, is what every man knows.
6. What this generation needs is a deep faith, a profound conviction in the practicability of righteousness, justice, and humanity in industry.
7…because only the business can pay wages. Certainly the employer cannot, unless the business warrants. But if that business does warrant higher wages and the employer refuses, what is to be done? As a rule, a business means the livelihood of too many men, to be tampered with. It is criminal to assassinate a business to which large numbers of men have given their labors and to which they have learned to look as their field of usefulness and their source of livelihood.
8. The moral fundamental is man's right in his labor. This is variously stated. It is sometimes called "the right of property." It is sometimes masked in the command, "Thou shall not steal." It is the other man's right in his property that makes stealing a crime. When a man has earned his bread, he has a right to that bread. If another steals it, he does more than steal bread; he invades a sacred human right. If we cannot produce we cannot have--but some say if we produce it is only for the capitalists. Capitalists who become such because they provide better means of production are of the foundation of society. They have really nothing of their own. They merely manage property for the benefit of others. Capitalists who become such through trading in money are a temporarily necessary evil. They may not be evil at all if their money goes to production. If their money goes to complicating distribution—to raising barriers between the producer and the consumer--then they are evil capitalists and they will pass away when money is better adjusted to work; and money will become better adjusted to work when it is fully realized that through work and work alone may health, wealth, and happiness inevitably be secured.
9. There is no reason why a man who is willing to work should not be able to work and to receive the full value of his work. There is equally no reason why a man who can but will not work should not receive the full value of his services to the community. He should most certainly be permitted to take away from the community an equivalent of what he contributes to it. If he contributes nothing he should take away nothing. He should have the freedom of starvation. We are not getting anywhere when we insist that every man ought to have more than he deserves to have--just because some do get more than they deserve to have.
10. There is nothing to running a business by custom--to saying: "I pay the going rate of wages." The same man would not so easily say: "I have nothing better or cheaper to sell than any one has." No manufacturer in his right mind would contend that buying only the cheapest materials is the way to make certain of manufacturing the best article. Then why do we hear so much talk about the "liquidation of labor" and the benefits that will flow to the country from cutting wages--which means only the cutting of buying power and the curtailing of the home market? What good is industry if it be so unskillfully managed as not to return a living to everyone concerned? No question is more important than that of wages--most of the people of the country live on wages. The scale of their living--the rate of their wages--determines the prosperity of the country.
11. If it is right for the manager of a business to try to make it pay larger dividends, it is quite as right that he should try to make it pay higher wages. But it is not the manager of the business who pays the high wages. Of course, if he can and will not, then the blame is on him. But he alone can never make high wages possible. High wages cannot be paid unless the workmen earn them. Their labor is the productive factor. It is not the only productive factor--poor management can waste labor and material and nullify the efforts of labor. Labor can nullify the results of good management. But in a partnership of skilled management and honest labor, it is the workman who makes high wages possible. He invests his energy and skill, and if he makes an honest, wholehearted investment, high wages ought to be his reward. Not only has he earned them, but he has had a big part in creating them.
12. The man who contributes much should take away much. Therefore no element of charity is present in the paying of wages. The kind of workman who gives the business the best that is in him is the best kind of workman a business can have. And he cannot be expected to do this indefinitely without proper recognition of his contribution. The man who comes to the day's job feeling that no matter how much he may give, it will not yield him enough of a return to keep him beyond want, is not in shape to do his day's work. He is anxious and worried, and it all reacts to the detriment of his work. But if a man feels that his day's work is not only supplying his basic need, but is also giving him a margin of comfort and enabling him to give his boys and girls their opportunity and his wife some pleasure in life, then his job looks good to him and he is free to give it of his best. This is a good thing for him and a good thing for the business.
13. The wage carries all the worker's obligations outside the shop; it carries all that is necessary in the way of service and management inside the shop. The day's productive work is the most valuable mine of wealth that has ever been opened. Certainly it ought to bear not less than all the worker's outside obligations. And certainly it ought to be made to take care of the worker's sunset days when labor is no longer possible to him--and should be no longer necessary. And if it is made to do even these, industry will have to be adjusted to a schedule of production, distribution, and reward, which will stop the leaks into the pockets of men who do not assist in production. In order to create a system which shall be as independent of the goodwill of benevolent employers as of the ill-will of selfish ones, we shall have to find a basis in the actual facts of life itself.
14. When can a wage be considered adequate? How much of a living is reasonably to be expected from work? Have you ever considered what a wage does or ought to do? To say that it should pay the cost of living is to say almost nothing. The cost of living depends largely upon the efficiency of production and transportation; and the efficiency of these is the sum of the efficiencies of the management and the workers. Good work, well managed, ought to result in high wages and low living costs.
