Significant Developments in Our American Economy
Publication:
The Empire Club of Canada Addresses (Toronto, Canada), 31 Oct 1957, p. 60-77


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Romney, George, Speaker
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Text
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Speeches
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Some background to the speaker's company, American Motors. Some remarks about the differences between Canadians and Americans. Conducting business in Canada on a Canadian basis. Some management details of Kelvinator of Canada and American Motors, especially with regard to Canadians on the Board. A pro-Canadian attitude. Some international problems that Americans and Canadians both face. Three fundamental and eternal principles of which the speaker wants to remind us. Some problems internal to the United States, with discussion. The economic imbalance between Agriculture and Industry. The factor of the U.S. approach to tariffs and foreign trade. The competitive principle. Anti-Trust laws. The "Big Three" of the automobile industry: General Motors, Ford and Chrysler. Collective Bargaining. The use of union power. Conflict in the principles of national labour laws and the principles of national economic laws in the U.S. The use of monetary control. The principal cause of inflation. Wage increases. The threat of depression in the U.S. The responsibility of the Federal Government, and of the State and local governments. The "Number One National Problem" in the U.S. today of "the excess concentration of private and public economic, social and political power—the very thing that our Constitution and basic documents were designed to prevent." Leadership. The revolution in the automobile industry in America. The philosophy of the speaker's company. The need for a strong Canada to help the U.S. solve its domestic problems. Developing economic and political strength in other nations to help reduce the magnitude of the responsibility now being borne in the United States. Welcoming a strong pro-Canadian attitude in Canada.
Date of Original:
31 Oct 1957
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English
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Full Text
"SIGNIFICANT DEVELOPMENTS IN OUR AMERICAN ECONOMY"
An Address by GEORGE ROMNEY, President of American Motors Corporation, Detroit
Thursday, October 31st, 1957
CHAIRMAN: The President, Lt.-Col. W. H. Montague.

LT. COL. MONTAGUE: Today we warmly welcome our first American guest speaker of the current season, Mr. George Romney, President of American Motors Corporation.

Born in Mexico of American parentage, he was educated in the United States-attending Latter Day Saints University, the University of Utah and George Washington University. In 1929 he joined the staff of U.S. Senator David 1. Walsh, as a tariff specialist. In 1930, he moved to the Aluminum Company of America, which company he later represented, along with the Aluminum Wares Association, in Washington until 1939, when he was appointed Detroit Manager of the Automobile Manufacturers' Association. By 1942, and until 1948, he was General Manager of that Association. In 1941, he helped to organize the Automotive Council for War Production and became its Managing Director as an additional responsibility. Just before the U.S.A. entered World War II he assisted in the creation of the Automotive Committee for Air Defence.

In 1948 he joined Nash-Kelvinator Corporation as Assistant to the President; within two years he was a Vice President, and it required only four more for him to become Executive Vice President and a Director.

Nash-Kelvinator Corporation and Hudson Motor Car Company merged to form American Motors Corporation in May 1954, and Mr. Romney was its first Executive Vice President and a Director. In less than six months, by 12th October 1954, he was elected President.

He is also Chairman of the Board of Refrigeration Discount Corporation; Chairman of the Board of Altorfer Bros. Company of Peoria, Illinois; a Director of Redisco of Canada, Limited; Kelvinator of Canada, Limited; American Motors of Canada, Limited; and of Kelvinator Limited (Great Britain). He tops things off with the Presidency of the Automobile Manufacturers' Association, with which he first established a connection in 1939.

Like so many high calibre business executives, Mr. Romney more than pulls his weight in community and religious activities. He is presently Chairman of the Detroit Citizens Advisory Committee on School Needs, and is a Director of Cranbrook School. Long active in religious affairs, he is President of the Detroit Church of Jesus Christ of Latter Day Saints.

He has chosen as his subject for today, "Some Significant American Economic Developments". Gentlemen, I have great pleasure in introducing Mr. George Romney, President, American Motors Corporation.

MR. ROMNEY: Thank you very much, President Montague, for that very generous introduction. I certainly welcome the opportunity to be here in Toronto and after that rather glowing introduction I would like to bring you back to earth and really let you know that I head up a company that is a David among Goliaths. If you are familiar at all with American Motors, you will know that we probably compete with more of the industrial giants of the earth than any other single company.

