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In some instances the motives were not so worthy as in others, yet they were practical and influential with many who would not have been converted otherwise to higher standards, for ethical management brings additional profits to business. Sooner or later it pays in dollars and cents.

Public opinion has aroused and probably always will arouse the consciences of men and women. Our sleep is broken, our digestion interrupted when we oppose the will of the majority; and we cannot long enjoy life in the face of public disfavor. We dread the condemnation of the general public, especially if there is reason for it. This is true of most persons. It must be admitted that in the past business men have not always been just in their treatment of others. Some have been Some have been selfish and arrogant, occasionally giving good ground for complaint. It is not certain that business men have always treated their employees exactly right, or that employees have always been paid adequate compensation for their services. If it be said that employers have paid as much as their business would afford, the answer is, the producer should have charged more for his commodities, and the general purchasing public should have shared the burden of increased wages.

Business affairs are conducted now in accordance with the avowed belief that right is superior to might, that morality looms as large as legality, and that a due observance of both is essential to worthy achievement; that the rights of the customer must always be respected; that employees are business associates, and should be treated accordingly; that the stock

holders in a corporation as well as all its officers are entitled to any information of value, immediately upon its receipt by any officer or partner; and that in no circumstances should there be preferential rights or opportunities, but, on the other hand, full and prompt publicity of all facts involving the public welfare or interest.

It is encouraging to note that the outlook, not only in the United States but throughout the world, is wholly changed. The present view is the antithesis of that which prevailed a quarter of a century ago, The seeming disposition of leaders in all nations is toward harmony of action. This augurs progress and prosperity. It means a higher world level of morals, a decrease of poverty, and an increase of the general comfort. The millennium has not arrived; we probably shall not see it in the near future; but conditions everywhere are improving. People on the average are growing better; in every department of human activity, in thought, in reading, in study, the world is made better and richer by a greater honesty of motive and intention. If one should ask whether there is a panacea for the ills that sometimes appear in the moral, social, political, and economic life of the nation, the answer would be:

"Yes, by the general adoption and practice of the golden rule."

It may be protested that this is impracticable. You may be sure that any one who makes such a protest has his neighbor in mind, not himself. There is no other rule of action that will insure perfection. Every one remembers when might was right, when jealousy, discord,

and brutal antagonism prevailed, to the loss and suffering of all those engaged in the strife, and to the distress and impoverishment of the innocent by-stander.

That time has passed. Our minds and hearts have awakened to a realization that others in business are possessed of the same sensibilities as ourselves, and we have tried with success the experiment of treating our competitors as friends and companions, rather than as enemies. We now understand that except for a spirit of coöperation, born of fair and honest methods, many of us would have impoverished the owners of the properties put into our hands for management.


On April 1, 1901, about twenty-six years ago, the United States Steel Corporation, as a completed organization, established offices and opened its books. The stockholders and the general public have been informed in great detail by its regular reports, published annually and quarterly from the beginning, of the growth and volume of its business, the extensions it has made and the physical condition of its properties, its financial resources and balances.

The iron and steel industry has long been known as the barometer of trade. That statement is probably justified. Occasionally the industry is the thermometer of conditions as well; it is like the mercury moving up and down in accordance with the weather; and that is the saddest and one of the most serious things about it. Why, we ask ourselves, are we not always successful in our business? I offer the suggestion that, to a greater or less extent, it is because of

lack of confidence in one another. Often we do not credit fully what our business neighbors say. We suspect they are moved solely by selfish considerations, and possibly this may be true; but do we not overlook the fact that it may be just as true of ourselves?

Possibly the worst disease that affects the business structure, at least in the United States, is the abnormal and unnecessary timidity, the ill poised mental attitude, of business men themselves. The substance and form of statements concerning present conditions and future business prospects often greatly affect progress and success. There is a right way and a wrong way of stating a fact for consideration. Those who are well advised ponder what they say. It is just as proper to say, "We consider that business is good; it is up to eighty per cent of producing capacity," as it is to say, “We consider that business is bad; it is down to eighty per cent of producing capacity."

The substance is the same, whichever form is used. No difference of net return is involved. Yet the psychological effect on those who hear the two statements may be quite different.

A robust faith in the good intention and integrity of one's fellows, and a tranquil confidence in the continued well-being of this richly endowed country, should be a part of every business leader's equipment. The lack of these qualities amounts, as I have said, to a disease, and must bear its share of blame for whatever failures American business has suffered. It should be remembered that business is not confined to cor

porations, or to any line of commercial enterprise. In some degree every calling in life is a business; and to the extent that business is involved in any human attempt toward livelihood or gain, these remarks will apply in due proportion. Big Business, so called, is more likely to be exposed to the public view, but small business is no more exempt from moral responsibility.

The iron and steel industry in the United States can do much to promote the golden rule in business. Perhaps it has done a good deal in that direction, although it is far from perfect, even between its own corporate members. Not only individuals but aggregations should become active participants in promoting the golden rule. Much of large business is negotiated; that is, many of the biggest commercial transactions are consummated in discussions between two or more persons, dealing as man to man but at arm's length. Frequently there are no fixed prices or precise basis for measuring or for valuations, and there is the need of reaching an agreement which is mutually satisfactory, or at least acceptable. Under these conditions neither side is obligated to expose what is in its mind as a minimum or a maximum of possible terms or prices. Yet in such cases there can be no excuse for misrepresentation or fraud of any kind.

It has been said on occasion that certain individuals absolutely have been dominant in the control and management of the United States Steel Corporation. Such a statement is wholly contrary to fact, indeed contrary to reason. Although in the earlier years there were differences of

opinion, the corporation's plans and policies have always been carefully considered, and harmoniously approved by our finance committee and by our board of directors.