15. What difference does it make in the units of energy a man uses in a productive day's work? If only the man himself were concerned, the cost of his maintenance and the profit he ought to have would be a simple matter. But he is not just an individual. He is a citizen, contributing to the welfare of the nation. He is a householder. He is perhaps a father with children who must be reared to usefulness on what he is able to earn. We must reckon with all these facts. How are you going to figure the contribution of the home to the day's work? You pay the man for his work, but how much does that work owe to his home? How much to his position as a citizen? How much to his position as a father? The man does the work in the shop, but his wife does the work in the home. The shop must pay them both.
16. The best wages that have up to date ever been paid are not nearly as high as they ought to be. Business is not yet sufficiently well organized and its objectives are not yet sufficiently clear to make it possible to pay more than a fraction of the wages that ought to be paid. That is part of the work we have before us.
17. I have learned through the years a good deal about wages. I believe in the first place that, all other considerations aside, our own sales depend in a measure upon the wages we pay. If we can distribute high wages, then that money is going to be spent and it will serve to make storekeepers and distributors and manufacturers and workers in other lines more prosperous and their prosperity will be reflected in our sales. Country-wide high wages spell country-wide prosperity, provided, however, the higher wages are paid for higher production. Paying high wages and lowering production is starting down the incline toward dull business.
18. (Ford was attacked by financiers for his policy of paying high wages based on production. This is his answer) There was, however, no charity in any way involved. That was not generally understood. Many employers thought we were just making the announcement because we were prosperous and wanted advertising and they condemned us because we were upsetting standards--violating the custom of paying a man the smallest amount he would take. There is nothing to such standards and customs. They have to be wiped out. Some day they will be. Otherwise, we cannot abolish poverty. We made the change not merely because we wanted to pay higher wages and thought we could pay them. We wanted to pay these wages so that the business would be on a lasting foundation. We were not distributing anything--we were building for the future. A low wage business is always insecure.
19. If you expect a man to give his time and energy, fix his wages so that he will have no financial worries. It pays. Our profits, after paying good wages and a bonus--which bonus used to run around ten millions a year before we changed the system--show that paying good wages is the most profitable way of doing business.
20. Get the costs down by better management. Get the prices down to the buying power.
Cutting wages is the easiest and most slovenly way to handle the situation, not to speak of its being an inhuman way. It is, in effect, throwing upon labor the incompetency of the managers of the business.
21. If a manufacturer wants to perform his function, he must get his price down to what people will pay. There is always, no matter what the condition, a price that people can and will pay for a necessity, and always, if the will is there, that price can be met.
22. It cannot be met by lowering quality or by shortsighted economy, which results only in a dissatisfied working force. It cannot be met by fussing or buzzing around. It can be met only by increasing the efficiency of production and, viewed in this fashion, each business depression, so-called, ought to be regarded as a challenge to the brains of the business community. Concentrating on prices instead of on service is a sure indication of the kind of business man who can give no justification for his existence as a proprietor.
23. This is only another way of saying that sales should be made on the natural basis of real value, which is the cost of transmuting human energy into articles of trade and commerce. But that simple formula is not considered business-like. It is not complex enough. We have "business" which takes the most honest of all human activities and makes them subject to the speculative shrewdness of men who can produce false shortages of food and other commodities, and thus excite in society anxiety of demand. We have false stimulation and then false numbness.
24. Take the industrial idea; what is it? The true industrial idea is not to make money. The industrial idea is to express a serviceable idea, to duplicate a useful idea, by as many thousands as there are people who need it.
25. To produce, produce; to get a system that will reduce production to a fine art; to put production on such a basis as will provide means for expansion and the building of still more shops, the production of still more thousands of useful things--that is the real industrial idea. The negation of the industrial idea is the effort to make a profit out of speculation instead of out of work. There are short-sighted men who cannot see that business is bigger than any one man's interests. Business is a process of give and take, live and let live. It is cooperation among many forces and interests. Whenever you find a man who believes that business is a river whose beneficial flow ought to stop as soon as it reaches him you find a man who thinks he can keep business alive by stopping its circulation. He would produce wealth by this stopping of the production of wealth.
26. Our policy is to reduce the price, extend the operations, and improve the article. You will notice that the reduction of price comes first. We have never considered any costs as fixed. Therefore we first reduce the price to a point where we believe more sales will result. Then we go ahead and try to make the price. We do not bother about the costs. The new price forces the costs down. The more usual way is to take the costs and then determine the price, and although that method may be scientific in the narrow sense, it is not scientific in the broad sense, because what earthly use is it to know the cost if it tells you you cannot manufacture at a price at which the article can be sold? But more to the point is the fact that, although one may calculate what a cost is, and of course all of our costs are carefully calculated, no one knows what a cost ought to be. One of the ways of discovering what a cost ought to be is to name a price so low as to force everybody in the place to the highest point of efficiency. The low price makes everybody dig for profits. We make more discoveries concerning manufacturing and selling under this forced method than by any method of leisurely investigation.
27. The payment of high wages fortunately contributes to the low costs because the men become steadily more efficient on account of being relieved of outside worries. The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made, and the six-dollar day wage is cheaper than the five. How far this will go, we do not know.