On the automotive side we compete with the "Big Three", and on the appliance side we compete with General Electric, Westinghouse, Whirlpool, with its R.C.A., and Sears Roebuck connections, and its Simpson-Sears connections. We know what competition means.

As a matter of fact, I don't think anybody appreciates more than I do, J. T. Keller's definition of a competitor as a man who goes in a revolving door behind you and comes out ahead of you.

Even my children have the competitive spirit. My nine year old boy came home from school the other day and he said, "Mom, we really build the best cars, don't we?"

She said, "Why, Mitt, of course we do. Why do you ask?"

He said, "Well, if we build the best cars, why is it that less than three per cent of the people agree with us?" When I came home that night I took my young son on my knee and I said, "Look, Mitt, size doesn't always indicate strength and popularity doesn't always indicate truth, and sales volume doesn't always indicate value." I hope, and expect, as a matter of fact, at the end of 1958 to take my young son on my knee and say, "Mitt, there is one thing I want to add, and that is right always prevails."

I feel I am entitled to this label "American", because I was born in Mexico. I live in the United States, except for the summer when I am a summer Canadian. So I really feel I am entitled to be called an American.

As a Yankee American I have been guilty, along with my associates, of taking Canada too much for granted. I think that is kind of a natural tendency because we speak the same language, even if we don't speak it as well as you do. We enjoy the same sports and after all, we do have the same heritage. From our Western European sources we inherit basically the same concepts of religious, political, and economic freedom.

The fact that we know each other so well has tended to cloud the fact that there are few fundamental differences, which reminds me of the debate in the House of Deputies over women's suffrage. It is an old story-you have probably all heard it. It is about the Deputy who was arguing for the women's right to vote. He said, "After all, there are very slight differences between men and women," and his opponent jumped up and said, "Long live the differences."

We are not identical, and we as Americans should stop thinking of Canadians in the same terms as we tend to think of people from other States in the United States.

As a company doing business in Canada we have recognized the desirability of conducting our business as much as possible on a Canadian basis. We highly value the relationship that we have with Canadians.

If you take the management of our two organizations -the automotive and Kelvinator of Canada-we have thirty top Executives. Of the thirty top Executives, twenty-six are Canadians, three are from England and one is from the United States.

In Kelvinator of Canada, American Motors own 55 per cent of the stock. In Simpson-Sears, Mr. Burton and his Sears associates own 20 per cent of the stock, and other Canadians own the balance of the stock of Kelvinator of Canada. We are pleased that we have important Canadian participation. We have three Canadians on our Board.

I believe that Yankee Americans should welcome the resurgence of the Canadian spirit of independence and distinction and your economic ambition. Actually, I don't think it is any different in its inherent qualities than the same spirit of independence and desire to achieve economically that enabled the United States to benefit from substantial foreign investment in the United States. If you go back to the turn of the century, a great deal of our basic enterprise was made possible as a result of important foreign investment, because we lacked capital funds.

From the time of my grade school education, I have been taught that we derive a great deal of our industrial know-how from Great Britain and Western European nations-processes as well as products-yet by maintaining our independence of approach, we have been able to attain the position that we now have.

I don't consider this pro-Canadian attitude an anti-American attitude, any more than I think the fact we had a Mayor of Chicago, back in 1920, who was anti-British made the American nation anti-British. Sure, Bill Thompson used to get played up in the British press and he used to say some very uncouth things about the King and others. But it wasn't an anti-British viewpoint, it was a pro-American viewpoint.

Jointly, as Americans and Canadians, we face some stupendous international problems and some internal problems that could be even more vital. I think they are more vital. All of us, I think, are more familiar with the international problems we face and as a result I decided to focus my comments on some of the significant trends in the United States, because I can speak of them on the basis of first-hand knowledge. The greatest American in my book is the one who said, "When you talk speak the words of life," and that means speak the words of experience.

If I refer to my own personal experience in this talk I hope you will excuse me because I think I can talk against that background with greater profit to you. I must of necessity leave any application of the American scene to your Canadian picture.