The United States Steel Corporation has been characterized as "a corporation with a soul." Whether or not the characterization is true might depend upon one's definition of the word soul. A definition acceptable for the purpose of this paper is that a soul is a controlling influence, possessed by individuals, corporations, or states, which recognizes, as of equal importance with its own, the rights, interests, and welfare of others—no greater, no less. Under this definition the United States Steel Corporation has striven to secure in all who are interested in its conduct the conviction that it is possessed of a soul. To say that it has sometimes failed in this effort is but to assert that its managers are human.


The management of a corporation stands fundamentally in a position of balance between three groups or factors: the security-holders, the general public, and the working forces.

The security-holders rightly occupy first place, because they own the properties and business, and their control must be recognized. Their capital makes possible the existence, the activities, and the success of the corporation. No enterprise would long continue active, or even remain in existence, if a majority of the stockholders were continuously dissatisfied. The managers of our corporation have neither minimized nor neglected the rights of the stockholders; but at times those rights have been ignored or

threatened by public speakers and writers, especially when incompetent, prejudiced, or unjust. The stockholders should remember that although it may sometimes seem to them, or to some of them, that the directors have been unduly liberal in expenditures, it nevertheless has been the conscientious judgment of the management that what was done was calculated to result in the greatest good and the largest benefit for all concerned.

We do not manage the Steel Corporation for the stock market. I have repeatedly made this declaration. We try to make our securities intrinsically a little more valuable as years go on, and we have succeeded up to the present time. The corporation is doing a business or has done a business ranging from a billion and a half to two billion dollars a year; it has employed from two hundred and sixty thousand to three hundred thousand men; wages have been advancing as the cost of living advanced, and costs of materials have been increasing. Until the World War, competition from foreign countries was growing and becoming more strenuous; since the war, competition within the boundaries of the United States has been increasing, and has become extremely strenuous. Notwithstanding these conditions, the United States Steel Corporation has shown a steady advancement.

The stockholder's interests are always served and protected by conservative management, calculated to avert financial loss or disaster, whatever business conditions may be or whatever emergency may arise. From time to time the Steel Corporation has increased the dividends on

its common stock; and we have made these increases as soon as we believed reasonable, and in amounts as large as we believed practicable, taking every factor into account. Requests for such increases have been many, sometimes in speech, sometimes in print. But with few exceptions they do not come from investors. Let me state a case as an illustration.

An individual wrote twice demanding an increase in the common stock dividend. Letters of the sort are usually anonymous, but this one was signed, and so we were able to examine the records. We found that the writer had been in and out and in again within a few months, that he had bought and sold and bought again again approximately the same number of shares each time. That he is an investor is doubtful; rather, he is what would be called a speculator, which he of course has a right to be. He would like to have an extra dividend declared in order to dispose of his holdings at a profit; after which he would presumably repurchase, if something happened to depress the market. Such reasons as these do not appeal to the judgment of a real investor.

With regard to the general public, it will cheerfully be admitted that its interests are highly important. When they clash with private interests the latter must be subordinated. The management of a corporation, for its own good and for the benefit of its stockholders, must have constantly uppermost in mind the rights and interests of the public, not only as determined by the law but as best it can be ascertained from public sentiment, when this is clear and well defined. Nowadays

the spoken or published expression of opinion, even though it voice undeserved criticism, will not be ignored by a wise management. If upon careful consideration it is found to be justified, criticism should be accepted and acted upon. There may be excuses for mistakes, but there can be no extenuation for an intentional wrong or unfairness. There may be differences of opinion as to what is fair and reasonable; often such differences arise; but we can and should act conscientiously in accordance with our best judgment, and from motives of honesty, as well as of friendship for others.

The public should be protected against combinations or agreements to monopolize or to restrain trade unduly; that protection still is, will be, and should be in full force. There is no tendency on the part of the courts or of any department of the government either to ignore or modify the effect of the Sherman Act when properly interpreted and applied. The law does not compel any one to compete with another if he does not desire to do so; it especially abhors competition which is intended to be destructive and dishonest.

All business men desire to procure just, even liberal profits, and would like to establish and maintain fair prices for what they produce and sell. The United States Steel Corporation wishes to have at least its proper and full share of the business that is offered. But we should not at any time endeavor, by unfair, unethical, or unreasonable practices, to gain for ourselves trade which normally would go to competitors. Competition is the life of trade, as it should be. It is not only desirable; it is

necessary. We should not try to suppress it when it is fair and reasonable. Destructive competition is not fair, it is not reasonable, it is never beneficial in the long run to anybody, and it may become the death of trade. Fair prices bring the greatest good to the greatest number.

In the early days of the Steel Corporation there was a great deal of opposition from public men to its large capitalization and to its preponderance in the industry. It was thought by many persons, some of them leaders in public affairs, that any corporation which had more than fifty per cent of the business was a monopoly and therefore inimical to the best interests of the country. We believed that this attitude was reasonable, and we did not expand the activities of some of our companies as rapidly as we could. After we got down to a ratio of fifty per cent, we held that position as nearly as was practicable and proper. We want to keep our present position as near that point as possible, but not with prejudice to the stockholders, nor with injury to the public.

The interests of the employees of the corporation receive as much, as constant, and as liberal consideration as those of the other groups we have been discussing. Labor, so called, has never been more highly paid nor treated so liberally as to-day. Our corporation has appropriated for welfare work more than $160,000,000. This is not ground for boasting; it is good business policy. It is true that individual shareholders have occasionally questioned what they thought was undue liberality toward our workmen; but that was largely because they lacked full understand

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