28. We believe it is possible someday to reach the point where all goods are produced so cheaply and in such quantities that overproduction will be a reality. But as far as we are concerned, we do not look forward to that condition with fear--we look forward to it with great satisfaction. Nothing could be more splendid than a world in which everybody has all that he wants. Our fear is that this condition will be too long postponed.
29. The primary object of a manufacturing business is to produce, and if that objective is always kept, finance becomes a wholly secondary matter that has largely to do with bookkeeping. My own financial operations have been very simple. I started with the policy of buying and selling for cash, keeping a large fund of cash always on hand, taking full advantage of all discounts, and collecting interest on bank balances. I regard a bank principally as a place in which it is safe and convenient to keep money. The minutes we spend on a competitor's business we lose on our own. The minutes we spend in becoming expert in finance we lose in production. The place to finance a manufacturing business is the shop, and not the bank. I would not say that a man in business needs to know nothing at all about finance, but he is better off knowing too little than too much, for if he becomes too expert he will get into the way of thinking that he can borrow money instead of earning it and then he will borrow more money to pay back what he has borrowed, and instead of being a business man he will be a note juggler, trying to keep in the
air a regular flock of bonds and notes.
30. Money is only a tool in business. It is just a part of the machinery. You might as well borrow 100,000 lathes as $100,000 if the trouble is inside your business. More lathes will not cure it; neither will more money. Only heavier doses of brains and thought and wise courage can cure. A business that misuses what it has will continue to misuse what it can get. The point is--cure the misuse. When that is done, the business will begin to make its own money, just as a repaired human body begins to make sufficient pure blood.
31. Borrowing may easily become an excuse for not boring into the trouble. Borrowing may easily become a sop for laziness and pride. Some business men are too lazy to get into overalls and go down to see what is the matter. Or they are too proud to permit the thought that anything they have originated could go wrong. But the laws of business are like the law of gravity, and the man who opposes them feels their power. Borrowing for expansion is one thing; borrowing to make up for mismanagement and waste is quite another.
32. In the first place, I hold that it is better to sell a large number of cars at a reasonably small margin than to sell fewer cars at a large margin of profit. I hold this because it enables a large number of people to buy and enjoy the use of a car and because it gives a larger number of men employment at good wages. Those are aims I have in life. But I would not be counted a success; I would be, in fact, a flat failure if I could not accomplish that and at the same time make a fair amount of profit for myself and the men associated with me in business.
33. And let me say right here, that I do not believe that we should make such an awful profit on our cars. A reasonable profit is right, but not too much. So it has been my policy to force the price of the car down as fast as production would permit, and give the benefits to users and laborers--with resulting surprisingly enormous benefits to ourselves.
This policy does not agree with the general opinion that a business is to be managed to the end that the stockholders can take out the largest possible amount of cash. Therefore I do not want stockholders in the ordinary sense of the term--they do not help forward the ability to serve. My ambition is to employ more and more men and to spread, in so far as I am able, the benefits of the industrial system that we are working to found; we want to help build lives and homes. This requires that the largest share of the profits be put back into productive enterprise. Hence we have no place for the non-working stockholders. The working stockholder is more anxious to increase his opportunity to serve
than to bank dividends.
34. If it at any time became a question between lowering wages or abolishing dividends, I would abolish dividends. That time is not apt to come, for, as I have pointed out, there is no economy in low wages. It is bad financial policy to reduce wages because it also reduces buying power. If one believes that leadership brings responsibility, then a part of that responsibility is in seeing that those whom one leads shall have an adequate opportunity to earn a living. Finance concerns not merely the profit or solvency of a company; it also comprehends the amount of money that the company turns back to the community through wages. There is no charity in this. There is no charity in proper wages. It is simply that no company can be said to be stable which is not so well managed that it can afford a man an opportunity to do a great deal of work and therefore to earn a good wage.
35. There is something sacred about wages--they represent homes and families and domestic destinies. People ought to tread very carefully when approaching wages. On the cost sheet, wages are mere figures; out in the world, wages are bread boxes and coal bins, babies' cradles and children's education--family comforts and contentment. On the other hand, there is something just as sacred about capital which is used to provide the means by which work can be made productive. Nobody is helped if our industries are sucked dry of their life-blood. There is something just as sacred about a shop that employs thousands of men as there is about a home. The shop is the mainstay of all the finer things which the home represents. If we want the home to be happy, we must contrive to keep the shop busy. The whole justification of the profits made by the shop is that they are used to make doubly secure the homes dependent on that shop, and to create more jobs for other men. If profits go to swell a personal fortune, that is one thing; if they go to provide a sounder basis for business, better working conditions, better wages, more extended employment--that is quite another thing. Capital thus employed should not be carelessly tampered with. It is for the service of all, though it may be under the direction of one.
36. Profits belong in three places: they belong to the business--to keep it steady, progressive, and sound. They belong to the men who helped produce them. And they belong also, in part, to the public. A successful business is profitable to all three of these interests--planner, producer, and purchaser.