As background, let me remind you of three fundamental and eternal principles. Number One, the one voiced by Ralph Waldo Emerson, one of the great American philosophers and writers, when he said, "There is no weakness except from within, and the only unsurmountable barrier is our own inherent weakness of purpose." That is essentially the same thought as that expressed by Mahatma Gandhi, who in my book achieved this century's victory, and his favourite advice was "Turn the searchlight inward."

The second principle I want to remind you of is that which was voiced by the great American poet, Walt Whitman, who wrote, "It is provided in the essence of things that every fruition of success, no matter what, is followed by something to make necessary a still greater struggle." That is true in our personal life as well as in our collective activities. The greater the responsibility of our achievement the greater the challenges and the greater the struggle we have to put forth to overcome the new challenges.

And the third principle is that voiced by Toynbee in "The Study of Civilization", that civilizations rise or fall depending on ability to meet new challenges and to respond to them in the right way."

What are the internal somethings in the United States that have resulted from the very magnitude of the United States' accomplishments, which must have the right response if the United States is going to be able to play its proper world role? Let me touch some of them.

I think one of our major economic problems in the United States is one which we have had for an extended period of time, and have been unable to solve. That has been the problem of the economic imbalance between Agriculture and Industry. In the United States, going back into the '20s we have had a disturbing imbalance between agricultural prices and industrial prices.

It happened when I worked with Senator Walsh down in Washington in 1929 and 1930, that the imbalance between agricultural prices and industrial prices in the United States was then considered to be one of the major, if not the major contributing factor to the great depression that started in 1929. Loose credit had a part, but there developed in the Congress of the United States a great debate, focussing around the agricultural problem and around the tariff laws. The farmers then were taking the position that they couldn't sell in world markets and buy in protected American markets; that they either had to be protected or subsidized or industrial tariffs had to be lowered so they can buy the things they had to buy on a world price basis.

Unfortunately, as far as I am concerned, the wrong decision was made in 1930. The United States Congress and President Hoover passed the Smoot-Hawley Tariff Act, and boosted industrial tariffs. Despite the fact we had become the greatest creditor nation in the world, we continued a restricted foreign trade policy and even tightened it.

Then because of this imbalance between Agricultural and Industrial prices, the McNary-Haugen Farm Bill was passed to subsidize the farmer out of the Federal Treasury.

In subsequent years our approach to tariffs and foreign trade has modified somewhat. We have the Reciprocal Trade Agreement Act and it is modified somewhat but not to the point where you can say that the American foreign trade policy is one in keeping with its creditor nation position and the reality of the need for international trade, or the meeting of the requirements of nations on the basis of their ability to produce and sell in the American market.

And, on the other side, the agricultural problem has continued to be met on the basis of subsidization, increasing agricultural prices that are completely unrealistic in terms of international world agricultural prices, and is reaching now the place of subsidization of sales of agricultural products in world markets-something I don't think you people feel too kindly about.

We have another factor in this imbalance in the United States between industrial and agricultural prices. The ability of unions to secure wage increases now bears no relationship to productivity increase which means you have to boost prices. Since 1948 we have increased industrial prices in the United States by 21 per cent and during the same period agricultural prices have declined 14 per cent. I submit that the disparity between agricultural prices and industrial prices has again become a major economic problem in the United States.

The American economy, and I believe yours, is premised primarily on the idea that the general public will be protected by adequate competition and also that there are only two ways to discipline an economy: through competition or through absolute authority, and the absolute authority can be either private or public.

The late Dr. Simmons, of the University of Chicago, once wrote, "Any community that loses the discipline of competition exposes itself to the discipline of absolute authority." You can have cartelism, private absolutism or collectivism which is public authority, but I, personally, don't know any other alternative to competition and absolute authority except in a perfect society. If you give me perfect human beings I can give another form, but that is for the Millenium.

To convey to you the picture of what has happened, let me give you the background of my own experience. It is true I represented the Aluminum Company of America in Washington for eight years. The Aluminum Company of America was the only producer of aluminum in the United States and it was a monopoly.

