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Every Business Has
No industry can thrive if Cooperation among the three is lacking. No business can succeed that has a dishonest or indifferent partner.
EACH PARTNER OWES A
You Are One of the
Business Men Must Take Greater
Interest in Political Problems
Frank A. Vanderlip, President, National City Bank
of New York City
Your President assigned to me the subject of the relation of the banker or of banking to industry. Now commerce, it seems to me, falls in three classes; we have, first, production, then transportation and then banking. Each field contributes its important part and an equally important part to the whole of commerce; each is absolutely essential. Obviously production by itself would not get far; it must have the aid of transportation, and I conceive that the business of banking plays as essential a part in the final make-up of commerce as do the other two fields of production and transportation. If that is So, the relation that must exist between banking and industry is a relation of complete co-operation; it is a relation that makes it evident that we must not look upon bankers in that narrow sense of men who hold for a time your money, who, for a time, loan it at a profit, and who are merely the parasites scraping off a bit of profit here and there. They are rendering, I believe, as essential service, as absolutely necessary service to society as either you who are producing, or as are the great transportation factors in the whole scheme of commerce. If, as I
say, that is so, then our relations are relations of complete co-operation if the best results are to be obtained. Now it seems to me that we are today peculiarly in a time when all of us, bankers, producers and those who manage the great transportation interests, must do more than look on their desks, must do more than the work that normally flows by us. We are all of us so
Address to the Twentieth Annual Convention of the National Founders' Association, November, 1916.
normally busy with that work that it pretty much consumes all of our time; it normally leaves us with little time to think, in broad, fundamental ways, of the problems that are affecting our business and are fundamentally affecting the society which we live. At the present time these problems are more fundamental and in many ways more important than any we have had to observe before. The very fundamental problem of all is the problem of government. I had an interesting conversation a few days ago with a very eminent Frenchman, a great financier, who has spent the last two years at the front and was profoundly affected, as are all of the men who are going through that great drama; I asked him what he thought was going to come out of the war that would be fundamental to the future world, and he told me that he thought it not improbable that as great changes in the fundamental forms of government would come out of this great war as came out of the French Revolution. He said he believed that democracy, in its present form, had been pretty well demonstrated to be a failure, and he went on to analyze some of the weaknesses as they appeared in the French Government.
Necessity for Business to Have More Expert Representation
in the Legislatures It struck me particularly that in that analysis he put his finger on almost identically the things that we would say were weaknesses here with ourselves, more particularly perhaps that democracy seemed usually to bring mediocrity into legislative places and that whenever there came into legislative office a man strongly representative of any interest, he was at once set down as a special pleader for that interest, was discounted and eliminated. Now if that is so, and it seems to me so with us as it is so in other countries, perhaps it is time that we did do some fundamental thinking, not about returning to any former type of government, not about changing fundamentally from democracy, but about ways and means for becoming represented in public life by men who do represent in an expert way the various interests of our society. I believe it is to such subjects as that that we must give some of our attention. I am merely citing this as a sort of a fundamental. The point that I want to emphasize is the necessity for all of us to have a broader vision than the consideration of our daily work.
Government and Business Should Co-operate One of the things that Mr. Rice referred to which I believe is going to be of vast importance to the business of this country and particularly to the productive energy of the country, is the co-operative relation between government and business. We are going to see illustrations of that co-operative relation in European countries that will be something novel in business life. We are seeing now great experiments in state socialism; we are seeing co-operation in the way of subsidies; we are seeing the direction of great shipping interests by government and the control of shipping interests as recently illustrated in Australia by government capital; we are going to meet in the future competition, an entirely new relationship in the European countries, particularly, between government and business, a relationship which is going to increase your difficulties in meeting that competition. Now unless we can get similar co-operation between government and industry in this country, unless we can get a sympathetic relation, a helpful relation of government to business, we are going to find oursleves very greatly handicapped in competition with this new order of affairs which I believe will grow very much from its present state in the future development of European politics.
Business Men Must Take Greater Interest in Public Affairs
So, there again, it is up to you to look at things in the large, to find time to look up from your desks, and not be so absorbed with your day's work that you are failing to participate in the political life and the legislative decisions that mean so much to our future. We are no longer isolated; we are out in the world in spite of oursleves. What the world does is of vast importance in our lives and in our industrial affairs, and it is up to you to take that interest in public affairs which will tend to make your voice heard and give your wisdom its influence in the shaping of that relation to business which forms so great a part of legislative action. I think we will see the most adroit tariffs framed by the European countries, and those must be met, not by the log-rolling tariffs that we have had heretofore, but by equally scientific, equally adroit legislative measures which will serve to protect our industries.
Government Regulation of Business We are going to see government ownership of utilities, particularly of shipping; we are going to see the influence of government in the shipping business to a larger extent than we have ever seen before. Now the business in this country that has felt, more than anything else, the hand of government, has been the business of transportation. Railroads have been regulated, I believe, in many respects properly regulated, although in my opinion we have very foolishly applied two theories to the regulation of railroads, both of which cannot possibly be right, and when both are applied at the same time, spell nothing but disaster. We have the one theory of minute regulation, starting with the regulation of rates and embracing almost every act of the transportation company; then we have the other theory of the prevention of combinations, prohibition of pooling. Both of these theories cannot be right; yet both of them are being worked side by side, both are applied to the railroads with resultant disaster. You may very readily say “Disaster? Where is the disaster to the railroads? They are doing more business than they ever did in their lives, their earnings are showing enormous increase; you are going a good ways to talk about disaster in the railroads' field.”
Railroads Now Unable to Get New Capital But I tell you when any business has become so hampered in the eyes of the investors that it will not attract money for partnership in the business, but has only credit that will permit it to borrow,—it is in a bad way. That is really the position of the railroads today; they can borrow money, yes, they still