37. People whose profits are excessive when measured by any sound standard should be the first to cut prices. But they never are. They pass all their extra costs down the line until the whole burden is borne by the consumer; and besides doing that, they charge the consumer a percentage on the increased charges. Their whole business philosophy is: "Get while the getting is good." They are the speculators, the exploiters, the no-good element that is always injuring legitimate business. There is nothing to be expected from them. They have no vision. They cannot see beyond their own cash registers.
38. These people can talk more easily about a 10 or 20 per cent. cut in wages than they can about a 10 or 20 per cent. cut in profits. But a business man, surveying the whole community in all its interests and wishing to serve that community, ought to be able to make his contribution to stability.
39. There can be no greater absurdity and no greater disservice to Humanity in general than to insist that all men are equal. Most certainly all men are not equal, and any democratic conception which strives to make men equal is only an effort to block progress. Men cannot be of equal service. The men of larger ability are less numerous than the men of smaller ability; it is possible for a mass of the smaller men to pull the larger ones down--but in so doing they pull themselves down. It is the larger men who give the leadership to the community and enable the smaller men to live with less effort.
40. A man ought to be able to live on a scale commensurate with the service that he renders.
41. The producer depends for his prosperity upon serving the people.
42. Money comes naturally as the result of service. And it is absolutely necessary to have money. But we do not want to forget that the end of money is not ease but the opportunity to perform more service. In my mind nothing is more abhorrent than a life of ease. None of us has any right to ease. There is no place in civilization for the idler. Any scheme looking to abolishing money is only making affairs more complex, for we must have a measure. That our present system of money is a satisfactory basis for exchange is a matter of grave doubt. …The gist of my objection to the present monetary system is that it tends to become a
thing of itself and to block instead of facilitate production.
43. The essence of my idea then is that waste and greed block the delivery of true service. Both waste and greed are unnecessary. Waste is due largely to not understanding what one does, or being careless in doing of it. Greed is merely a species of nearsightedness. I have striven toward manufacturing with a minimum of waste, both of materials and of human effort, and then toward distribution at a minimum of profit, depending for the total profit upon the volume of distribution. In the process of manufacturing I want to distribute the maximum of wage --that is, the maximum of buying power. Since also this makes for a minimum cost and we sell at a minimum profit, we can distribute a product in consonance with buying power. Thus everyone who is connected with us--either as a manager, worker, or purchaser—is the better for our existence. The institution that we have erected is performing a service.
44. I determined absolutely that never would I join a company in which finance came before the work or in which bankers or financiers had a part. And further that, if there were no way to get started in the kind of business that I thought could be managed in the interest of the public, then I simply would not get started at all. For my own short experience, together with what I saw going on around me, was quite enough proof that business as a mere money-making game was not worth giving much thought to and was distinctly no place for a man who wanted to accomplish anything. Also it did not seem to me to be the way to make money. I have yet to have it demonstrated that it is the way. For the only foundation of real business is service.
45. The money influence--the pressing to make a profit on an "investment"--and its consequent neglect of or skimping of work and hence of service showed itself to me in many ways. It seemed to be at the bottom of most troubles. It was the cause of low wages--for without well-directed work high wages cannot be paid. And if the whole attention is not given to the work it cannot be well directed.
46. Bankers play far too great a part in the conduct of industry. Most business men will privately admit that fact. They will seldom publicly admit it because they are afraid of their bankers. It required less skill to make a fortune dealing in money than dealing in production. The average successful banker is by no means so intelligent and resourceful a man as is the average successful business man. Yet the banker through his control of credit practically controls the average business man.
47. There has been a great reaching out by bankers in the last fifteen or twenty years--and especially since the war--and the Federal Reserve System for a time put into their hands an almost limitless supply of credit. The banker is, as I have noted, by training and because of his position, totally unsuited to the conduct of industry. If, therefore, the controllers of credit have lately acquired this very large power, is it not to be taken as a sign that there is something wrong with the financial system that gives to finance instead of to service the predominant power in industry? It was not the industrial acumen of the bankers that brought them into the management of industry. Everyone will admit that. They were pushed there, willy-nilly, by the system itself. Therefore, I personally want to discover whether we are operating under the best financial system.
48. No financial system is good which favors one class of producers over another. We want to discover whether it is not possible to take away power which is not based on wealth creation. Any sort of class legislation is pernicious. I think that the country's production has become so changed in its methods that gold is not the best medium with which it may be measured, and that the gold standard as a control of credit gives, as it is now (and I believe inevitably) administered, class advantage. The ultimate check on credit is the amount of gold in the country, regardless of the amount of wealth in the country.