It is a moot question among lawyers whether our Anti-Trust laws, designed to preserve the competitive principle, actually applied to the Aluminum Company of America, an industry on a modified non-competitive basis. Although the Government started proceedings against the Aluminum Company while I was still representing it, it wasn't until 1942, when the government had billions of dollars to spend for military purposes that the Government of the United States decided as a matter of public policy that there should be at least five aluminum companies in the public interest, and they literally subsidized one way or another such companies as Reynolds, Kaiser, and Anaconda Copper. Today there are six aluminum companies.

As a result of competition the production and consumption of aluminum in the United States has now been stimulated to the point where there is more consumption in two or three weeks than used to be produced in a whole year immediately prior to World War II. That is how fast competition has stimulated the aluminum market in the United States.

I left the Aluminum Company of America in the fall of 1939 because it was a vast monopoly, and like most monopolies, whether private or bureaucratic, the opportunities for promotion are more dependent on seniority than on other considerations. I had an opportunity to go into the automobile business in a trade association capacity, and leave the security of the Aluminum Company to go into the insecurity of a trade association job. It was a competitive job. I went because I felt in a competitive industry there were more opportunities if a fellow had any ability.

At that time there were eleven automobile companies. At that time there was one aluminum company. Today there are six aluminum companies; there are five automobile companies.

I submit that if it is a matter of national policy, and the United States of America needs six aluminum companies, it certainly needs at least five passenger car companies, because the automobile industry influences the employment of one out of every seven people in the United States.

I don't want my company or any other company to continue to exist in the United States purely on the basis of subsidy or special consideration, either by the industry or by the Government. I think it is essential to a competitive economy to have death for companies if they can't organize activities so they can produce something that free customers want to buy and I mean that without reservation. After all, there have been twelve hundred automobile companies. In fifty years they are down to five, and I don't want to see a situation continue where we can't have a few more deaths if we have to have them, and I mean that literally.

I have reached the conclusion in my own mind, that the "Big Three" have achieved their position of dominance in the United States, not by using improper methods, nor by doing things that are contrary to the public interest or the industry's interest, in the main. Nobody conducts a business perfectly, but in the main, they have. They have acquired their position because they have done a job better than others in terms of what free customers wanted.

So I don't want to disparage in any way, or have you think I am disparaging in any way the magnitude of the accomplishment of General Motors, Ford and Chrysler. I admire them for what they have done. I know that the competitive principle has operated to the point where with more deaths in basic industry we get inadequate competition. I am confronted with the hard truth, as far as I am concerned, that the laws were designed to prohibit improper competitive practices are no longer adequate and that the American laws affecting American economic policy must on the basis of principle, not on the basis of administrative discretion, such as was used to create competitors for the Aluminum Company of America, but as a matter of principle, provide for the continuation of the process of birth, growth and death in our major industries.

There hasn't been a successful birth in the automobile industry in the United States since Chrysler was born in the early twenties. I am not going to try to spell out here the application of that principle over there. I think there is a way to accomplish the objective stated, but I consider the modernizing and the strengthening of the laws of the United States as they apply to American industry, to provide for the continuation of the process of birth, growth and death over there as vital to the future of a vigorous American economy.

Now, Collective Bargaining. I happened to be in Washington when the laws protecting, fostering, promoting and removing collective bargaining from any significant limitation were passed. There is no limitation in the United States today on the extent to which a union, on a union basis can concentrate its power.

That will give some realization of why it is that union power has developed to the point it has. Actually, these laws were passed because Management was abusing its power and because the development of modern industrial society had resulted in huge corporations in which the individual worker had no adequate means of protecting himself except through sound collective bargaining.

Unfortunately, in an effort to redress that inequity we went too far and removed any limitation from unions. The result is unions have seized the opportunity and have organized their power to a point where they are on the verge of consolidating, not on an industry basis but a national basis. For several years collective bargaining in the United States has been essentially pattern bargaining, where one of the national unions, affiliating with the other national unions, picks a victim, either a company or an industry. They get from that company or industry -always a company or industry that is big enough to be used as a pattern setter-the conditions they want to apply through the whole economy.

For several years that has been one of the automobile companies. In 1955 it was the Ford Motor Car Company.

This use of union power which now exceeds the private power exercised at any time by any other private group in the history of the United States has been so successful that the wage increases annually have now moved up from the level of one, two and three per cent to an increase in 1955 of twelve per cent. That twelve per cent pattern established with Ford not only went through the automobile industry but other industry as well, and the result was you had higher costs and price increases.

I think we are faced in the United States with the question of whether we are going to apply to unions the same limitations that historically we have applied to all other segments of the American economy. In the United States either American industry is going to consolidate its power in the same way the unions have consolidated their power, on a national basis, or the Government of the United States is going to apply the same dispersion of power principles to unions as they have applied to Industry.

There is a complete conflict today in the principles of our national labour laws and the principles of our national economic laws. It is an economic absurdity to apply price competition and permit monopoly fixation of wages. Wages contribute ninety per cent of cost and therefore price, and the fixation of the wages when it is a pattern that goes through an economy is, in essence, a fixation of prices. That is another problem.

Another is an excessive reliance on monetary controls in combating our inflation over there. We did it in 1953 and we are doing it again now. Actually, the biggest single cause of inflation in the United States, is this matter of wage increases that exceed by several times any possible improvement in efficiency. The effect of that has been that industries in past years have been borrowing all the money they could, using all the credit they could, to mechanize around rising wages costs. We haven't any shortage of production capacity. We have too much production capacity in most of industry.

The use of monetary control as a substitute for getting at the principal cause of inflation, which is the inordinate level of wage increases, threatens us in the United States with economic depression. Or it could confront us with a repetition of what happened in 1953, namely, that the pressure because of declining economic activity reaches the point where the Federal Reserve Bureau retreats from its present monetary policy and the old forces of inflation take over. In 1953 to 1955 we moved from where we couldn't have much of a wage increase to a twelve per cent wage increase in 1955. We can see a repetition of that in 1958.

I don't know what is going to happen, but I am sure the problem of inflation in the United States is not going to be resolved until union power is curbed to the point where there is some equality of bargaining.

The loading of the responsibility on the Federal Government for full employment and prosperity, the responsibility of foreign aid and economic development around the world, have all resulted in a decline in the responsibility of the State and local government. It is an accurate statement, I think, to say that in the United States, unless there is a reversal of the trend, state government will cease to render any essential and important governmental function in the next twenty-five years.

Under that setup, the power of the President of the United States has increased to an alarming degree, to a degree where U.S. News and World Report, which is our most informative source of news on international and domestic affairs, had as its lead article in the October 25th issue, an article by a brilliant French economist and soldier entitled "The Coming Caesars in America". I would like to take the time to read a little bit from that article:

". . . It is the contention of this book that expanding democracy leads unintentionally to imperialism and that imperialism inevitably ends in destroying the republican institutions of earlier days . . . further, that the greater the social equality, the dimmer the prospects of liberty, and that as society becomes more equalitarian, it tends increasingly to concentrate absolute power in the hands of one single man."

"The legitimacy of all institutions rests on one factor: time. Those that endure over a long period of time are legitimate. Those that happen to seem logical at the immediate moment are not necessarily legitimate. This is the cardinal difference between Caesarism and tyrannies or dictatorship. Legitimacy involves a slow build-up over a period of generations, not a sudden seizure of power. Aristotle had already observed, from Greek experience, that tyrannies are short-lived. Not so Caesarism, which is a slow, organic growth within a society tending toward democratic equality."

One of the most specious ideologies in the world today is the idea that all men are equal and therefore should all have equal benefits.

"Western society today, and especially American society, presents the spectacle of an immense multitude of equal and similar men and women who think alike, work alike, and enjoy the same standardized pleasures. The more uniform the level, the less the inequality and greater the compact emotional power of the multitude of likeminded men. But this power has to be concentrated and personalized by one man who acts as its articulate spokesman. Who can this man be today, except the incumbent of the most powerful office in the most powerful state in the world-the President of the United States?

"The United States Congress has repeatedly expressed its fear, especially since the New Deal and World War II that the Constitution and the separation of powers is being steadily undermined-and so it is. Under present conditions, democratic equality ends inevitably in Caesarism. No system of checks and balances can hold out against this profound evolution, a psychological alteration that bypasses specific institutions. The thirst for equality and distrust of any form of hierarchy have even weakened Congress itself through its seniority rule. Dislike for aristocratic distinctions eventually ends by eliminating that most indispensable of all elites-the aristocracy of talent." And further: "In truth, no mental effort is required to understand that the President of the United States is the most powerful single human being in the world today."