49. All of our people come into the factory or the offices through the employment departments. As I have said, we do not hire experts—neither do we hire men on past experiences or for any position other than the lowest. Since we do not take a man on his past history, we do not refuse him because of his past history. I never met a man who was thoroughly bad. There is always some good in him--if he gets a chance. That is the
reason we do not care in the least about a man's antecedents--we do not hire a man's history, we hire the man. If he has been in jail, that is no reason to say that he will be in jail again. I think, on the contrary, he is, if given a chance, very likely to make a special effort to keep out of jail. Our employment office does not bar a man for anything he has previously done--he is equally acceptable whether he has been in Sing Sing (prison) or at Harvard (university) and we do not even inquire from which place he has graduated. All that he needs is the desire to work. If he does not desire to work, it is very unlikely that he will apply for a position, for it is pretty well understood that a man in the Ford plant works.
50. We do not, to repeat, care what a man has been. If he has gone to college he ought to be able to go ahead faster, but he has to start at the bottom and prove his ability. Every man's future rests solely with himself. There is far too much loose talk about men being unable to obtain recognition. With us every man is fairly certain to get the exact recognition he deserves.
51.. There is no difficulty in picking out men. They pick themselves out because--although one hears a great deal about the lack of opportunity for advancement--the average workman is more interested in a steady job than he is in advancement. Scarcely more than five per cent, of those who work for wages, while they have the desire to receive more money, have also the willingness to accept the additional responsibility and
the additional work which goes with the higher places. Only about twenty-five per cent. are even willing to be straw bosses, and most of them take that position because it carries with it more pay than working on a machine. Men of a more mechanical turn of mind, but with no desire for responsibility, go into the tool-making departments where they receive considerably more pay than in production proper. But the vast majority of men want to stay put. They want to be led. They want to have everything done for them and to have no responsibility. Therefore, in spite of the great mass of men, the difficulty is not to discover men to advance, but men who are willing to be advanced.
52. The accepted theory is that all people are anxious for advancement, and a great many pretty plans have been built up from that. I can only say that we do not find that to be the case. The Americans in our employ do want to go ahead, but they by no means do always want to go clear through to the top. The foreigners, generally speaking, are content to stay as straw bosses. Why all of this is, I do not know. I am giving the facts.
53. Bankers play far too great a part in the conduct of industry. Most business men will privately admit that fact. They will seldom publicly admit it because they are afraid of their bankers. It required less skill to make a fortune dealing in money than dealing in production. The average successful banker is by no means so intelligent and resourceful a man as is the average successful business man. Yet the banker through his control of credit practically controls the average business man.
54. There has been a great reaching out by bankers in the last fifteen or twenty years--and especially since the war--and the Federal Reserve System for a time put into their hands an almost limitless supply of credit. The banker is, as I have noted, by training and because of his position, totally unsuited to the conduct of industry. If, therefore, the controllers of credit have lately acquired this very large power, is it not to be taken as a sign that there is something wrong with the financial system that gives to finance instead of to service the predominant power in industry? It was not the industrial acumen of the bankers that brought them into the management of industry. Everyone will admit that. They were pushed there, willy-nilly, by the system itself. Therefore, I personally want to discover whether we are operating under the best financial system.
55. No financial system is good which favors one class of producers over another. We want to discover whether it is not possible to take away power which is not based on wealth creation. Any sort of class legislation is pernicious. I think that the country's production has become so changed in its methods that gold is not the best medium with which it may be measured, and that the gold standard as a control of credit gives, as it is now (and I believe inevitably) administered, class advantage. The ultimate check on credit is the amount of gold in the country, regardless of the amount of wealth in the country.
56. The people are thinking about the money question; and if the money masters have any information which they think the people ought to have to prevent them going astray, now is the time to give it. The days are fast slipping away when the fear of credit curtailment will avail, or when wordy slogans will affright. The people are naturally conservative. They are more conservative than the financiers. Those who believe that the people are so easily led that they would permit printing presses to run off money like milk tickets do not understand them. It is the innate conservation of the people that has kept our money good in spite of the fantastic tricks which the financiers play--and which they cover up with high technical terms.
57. Money, after all, is extremely simple. It is a part of our transportation system. It is a simple and direct method of conveying goods from one person to another. Money is in itself most admirable. It is essential. It is not intrinsically evil. It is one of the most useful devices in social life. And when it does what it was intended to do, it is all help and no hindrance.
But money should always be money. A foot is always twelve inches, but when is a dollar a dollar? If ton weights changed in the coal yard, and peck measures changed in the grocery, and yard sticks were to-day 42 inches and to-morrow 33 inches (by some occult process called "exchange") the people would mighty soon remedy that. When a dollar is not always a dollar, when the 100-cent dollar becomes the 65-cent dollar, and then the 50-cent dollar, and then the 47-cent dollar, as the good old American gold and silver dollars did, what is the use of yelling about "cheap money," "depreciated money"? A dollar that stays 100 cents is as necessary as a pound that stays 16 ounces and a yard that stays 36 inches.