(And in President Eisenhower we have a very humble man who inherently is opposed to the magnitude of power that he has to discharge.)

"Future crises will inevitably transform him into a full-fledged Caesar, if we do not beware. Today he wears ten hats-as Head of State, Chief Executive, Minister of Foreign Affairs, Chief Legislator, Head of Party, Tribune of the People, Ultimate Arbitrator of Social Justice, Guardian of Economic Prosperity and World Leader of Western Civilization. Slowly and unobtrusively, these hats are becoming crowns and this pyramid of hats is slowly metamorphosing itself into a tiara, the tiara of one man's world imperium."

We will never call anybody Caesar, but if trends continue the way they are I think it is hard to disagree with many of the arguments in this article.

And in conclusion: "So far, all Civilizations have chosen the easy solution of Caesarism. But Caesarism itself, if allowed to develop unchecked, implies organic death for the society that gives itself up to it out of fear of freedom. And whereas in the past a new Culture has always sprung up from the ruins of an antecedent Civilization and blossomed forth, the wreck of our own Western Civilization might well mean absolute death for the entire human race."

In my book the Number One National Problem in the United States today is the excess concentration of private and public economic, social and political power-the very thing that our Constitution and basic documents were designed to prevent.

We are getting an inadequate response to these problems. On this question of agricultural and industrial price disparity we are going further along the road of subsidization.

The McLelland Committee is investigating trade unions in the United States, but they are dealing with the excesses of power, the abuses of power, not with power.

Even the late Robert Taft, vigorous and courageous as he was, ducked the problem of union power in America and cast his vote in the Taft-Hartley Bill to prevent that from becoming the central issue. That is how difficult the problem is.

There is no leadership in the United States that has undertaken to deal with this concentration of union power. They are working at a business that is popular--we are all against excesses and abuses and criminals and thugs and things like that.

The President, well meaning as I think he is, has made what I consider a very unrealistic approach to the matter, by simply making an appeal to unions and companies to restrain themselves in the 1958 bargaining. There is no effort to do anything about the anti-trust laws and federal power continues to accumulate. There is lip service given to reversing the trend, but not much of an effective character is done. Industry is on the defensive. The unions have developed some skilled leadership and make no mistake about that. The union leadership in the United States, the more intelligent and able part of it, and the part that isn't smeared with abuses of their power of a character now being investigated have outflanked industry in the public arena. They have been smarter in their public relations and in shaping public attitudes and public action. They continue to be so because American Industry is afraid to speak out, because they are afraid of reprisals; they are afraid this man will shut the whole company down if they speak out. They are trying to use the mercenary approach of hiring the third parties to go out and tell the story, which has never worked in war or peace.

My time is up. I was going to touch on the auto situation over there. We are going through a revolution in the automobile industry in America. My little company has outflanked the "Big Three". We have developed a unique production position, based on exact opposition to their production philosophy. Our philosophy is make them more economical; make them smaller; make them less costly and build into them all the modern conveniences that people want.

In our automotive operations in 1956 we lost heavily. We had the problem, beginning three years ago to turn around two companies that had been losing heavily for some time, and you can't turn around in less than three years. In 1957, in ten months out of twelve we operated in the black. In the last ten months we have been acquiring dealers at an unprecedented rate. The level of dealer franchising is three times what it was earlier.

The trend to the smaller car in America is a basic new trend. It is based on the change that occurred in the use of the automobile. The auto is still revolutionizing American life. "Suburbia" is the new direction, and millions of people that have moved into the suburbs have to have two, three or four cars, and therefore they need less costly units. The new definition of a pedestrian is a man with two cars and a wife and teen age children.

And that new pattern of things let me give you the figures. Smaller cars, cars smaller than the Ford, Chev and Plymouth, took 1.2 per cent of the industry in 1955. They took 2.58 in 1956, and they are going to take at least 5 per cent in 1957, and in 1958, I will be conservative when I predict they will take at least 8 per cent of the industry. Before the '60s are over, 50 per cent of the cars in America will be smaller than the Chev, Ford and Plymouth.