58. If the present faulty system is more profitable to a financier than a more perfect system would be, and if that financier values his few remaining years of personal profits more highly than he would value the honor of making a contribution to the life of the world by helping to erect a better system, then there is no way of preventing a clash of interests. But it is fair to say to the selfish financial interests that, if their fight is waged to perpetuate a system just because it profits them, then their fight is already lost. Why should finance fear? The world will still be here. Men will do business with one another. There will be money and there will be need of masters of the mechanism of money. Nothing is going to depart but the knots and tangles. There will be some readjustments, of course. Banks will no longer be the masters of industry. They will be the servants of industry. Business will control money instead of money controlling business. The ruinous interest system will be greatly modified. Banking will not be a risk, but a service. Banks will begin to do much more for the people than they do now, and instead of being the most expensive businesses in the world to manage, and the most highly profitable in the matter of dividends, they will become less costly, and the profits of their operation will go to the community which they serve.
59. The wealth of the world neither consists in nor is adequately represented by the money of the world. Gold itself is not a valuable commodity. It is no more wealth than hat checks are hats. But it can be so manipulated, as the sign of wealth, as to give its owners or controllers the whip-hand over the credit which producers of real wealth require. Dealing in money, the commodity of exchange, is a very lucrative business. When money itself becomes an article of commerce to be bought and sold before real wealth can be moved or exchanged, the usurers and speculators are thereby permitted to lay a tax on production. The hold which controllers of money are able to maintain on productive forces is seen to be more powerful when it is remembered that, although money is supposed to represent the real wealth of the world, there is always much more wealth than there is money, and real wealth is often compelled to wait upon money, thus leading to that most paradoxical situation--a world filled with wealth but suffering want.
These facts are not merely fiscal, to be cast into figures and left there. They are instinct with human destiny and they bleed. The poverty of the world is seldom caused by lack of goods but by a "money stringency." Commercial competition between nations, which leads to international rivalry and ill-will, which in their turn breed wars-- these are some of the human significations of these facts. Thus poverty and war, two great preventable evils, grow on a single stem. Let us see if a beginning toward a better method cannot be made.
60. Poverty springs from a number of sources, the more important of which are controllable. So does special privilege. I think it is entirely feasible to abolish both poverty and special privilege--and there can be no question but that their abolition is desirable. Both are unnatural, but it is work, not law, to which we must look for results.
61. By poverty I mean the lack of reasonably sufficient food, housing, and clothing for an individual or a family. There will have to be differences in the grades of sustenance. Men are not equal in mentality or in physique. Any plan which starts with the assumption that men are or ought to be equal is unnatural and therefore unworkable. There can be no feasible or desirable process of leveling down. Such a course only promotes poverty by making it universal instead of exceptional. Forcing the efficient producer to become inefficient does not make the inefficient producer more efficient. Poverty can be done away with only by plenty, and we have now gone far enough along in the science of production to be able to see, as a natural development, the day when production and distribution will be so scientific that all may have according to ability and industry.
The underlying causes of poverty, as I can see them, are essentially due to the bad adjustment between production and distribution, in both industry and agriculture--between the source of power and its application. The wastes due to lack of adjustment are stupendous. All of these wastes must fall before intelligent leadership consecrated to service. So long as leadership thinks more of money than it does of service, the wastes will continue. Waste is prevented by far-sighted not by short-sighted men. Short-sighted men think first of money. They cannot see waste. They think of service as altruistic instead of as the most practical thing in the world. They cannot get far enough away from the little things to see the big things--to see the biggest thing of all, which is that opportunist production from a purely money standpoint is the least profitable.
62. It is not that the industrial enterprises are unable fairly to distribute a share of the wealth which they create. It is simply that the waste is so great that there is not a sufficient share for everyone engaged, notwithstanding the fact that the product is usually sold at so high a price as to restrict its fullest consumption.
63. The cure of poverty is not in personal economy but in better production. The "thrift" and "economy" ideas have been overworked. The word "economy" represents a fear. The great and tragic fact of waste is impressed on a mind by some circumstance, usually of a most materialistic kind. There comes a violent reaction against extravagance--the mind catches hold of the idea of "economy." But it only flies from a greater to a lesser evil; it does not make the full journey from error to truth.
Economy is the rule of half-alive minds. There can be no doubt that it is better than waste; neither can there be any doubt that it is not as good as use. People who pride themselves on their economy take it as a virtue. But what is more pitiable than a poor, pinched mind spending the rich days and years clutching a few bits of metal? What can be fine about paring the necessities of life to the very quick? We all know "economical people" who seem to be niggardly even about the amount of air they breathe and the amount of appreciation they will allow themselves to give to anything. They shrivel--body and soul. Economy is waste: it is waste of the juices of life, the sap of living. For there are two kinds of waste--that of the prodigal who throws his substance away in riotous living, and that of the sluggard who allows his substance to rot from non-use. The rigid economizer is in danger of being classed with the sluggard. Extravagance is usually a reaction from suppression of expenditure. Economy is likely to be a reaction from
64. Personal want may be avoided without changing the general condition. Wage increases, price increases, profit increases, other kinds of increases designed to bring more money here or money there, are only attempts of this or that class to get out of the fire--regardless of what may happen to everyone else. There is a foolish belief that if only the money can be gotten, somehow the storm can be weathered. Labor believes that if it can get more wages, it can weather the storm. Capital thinks that if it can get more profits, it can weather the storm. There is a pathetic faith in what money can do. Money is very useful in normal times, but money has no more value than the people put into it by production, and it can be so misused. It can be so superstitiously worshipped as a substitute for real wealth as to destroy its value altogether.
65. Capital that a business makes for itself, that is employed to expand the workman's opportunity and increase his comfort and prosperity, and that is used to give more and more men work, at the same time reducing the cost of service to the public--that sort of capital, even though it be under single control, is not a menace to humanity. It is a working surplus held in trust and daily use for the benefit of all. The holder of such capital can scarcely regard it as a personal reward. No man can view such a surplus as his own, for he did not create it alone. It is the joint product of his whole organization. The owner's idea may have released all the energy and direction, but certainly it did not supply all the energy and direction. Every workman was a partner in the creation. No business can possibly be considered only with reference to to-day and to the individuals engaged in it. It must have the means to carry on. The best wages ought to be paid. A proper living ought to be assured every participant in the business--no matter what his part. But, for the sake of that business's ability to support those who work in it, a surplus has to be held somewhere. The truly honest manufacturer holds his surplus profits in that trust. Ultimately it does not matter where this surplus be held nor who controls it; it is its use that matters.
Capital that is not constantly creating more and better jobs is more useless than sand. Capital that is not constantly making conditions of daily labor better and the reward of daily labor more just, is not fulfilling its highest function. The highest use of capital is not to make more money, but to make money do more service for the betterment of life. Unless we in our industries are helping to solve the social problem, we are not doing our principal work. We are not fully serving.
66. Industry organized for service removes the need for philanthropy. Philanthropy, no matter how noble its motive, does not make for self-reliance. We must have self-reliance. A community is the better for being discontented, for being dissatisfied with what it has. I do not mean the petty, daily, nagging, gnawing sort of discontent, but a broad, courageous sort of discontent which believes that everything which is done can and ought to be eventually done better. Industry organized for service--and the workingman as well as the leader must serve--can pay wages sufficiently large to permit every family to be both self-reliant and self-supporting. A philanthropy that spends its time and money in helping the world to do more for itself is far better than the sort which merely gives and thus encourages idleness. Philanthropy, like everything else, ought to be productive, and I believe that it can be. I have personally been experimenting with a trade school and a hospital to discover if such institutions, which are commonly regarded as benevolent, cannot be made to stand on their own feet. I have found that they can be.
67. If we can get away from charity, the funds that now go into charitable enterprises can be turned to furthering production--to making goods cheaply and in great plenty. And then we shall not only be removing the burden of taxes from the community and freeing men but also we can be adding to the general wealth. We leave for private interest too many things we ought to do for ourselves as a collective interest. We need
more constructive thinking in public service. We need a kind of "universal training" in economic facts. The over-reaching ambitions of speculative capital, as well as the unreasonable demands of irresponsible labor, are due to ignorance of the economic basis of life. Nobody can get more out of life than life can produce--yet nearly everybody thinks he can. Speculative capital wants more; labor wants more; the source of raw material wants more; and the purchasing public wants more. A family knows that it cannot live beyond its income; even the children know that. But the public never seems to learn that it cannot live beyond its income--have more than it produces.
In clearing out the need for charity we must keep in mind not only the economic facts of existence, but also that lack of knowledge of these facts encourages fear. Banish fear and we can have self-reliance. Charity is not present where self-reliance dwells.
68. Today I am more opposed to war than ever I was, and I think the people of the world know--even if the politicians do not--that war never settles anything. It was war that made the orderly and profitable processes of the world what they are to-day--a loose, disjointed mass. Of course, some men get rich out of war; others get poor. But the men
who get rich are not those who fought or who really helped behind the lines. No patriot makes money out of war. No man with true patriotism could make money out of war--out of the sacrifice of other men's lives. Until the soldier makes money by fighting, until mothers make money by giving their sons to death--not until then should any citizen make money out of providing his country with the means to preserve its life.
If wars are to continue, it will be harder and harder for the upright business man to regard war as a legitimate means of high and speedy profits. War fortunes are losing caste every day. Even greed will some day hesitate before the overwhelming unpopularity and opposition which
will meet the war profiteer. Business should be on the side of peace, because peace is business's best asset.
69. An impartial investigation of the last war, of what preceded it and what has come out of it, would show beyond a doubt that there is in the world a group of men with vast powers of control, that prefers to remain unknown, that does not seek office or any of the tokens of power, that belongs to no nation whatever but is international--a force that uses
every government, every widespread business organization, every agency of publicity, every resource of national psychology, to throw the world into a panic for the sake of getting still more power over the world. An old gambling trick used to be for the gambler to cry "Police!" when a lot of money was on the table, and, in the panic that followed, to seize the money and run off with it. There is a power within the world which cries "War!" and in the confusion of the nations, the unrestrained sacrifice which people make for safety and peace runs off with the spoils of the panic.