A revolution is taking place. The appliance industry is straightening out. I am happy to say some intelligence is coming into it and they are getting away from the whole industry selling on the basis of price. If you want to get into a sick business get into a business where that is the only thing that counts. We think it is going to straighten out.

In conclusion, we need a strong Canada to help us solve our domestic problems in the United States. It is essential for the preservation of freedom in the United States, to develop economic and political strength in other nations to help reduce the magnitude of the responsibility now being borne in the United States.

As an American, I welcome the spirit of independence and economic ambition that is so manifest in Canada. A strong pro-Canadian attitude in Canada, coupled with your abundant natural resources can produce a Canadian nation, capable of sharing the responsibility of individual freedom and world order, based on justice and humanitarianism. It would reduce the magnitude of American responsibility, and the power exercised by the President of the United States. It is vital for Canada and other nations to achieve an economic and political status that will permit them to stand on their own feet and take part in shaping the policies of the future world.

There is one thing I want to leave you from Mexican experience. My parents went down in poverty and applied the same methods to create prosperity that had been used in the West-irrigation, dams and such. Their prosperity became such that they and other foreigners were driven out of Mexico by Maximilian. I say, thank goodness-I might still be living down there if he hadn't come along and driven them out. The thing that resulted in our people being driven out was envy. The native couldn't understand why other people there should be more prosperous than they. It was envy that resulted in the Crucifixion of the Christ, if you will remember your Scriptures.

Here stands the United States and Canada, the two most prosperous nations in the world, and the undeveloped countries of the world can't understand how we did it. They think we were just blessed by natural resources. They resent it and the enemy is using this envy and jealousy to turn people against us. Now, foreign aid helps but it is important to help them in basic economic development. I was startled to learn recently that you are putting more, per Canadian, into foreign aid than the United States is. You are small in relation to the United States, and like my company you don't get as much credit as you should.

Our greatest problems in Canada and the United States are not going to be of the economic and political character. They are going to be personal and individual problems, because our greatest problem is going to be to raise our children in the midst of abundance so they will have the strength and the capacity to deal with bigger problems than we have to deal with. Whether we have the ability to deny our children enough ease and comfort, so they will develop the right slant on life, remains to be seen. Certainly, we ought to be jolted out of complacency by what the Russians have done in sport and Sputnik. We must come to recognize the truth of what Helen Keller said, namely, that not until we can refuse to take without giving, can we create a society whose chief activity is the common welfare.

I leave with you the words of one of our great American poets:

To side with Truth is noble when we share her wretched crust,

Ere her cause bring fame and profit, and 'tis prosperous to be just;

Then it is the brave man chooses, while the coward stands aside,

Doubting in his abject spirit, till his Lord is crucified.

THANKS OF THE MEETING were expressed by Major James Baxter, M.C., a Past President of the Club.

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Significant Developments in Our American Economy


Some background to the speaker's company, American Motors. Some remarks about the differences between Canadians and Americans. Conducting business in Canada on a Canadian basis. Some management details of Kelvinator of Canada and American Motors, especially with regard to Canadians on the Board. A pro-Canadian attitude. Some international problems that Americans and Canadians both face. Three fundamental and eternal principles of which the speaker wants to remind us. Some problems internal to the United States, with discussion. The economic imbalance between Agriculture and Industry. The factor of the U.S. approach to tariffs and foreign trade. The competitive principle. Anti-Trust laws. The "Big Three" of the automobile industry: General Motors, Ford and Chrysler. Collective Bargaining. The use of union power. Conflict in the principles of national labour laws and the principles of national economic laws in the U.S. The use of monetary control. The principal cause of inflation. Wage increases. The threat of depression in the U.S. The responsibility of the Federal Government, and of the State and local governments. The "Number One National Problem" in the U.S. today of "the excess concentration of private and public economic, social and political power—the very thing that our Constitution and basic documents were designed to prevent." Leadership. The revolution in the automobile industry in America. The philosophy of the speaker's company. The need for a strong Canada to help the U.S. solve its domestic problems. Developing economic and political strength in other nations to help reduce the magnitude of the responsibility now being borne in the United States. Welcoming a strong pro-Canadian attitude in Canada.