The point to keep in mind is that, though we won the military contest, the world has not yet quite succeeded in winning a complete victory over the promoters of war. We ought not to forget that wars are a purely manufactured evil and are made according to a definite technique. A campaign for war is made upon as definite lines as a campaign for any other purpose. First, the people are worked upon. By clever tales the people's suspicions are aroused toward the nation against whom war is desired. Make the nation suspicious; make the other nation suspicious. All you need for this is a few agents with some cleverness and no conscience and a press whose interest is locked up with the interests that will be benefited by war. Then the "overt act" will soon appear. It is no trick at all to get an "overt act" once you work the hatred of two nations up to the proper pitch.
There were men in every country who were glad to see the World War begin and sorry to see it stop. Hundreds of American fortunes date from the Civil War; thousands of new fortunes date from the World War. Nobody can deny that war is a profitable business for those who like that kind of money. War is an orgy of money, just as it is an orgy of blood.
And we should not so easily be led into war if we considered what it is that makes a nation really great. It is not the amount of trade that makes a nation great. The creation of private fortunes, like the creation of an autocracy, does not make any country great. Nor does the mere change of an agricultural population into a factory population. A country becomes great when, by the wise development of its resources and the skill of its people, property is widely and fairly distributed.
Foreign trade is full of delusions. We ought to wish for every nation as large a degree of self-support as possible. Instead of wishing to keep them dependent on us for what we manufacture, we should wish them to learn to manufacture themselves and build up a solidly founded civilization. When every nation learns to produce the things which it can produce, we shall be able to get down to a basis of serving each other along those special lines in which there can be no competition. The North Temperate Zone will never be able to compete with the tropics in the special products of the tropics. Our country will never be a competitor with the Orient in the production of tea, nor with the South
in the production of rubber.
70. When a country goes mad about foreign trade it usually depends on other countries for its raw material, turns its population into factory fodder, creates a private rich class, and lets its own immediate interest lie neglected. Here in the United States we have enough work to do developing our own country to relieve us of the necessity of looking
for foreign trade for a long time. We have agriculture enough to feed us while we are doing it, and money enough to carry the job through. Is there anything more stupid than the United States standing idle because Japan or France or any other country has not sent us an order when there is a hundred-year job awaiting us in developing our own country?
71. I have never been able to discover any honorable reasons for the beginning of the World War. It seems to have grown out of a very complicated situation created largely by those who thought they could profit by war.
72. For the victors wasted themselves in winning, and the vanquished in resisting. Nobody got an advantage, honorable or dishonorable, out of that war. I had hoped, finally, when the United States entered the war, that it might be a war to end wars, but now I know that wars do not end wars any more than an extraordinarily large conflagration does away with the fire hazard.
73. There is something sacred about a big business which provides a living for hundreds and thousands of families. When one looks about at the babies coming into the world, at the boys and girls going to school, at the young workingmen who, on the strength of their jobs, are marrying and setting up for themselves, at the thousands of homes that are being
paid for on installments out of the earnings of men--when one looks at a great productive organization that is enabling all these things to be done, then the continuance of that business becomes a holy trust. It becomes greater and more important than the individuals.
The employer is but a man like his employees and is subject to all the limitations of humanity. He is justified in holding his job only as he can fill it. If he can steer the business straight, if his men can trust him to run his end of the work properly and without endangering their security, then he is filling his place. Otherwise he is no more fit for
his position than would be an infant. The employer, like everyone else, is to be judged solely by his ability. He may be but a name to the men--a name on a signboard. But there is the business--it is more than a name. It produces the living--and a living is a pretty tangible thing. The business is a reality. It does things. It is a going concern. The
evidence of its fitness is that the pay envelopes keep coming.
74. There are two fools in this world. One is the millionaire who thinks that by hoarding money he can somehow accumulate real power, and the other is the penniless reformer who thinks that if only he can take the money from one class and give it to another, all the world's ills will be cured. They are both on the wrong track. They might as well try to
corner all the checkers or all the dominoes of the world under the delusion that they are thereby cornering great quantities of skill. Some of the most successful money-makers of our times have never added one pennyworth to the wealth of men. Does a card player add to the wealth of the world?
If we all created wealth up to the limits, the easy limits, of our creative capacity, then it would simply be a case of there being enough for everybody, and everybody getting enough. Any real scarcity of the necessaries of life in the world--not a fictitious scarcity caused by the lack of clinking metallic disks in one's purse--is due only to lack of production. And lack of production is due only too often to lack of knowledge of how and what to produce.
75. This much we must believe as a starting point:
That the earth produces, or is capable of producing, enough to give decent sustenance to everyone--not of food alone, but of everything else we need. For everything is produced from the earth.
That it is possible for labor, production, distribution, and reward to be so organized as to make certain that those who contribute shall receive shares determined by an exact justice. That regardless of the frailties of human nature, our economic system can be so adjusted that selfishness, although perhaps not abolished, can be robbed of power to work serious economic injustice.